10-K

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

                                                     FORM 10-K

(Mark One)

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                         December 31, 2003
                         ------------------------------------------------------------------------------------------

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the transition period from                           to
                               -------------------------    -------------------------------------------------------

                                           Commission File Number 1-9936

                                               EDISON INTERNATIONAL
                              (Exact name of registrant as specified in its charter)

                      California                                                            95-4137452
            (State or other jurisdiction of                                              (I.R.S. Employer
            incorporation or organization)                                              Identification No.)

               2244 Walnut Grove Avenue
                    (P.O. Box 999)
                 Rosemead, California                                                          91770
       (Address of principal executive offices)                                             (Zip Code)

                        Registrant's telephone number, including area code: (626) 302-2222

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

                                                                                       Name of each exchange
                  Title of each class                                                   on which registered
              Common Stock, no par value                                               New York and Pacific

     Rights to Purchase Series A Junior Participating                                  New York and Pacific
         Cumulative Preferred Stock, no par value

         Guarantee of 7.875% Cumulative Quarterly                                            New York
           Income Preferred Securities, Series A

          Guarantee of 8.60% Cumulative Quarterly                                            New York
         Income Preferred Securities, Series B

                         Securities registered pursuant to Section 12(g) of the Act: 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.    Yes |X|    No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation S-K is not contained
herein,  and will not be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or  information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    |_|

Indicate by check mark whether the  registrant  is an  accelerated  filer (as defined in Exchange Act  Rule 12b-2).
Yes |X|    No |_|

The   aggregate   market  value  of   registrant's   voting  stock  held  by   non-affiliates   was   approximately
$5,353,078,114.58  on or about June 30,  2003,  based upon prices  reported on the New York Stock  Exchange.  As of
March 10, 2004, there were 325,811,206 shares of Common Stock outstanding.


                                        DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  following documents listed below have been incorporated by reference into the parts of this
report so indicated.

(1)  Designated portions of the registrant's Annual Report to Shareholders
         for the year ended December 31, 2003....................................................  Parts I and II
(2)  Designated portions of the Joint Proxy Statement relating
         to registrant's 2004 Annual Meeting of Shareholders.....................................  Part III

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                                                 TABLE OF CONTENTS

Item                                                                                                       Page
- ---------------------------------------------------------------------------------------------------------------

Forward-Looking Statements...................................................................................  1

                                                      Part I

1.   Business................................................................................................  1
         Business of Edison International....................................................................  1
              Regulation of Edison International.............................................................  2
              Environmental Matters Affecting Edison International...........................................  3
         Business of Southern California Edison Company......................................................  4
              Regulation of SCE..............................................................................  4
              Competition of SCE.............................................................................  5
              Properties of SCE..............................................................................  5
              SCE Construction Program.......................................................................  7
              Nuclear Power Matters of SCE...................................................................  7
              SCE Purchased Power and Fuel Supply............................................................  8
              Environmental Matters Affecting SCE............................................................  9
         Business of Mission Energy Holding Company.......................................................... 15
         Business of Edison Mission Energy................................................................... 15
              Competition and Market Conditions of EME....................................................... 16
              Power Plants and Regions of EME................................................................ 17
              Discontinued Operations of EME................................................................. 20
              Price Risk Management and Trading Activities of EME............................................ 20
              Seasonality of EME............................................................................. 20
              Regulation of EME.............................................................................. 20
              Environmental Matters Affecting EME............................................................ 23
         Business of Edison Capital.......................................................................... 28
              Energy and Infrastructure Investments of Edison Capital........................................ 28
              Affordable Housing Investments of Edison Capital............................................... 31
              Business Environment of Edison Capital......................................................... 31
2.   Properties.............................................................................................. 32
3.   Legal Proceedings....................................................................................... 33
         Southern California Edison Company.................................................................. 33
              Navajo Nation Litigation....................................................................... 33
              CPUC Litigation and Settlement................................................................. 33
              CPUC Investigation Regarding SCE's Electric Line Maintenance Practices......................... 33
              Department of Toxic Substances Control Enforcement Action...................................... 33
              County of San Bernardino Investigation......................................................... 33
              Irvine Underground Storage Tank Matter......................................................... 33
         Edison Mission Energy............................................................................... 34
              EcoElectrica Environmental Proceeding.......................................................... 34
              Sunrise Power Company Lawsuits................................................................. 34
              Paiton Labor Suit.............................................................................. 35
4.   Submission of Matters to a Vote of Security Holders..................................................... 35






                                                 TABLE OF CONTENTS

Item                                                                                                         Page
- ----                                                                                                         ----

                                                      Part II

5.   Market for Registrant's Common Equity and Related Stockholder Matters................................... 39
6.   Selected Financial Data................................................................................. 40
7.   Management's Discussion and Analysis of Financial Condition and Results of Operations................... 40
7A.  Quantitative and Qualitative Disclosures About Market Risk.............................................. 40
8.   Financial Statements and Supplementary Data............................................................. 40
9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... 40
9A.  Controls and Procedures................................................................................. 40

                                                     Part III

10.  Directors and Executive Officers of the Registrant...................................................... 41
11.  Executive Compensation.................................................................................. 41
12.  Security Ownership of Certain Beneficial Owners and Management.......................................... 41
13.  Certain Relationships and Related Transactions.......................................................... 43
14.   Principal Accounting Fees and Services................................................................. 43
15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................................ 43
         Financial Statements................................................................................ 43
         Report of Independent Auditors and Schedules Supplementing Financial Statements..................... 43
         Exhibits............................................................................................ 43
         Reports on Form 8-K................................................................................. 44
         Signatures.......................................................................................... 53







                                            FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that reflect Edison International's current
expectations and projections about future events based on Edison International's knowledge of present facts and
circumstances and assumptions about future events.  Other information distributed by Edison International 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,"
"intends," "plans," "probable," and variations of such words and similar expressions 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, or that otherwise could impact Edison International or its
subsidiaries, are referred to in the first paragraph of the Introduction in the Management's Discussion and
Analysis of Financial Condition and Results of Operations (MD&A) that appears in Edison International's 2003
Annual Report to Shareholders (Annual Report) and is incorporated by reference into Part II, Item 7 of this
report.

Additional information about risks and uncertainties is contained throughout this report, in the MD&A, and in
Notes to Consolidated Financial Statements (Notes to Financial Statements) that appear in Edison International's
Annual Report and are incorporated by reference into Part II, Item 8 of this report.  Readers are urged to read
this entire report, including the information incorporated by reference, and carefully consider the risks,
uncertainties and other factors that affect Edison International's business.  The information contained in this
report is subject to change without notice, and Edison International is not obligated to publicly update or
revise forward-looking statements.  Readers should review future reports filed by Edison International with the
Securities and Exchange Commission (SEC).

Except when otherwise stated, references to each of Edison International, Southern California Edison Company
(SCE), Mission Energy Holding Company (MEHC), Edison Mission Energy (EME) or Edison Capital mean each such
company with its subsidiaries on a consolidated basis.  References to "Edison International (parent)" or "parent
company" mean Edison International on a stand-alone basis, not consolidated with its subsidiaries.  References to
SCE, MEHC, EME, or Edison Capital followed by "stand-alone" mean each such company alone, not consolidated with
its subsidiaries.

                                                      PART I

Item 1.  Business

                                         Business of Edison International

Edison International was incorporated on April 20, 1987, under the laws of the State of California for the
purpose of becoming the parent holding company of SCE, a California public utility corporation, and of other
subsidiaries engaged in nonutility businesses (Nonutility Companies).  SCE comprises the largest portion of the
assets and revenue of Edison International.  The principal Nonutility Companies are:  EME, which is engaged in
owning or leasing and operating electric power generation facilities worldwide and in energy trading and price
risk management activities; MEHC, which holds the common stock of EME; and Edison Capital, which has investments
in energy and infrastructure projects worldwide and in affordable housing projects located throughout the United
States.

Edison International is engaged in the business of holding, for investment, the common stock of its
subsidiaries.  At December 31, 2003, Edison International and its subsidiaries had an aggregate of
15,407 full-time employees, of which 30 were employed directly by Edison International.


Page 1


The principal executive offices of Edison International are located at 2244 Walnut Grove Avenue, Rosemead, P.O.
Box 999, California 91770, and the telephone number is (626) 302-2222.

Edison International's internet website address is http://www.edison.com.  Edison International makes available,
free of charge on its internet website, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as soon as reasonably practicable after Edison International electronically
files such material with, or furnishes it to, the SEC.  Such reports are also available on the SEC's internet
website at http://www.sec.gov.

Edison International has three business segments for financial reporting purposes:  an electric utility segment
(SCE), a nonutility power generation segment (EME), and a financial services provider segment (Edison Capital).
Financial information about these segments and about geographic areas, for fiscal years 2003, 2002, and 2001, is
contained in Note 12 of Notes to Financial Statements and incorporated herein by this reference.  Additional
information about each of these business segments is contained below in "Business of Southern California Edison
Company," "Business of Edison Mission Energy," and "Business of Edison Capital."

Regulation of Edison International

Edison International and its subsidiaries are exempt from all provisions, except Section 9(a)(2), of the Public
Utility Holding Company Act of 1935 on the basis that Edison International and SCE are incorporated in the same
state and their utility businesses are predominantly intrastate in character and carried on substantially in
their state of incorporation.  Section 9(a)(2) provides, in substance, that Edison International may not directly
or indirectly acquire 5% or more of the voting securities of a public utility company other than SCE, unless the
acquisition has been approved by the SEC.  The subsidiaries of Edison International, other than SCE, conduct
their businesses so as to avoid becoming public utility companies as defined in the Public Utility Holding
Company Act.  See "Business of Edison Mission Energy--Regulation of EME" below for more information on the
regulation of EME, including the effects on EME of the Public Utility Holding Company Act.  It is necessary for
Edison International to file an annual exemption statement with the SEC, and the exemption may be revoked by the
SEC upon a finding that the exemption may be detrimental to the public interest or the interest of investors or
consumers.  Edison International has no present intention of becoming a registered holding company under the
Public Utility Holding Company Act.

Edison International is not a public utility under the laws of the State of California and is not subject to
regulation as such by the California Public Utilities Commission (CPUC).  See "Business of Southern California
Edison Company--Regulation of SCE" below for a description of the regulation of SCE by the CPUC.  The CPUC
decision authorizing SCE to reorganize into a holding company structure, however, contains certain conditions,
which, among other things:  (1) ensure the CPUC access to books and records of Edison International and its
affiliates which relate to transactions with SCE; (2) require Edison International and its subsidiaries to employ
accounting and other procedures and controls to ensure full review by the CPUC and to protect against
subsidization of nonutility activities by SCE's customers; (3) require that all transfers of market,
technological, or similar data from SCE to Edison International or its affiliates be made at market value;
(4) preclude SCE from guaranteeing any obligations of Edison International without prior written consent from the
CPUC; (5) provide for royalty payments to be paid by Edison International or its subsidiaries in connection with
the transfer of product rights, patents, copyrights, or similar legal rights from SCE; and (6) prevent Edison
International and its subsidiaries from providing certain facilities and equipment to SCE except through
competitive bidding.


Page 2

In addition, the decision provides that SCE shall maintain a balanced capital structure in accordance with prior
CPUC decisions, that SCE's dividend policy shall continue to be established by SCE's Board of Directors as though
SCE were a stand-alone utility company, and that the capital requirements of SCE, as determined to be necessary
to meet SCE's service obligations, shall be given first priority by the boards of directors of Edison
International and SCE.

In addition, the CPUC has issued affiliate transaction rules governing the relationships between SCE and its
affiliates, including Edison International and the Nonutility Companies.  SCE has filed compliance plans which
set forth SCE's implementation of the CPUC's affiliate transaction rules.  The rules and compliance plans are
intended to maintain separateness between utility and nonutility activities and ensure that utility assets are
not used to subsidize the activities of nonutility affiliates.

In April 2001, the CPUC adopted an order instituting investigation that reopened the past CPUC decisions
authorizing the utilities to form holding companies and initiated an investigation into whether Edison
International and PG&E Corporation violated CPUC requirements to give first priority to the capital needs of
their respective utility subsidiaries; whether actions by Edison International and PG&E Corporation and their
respective nonutility affiliates to shield, or "ring-fence," nonutility assets also violated the requirements
that the holding companies give first priority to the capital needs of their utility subsidiaries; whether the
payment of dividends by the utilities violated requirements that the utilities maintain dividend policies as
though they were comparable stand-alone utility companies; whether there are any additional suspected violations
of laws or CPUC rules and decisions; and whether additional rules, conditions, or other changes to the holding
company decisions are necessary.  Additional information about this matter appears in the MD&A under the heading
"SCE:  Regulatory Matters--Other Regulatory Matters--Holding Company Proceeding."

Environmental Matters Affecting Edison International

Because Edison International does not own or operate any assets, except the stock of its subsidiaries, it does
not have any direct environmental obligations or liabilities.  However, legislative and regulatory activities by
federal, state, and local authorities in the United States and regulatory authorities with jurisdiction over
projects located outside the United States continue to result in the imposition of numerous restrictions on the
operation of existing facilities by Edison International's subsidiaries, on the timing, cost, location, design,
construction, and operation of new facilities by Edison International's subsidiaries, and on the cost of
mitigating the effect of past operations on the environment.  These laws and regulations, relating to air and
water pollution, waste management, hazardous chemical use, noise abatement, land use, aesthetics, and nuclear
control, substantially affect future planning and will continue to require modifications of existing facilities
and operating procedures by Edison International's subsidiaries.  Edison International is unable to predict with
certainty the extent to which additional regulations may affect its operations and capital expenditure
requirements.

Edison International's material estimated capital expenditures for environmental control facilities, on a
consolidated basis, are $421 million for 2004, $535 million for 2005, $444 million for 2006, $432 million for
2007 and $432 million for 2008.  Additional information about environmental matters affecting Edison
International appears in the MD&A under "Other Developments--Environmental Matters" and in Note 10 of Notes to
Financial Statements under "Environmental Remediation," and that information is incorporated herein by this
reference.  For details about the environmental liabilities and other business risks from environmental
regulation of SCE and EME, see "Business of Southern California Edison Company--Environmental Matters Affecting
SCE" and "Business of Edison Mission Energy--Environmental Matters Affecting EME," below.


Page 3


                                  BUSINESS OF SOUTHERN CALIFORNIA EDISON COMPANY

SCE was incorporated in 1909 under the laws of the State of California.  SCE is a public utility primarily
engaged in the business of supplying electric energy to a 50,000-square-mile area of central, coastal and
southern California, excluding the City of Los Angeles and certain other cities.  This SCE service territory
includes approximately 430 cities and communities and a population of more than 12 million people.  In 2003,
SCE's total operating revenue was derived as follows:  33% residential customers, 42% commercial customers, 8%
industrial customers, 6% public authorities, 6% agricultural and other customers, and 5% other electric revenue.
At December 31, 2003, SCE had consolidated assets of $18.5 billion and total shareholder's equity of
$4.5 billion.  SCE had 12,698 full-time employees at year-end 2003.

Regulation of SCE

SCE's retail operations are subject to regulation by the CPUC.  The CPUC has the authority to regulate, among
other things, retail rates, issuance of securities, and accounting practices.  SCE's wholesale operations are
subject to regulation by the Federal Energy Regulatory Commission (FERC).  The FERC has the authority to regulate
wholesale rates as well as other matters, including retail transmission service pricing, accounting practices,
and licensing of hydroelectric projects.

Additional information about the regulation of SCE by the CPUC and the FERC, and about SCE's competitive
environment, appears in the MD&A under the headings "SCE:  Management Overview" and "SCE:  Regulatory Matters,"
and that information is incorporated herein by this reference.  Also see "Competition of SCE" below.

SCE is subject to the jurisdiction of the United States Nuclear Regulatory Commission with respect to its nuclear
power plants.  Nuclear Regulatory Commission regulations govern the granting of licenses for the construction and
operation of nuclear power plants and subject those power plants to continuing review and regulation.

The construction, planning, and siting of SCE's power plants within California are subject to the jurisdiction of
the California Energy Commission and the CPUC.  SCE is subject to the rules and regulations of the California Air
Resources Board, State of Nevada, and local air pollution control districts with respect to the emission of
pollutants into the atmosphere; the regulatory requirements of the California State Water Resources Control Board
and regional boards with respect to the discharge of pollutants into waters of the state; and the requirements of
the California Department of Toxic Substances Control with respect to handling and disposal of hazardous
materials and wastes.  SCE is also subject to regulation by the United States Environmental Protection Agency
(EPA), which administers federal statutes relating to environmental matters.  Other federal, state, and local
laws and regulations relating to environmental protection, land use, and water rights also affect SCE.

The California Coastal Commission issued a coastal permit for the construction of the San Onofre Nuclear
Generating Station (San Onofre) Units 2 and 3 in 1974.  This permit, as amended, requires mitigation for impacts
to fish and the San Onofre kelp bed.  California Coastal Commission jurisdiction will continue for several years
due to ongoing implementation and oversight of these permit mitigation conditions, consisting of restoration of
wetlands and construction of an artificial reef for kelp.  These mitigation measures were required to offset San
Onofre's cooling water intake impacts to fish and kelp.  SCE has a coastal permit to construct a temporary dry
cask spent fuel storage installation for San Onofre Units 2 and 3.  The California Coastal Commission also has
continuing jurisdiction over coastal permits


Page 4


issued for the decommissioning of San Onofre Unit 1, including for the construction of a temporary dry cask spent
fuel storage installation for spent fuel from that unit.

The United States Department of Energy has regulatory authority over certain aspects of SCE's operations and
business relating to energy conservation, power plant fuel use and disposal, electric sales for export, public
utility regulatory policy, and natural gas pricing.

SCE is subject to CPUC affiliate transaction rules and compliance plans governing the relationship between SCE
and its affiliates.  See "Business of Edison International--Regulation of Edison International" above for further
discussion of these rules and a CPUC order regarding compliance with past CPUC decisions authorizing the
formation of utility holding companies and initiating an investigation into various affiliate and holding company
related issues.

Competition of SCE

Because SCE is an electric utility company operating within a defined service territory pursuant to authority
from the CPUC, SCE faces competition only to the extent that federal and California laws permit other entities to
provide electricity and related services to customers within SCE's service territory.  California law currently
provides only limited opportunities for customers to choose to purchase power directly from an energy service
provider other than SCE.  SCE also faces some competition from cities that create municipal utilities or
community choice aggregators.  In addition, customers may install their own on-site power generation facilities.
Competition with SCE is conducted mainly on the basis of price as customers seek the lowest cost power
available.  The effect of competition on SCE generally is to reduce the size of SCE's customer base, thereby
creating upward pressure on SCE's rate structure to cover fixed costs, which in turn may cause more customers to
seek lower rates.  Additional information about competition of SCE appears in the MD&A under the headings "SCE:
Management Overview" and "SCE:  Regulatory Matters--Generation and Power Procurement--Direct Access Proceedings."

Properties of SCE

SCE supplies electricity to its customers through extensive transmission and distribution networks.  Its
transmission facilities, which deliver power from generating sources to the distribution network, consist of
approximately 7,130 circuit miles of 33 kilovolt (kV), 55 kV, 66 kV, 115 kV, and 161 kV lines and 3,580 circuit
miles of 220 kV lines (all located in California), 1,238 circuit miles of 500 kV lines (1,040 miles in
California, 86 miles in Nevada, and 112 miles in Arizona), and 860 substations (all in California).  SCE's
distribution system, which takes power from substations to the customer, includes approximately 60,600 circuit
miles of overhead lines, 35,400 circuit miles of underground lines, 1.5 million poles, 570 distribution
substations, 678,760 transformers, and 734,800 area and street lights, all of which are located in California.

SCE owns and operates the following generating facilities:  (1) an undivided 75.05% interest (1,614 megawatts
(MW)) in San Onofre Units 2 and 3, which are large pressurized water nuclear units located on the California
coastline between Los Angeles and San Diego; (2) 36 hydroelectric plants (1,175 MW) located in California's
Sierra Nevada, San Bernardino and San Gabriel mountain ranges, three of which (2.7 MW) are no longer operational,
(3) a diesel-fueled generating plant (9 MW) and one hydroelectric plant (0.11 MW) located on Santa Catalina
island off the Southern California coast, and (4) an undivided 56% interest (885 MW net) in the Mohave Generating
Station, which consists of two coal-fueled generating units located in Clark County, Nevada near the California
border.


Page 5


SCE also owns an undivided 15.8% interest (590 MW) in Palo Verde Nuclear Generating Station, which is located
near Phoenix, Arizona, and an undivided 48% interest (740 MW) in Units 4 and 5 at Four Corners Generating
Station, which is a coal-fueled generating plant located in the Four Corners area of New Mexico.  The Palo Verde
and Four Corners plants are operated by Arizona Public Service Company.

At year-end 2003, the SCE-owned generating capacity (summer effective rating) was divided approximately as
follows:  44% nuclear, 32% coal, 23% hydroelectric, and less than 1% diesel.  The capacity factors in 2003 for
SCE's nuclear and coal-fired generating units were:  97% for San Onofre; 69% for Mohave; 87% for Four Corners; and
87% for Palo Verde.  For SCE's hydroelectric plants, generating capacity is dependent on the amount of available
water.  Therefore, while SCE's hydroelectric plants operated at a 39% capacity factor in 2003 due to a below
normal water year, these plants were operationally available for 92.1% of the year.

The San Onofre units, Four Corners station, certain of SCE's substations, and portions of its transmission,
distribution and communication systems are located on lands of the United States or others under (with minor
exceptions) licenses, permits, easements or leases, or on public streets or highways pursuant to franchises.
Certain of such documents obligate SCE, under specified circumstances and at its expense, to relocate
transmission, distribution, and communication facilities located on lands owned or controlled by federal, state,
or local governments.

Thirty-one of SCE's 36 hydroelectric plants (some with related reservoirs) are located in whole or in part on
United States lands pursuant to 30- to 50-year FERC licenses that expire at various times between 2004 and 2029
(the remaining five plants are located entirely on private property and are not subject to FERC jurisdiction).
Such licenses impose numerous restrictions and obligations on SCE, including the right of the United States to
acquire projects upon payment of specified compensation.  When existing licenses expire, the FERC has the
authority to issue new licenses to third parties that have filed competing license applications, but only if
their license application is superior to SCE's and then only upon payment of specified compensation to SCE.  New
licenses issued to SCE are expected to contain more restrictions and obligations than the expired licenses
because laws enacted since the existing licenses were issued require the FERC to give environmental purposes
greater consideration in the licensing process.  SCE's applications for the relicensing of certain hydroelectric
projects with an aggregate dependable operating capacity of approximately 24 MW are pending.  Annual licenses
have been issued to SCE hydroelectric projects that are undergoing relicensing and whose long-term licenses have
expired.  Federal Power Act Section 15 requires that the annual licenses be renewed until the long-term licenses
are issued or denied.

Substantially all of SCE's properties are subject to the lien of a trust indenture securing First and Refunding
Mortgage Bonds, of which approximately $3.1 billion in principal amount was outstanding on March 10, 2004.  Such
lien and SCE's title to its properties are subject to the terms of franchises, licenses, easements, leases,
permits, contracts, and other instruments under which properties are held or operated, certain statutes and
governmental regulations, liens for taxes and assessments, and liens of the trustees under the trust indenture.
In addition, such lien and SCE's title to its properties are subject to certain other liens, prior rights and
other encumbrances, none of which, with minor or insubstantial exceptions, affect SCE's right to use such
properties in its business, unless the matters with respect to SCE's interest in the Four Corners plant and the
related easement and lease referred to below may be so considered.


SCE's rights in the Four Corners station, which is located on land of the Navajo Nation of Indians under an
easement from the United States and a lease from the Navajo Nation, may be subject to possible


Page 6


defects.  These defects include possible conflicting grants or encumbrances not ascertainable because of the
absence of, or inadequacies in, the applicable recording law and the record systems of the Bureau of Indian
Affairs and the Navajo Nation, the possible inability of SCE to resort to legal process to enforce its rights
against the Navajo Nation without Congressional consent, the possible impairment or termination under certain
circumstances of the easement and lease by the Navajo Nation, Congress, or the Secretary of the Interior, and the
possible invalidity of the trust indenture lien against SCE's interest in the easement, lease, and improvements
on the Four Corners station.

Information about the acquisition of Mountainview Power Company LLC, by SCE and the construction of a new power
plant appears in the MD&A under the heading "Acquisitions and Dispositions" and is incorporated herein by this
reference.

SCE Construction Program

Cash spent by SCE for its construction expenditures totaled approximately $1.2 billion in 2003, $1.0 billion in
2002 and $688 million in 2001.  Construction expenditures for 2004 are forecasted at $1.9 billion.

Nuclear Power Matters of SCE

Nuclear Plant Reactor Vessel Heads Inspections

Recent nuclear industry concern has been expressed on the subject of leakage from nuclear reactor vessel head
nozzle penetrations due to leakage at the Davis-Besse nuclear plant in Ohio.  Inspections of the reactor head
penetrations provide early detection of the conditions that cause the Davis-Besse type leakage.  During scheduled
refueling and maintenance outages at San Onofre Units 2 and 3, conducted in 2002 and 2003, vessel head nozzle
penetrations in both units were inspected and no indications of leakage or degradation were detected.
Inspections of Palo Verde Units 1, 2 and 3 were also performed during scheduled refueling and maintenance outages
in 2002 and 2003 and no indications of leakage or degradation were detected.

San Onofre Steam Generator Replacements

Information about San Onofre steam generator replacements appears in the MD&A under the heading "SCE:  Other
Developments--San Onofre Steam Generators" and is incorporated herein by this reference.

Palo Verde Plant Steam Generator Replacements

Information about Palo Verde steam generator replacements appears in the MD&A under the heading "SCE:  Other
Developments--Palo Verde Steam Generators" and is incorporated herein by this reference.

Nuclear Facility Decommissioning

Decommissioning of San Onofre Unit 1 is underway and will be completed in three phases:  (1) decontamination and
dismantling of all structures and some foundations; (2) spent fuel storage monitoring; and (3) fuel storage
facility dismantling, removal of remaining foundations, and site restoration.  Phase one is anticipated to
continue through 2008.  Phase two is expected to continue until 2026.  Phase three will be conducted concurrently
with the San Onofre Units 2 and 3 decommissioning


Page 7


projects.  On February 3, 2004, SCE announced that it has discontinued plans to ship the San Onofre Unit 1
reactor pressure vessel to a disposal site until such time as appropriate arrangements are made for its permanent
disposal.  It will continue to be stored at its current location at San Onofre Unit 1, where it remains
completely safe and poses no risk to the public or the environment.  This action results in placing the disposal
of the reactor pressure vessel in Phase three of the San Onofre Unit 1 decommissioning project.

SCE expects that its reasonable San Onofre Unit 1 decommissioning costs will be paid from its nuclear
decommissioning trust funds, subject to CPUC review.  SCE maintains a customer-funded trust with a sufficient
balance to pay for its share of the estimated cost for the remaining San Onofre Unit 1 decommissioning work.  SCE
plans to decommission its other nuclear generating facilities following expiration of the operating licenses as
expeditiously as possible once authorized by the Nuclear Regulatory Commission.  The cost estimates for
decommissioning SCE's nuclear generating facilities other than San Onofre Unit 1 were based on the assumption
that decommissioning will commence following the expiration of the current operating licenses.  The operating
licenses expire in 2022 for San Onofre Units 2 and 3, and in 2024, 2026 and 2027 for the Palo Verde units.  SCE
customers are continuing to contribute to the decommissioning trusts for San Onofre Units 2 and 3, and for the
Palo Verde units.  Decommissioning costs are recorded as a component of depreciation expense.

Nuclear Insurance

Information about Nuclear Insurance can be found in Note 10 of Notes to Financial Statements and is incorporated
herein by this reference.

SCE Purchased Power and Fuel Supply

SCE obtains the power needed to serve its customers from its generating facilities and from purchases from other
utilities, independent power producers, qualifying facilities and the California Independent System Operator.  In
addition, power is provided to SCE's customers through purchases by the California Department of Water Resources
(CDWR) under contracts with third parties.  Sources of power to serve SCE's customers during 2003 were as
follows:  40.5% purchased power; 22.9% CDWR; and 36.6% SCE-owned generation consisting of 19.8% nuclear, 12.2%
coal, and 4.6% hydro.  Additional information about SCE's power procurement activities appears in the MD&A under
the heading "SCE:  Regulatory Matters--Generation and Power Procurement."

Natural Gas Supply

SCE's gas requirements in 2003 were for start-up use at the Mohave coal-fired generation facility and to meet
contractual obligations for power tolling agreements for SCE's residual-net sort position.  All of the gas
purchased by SCE in 2003 was purchased under North American Energy Standards Board agreements (master gas
agreements) that define the terms and conditions of transactions with a particular supplier prior to any
financial commitment.

SCE maintains firm access rights onto the Southern California Gas Company system at Wheelers Ridge for 198,863
million British thermal units (mmBtu) per day as a result of a 13-year contract entered into in August 1993.  SCE
also maintains firm transportation rights of 18,000 mmBtu per day on Southwest Gas Corp's pipeline to serve
Mohave generation facility.  In 2002, the CPUC instructed the investor-owned utilities to bid on El Paso Natural
Gas pipeline capacity in anticipation of a gas requirement in 2003.  SCE participated in the auction and was
awarded 9,218 mmBtu per day for delivery commencing in November 2002.  Since there was no gas requirement on the
El Paso Natural Gas pipeline in 2003, all


Page 8


capacity was released by SCE back to the market at tariff rates.  The CPUC has determined that SCE's acquisition
of the El Paso Natural Gas capacity was consistent with CPUC directions.

In 2003 SCE secured one-year natural gas storage capacity rights for 431,000 mmBtu with Southern California Gas
Company.  Storage capacity was secured to provide operation flexibility and to mitigate potential costs
associated with the dispatch of SCE's tolling agreements.

Nuclear Fuel Supply

SCE has contractual arrangements covering 100% of the projected nuclear fuel requirements for San Onofre Units 2
and 3 through the years indicated below:

      Uranium concentrates...................................................................  2008
           Conversion........................................................................  2008
           Enrichment........................................................................  2008
           Fabrication.......................................................................  2015

Spent Nuclear Fuel

Information about Spent Nuclear Fuel appears in Note 10 of Notes to Financial Statements and is incorporated
herein by this reference.

Coal Supply

SCE purchases coal pursuant to long term contracts to provide stable and reliable fuel supplies to its two
coal-fired generating stations, the Mohave and Four Corners plants.  SCE entered into a coal contract, dated
September 1, 1966, with BHP Navajo Coal Company, the predecessor to the current owner of the Navajo mine, to
supply coal to Four Corners Units 4 and 5.  The initial term of this coal supply contract for the Four Corners
plant is through 2004 and includes extension options for up to 15 additional years.  For discussion of the
litigation affecting the coal supply contract for the Mohave plant, see "SCE:  Other Developments--Navajo Nation
Litigation" in the MD&A.  SCE does not have reasonable assurance of an adequate coal supply for operating the
Mohave plant after 2005.  If reasonable assurance of an adequate coal supply is not obtained, it will become
necessary to shut down the Mohave plant after December 31, 2005.  For additional information, see "SCE:
Regulatory Matters--Generation and Power Procurement--Mohave Generating Station and Related Proceedings" in the
MD&A.

Environmental Matters Affecting SCE

SCE is subject to environmental regulation by federal, state and local authorities in the jurisdictions in which
it operates in the United States.  This regulation, including the areas of air and water pollution, waste
management, hazardous chemical use, noise abatement, land use, aesthetics, and nuclear control, continues to
result in the imposition of numerous restrictions on SCE's operation of existing facilities, on the timing, cost,
location, design, construction, and operation by SCE of new facilities, and on the cost of mitigating the effect
of past operations on the environment.

SCE believes that it is in substantial compliance with environmental regulatory requirements and that maintaining
compliance with current requirements will not materially affect its financial position or results of operation.
However, possible future developments, such as the promulgation of more stringent environmental laws and
regulations, future proceedings that may be initiated by environmental authorities, and settlements agreed to by
other companies could affect the costs and the manner in which


Page 9


SCE conducts its business and could cause it to make substantial additional capital or operational expenditures.
There is no assurance that SCE would be able to recover these increased costs from its customers or that SCE's
financial position and results of operations would not be materially adversely affected.  SCE is unable to
predict the extent to which additional regulations may affect its operations and capital expenditure requirements.

Typically, environmental laws and regulations require a lengthy and complex process for obtaining licenses,
permits and approvals prior to construction, operation or modification of a project.  Meeting all the necessary
requirements can delay or sometimes prevent the completion of a proposed project as well as require extensive
modifications to existing project, which may involve significant capital or operational expenditures.
Furthermore, if SCE fails to comply with applicable environmental laws, it may be subject to injunctive relief,
penalties and fines imposed by regulatory authorities.

Air Quality

SCE's facilities, including in particular the Mohave plant located in Laughlin, Nevada, and the Four Corners
plant located in the Four Corners area of New Mexico are subject to various air quality regulations, including
the Federal Clean Air Act and similar state and local statutes.

Mohave Consent Decree.  In 1998, several environmental groups filed suit against the co-owners of the Mohave
plant regarding alleged violations of emissions limits.  In order to resolve the lawsuit and accelerate
resolution of key environmental issues regarding the plant, the parties entered into a consent decree, which was
approved by the Nevada federal district court in December 1999.  The decree also addressed concerns raised by EPA
programs regarding regional haze and visibility.  As to regional haze, EPA issued final rulemaking on July 1,
1999, that did not impose any additional emissions control requirements on the Mohave plant beyond meeting the
provisions of the consent decree.  As to visibility, EPA issued its final rule regarding visibility impairment at
the Grand Canyon on February 8, 2002.  This final rule incorporated the terms of the consent decree into the
Visibility Federal Implementation Plan for the State of Nevada, making the terms of the consent decree federally
enforceable.

SCE's share of the costs of complying with the consent decree and taking other actions to continue operation of
the Mohave plant beyond 2005 is estimated to be approximately $605 million over the next four years; however, SCE
has suspended its efforts seeking CPUC approval for the installation of such Mohave plant controls.  Additional
information about these issues appears in the MD&A under the heading "SCE:  Regulatory Matters--Other
Developments--Clean Air Act."

Mercury Maximum Achievable Control Technology Determination.  In December 2000, EPA announced its intent to
regulate mercury emissions and other hazardous air pollutants from coal-fired electric power plants under Section
112 of the Clean Air Act, and indicated that it would propose a rule to regulate these emissions by no later than
December 15, 2003.  On December 15, 2003, EPA issued proposed rules for regulating mercury emissions from coal
fired power plants.  EPA proposed two rule options for public comment:  (1) regulate mercury as a hazardous air
pollutant under Section 112(d) of the Clean Air Act; or (2) rescind EPA's December 2000 finding regarding a need
to control coal power plant mercury emissions as a hazardous air pollutant, and instead, promulgate a new "cap
and trade" emissions regulatory program to reduce mercury emissions in two phases by years 2010 and 2018.  On
February 24, 2004, EPA announced a Supplemental Notice of Proposed Rulemaking that provides more details on their
emissions cap and trade proposal for mercury.  At this time, EPA anticipates finalizing the regulations in
December 2004, with controls required to be in place by some time between the end of 2007 (if the
technology-based standard is chosen) and 2010 (when Phase I of the cap and trade approach would be implemented if
this approach is chosen).


Page 10


Until the mercury regulations are finalized, SCE cannot fully evaluate the potential impact of these regulations
on the operations of all of its facilities.  Additional capital costs related to those regulations could be
required in the future and they could be material, depending upon the final standards adopted by EPA.

National Ambient Air Quality Standards.  New ambient air quality standards for ozone, coarse particulate matter
and fine particulate matter were adopted by EPA in July 1997.  It is widely understood that attainment of the
fine particulate matter standard may require reductions in emissions of nitrogen oxides and sulfur dioxides.
These standards were challenged in the courts, and on March 26, 2002, the United States Court of Appeals for the
District of Columbia Circuit upheld EPA's revised ozone and fine particulate matter ambient air quality standards.

Because of the delays resulting from the litigation over the new standards, EPA's new schedule for implementing
the ozone and fine particulate matter standards calls for designation of attainment and nonattainment areas under
the two standards in 2004.  Once these designations are published, states will be required to revise their
implementation plans to achieve attainment of the revised standards.  The revised state implementation plans are
likely to require additional emission reductions from facilities that are significant emitters of ozone
precursors and particulates.  Any requirement imposed on SCE's coal-fired generating facilities to further reduce
their emissions of sulfur dioxide, nitrogen oxides and fine particulates as a result of the ozone and fine
particulate matter standard will not be known until the states revise their implementation plans.

At this time, SCE cannot predict the emission reduction targets that EPA will ultimately adopt or the specific
timing for compliance with those targets.  In addition, any additional obligations on SCE's facilities to further
reduce their emissions of sulfur dioxide, nitrogen oxides and fine particulates to address local non-attainment
with the 8-hour ozone and fine particulate matter standards will not be known until the states revise their
implementation plans.  Depending upon the final standards that are adopted, SCE may incur substantial costs or
financial impacts resulting from required capital improvements or operational changes.

New Source Review Requirements.  On November 3, 1999, the United States Department of Justice filed suit against
a number of electric utilities, not including SCE, for alleged violations of the Clean Air Act's "new source
review" (NSR) requirements related to modifications of air emissions sources at electric generating stations.
Around that same time, EPA issued requests for information pursuant to the Clean Air Act to numerous other
electric utilities seeking to determine whether these utilities also engaged in activities in violation of the
NSR requirements.

On June 27, 2000, EPA issued a request for information to the Four Corners plant.  On September 1, 2000, Arizona
Public Service Company, the operator of the plant, replied to the request.  To date, no further action has been
taken by EPA with respect to the Four Corners plant.

Several utilities have reached formal agreements or agreements-in-principle with the United States to resolve
alleged NSR violations.  These settlements involved installation of additional pollution controls, supplemental
environment projects, and the payment of civil penalties.  The agreements provided for a phased approach to
achieving required emission reductions over the next 10 to 15 years, and some called for the retirement or
repowering of coal-fired generating units.  The total cost of some of these settlements exceeded $1 billion; the
civil penalties agreed to by these utilities generally range between $1 million and $10 million.  Because of the
uncertainty created by the Bush administration's review of the NSR regulations and NSR enforcement proceedings,
some of these settlements have not been


Page 11


finalized.  However, the Department of Justice review released in January 2002 concluded "EPA has a reasonable
basis for arguing that the enforcement actions are consistent with both the Clean Air Act and the Administrative
Procedure Act."  No change in the Department of Justice's position regarding pending NSR legal actions has been
announced as a result of EPA's proposed NSR reforms (discussed immediately below).  In January 2004, EPA
announced new enforcement actions against several power generating facilities.

On December 31, 2002, EPA finalized a rule to improve the NSR program.  This rule is intended to provide
additional flexibility with respect to NSR by, among other things, modifying the method by which a facility
calculates the emissions' increase from a plant modification; exempting, for a period of ten years, units that
have complied with NSR requirements or otherwise installed pollution control technology that is equivalent to
what would have been required by NSR; and allowing a facility to make modifications without being required to
comply with NSR if the facility maintained emissions below plant-wide applicability limits.  Although states,
industry groups and environmental organizations have filed litigation challenging various aspects of the rule, it
became effective March 3, 2003.  To date, the rule remains in effect, although the pending litigation could still
result in changes to the final rule.

A federal district court, ruling on a lawsuit filed by EPA, found on August 7, 2003 that the Ohio Edison Company
violated requirements of the NSR within the Clean Air Act by upgrading certain coal-fired power plants without
first obtaining the necessary preconstruction permits.  On August 26, 2003, another federal district court ruling
in an NSR enforcement action against Duke Energy Corporation, adopted a different interpretation of the NSR
provisions that could limit liability for similar upgrade projects.

On October 27, 2003, EPA issued a final rule revising its regulations to define more clearly a category of
activities that are not subject to NSR requirements under the "routine maintenance, repair and replacement"
exclusion.  This clearer definition of "routine maintenance, repair and replacement," would provide SCE greater
guidance in determining what investments can be made at its existing plants to improve the safety, efficiency and
reliability of its operations without triggering NSR permitting requirements and might mitigate the potential
impact of the Ohio Edison decision.  However, on December 24, 2003, the Unites States Court of Appeals for the
D.C. Circuit blocked implementation of the "routine maintenance, repair and replacement" rule, pending further
judicial review.

As a result of these recent developments, there is currently uncertainty as to EPA's enforcement policy on
alleged NSR violations.  These developments will continue to be monitored by SCE, to assess what implications, if
any, they will have on the operation of domestic power plants owned or operated by SCE, or on SCE's results of
operations or financial position.

Climate Change.  Since the adoption of the United Nations Framework Convention on Climate Change in 1992, there
has been worldwide attention with respect to greenhouse gas emissions.  In December 1997, the Clinton
administration participated in the Kyoto, Japan negotiations, where the basis of a Climate Change treaty was
formulated.  Under the treaty, known as the Kyoto Protocol, the United States would be required, by 2008-2012, to
reduce its greenhouse gas emissions by 7% from 1990 levels.

In March 2001, the Bush administration announced that the Unites States would not ratify the Kyoto Protocol, but
would instead offer an alternative.  On February 14, 2002, President Bush announced objectives to slow the growth
of greenhouse gas emissions by reducing the amount of greenhouse gas emissions per unit of economic output by 18%
by 2012 and to provide funding for climate-change related programs.  The President's proposed program does not
include mandatory reductions of greenhouse gas emissions.  However, various bills have been, or are expected to
be, introduced in Congress to require greenhouse gas emission reductions and to address other issues related to
climate change.  Apart from the


Page 12


Kyoto Protocol, SCE may be impacted by future federal or state legislation relating to controlling greenhouse gas
emissions.  To date, none have passed through Congress.  In addition, there have been several petitions from
states and other parties to compel EPA to regulate greenhouse gases under the Clean Air Act.  EPA denied on
September 3, 2003, a petition by Massachusetts, Maine and Connecticut to compel EPA under the Clean Air Act to
require EPA to establish a national ambient air quality standard for carbon dioxide.  Since that time, 11 states
and other entities have filed suits against EPA in the United States Court of Appeals for the D.C. Circuit and
the D.C. Circuit has granted intervention requests from 10 states that support EPA's ruling.  The D.C. Circuit
has not yet ruled on this matter.

SCE continues to monitor these developments relating to greenhouse gas emissions so as to determine the impacts,
if any, on SCE's operations.

Federal Legislative Initiatives.  There have been a number of bills introduced in the last session of Congress
and the current session of Congress that would amend the Clean Air Act to specifically target emissions of
certain pollutants from electric utility generating stations.  These bills would mandate reductions in emissions
of nitrogen oxides, sulfur dioxide and mercury.  Some bills would also impose limitations on carbon dioxide
emissions.  The various proposals differ in many details, including the timing of any required reductions; the
extent of required reductions; and the relationship of any new obligations that would be imposed by these bills
with existing legal requirements.  There is significant uncertainty as to whether any of the proposed legislative
initiatives will pass in their current form or whether any compromise can be reached that would facilitate
passage of legislation.  Accordingly, SCE is not able to evaluate the potential impact of these proposals at this
time.

Compliance with Hazardous Substances and Hazardous Waste Laws

Under various federal, state and local environmental laws and regulations, a current or previous owner or
operator of any facility, including an electric generating facility, may be required to investigate and remediate
releases or threatened releases of hazardous or toxic substances or petroleum products located at that facility,
and may be held liable to a governmental entity or to third parties for property damage, personal injury, natural
resource damages, and investigation and remediation costs incurred by these parties in connection with these
releases or threatened releases.  Many of these laws, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, commonly referred to as CERCLA, as amended by the Superfund Amendments
and Reauthorization Act of 1986, impose liability without regard to whether the owner knew of or caused the
presence of the hazardous substances, and courts have interpreted liability under these laws to be strict and
joint and several.

The cost of investigation, remediation or removal of these substances may be substantial.  In addition, persons
who arrange for the disposal or treatment of hazardous or toxic substances at a disposal or treatment facility
may be liable for the costs of removal or remediation of a release or threatened release of hazardous or toxic
substances at that disposal or treatment facility, whether or not that facility is owned or operated by that
person.  Some environmental laws and regulations create a lien on a contaminated site in favor of the government
for damages and costs it incurs in connection with the remediation of contamination.  The owner of a contaminated
site and persons who arrange for the disposal of hazardous substances at that site also may be subject to common
law claims by third parties based on damages and costs resulting from environmental contamination emanating from
that site.

Toxic Substances Control Act.  The federal Toxic Substances Control Act and accompanying regulations govern the
manufacturing, processing, distribution in commerce, use, and disposal of listed compounds, such as
polychlorinated biphenyls, a toxic substance used in certain electrical equipment.  For SCE, current costs
associated with remediation and disposal of this substance are immaterial.


Page 13


Asbestos.  Federal, state and local laws, regulations and ordinances also govern the removal, encapsulation or
disturbance of asbestos-containing materials when these materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a building.  Those laws and regulations may impose
liability for release of asbestos-containing materials and may provide for the ability of third parties to seek
recovery from owners or operators of these properties for persona injury associated with asbestos-containing
materials.

In connection with the ownership and operation of its facilities, SCE may be liable for costs associated with
hazardous waste compliance and remediation required by the laws and regulations identified herein.  The CPUC
allows SCE to recover in retail rates paid by its customers, partial environmental remediation costs at certain
sites through an incentive mechanism.  Additional information about these laws and regulations appears in Note 10
of Notes to Financial Statements and in the MD&A under the heading "SCE:  Other Developments--Environmental
Matters."

Water Quality

Clean Water Act.  Regulations under the federal Clean Water Act require permits for the discharge of pollutants
into United States waters and permits for the discharge of stormwater flows from certain facilities.  Under this
act, EPA issues effluent limitation guidelines, pretreatment standards, and new source performance standards for
the control of certain pollutants.  The Clean Water Act also regulates the thermal component (heat) of effluent
discharges and the location, design, and construction of cooling water intake structures at generating
facilities.  Individual states may impose more stringent effluent limitations than EPA.  California has an EPA
approved program to issue individual or group (general) permits for the regulation of Clean Water Act
discharges.  EPA does not issue permits for pollution discharges in California.

SCE incurs additional expenses and capital expenditures in order to comply with guidelines and standards
applicable to certain of its facilities.  SCE presently has discharge permits for all applicable facilities.

Cooling Water-Intake Structures.  EPA adopted new regulations governing cooling water intake structures at
existing electrical generating stations in February 2004.  On February 16, 2004, the Administrator of EPA signed
the final Phase II rule implementing Section 316(b) of the Clean Water Act establishing standards for cooling
water intake structures at existing electrical generating stations that withdraw more than 50 million gallons of
water per day and use more than 25% of that water for cooling purposes.  The purpose of the regulation is to
substantially reduce the number of aquatic organisms that are pinned against cooling water intake structures or
drawn into cooling water systems.  The San Onofre station will be subject to these rules.  SCE believes the new
rules will not significantly impact San Onofre and that the facility will be compliant without any physical or
operational modifications.  However, San Onofre will likely be required to conduct a comprehensive compliance
demonstration study that could cost approximately $3 million over the next five years.

Safe Drinking Water and Toxic Enforcement Act.  California's Safe Drinking Water and Toxic Enforcement Act
prohibits the exposure of individuals to chemicals known to the State of California to cause cancer or
reproductive harm and the discharge of such chemicals into potential sources of drinking water.  As SCE's
operations call for use of different products, and as additional chemicals are placed on the State's list, SCE is
required to incur additional costs to review and possibly revise its operations to ensure compliance with the
requirements of this law.


Page 14


                                    BUSINESS OF MISSION ENERGY HOLDING COMPANY

MEHC was formed as a wholly owned subsidiary of Edison Mission Group Inc. (formerly The Mission Group), which is
a wholly owned subsidiary of Edison International.  MEHC was formed to:

o        hold the common stock of EME;

o        incur indebtedness under $800 million of senior secured notes due in 2008 and a $385 million term loan
     due in 2006; and

o        use a portion of the proceeds from the senior secured notes and the term loan to pay a dividend to a
     wholly owned subsidiary of Edison International, which in turn loaned the funds to Edison International to
     retire a portion of its debt obligations.

On July 2, 2001, Edison Mission Group Inc. contributed to MEHC all the outstanding common stock of EME.  The
contribution of EME's common stock to MEHC has been accounted for as a transfer of ownership of companies under
common control, which is similar to a pooling of interest.  This means that MEHC's historical financial results
of operations and financial position will include the historical financial results and results of operations of
EME and its subsidiaries as though MEHC had such ownership throughout the periods presented.  MEHC's only
substantive liabilities are its obligations under the senior secured notes, the term loan and corporate overhead,
including fees of its legal counsel, auditors and other advisors.  MEHC does not have any substantive operations
other than through EME and its subsidiaries and other investments.

MEHC is incorporated under the laws of the State of Delaware.  MEHC's headquarters and principal executive
offices are located at 2600 Michelson Drive, Suite 1700, Irvine, California 92612, and its telephone number is
(949) 852-3576.

Information about significant credit and liquidity issues at MEHC appears in the MD&A under the headings "MEHC
and EME:  Management Overview" and "MEHC and EME:  Liquidity" and is incorporated herein by this reference.

                                         BUSINESS OF EDISON MISSION ENERGY

EME is an independent power producer engaged in the business of owning or leasing and operating electric power
generation facilities worldwide.  EME also conducts price risk management and energy trading activities in power
markets open to competition.  EME is a wholly owned subsidiary of MEHC.  Edison International is EME's ultimate
parent company.

EME was formed in 1986 with two domestic operating power plants.  As of December 31, 2003, EME owned or leased
interests in 80 operating power plants with an aggregate net physical capacity of 23,771 MW, of which EME's
capacity pro rata share was 18,733 MW.  At that date, one international power plant, totaling 369 MW of net
physical capacity, of which EME's anticipated capacity pro rata share will be approximately 185 MW, was under
construction.

EME is incorporated under the laws of the State of Delaware.  EME's headquarters and principal executive offices
are located at 18101 Von Karman Avenue, Suite 1700, Irvine, California 92612, and EME's telephone number is
(949) 752-5588.  Unless indicated otherwise or the context otherwise requires, references to EME in this Annual
Report on Form 10-K are with respect to EME and its


Page 15


consolidated subsidiaries and the partnerships or limited liability entities through which EME and its partners
own and manage their project investments.

Important information about EME's liquidity and related issues, including going concern issues, debt maturities,
credit ratings, financial covenants, leverage ratios, interest coverage ratios, and dividend restrictions appears
in the MD&A under the heading "MEHC and EME:  Liquidity" and is incorporated herein by this reference.

Competition and Market Conditions of EME

Until the enactment of the Public Utility Regulatory Policies Act of 1978, utilities and government-owned power
agencies were the only producers of bulk electric power intended for sale to third parties in the United States.
The Public Utility Regulatory Policies Act encouraged the development of independent power by removing regulatory
constraints relating to the production and sale of electric energy by certain non-utilities and requiring
electric utilities to buy electricity from specified types of non-utility power producers, known as qualifying
facilities, under specified conditions.  The passage of the Energy Policy Act of 1992 further encouraged the
development of independent power by significantly expanding the options available to independent power producers
with respect to their regulatory status and by liberalizing transmission access.  As a result, a significant
market for electric power produced by independent power producers, such as EME, developed in the United States.

Beginning in the mid-1990s, industry restructuring and opening of retail markets to competition in several states
led some utilities to divest generating assets, which created new opportunities for growth of independent power
in the United States.  In those jurisdictions that have deregulated retail markets, industry trends and
regulatory initiatives resulted in a new set of market relationships in which independent generators and
marketers compete with incumbent distribution utilities for sales to end-users on the basis of price, reliability
and other factors.  As a result of the 2000-2001 California power crisis and related volatility in wholesale
markets, some states have either discontinued or delayed implementation of initiatives involving deregulation and
some utilities have delayed or canceled plans to divest their generating assets.  These developments have
generally not affected the progress of industry restructuring in Illinois and Pennsylvania, where many of EME's
power plants are located.  However, as discussed further below, competition, regulatory uncertainty and lower
wholesale energy prices have adversely affected independent power producers, including several of EME's
subsidiaries.  Additional information about competition and market conditions at EME appears in the MD&A under
the heading, "MEHC and EME:  Management Overview."

The movement toward privatization of existing power generation capacity in many foreign countries and the growing
need for new capacity has also led to the development of significant new markets for independent power producers
outside the United States.  EME has developed or acquired power plants in the Asia Pacific region and in the
Europe region as a result of these developments.  However, as discussed below, volatility in global energy
markets has introduced considerable uncertainty as to the future rates of growth in the global independent power
producers sector.

EME and its subsidiaries are subject to intense competition in the United States and overseas from energy
marketers, utilities, industrial companies and other independent power producers.  Over the past several years,
the restructuring of energy markets has led to the sale of utility-owned assets to EME and its competitors.  More
recently, in response to market conditions, EME has changed its focus from acquisition and growth to reducing
debt and operating, maintaining, and maximizing the value of its current asset base.  Accordingly, EME has
engaged in asset sales, has canceled, deferred or sold new development projects, and has taken a number of
actions to decrease capital expenditures, including


Page 16


reductions in operating costs, and suspension of operations at several power plants.  This trend reflects
significant declines in the credit ratings of most major market participants, and the decline of liquidity in the
energy markets as a result of credit concerns.

Where EME sells power from plants from which the output is not committed to be sold under long-term contracts,
commonly referred to as merchant plants, EME is subject to market fluctuations in prices based on a number of
factors, including the amount of capacity available to meet demand, the price of fuel, particularly gas, and the
presence of transmission constraints.  EME's customers include large electric utilities or regional distribution
companies.  In some cases, the electric utilities and distribution companies have their own generation capacity,
including nuclear generation, that affects the amount of generation available to meet demand and may affect the
price of electricity in a particular market.

The proposed introduction of a new standard market design structure by the FERC, in those regions not currently
organized into centralized power markets and the continued expansion by utilities of unbundled retail
distribution services could lead to increased competition in the United States independent power market.

Power Plants and Regions of EME

EME operates predominantly in one line of business, electric power generation, which it organizes by geographic
region:  Americas, Asia Pacific and Europe.  EME's plants are located in different geographic areas, which
mitigate somewhat the effects of regional markets, regional economic downturns or unusual weather conditions.
Through its presence in these regions, EME has taken advantage of the increasing globalization of the independent
power market.


Page 17


As of December 31, 2003, EME had ownership or leasehold interests in the following domestic operating power
plants in the Americas region:

                                                                                                               EME's
                                                                                                             Capacity
                                                 Primary                                      Net Physical   Pro Rata
                                                Electric           Type of        Ownership     Capacity       Share
        Power Plants             Location     Purchaser(3)       Facility(4)       Interest     (in MW)       (in MW)
                                                                                                -
- -------------------------------------------------------------------------------------------------------------------------

American Bituminous(1)        West Virginia  MPC             Waste Coal              50%             80           40
Brooklyn Navy Yard(2)         New York       CE              Cogeneration/EWG        50%            286          143
Coalinga(1)                   California     PG&E            Cogeneration            50%             38           19
EcoElectrica                  Puerto Rico    PREPA           Cogeneration            50%            524          262
Homer City(1)                 Pennsylvania   PJM/NYISO       EWG                     100%         1,884        1,884
Illinois Plants (11
plants)(1)                    Illinois       EG              EWG                     100%         9,218        9,218
Kern River(1)                 California     SCE             Cogeneration            50%            300          150
March Point                   Washington     PSE             Cogeneration            50%            140           70
Mid-Set(1)                    California     PG&E            Cogeneration            50%             38           19
Midway-Sunset(1)              California     SCE             Cogeneration            50%            225          113
Salinas River(1)              California     PG&E            Cogeneration            50%             38           19
Sargent Canyon(1)             California     PG&E            Cogeneration            50%             38           19
Sunrise (1)                   California     CDWR            EWG                     50%            572          286
Sycamore(1)                   California     SCE             Cogeneration            50%            300          150
Watson                        California     SCE             Cogeneration            49%            385          189
- -------------------------------------------------------------------------------------------------------------------------

     Total Americas                                                                              14,066       12,581
- -------------------------------------------------------------------------------------------------------------------------

- -------------------
(1)  Plant is operated under contract by an EME operations and maintenance subsidiary (partially owned plants) or
     plant is operated directly by an EME subsidiary (wholly owned plants).

(2)  Currently being sold.  See "Note 15 of Notes to Financial Statements."

(3)  Electric purchaser abbreviations are as follows:

    CDWR       California Department of Water Resources         PREPA            Puerto Rico Electric Power Authority
    CE         Consolidated Edison Company of New York, Inc.    PSE              Puget Sound Energy, Inc.
    EG         Exelon Generation Company                        SCE              Southern California Edison Company
    MPC        Monongahela Power Company                        PJM/NYISO        Pennsylvania-New Jersey-Maryland/New York
    PG&E       Pacific Gas & Electric Company                                    Independent System Operator

(4)  All the cogeneration plants are gas-fired facilities. All the exempt wholesale generator (EWG) plants are
     gas-fired facilities, except for the Homer City facilities and six of the Illinois Plants, which use coal.


Page 18


As of December 31, 2003, EME had ownership or leasehold interests in the following operating power plants in the
Europe and Asia-Pacific regions:

                                                                                                             EME's
                                                                                                           Capacity
                                                                Primary                    Net Physical    Pro Rata
                                                                Electric      Ownership      Capacity        Share
               Power Plants                Location           Purchaser(3)     Interest       (in MW)       (in MW)
- -----------------------------------------------------------------------------------------------------------------------

 Europe:
Derwent(1)                                 England           SSE                  33%           214             71
Doga(1)                                    Turkey            TEDAS                80%           180            144
First Hydro (2 plants)(1)                  Wales             Various             100%         2,088          2,088
Iberian Hy-Power I & II (18 plants)(1)     Spain             FECSA               100% (5)        84 (7)         81
ISAB                                       Italy             GRTN                 49%           528            259
Italian Wind (13 plants)                   Italy             GRTN                 50%           303            152
- -----------------------------------------------------------------------------------------------------------------------
     Total Europe                                                                              3397          2,795

 Asia Pacific:
Contact Energy (11 plants)                 New Zealand/      Pool                 51% (6)     2,597          1,215
                                           Australia
CBK(3 plants)(2)                           Philippines       NPC                  50%           423 (8)        211
Kwinana(1)                                 Australia         WP/BP                70%           118             83
Loy Yang B(1)                              Australia         Pool(4)             100%           940            940
Paiton(1)                                  Indonesia         PLN                  40%         1,230            492
Tri Energy                                 Thailand          EGAT                 25%           700            175
Valley Power Peaker(1)                     Australia         Pool                 80%           300            241
- -----------------------------------------------------------------------------------------------------------------------
     Total Asia Pacific                                                                       6,308          3,357
- -----------------------------------------------------------------------------------------------------------------------

     Total Europe and Asia Pacific                                                            9,705          6,152
- -----------------------------------------------------------------------------------------------------------------------

- --------------------
(1)  Plant is operated under contract by an EME operations and maintenance subsidiary (partially owned plants) or
     plant is operated directly by an EME subsidiary (wholly owned plants).

(2)  Operational MW shown.  Unit under construction (369 MW/185 MW) at December 31, 2003 not included.

(3)  Electric purchaser abbreviations are as follows:

      BP         British Petroleum Kwinana Refinery            PLN      PT PLN
      EGAT       Electricity Generating Authority of Thailand  Pool     Electricity trading market for Australia
                                                                        and New Zealand
      FECSA      Fuerzas Electricas de Cataluna, S.A.          SSE      SSE Energy Supply Ltd.
      GRTN       Gestore Rete Transmissione Nazionale          TEDAS    Turkiye Elektrik Dagitim Anonim Sirketi
      NPC        National Power Corp.                          WP       Western Power

(4)  Sells to the pool with a long-term contract with the State Electricity Commission of Victoria.

(5)  Minority interests are owned by third parties in three of the power plants.

(6)  Minority interest in one power plant in Australia.

(7)  Total nameplate rating of all generators shown.  Actual maximum operating capacity may be reduced by
     streamflows.

(8)  The renegotiated power purchase agreement limits purchase to 728 MW of capacity until December 2005.


Page 19


Discontinued Operations of EME

Information about EME's discontinued operations appears in Note 15 of Notes to Financial Statements and is
incorporated herein by this reference.

Price Risk Management and Trading Activities of EME

EME's domestic power marketing and trading organization, Edison Mission Marketing & Trading, Inc., markets the
energy and capacity of EME's merchant generating fleet and, in connection with this activity, trades electric
power and energy and related commodity and financial products, including forwards, futures, options and swaps.
Edison Mission Marketing & Trading also provides services and price risk management capabilities to the electric
power industry.  Almost all of this trading activity is related either to realizing value from the sale of energy
and capacity from EME's merchant plants or to risk management activities related to preserving the value of this
marketing activity.  Additional information about risk management at EME is included in the MD&A under the
heading "MEHC and EME:  Market Risk Exposures--Commodity Price Risk," "--Credit Risk," "--Interest Rate Risk,"
"--Fair Value of Financial Instruments--Non-Trading Derivative Financial Instruments," and "--Energy Trading
Derivative Financial Instruments."

Seasonality of EME

EME's third quarter equity in income from its domestic energy projects is materially higher than equity in income
related to other quarters of the year due to warmer weather during the summer months and because a number of
EME's domestic energy projects, located on the West Coast, have power sales contracts that provide for higher
payments during the summer months.

EME's third quarter electric revenues are materially higher than revenues related to other quarters of the year
because warmer weather in the summer months results in higher electric revenues being generated from the Homer
City facilities and the Illinois Plants.  By contrast, the First Hydro plants have higher electric revenues
during the winter months.

Regulation of EME

General

EME's operations are subject to extensive regulation by governmental agencies in each of the countries in which
EME conducts operations.  EME's domestic operating projects are subject to energy, environmental and other
governmental laws and regulations at the federal, state and local levels in connection with the ownership and
operation of its projects, and the use of electric energy, capacity and related products, including ancillary
services from its projects.  Federal laws and regulations govern, among other things, transactions by and with
purchasers of power, including utility companies, the operation of a power plant and the ownership of a power
plant.  Under limited circumstances where exclusive federal jurisdiction is not applicable or specific exemptions
or waivers from state or federal laws or regulations are otherwise unavailable, federal and/or state utility
regulatory commissions may have broad jurisdiction over non-utility owned electric power plants.  Energy
producing projects are also subject to federal, state and local laws and regulations that govern the geographical
location, zoning, land use and operation of a project.  Federal, state and local environmental requirements
generally require that a wide variety of permits and other approvals be obtained before the commencement of
construction or operation of an energy producing facility and that the facility then operate in compliance with
these permits and approvals.  Furthermore, each of EME's international projects is subject to the energy and


Page 20


environmental laws and regulations of the foreign country in which the project is located.  The degree of
regulation varies by country and may be materially different from the regulatory regime in the United States.

United States Federal Energy Regulation

The FERC has ratemaking jurisdiction and other authority with respect to interstate wholesale sales and
transmission of electric energy under the Federal Power Act and with respect to certain interstate sales,
transportation and storage of natural gas under the Natural Gas Act of 1938.  The SEC has regulatory powers with
respect to upstream owners of electric and natural gas utilities under the Public Utility Holding Company Act of
1935.  The enactment of the Public Utility Regulatory Policies Act of 1978 and the adoption of regulations under
that Act by the FERC provided incentives for the development of cogeneration facilities and small power
production facilities using alternative or renewable fuels by establishing certain exemptions from the Federal
Power Act and the Public Utility Holding Company Act for the owners of qualifying facilities.  The passage of the
Energy Policy Act in 1992 further encouraged independent power production by providing additional exemptions from
the Public Utility Holding Company Act for exempt wholesale generators and foreign utility companies.

Federal Power Act - The Federal Power Act grants the FERC exclusive jurisdiction over the rates, terms and
conditions of wholesale sales of electricity and transmission services in interstate commerce, including ongoing,
as well as initial, rate jurisdiction.  This jurisdiction allows the FERC to revoke or modify previously approved
rates after notice and opportunity for hearing.  These rates may be based on a cost-of-service approach or, in
geographic and product markets determined by the FERC to be workably competitive, may be market-based.  As noted,
most qualifying facilities are exempt from the ratemaking and several other provisions of the Federal Power Act.
Exempt wholesale generators and other non-qualifying facility independent power projects are subject to the
Federal Power Act and to the ratemaking jurisdiction of the FERC thereunder, but the FERC typically grants exempt
wholesale generators the authority to charge market-based rates to purchasers which are not affiliated electric
utility companies as long as the absence of market power is shown.  In addition, the Federal Power Act grants the
FERC jurisdiction over the sale or transfer of jurisdictional facilities, including wholesale power sales
contracts, and in some cases, jurisdiction over the issuance of securities or the assumption of specified
liabilities and some interlocking directorates.  In granting authority to make sales at market-based rates, the
FERC typically also grants blanket approval for the issuance of securities and partial waiver of the restrictions
on interlocking directorates.  The FERC has indicated its intention to review some of the waivers of financial
reporting rules currently granted to some entities with market rate authority.

Currently, in addition to the facilities owned or operated by EME, a number of its operating projects, including
the Homer City facilities, the Illinois Plants, and Brooklyn Navy Yard facilities, are subject to the FERC
ratemaking regulation under the Federal Power Act.  EME's future domestic non-qualifying facility independent
power projects will also be subject to the FERC jurisdiction on rates.

The Public Utility Holding Company Act - Unless exempt or found not to be a holding company by the SEC, a company
that falls within the definition of a holding company must register with the SEC and become subject to SEC
regulation as a registered holding company under the Public Utility Holding Company Act.  "Holding company" is
defined in Section 2(a)(7) of the Public Utility Holding Company Act to include, among other things, any company
that owns 10% or more of the voting securities of an electric utility company.  "Electric utility company" is
defined in Section 2(a)(3) of the Public Utility Holding Company Act to include any company that owns or operates
facilities used for generation, transmission or distribution of electric energy for sale.  Exempt wholesale
generators and foreign utility


Page 21


companies are not deemed to be electric utility companies, and ownership or operation of qualifying facilities
does not cause a company to become an electric utility company.  SEC precedent also indicates that it does not
consider "paper facilities," such as contracts and tariffs used to make power sales, to be facilities used for
the generation, transmission or distribution of electric energy for sale, and power marketing activities will
not, therefore, result in an entity being deemed to be an electric utility company.

Edison International, EME's ultimate parent company, is a holding company because it owns Southern California
Edison, an electric utility company.  However, Edison International is exempt from registration pursuant to
Section 3(a)(1) of the Public Utility Holding Company Act, because the public utility operations of the holding
company system are predominantly intrastate in character.  Consequently, EME is not a subsidiary of a registered
holding company so long as Edison International continues to be exempt from registration pursuant to Section
3(a)(1) or another of the exemptions enumerated in Section 3(a).  EME is not a holding company under the Public
Utility Holding Company Act, because its interests in power generation facilities are exclusively in qualifying
facilities, facilities owned by exempt wholesale generators and facilities owned by foreign utility companies.
All international projects and specified United States projects that EME might develop or acquire will be
non-qualifying facility independent power projects.  EME intends for each project to qualify as an exempt
wholesale generator or as a foreign utility company.  Loss of exempt wholesale generator, qualifying facility or
foreign utility company status for one or more projects could result in EME's becoming a holding company subject
to registration and regulation under the Public Utility Holding Company Act and could trigger defaults under the
covenants in EME's project agreements.  Becoming a holding company could, on a retroactive basis, lead to, among
other things, fines and penalties and could cause certain of EME's project agreements and other contracts to be
voidable.

Public Utility Regulatory Policies Act of 1978 - The Public Utility Regulatory Policies Act provides two primary
benefits to qualifying facilities.  First, as discussed above, ownership of qualifying facilities will not cause
a company to be deemed an electric utility company for purposes of the Public Utility Holding Company Act.  In
addition, all cogeneration facilities that are qualifying facilities are exempt from most provisions of the
Federal Power Act and regulations of the FERC thereunder.  Second, the FERC regulations promulgated under the
Public Utility Regulatory Policies Act require that electric utilities purchase electricity generated by
qualifying facilities at a price based on the purchasing utility's avoided cost, and that the utilities sell back
up power to the qualifying facility on a nondiscriminatory basis.  The FERC's regulations define "avoided cost"
as the incremental cost to an electric utility of electric energy or capacity, or both, which, but for the
purchase from the qualifying facility or qualifying facilities, the utility would generate itself or purchase
from another source.  The FERC's regulations also permit qualifying facilities and utilities to negotiate
agreements for utility purchases of power at prices different from the utility's avoided costs.  While it has
been common for utilities to enter into long-term contracts with qualifying facilities in order, among other
things, to facilitate project financing of independent power facilities and to reflect the deferral by the
utility of capital costs for new plant additions, increasing competition and the development of new power markets
have resulted in a trend toward shorter term power contracts that would place greater risk on the project owner.

If one of the projects in which EME has an interest were to lose its status as a qualifying facility, the project
would no longer be entitled to the qualifying facility-related exemptions from regulation under the Public
Utility Holding Company Act and the Federal Power Act.  As a result, the project could become subject to rate
regulation by the FERC under the Federal Power Act, and EME could inadvertently become a holding company under
the Public Utility Holding Company Act.  Under Section 26(b) of the Public Utility Holding Company Act, any
project contracts that are entered into in violation of the Public Utility Holding Company Act, including
contracts entered into during any period of non-compliance with the registration requirement, could be determined
by the courts or the SEC to be void.


Page 22

If a project were to lose its qualifying facility status, EME could attempt to avoid holding company status on a
prospective basis by qualifying the project owner as an exempt wholesale generator.  However, assuming this
changed status would be permissible under the terms of the applicable power sales agreement, rate approval from
the FERC would be required.  In addition, the project would be required to cease selling electricity to any
retail customers, in order to qualify for exempt wholesale generator status, and could become subject to
additional state regulation.  Loss of qualifying facility status by one project could also potentially cause
other projects with the same partners to lose their qualifying facility status to the extent those partners
became electric utilities, electric utility holding companies or affiliates of such companies for purposes of the
ownership criteria applicable to qualifying facilities.  Loss of qualifying facility status could also trigger
defaults under covenants to maintain qualifying facility status in the project's power sales agreements, steam
sales agreements and financing agreements and result in termination, penalties or acceleration of indebtedness
under such agreements.  If a power purchaser were to cease taking and paying for electricity or were to seek to
obtain refunds of past amounts paid because of the loss of qualifying facility status, EME cannot provide
assurance that the costs incurred in connection with the project could be recovered through sales to other
purchasers.  Moreover, EME's business and financial condition could be adversely affected if regulations or
legislation were modified or enacted that changed the standards for maintaining qualifying facility status or
that eliminated or reduced the benefits, such as the mandatory purchase provisions of the Public Utility
Regulatory Policies Act and exemptions currently enjoyed by qualifying facilities.  Loss of qualifying facility
status on a retroactive basis could lead to, among other things, fines and penalties being levied against EME, or
claims by a utility customer for the refund of payments previously made.

Natural Gas Act - Many of the domestic operating facilities that EME owns, operates or has investments in use
natural gas as their primary fuel.  Under the Natural Gas Act, the FERC has jurisdiction over certain sales of
natural gas and over transportation and storage of natural gas in interstate commerce.  The FERC has granted
blanket authority to all persons to make sales of natural gas without restriction but continues to exercise
significant oversight with respect to transportation and storage of natural gas services in interstate commerce.

Recent Foreign Regulatory Matters

Information about recent foreign regulatory matters at EME is included in the MD&A under the heading "MEHC and
EME:  Market Risk Exposures."

Environmental Matters Affecting EME

EME is subject to environmental regulation by federal, state and local authorities in the United States and
foreign regulatory authorities with jurisdiction over projects located outside the United States.  EME believes
that it is in substantial compliance with environmental regulatory requirements and that maintaining compliance
with current requirements will not materially affect its financial position or results of operation.  However,
possible future developments, such as the promulgation of more stringent environmental laws and regulations,
future proceedings that may be initiated by environmental authorities, and settlements agreed to by other
companies could affect the costs and the manner in which EME conducts its business and could cause it to make
substantial additional capital expenditures.  There is no assurance that EME would be able to recover these
increased costs from its customers or that EME's financial position and results of operations would not be
materially adversely affected.

Typically, environmental laws and regulations require a lengthy and complex process for obtaining licenses,
permits and approvals prior to construction, operation or modification of a project or generating facility.
Meeting all the necessary requirements can delay or sometimes prevent the completion of a


Page 23


proposed project as well as require extensive modifications to existing projects, which may involve significant
capital expenditures.  If EME fails to comply with applicable environmental laws, it may be subject to injunctive
relief, penalties and fines imposed by regulatory authorities.

State - Illinois

Air Quality.  In June 2001, Illinois passed legislation mandating the Illinois Environmental Protection Agency,
or Illinois EPA, to evaluate and issue a report to the Illinois legislature addressing the need for further
emissions controls on fossil fuel-fired electric generating stations, including the potential need for additional
controls on nitrogen oxides, sulfur dioxide and mercury.  The study, which is to be submitted between
September 30, 2003 and September 30, 2004, also requires an evaluation of incentives to promote renewable energy
and the establishment of a banking system for certifying credits from voluntary reductions of greenhouse gases.
The law allows the Illinois EPA to propose regulations based on its findings no sooner than 90 days after the
issuance of its findings, and requires the Illinois Pollution Control Board to act within one year on such
proposed regulations.  Until the Illinois EPA issues its findings and proposes regulations in accordance with the
findings, if such regulations are proposed, EME cannot evaluate the potential impact of this legislation on the
operations of its facilities.

Beginning with the 2003 ozone season (May 1 through September 30), EME has been required to comply with an
average NOx emission rate of 0.25 lb NOx/mmBtu of heat input.  This limitation is commonly referred to as the
East St. Louis State Implementation Plan.  This regulation is a State of Illinois requirement.  Compliance with
this standard will be met by averaging the emissions of all EME's Illinois power plants.  Beginning with the 2004
ozone season, Midwest Generation's facilities will become subject to the federally-mandated "NOx SIP Call"
regulation that will cap ozone-season NOx emissions within a 19-state region east of the Mississippi.  This
program provides for NOx allowance trading similar to the current SO2 (acid rain) trading program already in
effect. EME has already qualified for early reduction allowances by reducing NOx emissions at various plants
ahead of the imposed deadline.  Additionally, the installation of emission control technology at certain plants
has demonstrated over-compliance at those individual plants with the pending NOx emission limitations.  Finally,
NOx emission trading will be utilized as needed to comply with any shortfalls at plants where installation of
emission control technology has demonstrated reductions at levels short of the pending NOx limitations.

Water Quality.  The Illinois EPA is reviewing the water quality standards for the Des Plaines River adjacent to
the Joliet Station and immediately downstream of the Will County Station to determine if the use classification
should be upgraded.  An upgraded use classification could result in more stringent limits being applied to
wastewater discharges to the river from these plants.  One of the limitations for discharges to the river that
could be made more stringent if the existing use classification is changed would be the temperature of the
discharges from Joliet and Will County.  The Illinois EPA has also begun a review of the water quality standards
for the Chicago River and Chicago Sanitary and Ship Canal which are adjacent to the Fisk and Crawford Stations.
At this time no new standards have been proposed, so EME cannot estimate the financial impact of this review.
However, the cost of additional cooling water treatment, if required, could be substantial.

State - Pennsylvania

Water Quality.  The discharge from the treatment plant receiving the wastewater stream from EME's Unit 3 flue gas
desulfurization system at the Homer City facilities has exceeded the stringent, water-quality based limits for
selenium in the station's NPDES permit.  As a result, EME has been notified by the Pennsylvania Department of
Environmental Protection that it has been included in the Quarterly Noncompliance Report submitted to the United
States EPA.  EME has met with the contractor


Page 24


responsible for the Unit 3 flue gas desulfurization system to discuss approaches to resolving the water quality
issues and is investigating technical alternatives for maximizing the level of selenium removal in the discharge.
EME has also discussed these approaches for resolving the water quality issues with PADEP.  Pilot studies are
underway, but until they are completed and the results are evaluated, EME cannot estimate the costs to comply
with these selenium limits.  After the results of the pilot studies are evaluated, EME will meet with PADEP to
discuss the drafting of a consent agreement to address the selenium issue and will instruct the contractor to
make the necessary improvements.  The consent agreement may include the payment of civil penalties, but the
amount cannot be estimated at this time.

Federal - United States of America

Clean Air Act.  EME expects that compliance with the Clean Air Act and the regulations and revised State
Implementation Plans developed as a consequence of the Act will result in increased capital expenditures and
operating expenses.  EME's approach to meeting these obligations will consist of a blending of capital
expenditure and emissions allowance purchases that will be based on an ongoing assessment of the dynamics of its
market conditions.

Mercury Regulation.  See "Business of Southern California Edison Company--Environmental Matters Affecting
SCE--Mercury Maximum Achievable Technology Determination" for a general description of EPA's proposal and project
timetable for finalizing regulations.  EME's preliminary estimate is that the mercury regulations may require EME
to spend up to $300 million for capital improvements at its Homer City facilities in the 2006-2010 time frame,
although the timing will depend on which proposal is adopted.  Until the mercury regulations are finalized, EME
cannot fully evaluate the potential impact of these regulations on the operations of all its facilities.
Additional capital costs related to these regulations could be required in the future and they could be material,
depending upon the final standards adopted by EPA.

National Ambient Air Quality Standards.  See "Business of Southern California Edison Company--Environmental
Matters Affecting SCE--National Ambient Air Quality Standards" for a general description of ambient air quality
standards.  Matters affecting EME not otherwise described therein are discussed below.

In December 2003, EPA proposed rules that would require states to revise their state implementation plans to
address alleged contributions to downwind areas that are not in attainment with the revised standards for ozone
and fine particulate matter.  This proposed "Interstate Air Quality" rule is designed to be completed before
states must revise their state implementation plans to address local reductions needed to meet the new ozone and
fine particulate matter standards.  The proposed rule would establish a two-phase, regional cap and trade program
for sulfur dioxide and nitrogen oxide.  The proposed rule would affect 27 states, including Illinois and
Pennsylvania.  The proposed rule would require sulfur dioxide emissions and nitrogen oxide emissions to be
reduced in two phases (by 2010 and 2015), with emissions reductions for each pollutant of 65% by 2015.  EPA is
expected to issue final rules in December 2004.

At this time, EME cannot predict the emission reduction targets that EPA will ultimately adopt or the specific
timing for compliance with those targets.  In addition, any additional obligations on EME's facilities to further
reduce their emissions of sulfur dioxide, nitrogen oxides and fine particulates to address local non-attainment
with the 8-hour ozone and fine particulate matter standards will not be known until the states revise their
implementation plans.  Depending upon the final standards that are adopted, EME may incur substantial costs or
financial impacts resulting from required capital improvements or operational changes.


Page 25


New Source Review Requirements.  See "Business of Southern California Edison Company--Environmental Matters
Affecting SCE--New Source Review Requirements" for a general description of new source review requirements.
Matters affecting EME not otherwise described therein are discussed below.

Prior to EME's purchase of the Homer City facilities, EPA requested information under Section 114 of the Clean
Air Act from the prior owners of the plant concerning physical changes at the plant.  This request was part of
EPA's industry-wide investigation of compliance by coal-fired plants with the Clean Air Act NSR requirements.  On
February 21, 2003, Midwest Generation received a request for information under Section 114 regarding past
operations, maintenance and physical changes at the Illinois coal plants from EPA.  On July 28, 2003,
Commonwealth Edison received a substantially similar request for information from EPA related to these same
plants.  Other than these request for information, no NSR enforcement-related proceedings have been initiated by
EPA with respect to any of EME's United States facilities.

The EPA's enforcement policy on alleged NSR violations is currently uncertain.  These developments will continue
to be monitored by EME to assess that implications, if any, they will have on the operation of domestic power
plants owned or operated by EME or its subsidiaries, or on EME's results of operations or financial position.

Federal Legislative Initiatives.  See "Business of Southern California Edison Company--Environmental Matters
Affecting SCE--Federal Legislative Initiatives" for a general discussion of federal legislative initiatives.
There is significant uncertainty as to whether any of the proposed legislative initiatives will pass in their
current form or whether any compromise can be reached that would facilitate passage of legislation.  Accordingly,
EME is not able to evaluate the potential impact of these proposals at this time.

Clean Water Act-Cooling Water Intake Structure.  See "Business of Southern California Edison--Environmental
Matters Affecting SCE--Federal Legislative Initiatives" for a general discussion of Section 316(b) of the Clean
Water Act.  EME is in the process of evaluating this regulation, which could have a material impact on some of
EME's United States facilities.

Environmental Remediation and Asbestos.  See "Business of Southern California Edison Company--Environmental
Matters Affecting SCE--Compliance with Hazardous Substances and Hazardous Waste Laws" for a general discussion of
CERCLA and related regulations.  Matters affecting EME not otherwise described therein are discussed below.

With respect to EME's liabilities arising under CERCLA or similar laws for the investigation and remediation of
contaminated property, EME accrues a liability to the extent the costs are probable and can be reasonably
estimated.  Midwest Generation has accrued approximately $2 million for estimated environmental investigation and
remediation costs for the Illinois Plants.  This estimate is based upon the number of sites, the scope of work
and the estimated costs for environmental activity where such expenditures could be reasonably estimated.  Future
estimated costs may vary based on changes in regulations or requirements of federal, state, or local governmental
agencies, changes in technology, and actual costs of disposal.  In addition, future remediation costs will be
affected by the nature and extent of contamination discovered at our sites that requires remediation.  Given the
prior history of the operations at its facilities, EME cannot be certain that the existence or extent of all
contamination at its sites has been fully identified.  However, based on available information, EME's management
believes that future costs in excess of the amounts disclosed on all known and quantifiable environmental
contingencies will not be material to EME's financial position.


Page 26


For a general discussion of asbestos laws and regulations, see "Business of Southern California Edison
Company--Environmental Matters Affecting SCE--Compliance with Hazardous Substances and Hazardous Waste Laws" above.
EME has agreed to indemnify the sellers of the Illinois Plants and the Homer City facilities with respect to
specified environmental liabilities.  Information about these indemnities appears in the MD&A under the heading
"EME's Guarantees and Indemnities."

International

Climate Change.  For a discussion of international laws and regulations relating to climate change, see "Business
of Southern California Edison Company--Environmental Matters Affecting SCE--Climate Change."  Matters affecting EME
not otherwise described therein are discussed below.  Apart from the Kyoto Protocol, EME may be affected by
future federal or state legislation relating to controlling greenhouse gas emissions.

Notwithstanding the Bush administration position, environment ministers from around the world have reached a
compromise agreement on the mechanics and rules of the Kyoto Protocol.  The compromise agreement is believed to
clear the way for countries to begin the treaty ratification process.

EME either has an equity interest in or owns and operates generating plants in Australia, Spain, Indonesia,
Thailand, Italy, Turkey, New Zealand, The United Kingdom, Philippines, and the United States.

All of these countries, with the exception of Indonesia, the Philippines and Thailand, are classified as Annex 1
or "developed" countries and are subject to national greenhouse gas emission reduction targets during the period
of 2008-2012 (e.g., Phase one).  Each nation is actively developing policies and measures meant to assist it with
meeting the individual national emission targets as set out within the Kyoto Protocol.

With the exception of Turkey, all of the countries identified have ratified the United Nations Framework
Convention on Climate Change, as well as signed the Kyoto Protocol.  Italy, New Zealand, Spain, Thailand, and the
United Kingdom have also ratified the Kyoto Protocol, and, with the exception of Australia and the United States,
all of the other remaining countries are expected to do so by mid-2004.

For the treaty to come into effect, approximately 55 countries that also represent at least 55% of the greenhouse
gas emissions of the developed world must ratify it.  Currently, the countries ratifying the Kyoto Protocol
account for 44.2% of carbon dioxide emissions.  Although Russia also indicated at the Johannesburg Summit on
September 2002 its desire to ratify the treaty, it stepped back from that position in late 2003 and has yet to
set a date for ratification.  Representing 17.4% of the developed world's greenhouse gas emissions, Russian
ratification is essential to bring the treaty into effect.

If EME does become subject to limitations on emissions of carbon dioxide from its fossil fuel-fired electric
generating plants, these requirements could have a significant economic impact on their operations.

United Nations Proposed Framework Convention on Mercury.  The United Nations Environment Programme (UNEP) has
convened a Global Mercury Assessment Working Group which met in Geneva in September 2002 and finalized a global
mercury assessment report for submittal to the UNEP Governing Council at the Global Ministerial Environment Forum
in Nairobi, Kenya, February 2003.  Based upon the report's key findings, the working group concluded that "there
is sufficient evidence of


Page 27

significant global adverse impacts to warrant international action to reduce the risks to human health and the
environment arising from the release of mercury into the environment."

The United States has indicated that it will support a decision to take international action on mercury at the
Global Ministerial Environment Forum.  However, the United States has further stated that it does not support
negotiation of a legally-binding convention at this time. In general, the United States' approach:  (1) agrees
that there is sufficient evidence of adverse impacts of mercury to warrant international action, (2) urges
countries to take actions within the context of their national circumstances to identify exposed populations and
to reduce anthropogenic emissions of mercury, (3) recommends the establishment of a "Mercury Program" within
UNEP, (4) recommends coordination between UNEP and other international organizations that work on mercury issues
such as the World Health Organization, and (5) asks countries to make voluntary contributions to support efforts
of the Mercury Program under UNEP.

If EME does become subject to limitations on emissions of mercury from its coal-fired electric generating plants,
these requirements could have a significant economic impact on their operations.

Employees

MEHC has no full-time employees.  At December 31, 2003, EME and its subsidiaries employed 2,610 people, all of
whom were full-time employees, and 141, 159 and 1,001 of whom were covered by collective bargaining agreements in
the United Kingdom, Australia and the United States, respectively.

                                            Business of Edison Capital

Edison Capital was incorporated in California in 1987.  Edison Capital has investments worldwide in energy and
infrastructure projects, including power generation, electric transmission and distribution, transportation, and
telecommunications.  Edison Capital also has investments in affordable housing projects located throughout the
United States.  As of December 31, 2003, and for the 12 months then ended, Edison Capital had total consolidated
assets of $3.4 billion, consolidated revenue of $88 million, and net income of $57 million.  At December 31,
2003, Edison Capital and its subsidiaries employed 62 people.

Energy and Infrastructure Investments of Edison Capital

Edison Capital's energy and infrastructure investments are in the form of domestic and cross-border leveraged
leases, partnership interests in international infrastructure funds and operating companies in the United States.


Page 28


Leveraged Leases.  As of December 31, 2003, Edison Capital is the lessor with an investment balance of $2.4
billion in the following leveraged leases:

  ---------------------------- ------------------------- -------------------- ----------------- ---------------
                                                                                Basic Lease       Investment
  Lessee                                Asset                 Location           Term Ends         Balance
                                                                                                (in millions)
  -------------------------------------------------------------------------------------------------------------

  Domestic Leases
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  MCV o Midland Cogeneration   1,500 MW gas-fired        Midland,                   2015             $   42
  Ventures, selling power to   cogeneration plant        Michigan
  Consumers Energy Company
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  Vidalia o selling power to   192 MW hydro power plant  Vidalia,                   2020             $   94
  Entergy Louisiana,                                     Louisiana
  City of Vidalia
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  Beaver Valley o selling      836 MW nuclear power      Shippingport,              2017             $  145
  power to Ohio Edison         plant                     Pennsylvania
  Company, Centerior Energy
  Corporation
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  American Airlines            3 Boeing 767 ER aircraft  domestic and               2016             $   63
                                                         international
                                                         routes
  -------------------------------------------------------------------------------------------------------------

  Cross-border Leases
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  EPON o power generation      1,675 MW combined         Gronhingen,                2016             $  437
  company                      cycle, gas-fired power    Netherlands
                               plant (3 of 5 units)
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  EPZ o consortium of          580 MW coal/gas-fired     Rotterdam,                 2016             $   87
  government electric          power plant               Netherlands
  distribution companies
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  ESKOM o government           4,110 MW coal-fired       Majuba,                    2018             $  642
  integrated utility           power plant (3 of 6       South Africa
                               units)
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  ETSA o government            5,900 kilometer           South Australia            2022             $  301
  integrated utility           electric transmission
                               system
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  NV Nederlandse Spoorwegen    40 electric locomotives   Netherlands                2011             $   37
  o national rail authority
  ---------------------------- ------------------------- -------------------- ----------------- ---------------
  Swisscom o government        Telecom conduit           Switzerland                2028             $  545
  telecom utility
  ---------------------------- ------------------------- -------------------- ----------------- ---------------

The rent paid by the lessee is expected to cover debt payments and provide a profit to Edison Capital.  As
lessor, Edison Capital also claims depreciation of the asset or amortization of lease payments and interest
deductions.  All regulatory, operating, maintenance, insurance and decommissioning costs are the responsibility
of the lessees.  The lessees' performance is secured not only by the project assets, but also by other collateral
that was valued as of December 31, 2003, in the aggregate at approximately $2.1 billion against $2.4 billion
invested in leveraged leases.  The lenders have a priority lien against the assets and collateral but the loans
are otherwise non-recourse to Edison Capital.  Edison Capital's leveraged lease investments depend upon the
performance of the asset, the lessee's performance of its


Page 29

contract obligations, enforcement of remedies and sufficiency of the collateral in the event of default, and
realization of tax benefits.

Information about issues with Edison Capital's investment in a power plant leased to Midland Cogeneration
Ventures, which sells electricity to Consumers Energy, and investments in aircraft leased to American Airlines is
contained in the MD&A under the heading "Edison Capital:  Market Risk Exposures--Credit and Performance Risk."

Infrastructure Funds.  Edison Capital holds a minority interest as a limited partner in three separate funds that
invest in infrastructure assets in Latin America, Asia and countries in Europe with emerging economies.  Edison
Capital is also a member of the investment committee of each fund.  At year-end 2003, Edison Capital had an
investment balance of $40 million in 17 assets in the Latin America fund, $36 million in 10 assets in the Asia
fund, and $73 million in 11 assets in the emerging Europe fund.  Edison Capital also made additional direct
investments alongside the Latin America fund in the amount of $29 million.  On December 31, 2003, the remaining
balance of the investment commitment was $12 million for the Latin America fund, $12 million for the Asia fund,
and $43 million for the emerging Europe fund.  These funds may be drawn during the remaining investment period
for each fund for certain fees and if investments are identified by the fund manager and recommended by the
fund's investment committee.  The fund investments currently generate modest operating cash flow for the limited
partners and the fund managers will look to exit the investments on favorable terms which provide a return to the
limited partners from appreciation in the value of the investment.  The ability to exit investments on favorable
terms depends upon many factors, including the economic conditions in each region, the performance of the asset,
and whether there is a public or private market for these interests.  For some fund investments there may also be
foreign currency exchange rate risk.  As of year-end 2003, Edison Capital received net cash of $16 million from
the Latin America fund, $55 million from the Asia fund, and $9 million from the emerging Europe fund.

Operating Companies.  At year-end 2003, Edison Capital had an investment balance of $84 million in four wind
power projects located in Iowa and Minnesota capable of generating 146 MW of electricity.  The wind projects sell
power to the local utilities under long-term power purchase agreements with rates currently ranging from 4.8(cent)to
6(cent)per kWh but declining over time according to contract schedules.  Edison Capital also claims production tax
credits, depreciation, and interest deductions from these projects for tax purposes.

Storm Lake, Edison Capital's largest wind power project with an investment balance of $73 million at December 31,
2003, was developed and operated by Enron Wind, a subsidiary of Enron Corp.  Enron Corp filed bankruptcy in
December 2001, and Enron Wind filed bankruptcy in April 2002.  Edison Capital's affiliate operates the project.
The project's lenders claim that Enron Corp's and Enron Wind's bankruptcies are events of default under the loan
agreements.  Edison Capital believes that Enron entities' bankruptcies do not impair the ability of the project
to meet its loan obligations, and Edison Capital is working with the lenders to resolve these defaults.

Edison Capital and Storm Lake are also seeking to recover damages in bankruptcy against Enron Wind.  Enron Wind
recently stipulated to allow damages in the aggregate amount of $61 million, against various Enron Wind debtors,
but the timing and amount of an actual recovery payment is still uncertain and depends upon resolution of other
creditors' claims, allocation of values among the various Enron Wind debtors and bankruptcy court approval.

At December 31, 2003 Edison Capital also has an investment balance of $16 million as a limited partner in a
waste-to-energy plant that provides waste services and electricity under long-term agreements.  The


Page 30

plant operator is a subsidiary of Covanta which filed bankruptcy in 2002.  In the plan of reorganization recently
approved by the bankruptcy court, the project equity is reinstated and the project assets are unimpaired by any
bankruptcy liens.  The partnership is currently receiving amounts due under the long-term agreements, and Edison
Capital is currently receiving its share of distributions from the partnership.

Affordable Housing Investments of Edison Capital

Over the past 14 years, Edison Capital has invested or participated in more than $1 billion in over
350 affordable housing projects with more than 26,500 units rented to qualifying low-income tenants in 36 states.
These investments are usually in the form of majority interests in limited partnerships or limited liability
companies.  With a few exceptions, the projects are managed by third parties.  At year-end 2003, Edison Capital
had an investment balance of $71 million in affordable housing projects after syndicating substantial interests
in 210 projects to other investors in previous years.  Edison Capital retained a minority interest in, and
continues to monitor, the syndicated investments.  Edison Capital is entitled to low-income housing tax credits,
depreciation and interest deductions, and a small percentage of cash generated from the projects.  Edison
Capital's tax credits from these projects could be recaptured by the Internal Revenue Service if, among other
things, the project fails to comply with the requirements of the tax credit program, costs are excluded from the
eligible basis used to compute the amount of tax credits, or the project changes ownership through foreclosure.
In most cases, Edison Capital is indemnified by the project manager (or parties related to it) against such
losses, but there is no assurance of collecting against such indemnities.  As of year-end 2003, Edison Capital
had not experienced any significant recapture of tax credits from its affordable housing projects.

Business Environment of Edison Capital

Edison Capital's investments may be affected by the financial condition of other parties, the performance of
assets, regulatory, economic conditions and other business and legal factors.  Edison Capital generally does not
control operations or management of the projects in which it invests and must rely on the skill, experience and
performance of third party project operators or managers.  These third parties may experience financial
difficulties or otherwise become unable or unwilling to perform their obligations.  Edison Capital's investments
also generally depend upon the operating results of a project with a single asset.  These results may be affected
by general market conditions, equipment or process failures, volatility in important fuel supplies or prices, or
another party's failure to perform material contract obligations, and regulatory actions affecting utilities
purchasing power from the leased assets.  Edison Capital has taken steps to mitigate these risks in the structure
of each project through contract requirements, warranties, insurance, step-in rights, collateral rights and
default remedies, but such measures may not be adequate to assure full performance.  In the event of default,
lenders with a security interest in the asset may exercise remedies that could lead to a loss of some or all of
Edison Capital's investment in the project.

Under tax allocation arrangements among Edison International and its subsidiaries, Edison Capital receives cash
for federal and state tax benefits from its investments that are utilized on Edison International's tax return.
Information about Edison Capital's tax allocation payments is contained in the MD&A under the heading "Edison
Capital:  Liquidity--Edison Capital's Intercompany Tax-Allocation Payments."


Page 31


Item 2.  Properties

As a holding company, Edison International does not directly own any significant properties other than the stock
of its subsidiaries.  The principal properties of SCE are described above under "Business of Southern California
Edison Company--Properties of SCE."  Properties of EME and Edison Capital are discussed above under "Business of
Edison Mission Energy" and "Business of Edison Capital," respectively.



Page 32

Item 3.  Legal Proceedings

The following is a description of litigation of subsidiaries of Edison International which may be material to
Edison International.

                                        SOUTHERN CALIFORNIA EDISON COMPANY

Navajo Nation Litigation

Information about the Navajo Nation Litigation appears in the MD&A under the heading "SCE:  Other
Developments--Navajo Nation Litigation" and is incorporated herein by this reference.

CPUC Litigation and Settlement

Information about SCE's lawsuit against the CPUC, its settlement, and the appeal of the stipulated judgment
approving the settlement appears in the MD&A under the heading "SCE:  Regulatory Matters--Generation and Power
Procurement--CPUC Litigation Settlement Agreement" and is incorporated herein by this reference.

CPUC Investigation Regarding SCE's Electric Line Maintenance Practices

Information about the CPUC's order instituting investigation regarding SCE's electric line maintenance practices
appears in the MD&A under the heading "SCE:  Regulatory Matters--Transmission and Distribution--Electric Line
Maintenance Practices Proceeding" and is incorporated herein by this reference.

Department of Toxic Substances Control Enforcement Action

SCE has received a draft enforcement order, consent order and related documents from the California Department of
Toxic Substances Control, seeking penalties totaling $383,400.  The Department of Toxic Substances Control
alleges that SCE failed, during a 13-month period ending in March 2002, to properly maintain prescribed levels of
financial assurance in connection with its on-site management of hazardous waste at San Onofre.  SCE is in
settlement discussions with the Department of Toxic Substances Control to resolve this matter through the use of
an administrative consent order.

County of San Bernardino Investigation

County of San Bernardino Office of District Attorney notified SCE, in a letter dated September 23, 2003, of its
intent to file a misdemeanor criminal complaint and a civil complaint seeking injunctive relief for the alleged
failure to report a spill of oil from a transformer in an isolated area of San Bernardino County.  The penalties
according to the County could range from $5,604 to $555,604.  The parties have entered into a tolling agreement
and are continuing settlement discussions.

Irvine Underground Storage Tank Matter

In a letter dated October 20, 2003, the office of the District Attorney of Orange County, California alleged that
reports generated by the Orange County Health Care Agency revealed that SCE violated the California Code of
Regulations by failing to upgrade an underground storage tank in Irvine, California, between December 23, 1998
and November 4, 2001.  While the tank had been removed at the date of the letter, the previous violations were
alleged to exist.  The October 20, 2003 letter advised that it was the


Page 33

intention of the District Attorney's office to bring an action against SCE in Orange County Superior Court,
seeking civil penalties ranging from $500 up to $5,000 per tank per day of violation, and costs of
investigation.  As a result of a prefiling settlement conference held on November 21, 2003, SCE settled the
matter with the office of the District Attorney of Orange County for an immaterial amount.

                                               EDISON MISSION ENERGY

EcoElectrica Environmental Proceeding

EME owns an indirect 50% interest in EcoElectrica, L.P., a limited partnership which owns and operates a
liquefied natural gas import terminal and cogeneration project at Penuelas, Puerto Rico.  In 2000, EPA issued to
EcoElectrica a notice of violation and a compliance order alleging violations of the Federal Clean Air Act
primarily related to start-up activities.  EcoElectrica and the Department of Justice agreed to settle the matter
for $195,000.  The parties signed a stipulation, settlement agreement and order reflecting their agreement.  The
Department of Justice then filed its complaint, which was subsequently dismissed by the court in recognition of
the stipulation, settlement agreement and order, and EcoElectrica paid the $195,000 fine, and the settlement
became final.

Sunrise Power Company Lawsuits

Sunrise Power Company, in which a wholly owned subsidiary of EME owns a 50% interest, sells all its output to the
CDWR under a power purchase agreement entered into on June 25, 2001.  On February 25, 2002, the CPUC and the
California Electricity Oversight Board filed complaints with the FERC against all sellers of power under
long-term contracts to the CDWR, including Sunrise Power Company.  The CPUC complaint alleged that the contracts
were "unjust and unreasonable" on price and other terms, and requested that the contracts be abrogated.  The
California Electricity Oversight Board complaint made a similar allegation and requested that the contracts be
deemed voidable at the request of the CDWR or, in the alternative, abrogated as of a future date, to allow for
the possibility of renegotiation.  In January 2003, the CPUC and the California Electricity Oversight Board
dismissed their complaints against Sunrise Power Company pursuant to a global settlement that also involved a
restructuring of Sunrise Power Company's long-term contract with the CDWR.  On December 31, 2002, Sunrise Power
Company restructured its contract with the CDWR.  The restructured agreement reduced by 5% the capacity payments
to be made to Sunrise Power Company as compensation for having power available when needed.  In addition, Sunrise
Power Company's option to extend the agreement for one year beyond December 31, 2011 was terminated; however, the
term of the restructured agreement was extended until June 30, 2012.

On May 2, 2002, the United States Justice Foundation announced that it had filed a complaint in the Superior
Court of the State of California, Los Angeles County, against the CDWR, all sellers of power under long-term
energy contracts entered into in 2001, including Sunrise Power Company, and Vikram Budhraja, one of the
consultants involved in the negotiation of energy contracts on behalf of the CDWR.  The lawsuit asks the Superior
Court to void all the contracts entered into in 2001, as well as all the contracts renegotiated in 2002, as a
result of a purported conflict of interest by Mr. Budhraja.  Sunrise Power Company was not served with the
complaint.  On November 25, 2003, the plaintiffs filed a voluntary dismissal with prejudice of this lawsuit.  The
dismissal was entered by the court on December 2, 2003.

On May 15, 2002, Sunrise Power Company was served with a complaint filed in the Superior Court of the State of
California, City and County of San Francisco, by James M. Millar, "individually, and on


Page 34


behalf of the general public and as a representative taxpayer suit" against sellers of long-term power to the
CDWR, including Sunrise Power Company.  The lawsuit alleges that the defendants, including Sunrise Power Company,
engaged in unfair and fraudulent business practices by knowingly taking advantage of a manipulated power market
to obtain unfair contract terms.  The lawsuit seeks to enjoin enforcement of the "unfair and oppressive terms and
conditions" in the contracts, as well as restitution by the defendants of excessive monies obtained by the
defendants.  Plaintiffs in several other class action lawsuits pending in Northern California have filed
petitions seeking to have the Millar lawsuit consolidated with those lawsuits.  The defendants in the Millar
lawsuit and other class action suits removed all the lawsuits to the United States District Court, Northern
District of California, and filed a motion to stay all proceedings pending final resolution of the jurisdictional
issue.  On July 9, 2003, Judge Whaley of the United States District Court concluded the federal court lacked
jurisdiction and remanded the case to the originating San Francisco Superior Court.  Defendants, including
Sunrise Power Company, stipulated to respond to the complaint thirty days after it is assigned to a specific
court of the San Francisco Superior Court.  In December 2003, James Millar filed a First Amended Class Action and
Representative Action Complaint which contains allegations similar to those in the earlier complaint but also
alleges a class action.  One of the newly added parties has again removed the lawsuit to federal court, where it
is currently pending (subject to remand).  EME believes that the outcome of this litigation will not have a
material adverse effect on its consolidated financial position or results of operations.

Paiton Labor Suit

In April 2001, Paiton Energy was sued in the Central Jakarta District Court by the PLN Labor Union.  PT PLN, the
state-owned electrical utility company, was also named as a defendant in the suit, along with the Indonesian
Minister of Mines and Energy and the former President Director of PT PLN.  The union seeks to set aside the power
purchase agreement between Paiton Energy and PT PLN and the interim agreement then in effect between Paiton
Energy and its lenders, as well as damages and other relief.  On April 16, 2002 the Central Jakarta District
Court dismissed the lawsuit against Paiton Energy and the other defendants on the basis that the PLN Labor Union
was not authorized under the law to bring such an action.  The PLN Labor Union filed an appeal on April 23, 2002.
 In order for the Appeals Court to hear any appeal on the matter, the District Court must have certified its
judgment and forwarded it to the Appeals Court.

While Paiton Energy has not, to date, received notice of any change in jurisdiction, it now appears that
jurisdiction has passed to the appellate court.  The appellate court has not indicated when, or if, it will move
on the PLN Labor Union's appeal.  Paiton Energy continues to believe that the District Court's decision was
grounded on the applicable legal bases and should withstand any appellate scrutiny.

Item 4.  Submission of Matters to a Vote of Security Holders

Inapplicable.

Pursuant to Form 10-K's General Instruction (General Instruction) G(3), the following information is included as
an additional item in Part I:


Page 35


Executive Officers(1) of the Registrant

- -------------------------------------------------------------------------------------------------------------------
                                               Edison International
- -------------------------------- -------------------------- -------------------------------------------------------
                                          Age at
Executive Officer                    December 31, 2003                         Company Position
- -------------------------------- -------------------------- -------------------------------------------------------

John E. Bryson                              60              Chairman of the Board, President and Chief Executive
                                                            Officer
- -------------------------------- -------------------------- -------------------------------------------------------

Theodore F. Craver, Jr.                     52              Executive Vice President, Chief Financial Officer and
                                                            Treasurer
- -------------------------------- -------------------------- -------------------------------------------------------

Bryant C. Danner                            66              Executive Vice President and General Counsel
- -------------------------------- -------------------------- -------------------------------------------------------

Thomas M. Noonan                            52              Vice President and Controller
- -------------------------------- -------------------------- -------------------------------------------------------


(1)  The term "Executive Officers" is defined by Rule 3b-7 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as amended.  Pursuant to this rule, the Executive Officers of Edison
     International include certain elected officers of Edison International and its subsidiaries SCE, EME, and
     Edison Capital, all of whom may be deemed significant policy makers of Edison International.  None of Edison
     International's Executive Officers is related to any other by blood or marriage.



Page 36


As set forth in Article IV of Edison International's Bylaws, the elected officers of Edison International are
chosen annually by and serve at the pleasure of Edison International's Board of Directors and hold their
respective offices until their resignation, removal, other disqualification from service, or until their
respective successors are elected.  All of the officers of Edison International have been actively engaged in the
business of Edison International, SCE, and/or the Nonutility Companies for more than five years.  Those officers
who have not held their present position with Edison International for the past five years had the following
business experience during that period:

- -------------------------------------------------------------------------------------------------------------------------
                                           Edison International
- ---------------------------- ------------------------------------------------------- ------------------------------------
Executive Officers                              Company Position                               Effective Dates
- ---------------------------- ------------------------------------------------------- ------------------------------------
John E. Bryson               Chairman of the Board, President and Chief Executive    January 2000 to present
                             Officer, Edison International
                             Chairman of the Board, SCE                              January 2003 to present
                             Chairman of the Board, Edison Capital                   January 2000 to present
                             Chairman of the Board, EME                              January 2000 to December 2002
                             Chairman of the Board and Chief Executive Officer,      October 1990 to December 1999
                             Edison International and SCE
- ---------------------------- ------------------------------------------------------- ------------------------------------
Theodore F. Craver, Jr.      Executive Vice President, Chief Financial Officer and   January 2002 to present
                             Treasurer, Edison International
                             Senior Vice President, Chief Financial Officer and      January 2000 to December 2001
                             Treasurer, Edison International
                             Chairman of the Board and Chief Executive Officer,      September 1999 to August 2001
                             Edison Enterprises(1)
                             Senior Vice President and Treasurer, Edison             February 1998 to January 2000
                             International
                             Senior Vice President and Treasurer, SCE                February 1998 to September 1999

- ---------------------------- ------------------------------------------------------- ------------------------------------
Bryant C. Danner             Executive Vice President and General Counsel, Edison    January 2000 to present
                             International
                             Executive Vice President and General Counsel, Edison    June 1995 to December 1999
                             International and SCE
- ---------------------------- ------------------------------------------------------- ------------------------------------
Thomas M. Noonan             Vice President and Controller, Edison International     March 1999 to present
                             and SCE
                             Assistant Controller, Edison International and SCE      September 1993 to March 1999
- ---------------------------- ------------------------------------------------------- ------------------------------------

- -----------------
(1)  Edison Enterprises is an inactive nonutility subsidiary of Edison International, originally organized to own
     the stock and coordinate the activities of Edison International's former retail products and services
     business.



Page 37


- ---------------------------------------------------------------------------------------------------------------------
                                         Southern California Edison Company
- ----------------------------- ------------------------ --------------------------------------------------------------
                                      Age at
Executive Officer                December 31, 2003                           Company Position
- ----------------------------- ------------------------ --------------------------------------------------------------
John E. Bryson(1)                       60             Chairman of the Board
- ----------------------------- ------------------------ --------------------------------------------------------------
Alan J. Fohrer                          53             Chief Executive Officer and Director
- ----------------------------- ------------------------ --------------------------------------------------------------
Robert G. Foster                        56             President
- ----------------------------- ------------------------ --------------------------------------------------------------
Thomas M. Noonan(1)                     52             Vice President and Controller
- ----------------------------- ------------------------ --------------------------------------------------------------

- ------------------
(1)  Messrs. Bryson and Noonan are also deemed Executive Officers due to their positions at Edison
     International.  Information concerning their Company positions and business experience is set forth under
     Edison International.  Edison International is the parent holding company of SCE.

As set forth in Article IV of SCE's Bylaws, the elected officers of SCE are chosen annually by and serve at the
pleasure of SCE's Board of Directors and hold their respective offices until their resignation, removal, other
disqualification from service, or until their respective successors are elected.  All of the above officers of
SCE have been actively engaged in the business of SCE, Edison International and/or the Nonutility Companies for
more than five years.  Those officers who have not held their present position with SCE for the past five years
had the following business experience during that period:

- -------------------------------------------------------------------------------------------------------------------
                                        Southern California Edison Company
- ------------------------- ----------------------------------------------- -----------------------------------------
Executive Officer                        Company Position                             Effective Dates
- ------------------------- ----------------------------------------------- -----------------------------------------
Alan J. Fohrer            Chief Executive Officer and Director, SCE       January 2003 to present
                          Chairman of the Board and Chief Executive       January 2002 to December 2002
                          Officer, SCE
                          President and Chief Executive Officer,          January 2000 to December 2001
                          EME
                          Executive Vice President and Chief Financial    September 1996 to January 2000
                          Officer, Edison International
                          Chairman of the Board, Edison                   January 1998 to September 1999
                          Enterprises
                          Executive Vice President and Chief Financial    September 1996 to December 1999
                          Officer, SCE
                          Chairman of the Board, EME                      January 1998 to December 1999
- ------------------------- ----------------------------------------------- -----------------------------------------
Robert G. Foster          President, SCE                                  January 2002 to present
                          Senior Vice President, External Affairs,        April 2001 to December 2001
                          Edison International and SCE
                          Senior Vice President, Public Affairs, Edison   November 1996 to April 2001
                          International and SCE
- ------------------------- ----------------------------------------------- -----------------------------------------



Page 38


- --------------------------------------------------------------------------------------------------------------------
                                             The Nonutility Companies
- ------------------------------ ------------------------ ------------------------------------------------------------
                                       Age at
Executive Officer                 December 31, 2003                          Company Position
- ------------------------------ ------------------------ ------------------------------------------------------------
Thomas R. McDaniel                       54             Chairman of the Board, President and Chief Executive
                                                        Officer, EME
                                                        Chief Executive Officer and Director, Edison Capital
- ------------------------------ ------------------------ ------------------------------------------------------------
John E. Bryson(1)                        60             Chairman of the Board, Edison Capital
- ------------------------------ ------------------------ ------------------------------------------------------------
Ashraf T. Dajani                         56             President and Chief Operating Officer, Edison Capital
- ------------------------------ ------------------------ ------------------------------------------------------------


(1)  Mr. Bryson is also deemed an Executive Officer due to his position at Edison International.  Information
     concerning his Company position and business experience is set forth under Edison International.  Edison
     International is the parent holding company of the Nonutility Companies.

As set forth in Article IV of their respective Bylaws, the elected officers of the Nonutility Companies are
chosen annually by and serve at the pleasure of the respective Boards of Directors and hold their respective
offices until their resignation, removal, other disqualification from service, or until their respective
successors are elected.  All of the above officers of the Nonutility Companies have been actively engaged in the
business of the respective Nonutility Companies, Edison International, and/or SCE for more than five years.
Those officers who have not held their present position with the Nonutility Companies for the past five years had
the following business experience:

- --------------------------------------------------------------------------------------------------------------------
                                             The Nonutility Companies
- ----------------------------- --------------------------------------------- ----------------------------------------
Executive Officer                           Company Position                            Effective Dates
- ----------------------------- --------------------------------------------- ----------------------------------------

Thomas R. McDaniel            Chairman of the Board, President and Chief    January 2003 to present
                              Executive Officer, EME
                              President and Chief Executive Officer, EME    August 2002 to December 2002
                              Chief Executive Officer, Edison Capital       August 2002 to present
                               President and Chief Executive Officer,
                              Edison Capital                                September 1987 to July 2002
- ----------------------------- --------------------------------------------- ----------------------------------------

Ashraf T. Dajani              President and Chief Operating Officer,        August 2002 to present
                              Edison Capital
                              Senior Vice President, Edison Capital         September 1995 to July 2002
- ----------------------------- --------------------------------------------- ----------------------------------------


                                                      PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Edison International Common Stock is traded on the New York Stock Exchange and the Pacific Exchange under the
symbol "EIX."

Market information responding to Item 5 is included in Edison International's Annual Report under the heading
"Quarterly Financial Data (Unaudited)" on page 166 and is incorporated herein by this reference.  There are restrictions on the ability of Edison
International's subsidiaries to transfer funds to Edison International that currently materially limit the
ability of Edison International to pay cash dividends.  Such restrictions are


Page 39


discussed in the MD&A under the heading "Edison International (Parent):  Liquidity Issues" on pages 59 through 60
and Note 5 of Notes to Financial Statements, which discussions are incorporated herein by this reference.  The
number of common stock shareholders of record of Edison International was 68,203 on December 31, 2003.  Additional
information concerning the market for Edison International's Common Stock is set forth on the cover page hereof.

Item 6.  Selected Financial Data

Information responding to Item 6 is included in the Annual Report under "Selected Financial and Operating Data:
1999-2003" on page 167, and is incorporated herein by this reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operation

Information responding to Item 7 is included in the Annual Report on pages 1 through 95 and is incorporated
herein by this reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Information responding to Item 7A is included in the MD&A under the headings "SCE:  Market Risk Exposures" on
pages 8 through 9; "MEHC AND EME:  MARKET RISK EXPOSURES" ON PAGES 42 THROUGH 55; "EDISON CAPITAL:  MARKET RISK
EXPOSURES" ON PAGES 57 THROUGH 58; AND "EDISON INTERNATIONAL (PARENT):  MARKET RISK EXPOSURES" ON PAGE 60 and is
incorporated herein by this reference.

Item 8.  Financial Statements and Supplementary Data

Certain information responding to Item 8 is set forth after Item 15 in Part III.  Other information responding to
Item 8 is included in the Annual Report on pages 100 through 165 and is incorporated herein by this reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

Edison International's management, with the participation of the company's Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of Edison International's disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the period covered by this report.  Based on such evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Edison
International's disclosure controls and procedures are effective.

Internal Control over Financial Reporting

There have not been any changes in Edison International's internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal year to which this report
relates that have materially affected, or are reasonably likely to materially affect, SCE's internal control over
financial reporting.


Page 40


                                                     PART III

Item 10.  Directors and Executive Officers of the Registrant

Information concerning executive officers of Edison International is set forth in Part I in accordance with
General Instruction G(3), pursuant to Instruction 3 to Item 401(b) of Regulation S-K.  Other information
responding to Item 10 will appear in Edison International's definitive Joint Proxy Statement (Proxy Statement) to
be filed with the SEC in connection with Edison International's Annual Shareholders' Meeting to be held on
May 20, 2004, under the headings "Election of Directors, Nominees for Election," "Board Committees and
Subcommittees," "Section 16(a) Beneficial Ownership Reporting Compliance," and "Code of Business Conduct and
Ethics," and is incorporated herein by this reference.

In addition, the following information is furnished with respect to Mr. Daniel M. Tellep, a Director of Edison
International, who is expected to retire from the Board of Directors on May 20, 2004:

Daniel M. Tellep, age 72, has been a Director of Edison International since 1992.  He also is a Director of SCE.
Mr. Tellep retired as Chairman of the Board of Lockheed Martin Corporation (aerospace industry) in 1996.

Item 11.  Executive Compensation

Information responding to Item 11 will appear in the Proxy Statement under the headings "Director Compensation,"
"Executive Compensation--Summary Compensation Table," "Option/SAR Grants in 2003," "Aggregated Option/SAR Exercises
in 2003 and FY-End Option/SAR Values," "Long-Term Incentive Plan Awards in Last Fiscal Year," "Pension Plan
Table," "Other Retirement Benefits," "Employment Contracts and Termination of Employment Arrangements," and
"Compensation and Executive Personnel Committees' Interlocks and Insider Participation," and is incorporated
herein by this reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Information responding to Item 12 will appear in the Proxy Statement under the headings "Stock Ownership of
Directors and Executive Officers" and "Stock Ownership of Certain Shareholders," and is incorporated herein by
this reference.


Page 41


Equity Compensation Plans

The following table provides information as of December 31, 2003, for compensation plans under which equity
securities may be issued:

                                                                                       Number of securities
                                Number of securities to      Weighted-average          remaining for future
                                be issued upon exercise      exercise price of         issuance under equity
                                of outstanding options,      outstanding options,      compensation plans
                                warrants and rights          warrants and rights       (excluding securities
       Plan Category                                                                   reflected in column (a))
                                          (a)                         (b)                          (c)
- ----------------------------    -------------------------    ----------------------    ----------------------------

Equity Compensation Plans              11,053,413                   $19.82                   9,765,402(1)(2)
approved by security
holders

Equity Compensation Plans              3,749,840                    $17.25                      6,156,773
not approved by security
holders(3)

Total                                  14,803,253                   $19.17                     15,922,175

- ----------------
(1)  This amount is the aggregate number of shares available to be issued under the Equity Compensation Plan as
     of December 31, 2003.  Each year, the number of shares available to be issued is increased by an amount
     equal to 1% of the total issued and outstanding shares of Edison International common stock as of
     December 31 of the prior year.  To the extent shares are not needed in any year, the excess authorized shares
     will carry over to subsequent years until the plan termination date, December 31, 2007.

(2)  The amount shown includes 493,147 shares available for issuance with respect to performance share awards in
     2002 and 2003, and 1,608,308 shares available for issuance with respect to deferred stock units awarded from
     1998 through 2003.

(3)  The 2000 Equity Plan is a broad-based stock option plan that did not require shareholder approval.  It was
     adopted in May 2000 by Edison International with an original authorization of 10 million shares.  The
     Compensation and Executive Personnel Committee of the Board of Directors of Edison International is the plan
     administrator.  Edison International nonqualified stock options may be granted to employees of various
     Edison International companies.  The exercise price may not be less than the fair market value of a share of
     Edison International Common Stock on the date of grant and the stock options may not be exercised more than
     10 years after the date of grant.  No stock options may be granted under the plan after December 31, 2007.
     Few shares have been issued under this plan since 2002, as company policy now is that only hiring grants to
     new employees are to be issued under this plan, and regular on-going grants are to be made from the
     shareholder-approved plan.

     The administrator establishes the terms and conditions of the option awards including vesting, option term,
     transferability, payment deferral, employment termination provisions and adjustment provisions relative to
     stock splits, reorganizations and other corporate transactions.  The terms of the stock options granted in
     2003 will appear in the Proxy Statement under the heading "Executive


Page 42

     Compensation:  Option/SAR Grants in 2003" and are incorporated herein by reference.  See Note 7 of Notes to
     Financial Statements for additional information concerning the 2000 Equity Plan.

Item 13.  Certain Relationships and Related Transactions

Information responding to Item 13 will appear in the Proxy Statement under the headings "Certain Relationships
and Transactions" and "Other Management Transactions," and is incorporated herein by this reference.

Item 14.  Principal Accounting Fees and Services

Information responding to Item 14 will appear in the Proxy Statement under the heading "Independent Accountant
Fees," and is incorporated herein by this reference.

Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)   Financial Statements
The following items contained in the Annual Report are found on pages 1 through 165, and are incorporated herein
by this reference.

         Management's Discussion and Analysis of Financial Condition and Results of Operations
         Responsibility for Financial Reporting
         Report of Independent Auditors
         Report of Predecessor Independent Public Accountants
         Consolidated Statements of Income - Years Ended December 31, 2003, 2002 and 2001
         Consolidated Balance Sheets - December 31, 2003 and 2002
         Consolidated Statements of Cash Flows - Years Ended December 31, 2003, 2002 and 2001
         Consolidated Statements of Changes in Common Shareholders' Equity - Years Ended December 31, 2003, 2002
              and 2001
         Notes to Consolidated Financial Statements

(a)(2)   Report of Independent Auditors and Schedules Supplementing Financial Statements

The following documents may be found in this report at the indicated page numbers:
                                                                                                         Page
                                                                                                         ----
         Report of Independent Auditors on Financial Statement Schedules                                  45
         Report of Predecessor Independent Public Accountants on Supplemental Schedules                   46
         Schedule I - Condensed Financial Information of Parent                                           47
         Schedule II - Valuation and Qualifying Accounts for the
              Years Ended DECEMBER 31, 2003, 2002 AND 2001                                                50

Schedules III through V, inclusive, are omitted as not required or not applicable.

(a)(3)   Exhibits

See Exhibit Index beginning on page 54 of this report.

Edison International will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written
request and upon payment to Edison International of its reasonable expenses of furnishing such


Page 43

exhibit, which shall be limited to photocopying charges and, if mailed to the requesting party, the cost of
first-class postage.

(b)      Reports on Form 8-K

         Date of Report                    Date Filed                      Item(s) Reported
         --------------                    ----------                      ----------------

         December 11, 2003                 December 12, 2003                      5
         November 5, 2003*                 November 5, 2003*                     12*
         October 28, 2003                  October 29, 2003                       5
         October 22, 2003                  October 23, 2003                       5
         October 16, 2003                  October 16, 2003                       5
         October 1, 2003                   October 3, 2003                        5

         --------------------
         * The November 5, 2003 Form 8-K was furnished under Item 12 and shall not be deemed to be "filed" for
           purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by
           reference in any filing under the Securities Act of 1933.



Page 44

                                         Report of Independent Auditors on
                                             Financial Statement Schedules


To the Board of Directors and Shareholders
of Edison International


Our audits of the consolidated financial statements referred to in our report dated March 10, 2004, appearing in
the 2003 Annual Report to Shareholders of Edison International (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedules for the years ended December 31, 2003 and 2002 listed in Item 15(a)(2) of this Form
10-K.  In our opinion, the 2003 and 2002 financial statement schedules present fairly, in all material respects,
the information set forth therein when read in conjunction with the related consolidated financial statements.
The financial statement schedule information for the year ended December 31, 2001 of Edison International was
audited by other independent accountants who have ceased operations.  Those independent accountants expressed an
unqualified opinion on that financial statement schedule information in their report dated March 25, 2002.



/s/ PricewaterhouseCoopers LLP

Los Angeles, California
March 10, 2004



Page 45

 THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY
                                               ARTHUR ANDERSEN LLP.



                               REPORT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS
                                             ON SUPPLEMENTAL SCHEDULES




To Edison International:

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated
financial statements included in the 2002 Annual Report to Shareholders of Edison International incorporated by
reference in this Form 10-K, and have issued our report thereon dated March 25, 2002.  Our audits were made for
the purpose of forming an opinion on those consolidated financial statements taken as a whole.  The supplemental
schedules listed in Part III of this Form 10-K are the responsibility of Edison International's management and
are presented for purposes of complying with the SEC's rules and regulations, and are not part of the
consolidated financial statements.  These supplemental schedules have been subjected to the auditing procedures
applied in the audits of the consolidated financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to the consolidated financial statements
taken as a whole.





                                                              ARTHUR ANDERSEN LLP


Los Angeles, California
MARCH 25, 2002


Page 46

                                               Edison International

                              SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT

                                             CONDENSED BALANCE SHEETS


                                                                                         December 31,
- -------------------------------------------------------------------------------------------------------------------

                                                                                    2003                 2002
- -------------------------------------------------------------------------------------------------------------------

                                                                                        (In thousands)
Assets:
    Cash and equivalents                                                      $    1,087,321      $     251,940
    Other current assets                                                           1,409,622          1,253,556
- -------------------------------------------------------------------------------------------------------------------

      Total current assets                                                         2,496,943          1,505,496

    Investments in subsidiaries                                                    6,740,610          7,025,535
    Other                                                                              2,917              4,385
- -------------------------------------------------------------------------------------------------------------------

      Total assets                                                            $    9,240,470      $   8,535,416
- -------------------------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity:
    Accounts payable                                                          $        4,587      $       4,080
    Other current liabilities                                                      2,082,923          1,376,038
- -------------------------------------------------------------------------------------------------------------------

      Total current liabilities                                                    2,087,510          1,380,118

    Long-term debt                                                                        --            747,988
    Other long-term liabilities                                                    1,664,778          1,666,664
    Other deferred credits                                                            55,204             61,788
    Common shareholders' equity                                                    5,432,978          4,678,858
- -------------------------------------------------------------------------------------------------------------------

      Total liabilities and shareholders' equity                              $    9,240,470      $   8,535,416
- -------------------------------------------------------------------------------------------------------------------




Page 47

                                               Edison International

                              SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT

                                          CONDENSED STATEMENTS OF INCOME
                               For the Years Ended December 31, 2003, 2002 and 2001


                                                                      2003                2002               2001
- -------------------------------------------------------------------------------------------------------------------

                                                                      (In thousands, except per-share amounts)

Operating revenue and other income                            $      63,626       $      78,147     $       105,747
Operating expenses and interest expense                             156,027             171,050             247,436
- -------------------------------------------------------------------------------------------------------------------

Loss before equity in earnings of subsidiaries                      (92,401)            (92,903)           (141,689)

Equity in earnings of subsidiaries                                  913,124           1,170,285           1,176,634
- -------------------------------------------------------------------------------------------------------------------

Net income                                                    $     820,723       $   1,077,382     $     1,034,945
- -------------------------------------------------------------------------------------------------------------------


Weighted-average shares of common stock outstanding                 325,811             325,811             325,811
Basic earnings per share                                      $        2.52       $        3.31     $            3.18
Diluted earnings per share                                    $        2.50       $        3.28     $            3.17




Page 48


                                               Edison International

                              SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT

                                        CONDENSED STATEMENTS OF CASH FLOWS
                               For the Years Ended December 31, 2003, 2002 and 2001


                                                                     2003               2002              2001
- -------------------------------------------------------------------------------------------------------------------
                                                                                   (In thousands)

Cash Flows From Operating Activities                           $   (229,048)      $    336,917      $   (320,606)
- -------------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities                              1,058,707           (116,094)           97,144
- -------------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities                                  5,722               (317)             (427)
- -------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and equivalents                     835,381            220,506          (223,889)
Cash and equivalents at beginning of year                           251,940             31,434           255,323
- -------------------------------------------------------------------------------------------------------------------


Cash and equivalents at the end of year                        $  1,087,321       $    251,940      $     31,434
- -------------------------------------------------------------------------------------------------------------------


Cash dividends received from Southern California
   Edison Company                                              $    945,000       $         --      $         --



Page 49


                                               Edison International

                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 2003


                                                                   Additions
                                                       -------------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------

                                                                   (In thousands)
Uncollectible accounts
    Customers                        $    43,263       $    20,542     $    1,175     $    34,663       $    30,317
    All other                              8,216             5,771             --           4,134             9,853
- -------------------------------------------------------------------------------------------------------------------

Total                                $    51,479       $    26,313     $    1,175     $    38,797(a)    $    40,170
- -------------------------------------------------------------------------------------------------------------------

- --------------------
(a)  Accounts written off, net.



Page 50

                                               Edison International

                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 2002


                                                                   Additions
                                                       -------------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------

                                                                   (In thousands)
Uncollectible accounts
    Customers                        $    42,955       $    22,657     $      338     $    22,687       $    43,263
    All other                              3,656             7,652             --           3,092             8,216
- -------------------------------------------------------------------------------------------------------------------

Total                                $    46,611       $    30,309     $      338     $    25,779(a)    $    51,479
- -------------------------------------------------------------------------------------------------------------------


(a)  Accounts written off, net.




Page 51

                                               Edison International

                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 2001


                                                                   Additions
                                                       -------------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------

                                                                (In thousands)
Group A:
Uncollectible accounts
     Customers                      $    36,513     $    43,529      $      32        $    37,119       $    42,955
     All other                            3,433           1,836             --              1,613             3,656
- -------------------------------------------------------------------------------------------------------------------

Total                               $    39,946     $    45,365      $      32        $    38,732(a)    $    46,611
- -------------------------------------------------------------------------------------------------------------------

Group B:
DOE Decontamination
     and Decommissioning            $    29,920     $        --      $      --        $     5,520(b)    $    24,400
Purchased-power settlements             466,232              --             --            110,353(c)        355,879
Pension and benefits                    307,729         197,985            973(d)          78,167(e)        428,520
Maintenance accrual                          --              --             --                 --                --
Insurance, casualty and other            71,368          54,836             --             51,059(f)         75,145
- -------------------------------------------------------------------------------------------------------------------

Total                               $   875,249     $   252,821      $     973        $   245,099       $   883,944
- -------------------------------------------------------------------------------------------------------------------


(a)  Accounts written off, net.
(b)  Represents amounts paid.
(c)  Represents the amortization of the liability established for purchased-power contract settlement agreements.
(d)  Primarily represents transfers from the accrued paid absence allowance account for required additions to the
     comprehensive disability plan accounts.
(e)  Includes pension payments to retired employees, amounts paid to active employees during periods of illness
     and the funding of certain pension benefits.
(f)  Amounts charged to operations that were not covered by insurance.




Page 52

                                                      SIGNATURES


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


                                                              EDISON INTERNATIONAL

                                                              By:

                                                              /s/ Kenneth S. Stewart
                                                              -----------------------------------------------
                                                              Kenneth S. Stewart
                                                              Assistant General Counsel

                                                              Date:  MARCH 15, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated.

       Signature                                             Title
       ---------                                             -----

Principal Executive Officer:
     John E. Bryson*                             Chairman of the Board, President,
                                                     Chief Executive Officer and Director

Principal Financial Officer:
     Theodore F. Craver, Jr.*                    Executive Vice President, Chief
                                                     Financial Officer and Treasurer

Controller or Principal Accounting Officer:
     Thomas M. Noonan*                           Vice President and Controller

Board of Directors:

     Bradford M. Freeman*                        Director
     Bruce Karatz*                               Director
     Luis Nogales*                               Director
     Ronald L. Olson*                            Director
     James M. Rosser*                            Director
     Richard T. Schlosberg, III*                 Director
     Robert H. Smith*                            Director
     Thomas C. Sutton*                           Director
     Daniel M. Tellep*                           Director

     *By:

     /s/ Kenneth S. Stewart
     -----------------------------------------
     Kenneth S. Stewart
     Assistant General Counsel

Date:  MARCH 15, 2004



Page 53

                                                   EXHIBIT INDEX

Exhibit
Number                                               Description
- ------                                               -----------

3.1           Restated Articles of Incorporation of Edison International effective May 9, 1996 (File No. 1-9936,
              filed as Exhibit 3.1 to Edison International Form 10-K for the year ended December 31, 1998)*
3.2           Certificate of Determination of Series A Junior Participating Cumulative Preferred Stock of Edison
              International dated November 21, 1996 (File No. 1-9936, Edison International Form 8-A dated
              November 21, 1996)*
3.3           Amended Bylaws of Edison International as adopted by the Board of Directors effective January 1,
              2002 (File No. 1-9936, Edison International Form 10-K for the year ended December 31, 2001)*

Edison International
4.1           Subordinated Indenture, dated as of July 26, 1999 (File No. 1-9936, filed as Exhibit 4.1 to Form
              8-K dated July 26, 1999)*
4.2           Supplemental Indenture No. 1, dated as of July 26, 1999 (File No. 1-9936, filed as Exhibit 4.2 to
              Form 8-K dated July 26, 1999)*
4.3           Amended and Restated Trust Agreement, dated as of July 26, 1999 (File No. 1-9936, filed as Exhibit
              4.3 to Form 8-K dated July 26, 1999)*
4.4           Senior Indenture, dated September 28, 1999 (File No. 1-9936, filed as Exhibit 4.1 to Form 10-Q for
              the quarter ended September 30, 1999)*
4.5           Supplemental Indenture No. 1, dated September 28, 1999 (File No. 1-9936, filed as Exhibit 4.2 to
              Edison International Form 10-Q for the quarter ended September 30, 1999)*
4.6           Supplemental Indenture No. 2, dated as of October 29, 1999 (File No. 1-9936, filed as Exhibit 4.1
              to Edison International Form 8-K dated October 29, 1999)*
4.7           Amended and Restated Trust Agreement, dated as of October 29, 1999 (File No. 1-9936, filed as
              Exhibit 4.2 to Edison International Form 8-K dated October 29, 1999)*
4.8           Shareholder Rights Agreement, dated November 21, 1996 (Form 8-A dated November 21, 1996)*
4.9           Amendment to Shareholder Rights Agreement, dated September 16, 1999 (File No. 1-9936, Form 10-Q for
              the quarter ended September 30, 1999)*
4.10          Agreement and Appointment of Successor Rights Agent, dated August 1, 2002 (File No. 1-9936, Form
              10-K for the year ended December 31, 2003)*
4.10.1        Amendment to Shareholder Rights Agreement, dated February 26, 2003 (File No. 1-9936, Form 8-K dated
              February 26, 2004)*

Southern California Edison Company
4.11          SCE First Mortgage Bond Trust Indenture, dated as of October 1, 1923 (Registration No. 2-1369)*
4.12          Supplemental Indenture, dated as of March 1, 1927 (Registration No. 2-1369)*
4.13          Third Supplemental Indenture, dated as of June 24, 1935 (Registration No. 2-1602)*
4.14          Fourth Supplemental Indenture, dated as of September 1, 1935 (Registration No. 2-4522)*
4.15          Fifth Supplemental Indenture, dated as of August 15, 1939 (Registration No. 2-4522)*
4.16          Sixth Supplemental Indenture, dated as of September 1, 1940 (Registration No. 2-4522)*
4.17          Eighth Supplemental Indenture, dated as of August 15, 1948 (Registration No. 2-7610)*
4.18          Twenty-Fourth Supplemental Indenture, dated as of February 15, 1964 (Registration No. 2-22056)*


Page 54

4.19          Eighty-Eighth Supplemental Indenture, dated as of July 15, 1992 (File No. 1-2313, Form 8-K dated July 22, 1992)*
4.20          Indenture, dated as of January 15, 1993 (File No. 1-2313, Form 8-K dated January 28, 1993)*

Mission Energy Holding Company
4.24          Indenture, dated as of July 2, 2001, by and between Mission Energy Holding Company and Wilmington
              Trust Company with respect to $900 million aggregate principal amount of 13.50% Senior Secured
              Notes due 2008 (File No. 333-68632, filed as Exhibit 4.1 to Mission Energy Holding Company's
              Registration Statement on Form S-4 to the SEC on August 29, 2001)*
4.25          Registration Rights Agreement, dated as of July 2, 2001, by and between Mission Energy Holding
              Company and Goldman, Sachs & Co. (File No. 333-68632, filed as Exhibit 4.2 to Mission Energy
              Holding Company's Registration Statement on Form S-4 to the SEC on August 29, 2001)*
4.26          Indenture Escrow and Security Agreement, dated as of July 2, 2001, by and among Mission Energy
              Holding Company, Wilmington Trust Company, as Trustee, and Wilmington Trust Company, as Indenture
              Escrow Agent (File No. 333-68632, filed as Exhibit 4.3 to Mission Energy Holding Company's
              Registration Statement on Form S-4 to the SEC on August 29, 2001)*
4.27          Amended and Restated Credit Agreement, dated as of July 3, 2001, by and among Mission Energy
              Holding Company, the lenders party thereto from time to time, Goldman Sachs Credit Partners L.P.,
              as sole Lead Arranger, as Administrative Agent and as Term Loan Collateral Agent, and Lehman
              Commercial Paper Inc., as Syndication Agent (File No. 333-68632, filed as Exhibit 4.4 to Mission
              Energy Holding Company's Registration Statement on Form S-4 to the SEC on August 29, 2001)*
4.28          Loan Escrow and Security Agreement, dated as of July 2, 2001, by and among Mission Energy Holding
              Company, Goldman, Sachs & Co., as Collateral Agent, Goldman Sachs Credit Partners L.P., as
              Administrative Agent, and Wilmington Trust Company, as Loan Escrow Agent (File No. 333-68632, filed
              as Exhibit 4.5 to Mission Energy Holding Company's Registration Statement on Form S-4 to the SEC on
              August 29, 2001)*
4.29          Pledge and Security Agreement, dated as of July 2, 2001, by and among Mission Energy Holding
              Company, Goldman Sachs Credit Partners L.P., as Administrative Agent, and Wilmington Trust Company,
              as Trustee and Joint Collateral Agent (File No. 333-68632, filed as Exhibit 4.6 to Mission Energy
              Holding Company's Registration Statement on Form S-4 to the SEC on August 29, 2001)*

Edison Mission Energy (EME)
4.30          Indenture, dated as of August 10, 2001, among Edison Mission Energy and The Bank of New York as
              Trustee (File No. 333-68630, filed as Exhibit 4.1 to Edison Mission Energy's Registration Statement
              on Form S-4 to the SEC on August 29, 2001)*
4.31          Form of 10% Senior Note due 2008 (File No. 333-68630, filed as part of Exhibit 4.1 to Edison
              Mission Energy's Registration Statement on Form S-4 to the SEC on August 29, 2001)*
4.32          Registration Rights Agreement, dated as of August 7, 2001, among Edison Mission Energy, Credit
              Suisse First Boston Corporation, BMO Nesbitt Burns Corp., Salomon Smith Barney Inc., SG Cowen
              Securities Corporation, TD Securities (USA) Inc. and Westdeutsche Landesbank Girozentrale
              (Dusseldorf) (File No. 333-68630, filed as Exhibit 4.2 to Edison Mission Energy's Registration
              Statement on Form S-4 to the SEC on August 29, 2001)*


Page 55

4.33          Indenture, dated as of April 5, 2001, among Edison Mission Energy and United States Trust Company
              of New York as Trustee (File No. 333-59348-01, filed as Exhibit 4.20 to Edison Mission Energy's and
              Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.34          Form of 9.875% Senior Note due 2011 (File No. 333-59468, filed as part of Exhibit 4.1 to Edison
              Mission Energy's Registration Statement on Form S-4 to the SEC on April 24, 2001)*
4.35          Registration Rights Agreement, dated as of April 2, 2001, among Edison Mission Energy and Credit
              Suisse First Boston Corporation and Westdeutsche Landesbank Girozentrale (Dusseldorf) as
              representatives of the Initial Purchasers (File No. 333-59468, filed as Exhibit 4.2 to Edison
              Mission Energy's Registration Statement on Form S-4 to the SEC on April 24, 2001)*
4.36          Guarantee, dated as of August 17, 2000, made by Edison Mission Energy, as Guarantor in favor of
              Powerton Trust I, as Owner Lessor (File No. 333-59348-01, filed as Exhibit 4.9 to Edison Mission
              Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on April 20,
              2001)*
4.37          Schedule identifying substantially identical agreement to Guarantee constituting Exhibit 4.36
              hereto (File No. 333-59348-01, filed as Exhibit 4.9.1 to Edison Mission Energy's and Midwest
              Generation LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.38          Guarantee, dated as of August 17, 2000, made by Edison Mission Energy, as Guarantor in favor of
              Joliet Trust I, as Owner Lessor (File No. 333-59348-01, filed as Exhibit 4.10 to Edison Mission
              Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on April 20,
              2001)*
4.39          Schedule identifying substantially identical agreement to Guarantee constituting Exhibit 4.38
              hereto (File No. 333-59348-01, filed as Exhibit 4.10.1 to Edison Mission Energy's and Midwest
              Generation LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.40          Registration Rights Agreement, dated as of August 17, 2000, among Edison Mission Energy, Midwest
              Generation, LLC and Credit Suisse First Boston Corporation and Lehman Brothers Inc., as
              representatives of the Initial Purchasers (File No. 333-59348-01, filed as Exhibit 4.11 to Edison
              Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on
              April 20, 2001)*
4.41          Participation Agreement (T1), dated as of August 17, 2000, by and among, Midwest Generation, LLC,
              Powerton Trust I, as the Owner Lessor, Wilmington Trust Company, as the Owner Trustee, Powerton
              Generation I, LLC, as the Owner Participant, Edison Mission Energy, United States Trust Company of
              New York, as the Lease Indenture Trustee, and United States Trust Company of New York, as the Pass
              Through Trustees (File No. 333-59348-01, filed as Edison Mission Energy's and Midwest Generation
              LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.42          Schedule identifying substantially identical agreement to Participation Agreement constituting
              Exhibit 4.41 hereto (File No. 333-59348-01, filed as Exhibit 4.12.1 to Edison Mission Energy's and
              Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.43          Participation Agreement (T1), dated as of August 17, 2000, by and among, Midwest Generation, LLC,
              Joliet Trust I, as the Owner Lessor, Wilmington Trust Company, as the Owner Trustee, Joliet
              Generation I, LLC, as the Owner Participant, Edison Mission Energy, United States Trust Company of
              New York, as the Lease Indenture Trustee and United States Trust Company of New York, as the Pass
              Through Trustees (File No. 333-59348-01, filed as


Page 56

              Exhibit 4.13 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on
              Form S-4 to the SEC on April 20, 2001)*
4.44          Schedule identifying substantially identical agreement to Participation Agreement constituting
              Exhibit 4.43 hereto (File No. 333-59348-01, filed as Exhibit 4.13.1 to Edison Mission Energy's and
              Midwest Generation LLC's Registration Statement on Form S-4 to the SEC on April 20, 2001)*
4.45          Copy of the Global Debenture representing Edison Mission Energy's 9-7/8% Junior Subordinated
              Deferrable Interest Debentures, Series A, Due 2024 (File No. 1-13434, filed as Exhibit 4.1 to
              Edison Mission Energy's Form 10-K for the year ended December 31, 1994)*
4.46          Conformed copy of the Indenture, dated as of November 30, 1994, between Edison Mission Energy and
              The First National Bank of Chicago, as Trustee (File No. 1-13434, filed as Exhibit 4.2 to Edison
              Mission Energy's Form 10-K for the year ended December 31, 1994)*
4.47          First Supplemental Indenture, dated as of November 30, 1994, to Indenture dated as of November 30,
              1994 between Edison Mission Energy and The First National Bank of Chicago, as Trustee (File No.
              1-13434, filed as Exhibit 4.2.1 to Edison Mission Energy's Form 10-K for the year ended December
              31, 1994)*
4.48          Second Supplemental Indenture, dated as of August 8, 1995, to Indenture dated as of November 30,
              1994 between Edison Mission Energy and The First National Bank of Chicago, as Trustee (File No.
              333-68630, filed as Exhibit 4.11.2 to Edison Mission Energy's Registration Statement on Form S-4 to
              the SEC on August 29, 2001)*
4.49          Indenture, dated as of June 28, 1999, between Edison Mission Energy and The Bank of New York, as
              Trustee (File No. 333-30748, filed as Exhibit 4.1 to Edison Mission Energy's Registration Statement
              on Form S-4 to the SEC on February 18, 2000)*
4.50          First Supplemental Indenture, dated as of June 28, 1999, to Indenture dated as of June 28, 1999,
              between Edison Mission Energy and The Bank of New York, as Trustee (File No. 333-30748, filed as
              Exhibit 4.2 to Edison Mission Energy's Registration Statement on Form S-4 to the SEC on
              February 18, 2000)*
4.51          Promissory Note ($499,450,800), dated as of August 24, 2000, by Edison Mission Energy in favor of
              Midwest Generation, LLC (File No. 000-24890, filed as Exhibit 4.5 to Edison Mission Energy's Form
              10-K for the year ended December 31, 2000)*
4.52          Schedule identifying substantially identical agreements to Promissory Note constituting Exhibit
              4.51 hereto (File No. 000-24890, filed as Exhibit 4.5.1 to Edison Mission Energy's Form 10-K for
              the year ended December 31, 2000)*
4.53          Participation Agreement, dated as of December 7, 2001, among EME Homer City Generation L.P., Homer
              City OL1 LLC, as Facility Lessor and Ground Lessee, Wells Fargo Bank Northwest National
              Association, General Electric Capital Corporation, The Bank of New York as the Security Agent, The
              Bank of New York as Lease Indenture Trustee, Homer City Funding LLC and The Bank of New York as
              Bondholder Trustee (File No. 333-92047-03, filed as to Exhibit 4.4 to the EME Homer City Generation
              L.P. Form 10-K for the year ended December 31, 2001)*
4.54          Schedule identifying substantially identical agreements to Participation Agreement constituting
              Exhibit 4.53 hereto (File No. 333-92047-03, filed as Exhibit 4.4.1 to the EME Homer City Generation
              L.P. Form 10-K for the year ended December 31, 2001)*
4.55          Open-End Mortgage, Security Agreement and Assignment of Rents, dated as of December 7, 2001, among
              Homer City OLI LLC, as the Owner Lessor to The Bank of New York, as Security Agent and Mortgagee
              (File No. 333-92047-03, filed as Exhibit 4.9 to the EME Homer City Generation L.P. Form 10-K for
              the year ended December 31, 2001)*
4.55.1        Schedule identifying substantially identical agreements to Open-End Mortgage, Security Agreement
              and Assignment of Rents constituting Exhibit 4.55 hereto, incorporate by


Page 57

              reference to Exhibit 4.9.1 to the EME Homer City Generation L.P. Form 10-K for the year ended
              December 31, 2003.

Edison International
10.1**        Form of 1981 Deferred Compensation Agreement (File No. 1-2313, filed as Exhibit 10.2 to SCE Form
              10-K for the year ended December 31, 1981)*
10.2**        Form of 1985 Deferred Compensation Agreement for Executives (File No. 1-2313, filed as Exhibit 10.3
              to SCE Form 10-K for the year ended December 31, 1985)*
10.3**        Form of 1985 Deferred Compensation Agreement for Directors (File No. 1-2313, filed as Exhibit 10.4
              to SCE Form 10-K for the year ended December 31, 1985)*
10.4**        Director Deferred Compensation Plan as restated May 14, 2002 (File No. 1-9936, filed as Exhibit
              10.1 to Edison International Form 10-Q for the quarter ended June 30, 2002)*
10.4.1**      Director Deferred Compensation Plan Amendment No. 1, effective January 1, 2003 (File No. 1-9936,
              filed as Exhibit 10.4.1 to Edison International Form 10-K for the year ended December 31, 2002)*
10.5**        Director Grantor Trust Agreement, dated August 1995 (File No. 1-9936, filed as Exhibit 10.10 to
              Edison International Form 10-K for the year ended December 31, 1995)*
10.5.1**      Director Grantor Trust Agreement Amendment 2002-1, effective May 14, 2002 (File No. 1-9936, filed
              as Exhibit 10.4 to Edison International Form 10-Q for the quarter ended June 30, 2002)*
10.6**        Executive Deferred Compensation Plan as amended and restated January 1, 1998 (File No. 1-9936,
              filed as Exhibit 10.2 to Edison International Form 10-Q for the quarter ended March 31, 1998)*
10.6.1**      Executive Deferred Compensation Plan Amendment No. 1, effective January 1, 2003 (File No. 1-9936,
              filed as Exhibit 10.6.1 to Edison International Form 10-K for the year ended December 31, 2002)*
10.7**        Executive Grantor Trust Agreement, dated August 1995 (File No. 1-9936, filed as Exhibit 10.12 to
              Edison International Form 10-K for the year ended December 31, 1995)*
10.7.1**      Executive Grantor Trust Agreement Amendment 2002-1, effective May 14, 2002 (File No. 1-9936, filed
              as Exhibit 10.3 to Edison International Form 10-Q for the quarter ended June 30, 2002)*
10.8**        Executive Supplemental Benefit Program as amended January 30, 1990 (File No. 1-9936, filed as
              Exhibit 10.2 to Edison International Form 10-Q for the quarter ended September 30, 1999)*
10.9**        Dispute resolution amendment, adopted November 30, 1989 of 1981 Executive Deferred Compensation
              Plan and 1985 Executive and Director Deferred Compensation Plans (File No. 1-9936, filed as Exhibit
              10.21 to Edison International Form 10-K for the year ended December 31, 1998)*
10.10**       Executive Retirement Plan as restated effective April 1, 1999 (File No. 1-9936, filed as Exhibit
              10.1 to Edison International Form 10-Q for the quarter ended September 30, 1999)*
10.10.1**     Executive Retirement Plan Amendment 2001-1, effective March 12, 2001 (File No. 1-9936, filed as
              Exhibit 10.1 to Edison International Form 10-Q for the quarter ended March 31, 2001)*
10.10.2**     Executive Retirement Plan Amendment 2002-1, effective January 1, 2003 (File No. 1-9936, filed as
              Exhibit 10.10.2 to Edison International Form 10-K for the year ended December 31, 2002)*
10.11**       Executive Incentive Compensation Plan, effective January 1, 1997 (File No. 1-9936, filed as Exhibit
              10.12 to Edison International Form 10-K for the year ended December 31, 1997)*


Page 58


10.12**       Executive Disability and Survivor Benefit Program, effective January 1, 1994 (File No. 1-9936,
              filed as Exhibit 10.22 to Edison International Form 10-K for the year ended December 31, 1994)*
10.13**       Retirement Plan for Directors as amended February 19, 1998 (File No. 1-9936, filed as Exhibit 10.2
              to Edison International Form 10-Q for the quarter ended June 30, 1998)*
10.14**       Officer Long-Term Incentive Compensation Plan as amended January 1, 1998 (File No. 1-9936, filed as
              Exhibit 10.3 to Edison International Form 10-Q for the quarter ended March 31, 1998)*
10.15**       Equity Compensation Plan as restated effective January 1, 1998 (File No. 1-9936, filed as Exhibit
              10.1 to Edison International Form 10-Q for the quarter ended June 30, 1998)*
10.15.1**     Equity Compensation Plan Amendment No. 1, effective May 18, 2000 (File No. 1-9936, filed as Exhibit
              10.3 to Edison International Form 10-Q for the quarter ended June 30, 2000)*
10.16**       2000 Equity Plan, effective May 18, 2000 (File No. 1-9936, filed as Exhibit 10.1 to Edison
              International Form 10-Q for the quarter ended June 30, 2000)*
10.17**       Terms and conditions for 1993-1995 long-term compensation awards under the Officer Long-Term
              Incentive Compensation Plan (File No. 1-9936, filed as Exhibit 10.21.1 to Edison International Form
              10-K for the year ended December 31, 1995)*
10.18**       Terms and conditions for 1996 long-term compensation awards under the Officer Long-Term Incentive
              Compensation Plan (File No. 1-9936, filed as Exhibit 10.16.2 to Edison International Form 10-K for
              the year ended December 31, 1996)*
10.19**       Terms and conditions for 1997 long-term compensation awards under the Officer Long-Term Incentive
              Compensation Plan (File No. 1-9936, filed as Exhibit 10.16.3 to Edison International Form 10-K for
              the year ended December 31, 1997)*
10.20**       Terms and conditions for 1998 long-term compensation awards under the Equity Compensation Plan
              (File No. 1-9936, filed as Exhibit 10.4 to Edison International Form 10-Q for the quarter ended
              June 30, 1998)*
10.21**       Terms and conditions for 1999 long-term compensation awards under the Equity Compensation Plan
              (File No. 1-9936, filed as Exhibit 10.1 to Edison International Form 10-Q for the quarter ended
              March 31, 1999)*
10.22**       Terms and conditions for 2000 basic long-term incentive compensation awards under the Equity
              Compensation Plan, , as restated (File No. 1-9936, filed as Exhibit 10.2 to Edison International
              Form 10-Q for the quarter ended March 31, 2000)*
10.23**       Terms and conditions for 2000 special stock option awards under the Equity Compensation Plan and
              2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.2 to Edison International Form 10-Q for the
              quarter ended June 30, 2000)*
10.24**       Terms and conditions for 2001 retention incentives under the Equity Compensation Plan (File No.
              1-9936, filed as Exhibit 10.5 to Edison International Form 10-Q for the quarter ended March 31,
              2001)*
10.25**       Terms and conditions for 2001 exchange offer deferred stock units under the Equity Compensation
              Plan (File No. 1-9936, filed as Attachment C of Exhibit (a)(1) to Edison International Schedule
              TO-I dated October 26, 2001)*
10.26**       Terms and conditions for 2002 long-term compensation awards under the Equity Compensation Plan and
              2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to Edison International Form 10-Q for the
              quarter ended March 31, 2002)*
10.27**       Terms and conditions for 2003 long-term compensation awards under the Equity Compensation Plan and
              2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to Edison International Form 10-Q for the
              quarter ended March 31, 2003)*
10.28**       Special Grant Certificate and Award Agreement with Bryant C. Danner related to a May 2000 stock
              option award under the Equity Compensation Plan (File No. 1-9936, filed as Exhibit 10.19 to Edison
              International Form 10-K for the year ended December 31, 2000)*


Page 59


10.29**       Director Nonqualified Stock Option Terms and Conditions under the Equity Compensation Plan (File
              No. 1-9936, filed as Exhibit 10.1 to Edison International Form 10-Q for the quarter ended June 30,
              2002)*
10.30**       Edison International and Edison Capital Affiliate Option Exchange Offer Circular dated July 3, 2000
              (File No. 1-9936, filed as Exhibit 10.1 to Edison International Form 10-Q for the quarter ended
              September 30, 2000)*
10.31**       Edison International and Edison Capital Affiliate Option Exchange Offer Summary of Deferred
              Compensation Alternatives, dated July 3, 2000 (File No. 1-9936, filed as Exhibit 10.2 to Edison
              International Form 10-Q for the quarter ended September 30, 2000)*
10.32**       Edison International and Edison Mission Energy Affiliate Option Exchange Offer Circular, dated July
              3, 2000 (File No. 1-13434, filed as Exhibit 10.93 to the Edison Mission Energy Form 10-K for the
              year ended December 31, 2001)*
10.33**       Edison International and Edison Mission Energy Affiliate Option Exchange Offer Summary of Deferred
              Compensation Alternatives, dated July 3, 2000 (File No. 1-13434, filed as Exhibit 10.94 to the
              Edison Mission Energy Form 10-K for the year ended December 31, 2001)*
10.34**       Estate and Financial Planning Program as amended April 23, 1999 (File No. 1-9936, filed as Exhibit
              10.2 to Edison International Form 10-Q for the quarter ended June 30, 1999)*
10.35**       Option Gain Deferral Plan as restated September 15, 2000 (File No. 1-9936, filed as Exhibit 10.25
              to Edison International Form 10-K for the year ended December 31, 2000)*
10.36**       Employment Letter Agreement with Bryant C. Danner, dated May 21, 1992 (File No. 1-9936, filed as
              Exhibit 10.27 to Edison International Form 10-K for the year ended December 31, 1992)*
10.37**       Resolution regarding the computation of disability and survivor benefits prior to age 55 for Alan
              J. Fohrer dated February 17, 2000 (File No. 1-9936, filed as Exhibit 10.2 to Edison International
              Form 10-Q for the quarter ended March 31, 2000)*
10.38**       Executive Severance Plan as adopted effective January 1, 2001 (File No. 1-9936, filed as Exhibit
              10.34 to Edison International Form 10-K for the year ended December 31, 2001)*
10.39**       Performance and Retention Incentive Agreement between Edison Capital and Thomas R. McDaniel,
              effective as of August 1, 2002 (File No. 1-9936, filed as Exhibit 10.32 to Edison International
              Form 10-K for the year ended December 31, 2001)*
10.40**       Performance and Retention Incentive Agreement between Edison Mission Energy and Thomas R. McDaniel,
              effective as of August 1, 2002 (File No. 1-13434, filed as Exhibit 10.108 to the Edison Mission
              Energy Form 10-K for the year ended December 31, 2002)*
10.41**       Employment Letter Agreement with Mahvash Yazdi, dated March 26, 1997 (File No. 1-9936, filed as
              Exhibit 10.34 to Edison International Form 10-K for the year ended December 31, 2001)*
10.42**       Amendment to 1985 Deferred Compensation Plan Agreement for Executives and Deferred Compensation
              Plan Deferred Compensation Agreement with John E. Bryson, dated December 31, 2003 (File No. 1-2313,
              filed as Exhibit 10.34 to SCE Form 10-K for the year ended December 31, 2003)*
10.43**       Agreement between Edison International and SCE, dated December 31, 2003, addressing responsibility
              for the prospective costs of participation of John E. Bryson under the 1985 Deferred Compensation
              Plan Agreement for Executives, dated September 27, 1985, as amended, and the Deferred Compensation
              Plan Deferred Compensation Agreement, dated November 28, 1984, as amended (File No. 1-2313, filed
              as Exhibit 10.35 to SCE Form 10-K for the year ended December 31, 2003)*
10.44**       Amendment to 1985 Deferred Compensation Plan Agreement for Directors with James M. Rosser, dated
              December 31, 2003 (File No. 1-2313, filed as Exhibit 10.36 to SCE Form 10-K for the year ended
              December 31, 2003)*


Page 60


10.45         Amended and Restated Agreement for the Allocation of Income Tax Liabilities and Benefits among
              Edison International, Southern California Edison Company and The Mission Group dated September 10,
              1996 (File No. 1-9936, filed as Exhibit 10.3 to Edison International Form 10-Q for the quarter
              ended September 30, 2002)*
10.45.1       Amended and Restated Tax Allocation Agreement among The Mission Group and its first-tier
              subsidiaries dated September 10, 1996 (File No. 1-9936, filed as Exhibit 10.3.1 to Edison
              International Form 10-Q for the quarter ended September 30, 2002)*
10.45.2       Amended and Restated Tax Allocation Agreement between Edison Capital and Edison Funding Company
              (formerly Mission First Financial and Mission Funding Company) dated May 1, 1995 (File No. 1-9936,
              filed as Exhibit 10.3.2 to Edison International Form 10-Q for the quarter ended September 30, 2002)*
10.45.3       Tax Allocation Agreement between Mission Energy Holding Company and Edison Mission Energy dated
              July 2, 2001 (File No. 1-9936, filed as Exhibit 10.3.3 to Edison International Form 10-Q for the
              quarter ended September 30, 2002)*
10.45.4       Administrative Agreement re Tax Allocation Payments among Edison International, Southern California
              Edison Company, The Mission Group, Edison Capital, Mission Energy Holding Company, Edison Mission
              Energy, Edison O&M Services, Edison Enterprises, and Mission Land Company dated July 2, 2001 (File
              No. 1-9936, filed as Exhibit 10.3.4 to Edison International Form 10-Q for the quarter ended
              September 30, 2002)*
12            Computation of Ratios of Earnings to Fixed Charges
13            Selected portions of the Annual Report to Shareholders for year ended December 31, 2003
21            Subsidiaries of the Registrant
23            Consent of Independent Accountants - PricewaterhouseCoopers LLP
24.1          Power of Attorney
24.2          Certified copy of Resolution of Board of Directors Authorizing Signature
31.1          Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2          Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32            Statement Pursuant to 18 U.S.C. Section 1350

- ----------------
  *    Incorporated by reference pursuant to Rule 12b-32.
**     Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)3.

Page 61

EX-12

                                                                EDISON INTERNATIONAL

                       COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED AND PREFERENCE STOCK

                                                               (Thousands of Dollars)


                                                                              Year Ended December 31,
                                                  -------------------------------------------------------------------------
                                                     1998        1999 (7)     2000 (7)     2001         2002        2003
                                                  -------------------------------------------------------------------------


EARNINGS BEFORE INCOME TAXES
  AND FIXED CHARGES:

Income before interest expense (1)               $1,416,332  $1,591,692   $ (560,514)  $4,098,347  $2,534,149   $2,065,095
Add:
  Taxes on income (2)                               461,711     347,315   (1,018,870)   1,647,147     390,489      213,365
  Rentals (3)                                         4,278       5,015       39,520       50,877       8,841       72,616
  Allocable portion of interest
      on long-term contracts for
      the purchase of power (4)                       1,767       1,735        1,699        1,659       1,616        1,568
  Dividends of lesser than 50% owned equity
      method investments                             49,208      80,891      121,463       87,676     141,605      109,789
  Interest on partnership
      indebtedness (5)                               36,019      33,186       25,523       17,809      11,641       23,565
  Amortization of previously capitalized
      fixed charges                                   7,246       7,601        7,191        6,214       6,514        7,284
Less:
  Earnings of lesser than 50% owned equity method    53,605      88,376      110,392      134,320     120,901      190,590
                                                  ---------- -----------  -----------  ----------- -----------  -----------

Total earnings before income
  taxes and fixed charges (A)                    $1,922,956  $1,979,059  $(1,494,380)  $5,775,409  $2,973,954   $2,302,692
                                                  =========  ==========  ============  =========== ===========  ===========




FIXED CHARGES:
  Interest and amortization                       $ 710,388   $ 840,784   $1,256,812   $1,582,139   $1,282,724  $1,194,087
  Rentals (3)                                         4,278       5,015       39,520       50,877        8,841      72,616
  Capitalized interest (6)                           19,219      28,682       15,819       14,820        4,457       6,649
  Allocable portion of interest on
      long-term contracts for
      the purchase of power (4)                       1,767       1,735        1,699        1,659        1,616       1,568
  Interest on partnership
      indebtedness (5)                               36,019      33,186       25,523       17,809       11,641      23,565
  Dividends on preferred securities                  13,149      44,287      100,382       91,889       96,342      77,488
  Subsidiary preferred and preference stock
      dividend requirements - pre-tax basis          41,653      39,098       32,710       37,844       25,833      19,560
                                                  ---------- -----------  -----------  ----------- ------------ ----------
Total fixed charges (B)                           $ 826,473   $ 992,787   $1,472,465   $1,797,037   $1,431,454  $1,395,533
                                                  ========== ===========  ===========  =========== ============ ==========


RATIO OF EARNINGS TO
  FIXED CHARGES (A) / (B):                             2.33         1.99    (1.01)(8)        3.21         2.08       1.65
                                                  ==========  ===========  ===========   ========= ============  =========



(1)   Includes allowance for funds used during construction, accrual of unbilled revenue and minority interest,
      net of income taxes.
(2)   Includes allocation of federal income and state franchise taxes to other income.
(3)   Rentals include the interest factor relating to certain significant rentals plus one-third of all remaining
      annual rentals.
(4)   Allocable portion of interest included in annual minimum debt service requirement of supplier.
(5)   Includes the allocable portion of interest on project indebtedness of fifty-percent partnership investment
      by other wholly-owned subsidiaries of Edison International.
(6)   Includes the fixed charges associated with Nuclear Fuel and capitalized interest of fifty-percent owned
      partnerships.
(7)   Revised to exclude the income and expenses associated with discontinued operations.
(8)   Ratio for 2000 is less than 1.00. In 2000, Edison International needed an additional $2,966,845,000 in
      earnings before income taxes and fixed charges to achieve a 1.00 ratio.

EX-13

[Edison International
           Logo]





                                                       2003 Annual Report








- ---------------------------------------------------------------------------------------------------------------------------------------
Edison International

Edison International, through its subsidiaries, is an electric power generator, distributor and structured finance provider.
Headquartered in Rosemead, California, Edison International is the parent company of Southern California Edison - a regulated
electric utility - and two nonutility businesses: Edison Mission Energy and Edison Capital.

Edison International's operating companies have principal offices in California, Boston, Chicago, Washington, D.C., Australia,
Singapore, and the United Kingdom.


           Contents
           --------

      1    Management's Discussion and Analysis of Financial Condition and Results of Operations
     97    Responsibility for Financial Reporting
     98    Report of Independent Auditors
     99    Report of Predecessor Independent Public Accountants
    100    Consolidated Statements of Income
    101    Consolidated Statements of Comprehensive Income
    102    Consolidated Balance Sheets
    104    Consolidated Statements of Cash Flows
    105    Consolidated Statements of Changes in Common Shareholders' Equity
    106    Notes to Consolidated Financial Statements
    166    Quarterly Financial Data
    167    Selected Financial and Operating Data:  1999 - 2003





- ---------------------------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of Operations


                                                             INTRODUCTION

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking
statements.  These statements are based on Edison International's knowledge of present facts, current expectations about future
events and assumptions about future developments.  Forward-looking statements are not guarantees of performance; they are subject to
risks and uncertainties that could cause actual future outcomes and results of operations to be materially different from those set
forth in this discussion.  Important factors that could cause actual results to differ are discussed throughout this MD&A.

Edison International is engaged in the business of holding, for investment, the common stock of its subsidiaries.  Edison
International's principal operating subsidiaries are Southern California Edison Company (SCE), Edison Mission Energy (EME) and Edison
Capital.  Mission Energy Holding Company (MEHC) is a holding company for EME.  SCE comprises the largest portion of the assets and
revenue of Edison International.  In this MD&A, except when stated to the contrary, references to each of Edison International, SCE,
EME, Edison Capital or MEHC mean each such company with its subsidiaries on a consolidated basis.  References to Edison International
(parent) or parent company mean Edison International on a stand-alone basis, not consolidated with its subsidiaries.  References to
SCE, EME, Edison Capital or MEHC followed by (stand alone) mean each such company alone, not consolidated with its subsidiaries.

This MD&A is presented in 13 major sections.  The MD&A begins with an Edison International management overview and a brief review of
the company's consolidated earnings for 2003.   Following is a company-by-company discussion of Edison International's principal
operating subsidiaries (SCE, MEHC and EME, Edison Capital) and Edison International (parent).  Each principal operating subsidiary's
discussion includes a management overview and discussions of liquidity, market risk exposures, and other matters (as relevant to each
principal operating subsidiary).  The remaining sections discuss Edison International on a consolidated basis, including results of
operations and historical cash flow analysis, discontinued operations, acquisitions and dispositions, critical accounting policies,
new accounting principles, commitments and guarantees, off-balance sheet transactions, and other developments.  These sections should
be read in conjunction with each subsidiary's section.

                                                                                Page
                                                                                ----
         Edison International:  Management Overview                                2
         SCE                                                                       4
         MEHC and EME                                                             22
         Edison Capital                                                           56
         Edison International (Parent)                                            59
         Results of Operations and Historical Cash Flow Analysis                  61
         Discontinued Operations                                                  72
         Acquisitions and Dispositions                                            73
         Critical Accounting Policies                                             74
         New Accounting Principles                                                81
         Commitments and Guarantees                                               84
         Off-Balance Sheet Transactions                                           88
         Other Developments                                                       92


Page 1


- ---------------------------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of Operations


                                                         EDISON INTERNATIONAL

Edison International:  Management Overview

Edison International was significantly impacted by California's energy crisis, which began in late 2000, and by world-wide
developments during 2001 and 2002 that adversely affected independent power producers and merchant generators.  Therefore, Edison
International's primary management focus in 2003 continued to be restoring the company's financial health.  In this regard, three
objectives were particularly critical:

o    Validating and completing SCE's recovery of power procurement costs arising from the energy crisis.  In July 2003, SCE
     completed recovery of $3.6 billion of procurement-related obligations through the regulatory account known as the
     Procurement-Related Obligations Account (PROACT).  By late 2003, both the California Supreme Court and the United States Court of
     Appeals for the Ninth Circuit (Ninth Circuit) had issued decisions upholding the 2001 CPUC settlement agreement that provided for
     creation of the PROACT and SCE's recovery of procurement-related costs.  (See "SCE:  Regulatory Matters--Generation and Power
     Procurement--CPUC Litigation Settlement Agreement," and "--PROACT Regulatory Asset").

o    Comprehensively addressing the indebtedness at EME and its subsidiaries that mature or expire in 2003 and 2004, with a focus
     on debt reduction.  In December 2003, EME's subsidiary, Mission Energy Holding International, Inc., received funding under a
     three-year, $800 million secured loan which was used, together with other internally generated cash, to repay $1.2 billion of EME
     and Edison Mission Midwest Holdings indebtedness.  See further discussion under "MEHC and EME:  Liquidity--Key Financing
     Developments."  This was the first step in a four-part restructuring plan announced in November 2003.  The remaining steps are
     described below.

o    Positioning the company to resume common stock dividends.  In November 2003, Edison International paid previously deferred
     interest on its quarterly income debt securities, which was a precondition to declaring a common stock dividend.  In December
     2003, the Board of Directors of Edison International declared a 20(cent)per share common stock quarterly dividend.  The $65 million
     dividend payment was made on January 30, 2004.

In 2004, Edison International's management intends to focus on continuing the company's financial recovery and resuming investments
in growth at Edison Capital.  Key objectives in 2004 include:

o    Completing the remaining three steps in EME's four-part restructuring plan, which consists of refinancing indebtedness
     associated with EME's Illinois plants, including termination of the lease at the Collins Station, selling some or all of EME's
     international operations and using the proceeds of asset sales to reduce EME's consolidated indebtedness.  See further discussion
     in "MEHC and EME:  Management Overview--EME's Restructuring Plan" and "MEHC and EME:  Liquidity--Key Financing Developments--EME's
     Subsidiary Financing Plans--Agreement in Principle to Terminate the Collins Station Lease," and "--Edison Mission Midwest Holdings."

o    Reducing Edison International (parent)'s debt.  At December 31, 2003, Edison International (parent) had outstanding $618
     million of notes due September 2004.  During January and February 2004, Edison International repurchased approximately $46
     million of these notes, leaving a remaining balance of $572 million of notes due in September 2004.  (See "Edison International
     (Parent):  Liquidity Issues").


Page 2


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Edison International


o    Making important investments at SCE to ensure electric reliability.  SCE currently plans to invest up to $9 billion over the next
     five years to replace and expand distribution and transmission infrastructure and construct and replace generation assets.  (See
     "SCE:  Management Overview").

o    Restarting investments at Edison Capital in affordable housing and electric infrastructure, ending a three-year investment
     hiatus (see "Edison Capital:  Management Overview").

Edison International's recorded earnings were $821 million or $2.52 per share in 2003, compared to $1.1 billion or $3.31 per share in
2002, which included a gain of $480 million related to a regulatory decision on SCE's utility-retained generation (URG).  Excluding this
one-time 2002 gain, Edison International's earnings from continuing operations in 2003 increased $124 million over 2002.  Major factors
contributing to the increase of $124 million over the prior year included the resolution of significant regulatory proceedings at SCE,
the impact of higher United States wholesale energy prices on EME, increased generation from EME's Homer City plant and the absence of
write-offs incurred in 2002 at EME.  These positive impacts to earnings were partially offset in 2003 by asset impairment charges at
EME.  Edison International's consolidated earnings for 2003 also included a gain on an SCE asset sale and related operating earnings
totaling $50 million reported in discontinued operations, and charges of $9 million for the cumulative effect of a change in accounting
principles at EME.  For a detailed review and analysis of the consolidated results of operations and historical cash flows, see "Results
of Operations and Historical Cash Flow Analysis" section.


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                                                  SOUTHERN CALIFORNIA EDISON COMPANY

SCE:  MANAGEMENT OVERVIEW

Background

SCE is an investor-owned utility company providing electricity to retail customers in central, coastal and southern California.  SCE
is regulated by the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC).  SCE bills its
customers for the sale of electricity at rates authorized by these two commissions.  These rates are categorized into two groups:
base rates and cost-recovery rates.

Base Rates:  Revenue arising from base rates is designed to provide SCE a reasonable opportunity to recover its costs and earn an
authorized return on the net book value of SCE's investment in generation and distribution plant (or rate base).  Base rates provide
for recovery of operations and maintenance (O&M) costs, capital-related carrying costs (depreciation, taxes and interest) and a
return or profit, on a forecast basis.  Base rates related to SCE's generation and distribution functions are currently authorized by
the CPUC through a General Rate Case (GRC) proceeding.  In a GRC proceeding, SCE files an application with the CPUC to update its
authorized annual revenue requirement. After a review process and hearings, the CPUC sets an annual revenue requirement by
multiplying an authorized rate of return, determined in annual cost of capital proceedings (as discussed below), by rate base, then
adding to this amount the adopted O&M costs and capital-related carrying costs.  Adjustments to the revenue requirement for the
remaining years of a typical three-year GRC cycle are requested from the CPUC based on criteria established in a GRC proceeding for
escalation in O&M costs, changes in capital-related costs and the expected number of nuclear refueling outages.  Variations in
generation and distribution revenue arising from the difference between forecast and actual electricity sales are recorded in
balancing accounts for future recovery or refund, and do not impact SCE's operating profit, while differences between forecast and
actual costs, other than cost-recovery costs (see below), do impact profitability.

SCE's capital structure, including the authorized rate of return, is regulated by the CPUC and is determined in annual cost of
capital proceedings.  The rate of return is a blend of a return on equity and cost of long-term debt and preferred stock.  SCE's 2003
cost of capital decision, issued on November 7, 2002, will remain in effect throughout 2004.  Accordingly, SCE's CPUC-authorized rate
of return of 9.75%, return on common equity of 11.6% and authorized rate-making capital structure will be maintained through 2004.

Current CPUC ratemaking also provides for performance incentives or penalties for differences between actual results and
GRC-determined standards of reliability, customer satisfaction and employee safety.

Base rate revenue related to SCE's transmission function is authorized by the FERC in periodic proceedings that are similar to the
CPUC's GRC proceeding, except that requested rate changes are generally implemented when the application is filed, and revenue is
subject to refund until a FERC decision is issued.  SCE currently receives approximately $260 million in annual revenue to recover
the costs associated with its transmission function and to earn a reasonable return on its $1.1 billion transmission rate base.

Cost-Recovery Rates:  Revenue requirements to recover SCE's costs of fuel, power procurement, demand-side management programs,
nuclear decommissioning costs, and rate reduction debt requirements are authorized in various CPUC proceedings on a cost-recovery
basis, with no markup for return or profit.  Approximately 50% of SCE's annual revenue relates to the recovery of these costs.
Although the CPUC authorizes balancing account mechanisms to refund or recover any differences


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between estimated and actual costs in these categories in future proceedings, under- or over-collections in these balancing accounts
can build rapidly due to fluctuating prices (particularly in power procurement) and can greatly impact cash flows.  The majority of
costs eligible for recovery are subject to CPUC reasonableness reviews, and thus could negatively impact earnings and cash flows if
found to be unreasonable and disallowed.

As described below under "SCE:  Regulatory Matters--Generation and Power Procurement--CDWR Power Purchases and Revenue Requirement
Proceedings," the California Department of Water Resources (CDWR) began purchasing power on behalf of utility customers during the
California energy crisis.  In addition to billing its customers for SCE's power procurement activities, SCE also bills and collects
from its customers for power purchased and sold by the CDWR, CDWR bond-related charges and direct access exit fees.  These amounts
are remitted to the CDWR as they are collected and are not recognized as revenue by SCE.  As a result, these transactions should have
no impact on SCE's earnings or cash flow.

For a discussion of important issues related to the rate-making process, see the "SCE:  Regulatory Matters" section.

SCE Issues Overview

This overview discusses key business issues facing SCE.  It is not intended to be an exhaustive discussion.  It includes issues that
could materially affect SCE's earnings, cash flow or business risk.  The overview includes a discussion of current and planned
capital expenditures (including the acquisition and construction of the Mountainview project, either potential expenditures or the
possibility of a shutdown at the Mohave Generating Station (Mohave), and costs of replacing the steam generators at the San Onofre
Nuclear Generating Station (San Onofre)), anticipated procurement requirements (including the effects of a resource adequacy
requirement, community aggregation, and related ratemaking), and the 2003 and 2006 CPUC General Rate Cases.

The issues discussed in this overview are described in more detail in the remainder of this "Southern California Edison Company"
section.

SCE's utility business is experiencing significant growth in actual and planned capital expenditures.  SCE plans to spend up to $1.9
billion during 2004, compared to $1.2 billion in 2003.  The growth in spending will require a partial reinvestment of earnings and
issuance of debt securities to maintain a balanced capital structure, as required by the CPUC.  For 2005 and beyond, capital spending
is anticipated to remain at levels substantially above historical levels, but somewhat below planned spending for 2004.

Each of SCE's business areas (distribution, transmission and generation) is contributing to the capital spending growth.  The
distribution area, which represents approximately 70% of SCE's rate base, is experiencing continued expansion of the number of
customer accounts.  Beginning with a base of 4.6 million active accounts, for 2004, SCE expects to add approximately 60,000 new
accounts, and forecasts a similar level of activity over the next several years.  SCE also forecasts that it will need to accelerate
the replacement of distribution poles, transformers and other infrastructure to maintain existing levels of system reliability.

SCE forecasts that expenditures for transmission facilities will substantially increase over the balance of the decade.  SCE is now
planning for and beginning to construct new substations to meet customer load-growth requirements.  Moreover, SCE is conducting
preliminary engineering on new and existing transmission lines that would expand the capacity to bring in additional energy from the
Southwest.

In 2004, generation capital expenditures will increase dramatically, driven primarily by the recently approved Mountainview project.
In addition, SCE will spend in excess of $50 million at the San Onofre


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Management's Discussion and Analysis of Financial Condition and Results of Operations


plant to construct facilities to protect the site against a design basis threat as determined by the Nuclear Regulatory Commission.
These expenditures are in addition to ongoing capital expenditures to maintain the safety and reliability of SCE's nuclear, coal and
hydroelectric facilities.  Beyond 2004, SCE may replace the San Onofre steam generators in the 2009-2010 time frame.  Given the
lead-time requirements to fabricate the steam generators, SCE must make commitments to begin fabrication during 2004.

Recently, the CPUC ordered all load-serving entities to procure sufficient resources to meet their customers' needs.  This resource
adequacy requirement phases in over the 2005-2008 period and requires planning reserve margins of 15-17% of peak load.  This resource
adequacy requirement, combined with the anticipated closure of Mohave at the end of 2005, expected reductions in deliveries under
CDWR contracts, expected expiration of contracts with some independent power producers known as qualifying facilities (QFs), and
expected peak-load growth of 1.5-2.0% per year, will require SCE to either construct new generation facilities or enter into
additional power-purchase contracts to provide for forecasted customer requirements.  Implementation of the CPUC order will be
addressed in workshops commencing in mid-March 2004.

At the same time that SCE is evaluating new generation investments and contractual obligations, SCE has raised fundamental concerns
about the stability of its customer base in the CPUC's ongoing long-term procurement proceeding.  The CPUC's direct access rules, the
possible expansion of community choice aggregation, other forms of municipalization, and application of exit fees to departing
customers all affect the ability of SCE to retain bundled service customers (customers who purchase power from SCE).  It is SCE's
goal to ensure that customers who depart from utility generation service pay their fair share of costs, and that costs are not
unfairly shifted to remaining bundled service customers, which could have the effect of increasing SCE's rates and causing more
customers to seek alternative providers.

SCE is aware that the concern for high rates was a contributing factor that led California regulators to deregulate the electric
services industry in the mid-1990's.  Today, SCE's system average rate is 12.3(cent)-per-kilowatt-hour (kWh) for bundled service customers
and its average monthly bill is $79.  On a cents-per-kWh basis, SCE's average rate is above the national average, but similar to the
other investor-owned electric utilities in California.  Therefore, SCE is focused on providing bundled service customers competitive
and stable electric rates.  But this focus must be balanced with the obligation to safely and reliably serve customers.

At the beginning of 2003, SCE resumed procurement of power for its bundled service customers.  During 2003, much of management's
attention was focused on establishing fair and reasonable rules for the procurement of power for utility customers.  Additional work
is needed.  For 2004 and 2005, SCE forecasts that it will have a residual long position in the majority of hours.  SCE's residual-net
long position arises primarily because of the CPUC's allocation of CDWR contract energy.  For the reasons listed above, such as
customer growth and run-off of existing contracts, SCE expects to have substantially greater power procurement requirements beyond
2005.  The acquisition and construction of the Mountainview project, the replacement of the San Onofre steam generators and the
expansion of transmission facilities are all part of SCE's plan to meet a portion of expected customer requirements.  However, even
more additional resources will be needed to meet those expected requirements.

To promote and ensure recovery of both generation investments and contract costs, SCE has established a corporate priority to secure
a fair and durable regulatory framework.  To this end, SCE supports adoption of Assembly Bill 2006, introduced by California's
Speaker of the Assembly Fabian Nunez.  The bill is pending before the California State Assembly.

SCE is in the final stages of its 2003 GRC proceeding, which will set annual base rates for the years 2003-2005 years.  On February
13, 2004, SCE received a proposed decision from the administrative law judge that heard the 2003 GRC.  SCE is seeking a $251 million
increase in its annual base rate revenue,


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but the proposed decision would allow only a $15 million increase.  SCE is disappointed with the proposed decision and will press for
reinstatement of its requested amount by the CPUC commissioners.  The CPUC commissioners can accept, reject, or modify any proposed
decision.

SCE is now preparing its 2006 General Rate Case.  SCE's preliminary application files in August 2004, with the application scheduled
to file before year-end 2004.  With the expected growth in capital spending discussed above, SCE expects that it will need further
increases in its revenue requirement.

SCE:  LIQUIDITY ISSUES

SCE's liquidity is primarily affected by under- or over-collections of procurement-related costs as discussed in "SCE:  Management
Overview--Background" and access to capital markets or external financings.  In the fourth quarter of 2003, Moody's Investors Service
and Standard & Poor's both raised SCE's credit ratings to investment grade.

At December 31, 2003, SCE had cash and equivalents of $95 million.  SCE's long-term debt, including current maturities, at
December 31, 2003, was $4.5 billion.  SCE has a $700 million credit facility that expires in December 2006.  SCE drew $200 million on
the facility on December 19, 2003.  In addition, the facility supported letters of credit in the amount of $33 million at year-end
2003.  At December 31, 2003, SCE had borrowing capacity under its credit facility of $467 million.  SCE's 2004 cash requirements
consist of:

o    $125 million of 5.875% bonds due in September 2004;

o    Approximately $246 million of rate reduction notes that are due at various times in 2004, but which have a separate cost
     recovery mechanism approved by state legislation and CPUC decisions;

o    Projected capital expenditures of $1.9 billion, including the investment in the Mountainview project and related capital
     expenditures (see "Acquisitions and Dispositions");

o    Dividend payments to SCE's parent company;

o    Fuel and procurement-related costs; and

o    General operating expenses.

SCE expects to meet its continuing obligations and cash outflows for undercollections (if incurred) through cash and equivalents on
hand, operating cash flows and short-term borrowings, when necessary.  Projected capital expenditures are expected to be financed
through cash flows and the issuance of long-term debt.

SCE's capital structure is regulated by the CPUC.  SCE's CPUC-authorized common equity to total capitalization ratio level is 48%.
On October 16, 2003, SCE transferred, through a dividend to Edison International, $945 million of equity that exceeded the
CPUC-authorized level.  This dividend was a first step to rebalance SCE's capital structure in accordance with CPUC requirements.  As
of December 31, 2003, SCE's common equity to total capitalization ratio, for rate-making purposes, was approximately 55%.

In January 2004, SCE issued $975 million of first and refunding mortgage bonds.  The issuance included $300 million of 5% bonds due
in 2014, $525 million of 6% bonds due in 2034 and $150 million of floating rate bonds due in 2006.  The proceeds were used to redeem
$300 million of 7.25% first and refunding mortgage bonds due March 2026, $225 million of 7.125% first and refunding mortgage bonds


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Management's Discussion and Analysis of Financial Condition and Results of Operations


due July 2025, $200 million of 6.9% first and refunding mortgage bonds due October 2018, and $100 million of junior subordinated
deferrable interest debentures due June 2044.  In March 2004, SCE remarketed approximately $550 million of pollution-control bonds
with varying maturity dates ranging from 2008 to 2040.

SCE resumed procurement of its residual-net short (the amount of energy needed to serve SCE's customers from sources other than its
own generating plants, power-purchase contracts and CDWR contracts) on January 1, 2003, and as of December 31, 2003, had posted
approximately $66 million ($33 million in cash and $33 million in letters of credit) as collateral to secure its obligations under
power-purchase contracts and to transact through the Independent System Operator (ISO) for imbalance energy.  SCE's collateral
requirements can vary depending upon the level of unsecured credit extended by counterparties, the ISO's credit requirements, changes
in market prices relative to contractual commitments, and other factors.

SCE's liquidity may be affected by, among other things, matters described in "SCE:  Regulatory Matters--Generation and Power
Procurement--CPUC Litigation Settlement Agreement," "--CDWR Power Purchases and Revenue Requirement Proceedings," and "--Generation
Procurement Proceedings" sections.

SCE:  MARKET RISK EXPOSURES

SCE's primary market risks include fluctuations in interest rates, generating fuel commodity prices and volume and counterparty
credit.  Fluctuations in interest rates can affect earnings and cash flows.  However, fluctuations in fuel prices and volumes and
counterparty credit losses temporarily affect cash flows, but should not affect earnings.

Interest Rate Risk

SCE is exposed to changes in interest rates primarily as a result of its borrowing and investing activities used for liquidity
purposes and to fund business operations, as well as to finance capital expenditures.  The nature and amount of SCE's long-term and
short-term debt can be expected to vary as a result of future business requirements, market conditions and other factors.  In
addition, SCE's authorized return on common equity (11.6% for 2003 and 2004), which is established in SCE's annual cost of capital
proceeding, is set on the basis of forecasts of interest rates and other factors.

At December 31, 2003, SCE did not believe that its short-term debt and current portion of long-term debt and preferred stock was
subject to interest rate risk, due to the fair market value being approximately equal to the carrying value.

At December 31, 2003, the fair market value of SCE's long-term debt was $4.4 billion.  A 10% increase in market interest rates would
have resulted in a $166 million decrease in the fair market value of SCE's long-term debt.  A 10% decrease in market interest rates
would have resulted in a $183 million increase in the fair market value of SCE's long-term debt.  At December 31, 2003, the fair
market value of SCE's preferred stock subject to mandatory redemption was $139 million.  A 10% increase in market interest rates
would have resulted in a $12 million decrease in the fair market value of SCE's preferred stock subject to mandatory redemption.  A
10% decrease in market interest rates would have resulted in a $14 million increase in the fair market value of SCE's preferred stock
subject to mandatory redemption.

Generating Fuel Commodity Price Risk

SCE's purchased-power expense in 2003 was approximately 38% of SCE's total operating expenses.  SCE recovers its reasonable power
procurement costs through regulatory mechanisms established by the


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CPUC.  The California public utilities code provides that the CPUC shall adjust rates, or order refunds, to amortize undercollections
or overcollections of power procurement costs.  Until January 1, 2006, the CPUC must adjust rates if the undercollection or
overcollection exceeds 5% of SCE's prior year's procurement costs, excluding revenue collected for the CDWR.  As a result of these
regulatory mechanisms, changes in energy prices may impact SCE's cash flows but should have no impact on earnings.

On January 1, 2003, SCE resumed procurement of its residual-net short.  SCE forecasts that it will have a residual long position in
the majority of hours for 2004.  SCE's residual-net long position arises from an expected increase in deliveries under CDWR contracts
allocated to SCE's customers.  SCE has incorporated a price and volume forecast from expected sales of residual-net long power in its
2004 procurement plan filed with the CPUC, as well as in the revenue forecast used for setting rates.  If actual prices or volumes
vary from forecast, SCE's cash flow would be temporarily impacted, but should not affect earnings.  For 2004 and beyond, several
factors could cause SCE's residual-net short to be much larger than expected, including the return of direct access customers
(customers who choose to purchase power directly from an electric service provider other than SCE) to utility service, lower utility
generation due to expected or unexpected outages or plant closures, lower deliveries under third-party power contracts, higher than
anticipated demand for electricity, or displacement of existing generation resources with economic short-term transactions.  Such an
increase in procurement requirements could lead to temporary revenue undercollections if the costs to purchase the additional energy
were to exceed the amount recovered in rates.

SCE anticipates it will need to purchase additional capacity and/or ancillary services to meet its peak-energy requirements in 2004
and 2005.  In 2006, SCE's residual-net short exposure will increase significantly from the reduction in expected CDWR power
deliveries, expiration of certain contracts with QFs, expected shutdown of Mohave, and load growth.

Pursuant to CPUC decisions, SCE, as the CDWR's limited agent, arranges for natural gas and performs related services for CDWR
contracts allocated to SCE by the CPUC.  Financial and legal responsibility for the allocated contracts remains with the CDWR.  The
CDWR, through the coordination of SCE, has hedged a portion of its expected natural gas requirements for certain contracts allocated
to SCE.  To the extent the price of natural gas were to increase above the levels assumed for cost recovery purposes, California
state law permits the CDWR to recover its actual costs through rates established by the CPUC.  This would affect rates charged to
SCE's customers, but would not affect SCE's earnings or cash flows.

SCE purchases power from QFs under CPUC state-mandated contracts.  Contract energy prices for most nonrenewable QFs are tied to the
Southern California border price of natural gas established on a monthly basis.  The CPUC has authorized SCE to hedge a majority of
its natural gas price exposure associated with these QF contracts.  During 2003, SCE substantially hedged the risk of increasing
natural gas prices through hedging instruments purchased in late 2001 pursuant to authority granted by the CPUC.  The cost of these
hedging instruments was recovered through PROACT.  None of these hedging instruments were outstanding as of December 31, 2003.  The
CPUC approved SCE's short-term resource plan, which includes hedging of natural gas price exposure for its existing QF contracts for
2004.  These hedging costs are recovered through a balancing account known as Energy Resource Recovery Account (ERRA) and should have
no impact on earnings. SCE cannot predict with certainty whether in the future it will be able to hedge customer risk for other
commodities on favorable terms or that the cost of such hedges will be fully recovered in rates.

Credit Risk

Credit risk arises primarily due to the chance that a counterparty under various purchase and sale contracts will not perform as
agreed or pay SCE for energy products delivered.  SCE uses a variety of


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strategies to mitigate its exposure to credit risk.  SCE's risk management committee regularly reviews procurement credit exposure
and approves credit limits for transacting with counterparties.  SCE follows the credit limits established in its CPUC-approved
procurement plan, and accordingly believes that any losses which may occur should be fully recoverable from customers, and therefore
should not affect earnings.

SCE:  REGULATORY MATTERS

This section of the MD&A describes SCE's regulatory matters in three main subsections:

o    generation and power procurement;

o    transmission and distribution; and

o    other regulatory matters.

Generation and Power Procurement

CPUC Litigation Settlement Agreement

During the California energy crisis, prices charged by sellers of wholesale power escalated far beyond what SCE was permitted by the
CPUC to charge its customers.  In November 2000, SCE filed a lawsuit against the CPUC in federal district court seeking a ruling that
SCE is entitled to full recovery of its electricity procurement costs incurred during the energy crisis in accordance with the
tariffs filed with the FERC.  In October 2001, SCE and the CPUC entered into a settlement of SCE's lawsuit against the CPUC.  A key
element of the 2001 CPUC settlement agreement was the establishment of a $3.6 billion regulatory balancing account, called the
PROACT, as of August 31, 2001.  The Utility Reform Network (TURN) and other parties appealed to the Ninth Circuit seeking to overturn
the stipulated judgment of the federal district court that approved the 2001 CPUC settlement agreement.  On September 23, 2002, the
Ninth Circuit issued its opinion affirming the federal district court on all claims, with the exception of the challenges founded
upon California state law, which the Ninth Circuit referred to the California Supreme Court.

On August 21, 2003, the California Supreme Court issued its decision on the certified questions on challenges founded upon California
state law, concluding that the 2001 CPUC settlement agreement did not violate California law in any of the respects raised by the
Ninth Circuit.  Specifically, the California Supreme Court concluded that:  (1) the commissioners of the CPUC had the authority to
propose the stipulated judgment under the provisions of California's restructuring statute, Assembly Bill 1890, as amended or
impacted by subsequent legislation; (2) the procedures employed by the CPUC in entering the stipulated judgment did not violate
California's open meeting law for public agencies; and (3) the stipulated judgment did not violate California's public utilities code
by allegedly altering rates without a public hearing and issuance of findings.

On October 22, 2003, the California Supreme Court denied TURN's petition for rehearing of the decision.  The matter was returned to
the Ninth Circuit for final disposition, subject to any efforts by TURN to pursue further federal appeals.  On December 19, 2003, the
Ninth Circuit unanimously affirmed the original stipulated judgment of the federal district court, and no petition for rehearing was
filed.  On January 12, 2004, the Ninth Circuit issued its mandate, relinquishing jurisdiction of the case and returning jurisdiction
to the federal district court.  TURN and those parties whose appeals to the Ninth Circuit were consolidated with TURN's appeal
currently have 90 days from December 19, 2003 in which to seek discretionary review from the United States Supreme Court.  SCE
continues to believe it is probable that recovery of its past procurement costs through regulatory mechanisms, including the PROACT,
will not


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be invalidated.  However, SCE cannot predict with certainty the ultimate outcome of further legal proceedings, if any.

PROACT Regulatory Asset

In accordance with the 2001 CPUC settlement agreement described above and an implementing resolution adopted by the CPUC, in the
fourth quarter of 2001, SCE established the PROACT regulatory balancing account, with an initial balance of approximately
$3.6 billion.  The initial balance reflected the net amount of past procurement-related liabilities to be recovered by SCE.  On a
monthly basis, the difference between SCE's revenue from retail electric rates (including surcharges) and the costs that SCE was
authorized by the CPUC to recover in retail electric rates was applied to the PROACT until SCE fully recovered the balance.

At July 31, 2003, the PROACT regulatory balancing account was overcollected by $148 million.  On October 14, 2003, the CPUC approved
SCE's advice filing which allowed SCE to transfer this July 31, 2003 overcollected PROACT balance and a temporary surcharge balancing
account overcollection (see "--Generation and Power Procurement--Temporary Surcharges") to the ERRA (discussed below) on August 1,
2003, and to implement a $1.2 billion customer rate reduction effective August 1, 2003.

Energy Resource Recovery Account Proceedings

In an October 24, 2002 decision, the CPUC established the ERRA as the rate-making mechanism to track and recover SCE's:  (1) fuel
costs related to its generating stations; (2) purchased-power costs related to cogeneration and renewable contracts; (3)
purchased-power costs related to existing interutility and bilateral contracts that were entered into before January 17, 2001; and
(4) new procurement-related costs incurred on or after January 1, 2003 (the date on which the CPUC transferred back to SCE the
responsibility for procuring energy resources for its customers).  As described in "SCE:  Management Overview," SCE recovers these
costs on a cost-recovery basis, with no markup for return or profit.  SCE files annual forecasts of the above-described costs that it
expects to incur during the following year.  As these costs are subsequently incurred, they will be tracked and recovered through the
ERRA, but are subject to a reasonableness review in a separate annual ERRA application.  If the ERRA overcollection or
undercollection exceeds 5% of SCE's prior year's procurement costs, SCE can request an emergency rate adjustment in addition to the
annual forecast and reasonableness ERRA applications.

SCE submitted its first ERRA forecast application in April 2003, in which it forecast procurement-related costs for the 2003 calendar
year of $2.5 billion.  On January 22, 2004, the CPUC issued a decision that approved SCE's forecast as submitted.  The CPUC issued a
proposed decision on February 24, 2004, approving SCE's 2004 forecast revenue requirement and rates for both generation and delivery
services.

In October 2003, SCE submitted its first ERRA reasonableness review application, in which it requested the CPUC find its
procurement-related operations during the period from September 1, 2001 through June 30, 2003 to be reasonable.  Because this is the
first annual review of this activity, pursuant to new California state law, the CPUC's interpretation and application of California
state law is uncertain.  SCE cannot predict with certainty the outcome of its application and recovery of its procurement-related
operations costs.

Pursuant to the assigned commissioner's scoping memo issued on December 9, 2003, the CPUC's Office of Ratepayer Advocates (ORA) was
allowed to review the accounting calculations used in the PROACT mechanism.  The ORA testimony, due on March 19, 2004, will include
an audit of these accounting calculations.  Hearings are scheduled to be held during April 2004.


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Utility-Retained Generation

As a result of an April 2002 CPUC decision, SCE's retained generation assets were returned to cost-of-service ratemaking after
operating in a deregulated environment since 1998.  The CPUC decision provided for the:  (1) recovery of costs for all URG components
other than San Onofre Units 2 and 3, subject to reasonableness review by the CPUC; (2) retention of the incremental cost incentive
pricing mechanism (ICIP) for San Onofre Units 2 and 3 through 2003; (3) establishment of an amortization schedule for SCE's nuclear
facilities that reflects their current remaining Nuclear Regulatory Commission license durations, using unamortized balances as of
January 1, 2001 as a starting point; (4) establishment of balancing accounts for the costs of utility generation, purchased power,
and ancillary services purchased from the ISO; and (5) continuation of the use of SCE's last CPUC-authorized return on common equity
of 11.6% for SCE's URG rate base other than San Onofre Units 2 and 3, and the 7.35% return on rate base for San Onofre Units 2 and 3
under the ICIP.  SCE will operate under the April 2002 CPUC decision until implementation of the 2003 GRC (see "--Transmission and
Distribution--2003 General Rate Case Proceeding").

CDWR Power Purchases and Revenue Requirement Proceedings

In accordance with an emergency order by the Governor of California, the CDWR began making emergency power purchases for SCE's
customers on January 17, 2001.  In February 2001, a California law was enacted which authorized the CDWR to:  (1) enter into
contracts to purchase electric power and sell power at cost directly to SCE's retail customers; and (2) issue bonds to finance those
electricity purchases.  During the fourth quarter of 2002, the CDWR issued $11 billion in bonds to finance its electricity
purchases.  The CDWR's total statewide power charge and bond charge revenue requirements are allocated by the CPUC among the
customers of SCE, Pacific Gas and Electric (PG&E) and San Diego Gas & Electric (SDG&E).  Amounts billed to and collected from SCE's
customers for electric power purchased and sold by the CDWR (approximately $1.7 billion in 2003) are remitted directly to the CDWR
and are not recognized as revenue by SCE.

Direct Access Proceedings

From 1998 through mid-September 2001, SCE's customers were able to choose to purchase power directly from an electric service
provider other than SCE (thus becoming direct access customers) or continue to purchase power from SCE.  During that time, direct
access customers received a credit for the generation costs SCE saved by not serving them, resulting in additional undercollected
power procurement costs to SCE during 2000 and 2001.  On March 21, 2002, the CPUC issued a decision affirming that new direct access
arrangements entered into by SCE's customers after September 20, 2001 are invalid.  That decision did not affect direct access
arrangements in place before that date.

In May 2003, a CPUC decision allowed customers with valid direct access arrangements to switch back and forth between bundled service
provided by SCE and direct access.  This decision, as well as CPUC decisions or proceedings discussed below, affects SCE's ability to
predict the size of its customer base, the amount of bundled service load for which it must procure or generate electricity, its
net-short position and its ability to plan for resource requirements.

The CPUC has received several petitions requesting clarification of previous decisions on whether to allow load growth on existing
direct access accounts or add new accounts if necessary to accommodate direct access customers who relocate their facilities.
Recently, the CPUC agreed, in response to one of these petitions, to allow direct access customers to add new accounts when
relocating facilities as long as there is no increase in a customer's total eligible direct access load.  SCE cannot predict how the
CPUC will rule on the remaining petitions.  If the CPUC allows load growth on existing direct access accounts and allows new direct
access accounts to be added notwithstanding the suspension of direct access, the


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level of direct access load in SCE's territory could rise considerably, resulting in a shift of a greater portion of SCE's costs to
bundled service customers.

The CPUC has also opened a proceeding to identify issues relating to the implementation of a 2002 California law authorizing
community choice aggregation.  This form of direct access allows local governments to combine the loads of its residents, businesses,
and municipal facilities in a community-wide electricity buyers program and to create an entity called a community choice
aggregator.  Hearings on this matter are scheduled to begin in May 2004.  Depending on how many, if any, cities choose to participate
in community choice aggregation, a large amount of load could depart from SCE's bundled service, resulting in additional shifting of
cost responsibility.

The CPUC has issued decisions or has opened proceedings to establish various charges (exit fees) for customers who (1) switch to
another electric service provider, (2) switch to a municipal utility; or (3) install onsite generation facilities or arrange to
purchase power from another entity that installs such facilities.  The charges recovered from these customers are used to reduce
SCE's rates to bundled service customers and have no impact on earnings.

Temporary Surcharges

A March 2001 CPUC decision, authorized a 3(cent)-per-kWh revenue surcharge to SCE's customers and made permanent a 1(cent)-per-kWh surcharge to
SCE's customers authorized in January 2001.  In addition, the CPUC authorized an additional 0.6(cent)-per-kWh catch-up surcharge for a
twelve-month period, beginning in June 2001, to compensate SCE for a delay in collecting the 3(cent)-per-kWh surcharge.  These surcharges
were used for SCE's procurement costs.

The CPUC later allowed the continuation of the 0.6(cent)-per-kWh catch-up surcharge.  Amounts collected between June 2002 and December
2002 were to be used to recover 2003 procurement costs.   As a result, at December 31, 2002, this revenue ($187 million of surcharge
revenue) was credited to a regulatory liability account until it was used to offset SCE's higher 2003 procurement revenue
requirement.  Between January 1, 2003 and July 31, 2003, $150 million of this regulatory liability account was amortized into
revenue.  The remaining balance of $37 million was transferred to the ERRA as of August 1, 2003.

The $1.2 billion customer rate reduction plan implemented by SCE eliminated all of the temporary surcharges (see "--Generation and
Power Procurement--PROACT Regulatory Asset").

Generation Procurement Proceedings

SCE resumed power procurement responsibilities for its residual-net short position on January 1, 2003, pursuant to CPUC orders and
California statutes passed in 2002.  The current regulatory and statutory framework requires SCE to assume limited responsibilities
for CDWR contracts allocated by the CPUC, and provide full power procurement responsibilities on the basis of annual short-term
procurement plans, long-term resource plans and increased procurement of renewable resources.

Short-Term Procurement Plan

In 2003, SCE operated under a CPUC-approved short-term procurement plan, which includes contracts entered into during a transitional
period beginning in August 2002 for deliveries in 2003 and the allocation of CDWR contracts.  In December 2003, the CPUC adopted a
2004 procurement plan for SCE, which established a target level for spot market purchases equal to 5% of monthly need, and allowed
SCE to enter into contracts of up to five years.


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Long-Term Resource Plan

On April 15, 2003, SCE filed its long-term resource plan with the CPUC, which includes a 20-year forecast.  SCE's long-term resource
plan included both a preferred plan and an interim plan (both described below).  On January 22, 2004, the CPUC issued a decision
which did not adopt any long-term resource plan, but adopted a framework for resource planning.  Until the CPUC approves a long-term
resource plan for SCE, SCE will operate under its interim resource plan.

o    Preferred Resource Plan:  The preferred resource plan contains long-term commitments intended to encourage investment in new
     generation and transmission infrastructure, increase long-term reliability and decrease price volatility.  These commitments
     include energy efficiency and demand-response investments, additional renewable resource contracts that will meet or exceed the
     requirements of legislation passed in 2002, additional utility and third-party owned generation, and new major transmission
     projects.

o    Interim Resource Plan:  The interim resource plan, by contrast, relies exclusively on new short- and medium-term contracts
     with no long-term resource commitments (except for new renewable contracts).

In its long-term resource plan filing, SCE maintained that implementation of its preferred resource plan requires resolution of
various issues including:  (1) stabilizing SCE's customer base; (2) restoring SCE's investment-grade creditworthiness;
(3) restructuring regulations regarding energy efficiency and demand-response programs; (4) removing barriers to transmission
development; (5) modifying prior decisions, which impede long-term procurement; and (6) adopting a commercially realistic
cost-recovery framework that will enable utilities to obtain financing and enable contracting for new generation.

Under the framework adopted in the CPUC's January 22, 2004 decision, all load-serving entities in California have an obligation to
procure sufficient resources to meet their customers' needs.  This resource adequacy requirement phases in over the 2005-2008 period
and requires planning reserve margins of 15-17% of peak load.  The decision requires SCE to enter into forward contracts for 90% of
SCE's summer peaking needs a year in advance and to file a revised long-term resource plan in 2004.  The decision does not
comprehensively address important issues SCE has raised about its customer base, recovery of indirect procurement costs (including
debt equivalence) and other matters.

Procurement of Renewable Resources

As part of SCE's resumption of power procurement, in accordance with a California statute passed in 2002, SCE is required to increase
its procurement of renewable resources by at least 1% of its annual electricity sales per year so that 20% of its annual electricity
sales are procured from renewable resources by no later than December 31, 2017.  In June 2003, the CPUC issued a decision adopting
preliminary rules and guidance on renewable procurement-related issues, including penalties for noncompliance with renewable
procurement targets.  As of December 31, 2003, SCE procured approximately 18% of its annual electricity from renewable resources.

SCE has received bids for renewable resource contracts in response to a solicitation it made in August 2003, and is proceeding to
enter into negotiations for contracts with some bidders based upon its preliminary bid evaluation.

CDWR Contract Allocation and Operating Order

The CDWR power-purchase contracts entered into as a result of the California energy crisis have been allocated on a
contract-by-contract basis among SCE, PG&E and SDG&E, in accordance with a 2002


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CPUC decision.  SCE only assumes scheduling and dispatch responsibilities and acts only as a limited agent for the CDWR for contract
implementation.  Legal title, financial reporting and responsibility for the payment of contract-related bills remain with the CDWR.
The allocation of CDWR contracts to SCE significantly reduces SCE's residual-net short and also increases the likelihood that SCE
will have excess power during certain periods.  SCE has incorporated CDWR contracts allocated to it in its procurement plans.
Wholesale revenue from the sale of excess power, if any, is prorated between the CDWR and SCE.

SCE's maximum annual disallowance risk exposure for contract administration, including administration of allocated CDWR contracts and
least cost dispatch of CDWR contract resources, is $37 million.  In addition, gas procurement, including hedging transactions,
associated with CDWR contracts is included within the cap.

Mohave Generating Station and Related Proceedings

On May 17, 2002, SCE filed an application with the CPUC to address certain issues (mainly coal and slurry-water supply issues) facing
the future extended operation of Mohave, which is partly owned by SCE.  Mohave obtains all of its coal supply from the Black Mesa
Mine in northeast Arizona, located on lands of the Navajo Nation and Hopi Tribe (the Tribes).  This coal is delivered from the mine
to Mohave by means of a coal slurry pipeline, which requires water from wells located on lands belonging to the Tribes in the mine
vicinity.

Due to the lack of progress in negotiations with the Tribes and other parties to resolve several coal and water supply issues, SCE's
application stated that SCE would probably be unable to extend Mohave's operation beyond 2005.  The uncertainty over a post-2005 coal
and water supply has prevented SCE and other Mohave co-owners from making approximately $1.1 billion in Mohave-related investments
(SCE's share is $605 million), including the installation of pollution-control equipment that must be put in place in order for
Mohave to continue to operate beyond 2005, pursuant to a 1999 consent decree concerning air quality.

Negotiations are continuing among the relevant parties in an effort to resolve the coal and water supply issues, but no resolution
has been reached.  The Mohave co-owners, the Tribes, and the federal government have recently finalized a memorandum of understanding
under which the Mohave co-owners will fund, subject to the terms and conditions of the memorandum of understanding, a $6 million
study of a possible alternative groundwater source for the slurry water.  The study is expected to begin in early 2004.  SCE and
other parties submitted further testimony and made various other filings in 2003 in SCE's application proceeding.  On February 9,
2004, the CPUC held a prehearing conference to discuss whether additional testimony and hearings are needed to determine the future
of the plant.  The CPUC has not issued any ruling as result of the prehearing conference, but has indicated that further testimony
can be expected in early to mid-2004.  The outcome of the coal and water negotiations and SCE's application are not expected to
impact Mohave's operation through 2005, but could have a major impact on SCE's long-term resource plan.

For additional matters related to Mohave, see "SCE:  Other Developments--Navajo Nation Litigation."

In light of all of the issues discussed above, SCE has concluded that it is probable Mohave will be shut down at the end of 2005.
Because the expected undiscounted cash flows from the plant during the years 2003-2005 were less than the $88 million carrying value
of the plant as of December 31, 2002, SCE incurred an impairment charge of $61 million in 2002.  However, in accordance with
accounting standards for rate-regulated enterprises, this incurred cost was deferred and recorded as a regulatory asset, based on
SCE's expectation that any unrecovered book value at the end of 2005 would be recovered in future rates through a balancing account
mechanism presented in its May 17, 2002 application and discussed in its supplemental testimony filed in January 2003.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Transmission and Distribution

2003 General Rate Case Proceeding

On May 3, 2002, SCE filed its application for a 2003 GRC, requesting:  (1) a 2003 revenue requirement of approximately $3.1 billion;
(2) a 2004 revenue requirement of approximately $3.5 billion; and (3) a 2005 revenue requirement of approximately $3.7 billion.
These revenue requirements were based on SCE's projected rate base amounts of $7.8 billion in 2003, $8.2 billion in 2004 and $8.5
billion in 2005.  When compared to forecast revenue at currently authorized rates (approximately $2.8 billion), SCE's 2003 GRC
request was an increase of $286 million, which was subsequently revised to an increase of $251 million.  The requested revenue
increase for 2003 was primarily related to capital additions, updated depreciation costs and projected increases in pension and
benefit expenses.  The application also proposed an estimated base rate revenue decrease of $78 million in 2004, and a subsequent
increase of $116 million in 2005.  The forecast reduction in 2004 was largely attributable to the expiration of the San Onofre ICIP
rate-making mechanism at year-end 2003 and a forecast of increased sales.  The expiration of San Onofre ICIP mechanism is expected to
decrease SCE's 2004 earnings by approximately $100 million.  Beginning in 2004, San Onofre Units 2 and 3 cost recovery reverts to
cost-of-service ratemaking.

In a proposed decision issued on February 13, 2004, a CPUC administrative law judge recommended that the CPUC adopt only $15 million
of the $251 million increase in authorized base rate revenue requirement that SCE had requested.  SCE filed comments opposing parts
of the proposed decision in an attempt to restore important components of the requested revenue requirement.  The CPUC is scheduled
to vote on the proposed decision on March 16, 2004, either modifying or accepting it.  If an alternate decision is proposed, a final
decision could be delayed into April 2004.  If the CPUC adopts the administrative law judge's proposed decision without modification,
and if SCE does not reduce its expected capital or operating expenditures accordingly, SCE estimates that on an annual basis SCE's
earnings per share would be about 15(cent)-per-share lower and cash flow would be approximately $135 million lower than if SCE's base rate
request had been granted in full.  SCE cannot predict with certainty the final outcome of SCE's GRC application.

Because processing of the GRC took longer than initially scheduled, in May 2003 the CPUC approved SCE's request to establish a
memorandum account to track the revenue requirement increase during the period between May 22, 2003 (the date a final CPUC decision
was originally scheduled to be issued) and the date a final decision is ultimately adopted.  The revenue requirement approved in the
final GRC decision will be effective retroactive to May 22, 2003.  Any balance in the GRC memorandum account authorized by the CPUC
would be recovered in rates beginning in 2004, together with the combined revenue requirement authorized by the CPUC in the GRC
decision for 2003 and 2004.

Hearings to address revenue allocation and rate design issues have been continued until after the CPUC issues a decision on SCE's
revenue requirement.  Due to the implementation of SCE's $1.2 billion customer rate-reduction plan, rate design changes will not be
effective until August 2004, at the earliest.  Until SCE's 2003 GRC is implemented, SCE's revenue requirement related to distribution
operations is determined through a performance-based rate-making (PBR) mechanism.

Electric Line Maintenance Practices Proceeding

In August 2001, the CPUC issued an order instituting investigation regarding SCE's overhead and underground electric line maintenance
practices.  The order was based on a report issued by the CPUC's Consumer Protection and Safety Division, which alleged a pattern of
noncompliance with the CPUC's general orders for the maintenance of electric lines for 1998-2000.  The order also alleged that
noncompliant conditions were involved in 37 accidents resulting in death, serious injury or property


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damage.  The Consumer Protection and Safety Division identified 4,817 alleged violations of the general orders during the three-year
period; and the order put SCE on notice that it could be subject to a penalty of between $500 and $20,000 for each violation or
accident.  In its opening brief on October 21, 2002, the Consumer Protection and Safety Division recommended that SCE be assessed a
penalty of $97 million.

On June 19, 2003, a CPUC administrative law judge issued a presiding officer's decision on the Consumer Protection and Safety
Division report.  The decision did the following:

o    Fined SCE $576,000 for 2% of the alleged violations involving death, injury or property damage, failure to identify unsafe
     conditions or exceeding required inspection intervals.  The decision did not find that any of the alleged violations compromised
     the integrity or safety of SCE's electric system or were excessive compared to other utilities.

o    Ordered SCE to consult with the Consumer Protection and Safety Division and refine SCE's maintenance priority system
     consistent with the decision.

o    Adopted an interpretation that all SCE's nonconformances with the CPUC's general orders for the maintenance of electric
     lines are violations subject to potential penalty.

On July 21, 2003, SCE filed an appeal with the CPUC challenging, among other things, the decision's interpretation of
nonconformance.  The Consumer Protection and Safety Division also appealed, challenging the fact that the decision did not penalize
SCE for 4,721 of the 4,817 alleged violations.  A final decision is scheduled to be issued on March 16, 2004.

Transmission Rate Case

In July 2000, the FERC issued a decision in SCE's 1998 transmission rate case in which it ordered a reduction of approximately $38
million to SCE's requested annual transmission revenue requirement of $213 million.  In the decision, the FERC rejected SCE's
proposed method for allocating overhead costs between transmission and distribution operations, which accounted for approximately $24
million of the $38 million reduction.  After the FERC decision, SCE sought recovery in distribution rates from the CPUC.  In third
quarter 2003, the CPUC authorized recovery of $133 million of overhead costs for the period April 1, 1998 to August 31, 2002, and SCE
credited this amount to provisions for regulatory adjustment clauses - net in the consolidated statements of income.  On September
22, 2003, the ORA applied for rehearing of the matter.  On February 11, 2004, the CPUC denied the ORA's request and reaffirmed its
decision authorizing recovery.

Wholesale Electricity and Natural Gas Markets

In 2000, the FERC initiated an investigation into the justness and reasonableness of rates charged by sellers of electricity in the
California Power Exchange (PX)/ ISO markets.  On March 26, 2003, the FERC staff issued a report concluding that there had been
pervasive gaming and market manipulation of both the electric and natural gas markets in California and on the West Coast during
2000-2001 and describing many of the techniques and effects of that market manipulation.  SCE is participating in several related
proceedings seeking recovery of refunds from sellers of electricity and natural gas who manipulated the electric and natural gas
markets.  Under the 2001 CPUC settlement agreement, mentioned in "--Generation and Power Procurement--CPUC Litigation Settlement
Agreement," 90% of any refunds actually realized by SCE will be refunded to customers, except for the El Paso Natural Gas Company
settlement agreement discussed below.

El Paso Natural Gas Company entered into a settlement agreement with parties to a class action lawsuit (including SCE, PG&E and the
State of California) settling claims stated in proceedings at the FERC and


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Management's Discussion and Analysis of Financial Condition and Results of Operations


in San Diego County Superior Court that El Paso Natural Gas Company had manipulated interstate capacity and engaged in other
anticompetitive behavior in the natural gas markets in order to unlawfully raise gas prices at the California border in 2000-2001.
The San Diego County Superior Court approved the settlement on December 5, 2003.  Notice of appeal of that judgment was filed by a
party to the action on February 6, 2004.  Accordingly, until the appeal is resolved, the judgment is not final and no refunds will be
paid.  Pursuant to a CPUC decision, SCE will refund to customers any amounts received under the terms of the El Paso Natural Gas
Company settlement (net of legal and consulting costs) through its ERRA mechanism.  In addition, amounts El Paso Natural Gas Company
refunds to the CDWR will result in equivalent reductions in the CDWR's revenue requirement allocated to SCE.

On February 24, 2004, SCE and PG&E entered into a settlement agreement with The Williams Cos. and Williams Power Company, providing
for approximately $140 million in refunds against some of Williams' power charges in 2000-2001.  The allocation of refunds under the
settlement agreement has not been determined.  The settlement is subject to the approval of the FERC, the CPUC and the PG&E
bankruptcy court.

Other Regulatory Matters

Catastrophic Event Memorandum Account

The catastrophic event memorandum account (CEMA) is a CPUC-authorized mechanism that allows SCE to immediately start the tracking of
all of its incremental costs associated with declared disasters or emergencies and to subsequently receive rate recovery of its
reasonably incurred costs upon CPUC approval.  Incremental costs associated with restoring utility service; repairing, replacing or
restoring damaged utility facilities; and complying with governmental agency orders are tracked in the CEMA.  SCE currently has a
CEMA for the bark beetle emergency and initiated a second CEMA associated with the fires that occurred in SCE territory in October
2003.  Costs tracked through the CEMA mechanism are expected to be recovered in future rates with no impact on earnings. However,
cash flow will be impacted due to the timing difference between expenditures and rate recovery.

Bark Beetle CEMA

On March 7, 2003, the Governor of California issued a proclamation declaring a state of emergency in Riverside, San Bernardino and
San Diego counties where an infestation of bark beetles has created the potential for catastrophic forest fires.  The proclamation
requested that the CPUC direct utilities with transmission lines in these three counties to ensure that all dead, dying and diseased
trees and vegetation are completely cleared from their utility rights-of-way to mitigate the potential fire damage.  SCE estimates
that it may incur several hundred million dollars in incremental expenses over the next several years to remove over 350,000 of these
trees.  This cost estimate is subject to significant change, depending on a number of evolving circumstances, including, but not
limited to the spread of the bark beetle infestation, the speed at which trees can be removed, and tree disposal costs.  In 2003, SCE
removed approximately 26,000 dead or dying trees at an incremental expense of approximately $18 million which has been reflected in
the CEMA as of December 31, 2003.  SCE expects to submit an advice filing with the CPUC in the first quarter of 2004 to recover these
costs.  SCE estimates that it will spend up to $150 million on this project in 2004.

Fire-Related CEMA

During the last two weeks of October 2003, wildfires damaged SCE's electrical infrastructure, primarily in the San Bernardino
Mountains of Southern California where an estimated 1,500 power poles and 220 transformers were damaged or downed.  SCE notified the
CPUC that it initiated a CEMA on October 21, 2003 to track the incremental costs to repair and restore its infrastructure.  These
costs are


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estimated to be approximately $30 million. The balance in this CEMA account is approximately $9 million as of December 31, 2003.

Holding Company Proceeding

In April 2001, the CPUC issued an order instituting investigation that reopened the past CPUC decisions authorizing utilities to form
holding companies and initiated an investigation into, among other things:  (1) whether the holding companies violated CPUC
requirements to give first priority to the capital needs of their respective utility subsidiaries; (2) any additional suspected
violations of laws or CPUC rules and decisions; and (3) whether additional rules, conditions, or other changes to the holding company
decisions are necessary.

On January 9, 2002, the CPUC issued an interim decision interpreting the CPUC requirement that the holding companies give first
priority to the capital needs of their respective utility subsidiaries.  The decision stated that, at least under certain
circumstances, holding companies are required to infuse all types of capital into their respective utility subsidiaries when
necessary to fulfill the utility's obligation to serve its customers.  The decision did not determine whether any of the utility
holding companies had violated this requirement, reserving such a determination for a later phase of the proceedings.  On
February 11, 2002, SCE and Edison International filed an application before the CPUC for rehearing of the decision.  On July 17, 2002,
the CPUC affirmed its earlier decision on the first priority requirement and also denied Edison International's request for a
rehearing of the CPUC's determination that it had jurisdiction over Edison International in this proceeding.  On August 21, 2002,
Edison International and SCE jointly filed a petition in California state court requesting a review of the CPUC's decisions with
regard to first priority requirements, and Edison International filed a petition for a review of the CPUC decision asserting
jurisdiction over holding companies.  PG&E and SDG&E and their respective holding companies filed similar challenges, and all cases
have been transferred to the First District Court of Appeals in San Francisco.  On November 26, 2003, the Court of Appeals issued an
order indicating it would hear the cases but did not decide the merits of the petitions.  Oral argument was held before the Court of
Appeals on March 5, 2004, and the Court of Appeals is expected to rule within 90 days.

Investigation Regarding Performance Incentives Rewards

SCE is eligible under its CPUC-approved PBR mechanism to earn rewards or penalties based on its performance in comparison to
CPUC-approved standards of reliability, customer satisfaction, and employee safety.  SCE received two letters over the last year from
anonymous employees alleging that personnel in the service planning group of SCE's transmission and distribution business unit
altered or omitted data in attempts to influence the outcome of customer satisfaction surveys conducted by an independent survey
organization.  The results of these surveys are used, along with other factors, to determine the amounts of any incentive rewards or
penalties to SCE under the PBR provisions for customer satisfaction.  SCE is conducting an internal investigation and has determined
that some wrongdoing by a number of the service planning employees has occurred.  SCE has informed the CPUC of its findings to date,
and will continue to inform the CPUC of developments as the investigation progresses.  SCE anticipates that, after the investigation
is completed, there may be CPUC proceedings to determine whether any portion of past and potential rewards for customer satisfaction
should be refunded or disallowed.  It also is possible that penalties could be imposed.  SCE recorded aggregate customer satisfaction
rewards of $28 million for the years 1998, 1999, and 2000.  Potential customer satisfaction rewards aggregating $10 million for 2001
and 2002 are pending before the CPUC and have not been recognized in income by SCE.  SCE also had anticipated that it could be
eligible for customer satisfaction rewards of about $10 million for 2003.  SCE has not yet been able to determine whether or to what
extent employee misconduct has compromised the surveys that are the basis for a portion of the awards.  Accordingly, SCE cannot
predict with certainty the outcome of this matter.  SCE plans to complete its


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investigation as quickly as possible and cooperate fully with the CPUC in taking appropriate remedial action.

SCE:  OTHER DEVELOPMENTS

Electric and Magnetic Fields

Electric and magnetic fields naturally result from the generation, transmission, distribution and use of electricity.  Since the
1970s, concerns have been raised about the potential health effects of electric and magnetic fields.  After 30 years of research, a
health hazard has not been established to exist.  Potentially important public health questions remain about whether there is a link
between electric and magnetic fields exposures in homes or work and some diseases, and because of these questions, some health
authorities have identified electric and magnetic fields exposures as a possible human carcinogen.

In October 2002, the California Department of Health Services released to the CPUC and the public its report evaluating the possible
risks from electric and magnetic fields.  The conclusions in the report of the California Department of Health Services contrast with
other recent reports by authoritative health agencies in that the California Department of Health Services has assigned a
substantially higher probability to the possibility that there is a causal connection between electric and magnetic fields exposures
and a number of diseases and conditions, including childhood leukemia, adult leukemia, amyotrophic lateral sclerosis, and
miscarriages.

It is not yet clear what actions the CPUC will take to respond to the report of the California Department of Health Services and to
the recent electric and magnetic fields reports by other health authorities such as the National Institute of Environmental Health
Sciences, the World Health Organization's International Agency for Research on Cancer, and the United Kingdom's National Radiation
Protection Board.  Possible outcomes may include continuation of current policies or imposition of more stringent policies to
implement greater reductions in electric and magnetic fields exposures.  The costs of these different outcomes are unknown at this
time.

Navajo Nation Litigation

In June 1999, the Navajo Nation filed a complaint in the United States District Court for the District of Columbia (D.C. District
Court) against Peabody Holding Company (Peabody) and certain of its affiliates, Salt River Project Agricultural Improvement and Power
District, and SCE arising out of the coal supply agreement for Mohave.  The complaint asserts claims for, among other things,
violations of the federal Racketeer Influenced and Corrupt Organizations statute, interference with fiduciary duties and contractual
relations, fraudulent misrepresentation by nondisclosure, and various contract-related claims.  The complaint claims that the
defendants' actions prevented the Navajo Nation from obtaining the full value in royalty rates for the coal.  The complaint seeks
damages of not less than $600 million, trebling of that amount, and punitive damages of not less than $1 billion, as well as a
declaration that Peabody's lease and contract rights to mine coal on Navajo Nation lands should be terminated.  SCE joined Peabody's
motion to strike the Navajo Nation's complaint.  In addition, SCE and other defendants filed motions to dismiss.

Some of the issues included in this case were addressed by the United States Supreme Court in a separate legal proceeding filed by
the Navajo Nation in the Court of Federal Claims against the United States Department of Interior.  In that action, the Navajo Nation
claimed that the Government breached its fiduciary duty concerning negotiations relating to the coal lease involved in the Navajo
Nation's lawsuit against SCE and Peabody.  On March 4, 2003, the Supreme Court concluded, by majority decision, that there was no
breach of a fiduciary duty and that the Navajo Nation did not have a right to relief against the Government.  Based on the Supreme
Court's analysis, on April 28, 2003, SCE filed a motion to dismiss or, in the alternative, for summary judgment in the D.C. District
Court action.  The motion remains pending.


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The Federal Circuit Court of Appeals, acting on a suggestion on remand filed by the Navajo Nation, held in a October 24, 2003
decision that the Supreme Court's March 24, 2003 decision was focused on three specific statutes or regulations and therefore did not
address the question of whether a network of other statutes, treaties and regulations imposed judicially enforceable fiduciary duties
on the United States during the time period in question.  The Government and the Navajo Nation both filed petitions for rehearing of
the October 24, 2003 Court of Appeals decision.  Both petitions were denied on March 9, 2004.

SCE cannot predict with certainty the outcome of the 1999 Navajo Nation's complaint against SCE, the impact of the Supreme Court's
decision in the Navajo Nation's suit against the Government on this complaint, or the impact of the complaint on the operation of
Mohave beyond 2005.

San Onofre Steam Generators

Like other nuclear power plants with steam generators of the same design and material properties, San Onofre Units 2 and 3 have
experienced degradation in their steam generators.  Based on industry experience and analysis of recent inspection data, SCE has
determined that the existing San Onofre Unit 2 and 3 steam generators may not enable continued reliable operation of the units beyond
their scheduled refueling outages in 2009-2010.  SCE currently estimates that the cost of replacing the steam generators would be
about $680 million, of which SCE's 75% share would be about $510 million.  On February 27, 2004, SCE asked the CPUC to issue a
decision by July 2005 finding that it is reasonable for SCE to replace the San Onofre Unit 2 and 3 steam generators and establishing
appropriate ratemaking for the replacement costs.  In its application, SCE stated that the San Onofre operating agreement requires
unanimous approval of all co-owners for the costs of the steam generator replacement to be included in the capital budget for Units 2
and 3 and, therefore, SCE must have the approval of its co-owners to go forward as planned, which approval currently is lacking.
Because SCE will need to enter into commitments in 2004 to obtain timely delivery of replacement steam generators, SCE also asked the
CPUC to create a memorandum account by September 2004 for SCE to recover initial costs of up to $50 million if the replacement
project ultimately is not approved by the CPUC or co-owner approval is not obtained.  If the CPUC finds investment in the steam
generators to be reasonable and cost effective and the steam generator replacement takes place, SCE's investment should be reflected
in retail rates for recovery over the remaining useful life of the plants.  SCE currently does not expect that it would proceed with
replacement of the San Onofre Units 2 and 3 steam generators without CPUC approval of reasonable cost recovery.

Palo Verde Steam Generators

The steam generators at the Palo Verde Nuclear Generating Station (Palo Verde), in which SCE owns a 15.8% interest, have the same
design and material properties as the San Onofre units.  During 2003, the Palo Verde Unit 2 steam generators were replaced.  In
addition, the Palo Verde owners have approved the manufacture of two additional sets of steam generators for installation in Units 1
and 3.  The Palo Verde owners expect that these steam generators will be installed in Units 1 and 3 in the 2005 to 2008 time frame.
SCE's share of the costs of manufacturing and installing all the replacement steam generators at Palo Verde is estimated to be about
$110 million; SCE plans to seek recovery of that amount through the rate-making process.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


                                                    MISSION ENERGY HOLDING COMPANY
                                                       and EDISON MISSION ENERGY

MEHC AND EME:  MANAGEMENT OVERVIEW

MEHC as a Holding Company

MEHC is the holding company of EME which, itself, operates through its subsidiaries and affiliates which are engaged in the business
of owning or leasing, operating and selling energy and capacity from electric power generation facilities worldwide.  MEHC has no
business activities other than through its ownership interest in EME.  During 2001, MEHC issued $800 million of senior secured notes
and borrowed $385 million under a term loan.  The senior secured notes and the term loan are secured by a first priority security
interest in EME's common stock.  MEHC's ability to honor its obligations under the senior secured notes and the term loan is entirely
dependent upon the receipt of dividends from EME and receipt of tax-allocation payments from MEHC's parent, Edison Mission Group
Inc., and ultimately Edison International (see "MEHC and EME:  Liquidity--EME's Liquidity as a Holding Company--Intercompany
Tax-Allocation Payments").  Dividends from EME are limited based on its earnings and cash flow, terms of restrictions contained in
EME's contractual obligations (including its corporate credit facility), EME's charter documents, business and tax considerations, and
restrictions imposed by applicable law. MEHC did not receive any distributions from EME during 2003.

The lenders under MEHC's $385 million term loan due in 2006 have the right to require MEHC to repurchase up to $100 million of
principal amount at par on July 2, 2004 (referred to as the "Term Loan Put-Option").  In order for MEHC to have sufficient cash in
the event of an exercise of a significant portion, or all, of the Term Loan Put-Option, MEHC would require additional cash from
dividends from EME, or would need to either extend the effective date of the Term Loan Put-Option or extend or refinance the term
loan. Dividends from EME are currently limited as described in "MEHC and EME:  Liquidity--Financial Ratios--Ability of EME to Pay
Dividends."

EME Introduction

EME is a holding company which operates primarily through its subsidiaries and affiliates which are engaged in the business of owning
or leasing, operating and selling energy and capacity from electric power generation facilities worldwide. EME's subsidiaries or
affiliates have typically been formed to own all of or an interest in one or more power plants and ancillary facilities, with each
plant or group of related plants being individually referred to by EME as a project. EME also owns a 51% interest in Contact Energy,
an integrated energy company located in New Zealand.  As of December 31, 2003, EME's subsidiaries and affiliates owned or leased
interests in 28 projects, of which 14 are domestic and 14 (including EcoElectrica) are international.

EME has financed the development and construction or acquisition of its projects by contributions of equity from EME and the
incurrence of so-called project financed debt obligations by the subsidiaries and affiliates owning the operating facilities. These
project level debt obligations are generally structured as nonrecourse to EME, with several exceptions, including EME's guarantee of
the Powerton and Joliet leases as part of a refinancing of indebtedness incurred by its project subsidiary to purchase the Illinois
plants. As a result, these project level debt obligations have structural priority with respect to revenue, cash flows and assets of
the project companies over debt obligations incurred by EME, itself. In this regard, EME has, itself, borrowed funds to make the
equity contributions required of it for its projects and for general corporate purposes. Since EME does not, itself, directly own any
revenue producing generation facilities, it depends for the most part on cash distributions from its projects to meet its debt


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service obligations, to pay for general and administrative expenses and to pay dividends to its parent, MEHC.

Distributions to EME from projects are generally only available after all current debt service obligations at the project level have
been paid and are further restricted by contractual restrictions on distributions included in the documentation evidencing the
project level debt obligations. Because of such a contractual constraint, distributions to EME from cash generated from the Illinois
plants has been restricted since October 1, 2002 due to a downgrade of the credit rating of this project's debt to below investment
grade. EME also is currently subject to constraints on its ability to make distributions to its parent, MEHC. For a description of
the most significant contractual constraints under the projects, see "MEHC and EME:  Liquidity--Dividend Restrictions in Major
Financings."

EME's project portfolio may be grouped into two categories: contracted plants and merchant plants. At December 31, 2003, EME owned 25
projects that sell a majority of their power to customers under long-term sales arrangements (greater than 5 years) consisting of
power-purchase agreements or hedge contracts (in the case of Contact Energy, sales are made through its retail electricity business).
While these projects involve a number of risks, their long-term sales arrangements generally provide a stable and predictable revenue
stream which results in reasonably predictable cash distributions to EME.

EME owns three projects (the Illinois plants, the Homer City facilities and the First Hydro Power Plants) which operate in whole or
in part without long-term sales arrangements (representing approximately 70% of EME's project portfolio based on capacity). Although
the generation of the Illinois plants was at the time of their acquisition in late 1999 subject to sale under contracts with Exelon
Generation, the amount of capacity and energy subject to sale under these contracts has been gradually reduced in the ensuing
contract years, and these contracts will expire at the end of 2004. Output from merchant plants (as well as excess output from
contracted plants) which is not committed to be sold under long-term sales arrangements is subject, in terms of price and volume, to
market forces which determine the actual amount and price of power sold from these power plants. A description of these market forces
and the risks associated with them is included under "MEHC and EME:  Market Risk Exposures."

EME Industry Developments

Beginning in 2001, a number of significant developments adversely affected merchant generators (companies that sell a majority of
their generation into wholesale energy markets), including EME. These developments included lower prices and greater volatility in
wholesale energy markets both in the United States and United Kingdom, significant declines in the credit ratings of most major
market participants, decreased availability of debt financing or refinancing, and a resulting decline of liquidity in the energy
markets due to growing concern about the ability of counterparties to perform their obligations.

Overview of EME's 2003 Operating Performance

EME's 2003 operating performance was significantly improved over 2002.  A number of important items affected this performance,
including the following:

o    Power prices in PJM rebounded in 2003 from their depressed prices in 2002 driven largely by higher natural gas prices in the
     United States as discussed further below. The 24-hour PJM market price (at the Homer City busbar) increased 37% from $25.63 per
     megawatt hour in 2002 to $35.08 per megawatt hour in 2003. The increase in market price substantially improved the profitability
     of the Homer City plant.

o    Higher natural gas prices also resulted in improved profitability of EME's interest in Four Star Oil & Gas Company and the
     Big 4 projects.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


o    EME achieved an availability factor of 89% across its project portfolio and a forced outage rate of 5% compared to a
     benchmark (NERC-GD) availability factor of 85% and a forced outage rate of 7% for an equivalent project portfolio.

o    The Paiton project debt was restructured following on the late 2002 revisions in its power-purchase contracts.

o    The Sunrise project completed Phase 2 of its development ahead of schedule and, thus, was able to generate additional
     capacity revenue during the summer of 2003.

o    Contact Energy continued to expand its retail customer base which, together with increases in retail prices and higher sales
     of wholesale natural gas, collectively improved the profitability of this subsidiary.

o    On the negative side, EME recorded three asset impairment charges (pre-tax) during 2003:

     o   $245 million related to the impairment of eight small peaking units of the Illinois plants resulting from a revised
         long-term outlook for capacity revenue from these units. The lower capacity revenue outlook is the result of a number of
         factors, including higher forecasted long-term natural gas prices and the current oversupply of generation in the
         Mid-America Interconnected Network (MAIN) region;

     o   $53 million related to the write-down of EME's investment in the Brooklyn Navy Yard project due to its planned disposition;
         and

     o   $6 million related to the write-down of EME's investment in the Gordonsville project, which was subsequently sold in 2003.

o    Also on the negative side, the amount of capacity sold to Exelon Generation from the Illinois plants decreased significantly
     from 2002 as discussed further below.

In 2003, the Illinois plants had 4,739 MW of contracted capacity (to Exelon Generation) and 3,109 MW of uncontracted capacity
available for sale in the merchant generation market, compared with 8,987 MW of contract capacity and 300 MW of such uncontracted
capacity in 2002.  The reduction in contracted generating capacity decreased revenue from Exelon Generation as a percentage of the
Illinois plants' total energy and capacity revenue to 68% in 2003 from 99% in each of 2002 and 2001. The reduction in contracted
capacity resulted in a decrease of capacity revenue of $222 million, partially offset by an increase of $127 million in energy
revenue from sales of increased merchant generation. Prices realized from sales of merchant generation were significantly higher than
energy prices payable under the power-purchase agreements with Exelon Generation. EME expects that capacity prices in the MAIN region
will, in the near term, be significantly lower than those payable under the existing agreements with Exelon Generation (due to
generation overcapacity conditions in the MAIN region market), but also expects that merchant energy prices will, in the near term,
be higher than those currently received under the existing agreements with Exelon.  See "MEHC and EME:  Market Risk Exposures" for
further discussion of forward market prices in the MAIN region.

A significant factor affecting merchant generators in 2003 was the substantial increase in the price of natural gas, especially when
compared with the less volatile cost of other fuels, such as coal.  During 2003, natural gas prices at Henry Hub (a major natural gas
trading hub) averaged $5.48 per million British Thermal Units, commonly referred to as MMBtu, compared to $3.37 per MMBtu for 2002.
Based upon data from NYMEX as of December 26, 2003, the calendar year 2004 forward natural gas price at


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Henry Hub was $5.45 per MMBtu.  Increases in natural gas prices during 2003 resulted in higher wholesale electricity prices (since
natural gas is the primary fuel for many generating plants).  This increase in natural gas prices was a positive factor for low-cost
merchant coal facilities (such as a majority of EME's domestic merchant plants) in markets dominated by gas-fired plants and somewhat
positive for such facilities in those markets more dependent on low-cost coal and nuclear facilities.  In contrast, for gas-fired
merchant generators that sell their power into markets dominated by low-cost coal and nuclear power plants, the increase in natural
gas prices adversely affected their results.  These conditions adversely affected the Collins Station and small peaking units in
Illinois as discussed above.

EME's Restructuring Plan

EME has undertaken a four-step restructuring plan with the goal of reducing consolidated indebtedness. The four-step restructuring
plan includes:

1)   Repayment of the December 2003 debt maturity at Edison Mission Midwest Holdings and other near term debt maturities.

     In December 2003, EME's subsidiary, Mission Energy Holding International, Inc., received funding under a three-year, $800 million
     secured loan which was used, together with other internally generated cash, to repay $1.2 billion of EME and Edison Mission
     Midwest Holdings indebtedness.  See further discussion under "MEHC and EME:  Liquidity--Key Financing Developments."

2)   Refinancing indebtedness associated with the Illinois Plants.

     EME intends to arrange a refinancing of indebtedness associated with the Illinois plants. This consists of $693 million of debt
     due at Edison Mission Midwest Holdings and the planned termination of the Collins Station lease. See "MEHC and EME:
     Liquidity--Key Financing Developments--EME's Subsidiary Financing Plans--Agreement in Principle to Terminate the Collins Station
     Lease."  EME expects that the refinancing of these arrangements will be completed well in advance of December 2004, but there is
     no assurance that this will be accomplished.

3)   Selling some or all of its international operations.

     EME has engaged investment bankers to market for sale its international project portfolio.  The marketing efforts commenced
     during the first quarter of 2004. Completion of the sale of some or all of EME's international project portfolio is contingent on
     receiving acceptable offers with respect to both price and terms and conditions.

4)   Using the proceeds of asset sales to reduce consolidated indebtedness.

     Assuming a successful sale of its international assets and completion of the sale of identified domestic projects, EME plans to
     use the proceeds first to repay the $800 million term loan described above and, with any additional proceeds received, to retire
     other consolidated indebtedness.

Expansion of PJM in Illinois

For the Illinois plants to achieve their optimal value, it is important that efficient and fair markets exist in the Midwest region.
The Illinois plants are located within the service territory of Exelon Generation's affiliate, Commonwealth Edison (ComEd), which has
made a filing with the FERC to join the PJM System effective May 1, 2004. Although FERC has indicated its general approval for ComEd
and American Electric Power (AEP) to join PJM if certain conditions designed to foster broad regional markets in the Midwest are met,
the integration of AEP into PJM has been stalled due to the opposition of


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Management's Discussion and Analysis of Financial Condition and Results of Operations


the states of Virginia and Kentucky. While EME and Midwest Generation have supported the entry of ComEd and AEP into PJM at the same
time, they have nevertheless opposed ComEd's entry into PJM without AEP on numerous grounds, including the importance of the AEP
system to the proper functioning of the markets administered by PJM. This issued is currently pending before FERC.

If the integration of ComEd into PJM standing alone is allowed by the FERC to proceed on May 1, 2004, the Illinois plants will become
subject to PJM's market rules, including those designed to mitigate generation market power, which PJM has indicated may be applied
as if the market is limited only to the generation within the ComEd footprint. (By contrast, PJM has stated to the FERC that market
mitigation measures will likely not be necessary from and after the integration of AEP into PJM.) EME and Midwest Generation have
strongly opposed this limited view of the market with the FERC, and the matter is pending decision in connection with the ComEd/PJM
integration filing. If this opposition is unsuccessful, the price for sales of energy from such plants (during the period prior to
AEP's integration) not sold pursuant to bilateral agreement could be capped at their marginal operating cost to produce such energy
plus ten percent, under the proposed rules of the PJM Market Monitor.

Contracting Strategy

EME's goal is to reduce the volatility of its earnings and cash flow and, thus, improve the predictability of operating results.  To
do this, EME's plans to implement a layered contracting strategy for forward sales from the Illinois plants and the Homer City
facilities. A layered contracting strategy means that EME's marketing subsidiary, Edison Mission Marketing & Trading, plans to enter
into a number of forward contracts diversified by counterparty, contract term and generation product to reduce risk and enhance the
predictability of revenue. Implementation of this strategy is dependent on a number of factors, such as a reduction in the current
oversupply of generation, the rate of demand growth, and agreement between counterparties of reasonable credit support undertakings.

MEHC AND EME:  LIQUIDITY

At December 31, 2003, MEHC and its subsidiaries had cash and cash equivalents of $654 million. MEHC's consolidated debt at
December 31, 2003 was $7.4 billion, including $693 million of debt maturing on December 15, 2004 which is owed by EME's largest
subsidiary, Edison Mission Midwest Holdings. In addition, EME's subsidiaries have $6.7 billion of long-term lease obligations that
are due over a period ranging up to 31 years.

The following discussion of liquidity is organized in the following sections:

o    MEHC's Liquidity

o    Key Financing Developments

o    2004 Capital Expenditures

o    EME's Credit Ratings

o    EME's Liquidity as a Holding Company

o    Dividend Restrictions in Major Financings

o    Financial Ratios


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MEHC's Liquidity

MEHC's ability to honor its obligations under the senior secured notes and the term loan, and to pay overhead is entirely dependent
upon the receipt of dividends from EME and receipt of tax-allocation payments from MEHC's parent, Edison Mission Group, and
ultimately Edison International (see "--EME's Liquidity as a Holding Company--Intercompany Tax-Allocation Payments"). Dividends from
EME are limited based on its earnings and cash flow, terms of restrictions contained in EME's contractual obligations (including its
corporate credit facility), EME's charter documents, business and tax considerations, and restrictions imposed by applicable law.
MEHC did not receive any distributions from EME during 2003.

At December 31, 2003, MEHC had cash and cash equivalents of $150 million (excluding amounts held by EME and its subsidiaries). The
lenders under MEHC's $385 million term loan due in 2006 have the right to require MEHC to repurchase up to $100 million of principal
amount at par on July 2, 2004 (referred to as the "Term Loan Put-Option"). In order for MEHC to have sufficient cash in the event of
an exercise of a significant portion, or all, of the Term Loan Put-Option, MEHC would require additional cash from dividends from
EME, or would need to either extend the effective date of the Term Loan Put-Option or extend or refinance the term loan. The timing
and amount of dividends from EME and its subsidiaries may be affected by many factors beyond MEHC's control. Dividends from EME are
currently limited as described in "--Financial Ratios--Ability of EME to Pay Dividends."

Key Financing Developments

On December 11, 2003, EME's subsidiary, Mission Energy Holdings International, received funding under a three-year, $800 million
secured loan from Citigroup, Credit Suisse First Boston, JPMorganChaseBank, and Lehman Brothers. Interest on this secured loan is
based on LIBOR (with a LIBOR floor of 2%) plus 5%. After payment of transaction expenses, a portion of the net proceeds from this
financing was used to make an equity contribution of $550 million to Edison Mission Midwest Holdings which, together with cash on
hand, was used to repay Edison Mission Midwest Holdings' $781 million indebtedness due December 11, 2003. The remaining net proceeds
from this financing were used to make a deposit of cash collateral of approximately $67 million under the new letter of credit
facility described below and to repay approximately $160 million of indebtedness of a foreign subsidiary under the Coal and Capex
facility guaranteed by EME. Mission Energy Holdings International owns substantially all of EME's international operations through
its subsidiary, MEC International B.V.  As security for this loan, Mission Energy Holdings International, directly, and through its
subsidiaries, pledged approximately 65% of its ownership interest in MEC International B.V. See "MEHC and EME:  Management Overview"
for discussion of the plan to sell off some of or all of EME's international projects.

On December 11, 2003, EME's subsidiary, Midwest Generation EME, LLC, entered into a three-year, $100 million letter of credit
facility with Citibank, N.A., as Issuing Bank. Under the terms of this letter of credit facility, Midwest Generation EME is required
to deposit cash in a bank account in order to cash collateralize any letters of credit that may be outstanding under it. The bank
account is pledged to the Issuing Bank. On December 11, 2003, EME canceled $67 million of the commitment under its existing line of
credit and was relieved of its reimbursement obligations with respect to the same amount of letters of credit issued thereunder.
Concurrently, such letters of credit were issued under Midwest Generation EME's new letter of credit facility, and Midwest Generation
EME made a deposit of cash collateral in the amount of $67 million for this purpose. The funds for this deposit were obtained as part
of the financing referred to above. At December 31, 2003, $47 million of letters of credit were outstanding under Midwest Generation
EME's letter of credit facility. Midwest Generation EME owns 100% of Edison Mission Midwest Holdings, which in turn owns 100% of
Midwest Generation LLC.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


EME's Subsidiary Financing Plans

Agreement in Principle to Terminate the Collins Station Lease

Midwest Generation operates the Collins Station under a long-term lease.  See "Off-Balance Sheet Transactions--EME's Off-Balance Sheet
Transactions--Sale-Leaseback Transactions" for detail of the lease of the Collins Station.  Due in part to higher long-term natural
gas prices and the current oversupply of generation in the MAIN region, Midwest Generation does not believe the Collins Station is
economically competitive in the current marketplace.  In light of this, Midwest Generation has agreed in principle with the lease
equity investor to terminate the Collins Station lease.  The agreement in principle sets forth specified conditions required for the
termination, including Midwest Generation successfully borrowing funds to finance the repayment of Collins Station lease debt of $774
million and settlement of Midwest Generation's termination liability with the lease equity investor.  There is no assurance that the
agreement in principle will result in termination of the Collins Station lease.  If the termination occurs, Midwest Generation will
take title to the Collins Station and, subject to its contractual obligation to Exelon Generation, plans to subsequently abandon the
Collins Station or sell it to a third party.

If Midwest Generation completes the lease termination and subsequently abandons the Collins Station, EME expects to record a pre-tax
loss of approximately $1 billion (approximately $620 million after tax).  This loss will reduce EME's net worth (using December 31,
2003) from $1.9 billion to approximately $1.3 billion.  To avoid the possibility of covenant defaults which could arise from a
decline in net worth, EME plans to take the following actions before or simultaneously with the Collins Station lease termination:

o    replace its $145 million corporate credit facility with a new secured credit facility;

o    repay the $28 million due under the Coal and Capex facility (guaranteed by EME); and

o    eliminate or modify the net worth covenant in its guaranty of the Powerton-Joliet lease.

If Midwest Generation completes the termination of the Collins Station lease followed by abandonment or sale to a third party, EME
anticipates that the termination payment would result in a substantial income tax deduction.  Because of these arrangements, EME does
not expect that termination of the Collins Station lease will have a material adverse effect on its liquidity.  If the lease
termination does not occur, the terms of the lease will remain in effect and Midwest Generation will seek to restructure the lease
with the lease equity investor.

Edison Mission Midwest Holdings

EME's wholly owned subsidiary, Edison Mission Midwest Holdings, has $693 million of debt maturing on December 15, 2004 which will
need to be repaid or refinanced. Edison Mission Midwest Holdings is currently not expected to have sufficient cash to repay the
$693 million debt due in December 2004, and there is no assurance that it will be able to refinance this debt obligation on similar
terms and rates as the existing debt, on commercially reasonable terms, on the terms permitted under the financing documents entered
into by MEHC in July 2001, or under the guarantee entered into by Midwest Generation EME in December 2003, or at all. MEHC's
independent auditors' audit opinion for the year ended December 31, 2003 contains an explanatory paragraph that indicates the
consolidated financial statements are prepared on the basis that MEHC will continue as a going concern and that the uncertainty about
Edison Mission Midwest Holdings' ability to repay or refinance this obligation raises substantial doubt about MEHC's ability to
continue as a going concern. Accordingly, the consolidated financial statements do not include any adjustments that might result from
the resolution of this uncertainty.


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A failure to repay or refinance Edison Mission Midwest Holdings' $693 million of debt as required by its terms would result in an
event of default under the Edison Mission Midwest Holdings financing documents. Furthermore, these events would trigger
cross-defaults under agreements to which Edison Mission Midwest Holdings and Midwest Generation are parties, including the Collins,
Powerton and Joliet leases. An acceleration of debt and lease payments due under these agreements could result in a substantial claim
for termination value under the EME guarantee of the Powerton and Joliet leases and could result in a default under EME's financing
arrangements. A default by EME on its financing arrangements or a default by one of its subsidiaries on indebtedness considered under
the MEHC financing documents as having recourse to EME is likely to result in a default under the MEHC financing documents. These
events could make it necessary for MEHC or EME or both to file a petition for reorganization under Chapter 11 of the United States
Bankruptcy Code.

2004 Capital Expenditures

The estimated construction expenditures of EME's subsidiaries for 2004 are $78 million. These expenditures are planned to be financed
by existing subsidiary credit agreements and cash generated from their operations.

EME's Credit Ratings

Overview

Credit ratings for EME and its subsidiaries, Edison Mission Midwest Holdings and Edison Mission Marketing & Trading, are as follows:

                                                           Moody's Rating      S&P Rating
- ---------------------------------------------------------- ---------------- -----------------
EME                                                              B2                B
Edison Mission Midwest Holdings                                  Ba3               B
Edison Mission Marketing & Trading                            Not Rated            B
- ---------------------------------------------------------- ---------------- -----------------


On October 28, 2003, Standard & Poor's Ratings Service downgraded EME's senior unsecured credit rating to B from BB-. Standard &
Poor's also lowered the credit ratings of EME's wholly owned indirect subsidiaries, Edison Mission Midwest Holdings (syndicated loan
facility to B from BB-) and Edison Mission Marketing & Trading (corporate credit rating to B from BB-). Standard & Poor's removed the
ratings from CreditWatch with negative implications on December 12, 2003, following the repayment of $781 million of debt by Edison
Mission Midwest Holdings; however, the outlook remains negative. In addition, Moody's Investors Service has assigned a negative
rating outlook for EME and Edison Mission Midwest Holdings.

These ratings actions did not trigger any defaults under EME's credit facilities or those of the other affected entities. See "--EME's
Credit Ratings--Credit Ratings of Edison Mission Midwest Holdings" for a discussion of the impact of the ratings action on Edison
Mission Midwest Holdings. EME does not have any "rating triggers" contained in subsidiary financings that would result in EME being
required to make equity contributions or provide additional financial support to its subsidiaries.

The credit ratings of EME are below investment grade and, accordingly, EME has agreed to provide collateral in the form of cash and
letters of credit for the benefit of counterparties for its price risk management and domestic trading activities related to accounts
payable and unrealized losses ($65 million as of February 27, 2004). EME has also provided collateral for a portion of its United
Kingdom trading activities. To this end, EME's subsidiary, Edison Mission Operation and Maintenance


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Limited, has obtained a cash collateralized credit facility, under which letters of credit totaling(pound)20 million have been issued as
of February 27, 2004.

EME anticipates that sales of power from its Illinois plants, Homer City facilities and First Hydro plants in the United Kingdom may
require additional credit support, depending upon market conditions and the strategies adopted for the sale of this power. Changes in
forward market prices and margining requirements could further increase the need for credit support for the price risk management and
trading activities related to these projects. EME currently projects the potential working capital required to support its price risk
management and trading activity to be between $100 million and $200 million from time to time.

EME cannot provide assurance that its current credit ratings or the credit ratings of its subsidiaries will remain in effect for any
given period of time or that one or more of these ratings will not be lowered further. EME notes that these credit ratings are not
recommendations to buy, sell or hold its securities and may be revised at any time by a rating agency.

Credit Ratings of Edison Mission Midwest Holdings

As a result of Edison Mission Midwest Holdings' credit rating being below investment grade since October 2002, provisions in the
agreements binding on Edison Mission Midwest Holdings and Midwest Generation have restricted the ability of Edison Mission Midwest
Holdings to make distributions to its parent company, thereby eliminating distributions to EME. The provisions in the agreements
binding on Edison Mission Midwest Holdings required it to deposit, on a quarterly basis, 100% of its excess cash flow as defined in
the agreements into a cash flow recapture account held and maintained by the collateral agent. In accordance with these provisions,
Edison Mission Midwest Holdings deposited $246 million into the cash flow recapture account in 2002 and 2003.

As a result of the October 28, 2003 Standard & Poor's downgrade of Edison Mission Midwest Holdings to B from BB-, the cash on deposit
in the cash flow recapture account ($246 million) was required to be used to prepay Edison Mission Midwest Holdings' indebtedness,
with the amount of such prepayment applied ratably to the $911 million and $808 million tranches thereof. Therefore, on October 29,
2003, $130 million from the cash flow recapture account was applied to the $911 million tranche, and $116 million to the $808 million
tranche, thereby reducing Edison Mission Midwest Holdings' debt obligations to $781 million and $693 million, respectively.
Subsequently, Edison Mission Midwest Holdings repaid the $781 million tranche in full on December 11, 2003. In the future, so long as
Edison Mission Midwest Holdings' ratings remain at the current level or lower, amounts of excess cash flow deposited in the cash flow
recapture account at the end of each calendar quarter will be used upon deposit to prepay amounts then outstanding under the
$693 million bank facility. There was no change to the cost of borrowings for Edison Mission Midwest Holdings as a result of the
downgrade.

As part of the sale-leaseback of the Powerton and Joliet power stations, Midwest Generation loaned the proceeds ($1.4 billion) to EME
in exchange for promissory notes in the same aggregate amount. Debt service payments by EME on the promissory notes may be used by
Midwest Generation to meet its payment obligations under these leases in whole or part. Furthermore, EME has guaranteed the lease
obligations of Midwest Generation under these leases.  EME's obligations under the promissory notes payable to Midwest Generation are
general corporate obligations of EME and are not contingent upon receiving distributions from Edison Mission Midwest Holdings.
Accordingly, EME must continue to make payments under the intercompany notes notwithstanding that Edison Mission Midwest Holdings is
not permitted to make distributions to EME. If EME were not able to make the loan payments, it would result in a default under the
financing documents to which Edison Mission Midwest Holdings is a party and could result in a default under EME's financing
arrangements. This could have a material adverse effect on the results of operations and cash flow of MEHC and EME. See "--Dividend
Restrictions in


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Major Financings--Edison Mission Midwest Holdings Co. (Illinois Plants)" for a discussion of implications for the Powerton and Joliet
leases.

Credit Rating of Edison Mission Marketing & Trading

Pursuant to the Homer City sale-leaseback documents, a below investment grade credit rating of Edison Mission Marketing & Trading
restricts the ability of EME Homer City Generation L.P. to enter into permitted trading activities, as defined in the documents, with
Edison Mission Marketing & Trading to sell forward the output of the Homer City facilities. These documents include a requirement
that the counterparty to such transactions, and EME Homer City, if acting as seller to an unaffiliated third party, be investment
grade. EME currently sells all of the output from the Homer City facilities through Edison Mission Marketing & Trading, which has a
below investment grade credit rating, and EME Homer City is not rated. Therefore, in order for EME to continue to sell forward the
output of the Homer City facilities, either:  (1) EME must obtain consent from the sale-leaseback owner participant to permit EME
Homer City to sell directly into the market or through Edison Mission Marketing & Trading; or (2) Edison Mission Marketing & Trading
must provide assurances of performance consistent with the requirements of the sale-leaseback documents. EME has obtained a consent
from the sale-leaseback owner participant that will allow EME Homer City to enter into such sales, under specified conditions,
through December 31, 2004. EME Homer City continues to be in compliance with the terms of the consent, although as a result of the
downgrade of Edison Mission Marketing & Trading's corporate credit rating to B from BB-, the consent is now revocable.  The owner
participant has not indicated that it intends to revoke the consent; however, there can be no assurance that it will not do so in the
future. Revocation of the consent would not affect trades between Edison Mission Marketing & Trading and EME Homer City that had been
entered into while the consent was still in effect. EME is permitted to sell the output of the Homer City facilities into the spot
market at any time. See "MEHC and EME:  Market Risk Exposures--Commodity Price Risk--Homer City Facilities."

EME's Liquidity as a Holding Company

Overview

EME has a $145 million corporate credit facility that expires on September 17, 2004. At December 31, 2003, EME had borrowing capacity
of $145 million and corporate cash and cash equivalents of $179 million. During 2003, EME's cash position increased primarily due to
an increase of distributions received from its consolidated subsidiaries and initial distributions from the Sunrise project upon
completion of project financing. The timing and amount of distributions from EME's subsidiaries may be affected by many factors
beyond its control. See "--EME's Liquidity as a Holding Company--Historical Distributions Received by EME" and    "--Dividend
Restrictions in Major Financings." In addition, the right of EME to receive tax-allocation payments, and the timing and amount of
tax-allocation payments received by EME are subject to factors beyond EME's control. See "--EME's Liquidity as a Holding
Company--Intercompany Tax-Allocation Payments."

EME's corporate credit facility provides credit available in the form of cash advances or letters of credit. At December 31, 2003,
there were no cash advances outstanding or letters of credit outstanding under the credit facility. In addition to the interest
payments, EME pays a facility fee determined by its long-term credit ratings (1.00% at December 31, 2003) on the credit facility
independent of the level of borrowings. Under the credit agreement governing its credit facility, EME has agreed to maintain an
interest coverage ratio that is based on cash received by EME, including tax-allocation payments, cash disbursements and interest
paid. At December 31, 2003, EME met this interest coverage ratio. The interest coverage ratio in the ring-fencing provisions of EME's
certificate of incorporation and bylaws remains relevant for determining EME's ability to make distributions. See "--Financial
Ratios--EME's Interest Coverage Ratio."


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Historical Distributions Received By EME

The following table is presented as an aid in understanding the cash flow of EME and its various subsidiary holding companies which
depend on distributions from subsidiaries and affiliates to fund general and administrative costs and debt service costs of recourse
debt.

             In millions                         December 31,                                     2003            2002
             ------------------------------------------------------------------------------ -------------- ---------------
             Domestic Projects
             Distributions from Consolidated Operating Projects:
                EME Homer City Generation L.P. (Homer City facilities)(1)                      $    128       $     --
                Holding companies of other consolidated operating projects                            1              2
             Distributions from Unconsolidated Operating Projects:
                Edison Mission Energy Funding Corp. (Big 4 Projects)(2)                              98            137
                Four Star Oil & Gas Company                                                          21             21
                Sunrise Power Company(3)                                                             69             --
                Holding companies for Westside projects                                              25             42
                Holding companies of other unconsolidated operating projects                          7             10
             ------------------------------------------------------------------------------ -------------- ---------------
             Total Distributions from Domestic Projects                                        $    349       $    212

             International Projects (Mission Energy Holdings International)
             Distributions from Consolidated Operating Projects:
                First Hydro Holdings (First Hydro project)                                     $     18       $     --
                Loy Yang B                                                                           39             27
                Doga                                                                                 18             47
                Contact Energy                                                                       16             12
                Valley Power                                                                          8             --
                Kwinana                                                                               4              6
             Distributions from Unconsolidated Operating Projects:
                ISAB Energy                                                                          27              1
                IVPC4 (Italian Wind project)                                                         10             33
                Derwent                                                                               3              2
                Paiton(4)                                                                             9             --
                Tri Energy                                                                            4              3
                Holding companies of other unconsolidated operating project                           2              8
             ------------------------------------------------------------------------------ -------------- ---------------
             Total Distributions from International Projects                                   $    158       $    139

             Total Distributions                                                               $    507       $    351
             ------------------------------------------------------------------------------ -------------- ---------------
     --------------------
     (1)  Excludes $34 million distributed by EME Homer City from additional cash on hand due to accelerated payments received from
          Edison Mission Marketing & Trading.

     (2)  The Big 4 projects are comprised of investments in the Kern River project, Midway-Sunset project, Sycamore project and
          Watson project. Distributions do not include either capital contributions made during the California energy crisis or the
          subsequent return of such capital. Distributions reflect the amount received by EME after debt service payments by Edison
          Mission Energy Funding Corp.

     (3)  Includes $59 million of the $151 million proceeds from the Sunrise project financing. The remaining $92 million EME has
          classified as a return of capital.

     (4)  Represents a return of capital received as part of completion of the restructuring of the Paiton debt obligations.


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Total distributions to EME increased between 2003 and 2002 due to:

o    Distributions from Homer City due to increased generation and higher energy prices. The project did not make any
     distributions in 2002 because of outages in the first half of 2002;

o    Distribution from the First Hydro project in May 2003. The project did not make any distributions in 2002 due to
     restrictions under its bond indenture;

o    Initial distributions from the Sunrise project upon completion of project financing; and

o    Initial partner distributions from the ISAB Energy project.

Partially offset by:

o    Lower distributions from the Big 4 projects (in March 2002, SCE paid the Big 4 projects their past due accounts receivable
     that accrued during the California energy crisis);

o    Lower distributions from the Westside projects due to payments of past due accounts receivable from Pacific Gas & Electric
     in 2002 that accrued during the California energy crisis; and

o    2003 distributions from the Doga and Italian Wind projects represented twelve months of operating cash flow, whereas the
     initial distributions in 2002 included cash flow from prior years.

Intercompany Tax-Allocation Payments

MEHC and EME are included in the consolidated federal and combined state income tax returns of Edison International and are eligible
to participate in tax-allocation payments with other subsidiaries of Edison International. These arrangements depend on Edison
International continuing to own, directly or indirectly, at least 80% of the voting power of the stock of MEHC and EME and at least
80% of the value of such stock. The arrangements are subject to the terms of tax-allocation and payment agreements among Edison
International, MEHC, EME, and other Edison International subsidiaries. The agreements to which MEHC and EME are parties may be
terminated by the immediate parent company of MEHC at any time, by notice given before the first day of the first tax year with
respect to which the termination is to be effective. However, termination does not relieve any party of any obligations with respect
to any tax year beginning prior to the notice. MEHC became a party to the tax-allocation agreement with Edison Mission Group on
July 2, 2001, when it became part of the Edison International consolidated filing group. EME and MEHC have historically received
tax-allocation payments related to domestic net operating losses incurred by EME and MEHC. The right of MEHC and EME to receive and
the amount and timing of tax-allocation payments are dependent on the inclusion of MEHC and EME, respectively, in the consolidated
income tax returns of Edison International and its subsidiaries, the amount of net operating losses and other tax items of MEHC, EME,
its subsidiaries, and other subsidiaries of Edison International and specific procedures regarding allocation of state taxes. MEHC
and EME receive tax-allocation payments for tax losses when and to the extent that the consolidated Edison International group
generates sufficient taxable income in order to be able to utilize MEHC's tax losses or the tax losses of EME in the consolidated
income tax returns for Edison International and its subsidiaries. MEHC received $61 million and $89 million in tax-allocation
payments from Edison International during 2003 and 2002, respectively. EME received $112 million and $395 million in tax-allocation
payments from Edison International during 2003 and 2002, respectively. In the future, based on the application of the factors cited
above, MEHC and EME may be obligated during periods it generates taxable income to make payments under the tax-allocation agreements.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Dividend Restrictions in Major Financings

General

Each of EME's direct or indirect subsidiaries is organized as a legal entity separate and apart from EME and its other subsidiaries.
Assets of EME's subsidiaries are not available to satisfy EME's obligations or the obligations of any of its other subsidiaries.
However, unrestricted cash or other assets that are available for distribution may, subject to applicable law and the terms of
financing arrangements of the parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to EME or to
its subsidiary holding companies. EME itself has restrictions on its ability to pay dividends under its organizational documents and
its corporate credit facility.  See "--Financial Ratios--Ability of EME to Pay Dividends."

Set forth below is a description of covenants binding EME's principal subsidiaries that may restrict the ability of those entities to
make distributions to EME directly or indirectly through the other holding companies owned by EME.

Edison Mission Midwest Holdings Co. (Illinois Plants)

Edison Mission Midwest Holdings Co. is the borrower under a $1.9 billion credit facility with a group of commercial banks. Amounts
outstanding under this facility have been reduced to $693 million as of December 31, 2003. The funds borrowed under this facility
were used to fund the acquisition of the Illinois plants and provide working capital to such operations. Midwest Generation, a wholly
owned subsidiary of Edison Mission Midwest Holdings, owns or leases and operates the Illinois plants. As part of the original
acquisition, Midwest Generation entered into a sale-leaseback transaction for the Collins Station, which Edison Mission Midwest
Holdings guarantees, and then subsequently entered into sale-leaseback transactions for the Powerton Station and the Joliet Station
in August 2000. In order for Edison Mission Midwest Holdings to make a distribution, Edison Mission Midwest Holdings must be in
compliance with the covenants specified in these agreements, including maintaining a minimum credit rating. Because Edison Mission
Midwest Holdings' credit rating is below investment grade, no distributions can currently be made by Edison Mission Midwest Holdings
to its parent company, and ultimately to EME, at this time. See "--EME's Credit Ratings."

Edison Mission Midwest Holdings must maintain a debt service coverage ratio for the prior twelve-month period of at least 1.50 to 1
as long as the power-purchase agreements with Exelon Generation represent 50% or more of Edison Mission Midwest Holdings' and its
subsidiaries' revenue. If the power-purchase agreements with Exelon Generation represent less than 50% of Edison Mission Midwest
Holdings' and its subsidiaries' revenue, it must maintain a debt service coverage ratio of at least 1.75 to 1.  In addition, Edison
Mission Midwest Holdings must maintain a debt-to-capital ratio no greater than 0.60 to 1. Failure to meet the historical debt service
coverage ratio and the debt-to-capital ratio are events of default under the credit agreement and Collins lease agreements, which,
upon a vote by a majority of the lenders, could cause an acceleration of the due date of the obligations of Edison Mission Midwest
Holdings and those associated with the Collins lease. Such an acceleration would result in an event of default under the Powerton and
Joliet leases. During the 12 months ended December 31, 2003, the historical debt service coverage ratio was 2.06 to 1 and the
debt-to-capital ratio was approximately 0.36 to 1.

There are no restrictions on the ability of Midwest Generation to make payments on the outstanding intercompany loans from its
affiliate Edison Mission Overseas Co. (which is also a subsidiary of Edison Mission Midwest Holdings) or to make distributions
directly to Edison Mission Midwest Holdings.


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                                                                                                             Edison International


EME Homer City Generation L.P. (Homer City facilities)

EME Homer City Generation L.P. completed a sale-leaseback of the Homer City facilities in December 2001. In order to make a
distribution, EME Homer City must be in compliance with the covenants specified in the lease agreements, including the following
financial performance requirements measured on the date of distribution:

o    At the end of each quarter, the senior rent service coverage ratio for the prior twelve-month period (taken as a whole) must
     be greater than 1.7 to 1.  The senior rent service coverage ratio is defined as all income and receipts of EME Homer City less
     amounts paid for operating expenses, required capital expenditures, taxes and financing fees divided by the aggregate amount of
     the debt portion of the rent, plus fees, expenses and indemnities due and payable with respect to the lessor's debt service
     reserve letter of credit.

At the end of each quarter, the equity and debt portions of rent then due and payable must have been paid. The senior rent service
coverage ratio (discussed in the bullet point above) projected for each of the prospective two twelve-month periods must be greater
than 1.7 to 1. No more than two rent default events may have occurred, whether or not cured. A rent default event is defined as the
failure to pay the equity portion of the rent within five business days of when it is due.

During the 12 months ended December 31, 2003, the senior rent service coverage ratio was 4.68 to 1.

Edison Mission Energy Funding Corp. (Big 4 Projects)

EME's subsidiaries, which EME refers to in this context as the guarantors, that hold EME's interests in the Big 4 projects completed
a $450 million secured financing in December 1996. Edison Mission Energy Funding Corp., a special purpose Delaware corporation,
issued notes ($260 million) and bonds ($190 million), the net proceeds of which were lent to the guarantors in exchange for a note.
The guarantors have pledged their cash proceeds from the Big 4 projects to Edison Mission Energy Funding as collateral for the note.
All distributions receivable by the guarantors from the Big 4 projects are deposited into trust accounts from which debt service
payments are made on the obligations of Edison Mission Energy Funding and from which distributions may be made to EME if the
guarantors and Edison Mission Energy Funding are in compliance with the terms of the covenants in their financing documents,
including the following requirements measured on the date of distribution:

o    The debt service coverage ratio for the preceding four fiscal quarters is at least 1.25 to 1.

o    The debt service coverage ratio projected for the succeeding four fiscal quarters is at
     least 1.25 to 1.

The debt service coverage ratio is determined primarily based upon the amount of distributions received by the guarantors from the
Big 4 projects during the relevant quarter divided by the debt service (principal and interest) on Edison Mission Energy Funding's
notes and bonds paid or due in the relevant quarter. During the 12 months ended December 31, 2003, the debt service coverage ratio
was 2.16 to 1. Although the credit ratings of Edison Mission Energy Funding's notes and bonds are below investment grade, this has no
effect on the ability of the guarantors to make distributions to EME.

Mission Energy Holdings International

Mission Energy Holdings International owns substantially all of EME's international operations through its subsidiary, MEC
International B.V., as more fully described in "--Key Financing Developments."


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Management's Discussion and Analysis of Financial Condition and Results of Operations


In order to make a distribution, Mission Energy Holdings International must be in compliance with the covenants specified in the
credit agreement, including the following:

o    Maintenance of a specified interest coverage ratio. For more information about the interest coverage ratio, see "--Financial
     Ratios--Mission Energy Holdings International Interest Coverage Ratio."

o    Ownership by Edison International, directly or indirectly, of at least 80% of Mission Energy Holdings International.

When measured for the twelve-month period ended December 31, 2003, Mission Energy Holdings International interest coverage ratio was
2.75 to 1.

The following subsidiaries of EME have guaranteed the obligations of Mission Energy Holdings International under its secured credit
agreement:

o    Midwest Generation EME - a direct subsidiary of EME and an indirect parent of Midwest Generation, the entity that owns the
     Illinois plants.

o    Edison Mission Finance - a direct subsidiary of Edison Mission Holdings and the holder of intercompany receivables due from
     EME Homer City.

o    Mission Del Cielo - a direct subsidiary of EME and an indirect parent of Sunrise Power Company, LLC, the entity that owns
     the Sunrise project.

o    Viejo Energy Company, Anacapa Energy Company, Del Mar Energy Company and Silverado Energy Company - each is a direct
     subsidiary of EME and a general partner in a partnership that owns each of the Westside projects.

Distributions may be made by any of these entities so long as, neither a default nor event of default exists under the Mission Energy
Holdings International secured credit agreement.

First Hydro Holdings

A subsidiary of First Hydro Holdings, First Hydro Finance plc, has issued(pound)400 million of Guaranteed Secured Bonds due in 2021. In
order to make a distribution, First Hydro Finance must be in compliance with the covenants specified in its bond indenture, including
the following interest coverage ratio:

o    As determined on June 30 and December 31 of each year, the ratio of net revenue (which is generally the consolidated profit
     of First Hydro Holdings and its subsidiaries before tax) to interest payable on the Guaranteed Secured Bonds for the prior
     twelve-month period (taken as a whole) must be greater than 1.2 to 1.

First Hydro Holdings' interest coverage ratio must also exceed a minimum default threshold included in the Guaranteed Secured Bonds.
When measured for the twelve-month period ended December 31, 2003, First Hydro Holdings' interest coverage ratio was 1.6 to 1.

In March 2003, the trustee for the First Hydro bonds sent a letter to First Hydro Finance plc on behalf of a group of First Hydro
bondholders, requesting First Hydro Finance to engage in a process to determine whether the termination of the pool system in the
United Kingdom during 2001 (replaced with the new electricity trading arrangements, referred to as NETA) was materially prejudicial
to the interests of the First Hydro bondholders. If this were the case, it could provide the First Hydro bondholders with an early
redemption option. First Hydro Finance does not believe that this event was materially prejudicial to the


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                                                                                                             Edison International


First Hydro bondholders and has continued to meet all of its debt service obligations and financial covenants under the bond
documentation, including required interest coverage ratio. First Hydro Finance is not aware of further actions being pursued by First
Hydro bondholders regarding this matter.

Financial Ratios

MEHC's Interest Coverage Ratio

The following details of MEHC's interest coverage ratio are provided as an aid to understanding the components of the computations
that are set forth in the indenture governing MEHC's senior secured notes. This information is not intended to measure the financial
performance of MEHC and, accordingly, should not be used in lieu of the financial information set forth in MEHC's consolidated
financial statements. The terms Funds Flow from Operations, Operating Cash Flow and Interest Expense are as defined in the indenture
and are not the same as would be determined in accordance with generally accepted accounting principles.

MEHC's interest coverage ratio is comprised of interest income and expense related to its holding company activities and the
consolidated financial information of EME. For a complete discussion of EME's interest coverage ratio and the components included
therein, see "--Financial Ratios--EME's Interest Coverage Ratio" below. The following table sets forth MEHC's interest coverage ratio
for the years ended December 31, 2003 and 2002:

In millions                       December 31,                                     2003               2002
- -------------------------------------------------------------------------- ------------------ -----------------
Funds Flow from Operations:
     EME                                                                      $     699          $     692
     Operating cash flow from unrestricted subsidiaries                              (2)               (17)
     Funds flow from operations of projects sold                                     (1)                 2
     MEHC                                                                             1                  7
- -------------------------------------------------------------------------- ------------------ -----------------
                                                                              $     697          $     684
Interest Expense:
     EME                                                                      $     286          $     293
     EME - affiliate debt                                                             1                  2
     MEHC interest expense                                                          160                159
- -------------------------------------------------------------------------- ------------------ -----------------
          Total interest expense                                              $     447          $     454
Interest Coverage Ratio                                                            1.56               1.51
- -------------------------------------------------------------------------- ------------------ -----------------

The above interest coverage ratio was determined in accordance with the definitions set forth in the bond indenture governing MEHC's
senior secured notes and the credit agreement governing the term loan.  The interest coverage ratio prohibits MEHC, EME and its
subsidiaries from incurring additional indebtedness, except as specified in the indenture and the financing documents, unless MEHC's
interest coverage ratio exceeds 1.75 to 1 for the immediately preceding four fiscal quarters prior to December 31, 2003 and 2.0 to 1
for periods thereafter.

Ability of EME to Pay Dividends

EME's organizational documents and corporate credit facility contain restrictions on its ability to declare or pay dividends or
distributions. These restrictions require the unanimous approval of its Board of Directors, including at least one independent
director, before it can declare or pay dividends or distributions, unless either of the following is true:

o    EME then has investment grade ratings with respect to its senior unsecured long-term debt and receives rating agency
     confirmation that the dividend or distribution will not result in a downgrade; or


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Management's Discussion and Analysis of Financial Condition and Results of Operations


o    such dividends and distributions do not exceed $32.5 million in any fiscal quarter and EME then meets an interest coverage
     ratio of not less than 2.2 to 1 for the immediately preceding four fiscal quarters.

EME's interest coverage ratio for the twelve months ended December 31, 2003 was 2.45 to 1.  See further details of EME's interest
coverage ratio below.  Accordingly, EME is currently permitted to pay dividends of up to $32.5 million per quarter beginning the
first quarter of 2004 under the "ring-fencing" provisions of EME's certificate of incorporation and bylaws and corporate credit
facility without the approval of the independent director.  EME did not pay or declare any dividends to MEHC during 2003.

EME's Interest Coverage Ratio

The following details of EME's interest coverage ratio (defined as Funds Flow from Operations divided by Interest Expense) are
provided as an aid to understanding the components of the computations that are set forth in EME's organizational documents. This
information is not intended to measure the financial performance of EME and, accordingly, should not be used in lieu of the financial
information set forth in EME's consolidated financial statements. The terms Funds Flow from Operations, Operating Cash Flow and
Interest Expense are as defined in EME's organizational documents and are not the same as would be determined in accordance with
generally accepted accounting principles.

The following table sets forth the major components of the interest coverage ratio for 2003 and 2002:

In millions                        December 31,                                  2003               2002
- ------------------------------------------------------------------------- ------------------- ------------------
Funds Flow from Operations:
     Operating Cash Flow(1) from Consolidated Operating Projects(2):
          Illinois plants(3)                                                 $     242           $     294
          Homer City                                                               153                  51
          First Hydro                                                               (8)                 47
     Other consolidated operating projects                                         165                 158
     Price risk management and energy trading                                       11                  16
     Distributions from unconsolidated Big 4 projects(4)                            98                 137
     Distributions from other unconsolidated operating projects                    178                 120
     Interest income                                                                 4                   8
     Operating expenses                                                           (144)               (139)
- ------------------------------------------------------------------------- ------------------- ------------------
          Total funds flow from operations                                   $     699           $     692

Interest Expense:
     From obligations to unrelated third parties                             $     172           $     178
     From notes payable to Midwest Generation                                      113                 115
- ------------------------------------------------------------------------- ------------------- ------------------
          Total interest expense                                             $     285           $     293
Interest Coverage Ratio                                                           2.45                2.36
- ------------------------------------------------------------------------- ------------------- ------------------
- --------------------
(1)  Operating cash flow is defined as revenue less operating expenses, foreign taxes paid and project debt service. Operating cash
     flow does not include capital expenditures or the difference between cash payments under EME's long-term leases and lease
     expenses recorded in EME's income statement. EME expects its cash payments under its long-term power plant leases to be higher
     than its lease expense through 2014.


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                                                                                                             Edison International


(2)  Consolidated operating projects are entities of which EME owns more than a 50% interest and, thus, include the operating results
     and cash flows in its consolidated financial statements.  Unconsolidated operating projects are entities of which EME owns 50% or
     less and which EME accounts for on the equity method.

(3)  Distribution to EME of funds flow from operations of the Illinois plants is currently restricted.  See "--EME's Credit
     Ratings--Credit Ratings of Edison Mission Midwest Holdings."

(4)  The Big 4 projects are comprised of investments in the Kern River project, Midway-Sunset project, Sycamore project and Watson
     project.

The major factors affecting funds flow from operations during 2003 as compared to 2002, were:

o    lower earnings at the Illinois plants primarily due to lower capacity revenue from the reduction in megawatts contracted
     under the power-purchase agreements;

o    repayment of $29 million debt service reserve loan at First Hydro;

o    lower distributions from the Big 4 projects (in March 2002, SCE paid the Big 4 projects their past due accounts receivable
     that accrued during the California energy crisis);

o    higher revenue at Homer City due to increased generation and higher energy prices; and

o    initial partner distributions from the Sunrise and ISAB Energy projects.

Interest expense decreased by $8 million for the twelve months ended December 31, 2003, compared to the year ended December 31, 2002
due to a lower average debt balance.

The above interest coverage ratio is not determined in accordance with generally accepted accounting principles as reflected in
Edison International's Consolidated Statements of Cash Flows. Accordingly, this ratio should not be considered in isolation or as a
substitute for cash flows from operating activities or cash flow statement data set forth in Edison International's Consolidated
Statement of Cash Flows. This ratio does not measure the liquidity or ability of EME's subsidiaries to meet their debt service
obligations. Furthermore, this ratio is not necessarily comparable to other similarly titled captions of other companies due to
differences in methods of calculations.

EME Recourse Debt to Recourse Capital Ratio

Under the credit agreement governing its credit facility, EME has agreed to maintain a recourse debt to recourse capital ratio as
shown in the table below.

                                             Actual at
Financial Ratio          Covenant         December 31, 2003                    Description
- ----------------------------------------------------------------------------------------------------------------
Recourse Debt to       Less than or               59.8%             Ratio of (a) senior recourse debt to
Recourse Capital       equal to 67.5%                               (b) sum of (i) adjusted shareholder's
Ratio                                                               equity as defined in the credit agreement,
                                                                    plus (ii) senior recourse debt
- ----------------------------------------------------------------------------------------------------------------



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Management's Discussion and Analysis of Financial Condition and Results of Operations


The recourse debt to recourse capital ratio of EME at December 31, 2003 and 2002 was calculated as follows:

In millions                        December 31,                              2003                2002
- -------------------------------------------------------------------- -------------------- ------------------
Recourse Debt(1)
    Corporate Credit Facilities                                         $      --           $     140
    Senior Notes                                                            1,600               1,600
    Guarantee of termination value of Powerton/Joliet
       operating leases                                                     1,470               1,452
    Coal and Capex Facility                                                    29                 182
    Other                                                                      --                  30
- -------------------------------------------------------------------- -------------------- ------------------
    Total Recourse Debt to EME                                          $   3,099           $   3,404
- -------------------------------------------------------------------- -------------------- ------------------
Adjusted Shareholder's Equity(2)                                        $   2,085           $   2,066
- -------------------------------------------------------------------- -------------------- ------------------
Recourse Capital(3)                                                     $   5,184           $   5,470
Recourse Debt to Recourse Capital Ratio                                      59.8%               62.2%
- -------------------------------------------------------------------- -------------------- ------------------
- --------------------
(1)  Recourse debt means senior direct obligations of EME or obligations related to indebtedness or rental expenses of one of its
     subsidiaries for which EME has provided a guarantee.

(2)  Adjusted shareholder's equity is defined as the sum of total shareholder's equity and equity preferred securities, less changes
     in accumulated other comprehensive gain or loss after December 31, 1999.

(3)  Recourse capital is defined as the sum of adjusted shareholder's equity and recourse debt.

EME's indirect subsidiary, Midwest Generation, reported in its second quarter report on Form 10-Q an asset impairment charge of
$475 million, after tax, related to the 2,698 MW gas-fired Collins Station. The impairment charge resulted from a write-down of the
book value of capitalized assets related to the Collins Station from $858 million to an estimated fair market value of $78 million.
The impairment charge by Midwest Generation is not reflected in the operating results of EME because the lease related to the Collins
Station is treated in EME's financial statements as an operating lease and not as an asset and, therefore, is not subject to
impairment for accounting purposes.  See "--Key Financing Developments--EME's Subsidiary Financing Plans--Agreement in Principle to
Terminate the Collins Station Lease" for further discussion of the plan to replace EME's corporate credit facility with a new secured
credit facility.

Mission Energy Holdings International Interest Coverage Ratio

Under the credit agreement governing its term loan (see "--Dividend Restrictions in Major Financings--Mission Energy Holdings
International"), Mission Energy Holdings International has agreed to a minimum interest coverage ratio of 1.30 to 1 beginning March
2004 for the trailing twelve month period.


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The following table sets forth the major components of the interest coverage ratio for the twelve months ended December 31, 2003 on a
pro forma basis assuming the term loan had been in existence at the beginning of 2003:

                                                                                         2003
                                                                     ---------------------------------------------
                                                                                        Pro Forma          Pro
 In millions                                                            Actual         Adjustment(2)      Forma
- ------------------------------------------------------------------------------------------------------------------
 Funds Flow from Operations
     Historical distributions from international projects(1)           $   158      $     --           $   158
     Other fees and cash payments considered distributions under
         the term loan                                                      20            --                20
     Administrative and general expenses                                    (2)           --                (2)
 Total Flow of Funds from Operations                                   $   176      $     --           $   176
- ------------------------------------------------------------------------------------------------------------------
 Term Loan Interest Expense                                            $     4      $     60           $    64
 Interest Coverage Ratio                                                                                  2.75
- ------------------------------------------------------------------------------------------------------------------
- --------------------
(1)  See "--EME's Liquidity as a Holding Company--Historical Distributions Received By EME."

(2)  The pro forma adjustment assumes the $800 million loan was outstanding at the beginning of 2003.  Pro forma interest expense
     was calculated using the interest rate floor of 7% plus amortization of deferred financing costs.

The above details of Mission Energy Holdings International's interest coverage ratio are provided as an aid to understanding the
components of the computations that are set forth in the term loan credit agreement. The terms Funds Flow from Operations and
Interest Expense are as defined in the term loan and are not the same as would be determined in accordance with generally accepted
accounting principles.

Summarized combined financial information (unaudited) of Mission Energy Holdings International, Inc. and its Subsidiaries and Edison
Mission Project Co. is set forth below:

                    December 31,                                      2003          2002            2001
           --------------------------------------------------------------------------------------------------
            Revenue                                                $ 1,526       $ 1,148       $     835
            Expenses                                                 1,410         1,112           2,003
           --------------------------------------------------------------------------------------------------
               Net income (loss)                                   $   116       $    36       $  (1,168)
           --------------------------------------------------------------------------------------------------

                    December 31,                                      2003          2002
           ---------------------------------------------------------------------------------
            Current assets                                         $   621       $   473
            Noncurrent assets                                        6,723         5,260
           ---------------------------------------------------------------------------------
               Total assets                                        $ 7,344       $ 5,733

            Current liabilities                                    $   580       $   470
            Noncurrent liabilities                                   4,994         3,154
            Minority interest                                          746           652
            Preferred security                                          --           131
            Equity                                                   1,024         1,326
           ---------------------------------------------------------------------------------
               Total liabilities and equity                        $ 7,344       $ 5,733
           ---------------------------------------------------------------------------------

The majority of noncurrent liabilities are comprised of project financing arrangements that are nonrecourse to EME.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


MEHC AND EME:  MARKET RISK EXPOSURES

EME's primary market risk exposures are associated with the sale of electricity from and the procurement of fuel for its uncontracted
generating plants. These market risks arise from fluctuations in electricity and fuel prices, emission allowances, transmission
rights, interest rates and foreign currency exchange rates. EME manages these risks in part by using derivative financial instruments
in accordance with established policies and procedures.  See "MEHC and EME:  Management Overview," "MEHC and EME:  Liquidity--EME's
Credit Ratings" and "Critical Accounting Policies" for a discussion of market developments and their impact on EME's credit and the
credit of its counterparties.

Commodity Price Risk

EME's merchant power plants and energy trading activities expose EME to commodity price risks. Commodity price risks are actively
monitored to ensure compliance with EME's risk management policies. Policies are in place which define risk tolerances for each EME
regional business unit. Procedures exist which allow for monitoring of all commitments and positions with regular reviews by a risk
management committee. In order to provide more predictable earnings and cash flow, EME may hedge a portion of the electric output of
its merchant plants, the output of which is not committed to be sold under long-term contracts. When appropriate, EME manages the
spread between electric prices and fuel prices, and uses forward contracts, swaps, futures, or options contracts to achieve those
objectives. There is no assurance that contracts to hedge changes in market prices will be effective.

EME's revenue and results of operations of its merchant power plants will depend upon prevailing market prices for capacity, energy,
ancillary services, fuel oil, coal and natural gas and associated transportation costs and emission credits in the market areas where
EME's merchant plants are located. Among the factors that influence the price of power in these markets are:

o    prevailing market prices for fuel oil, coal and natural gas and associated transportation costs;

o    the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market
     entrants, including the development of new generation facilities;

o    transmission congestion in and to each market area;

o    the market structure rules to be established for each market area;

o    the cost of emission credits or allowances;

o    the availability, reliability and operation of nuclear generating plants, where applicable, and the extended operation of
     nuclear generating plants beyond their presently expected dates of decommissioning;

o    weather conditions prevailing in surrounding areas from time to time; and

o    the rate of electricity usage as a result of factors such as regional economic conditions and the implementation of
     conservation programs.

EME performs a "value at risk" analysis in its daily business to measure, monitor and control its overall market risk exposure in
respect of its Illinois plants, its Homer City facilities, and its trading positions.  The use of value at risk allows management to
aggregate overall commodity risk, compare risk on a consistent basis and identify the risk factors.  Value at risk measures the
possible loss over a given time interval, under normal market conditions, at a given confidence level. Given the inherent limitations
of


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value at risk and relying on a single risk measurement tool, EME supplements this approach with the use of stress testing and
worst-case scenario analysis for key risk factors, as well as stop loss limits and counterparty credit exposure limits. Despite this,
there can be no assurance that all risks have been accurately identified, measured and/or mitigated.

Electric power generated at EME's domestic merchant plants is generally sold under bilateral arrangements with utilities and power
marketers under short-term transactions with terms of two years or less or, in the case of the Homer City facilities, to the PJM
and/or the New York Independent System Operator (NYISO). As discussed further below, beginning in 2003, EME has been selling a
significant portion of the power generated from its Illinois plants into wholesale power markets.

Illinois Plants

Energy power generated at the Illinois plants has historically been sold under three power-purchase agreements between EME's wholly
owned subsidiary, Midwest Generation, and Exelon Generation Company, in which Exelon Generation purchases capacity and has the right
to purchase energy generated by the Illinois plants. The power-purchase agreements, which began on December 15, 1999 and expire in
December 2004, provide for capacity and energy payments. Exelon Generation is obligated to make capacity payments for the plants
under contract and energy payments for the energy produced by these plants and taken by Exelon Generation. The capacity payments
provide the Illinois plants revenue for fixed charges, and the energy payments compensate the Illinois plants for all, or a portion
of, variable costs of production.

Approximately 65% of the energy and capacity sales from the Illinois plants in 2003 were to Exelon Generation under the
power-purchase agreements. As a result of notices given in 2003, Midwest Generation's reliance on sales into the wholesale market
will increase in 2004 from 2003. As discussed in detail below, 3,859 MW of Midwest Generation's generating capacity remains subject
to power-purchase agreements with Exelon Generation in 2004. 2004 is the final contract year under these power-purchase agreements.

In June 2003, Exelon Generation exercised its option to contract 687 MW of capacity and the associated energy output (out of a
possible total of 1,265 MW subject to option) during 2004 from Midwest Generation's coal-fired units in accordance with the terms of
the existing power-purchase agreement related to Midwest Generation's coal-fired generation units. As a result, 578 MW of capacity at
the Crawford Unit 7, Waukegan Unit 6 and Will County Unit 3 is no longer subject to the power-purchase agreement beginning January 1,
2004. For 2004, Exelon Generation will have 2,383 MW of capacity related to its coal-fired generation units under contract with
Midwest Generation.

In October 2003, Exelon Generation exercised its option to retain under a power-purchase agreement for calendar year 2004 the 1,084
MW of capacity and energy from Midwest Generation's Collins Station. Exelon Generation also exercised its option to release from a
related power-purchase agreement 302 MW of capacity and energy (out of a possible total of 694 MW subject to the option) from Midwest
Generation's natural gas and oil-fired peaking units, thereby retaining under that contract 392 MW of the capacity and energy of such
units for calendar year 2004.

The energy and capacity from any units which are not subject to one of the power-purchase agreements with Exelon Generation will be
sold under terms, including price and quantity, negotiated by Edison Mission Marketing & Trading with customers through a combination
of bilateral agreements, forward energy sales and spot market sales. These arrangements generally have a term of two years or less.
Thus, EME is subject to market risks related to the price of energy and capacity described above. EME expects that capacity prices
for merchant energy sales will, in the near term, be negligible in comparison to those Midwest Generation currently receives under
its existing agreements with Exelon Generation (the


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possibility of minimal revenue is due to the current oversupply conditions in this marketplace). EME further expects that the lower
revenue resulting from this difference will be offset in part by energy prices, which EME believes will, in the near term, be higher
for merchant energy sales than those Midwest Generation currently receives under its existing agreements, as indicated below in the
table of forward-looking prices. EME intends to manage this price risk, in part, by accessing both the wholesale customer and
over-the-counter markets described below as well as using derivative financial instruments in accordance with established policies
and procedures.

During 2004, the primary markets available to Midwest Generation for wholesale sales of electricity from the Illinois plants are
expected to be direct "wholesale customers" and broker-arranged "over-the-counter customers." The most liquid over-the-counter
markets in the Midwest region are sales into the control area of Cinergy, referred to as "Into Cinergy," and, to a lesser extent,
sales into the control areas of ComEd and AEP, referred to as "Into ComEd" and "Into AEP," respectively. "Into Cinergy," "Into ComEd"
and "Into AEP" are bilateral markets for the sale or purchase of electrical energy for future delivery. Performance of transactions
in these markets is subject to contracts that generally provide for liquidated damages supported by a variety of credit requirements,
which may include independent credit assessment, parent company guarantees, letters of credit, and cash margining arrangements.

The following table depicts the historical average market prices for energy per megawatt-hour "Into ComEd" and "Into Cinergy" for
2003. Due to geographic proximity, "Into ComEd" has been the primary market for Midwest Generation. Market prices are included for
"Into Cinergy" for illustrative purposes.

                                                 2003                                     2003
                                              Into ComEd*                             Into Cinergy*
                                ---------------------------------------- ----------------------------------------
Historical Energy Prices            On-Peak(1)   Off-Peak(1)   24-Hr         On-Peak(1)   Off-Peak(1)   24-Hr
- -----------------------------------------------------------------------------------------------------------------
January                            $  42.62      $  20.77      $ 30.81      $  44.38      $  21.46      $ 32.00
February                              54.43         23.13        37.81         58.09         24.00        39.99
March                                 47.96         22.35        33.92         51.68         24.34        36.69
April                                 39.12         15.05        26.67         41.12         15.96        28.11
May                                   29.59         10.80        19.57         28.89         10.68        19.18
June                                  30.27          8.17        19.22         28.41          8.31        18.36
July                                  41.63         12.81        27.07         39.15         11.72        25.29
August                                48.75         13.84        29.61         48.80         13.53        29.46
September                             27.44          9.85        17.67         28.07         10.36        18.23
October                               24.47         12.01        18.17         24.95         13.51        19.17
November                              24.78         14.32        18.51         23.66         14.61        18.23
December                              34.72         12.49        22.56         34.71         14.73        23.73
- -----------------------------------------------------------------------------------------------------------------
Yearly Average                     $  37.15      $  14.63      $ 25.13      $  37.66      $  15.27      $ 25.70
- -----------------------------------------------------------------------------------------------------------------
- --------------------
(1)  On-peak refers to the hours of the day between 6:00 a.m. and 10:00 p.m. Monday through Friday, excluding North American Electric
     Reliability Council (NERC) holidays. All other hours of the week are referred to as off-peak.

*    Source:  Energy prices were determined by obtaining broker quotes and other public price sources, for both "Into ComEd" and "Into
     Cinergy" delivery points.

The following table sets forth the forward month-end market prices for energy per megawatt-hour for the calendar year 2004 and
calendar year 2005 "strips," which are defined as energy purchases for the entire calendar year, as quoted for sales "Into ComEd" and
"Into Cinergy" during 2003.  These forward prices will continue to fluctuate as a result of a number of factors, including gas
prices, electricity demand, which is also affected by economic growth, and the amount of existing and planned power plant capacity.


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The actual spot prices for electricity delivered into these markets may vary materially from the forward market prices.

                                                                   Into ComEd*
                                 --------------------------------------------------------------------------------
     Forward Energy Prices                        2004                                     2005
     -------------------------------------------------------------------   --------------------------------------
     Date                            On-Peak(1)    Off-Peak(1)    24-Hr       On-Peak(1)     Off-Peak(1)   24-Hr
     ------------------------------------------------------------------------------------------------------------
     January 31, 2003               $ 45.50       $  18.75       $30.83       $ 40.75      $  19.50       $29.10
     February 28, 2003                41.15          18.25        28.78         39.75         19.00        28.88
     March 31, 2003                   37.00          16.75        26.76         38.75         17.75        28.14
     April 30, 2003                   34.39          16.25        25.12         36.75         17.25        26.35
     May 31, 2003                     31.09          15.75        22.35         33.50         16.75        24.31
     June 30, 2003                    34.17          17.25        25.52         36.00         18.25        26.93
     July 31, 2003                    44.72          20.00        31.16         45.50         21.00        31.54
     August 30, 2003                  43.72          19.00        30.70         44.50         20.00        32.12
     September 30, 2003               31.33          15.75        23.02         31.00         16.75        23.40
     October 31, 2003                 27.17          14.75        20.36         28.00         15.75        21.28
     November 27, 2003                28.17          14.75        21.01         29.00         15.75        21.93
     December 31, 2003                30.17          15.25        22.63         31.00         16.25        22.91
     ------------------------------------------------------------------------------------------------------------


                                                                  Into Cinergy*
                                 --------------------------------------------------------------------------------
     Forward Energy Prices                        2004                                     2005
     -------------------------------------------------------------------   --------------------------------------
     Date                            On-Peak(1)    Off-Peak(1)    24-Hr       On-Peak(1)     Off-Peak(1)   24-Hr
     ------------------------------------------------------------------------------------------------------------
     January 31, 2003               $ 45.00       $  20.00       $31.29       $ 41.57      $  21.38       $30.50
     February 28, 2003                41.53          19.70        29.73         40.56         20.88        30.25
     March 31, 2003                   38.86          18.57        28.60         38.95         19.63        29.18
     April 30, 2003                   36.80          18.07        27.22         36.95         19.13        27.44
     May 31, 2003                     32.95          17.98        24.42         34.18         18.43        25.54
     June 30, 2003                    36.68          18.98        27.63         37.74         19.93        28.64
     July 31, 2003                    46.15          21.88        32.84         47.34         22.88        33.40
     August 30, 2003                  45.15          20.88        32.36         46.34         21.88        33.98
     September 30, 2003               33.25          17.36        24.77         33.63         18.44        25.52
     October 31, 2003                 29.62          17.08        22.74         30.12         17.68        23.29
     November 27, 2003                30.62          17.08        23.40         31.11         17.68        23.95
     December 31, 2003                32.62          17.58        25.02         33.11         18.18        24.92
     ------------------------------------------------------------------------------------------------------------
- --------------------
(1)  On-peak refers to the hours of the day between 6:00 a.m. and 10:00 p.m. Monday through Friday, excluding NERC holidays. All other
     hours of the week are referred to as off-peak.

*    Source:  Energy prices were determined by obtaining broker quotes and other public price sources, for both "Into ComEd" and "Into
     Cinergy" delivery points.

Midwest Generation intends to hedge a portion of its merchant portfolio risk through Edison Mission Marketing & Trading. To the
extent it does not do so, the unhedged portion will be subject to the risks and benefits of spot market price movements. The extent
to which Midwest Generation will hedge its market price risk through forward over-the-counter sales depends on several factors.
First, Midwest Generation will evaluate over-the-counter market prices to determine whether sales at forward market prices are
sufficiently attractive compared to assuming the risk associated with spot market sales. Second, Midwest Generation's ability to
enter into hedging transactions will depend upon its and Edison Mission Marketing & Trading's credit capacity and upon the
over-the-counter forward sales markets having


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Management's Discussion and Analysis of Financial Condition and Results of Operations


sufficient liquidity to enable Midwest Generation to identify counterparties who are able and willing to enter into hedging
transactions with it. Due to factors beyond Midwest Generation's control, market liquidity has decreased significantly since the
beginning of 2002 and a number of formerly significant trading parties have completely withdrawn from the market or substantially
reduced their trading activities, resulting in far fewer creditworthy participants in these electricity markets. See "--Credit Risk,"
below.

In addition to the prevailing market prices, Midwest Generation's ability to derive profits from the sale of electricity from the
released units will be affected by the cost of production, including costs incurred to comply with environmental regulations. The
costs of production of the released units vary and, accordingly, depending on market conditions, the amount of generation that will
be sold from the released units is expected to vary from unit to unit. In this regard, Midwest Generation suspended operations of
Will County Units 1 and 2 and Collins Station Units 4 and 5 at the end of 2002 pending improvement in market conditions.

Under PJM's proposed revisions to the PJM Tariff, the integration of ComEd into PJM could result in market power mitigation measures
being imposed on future power sales by Midwest Generation in the NICA energy and capacity markets.  In addition, power produced by
Midwest Generation not under contract with Exelon Generation is sold using transmission obtained from ComEd under its open-access
tariff filed with the FERC, and the application of the PJM Tariff to ComEd's transmission system could also affect the rates, terms
and conditions of transmission service received by Midwest Generation.  EME and Midwest Generation have contested the appropriateness
of ComEd joining PJM on an "islanded" basis and the imposition of market power mitigation measures proposed by PJM for the NICA
energy and capacity markets.  EME is unable to predict the outcome of these efforts, the effect of integration of ComEd into PJM on
an "islanded" basis, the effect of integration of AEP into PJM, or any final integration configuration for PJM on the markets into
which Midwest Generation sells its power.

In addition to the price risks described previously, Midwest Generation's ability to transmit energy to counterparty delivery points
to consummate spot sales and hedging transactions may also be affected by transmission service limitations and constraints and new
standard market design proposals proposed by and currently pending before the  FERC. Although the FERC and the relevant industry
participants are working to minimize such issues, Midwest Generation cannot determine how quickly or how effectively such issues will
be resolved.

Homer City Facilities

Electric power generated at the Homer City facilities is sold under bilateral arrangements with domestic utilities and power
marketers pursuant to transactions with terms of two years or less, or to the PJM or the NYISO. These pools have short-term markets,
which establish an hourly clearing price. The Homer City facilities are situated in the PJM control area and are physically connected
to high-voltage transmission lines serving both the PJM and NYISO markets.


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The following table depicts the average market prices per megawatt-hour in PJM during the past three years:

                                                                 24-Hour PJM
                                                          Historical Energy Prices*
                                                 --------------------------------------------
                                                      2003          2002          2001
- ---------------------------------------------------------------------------------------------
January                                             $  36.56      $  20.52      $  36.66
February                                               46.13         20.62         29.53
March                                                  46.85         24.27         35.05
April                                                  35.35         25.68         34.58
May                                                    32.29         21.98         28.64
June                                                   27.26         24.98         26.61
July                                                   36.55         30.01         30.21
August                                                 39.27         30.40         43.99
September                                              28.71         29.00         22.44
October                                                26.96         27.64         21.95
November                                               29.17         25.18         19.58
December                                               35.89         27.33         19.66
- ---------------------------------------------------------------------------------------------
Yearly Average                                      $  35.08      $  25.63      $  29.07
- ---------------------------------------------------------------------------------------------
- -------------------
*    Energy prices were calculated at the Homer City busbar (delivery point) using historical hourly real-time prices provided on the
     PJM-ISO web-site.

As shown on the above table, the average historical market prices at the Homer City busbar (delivery point) during 2003 were higher
than the average historical market prices during 2002, although in September and October of each year the power prices were similar.
Forward market prices in PJM fluctuate as a result of a number of factors, including natural gas prices, transmission congestion,
changes in market rules, electricity demand which is affected by weather and economic growth, and the amount of existing and planned
power plant capacity. The actual spot prices for electricity delivered into these markets may vary materially from the forward market
prices.

Sales made in the real-time or day-ahead market receive the actual spot prices at the Homer City busbar. In order to mitigate price
risk from changes in spot prices at the Homer City busbar, EME may enter into forward contracts with counterparties for forecasted
generation in future periods. Currently, there is not a liquid market for entering into forward contracts at the Homer City busbar. A
liquid market does exist for delivery to a collection of delivery points known as PJM West Hub, which EME's price risk management
activities use to enter into forward contracts. EME's revenue with respect to such forward contracts include:

o    sales of actual generation in the amounts covered by such forward contracts with reference to PJM spot prices at the Homer
     City busbar, plus,

o    sales to third parties under such forward contracts at designated delivery points (generally the PJM West Hub) less the cost
     of purchasing power at spot prices at the same designated delivery points to fulfill obligations under such forward contracts.

Under the PJM market design, locational marginal pricing (sometimes referred to as LMP), which establishes hourly prices at specific
locations throughout PJM by considering factors including generator bids, load requirements, transmission congestion and losses, has
the effect of raising prices at those delivery points affected by transmission congestion.  During the past 12 months, an increase in
transmission congestion at delivery points east of the Homer City facilities has resulted in prices at the PJM West Hub (which
includes delivery points east of the Homer City facilities) being higher than those


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Management's Discussion and Analysis of Financial Condition and Results of Operations


at the Homer City busbar. Thus, while forward prices at PJM West Hub have historically been higher than the prices at the Homer City
busbar by less than 5%, increased congestion during the last 12 months at delivery points east of the Homer City facilities has
resulted in prices at PJM West Hub being on average 6% higher than those at the Homer City busbar.

By entering into forward contracts using the PJM West Hub as the delivery point, EME is exposed to "basis risk," which occurs when
forward contracts are executed on a different basis (in this case PJM West Hub) than the actual point of delivery (Homer City
busbar). In order to mitigate basis risk resulting from forward contracts using PJM West Hub as the delivery point, EME has
participated in purchasing fixed transmission rights in PJM, and may continue to do so in the future. A fixed transmission right
provides the holder with a financial instrument to receive actual spot prices at one point of delivery and pay prices at another
point of delivery that are pegged to prices at the first point of delivery, plus or minus a fixed amount. Accordingly, EME's price
risk management activities include using fixed transmission rights alone or in combination with forward contracts to manage the risks
associated with changes in prices within the PJM market.

The following table sets forth the forward month-end market prices per megawatt-hour for the calendar 2004 and 2005 "strips," which
are defined as energy purchases for the entire calendar year, as quoted for sales into the PJM West Hub during 2003:

                                                                       24-Hour PJM West
                                                                    Forward Energy Prices*
                                                                -------------------------------
                                                                      2004            2005
                    ------------------------------------------- -------------------------------
                    January 31, 2003                                $ 43.03          $ 37.75
                    February 28, 2003                                 42.88            38.18
                    March 31, 2003                                    39.57            33.88
                    April 30, 2003                                    34.45            32.85
                    May 31, 2003                                      30.20            30.60
                    June 30, 2003                                     34.23            33.45
                    July 31, 2003                                     41.67            39.77
                    August 30, 2003                                   42.31            41.61
                    September 30, 2003                                30.20            30.62
                    October 31, 2003                                  29.02            28.51
                    November 27, 2003                                 29.49            28.74
                    December 31, 2003                                 30.18            28.51
                    ------------------------------------------- -------------------------------
- -------------------
*    Energy prices were determined by obtaining broker quotes and other public sources for the PJM West Hub delivery point. Forward
     prices at PJM West are generally higher than the prices at the Homer City busbar.

The ability of EME's subsidiary, EME Homer City, to make payments under the long-term lease entered into as part of the
sale-leaseback transaction discussed under "Off-Balance Sheet Transactions--EME's Off-Balance Sheet Transactions--Sale-Leaseback
Transactions," depends on revenue generated by the Homer City facilities, which depend in part on the market conditions for the sale
of capacity and energy. These market conditions are beyond EME's control.

United Kingdom

The First Hydro plant sells electrical energy and capacity through bilateral contracts of varying terms in the England and Wales
wholesale electricity market.


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The electricity trading arrangements introduced in March 2001 provide, among other things, for the establishment of a range of
voluntary short-term power exchanges and brokered markets operating from a year or more in advance to 1 hour prior to the delivery or
receipt of power. In the final hour after the notification of all contracts, the system operator can accept bids and offers in the
Balancing Mechanism to balance generation and demand and resolve any transmission constraints. There is a mandatory settlement
process for recovering imbalances between contracted and metered volumes with strong incentives for being in balance, and a Balancing
and Settlement Code Panel to oversee governance of the Balancing Mechanism. The system operator can also purchase system reserve and
response services to maintain the quality of the electrical supply directly from generators (generally referred to as "ancillary
services"). Ancillary services contracts typically run for up to a year and can consist of both fixed amounts and variable amounts
represented by prices for services that are only paid for when actually called upon by the grid operator. A key feature of the
trading arrangements is the requirement for firm physical delivery, which means that a generator must deliver, and a consumer must
take delivery of, its net contracted positions or pay for any energy imbalance at the imbalance prices calculated by the system
operator based on the prices of bids and offers accepted in the Balancing Mechanism. This provides an incentive for parties to
contract in advance and for the development of forwards and futures markets. Under these arrangements, there has been an increased
emphasis on credit quality, including the need for parent company guarantees or letters of credit for companies below investment
grade.

The wholesale price of electricity has decreased significantly in recent years. The reduction has been driven principally by surplus
generating capacity and increased competition. During 2003, prices were more volatile. There was further downward pressure on
wholesale prices in the first part of the year followed by some recovery during the summer in prices and in the peak/off peak
differentials for the upcoming winter period. That recovery tailed off towards the end of the year with a considerable narrowing in
the peak/off peak differentials.  Compliance with First Hydro's bond financing documents is subject to market conditions for electric
energy and ancillary services, which are beyond First Hydro's control.

Australia

The Loy Yang B plant and the Valley Power Peaker project sell electrical energy through a centralized electricity pool, which
provides for a system of generator bidding, central dispatch and a settlements system based on a clearing market for each half-hour
of every day. The National Electricity Market Management Company, operator and administrator of the pool, determines a spot price
each half-hour. To mitigate exposure to price volatility of the electricity traded into the pool, the Loy Yang B plant and the Valley
Power Peaker project have entered into a number of financial hedges. The State Hedge agreement with the State Electricity Commission
of Victoria is a long-term contractual arrangement based upon a fixed price commencing May 8, 1997 and terminating October 31, 2016.
The State Government of Victoria, Australia guarantees the State Electricity Commission of Victoria's obligations under the State
Hedge. From January 2003 to July 2014, approximately 77% of the Loy Yang B plant output sold is hedged under the State Hedge. From
August 2014 to October 2016, approximately 56% of the Loy Yang B plant output sold is hedged under the State Hedge. Additionally, the
Loy Yang B plant and the Valley Power Peaker project have entered into a number of derivative contracts to mitigate further against
price volatility inherent in the electricity pool. These contracts consist of fixed forward electricity contracts and/or cap
contracts that expire on various dates through December 31, 2006.

New Zealand

Contact Energy generates about 30% of New Zealand's electricity and is the largest retailer of natural gas and electricity in New
Zealand. A substantial portion of Contact Energy's generation output is matched with the demand of its retail electricity customers
or sold through forward contracts with other wholesale electricity counterparties. The forward contracts and/or option contracts have
varying terms that expire on


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various dates through June 30, 2010, although the majority of the forward contracts are short term (less than two years).

The New Zealand government released a government policy statement in December 2001, which called for the industry to rationalize the
three existing industry codes, form a single governance structure and address transmission investment and pricing issues. The
industry was unable to agree on new rules to facilitate the government policy statement.

Subsequently, in May 2003, the New Zealand government announced that it would establish a new governance body to be known as the
Electricity Commission along with a set of rules to govern the market. The Electricity Governance Regulations and Rules were
finalized in 2003. The Regulations came into force on January 16, 2004, and the Rules came into force during February and March of
2004.

During the winter of 2003, wholesale electricity prices increased significantly in response to lower hydro inflows, higher demand and
anticipated restrictions on the availability of thermal fuel. The New Zealand government responded by calling for nationwide energy
savings in the order of 10%. Recent rains and anticipated snowmelt have largely improved the earlier conditions with wholesale
electricity prices returning to more normal levels. The national energy savings program ended in July 2003.

However, there are ongoing concerns that new investment in generation has not been forthcoming and that there is a significant risk
that similar events may arise in subsequent years. As a consequence the New Zealand government announced that it will take the
following steps:

o    the Electricity Commission will be given responsibility for managing dry year reserve, expected to be through the
     procurement of reserve capacity; and

o    the Electricity Commission will be given additional reserve powers ranging from information disclosure to imposing hedge
     obligations on major users and generators.

Submissions have been made in respect of the policy, which are currently being considered by the New Zealand government. Final
details of the policy were released in September 2003, and it is expected that legislation will be passed in 2004.

The New Zealand government announced in July 2003 that it would purchase a new 155 MW power plant before winter 2004 to increase
electricity security. The plant is to be situated at Whirinaki, Hawkes Bay. The Electricity Commission will be required to include
this plant in its portfolio of reserve energy. The Whirinaki plant will be located on a site leased to the government from Contact
Energy and will also be operated under contract by Contact Energy.

Credit Risk

In conducting EME's price risk management and trading activities, EME contracts with a number of utilities, energy companies and
financial institutions, collectively referred to as counterparties. Due to factors beyond EME's control, a number of formerly
significant trading parties have completely withdrawn from the market or substantially reduced their trading activities since the
beginning of 2002, thereby potentially increasing exposure to the remaining counterparties. The reduction in the credit quality of
traditional trading parties increases EME's credit risk. In addition, the decrease in market liquidity may require EME to rely more
heavily on wholesale electricity sales to wholesale customer markets which may also increase EME's credit risk. In the event a
counterparty were to default on its trade obligation, EME would be exposed to the risk of possible loss associated with reselling the
contracted product at a lower price if the nonperforming counterparty were unable to pay the resulting


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liquidated damages owed to EME. Further, EME would be exposed to the risk of nonpayment of accounts receivable accrued for products
delivered prior to the time such counterparty defaulted.

To manage credit risk, EME looks at the risk of a potential default by counterparties. Credit risk is measured by the loss that would
be incurred if counterparties failed to perform pursuant to the terms of their contractual obligations. EME measures, monitors and
mitigates, to the extent possible, credit risk. To mitigate counterparty risk, master netting agreements are used whenever possible
and counterparties may be required to pledge collateral when deemed necessary. EME also takes other appropriate steps to limit or
lower credit exposure. Processes have also been established to determine and monitor the creditworthiness of counterparties. EME
manages the credit risk on the portfolio 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. A risk management committee regularly
reviews the credit quality of EME's counterparties. Despite this, there can be no assurance that these efforts will be wholly
successful in mitigating credit risk or that collateral pledged will be adequate.

EME measures credit risk exposure from counterparties of its merchant energy activities by the sum of: (i) 60 days of accounts
receivable, (ii) current fair value of open positions, and (iii) a credit value at risk. EME's subsidiaries enter into master
agreements and other arrangements in conducting price risk management and trading activities which typically provide for a right of
setoff in the event of bankruptcy or default by the counterparty. Accordingly, EME's credit risk exposure from counterparties is
based on net exposure under these agreements. At December 31, 2003, the credit ratings of EME's counterparties were as follows:

 In millions              December 31,                                  2003
- -------------------------------------------------------------------------------------
 S&P Credit Rating
    A or higher                                                     $    101
    A-                                                                    26
    BBB+                                                                  82
    BBB                                                                   57
    BBB-                                                                  14
    Below investment grade                                                --
- -------------------------------------------------------------------------------------
    Total                                                           $    280
- -------------------------------------------------------------------------------------

Exelon Generation accounted for 22%, 40% and 42% of nonutility power generation revenue in 2003, 2002 and 2001, respectively.  EME
expects the percentage to be less in 2004 because a smaller number of plants will be subject to contracts with Exelon Generation.
See "--Commodity Price Risk--Illinois Plants."  Any failure of Exelon Generation to make payments under the power-purchase agreements
could adversely affect EME's results of operations and financial condition.

EME's contracted power plants and the plants owned by unconsolidated affiliates in which EME owns an interest sell power under
long-term power-purchase agreements. Generally, each plant sells its output to one counterparty. Accordingly, a default by a
counterparty under a long-term power-purchase agreement, including a default as a result of a bankruptcy, would likely have a
material adverse affect on the operations of such power plant. During 2002, the counterparty to the Lakeland project power-purchase
agreement filed a notice of disclaimer of its power-purchase agreement with the project, ultimately resulting in an impairment of
$77 million, after tax. See "Results of Operations and Historical Cash Flow Analysis--Results of Operations--Earnings (Loss) from
Discontinued Operations."


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Interest Rate Risk

MEHC has mitigated the risk of interest rate fluctuations associated with the $385 million term loan due 2006 by arranging for
variable rate financing with interest rate swaps. Swaps covering interest accrued from January 2, 2002 to January 2, 2003 expired on
January 2, 2003. Subsequently, MEHC entered into swaps that cover interest accrued from January 2, 2003 to July 2, 2004 and April 2,
2003 to July 2, 2004. A 10% fluctuation in market interest rates at December 31, 2003 would change the fair value of MEHC's interest
rate swaps by approximately $237 thousand.

The fair market value of MEHC's (stand alone) total long-term obligations was $1.2 billion at December 31, 2003, compared to the
carrying value of $1.2 billion. A 10% increase in market interest rates at December 31, 2003 would result in a decrease in the fair
value of total long-term obligations by approximately $34 million. A 10% decrease in market interest rates at December 31, 2003 would
result in an increase in the fair value of total long-term obligations by approximately $36 million.

Interest rate changes affect the cost of capital needed to operate EME's projects and the lease costs under the Collins Station
lease. EME has mitigated the risk of interest rate fluctuations by arranging for fixed rate financing or variable rate financing with
interest rate swaps, interest rate options or other hedging mechanisms for a number of its project financings. Interest expense
included $60 million, $34 million and $17 million of additional interest expense for the years 2003, 2002 and 2001, respectively, as
a result of interest rate hedging mechanisms. EME has entered into several interest rate swap agreements under which the maturity
date of the swaps occurs prior to the final maturity of the underlying debt. A 10% increase in market interest rates at December 31,
2003 would result in a $14 million increase in the fair value of EME's interest rate hedge agreements. A 10% decrease in market
interest rates at December 31, 2003 would result in a $15 million decrease in the fair value of EME's interest rate hedge agreements.
Based on the amount of variable rate long-term debt for which EME has not entered into interest rate hedge agreements and the amount
of the Collins lease at December 31, 2003, a 100 basis point change in interest rates at December 31, 2003 would increase or decrease
2004 income before taxes by approximately $23 million.

EME had short-term obligations of $52 million at December 31, 2003, consisting of promissory notes related to Contact Energy. The
fair values of these obligations approximated their carrying values at December 31, 2003, and would not have been materially affected
by changes in market interest rates. The fair market values of long-term fixed interest rate obligations are subject to interest rate
risk. The fair market value of MEHC's total long-term obligations (including current portion) was $7.3 billion at December 31, 2003,
compared to the carrying value of $7.4 billion. A 10% increase in market interest rates at December 31, 2003 would result in a
decrease in the fair value of total long-term obligations by approximately $159 million. A 10% decrease in market interest rates at
December 31, 2003 would result in an increase in the fair value of total long-term obligations by approximately $172 million.

Foreign Exchange Rate Risk

Fluctuations in foreign currency exchange rates can affect, on a United States dollar equivalent basis, the amount of EME's equity
contributions to, and distributions from, its international projects. At times, EME has hedged a portion of its current exposure to
fluctuations in foreign exchange rates through financial derivatives, offsetting obligations denominated in foreign currencies, and
indexing underlying project agreements to United States dollars or other indices reasonably expected to correlate with foreign
exchange movements. In addition, EME has used statistical forecasting techniques to help assess foreign exchange risk and the
probabilities of various outcomes. EME cannot provide assurances, however, that fluctuations in exchange rates will be fully offset
by hedges or that currency movements and the relationship between certain macroeconomic variables will behave in a manner that is
consistent with historical or forecasted relationships.


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                                                                                                             Edison International


The First Hydro plant in the United Kingdom and the plants in Australia have been financed in their local currencies, pounds sterling
and Australian dollars, respectively, thus hedging the majority of their acquisition costs against foreign exchange fluctuations.
Furthermore, EME has evaluated the return on the remaining equity portion of these investments with regard to the likelihood of
various foreign exchange scenarios. These analyses use market-derived volatilities, statistical correlations between specified
variables, and long-term forecasts to predict ranges of expected returns.

During 2003, foreign currencies in Australia, New Zealand and the United Kingdom increased in value compared to the United States
dollar by 34%, 25% and 11%, respectively (determined by the change in the exchange rates from December 31, 2002 to December 31,
2003). The increase in value of these currencies was the primary reason for the foreign currency translation gain of $154 million
during 2003. A 10% increase in the exchange rates at December 31, 2003 would result in foreign currency translation gains of
$329 million.  A 10% decrease in the exchange rates at December 31, 2003 would result in foreign currency translation gains of $40
million.

Contact Energy enters into foreign currency forward exchange contracts to hedge identifiable foreign currency commitments associated
with transactions in the ordinary course of business. The contracts are primarily in Australian and United States dollars with
varying maturities through February 2006. At December 31, 2003, the outstanding notional amount of the contracts totaled $29 million
and the fair value of the contracts totaled $(2) million. A 10% decrease in the exchange rates at December 31, 2003 would result in a
$2 million increase in the fair value of the contracts.

In addition, Contact Energy enters into cross currency interest rate swap contracts in the ordinary course of business. These cross
currency swap contracts involve swapping fixed and floating-rate United States and Australian dollar loans into floating-rate New
Zealand dollar loans with varying maturities through April 2018.

EME will continue to monitor its foreign exchange exposure and analyze the effectiveness and efficiency of hedging strategies in the
future.

Fair Value of Financial Instruments

Non-Trading Derivative Financial Instruments

The following table summarizes the fair values for outstanding derivative financial instruments used for purposes other than trading
by risk category and instrument type:

 In millions               December 31,                                   2003              2002
- ------------------------------------------------------------------------------------------------------
 Derivatives:
    Interest rate:
      Interest rate swap/cap agreements                                $   (34)         $   (56)
      Interest rate options                                                 (1)              (2)
    Commodity price:
      Electricity                                                         (126)            (100)
    Foreign currency forward exchange agreements                            (2)              --
    Cross currency interest rate swaps                                     (91)              (2)
- ------------------------------------------------------------------------------------------------------



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Management's Discussion and Analysis of Financial Condition and Results of Operations


In assessing the fair value of EME's non-trading derivative financial instruments, EME uses a variety of methods and assumptions
based on the market conditions and associated risks existing at each balance sheet date. The fair value of commodity price contracts
takes into account quoted market prices, time value of money, volatility of the underlying commodities and other factors. The fair
value of outstanding derivative commodity price contracts that would be expected after a 10% adverse price change at December 31,
2003 is $(143) million. The following table summarizes the maturities, the valuation method and the related fair value of EME's
commodity price risk management assets and liabilities (as of December 31, 2003):

                                         Total       Maturity        Maturity       Maturity         Maturity
                                          Fair       Less than        1 to 3         4 to 5        Greater than
 In millions                             Value        1 year          years           years           5 years
- ------------------------------------- ------------ -------------- --------------- -------------- ------------------
Prices actively quoted                 $    (3)        $   (4)        $  1            $   --           $   --
Prices based on models and other
   valuation methods                      (123)            19            8               (13)            (137)
- ------------------------------------- ------------ -------------- --------------- -------------- ------------------
Total                                  $  (126)        $   15         $  9            $  (13)          $ (137)
- ------------------------------------- ------------ -------------- --------------- -------------- ------------------

The fair value of the electricity rate swap agreements (included under commodity price-electricity) entered into by the Loy Yang B
plant and the First Hydro plant has been estimated by discounting the future net cash flows resulting from the difference between the
average aggregate contract price per MW and a forecasted market price per MW multiplied by the number of MW remaining to be sold
under the contract.

Energy Trading Derivative Financial Instruments

EME's risk management and trading operations are conducted by its subsidiary, Edison Mission Marketing & Trading. As a result of a
number of industry and credit-related factors, Edison Mission Marketing & Trading has minimized its price risk management and trading
activities not related to EME's power plants or investments in energy projects. To the extent Edison Mission Marketing & Trading
engages in trading activities, Edison Mission Marketing & Trading seeks to manage price risk and to create stability of future income
by selling electricity in the forward markets and, to a lesser degree, to generate profit from price volatility of electricity and
fuels by buying and selling these commodities in wholesale markets. EME generally balances forward sales and purchase contracts and
manages its exposure through a value at risk analysis as described under "--Commodity Price Risk."

The fair value of the commodity financial instruments related to energy trading activities as of December 31, 2003 and December 31,
2002, are set forth below:

                                              December 31, 2003                December 31, 2002
                                         ----------------------------     ----------------------------
    In millions                             Assets     Liabilities           Assets      Liabilities
   ---------------------------------------------------------------------------------------------------
    Electricity                             $ 104        $  11               $ 109         $  15
    Other                                      --            1                  --             2
   ---------------------------------------------------------------------------------------------------
    Total                                   $ 104        $  12               $ 109         $  17
   ---------------------------------------------------------------------------------------------------



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                                                                                                             Edison International


The fair value of trading contracts that would be expected after a 10% adverse price change at December 31, 2003 are shown in the
table below:

                                                                          Fair Value After 10%
  In millions                                          Fair Value         Adverse Price Change
 --------------------------------------------------------------------------------------------------
  Electricity                                          $   93                  $   94
  Other                                                    (1)                     (1)
 --------------------------------------------------------------------------------------------------
  Total                                                $   92                  $   93
 --------------------------------------------------------------------------------------------------

The change in the fair value of trading contracts for the year ended December 31, 2003, was as follows:

          In millions                                                                   Fair Value
         -------------------------------------------------------------------------- ------------------
          Fair value of trading contracts at January 1, 2003                             $    92
          Net gains from energy trading activities                                            40
          Amount realized from energy trading activities                                     (40)
         -------------------------------------------------------------------------- ------------------
          Fair value of trading contracts at December 31, 2003                           $    92
         -------------------------------------------------------------------------- ------------------

Quoted market prices are used to determine the fair value of the financial instruments related to energy trading activities, except
for the power sales agreement with an unaffiliated electric utility that EME's subsidiary purchased and restructured and a long-term
power supply agreement with another unaffiliated party. EME's subsidiary recorded these agreements at fair value based upon a
discounting of future electricity prices derived from a proprietary model using a discount rate equal to the cost of borrowing the
nonrecourse debt incurred to finance the purchase of the power supply agreement. The following table summarizes the maturities, the
valuation method and the related fair value of energy trading assets and liabilities (as of December 31, 2003):

                                            Total     Maturity       Maturity       Maturity          Maturity
                                            Fair      Less than       1 to 3         4 to 5         Greater than
In millions                                 Value       1 year         years          years           5 years
- ----------------------------------------- ---------- ------------- -------------- -------------- -------------------
Prices actively quoted                     $    --    $    --         $    --        $    --          $    --
Prices based on models and other
   valuation methods                            92         (3)              5              9               81
- ----------------------------------------- ---------- ------------- -------------- -------------- -------------------
Total                                      $    92    $    (3)        $     5        $     9          $    81
- ----------------------------------------- ---------- ------------- -------------- -------------- -------------------



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Management's Discussion and Analysis of Financial Condition and Results of Operations


                                                            EDISON CAPITAL

EDISON CAPITAL:  MANAGEMENT OVERVIEW

Edison Capital is a global provider of capital and financial services in energy, affordable housing, and infrastructure projects
focusing primarily on investments related to the production and delivery of electricity.

Edison Capital has $2.6 billion invested worldwide in energy and infrastructure projects, including electric generation, transmission
and distribution, transportation and telecommunications.  These investments are in the form of long-term domestic and cross-border
leveraged leases, partnership interests in international infrastructure funds, and domestic companies that operate renewable energy
projects including wind power.  The leveraged lease investments depend upon the operation of the asset, the lessee's performance of
its contract obligations, enforcement of remedies and the sufficiency of collateral in the event of default, and realization of tax
benefits.  The infrastructure fund investments depend upon the sale on favorable terms of the project assets held by the funds.  The
domestic wind power investments depend upon wind resources, the operation of the assets, the sale of electricity under long-term
power-purchase agreements and realization of energy production tax credits and other tax benefits.

Edison Capital also has $71 million invested in affordable housing projects located throughout the United States.  The investments
are usually in the form of majority interests in limited partnerships or limited liability companies of which a significant portion
has been sold to other parties.  The affordable housing investments depend primarily upon realization of low-income housing tax
credits.

A significant portion of revenue is derived from lease income.  A major component of earnings includes the realization of low-income
housing and energy production tax credits and gains or losses realized on sale of project assets by the infrastructure funds.
Sources of cash result from lease payments, distributions from sale of project assets by the infrastructure funds and Edison
International's ability to utilize tax benefits and credits from Edison Capital's investments.

Edison Capital management is currently concerned about several matters.  First, the Internal Revenue Service (IRS) is expected to
challenge Edison Capital's tax position in certain types of cross-border, leveraged leases as further described in "Other
Developments--Federal Income Taxes."  Second, Edison Capital's investments in three aircraft leased to American Airlines may be
impacted by economic conditions affecting American Airlines.  Third, Edison Capital's receipt of payments under a lease of a domestic
electric generation asset may be indirectly impacted by the regulatory and economic conditions affecting the utility purchasing power
from that asset.  The matters are discussed below.

Edison Capital is currently pursuing new electric infrastructure investments, including renewable energy, after suspending all new
investments since 2001 in order to conserve cash in response to the California energy crisis.  Edison Capital is also evaluating
whether to pursue new affordable housing investments.

EDISON CAPITAL:  LIQUIDITY

Since 2001, as a result of the California energy crisis, Edison Capital reduced debt and accumulated cash, which resulted in a
significant de-leveraging of Edison Capital.  In light of Edison Capital's improved liquidity, Edison Capital made a $225 million
dividend payment to Edison International while maintaining a cash and cash equivalent balance of $354 million at December 31, 2003.
The improvement in liquidity is primarily from Edison International's utilization of tax benefits that had been delayed in previous
years because of the California energy crisis.  Edison Capital expects to meet its operating cash needs through cash on hand,
tax-allocation payments from the parent company and expected cash flow


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                                                                                                             Edison International


from operating activities.  To the extent that certain funding conditions are satisfied, Edison Capital has unfunded current and
long-term commitments of $68 million for energy and infrastructure investments.  In 2004, Edison Capital is evaluating its capital
structure, the potential for additional borrowings and potentially making dividend payments to Edison International.

At December 31, 2003, Edison Capital's long-term debt had credit ratings of Ba1 and BB+ from Moody's and Standard & Poor's,
respectively.

Edison Capital's Intercompany Tax-Allocation Payments

Edison Capital is included in the consolidated federal and combined state income tax returns of Edison International and is eligible
to participate in tax-allocation payments with Edison International and other subsidiaries of Edison International.  See "MEHC and
EME:  Liquidity--EME's Liquidity as a Holding Company--Intercompany Tax-Allocation Payments" for additional information regarding these
arrangements.  Edison Capital received $141 million in tax-allocation payments from Edison International during 2003.  The amount
received is net of payments made to Edison International.  In the future, Edison Capital may be obligated to make payments under the
tax-allocation agreements.  (See "Other Developments--Federal Income Taxes" for further discussion of tax-related issues regarding
Edison Capital's leveraged leases).

EDISON CAPITAL:  MARKET RISK EXPOSURES

Edison Capital is exposed to interest rate risk, foreign currency exchange rate risk and credit and performance risk that could
adversely affect its results of operations or financial position.

Interest Rate Risk

Changes in interest rates can have an impact on Edison Capital's results of operations.  Edison Capital is exposed to changes in
interest rates primarily as a result of its borrowing and investing activities.  The nature and amount of Edison Capital's long- and
short-term debt can be expected to vary as a result of future business requirements and other factors.

Edison Capital believes that the fair market value of its fixed rate long-term debt is subject to interest rate risk.  At December
31, 2003, a 10% increase in market interest rates would have resulted in a $6 million decrease in the fair market value of Edison
Capital's long-term debt.  A 10% decrease in market interest rates would have resulted in a $7 million increase in the fair market
value of Edison Capital's long-term debt.

Foreign Currency Exchange Risk

At December 31, 2003, Edison Capital's outstanding debt included(pound)75 million and the cash equivalents balance included(pound)75 million
(both approximately $134 million) which result in self hedging of the outstanding balances with differences in interest rates and
payment dates subject to foreign currency exchange fluctuations.  A decrease in the cash equivalents balance noted above will
increase the risk associated with foreign currency exchange fluctuations.

Credit and Performance Risk

Edison Capital's investments may be affected by the financial condition of other parties, the performance of the asset, economic
conditions and other business and legal factors.  Edison Capital generally does not control operations or management of the projects
in which it invests and must rely on the skill, experience and performance of third party project operators or managers.  These third
parties may experience


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Management's Discussion and Analysis of Financial Condition and Results of Operations


financial difficulties or otherwise become unable or unwilling to perform their obligations.  Edison Capital's investments generally
depend upon the operating results of a project with a single asset.  These results may be affected by general market conditions,
equipment or process failures, disruptions in important fuel supplies or prices, or another party's failure to perform material
contract obligations, and regulatory actions affecting utilities purchasing power from the leased assets.  Edison Capital has taken
steps to mitigate these risks in the structure of each project through contract requirements, warranties, insurance, collateral
rights and default remedies, but such measures may not be adequate to assure full performance.  In the event of default, lenders with
a security interest in the asset may exercise remedies that could lead to a loss of some or all of Edison Capital's investment in the
projects.

At December 31, 2003, Edison Capital has $42 million invested for an 8.5% ownership interest in a 1,500 MW gas-fired co-generation
power plant leased to Midland Cogeneration Ventures.  Midland Cogeneration Ventures sells electricity to Consumers Energy under a
long-term power-purchase agreement.  The energy and capacity prices paid to Midland Cogeneration Ventures under the power-purchase
agreement are based on the avoided cost of a coal plant established by the Michigan Public Services Commission.  However, the cost of
gas that Midland Cogeneration Ventures must purchase to operate the plant has increased significantly in the last several years.

Consumers Energy is seeking Michigan Public Services Commission's authorization of a resource conservation plan designed to provide
natural gas conservation that would revise dispatch procedures applicable to the power purchased under the power-purchase agreement.
Edison Capital is currently evaluating the impact that the resource conservation plan might have on Midland Cogeneration Ventures and
its ability to make lease payments to Edison Capital.  At December 31, 2003, Midland Cogeneration Ventures was current on its lease
payments to Edison Capital.  Midland Cogeneration Ventures also had lease payment reserves of $299 million at January 31, 2004.

Edison Capital has $63 million invested in three aircraft leased to American Airlines.  The independent auditors' opinion on the
year-end 2002 financial statements of AMR Corporation, parent company of American Airlines, questions AMR Corporation's ability to
continue as a going concern.  As disclosed in AMR Corporation's Form 10-Q filing for September 30, 2003, there were some improvements
made in 2003, such as concessionary agreements with unions and certain other lessors, and reporting operating income of $165 million
for the third quarter of 2003.  However, significant uncertainty remains and if American Airlines defaults in making its lease
payments, the lenders with a security interest in the aircraft or leases may exercise remedies that could lead to a loss of some or
all of Edison Capital's investment in the aircraft plus any accrued interest.  The total maximum loss exposure to Edison Capital in
2004 is $46 million.  A restructure of the lease could also result in a loss of some or all of the investment.  At December 31, 2003,
American Airlines was current in its lease payments to Edison Capital.



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                                                                                                             Edison International


                                                     EDISON INTERNATIONAL (PARENT)

EDISON INTERNATIONAL (PARENT):  LIQUIDITY ISSUES

The parent company's liquidity and its ability to pay interest, debt principal, operating expenses and dividends to common
shareholders are affected by dividends from subsidiaries, tax-allocation payments under its tax-allocation agreements with its
subsidiaries, and access to capital markets or external financings.  Edison International is focused on reducing its parent company
debt in 2004, which may further impact Edison International's liquidity.

Edison International (parent)'s 2004 cash requirements primarily consist of:

o    $618 million of 6-7/8% notes due September 2004.  During January and February 2004, Edison International repurchased
     approximately $46 million of these notes, leaving a remaining balance of $572 million of notes due in September 2004;

o    Interest payments on its long-term notes payable related to the quarterly income debt securities of approximately $67
     million;

o    General operating expenses; and

o    Dividends to common shareholders.

Edison International (parent) expects to meet its continuing obligations through cash and cash equivalents on hand and dividends from
its subsidiaries.  At December 31, 2003, Edison International (parent) had approximately $1.1 billion of cash and cash equivalents on
hand.

Beginning in May 2001, Edison International deferred interest payments in accordance with the terms of its outstanding $825 million
quarterly income debt securities, due 2029, issued to affiliates (EIX Trust I and II, which are Delaware business trusts).  This
interest payment deferral caused a corresponding deferral of distributions on quarterly income preferred securities issued by that
affiliate.  Interest payments may be deferred for up to 20 consecutive quarters.  On December 2, 2003, Edison International made
aggregate payments of approximately $205 million, which covered repayment of the deferred distributions, with interest, and payment
of the distribution due on November 30, 2003.  Edison International has resumed quarterly distributions on the quarterly income debt
securities, subject to its rights to begin deferring distributions again in the future at its election.  As of December 31, 2003,
Edison International deconsolidated EIX Trust I and II, and as a result these securities are now included in long-term debt.  See
"New Accounting Principles" for further discussion.

On October 16, 2003, Edison International received cash dividends of $945 million from SCE and $225 million from Edison Capital.  The
receipt of dividends from SCE and Edison Capital, as well as the payment of all deferred amounts on the quarterly income debt
securities allowed Edison International to declare a common dividend to its shareholders.  On December 11, 2003, the Board of
Directors of Edison International declared a 20(cent)per share common stock dividend.  The $65 million dividend payment was made on
January 30, 2004.

The CPUC regulates SCE's capital structure by requiring that SCE maintain prescribed percentages of common equity, preferred stock
and long-term debt in the utility's capital structure.  SCE may not make any distributions to Edison International that would reduce
the common equity component of SCE's capital structure below the prescribed level.  The CPUC also requires that SCE establish its
dividend policy as though it were a comparable stand-alone utility company and give first priority to the capital requirements of the
utility as necessary to meet its obligation to serve its customers.  SCE's 2001 CPUC settlement agreement precluded SCE from
declaring or paying dividends or other distributions on its


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Management's Discussion and Analysis of Financial Condition and Results of Operations


common stock (all of which is held by its parent, Edison International) prior to the date on which SCE had recovered all of its
procurement-related obligations, with certain exceptions.  SCE fully recovered the PROACT balance during July 2003, and paid a $945
million dividend to Edison International in October 2003 (see further discussion in "SCE:  Liquidity Issues").  Other factors at SCE
that affect the amount and timing of dividend payments by SCE to Edison International include, among other things, SCE's cash
requirements, SCE's access to capital markets, and actions by the CPUC.

MEHC may not pay dividends unless it has an interest coverage ratio of at least 2.0 to 1.  At December 31, 2003, its interest
coverage ratio was 1.56 to 1.  See "MEHC and EME:  Liquidity--Financial Ratios--MEHC's Interest Coverage Ratio."  MEHC did not declare
or pay a dividend in 2003.  MEHC's ability to pay dividends is dependent on EME's ability to pay dividends to MEHC.  EME and its
subsidiaries have certain dividend restrictions as discussed in the "MEHC and EME:  Liquidity" section above.  EME did not pay or
declare a dividend to MEHC in 2003.

Edison International's investment in MEHC, through a wholly owned subsidiary, as of December 31, 2003, was $874 million.  MEHC's
investment in EME, as of December 31, 2003, was $1.9 billion.  MEHC's and EME's independent accountants' audit opinion for the year
ended December 31, 2003, contains an explanatory paragraph that indicates the consolidated financial statements have been prepared on
the basis that EME will continue as a going concern and that the uncertainty about Edison Mission Midwest Holdings' ability to repay
or refinance Edison Mission Midwest Holdings' $693 million of debt due in December 2004 raises substantial doubt about EME's ability
to continue as a going concern. Accordingly, the consolidated financial statements do not include any adjustments that might result
from the resolution of this uncertainty.

Edison Capital's ability to make dividend payments is currently restricted by debt covenants, which require Edison Capital, through a
wholly owned subsidiary, to maintain a specified minimum net worth of $300 million.  In October 2003, Edison Capital paid a $225
million cash dividend to Edison International.  Edison Capital currently meets the minimum net worth covenant.

EDISON INTERNATIONAL (PARENT):  MARKET RISK EXPOSURES

The parent company is exposed to changes in interest rates primarily as a result of its borrowing and investing activities, the
proceeds of which are used for general corporate purposes, including investments in nonutility businesses.  The nature and amount of
the parent company's long-term and short-term debt can be expected to vary as a result of future business requirements, market
conditions and other factors.

At December 31, 2003, the fair market value of Edison International (parent)'s 6-7/8% notes due September 2004  was $637 million.  A
10% increase/decrease in market interest rates would have resulted in a $1.1 million decrease/increase in the fair market value of
the parent company's 6-7/8% notes.  At December 31, 2003, the fair market value of Edison International (parent)'s long-term note
payable related to the quarterly income debt securities was $830 million.  A 10% increase in market interest rates would have
resulted in a $68 million decrease in the fair market value of the long-term note payable related to the quarterly income debt
securities.  A 10% decrease in market interest rates would have resulted in a $78 million increase in the fair market value of the
long-term note payable related to the quarterly income debt securities.

EDISON INTERNATIONAL (PARENT):  OTHER DEVELOPMENTS

Holding Company Proceeding

Edison International is a party to a CPUC holding company proceeding.  See "SCE:  Regulatory Matters--Other Regulatory Matters--Holding
Company Proceeding" for a discussion of this matter.


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                                                                                                             Edison International


                                                  EDISON INTERNATIONAL (CONSOLIDATED)

The following sections of the MD&A are on a consolidated basis.  The section begins with a discussion of Edison International's
consolidated results of operations and historical cash flow analysis.  This is followed by discussions of discontinued operations,
acquisitions and dispositions, critical accounting policies, new accounting principles, commitments and guarantees, off-balance sheet
transactions and other developments.

RESULTS OF OPERATIONS AND HISTORICAL CASH FLOW ANALYSIS

The following subsections of "Results of Operations and Historical Cash Flow Analysis" provide a discussion on the changes in various
line items presented on the Consolidated Statements of Income as well as a discussion of the changes on the Consolidated Statements
of Cash Flows.

Results of Operations

The table below presents Edison International's earnings and earnings per share for the years ended December 31, 2003, 2002 and 2001,
and the relative contributions by its subsidiaries.

In millions, except per share amounts                      Earnings (Loss)                  Earnings per Share
- ------------------------------------------------------------------------------------------------------------------------
  Year Ended December 31,                             2003       2002       2001         2003       2002        2001
- ------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) from Continuing Operations:
Core Earnings:
     SCE                                           $   872    $   748    $   408      $  2.68    $  2.30    $  1.25
     EME                                                28         82        113         0.08       0.26       0.35
     Edison Capital                                     57         33         84         0.17       0.10       0.26
     MEHC (stand alone)                                (98)       (94)       (49)       (0.30)     (0.29)     (0.15)
     Edison International (parent) and other           (80)      (114)      (132)       (0.24)     (0.35)     (0.41)
- ------------------------------------------------------------------------------------------------------------------------
Edison International Core Earnings                     779        655        424         2.39       2.02       1.30
SCE implementation of URG decision                      --        480         --           --       1.47         --
SCE procurement and generation-related adjustment       --         --      1,978           --         --       6.07
- ------------------------------------------------------------------------------------------------------------------------
Edison International Consolidated Earnings
   from Continuing Operations                          779      1,135      2,402         2.39       3.49       7.37
- ------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) from Discontinued Operations            51        (58)    (1,367)        0.16      (0.18)     (4.19)
- ------------------------------------------------------------------------------------------------------------------------
Cumulative Effect of Accounting Change                  (9)        --         --        (0.03)        --         --
- ------------------------------------------------------------------------------------------------------------------------
Edison International Consolidated                  $   821    $ 1,077    $ 1,035      $  2.52    $  3.31    $  3.18
- ------------------------------------------------------------------------------------------------------------------------


Earnings (Loss) from Continuing Operations

Edison International's 2003 earnings from continuing operations were $779 million, or $2.39 per share, compared with earnings of $1.1
billion, or $3.49 per share, in 2002 and earnings of $2.4 billion, or $7.37 per share, in 2001.

2003 vs. 2002

SCE's earnings from continuing operations were $872 million in 2003, compared to $748 million in 2002, excluding the $480 million
gain.  The $124 million increase results from the net effect of the resolution of several regulatory proceedings in 2002 and 2003.
The 2003 proceedings include the CPUC decision on the allocation of certain costs between state and federal regulatory jurisdictions,
tax impacts from the FERC rate case, and the final disposition of the PROACT which had been created to record the recovery of SCE's
procurement-related obligations.  The positive effects of these factors on 2003 earnings were partially offset by the implementation
in 2002 of the CPUC's URG decision and PBR


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Management's Discussion and Analysis of Financial Condition and Results of Operations


rewards received in 2002.  SCE's results also included higher depreciation expense and lower net interest income, partially offset by
higher FERC and PBR revenue.

EME's earnings from continuing operations in 2003 were $28 million compared to $82 million in 2002.  The decrease in earnings was
primarily due to the asset impairment charge of $150 million, after tax, for Midwest Generation's peaking facilities, a reduction in
capacity revenue for the Illinois power plants and a $32 million, after tax, asset impairment charge related to EME's investment in
the Brooklyn Navy Yard project, partially offset by higher United States wholesale energy prices, increased generation from the Homer
City plant and other net charges in 2002.  These net charges, after tax, include write-offs totaling $66 million related to the
cancellation of turbine orders, the suspension of the Powerton SCR project, and the impairment of goodwill and a $27 million loss
from a settlement agreement that terminated the obligation to build additional generation in Chicago; partially offset by a gain of
$43 million from the settlement of a postretirement employee benefit liability.  EME's 2003 earnings included increased profitability
from its interest in the Paiton project in Indonesia and its interest in the Sunrise project which commenced operation of Phase II in
June 2003.  These favorable items together with higher profitability from Contact Energy were partially offset by lower state tax
benefits.

Earnings from continuing operations for Edison Capital were $57 million in 2003 compared with $33 million in 2002.  The increase in
earnings was primarily the result of the write-off in 2002 of an investment in aircraft leases with United Airlines totaling $34
million, after-tax, partially offset by a maturing investment portfolio which produces lower income.

The 2003 loss at MEHC (stand alone) increased by $4 million due to lower interest income and higher consulting fees.

The loss for Edison International (parent) and other decreased $34 million primarily from charges in 2002 associated with businesses
the company exited.

2002 vs. 2001

SCE's earnings were $748 million in 2002, excluding the $480 million benefit related to the implementation of the CPUC's URG
decision, compared to earnings of $408 million in 2001 excluding an adjustment of $2.0 billion to establish the PROACT and record the
recovery of SCE's past procurement-related costs.  The $340 million or 83% increase in SCE's earnings primarily reflects increased
revenue resulting from the CPUC's 2002 decision in SCE's PBR proceeding, increased earnings from SCE's larger rate base in 2002
compared to 2001, lower interest expense, PBR rewards from prior years and increased income from San Onofre Units 2 and 3.  The
increase was partially offset by higher operating and maintenance expense.

Based on the CPUC's January 23, 2003 PROACT resolution, SCE was able to conclude that $3.6 billion in regulatory assets previously
written off were probable of recovery through the rate-making process as of December 31, 2001.  As a result, SCE's December 31, 2001
consolidated income statement included a $3.6 billion credit to provisions for regulatory adjustment clauses and a $1.5 billion
charge to income tax expense, to reflect the $2.1 billion (after tax) credit to earnings.

EME's earnings from continuing operations in 2002 were $82 million, compared to $113 million in 2001.  The decrease in earnings was
primarily due to lower west coast energy prices, unplanned outages at the Homer City plant, gains related to gas swaps from EME's oil
and gas activities, the implementation of a new accounting standard for derivatives in 2001, and other net charges during 2002
totaling $50 million, after tax, or $0.15 per share.  These net charges included a $27 million loss from a settlement agreement that
terminated the obligation to build additional generation in Chicago and a $66 million write-down of assets related to the
cancellation of turbine orders, the suspension of the Powerton SCR project, and an


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impairment of goodwill, partially offset by a gain of $43 million from the settlement of a postretirement employee benefit
liability.  The decrease in earnings from continuing operations was partially offset by improved operating results at EME's Illinois,
Loy Yang B and ISAB plants, income from the Paiton project in Indonesia, and lower state income taxes.

Edison Capital's earnings were $33 million in 2002 compared with $84 million in 2001.  The decrease in earnings was primarily the
result of a write-off of an investment in aircraft leases with United Airlines totaling $34 million, after tax, or $0.11 per share.
Also contributing to the decline in earnings was lower earnings attributable to a maturing investment portfolio and gains in 2001
associated with asset sales.  The decline in earnings was partially offset by lower interest expense and higher tax benefits.

The loss at MEHC (stand alone) increased by $45 million reflecting the issuance of debt in mid-2001.

The loss for Edison International (parent) and other decreased $18 million primarily from lower interest expense and a tax adjustment
in 2001.

Operating Revenue

SCE's retail sales represented approximately 91%, 96% and 94% of electric utility revenue in 2003, 2002, and 2001, respectively.  Due
to warmer weather during the summer months, electric utility revenue during the third quarter of each year is significantly higher
than other quarters.

The following table sets forth the major changes in electric utility revenue:

In millions                           Year ended December 31,             2003 vs. 2002             2002 vs. 2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Electric utility revenue
   Rate changes (including surcharges)                                     $    (677)                $    563
   Direct access credit                                                          471                     (604)
   Sales volume changes                                                          (60)                     696
   Sales for resale                                                              394                      (11)
   Other (including intercompany transactions)                                    20                      (59)
- ---------------------------------------------------------------------------------------------------------------------------------------
Total                                                                      $     148                 $    585
- ---------------------------------------------------------------------------------------------------------------------------------------


Total electric utility revenue increased by $148 million in 2003 (as shown in the table above).  The reduction in electric utility
revenue due to rate changes resulted from the implementation of a CPUC-approved customer rate-reduction plan effective August 1,
2003, partially offset by the recognition of revenue from the CPUC-authorized temporary surcharge collected in 2002, used to recover
costs incurred in 2003 (see "SCE:  Regulatory Matters--Generation and Power Procurement--Temporary Surcharges").  The increase in
electric utility revenue due to direct access credits resulted from a net 1(cent)-per-kWh decrease in credits given to direct access
customers.  The reduction in electric revenue resulting from changes in sales volume was mainly due to an increase in the amount
allocated to the CDWR for bond and direct access exit fees (see discussion below), partially offset by an increase in kWh sold due to
warmer weather in 2003 as compared to 2002.  Sales for resale revenue increased due to a greater amount of excess energy at SCE in
2003 as compared to 2002.  As a result of CDWR contracts allocated to SCE, excess energy from SCE sources may exist at certain times
and is resold in the energy markets.

Electric utility revenue increased by $585 million in 2002 as compared to 2001 (as shown in the table above).  The increase in
electric utility revenue due to rate changes resulted from a 3(cent)-per-kWh surcharge authorized by the CPUC as of March 27, 2001.  The
decrease in electric utility revenue due to direct access credits resulted from an increase in credits given to direct access
customers due to a significant increase in the number of direct access customers.  The increase in electric utility revenue resulting
from changes in sales volume was primarily due to SCE providing its customers with a greater volume of


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energy generated from its own generating plants and power-purchase contracts, rather than the CDWR purchasing power on behalf of
SCE's customers.

Amounts SCE bills and collects from its customers for electric power purchased and sold by the CDWR to SCE's customers (beginning
January 17, 2001), CDWR bond-related costs (beginning November 15, 2002) and direct access exit fees (beginning January 1, 2003) are
remitted to the CDWR and are not recognized as revenue by SCE.  These amounts were $1.7 billion, $1.4 billion, and $2.0 billion for
the years ended December 31, 2003, 2002, and 2001, respectively.

Nonutility power generation revenue increased in both 2003 and 2002.  The 2003 increase was primarily due to increased electric
revenue from EME's Homer City facilities and Contact Energy projects, partially offset by lower capacity revenue from EME's Illinois
plants due to a deduction in megawatts under contract with Exelon Generation.  The increases at EME's Homer City facilities were
primarily due to increased generation and higher energy prices.  The increases at EME's Contact Energy projects were primarily due to
higher wholesale energy prices, higher generation and an increase in the average exchange rate.  The 2002 increase was primarily due
to EME's consolidation of Contact Energy for a full year in 2002, compared to a partial year in 2001 (ownership interest increased to
51%, effective June 1, 2001), and increased revenue from the Illinois plants and First Hydro plant.  These increases were partially
offset by decreased revenue from EME's Homer City facilities.

During 2003, 2002 and 2001, 22%, 40% and 42%, respectively, of nonutility power generation revenue was derived under three
power-purchase agreements between EME's wholly owned subsidiary, Midwest Generation, and Exelon Generation Company, a subsidiary of
Exelon Corporation.  Revenue under these agreements was $708 million in 2003 and $1.1 billion in both 2002 and 2001.  Midwest
Generation expects to be less dependent on Exelon Generation as a major customer during 2004 due to Exelon Generation's release of
3,262 MW of capacity from the coal units and 1,614 MW of capacity from the Collins Station. In 2004, 2,383 MW of capacity from the
coal units and 1,084 MW of capacity from the Collins Station will remain subject to the power-purchase agreements.  The
power-purchase agreements terminate at the end of 2004.  Exelon Corporation is the holding company of ComEd and PECO Energy Company,
major utilities located in Illinois and Pennsylvania. If Exelon Generation were to fail, become unable to fulfill, or choose to
terminate some of its obligations under these power-purchase agreements, Midwest Generation might not be able to find another
customer on similar terms for the output of the Illinois plants.  Any material failure by Exelon Generation to make payments to
Midwest Generation under these power-purchase agreements could result in a shortfall of cash available for Midwest Generation to meet
its obligations. A default by Midwest Generation in meeting its obligations could in turn have a material adverse effect on EME.

Nonutility power generation revenue during the third quarter is materially higher than revenue related to other quarters of the year
because warmer weather during the summer months results in higher revenue being generated from EME's Homer City facilities and
Illinois plants.  By contrast, EME's First Hydro plants have higher revenue during their winter months.

Financial services and other revenue increased in 2003 and decreased in 2002.  The 2003 increase was primarily due to Edison
Capital's recording of the cumulative impact of a change in its effective state tax rate on leveraged leases in 2002 (that was
substantially offset by tax benefits), partially offset by Edison Capital's maturing lease portfolio, the termination of a major
contract at a nonutility subsidiary providing operation and maintenance services and no nonutility real estate sales in 2003, as
compared to 2002, for another subsidiary.  In addition to the above, the 2002 decrease also reflected the impact of adopting the
equity method of accounting in conformance with the infrastructure funds accounting policies.


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Operating Expenses

Fuel expense increased for both 2003 and 2002.  The increase in 2003 was primarily due to increased generation at EME's Homer City
facilities primarily resulting from outages experienced during the first two quarters of 2002, increased fuel costs at EME's Contact
Energy projects primarily due to higher gas prices and an increase in the value of the New Zealand dollar compared to the United
States dollar.  The increase in 2002 was primarily related to EME's consolidation of Contact Energy for a full year in 2002 as
compared to a partial year in 2001, increased pumping power costs from EME's First Hydro plant, increased fuel costs from EME's
Illinois plants and an increase at SCE related to a payment received under a settlement agreement with Peabody associated with
Mohave.  The 2002 increase was partially offset by decreased fuel costs from EME's Homer City facilities.

Purchased-power expense increased in 2003 and decreased in 2002.  The 2003 increase was mainly due to higher expenses resulting from
SCE's resumption of power procurement on January 1, 2003.  The higher expenses resulted from an increase in the number of bilateral
contracts entered into during 2003 and an increase in energy purchased in 2003.  The increase also includes higher expenses related
to power purchased by SCE from QFs, mainly due to higher spot natural gas prices in 2003 as compared to 2002.  The 2002 decrease
resulted primarily from lower expenses at SCE related to power purchased from QFs, bilateral contracts and interutility contracts,
mainly due to lower spot natural gas prices in 2002 as compared to 2001.  In addition, the decrease reflects the absence of PX/ISO
purchased-power expense after mid-January 2001.

Federal law and CPUC orders required SCE to enter into contracts to purchase power from QFs at CPUC-mandated prices.  These contracts
expire on various dates through 2025.  Energy payments to gas-fired cogeneration QFs are generally tied to spot natural gas prices.
Effective May 2002, energy payments for most renewable QFs were converted to a fixed price of 5.37(cent)-per-kWh, compared with an average
of 3.1(cent)-per-kWh during the period of January and April 2002.  During 2003, spot natural gas prices were higher compared to the same
period in 2002.  During 2002, spot natural gas prices were significantly lower than the same periods in 2001.

Provisions for regulatory adjustment clauses - net decreased in 2003 and increased in 2002.  The 2003 decrease was mainly due to
lower overcollections used to recover SCE's PROACT balance, the implementation of the CPUC-authorized customer rate-reduction plan, a
net increase in energy procurement costs and favorable resolution of several regulatory proceedings.  The 2003 proceedings include
the CPUC decision on the allocation of certain costs between state and federal regulatory jurisdictions and the final disposition of
the PROACT.  The decrease was partially offset by the implementation of the CPUC decision related to URG and the PBR mechanism, as
well as the impact of other regulatory actions recorded in 2002.  The 2002 increase was primarily due to the establishment of the
PROACT regulatory asset in 2001, overcollections used to recover the PROACT balance and revenue collected to recover the rate
reduction bond regulatory asset, partially offset by the impact of SCE's implementation of the CPUC decision related to URG and the
PBR mechanism, as well as the impact of other regulatory actions.

As a result of the URG decision received in 2002, SCE reestablished regulatory assets previously written off (approximately
$1.1 billion) related to its nuclear plant investments, purchased-power settlements and flow-through taxes, and decreased the PROACT
balance by $256 million, all retroactive to January 1, 2002.  The impact of the URG decision is reflected in the 2002 financial
statements as a credit (decrease) to the provisions for regulatory adjustment clauses of $644 million, partially offset by an
increase in deferred income tax expense of $164 million, for a net credit to earnings of $480 million.  As a result of the CPUC
decision that modified the PBR mechanism, SCE recorded a $136 million credit (decrease) to the provisions for regulatory adjustment
clauses in the second quarter of 2002, to reflect undercollections in CPUC-authorized revenue resulting from changes in retail rates.


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Other operation and maintenance expense increased in both 2003 and 2002 primarily due to increases at both SCE and EME.

SCE's other operating and maintenance expense increase in 2003 was mainly due to higher health-care costs, higher spending on certain
CPUC-authorized programs, higher transmission access charges and costs incurred in 2003 related to the removal of dead, dying and
diseased trees and vegetation associated with the bark beetle infestation (see "SCE:  Regulatory Matters--Other Regulatory
Matters--Catastrophic Event Memorandum Account").  SCE's other operation and maintenance expense increase in 2002 was primarily due to
the San Onofre Unit 2 refueling outage in 2002, increases in transmission and distribution maintenance and inspection activities, and
temporary cost containment efforts that took place in 2001.  The 2002 increases were partially offset by lower expenses related to
balancing accounts.

EME's other operation and maintenance expense increased in 2003 due to an increase in transmission costs due to higher retail sales
generated by EME's Contact Energy and an increase in the value of the New Zealand dollar, compared to the United States dollar.
EME's other operation and maintenance expense increased in 2002 mainly due to an increase in transmission costs, primarily due to
consolidating Contact Energy, effective June 1, 2001 and an increase in operating leases due to the sale-leaseback transactions for
the Homer City and Powerton-Joliet power facilities.  There were no comparable lease costs for the Homer City facilities through the
period ended December 2001 and the Powerton-Joliet power facilities through the period ended August 2000.  See "Off-Balance Sheet
Transactions--EME's Off-Balance Sheet Transactions--Sale-Leaseback Transactions," for discussion of the financial impact of
sale-leaseback transactions.  In addition, in 2002, EME recorded a $45 million charge related to a settlement of EME's Chicago
In-City obligation.  These increases were partially offset by a gain recorded related to the termination of postretirement benefits
as discussed below.

The settlement of postretirement employee benefit liability in 2002 relates to a retirement health care and other benefits plan for
union-represented employees at the Illinois plants that expired on June 15, 2002.  In October 2002, Midwest Generation reached an
agreement with its union-represented employees on new benefits plans, which extend from January 1, 2003 through June 15, 2006.
Midwest Generation continued to provide benefits at the same level as those in the expired agreement until December 31, 2002.  The
accounting for postretirement benefits liabilities has been determined on the basis of a substantive plan under an accounting
standard for postretirement benefits other than pensions.  A substantive plan means that Midwest Generation assumed, for accounting
purposes, it would provide for postretirement health care benefits to union-represented employees following conclusion of
negotiations to replace the current benefits agreement, even though Midwest Generation had no legal obligation to do so.  Under the
new agreement, postretirement health care benefits will not be provided.  Accordingly, Midwest Generation treated this as a plan
termination in accordance with this accounting standard and recorded a pre-tax gain of $71 million during the fourth quarter of 2002.

Asset impairment expense in 2003 consisted of $245 million related to the impairment of eight small peaking plants owned by EME's
wholly owned subsidiary, Midwest Generation, $53 million to write-down the estimated net proceeds from the planned sale of EME's
Brooklyn Navy Yard project and $6 million related to EME's write-down of its investment in the Gordonsville project due to its
planned disposition (see "Acquisitions and Dispositions" for further discussion).  The impairment charge related to the peaking
plants resulted from a revised long-term outlook for capacity revenue from the peaking plants.  The lower capacity revenue outlook is
the result of a number of factors, including higher long-term natural gas prices and the current generation overcapacity in the MAIN
region market.  See "MEHC and EME:  Liquidity--Financial Ratios--EME's Recourse Debt to Recourse Capital Ratio."  The book value of
these assets was written down from $286 million to an estimated fair market value of $41 million.  The estimated fair market value
was determined based on discounting estimated future pre-tax cash flows using a 17.5% discount rate.  Asset impairment expense in
2002 consisted of $61 million related to the write-off of capitalized costs associated with EME's termination of equipment purchase


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contracts and $25 million related to the write-off of capitalized costs associated with EME's suspension of its Powerton Station
selective catalytic reduction major capital environmental improvements project at its Illinois plants.

Depreciation, decommissioning and amortization expense increased in both 2003 and 2002.  The 2003 increase was mainly due to an
increase in depreciation expense associated with SCE's additions to transmission and distribution assets, an increase in SCE's
nuclear decommissioning expense and higher depreciation expense at EME's Contact Energy projects associated with the Taranaki Station
acquisition.  The 2003 increase also included additional depreciation expense resulting from the termination of EME's Midwest
Generation equipment lease in August 2002, and an increase in amortization expense at Edison Capital resulting from a change from the
cost method to the equity method of accounting for its fund investments in 2002.  The 2003 increase was partially offset by a change
in the amortization period for SCE's San Onofre recorded in the third quarter of 2002 based on the implementation of a CPUC decision.
The increase in 2002 was mainly due to an increase in depreciation expense associated with SCE's additions to transmission and
distribution assets and an increase in SCE's nuclear decommissioning expense.  A 1994 CPUC decision allowed SCE to accelerate the
recovery of its nuclear-related assets while deferring the recovery of its distribution-related assets for the same amount.
Beginning in January 2002, the CPUC approved the commencement of recovery of SCE's deferred distribution assets.  In addition, the
increases reflect amortization expense on the nuclear regulatory asset reestablished during second quarter 2002 based on the URG
decision.  These 2002 increases were partially offset by lower depreciation expense at EME's Homer City facilities due to the
sale-leaseback transaction that took place in December 2001, as well as ceasing the amortization of goodwill in January 1, 2002.

Other Income and Deductions

Interest and dividend income decreased in 2003 and increased in 2002.  The 2003 decrease was mainly due to lower interest income on
the PROACT balance at SCE as well as lower interest income from lower average cash balances at SCE, compared to the same period in
2002.  The 2002 increase was mainly due to the interest income earned on the PROACT balance at SCE.  The 2002 increase was partially
offset by lower interest income due to lower average cash balances and lower interest rates at SCE, EME and Edison Capital during
2002, as compared to 2001 and lower earnings from Edison Capital's investments.

Equity in income from partnerships and unconsolidated subsidiaries - net increased in 2003 and decreased in 2002.  The 2003 increase
was primarily due to an increase in EME's income from the Big 4 projects, Four Star Oil & Gas and the Sunrise project.  Also
contributing to the 2003 increase were increased earnings from Edison Capital's infrastructure funds.  The 2002 decrease was
primarily due to a decrease in EME's income from the Big 4 projects and Four Star Oil & Gas, partially offset by an increase in EME's
income from the Paiton Energy and ISAB projects.  EME's third quarter equity in income from its domestic energy projects is
materially higher than equity in income related to other quarters for the year due to warmer weather during the summer months and
because a number of EME's domestic energy projects, located on the West Coast, have power sales contracts that provide for higher
payments during the summer months.

Other nonoperating income increased in 2003 and decreased in 2002.  The 2003 increase was mainly due to SCE's recognition of 2000 and
2001 Palo Verde performance rewards approved by the CPUC during 2003, as well as higher gains on the sale of EME's development
projects in 2003 as compared to 2002.  The increase was almost entirely offset by property condemnation settlements received at SCE
in 2002, with no comparable settlements received in 2003 and lower foreign exchange gains at Edison Capital in 2003, compared to
2002.  The 2002 decrease was primarily due to a decrease at EME, partially offset by increases at SCE and Edison Capital.  The
decrease at EME was mainly due to foreign exchange losses in 2002 compared to foreign exchange gains in 2001, lower gains on the sale
of EME's interest in energy projects in 2002 compared to 2001, as well as a gain on early extinguishment of debt in 2001.  The 2002


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Management's Discussion and Analysis of Financial Condition and Results of Operations


increase at SCE was primarily due to property condemnation settlements received, partially offset by PBR incentive awards for 1999
and 2000, which were approved by the CPUC and recorded in 2001.  The increase at Edison Capital was primarily due to higher foreign
exchange gains in 2002 compared to 2001.

Interest expense - net of amounts capitalized decreased in both 2003 and 2002.  The 2003 decrease was due to lower interest expense
at SCE due to the accrual of interest in 2002 related to the 2001 and early 2002 suspension of payments for purchased power (these
suspended payments were paid in March 2002), as well as lower interest expense on SCE's long-term debt resulting from the early
retirement of debt.  The 2003 decrease was partially offset by higher interest costs at EME's Illinois plants due to a downgrade of
the credit rating of Edison Mission Midwest Holdings (see "MEHC and EME:  Liquidity--EME's Credit Ratings") and higher levels of
borrowings at EME's Contact Energy related to the Taranaki Station acquisition.  Interest expense - net in 2003 reflects a change in
the classification of dividend payments on preferred securities to interest expense - net from dividends on preferred securities.
Effective July 1, 2003, dividend payments on preferred securities subject to mandatory redemption are included as interest expense
based on the adoption of a new accounting standard.  The new standard did not allow for prior period restatements, therefore
dividends on preferred securities subject to mandatory redemption for the first six months of 2003 are not included in interest
expense - net of amounts capitalized in the consolidated statements of income.  The 2002 decrease is mainly due to: lower long-term
debt balances at Edison Capital as compared to 2001; lower short-term debt balances at Edison International (parent) and all of the
principal operating subsidiaries compared to 2001; and lower interest expense at SCE related to the suspension of payments for
purchased power during 2001, which were subsequently paid in early 2002.  The decrease was partially offset by: an increase in
interest expense on long-term debt at SCE due to higher long-term debt balances; an increase in long-term debt interest expense at
MEHC resulting from the debt financing that took place in July 2001; and the consolidation of Contact Energy at EME.

Other nonoperating deductions increased in both 2003 and 2002.  The 2003 increase was primarily due to the reversal of accruals for
regulatory matters in 2002, partially offset by a goodwill impairment charge associated with EME's Citizens Power acquisition
resulting from adoption of an accounting standard in 2002, as well as lower foreign exchange losses at Edison Capital.  The adoption
of the standard was not material to Edison International; therefore the impact was recorded in other nonoperating deductions, rather
than as a cumulative effect of a change in accounting principle.  The 2002 increase was mainly due to the goodwill impairment charge
at EME, partially offset by the reversal of accruals for regulatory matters at SCE in 2002.

Income Taxes

Income tax expense decreased in both 2003 and 2002.  The 2003 and 2002 decreases were primarily due to reductions in pre-tax income.
The 2003 decrease also resulted from the favorable resolution of a FERC rate case at SCE.  The 2003 decrease was partially offset by
the reestablishment of tax-related regulatory assets upon implementation of the URG decision at SCE and the cumulative adjustment to
deferred tax balances at Edison Capital to reflect changes in its effective state tax rate, both recorded in 2002.  The 2002 decrease
also resulted from the reestablishment of tax-related regulatory assets upon implementation of the URG decision at SCE, a cumulative
adjustment to deferred tax balances at Edison Capital to reflect changes in its effective state tax rate and favorable resolution of
tax audits at SCE.

Edison International's composite federal and state statutory rate was approximately 40% for all years presented.  The lower effective
tax rate of 21.5% realized in 2003 was primarily due to the resolution of a FERC rate case at SCE, recording the benefit of favorable
resolution of tax audit issues at SCE and the benefits received from low-income housing and production tax credits at Edison
Capital.  The lower effective tax rate of 25.6% realized in 2002 was primarily due to the reestablishment of tax-related regulatory
assets upon implementation of the URG decision at SCE, a cumulative adjustment to deferred


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tax balances at Edison Capital to reflect changes in its effective state tax rate, the favorable resolution of tax audit issues at
SCE and the benefits received from low-income housing and production credits at Edison Capital.

Earnings (Loss) from Discontinued Operations

Edison International's earnings from discontinued operations in 2003 were $51 million, including a $44 million (after-tax) gain on
the sale of SCE's fuel oil pipeline business.  Edison International's loss from discontinued operations in 2002 represent the
one-time asset impairment charge of $77 million (after tax) resulting from EME's Lakeland project being placed into administrative
receivership in the United Kingdom, offset by $22 million in 2002 operating results from the Lakeland project.  See further
discussion at "Discontinued Operations" and "Acquisitions and Dispositions."  The 2002 loss also includes minor adjustments related
to the sale of EME's Fiddler's Ferry and Ferrybridge coal stations and the sale of a majority of Edison Enterprises (a nonutility
subsidiary of Edison International that formerly provided retail services) assets in 2001.  The 2001 loss includes impairment charges
resulting from the sale of the Fiddler's Ferry and Ferrybridge plants and the majority of Edison Enterprises' assets, as well as
operating results from the discontinued entities.

Cumulative Effect of Accounting Change - net of tax

Edison International's results for 2003 include a $9 million charge at EME for the cumulative effect of an accounting change related
to the new accounting standard for recording asset retirement obligations adopted by Edison International in January 2003.  As SCE
follows accounting principles for rate-regulated enterprises, implementation of this new standard did not affect earnings.  (See "New
Accounting Principles.")

Historical Cash Flow Analysis

The "Historical Cash Flow Analysis" section of this MD&A discusses consolidated cash flows from operating, financing and investing
activities.

Cash Flows from Operating Activities

Net cash provided by operating activities:

         In millions         Year ended December 31,               2003           2002           2001
- ---------------------------------------------------------------------------------------------------------
         Continuing operations                                  $ 3,359        $ 2,241        $ 3,121
         Discontinued operations                                    (52)            80           (147)
- ---------------------------------------------------------------------------------------------------------
                                                                $ 3,307        $ 2,321        $ 2,974
- ---------------------------------------------------------------------------------------------------------


The 2003 increase in cash provided by operating activities from continuing operations was mainly due to SCE's March 2002 repayment of
past-due obligation.  The change was also due to timing of cash receipts and disbursements related to working capital items at both
SCE and EME.  The 2002 decrease in cash provided by operating activities from continuing operations was mainly due to SCE's March
2002 repayment of past-due obligations, partially offset by higher overcollections used to recover regulatory assets resulting from
the CPUC-approved surcharges (1(cent)-per-kWh in January 2001 and 3(cent)-per-kWh in June 2001) and an increase in operating cash flow from EME
resulting from the timing of cash payments related to working capital items.

Cash used by operating activities from discontinued operations in 2003 primarily reflects operating activities at SCE's fuel oil
pipeline business.  Cash provided by operating activities from discontinued


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Management's Discussion and Analysis of Financial Condition and Results of Operations


operations in 2002 primarily reflects the settlement of working capital items from EME's Fiddler's Ferry and Ferrybridge power plants
and operating income from the EME's Lakeland power plant during 2002.  Cash used by operating activities from discontinued operations
in 2001 reflects operating losses from EME's Fiddler's Ferry and Ferrybridge power plants in 2001, as compared to operating income in
2000, and the timing of cash payments related to working capital items.

Cash Flows from Financing Activities

Net cash used by financing activities:

         In millions         Year ended December 31,               2003           2002           2001
- ----------------------------------------------------------------------------------------------------------
         Continuing operations                                $  (2,006)     $  (2,582)      $   (379)
         Discontinued operations                                     --            (19)        (1,178)
- ----------------------------------------------------------------------------------------------------------
                                                              $  (2,006)     $  (2,601)      $ (1,557)
- ----------------------------------------------------------------------------------------------------------


Cash used by financing activities from continuing operations in 2003 mainly consisted of long-term and short-term debt payments at
SCE and EME.

During the first quarter of 2003, Edison International (parent) repurchased approximately $132 million of the outstanding $750
million of its 6-7/8% notes due September 2004.  No repurchases were made during the remainder of 2003.  SCE's financing activities
during 2003 included an exchange offer of $966 million of 8.95% variable rate notes due November 2003 for $966 million of new series
first and refunding mortgage bonds due February 2007.  In addition, during 2003, SCE repaid $125 million of its 6.25% bonds, the
outstanding balance of $300 million of a $600 million one-year term loan due March 3, 2003, $300 million on its revolving line of
credit, and $700 million of a term loan due March 2005.  The $700 million term loan was retired with a cash payment of $500 million
and $200 million drawn on a $700 million credit facility that expires in 2006.  EME's financing activity during 2003 includes an
$800 million secured loan received by EME's subsidiary, Mission Energy Holdings International, combined with borrowings of $800
million $275 million in borrowings by Contact Energy, EME's 51% owned subsidiary, used to finance Contact Energy's acquisition of the
Taranaki Combined Cycle power station (see "Acquisitions and Dispositions" for further discussion of the acquisition).  EME's
financing activity in 2003 also included debt service payments of $911 million related to Tranche A and $116 million related to
Tranche B of Edison Mission Energy Holdings' credit facility, repayment of $167 million on the Coal and Capex facility guaranteed by
EME, debt service payments of $118 million related to three of EME's subsidiaries, and repayment of $31 million of debt obligations
due from EME's acquisition of the Spanish Hydro project.

During the first quarter of 2002, SCE paid $531 million of matured commercial paper and remarketed $196 million of the $550 million
of pollution-control bonds repurchased during December 2000 and early 2001.  Also during the first quarter of 2002, SCE replaced the
$1.65 billion credit facility with a $1.6 billion financing and made a payment of $50 million to retire the entire credit facility.
Throughout the year, SCE paid approximately $1.2 billion of maturing long-term debt.  The $1.6 billion financing included a
$600 million, one-year term loan due March 3, 2003.  SCE prepaid $300 million of this loan in August 2002.  EME's debt payments in
2002 consisted of payment of $100 million of senior notes that matured in 2002, net payments of $80 million on EME's $487 million
corporate credit facility, $44 million related to debt service payments and payments of $86 million on EME's debentures and notes.
Edison Capital's net payments on short-term debt were approximately $312 million.

Cash used by financing activities from continuing operations in 2001 consisted of long-term debt repayments at EME and short-term
debt repayments at the parent company and at EME.  The uses of cash


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were partially offset by the issuance of long-term debt at EME of $1.0 billion and at MEHC of $1.2 billion.

Cash used by financing activities from discontinued operations in 2002 represents repayments of long-term debt at EME's Lakeland
power plant.  Cash used by financing activities from discontinued operations in 2001 related to the early repayment of a term loan
facility in connection with the sale of the Ferrybridge and Fiddler's Ferry power plants on December 21, 2001.

In December 1997, $2.5 billion of rate reduction notes were issued on behalf of SCE by SCE Funding LLC, a special purpose entity.
These notes were issued to finance the 10% rate reduction mandated by state law.  The proceeds of the rate reduction notes were used
by SCE Funding LLC to purchase from SCE an enforceable right known as transition property.  Transition property is a current property
right created by the electric industry restructuring legislation and a financing order of the CPUC and consists generally of the
right to be paid a specified amount from nonbypassable rates charged to residential and small commercial customers.  The rate
reduction notes are being repaid over 10 years through these nonbypassable residential and small commercial customer rates, which
constitute the transition property purchased by SCE Funding LLC.  The remaining series of outstanding rate reduction notes have
scheduled maturities through 2007, with interest rates ranging from 6.38% to 6.42%.  The notes are collateralized by the transition
property and are not collateralized by, or payable from, assets of SCE or Edison International.  SCE used the proceeds from the sale
of the transition property to retire debt and equity securities.  Although, as required by accounting principles generally accepted
in the United States, SCE Funding LLC is consolidated with SCE and the rate reduction notes are shown as long-term debt in the
consolidated financial statements, SCE Funding LLC is legally separate from SCE.  The assets of SCE Funding LLC are not available to
creditors of SCE or Edison International and the transition property is legally not an asset of SCE or Edison International.

Cash Flows from Investing Activities

Net cash provided (used) by investing activities:

         In millions         Year ended December 31,               2003           2002           2001
- ---------------------------------------------------------------------------------------------------------
         Continuing operations                                 $ (1,725)     $  (1,331)       $  (424)
         Discontinued operations                                    150              2          1,125
- ---------------------------------------------------------------------------------------------------------
                                                               $ (1,575)     $  (1,329)       $   701
- ---------------------------------------------------------------------------------------------------------


Cash flows from investing activities are affected by additions to property and plant, EME's sales of assets and SCE's funding of
nuclear decommissioning trusts.

Additions to SCE's property and plant during 2003 were approximately $1.2 billion, primarily for transmission and distribution
assets.  EME's capital additions in 2003 were $127 million primarily for new plant and equipment related to EME's Illinois plants,
its Homer City facilities, and Contact Energy projects.  EME's 2003 investing activity also included $275 million paid by Contact
Energy for the acquisition of the Taranaki Combined Cycle power station (see "Acquisitions and Dispositions" for further discussion
of the acquisition).

Additions to SCE's property and plant during 2002 were approximately $1.0 billion, primarily for transmission and distribution
assets; EME's capital additions of $554 million included a $300 million payment for the Illinois peaker power units that were subject
to a lease (see "Off-Balance Sheet Transactions--EME's Off-Balance Sheet Transactions").  The remaining increases were primarily for
the Valley Power Peaker project in Australia, the Illinois plants, the Homer City facilities and payments


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related to three turbines.  These increases were partially offset by proceeds from the sale of various EME projects.

Cash flows from investing activities from continuing operations in 2001 included proceeds from EME's sale-leaseback transaction with
respect to the Homer City facilities in December 2001 and from EME's sale of a 50% interest in the Sunrise project, as well as EME's
equity contributions to meet capital calls by its QF partnerships in California.

Investing cash flows from discontinued operations in 2003 represents the proceeds received from SCE's sale of its fuel oil pipeline
business.  Cash flows from investing activities from discontinued operations in 2001 includes the proceeds received from EME's sale
of Ferrybridge and Fiddler's Ferry power plants on December 21, 2001.

Nuclear decommissioning costs are recovered in utility rates.  These costs are expected to be funded from independent decommissioning
trusts that receive SCE contributions of approximately $32 million per year.  The fair value of decommissioning SCE's nuclear power
facilities is $2.1 billion as of December 31, 2003, based on site-specific studies performed in 2001 for San Onofre and Palo Verde.
As of December 31, 2003, the decommissioning trust balance was $2.5 billion.  The CPUC has set certain restrictions related to the
investments of these trusts.  Contributions to the decommissioning trusts are reviewed every three years by the CPUC.  The
contributions are determined from an analysis of estimated decommissioning costs, the current value of trust assets and long-term
forecasts of cost escalation and after-tax return on trust investments.  Favorable or unfavorable investment performance in a period
will not change the amount of contributions for that period.  However, trust performance for the three years leading up to a CPUC
review proceeding will provide input into future contributions.  SCE's costs to decommission San Onofre Unit 1 are paid from the
nuclear decommissioning trust funds.  These withdrawals from the decommissioning trusts are netted with the contributions to the
trust funds in the Consolidated Statements of Cash Flows.

DISCONTINUED OPERATIONS

On July 10, 2003, the CPUC approved SCE's sale of certain oil storage and pipeline facilities to Pacific Terminals LLC for $158
million.  In third quarter 2003, SCE recorded a $44 million after-tax gain to shareholders.  In 2003, the results of SCE's oil
storage and pipeline facilities unit have been accounted for as a discontinued operation in the consolidated financial statements.

On December 19, 2002, the lenders to EME's Lakeland project accelerated the debt owing under the bank agreement that governs the
project's indebtedness, and on December 20, 2002, the Lakeland project lenders appointed an administrative receiver over the assets
of Lakeland Power Ltd.  The appointment of the administrative receiver results in the treatment of Lakeland power plant as an asset
held for sale under an accounting standard related to the impairment or disposal of long-lived assets.  Due to EME's loss of control
arising from the appointment of the administrative receiver, EME no longer consolidates the activities of Lakeland Power Ltd.  The
loss from operations of Lakeland in 2002 includes an impairment charge of $92 million ($77 million after tax) and a provision for bad
debts of $1 million, after tax, arising from the write-down of the Lakeland power plant and related claims under the power sales
agreement (an asset group according to an impairment standard) to their fair market value.  The fair value of the asset group was
determined based on discounted cash flows and estimated recovery under related claims under the power sales agreement.  In 2002, the
results of the Lakeland project are reflected as discontinued operations in the consolidated financial statements.

On December 21, 2001, EME completed the sale of the Fiddler's Ferry and Ferrybridge coal stations located in the United Kingdom to
two wholly owned subsidiaries of AEP.  The net proceeds from the sale ((pound)643 million) were used to repay borrowings outstanding under
the existing debt facility related to the


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acquisition of the plants.  In addition, the buyers acquired other assets and assumed specific liabilities associated with the
plants.  EME recorded a charge of $1.9 billion ($1.1 billion after tax) related to the loss on sale.  The $1.9 billion charge
includes the asset impairment charge recorded in third quarter 2001 to reduce the carrying value of the assets held for sale to
reflect estimated fair value less the cost to sell and related currency adjustments.  EME had acquired the plants in 1999 for
approximately $2.0 billion ((pound)1.3 billion).

In August 2001, Edison Enterprises, a wholly owned subsidiary of Edison International, sold a subsidiary principally engaged in the
business of providing residential security services and residential electrical warranty repair services.  In October 2001, Edison
Enterprises completed the sale of substantially all of its assets of another subsidiary (engaged in the business of commercial energy
management) to the subsidiary's current management.  As a result, Edison International recorded a charge of $127 million (after tax)
in 2001 related to the losses on these sales.  The impairment charges recorded in 2001 to reduce the carrying value of these
investments held for sale to reflect the estimated fair value less cost to sell are included in the $127 million charge.  For all
years presented, the results of the Fiddler's Ferry and Ferrybridge coal stations and Edison Enterprises subsidiaries sold during
2001 have been reflected as discontinued operations in the consolidated financial statements.

ACQUISITIONS AND DISPOSITIONS

On December 31, 2003, EME agreed to sell its 50% partnership interest in Brooklyn Navy Yard Cogeneration Partners L.P. to a third
party.  Completion of the sale, currently expected in the first quarter of 2004, is subject to closing conditions, including
obtaining regulatory approval.  Proceeds from the sale are expected to be approximately $42 million.  EME recorded an impairment
charge of $53 million during the fourth quarter of 2003 related to the planned disposition of this investment.

On December 12, 2003, EME agreed to sell 100% of its stock of Edison Mission Energy Oil & Gas, which in turn holds minority interests
in Four Star Oil & Gas, to Medicine Bow Energy Corporation.  Following receipt of regulatory approvals and satisfaction of all other
closing conditions, EME completed this sale on January 7, 2004. Proceeds from the sale were approximately $100 million.  EME expects
to record a pre-tax gain on the sale of approximately $47 million during the first quarter of 2004.

On November 21, 2003, Gordonsville Energy Limited Partnership, in which EME owns a 50% interest, completed the sale of the
Gordonsville cogeneration facility to Virginia Electric and Power Company.  Proceeds from the sale, including distribution of a debt
service reserve fund, were $36 million.  EME recorded an impairment charge of $6 million during the second quarter of 2003 related to
the planned disposition of this investment.

On July 17, 2003, SCE signed an option agreement with Sequoia Generating LLC, a subsidiary of InterGen, to acquire Mountainview Power
Company LLC, the owner of a new 1,054-megawatt, combined-cycle, natural gas-fired power plant currently being developed in Redlands,
California.  Mountainview Power Company LLC would sell all the output of the power plant to SCE pursuant to a 30-year tolling
power-purchase agreement.  The power-purchase agreement would be a cost-based contract providing for recovery of investment, fixed
and variable costs, and a regulated rate of return, over the 30-year life of the contract.  On December 18, 2003, the CPUC approved
the Mountainview power-purchase agreement, subject to SCE receiving a FERC decision approving the agreement without any modifications
that would have potential rate impacts.  On February 25, 2004, the FERC granted conditional approval of the Mountainview
power-purchase agreement.  On March 1, 2004, a CPUC administrative law judge issued a proposed decision that would accept the
conditions in the FERC approval of the power-purchase agreement.  The matter is scheduled to be considered by the CPUC at its meeting
on March 16, 2004.  On February 28, 2004, SCE exercised its option to purchase Mountainview Power LLC.  SCE currently anticipates
that it will close the purchase before the end of March 2004 and recommence construction of


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the project immediately thereafter.  SCE estimates that the project will be completed in March 2006 at a cost of approximately
$600 million, excluding financing costs.  SCE expects to finance the capital costs of the project with debt and equity at the utility
level consistent with its authorized capital structure.

On July 10, 2003, the CPUC approved a joint application filed by SCE and Pacific Terminals LLC, requesting authorization for the sale
of certain oil storage and pipeline facilities by SCE to Pacific Terminals for $158 million.  The sale closed on July 31, 2003 and
resulted in a $44 million after-tax gain to shareholders recorded in the third quarter of 2003.

On March 3, 2003, Contact Energy, EME's 51% owned subsidiary, completed a transaction with NGC Holdings Ltd. to acquire the Taranaki
Combined Cycle power station and related interests.  The Taranaki station is a 357 MW combined cycle, natural gas-fired plant located
near Stratford, New Zealand.  Consideration for the Taranaki station consisted of a cash payment of approximately $275 million, which
was initially financed with bridge loan facilities.  The bridge loan facilities were subsequently repaid with proceeds from Contact
Energy's issuance of long-term United States dollar denominated notes.

CRITICAL ACCOUNTING POLICIES

The accounting policies described below are viewed by management as critical because their application is the most relevant and
material to Edison International's results of operations and financial position and these policies require the use of material
judgments and estimates.

Asset Impairment

Edison International evaluates long-lived assets whenever indicators of potential impairment exist.  Accounting standards require
that if the undiscounted expected future cash flow from a company's assets or group of assets (without interest charges) is less than
its carrying value, an asset impairment must be recognized in the financial statements.  The amount of impairment is determined by
the difference between the carrying amount and fair value of the asset.

The assessment of impairment is a critical accounting estimate because significant management judgment is required to determine:  (1)
if an indicator of impairment has occurred, (2) how assets should be grouped, (3) the forecast of undiscounted expected future cash
flow over the asset's estimated useful life to determine if an impairment exists, and (4) if an impairment exists, the fair value of
the asset or asset group.  Factors Edison International considers important, which could trigger an impairment, include operating
losses from a project, projected future operating losses, the financial condition of counterparties, or significant negative industry
or economic trends.

During the second quarter of 2003, EME assessed the impairment of its Illinois plants.  EME has grouped the Illinois plants into two
asset groups: coal-fired power plants and the small peaker plants.  Management judgment was required to make this assessment based on
the lowest level of cash flow that was viewed by management as largely independent of each other.  The expected future undiscounted
cash flow from EME's merchant power plants is a critical accounting estimate because: (1) estimating future prices of energy and
capacity in wholesale energy markets is susceptible to significant change, and (2) the forecast is over an extended time period due
to the estimated useful life (15 to 33.75 years) of power plants, and (3) the impact of an impairment on EME's consolidated financial
position and results of operations would be material.  The expected undiscounted future cash flow from the small peaker plants did
not exceed the carrying value of that asset group.  The book value of these assets was written down from $286 million to an estimated
fair market value of $41 million.  The estimated fair market value was determined based on discounting estimated future pretax cash
flows using a 17.5% discount rate.  The impairment charge relating to the peaking plants resulted from a revised long-term outlook
for capacity revenue from the peaking plants.  The lower capacity revenue outlook is the result of a number of factors,


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including higher long-term natural gas prices and the current generation overcapacity in the MAIN region market.  See "MEHC and EME:
Market Risk Exposures--Commodity Price Risk--Illinois Plants."

In addition to the asset impairment charge related to the small peaking plants in 2003, EME's indirect subsidiary, Midwest
Generation, also reported an impairment charge of $475 million, after tax, related to the 2,698 MW gas-fired Collins Station in its
second quarter report on Form 10-Q.  The impairment charge resulted from a write-down of the book value of the Collins Station
capitalized assets from $858 million to an estimated fair market value of $78 million.  The impairment charge by Midwest Generation
is not reflected in the operating results of EME because the lease related to the Collins Station is treated in EME's financial
statements as an operating lease and not as an asset and, therefore, is not subject to impairment for accounting purposes.  See "MEHC
and EME:  Liquidity--Financial Ratios--EME Recourse Debt to Recourse Capital Ratio."

During the fourth quarter of 2002, SCE assessed the impairment of Mohave due to the probability of a plant shutdown at the end of
2005.  Because the expected undiscounted cash flows from the plant during the years 2003-2005 were less than the $88 million carrying
value of the plant as of December 31, 2002, SCE incurred an impairment charge of $61 million.  However, in accordance with accounting
principles for rate regulated companies, this incurred cost was deferred and recorded as a regulatory asset, due to the expectation
that the unrecovered book value of Mohave at the time of shutdown will be recovered through the rate-making process.  See "SCE:
Regulatory Matters--Generation and Power Procurement--Mohave Generating Station and Related Proceedings," and "--Rate Regulated
Enterprises."

During the fourth quarter of 2002, an impairment charge of $92 million ($77 million after tax) was recorded by EME's subsidiary
holding the Lakeland power plant due to the change in financial condition of TXU Europe and its subsidiaries, one of which was
counterparty to a long-term power-purchase agreement (considered an indicator of impairment under the accounting standard).
Management's judgment was required to determine the asset group, which was determined as the power plant and claim under the
power-purchase agreement.  Furthermore, a management estimate was required to determine the fair value of the asset group as the
expected undiscounted future cash flow was less than the carrying value of the asset.  See "Results of Operations and Historical Cash
Flow Analysis--Results of Operations--Earnings (Loss) from Discontinued Operations," for further discussion.

Edison International also would record an impairment charge if a decision is made (which generally occurs when Edison International
enters into an agreement to sell an asset) to dispose of an asset and the fair value is less than Edison International's book value.
The accounting standards require the following criteria to be met to classify an asset held for sale:

1.   management approves the action and commits to a plan to sell an asset, which is generally evidenced by the signing of an
     asset sales agreement or Board of Directors approval;

2.   the long-lived asset (asset group) is generally deemed to be available for immediate sale and conditions for sale is subject
     only to the terms and conditions customary for sale of such assets;

3.   management has actively engaged in a program to locate a buyer and has initiated other such actions required to complete the
     plan to sell the asset;

4.   the sale is probable and the transfer of the asset is expected to be completed within one year;

5.   the asset is being marketed at a price that is believed to be reasonable in relation to fair value; and

6.   management believes that it is unlikely that significant changes to the plan that asset will be made or that the plan will
     be withdrawn.


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EME has engaged investment bankers to market for sale its international project portfolio which commenced during the first quarter of
2004.  Completion of the sale of all or part of EME's international project portfolio is contingent on receiving acceptable offers in
terms of both price and terms and conditions related to risk factors.  Due to the uncertainty regarding completion of the sale of all
or part of the international project portfolio through the current offering process, management has concluded that it has not met all
of the requirements listed above at December 31, 2003.  EME's book value of its international project portfolio was approximately
$2.2 billion at December 31, 2003.  Edison International cannot predict with certainty whether EME will be able to sell these assets
at or above book value.

During 2003, EME met the asset held for sale criteria under the accounting standards regarding its investment in the Gordonsville and
Brooklyn Navy projects and recorded an impairment based on the net proceeds expected from the sale of $6 million and $53 million,
respectively.  Using this type of analysis, EME recorded $1.9 billion impairment of EME's Ferrybridge and Fiddler's Ferry power
plants during the third quarter of 2001 and Edison Enterprises recorded $127 million impairment for the majority of its assets in
2001.  See "Results of Operations and Historical Cash Flow Analysis--Results of Operations-- Earnings (Loss) from Discontinued
Operations," for further discussion.

EME operates several power plants under leases as described below under "--Off-Balance Sheet Financing."  Under generally accepted
accounting principles as currently interpreted, EME is not required to record a loss if future cash flows from use of an asset under
lease are less than the expected minimum lease payments.  This accounting issue has been discussed in an authoritative accounting
interpretation for the recognition by a purchaser of losses on firmly committed executory contracts, without reaching a consensus.
Future minimum lease payments on the Collins Station are estimated to be $1.3 billion.  As a result, if the accounting guidance in
this area were to change, EME could be required to record a loss on this lease, depending on an assessment of future expected cash
flow at the time such guidance was changed.

Due to lower wholesale prices for energy during 2002 and 2003 (see "MEHC and EME:  Market Risk Exposures--Commodity Price Risk"), EME
has suspended operations of four units at the Illinois plants (Units 1 and 2 at Will County and Units 4 and 5 at the Collins
Station).  EME continues to record depreciation on such assets during the period that EME has suspended operations.  Accounting for
these units as idle facilities requires management's judgment that these units will return to service.  EME has continued the
maintenance of these units in order to return them to service when market conditions improve on a sustained basis and future
environmental uncertainties are resolved.  If market conditions do not improve on a sustained basis, environmental uncertainties are
not resolved or are resolved unfavorably, or if a decision is made not to return them to service due to other factors, EME could sell
or decommission one or more of these units.  Such a decision could result in a loss on sale or a write-down of the carrying value of
these assets.

EME evaluates goodwill whenever indicators of impairment exist, but at least annually on October 1 of each year.  EME's goodwill is
primarily related to the acquisitions of Contact Energy and First Hydro.  EME determined through a fair value analysis conducted by
third parties that the fair value of the Contact Energy and First Hydro reporting units was in excess of book value.  Accordingly, no
impairment of the goodwill related to these reporting units was recorded upon adoption of this standard.

Determining the fair value of the reporting unit under the goodwill and other intangible accounting standard is a critical accounting
estimate because:  (1) it is susceptible to change from period to period since it requires assumptions regarding future revenue and
costs of operations and discount rates over an indefinite life, and (2) the impact of recognizing an impairment on EME's consolidated
financial position and results of operations would be material.  EME has engaged third parties to conduct appraisals of the fair
value of the major reporting units with goodwill on October 1, 2003 (the annual impairment testing


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date).  The fair value of the First Hydro and Contact Energy reporting units set forth in these appraisals exceeded the carry value.

Derivative Financial Instruments and Hedging Activities

Edison International follows the accounting standard for derivative instruments and hedging activities, which requires derivative
financial instruments to be recorded at their fair value unless an exception applies.  The accounting standard also requires that
changes in a derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.  For
derivatives that qualify for hedge accounting, depending on the nature of the hedge, changes in fair value are either offset by
changes in the fair value of the hedged assets, liabilities or firm commitments through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative's change in fair value
is immediately recognized in earnings.

EME uses derivative financial instruments for price risk management activities and trading purposes.  Derivative financial
instruments are mainly utilized to manage exposure from changes in electricity and fuel prices, interest rates and fluctuations in
foreign currency exchange rates.

Management's judgment is required to determine if a transaction meets the definition of a derivative and whether the normal sales and
purchases exception applies or whether individual transactions qualify for hedge accounting treatment.  The majority of EME's power
sales and fuel supply agreements related to its generation activities either:  (1) do not meet the definition of a derivative as they
are not readily convertible to cash, or (2) qualify as normal purchases and sales and are, therefore, recorded on an accrual basis.

Derivative financial instruments used at EME for trading purposes includes forwards, futures, options, swaps and other financial
instruments with third parties.  EME records at fair value derivative financial instruments used for trading.  The majority of EME's
derivative financial instruments with a short-term duration (less than one year) are valued using quoted market prices.  In the
absence of quoted market prices, derivative financial instruments are valued at fair value, considering time value of money,
volatility of the underlying commodity, and other factors as determined by EME.  Resulting gains and losses are recognized in net
gains (losses) from price risk management and energy trading in the accompanying consolidated income statements in the period of
change.  Assets from price risk management and energy trading activities include the fair value of open financial positions related
to derivative financial instruments recorded at fair value, including cash flow hedges, that are in-the-money and the present value
of net amounts receivable from structured transactions.  Liabilities from price risk management and energy trading activities include
the fair value of open financial positions related to derivative financial instruments, including cash flow hedges, that are
out-of-the-money and the present value of net amounts payable from structured transactions.

Determining the fair value of derivatives under this accounting standard is a critical accounting estimate because the fair value of
a derivative is susceptible to significant change resulting from a number of factors, including volatility of energy prices, credits
risks, market liquidity and discount rates.  See "MEHC and EME:  Market Risk Exposures," and "SCE:  Market Risk Exposures" for a
description of risk management activities and sensitivities to change in market prices.

EME enters into master agreements and other arrangements in conducting price risk management and trading activities with a right of
setoff in the event of bankruptcy or default by the counterparty.  Such transactions are reported net in the balance sheet in
accordance with an authoritative interpretation for offsetting amounts related to certain contracts.


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Income Taxes

The accounting standard for income taxes requires the asset and liability approach for financial accounting and reporting for
deferred income taxes.  Edison International uses the asset and liability method of accounting for deferred income taxes and provides
deferred income taxes for all significant income tax temporary differences.

As part of the process of preparing its consolidated financial statements, Edison International is required to estimate its income
taxes in each of the jurisdictions in which it operates.  This process involves estimating actual current tax expense together with
assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting purposes.
These differences result in deferred tax assets and liabilities, which are included within Edison International's consolidated
balance sheet.  Edison International takes certain tax positions it believes are applied in accordance with tax laws.  The
application of these positions are subject to interpretation and audit by the IRS.  As further described in "Other
Developments--Federal Income Taxes," the IRS has raised issues in the 1994 to 1996 audit of Edison International's tax returns with
respect to certain leveraged leases at Edison Capital and Edison Capital expects the IRS will also challenge several of its other
leveraged leases in the audit of years 1997 through 1999.  Edison International does not provide for federal income taxes or tax
benefits on the undistributed earnings or losses of its international subsidiaries because such earnings are either reinvested
indefinitely or would not be subject to additional taxes if repatriated.  At December 31, 2003, EME reviewed the undistributed
earnings of its international subsidiaries and concluded:

o    Its international holding company, MEC B.V., had negative retained earnings under United States generally accepted
     accounting principles and negative accumulative earnings and profits for federal income tax purposes.

o    Distributions of lower tier international subsidiaries to MEC B.V. are either not taxable or could be distributed without
     additional income taxes.

o    MEC B.V. had outstanding indebtedness to domestic subsidiaries of EME totaling $445 million at December 31, 2003 which could
     be repaid without incurring additional income taxes.

Management continually evaluates its income tax exposures and provides for allowances and/or reserves as deemed necessary.

Off-Balance Sheet Financing

EME has entered into sale-leaseback transactions related to the Collins, Powerton and Joliet plants in Illinois and the Homer City
facilities in Pennsylvania.  (See "Off-Balance Sheet Transactions--EME's Off-Balance Sheet Transactions--Sale-Leaseback
Transactions.")  Each of these transactions was completed and accounted for by EME as an operating lease in its consolidated financial
statements in accordance with the accounting standard for sale-leaseback transactions involving real estate, which requires, among
other things, that all of the risk and rewards of ownership of assets be transferred to a new owner without continuing involvement in
the assets by the former owner other than as normal for a lessee.  Completion of sale-leaseback transactions of these power plants is
a complex matter involving management judgment to determine compliance with the provisions of the accounting standards, including the
transfer of all the risk and rewards of ownership of the power plants to the new owner without EME's continuing involvement other
than as normal for a lessee.  These transactions were entered into to provide a source of capital either to fund the original
acquisition of the assets or to repay indebtedness previously incurred for the acquisition. Each of these leases uses special purpose
entities.


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Based on existing accounting guidance, EME does not record these lease obligations in its consolidated balance sheet.  If these
transactions were required to be consolidated as a result of future changes in accounting guidance, it would:  (1) increase property,
plant and equipment and long-term obligations in the consolidated financial position, and (2) impact the pattern of expense
recognition related to these obligations as EME would likely change from its current straight-line recognition of rental expense to
an annual recognition of the straight-line depreciation on the leased assets as well as the interest component of the financings
which is weighted more heavily toward the early years of the obligations.  The difference in expense recognition would not affect
EME's cash flows under these transactions.  See "Off-Balance Sheet Transactions."  Also see "MEHC and EME:  Liquidity--Key Financing
Developments--EME's Subsidiary Financing Plans--Agreement in Principle to Terminate the Collins Station Lease."

Edison Capital has entered into lease transactions, as lessor, related to various power generation, electric transmission and
distribution, transportation and telecommunications assets.  All of the debt under Edison Capital's leveraged leases is nonrecourse
and is not recorded on Edison International's balance sheet in accordance with the applicable accounting standards.

Partnership investments, in which Edison International owns a percentage interest and does not have operational control or
significant voting rights, are accounted for under the equity method as required by accounting standards.  As such, the project
assets and liabilities are not consolidated on the balance sheet.  Rather, the financial statements reflect only the proportionate
ownership share of net income or loss.  See "Off-Balance Sheet Transactions."

Pensions and Postretirement Benefits Other than Pensions

Pension and other postretirement obligations and the related effects on results of operations are calculated using actuarial models.
Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense and liability
measurement.  Additionally, health care cost trend rates are critical assumptions for postretirement heath care plans.  These
critical assumptions are evaluated at least annually.  Other assumptions, such as retirement, mortality and turnover, are evaluated
periodically and updated to reflect actual experience.

The discount rate enables Edison International to state expected future cash flows at a present value on the measurement date.  At
the December 31, 2003 measurement date, Edison International used a discount rate of 6.0% for pensions and 6.25% for postretirement
benefits other than pensions (PBOP) that represented the market interest rate for high-quality fixed income investments.

To determine the expected long-term rate of return on pension plan assets, current and expected asset allocations are considered, as
well as historical and expected returns on plan assets.  The expected rate of return on plan assets was 8.5% for pensions and 8.2%
for PBOP.  A portion of PBOP trusts asset returns are subject to taxation, so the 8.2% figure above is determined on an after-tax
basis.  Actual returns on the pension plan assets were 27.6%, 7.3% and 10.8% for the one-year, five-year and ten-year periods ended
December 31, 2003, respectively.  Actual returns on the PBOP plan assets were 26%, 2.2% and 9.1% over these same periods.  Accounting
principles provide that differences between expected and actual returns are recognized over the average future service of employees.

At December 31, 2003, Edison International's pension plans included $3.0 billion in projected benefit obligation (PBO), $2.6 billion
in accumulated benefit obligation (ABO) and $2.9 billion in plan assets.  A 1% decrease in the discount rate would increase the PBO
by $210 million, and a 1% increase would decrease the PBO by $195 million, with corresponding changes in the ABO.  A 1% decrease in
the expected rate of return on plan assets would increase pension expense by $22 million.


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SCE accounts for about 92% of Edison International's total pension obligation, and 96% of its assets held in trusts, at December 31,
2003.  SCE records pension expense equal to the amount funded to the trusts, as calculated using an actuarial method required for
rate-making purposes, in which the impact of market volatility on plan assets is recognized in earnings on a more gradual basis.  Any
difference between pension expense calculated in accordance with rate-making methods and pension expense or income calculated in
accordance with accounting standards is accumulated in a regulatory asset or liability, and will, over time, be recovered from or
returned to customers.  As of December 31, 2003, this cumulative difference amounted to a regulatory liability of $140 million,
meaning that the rate-making method has resulted in recognizing $140 million more in expense than the accounting method since
implementation of the pension accounting standard in 1987.

Under accounting standards, if the ABO exceeds the market value of plan assets at the measurement date, the difference may result in
a reduction to shareholders' equity through a charge to other comprehensive income, but would not affect current net income.  The
reduction to other comprehensive income would be restored through shareholders' equity in future periods to the extent the market
value of trust assets exceeded the ABO.

See "Other Developments--Employee Compensation and Benefit Plans" for information related to Edison International's cash balance
pension plan.

At December 31, 2003, Edison International's PBOP plans included $2.2 billion in PBO and $1.4 billion in plan assets.  Total expense
for these plans was $122 million for 2003.  Increasing the health care cost trend rate by one percentage point would increase the
accumulated obligation as of December 31, 2003 by $317 million and annual aggregate service and interest costs by $29 million.
Decreasing the health care cost trend rate by one percentage point would decrease the accumulated obligation as of December 31, 2003
by $257 million and annual aggregate service and interest costs by $23 million.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003.  The Act
authorized a federal subsidy to be provided to plan sponsors for certain prescription drug benefits under Medicare.  Edison
International has elected to defer accounting for the effects of the Act until the earlier of the issuance of guidance by the
Financial Accounting Standards Board on how to account for the Act, or the remeasurement of plan assets and obligations subsequent to
January 31, 2004.  Accordingly, any measures of the accumulated postretirement benefit obligation or net periodic postretirement
benefit expense above do not reflect the effects of the Act on Edison International's plans.  Specific authoritative guidance on the
accounting for the federal subsidy is pending and that guidance, when issued, could require Edison International to restate
previously reported information.

Rate Regulated Enterprises

SCE applies accounting principles for rate-regulated enterprises to the portion of its operations, in which regulators set rates at
levels intended to recover the estimated costs of providing service, plus a return on capital.  Due to timing and other differences
in the collection of revenue, these principles allow an incurred cost that would otherwise be charged to expense by a nonregulated
entity to be capitalized as a regulatory asset if it is probable that the cost is recoverable through future rates and conversely
allow creation of a regulatory liability for probable future costs collected through rates in advance.  SCE's management continually
assesses whether the regulatory assets are probable of future recovery by considering factors such as the current regulatory
environment, the issuance of rate orders on recovery of the specific incurred cost or a similar incurred cost to SCE or other
rate-regulated entities in California, and assurances from the regulator (as well as its primary intervenor groups) that the incurred
cost will be treated as an allowable cost (and not challenged) for rate-making purposes.  Because current rates include the recovery
of existing regulatory assets and settlement of regulatory liabilities, and rates in effect are


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expected to allow SCE to earn a reasonable rate of return, management believes that existing regulatory assets and liabilities are
probable of recovery.  This determination reflects the current political and regulatory climate in California and is subject to
change in the future.  If future recovery of costs ceases to be probable, all or part of the regulatory assets and liabilities would
have to be written off against current period earnings.  At December 31, 2003, the Consolidated Balance Sheets included regulatory
assets, less regulatory liabilities, of $234 million.  Management continually evaluates the anticipated recovery of regulatory
assets, liabilities, and revenue subject to refund and provides for allowances and/or reserves as deemed necessary.

SCE applied judgment in the use of the above principles when it:  (1) created the $3.6 billion PROACT regulatory asset in the fourth
quarter of 2001; (2) restored $480 million (after-tax) of generation-related regulatory assets based on the URG decision in the
second quarter of 2002; and (3) established a $61 million regulatory asset related to the impaired Mohave in the fourth quarter of
2002.  In all instances, SCE recorded corresponding credits to earnings upon concluding that such incurred costs were probable of
recovery in the future.  See further discussion in "Results of Operations and Historical Cash Flow Analysis--Results of
Operations--Earnings (Loss) from Continuing Operations" and "SCE:  Regulatory Matters--Generation and Power Procurement--PROACT
Regulatory Asset," "--Utility-Retained Generation," and "--Mohave Generating Station and Related Proceedings" sections.

NEW ACCOUNTING PRINCIPLES

On January 1, 2001, Edison International adopted a new accounting standard for derivative instruments and hedging activities.  An
authoritative accounting interpretation issued in October 2001 precludes fuel contracts that have variable amounts from qualifying
under the normal purchases and sales exception effective April 1, 2002.  The adoption of this interpretation did not have a
significant impact on Edison International's financial statements.  Under a revised authoritative accounting interpretation issued in
December 2001, EME's forward electricity contracts no longer qualify for the normal sales exception since EME has net settlement
provisions with its counterparties.  However, these contracts qualify as cash flow hedges.  Edison International implemented the
December 2001 interpretation, effective April 1, 2002.

In June 2003, clarifying guidance was issued related to derivative instruments and hedging activities.  The guidance is related to
pricing adjustments in contracts that qualify under the normal purchases and normal sales exception under derivative instrument
accounting.  This implementation guidance became effective on October 1, 2003.  The guidance had no impact on Edison International's
consolidated financial statements.

On January 1, 2003, Edison International adopted a new accounting standard, Accounting for Asset Retirement Obligations, which
requires entities to record the fair value of a liability for a legal asset retirement obligation (ARO) in the period in which it is
incurred.  When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related
long-lived asset.  Over time, the liability is increased to its present value each period, and the capitalized cost is depreciated
over the useful life of the related asset.  Upon settlement of the liability, an entity either settles the obligation for its recorded
amount or incurs a gain or loss upon settlement.  However, rate-regulated entities may recognize regulatory assets or liabilities as
a result of timing differences between the recognition of costs as recorded in accordance with this standard and the recovery of
costs through the rate-making process. Regulatory assets and liabilities may also be recorded when it is probable that the ARO will
be recovered through the rate-making process.


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Edison International's impacts of adopting this standard were:

o    SCE adjusted its nuclear decommissioning obligation to reflect the fair value of decommissioning its nuclear power
     facilities.  SCE also recognized ARO associated with the decommissioning of other coal-fired generation assets.  Fair values were
     determined based on site-specific studies conducted by third-party contractors.

o    At December 31, 2002, SCE had accrued $2.3 billion to decommission its nuclear facilities and $12 million to decommission
     its share of a coal-fired generating plant, under accounting principles in effect at that time.  Of these amounts, $298 million
     to decommission its inactive nuclear facility was recorded in other long-term liabilities, and the remaining $2.0 billion was
     recorded as a component of the accumulated provision for depreciation and decommissioning on the consolidated balance sheets in
     the 2002 Annual Report.

o    As of January 1, 2003, SCE reversed the $2.3 billion it had previously recorded for decommissioning, recorded the fair value
     of its AROs of approximately $2.02 billion in the deferred credits and other liabilities section of the balance sheet, and
     increased its unamortized nuclear investment by $303 million.  The cumulative effect of a change in accounting principle from
     unrecognized accretion expense and adjustments to depreciation, decommissioning and amortization expense recorded to date was a
     $354 million after-tax gain, which under accounting standards for rate-regulated enterprises was deferred as a regulatory
     liability, partially offset by a $235 million deferred tax asset, as of January 1, 2003.  Accretion expense on the ARO ($128
     million) and depreciation expense on the new asset ($15 million) resulting from the application of the new standard in 2003
     reduced the regulatory liability, with no impact on earnings.  SCE's ARO liability account increased from $2.02 billion to $2.08
     billion in 2003, with the $128 million in accretion partially offset by $68 million in expenditures related to the
     decommissioning of its inactive nuclear facility.  As of December 31, 2003, SCE's ARO for its nuclear facilities totaled
     approximately $2.07 billion and its nuclear decommissioning trust assets had a fair value of $2.5 billion.  If the new standard
     had been in place on January 1, 2002, SCE's ARO as of that date would have been $1.98 billion.  If the standard had been applied
     retroactively for the years ended December 31, 2002 and 2001, it would not have had any effect on SCE's results of operations.

o    SCE has collected in rates amounts for the future costs of removal and decommissioning of assets, and has historically
     recorded these amounts in accumulated provision for depreciation.  However, in accordance with recent Securities and Exchange
     Commission accounting guidance, the amounts accrued in accumulated provision for depreciation for decommissioning and costs of
     removal were reclassified to regulatory liabilities as of December 31, 2002.  The cost of removal amounts collected for assets
     not legally required to be removed remains in regulatory liabilities as of December 31, 2003.  Amounts collected through rates
     for cost of removal of plant assets not considered to be legal obligations ($2.02 billion at December 31, 2003 and $1.92 billion
     at December 31, 2002) are included in regulatory liabilities.

o    As of January 1, 2003, EME's ARO was approximately $17 million and EME recorded a cumulative effect adjustment that
     decreased net income by approximately $9 million, net of tax.  If the new standard had been applied retroactively in the years
     ended December 31, 2002 and 2001, it would not have had a material effect on EME's results of operations.

In December 2003, the Financial Accounting Standards Board issued a revision to an accounting Interpretation (originally issued in
January 2003), Consolidation of Variable Interest Entities (VIEs).  The primary objective of the Interpretation is to provide
guidance on the identification of, and financial reporting for, so-called "variable interest entities," where control may be achieved
through means other than voting rights.  Under the Interpretation, the enterprise that, using a discounted cash flow method, is
expected to absorb or receive the majority of a VIE's expected losses or residual returns, or both, must


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consolidate the VIE.  This Interpretation is effective for special purpose entities, as defined by accounting principles generally
accepted in the United States, as of December 31, 2003, and all other entities as of March 31, 2004.

Guidance related to implementation of this Interpretation is evolving.  SCE has over 240 long-term power-purchase contracts with
independent power producers that own QFs.  SCE was required under federal law to sign such contracts, which typically require SCE to
purchase 100% of the power produced by these facilities, and the CPUC controls the terms and pricing.  Under this accounting
Interpretation, SCE could be required to consolidate some or all of the entities that hold these contracts depending on (1) whether
these power generators are considered to be VIEs, and (2) whether SCE is considered to be the consolidating entity.  These entities
are not legally obligated to provide the financial information to SCE, which would be required to determine whether SCE must
consolidate these entities.  SCE does not know which, if any, of these entities will provide the necessary information.  SCE has no
investment in, nor obligation to provide support to, these entities other than its requirement to make payment as required by the
power-purchase agreements.  However, if SCE is required to consolidate these entities, it may be required to recognize losses to the
extent of any negative equity.  These losses, if any, would not affect SCE's liquidity.  EME's interests in certain power generators
could also potentially be considered as variable interests.  EME's maximum exposure to loss is generally limited to its investment in
these entities.  EME has 49%-50% ownership in four QF partnerships that have long-term power sales contracts with SCE.  EME accounts
for these projects using the equity method.  If long-term power-purchase contracts are deemed to be variable interests, and due to
the related-party nature of this transaction, it is likely that these four QFs could be consolidated by either EME or SCE.

Edison International had originally disclosed that it would adopt the Interpretation as of October 1, 2003.  As a result of the
December 2003 revision to the Interpretation and uncertainty surrounding its application to long-term power contracts, Edison
International delayed implementation for its special purpose entities to December 31, 2003, and for all other entities until March
31, 2004, as allowed under the December revision of the Interpretation.  As a result, EME's Brooklyn Navy Yard project, which is a
VIE, was not consolidated as previously disclosed.  On December 31, 2003, EME agreed to sell its 50% partnership interest in Brooklyn
Navy Yard to a third party.  Completion of the sale, expected in first quarter 2004, is subject to closing conditions, including
obtaining regulatory approval.  If the sale is completed prior to March 31, 2004, EME will not be required to consolidate this entity
regardless of the results of the power-contract analysis described above.  If the sale is not completed by this date, EME could be
required to consolidate the Brooklyn Navy Yard project at March 31, 2004, if it is considered to be the consolidating entity.  If
required, consolidation would result in EME recording a cumulative effect, after-tax loss of approximately $44 million, primarily due
to cumulative losses allocated to the other 50% partner in excess of their equity contributions.  If this loss were recorded, it
would be reversed in a subsequent period if the sale were completed after March 31, 2004.

Edison Capital has concluded that its investments in its affordable housing and wind projects are variable interests in VIEs.  Edison
Capital also has power-purchase agreements that could potentially be considered to be variable interests.  At December 31, 2003, the
maximum exposure to loss from Edison Capital's investments is limited to its investment balance and certain guarantees for a total of
$424 million, and recapture of tax credits.

Edison International implemented the Interpretation for its special purpose entities as of December 31, 2003.  As a result, Edison
International deconsolidated three special purpose entities:  EIX Trusts I and II; and EME's Mission Capital, L.P.  These special
purpose entities function as financing entities.  The bonds and securities associated with these financing entities are now included
in long-term debt on Edison International's consolidated balance sheet and Edison International no longer consolidates the assets and
liabilities of these special purpose entities.


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Effective July 1, 2003, Edison International adopted a new accounting standard, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities.  This statement amends and clarifies financial accounting and reporting for derivative instruments and for
hedging activities under derivative instrument accounting.  The amendment reflects decisions made by accounting authorities in
connection with issues raised about the application of the derivative instrument accounting standard.  Generally, the provisions of
this new standard apply prospectively for contracts entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003.  The adoption of this standard had no impact on Edison International's consolidated financial
statements.

Effective July 1, 2003, Edison International adopted a new accounting standard, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which required issuers to classify certain freestanding financial instruments as
liabilities.  These freestanding liabilities include mandatorily redeemable financial instruments, obligations to repurchase the
issuer's equity shares by transferring assets and certain obligations to issue a variable number of shares.  Effective July 1, 2003,
Edison International reclassified its company-obligated mandatorily redeemable securities, its other mandatorily redeemable preferred
securities and SCE's preferred stock subject to mandatory redemption to the liabilities section of its consolidated balance sheet.
These items were previously classified between liabilities and equity.  In addition, effective July 1, 2003, dividend payments on
these instruments are included in interest expense - net of amounts capitalized on Edison International's consolidated statements of
income.  Prior period financial statements are not permitted to be restated for these changes.  Therefore, upon adoption there was no
cumulative impact incurred due to this accounting change.

In May 2003, the Emerging Issues Task Force (EITF) reached a consensus on Determining Whether an Arrangement Contains a Lease, which
provides guidance on how to determine whether an arrangement contains a lease that is within the scope of the standard, Accounting
for Leases.  A lease is defined as an agreement conveying the right to use property, plant, or equipment (land and/or depreciable
assets) usually for a stated period of time.  The guidance issued by the EITF could affect the classification of a power sales
agreement that meets specific criteria, such as a power sales agreement for substantially all of the output from a power plant to one
customer.  If a power sales agreement meets the guidance issued by the EITF, it would be accounted for as a lease subject to the
lease accounting standard.  The consensus is effective prospectively for arrangements entered into or modified after June 30, 2003.
The consensus had no impact on Edison International's consolidated financial statements.

COMMITMENTS AND GUARANTEES

Edison International's commitments for the years 2004 through 2008 and thereafter are estimated below:

In millions                                  2004         2005         2006         2007         2008    Thereafter
- -----------------------------------------------------------------------------------------------------------------------
Long-term debt maturities and
   sinking fund requirements              $ 2,003        $ 753      $ 1,805      $ 1,764      $ 1,276    $ 6,189
Fuel supply contract payments                 911          814          533          377          204      1,579
Gas transportation payments                     7            7            7            7            7         65
Purchased-power capacity payments             682          663          637          637          444      3,621
Unconditional purchase obligations             10           10           10           10           10         89
Estimated noncancelable lease payments        334          374          452          487          484      4,577
Preferred securities redemption
   requirements                                 9            9          173           69           54         --
- ------------------------------------------------------------------------------------------------------------------------


Edison International's projected construction expenditures for 2004 are $2.0 billion, including the investment and projected
construction expenditures for the Mountainview project (see "Acquisitions and Dispositions").  These expenditures are planned to be
financed primarily through cash generated from operations and borrowings.


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Fuel Supply Contracts

SCE and EME have fuel supply contracts which require payment only if the fuel is made available for purchase.  Certain gas and coal
fuel contracts require payment of certain fixed charges whether or not gas or coal is delivered.  In addition, fuel supply contract
payments include payments for nuclear fuel commitments at SCE.

Gas Transportation

At December 31, 2003, EME had a contractual commitment to transport natural gas.  EME is committed to pay minimum fees under this
agreement, which has a term of 15 years.

Power-Purchase Contracts

SCE has power-purchase contracts with certain QFs (cogenerators and small power producers) and other utilities.  These contracts
provide for capacity payments if a facility meets certain performance obligations and energy payments based on actual power supplied
to SCE.  There are no requirements to make debt-service payments.  In an effort to replace higher-cost contract payments with
lower-cost replacement power, SCE has entered into settlements to end its contract obligations with certain QFs.  The settlements are
reported as power-purchase contracts on the balance sheets.  In addition, SCE entered into bilateral forward power contracts during
2003, which contain capacity payment provisions.

Unconditional Purchase Obligations

SCE has unconditional purchase obligations for part of a power plant's generating output, as well as firm transmission service from
another utility.  Minimum payments are based, in part, on the debt-service requirements of the provider, whether or not the plant or
transmission line is operable.  The purchased-power contract is expected to provide approximately 5% of current or estimated future
operating capacity, and is reported as power-purchase contracts (approximately $28 million).

Leases

Edison International has operating leases for office space, vehicles, property and other equipment (with varying terms, provisions
and expiration dates).

At December 31, 2003, minimum operating lease payments were primarily related to long-term leases for EME's Collins, Powerton, Joliet
and Homer City power plants.  In connection with the 1999 acquisition of the Illinois plants, EME assigned the right to purchase the
Collins gas and oil-fired power plant to third-party lessors.  The third-party lessors purchased the Collins Station for $860 million
and leased the plant to EME.  During 2000, EME entered into sale-leaseback transactions for equipment, primarily the Illinois peaker
power units, and for two power facilities, the Powerton and Joliet coal fired stations located in Illinois, with third-party
lessors.  In August 2002, EME exercised its option and repurchased the Illinois peaker power units.  During the fourth quarter of
2001, EME entered into a sale-leaseback transaction for the Homer City coal-fired facilities located in Pennsylvania, with
third-party lessors.  For further discussion, see "Off-Balance Sheet Transactions--EME's Off-Balance Sheet Transactions--
Sale-Leaseback Transactions."

Other Commitments

As of December 31, 2003, Edison Capital had outstanding commitments of $68 million to fund energy and infrastructure investments.
Prior to funding any commitments, specific contract conditions must be


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satisfied.  At December 31, 2003, Edison Capital had deposited approximately $5 million as collateral for several letters of credit
currently outstanding.

At December 31, 2003, EME had firm commitments to spend approximately $80 million on construction and other capital investments
during 2004 through 2006.  The construction expenditures primarily relate to the construction of a power plant in New Zealand by
Contact Energy.  The capital expenditures primarily relate to new plant and equipment at EME's Midwest Generation subsidiary and its
Contact Energy project.

At December 31, 2003, EME's Midwest Generation was party to a long-term power-purchase contract with Calumet Energy Team LLC entered
into as part of the settlement agreement with ComEd, which terminated Midwest Generation's obligation to build additional gas-fired
generation in the Chicago area.  The contract requires Midwest Generation to pay a monthly capacity payment and gives Midwest
Generation an option to purchase energy from Calumet Energy Team LLC at prices based primarily on operations and maintenance and fuel
costs.

EME Homer City entered into a Coal Cleaning Agreement with Homer City Coal Processing Corporation to operate and maintain a coal
cleaning plant owned by EME Homer City.  Under the terms of the agreement, EME Homer City is obligated to reimburse Homer City Coal
Processing Corporation for the actual costs incurred in the operations and maintenance of the coal cleaning plant, a fixed general
and administrative service fee of approximately $260 thousand per year, and an operating fee that ranges from $.20 to $.35 per ton
depending on the level of tonnage.  The agreement expired on August 31, 2002 and was renewed with the same terms through December 31,
2005, with a two-year extension option.

At December 31, 2003, commitments related to these two contracts discussed above are summarized as follows: 2004 - $11 million; 2005
- - $10 million; 2006 - $4 million; 2007 - $4 million; and 2008 - $4 million.

Edison International's expected contributions (all by the employer) for United States pension and PBOP plans are approximately $47
million and $100 million, respectively, for the year ended December 31, 2004.  These amounts are subject to change based on, among
other things, the limits established for federal tax deductibility (pension plans) and the impact of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (PBOP plans).

EME's Guarantees and Indemnities

Tax Indemnity Agreements

In connection with the sale-leaseback transactions that EME has entered into related to the Collins Station, Powerton and Joliet
plants in Illinois and the Homer City facilities in Pennsylvania, EME or one of its subsidiaries has entered into tax indemnity
agreements.  Under these tax indemnity agreements, EME agreed to indemnify the lessors in the sale-leaseback transactions for
specified adverse tax consequences that could result in certain situations set forth in each tax indemnity agreement, including
specified defaults under the respective leases.  The potential indemnity obligations under these tax indemnity agreements could be
significant.  Due to the nature of these obligations under these tax indemnity agreements, EME cannot determine a maximum potential
liability.  The indemnities would be triggered by a valid claim from the lessors.  EME has not recorded a liability related to these
indemnities.

Indemnities Provided as Part of EME's Acquisition of the Illinois Plants

In connection with the acquisition of the Illinois plants, EME agreed to indemnify ComEd with respect to environmental liabilities
before and after the date of sale as specified in the Asset Sale Agreement dated


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March 22, 1999.  The indemnification claims are reduced by any insurance proceeds and tax benefits related to such claims and are
subject to a requirement by ComEd to take all reasonable steps to mitigate losses related to any such indemnification claim.  Due to
the nature of the obligation under this indemnity, a maximum potential liability cannot be determined.  The indemnification for the
environmental liabilities referred to above is not limited in term and would be triggered by a valid claim from ComEd.  Except as
discussed below, EME has not recorded a liability related to this indemnity.

Midwest Generation entered into a supplemental agreement with ComEd on February 20, 2003 to resolve a dispute regarding
interpretation of its reimbursement obligation for asbestos claims under the environmental indemnities set forth in the Asset Sale
Agreement.  Under this supplemental agreement, Midwest Generation agreed to reimburse ComEd 50% of specific existing asbestos claims
less recovery of insurance costs, and agreed to a sharing arrangement for liabilities associated with future asbestos related claims
as specified in the agreement.  The obligations under this agreement are not subject to a maximum liability.  The supplemental
agreement has a five-year term with an automatic renewal provision (subject to the right to terminate).  Payments are made under this
indemnity by a valid claim provided from ComEd.  At December 31, 2003, Midwest Generation had $10 million recorded as a liability
related to this matter and had made $1 million in payments.

Indemnity Provided as Part of the Acquisition of the Homer City Facilities

In connection with the acquisition of the Homer City facilities, EME Homer City Generation L.P. (EME Homer City) agreed to indemnify
the sellers with respect to environmental liabilities before and after the date of sale as specified in the Asset Purchase Agreement
dated August 1, 1998.  EME guaranteed the obligations of EME Homer City.  Due to the nature of the obligation under this indemnity
provision, it is not subject to a maximum potential liability and does not have an expiration date.  Payments would be triggered
under this indemnity by a claim from the sellers.  EME has not recorded a liability related to this indemnity.

Indemnities Provided Under Asset Sale Agreements

In connection with the sale of assets, EME has provided indemnities to the purchasers for taxes imposed with respect to operations of
the asset prior to the sale, and EME or its subsidiaries have received similar indemnities from purchasers related to taxes arising
from operations after the sale.  EME has also provided indemnities to purchasers for items specified in each agreement (for example,
specific pre-existing litigation matters and/or environmental conditions).  Due to the nature of the obligations under these
indemnity agreements, a maximum potential liability cannot be determined.  Not all indemnities under the asset sale agreements have
specific expiration dates.  Payments would be triggered under these indemnities by valid claims from the sellers or purchasers, as
the case may be.  EME has not recorded a liability related to these indemnities.

Guarantee of Brooklyn Navy Yard Contractor Settlement Payments

Brooklyn Navy Yard is a 286 MW gas-fired cogeneration power plant in Brooklyn, New York. EME's wholly owned subsidiary owns 50% of
the project.  In February 1997, the construction contractor asserted general monetary claims under the turnkey agreement against
Brooklyn Navy Yard Cogeneration Partners, L.P. A settlement agreement was executed on January 17, 2003, and all litigation has been
dismissed.  EME agreed to indemnify Brooklyn Navy Yard Cogeneration Partners, L.P. for any payments due under this settlement
agreement, which are scheduled through 2006.  At December 31, 2003, EME recorded a liability of $14 million related to this indemnity.


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Guarantee of 50% of TM Star Fuel Supply Obligations

TM Star was formed for the limited purpose of selling natural gas to March Point Cogeneration Company, an affiliate through common
ownership, under a fuel supply agreement that extends through December 31, 2011.  TM Star has entered into fuel purchase contracts
with unrelated third parties to meet a portion of the obligations under the fuel supply agreement.  EME has guaranteed 50% of TM
Star's obligation under the fuel supply agreement to March Point Cogeneration Company.  Due to the nature of the obligation under this
guarantee, a maximum potential liability cannot be determined.  TM Star has met its obligations to March Point Cogeneration Company,
and, accordingly, no claims against this guarantee have been made.  TM Star was merged into March Point Cogeneration Company
effective as of January 16, 2004, and this guarantee terminated by operation of law as of that date.

Capacity Indemnification Agreements

EME has guaranteed, jointly and severally with Texaco Inc., the obligations of March Point Cogeneration Company under its project
power sales agreements to repay capacity payments to the project's power purchaser in the event that the power sales agreements
terminate, March Point Cogeneration Company abandons the project, or the project fails to return to normal operations within a
reasonable time after a complete or partial shutdown, during the term of the power contracts.  In addition, subsidiaries of EME have
guaranteed the obligations of Kern River Cogeneration Company and Sycamore Cogeneration Company under their project power sales
agreements to repay capacity payments to the projects' power purchaser in the event that the projects unilaterally terminate their
performance or reduce their electric power producing capability during the term of the power contracts.  The obligations under the
indemnification agreements as of December 31, 2003, if payment were required, would be $181 million.  EME has no reason to believe
that any of these projects will either cease operations or reduce its electric power producing capability during the term of its
power contract.

Bank Indemnity under a Letter of Credit Supporting ISAB Energy's Debt Service Reserve Account

EME agreed to indemnify its lenders under its credit facilities from amounts drawn on a $26 million letter of credit issued for the
benefit of the lenders to ISAB Energy, a 49% unconsolidated affiliate, in lieu of ISAB Energy funding a debt service reserve account
using additional equity contributions.  Accordingly, a default under ISAB Energy's project debt could result in a draw under the
letter of credit which, in turn, would result in a borrowing under EME's credit facilities.  The letter of credit is renewed each
six-month period or until ISAB Energy funds the debt service account.  The indemnification is subject to the maximum amount drawn
under the letter of credit.  EME has not recorded a liability related to this indemnity.

OFF-BALANCE SHEET TRANSACTIONS

This section of the MD&A discusses off-balance sheet transactions at EME and Edison Capital.  SCE does not have any off-balance sheet
transactions.  Included are discussions of investments accounted for under the equity method for both subsidiaries, as well as
sale-leaseback transactions at EME, EME's obligations to one of its subsidiaries, and leveraged leases at Edison Capital.

EME's Off-Balance Sheet Transactions

EME has off-balance sheet transactions in two principal areas: investments in projects accounted for under the equity method and
operating leases resulting from sale-leaseback transactions.


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                                                                                                             Edison International


Investments Accounted for under the Equity Method

Investments in which EME has a 50% or less ownership interest are accounted for under the equity method in accordance with current
accounting standards.  Under the equity method, the project assets and related liabilities are not consolidated in EME's consolidated
balance sheet.  Rather, EME's financial statements reflect its investment in each entity and it records only its proportionate
ownership share of net income or loss.  These investments are of three principal categories.

Historically, EME has invested in QFs, those which produce electrical energy and steam, or other forms of energy, and which meet the
requirements set forth in the Public Utility Regulatory Policies Act.  These regulations limit EME's ownership interest in QFs to no
more than 50% due to EME's affiliation with SCE, a public utility.  For this reason, EME owns a number of domestic energy projects
through partnerships in which it has a 50% or less ownership interest.

On an international basis, for purposes of risk mitigation, EME has often invested in energy projects with strategic partners where
its ownership interest is 50% or less.

Entities formed to own these projects are generally structured with a management committee or Board of Directors in which EME
exercises significant influence but cannot exercise unilateral control over the operating, funding or construction activities of the
project entity.  EME's energy projects have generally secured long-term debt to finance the assets constructed and/or acquired by
them.  These financings generally are secured by a pledge of the assets of the project entity, but do not provide for any recourse to
EME.  Accordingly, a default on a long-term financing of a project could result in foreclosure on the assets of the project entity
resulting in a loss of some or all of EME's project investment, but would generally not require EME to contribute additional
capital.  At December 31, 2003, entities which EME has accounted for under the equity method had indebtedness of $6 billion, of which
$3 billion is proportionate to EME's ownership interest in these projects.

Sale-Leaseback Transactions

EME has entered into sale-leaseback transactions related to the Collins, Powerton and Joliet plants in Illinois and the Homer City
facilities in Pennsylvania.  Each of these transactions was completed and accounted for according to an accounting standard, which
requires, among other things, that all of the risk and rewards of ownership of assets be transferred to a new owner without
continuing involvement in the assets by the former owner other than as normal for a lessee.  These transactions were entered into to
provide a source of capital either to fund the original acquisition of the assets or to repay indebtedness previously incurred for
the acquisition.  In each of these transactions, the assets (or, in the case of the Collins Station, the rights to purchase them)
were sold to and then leased from owner/lessors owned by independent equity investors.  In addition to the equity invested in them,
these owner/lessors incurred or assumed long-term debt, referred to as lessor debt, to finance the purchase of the assets.  In the
case of Powerton and Joliet and Homer City, the lessor debt takes the form generally referred to as secured lease obligation bonds.
In the case of Collins, the lessor debt takes the form of lessor notes as described in the footnote to the table below.

EME's subsidiaries account for these leases as financings in their separate financial statements due to specific guarantees provided
by EME or another one its subsidiaries as part of the sale-leaseback transactions.  These guarantees do not preclude EME from
recording these transactions as operating leases in its consolidated financial statements, but constitute continuing involvement
under the accounting standard that precludes EME's subsidiaries from utilizing this accounting treatment in their separate subsidiary
financial statements.  Instead, each subsidiary continues to record the power plants as assets in a similar manner to a capital lease
and records the obligations under the leases as lease financings.  EME's subsidiaries, therefore, record depreciation expense from
the power plants and interest expense


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Management's Discussion and Analysis of Financial Condition and Results of Operations


from the lease financing in lieu of an operating lease expense which EME uses in preparing its consolidated financial statements.
The treatment of these leases as an operating lease in its consolidated financial statements in lieu of a lease financing, which is
recorded by EME's subsidiaries, results in an increase in consolidated net income by $81 million, $89 million and $55 million in
2003, 2002 and 2001, respectively.

The lessor equity and lessor debt associated with the sale-leaseback transactions for the Collins, Powerton, Joliet and Homer City
assets are summarized in the following table:

                                  Acquisition        Equity      Equity Investment     Amount of     Maturity Date
     In millions                     Price          Investor      in Owner/Lessor     Lessor Debt   of Lessor Debt
     ------------------------- ----------------- ------------- -------------------- -------------- ----------------
     Power Station(s)
         Collins                   $    860      PSEG               $  117            $   774            (i)
         Powerton/Joliet              1,367      PSEG/                 238                333.5         2009
                                                 Citicapital                              813.5         2016
         Homer City                   1,591      GECC                  798                300           2019
                                                                                          530           2026
     ------------------------- ----------------- ------------- -------------------- -------------- ----------------
     --------------
     PSEG - PSEG Resources, Inc.
     GECC - General Electric Capital Corporation

     (i) The owner/lessor under the Collins Station lease issued notes in the amount of the lessor debt to Midwest Funding LLC, a
         funding vehicle which is owned by Broad Street Contract Services, Inc.  These notes mature in January 2014 and are referred
         to as the lessor notes. Midwest Funding LLC, in turn, entered into a commercial paper and loan facility with a group of
         banks pursuant to which it borrowed the funds required for its purchase of the lessor notes.  These borrowings are currently
         scheduled to mature in December 2004 and are referred to as the lessor borrowings.

         The rent under the Collins Station lease includes both a fixed component and a variable component, which is affected by
         movements in defined interest rate indices.  If the lessor borrowings are not repaid at maturity, by a refinancing or
         otherwise, the interest rate on them would increase at specified increments every three months, which would be reflected in
         adjustments to the Collins Station lease rent payments.  EME's subsidiary lessee under the Collins Station lease may request
         the owner/lessor to cause Midwest Funding LLC to refinance the lessor borrowings in accordance with guidelines set forth in
         the lease, but such refinancing is subject to the owner/lessor's approval.  If the lessor borrowings are not refinanced by
         December 2004 because the owner/lessor's approval is not obtained or a refinancing is not commercially available, rent under
         the Collins Station lease in 2005 would increase by approximately $9 million for the first quarter of 2005 and increase
         approximately $2 million for each subsequent quarter thereafter.

The operating lease payments to be made by each of EME's subsidiary lessees are structured to service the lessor debt and provide a
return to the owner/lessor's equity investors.  Neither the value of the leased assets nor the lessor debt is reflected in EME's
consolidated balance sheet.  In accordance with generally accepted accounting principles, EME records rent expense on a levelized
basis over the terms of the respective leases.  To the extent that EME's cash rent payments exceed the amount levelized over the term
of each lease, EME records prepaid rent.  At December 31, 2003 and 2002, prepaid rent on these leases was $214 million and
$117 million, respectively.  To the extent that EME's cash rent payments are less than the amount levelized, EME reduces the amount of
prepaid rent.

In the event of a default under the leases, each lessor can exercise all of its rights under the applicable lease, including
repossessing the power plant and seeking monetary damages.  Each lease sets forth a termination value payable upon termination for
default and in certain other circumstances, which generally declines over time and in the case of default may be reduced by the
proceeds arising from the sale of the repossessed power plant.  A default under the terms of the Collins, Powerton and Joliet or
Homer City leases could result in a loss of EME's ability to use such power plant and would trigger


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                                                                                                             Edison International


obligations under EME's guarantee of the Powerton and Joliet leases.  These events could have a material adverse effect on EME's
results of operations and financial position.

EME's minimum lease obligations under its power related leases are set forth under "Commitments and Guarantees."  Also see "MEHC and
EME:  Liquidity--Key Financing Developments--EME's Subsidiary Financing Plans--Agreement in Principle to Terminate the Collins Station
Lease."

EME's Obligations to Midwest Generation, LLC

The proceeds, in the aggregate amount of approximately $1.4 billion, received by Midwest Generation from the sale of the Powerton and
Joliet plants, described above under Sale-Leaseback Transactions, were loaned to EME.  EME used the proceeds from this loan to repay
corporate indebtedness.  Although interest and principal payments made by EME to Midwest Generation under this intercompany loan
assist in the payment of the lease rental payments owing by Midwest Generation, the intercompany obligation does not appear on EME's
consolidated balance sheet.  This obligation was disclosed to the credit rating agencies at the time of the transaction and has been
included by them in assessing EME's credit ratings.  The following table summarizes principal payments due under this intercompany
loan:

              In millions                                                             Amount
              ----------------------------------------------------------------------------------
               Years Ending December 31,
                   2004                                                           $      2
                   2005                                                                  2
                   2006                                                                  3
                   2007                                                                  3
                   2008                                                                  4
                   Thereafter                                                        1,352
              ----------------------------------------------------------------------------------
                   Total                                                          $  1,366
              ----------------------------------------------------------------------------------


EME funds the interest and principal payments due under this intercompany loan from distributions from EME's subsidiaries, including
Midwest Generation, cash on hand, and amounts available under corporate lines of credit.  A default by EME in the payment of this
intercompany loan could result in a shortfall of cash available for Midwest Generation to meet its lease and debt obligations.  A
default by Midwest Generation in meeting its obligations could in turn have a material adverse effect on EME.

Edison Capital's Off-Balance Sheet Transactions

Edison Capital has entered into off-balance sheet transactions for investments in projects, which, in accordance with generally
accepted accounting principles, do not appear on Edison International's balance sheet.

Investments Accounted for under the Equity Method

Partnership investments, in which Edison Capital does not have operational control or significant voting rights, are accounted for
under the equity method as required by accounting standards.  As such, the project assets and liabilities are not consolidated on the
balance sheet; rather, the financial statements reflect the carrying amount of the investment and the proportionate ownership share
of net income or loss.

Edison Capital has invested in affordable housing projects utilizing partnership or limited liability companies in which Edison
Capital is a limited partner or limited liability member.  In these entities, Edison Capital usually owns a 99% interest.  With a few
exceptions, an unrelated general partner or managing member exercises operating control; voting rights of Edison Capital are limited
by agreement


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Management's Discussion and Analysis of Financial Condition and Results of Operations


to certain significant organizational matters.  Edison Capital has subsequently sold a majority of these interests to unrelated third
party investors through syndication partnerships in which Edison Capital has retained an interest, with one exception, of less than
20%.  The debt of those partnerships and limited liability companies is secured by real property and is nonrecourse to Edison
Capital, except in limited cases where Edison Capital has guaranteed the debt.  At December 31, 2003, Edison Capital had made
guarantees to lenders in the amount of $5 million.

At December 31, 2003, entities that Edison Capital has accounted for under the equity method had indebtedness of $1.7 billion, of
which approximately $474 million is proportionate to Edison Capital's ownership interest in these projects.  Substantially all of
this debt is nonrecourse to Edison Capital.

Leveraged Leases

Edison Capital is the lessor in various power generation, electric transmission and distribution, transportation and
telecommunications leases.  The debt in these leveraged leases is nonrecourse to Edison Capital and is not recorded on Edison
International's balance sheet in accordance with the applicable accounting standards.

At December 31, 2003, Edison Capital had investments of $2.4 billion in its leveraged leases, with nonrecourse debt in the amount of
$5 billion.

OTHER DEVELOPMENTS

Environmental Matters

Edison International is subject to numerous environmental laws and regulations, which require it to incur substantial costs to
operate existing facilities, construct and operate new facilities, and mitigate or remove the effect of past operations on the
environment.

Edison International believes that it is in substantial compliance with environmental regulatory requirements; however, possible
future developments, such as the enactment of more stringent environmental laws and regulations, could affect the costs and the
manner in which business is conducted and could cause substantial additional capital expenditures.  There is no assurance that
additional costs would be recovered from customers or that Edison International's financial position and results of operations would
not be materially affected.

Environmental Remediation

Edison International records its environmental remediation liabilities when site assessments and/or remedial actions are probable and
a range of reasonably likely cleanup costs can be estimated.  Edison International 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, operations and maintenance, monitoring and site closure.  Unless there is a probable amount, Edison International
records the lower end of this reasonably likely range of costs (classified as other long-term liabilities) at undiscounted amounts.

Edison International's recorded estimated minimum liability to remediate its 32 identified sites at SCE (26 sites) and EME (6 sites
related to Midwest Generation) is $94 million, $92 million of which is related to SCE.  In third quarter 2003, SCE sold certain oil
storage and pipeline facilities.  This sale caused a reduction in Edison International's recorded estimated minimum environmental
liability.  Edison


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                                                                                                             Edison International


International's other subsidiaries have no identified remediation sites.  The ultimate costs to clean up Edison International'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.  Edison International believes that, due to these uncertainties, it is reasonably
possible that cleanup costs could exceed its recorded liability by up to $238 million, all of which is related to SCE.  The upper
limit of this range of costs was estimated using assumptions least favorable to Edison International among a range of reasonably
possible outcomes.

The CPUC allows SCE to recover environmental remediation costs at certain sites, representing $34 million of its recorded liability,
through an incentive mechanism (SCE may request to include additional sites).  Under this mechanism, SCE will recover 90% of cleanup
costs through customer rates; shareholders fund the remaining 10%, with the opportunity to recover these costs from insurance
carriers and other third parties.  SCE has successfully settled insurance claims with all responsible carriers.  SCE expects to
recover costs incurred at its remaining sites through customer rates.  SCE has recorded a regulatory asset of $71 million for its
estimated minimum environmental-cleanup costs expected to be recovered through customer rates.

Edison International'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 Edison International 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.

Edison International expects to clean up its identified sites over a period of up to 30 years.  Remediation costs in each of the next
several years are expected to range from $13 million to $25 million.  Recorded costs for 2003 were $14 million.

Based on currently available information, Edison International believes it is unlikely that it will incur amounts in excess of the
upper limit of the estimated range for its identified sites and, based upon the CPUC's regulatory treatment of environmental
remediation costs incurred at SCE, Edison International believes that costs ultimately recorded will not materially affect its
results of operations or financial position.  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 such estimates.

Clean Air Act

The Clean Air Act requires power producers to have emissions allowances to emit sulfur dioxide.  Power companies receive emissions
allowances from the federal government and may bank or sell excess allowances.  SCE expects to have excess allowances under Phase II
of the Clean Air Act (2000 and later).

In 1999, SCE and other co-owners of Mohave entered into a consent decree to resolve a federal court lawsuit that had been filed
alleging violations of various emissions limits.  This decree, approved by a federal court in December 1999, required certain
modifications to the plant in order for it to continue to operate beyond 2005 to comply with the Clean Air Act.

SCE's share of the costs of complying with the consent decree and taking other actions to continue operation of Mohave beyond 2005 is
estimated to be approximately $605 million. SCE has received from the State of Nevada a permit to install the necessary
pollution-control equipment.  However, SCE has suspended its efforts to seek CPUC approval to install the Mohave pollution-control
equipment because it has not obtained reasonable assurance of adequate coal and water supplies for operating Mohave beyond 2005.
Unless adequate coal and water supplies are obtained, it will become necessary to shut down


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Management's Discussion and Analysis of Financial Condition and Results of Operations


Mohave after December 31, 2005.  If the station is shut down at that time, the shutdown is not expected to have a material adverse
impact on SCE's financial position or results of operations, assuming the remaining book value of the station (approximately $24
million as of December 31, 2003) and the related regulatory asset (approximately $66 million as of December 31, 2003), and plant
closure and decommissioning-related costs are recoverable in future rates.  SCE cannot predict with certainty what effect any future
actions by the CPUC may have on this matter.  See "SCE:  Regulatory Matters--Generation and Power Procurement--Mohave Generating
Station and Related Proceedings" for further discussion of the Mohave issues.

Edison International's facilities in the United States are subject to the Clean Air Act's new source review (NSR) requirements
related to modifications of air emissions sources at electric generating stations.  Over the past five years, the United States
Environmental Protection Agency (EPA) has initiated investigations of numerous electric utilities seeking to determine whether these
utilities engaged in activities in violation of the NSR requirements, brought enforcement actions against some of those utilities,
and reached settlements with some of those utilities.  EPA has made information requests concerning electric generating stations in
which SCE and EME hold ownership interests, including SCE's Four Corners station and EME's Midwest Generation and Homer City
stations.  Other than these requests for information, no enforcement-related proceedings have been initiated against any Edison
International facilities by EPA relating to NSR compliance.

Over this same period, EPA has proposed several regulatory changes to NSR requirements that would clarify and provide greater
guidance to the utility industry as to what activities can be undertaken without triggering the NSR requirements.  Several of these
regulatory changes have been challenged in the courts.  As a result of these developments, EPA's enforcement policy on alleged NSR
violations is currently uncertain.

These developments will continue to be monitored by Edison International, SCE, and EME, to assess what implications, if any, they
will have on the operation of domestic power plants owned or operated by SCE, EME, or their subsidiaries, or the impact on Edison
International's results of operations or financial position.

Edison International's projected environmental capital expenditures are $2.3 billion, including the $605 million for Mohave discussed
above for the 2004-2008 period, mainly for undergrounding certain transmission and distribution lines at SCE and upgrading
environmental controls at EME.

Employee Compensation and Benefit Plans

On July 31, 2003, a federal district court held that the formula used in a cash balance pension plan created by International
Business Machine Corporation (IBM) in 1999 violated the age discrimination provisions of the Employee Retirement Income Security Act
of 1974.  In its decision, the federal district court set forth a standard for cash balance pension plans.  This decision, however,
conflicts with the decisions from two other federal district courts and with the proposed regulations for cash balance pension plans
issued by the IRS in December 2002.  On February 12, 2004, the same federal district court ruled that IBM must make back payments to
workers covered under this plan.  IBM has indicated that it will appeal both decisions to the United States Court of Appeals for the
Seventh Circuit.  The formula for Edison International's cash balance pension plan does not meet the standard set forth in the
federal district court's July 31, 2003 decision.  Edison International cannot predict with certainty the effect of the two IBM
decisions on Edison International's cash balance pension plan.


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                                                                                                             Edison International


Federal Income Taxes

In August 2002, Edison International received a notice from the IRS asserting deficiencies in federal corporate income taxes for its
1994 to 1996 tax years.  The vast majority of the asserted tax deficiencies are timing differences and, therefore, amounts ultimately
paid (exclusive of interest and penalties), if any, would benefit Edison International as future tax deductions.  Edison
International believes that it has meritorious legal defenses to those deficiencies and believes that the ultimate outcome of this
matter will not result in a material impact on Edison International's consolidated results of operations or financial position.

Among the issues raised by the IRS in the 1994 to 1996 audit was Edison Capital's treatment of the EPZ and Dutch electric locomotive
leases.  Written protests were filed against these deficiency notices, as well as other alleged deficiencies, asserting that the
IRS's position misstates material facts, misapplies the law and is incorrect.  This matter is now being considered by the
Administrative Appeals branch of the IRS.  Edison Capital will contest the assessment through administrative appeals and litigation,
if necessary, and believes it should prevail in an outcome that will not have a material adverse financial impact.

The IRS is examining the tax returns for Edison International, which includes Edison Capital, for years 1997 through 1999.  Edison
Capital expects the IRS will also challenge several of its other leveraged leases based on recent Revenue Rulings addressing a
specific type of leveraged lease (termed a lease in/lease out or LILO transaction).  Edison Capital believes that the position
described in the Revenue Ruling is incorrectly applied to Edison Capital's transactions and that its leveraged leases are factually
and legally distinguishable in material respects from that position.  Edison Capital intends to defend, and litigate if necessary,
against any challenges based on that position.




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Responsibility for Financial Reporting                                                         Edison International


The management of Edison International is responsible for the integrity and objectivity of the accompanying financial statements.
The statements have been prepared in accordance with accounting principles generally accepted in the United States and are based, in
part, on management estimates and judgment.

Edison International and its subsidiaries maintain systems of internal control to provide reasonable, but not absolute, assurance
that assets are safeguarded, transactions are executed in accordance with management's authorization and the accounting records may
be relied upon for the preparation of the financial statements.  There are limits inherent in all systems of internal control, the
design of which involves management's judgment and the recognition that the costs of such systems should not exceed the benefits to
be derived.  Edison International believes its systems of internal control achieve this appropriate balance.  These systems are
augmented by internal audit programs through which the adequacy and effectiveness of internal controls and policies and procedures
are monitored, evaluated and reported to management.  Actions are taken to correct deficiencies as they are identified.

Edison International's independent auditors, PricewaterhouseCoopers LLP, are engaged to audit the financial statements in accordance
with auditing standards generally accepted in the United States and to express an informed opinion on the fairness, in all material
respects, of Edison International's reported results of operations, cash flows and financial position.

As a further measure to assure the ongoing objectivity of financial information, the Audit Committee of the Board of Directors, which
is composed of outside directors, meets periodically, both jointly and separately, with management, the independent auditors and
internal auditors, who have unrestricted access to the committee.  The committee annually appoints a firm of independent auditors
(who are ultimately responsible to the committee) to conduct audits of Edison International's financial statements; considers the
independence of such firm and the overall adequacy of the audit scope and Edison International's systems of internal control; reviews
financial reporting issues; and is advised of management's actions regarding financial reporting and internal control matters.

Edison International and its subsidiaries maintain high standards in selecting, training and developing personnel to assure that its
operations are conducted in conformity with applicable laws and are committed to maintaining the highest standards of personal and
corporate conduct.  Management maintains programs to encourage and assess compliance with these standards.








Thomas M. Noonan                                                       John E. Bryson
Vice President                                                         Chairman of the Board, President
and Controller                                                         and Chief Executive Officer


March 10, 2004


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Report of Independent Auditors                                                                 Edison International


To the Board of Directors and Shareholders of Edison International:


In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income,
cash flows and changes in common shareholders' equity present fairly, in all material respects, the financial position of Edison
International and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for the
years then ended in conformity with accounting principles generally accepted in the United States of America.  These financial
statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted
in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for
our opinion.  The financial statements of the Company for the year ended December 31, 2001 were audited by other independent
accountants who have ceased operations.  Those independent accountants expressed an unqualified opinion on the financial statements
and included an explanatory paragraph that described the change in manner in which the Company accounts for derivative instruments
and hedging activities and the impairment of long-lived assets discussed in Note 1 to the financial statements in their report dated
March 25, 2002.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for asset
retirement costs as of January 1, 2003, financial instruments with characteristics of both debt and equity as of July 1, 2003, and
certain variable interest entities as of December 31, 2003.




/s/ PricewaterhouseCoopers LLP



Los Angeles, California
March 10, 2004


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Report of Predecessor Independent Public Accountants                                           Edison International



                                    THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY
                                 ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP



To the Shareholders and the Board of Directors, Edison International:

We have audited the accompanying consolidated balance sheets of Edison International (a California corporation) and its subsidiaries
as of December 31, 2001, and 2000, and the related consolidated statements of income (loss), comprehensive income (loss), cash flows
and common shareholders' equity for each of the three years in the period ended December 31, 2001.  These financial statements are
the responsibility of Edison International's management.  Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States.  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Edison
International and its subsidiaries as of December 31, 2001, and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the
United States.

As explained in Note 1 to the financial statements, effective January 1, 2001, Edison International has changed its method of
accounting for derivative instruments and hedging activities in accordance with SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," and its method of accounting for the impairment or disposal of long-lived assets in accordance with SFAS 144,
"Accounting for the Impairment or Disposal of Long-lived Assets."




                                                              Arthur Andersen LLP

Los Angeles, California
March 25, 2002


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Consolidated Statements of Income                                                              Edison International


In millions, except per-share amounts       Year ended December 31,                 2003         2002         2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Electric utility                                                                $  8,853     $  8,705     $  8,120
Nonutility power generation                                                        3,181        2,750        2,594
Financial services and other                                                         101           33          348
- ---------------------------------------------------------------------------------------------------------------------------------------
Total operating revenue                                                           12,135       11,488       11,062
- ---------------------------------------------------------------------------------------------------------------------------------------
Fuel                                                                               1,338        1,186        1,128
Purchased power                                                                    2,786        2,016        3,770
Provisions for regulatory adjustment clauses - net                                 1,138        1,502       (3,028)
Other operation and maintenance                                                    3,389        3,156        3,029
Asset impairment                                                                     304           86           --
Depreciation, decommissioning and amortization                                     1,184        1,030          973
Property and other taxes                                                             210          145          114
Net gain on sale of utility plant                                                     (5)          (5)          (6)
- ---------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses                                                          10,344        9,116        5,980
- ---------------------------------------------------------------------------------------------------------------------------------------
Operating income                                                                   1,791        2,372        5,082
Interest and dividend income                                                         127          287          282
Equity in income from partnerships and
  unconsolidated subsidiaries - net                                                  354          249          343
Other nonoperating income                                                             91           90          108
Interest expense - net of amounts capitalized                                     (1,226)      (1,283)      (1,582)
Other nonoperating deductions                                                        (84)         (74)         (70)
Dividends on preferred securities                                                    (51)         (96)         (92)
Dividends on utility preferred stock                                                 (10)         (19)         (22)
- ---------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before tax                                         992        1,526        4,049
Income tax                                                                           213          391        1,647
- ---------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations                                                    779        1,135        2,402
Income (loss) from discontinued operations (including gain on disposal of
  $44 in 2003 and loss on disposal of $1,309 in 2001) - net of tax                    51          (58)      (1,367)
- ---------------------------------------------------------------------------------------------------------------------------------------
Income before accounting change                                                      830        1,077        1,035
Cumulative effect of accounting change - net of tax                                   (9)          --           --
- ---------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                      $    821     $  1,077     $  1,035
- ---------------------------------------------------------------------------------------------------------------------------------------

Weighted-average shares of common stock outstanding                                  326          326          326
Basic earnings (loss) per share:
Continuing operations                                                           $   2.39     $   3.49     $   7.37
Discontinued operations                                                             0.16        (0.18)       (4.19)
Cumulative effect of accounting change                                             (0.03)          --           --
- ---------------------------------------------------------------------------------------------------------------------------------------
Total                                                                           $   2.52     $   3.31     $   3.18
- ---------------------------------------------------------------------------------------------------------------------------------------

Weighted-average shares, including effect of dilutive securities                     329          328          326
Diluted earnings (loss) per share:
Continuing operations                                                           $   2.37     $   3.46     $   7.36
Discontinued operations                                                             0.16        (0.18)       (4.19)
Cumulative effect of accounting change                                             (0.03)          --           --
- ---------------------------------------------------------------------------------------------------------------------------------------
Total                                                                           $   2.50     $   3.28     $   3.17
- ---------------------------------------------------------------------------------------------------------------------------------------

Dividends declared per common share                                             $   0.20     $     --     $     --





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


Page 100


- ---------------------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Comprehensive Income                                                Edison International


In millions                                 Year ended December 31,                 2003         2002         2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                        $  821       $1,077       $1,035
Other comprehensive income (expense), net of tax:
   Foreign currency translation adjustments                                          154          125            6
   Minimum pension liability adjustment                                               (2)         (21)          --
   Unrealized gain (loss) on investments - net                                         2           (9)          --
   Unrealized gains (losses) on cash flow hedges:
     Cumulative effect of change in accounting for derivatives                        --            6          148
     Other unrealized gain (loss) on cash flow hedges - net                           50          (20)        (359)
     Reclassification adjustment for gain (loss) included in net income              (10)          --           16
- ---------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (expense)                                                 194           81         (189)
- ---------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                                              $1,015       $1,158       $  846
- ---------------------------------------------------------------------------------------------------------------------------------------




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


Page 101


- ---------------------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheets


In millions                                               December 31,                  2003                  2002
- ---------------------------------------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash and equivalents                                                              $     2,198           $     2,468
Restricted cash                                                                            79                    53
Receivables, less allowances of $37 and $49 for uncollectible
    accounts at respective dates                                                        1,200                 1,111
Accrued unbilled revenue                                                                  408                   437
Fuel inventory                                                                             92                   124
Materials and supplies, at average cost                                                   252                   219
Accumulated deferred income taxes - net                                                   508                   527
Trading and price risk management assets                                                   48                    34
Regulatory assets - net                                                                    --                   459
Prepayments                                                                                88                    85
Other current assets                                                                      176                   142
- ---------------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                    5,049                 5,659
- ---------------------------------------------------------------------------------------------------------------------------------------
Nonutility property - less accumulated provision for
    depreciation of $1,318 and $911 at respective dates                                 7,701                 6,873
Nuclear decommissioning trusts                                                          2,530                 2,210
Investments in partnerships and unconsolidated subsidiaries                             1,908                 2,011
Investments in leveraged leases                                                         2,361                 2,313
Other investments                                                                         176                   256
- ---------------------------------------------------------------------------------------------------------------------------------------
Total investments and other assets                                                     14,676                13,663
- ---------------------------------------------------------------------------------------------------------------------------------------
Utility plant, at original cost
    Transmission and distribution                                                      14,861                14,202
    Generation                                                                          1,371                 1,348
Accumulated provision for depreciation                                                 (4,386)               (4,057)
Construction work in progress                                                             600                   529
Nuclear fuel, at amortized cost                                                           141                   153
- ---------------------------------------------------------------------------------------------------------------------------------------
Total utility plant                                                                    12,587                12,175
- ---------------------------------------------------------------------------------------------------------------------------------------
Goodwill                                                                                  868                   661
Restricted cash                                                                           339                   412
Regulatory assets - net                                                                   510                    --
Other deferred charges                                                                    917                   914
- ---------------------------------------------------------------------------------------------------------------------------------------
Total deferred charges                                                                  2,634                 1,987
- ---------------------------------------------------------------------------------------------------------------------------------------
Assets of discontinued operations                                                          16                   123
- ---------------------------------------------------------------------------------------------------------------------------------------





Total assets                                                                      $    34,962           $    33,607
- ---------------------------------------------------------------------------------------------------------------------------------------




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


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- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Edison International


In millions, except share amounts                         December 31,                   2003                  2002
- ---------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------------
Short-term debt                                                                   $       252           $        78
Long-term debt due within one year                                                      2,003                 2,761
Preferred stock to be redeemed within one year                                              9                     9
Accounts payable                                                                        1,086                   786
Accrued taxes                                                                             596                   855
Trading and risk management liabilities                                                   168                    45
Regulatory liabilities - net                                                              276                    --
Other current liabilities                                                               1,777                 2,070
- ---------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                               6,167                 6,604
- ---------------------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                         11,787                11,578
- ---------------------------------------------------------------------------------------------------------------------------------------
Accumulated deferred income taxes - net                                                 5,967                 6,099
Accumulated deferred investment tax credits                                               149                   167
Customer advances and other deferred credits                                            1,554                 1,486
Power-purchase contracts                                                                  213                   309
Other preferred securities subject to mandatory redemption                                305                    --
Accumulated provision for pensions and benefits                                           425                   461
Asset retirement obligations                                                            2,106                    --
Regulatory liabilities - net                                                               --                   393
Other long-term liabilities                                                               247                   218
- ---------------------------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                           10,966                 9,133
- ---------------------------------------------------------------------------------------------------------------------------------------
Liabilities of discontinued operations                                                     13                    72
- ---------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                      28,933                27,387
- ---------------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 2, 9 and 10)
Minority interest                                                                         517                   425
- ---------------------------------------------------------------------------------------------------------------------------------------
Preferred stock of utility:
   Not subject to mandatory redemption                                                    129                   129
   Subject to mandatory redemption                                                         --                   147
Company-obligated mandatorily redeemable securities of subsidiaries
    holding solely parent company debentures                                               --                   951
Other preferred securities                                                                 --                   131
- ---------------------------------------------------------------------------------------------------------------------------------------
Total preferred securities of subsidiaries                                                129                 1,358
- ---------------------------------------------------------------------------------------------------------------------------------------
Common stock (325,811,206 shares outstanding at each date)                              1,970                 1,973
Accumulated other comprehensive loss                                                      (53)                 (247)
Retained earnings                                                                       3,466                 2,711
- ---------------------------------------------------------------------------------------------------------------------------------------
Total common shareholders' equity                                                       5,383                 4,437
- ---------------------------------------------------------------------------------------------------------------------------------------


Total liabilities and shareholders' equity                                        $    34,962           $    33,607
- ---------------------------------------------------------------------------------------------------------------------------------------




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


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- ---------------------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Cash Flows                                                          Edison International

In millions                  Year ended December 31,                                  2003         2002        2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Income from continuing operations, after accounting change, net of tax             $   770       $ 1,135    $ 2,402
Adjustments to reconcile to net cash provided by operating activities:
     Cumulative effect of accounting change - net of tax                                 9            --         --
     Depreciation, decommissioning and amortization                                  1,184         1,030        973
     Other amortization                                                                108           113         92
     Deferred income taxes and investment tax credits                                  194           160      1,908
     Equity in income from partnerships and unconsolidated subsidiaries               (354)         (249)      (343)
     Income from leveraged leases                                                      (82)           (6)      (154)
     Regulatory assets - long-term - net                                               495         1,860     (3,135)
     Gas options                                                                        75            14        (91)
     Asset impairment                                                                  304            86         --
     Write-down of nonutility assets                                                    --            --        245
     Levelized rent expense                                                            (96)           --         --
     Other assets                                                                      134             3        (51)
     Other liabilities                                                                (347)          170       (134)
     Changes in working capital:
       Receivables and accrued unbilled revenue                                       (160)          193        (47)
       Regulatory assets - short-term - net                                            697          (376)      (278)
       Fuel inventory, materials and supplies                                            4           (11)       (16)
       Prepayments and other current assets                                             86           (17)       203
       Accrued interest and taxes                                                     (120)          523       (240)
       Accounts payable and other current liabilities                                   42        (2,724)     1,551
Distributions and dividends from unconsolidated entities                               416           337        236
Operating cash flows from discontinued operations                                      (52)           80       (147)
- ---------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                            3,307         2,321      2,974
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term debt issued                                                                1,058           409      3,386
Long-term debt repaid                                                               (2,796)       (1,784)    (1,761)
Bonds remarketed (repurchased) and funds held in trust - net                            --           191       (130)
Issuance of preferred securities                                                        --            --        104
Redemption of preferred securities                                                      (6)         (100)      (164)
Rate reduction notes repaid                                                           (246)         (246)      (246)
Nuclear fuel financing - net                                                            --           (59)       (21)
Short-term debt financing - net                                                         26          (956)    (1,547)
Dividends to minority shareholders                                                     (42)          (37)        --
Financing cash flows from discontinued operations                                       --           (19)    (1,178)
- ---------------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities                                               (2,006)       (2,601)    (1,557)
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and plant - net                                               (1,288)       (1,590)      (933)
Purchase of power sales agreement                                                       --           (80)        --
Purchase of common stock of acquired companies                                        (278)           --         --
Proceeds from sale of property                                                           7            62      1,032
Proceeds from sale of interest in projects                                              41            --         --
Contributions to nuclear decommissioning trusts - net                                  (86)          (12)       (36)
Distributions from (investments in) partnerships
   and unconsolidated subsidiaries                                                     (63)           42       (122)
Net investments in leveraged leases                                                     --            --         68
Other assets                                                                           (58)          247       (433)
Investing cash flows from discontinued operations                                      150             2      1,125
- ---------------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities                                    (1,575)       (1,329)       701
- ---------------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                  4            23        (37)
- ---------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents                                       (270)       (1,586)     2,081
Cash and equivalents, beginning of year                                              2,468         4,054      1,973
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of year                                                    2,198         2,468      4,054
Cash and equivalents - discontinued operations                                          --            --        (63)
- ---------------------------------------------------------------------------------------------------------------------------------------
Cash and equivalents - continuing operations                                       $ 2,198       $ 2,468    $ 3,991
- ---------------------------------------------------------------------------------------------------------------------------------------

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


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- ---------------------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Changes in Common Shareholders' Equity                              Edison International


                                                                  Accumulated                           Total
                                                                     Other                             Common
                                                  Common         Comprehensive      Retained        Shareholders'
In millions                                        Stock         Income (Loss)      Earnings           Equity
- ---------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000                     $   1,960        $    (139)        $     599      $   2,420
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net income                                                                           1,035          1,035
   Foreign currency translation adjustments                              (1)                              (1)
     Tax effect                                                           7                                7
   Other unrealized loss on cash flow hedges                           (296)                            (296)
     Tax effect                                                         (63)                             (63)
   Reclassification adjustment for gain
     included in net income                                              24                               24
     Tax effect                                                          (8)                              (8)
   Cumulative effect of change in
     accounting for derivatives                                          24                               24
     Tax effect                                                         124                              124
   Stock option appreciation                            6                                                  6
- ---------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001                     $   1,966        $    (328)        $   1,634      $   3,272
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net income                                                                           1,077          1,077
   Foreign currency translation adjustments                             128                              128
     Tax effect                                                          (3)                              (3)
   Minimum pension liability adjustment                                 (29)                             (29)
     Tax effect                                                           8                                8
   Unrealized loss on investment                                        (14)                             (14)
     Tax effect                                                           5                                5
   Other unrealized loss on cash flow hedges                            (22)                             (22)
     Tax effect                                                           2                                2
   Cumulative effect of change in
     accounting for derivatives                                          12                               12
     Tax effect                                                          (6)                              (6)
   Stock option appreciation and other                   7                                                 7
- ---------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002                     $   1,973        $    (247)        $   2,711      $   4,437
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net income                                                                             821            821
   Foreign currency translation adjustments                             159                              159
     Tax effect                                                          (5)                              (5)
   Minimum pension liability adjustment                                  (3)                              (3)
     Tax effect                                                           1                                1
   Unrealized gain on investment                                          3                                3
     Tax effect                                                          (1)                              (1)
   Other unrealized gain on cash flow hedges                             54                               54
     Tax effect                                                          (4)                              (4)
   Reclassification adjustment for loss
     included in net income                                              (9)                              (9)
     Tax effect                                                          (1)                              (1)
   Dividends declared on common stock                                                    (65)            (65)
   Stock option appreciation and other                  (3)                               (1)             (4)
- ---------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003                     $   1,970        $     (53)        $   3,466      $   5,383
- ---------------------------------------------------------------------------------------------------------------------------------------

Authorized common stock is 800 million shares with no par value.


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


Page 105



- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Significant accounting policies are discussed in Note 1, unless discussed in the respective Notes for specific topics.

Note 1.  Summary of Significant Accounting Policies

Edison International's principal wholly owned subsidiaries include:  Southern California Edison Company (SCE), a rate-regulated
electric utility that supplies electric energy to a 50,000 square-mile area of central, coastal and southern California; Edison
Mission Energy (EME), a producer of electricity engaged in the development and operation of electric power generation facilities
worldwide; Edison Capital, a provider of capital and financial services; and Mission Energy Holding Company (MEHC), a holding company
for EME.  EME and Edison Capital have domestic and foreign projects, primarily in Europe, Asia, Australia and Africa.

EME's plants are located in different geographic areas, partially mitigating the effects of regional markets, economic downturns or
unusual weather conditions.  EME's domestic facilities (other than Homer City and the Illinois plants) generally sell power to a
limited number of electric utilities under long-term (15 years to 30 years) contracts.  A plant in Australia sells its energy and
capacity production through a centralized power pool.  A plant in the United Kingdom sells its energy production by entering into
physical bilateral contracts with various counterparties.  Other electric power generated overseas is sold under short- and long-term
contracts to electricity companies, electricity buying groups or electric utilities located in the country where the power is
generated.  EME also conducts energy trading and price risk management activities for its generation in power markets open to
competition.

Basis of Presentation

The consolidated financial statements include Edison International and its wholly owned subsidiaries.  Edison International's
subsidiaries consolidate their majority owned subsidiaries.  In addition, Edison International's subsidiaries generally use the
equity method to account for significant investments in partnerships and subsidiaries in which they own 50% or less of the
significant voting rights.  However, beginning October 1, 2003, Edison Capital began consolidating its Storm Lake project due to
taking temporary control of the project company.  Effective December 31, 2003, Edison International no longer consolidates the assets
and liabilities of three special purpose entities, EIX Trusts I and II (which are Delaware business trusts), and Mission Capital,
L.P.  See further discussion in "New Accounting Principles."  Intercompany transactions have been eliminated, except EME's profits
from energy sales to SCE, which are allowed in utility rates.  Except as indicated, amounts presented in the Notes to the
Consolidated Financial Statements relate to continuing operations.

SCE's accounting policies conform to accounting principles generally accepted in the United States, including the accounting
principles for rate-regulated enterprises, which reflect the rate-making policies of the California Public Utilities Commission
(CPUC) and the Federal Energy Regulatory Commission (FERC).  In 1997, due to changes in the rate-recovery of generation-related
assets, SCE began using accounting principles applicable to enterprises in general for its investment in generation facilities.  In
April 2002, SCE reapplied accounting principles for rate-regulated enterprises to assets that were returned to cost-based regulation
under the utility-retained generation (URG) decision.

Financial statements prepared in compliance with accounting principles generally accepted in the United States require management to
make estimates and assumptions that affect the amounts reported in the financial statements and Notes.  Actual results could differ
from those estimates.  Certain significant estimates related to electric utility regulatory matters, financial instruments, income
taxes, pensions and postretirement benefits other than pensions, decommissioning and contingencies are further discussed in Notes 2,
3, 6, 7, 9 and 10 to the Consolidated Financial Statements, respectively.


Page 106


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Edison International


Cash Equivalents

Cash equivalents include time deposits and other investments with original maturities of three months or less.  All investments are
classified as available for sale.  For a discussion of restricted cash, see "Restricted Cash."

Debt and Equity Investments

Net unrealized gains (losses) on equity investments are recorded as a separate component of shareholders' equity under the caption
"Accumulated other comprehensive income."  Unrealized gains and losses on decommissioning trust funds increase or decrease the related
regulatory asset or liability.  All investments are classified as available-for-sale.

Earnings (Loss) Per Share (EPS)

Basic EPS is computed by dividing net income (loss) by the weighted-average number of common shares outstanding.  In arriving at net
income (loss), dividends on preferred securities and preferred stock have been deducted.  For the diluted EPS calculation, dilutive
securities (stock-based compensation) are added to the weighted-average shares.  Dilutive securities are excluded from the diluted
EPS calculation during periods of net loss due to their antidilutive effect.

The following table presents the effect of dilutive securities on the number of weighted-average shares of common stock outstanding:

     In millions                    Year ended December 31,                 2003         2002         2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Basic weighted-average shares
        of common stock outstanding                                          326          326          326
     Stock-based compensation awards exercisable                               3            2           --
- ---------------------------------------------------------------------------------------------------------------------------------------
     Dilutive weighted-average shares
        of common stock outstanding                                          329          328          326
- ---------------------------------------------------------------------------------------------------------------------------------------


Fuel Inventory

SCE's fuel inventory is valued under the last-in, first-out method for fuel oil, and under the first-in, first-out method for coal.
EME's fuel inventory is stated at the lower of weighted-average cost or market value.

Goodwill

Goodwill represents the excess of cost incurred over the fair value of net assets acquired in a purchase transaction.  Goodwill was
amortized on a straight-line basis over periods ranging from 20 to 40 years.  On January 1, 2002, the amortization of goodwill ceased
upon adoption of a new accounting standard.  As required by this new accounting standard, EME evaluates goodwill whenever indicators
of impairment exist, but at least annually on October 1 of each year. EME's goodwill ($867 million at December 31, 2003 and
$660 million at December 31, 2002) is primarily related to the acquisitions of Contact Energy and First Hydro.  In 2003, EME
determined through a fair value analysis conducted by third parties that the fair value of the Contact Energy and First Hydro
reporting units was in excess of book value.  Accordingly, no adjustment to impair goodwill was necessary at December 31, 2003.


Page 107


- ---------------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


New Accounting Principles

On January 1, 2001, Edison International adopted a new accounting standard for derivative instruments and hedging activities.  An
authoritative accounting interpretation issued in October 2001 precludes fuel contracts that have variable amounts from qualifying
under the normal purchases and sales exception effective April 1, 2002.  The adoption of this interpretation did not have a
significant impact on Edison International's financial statements.  Under a revised authoritative accounting interpretation issued in
December 2001, EME's forward electricity contracts no longer qualify for the normal sales exception since EME has net settlement
provisions with its counterparties.  However, these contracts qualify as cash flow hedges.  Edison International implemented the
December 2001 interpretation, effective April 1, 2002.

In June 2003, clarifying guidance was issued related to derivative instruments and hedging activities.  The guidance is related to
pricing adjustments in contracts that qualify under the normal purchases and normal sales exception under derivative instrument
accounting.  This implementation guidance became effective on October 1, 2003.  The guidance had no impact on Edison International's
consolidated financial statements.

On January 1, 2003, Edison International adopted a new accounting standard, Accounting for Asset Retirement Obligations, which
requires entities to record the fair value of a liability for a legal asset retirement obligation (ARO) in the period in which it is
incurred.  When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related
long-lived asset.  Over time, the liability is increased to its present value each period, and the capitalized cost is depreciated
over the useful life of the related asset.  Upon settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement.  However, rate-regulated entities may recognize regulatory assets or
liabilities as a result of timing differences between the recognition of costs as recorded in accordance with this standard and the
recovery of costs through the rate-making process. Regulatory assets and liabilities may also be recorded when it is probable that
the ARO will be recovered through the rate-making process.

Edison International's impacts of adopting this standard were:

o    SCE adjusted its nuclear decommissioning obligation to reflect the fair value of decommissioning its nuclear power
     facilities.  SCE also recognized AROs associated with the decommissioning of other coal-fired generation assets.  Fair values
     were determined based on site-specific studies conducted by third-party contractors.

o    At December 31, 2002, SCE had accrued $2.3 billion to decommission its nuclear facilities and $12 million to decommission
     its share of a coal-fired generating plant, under accounting principles in effect at that time.  Of these amounts, $298 million
     to decommission its inactive nuclear facility was recorded in other long-term liabilities, and the remaining $2.0 billion was
     recorded as a component of the accumulated provision for depreciation and decommissioning on the consolidated balance sheets in
     the 2002 Annual Report.

o    As of January 1, 2003, SCE reversed the $2.3 billion it had previously recorded for decommissioning, recorded the fair value
     of its AROs of approximately $2.02 billion in the deferred credits and other liabilities section of the balance sheet, and
     increased its unamortized nuclear investment by $303 million.  The cumulative effect of a change in accounting principle from
     unrecognized accretion expense and adjustments to depreciation, decommissioning and amortization expense recorded to date was a
     $354 million after-tax gain, which under accounting standards for rate-regulated enterprises was deferred as a regulatory
     liability, partially offset by a $235 million deferred tax asset, as of January 1, 2003.  Accretion expense on the ARO ($128
     million) and depreciation expense on the new asset


Page 108


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Edison International


     ($15 million) resulting from the application of the new standard in 2003 reduced the regulatory liability, with no impact on
     earnings.  SCE's ARO liability account increased from $2.02 billion to $2.08 billion in 2003, with the $128 million in accretion
     partially offset by $68 million in expenditures related to the decommissioning of its inactive nuclear facility.  As of December
     31, 2003, SCE's ARO for its nuclear facilities totaled approximately $2.07 billion and its nuclear decommissioning trust assets
     had a fair value of $2.5 billion.  If the new standard had been in place on January 1, 2002, SCE's ARO as of that date would have
     been $1.98 billion.  If the standard had been applied retroactively for the years ended December 31, 2002 and 2001, it would not
     have had any effect on SCE's results of operations.

o    SCE has collected in rates amounts for the future costs of removal and decommissioning of assets, and has historically
     recorded these amounts in accumulated provision for depreciation.  However, in accordance with recent Securities and Exchange
     Commission accounting guidance, the amounts accrued in accumulated provision for depreciation for decommissioning and costs of
     removal were reclassified to regulatory liabilities as of December 31, 2002.  The cost of removal amounts collected for assets
     not legally required to be removed remain in regulatory liabilities as of December 31, 2003.  Amounts collected through rates for
     cost of removal of plant assets not considered to be legal obligations ($2.02 billion at December 31, 2003 and $1.92 billion at
     December 31, 2002) are included in regulatory liabilities.

o    As of January 1, 2003, EME's ARO was approximately $17 million and EME recorded a cumulative effect adjustment that
     decreased net income by approximately $9 million, net of tax.  If the new standard had been applied retroactively in the years
     ended December 31, 2002 and 2001, it would not have had a material effect on EME's results of operations.

In December 2003, the Financial Accounting Standards Board issued a revision to an accounting Interpretation (originally issued in
January 2003), Consolidation of Variable Interest Entities (VIEs).  The primary objective of the Interpretation is to provide
guidance on the identification of, and financial reporting for, so-called "variable interest entities," where control may be achieved
through means other than voting rights.  Under the Interpretation, the enterprise that, using a discounted cash flow method, is
expected to absorb or receive the majority of a VIE's expected losses or residual returns, or both, must consolidate the VIE.  This
Interpretation is effective for special purpose entities, as defined by accounting principles generally accepted in the United
States, as of December 31, 2003, and all other entities as of March 31, 2004.

Guidance related to implementation of this Interpretation is evolving.  SCE has over 240 long-term power-purchase contracts with
independent power producers that own qualifying facilities (QFs).  SCE was required under federal law to sign such contracts, which
typically require SCE to purchase 100% of the power produced by these facilities, and the CPUC controls the terms and pricing.  Under
this accounting Interpretation, SCE could be required to consolidate some or all of the entities that hold these contracts depending
on (1) whether these power generators are considered to be VIEs, and (2) whether SCE is considered to be the consolidating entity.
These entities are not legally obligated to provide the financial information to SCE, which would be required to determine whether SCE
must consolidate these entities.  SCE does not know which, if any, of these entities will provide the necessary information.  SCE has
no investment in, nor obligation to provide support to, these entities other than its requirement to make payment as required by the
power purchase agreements.  However, if SCE is required to consolidate these entities, it may be required to recognize losses to the
extent of any negative equity.  These losses, if any, would not affect SCE's liquidity.  EME's interests in certain power generators
could also potentially be considered as variable interests.  EME's maximum exposure to loss is generally limited to its investment in
these entities.  EME has 49% to 50% ownership in four QF partnerships that have long-term power sales contracts with SCE.  EME
accounts for these projects using the equity method.  If long-term power-purchase contracts are deemed to be variable interests, and
due to the related-party nature of this transaction, it is likely that these four QFs could be consolidated by either EME or SCE.


Page 109


- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Edison International had originally disclosed that it would adopt the Interpretation as of October 1, 2003.  As a result of the
December 2003 revision to the Interpretation and uncertainty surrounding its application to long-term power contracts, Edison
International delayed implementation for its special purpose entities to December 31, 2003, and for all other entities until March
31, 2004, as allowed under the December revision of the Interpretation.  As a result, EME's Brooklyn Navy Yard project, which is a
VIE, was not consolidated as previously disclosed.  On December 31, 2003, EME agreed to sell its 50% partnership interest in Brooklyn
Navy Yard to a third party.  Completion of the sale, expected in first quarter 2004, is subject to closing conditions, including
obtaining regulatory approval.  If the sale is completed prior to March 31, 2004, EME will not be required to consolidate this entity
regardless of the results of the power-contract analysis described above.  If the sale is not completed by this date, EME could be
required to consolidate the Brooklyn Navy Yard project at March 31, 2004, if it is considered to be the consolidating entity.  If
required, consolidation would result in EME recording a cumulative-effect, after-tax loss of approximately $44 million, primarily due
to cumulative losses allocated to the other 50% partner in excess of their equity contributions.  If this loss were recorded, it
would be reversed in a subsequent period if the sale were completed after March 31, 2004.

Edison Capital has concluded that its investments in its affordable housing and wind projects are variable interests in VIEs.  Edison
Capital also has power-purchase agreements that could potentially be considered to be variable interests.  At December 31, 2003, the
maximum exposure to loss from Edison Capital's investments is limited to its investment balance and certain guarantees for a total of
$424 million, and recapture of tax credits.

Edison International implemented the Interpretation for its special purpose entities as of December 31, 2003.  As a result, Edison
International deconsolidated three special purpose entities: EIX Trusts I and II; and EME's Mission Capital, L.P.  These special
purpose entities function as financing entities.  The bonds and securities associated with these financing entities are now included
in long-term debt on Edison International's consolidated balance sheet and Edison International no longer consolidates the assets and
liabilities of these special purpose entities.

Effective July 1, 2003, Edison International adopted a new accounting standard, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities.  This statement amends and clarifies financial accounting and reporting for derivative instruments and for
hedging activities under derivative instrument accounting.  The amendment reflects decisions made by accounting authorities in
connection with issues raised about the application of the derivative instrument accounting standard.  Generally, the provisions of
this new standard apply prospectively for contracts entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003.  The adoption of this standard had no impact on Edison International's consolidated financial
statements.

Effective July 1, 2003, Edison International adopted a new accounting standard, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which required issuers to classify certain freestanding financial instruments as
liabilities.  These freestanding liabilities include mandatorily redeemable financial instruments, obligations to repurchase the
issuer's equity shares by transferring assets and certain obligations to issue a variable number of shares.  Effective July 1, 2003,
Edison International reclassified its company-obligated mandatorily redeemable securities, its other mandatorily redeemable preferred
securities and SCE's preferred stock subject to mandatory redemption to the liabilities section of its consolidated balance sheet.
These items were previously classified between liabilities and equity.  In addition, effective July 1, 2003, dividend payments on
these instruments are included in interest expense - net of amounts capitalized on Edison International's consolidated statements of
income.  Prior period financial statements are not permitted to be restated for these changes.  Therefore, upon adoption there was no
cumulative impact incurred due to this accounting change.  See disclosures regarding these preferred securities in Note 4.


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In May 2003, the Emerging Issues Task Force (EITF) reached a consensus on Determining Whether an Arrangement Contains a Lease, which
provides guidance on how to determine whether an arrangement contains a lease that is within the scope of the standard, Accounting
for Leases.  A lease is defined as an agreement conveying the right to use property, plant, or equipment (land and/or depreciable
assets) usually for a stated period of time.  The guidance issued by the EITF could affect the classification of a power sales
agreement that meets specific criteria, such as a power sales agreement for substantially all of the output from a power plant to one
customer.  If a power sales agreement meets the guidance issued by the EITF, it would be accounted for as a lease subject to the
lease accounting standard.  The consensus is effective prospectively for arrangements entered into or modified after June 30, 2003.
The consensus had no impact on Edison International's consolidated financial statements.

Nuclear

SCE's nuclear plant investments are recorded as a regulatory asset on its balance sheets.  This classification does not affect the
rate-making treatment for these assets.  SCE had been recovering its investments in San Onofre Nuclear Generating Station (San
Onofre) Units 2 and 3 and Palo Verde Nuclear Generating Station (Palo Verde) on an accelerated basis, as authorized by the CPUC.  The
accelerated recovery was to continue through December 2001, earning a 7.35% fixed rate of return on investment.  San Onofre's
operating costs, including nuclear fuel and nuclear fuel financing costs, and incremental capital expenditures, were recovered
through an incentive pricing plan that allows SCE to receive about 4(cent)per kilowatt-hour (kWh) through 2003.  Any differences between
these costs and the incentive price would flow through to shareholders.  Palo Verde's accelerated plant recovery, as well as
operating costs, including nuclear fuel and nuclear fuel financing costs, and incremental capital expenditures, were subject to
balancing account treatment through the effective date of the 2003 general rate case.

The nuclear rate-making plans were to continue for rate-making purposes at least through the 2003 general rate case effective date
for Palo Verde operating costs and through 2003 for the San Onofre incentive pricing plan.  However, due to the various unresolved
regulatory and legislative issues as of December 31, 2000, SCE was no longer able to conclude that the unamortized nuclear investment
was probable of recovery through the rate-making process.  As a result, this balance was written off as a charge to earnings at that
time.  As a result of the CPUC's April 4, 2002 decision that returned SCE's URG assets to cost-based ratemaking, SCE reestablished
for financial reporting purposes its unamortized nuclear investment and related flow-through taxes, retroactive to August 31, 2001,
based on a 10-year recovery period, effective January 1, 2001, with a corresponding credit to earnings.  SCE adjusted the
procurement-related obligations account (PROACT) regulatory asset balance to reflect recovery of the nuclear investment in accordance
with the final URG decision.

In a September 2001 decision, the CPUC granted SCE's request to continue the current rate-making treatment for Palo Verde, including
the continuation of the existing nuclear unit incentive procedure with a 5(cent)per kWh cap on replacement power costs, until resolution
of SCE's next general rate case or further CPUC action.  Palo Verde's existing nuclear unit incentive procedure calculates a reward
for performance of any unit above an 80% capacity factor for a fuel cycle.  The San Onofre Units 2 and 3 incentive rate-making plan
continued until December 31, 2003.  In its general rate case, SCE has requested to transition San Onofre Units 2 and 3 back to
traditional cost-of-service ratemaking on January 1, 2004, and to return Palo Verde to traditional cost-of-service ratemaking upon
the effective date of the decision on that application.


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Notes to Consolidated Financial Statements


Other Nonoperating Income and Deductions

Other nonoperating income and deductions are as follows:

     In millions           Year ended December 31,                 2003           2002         2001
- ------------------------------------------------------------------------------------------------------------------------------
     Nonutility nonoperating income                             $    19         $   15       $   51
     Utility nonoperating income                                     72             75           57
- ------------------------------------------------------------------------------------------------------------------------------
     Total nonoperating income                                  $    91         $   90       $  108
- ------------------------------------------------------------------------------------------------------------------------------
     Nonutility nonoperating deductions                         $    43         $   83       $   32
     Utility nonoperating deductions                                 41             (9)          38
- ------------------------------------------------------------------------------------------------------------------------------
     Total nonoperating deductions                              $    84         $   74       $   70
- ------------------------------------------------------------------------------------------------------------------------------


Planned Major Maintenance

Certain plant facilities require major maintenance on a periodic basis.  All such costs are expensed as incurred.

Property and Plant

Utility plant additions, including replacements and betterments, are capitalized.  Such costs include direct material and labor,
construction overhead and an allowance for funds used during construction (AFUDC).  AFUDC represents the estimated cost of debt and
equity funds that finance utility-plant construction.  AFUDC is capitalized during plant construction and reported in current
earnings in other nonoperating income.  AFUDC is recovered in rates through depreciation expense over the useful life of the related
asset.  Depreciation of utility plant is computed on a straight-line, remaining-life basis.

Depreciation expense stated as a percent of average original cost of depreciable utility plant was 4.3% for 2003, 4.2% for 2002 and
3.6% for 2001.

AFUDC - equity was $21 million in 2003, $11 million in 2002 and $7 million in 2001.  AFUDC - debt was $6 million in 2003, $8 million
in 2002 and $9 million in 2001.

Replaced or retired property costs are charged to the accumulated provision for depreciation.  Historically, cash payments for
removal costs less salvage were charged to the accumulated provision for depreciation and decommissioning and cash collections from
customers for future decommissioning were credited to accumulated provision for depreciation and decommissioning.  However, as a
result of recent guidance from the staff of the Securities and Exchange Commission, SCE reclassified amounts related to removal costs
to regulatory liabilities in its December 31, 2003 and 2002 balance sheets.  See further discussion in "New Accounting Principles"
and "Regulatory Assets and Liabilities."

Estimated useful lives of SCE's property, plant and equipment, as authorized by the CPUC, are as follows:

- -------------------------------------------------------------------------------------------------------------
           Generation plant                                   38 years to 81 years
           Distribution plant                                 24 years to 53 years
           Transmission plant                                 40 years to 60 years
           Other plant                                         5 years to 40 years
- -------------------------------------------------------------------------------------------------------------


SCE's net investment in generation-related utility plant was $867 million at December 31, 2003 and $842 million at December 31, 2002.


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Nuclear fuel is recorded as utility plant in accordance with CPUC rate-making procedures.

Nonutility property, including leasehold improvements and construction in progress, is capitalized at cost, including interest
incurred on borrowed funds that finance construction.  Depreciation of nonutility properties is primarily computed on a straight-line
basis over their estimated useful lives and over the lease term for leasehold improvements.

Depreciation expense stated as a percent of average original cost of depreciable nonutility property was, on a composite basis, 3.3%
for 2003, 3.5% for 2002 and 4.2% for 2001.

Emission allowances were acquired by EME as part of its Illinois plants and Homer City facilities acquisitions.  Although these
emission allowances are freely transferable, EME intends to use substantially all the emission allowances in the normal course of its
business to generate electricity.  Accordingly, Edison International has classified emission allowances expected to be used by EME to
generate power as part of nonutility property.  These acquired emission allowances will be amortized over the estimated lives of the
plants on a straight-line basis.

Estimated useful lives for nonutility property are as follows:

- -------------------------------------------------------------------------------------------------------------
           Furniture and equipment                             3 years to  11 years
           Building, plant and equipment                       3 years to 100 years
           Emission allowances                                25 years to  35 years
           Civil works                                        25 years to 100 years
           Leasehold improvements                             Life of lease
- -------------------------------------------------------------------------------------------------------------


Purchased Power

SCE purchased power through the California Power Exchange (PX) and California Independent System Operator (ISO) from April 1998
through mid-January 2001.  SCE has bilateral forward contracts with other entities and power-purchase contracts with other utilities
and independent power producers classified as QFs.  Purchased-power detail is provided below:

     In millions           Year ended December 31,               2003           2002          2001
- --------------------------------------------------------------------------------------------------------------------------
     PX/ISO:
     Purchases                                              $     284      $      75     $     775
     Generation sales                                              --             --           324
- --------------------------------------------------------------------------------------------------------------------------
     Purchased power - PX/ISO - net                               284             75           451
     Purchased power - bilateral contracts                        342             61           188
     Purchased power - interutility/QF contracts                2,160          1,880         3,131
- --------------------------------------------------------------------------------------------------------------------------
     Total                                                  $   2,786      $   2,016     $   3,770
- --------------------------------------------------------------------------------------------------------------------------


Net PX/ISO amounts for 2002 reflect only billing adjustments.  These billing adjustments are recovered through the PROACT and have no
impact on earnings.  Net PX/ISO amounts for 2003 include ISO imbalance purchases and billing adjustments.

From January 17, 2001 to December 31, 2002, the California Department of Water Resources (CDWR) purchased power for delivery to SCE's
customers in an amount equal to the difference between customer requirements and supplies provided through QF and bilateral
contracts, and SCE's utility-retained generation.  Effective January 1, 2003, SCE assumed responsibility for power requirements not
met by


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Notes to Consolidated Financial Statements


the CDWR.  Power purchased by the CDWR for delivery to SCE's customers is not considered a cost to SCE.

Regulatory Assets and Liabilities

In accordance with accounting principles for rate-regulated enterprises, SCE records regulatory assets, which represent probable
future recovery of certain costs from customers through the rate-making process, and regulatory liabilities, which represent probable
future credits to customers through the rate-making process.

SCE assessed the probability of recovery of its generation-related regulatory assets in light of the CPUC's March 27, 2001
decisions.  These decisions and other regulatory and legislative actions did not meet SCE's prior expectation that the CPUC would
provide adequate cost recovery mechanisms.  SCE was unable to conclude that its generation-related regulatory assets were probable of
recovery through the rate-making process as of December 31, 2000.  Therefore, in accordance with accounting rules, SCE recorded a
$2.5 billion after-tax charge to earnings at that time, to write off various regulatory assets.

In accordance with an October 2001 settlement agreement between the CPUC and SCE, the CPUC passed a resolution on January 23, 2002
allowing SCE to establish the PROACT regulatory asset for previously incurred energy procurement costs, retroactive to August 31,
2001.  SCE fully recovered the PROACT balance during July 2003 and on August 1, 2003, transferred the PROACT overcollection to a new
energy resource recovery account regulatory balancing account.  The new balancing account acts as a mechanism to recover SCE's fuel
costs related to its generating stations, purchased-power costs related to cogeneration and renewable contracts, existing
interutility and bilateral contracts that were entered into prior to January 17, 2001, and new procurement-related costs that SCE
began incurring on January 1, 2003, the date on which the CPUC transferred back to SCE the responsibility for procuring energy
resources for its customers.

Based on the CPUC's April 2002 decision related to SCE's URG assets, during the second quarter of 2002, SCE reestablished for
financial reporting purposes regulatory assets related to its unamortized nuclear facilities, purchased-power settlements and
flow-through taxes.

Due to the current status of the Mohave Generating Station (Mohave) and Related Proceedings (discussed in Note 2), SCE has concluded
that it is probable Mohave will be shut down at the end of 2005 and that its book value must be reduced to fair value in accordance
with an impairment-related accounting standard.  Based on SCE's expectation that any unrecovered book value at the end of 2005 would
be recovered in future rates through the rate-making mechanism discussed in its May 17, 2002 application and again in its January 30,
2003 supplemental testimony, and in accordance with accounting standards for rate-regulated enterprises, SCE reclassified for
financial reporting purposes approximately $61 million of Mohave's $88 million book value (at December 31, 2002) to a regulatory
asset as of December 31, 2002.

As part of a new accounting standard, Accounting for Asset Retirement Obligations, SCE capitalized the initial cost of the ARO into a
nuclear-related ARO regulatory asset, and also recorded an ARO regulatory liability as a result of timing differences between the
recognition of costs as recorded in accordance with this standard and the recovery of the related asset retirement costs through the
rate-making process.  The ARO regulatory liability defers the impact on earnings of the change in accounting principle.  See further
discussion in "New Accounting Principles."

SCE has collected in rates amounts for the future costs of removal and decommissioning of assets, and has historically recorded these
amounts in accumulated provision for depreciation.  However, in accordance with recent Securities and Exchange Commission accounting
guidance, the amounts accrued


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                                                                                                             Edison International


in accumulated provision for depreciation for decommissioning and costs of removal were reclassified to regulatory liabilities as of
December 31, 2002.  Upon implementation of the new accounting standard for AROs, SCE reversed the decommissioning amounts collected
for assets legally required to be removed and recorded the fair value of this ARO (included in the deferred credits and other
liabilities section of the consolidated balance sheet).  The cost of removal amounts collected for assets not legally required to be
removed remain in regulatory liabilities as of December 31, 2003.

Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are:

     In millions                    December 31,                                    2003                2002
- ---------------------------------------------------------------------------------------------------------------------------------------
     Current:
     PROACT - net                                                               $     --           $     574
     Regulatory balancing accounts and other - net                                  (276)               (115)
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                    (276)                459
- ---------------------------------------------------------------------------------------------------------------------------------------
     Long-term:
     Flow-through taxes - net                                                        974               1,336
     Rate reduction notes - transition cost deferral                                 949               1,215
     Unamortized nuclear investment - net                                            601                 630
     Nuclear-related ARO investment - net                                            288                  --
     Unamortized coal plant investment - net                                          66                  61
     Unamortized loss on reacquired debt                                             222                 237
     Environmental remediation                                                        71                  70
     ARO                                                                            (720)                 --
     Costs of removal                                                             (2,020)             (4,231)
     Regulatory balancing accounts and other - net                                    79                 289
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                     510                (393)
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                      $    234           $      66
- ---------------------------------------------------------------------------------------------------------------------------------------


The regulatory asset related to the rate reduction notes will be recovered over the terms of those notes.  The net regulatory asset
related to the unamortized nuclear investment will be recovered by the end of the remaining useful lives of the nuclear assets.  SCE
has requested a four-year recovery period for the net regulatory asset related to its unamortized coal plant investment.  CPUC
approval is pending.  The other regulatory assets and liabilities are being recovered through other components of electric rates.

Balancing account undercollections and overcollections accrue interest based on a three-month commercial paper rate published by the
Federal Reserve.  PROACT accrued interest based on the interest expense for the debt issued to finance the procurement-related
obligations, net of interest income on SCE's cash balance.  Income tax effects on all balancing account changes are deferred.

Related Party Transactions

Certain EME subsidiaries have 49% to 50% ownership in partnerships (QFs) that sell electricity generated by their project facilities
to SCE under long-term power purchase agreements with terms and pricing approved by the CPUC.  SCE's purchases from these
partnerships were $754 million in 2003, $548 million in 2002 and $983 million in 2001.

Restricted Cash

Edison International had total restricted cash of $418 million at December 31, 2003 and $465 million at December 31, 2002.  The
restricted amounts included in current assets are primarily used to make


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


scheduled payments on the current maturities of rate reduction notes issued on behalf of SCE by a special purpose entity, as well as
to serve as collateral at Edison Capital for outstanding letters of credit.  In 2003, the restricted amounts were also held by others
for the specific use of Edison Capital for its operations.  The restricted amounts included in deferred charges in both 2003 and 2002
are primarily to pay amounts for debt payments at MEHC and EME and letter of credit expenses at EME.

Revenue

Electric utility revenue is recognized as electricity is delivered and includes amounts for services rendered but unbilled at the end
of each year.  Amounts charged for services rendered are based on CPUC-authorized rates.  Rates include amounts for current period
costs, plus the recovery of certain previously incurred costs.  However, in accordance with accounting standards for rate-regulated
enterprises, amounts currently authorized in rates for recovery of costs to be incurred in the future are not considered as revenue
until the associated costs are incurred.

Since January 17, 2001, power purchased by the CDWR or through the ISO for SCE's customers is not considered a cost to SCE because
SCE is acting as an agent for these transactions.  Further, amounts billed to ($1.7 billion in 2003, $1.4 billion in 2002 and
$2.0 billion in 2001) and collected from SCE's customers for these power purchases, CDWR bond-related costs (effective November 15,
2002) and direct access exit fees (effective January 1, 2003) are being remitted to the CDWR and are not recognized as revenue to SCE.

Generally, nonutility power generation revenue is recorded as electricity is generated or services are provided.  Some nonutility
power generation revenue from power sales contracts is deferred and amortized to income over the life of the contracts.  Included in
this deferred revenue is the deferred gain from the termination of the Loy Yang B power sales agreement.  Nonutility power generation
revenue is adjusted for price differentials resulting from electricity rate swap agreements in the United States, United Kingdom and
Australia.

Generally, financial services and other revenue is recorded by recognizing income from leveraged leases over the term of the lease so
as to produce a constant rate of return based on the investment leased.  Ordinary gains and losses from sale of assets are recognized
at the time of the transaction.


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Stock-Based Employee Compensation

Edison International has three stock-based employee compensation plans, which are described more fully in Note 7.  Edison
International accounts for those plans using the intrinsic value method.  Upon grant, no stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying
common stock on the date of grant.  Compensation expense recorded under the stock-compensation program was $12 million in 2003,
$13 million in 2002 and $1 million in 2001.  The following table illustrates the effect on net income and EPS if Edison International
had used the fair-value accounting method.

     In millions                    Year ended December 31,                     2003         2002         2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Net income, as reported                                               $     821    $   1,077    $   1,035
     Add:  stock-based compensation expense using
        the intrinsic value accounting method - net of tax                         7            8            1
     Less:  stock-based compensation expense using
       the fair-value accounting method - net of tax                               9            5            5
- ---------------------------------------------------------------------------------------------------------------------------------------
     Pro forma net income                                                  $     819    $   1,080    $   1,031
- ---------------------------------------------------------------------------------------------------------------------------------------
     Basic EPS:
       As reported                                                         $    2.52    $    3.31    $    3.18
       Pro forma                                                                2.51         3.31         3.17

     Diluted EPS:
       As reported                                                         $    2.50    $    3.28    $    3.17
       Pro forma                                                                2.49         3.29         3.16
- ---------------------------------------------------------------------------------------------------------------------------------------


Supplemental Accumulated Other Comprehensive Loss Information

Supplemental information regarding Edison International's accumulated other comprehensive loss, including the discontinued operations
of the Ferrybridge and Fiddler's Ferry power plants and Lakeland project, is:

     In millions                      December 31,                                2003        2002
- --------------------------------------------------------------------------------------------------------------------------
     Foreign currency translation adjustments - net                          $     146    $     (8)
     Minimum pension liability - net(1)                                            (23)        (21)
     Unrealized loss on investments - net                                           (7)         (9)
     Unrealized losses on cash flow hedges - net                                  (169)       (209)
- --------------------------------------------------------------------------------------------------------------------------
     Accumulated other comprehensive loss                                    $     (53)   $   (247)
- --------------------------------------------------------------------------------------------------------------------------
     (1) The minimum pension liability is discussed in Note 7, Employee Compensation and Benefit Plans.

Unrealized losses on cash flow hedges included losses on interest rate hedges and commodity hedges.  Unrealized losses on commodity
hedges included those related to EME's hedge agreement with the State Electricity Commission of Victoria for electricity prices from
the Loy Yang B project in Australia.  This contract does not qualify under the normal sales and purchases exception because financial
settlement of the contract occurs without physical delivery.  These commodity hedge losses arise because current forecasts of future
electricity prices in these markets are greater than contract prices.  In addition to this contract, unrealized losses on cash flow
hedges included those related to EME's share of interest rate swaps of its unconsolidated affiliates and the Loy Yang B project.
Interest rate swaps entered into to hedge the floating interest rate risk on MEHC's $385 million term loan due 2006 qualify for
treatment under the derivative accounting standard as cash flow hedges with appropriate adjustments made to other


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


comprehensive income.  Included in Edison International's accumulated other comprehensive loss at December 31, 2003, was a
$156 million loss related to EME's unrealized losses on cash flow hedges.  Of the $156 million loss, $77 million was related to EME's
commodity hedges and $79 million was related to EME's interest rate hedges.

Unrealized losses on cash flow hedges also included those related to SCE's interest rate swap.  The swap terminated on January 5,
2001, but the related debt matures in 2008.  The unamortized loss of $9 million (as of December 31, 2003, net of tax) on the interest
rate swap will be amortized over a period ending in 2008.  Approximately $2 million (after tax) of the unamortized loss on this swap
will be reclassified into earnings during 2004.  Additionally, SCE recorded a $1 million unrealized loss as of December 31, 2003, on
an interest rate hedge that terminated on January 7, 2004.

As EME's hedged positions are realized, approximately $13 million (after tax) of the net unrealized gains on cash flow hedges at
December 31, 2003 are expected to be reclassified into earnings during 2004.  EME expects that when the hedged items are recognized
in earnings, the net unrealized gains associated with them will be offset.  The maximum period over which EME has designated a cash
flow hedge, excluding those forecasted transactions related to the payment of variable interest on existing financial instruments, is
13 years.  Actual amounts ultimately reclassified into earnings over the next 12 months could vary materially from this estimated
amount as a result of changes in market conditions.


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Supplemental Cash Flows Information

Edison International supplemental cash flows information is:

     In millions                        Year ended December 31,               2003           2002         2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Cash payments for interest and taxes:
     Interest - net of amounts capitalized                               $   1,280      $   1,113    $   1,192
     Tax payments (receipts)                                                   230           (301)         (70)

     Non-cash investing and financing activities:
     Obligation to fund investments in partnerships and
       unconsolidated subsidiaries                                              --             --    $       4

     Obligation to fund investment in acquisition                        $       8             --           --

     Details of long-term debt exchange offer:
       Variable rate notes redeemed                                      $    (966)            --           --
       First and refunding mortgage bonds issued                               966             --           --

     Details of debt exchange:
       Retirement of senior secured credit facility                      $    (700)            --           --
       Cash paid                                                               500             --           --
- ---------------------------------------------------------------------------------------------------------------------------------------
       Short-term credit line utilized                                         200             --           --
- ---------------------------------------------------------------------------------------------------------------------------------------

     Details of assets acquired:
       Fair value of assets acquired                                     $     336      $      16    $     898
       Cash paid for acquisitions                                             (278)           (16)         (97)
- ---------------------------------------------------------------------------------------------------------------------------------------
     Liabilities assumed                                                 $      58      $      --    $     801
- ---------------------------------------------------------------------------------------------------------------------------------------

     Details of senior secured credit facility transaction:
       Retirement of credit facility                                            --      $   1,650           --
       Cash paid on retirement of credit facility                               --            (50)          --
- ---------------------------------------------------------------------------------------------------------------------------------------
     Senior secured credit facility replacement                                 --      $   1,600           --
- ---------------------------------------------------------------------------------------------------------------------------------------


Translation of Foreign Financial Statements

Assets and liabilities of most foreign operations are translated at end of period rates of exchange and the income statements are
translated at the average rates of exchange for the year.  Gains or losses from translation of foreign currency financial statements
are included in accumulated other comprehensive income in shareholders' equity.  Gains or losses resulting from foreign currency
transactions are included in other nonoperating income or deductions.  Foreign currency transaction gains/(losses) were $2 million,
$(8) million and $2 million for 2003, 2002 and 2001, respectively.

Note 2.  Regulatory Matters

CDWR Power Purchases and Revenue Requirement Proceedings

In accordance with an emergency order by the Governor of California, the CDWR began making emergency power purchases for SCE's
customers on January 17, 2001.  In February 2001, a California law was enacted which authorized the CDWR to:  (1) enter into
contracts to purchase electric power and sell power at cost directly to SCE's retail customers; and (2) issue bonds to finance those
electricity


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


purchases.  During the fourth quarter of 2002, the CDWR issued $11 billion in bonds to finance its electricity purchases.  The CDWR's
total statewide power charge and bond charge revenue requirements are allocated by the CPUC among the customers of SCE, Pacific Gas
and Electric (PG&E) and San Diego Gas & Electric (SDG&E).  Amounts billed to and collected from SCE's customers for electric power
purchased and sold by the CDWR (approximately $1.7 billion in 2003) are remitted directly to the CDWR and are not recognized as
revenue by SCE.

CPUC Litigation Settlement Agreement

During the California energy crisis, prices charged by sellers of wholesale power escalated far beyond what SCE was permitted by the
CPUC to charge its customers.  In November 2000, SCE filed a lawsuit against the CPUC in federal district court seeking a ruling that
SCE is entitled to full recovery of its electricity procurement costs incurred during the energy crisis in accordance with the
tariffs filed with the FERC.  In October 2001, SCE and the CPUC entered into a settlement of SCE's lawsuit against the CPUC.  A key
element of the 2001 CPUC settlement agreement was the establishment of a $3.6 billion regulatory balancing account, called the
PROACT, as of August 31, 2001.  The Utility Reform Network (TURN) and other parties appealed to the United States Court of Appeals
for the Ninth Circuit (Ninth Circuit) seeking to overturn the stipulated judgment of the federal district court that approved the
2001 CPUC settlement agreement.  On September 23, 2002, the Ninth Circuit issued its opinion affirming the federal district court on
all claims, with the exception of the challenges founded upon California state law, which the Ninth Circuit referred to the
California Supreme Court.

On August 21, 2003, the California Supreme Court issued its decision on the certified questions on challenges founded upon California
state law, concluding that the 2001 CPUC settlement agreement did not violate California law in any of the respects raised by the
Ninth Circuit.  Specifically, the California Supreme Court concluded that:  (1) the commissioners of the CPUC had the authority to
propose the stipulated judgment under the provisions of California's restructuring statute, Assembly Bill 1890, as amended or
impacted by subsequent legislation; (2) the procedures employed by the CPUC in entering the stipulated judgment did not violate
California's open meeting law for public agencies; and (3) the stipulated judgment did not violate California's public utilities code
by allegedly altering rates without a public hearing and issuance of findings.

On October 22, 2003, the California Supreme Court denied TURN's petition for rehearing of the decision.  The matter was returned to
the Ninth Circuit for final disposition, subject to any efforts by TURN to pursue further federal appeals.  On December 19, 2003, the
Ninth Circuit unanimously affirmed the original stipulated judgment of the federal district court, and no petition for rehearing was
filed.  On January 12, 2004, the Ninth Circuit issued its mandate, relinquishing jurisdiction of the case and returning jurisdiction
to the federal district court.  TURN and those parties whose appeals to the Ninth Circuit were consolidated with TURN's appeal
currently have 90 days from December 19, 2003 in which to seek discretionary review from the United States Supreme Court.  SCE
continues to believe it is probable that recovery of its past procurement costs through regulatory mechanisms, including the PROACT,
will not be invalidated.  However, SCE cannot predict with certainty the ultimate outcome of further legal proceedings, if any.

Electric Line Maintenance Practices Proceeding

In August 2001, the CPUC issued an order instituting investigation regarding SCE's overhead and underground electric line maintenance
practices.  The order was based on a report issued by the CPUC's Consumer Protection and Safety Division, which alleged a pattern of
noncompliance with the CPUC's general orders for the maintenance of electric lines for 1998-2000.  The order also alleged that
noncompliant conditions were involved in 37 accidents resulting in death, serious injury or property damage.  The Consumer Protection
and Safety Division identified 4,817 alleged violations of the general


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orders during the three-year period; and the order put SCE on notice that it could be subject to a penalty of between $500 and
$20,000 for each violation or accident.  In its opening brief on October 21, 2002, the Consumer Protection and Safety Division
recommended that SCE be assessed a penalty of $97 million.

On June 19, 2003, a CPUC administrative law judge issued a presiding officer's decision on the Consumer Protection and Safety
Division report.  The decision did the following:

o    Fined SCE $576,000 for 2% of the alleged violations involving death, injury or property damage, failure to identify unsafe
     conditions or exceeding required inspection intervals.  The decision did not find that any of the alleged violations compromised
     the integrity or safety of SCE's electric system or were excessive compared to other utilities.

o    Ordered SCE to consult with the Consumer Protection and Safety Division and refine SCE's maintenance priority system
     consistent with the decision.

o    Adopted an interpretation that all of SCE's nonconformances with the CPUC's general orders for the maintenance of electric
     lines are violations subject to potential penalty.

On July 21, 2003, SCE filed an appeal with the CPUC challenging, among other things, the decision's interpretation of nonconformance.
The Consumer Protection and Safety Division also appealed, challenging the fact that the decision did not penalize SCE for 4,721 of
the 4,817 alleged violations.  A final decision is scheduled to be issued on March 16, 2004.

Generation Procurement Proceedings

SCE resumed power procurement responsibilities for its residual-net short position on January 1, 2003, pursuant to CPUC orders and
California statutes passed in 2002.  The current regulatory and statutory framework requires SCE to assume limited responsibilities
for CDWR contracts allocated by the CPUC, and provide full power procurement responsibilities on the basis of annual short-term
procurement plans, long-term resource plans and increased procurement of renewable resources.

Short-Term Procurement Plan

In 2003, SCE operated under a CPUC-approved short-term procurement plan, which includes contracts entered into during a transitional
period beginning in August 2002 for deliveries in 2003 and the allocation of CDWR contracts.  In December 2003, the CPUC adopted a
2004 procurement plan for SCE, which established a target level for spot market purchases equal to 5% of monthly need, and allowed
SCE to enter into contracts of up to five years.

Long-Term Resource Plan

On April 15, 2003, SCE filed its long-term resource plan with the CPUC, which includes a 20-year forecast.  SCE's long-term resource
plan included both a preferred plan and an interim plan (both described below).  On January 22, 2004, the CPUC issued a decision
which did not adopt any long-term resource plan, but adopted a framework for resource planning.  Until the CPUC approves a long-term
resource plan for SCE, SCE will operate under its interim resource plan.

o    Preferred Resource Plan:  The preferred resource plan contains long-term commitments intended to encourage investment in new
     generation and transmission infrastructure, increase long-term reliability and decrease price volatility.  These commitments
     include energy efficiency and demand-response investments, additional renewable resource contracts that will meet or exceed the
     requirements of


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Notes to Consolidated Financial Statements


     legislation passed in 2002, additional utility and third-party owned generation, and new major transmission projects.

o    Interim Resource Plan:  The interim resource plan, by contrast, relies exclusively on new short- and medium-term contracts
     with no long-term resource commitments (except for new renewable contracts).

In its long-term resource plan filing, SCE maintained that implementation of its preferred resource plan requires resolution of
various issues including:  (1) stabilizing SCE's customer base; (2) restoring SCE's investment-grade creditworthiness;
(3) restructuring regulations regarding energy efficiency and demand-response programs; (4) removing barriers to transmission
development; (5) modifying prior decisions, which impede long-term procurement; and (6) adopting a commercially realistic
cost-recovery framework that will enable utilities to obtain financing and enable contracting for new generation.

Under the framework adopted in the CPUC's January 22, 2004 decision, all load-serving entities in California have an obligation to
procure sufficient resources to meet their customers' needs.  This resource adequacy requirement phases in over the 2005-2008 period
and requires planning reserve margins of 15% to 17% of peak load.  The decision requires SCE to enter into forward contracts for 90%
of SCE's summer peaking needs a year in advance and to file a revised long-term resource plan in 2004.  The decision does not
comprehensively address important issues SCE has raised about its customer base, recovery of indirect procurement costs (including
debt equivalence) and other matters.

Procurement of Renewable Resources

As part of SCE's resumption of power procurement, in accordance with a California statute passed in 2002, SCE is required to increase
its procurement of renewable resources by at least 1% of its annual electricity sales per year so that 20% of its annual electricity
sales are procured from renewable resources by no later than December 31, 2017.  In June 2003, the CPUC issued a decision adopting
preliminary rules and guidance on renewable procurement-related issues, including penalties for noncompliance with renewable
procurement targets.  As of December 31, 2003, SCE procured approximately 18% of its annual electricity from renewable resources.

SCE has received bids for renewable resource contracts in response to a solicitation it made in August 2003, and is proceeding to
enter into negotiations for contracts with some bidders based upon its preliminary bid evaluation.

CDWR Contract Allocation and Operating Order

The CDWR power-purchase contracts entered into as a result of the California energy crisis have been allocated on a
contract-by-contract basis among SCE, PG&E and SDG&E, in accordance with a 2002 CPUC decision.  SCE only assumes scheduling and
dispatch responsibilities and acts only as a limited agent for the CDWR for contract implementation.  Legal title, financial
reporting and responsibility for the payment of contract-related bills remain with the CDWR.  The allocation of CDWR contracts to SCE
significantly reduces SCE's residual-net short and also increases the likelihood that SCE will have excess power during certain
periods.  SCE has incorporated the CDWR contracts allocated to it in its procurement plans.  Wholesale revenue from the sale of
excess power, if any, is prorated between the CDWR and SCE.

SCE's maximum annual disallowance risk exposure for contract administration, including administration of allocated CDWR contracts and
least cost dispatch of CDWR contract resources, is $37 million.  In addition, gas procurement, including hedging transactions,
associated with the CDWR contracts is included within the cap.


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Holding Company Proceeding

In April 2001, the CPUC issued an order instituting investigation that reopened the past CPUC decisions authorizing utilities to form
holding companies and initiated an investigation into, among other things:  (1) whether the holding companies violated CPUC
requirements to give first priority to the capital needs of their respective utility subsidiaries; (2) any additional suspected
violations of laws or CPUC rules and decisions; and (3) whether additional rules, conditions, or other changes to the holding company
decisions are necessary.

In January 2002, the CPUC issued an interim decision interpreting the CPUC requirement that the holding companies give first priority
to the capital needs of their respective utility subsidiaries.  The decision stated that, at least under certain circumstances,
holding companies are required to infuse all types of capital into their respective utility subsidiaries when necessary to fulfill
the utility's obligation to serve its customers.  The decision did not determine whether any of the utility holding companies had
violated this requirement, reserving such a determination for a later phase of the proceedings.  In February 2002, SCE and Edison
International filed an application before the CPUC for rehearing of the decision.  In July 2002, the CPUC affirmed its earlier
decision on the first priority requirement and also denied Edison International's request for a rehearing of the CPUC's determination
that it had jurisdiction over Edison International in this proceeding.  In August 2002, Edison International and SCE jointly filed a
petition in California state court requesting a review of the CPUC's decisions with regard to first priority requirements, and Edison
International filed a petition for a review of the CPUC decision asserting jurisdiction over holding companies.  PG&E and SDG&E and
their respective holding companies filed similar challenges, and all cases have been transferred to the First District Court of
Appeals in San Francisco.  On November 26, 2003, the Court of Appeals issued an order indicating it would hear the cases but not
decide the merits of the petitions.  Oral argument was held before the Court of Appeals on March 5, 2004, and the Court of Appeals is
expected to rule within 90 days.

Mohave Generating Station and Related Proceedings

In May 2002, SCE filed an application with the CPUC to address certain issues (mainly coal and slurry-water supply issues) facing the
future extended operation of Mohave, which is partly owned by SCE.  Mohave obtains all of its coal supply from the Black Mesa Mine in
northeast Arizona, located on lands of the Navajo Nation and Hopi Tribe (the Tribes).  This coal is delivered from the mine to Mohave
by means of a coal slurry pipeline, which requires water from wells located on lands belonging to the Tribes in the mine vicinity.

Due to the lack of progress in negotiations with the Tribes and other parties to resolve several coal and water supply issues, SCE's
application stated that SCE would probably be unable to extend Mohave's operation beyond 2005.  The uncertainty over a post-2005 coal
and water supply has prevented SCE and other Mohave co-owners from making approximately $1.1 billion in Mohave-related investments
(SCE's share is $605 million), including the installation of pollution-control equipment that must be put in place in order for
Mohave to continue to operate beyond 2005, pursuant to a 1999 consent decree concerning air quality.

Negotiations are continuing among the relevant parties in an effort to resolve the coal and water supply issues, but no resolution
has been reached.  The Mohave co-owners, the Tribes and the federal government have recently finalized a memorandum of understanding
under which the Mohave co-owners will fund, subject to the terms and conditions of the memorandum of understanding, a $6 million
study of a possible alternative groundwater source for the slurry water.  The study is expected to begin in early 2004.  SCE and
other parties submitted further testimony and made various other filings in 2003 in SCE's application proceeding.  On February 9,
2004, the CPUC held a prehearing conference to discuss whether


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Notes to Consolidated Financial Statements


additional testimony and hearings are needed to determine the future of the plant.  The CPUC has not issued any ruling as result of
the prehearing conference, but has indicated that further testimony can be expected in early to mid-2004.  The outcome of the coal
and water negotiations and SCE's application are not expected to impact Mohave's operation through 2005, but could have a major
impact on SCE's long-term resource plan.

For additional matters related to Mohave, see "Navajo Nation Litigation" in Note 10.

In light of all of the issues discussed above, SCE has concluded that it is probable Mohave will be shut down at the end of 2005.
Because the expected undiscounted cash flows from the plant during the years 2003-2005 were less than the $88 million carrying value
of the plant as of December 31, 2002, SCE incurred an impairment charge of $61 million in 2002.  However, in accordance with
accounting standards for rate-regulated enterprises, this incurred cost was deferred and recorded as a regulatory asset, based on
SCE's expectation that any unrecovered book value at the end of 2005 would be recovered in future rates through a balancing account
mechanism presented in its May 2002 application and discussed in its supplemental testimony filed in January 2003.

Wholesale Electricity and Natural Gas Markets

In 2000, the FERC initiated an investigation into the justness and reasonableness of rates charged by sellers of electricity in the
PX/ISO markets.  On March 26, 2003, the FERC staff issued a report concluding that there had been pervasive gaming and market
manipulation of both the electric and natural gas markets in California and on the West Coast during 2000-2001 and describing many of
the techniques and effects of that market manipulation.  SCE is participating in several related proceedings seeking recovery of
refunds from sellers of electricity and natural gas who manipulated the electric and natural gas markets.  Under the 2001 CPUC
settlement agreement, mentioned in "CPUC Litigation Settlement Agreement," 90% of any refunds actually realized by SCE will be
refunded to customers, except for the El Paso Natural Gas Company settlement agreement discussed below.

El Paso Natural Gas Company entered into a settlement agreement with parties to a class action lawsuit (including SCE, PG&E and the
State of California) settling claims stated in proceedings at the FERC and in San Diego County Superior Court that El Paso Natural
Gas Company had manipulated interstate capacity and engaged in other anticompetitive behavior in the natural gas markets in order to
unlawfully raise gas prices at the California border in 2000-2001.  The San Diego County Superior Court approved the settlement on
December 5, 2003.  Notice of appeal of that judgment was filed by a party to the action on February 6, 2004.  Accordingly, until the
appeal is resolved, the judgment is not final and no refunds will be paid.  Pursuant to a CPUC decision, SCE will refund to customers
any amounts received under the terms of the El Paso Natural Gas Company settlement (net of legal and consulting costs) through its
energy resource recovery account mechanism.  In addition, amounts El Paso Natural Gas Company refunds to the CDWR will result in
equivalent reductions in the CDWR's revenue requirement allocated to SCE.

On February 24, 2004, SCE and PG&E entered into a settlement agreement with The Williams Cos. and Williams Power Company, providing
for approximately $140 million in refunds against some of Williams' power charges in 2000-2001.  The allocation of refunds under the
settlement agreement has not been determined.  The settlement is subject to the approval of the FERC, the CPUC and the PG&E
bankruptcy court.

Note 3.  Derivative Instruments and Hedging Activities

Edison International's risk management policy allows the use of derivative financial instruments to manage financial exposure on its
investments and fluctuations in interest rates, foreign currency exchange


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rates, emission and transmission rights, and oil, gas and energy prices but prohibits the use of these instruments for speculative or
trading purposes, except at EME's trading operations unit.

On January 1, 2001, Edison International adopted a new accounting standard for derivative instruments and hedging activities.  Edison
International has also adopted subsequent interpretations of this standard.  The standard requires derivative instruments to be
recognized on the balance sheet at fair value unless they meet the definition of a normal purchase or sale.  The normal purchases and
sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in
the normal course of business.  Gains or losses from changes in the fair value of a recognized asset or liability or a firm
commitment are reflected in earnings for the ineffective portion of the hedge.  For a hedge of the cash flows of a forecasted
transaction or a foreign currency exposure, the effective portion of the gain or loss is initially recorded as a separate component
of shareholders' equity under the caption "accumulated other comprehensive income," and subsequently reclassified into earnings when
the forecasted transaction affects earnings.  The ineffective portion of the hedge is reflected in earnings immediately.  Fair value
changes for EME's trading operations are reflected in earnings.

SCE recorded its interest rate swap agreement (terminated January 5, 2001) and its block forward power-purchase contracts at fair
value effective January 1, 2001.  The unamortized loss of $9 million (as of December 31, 2003, net of tax) on the interest rate swap
will be amortized over a period ending in 2008, when the related debt matures.

In December 2003, SCE entered into an interest rate lock to hedge its exposure to changes in interest rates for $825 million of
anticipated issuances of first mortgage bonds.  SCE recorded a $1 million liability as of December 31, 2003, representing the fair
value of the interest rate lock.  The lock expired on January 7, 2004, the pricing date of $975 million of new mortgage bonds,
resulting in a payment of $6 million to the counterparties due to a decline in treasury rates.  This loss will be treated as a debt
discount and amortized over the life of the mortgage bonds.

SCE has bilateral forward power contracts, which are considered normal purchases under accounting rules.  SCE is exposed to credit
loss in the event of nonperformance by the counterparties to its bilateral forward contracts, but does not expect the counterparties
to fail to meet their obligations.  The counterparties are required to post collateral depending on the creditworthiness of each
counterparty.

In October and November 2001, SCE purchased $209 million of call options that mitigated its exposure to increases in natural gas
prices during 2002 and 2003.  This amount was recovered through a balancing account mechanism.  Amounts paid to QFs for energy are
based on natural gas prices.  Any fair value changes for gas call options are offset through a regulatory balancing account;
therefore, fair value changes do not affect earnings.  In fourth quarter 2003, SCE purchased $4 million of call options to hedge some
gas price exposure for 2004.

SCE purchases power from certain QFs in which the contract pricing is based on a natural gas index, but the power is not generated
with natural gas.  A portion of these contracts is not eligible for the normal purchases and sales exception under accounting rules
and the fair value is recorded on the balance sheet.  Any fair value changes for these QF contracts are offset through a regulatory
mechanism; therefore, fair value changes do not affect earnings.

EME's primary market risk exposures arise from fluctuations in electricity and fuel prices, emission and transmission rights,
interest rates and foreign currency exchange rates.  EME manages these risks in part by using derivative financial instruments in
accordance with established policies and procedures.

In 2001, EME recorded a $250,000 (after tax) increase to income from continuing operations, a $6 million (after tax) increase to
income from discontinued operations and a $230 million (after tax)


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Notes to Consolidated Financial Statements


decrease to other comprehensive income as the cumulative effect of a change in accounting for derivatives.  Upon implementation,
EME's forward sales contracts from the Homer City facilities qualified as cash flow hedges.  EME did not use the normal purchases and
sales exception for these forward sales contracts due to net settlement procedures with counterparties.  As a result of higher market
prices for forward sales from its Homer City facilities, EME recorded a liability of $116 million at January 1, 2001, deferred tax
benefits of $54 million and a decrease in other comprehensive income of $62 million. EME's hedge agreement with the State Electricity
Commission of Victoria for electricity prices from its Loy Yang B project in Australia qualified as a cash flow hedge.  This contract
could not qualify under the normal purchases and sales exception because financial settlement of the contract occurs without physical
delivery.  As a result of higher market prices for forward sales from EME's Loy Yang B plant, EME recorded a liability of
$227 million at January 1, 2001, deferred tax benefits of $68 million and a decrease in other comprehensive income of $159 million.
The majority of EME's activities related to the fuel contracts for EME's Collins Station in Illinois did not qualify for either the
normal purchases and sales exception or as cash flow hedges.  EME could not conclude, based on information available at January 1,
2001, that the timing of generation from the Collins Station met the probable requirement for a specific forecasted transaction under
the new accounting standard for derivatives and hedging activities.  Accordingly, these contracts were recorded at fair value, with
subsequent changes in fair value reflected in nonutility power generation revenue in the consolidated income statement.  EME has
continued to record fuel contracts for its Collins Station at fair value.

New accounting guidance effective July 1, 2001, modified the normal purchases and sales exception to include electricity contracts
which include terms that require physical delivery by the seller in quantities that are expected to be sold in the normal course of
business.  This modification resulted in EME's Homer City forward sales contracts qualifying for the normal sales and purchases
exception commencing July 1, 2001.  Based on this accounting guidance, on July 1, 2001, EME eliminated the value of the Homer City
forward sales contracts from its consolidated balance sheet.  The cumulative effect of this change in accounting is reflected as a
$16 million (after tax) decrease to other comprehensive income in 2001.  Also, for the period between January 1, 2001 and June 30,
2001, EME applied the normal purchases and sales exception for long-term commodity contracts that included both selling and buying
electricity by EME's First Hydro plant.  However, the criteria applicable to the buyer of power under the new interpretation
precluded the contracts from qualifying under the normal purchases and sales exception as of July 1, 2001, because First Hydro is not
contractually obligated to maintain sufficient capacity to meet electricity needs of a customer.  Accordingly, EME recorded a
$15 million (after tax) increase to income from continuing operations as the cumulative effect of change in accounting for derivatives
in the consolidated income statement as of July 1, 2001.  All subsequent changes in the fair value of these contracts will be
reflected in nonutility power generation revenue in the consolidated income statement.

On April 1, 2002, EME implemented a revised interpretation (issued in December 2001) that resulted in EME's forward electricity
contracts no longer qualifying for the normal purchases and sales exception since EME has net settlement agreements with its
counterparties.  Under this exception, EME records revenue on an accrual basis.  Subsequent to implementation of this interpretation,
EME accounted for these contracts as cash flow hedges.  Under a cash flow hedge, EME records the fair value of the forward sales
agreements on its balance sheet and records the effective portion of the cash flow hedge as part of other comprehensive income.  The
ineffective portion of EME's cash flow hedges is recorded directly in its income statement.  Upon implementation, EME recorded assets
at fair value of $12 million, deferred taxes of $6 million and a $6 million increase to other comprehensive income as the cumulative
effect of adoption of this interpretation.

In June 2003, clarifying guidance was issued related to derivative instruments and hedging activities.  The guidance is related to
pricing adjustments in contracts that qualify under the normal purchases and normal sales exception under derivative instrument
accounting.  This implementation guidance became effective


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on October 1, 2003, but did not have any impact on Edison International's consolidated financial statements.

Under the accounting standard for derivatives and hedging activities, the portion of a cash flow hedge that does not offset the
change in value of the transaction being hedged, which is referred to as the ineffective portion, is immediately recognized in
earnings.  EME recorded a net loss of approximately $2 million and $1 million in 2002 and 2001, respectively, representing the amount
of cash flow hedges' ineffectiveness; these amounts are reflected in nonutility power generation revenue in the consolidated income
statement.

Under EME's fixed to variable swap agreements, the fixed interest rate payments are at a weighted average rate of 6.39% and 6.91% at
December 31, 2003 and 2002, respectively.  Variable rate payments under EME's corporate agreements were based on six-month LIBOR
capped at 9% at December 31, 2001.  Variable rate payments pertaining to its foreign subsidiary agreements are based on an equivalent
interest rate benchmark to LIBOR.  The weighted average rate applicable to these agreements was 5.36% and 6.18% at December 31, 2003
and 2002, respectively.  Under the variable to fixed swap agreements, EME will pay counterparties interest at a weighted average
fixed rate of 6.74% and 6.96% at December 31, 2003 and 2002, respectively.  Counterparties will pay EME interest at a weighted
average variable rate of 5.07% and 5.10% at December 31, 2003 and 2002, respectively.  The weighted average variable interest rates
are based on LIBOR or equivalent interest rate benchmarks for foreign denominated interest rate swap agreements.  Under EME's
interest rate options, the weighted average strike interest rate is was 6.24% and 6.90% and December 31, 2003 and 2002, respectively.

In September 2000, EME acquired the trading operations of Citizens Power LLC, expanding EME's operations beyond the traditional
marketing of electric power to include trading of electricity and fuels. Energy trading and price risk management activities give
rise to market risk (potential loss that can be caused by a change in the market value of a particular commitment).  Market risks are
actively monitored to ensure compliance with EME's risk management policies.  EME performs a "value at risk" analysis daily to
monitor its overall market risk exposure.  This analysis measures the worst expected loss over a given time interval, under normal
market conditions, at a given confidence level.  Given the inherent limitations of value at risk and relying on a single risk
measurement tool, EME supplements this approach with other techniques, including the use of stress testing and worst case scenario
analysis, as well as stop limits and counterparty credit exposure limits.

MEHC, a wholly owned indirect subsidiary of Edison International, has two interest rate swaps to hedge floating interest rate risk on
its term loan.  These contracts qualify for treatment as cash flow hedges with appropriate adjustments made to other comprehensive
income.  During the years ended December 31, 2003 and 2002, MEHC recorded decreases to other comprehensive income of $3 million
(after tax) and $5 million (after tax), respectively, resulting from unrealized holding losses on these contracts.  Under the
variable-to-fixed swap agreements, MEHC will pay counterparties interest at a weighted average fixed rate of 2.84% and 3.04% at
December 31, 2003 and 2002, respectively; counterparties will pay interest at a weighted average variable rate based on LIBOR of
1.15% and 1.63% at December 31, 2003 and 2002, respectively.

Edison Capital had an interest rate swap and an interest rate cap in place during 2003.  The purpose of the interest rate swap was to
convert floating rate debt to fixed rate debt to hedge changes in interest rates.  The purpose of the interest rate cap was to limit
Edison Capital's exposure to an increase in interest rates.  In 2003, Edison Capital made payments on its swap agreement at a
weighted average rate of 6.79% and received payments at a weighted average rate of 1.17%.  In 2003, Edison Capital received no
payments on its cap agreement.


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Notes to Consolidated Financial Statements


Fair values of financial instruments are:

     In millions                                   December 31,                 2003             2002
- ------------------------------------------------------------------------------------------------------------------------------------
     Derivatives:
       Interest rate hedges                                                 $    (35)        $    (56)
       Interest rate options                                                      (1)              (2)
       Commodity price
         Electricity                                                            (126)            (100)
         Natural gas                                                               3               77
       Foreign currency forward exchange agreements                               (2)              --
       Cross currency interest rate swaps                                        (91)              (2)
     Other:
       Decommissioning trusts                                                  2,530            2,210
       Long-term receivables                                                       6                6
       DOE decommissioning and decontamination fees                              (18)             (22)
       QF power contracts                                                        (32)             (70)
       Long-term debt                                                        (11,833)          (9,952)
       Long-term debt due within one year                                     (2,029)          (2,812)
       Preferred stock to be redeemed within one year                             (9)              (8)
       Company-obligated mandatorily redeemable
         securities of subsidiaries                                               --             (741)
       Other preferred securities subject to mandatory redemption               (303)            (375)
     Trading Activities:
       Assets                                                                    104              109
       Liabilities                                                               (12)             (17)
- -----------------------------------------------------------------------------------------------------------------------------------


The fair value of the interest rate hedges and interest rate options is based on quoted market prices.

The fair value of the commodity contracts considers quoted market prices, time value, volatility of the underlying commodities and
other factors.  The fair value of the electricity rate swap agreements (included under commodity price) is estimated by discounting
the future cash flows on the difference between the average aggregate contract price per MW and a forecasted market price per MW,
multiplied by the amount of MW sales remaining under contract.  The fair value of the QF power contracts is based on financial
models; the fair value of the gas call options (included under commodity price) is based on quoted market prices.

Foreign currency forward exchange agreements and cross currency interest rate swaps are based on bank quotes.

Other fair values are based on: quoted market prices for decommissioning trusts and long-term receivables; discounted future cash
flows for United States Department of Energy (DOE) decommissioning and decontamination fees; and brokers' quotes for long-term debt,
company-obligated mandatorily redeemable securities of subsidiaries, and preferred stock and preferred securities subject to
mandatory redemption.

Quoted market prices are used to determine the fair values of trading instruments.  Assets from trading and price risk management
activities include the fair value of open financial positions related to trading activities and the present value of net amounts
receivable from structured transactions.  Liabilities from trading and price risk management activities include the fair value of
open financial positions related to trading activities and the present value of net amounts payable from structured transactions.


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Due to their short maturities, amounts reported for cash equivalents approximate fair value.

Note 4.  Liabilities and Lines of Credit

Long-Term Debt

In fourth quarter 2003, Edison International adopted a new accounting interpretation regarding VIEs which required Edison
International to deconsolidate three special purpose entities, EIX Trusts I and II, and Mission Capital, L.P.  As a result of these
deconsolidations, the bonds and securities associated with these financing entities are now included in long-term debt on Edison
International's consolidated balance sheet.  Under prior accounting treatment, these bonds and securities would have been eliminated
in consolidation and the bonds and securities held by the special purpose entities would have been included in company-obligated
mandatorily redeemable securities of subsidiary on the consolidated balance sheet.

Almost all SCE properties are subject to a trust indenture lien.  SCE has pledged first and refunding mortgage bonds as security for
borrowed funds obtained from pollution-control bonds issued by government agencies.  SCE used these proceeds to finance construction
of pollution-control facilities.  Bondholders have limited discretion in redeeming certain pollution-control bonds, and SCE has
arrangements with securities dealers to remarket or purchase them if necessary.  In December 2000 and early 2001, as a result of
investors' concerns regarding SCE's liquidity difficulties and overall financial condition, SCE had to repurchase $550 million of
pollution-control bonds that could not be remarketed in accordance with their terms.  On March 1, 2002, SCE remarketed $196 million
of the pollution-control bonds that SCE had repurchased in late 2000.

Debt premium, discount and issuance expenses are amortized over the life of each issue.  Under CPUC rate-making procedures, debt
reacquisition expenses are amortized over the remaining life of the reacquired debt or, if refinanced, the life of the new debt.
California law prohibits SCE from incurring or guaranteeing debt for its nonutility affiliates.

In December 1997, $2.5 billion of rate reduction notes were issued on behalf of SCE by SCE Funding LLC, a special purpose entity.
These notes were issued to finance the 10% rate reduction mandated by state law.  The proceeds of the rate reduction notes were used
by SCE Funding LLC to purchase from SCE an enforceable right known as transition property.  Transition property is a current property
right created by the restructuring legislation and a financing order of the CPUC and consists generally of the right to be paid a
specified amount from nonbypassable rates charged to residential and small commercial customers.  The rate reduction notes are being
repaid over 10 years through these nonbypassable residential and small commercial customer rates, which constitute the transition
property purchased by SCE Funding LLC.  The notes are collateralized by the transition property and are not collateralized by, or
payable from, assets of SCE or Edison International.  SCE used the proceeds from the sale of the transition property to retire debt
and equity securities.  Although, as required by accounting principles generally accepted in the United States, SCE Funding LLC is
consolidated with SCE and the rate reduction notes are shown as long-term debt in the consolidated financial statements, SCE
Funding LLC is legally separate from SCE.  The assets of SCE Funding LLC are not available to creditors of SCE or Edison International
and the transition property is legally not an asset of SCE or Edison International.

MEHC used the common stock of EME as security for MEHC's corporate debt obligations.  MEHC's senior secured notes and credit
agreement are nonrecourse to Edison International and EME, and accordingly, Edison International and EME have no obligations under
these instruments.

MEHC's consolidated debt at December 31, 2003 was $7.4 billion, including $693 million of debt maturing in December 2004 that is owed
by EME's largest subsidiary, Edison Mission Midwest Holdings.  Edison Mission Midwest Holdings is not expected to have sufficient
cash to repay the


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


$693 million debt due in December 2004.  Edison Mission Midwest Holdings plans to refinance the $693 million debt obligation prior to
its expiration in December 2004.  EME believes that Edison Mission Midwest Holdings will be able to refinance the debt maturing in
December 2004 through a combination of borrowings in the bank and capital markets.  Completion of this refinancing is subject to a
number of uncertainties, including availability of new credit from the capital and bank markets.  Accordingly, there is no assurance
that Edison Mission Midwest Holdings will be able to extend or refinance this debt when it becomes due or that the terms will not be
substantially different from those under the current credit facility.

On December 11, 2003, EME's subsidiary, Mission Energy Holdings International, Inc., received funding under a three-year,
$800 million secured loan.  Interest on this secured loan is based on LIBOR (with a LIBOR floor of 2%) plus 5%.  After payment of
transaction expenses, a portion of the net proceeds from this financing was used to make an equity contribution of $550 million to
Edison Mission Midwest Holdings that, together with cash on hand, was used to repay Edison Mission Midwest Holdings' $781 million
indebtedness due December 11, 2003.  The remaining net proceeds from this financing were used to make a deposit of cash collateral of
approximately $67 million under a new letter of credit facility and to repay approximately $160 million of indebtedness of a foreign
subsidiary under the Coal and Capex facility guaranteed by EME.  Mission Energy Holdings International owns substantially all of
EME's international operations through its subsidiary, MEC International B.V.

To isolate EME from credit downgrades of Edison International and SCE and to help preserve the value of EME, EME has adopted certain
provisions (ring-fencing) in the form of amendments to its articles of incorporation and bylaws.  The provisions include the
appointment of an independent EME director whose consent is required for EME to: consolidate or merge with any entity that does not
have substantially similar provisions in its organizational documents; institute or consent to bankruptcy, insolvency or similar
proceedings; or declare or pay dividends unless certain conditions exist.  Such conditions are that EME has an investment grade
rating and receives rating agency confirmation that the dividend will not result in a downgrade, or such dividends do not exceed
$32.5 million in any quarter and EME meets an interest coverage ratio of 2.2 to 1 for the immediately preceding four quarters.

Long-term debt is:

     In millions                        December 31,                     2003                    2002
- -------------------------------------------------------------------------------------------------------------------------------------
     First and refunding mortgage bonds:
       2004 - 2026 (5.875% to 8.00% and variable)                  $    1,816               $   2,275
     Rate reduction notes:
       2004 - 2007 (6.38% to 6.42%)                                       985                   1,232
     Pollution-control bonds:
       2005 - 2040 (5.125% to 7.2% and variable)                        1,216                   1,216
     Bonds repurchased                                                   (354)                   (354)
     Debentures and notes:
       2004 - 2039 (2.31% to 13.5% and variable)                        9,927                   9,922
     Subordinated debentures:
       2024 - 2044 (8.375% to 9.875%)                                     254                     100
     Long-term debt due within one year                                (2,003)                 (2,761)
     Unamortized debt discount - net                                      (54)                    (52)
- -------------------------------------------------------------------------------------------------------------------------------------
     Total                                                         $   11,787               $  11,578
- -------------------------------------------------------------------------------------------------------------------------------------
     Note:  Rates and terms as of December 31, 2003.

Long-term debt maturities and sinking-fund requirements for the next five years are: 2004 - $2.0 billion; 2005 - $753 million; 2006 -
$1.8 billion; 2007 - $1.7 billion; and 2008 - $1.3 billion.


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                                                                                                             Edison International


Long-term debt due within one year includes $29 million and $31 million of debt related to Edison Capital's Storm Lake project that
is not due until 2011 and 2017, respectively.  This debt has been reclassified to long-term debt due within one year as a result of
various defaults asserted by the lenders and related to the Enron bankruptcy among other things, which may give the lenders the
ability to call the loans due and payable.  However, the lenders are currently discussing resolution of the defaults with Storm Lake
and are not actively pursuing remedies.

In January 2004, SCE issued $975 million of first and refunding mortgage bonds.  The issuance included $300 million of 5% bonds due
in 2014, $525 million of 6% bonds due in 2034 and $150 million of floating rate bonds due in 2006.  The proceeds were used to redeem
$300 million of 7.25% first and refunding mortgage bonds due March 2026, $225 million of 7.125% first and refunding mortgage bonds
due July 2025, $200 million of 6.9% first and refunding mortgage bonds due October 2018, and $100 million of junior subordinated
deferrable interest debentures due June 2044.  In March 2004, SCE remarketed approximately $550 million of pollution-control bonds
with varying maturity dates ranging from 2008 to 2040.

During January and February 2004, Edison International repurchased approximately $46 million of its outstanding $618 million of
6-7/8% notes, leaving a remaining balance of $572 million of notes due September 2004.

Short-Term Debt

Short-term debt is used to finance fuel inventories, balancing account undercollections and general cash requirements, including
power purchase payments.

Short-term debt is:

     In millions               December 31,                      2003                          2002
- -----------------------------------------------------------------------------------------------------------------------------------
     Bank loans                                               $   200                        $   --
     Floating rate notes                                           --                            78
     Other short-term debt                                         52                            --
- -----------------------------------------------------------------------------------------------------------------------------------
     Total                                                    $   252                        $   78
- -----------------------------------------------------------------------------------------------------------------------------------
     Weighted-average interest rate                               3.2%                          6.1%


Lines of Credit

At December 31, 2003, Edison International's subsidiaries had lines of credit totaling $845 million, with various expiration dates,
and when available, can be drawn down at negotiated or bank index rates.  EME had total lines of credit of $145 million, with all of
it available to finance general cash requirements.  SCE had drawn $200 million on a $700 million line of credit.

At December 31, 2002, Edison International's subsidiaries had short-term and long-term lines of credit totaling $787 million, with
various expiration dates, and when available, could be drawn down at negotiated or bank index rates.  Of the total lines of credit,
$512 million were long-term.  EME had total lines of credit of $487 million, with $355 million available to finance general cash
requirements.  SCE had a fully drawn long-term line of credit of $300 million.


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Notes to Consolidated Financial Statements


Preferred Securities Subject to Mandatory Redemption

In compliance with a new accounting standard, effective July 1, 2003, Edison International reclassified its company-obligated
mandatorily redeemable securities, its other mandatorily redeemable preferred securities and SCE's preferred stock subject to
mandatory redemption to the liabilities section of its consolidated balance sheet.  These items were previously classified between
liabilities and equity.

Company-Obligated Mandatorily Redeemable Securities of Subsidiary

In 1999, Edison International (the parent company) issued, through affiliates (EIX Trusts I and II), $500 million of 7.875%
cumulative quarterly income preferred securities and $325 million of 8.6% cumulative quarterly income preferred securities, at a
price of $25 per security.  The 7.875% securities have a stated maturity of July 2029, but are redeemable at the option of Edison
International, in whole or in part, beginning July 2004.  The 8.6% securities have a stated maturity of October 2029, but are
redeemable at the option of Edison International, in whole or in part, beginning October 2004.  Both of these securities are
guaranteed by Edison International.  In order to reduce its cash requirements, in May 2001, the parent company deferred the interest
payments in accordance with the terms of its outstanding quarterly income debt securities issued to an affiliate.  This caused a
corresponding deferral of distributions on quarterly income preferred securities issued by the affiliate.  Interest payments may be
deferred for up to 20 consecutive quarters.  During the deferral period, the principal of the debt securities and each unpaid
interest installment continues to accrue interest at the applicable coupon rate.  All interest in arrears must be paid in full at the
end of the deferral period.  The parent company cannot pay dividends on or purchase its common stock while interest is being
deferred.  In December 2003, Edison International made aggregate payments of approximately $205 million, which covered repayment of
the deferred distributions, with interest, and payment of the distribution due on November 30, 2003.

In November 1994, EME issued, through a limited partnership (Mission Capital, L.P.), 3.5 million shares of 9.875% cumulative monthly
income preferred securities, at a price of $25 per security and invested the proceeds in 9.875% junior subordinated deferrable
interest debentures due 2024.  These securities are redeemable at the option of the partnership (EME is the sole general partner), in
whole or in part, with mandatory redemption in 2024 at a redemption price of $25 per security plus accrued and unpaid distributions.
In August 1995, EME also issued, through a limited partnership, 2.5 million shares of 8.5% cumulative monthly income preferred
securities, at a price of $25 per security and invested the proceeds in 8.5% junior subordinated deferrable interest debentures due
2025.  These securities are redeemable at the option of the partnership, in whole or in part, with mandatory redemption in 2025 at a
redemption price of $25 per security plus accrued and unpaid distributions.  EME issued a guarantee in favor of its preferred
securities holders, which ensures the payments of distributions declared on the preferred securities, payments upon liquidation of
the limited partnership and payments on redemption for securities called for redemption by the limited partnership.  No securities
have been redeemed as of December 31, 2003.

EME has the right from time to time to extend the interest payment period on its junior subordinated deferrable interest debentures
to a period not exceeding 60 consecutive months, at the end of which all accrued and unpaid interest will be paid in full.  If EME
does not make interest payments on its junior subordinated debentures, it is expected that this limited partnership will not declare
or pay distributions on its cumulative monthly income preferred securities.  During an extension period, EME may not do any of the
following:

o    declare or pay any dividend on, or purchase, acquire or make a distribution or liquidation payment with respect to, any of
     its common or preferred stock;


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                                                                                                             Edison International


o    acquire for cash or other property any indebtedness of any affiliate of EME (other than affiliates of EME which meet specified
     requirements) for money borrowed; or

o    make any loan or advance to, or guarantee or become contingently liable in respect of indebtedness of, any affiliate of EME
     (other than affiliates of EME which meet specified requirements).

Further, as long as any preferred securities remain outstanding, EME will not be able to declare or pay dividends on, or purchase,
any of its common stock if at such time it is in default on its payment obligations under the guarantee or the subordinated indenture
unless EME has given notice of the extended interest payment period described above.

In fourth quarter 2003, Edison International adopted a new accounting interpretation regarding VIEs which required Edison
International to deconsolidate three special purpose entities, EIX Trusts I and II, and Mission Capital, L.P.  As a result of these
deconsolidations, the bonds and securities associated with these entities are now included in long-term debt on Edison
International's consolidated balance sheet.  Under the prior accounting treatment, these securities would have been eliminated in
consolidation and reflected as company-obligated mandatorily redeemable securities of subsidiary.

Other Preferred Securities Subject to Mandatory Redemption

SCE has 12 million authorized shares of preferred stock subject to mandatory redemption.  All cumulative preferred stock is
redeemable.  Mandatorily redeemable preferred stock is subject to sinking-fund provisions.  When preferred shares are redeemed, the
premiums paid, if any, are charged to expense.

SCE's preferred stock redemption requirements for the next five years are:  2004 - $9 million; 2005 - $9 million; 2006 - $9 million;
2007 - $69 million; and 2008 - $54 million.

SCE's cumulative preferred stock subject to mandatory redemption is:

     Dollars in millions, except per-share amounts            December 31,               2003         2002
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                             December 31, 2003
                                                       ----------------------------
                                                           Shares       Redemption
                                                         Outstanding       Price
                                                       --------------  ------------
     $100 par value:
     6.05% Series                                          693,800      $ 100.00      $    69      $    75
     7.23                                                  807,000        100.00           81           81
     Preferred stock to be redeemed within one year                                        (9)          (9)
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                            $   141      $   147
- ---------------------------------------------------------------------------------------------------------------------------------------


In 2001, SCE did not redeem any preferred stock.  In 2002, SCE redeemed 1,000,000 shares of 6.45% Series preferred stock.  In 2003,
SCE redeemed 56,200 shares of 6.05% Series preferred stock.  SCE did not issue any preferred stock in the last three years.

The 7.23% Series preferred stock has mandatory sinking funds, requiring SCE to redeem at least 50,000 shares per year from 2002
through 2006, and 750,000 shares in 2007.  However, SCE is allowed to credit previously repurchased shares against the mandatory
sinking fund provisions.  Since SCE had previously repurchased 193,000 shares of this series, no shares were redeemed in 2002 or
2003.  At December 31, 2003, SCE had 93,000 of previously repurchased, but not retired, shares available to credit against the
mandatory sinking fund provisions.


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Notes to Consolidated Financial Statements


During 2001, a subsidiary of EME issued $104 million of redeemable preferred shares (250 million shares at a price of one New Zealand
dollar per share with a dividend rate of 6.03%).  The shares are redeemable in July 2006 at the issuance price.  At December 31,
2003, total accumulated dividends were approximately $5 million.  Optional early redemption may occur if the holders pass an
extraordinary resolution to redeem the shares if certain EME subsidiaries cease to be subsidiaries of EME or in the case of certain
defaults of the security trust deed.  The security trust deed secures a limited recourse guarantee by an EME subsidiary's payment
obligations to holders of the redeemable preferred shares.

Note 5.  Preferred Securities Not Subject to Mandatory Redemption

SCE's authorized shares are: $25 cumulative preferred - 24 million and preference - 50 million.  All cumulative preferred stock is
redeemable.  When preferred shares are redeemed, the premiums paid, if any, are charged to common equity.

SCE's cumulative preferred stock not subject to mandatory redemption is:

     Dollars in millions, except per-share amounts            December 31,               2003         2002
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                             December 31, 2003
                                                       ----------------------------
                                                           Shares       Redemption
                                                         Outstanding       Price
                                                       --------------  ------------
     $25 par value:
     4.08% Series                                        1,000,000        $25.50         $ 25         $ 25
     4.24                                                1,200,000         25.80           30           30
     4.32                                                1,653,429         28.75           41           41
     4.78                                                1,296,769         25.80           33           33
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                               $129         $129
- ---------------------------------------------------------------------------------------------------------------------------------------

Note 6.  Income Taxes

Edison International's eligible subsidiaries are included in Edison International's consolidated federal income tax and combined
state franchise tax returns.  Edison International has tax-allocation and payment agreements with certain of its subsidiaries.  For
subsidiaries other than SCE, the right of a participating subsidiary to receive or make a payment and the amount and timing of
tax-allocation payments are dependent on the inclusion of the subsidiary in the consolidated income tax returns of Edison
International and other factors including the consolidated taxable income of Edison International and its includible subsidiaries,
the amount of taxable income or net operating losses and other tax items of the participating subsidiary, as well as the other
subsidiaries of Edison International.  There are specific procedures regarding allocations of state taxes.  Each subsidiary is
eligible to receive tax-allocation payments for its tax losses or credits only at such time as Edison International and its
subsidiaries generate sufficient taxable income to be able to utilize the participating subsidiary's losses in the consolidated tax
return of Edison International.  Under an income tax-allocation agreement approved by the CPUC, SCE's tax liability is computed as if
it filed a separate return.

As part of the process of preparing its consolidated financial statements, Edison International is required to estimate its income
taxes in each of the jurisdictions in which it operates.  This process involves estimating actual current tax exposure together with
assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting purposes.
These differences result in deferred tax assets and liabilities, which are included within Edison International's consolidated
balance sheet.


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                                                                                                             Edison International


Edison International's subsidiary, EME, does not provide for federal income taxes or tax benefits on the undistributed earnings or
losses of its international subsidiaries because such earnings are reinvested indefinitely or would not be subject to additional
income taxes if repatriated.  EME reviewed undistributed earnings of its international subsidiaries and concluded that no additional
income taxes are required to be provided since (1) its international holding company had negative retained earnings and negative
accumulated earnings and profits for federal income tax purposes, (2) distributions from lower tier international subsidiaries would
either not be taxable or could be distributed without additional income taxes and (3) its international holding company had
outstanding indebtedness to domestic subsidiaries of $445 million at December 31, 2003, which could be repaid without incurring
additional income taxes.

Income tax expense includes the current tax liability from operations and the change in deferred income taxes during the year.
Investment tax credits are amortized over the lives of the related properties.

The sources of income (loss) before income taxes are:

     In millions         Year ended December 31,                  2003              2002              2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Domestic                                                 $    787          $  1,379         $   3,962
     Foreign                                                       205               147                87
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total continuing operations                                   992             1,526             4,049
- ---------------------------------------------------------------------------------------------------------------------------------------
     Discontinued operations                                        84               (74)           (2,223)
     Change in accounting                                          (13)               --                --
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                    $  1,063          $  1,452         $   1,826
- ---------------------------------------------------------------------------------------------------------------------------------------



The components of income tax expense (benefit) by location of taxing jurisdiction are:

     In millions         Year ended December 31,                  2003              2002              2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Current:
     Federal                                                  $    194          $    585         $    (215)
     State                                                         100               111                --
     Foreign                                                        54                38                30
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                   348               734              (185)
- ---------------------------------------------------------------------------------------------------------------------------------------
     Deferred:
     Federal                                                      (101)             (312)            1,422
     State                                                         (67)              (43)              406
     Foreign                                                        33                12                 4
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                  (135)             (343)            1,832
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total continuing operations                                   213               391             1,647
- ---------------------------------------------------------------------------------------------------------------------------------------
     Discontinued operations                                        33               (16)             (856)
     Change in accounting                                           (4)               --                --
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                    $    242          $    375         $     791
- ---------------------------------------------------------------------------------------------------------------------------------------


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


The components of the net accumulated deferred income tax liability are:

     In millions                                   December 31,                     2003              2002
- ---------------------------------------------------------------------------------------------------------------------------------------
     Deferred tax assets:
     Property-related                                                           $    243         $     178
     Unrealized gains or losses                                                      365               274
     Investment tax credits                                                           68                73
     Regulatory balancing accounts                                                   144             5,365
     Deferred income                                                                 177               172
     Decommissioning                                                                 166                --
     Accrued charges                                                                 344               501
     Loss carryforwards                                                              373               448
     Other                                                                           211               240
- ---------------------------------------------------------------------------------------------------------------------------------------
     Subtotal                                                                      2,091             7,251
- ---------------------------------------------------------------------------------------------------------------------------------------
     Valuation allowance                                                             (74)              (21)
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                      $  2,017         $   7,230
- ---------------------------------------------------------------------------------------------------------------------------------------
     Deferred tax liabilities:
     Property-related                                                           $  4,337         $   4,424
     Leveraged leases                                                              2,055             2,044
     Capitalized software costs                                                      160               204
     Regulatory balancing accounts                                                   360             5,606
     Unrealized gains and losses                                                     262               171
     Other                                                                           302               353
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                      $  7,476         $  12,802
- ---------------------------------------------------------------------------------------------------------------------------------------
     Accumulated deferred income taxes - net                                    $  5,459         $   5,572
- ---------------------------------------------------------------------------------------------------------------------------------------
     Classification of accumulated deferred income taxes:
     Included in deferred credits                                               $  5,967         $   6,099
     Included in current assets                                                 $    508         $     527


The federal statutory income tax rate is reconciled to the effective tax rate from continuing operations as follows:

     Year ended December 31,                                    2003                2002              2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Federal statutory rate                                     35.0%               35.0%             35.0%
     Resolution of FERC rate case                               (7.6)                 --                --
     Housing credits                                            (2.7)               (2.4)             (1.2)
     Property-related and other                                 (3.9)               (8.3)              0.6
     Favorable resolution of audit                              (3.6)               (2.4)               --
     State tax - net of federal deduction                        4.3                 3.7               6.3
- ---------------------------------------------------------------------------------------------------------------------------------------
     Effective tax rate                                         21.5%               25.6%             40.7%
- ---------------------------------------------------------------------------------------------------------------------------------------


Edison International's composite federal and state statutory tax rate was approximately 40% for all years presented.  The lower
effective tax rate of 21.5% realized in 2003 was primarily due to the resolution of a FERC rate case at SCE, recording the benefit of
favorable settlements of Internal Revenue Service (IRS) audit issues at SCE and the benefits received from low income housing and
production tax credits at Edison Capital.  The lower effective tax rate of 25.6% realized in 2002 was primarily due to:
reestablishing a tax related regulatory asset at SCE due to implementation of the CPUC's URG decision; a favorable adjustment to
Edison Capital's cumulative deferred taxes for changes in its effective state tax rate; the benefits received from low income housing
and production tax credits at Edison Capital;


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                                                                                                             Edison International


recording the benefit of favorable settlements of IRS audits at SCE; and the effect of lower foreign tax rates and permanent
reinvestment of earnings of foreign affiliates at EME, offset by foreign losses which were not able to be utilized in the current
period.

At December 31, 2003, Edison International and its subsidiaries have federal tax credits of $116 million which expire between 2018
and 2021, California net operating loss carryforwards of $1.2 billion which expire between 2009 and 2011, and California capital loss
carryforwards of $88 million that expire in 2005.  In addition, EME has foreign loss carryforwards, primarily Australian, of $487
million and $204 million at December 31, 2003 and 2002, respectively, with no expiration date.  EME has state loss carryforwards for
various states of $168 million and $230 million at December 31, 2003 and 2002, respectively, with various expiration dates.

As a matter of course, Edison International is regularly audited by federal, state and foreign taxing authorities.  For further
discussion of this matter, see "Federal Income Taxes" in Note 10.

Note 7.  Employee Compensation and Benefit Plans

Employee Savings Plan

Edison International has a 401(k) defined contribution savings plan designed to supplement employees' retirement income.  The plan
received employer contributions of $43 million in 2003, $42 million in 2002 and $40 million in 2001.

Pension Plan and Postretirement Benefits Other Than Pensions

Pension Plan

Defined benefit pension plans (some with cash balance features) cover United States employees meeting minimum service and other
requirements.  SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking.
Certain foreign subsidiaries of EME also participate in their own respective defined benefit pension plans.

EME's Ferrybridge and Fiddler's Ferry employees joined a separate defined benefit pension plan during first quarter 2000.  In
December 2001, the Ferrybridge and Fiddler's Ferry plants were sold to two wholly owned subsidiaries of American Electric Power.
American Electric Power hired EME's employees upon completion of the purchase and all of EME's former employees transferred to the
new plan as of December 20, 2002.  In accordance with accounting standards, Edison International recorded a curtailment gain of
approximately $10 million related to the cessation of future benefits for EME's former employees in 2001.  The curtailment gain
reduced actuarial losses incurred during the year and, therefore, did not impact Edison International's pension expense.

At December 31, 2003 and December 31, 2002, the accumulated benefit obligations of the executive pension plans, as well as the First
Hydro and Edison Mission Limited plans, exceeded the related plan assets at the measurement dates.  In accordance with accounting
standards, Edison International's balance sheets include an additional minimum liability, with corresponding charges to intangible
assets and shareholders' equity (through a charge to accumulated other comprehensive income).  The charge to accumulated other
comprehensive income would be restored through shareholders' equity in future periods to the extent the fair value of the plan assets
exceed the accumulated benefit obligation.

The expected contributions (all by the employer) for United States plans are approximately $47 million for the year ended
December 31, 2004.  This amount is subject to change based on, among other things, the limits established for federal tax
deductibility.


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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Edison International uses a December 31 measurement date for all of its plans.

Information on plan assets and benefit obligations for United States plans is shown below:

In millions                         Year ended December 31,                              2003             2002
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in projected benefit obligation
Projected benefit obligation at beginning of year                                   $   2,694        $   2,480
Service cost                                                                               95               86
Interest cost                                                                             170              165
Amendments                                                                                 --                3
Actuarial loss                                                                            139              104
Benefits paid                                                                            (139)            (144)
- ---------------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation at end of year                                         $   2,959        $   2,694
- ---------------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation at end of year                                       $   2,540        $   2,288
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at beginning of year                                      $   2,322        $   2,768
Actual return on plan assets                                                              605             (316)
Employer contributions                                                                     47               14
Benefits paid                                                                            (139)            (144)
- ---------------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year                                            $   2,835        $   2,322
- ---------------------------------------------------------------------------------------------------------------------------------------
Funded status                                                                       $    (124)       $    (372)
Unrecognized net loss                                                                     144              439
Unrecognized transition obligation                                                          7               12
Unrecognized prior service cost                                                            86              101
- ---------------------------------------------------------------------------------------------------------------------------------------
Recorded asset                                                                      $     113        $     180
- ---------------------------------------------------------------------------------------------------------------------------------------
Additional detail of amounts recognized in balance sheets:
Intangible asset                                                                    $       4        $       4
Accumulated other comprehensive income                                                    (22)             (19)
Pension plans with an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation                                                        $     162        $     100
Accumulated benefit obligation                                                            121               76
Fair value of plan assets                                                                  25               --
Weighted-average assumptions at end of year:
Discount rate                                                                             6.0%             6.5%
Rate of compensation increase                                                             5.0%             5.0%



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                                                                                                             Edison International


Expense components for United States plans are:

In millions              Year ended December 31,                  2003              2002              2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Service cost                                                  $     95            $   86           $    82
Interest cost                                                      170               165               164
Expected return on plan assets                                    (191)             (228)             (255)
Special termination benefits                                         3                --                13
Net amortization and deferral                                       36                22                (6)
- ---------------------------------------------------------------------------------------------------------------------------------------
Expense under accounting standards                                 113                45                (2)
Regulatory adjustment - deferred                                   (44)              (18)               39
- ---------------------------------------------------------------------------------------------------------------------------------------
Total expense recognized                                      $     69            $   27           $    37
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in accumulated other comprehensive income              $     (3)           $  (19)          $    --
Weighted-average assumptions:
Discount rate                                                      6.5%              7.0%             7.25%
Rate of compensation increase                                      5.0%              5.0%             5.0%
Expected return on plan assets                                     8.5%              8.5%             8.5%



Asset allocations for United States plans are:

                                                                                            December 31,
                                                             Target for                 -------------------
                                                                2004                    2003          2002
- ---------------------------------------------------------------------------------------------------------------------------------------
United States equity                                            45%                     46%           45%
Non-United States equity                                        25%                     26%           25%
Private equity                                                   4%                      3%            3%
Fixed income                                                    26%                     25%           27%
- ---------------------------------------------------------------------------------------------------------------------------------------



Page 139


- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Information on plan assets and benefit obligation for foreign plans is shown below:

In millions         Year ended December 31,                                       2003                  2002
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in projected benefit obligation
Benefit obligation at beginning of year                                         $   66             $     114
Service cost                                                                         4                     2
Interest cost                                                                        4                     8
Actuarial loss (gain)                                                               12                    (4)
Curtailment                                                                          2                   (53)
Plan participants' contribution                                                      1                     1
Benefits paid                                                                       (4)                   (2)
- ---------------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation at end of year                                     $   85             $      66
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at beginning of year                                  $   43             $     110
Actual return on plan assets                                                        16                   (18)
Employer contributions                                                               8                     4
Curtailment                                                                         --                   (51)
Benefits paid                                                                       (4)                   (2)
- ---------------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year                                        $   63             $      43
- ---------------------------------------------------------------------------------------------------------------------------------------
Funded status                                                                   $  (22)            $     (23)
Unrecognized net loss                                                               20                    19
- ---------------------------------------------------------------------------------------------------------------------------------------
Recorded liability                                                              $   (2)            $      (4)
- ---------------------------------------------------------------------------------------------------------------------------------------
Pension plans with an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation                                                    $   73             $      58
Accumulated benefit obligation                                                      69                    52
Fair value of plan assets                                                           53                    37
Weighted-average assumptions at end of year:
Discount rate                                                            5.50%                  5.0% to 5.50%
Rate of compensation increase                                            3.80% to 4.0%          3.5% to 4.0%



Expense components for foreign plans are:

In millions         Year ended December 31,                        2003              2002              2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Service cost                                                    $    4            $    2           $     3
Interest cost                                                        4                 8                 6
Expected return on plan assets                                      (5)              (10)               (7)
Curtailment/settlement                                               1                --                --
Net amortization and deferral                                       --                15                --
- ---------------------------------------------------------------------------------------------------------------------------------------

Total expense recognized                                        $    4            $   15           $     2
- ---------------------------------------------------------------------------------------------------------------------------------------

Weighted-average assumptions:
Discount rate                                                5.0% to 5.5%       4.0% to 6.0%     4.0% to 6.0%
Rate of compensation increase                                3.5% to 4.0%       3.5% to 4.0%     3.75% to 4.5%
Expected return on plan assets                               7.5% to 8.0%       8.0%             5.75% to 9.0%


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Postretirement Benefits Other Than Pensions

Most United States nonunion employees retiring at or after age 55 with at least 10 years of service are eligible for postretirement
health and dental care, life insurance and other benefits.  Eligibility depends on a number of factors, including the employee's hire
date.

The settlement of postretirement employee benefits liability relates to a retirement health care and other benefits plan for
represented employees at the Midwest Generation unit (EME's subsidiary that is operating the Illinois plants) that expired on June 15,
2002.  In October 2002, Midwest Generation reached an agreement with its union-represented employees on new benefits plans, for the
period of January 1, 2003 through June 15, 2006. Midwest Generation continued to provide benefits at the same level as those in the
expired agreement until December 31, 2002.  The accounting for postretirement benefits liabilities has been determined on the basis
of a substantive plan under applicable accounting rules.  A substantive plan means that Midwest Generation assumed, for accounting
purposes, that it would provide postretirement health care benefits to union-represented employees following conclusion of
negotiations to replace the current benefits agreement, even though Midwest Generation had no legal obligation to do so.  Under the
new agreement, postretirement health care benefits will not be provided.  Accordingly, Midwest Generation treated this as a plan
termination and recorded a pre-tax gain of $71 million during fourth quarter 2002.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003.  The Act
authorized a federal subsidy to be provided to plan sponsors for certain prescription drug benefits under Medicare.  Edison
International has elected to defer accounting for the effects of the Act until the earlier of the issuance of guidance by the
Financial Accounting Standards Board on how to account for the Act, or the remeasurement of plan assets and obligations subsequent to
January 31, 2004.  Accordingly, any measures of the accumulated postretirement benefit obligation or net periodic postretirement
benefit expense in the financial statements or this Note do not reflect the effects of the Act on Edison International's plans.
Specific authoritative guidance on the accounting for the federal subsidy is pending and that guidance, when issued, could require
Edison International to restate previously reported information.

The expected contributions (all by the employer) for the postretirement benefits other than pensions plan are approximately
$100 million for the year ended December 31, 2004.  This amount is subject to change based on, among other things, the Act referenced
above and the impact of any benefit plan amendments.

Edison International uses a December 31 measurement date.


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Notes to Consolidated Financial Statements


Information on plan assets and benefit obligations is shown below:

In millions                     Year ended December 31,                                 2003              2002
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation at beginning of year                                             $   2,171        $   2,053
Service cost                                                                               44               49
Interest cost                                                                             126              141
Amendments                                                                               (640)              --
Actuarial loss                                                                            588               82
Settlement                                                                                 --              (74)
Benefits paid                                                                             (90)             (80)
- ---------------------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year                                                   $   2,199        $   2,171
- ---------------------------------------------------------------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at beginning of year                                      $   1,072        $   1,139
Actual return on assets                                                                   292             (148)
Employer contributions                                                                    116              161
Benefits paid                                                                             (90)             (80)
- ---------------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year                                            $   1,390        $   1,072
- ---------------------------------------------------------------------------------------------------------------------------------------
Funded status                                                                       $    (809)       $  (1,099)
Unrecognized net loss                                                                   1,047              715
Unrecognized transition obligation                                                         --              269
Unrecognized prior service cost                                                          (361)              (2)
- ---------------------------------------------------------------------------------------------------------------------------------------
Recorded liability                                                                  $    (123)       $    (117)
- ---------------------------------------------------------------------------------------------------------------------------------------
Assumed health care cost trend rates:
Rate assumed for following year                                                          12.0%           9.75%
Ultimate rate                                                                             5.0%           5.0%
Year ultimate rate reached                                                               2010           2008
Weighted-average assumptions at end of year:
Discount rate                                                                            6.25%           6.75%


Expense components are:

In millions                      Year ended December 31,                2003             2002             2001
- ---------------------------------------------------------------------------------------------------------------------------------------
Service cost                                                         $    44         $     49          $    50
Interest cost                                                            126              141              137
Expected return on plan assets                                           (89)             (93)             (98)
Special termination benefits                                               1               --                2
Settlement                                                                --              (71)              --
Net amortization and deferral                                             40               37               27
- ---------------------------------------------------------------------------------------------------------------------------------------
Total expense                                                        $   122         $     63          $   118
- ---------------------------------------------------------------------------------------------------------------------------------------
Assumed health care cost trend rates:
Current year                                                            9.75%             10.5%            11.0%
Ultimate rate                                                            5.0%              5.0%             5.0%
Year ultimate rate reached                                              2008              2008             2008
Weighted-average assumptions:
Discount rate                                                            6.4%             7.25%             7.5%
Expected return on plan assets                                           8.2%              8.2%             8.2%


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                                                                                                             Edison International


Increasing the health care cost trend rate by one percentage point would increase the accumulated obligation as of December 31, 2003
by $317 million and annual aggregate service and interest costs by $29 million.  Decreasing the health care cost trend rate by one
percentage point would decrease the accumulated obligation as of December 31, 2003 by $257 million and annual aggregate service and
interest costs by $23 million.

Asset allocations are:

                                                                                           December 31,
                                                             Target for                 ------------------
                                                                2004                    2003          2002
- ---------------------------------------------------------------------------------------------------------------------------------------
United States equity                                            64%                     64%           64%
Non-United States equity                                        16%                     13%           13%
Fixed income                                                    20%                     23%           23%
- ---------------------------------------------------------------------------------------------------------------------------------------


Description of Investment Strategies for United States Plans

The investment of plan assets is overseen by a fiduciary investment committee.  Plan assets are invested using a combination of asset
classes, and may have active and passive investment strategies within asset classes.  Edison International employs multiple
investment management firms.  Investment managers within each asset class cover a range of investment styles and approaches.  Risk is
controlled through diversification among multiple asset classes, managers, styles and securities.  Plan, asset class and individual
manager performance is measured against targets.  Edison International also monitors the stability of its investments managers'
organizations.

Allowable investment types include:

United States Equity:  Common and preferred stock of large, medium, and small companies which are predominantly United States-based.

Non-United States Equity:  Equity securities issued by companies domiciled outside the United States and in depository receipts which
represent ownership of securities of non-United States companies.

Private Equity:  Limited partnerships that invest in nonpublicly traded entities.

Fixed Income:  Fixed income securities issued or guaranteed by the United States government, non- United States governments,
government agencies and instrumentalities, mortgage backed securities and corporate debt obligations.  A small portion of the fixed
income position may be held in debt securities that are below investment grade.

Permitted ranges around asset class portfolio weights are plus or minus 5%.  Where approved by the fiduciary investment committee,
futures contracts are used for portfolio rebalancing and to approach fully invested portfolio positions.  Where authorized, a few of
the plan's investment managers employ limited use of derivatives, including futures contracts, options, options on futures and
interest rate swaps in place of direct investment in securities to gain efficient exposure to markets.  Derivatives are not used to
leverage the plans or any portfolios.

Determination of the Expected Long-Term Rate of Return on Assets for United States Plans

The overall expected long term rate of return on assets assumption is based on the target asset allocation for plan assets, capital
markets return forecasts for asset classes employed, and active management excess return expectations.  A portion of postretirement
benefits other than pensions trust asset returns are



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Notes to Consolidated Financial Statements


subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis.

Capital Markets Return Forecasts

The estimated total return for fixed income is based on an equilibrium yield for intermediate United States government bonds plus a
premium for exposure to nongovernment bonds in the broad fixed income market.  The equilibrium yield is based on analysis of historic
data and is consistent with experience over various economic environments. The premium of the broad market over United States
government bonds is a historic average premium.  The estimated rate of return for equity is estimated to be a 3% premium over the
estimated total return of intermediate United States government bonds.  This value is determined by combining estimates of real
earnings growth, dividend yields and inflation, each of which was determined using historical analysis.  The rate of return for
private equity is estimated to be a 5% premium over public equity, reflecting a premium for higher volatility and illiquidity.

Active Management Excess Return Expectations

For asset classes that are actively managed, an excess return premium is added to the capital market return forecasts discussed above.

Long-Term Incentive Plans

Phantom Stock Options

Phantom stock option performance awards were granted through 1999 at EME and Edison Capital as part of the Edison International
long-term incentive compensation program for senior management.  In August 2000, all outstanding phantom options were exchanged for a
combination of cash and stock equivalent units relating to Edison International common stock, in accordance with the EME and Edison
Capital affiliate option exchange offers.  Compensation expense recorded for the phantom stock options was $5 million in 2003,
$3 million in 2002 and $7 million in 2001.

Stock-Based Employee Compensation

In 1998, Edison International shareholders approved the Edison International Equity Compensation Plan, replacing the long-term
incentive compensation program that had been adopted by Edison International shareholders in 1992.  The 1998 plan authorizes a
limited annual number of Edison International common shares that may be issued in accordance with plan awards.  The annual
authorization is cumulative, allowing subsequent issuance of previously unutilized awards.  In May 2000, the Edison International
Board of Directors adopted an additional plan, the 2000 Equity Plan, under which stock options, including the special options
discussed below, may be awarded.

Under the 1992, 1998 and 2000 plans, options on 14.8 million shares of Edison International common stock are currently outstanding to
officers and senior managers.

Each option may be exercised to purchase one share of Edison International common stock and is exercisable at a price equivalent to
the fair market value of the underlying stock at the date of grant.  Options generally expire 10 years after date of grant and vest
over a period of up to five years.

Edison International stock options awarded prior to 2000 include a dividend equivalent feature.  Dividend equivalents on stock
options issued after 1993 and prior to 2000 are accrued to the extent dividends are declared on Edison International common stock and
are subject to reduction unless certain performance criteria are met.  Only a portion of the 1999 Edison International stock option
awards include a dividend



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                                                                                                             Edison International


equivalent feature.  The 2003 options include a dividend equivalent feature for the first five years of the option term.  Dividend
equivalents accumulate without interest.

Options issued after 1997 generally have a four-year vesting period.  The special options granted in 2000 vest over five years, in
25% increments beginning in May 2002.  Earlier options had a three-year vesting period with one-third of the total award vesting
annually.  If an option holder retires, dies, is terminated by the company, or is terminated while permanently and totally disabled
(qualifying event) during the vesting period, the unvested options will vest on a pro rata basis.

Unvested options of any person who has served in the past on the SCE Management Committee (which was dissolved in 1993) will vest and
be exercisable upon a qualifying event.  If a qualifying event occurs, the vested options may continue to be exercised within their
original terms by the recipient or beneficiary except that in the case of termination by the company where the option holder is not
eligible for retirement, vested options are forfeited unless exercised within one year of termination date.  If an option holder is
terminated other than by a qualifying event, options that had vested as of the prior anniversary date of the grant are forfeited
unless exercised within 180 days of the date of termination.  All unvested options are forfeited on the date of termination.

The fair value for each option granted, reflecting the basis for the pro forma disclosures in Note 1, was determined on the date of
grant using the Black-Scholes option-pricing model.  The following assumptions were used in determining fair value through the model:

     December 31,                       2003                       2002                      2001
- --------------------------------------------------------------------------------------------------------------------------------
     Expected life                    10 years              7 years - 10 years          7 years - 10 years
     Risk-free interest rate        3.8% to 4.5%               4.7% to 6.1%              4.7% to 6.1%
     Expected dividend yield            1.8%                       1.8%                      3.3%
     Expected volatility             44% to 53%                 18% to 54%                17% to 52%
- --------------------------------------------------------------------------------------------------------------------------------


The expected dividend yield above is computed using an average of the previous 12 quarters.  The expected volatility above is
computed on a historical 36-month basis.

The application of fair-value accounting to calculate the pro forma disclosures is not an indication of future income statement
effects.  The pro forma disclosures do not reflect the effect of fair-value accounting on stock-based compensation awards granted
prior to 1995.




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Notes to Consolidated Financial Statements


A summary of the status of Edison International's stock options is as follows:

                                                                                    Weighted-Average
                                                                           -------------------------------------
                                        Share          Exercise            Exercise    Fair Value      Remaining
                                       Options           Price               Price      At Grant         Life
- ---------------------------------------------------------------------------------------------------------------------------------------
Outstanding, Dec. 31, 2000           19,774,672      $14.56-$29.34          $22.24                     8 years
Granted                               1,001,704      $ 9.10-$15.92          $10.90        $3.88
Expired                                 (74,512)     $18.75-$19.35          $18.79
Forfeited                           (11,407,835)     $ 9.15-$29.34          $20.91
Exercised                                    --                 --             --
- ---------------------------------------------------------------------------------------------------------------------------------------
Outstanding, Dec. 31, 2001            9,294,029      $ 9.10-$29.34          $22.45                     6 years
Granted                               3,450,393      $ 8.90-$19.45          $18.59        $7.88
Expired                                (520,706)     $ 9.57-$29.34          $23.34
Forfeited                              (318,980)     $ 9.10-$28.13          $17.43
Exercised                               (68,444)     $ 9.15-$16.59          $12.45
- ---------------------------------------------------------------------------------------------------------------------------------------
Outstanding, Dec. 31, 2002           11,836,292      $ 8.90-$29.25          $21.46                     6 years
Granted                               3,819,930      $11.88-$19.80          $12.38        $7.31
Expired                                (482,394)     $ 9.57-$29.25          $23.48
Forfeited                              (110,094)     $ 9.57-$18.73          $15.02
Exercised                              (260,481)     $ 9.10-$20.19          $17.67
- ---------------------------------------------------------------------------------------------------------------------------------------
Outstanding, Dec. 31, 2003           14,803,253      $ 8.90-$28.94          $19.17
- ---------------------------------------------------------------------------------------------------------------------------------------


The number of options exercisable and their weighted-average exercise prices at December 31, 2003, 2002 and 2001 were 7,337,939 at
$23.37, 6,475,029 at $23.61 and 5,930,024 at $22.92, respectively.

Other Equity-Based Awards

For the years after 1999, a portion of the executive long-term incentives was awarded in the form of performance shares.  Performance
shares were awarded in January 2001, January 2002 and January 2003.  The performance shares vest December 31, 2003, December 31, 2004
and December 31, 2005, respectively, and are paid out half in shares of Edison International common stock and half in cash.  The
number of shares that will be paid out from the 2002 and 2003 performance share awards will depend on the performance of Edison
International common stock relative to the stock performance of a specific group of peer companies.  The 2001 performance share
values are accrued ratably over the three-year performance period.  The 2002 and 2003 performance shares will be valued based on
Edison International's stock performance relative to the stock performance of other such entities.

In March 2001, deferred stock units were awarded as part of a retention program.  These vest and were paid on March 12, 2003 in
shares of Edison International common stock.

In October 2001, a stock option retention exchange offer was extended, offering holders of Edison International stock options granted
in 2000 the opportunity to exchange those options for a lesser number of deferred stock units.  The exchange ratio was based on the
Black-Scholes value of the options and the stock price at the time the offer was extended.  The exchange took place in November 2001;
the options that participants elected to exchange were cancelled, and deferred stock units were issued.  Approximately three options
were cancelled for each deferred stock unit issued.  Twenty-five percent of the deferred stock units will vest and be paid in Edison
International common stock per year over four years; the first and second vesting dates were in November 2002 and November 2003,
respectively.  The following assumptions were used in determining fair value through the Black-Scholes option-pricing model:
expected life - 8 to 9 years; risk-free interest rate - 5.1%; expected volatility - 52%.



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                                                                                                             Edison International


See Note 1 for Edison International's accounting policy and expenses related to stock-based employee compensation.

Note 8.  Jointly Owned Utility Projects

SCE owns interests in several generating stations and transmission systems for which each participant provides its own financing.
SCE's share of expenses for each project is included in the consolidated statements of income.

The investment in each project as of December 31, 2003 is:

                                                                              Accumulated
                                                                              Depreciation
                                                           Investment             and         Ownership
In millions                                                in Facility        Amortization     Interest
- ---------------------------------------------------------------------------------------------------------------------------------------
Transmission systems:
   Eldorado                                                 $    45          $      11            60%
   Pacific Intertie                                             257                 80            50
Generating stations:
   Four Corners Units 4 and 5 (coal)                            488                384            48
   Mohave (coal) (1)                                            347                257            56
   Palo Verde (nuclear)(2)                                    1,657              1,460            16
   San Onofre (nuclear)(2)                                    4,297              3,923            75
- ---------------------------------------------------------------------------------------------------------------------------------------
Total                                                       $ 7,091          $   6,115
- ---------------------------------------------------------------------------------------------------------------------------------------

(1)  A portion is included in regulatory assets on the consolidated balance sheet.  See Note 1.
(2)  Included in regulatory assets on the consolidated balance sheet.

Note 9.  Commitments

Leases

Edison International has operating leases for office space, vehicles, property and other equipment (with varying terms, provisions
and expiration dates).

During 2001, EME entered into a sale-leaseback of its Homer City facilities to third-party lessors for an aggregate purchase price of
$1.6 billion, consisting of $782 million in cash and assumption of debt (with a fair value of $809 million).

During 2000, EME entered into a sale-leaseback transaction for power facilities, located in Illinois, with third party lessors for an
aggregate purchase price of $1.4 billion.

The lease costs for the power facilities will be levelized over the terms of the power facilities' respective leases.  The gain on
the sale of the facilities, power plant and equipment has been deferred and is being amortized over the terms of the respective
leases.

In connection with EME's acquisition of the Illinois plants, EME assigned the right to purchase the Collins Station in Illinois to
third-party lessors.  The third-party lessors purchased the Collins Station and entered into leases of the plant with EME.  The base
lease rent includes both a fixed and variable component; the variable component of which is impacted by movements in defined
short-term interest rate indexes.  See further discussion in Note 16.



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Notes to Consolidated Financial Statements


Estimated remaining commitments (the majority of which are related to EME's long-term leases for the Collins, Powerton, Joliet and
Homer City power plants) for noncancelable leases at December 31, 2003 are:

     Year ended December 31,                                                 In millions
- ------------------------------------------------------------------------------------------------------------------------
     2004                                                                    $     334
     2005                                                                          374
     2006                                                                          452
     2007                                                                          487
     2008                                                                          484
     Thereafter                                                                  4,577
- ------------------------------------------------------------------------------------------------------------------------
     Total                                                                   $   6,708
- ------------------------------------------------------------------------------------------------------------------------


Operating lease expense was $257 million in 2003, $249 million in 2002 and $182 million in 2001.

Nuclear Decommissioning

Effective January 1, 2003, SCE adopted a new accounting standard, Accounting for Asset Retirement Obligations, which requires
entities to record the fair value of a liability for a legal ARO in the period in which it is incurred.  At that time, SCE adjusted
its nuclear decommissioning obligation, increased its unamortized nuclear investment for a new ARO asset, and recorded a regulatory
liability to defer the impact on earnings of the change in accounting principle (see further details in "New Accounting Principles"
in Note 1).  The fair value of decommissioning SCE's nuclear power facilities is $2.1 billion as of December 31, 2003, based on
site-specific studies performed in 2001 for San Onofre and Palo Verde.  Changes in the estimated costs, timing of decommissioning, or
the assumptions underlying these estimates could cause material revisions to the estimated total cost to decommission in the near
term.  SCE estimates that it will spend approximately $11.4 billion through 2049 to decommission its nuclear facilities.  This
estimate is based on SCE's current-dollar decommissioning cost methodology used for rate-making purposes, escalated at rates ranging
from 0.9% to 10.0% (depending on the cost element) annually.  These costs are expected to be funded from independent decommissioning
trusts, which effective October 2003 receive contributions of approximately $32 million per year.  SCE estimates annual after-tax
earnings on the decommissioning funds of 3.7% to 6.5%.  If the assumed return on trust assets is not earned, it is probable that
additional funds needed for decommissioning will be recoverable through rates.

Decommissioning of San Onofre Unit 1 (shut down in 1992 per CPUC agreement) started in 1999 and will continue through 2008.  All of
SCE's San Onofre Unit 1 decommissioning costs will be paid from its nuclear decommissioning trust funds.  The estimated remaining
cost to decommission San Onofre Unit 1 is recorded as an ARO liability ($177 million at December 31, 2003).  Total expenditures for
the decommissioning of San Onofre Unit 1 were $317 million through December 31, 2003.

SCE plans to decommission its nuclear generating facilities by a prompt removal method authorized by the Nuclear Regulatory
Commission.  Decommissioning is expected to begin after the plants' operating licenses expire.  The operating licenses expire in 2022
for San Onofre Units 2 and 3, and in 2024, 2026 and 2027 for the Palo Verde units.  Decommissioning costs, which are recovered
through nonbypassable customer rates over the term of each nuclear facility's operating license, are recorded as a component of
depreciation expense, with a corresponding credit to the ARO regulatory liability.  The earnings impact of amortization of the ARO
asset included within the unamortized nuclear investment and accretion of the ARO liability, both created under this new standard,
are deferred as increases to the ARO regulatory liability account, with no impact on earnings.



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                                                                                                             Edison International


SCE has collected in rates amounts for the future costs of removal of its nuclear assets, and has historically recorded these amounts
in accumulated provision for depreciation and decommissioning.  However, in accordance with recent Securities and Exchange Commission
accounting guidance, the amounts accrued in accumulated provision for depreciation and decommissioning for nuclear decommissioning
and costs of removal were reclassified to regulatory liabilities as of December 31, 2002.  Upon implementation of the new accounting
standard for AROs, SCE reversed the decommissioning amounts collected for assets legally required to be removed and recorded the fair
value of this ARO (included in the deferred credits and other liabilities section of the consolidated balance sheet).  The cost of
removal amounts collected for assets not legally required to be removed remain in regulatory liabilities as of December 31, 2003.

Decommissioning expense under the rate-making method was $118 million in 2003, $73 million in 2002 and $96 million in 2001.  The ARO
for decommissioning SCE's active nuclear facilities was $1.9 billion at December 31, 2003 and $1.8 billion at December 31, 2002.

Decommissioning funds collected in rates are placed in independent trusts, which, together with accumulated earnings, will be
utilized solely for decommissioning.

Trust investments (at fair value) include:

     In millions                          Maturity Dates         December 31,              2003         2002
- -------------------------------------------------------------------------------------------------------------------------------------
     Municipal bonds                        2004 - 2041                               $     702    $     486
     Stock                                       -                                        1,324        1,085
     United States government issues        2004 - 2033                                     363          264
     Corporate bonds                        2004 - 2038                                      91          270
     Short-term                                2004                                          50          105
- -------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                            $   2,530    $   2,210
- -------------------------------------------------------------------------------------------------------------------------------------

     Note:  Maturity dates as of December 31, 2003.

Trust fund earnings (based on specific identification) increase the trust fund balance and the ARO regulatory liability.  Net
earnings (loss) were $93 million in 2003, $(25) million in 2002 and $13 million in 2001.  Proceeds from sales of securities (which
are reinvested) were $2.2 billion in 2003, $3.8 billion in 2002 and $3.9 billion in 2001.  Gross unrealized holding gains were
$677 million and $443 million at December 31, 2003 and 2002, respectively.  There were no unrealized holding losses for the years
presented.  Approximately 91% of the cumulative trust fund contributions were tax-deductible.

Other Commitments

At December 31, 2003, EME had firm commitments to spend approximately $80 million on construction and other capital investments
during 2004 through 2006.  The construction expenditures primarily relate to the construction of a power plant in New Zealand by
Contact Energy.  The capital expenditures primarily relate to new plant and equipment at EME's Midwest Generation subsidiary and its
Contact Energy project.

At December 31, 2003, EME's Midwest Generation subsidiary was party to a long-term power-purchase contract.  The contract requires
Midwest Generation to pay a monthly capacity payment and gives Midwest Generation an option to purchase energy at prices based
primarily on operations and maintenance and fuel costs.



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Notes to Consolidated Financial Statements


An EME subsidiary entered into a coal cleaning agreement with an outside party to operate and maintain a coal cleaning plant owned by
the EME subsidiary.  Under the terms of the agreement, the subsidiary is obligated to reimburse the outside party for the actual
costs incurred in the operations and maintenance of the coal cleaning plant, a fixed general and administrative service fee and an
operating fee that is dependent on the level of tonnage.  The agreement expires on December 31, 2005, with a two-year extension
option.

At December 31, 2003, commitments related to these two contracts discussed above are summarized as follows: 2004 - $11 million; 2005
- - $10 million; 2006 - $4 million; 2007 - $4 million; and 2008 - $4 million.

SCE and EME have fuel supply contracts which require payment only if the fuel is made available for purchase.  Certain gas and coal
fuel contracts require payment of certain fixed charges whether or not gas or coal is delivered.

At December 31, 2003, EME had a contractual commitment to transport natural gas.  EME is committed to pay minimum fees under this
agreement, which has a term of 15 years.

SCE has power-purchase contracts with certain QFs (cogenerators and small power producers) and other utilities.  These contracts
provide for capacity payments if a facility meets certain performance obligations and energy payments based on actual power supplied
to SCE.  There are no requirements to make debt-service payments.  In an effort to replace higher-cost contract payments with
lower-cost replacement power, SCE has entered into purchased-power settlements to end its contract obligations with certain QFs.  The
settlements are reported as power-purchase contracts on the balance sheets.

Certain commitments for the years 2004 through 2008 are estimated below:

     In millions                                              2004       2005       2006       2007     2008
- -----------------------------------------------------------------------------------------------------------------------------------
     Fuel supply contracts                                   $ 911      $ 814      $ 533      $ 377    $ 204
     Gas transportation payments                                 7          7          7          7        7
     Purchased-power capacity payments                         682        663        637        637      444
- -----------------------------------------------------------------------------------------------------------------------------------


SCE has unconditional purchase obligations for part of a power plant's generating output, as well as firm transmission service from
another utility.  Minimum payments are based, in part, on the debt-service requirements of the provider, whether or not the plant or
transmission line is operable.  SCE's minimum commitment under both contracts is approximately $139 million through 2017.  The
purchased-power contract is expected to provide approximately 5% of current or estimated future operating capacity, and is reported
as power-purchase contracts (approximately $28 million).  The transmission service contract requires a minimum payment of
approximately $6 million a year.

As of December 31, 2003, Edison Capital had outstanding commitments of $68 million to fund energy and infrastructure investments.
Prior to funding any commitments, specific contract conditions must be satisfied.  At December 31, 2003, Edison Capital had deposited
approximately $5 million as collateral for several letters of credit currently outstanding.

EME's Guarantees and Indemnities

Tax Indemnity Agreements

In connection with the sale-leaseback transactions that EME has entered into related to the Collins Station, Powerton and Joliet
plants in Illinois and the Homer City facilities in Pennsylvania, EME or one



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                                                                                                             Edison International


of its subsidiaries has entered into tax indemnity agreements.  Under these tax indemnity agreements, EME has agreed to indemnify the
lessors in the sale-leaseback transactions for specified adverse tax consequences that could result in certain situations set forth
in each tax indemnity agreement, including specified defaults under the respective leases.  The potential indemnity obligations under
these tax indemnity agreements could be significant.  Due to the nature of these obligations under these tax indemnity agreements,
EME cannot determine a maximum potential liability.  The indemnities would be triggered by a valid claim from the lessors.  EME has
not recorded a liability related to these indemnities.

Indemnities Provided as Part of EME's Acquisitions

In connection with the acquisition of the Illinois plants and the Homer City project, EME agreed to indemnify the sellers against
damages, claims, fines, liabilities and expenses and losses arising from, among other things, environmental liabilities before and
after the date of each sale as specified in the specific asset sale agreements (August 1, 1998 for Homer City and March 22, 1999 for
the Illinois plants).  In the case of the Illinois plants, the indemnification claims are reduced by any insurance proceeds and tax
benefits related to such claims and are subject to a requirement by the seller to take all reasonable steps to mitigate losses
related to any such indemnification claim.  Due to the nature of the obligation under these indemnities, a maximum potential
liability cannot be determined.  Each of these indemnifications is not limited in term and would be triggered by a valid claim from
the respective seller.  Except as discussed below, EME has not recorded a liability related to these indemnities.

Midwest Generation entered into a supplemental agreement to resolve a dispute regarding interpretation of its reimbursement
obligation for asbestos claims under the environmental indemnities set forth in the Illinois plants asset sale agreement.  Under this
supplemental agreement, Midwest Generation agreed to reimburse the seller 50% of specific existing asbestos claims, less recovery of
insurance costs, and agreed to a sharing arrangement for liabilities associated with future asbestos related claims as specified in
the agreement.  The obligations under this agreement are not subject to a maximum liability.  The supplemental agreement has a
five-year term with an automatic renewal provision (subject to the right to terminate).  Payments are made under this indemnity by a
valid claim provided from the seller. At December 31, 2003, Midwest Generation recorded a $10 million liability related to this
matter and had made $1 million in payments.

Indemnities Provided Under Asset Sale Agreements

In connection with the sale of assets, EME has provided indemnities to the purchasers for taxes imposed with respect to operations of
the asset prior to the sale, and EME or its subsidiaries have received similar indemnities from purchasers related to taxes arising
from operations after the sale.  EME also provided indemnities to purchasers for items specified in each agreement (for example,
specific pre-existing litigation matters and/or environmental conditions).  Due to the nature of the obligations under these
indemnity agreements, a maximum potential liability cannot be determined.  Not all indemnities under the asset sale agreements have
specific expiration dates.  Payments would be triggered under these indemnities by valid claims from the sellers or purchasers, as
the case may be.  EME has not recorded a liability related to these indemnities.

Guarantee of 50% of TM Star Fuel Supply Obligations

TM Star was formed for the limited purpose to sell natural gas to the March Point Cogeneration Company, an affiliate through common
ownership, under a fuel supply agreement that extends through December 31, 2011.  TM Star has entered into fuel purchase contracts
with unrelated third parties to meet a portion of the obligations under the fuel supply agreement.  EME has guaranteed 50% of TM
Star's obligation under the fuel supply agreement to March Point Cogeneration.  Due to the nature of the obligation under this
guarantee, a maximum potential liability cannot be determined.  TM Star has met its



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obligations to March Point Cogeneration, and, accordingly, no claims against this guarantee have been made.  TM Star was merged into
March Point Cogeneration Company effective as of January 16, 2004, and this guarantee terminated by operation of law as of that date.

Capacity Indemnification Agreements

EME has guaranteed, jointly and severally with Texaco Inc., the obligations of March Point Cogeneration Company under its project
power sales agreements to repay capacity payments to the project's power purchaser in the event that the power sales agreements
terminate, March Point Cogeneration Company abandons the project, or the project fails to return to normal operations within a
reasonable time after a complete or partial shutdown, during the term of the power contracts.  In addition, subsidiaries of EME have
guaranteed the obligations of Kern River Cogeneration Company and Sycamore Cogeneration Company under their project power sales
agreements to repay capacity payments to the projects' power purchaser in the event that the projects unilaterally terminate their
performance or reduce their electric power producing capability during the term of the power contracts.  The obligations under the
indemnification agreements as of December 31, 2003, if payment were required, would be $181 million.  EME has no reason to believe
that any of these projects will either cease operations or reduce its electric power producing capability during the term of its
power contract.

Note 10.  Contingencies

In addition to the matters disclosed in these Notes, Edison International is 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
believes the outcome of these other proceedings will not materially affect its results of operations or liquidity.

Aircraft Leases

Edison Capital has $63 million invested in three aircraft leased to American Airlines.  The independent auditors' opinion on the
year-end 2002 financial statements of AMR Corporation, parent company of American Airlines, questions AMR Corporation's ability to
continue as a going concern.  As disclosed in AMR Corporation's Form 10Q filing for September 30, 2003, there were some improvements
made in 2003, such as concessionary agreements with unions and certain other lessors, and reporting operating income of $165 million
for the third quarter of 2003.  However, significant uncertainty remains and if American Airlines defaults in making its lease
payments, the lenders with a security interest in the aircraft or leases may exercise remedies that could lead to a loss of some or
all of Edison Capital's investment in the aircraft plus any accrued interest.  The total maximum loss exposure to Edison Capital in
2004 is $46 million.  A restructure of the lease could also result in a loss of some or all of the investment.  At December 31, 2003,
American Airlines was current in its lease payments to Edison Capital.

Employee Compensation and Benefit Plans

On July 31, 2003, a federal district court held that the formula used in a cash balance pension plan created by International
Business Machine Corporation (IBM) in 1999 violated the age discrimination provisions of the Employee Retirement Income Security Act
of 1974.  In its decision, the federal district court set forth a standard for cash balance pension plans.  This decision, however,
conflicts with the decisions from two other federal district courts and with the proposed regulations for cash balance pension plans
issued by the IRS in December 2002.  On February 12, 2004, the same federal district court ruled that IBM must make back payments to
workers covered under this plan.  IBM has indicated that it will appeal both decisions to the United States Court of Appeals for the
Seventh Circuit.  The formula for Edison International's cash balance pension plan does not meet the standard set forth in the
federal district court's



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July 31, 2003 decision.  Edison International cannot predict with certainty the effect of the two IBM decisions on Edison
International's cash balance pension plan.

Environmental Remediation

Edison International is subject to numerous environmental laws and regulations, which require it to incur substantial costs to
operate existing facilities, construct and operate new facilities, and mitigate or remove the effect of past operations on the
environment.

Edison International believes that it is in substantial compliance with environmental regulatory requirements; however, possible
future developments, such as the enactment of more stringent environmental laws and regulations, could affect the costs and the
manner in which business is conducted and could cause substantial additional capital expenditures.  There is no assurance that
additional costs would be recovered from customers or that Edison International's financial position and results of operations would
not be materially affected.

Edison International records its environmental remediation liabilities when site assessments and/or remedial actions are probable and
a range of reasonably likely cleanup costs can be estimated.  Edison International 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, operations and maintenance, monitoring and site closure.  Unless there is a probable amount, Edison International
records the lower end of this reasonably likely range of costs (classified as other long-term liabilities) at undiscounted amounts.

Edison International's recorded estimated minimum liability to remediate its 32 identified sites at SCE (26 sites) and EME (6 sites
related to Midwest Generation) is $94 million, $92 million of which is related to SCE.  In third quarter 2003, SCE sold certain oil
storage and pipeline facilities.  This sale caused a reduction in Edison International's recorded estimated minimum environmental
liability.  Edison International's other subsidiaries have no identified remediation sites.  The ultimate costs to clean up Edison
International'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.  Edison International believes that, due to these uncertainties,
it is reasonably possible that cleanup costs could exceed its recorded liability by up to $238 million, all of which is related to
SCE.  The upper limit of this range of costs was estimated using assumptions least favorable to Edison International among a range of
reasonably possible outcomes.

The CPUC allows SCE to recover environmental remediation costs at certain sites, representing $34 million of its recorded liability,
through an incentive mechanism (SCE may request to include additional sites).  Under this mechanism, SCE will recover 90% of cleanup
costs through customer rates; shareholders fund the remaining 10%, with the opportunity to recover these costs from insurance
carriers and other third parties.  SCE has successfully settled insurance claims with all responsible carriers.  SCE expects to
recover costs incurred at its remaining sites through customer rates.  SCE has recorded a regulatory asset of $71 million for its
estimated minimum environmental-cleanup costs expected to be recovered through customer rates.

Edison International'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 Edison International 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.



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Notes to Consolidated Financial Statements


Edison International expects to clean up its identified sites over a period of up to 30 years.  Remediation costs in each of the next
several years are expected to range from $13 million to $25 million.  Recorded costs for 2003 were $14 million.

Based on currently available information, Edison International believes it is unlikely that it will incur amounts in excess of the
upper limit of the estimated range for its identified sites and, based upon the CPUC's regulatory treatment of environmental
remediation costs incurred at SCE, Edison International believes that costs ultimately recorded will not materially affect its
results of operations or financial position.  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 such estimates.

Federal Income Taxes

In August 2002, Edison International received a notice from the IRS asserting deficiencies in federal corporate income taxes for its
1994 to 1996 tax years.  The vast majority of the asserted tax deficiencies are timing differences and, therefore, amounts ultimately
paid (exclusive of interest and penalties), if any, would benefit Edison International as future tax deductions.  Edison
International believes that it has meritorious legal defenses to those deficiencies and believes that the ultimate outcome of this
matter will not result in a material impact on Edison International's consolidated results of operations or financial position.

Among the issues raised by the IRS in the 1994 to 1996 audit was Edison Capital's treatment of the EPZ and Dutch electric locomotive
leases.  Written protests were filed against these deficiency notices, as well as other alleged deficiencies, asserting that the
IRS's position misstates material facts, misapplies the law and is incorrect.  This matter is now being considered by the
Administrative Appeals branch of the IRS.  Edison Capital will contest the assessment through administrative appeals and litigation,
if necessary, and believes it should prevail in an outcome that will not have a material adverse financial impact.

The IRS is examining the tax returns for Edison International, which includes Edison Capital, for years 1997 through 1999.  Edison
Capital expects the IRS will also challenge several of its other leveraged leases based on recent Revenue Rulings addressing a
specific type of leveraged lease (termed a lease in/lease out or LILO transaction).  Edison Capital believes that the position
described in the Revenue Ruling is incorrectly applied to Edison Capital's transactions and that its leveraged leases are factually
and legally distinguishable in material respects from that position.  Edison Capital intends to defend, and litigate if necessary,
against any challenges based on that position.

Investigation Regarding Performance Incentives Rewards

SCE is eligible under its CPUC-approved performance-based rate-making (PBR) mechanism to earn rewards or penalties based on its
performance in comparison to CPUC-approved standards of reliability, customer satisfaction, and employee safety.  SCE received two
letters over the last year from anonymous employees alleging that personnel in the service planning group of SCE's transmission and
distribution business unit altered or omitted data in attempts to influence the outcome of customer satisfaction surveys conducted by
an independent survey organization.  The results of these surveys are used, along with other factors, to determine the amounts of any
incentive rewards or penalties to SCE under the PBR provisions for customer satisfaction.  SCE is conducting an internal
investigation and has determined that some wrongdoing by a number of the service planning employees has occurred.  SCE has informed
the CPUC of its findings to date, and will continue to inform the CPUC of developments as the investigation progresses.  SCE
anticipates that, after the investigation is completed, there may be CPUC proceedings to determine whether any portion of past and
potential rewards for customer satisfaction should be refunded or disallowed.  It also is possible that penalties could be imposed.
SCE recorded aggregate customer



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satisfaction rewards of $28 million for the years 1998, 1999, and 2000.  Potential customer satisfaction rewards aggregating $10
million for 2001 and 2002 are pending before the CPUC and have not been recognized in income by SCE.  SCE also had anticipated that
it could be eligible for customer satisfaction rewards of about $10 million for 2003.  SCE has not yet been able to determine whether
or to what extent employee misconduct has compromised the surveys that are the basis for a portion of the awards.  Accordingly, SCE
cannot predict with certainty the outcome of this matter.  SCE plans to complete its investigation as quickly as possible and
cooperate fully with the CPUC in taking appropriate remedial action.

Navajo Nation Litigation

In June 1999, the Navajo Nation filed a complaint in the United States District Court for the District of Columbia (D.C. District
Court) against Peabody Holding Company (Peabody) and certain of its affiliates, Salt River Project Agricultural Improvement and Power
District, and SCE arising out of the coal supply agreement for Mohave.  The complaint asserts claims for, among other things,
violations of the federal Racketeer Influenced and Corrupt Organizations statute, interference with fiduciary duties and contractual
relations, fraudulent misrepresentation by nondisclosure, and various contract-related claims.  The complaint claims that the
defendants' actions prevented the Navajo Nation from obtaining the full value in royalty rates for the coal.  The complaint seeks
damages of not less than $600 million, trebling of that amount, and punitive damages of not less than $1 billion, as well as a
declaration that Peabody's lease and contract rights to mine coal on Navajo Nation lands should be terminated.  SCE joined Peabody's
motion to strike the Navajo Nation's complaint.  In addition, SCE and other defendants filed motions to dismiss.

Some of the issues included in this case were addressed by the United States Supreme Court in a separate legal proceeding filed by
the Navajo Nation in the Court of Federal Claims against the United States Department of Interior.  In that action, the Navajo Nation
claimed that the Government breached its fiduciary duty concerning negotiations relating to the coal lease involved in the Navajo
Nation's lawsuit against SCE and Peabody.  On March 4, 2003, the Supreme Court concluded, by majority decision, that there was no
breach of a fiduciary duty and that the Navajo Nation did not have a right to relief against the Government.  Based on the Supreme
Court's analysis, on April 28, 2003, SCE filed a motion to dismiss or, in the alternative, for summary judgment in the D.C. District
Court action.  The motion remains pending.

The Federal Circuit Court of Appeals, acting on a suggestion on remand filed by the Navajo Nation, held in a October 24, 2003
decision that the Supreme Court's March 24, 2003 decision was focused on three specific statutes or regulations and therefore did not
address the question of whether a network of other statutes, treaties and regulations imposed judicially enforceable fiduciary duties
on the United States during the time period in question.  The Government and the Navajo Nation both filed petitions for rehearing of
the October 24, 2003 Court of Appeals decision.   Both petitions were denied on March 9, 2004.

SCE cannot predict with certainty the outcome of the 1999 Navajo Nation's complaint against SCE, the impact of the Supreme Court's
decision in the Navajo Nation's suit against the Government on this complaint, or the impact of the complaint on the operation of
Mohave beyond 2005.

Nuclear Insurance

Federal law limits public liability claims from a nuclear incident to $10.9 billion.  SCE and other owners of the San Onofre and Palo
Verde Nuclear Generating Stations have purchased the maximum private primary insurance available ($300 million).  The balance is
covered by the industry's retrospective rating plan that uses deferred premium charges to every reactor licensee if a nuclear
incident at any licensed reactor in the United States results in claims and/or costs which exceed the primary insurance at that plant
site.  Federal regulations require this secondary level of financial protection.  The Nuclear Regulatory



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Notes to Consolidated Financial Statements


Commission exempted San Onofre Unit 1 from this secondary level, effective June 1994.  The maximum deferred premium for each nuclear
incident is $101 million per reactor, but not more than $10 million per reactor may be charged in any one year for each incident.
Based on its ownership interests, SCE could be required to pay a maximum of $199 million per nuclear incident.  However, it would
have to pay no more than $20 million per incident in any one year.  Such amounts include a 5% surcharge if additional funds are
needed to satisfy public liability claims and are subject to adjustment for inflation.  If the public liability limit above is
insufficient, federal regulations may impose further revenue-raising measures to pay claims, including a possible additional
assessment on all licensed reactor operators.  The United States Congress has extended the expiration date of the applicable law
until December 31, 2004.

Property damage insurance covers losses up to $500 million, including decontamination costs, at San Onofre and Palo Verde.
Decontamination liability and property damage coverage exceeding the primary $500 million also has been purchased in amounts greater
than federal requirements.  Additional insurance covers part of replacement power expenses during an accident-related nuclear unit
outage.  A mutual insurance company owned by utilities with nuclear facilities issues these policies.  If 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 $38 million per year.  Insurance premiums are charged to operating expense.

Spent Nuclear Fuel

Under federal law, the United States DOE is responsible for the selection and construction of a facility for the permanent disposal
of spent nuclear fuel and high-level radioactive waste.  The DOE has the obligation to begin acceptance of spent nuclear fuel not
later than January 31, 1998.  However, the DOE did not meet its obligation.  It is not certain when the DOE will begin accepting
spent nuclear fuel from San Onofre or other nuclear power plants.  Extended delays by the DOE have led to the construction of costly
alternatives, including siting and environmental issues.  SCE has paid the DOE the required one-time fee applicable to nuclear
generation at San Onofre through April 6, 1983 (approximately $24 million, plus interest).  SCE is also paying the required quarterly
fee equal to 0.1(cent)-per-kWh of nuclear-generated electricity sold after April 6, 1983.  On January 29, 2004, SCE, as operating agent,
filed a complaint against the DOE in the Federal Court of Claims seeking damages for DOE's failure to meet its obligation to begin
accepting spent nuclear fuel from San Onofre.

SCE has primary responsibility for the interim storage of spent nuclear fuel generated at San Onofre.  Spent nuclear fuel is stored
in the San Onofre Units 1, 2 and 3 spent fuel pools and the San Onofre independent spent fuel storage installation.  Movement of Unit
1 spent fuel from the Unit 3 spent fuel pool to the independent spent fuel storage installation was completed in late 2003.  Movement
of Unit 1 spent fuel from the Unit 1 spent fuel pool to the independent spent fuel storage installation is scheduled to be completed
by late 2004 and from the Unit 2 spent fuel pool to the independent spent fuel storage installation by late 2005.  With these moves,
there will be sufficient space in the Unit 2 and 3 spent fuel pools to meet plant requirements through mid-2007 and mid-2008,
respectively.  In order to maintain a full core off-load capability, SCE is planning to begin moving Unit 2 and 3 spent fuel into the
independent spent fuel storage installation by early 2006.

In order to increase on-site storage capacity and maintain core off-load capability, Palo Verde has constructed a dry cask storage
facility.  Arizona Public Service, as operating agent, plans to continually load casks on a schedule to maintain full core off-load
capability for all three units.

Storm Lake

As of December 31, 2003, Edison Capital had an investment of approximately $73 million in Storm Lake Power, a project developed by
Enron Wind, a subsidiary of Enron Corporation.  As of December 31,



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2003, Storm Lake had outstanding loans of approximately $60 million.  The lenders claim that Enron's bankruptcy, among other things,
is an event of default under the loan agreement and as a result, the debt has been reclassified to long-term debt due within one
year.  However, the lenders are currently discussing resolution of the defaults with Storm Lake and are not actively pursuing remedies.

Note 11.  Investments in Leveraged Leases, Partnerships and Unconsolidated Subsidiaries

Leveraged Leases

Edison Capital is the lessor in various power generation, electric transmission and distribution, transportation and
telecommunication leases with terms of 24 to 38 years.  Each of Edison Capital's leveraged lease transactions was completed and
accounted for in accordance with lease accounting standards.  All operating, maintenance, insurance and decommissioning costs are the
responsibility of the lessees.  The acquisition cost of these facilities was $6.9 billion at both December 31, 2003 and 2002.

The equity investment in these facilities is generally 20% of the cost to acquire the facilities.  The balance of the acquisition
costs was funded by nonrecourse debt secured by first liens on the leased property.  The lenders do not have recourse to Edison
Capital in the event of loan default.

The net income from leveraged leases is:

     In millions           Year ended December 31,                       2003            2002           2001
- -------------------------------------------------------------------------------------------------------------------------------------
     Income from leveraged leases                                    $     82       $     105        $   154
     Recomputation due to tax rate change                                  --             (99)            --
     Tax effect of pre-tax income:
       Current                                                             40             138            246
       Deferred                                                           (71)            (86)          (307)
- -------------------------------------------------------------------------------------------------------------------------------------
       Total tax (expense) benefit                                        (31)             52            (61)
- -------------------------------------------------------------------------------------------------------------------------------------
     Net income from leveraged leases                                $     51       $      58        $    93
- -------------------------------------------------------------------------------------------------------------------------------------


The net investment in leveraged leases is:

     In millions           December 31,                                                  2003           2002
- -------------------------------------------------------------------------------------------------------------------------------------
     Rentals receivable (net of principal and interest on nonrecourse debt)         $   3,497        $   3,496
     Unearned income                                                                   (1,178)          (1,260)
- -------------------------------------------------------------------------------------------------------------------------------------
     Investment in leveraged leases                                                     2,319            2,236
     Estimated residual value                                                              42               42
     Deferred income taxes                                                             (2,055)          (2,044)
- -------------------------------------------------------------------------------------------------------------------------------------
     Net investment in leveraged leases                                             $     306        $     234
- -------------------------------------------------------------------------------------------------------------------------------------


Partnerships and Unconsolidated Subsidiaries

Edison International and its nonutility subsidiaries have equity interests primarily in energy projects, oil and gas and real estate
investment partnerships.  The difference between the carrying value of energy projects and oil and gas investments and the underlying
equity in the net assets was $264 million at December 31, 2003.  The difference related to the energy projects is being amortized
over the life of the energy projects; the difference related to the oil and gas investments is amortized on a unit-of-production
basis over the life of the reserves for the oil and gas projects.  Amortization stopped January 1, 2002 in accordance with a new
accounting standard.



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Notes to Consolidated Financial Statements


Summarized financial information of these investments is:

     In millions           Year ended December 31,                     2003              2002             2001
- ---------------------------------------------------------------------------------------------------------------------------------------
     Revenue                                                      $   4,068          $  1,523         $  3,380
     Expenses                                                         3,450             1,312            2,847
- ---------------------------------------------------------------------------------------------------------------------------------------
     Net income                                                   $     618          $    211         $    533
- ---------------------------------------------------------------------------------------------------------------------------------------

     In millions                    December 31,                       2003              2002
- ------------------------------------------------------------------------------------------------------------------------
     Current assets                                               $   1,804          $    790
     Other assets                                                    12,056             5,564
- ------------------------------------------------------------------------------------------------------------------------
     Total assets                                                 $  13,860          $  6,354
- ------------------------------------------------------------------------------------------------------------------------
     Current liabilities                                          $   1,239          $  1,205
     Other liabilities                                                7,930             3,759
     Equity                                                           4,691             1,390
- ------------------------------------------------------------------------------------------------------------------------
     Total liabilities and equity                                 $  13,860          $  6,354
- ------------------------------------------------------------------------------------------------------------------------


The undistributed earnings of investments accounted for by the equity method were $283 million in 2003 and $275 million in 2002.

Note 12.  Business Segments

Edison International's reportable business segments include its electric utility operation segment (SCE), a nonutility power
generation segment (EME) and a financial services provider segment (Edison Capital).  Its segments are based on Edison
International's internal organization.  They are separate business units and are managed separately.  Edison International evaluates
performance based on net income.

SCE is a rate-regulated electric utility that supplies electric energy to a 50,000 square-mile area of central, coastal and Southern
California.  SCE also produces electricity.  EME is engaged in the operation of electric power generation facilities worldwide.  EME
also conducts energy trading and price risk management activities in markets where power generation facilities are open to
competition.  Edison Capital is a provider of financial services with investments worldwide.

The accounting policies of the segments are the same as those described in Note 1.

A significant source of revenue from EME's sale of energy and capacity is derived from its Midwest Generation subsidiary's sales to
Exelon Generation Company under power purchase agreements terminating in December 2004.  Revenue from such sales was $708 million in
2003 and $1.1 billion for each of the years 2002 and 2001.  The nonutility power generation segment is responsible for the goodwill
reported on the consolidated balance sheets.



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                                                                                                             Edison International


Edison International's business segment information is:

                                                             Nonutility
                                                 Electric       Power       Financial  Corporate       Edison
In millions                                       Utility    Generation     Services  & Other(1)    International
- ---------------------------------------------------------------------------------------------------------------------------------------
2003
Operating revenue                                $   8,853    $   3,181      $    88    $    13      $  12,135
Depreciation, decommissioning
   and amortization                                    882          290           12         --          1,184
Interest and dividend income                           100           16            8          3            127
Equity in income from partnerships and
   unconsolidated subsidiaries - net                    --          368          (14)        --            354
Interest expense - net of amounts
   capitalized                                         457          498           26        245          1,226
Income tax (benefit) - continuing operations           388          (24)         (38)      (113)           213
Income (loss) from continuing operations               872           28           57       (178)           779
Net income (loss)                                      922(2)        20           57       (178)           821
Total assets                                        18,466       12,078        3,418      1,000         34,962
Additions to and acquisition of
   property and plant                                1,161          127           --         --          1,288
- ---------------------------------------------------------------------------------------------------------------------------------------

2002
Operating revenue                                $   8,705    $   2,750      $     7    $    26      $  11,488
Depreciation, decommissioning
   and amortization                                    780          247           --          3          1,030
Interest and dividend income                           262           18           (1)         8            287
Equity in income from partnerships and
   unconsolidated subsidiaries - net                    --          283          (34)        --            249
Interest expense - net of amounts
   capitalized                                         584          452           36        211          1,283
Income tax (benefit) - continuing operations           642           38         (146)      (143)           391
Income (loss) from continuing operations             1,228           82           33       (208)         1,135
Net income (loss)                                    1,228(2)        25           33       (209)         1,077
Total assets                                        18,637       11,092        3,479        399         33,607
Additions to and acquisition of
   property and plant                                1,046          554            1        (11)         1,590
- ---------------------------------------------------------------------------------------------------------------------------------------

2001
Operating revenue                                $   8,120    $   2,594      $   202    $   146      $  11,062
Depreciation, decommissioning
   and amortization                                    681          273           17          2            973
Interest and dividend income                           215           35           19         13            282
Equity in income from partnerships and
   unconsolidated subsidiaries - net                    --          374          (31)        --            343
Interest expense - net of amounts
   capitalized                                         785          547           64        186          1,582
Income tax (benefit) - continuing operations         1,658           96          (24)       (83)         1,647
Income (loss) from continuing operations             2,386          113           84       (181)         2,402
Net income (loss)                                    2,386(2)    (1,121)          84       (314)         1,035
Total assets                                        22,453       10,730        3,736       (145)        36,774
Additions to and acquisition of
   property and plant                                  688          242            3         --            933
- ---------------------------------------------------------------------------------------------------------------------------------------

(1)  Includes amounts from nonutility subsidiaries (including MEHC), as well as Edison International (parent) not significant as a
     reportable segment
(2)  Net income available for common stock.



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Notes to Consolidated Financial Statements


The net income reported for electric utility includes earnings from discontinued operations of $50 million for 2003.  The net income
(loss) reported for nonutility power generation includes earnings (loss) from discontinued operations of $1 million for 2003,
$(57) million for 2002 and $(1.2) billion for 2001.  The net loss reported for corporate and other includes loss from discontinued
operations of $(1) million for 2002 and $(133) million for 2001.

Geographic Information

Electric power and steam generated domestically by EME is sold primarily under long-term contracts to electric utilities, through a
centralized power pool, or under a power-purchase agreement with a term of up to five years.  A project in Australia sells its energy
through a centralized power pool.  A project in the United Kingdom sells its energy production by entering into physical bilateral
contracts with various counterparties.  Other electric power generated overseas is sold under short- and long-term contracts to
electricity companies, electricity buying groups or electric utilities located in the country where the power is generated.

Edison International's foreign and domestic revenue and assets information is:

     In millions         Year ended December 31,                        2003            2002          2001
- -----------------------------------------------------------------------------------------------------------------------------------
     Revenue
     United States                                                   $ 10,533        $ 10,331     $ 10,141
     Foreign countries:
       United Kingdom                                                     371             317          324
       Australia                                                          234             204          166
       New Zealand                                                        756             493          294
       Netherlands                                                          5             (24)          --
       South Africa                                                         6             (16)          --
       Switzerland                                                         62              56           --
       Other                                                              168             127          137
- -----------------------------------------------------------------------------------------------------------------------------------
     Total                                                           $ 12,135        $ 11,488     $ 11,062
- -----------------------------------------------------------------------------------------------------------------------------------

     In millions         December 31,                                   2003            2002
- ----------------------------------------------------------------------------------------------------------------------
     Assets
     United States(1)                                                $ 25,602        $ 25,743
     Foreign countries:
       United Kingdom(1)                                                1,630           1,680
       Australia                                                        1,989           1,565
       New Zealand                                                      2,640           1,738
       Netherlands                                                        562             556
       South Africa                                                       642             646
       Switzerland                                                        545             483
       Other                                                            1,352           1,196
- ----------------------------------------------------------------------------------------------------------------------
     Total                                                           $ 34,962        $ 33,607
- ----------------------------------------------------------------------------------------------------------------------

     (1)  Includes assets of discontinued operations.



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                                                                                                             Edison International


Note 13.  Acquisitions and Dispositions

Acquisitions

On July 17, 2003, SCE signed an option agreement with Sequoia Generating LLC, a subsidiary of InterGen, to acquire Mountainview Power
Company LLC, the owner of a new power plant currently being developed in Redlands, California.  This acquisition requires regulatory
approval from both the CPUC and the FERC.  On December 18, 2003, the CPUC approved SCE's application proposing a power-purchase
agreement between SCE and Mountainview Power Company LLC.  On February 25, 2004, the FERC granted conditional approval of the
power-purchase agreement.  On February 28, 2004, SCE exercised its option to purchase Mountainview.  The purchase is expected to
close in March 2004.  SCE will recommence full construction of the project once the purchase closes.

On March 3, 2003, Contact Energy, EME's 51% owned subsidiary, completed a transaction with NGC Holdings Ltd. to acquire the Taranaki
combined cycle power station and related interests.  Consideration for the Taranaki station consisted of a cash payment of
approximately $275 million, which was initially financed with bridge loan facilities.  The bridge loan facilities were subsequently
repaid with proceeds from Contact Energy's issuance of long-term United States dollar denominated notes.  The Taranaki station is a
357 MW combined cycle, natural gas-fired plant located near Stratford, New Zealand.

During the second quarter of 2001, EME completed the purchase of additional shares of Contact Energy Ltd. for NZ$152 million,
increasing its ownership interest from 43% to 51%.  EME acquired 40% of the shares of Contact Energy during 1999 and increased its
share of ownership to 43% during 2000.  Accordingly, EME began accounting for Contact Energy on a consolidated basis effective
June 1, 2001, upon acquisition of a controlling interest.  Prior to June 1, 2001, EME used the equity method of accounting for Contact
Energy.  To finance the purchase of the additional shares in 2001, EME obtained a NZ$135 million, 364-day bridge loan from an
investment bank under a credit facility, which was syndicated by the bank.  In addition to other security arrangements, a security
interest over all Contact Energy shares held has been provided as collateral.  From June 2001 to October 2001, EME issued through one
of its subsidiaries new preferred securities.  The proceeds were used to repay borrowings outstanding under a credit facility and to
repay the bridge loan.

In February 2001, EME completed the acquisition of a 50% interest in CBK Power Co. Ltd. for $20 million.  CBK Power has entered into
a 25-year build-rehabilitate-transfer-and-operate agreement with National Power Corporation related to a hydroelectric project
located in the Philippines.  Financing for this $460 million project includes equity commitments of $117 million (EME's share is
approximately $59 million) and debt financing, which is in place for the remainder of the cost of this project.  The indebtedness
incurred by CBK Power is nonrecourse to EME.

Dispositions

On January 7, 2004, EME completed the sale of 100% of its stock of Edison Mission Energy Oil & Gas, which in turn holds minority
interests in Four Star Oil & Gas.  Proceeds from the sale were approximately $100 million.  EME expects to record a pre-tax gain on
the sale of approximately $47 million during the first quarter of 2004.

In 2003, SCE completed the sale of certain oil storage and pipeline facilities.  See additional discussion in Note 15.

On December 31, 2003, EME agreed to sell its 50% partnership interest in its Brooklyn Navy Yard project to a third party.  Completion
of the sale, currently expected in the first quarter of 2004, is subject to closing conditions, including obtaining regulatory
approval.  Proceeds from the sale are expected to be



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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


approximately $42 million.  EME recorded an impairment charge of $53 million during the fourth quarter of 2003 related to the planned
disposition of this investment.

On November 21, 2003, Gordonsville Energy Limited Partnership, in which EME owns a 50% interest, completed the sale of the
Gordonsville cogeneration facility.  Proceeds from the sale, including distribution of a debt service reserve fund, were
$36 million.  In second quarter 2003, EME recorded an impairment charge of $6 million related to the planned disposition of this
investment.

During 2002, EME completed the sales of its 50% interests in the Commonwealth Atlantic and James River projects and its 30% interest
in the Harbor project.  Proceeds received from the sales were $44 million.  During 2001, EME had previously recorded asset impairment
charges of $32 million related to these projects based on the expected sales proceeds.  No gain or loss was recorded from the sale of
EME's interests in these projects during 2002.

During 2001, EME completed the sales of its interests in the Nevada Sun-Peak project (50%), Saguaro project (50%) and Hopewell
project (25%) for a total gain on sale of $45 million ($24 million after tax).  In addition, EME entered into agreements, subject to
obtaining consents from third parties and other conditions, for the sale of its interests in the Commonwealth Atlantic, Gordonsville,
EcoElectrica, Harbor and James River projects.  During 2001, EME recorded asset impairment charges of $34 million related to these
projects based on the expected sales proceeds.

Also, during 2001, EME sold a 50% interest in its Sunrise project to Texaco for $84 million (50% of the project costs, prior to
commercial operation).  In late 2000, EME had purchased from Texaco all rights, title and interest in the Sunrise project; Texaco had
an option to repurchase, at cost, a 50% interest in the project.

In December 2001, EME completed the sale of the Ferrybridge and Fiddler's Ferry coal-fired power plants located in the United
Kingdom.  See additional discussion in Note 15.

In 2001, Edison Capital syndicated its interests in several affordable housing projects for $169 million and recorded fee and
syndication income of $40 million (after tax) resulting from the syndication.

Note 14.  Asset Impairments

In fourth quarter 2001, Edison International adopted early an accounting standard for the impairment or disposal of long-lived
assets.  Edison International evaluates the long-lived assets whenever indicators of impairment exist.  This accounting standard
requires that if the undiscounted expected future cash flow from a company's assets or group of assets (without interest charges) is
less than its carrying value, an asset impairment must be recognized in the financial statements.  The amount of the impairment is
determined by the difference between the carrying amount and fair value of the asset.

During 2003, EME recorded asset impairment charges of $304 million, consisting of $245 million related to eight small peaking plants
in Illinois (owned by Midwest Generation) and $53 million and $6 million to write-down the estimated net proceeds from the planned
sale of its interests in the Brooklyn Navy Yard and Gordonsville projects, respectively (see Note 13).  The impairment charge related
to the peaking plants resulted from a revised long-term outlook for capacity revenue from the peaking plants due to a number of
factors, including higher long-term natural gas prices and a current generation overcapacity.  The book value of these assets was
written down from $286 million to an estimated fair market value of $41 million.  The estimated fair value was determined based on
discounting estimated future cash flows using a 17.5% discount rate.

During 2002, EME recorded asset impairment charges of $86 million, consisting of $61 million related to the write-off of capitalized
costs associated with the termination of equipment purchase contracts with



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                                                                                                             Edison International


Siemens Westinghouse and $25 million related to the write-off of capitalized costs associated with the suspension of the Powerton
Station selective catalytic reduction major capital environmental improvements project at the Illinois plants.

Note 15.  Discontinued Operations

On July 10, 2003, the CPUC approved SCE's sale of certain oil storage and pipeline facilities to Pacific Terminals LLC for
$158 million.  In third quarter 2003, SCE recorded a $44 million after-tax gain to shareholders.

On December 19, 2002, the lenders to EME's Lakeland project accelerated the debt owing under the bank agreement that governs the
project's indebtedness, and on December 20, 2002, the Lakeland project lenders appointed an administrative receiver over the assets
of Lakeland Power Ltd.  The appointment of the administrative receiver results in the treatment of Lakeland power plant as an asset
held for sale under an accounting standard related to the impairment or disposal of long-lived assets.  Due to EME's loss of control
arising from the appointment of the administrative receiver, EME no longer consolidates the activities of Lakeland Power Ltd.  The
loss from operations of Lakeland in 2002 includes an impairment charge of $92 million ($77 million after tax) and a provision for bad
debts of $1 million (after tax) arising from the write-down of the Lakeland power plant and related claims under the power sales
agreement (an asset group according to an impairment standard) to their fair market value.  The fair value of the asset group was
determined based on discounted cash flows and estimated recovery under related claims under the power sales agreement.

On December 21, 2001, EME completed the sale of the Fiddler's Ferry and Ferrybridge coal stations located in the United Kingdom to
two wholly owned subsidiaries of American Electric Power.  The net proceeds from the sale ((pound)643 million) were used to repay
borrowings outstanding under the existing debt facility related to the acquisition of the plants.  In addition, the buyers acquired
other assets and assumed specific liabilities associated with the plants.  EME recorded a charge of $1.9 billion ($1.1 billion after
tax) related to the loss on sale.  The $1.9 billion charge includes the asset impairment charge recorded in third quarter 2001 to
reduce the carrying value of the assets held for sale to reflect estimated fair value less the cost to sell and related currency
adjustments.  EME had acquired the plants in 1999 for approximately $2.0 billion ((pound)1.3 billion).

In August 2001, Edison Enterprises, a wholly owned subsidiary of Edison International, sold a subsidiary principally engaged in the
business of providing residential security services and residential electrical warranty repair services.  In October 2001, Edison
Enterprises completed the sale of substantially all of its assets of another subsidiary (engaged in the business of commercial energy
management) to the subsidiary's current management.  As a result, Edison International recorded a charge of $127 million (after tax)
in 2001 related to the losses on these sales.  The impairment charges recorded in 2001 to reduce the carrying value of these
investments held for sale to reflect the estimated fair value less cost to sell are included in the $127 million charge.

In 2003, the results of SCE's oil storage and pipeline facilities unit have been accounted for as a discontinued operation in
accordance with an accounting standard related to the impairment and disposal of long-lived assets.  Due to immateriality, the
results of this unit for prior years have not been restated and are reflected as part of continuing operations.

In 2002, the results of the Lakeland project are reflected as discontinued operations in the consolidated financial statements in
accordance with an accounting standard related to the impairment and disposal of long-lived assets.  Due to immateriality, the
results of the Lakeland project in 2001 have not been restated and are reflected as part of continuing operations.



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- ----------------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


For all years presented, the results of the Fiddler's Ferry and Ferrybridge coal stations and Edison Enterprises subsidiaries sold
during 2001 have been reflected as discontinued operations in the consolidated financial statements in accordance with an accounting
standard related to the impairment and disposal of long-lived assets.  Unless otherwise discussed above, the consolidated financial
statements have been restated to conform to the discontinued operations presentation for all years presented.

Revenue from discontinued operations was $21 million in 2003, $74 million in 2002 and $748 million in 2001.  The before-tax earnings
(losses) of the discontinued operations were $84 million in 2003, $(74) million in 2002 and $(2.2) billion in 2001.

The carrying value of assets and liabilities of discontinued operations is:

     In millions                    December 31,                                2003                  2002
- ---------------------------------------------------------------------------------------------------------------------------------------
     Assets
     Receivables - net                                                       $    --               $     1
     Other                                                                         5                     9
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total current assets                                                          5                    10
- ---------------------------------------------------------------------------------------------------------------------------------------
     Utility plant - net                                                          --                     5
     Nonutility property - net                                                    --                    51
     Other noncurrent assets                                                      11                    57
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total assets                                                            $    16               $   123
- ---------------------------------------------------------------------------------------------------------------------------------------
     Liabilities
     Accounts payable and accrued liabilities                                $     3               $    23
     Noncurrent liabilities                                                       10                    49
- ---------------------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                       $    13               $    72
- ---------------------------------------------------------------------------------------------------------------------------------------


Note 16.  Subsequent Event

On March 10, 2004, EME's subsidiary, Midwest Generation, agreed in principle with the lease equity investor to terminate the Collins
Station lease.  The agreement in principle sets forth specified conditions required for the termination, including Midwest Generation
successfully borrowing funds to finance the repayment of Collins Station lease debt of $774 million and settlement of Midwest
Generation's termination liability with the lease equity investor.  There is no assurance that the agreement in principle will result
in termination of the Collins Station lease.  If the termination occurs, Midwest Generation will take title to the Collins Station
and, subject to its contractual obligation to Exelon Generation, plans to subsequently abandon the Collins Station or sell it to a
third party.

If Midwest Generation completes the lease termination and subsequently abandons the Collins Station, EME expects to record a pre-tax
loss of approximately $1 billion (approximately $620 million after tax).  This loss will reduce EME's net worth (using December 31,
2003) from $1.9 billion to approximately $1.3 billion.  To avoid the possibility of covenant defaults which could arise from a
decline in net worth, EME plans to take the following actions before or simultaneously with the Collins Station lease termination:

o    replace its $145 million corporate credit facility with a new secured credit facility;

o    repay the $28 million due under the Coal and Capex facility (guaranteed by EME); and



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- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Edison International


o    eliminate or modify the net worth covenant in its guaranty of the Powerton-Joliet lease.

If Midwest Generation completes the termination of the Collins Station lease followed by abandonment or sale to a third party, EME
anticipates that the termination payment would result in a substantial income tax deduction.  Because of these arrangements, EME does
not expect that termination of the Collins Station lease will have a material adverse effect on its liquidity.  If the lease
termination does not occur, the terms of the lease will remain in effect and Midwest Generation will seek to restructure the lease
with the lease equity investor.





Page 165



- ---------------------------------------------------------------------------------------------------------------------------------------
Quarterly Financial Data (Unaudited)                                                           Edison International


                                                                                    2003
                                                         ---------------------------------------------------------
In millions, except per-share amounts                      Total       Fourth      Third       Second      First
- ------------------------------------------------------------------------------------------------------------------
Operating revenue                                       $ 12,135      $ 2,654    $ 3,833      $ 3,125    $ 2,523
Operating income                                           1,791          331        925          224        311
Income from continuing operations                            779          193        500           23         63
Income from discontinued operations - net                     51            3         44            1          3
Cumulative effect of accounting change - net                  (9)          --         --           --         (9)
Net income                                                   821          196        544           24         57
Basic earnings (loss) per share:
   Continuing operations                                    2.39        0.59        1.53         0.07       0.19
   Discontinued operations                                  0.16        0.01        0.14           --       0.01
   Cumulative effect of accounting change                  (0.03)         --          --           --      (0.03)
   Total                                                    2.52        0.60        1.67         0.07       0.17
Diluted earnings (loss) per share:
   Continuing operations                                    2.37        0.59        1.52         0.07       0.19
   Discontinued operations                                  0.16        0.01        0.13           --       0.01
   Cumulative effect of accounting change                  (0.03)         --          --           --      (0.03)
   Total                                                    2.50        0.60        1.65         0.07       0.17
Dividends declared per share                                0.20        0.20          --           --         --
Common stock prices:
   High                                                    22.07       22.07       19.65        17.12      14.00
   Low                                                     10.57       19.10       15.81        13.30      10.57
   Close                                                   21.93       21.93       19.10        16.43      13.69


                                                                                    2002
                                                         ---------------------------------------------------------
In millions, except per-share amounts                      Total       Fourth      Third       Second      First
- ------------------------------------------------------------------------------------------------------------------
Operating revenue                                       $ 11,488      $ 2,469    $ 3,707      $ 2,824    $ 2,488
Operating income                                           2,372          156        703        1,204        309
Income from continuing operations                          1,135           56        345          655         79
Income (loss) from discontinued operations - net             (58)         (80)         7           10          5
Net income (loss)                                          1,077          (24)       352          665         84
Basic earnings (loss) per share:
   Continuing operations                                    3.49         0.18       1.06         2.01       0.24
   Discontinued operations                                 (0.18)       (0.25)      0.02         0.03       0.02
   Total                                                    3.31        (0.07)      1.08         2.04       0.26
Diluted earnings (loss) per share:
   Continuing operations                                    3.46         0.17       1.05         1.99       0.24
   Discontinued operations                                 (0.18)       (0.24)      0.02         0.03       0.02
   Total                                                    3.28        (0.07)      1.07         2.02       0.26
Dividends declared per share                                  --           --         --           --         --
Common stock prices:
   High                                                    19.60        12.25      17.24        19.60      17.56
   Low                                                      7.80         7.80       8.80        16.26      14.82
   Close                                                   11.85        11.85      10.00        17.00      16.75
- -------------------------------------------------------------------------------------------------------------------





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- ---------------------------------------------------------------------------------------------------------------------------------------
Selected Financial and Operating Data:  1999 - 2003                                            Edison International


Dollars in millions, except per-share amounts           2003         2002         2001         2000         1999
- ---------------------------------------------------------------------------------------------------------------------------------------
Edison International and Subsidiaries
Operating revenue                                  $  12,135    $  11,488    $  11,062    $  10,424     $  8,932
Operating expenses                                 $  10,344    $   9,116    $   5,980    $  12,499     $  7,359
Income (loss) from continuing operations           $     779    $   1,135    $   2,402    $  (1,939)    $    681
Net income (loss)                                  $     821    $   1,077    $   1,035    $  (1,943)    $    623
Weighted-average shares of
common stock outstanding (in millions)                   326          326          326          333          348
Basic earnings per share:
   Continuing operations                           $    2.39    $    3.49    $    7.37    $   (5.83)    $   1.96
   Discontinued operations                         $    0.16    $   (0.18)   $   (4.19)   $   (0.01)    $  (0.17)
   Cumulative effect of accounting change          $   (0.03)   $     --     $      --    $      --     $     --
   Total                                           $    2.52    $    3.31    $    3.18    $   (5.84)    $   1.79
Diluted earnings per share                         $    2.50    $    3.28    $    3.17    $   (5.84)    $   1.79
Dividends declared per share                       $    0.20    $     --     $     --     $    0.84     $   1.08
Book value per share at year-end                   $   16.52    $   13.62    $   10.04    $    7.43     $  15.01
Market value per share at year-end                 $   21.93    $   11.85    $   15.10    $  15.625     $ 26.187
Rate of return on common equity                         17.1%        27.0%        58.0%       (41.0)%       12.2%
Price/earnings ratio                                     8.7          3.6          4.7         (2.7)        14.6
Ratio of earnings to fixed charges                      1.65         2.08         3.21            *         1.99
Assets                                             $  34,962    $  33,607    $  36,774    $  35,100     $ 36,229
Long-term debt                                     $  11,787    $  11,578    $  12,674    $  12,150     $ 13,391
Common shareholders' equity                        $   5,383    $   4,437    $   3,272    $   2,420     $  5,211
Preferred stock subject to mandatory redemption    $     141    $     147    $     151    $     256     $    256
Company-obligated mandatorily redeemable
   securities of subsidiaries holding solely parent$      --    $     951    $     949    $     949     $    948
   company debentures
Retained earnings                                  $   3,466    $   2,711    $   1,634    $     599     $  3,079
- ---------------------------------------------------------------------------------------------------------------------------------------

Southern California Edison Company
Operating revenue                                  $   8,854    $   8,706    $   8,126    $   7,870     $  7,548
Net income (loss) available for common stock       $     922    $   1,228    $   2,386    $  (2,050)    $    484
Basic earnings (loss) per Edison International
   common share                                    $    2.83    $    3.77    $    7.32    $   (6.16)    $   1.39
Rate of return on common equity                         20.2%        31.8%       311.0%       (67.6)%       15.2%
Peak demand in megawatts (MW)                         20,136       18,821       17,890       19,757       19,122
Generation capacity at peak (MW)                       9,861        9,767        9,802        9,886       10,431
Kilowatt-hour deliveries (in millions)                93,826       79,693       78,524       84,430       78,602
Customers (in millions)                                 4.60         4.53         4.47         4.42         4.36
Full-time employees                                   12,698       12,113       11,663       12,593       13,040
- ---------------------------------------------------------------------------------------------------------------------------------------

Edison Mission Energy
Revenue                                            $   3,181    $   2,750    $   2,594    $   2,294     $  1,083
Income from continuing operations                  $      28    $      82    $     113    $     101     $    109
Net income (loss)                                  $      20    $      25    $  (1,121)   $     125     $    130
Assets                                             $  12,078    $  11,092    $  10,730    $  15,017     $ 15,534
Rate of return on common equity                          1.1%         1.5%       (46.9)%        4.3%         8.1%
Ownership in operating projects (MW)                  18,733       18,688       19,019       22,759       22,037
Full-time employees                                    2,610        2,662        3,021        3,391        3,245
- ---------------------------------------------------------------------------------------------------------------------------------------

Edison Capital
Revenue                                            $      88    $       7    $     202    $     274     $    282
Net income                                         $      57    $      33    $      84    $     135     $    129
Assets                                             $   3,418    $   3,479    $   3,736    $   3,713     $  2,712
Rate of return on common equity                          7.5%         4.2%        11.9%        22.9%        27.0%
Full-time employees                                       62           61           66          119          115
- ---------------------------------------------------------------------------------------------------------------------------------------

*  less than 1.00

During 2003, SCE sold certain oil storage and pipeline facilities.  During 2002, EME recorded an impairment charge related to its
Lakeland plant and during 2001, EME sold its generating plants located in the United Kingdom and Edison Enterprises sold the majority
of its assets.  Amounts presented in this table have been restated to reflect continuing operations unless stated otherwise.  See
Note 15, Discontinued Operations, for further discussion.




Page 167








                                                      [Edison International Logo]

                                         2244 Walnut Grove Avenue, Rosemead, California 91770
                                                             626.302.1212

                                                            www.edison.com

EX-21

                                          EDISON INTERNATIONAL TIER LIST
                                          ------------------------------

                                              AS OF DECEMBER 31, 2003

Numbers on left are                                                                     U.S. corporations
tier level indicators.                                                                 shown in all caps.

                                                  HOLDING COMPANY
                                                  ---------------

00     EDISON INTERNATIONAL is a corporation organized under the laws of the State of California and having its
       principal place of business at 2244 Walnut Grove Avenue (P.O. Box 999), Rosemead, California 91770.  It
       was organized principally to acquire and hold securities of other corporations for investment purposes.
       Edison International has the following subsidiaries:

                                               UTILITY SUBSIDIARIES
                                               --------------------

01     SOUTHERN CALIFORNIA EDISON COMPANY ("SCE") is a California corporation having its principal place of
       business at 2244 Walnut Grove Avenue (P.O. Box 800), Rosemead, California 91770.  SCE is a public utility
       primarily engaged in the business of supplying electric energy to portions of central and southern
       California, excluding the City of Los Angeles and certain other cities.  Unless otherwise indicated, its
       subsidiaries have the same principal place of business as Southern California Edison Company:

02        CALIFORNIA ELECTRIC POWER COMPANY [dissolved 11/06/2003]

02        CONSERVATION FINANCING CORPORATION is a California corporation engaged in the remediation and
          mitigation of environmental liabilities.

02        EDISON ESI is a California corporation engaged in the business of marketing services, products,
          information, and copyrighted materials to third parties on behalf of SCE.

02        Edison Material Supply is a Delaware limited liability company that provides procurement, inventory and
          warehousing services.

02        MONO POWER COMPANY is an inactive California corporation that has been engaged in the business of
          exploring for and developing fuel resources.

03            The Bear Creek Uranium Company is an inactive California partnership between Mono Power Company
              (50%) and RME Holding Company (formerly Union Pacific Resources Group, Inc.) (50%) that is engaged
              in reclamation of an integrated uranium mining and milling complex in Wyoming.

02        SCE CAPITAL COMPANY (inactive Delaware corporation)

02        SCE Funding LLC is a Delaware limited liability company that acts as a financing vehicle for rate
          reduction bonds.

02        SCE Trust I is a Delaware business trust organized to act as a financing vehicle.

02        SCE Trust II is a Delaware business trust organized to act as a financing vehicle.

02        SCE UK Services Ltd. (inactive United Kingdom private limited company)

02        SOUTHERN STATES REALTY is a California corporation engaged in holding real estate assets for SCE.


Page 1


                                              NONUTILITY SUBSIDIARIES
                                              -----------------------

01     EDISON DRIVES ELECTRIC (inactive California corporation)

01     EDISON ENERGY [dissolved 11/06/2003]

01     EDISON INSURANCE SERVICES, INC. is a Hawaii corporation having its principal executive office at 745 Fort
       Street, Suite 800, Honolulu, Hawaii 96813, which provides domestic and foreign property damage and
       business interruption insurance to Edison International and its subsidiaries.

01     EDISON INTERNATIONAL POWER [dissolved 11/06/2003]

01     EDISON VENTURES (inactive California corporation)

02        EDISON TRANSENERGY (inactive California corporation)

01     EIX Trust I is a Delaware business trust that acts as a financing vehicle.

01     EIX Trust II is a Delaware business trust that acts as a financing vehicle.

01     EIX Trust III is a Delaware business trust organized to act as a financing vehicle.

01     EDISON MISSION GROUP INC. (formerly The Mission Group) is a Delaware corporation having its principal
       place of business at 2244 Walnut Grove Avenue, Rosemead, California 91770, which owns the stock and
       coordinates the activities of nonutility companies.  The subsidiaries of Edison Mission Group Inc. are as
       follows:

02        EDISON ENTERPRISES is a California corporation having its principal place of business at 2244 Walnut
          Grove Avenue, Rosemead, California 91770, which owns the stock and coordinates the activities of its
          nonutility subsidiaries.  The subsidiaries of Edison Enterprises are as follows:

03            EDISON SOURCE is a California corporation having its principal place of business at 18101 Von
              Karman Avenue, Suite 1700, Irvine, California 92612-1046, which owns the stock of its
              subsidiaries.  The majority of the assets of Edison Source were sold to its former management in
              October 2001.  It is engaged in the business of selling, installing and servicing rapid battery
              charging products for the electric fork lift market.

04               Edison Source Norvik Company is a Canadian company having its principal place of business at
                 1959 Upper Water Street, Suite 800, Halifax, NS B3J 2X2.  It is principally engaged in the
                 business of research and development, and manufacturing of rapid battery charging projects for
                 the electric fork lift market.

04               G.H.V. REFRIGERATION, INC. is an inactive California corporation having its principal place of
                 business at 2244 Walnut Grove Avenue, Rosemead, California 91770.

02        EDISON ENVIRONMENTAL SERVICES [dissolved 11/06/2003]

02        EDISON O&M SERVICES (inactive California corporation)

02        EDISON TECHNOLOGY SOLUTIONS (inactive California corporation)

03            EDISON EV (inactive California corporation)

03            Facilichem, Inc., is a California corporation having its principal place of business at 333
              Ravenswood Avenue, Menlo Park, California 94025, which was organized to engage in the research,
              development and commercialization of liquid membrane technologies for application in specific
              industrial and chemical processes.  Edison Technology Solutions has a 10% ownership interest.

02        EDISON CAPITAL is a California corporation having its principal place of business at 18101 Von Karman
          Avenue, Suite 1700, Irvine, California 92612-1046.  It is engaged in the business of

Page 2

          providing capital and financial services in energy and infrastructure projects and affordable housing projects.
          Edison Capital owns a group of subsidiaries and has interests in various partnerships through its
          subsidiaries.  The subsidiaries and partnerships of Edison Capital are listed below. Unless otherwise
          indicated, all entities are corporations, are organized under the laws of the State of California, and
          have the same principal place of business as Edison Capital.

03     BURLINGTON APARTMENTS, INC.
03     Edison Capital Europe Limited (UK corporation)
       Address:  Lansdowne House, Berkeley Square, London, England W1X 5DH
03     EDISON FUNDING COMPANY
       [directly owns 0.08% of Edison Funding Omicron Incorporated; see listing under Edison Housing
       Consolidation Company)
04        EDISON CAPITAL HOUSING INVESTMENTS
          [directly owns 0.35% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
          [directly owns 35.52% of Edison Funding Omicron Incorporated; see listing under Edison Housing
          Consolidation Co.]
05            1st Time Homebuyer Opportunities LP (Chester County Homes) 99%
05            1732 Champa LP (Buerger Brothers Lofts) 99%
05            18303 Kittridge Associates LP 99%
05            210 Washington Avenue Associates (Renaissance Plaza) (Connecticut partnership) 99%
05            2400 Locust Associates LP (Locust on the Park) 99%
05            3790 Wisconsin Street Partners LP (Wisconsin III) 99.9%
05            Argyle Redevelopment Partnership, Ltd. (Colorado partnership) 99%
05            Auburn Manor L.L.C. 50% GP
06               Auburn Manor LP 1%
05            Bartlett Hill Associates LP 99%
05            CCS/Bellingham LP (Washington Grocery Building) 99.9%
05            Conejo Valley Community Housing Associates (Community House Apartments) 99%
05            EC ASSET SERVICES, INC. (Massachusetts corporation)
              Address:  160 Federal Street, Boston, MA 02110-1776
05            EC PROPERTIES, INC. (Massachusetts corporation)
              Address:  160 Federal Street, Boston, MA 02110-1776
06               Corporations for Affordable Housing LP 1%GP
07                  Arbor Lane Associates Phase II LP (Timberwood) 99%
07                  Arroyo Vista Associates LP 99%
07                  Artloft Associates LP 35.6%
07                  Caleb Affordable Housing Associates LP (Ledges/Pinebrook) 99%
07                  The Carlin LP 99%
07                  Diamond Phase III Venture LP 99%
07                  Fairmont Hotel Urban Renewal Associates LP 99%
07                  Mackenzie Park Associates LP 99%
07                  Parkside Associates LP (Parkside Garden) 99%
07                  Pines Housing LP 99%
07                  Pines Housing II, LP 99%
07                  Smyrna Gardens Associates LP 99%
07                  Tioga Gardens LP 99%
07                  Walden Pond, LP (Hamlet) 99%
06               Corporations for Affordable Housing LP II 1%GP
07                  2601 North Broad Street Associates LP (Station House) 99%
07                  Artloft Associates LP 53.39%
07                  Brookline Housing Associates LLC (Bridgewater) 99%
07                  EDA LP (Eagle's Nest) 48%
07                  Edgewood Manor Associates II LP 99%
07                  Gateway Housing LP (Gateway Townhomes) 99%
07                  Homestead Village Associates LP 99%
07                  Junction City Apartments LP (Green Park) 99%
07                  Liberty House Associates LP 99%
07                  Maple Ridge Development Associates LP 99%
07                  Parsonage Cottage Senior Residence LP 99%
07                  Rittenhouse School LP 99%
07                  Silver City Housing LP 99%
07                  South 55th Street, LP 49.5%
07                  W. M. Housing Associates LP (Williamsport Manor) 99%


Page 3

07                  Winnsboro Apartments LP (Deer Wood) 99%
05            EC PROPERTIES III, INC. (Massachusetts corporation)
              Address:  160 Federal Street, Boston, MA 02110-1776
06               Corporations for Affordable Housing LP III 1%GP
07                  Piedmont Housing Associates 99%
07                  Pines Housing III LP 99%
07                  Salem Lafayette Urban Renewal Associates, LP 99%
07                  Spring Valley Commons LP 99%
07                  Stevenson Housing Associates (Park Vista) 99%
05            EC-SLP, INC. (Massachusetts corporation)
              Address:  160 Federal Street, Boston, MA 02110-1776
05            ECH Investor Partners VI-A LP 1%GP
06               Edison Capital Housing Partners VI LP 61.8166%LP
07                  Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
07                  Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
07                  Altamont Hotel Associates LP 99%
07                  Bradley Manor Senior Apartments LP 99%
07                  Double X Associates 1995 LP (Terrace Manor) 99%
07                  Hamilton Place Apartments LP (Larkin Place) 99%
07                  Hamilton Place Senior Living LP 99%
07                  Hearthstone Group 3 LP (Evergreen Court) 99%
07                  KDF Malabar LP 99%
07                  LINC-Bristol Associates I, LP (City Gardens) 99%
07                  MAS-WT, LP (Washington Terrace) 99%
07                  Northwood Manor Associates LP 99%
07                  Silver Lake Properties LP 99%
07                  University Park Properties LP 99%
07                  Upland Senior Housing LP (Coy D. Estes) 99%
07                  Vista Properties LLC (Vista View) 99%
07                  Vista Verde Townhomes II LLC 99%
05            ECH Investor Partners VI-B LP 1%GP
06               Edison Capital Housing Partners VI LP 37.1834%LP
07                  Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
07                  Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
07                  Altamont Hotel Associates LP 99%
07                  Bradley Manor Senior Apartments LP 99%
07                  Double X Associates 1995 LP (Terrace Manor) 99%
07                  Hamilton Place Apartments LP (Larkin Place) 99%
07                  Hamilton Place Senior Living LP 99%
07                  Hearthstone Group 3 LP (Evergreen Court) 99%
07                  KDF Malabar LP 99%
07                  LINC-Bristol Associates I, LP (City Gardens) 99%
07                  MAS-WT, LP (Washington Terrace) 99%
07                  Northwood Manor Associates LP 99%
07                  Silver Lake Properties LP 99%
07                  University Park Properties LP 99%
07                  Upland Senior Housing LP (Coy D. Estes) 99%
07                  Vista Properties LLC (Vista View) 99%
07                  Vista Verde Townhomes II LLC 99%
05            ECH/HFC GP Partnership No. 1 34.9%GP
06               Edison Capital Housing Partners VII LP 19.4187%GP
07                  C-Court LP (Cawelti Court) 99%
07                  Cottonwood Affordable Housing LP (Verde Vista) 99%
07                  Fifth and Wilshire Apartments LP 99%
07                  Flagstaff Affordable Housing II, LP (Forest View Apts.) 99%
07                  Huff Avenue Associates LP 99%
07                  Mountain View Townhomes Associates LP 99%
07                  Oak Forest Associates LP 99%
07                  Paradise Road Partners LP (Gateway Village) 99%
07                  Woodland Arms Apartments, Ltd. 99%
05            ECH/HFC GP Partnership No. 2 56.7%GP
06               Edison Capital Housing Partners VIII LP 18.54%GP
07                  Catalonia Associates LP 99%


Page 4

07                  Ohlone Housing Associates LP 99%
05            ECHP INVESTMENT COMPANY
06               ECHP LLC 99.999%GP
07                  Edison Capital Housing Partners XVI LP 0.01%GP
08                      Bouquet Canyon Seniors LP 99.9%
08                      Diamond Creek Apartments LP 99.9%
08                      Eugene Hotel LP 99.9%
08                      Hilltop Farms LP 99.9%
08                      KDF Park Glenn LP (Park Glenn) 99%
08                      KDF Park Glenn Seniors LP (Park Glenn II) 99.9%
08                      King Road Associates LP 99.9%
08                      LL Housing LP (Maryland partnership) (Laurel Lakes) 99%
08                      Red Lake LP #1 99.9%
08                      San Martin de Porres LP 99.9%
08                      Southern Hotel LP 99.9%
08                      Terra Cotta Housing Associates LP 99.9%
07                  Edison Capital Housing Partners XVII LP 0.01%GP
08                      Antelope Associates LP 99%
08                      Baker Park Associates LP 99%
08                      Fremont Building LP (Crescent Arms) 99%
08                      Hercules Senior Housing Associates 99.9%
08                      La Terraza Associates LP (Carlsbad Villas at Camino Real) 99%
08                      Parkview Apartments Associates LP (Parkview/Sunburst) 99.9%
08                      Quebec Arms Apartments LP 99.9%
08                      Sky Parkway Housing Associates LP 99%
08                      Sunset Creek Partners LP 99%
08                      University Manor Apartments LP 99.9%
08                      Vista Verde Housing Associates LP 99.9%
07                  Edison Capital Housing Partners XVIII LP 0.01%GP
08                      Aaron Michael Associates LP 99.9%
08                      Bracher Associates LP 99%
08                      Florin Woods Associates LP 99%
08                      Lovejoy Station LP 99.9%
08                      OL Hope LP (Olympic Hope) 99.9%
08                      Palmer Heights, LLC 99.9%
08                      Pinmore Associates LP 99.9%
08                      SD Regency Centre LP 99.9%
07                  Edison Capital Housing Partners XIX LP 0.01%GP
08                      Cochrane Village Apartments LP 99%
08                      CCS/Mount Vernon Housing LP (La Venture) 99.9%
08                      Ontario Senior Housing LP (Ontario Plaza) 98.9%
08                      Pecan Court Associates LP 99.9%
08                      Pellettieri Homes Urban Renewal Associates, LP 99%
08                      Rincon De Los Esteros Associates LP 99.9%
08                      KDF Santa Paula LP (Santa Paula) 99%
08                      Schoolhouse Court Housing Associates LP 99.9%
08                      Virginia Lane LP (Maplewood/Golden Glenn) 99.9%
08                      Winfield Hill Associates LP 99%
05            Edison Capital Affordable Housing 99A G.P. 27.69%GP
06               Edison Capital Housing Partners IX LP 13.5533%GP
07                  1010 SVN Associates LP 99.9%
07                  2814 Fifth Street Associates LP (Land Park Woods) 99%
07                  Alma Place Associates LP 99%
07                  Knolls Community Associates LP 99.9%
07                  Monterra Village Associates LP 99%
07                  Pacific Terrace Associates LP 99.9%
07                  PVA LP (Park Victoria) 99%
07                  Sherman Glen, L.L.C. 99%
07                  Strobridge Housing Associates LP 99%
07                  Trolley Terrace Townhomes LP 99.9%
07                  Walnut Avenue Partnership LP 99%
05            Edison Capital Affordable Housing 99B G.P. 99.99%GP
06               Edison Capital Housing Partners X LP 19.3952%GP


Page 5

07                  Beacon Manor Associates LP 99%
07                  Boulder Creek Apartments LP 99.9%
07                  Burlington Senior Housing LLC 99.9%
07                  CCS/Renton Housing LP (Renton) 99.9%
07                  Coolidge Station Apartments L.L.C. 99%
07                  Lark Ellen LP 99%
07                  Mercy Housing California IX LP (Sycamore) 99.9%
07                  Morgan Hill Ranch Housing LP 99%
07                  Pacifica Community Associates LP (Villa Pacifica) 99%
07                  Persimmon Associates LP 99%
07                  Providence-Brown Street Housing LP (Brown Street) 99.9%
07                  San Juan Commons 1996 LP 99.9%
07                  Timber Sound, Ltd. 99%
07                  Timber Sound II, Ltd. 99%
07                  Trinity Park Apartments LP 99.9%
07                  Venbury Trail LP 99.9%
06               Edison Capital Housing Partners XI LP 18.62486%GP
07                  1475 167th Avenue Associates LP (Bermuda Gardens) 99.9%
07                  Auburn Manor Apartments LP 99%
07                  Barnsdall Court LP (Villa Mariposa) 99.9%
07                  Borregas Court LP 99%
07                  Bryson Family Apartments LP 99.9%
07                  Carson Housing LP (Carson Street) 98%
07                  Casa Rampart LP (Rampart Apartments) 99.9%
07                  Davis MHA Twin Pines Community Associates LP (Northstar Apartments) 99.9%
07                  Eastwood Homes LP 99%
07                  Electra Arms Senior Associates LP 99%
07                  Grace Housing LP 99%
07                  Stony Point Apartment Investors LP (Panas Place) 99.9%
07                  Wall Street Palmer House LP 99%
07                  Wilmington Housing Associates LP (New Harbor Vista) 99.9%
06               Edison Capital Housing Partners XII LP 13.73759%GP
07                  Cedarshores Limited Dividend Housing Association LP 99.99%
07                  Heritage Partners LP 99.9%
07                  Osage Terrace LP 99.89%
07                  West Oaks Apartments LP 99.9%
07                  Yale Street LP 99.9%
06               Edison Capital Housing Partners XIII LP 17.03513%GP
07                  Alhambra Apartments LP 99.9%
07                  Chamber Apartments LP 99%
07                  Park Land Senior Apartments Investors LP (Banducci) 99.9%
07                  President John Adams Manor Apartments LP 99.9%
07                  Riverwalk Apartments, Ltd. (Colorado) 99.8%
07                  Rosecreek Senior Living LP 99.9%
07                  Twin Ponds Apartments LP 99.9%
07                  Woodleaf Village LP 99.9%
07                  Women's Westlake LP (Dorothy Day) 99.9%
06               Edison Capital Housing Partners XIV LP 7.6118%GP
07                  Apollo Development Associates LP (Apollo Hotel) 99.9%
07                  Carson Terrace LP 99.9%
07                  Don Avante Association II LP (Village Avante) 99.9%
07                  Preservation Properties I 99.9%
07                  Preservation Properties II 99.9%
07                  Preservation Properties III 99.9%
07                  Preservation Properties IV 99.9%
07                  Preservation Properties V 99.9%
07                  Rowland Heights Preservation LP 99.9%
07                  Springdale Preservation LP (Springdale West) 99.9%
06               Edison Capital Housing Partners XV LP 9.567%GP
07                  708 Pico LP (Wavecrest Apartments) 99.9%
07                  Benton Green LP 99.9%
07                  Don Avante Association I LP (Don de Dios) 99.9%
07                  Emmanuel Grant Company LLC (Capitol Heights) 99.9%


Page 6

07                  Highland Village Partners LP 99.9%
07                  I.G. Partners LP (Islands Gardens) 99.9%
07                  Karen Partners LP 99.9%
07                  Lilac Estates LP 99.9%
07                  Mountainlands Housing Partners LP (Holiday Village Apartments) 99.9%
07                  NAHF Brockton LP (Southfield Gardens) 99.9%
07                  Northern Senior Housing LP (St. Johnsbury) 99.9%
07                  Park Place 1998, LLC 99.9%
07                  Park Williams Partners LP 99.9%
07                  Patriots Pointe at Colonial Hills LP 99.9%
07                  PlumTree Preservation LP 99.9%
07                  Poinsettia Housing Associates 99.9%
07                  Project Home I LLC 99.99%
07                  Saratoga Vacaville LP (Saratoga Senior) 99.9%
07                  Serena Sunbow LP (Villa Serena) 99.9%
07                  St. Regis Park LP (Pear Tree) 99.9%
07                  Vista Sonoma Senior Living LP 99.9%
07                  Westfair LLC (Cedar Ridge) 99.9%
07                  Windrush Apartments of Statesville LP 99.9%
07                  Wingate LLC (Regency Park) 99.9%
05            Edison Capital Contributions VI Partners 91.77%GP
06               ECH Investor Partners VI-A LP 15.3877%LP
07                  Edison Capital Housing Partners VI LP 61.8166%LP
08                      Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
08                      Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
08                      Altamont Hotel Associates LP 99%
08                      Bradley Manor Senior Apartments LP 99%
08                      Double X Associates 1995 LP (Terrace Manor) 99%
08                      Hamilton Place Apartments LP (Larkin Place) 99%
08                      Hamilton Place Senior Living LP 99%
08                      Hearthstone Group 3 LP (Evergreen Court) 99%
08                      KDF Malabar LP 99%
08                      LINC-Bristol Associates I, LP (City Gardens) 99%
08                      MAS-WT, LP (Washington Terrace) 99%
08                      Northwood Manor Associates LP 99%
08                      Silver Lake Properties LP 99%
08                      University Park Properties LP 99%
08                      Upland Senior Housing LP (Coy D. Estes) 99%
08                      Vista Properties LLC (Vista View) 99%
08                      Vista Verde Townhomes II LLC 99%
06               ECH Investor Partners VI-B LP 99%LP
07                  Edison Capital Housing Partners VI LP 37.1834%LP
08                      Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
08                      Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
08                      Altamont Hotel Associates LP 99%
08                      Bradley Manor Senior Apartments LP 99%
08                      Double X Associates 1995 LP (Terrace Manor) 99%
08                      Hamilton Place Apartments LP (Larkin Place) 99%
08                      Hamilton Place Senior Living LP 99%
08                      Hearthstone Group 3 LP (Evergreen Court) 99%
08                      KDF Malabar LP 99%
08                      LINC-Bristol Associates I, LP (City Gardens) 99%
08                      MAS-WT, LP (Washington Terrace) 99%
08                      Northwood Manor Associates LP 99%
08                      Silver Lake Properties LP 99%
08                      University Park Properties LP 99%
08                      Upland Senior Housing LP (Coy D. Estes) 99%
08                      Vista Properties LLC (Vista View) 99%
08                      Vista Verde Townhomes II LLC 99%
05            EDISON CAPITAL HOUSING DELAWARE, INC.
06               B.A.I. Edison Ravenwood LP (Ravenwood) 90%GP
07                  Cincinnati Ravenwood Apartments LP 0.95%GP
05            Edison Capital Housing Partners V LP 16.18%GP


Page 7

06               AMCAL Santa Barbara Fund XXXVI LP (Positano) 99%
06               Bodega Hills Investors LP 99%
06               Mercy Housing California IV LP (Vista Grande) 99%
06               Park Place Terrace LP 99%
06               River Walk Apartments Homes LP 99%
06               San Diego Golden Villa Partners LP (Golden Villa) 98.9%
06               Santa Alicia Gardens Townhomes LP (The Gardens) 99%
06               St. Hedwig's Gardens LP 99%
06               Sunshine Terrace LP 99%
06               Union Meadows Associates LLC 99%
05            Edison Capital Housing Partners VI LP 1%GP
06               Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
06               Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
06               Altamont Hotel Associates LP 99%
06               Bradley Manor Senior Apartments LP 99%
06               Double X Associates 1995 LP (Terrace Manor) 99%
06               Hamilton Place Apartments LP (Larkin Place) 99%
06               Hamilton Place Senior Living LP 99%
06               Hearthstone Group 3 LP (Evergreen Court) 99%
06               KDF Malabar LP 99%
06               LINC-Bristol Associates I, LP (City Gardens) 99%
06               MAS-WT, LP (Washington Terrace) 99%
06               Northwood Manor Associates LP 99%
06               Silver Lake Properties LP 99%
06               University Park Properties LP 99%
06               Upland Senior Housing LP (Coy D. Estes) 99%
06               Vista Properties LLC (Vista View) 99%
06               Vista Verde Townhomes II LLC 99%
05            EDISON CAPITAL HOUSING MANAGEMENT
05            EDISON CAPITAL HOUSING NEW JERSEY
              [owns 6.16% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            EDISON CAPITAL HOUSING PENNSYLVANIA
              [owns 5.26% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            EDISON FUNDING OMICRON INCORPORATED (Delaware corporation) (formerly Edison Funding Omicron GP)
              55.52% [Also owned 0.08% by Edison Funding Company and 44.40% by Edison Housing Consolidation Co.,
              where Omicron subsidiaries are listed.]
05            EDISON HOUSING NORTH CAROLINA
06               Edison Capital Contributions VI Partners 4.03%GP
07                  ECH Investor Partners VI-A LP 15.3877%LP
08                      Edison Capital Housing Partners VI LP 61.8166%LP
09                         Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
09                         Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
09                         Altamont Hotel Associates LP 99%
09                         Bradley Manor Senior Apartments LP 99%
09                         Double X Associates 1995 LP (Terrace Manor) 99%
09                         Hamilton Place Apartments LP (Larkin Place) 99%
09                         Hamilton Place Senior Living LP 99%
09                         Hearthstone Group 3 LP (Evergreen Court) 99%
09                         KDF Malabar LP 99%
09                         LINC-Bristol Associates I, LP (City Gardens) 99%
09                         MAS-WT, LP (Washington Terrace) 99%
09                         Northwood Manor Associates LP 99%
09                         Silver Lake Properties LP 99%
09                         University Park Properties LP 99%
09                         Upland Senior Housing LP (Coy D. Estes) 99%
09                         Vista Properties LLC (Vista View) 99%
09                         Vista Verde Townhomes II LLC 99%
07                  ECH Investor Partners VI-B LP 99%LP
08                      Edison Capital Housing Partners VI LP 37.1834%LP
09                         Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
09                         Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
09                         Altamont Hotel Associates LP 99%
09                         Bradley Manor Senior Apartments LP 99%


Page 8

09                         Double X Associates 1995 LP (Terrace Manor) 99%
09                         Hamilton Place Apartments LP (Larkin Place) 99%
09                         Hamilton Place Senior Living LP 99%
09                         Hearthstone Group 3 LP (Evergreen Court) 99%
09                         KDF Malabar LP 99%
09                         LINC-Bristol Associates I, LP (City Gardens) 99%
09                         MAS-WT, LP (Washington Terrace) 99%
09                         Northwood Manor Associates LP 99%
09                         Silver Lake Properties LP 99%
09                         University Park Properties LP 99%
09                         Upland Senior Housing LP (Coy D. Estes) 99%
09                         Vista Properties LLC (Vista View) 99%
09                         Vista Verde Townhomes II LLC 99%
05            EDISON HOUSING SOUTH CAROLINA
06               Edison Capital Contributions VI Partners 4.20%GP
07                  ECH Investor Partners VI-A LP 15.3877%LP
08                      Edison Capital Housing Partners VI LP 61.8166%LP
09                         Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
09                         Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
09                         Altamont Hotel Associates LP 99%
09                         Bradley Manor Senior Apartments LP 99%
09                         Double X Associates 1995 LP (Terrace Manor) 99%
09                         Hamilton Place Apartments LP (Larkin Place) 99%
09                         Hamilton Place Senior Living LP 99%
09                         Hearthstone Group 3 LP (Evergreen Court) 99%
09                         KDF Malabar LP 99%
09                         LINC-Bristol Associates I, LP (City Gardens) 99%
09                         MAS-WT, LP (Washington Terrace) 99%
09                         Northwood Manor Associates LP 99%
09                         Silver Lake Properties LP 99%
09                         University Park Properties LP 99%
09                         Upland Senior Housing LP (Coy D. Estes) 99%
09                         Vista Properties LLC (Vista View) 99%
09                         Vista Verde Townhomes II LLC 99%
07                  ECH Investor Partners VI-B LP 99%LP
08                      Edison Capital Housing Partners VI LP 37.1834%LP
09                         Admiralty Heights Associates II 1995 LP (Kent Manor) 99%
09                         Affordable/Citrus Glenn Phase II, Ltd. (Citrus Glenn Apts. Phase II) 99%
09                         Altamont Hotel Associates LP 99%
09                         Bradley Manor Senior Apartments LP 99%
09                         Double X Associates 1995 LP (Terrace Manor) 99%
09                         Hamilton Place Apartments LP (Larkin Place) 99%
09                         Hamilton Place Senior Living LP 99%
09                         Hearthstone Group 3 LP (Evergreen Court) 99%
09                         KDF Malabar LP 99%
09                         LINC-Bristol Associates I, LP (City Gardens) 99%
09                         MAS-WT, LP (Washington Terrace) 99%
09                         Northwood Manor Associates LP 99%
09                         Silver Lake Properties LP 99%
09                         University Park Properties LP 99%
09                         Upland Senior Housing LP (Coy D. Estes) 99%
09                         Vista Properties LLC (Vista View) 99%
09                         Vista Verde Townhomes II LLC 99%
05            EHI DEVELOPMENT COMPANY
05            EHI DEVELOPMENT FUND
05            Florence Apartments LLC 99%
05            Josephinum Associates LP, The (Washington partnership) 99%
05            Kennedy Lofts Associates LP (Massachusetts partnership) 99%
05            Madison/Mollison LP (Park Mollison) 99.9%
05            Maplewood Housing Associates LP 99.9%
05            MH I LP 1%GP
06               California Park Apartments LP 99%
05            MH II LP 1%GP


Page 9

06               5363 Dent Avenue Associates LP 99%
05            MH III LP 1%GP
06               DeRose Housing Associates LP 99%
05            MH IV LP 1%GP
06               MPT Apartments LP (MacArthur Park) 99%
05            MH V LP 1%GP
06               Centennial Place LP 99%
05            MHICAL 94 COMPANY
              [owns 19.32% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            MHICAL 94 LP (Delaware partnership) 1%GP
06               Mayacamas Village Associates LP 99%
06               West Capital Courtyard LP 99%
05            MHICAL 95 LP (Delaware partnership) 1%GP
06               Abby Associates LP (Windmere) 99%
06               Colina Vista LP 99%
06               ECH/HFC GP Partnership No. 2 43.3%GP
07                  Edison Capital Housing Partners VIII LP 18.5396%GP
08                      Catalonia Associates LP 99%
08                      Ohlone Housing Associates LP 99%
06               Mercy Housing California VI LP (205 Jones) 99%
05            MHICAL 96 LP (Delaware partnership) 1%GP
06               ECH/HFC GP Partnership No. 1 50.44%GP
07                  Edison Capital Housing Partners VII LP 19.4187%GP
08                      C-Court LP (Cawelti Court) 99%
08                      Cottonwood Affordable Housing LP (Verde Vista) 99%
08                      Fifth and Wilshire Apartments LP 99%
08                      Flagstaff Affordable Housing II, LP (Forest View Apts.) 99%
08                      Huff Avenue Associates LP 99%
08                      Mountain View Townhomes Associates LP 99%
08                      Oak Forest Associates LP 99%
08                      Paradise Road Partners LP (Gateway Village) 99%
08                      Woodland Arms Apartments, Ltd. 99%
06               Edison Capital Affordable Housing 99A G.P. 36.47%GP
07                  Edison Capital Housing Partners IX LP 13.5533%GP
08                      1010 SVN Associates LP 99.9%
08                      2814 Fifth Street Associates LP (Land Park Woods) 99%
08                      Alma Place Associates LP 99%
08                      Knolls Community Associates LP 99.9%
08                      Monterra Village Associates LP 99%
08                      Pacific Terrace Associates LP 99.9%
08                      PVA LP (Park Victoria) 99%
08                      Sherman Glen, L.L.C. 99%
08                      Strobridge Housing Associates LP 99%
08                      Trolley Terrace Townhomes LP 99.9%
08                      Walnut Avenue Partnership LP 99%
06               Greenway Village Associates LP 99%
06               Kennedy Court Partners LP 99%
06               Klamath Associates LP 99%
06               Westgate Townhomes Associates LP 99%
05            MHICAL 95 COMPANY
06               EDISON HOUSING CONSOLIDATION CO. (formerly Edison Housing Georgia) 29.90%
07                  EDISON FUNDING OMICRON INCORPORATED (Delaware corporation) (formerly Edison Funding Omicron
                    GP) 44.40% [also owned 0.08% by Edison Funding Company and 55.52% by Edison Capital Housing
                    Investments]
08                      16th and Church Street Associates LP 99%
08                      1856 Wells Court Partners, LP (Wells Court) 99%
08                      AE Associates LP (Avenida Espana) 99%
08                      Agape Housing LP 99%
08                      Brantwood II Associates LP 99%
08                      Brooks School Associates LP 99%
08                      Bryn Mawr - Belle Shore LP (The) 99%
08                      Bush Hotel LP 99%
08                      Centertown Associates LP (Ravenwood) 99%


Page 10

08                      Centro Partners LP (El Centro) 99%
08                      Cincinnati Ravenwood Apts. LP 99%
08                      Coyote Springs Apartments Associates LP 99%
08                      Cypress Cove Associates 99%
08                      Del Carlo Court Associates LP 99%
08                      Delta Plaza Apartments LP 99%
08                      EAH Larkspur Creekside Associates LP 99%
08                      East Cotati Avenue Partners LP 99%
08                      EDISON FUNDING OLIVE COURT 100%GP
09                         Olive Court Housing Associates LP 1.1%
08                      Edmundson Associates LP (Willows) 99%
08                      El Barrio Academy Urban Renewal Associates, LP (Academy Street) 99%
08                      Elizabeth West and East LP 99%
08                      Farm (The) Associates LP 99%
08                      Gilroy Redwood Associates LP (Redwoods) 99%
08                      Ginzton Associates LP 99%
08                      Grossman Apartments Investors LP 99%
08                      Heather Glen Associates LP 99%
08                      HMB-Atlanta I LP (Spring Branch) 99%
08                      Holy Family Associates LP 99%
08                      Lackawana Housing Associates LLC (Goodwill Neighborhood Residences) 99%
08                      Maplewood School Apartments LP 99%
08                      Mar Associates LP (Frank Mar) 99%
08                      McFarland Press Associates LP 99%
08                      Mercantile Housing LLC (Mercantile Square) 99%
08                      Merrill Road Associates LP 99%
08                      MH I LP 99%
09                         California Park Apartments LP 99%
08                      MHICAL 94 LP (Delaware partnership) 99%LP
09                         Mayacamas Village Associates LP 99%
09                         West Capital Courtyard LP 99%
08                      MHICAL 95 LP (Delaware partnership) 99%LP
09                         Abby Associates LP (Windmere) 99%
09                         Colina Vista LP 99%
09                         ECH/HFC GP Partnership No. 2 43.3%GP
10                            Edison Capital Housing Partners VIII LP 18.5396%GP
11                               Catalonia Associates LP 99%
11                               Ohlone Housing Associates LP 99%
09                         Mercy Housing California VI LP (205 Jones) 99%
08                      MHICAL 96 LP (Delaware partnership) 99%LP
09                         Greenway Village Associates LP 99%
09                         Kennedy Court Partners LP 99%
09                         Klamath Associates LP 99%
09                         Westgate Townhomes Associates LP 99%
08                      Mid-Peninsula Century Village Associates LP (Century Village) 99%
08                      Mission Capp LP 99%
08                      Mission Housing Partnership 1996 LP (Delaware partnership) 99%LP
08                      Neary Lagoon Partners LP 99%
08                      North Park Village LLC 99%
08                      Oceanside Gardens LP 99%
08                      Omaha Amber Ridge LP (Amber Ridge) 98.9%
08                      Open Door Associates LP (West Valley) 99%
08                      Palmer House LP 99%
08                      Richmond City Center Associates LP 99%
08                      Riverside/Liebrandt Partners LP (La Playa) 99%
08                      Roebling Village Inn Urban Renewal LP 99%
08                      Rosebloom Associates LP (Oakshade) 99%
08                      San Pablo Senior Housing Associates LP 99%
08                      San Pedro Gardens Associates LP 99%
08                      Santa Paulan Senior Apartments Associates LP (The Paulan) 99%
08                      South Beach Housing Associates LP (Steamboat) 99%
08                      South Winery Associates LP (The Winery Apartments) 99%
08                      Stoney Creek Associates LP 99%


Page 11

08                      Studebaker Building LP 99%
08                      Sultana Acres Associates LP 99%
08                      Thomson Rental Housing, LP (Washington Place) 99%
08                      Tuscany Associates LP (Tuscany Villa) 99%
08                      Villa Maria Housing LP 99%
08                      Washington Creek Associates LP 99%
08                      Westport Village Homes Associates LP 99%
08                      Wheeler Manor Associates LP 99%
08                      YWCA Villa Nueva Partners LP 99%
05            MHICAL 96 COMPANY
              [owns 8.96% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
06               MHICAL 96 LP 99%
07                  ECH/HFC GP Partnership No. 1 50.44%GP
08                      Edison Capital Housing Partners VII LP 19.4187%GP
09                         C-Court LP (Cawelti Court) 99%
09                         Cottonwood Affordable Housing LP (Verde Vista) 99%
09                         Fifth and Wilshire Apartments LP 99%
09                         Flagstaff Affordable Housing II, LP (Forest View Apts.) 99%
09                         Huff Avenue Associates LP 99%
09                         Mountain View Townhomes Associates LP 99%
09                         Oak Forest Associates LP 99%
09                         Paradise Road Partners LP (Gateway Village) 99%
09                         Woodland Arms Apartments, Ltd. 99%
07                  Edison Capital Affordable Housing 99A G.P. 36.47%GP
08                      Edison Capital Housing Partners IX LP 13.5533%GP
09                         1010 SVN Associates LP 99.9%
09                         2814 Fifth Street Associates LP (Land Park Woods) 99%
09                         Alma Place Associates LP 99%
09                         Knolls Community Associates LP 99.9%
09                         Monterra Village Associates LP 99%
09                         Pacific Terrace Associates LP 99.9%
09                         PVA LP (Park Victoria) 99%
09                         Sherman Glen, L.L.C. 99%
09                         Strobridge Housing Associates LP 99%
09                         Trolley Terrace Townhomes LP 99.9%
09                         Walnut Avenue Partnership LP 99%
05            MHICAL 97 COMPANY
06               MHICAL 97 LP 99%
07                  ECH/HFC GP Partnership No. 1 14.66%GP
08                      Edison Capital Housing Partners VII LP 19.4187%GP
09                         C-Court LP (Cawelti Court) 99%
09                         Cottonwood Affordable Housing LP (Verde Vista) 99%
09                         Fifth and Wilshire Apartments LP 99%
09                         Flagstaff Affordable Housing II, LP (Forest View Apts.) 99%
09                         Huff Avenue Associates LP 99%
09                         Mountain View Townhomes Associates LP 99%
09                         Oak Forest Associates LP 99%
09                         Paradise Road Partners LP (Gateway Village) 99%
09                         Woodland Arms Apartments, Ltd. 99%
07                  Edison Capital Affordable Housing 99A G.P. 33.05%
08                      Edison Capital Housing Partners IX LP 13.5533%GP
09                         1010 SVN Associates LP 99.9%
09                         2814 Fifth Street Associates LP (Land Park Woods) 99%
09                         Alma Place Associates LP 99%
09                         Knolls Community Associates LP 99.9%
09                         Monterra Village Associates LP 99%
09                         Pacific Terrace Associates LP 99.9%
09                         PVA LP (Park Victoria) 99%
09                         Sherman Glen, L.L.C. 99%
09                         Strobridge Housing Associates LP 99%
09                         Trolley Terrace Townhomes LP 99.9%
09                         Walnut Avenue Partnership LP 99%
06               MHICAL 97 LP 99%LP


Page 12

07                  Garnet Housing Associates LP 99%
05            MHICAL 97 LP 1%GP
06               ECH/HFC GP Partnership No. 1 14.66%GP
07                  Edison Capital Housing Partners VII LP 19.4187%GP
08                      C-Court LP (Cawelti Court) 99%
08                      Cottonwood Affordable Housing LP (Verde Vista) 99%
08                      Fifth and Wilshire Apartments LP 99%
08                      Flagstaff Affordable Housing II, LP (Forest View Apts.) 99%
08                      Huff Avenue Associates LP 99%
08                      Mountain View Townhomes Associates LP 99%
08                      Oak Forest Associates LP 99%
08                      Paradise Road Partners LP (Gateway Village) 99%
08                      Woodland Arms Apartments, Ltd. 99%
06               Edison Capital Affordable Housing 99A G.P. 33.05%GP
07                  Edison Capital Housing Partners IX LP 13.5533%GP
08                      1010 SVN Associates LP 99.9%
08                      2814 Fifth Street Associates LP (Land Park Woods) 99%
08                      Alma Place Associates LP 99%
08                      Knolls Community Associates LP 99.9%
08                      Monterra Village Associates LP 99%
08                      Pacific Terrace Associates LP 99.9%
08                      PVA LP (Park Victoria) 99%
08                      Sherman Glen, L.L.C. 99%
08                      Strobridge Housing Associates LP 99%
08                      Trolley Terrace Townhomes LP 99.9%
08                      Walnut Avenue Partnership LP 99%
06               Garnet Housing Associates LP 99%
05            MHIFED 94 LP (Delaware partnership) 1%GP; 99%LP to Bell Atlantic
06               Berry Avenue Associates LP 99%
06               Carlton Way Apartments LP 99%
06               CDR Senior Housing Associates (Casa del Rio) 99%
06               Corona Ely/Ranch Associates LP 99%
06               Fairview Village Associates LP 99%
06               Fell Street Housing Associates LP 99%
06               Hope West Apartments LP 99%
06               Morrone Gardens Associates LP 99%
06               Pajaro Court Associates LP 99%
06               Tierra Linda Associates LP 99%
06               Tlaquepaque Housing Associates LP 99%
05            MHIFED 95 LP (Delaware partnership) 1%GP; 99%LP to Bell Atlantic
06               1101 Howard Street Associates LP 99%
06               Avalon Courtyard LP (Carson Senior Housing) 99%
06               Hollywood El Centro LP 99%
06               La Brea/Franklin LP 99%
06               Larkin Pine LP 99%
06               Mercy Housing California III LP (3rd and Reed) 99%
06               Pinole Grove Associates LP 99%
06               Second Street Center LP (Santa Monica) 99%
06               Solinas Village Partners LP 99%
06               Three Oaks Housing LP 99%
05            MHIFED 96 LP (Delaware partnership) 5%GP; 95%LP to Cargill
06               Lavell Village Associates LP 99%
06               North Town Housing Partners LP (Villa del Norte Village) 99%
06               Poco Way Associates LP 99%
06               Seasons Affordable Senior Housing LP 99%
05            MHIFED 96A LP (Delaware partnership) 1%GP; 99%LP to Bell Atlantic
06               Good Samaritan Associates LP 99%
06               Metro Senior Associates LP 99%
06               Oxnard Housing Associates LP 99%
06               Reseda Village LP 99%
06               Round Walk Village Apartments LP 99%
06               Santa Alicia Family Housing Associates 99%
06               Vine Street Court LP 99%


Page 13

06               Vine Street Court LP II 99%
05            Mid-Peninsula Sharmon Palms Associates LP (Sharmon Palms) 99%
05            MISSION HOUSING ALPHA
06               LL Housing LLC 24.5%
07                  Laurel Lakes LP 1%
06               Quebec Arms Apartments LP 0.05% GP
06               University Manor Apartment LP 0.05% GP
05            MISSION HOUSING BETA
              [owns 2.58% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            MISSION HOUSING DELTA
              [owns 1.07% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
06               MH II LP 99%
07                  5363 Dent Avenue Associates LP 99%
06               MH III LP 99%
07                  DeRose Housing Associates LP 99%
06               MH IV LP 99%
07                  MPT Apartments LP (MacArthur Park) 99%
06               MH V LP 99%
07                  Centennial Place LP 99%
05            MISSION HOUSING DENVER
              [owns 5.67% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            MISSION HOUSING EPSILON
              [owns 0.54% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
06               Edison Capital Affordable Housing 99A G.P. 2.78%
07                  Edison Capital Housing Partners IX LP 13.5533%GP
08                      1010 SVN Associates LP 99.9%
08                      2814 Fifth Street Associates LP (Land Park Woods) 99%
08                      Alma Place Associates LP 99%
08                      Knolls Community Associates LP 99.9%
08                      Monterra Village Associates LP 99%
08                      Pacific Terrace Associates LP 99.9%
08                      PVA LP (Park Victoria) 99%
08                      Sherman Glen, L.L.C. 99%
08                      Strobridge Housing Associates LP 99%
08                      Trolley Terrace Townhomes LP 99.9%
08                      Walnut Avenue Partnership LP 99%
06               Hotel Elkhart L.L.C. (The Cornerstone) 99%
05            MISSION HOUSING GAMMA
              [owns 1.73% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            MISSION HOUSING HOLDINGS
              [owns 13.10% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            Mission Housing Partnership 1996 LP (Delaware partnership) 1%GP
05            MISSION HOUSING THETA
06               MISSION FUNDING THETA
                 [owns 0.01% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
07                  Edison Capital Affordable Housing 99A G.P. 0.01%
08                      Edison Capital Housing Partners IX LP 13.5533%GP
09                         1010 SVN Associates LP 99.9%
09                         2814 Fifth Street Associates LP (Land Park Woods) 99%
09                         Alma Place Associates LP 99%
09                         Knolls Community Associates LP 99.9%
09                         Monterra Village Associates LP 99%
09                         Pacific Terrace Associates LP 99.9%
09                         PVA LP (Park Victoria) 99%
09                         Sherman Glen, L.L.C. 99%
09                         Strobridge Housing Associates LP 99%
09                         Trolley Terrace Townhomes LP 99.9%
09                         Walnut Avenue Partnership LP 99%
07                  Edison Capital Affordable Housing 99B G.P. 0.01%
08                      Edison Capital Housing Partners X LP 19.3952%GP
09                         Beacon Manor Associates LP 99.9%
09                         Boulder Creek Apartments LP 99.9%
09                         Burlington Senior Housing LLC 99.9%


Page 14

09                         CCS/Renton Housing LP (Renton) 99.9%
09                         Coolidge Station Apartments L.L.C. 99%
09                         Lark Ellen LP 99%
09                         Mercy Housing California IX LP (Sycamore) 99.9%
09                         Morgan Hill Ranch Housing LP 99%
09                         Pacifica Community Associates LP (Villa Pacifica) 99.9%
09                         Persimmon Associates LP (Persimmon Tree) 99%
09                         Providence-Brown Street Housing LP (Brown Street) 99.9%
09                         San Juan Commons 1996 LP 99.9%
09                         Timber Sound, Ltd. 99%
09                         Timber Sound II, Ltd. 99%
09                         Trinity Park Apartments LP 99.9%
09                         Venbury Trail LP 99.9%
07                  Oakdale Terrace Leased Housing Associates LP 0.01%
07                  Westfield Condominium Investment LP 0.01%
06               Mission Housing Investors Partnership 5%GP; 95%LP to GECC
07                  1028 Howard Street Associates LP 99%
07                  Forest Winds Associates LP 99%
07                  Glen Eden Associates LP (A Street) 99%
07                  Gray's Meadows Investors LP 99%
07                  Prince Bozzuto LP (Fairground Commons) (Maryland partnership) 99%
07                  Rancho Park Associates LP 99%
07                  Rustic Gardens Associates LP 99%
07                  Sea Ranch Apartments LP 99%
07                  Springdale Kresson Associates LP (Jewish Federation) (New Jersey partnership) 99%
05            MISSION HOUSING ZETA
              [owns 5.35% of Edison Housing Consolidation Co.; see listing under MHICAL 95 Company.]
05            National Boston Lofts Associates LLLP (Boston Lofts) 99%
05            Oakdale Terrace Leased Housing Associates LP 98.99%
05            Olive Court Apartments LP 98.9%
05            Pacific Vista Las Flores LP (Vista Las Flores) 99.9%
05            Pilot Grove LP (Massachusetts partnership) 99%
05            Post Office Plaza LP (Ohio partnership) 99%
05            Tabor Grand LP (Colorado partnership) 99%
05            West Valley Hart LP (Hart and Alabama) 99.9%
05            Westfield Condominium Investment LP 98.99%
05            White Mountain Apache LP 99%
04        EDISON FUNDING OMICRON INCORPORATED (Delaware corporation) (formerly Edison Funding Omicron GP) 0.08%
          [also owned 55.52% by Edison Capital Housing Investments and 44.40% by Edison Housing Consolidation Co.]
05            Cincinnati Ravenwood Apts, LP 99%
05            EDISON FUNDING OLIVE COURT 100%
06               Olive Court Housing Associates LP 1.1%
04        MISSION FUNDING BETA
04        MISSION FUNDING EPSILON
05            Edison Capital (Bermuda) Investments, Ltd. (Bermuda corporation)
              Address:  Clarendon House, 2 Church Street, Hamilton HM CX, Bermuda
06               Edison Capital LAI (Bermuda) Ltd. (Bermuda corporation)
                 Address:  Clarendon House, 2 Church Street, P.O. Box HM666, Hamilton HM CX, Bermuda
07                  Trinidad and Tobago Methanol Company Limited (equity) 1.0%
06               Edison Capital Latin American Investments (Bermuda) Ltd. (Bermuda corporation) 33.3%
                 Address:  Clarendon House, 2 Church Street, P.O. Box HM666, Hamilton HM CX, Bermuda
07                  AIG Asian Infrastructure Fund II LP 5.8%
07                  AIG-GE Capital Latin American Infrastructure Fund LP 8%
07                  AIG Emerging Europe Infrastructure Fund LP 22.70%
07                  AIG Emerging Europe Infrastructure Management LP 18.05%GP
05            Edison Capital International (Bermuda) Ltd. (Bermuda corporation)
              Address:  Clarendon House, 2 Church Street, P.O. Box HM666, Hamilton HM CX, Bermuda
06               Edison Capital Latin American Investments (Bermuda) Ltd. (Bermuda corporation) 33.3%
07                  AIG Asian Infrastructure Fund II LP 5.8%
07                  AIG-GE Capital Latin American Infrastructure Fund LP 7.89%
08                      Andes Energy XII Ltd. 100%


Page 15

09                         Paz Holdings Ltd. 43.22%
10                            Compania Adminstradora de Empresas Bolivia S.A. ("Cade") 12.55% (Bolivian service
                              company)
                              Address:  Edificio Electropaz SA, subsuelo Plaza Venezuela No. 1401 esq. Loayza, La
                              Paz, Bolivia
10                            Electricidad de La Paz S.A. ("Electropaz") (equity) 10% (Bolivian foreign utility
                              company) [See 4.EC01]
                              Address:  Avenida Illimani l973, Casilla 10511, La Paz, Bolivia
10                            Empresa de Luz y Fuerza Electrica de Oruro S.A. ("Elfeo") 12.55% (Bolivian foreign
                              utility company) [See 4.EC02]
                              Address:  Calle Junin No. 710, Casilla No. 53, Oruro, Bolivia
10                            Empresa de Servicios Edeser S.A. ("Edeser") 12.55% (Bolivian
                              service company)
                              Address:  Iturralde No. 1309, Miraflores, La Paz, Bolivia
07                  AIG Emerging Europe Infrastructure Fund LP 22.7%
07                  AIG Emerging Europe Infrastructure Management LP 18.05%GP
06               Olmeca Cable Investments Ltd. (Mandeville Mexico, S.A.) 21.7%
06               Paz Holdings Ltd. 30.42%
07                  Compania Adminstradora de Empresas Bolivia S.A. ("Cade") 12.55% (Bolivian service company)
                    Address:  Edificio Electropaz SA, subsuelo Plaza Venezuela No. 1401 esq. Loayza, La Paz,
                    Bolivia
07                  Electricidad de La Paz S.A. ("Electropaz") (equity) 10% (Bolivian foreign utility company)
                    [See 4.EC01]
                    Address:  Avenida Illimani 1973, Casilla 10511, La Paz, Bolivia
07                  Empresa de Luz y Fuerza Electrica de Oruro S.A. ("Elfeo") 12.55% (Bolivian foreign utility
                    company) [See 4.EC02]
                    Address:  Calle Junin No. 710, Casilla No. 53, Oruro, Bolivia
07                  Empresa de Servicios Edeser S.A. ("Edeser") 12.55% (Bolivian service
                    company)
                    Address:  Iturralde No. 1309, Miraflores, La Paz, Bolivia
05            Edison Capital Latin American Investments Holding Company (Delaware corporation)
06               Edison Capital Latin American Investments (Bermuda) Ltd. (Bermuda corporation) 33.3%
07                  AIG Asian Infrastructure Fund II LP 5.8%
07                  AIG-GE Capital Latin American Infrastructure Fund LP 7.89%
07                  AIG Emerging Europe Infrastructure Fund LP 22.70%
07                  AIG Emerging Europe Infrastructure Management LP 18.05%GP
05            Edison Capital (Netherlands) Holdings Company B.V.
              Address:  Herengracht 548, 1017 CG Amsterdam, Netherlands
06               Edison Capital (Netherlands) Investments B.V.
                 Address:  Herengracht 548, 1017 CG Amsterdam, Netherlands
05            MISSION FUNDING ALPHA
06               MISSION FUNDING MU
07                  EPZ Mission Funding Mu Trust (equity interest in foreign utility company) [See 4.EC03]
                    Address:  c/o Wilmington Trust Company, Rodney Square North, 1100 North Market Square,
                    Wilmington, Delaware 19890-0004
05            MISSION FUNDING DELTA
05            MISSION FUNDING NU
06               EPZ Mission Funding Nu Trust (equity interest in foreign utility company) [See 4.EC04]
                 Address:  c/o Wilmington Trust Company, Rodney Square North, 1100 North Market Square,
                    Wilmington, Delaware 19890-0004
05            Mission Investments, Inc. (U.S. Virgin Islands corp.)
              Address:  ABN Trustcompany, Guardian Building, Havensight, 2nd Floor, St. Thomas, U.S. Virgin
              Islands
05            Mission (Bermuda) Investments, Ltd. (Bermuda corp.)
              Address:  Clarendon House, 2 Church Street, Hamilton HM CX, Bermuda
04        MISSION FUNDING GAMMA
04        MISSION FUNDING KAPPA
05            ABB Funding Partners, LP 14.27%
04        MISSION FUNDING ZETA
05            Huntington LP (New York partnership) 50%


Page 16

05            Lakota Ridge LLC 75% [See 4.EC05]
              Address:  c/o DanMar & Associates, 520 Fifth Avenue SE, Pipestone, Minnesota 56164
05            Shaokatan Hills LLC 75% [See 4.EC06]
              Address:  c/o DanMar & Associates, 520 Fifth Avenue SE, Pipestone, Minnesota 56164
05            Woodstock Hills LLC 75% [See 4.EC07]
              Address:  c/o DanMar & Associates, 520 Fifth Avenue SE, Pipestone, Minnesota 56164
04        MISSION IOWA WIND COMPANY
05            Storm Lake Power Partners I LLC (99%) [See 4.EC08]

02        MISSION LAND COMPANY is a California corporation having its principal place of business at 18101 Von
          Karman Avenue, Suite 1700, Irvine, California 92612-1046.  It is engaged, directly and through its
          subsidiaries, in the business of owning, managing and selling industrial parks and other real property
          investments.  The subsidiaries and partnerships of Mission Land Company are listed below.  Unless
          otherwise indicated, all entities are corporations, are organized under the laws of the State of
          California, and have the same principal place of business as Mission Land Company.

03     ASSOCIATED SOUTHERN INVESTMENT COMPANY
03     CALABASAS PALATINO, INC. (inactive)
03     Centrelake Partners, LP (limited partnership) 98%LP (inactive)
03     IRWINDALE LAND COMPANY (inactive)
03     MISSION AIRPORT PARK DEVELOPMENT CO. (inactive)
04        Centrelake Partners, LP (limited partnership) 2%GP (inactive)
04        Mission Vacaville LP (limited partnership) 1%GP (inactive)
03     MISSION INDUSTRIAL CONSTRUCTORS, INC. (inactive)
03     Mission-Oceangate 75%GP (inactive)
03     MISSION/ONTARIO, INC. (inactive)
03     MISSION SOUTH BAY COMPANY (inactive)
04        Mission-Oceangate 25%GP (inactive)
03     MISSION TEXAS PROPERTY HOLDINGS, INC. (inactive)
03     Mission Vacaville LP (limited partnership) 99%LP (inactive)

02        MISSION POWER ENGINEERING COMPANY is an inactive California corporation having its principal place of
          business at 2244 Walnut Grove Avenue, Rosemead, California 91770.  The subsidiary of Mission Power
          Engineering Company is listed below.

03     ASSOCIATED SOUTHERN ENGINEERING COMPANY (inactive California corporation)

02        MISSION ENERGY HOLDING COMPANY is a Delaware corporation having its principal place of business at 2600
          Michelson Drive, Suite 1700, Irvine, California 92612.  Mission Energy Holding Company owns the stock
          of Edison Mission Energy and also acts as a financing vehicle.

03     EDISON MISSION ENERGY is a Delaware corporation having its principal place of business at 18101 Von Karman
       Avenue, Suite 1700, Irvine, California 92612-1046.  Edison Mission Energy owns the stock of a group of
       corporations which, primarily through partnerships with non-affiliated entities, are engaged in the
       business of developing, owning, leasing and/or operating cogeneration, geothermal and other energy or
       energy-related projects pursuant to the Public Utility Regulatory Policies Act of 1978.  Edison Mission
       Energy, through wholly owned subsidiaries, also has ownership interests in a number of independent power
       projects in operation or under development that either have been reviewed by the Commission's staff for
       compliance with the Act or are or will be exempt wholesale generators or foreign utility companies under
       the Energy Policy Act of 1992.  In addition, some Edison Mission Energy subsidiaries have made
       fuel-related investments and a limited number of non-energy related investments.  The subsidiaries and
       partnerships of Edison Mission Energy are listed below.  Unless otherwise indicated, all entities are
       corporations, are organized under the laws of the State of California and have the same principal place of
       business as Edison Mission Energy.

EDISON MISSION ENERGY DOMESTIC COMPANIES:
04     AGUILA ENERGY COMPANY (LP)
05        American Bituminous Power Partners, LP (Delaware limited partnership) 49.5%; 50% with Pleasant Valley
          Address:  Grant Town Power Plant, Highway 17, Grant Town, WV 26574
06            American Kiln Partners, LP (Delaware limited partnership) (inactive) 49.5% of 53%
04     ANACAPA ENERGY COMPANY (GP)


Page 17

05        Salinas River Cogeneration Company (California general partnership) 50%
          Address:  Star Route 42, Sargents Road, San Ardo, CA 93450
04     ARROWHEAD ENERGY COMPANY (inactive)
05        Crown Energy, L.P. (New Jersey limited partnership) (inactive) 50%LP; 100% w/ Thorofare, Mission/Eagle
06            Crown Vista Urban Renewal Corporation  (inactive) 50%
04     BALBOA ENERGY COMPANY (GP) (inactive)
05        Smithtown Cogeneration, L.P. (Delaware limited partnership) (inactive) 50%; 100% w/ Kingspark
04     BLUE RIDGE ENERGY COMPANY (GP) (inactive)
05        Bretton Woods Cogeneration, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Bretton Woods
04     BRETTON WOODS ENERGY COMPANY (GP and LP) (inactive)
05        Bretton Woods Cogeneration, LP (Delaware LP) (inactive) 50%; 100% w/ Blue Ridge
04     CAMINO ENERGY COMPANY (GP)
05        Watson Cogeneration Company (California general partnership) 49%
04     CENTERPORT ENERGY COMPANY (GP and LP) (inactive)
05        Riverhead Cogeneration I, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Ridgecrest
04     CHESAPEAKE BAY ENERGY COMPANY (GP) (inactive)
05        Delaware Clean Energy Project (Delaware general partnership) (inactive)50%
04     CHESTER ENERGY COMPANY (inactive)
04     CLAYVILLE ENERGY COMPANY (inactive)
05        Oconee Energy, LP (Delaware limited partnership) (inactive) 50%; 100% w/Coronado
04     COLONIAL ENERGY COMPANY (inactive)
04     CORONADO ENERGY COMPANY (inactive)
05        Oconee Energy, LP (Delaware limited partnership) (inactive) 50%; 100% with Clayville
04     CRESCENT VALLEY ENERGY COMPANY (inactive)
04     DEL MAR ENERGY COMPANY (GP)
05        Mid-Set Cogeneration Company (California general partnership) 50%
          Address:  13705 Shalae Road, Fellows, CA 93224
04     DELAWARE ENERGY CONSERVERS, INC. (Delaware corporation) (inactive)
04     DESERT SUNRISE ENERGY COMPANY (Nevada corporation) (inactive)
04     DEVEREAUX ENERGY COMPANY (LP) (inactive)
04     EAST MAINE ENERGY COMPANY (inactive)
04     EDISON ALABAMA GENERATING COMPANY (inactive)
04     EDISON MISSION DEVELOPMENT, INC. (Delaware corporation) 100%
04     EDISON MISSION ENERGY FUEL
05        EDISON MISSION ENERGY OIL & GAS [sold 01/07/2004]
06            Four Star Oil & Gas Company (Delaware corporation) 35.84% [sold 01/07/2004]
              Address:  200 Westchester Avenue, White Plains, NY 10650
05        EDISON MISSION ENERGY PETROLEUM
05        POCONO FUELS COMPANY (inactive)
05        SOUTHERN SIERRA GAS COMPANY
06            TM Star Fuel Company (California general partnership) 50%
04     EDISON MISSION ENERGY FUNDING CORP. (Delaware corporation) 1%
04     Edison Mission Energy Interface Ltd. (Canadian corporation)
       Address:  2 Sheppard Ave. E. #200, North York, Ontario, Canada
05        The Mission Interface Partnership (Province of Ontario general partnership) 50%
04     EDISON MISSION ENERGY SERVICES, INC. [formerly Edison Mission
       Energy Fuel Services, Inc.] [PowerGen project]
04     EDISON MISSION FUEL RESOURCES, INC. (Delaware corporation) [Com Ed Project
04     EDISON MISSION FUEL TRANSPORTATION, INC. (Delaware corporation) [Com Ed Project]
04     EDISON MISSION MARKETING & TRADING, INC. [Com Ed Project]
05        Midwest Generation Energy Services, LLC (Delaware LLC) (formerly CP Power Sales Eighteen, L.L.C.) 100%
04     EDISON MISSION HOLDINGS CO. (formerly EME Homer City Holdings Co.)
05        CHESTNUT RIDGE ENERGY COMPANY 100%
06            EME HOMER CITY GENERATION, L.P. (Pennsylvania limited partnership) 99%LP [See 4.EME01]
              Address:  1750 Power Plant Road, Homer City, PA 15748-8009
05        EDISON MISSION FINANCE CO. 100%
05        HOMER CITY PROPERTY HOLDINGS, INC. 100%


Page 18

05        MISSION ENERGY WESTSIDE, INC. 100%
06            EME HOMER CITY GENERATION, L.P. (Pennsylvania limited partnership) 1%GP [See 4.EME01]
              Address:  1750 Power Plant Road, Homer City, PA 15748-8009
04     EDISON MISSION OPERATION & MAINTENANCE, INC.
04     EDISON MISSION PROJECT CO. (formerly EME UK International, Inc.) (Delaware corporation) 100% [holds 100%
       of the issued and outstanding Class D shares of MEC International B.V. (0.01%)--see INTERNATIONAL section]
04     EL DORADO ENERGY COMPANY (GP) (inactive)
04     EME CP HOLDINGS CO. (Delaware corporation)
05        Bretton Woods Funding I, L.L.C. (Delaware limited liability company)
05        CP Power Sales Seventeen, L.L.C. (Delaware limited liability company)
05        CP Power Sales Nineteen, L.L.C. (Delaware limited liability company) (inactive)
05        CP Power Sales Twenty, L.L.C. (Delaware limited liability company) (inactive)
05        Sunapee Funding I, L.L.C. (Delaware LLC) (inactive)
04     EME EASTERN HOLDINGS CO. (Delaware corporation)
05        Athens Funding, L.L.C. (Delaware limited liability company)
05        Citizens Power Holdings One, LLC (Delaware limited liability company)
06            CL Power Sales One, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Two, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Six, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Seven, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Eight, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Nine, L.L.C. (Delaware LLC) 25%
06            CL Power Sales Ten, L.L.C. (Delaware LLC) 25%
05        CP Power Sales Twelve, L.L.C. (Delaware limited liability company)
04     EMOM SERVICES, INC. (Delaware corporation)
04     EMP, INC. (Oregon corporation) (GP and LP) (inactive)
05        GEO East Mesa Limited Partnership 50% [cancelled effective 04/30/2003]
06            GEO East Mesa Electric Co. (Nevada Corporation) 100% [dissolved 05/05/2003]
04     FOUR COUNTIES GAS COMPANY (inactive)
04     GLOBAL POWER INVESTORS, INC. (Delaware corporation)
04     Hancock Generation LLC (Delaware limited liability company) (inactive)
04     HOLTSVILLE ENERGY COMPANY (GP and LP) (inactive)
05        Brookhaven Cogeneration, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Madera
04     INDIAN BAY ENERGY COMPANY (GP and LP) (inactive)
05        Riverhead Cogeneration III, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Santa Ana
04     JEFFERSON ENERGY COMPANY (GP and LP) (inactive)
04     KINGS CANYON ENERGY COMPANY (inactive)
04     KINGSPARK ENERGY COMPANY (GP and LP) (inactive)
05        Smithtown Cogeneration, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Balboa
04     LAGUNA ENERGY COMPANY (inactive)
04     LA JOLLA ENERGY COMPANY (inactive)
04     LAKEVIEW ENERGY COMPANY (inactive)
05        Georgia Peaker, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Silver Springs
04     LEHIGH RIVER ENERGY COMPANY (inactive)
04     LONGVIEW COGENERATION COMPANY  (inactive)
04     MADERA ENERGY COMPANY (GP) (inactive)
05        Brookhaven Cogeneration, LP (Delaware partnership) (inactive) 50%; 100% w/ Holtsville
04     MADISON ENERGY COMPANY (LP) (inactive)
05        Gordonsville Energy, L.P. (Delaware limited partnership) 49%; 50% w/ Rapidan [See 4.EME02]
          Address:  115 Red Hill Road, Gordonsville, VA 22942 [sold 11/21/2003]
04     MIDWEST GENERATION EME, LLC (Delaware LLC) 100%
       Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
05        COLLINS HOLDINGS EME, LLC (Delaware limited liability company) (inactive)
          Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
05        EDISON MISSION MIDWEST HOLDINGS CO. (Delaware corporation) 100%
          Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
06            EDISON MISSION ENERGY FUEL SERVICES, LLC (Delaware limited liability company)
              Address:  One Financial Place, 440 South LaSalle Street, Suite 3500, Chicago, Illinois 60605
06            EDISON MISSION OVERSEAS CO. (Delaware corporation) (Com Ed project) 100%


Page 19

              Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
07               Edison Mission Overseas Ltd. (UK company) (Com Ed project) 100%
                 Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
06            MIDWEST GENERATION, LLC (Delaware LLC) (Com Ed project) 100% [See 4.EME03]
              Address:  One Financial Place, 400 South LaSalle Street, Suite 3410, Chicago, Illinois 60605
              Crawford Station, 3501 South Pulaski Road, Chicago, IL 60608
              Collins Station, 4200 East Pine Bluff Road, Morris, IL 60623
              Fisk Station, 1111 West Cermak Road, Chicago, IL 60608
              Joliet Station, 1800 Channahon Road, Joliet, IL 60436
              Powerton Station, 13082 East Manito Road, Pekin, IL 61554
              Waukegon Station, 10 Greenwood Avenue, Waukegan, IL 60087
              Will County Station, 529 East Romeo Road, Romeoville, IL 60441
04     MIDWEST PEAKER HOLDINGS, INC. (Delaware corporation) 100%
04     Mission Capital, LP (Delaware limited partnership) 3%; MIPS partnership
04     MISSION DEL CIELO, INC. (Delaware corporation) 100%
05        Mission del Sol, LLC (Delaware limited liability company) 100%
06            Sunrise Power Company, LLC (Delaware LLC) 50% [EWG] [See 4.EME04]
              Address:  12857 Sunrise Power Road, Fellows, CA 93224
07               Mission De Las Estrellas LLC (Delaware corporation) 100%
04     MISSION/EAGLE ENERGY COMPANY (inactive)
05        Crown Energy, L.P. (New Jersey limited partnership) (inactive) 2%GP; 100% w/ Arrowhead, Thorofare
06            Crown Vista Urban Renewal Corporation  (inactive) 50%
04     MISSION ENERGY CONSTRUCTION SERVICES, INC.
04     MISSION ENERGY GENERATION, INC. (inactive)
04     MISSION ENERGY HOLDINGS, INC.
05        Mission Capital, LP (Delaware LP) 97%; MIPS partnership
04     MISSION ENERGY HOLDINGS INTERNATIONAL, INC. (Delaware corporation) [holds 100% of the issued and
       outstanding Class A shares of MEC International B.V. (99.97%)--see INTERNATIONAL section]
05        EME Investments, LLC (Delaware LLC) 100% (inactive)
05        EME SOUTHWEST POWER CORPORATION (Delaware corporation) 100% [holds 100% of the issued and outstanding
          Class C shares of MEC International B.V. (0.01%)--see INTERNATIONAL section]
05        EME UK International LLC (Delaware LLC) 100% [holds 100% of the issued and outstanding Class B stock of
          MEC International B.V. (0.01%)--see INTERNATIONAL section]
04     MISSION ENERGY INDONESIA (inactive)
04     MISSION ENERGY MEXICO (inactive) formerly the branch office in Mexico (no partnership)
04     MISSION ENERGY NEW YORK, INC. (GP and LP)
05        Brooklyn Navy Yard Cogeneration Partners, LP (Delaware limited partnership) 50% [See 4.EME05]
          Address:  Flushing Avenue, Cumberland Street, Building 41, Brooklyn, NY 11205
04     MISSION ENERGY WALES COMPANY
05        Mission Hydro Limited Partnership (UK limited partnership) 30%
          Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
06            EME Generation Holdings Limited (UK company) 100%
              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Edison Mission Operation & Maintenance Limited (a United Kingdom corporation) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               EME Victoria Generation Limited (UK company) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  Energy Capital Partnership (Australian partnership) 98%
09                      Enerloy Pty Ltd. (Australian company) 100%
08                  Mission Energy Development Australia Pty Ltd. (Australian company) 100%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
09                      Gippsland Power Pty Ltd 100%
                        Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                        Victoria, Australia
10                         Loy Yang B Joint Venture 49% [See 4.EME06]
                           Address:  Bartons Lane, Loy Yang, Victoria, Australia 3844
07               Energy Capital Partnership (Australia partnership) 1%LP
08                  Enerloy Pty Ltd. (Australia company) 100%


Page 20

07               FHH No. 1 Limited (UK company) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1J 6ER England
08                  First Hydro Holdings Company (Australia partnership) 99%
                    Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      First Hydro Company 99% [See 4.EME07]
                        Address:  Bala House, St. David's Park, Ewloe, Deeside, Flintshire, Wales CH5 3XJ
09                      First Hydro Finance plc 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
10                         First Hydro Company 1% [See 4.EME07]
                           Address:  Bala House, St. David's Park, Ewloe, Deeside, Flintshire, Wales CH5 3XJ
07               Loyvic Pty. Ltd. (Australian company) 100%
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
08                  Energy Capital Partnership (Australia partnership) 1%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
09                      Enerloy Pty Ltd. (Australian company) 100%
                        Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                        Victoria, Australia
04     MISSION TRIPLE CYCLE SYSTEMS COMPANY (GP) (inactive)
05        Triple Cycle Partnership (Texas general partnership) (inactive) 50%
04     NORTH JACKSON ENERGY COMPANY (inactive)
04     NORTHERN SIERRA ENERGY COMPANY (GP) (inactive)
05        Sobel Cogeneration Company (California general partnership) (inactive) 50%
04     ORTEGA ENERGY COMPANY (inactive)
04     PANTHER TIMBER COMPANY (GP) (inactive)
05        American Kiln Partners, LP (Delaware limited partnership) (inactive)2%
04     PARADISE ENERGY COMPANY (inactive)
05        Vista Energy, L.P. (New Jersey limited partnership) (inactive) 50%; 100% w/ Vista Energy
          Company
06            Crown Vista Urban Renewal Corporation (inactive) 50%
04     PLEASANT VALLEY ENERGY COMPANY (GP)
05        American Bituminous Power Partners, LP (Delaware limited partnership) 0.5%; 50% w/ Aguila
          Address:  Grant Town Power Plant, Highway 17, Grant Town, WV 26574
06            American Kiln Partners, LP (Delaware limited partnership) (inactive) 0.5% of 53%
04     QUARTZ PEAK ENERGY COMPANY (LP) (inactive)
04     RAPID ENERGY LIMITED (UK company) 100%
       Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
05        Edison Mission Services Limited (UK company) 100%
          Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
04     RAPIDAN ENERGY COMPANY (GP) (inactive)
05        Gordonsville Energy, L.P. (Delaware limited partnership) 1%; 50% w/ Madison [See 4.EME02]
          Address:  115 Red Hill Road, Gordonsville, VA 22942 [sold 11/21/2003]
04     REEVES BAY ENERGY COMPANY (GP and LP) (inactive)
05        North Shore Energy LP (Delaware limited partnership) (inactive) 50%; 100% w/ Santa Clara
06            Northville Energy Corporation (New York corporation) (inactive) 100%
04     RIDGECREST ENERGY COMPANY (GP) (inactive)
05        Riverhead Cogeneration I, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Centerport
04     RIO ESCONDIDO ENERGY COMPANY (inactive)
04     RIVERPORT ENERGY COMPANY (GP and LP) (inactive)
05        Riverhead Cogeneration II, LP (Delaware limited partnership) (inactive) 50%; 100% w/ San Pedro
04     SAN GABRIEL ENERGY COMPANY (inactive)
04     SAN JOAQUIN ENERGY COMPANY (GP)
05        Midway-Sunset Cogeneration Company, LP (California general partnership) 50%
          Address:  3466 West Crocker Springs Road, Fellows, CA 93224
04     SAN JUAN ENERGY COMPANY (GP)
05        March Point Cogeneration Company (California general partnership) 50%
04     SAN PEDRO ENERGY COMPANY (GP) (inactive)
05        Riverhead Cogeneration II, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Riverport
04     SANTA ANA ENERGY COMPANY (GP) (inactive)


Page 21

05        Riverhead Cogeneration III, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Indian Bay
04     SANTA CLARA ENERGY COMPANY (GP) (inactive)
05        North Shore Energy, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Reeves Bay
06            Northville Energy Corporation (New York corporation) (inactive) 100%
04     SILVERADO ENERGY COMPANY (GP)
05        Coalinga Cogeneration Company (California general partnership) 50%
          Address:  32812 West Gate Road, Bakersfield, CA 93210
04     SILVER SPRINGS ENERGY COMPANY (inactive)
05        Georgia Peaker, LP (Delaware limited partnership) (inactive) 50%; 100% w/ Lakeview
04     SONOMA GEOTHERMAL COMPANY (inactive)
04     SOUTH COAST ENERGY COMPANY (GP) (inactive)
04     SOUTHERN SIERRA ENERGY COMPANY (GP)
05        Kern River Cogeneration Company (general partnership) 50%
          Address:  SW China Grade Loop, Bakersfield, CA 93308
04     THOROFARE ENERGY COMPANY (inactive)
05        Crown Energy, L.P. (New Jersey limited partnership) (inactive) 48%LP; 100% w/ Arrowhead, Mission/Eagle
06            Crown Vista Urban Renewal Corporation  (inactive) 50%
04     VIEJO ENERGY COMPANY (GP)
05        Sargent Canyon Cogeneration Company (California general partnership) 50%
          Address:  Star Route 42, Sargents Road, San Ardo, CA 93450
04     VISTA ENERGY COMPANY (New Jersey corporation) (inactive)
05        Vista Energy, L.P. (New Jersey limited partnership) (inactive) 50%; 100% w/ Paradise Energy Company
06            Crown Vista Urban Renewal Corporation (inactive) 50%
04     WESTERN SIERRA ENERGY COMPANY (GP)
05        Sycamore Cogeneration Company (California general partnership) 50%
          Address:  SW China Grade Loop, Bakersfield, CA 93308

EDISON MISSION ENERGY INTERNATIONAL COMPANIES [all foreign corporation names bold]:
05        MEC International B.V. (Netherlands company) (Holding Company 99.97% owned by Mission Energy Holdings
          International, Inc., a California corp. (owns 100% of Class A Shares), 0.01% by EME UK International
          LLC, a Delaware LLC (owns 100% of Class B shares), 0.01% by EME Southwest Power Corporation (owns 100%
          of Class C shares) and 0.01% by Edison Mission Project Co.  (owns 100% of Class D shares).
          Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            Beheer-en Beleggingsmaatschappij Jydeno B.V. 100% (Netherlands company)
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Vindoor Investments (Mauritius) Limited (Mauritius company) 10%
                 Address:  BAI Building, 5th Floor, Pope Hennessey Street, Port Luis, Mauritius
08                  Coaltrade Services International Pte. Ltd. (Singapore company) 100%
                    Address:  10 Anson Road, #18-12, International Plaza, Singapore 079903
06            EcoElectrica s.a.r.l. (Luxemburg company)
              Address:  12-16, Avenue Monterey, L-2163 Luxembourg
07               EME del Caribe Holding GmbH (Austrian company)
                 Address:  4020 Linz, Landstrasse 12, Austria
08                  EME del Caribe (Cayman Islands company)
                    Address:  First Floor, Caledonian House, Mary St, George Town, Grand Cayman, Cayman Islands
09                      EcoElectrica Holdings, Ltd. (Cayman Islands company) 50%
                        Address:  1350 GT, The Huntlaw Building, Fort Street, Grand Cayman, Cayman Islands
10                         EcoElectrica Ltd. (Cayman Islands company) 100%
                           Address:  1350 GT, The Huntlaw Building, Fort Street, Grand Cayman, Cayman Islands
11                            EcoElectrica LP (Bermuda exempted limited partnership) (EQUITY) 1% GP [See 4.EME21]
                              Address:  Plaza Scotiabank, 273 Ponce de Leon Avenue, Suite 902, Hato Rey, Puerto
                              Rico 00918
10                         EcoElectrica LP (Bermuda exempted limited partnership) (EQUITY) 99% LP [See 4.EME21]


Page 22

                           Address:  Plaza Scotiabank, Suite 902, Avenida Ponce de Leon 273, Hato Rey, Puerto
                           Rico 00918
06            Edison Mission Advantage B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Edison Mission LYB PEDS Pty Ltd (formerly Edison Mission De Laide Pty Ltd. (Australian company)
                 100%
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
06            Edison Mission Ausone Pty. Ltd. (Australian company) (inactive) 100%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
06            Edison Mission Energy International B.V. (formerly MEC Mission B.V.) (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            Edison Mission Energy Services B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               EME Australia Capital Pty. Ltd. (formerly EME Australia Finance Pty. Ltd.) 100%
                 Address:  Level 20, HWT Tower, 40 City Road, Southbank,Victoria, 3006 Australia
06            Edison Mission Millennium B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               EME Caliraya B.V. (formerly Beheer-en Beleggingsmaatschappij Trepo B.V.) (Netherlands company)
                 75%
                 Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
08                  CBK Power Company Ltd. (Philippine limited partnership) 49%
                    Address:  1701 One Magnificent Mile Building, San Miguel Avenue, Ortigas Center, Pasig City,
                    Philippines [See 4.EME08]
07               EME Kayalaan B.V. (formerly Beheer-en Beleggingsmaatschappij Hagra B.V.) (Netherlands company)
                 100%
                 Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
08                  CBK Power Company Ltd. (Philippine LP) 1%
                    Address:  1701 One Magnificent Mile Building, San Miguel Avenue, Ortigas Center, Pasig City,
                    Philippines [See 4.EME08]
06            Edison Mission Operation & Maintenance Services B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Edison Mission Operation & Maintenance (Thailand) Company Limited (Cayman Islands company) 100%
                 Address:  7th Fl. Bubhajit Bldg., 20 North Sathorn Road, Kwaeng Silom, Khet Bangrak, Bangkok,
                 Thailand
07               EME Philippines Services Corporation [formerly EME Philippines OandM Corporation] (Philippines
                 company) 100%
                 Address:  Unit 1105, Tower One, Ayala Triangle, Ayala Avenue, Makati City, Philippines
07               Kalayaan Power Management Corporation (Philippines corporation) 50% [EWG] [See 4.EME09]
                 Address:  1701 One Magnificent Mile Building, San Miguel Avenue, Ortigas Center, Pasig City,
                 Philippines
06            Edison Mission Retail Pty. Ltd. (Australian company) (inactive) 100%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
06            Edison Mission Utilities Pty. Ltd. (Australian company) (inactive) 100%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
06            Edison Mission Wind Power Italy B.V. (formerly IVPC Energy 5 B.V.) (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Italian Vento Power Corporation 4 S.r.l. (Italian company) 50% [See 4.EME10]
                 Address:  Via Circumvallazione, 54/h, 83100 Avellino, Italy
06            Edison Mission Vendesi Pty Ltd. (Australian company) (inactive) 100%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
06            EME Atlantic Holdings Limited (UK company) 100%
              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               EME Ascot Limited (UK company) 100% [Contact Energy Project, 2nd Stage]


Page 23

                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  EME Buckingham Limited (UK company) 100% [Contact Energy Project, 2nd Stage]
                    Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      EME Precision B.V. (Netherlands company) (formerly Beheer-en-Beleggingsmaatschappij Pylamo
                        B.V.) 100% [Contact Energy Project, 2nd Stage]
                        Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
10                         Mission Energy Universal Holdings [formerly EME Universal Holdings] (New Zealand
                           company) 100% [Contact Energy Project, 2nd Stage]
                           Address:  Lansdowne House, Berkeley Square, London W1X 5DH
                           England
11                            Contact Energy Limited (New Zealand company) 0.624% [See 4.EME11]
                              Address:  Level 1, Harbor City Tower, 29 Brandon Street, Box 10-742, Wellington,
                              New Zealand
11                            Mission Contact Finance Limited (New Zealand company) 100%
                              Address:  Bell Gully, IBM Centre, 171 Featherston Street, Wellington, New Zealand
11                            Mission Energy Five Star (New Zealand company) 100%
                              Address:  IBM Centre, 171 Featherston Street, Wellington, New
                              Zealand
11                            Mission Energy Pacific Holdings [formerly EME Pacific Holdings] (New Zealand
                              company) 100% [Contact Energy Project, 2nd Stage]
                              Address:  IBM Centre, 171 Featherston Street, Wellington, New
                              Zealand
12                               Contact Energy Limited (New Zealand company) 50.598%
                                 [See 4.EME11]
06            EME Tri Gen B.V. 100% (Netherlands company)
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Tri Energy Company Limited (Thai limited liability company) (Tri Energy Project) (EQUITY) 25%
                 [See 4.EME12]
                 Address:  Grand, Amarin Tower, 16th Floor, New Petchburi Road, Ratchathewi, Bangkok 10320
                 Thailand
06            EME Victoria B.V. 100% (Netherlands company) (inactive)
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            First Hydro Renewables Limited (formerly Celtic Offshore Wind Ltd.) (UK company) (inactive) 100%
              Address:  Dinorwig Power Station, Llamberis, Gwynedd, LL55 4TY, Wales
07               First Hydro Renewables Number 2 Limited (UK company) (inactive) 100%
                 Address:  Dinorwig Power Station, Llamberis, Gwynedd, LL55 4TY, Wales
06            Global Generation B.V. 100% (Netherlands company)
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Caresale Services Limited (UK company) 49%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Edison First Power Holdings II (UK company) 100% [PowerGen project]
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  Edison First Power Holdings I (UK company) 100% [PowerGen project]
                    Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      Caresale Services Limited (UK company) 51%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      Edison Mission Marketing and Services Limited (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      EME Finance UK Limited (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      Energy Generation Finance UK Plc (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      Maplekey Holdings Limited (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
10                         Maplekey UK Finance Limited (UK company) 100%
                           Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
11                            Maplekey UK Limited (UK company) 100%
                              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
12                               Edison First Power Limited (UK company) (inactive) 100%
                                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England


Page 24

09                      South Australian Holdings Limited 100% [dissolved 03/04/2003]
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
10                         EME International Dragon Limited (UK company) 100% [dissolved 08/05/2003]
                           Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
11                            EME Adelaide Energy Limited (UK company) 100% [dissolved 01/14/2003]
                              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
11                            EME Monet Ltd. (UK company) 100% [dissolved 08/05/2003]
                              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Redbill Contracts Limited (UK company) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
06            Hydro Energy B.V. (Netherlands company) 10%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Iberica de Energias, S.L. (Spain company) 96.65% [See 4.EME13]
                 Address:  Paseo de Gracia 18, Planta 4, 08007, Barcelona, Spain
08                  Electrometalurgica del Ebro, S.L. ("EMESA") (Spain company) 91.32% [See 4.EME14]
                    Address:  Paseo de Gracia 18, Planta 4, 08007, Barcelona, Spain
06            Iberian Hy-Power Amsterdam B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Edison Mission Energy Desarrollos Espana, S.L. (Spain company) 100%
                 Address:  Paseo de Gracia 18, 4o. Piso, 08007, Barcelona, Spain
07               Hydro Energy B.V. (Netherlands company) 90%
08                  Iberica de Energias, S.L. (Spain company) 96.65% [See 4.EME13]
09                      Electrometalurgica del Ebro, S.L. ("EMESA") (Spain corporation) 91.32%
                        [See 4.EME14]
10                         Monasterio de Rueda, S.L. (Spain) 100%
07               Iberica de Energias, S.L. (Spain company) 3.35% [See 4.EME13]
08                  Electrometalurgica del Ebro, S.L. ("EMESA") (Spain corporation) 91.32%
                    [See 4.EME14]
09                      Monasterio de Rueda, S.L. (Spain) 100%
06            Latrobe Power Pty. Ltd. (Australian company) 99%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
07               Mission Victoria Partnership (Australian partnership) 52.31% (100% w/ Traralgon PPL 46.69% and
                 MEVALP 1%)
08                  Latrobe Power Partnership (Australian partnership) 99%
09                      Loy Yang B Joint Venture 51% [See 4.EME06]
                        Address:  Bartons Lane, Loy Yang, Victoria, Australia 3844
06            Latrobe Valley B.V. [formerly Beheer-en Beleggingsmaatschappij Botara B.V.] (Netherlands company)
              (LYB Peakers Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Valley Power Pty Ltd. (Australian company) (LYB Peakers Project)
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
06            Loy Yang Holdings Pty. Ltd. (Australian company) 100%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
07               Edison Mission Energy Holdings Pty. Ltd. (Australian company) 100%
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
08                  Edison Mission Energy Australia Limited (Australian company) 100%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
09                      Latrobe Power Partnership (Australian partnership) 1%
                        Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                        Victoria, Australia
10                         Loy Yang B Joint Venture 51% [See 4.EME06]
08                  Edison Mission Energy Australia Pilbara Power Pty. Ltd. (Australian company) (inactive) 100%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia


Page 25

08                  Edison Mission Operation & Maintenance Kwinana Pty. Ltd. (Australian company) 100% (Operator
                    of Kwinana Project)
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
08                  Edison Mission Operation & Maintenance Loy Yang Pty. Ltd. (Australian company) 100%
                    Address:  P.O. Box 1792, Traralgon, Victoria 3844, Australia
08                  Mission Energy Holdings Superannuation Fund Pty. Ltd. (Australian company) (retirement fund
                    required by Australia law) 100%
08                  Mission Energy (Kwinana) Pty. Ltd. (Australian company) 100%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
09                      Kwinana Power Partnership (Philippines partnership) 1%
                        Address:  Level 23, St. Martins Tower, 44 St George's Terrace, Perth WA 6000
10                         Perth Power Partnership (Australian partnership) 70% (Kwinana Project) [See 4.EME15]
                           Address:  James Court, Kwinana Beach 6167, Western Australia
07               Latrobe Power Pty. Ltd. (Australian company) 1%
08                  Mission Victoria Partnership (Australian partnership) 52.31%
09                      Latrobe Power Partnership (Australian partnership) 99%
10                         Loy Yang B Joint Venture 51% [See 4.EME06]
07               Mission Energy Ventures Australia Pty. Ltd. (Australian company) 100%
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
08                  Mission Victoria Partnership (Australian partnership) 1%
09                      Latrobe Power Partnership (Australian partnership) 99%
10                         Loy Yang B Joint Venture 51% [See 4.EME06]
07               Traralgon Power Pty. Ltd. (Australian company) 1%
                 Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
                 Australia
08                  Mission Victoria Partnership (Australian partnership) 46.69%
09                      Latrobe Power Partnership (Australian partnership) 99%
10                         Loy Yang B Joint Venture 51% [See 4.EME06]
06            Majestic Energy Limited (UK company)
              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               EME Royale (New Zealand unlimited liability company)
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  Edison Mission Energy Taupo Limited (New Zealand company) (inactive) 100%
                    Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                    Victoria, Australia
06            MEC Esenyurt B.V. (Netherlands company) (Doga Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Doga Enerji Uretim Sanayi ve Ticaret L.S. (Turkish corporation) (Project company) 80% [See
                 4.EME16]
                 Address:  Merkez Mahallesi, Birlik Caddesi 11/8, Esenyurt, Istanbul, Turkey
07               Doga Isi Satis Hizmetleri ve Ticaret L.S. (Turkish corporation) (Heat company) 80%
                 Address:  Merkez Mahallesi, Birlik Caddesi 11/8, Esenyurt, Istanbul, Turkey
07               Doga Isletme ve Bakim Ticaret L.S. (Turkish corporation) (OandM company) 80%
                 Address:  Merkez Mahallesi, Birlik Caddesi 11/8, Esenyurt, Istanbul, Turkey
06            MEC IES B.V. (Netherlands company) (ISAB Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               ISAB Energy Services s.r.l. 49% (Italian company) (services co ISAB Project)
                 Address:  Ex S.S. 114km 146, 96100 Priolo G (SR), Sicily, Italy
06            MEC Indo Coal B.V. (Netherlands company) (Adaro Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               P. T. Adaro Indonesia (Indonesian company) (EQUITY) 8.17%
                 Address:  Suite 704, World Trade Centre, Jl. Jend. Sudirman Kav. 31, Jakarta 12920 Indonesia
06            MEC Indonesia B.V. (Netherlands company) 99%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands


Page 26

07               Edison Mission Energy Power (Mauritius corporation) (Branch office in India) (inactive) 100%
                 Address:  Louis Leconte Street, Curepipe, Mauritius
07               P. T. Paiton Energy (Indonesian company) (EQUITY) (Paiton Project) 40% [See 4.EME17]
                 Address:  Jl. Raya Surabaya Situbondo KM 141, Paiton 67291, Probolinggo, East Java, Indonesia
06            MEC International Holdings B.V. (Netherlands company) 100% [in liguidation]
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               MEC Indonesia B.V. (Netherlands company) 1%
08                  Edison Mission Energy Power (Mauritius corporation) (Branch office in India) 100%
08                  P. T. Paiton Energy (Indonesian company) (EQUITY) (Paiton Project) 40% [See 4.EME17]
07               P.T. Edison Mission Operation and Maintenance Indonesia (Indonesian company) 1%
                 Address:  Jl. Raya Surabaya Situbondo Km 141, P.O. Box
                 78, Paiton 67291, Probolinggo, East Java, Indonesia
06            MEC Java B.V. (formerly MEC India B.V) (Netherlands company) (Jojobera Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Island Capital S.a.r.l. (Luxembourg company) 100%
                 Address:  L-2636 Luxembourg, 12, rue Leon Thyes
08                  Edison Mission Energy Asia Pte. Ltd. (Singapore private company limited by shares)
                    100% (EME's Regional Asia Pacific Headquarters)
                    Address:  1 Robinson Road, #19-01 AIA Tower,Singapore 048542
09                      Edison Mission Energy Asia Pacific Pte. Ltd. (Singapore company) 100%
                        Address:  Address:  1 Robinson Road, #19-01 AIA Tower,Singapore 048542
09                      Edison Mission Energy Fuel Company Pte. Ltd. (Singapore company) 100%
                        Address:  Address:  1 Robinson Road, #19-01 AIA Tower,Singapore 048542
09                      Edison Mission Operation & Maintenance Services Pte. Ltd. (Singapore company)
                        100%
                        Address:  Address:  1 Robinson Road, #19-01 AIA Tower,Singapore 048542
09                      P.T. Edison Mission Operation and Maintenance Indonesia (Indonesian company)
                        99%
                        Address:  Jl. Gen. A Yani No. 54 Probolinggo, East Java, Indonesia
06            MEC Laguna Power B.V. (Netherlands company) (Malaya Project) (inactive) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Gulf Power Generation Co. Ltd. (Bangkok company) 40%
                 Address:  888/101 Mahatun Plaza Tower, 10th Floor, Ploenchit, Lumphini, Patumwan, Bangkok 10330
                 [Sold 12/12/2003]
06            MEC Perth B.V. (Netherlands company) (Kwinana Project) 100%
07               Kwinana Power Partnership (Philippines partnership) 99%
                 Address:  Level 23, St. Martins Tower, 44 St George's Terrace, Perth WA 6000
08                  Perth Power Partnership (Australian partnership) 70% (Kwinana Project) [See 4.EME15]
                    Address:  James Court, Kwinana Beach 6167, Western Australia
06            MEC Priolo B.V. (Netherlands company) (ISAB Project) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               ISAB Energy s.r.l. (Italian company) (EQUITY) 99% of 49% (quota, not shares)
                 [See 4.EME18]
                 Address:  Corso Gelone No. 103, Siracusa, Sicily, Italy
06            MEC San Pascual B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               San Pascual Cogeneration Company International B.V. 50%
                 Address:  Croeselaan 18, 3521 CB Utrecht, The Netherlands
08                  San Pascual Cogeneration Company (Philippines) Ltd (San Pascual Project) (EQUITY) 1%GP and
                    74%LP
                    Address:  Unit 1610/1611, Tower One, Ayala Triangle, Ayala Ave, 1200 Makati City, Metro
                    Manila, Philippines
07               Morningstar Holdings B.V. (formerly Beheer-en Beleggingsmaatschappij Vestra B.V.) (Netherlands
                 company) (inactive) 50%
                 Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            MEC Sidi Krir B.V. (Netherlands company) (inactive) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            MEC Sumatra B.V. (Netherlands company) (inactive) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands


Page 27

06            MEC Wales B.V. (Netherlands company) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
07               Mission Hydro Limited Partnership (UK limited partnership) 69%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  EME Generation Holdings Limited (UK company) 100%
                    Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      Edison Mission Operation & Maintenance Limited (a United Kingdom corporation) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
09                      EME Victoria Generation Limited (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
10                         Energy Capital Partnership (Australian partnership 98%
11                            Enerloy Pty Ltd. (Australian company) 100%
10                         Mission Energy Development Australia Pty Ltd. (Australian company) 100%
                           Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                           Victoria, Australia
11                            Gippsland Power Pty Ltd 100%
                              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne,
                              3205 Victoria, Australia
12                               Loy Yang B Joint Venture 49% [See 4.EME06]
                                 Address: Bartons Lane, Loy Yang, Victoria, Australia 3844
09                      Energy Capital Partnership (Australian partnership) 1%LP
10                         Enerloy Pty Ltd. (Australian company) 100%
09                      FHH No. 1 Limited (UK company) 100%
                        Address:  Lansdowne House, Berkeley Square, London W1J 6ER England
10                         First Hydro Holdings Company (UK company) 99%
                           Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
11                            First Hydro Company (UK company) 99% [See 4.EME07]
                              Address:  Bala House, St. David's Park, Ewloe, Deeside, Flintshire, Wales
                              CH5 3XJ
11                            First Hydro Finance plc (UK company) 100%
                              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
12                               First Hydro Company (UK company) 1% [See 4.EME07]
                                 Address:  Bala House, St. David's Park, Ewloe, Deeside, Flintshire, Wales
                                 CH5 3XJ
09                      Loyvic Pty. Ltd. (Australian company) 100%
                        Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                        Victoria, Australia
10                         Energy Capital Partnership (Australian partnership) 1%
                           Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205
                           Victoria, Australia
11                            Enerloy Pty Ltd. (Australian company) 100%
                              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne,
                              3205 Victoria, Australia
06            Mission Energy Company (UK) Limited (UK company) 100%
              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Derwent Cogeneration Limited (UK company) (EQUITY) 33% [See 4.EME19]
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Edison Mission Energy Limited (UK company) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Mission Hydro (UK) Limited (UK company) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  FHH No. 2 Limited (UK company) 100%
                    Address:  Lansdowne House, Berkeley Square, London W1J 6ER England
09                      First Hydro Holdings Company (UK company) 1%
10                         First Hydro Company (UK company) 99% [See 4.EME07]
10                         First Hydro Finance plc (UK company) 100%
11                            First Hydro Company (UK company)1% [See 4.EME07]
08                  Mission Hydro Limited Partnership (UK limited partnership) 1%GP
09                      EME Generation Holdings Limited (UK company) 100%
10                         Edison Mission Operation & Maintenance Limited (UK company) 100%


Page 28

10                         EME Victoria Generation Limited (UK company) 100%
11                            Energy Capital Partnership (Australian partnership 98%
12                               Enerloy Pty Ltd. (Australian company) 100%
11                            Mission Energy Development Australia Pty Ltd. (Australian company) 100%
12                               Gippsland Power Pty Ltd 100%
13                                   Loy Yang B Joint Venture 49% [See 4.EME06]
10                         Energy Capital Partnership (Australian partnership) 1%LP
11                            Enerloy Pty Ltd. (Australian company) 100%
10                         FHH No. 1 Limited (UK company) 100%
                           Address:  Lansdowne House, Berkeley Square, London W1J 6ER England
11                            First Hydro Holdings Company (UK company) 99%
12                               First Hydro Company (UK company) 99% [See 4.EME07]
12                               First Hydro Finance plc (UK company) 99%
13                                   First Hydro Company (UK company) 1% [See 4.EME07]
10                         Loyvic Pty. Ltd. (Australian company) 100%
11                            Energy Capital Partnership (Australian partnership) 1%
12                               Enerloy Pty Ltd. (Australian company) 100%
07               Pride Hold Limited (UK company) 99%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
08                  Lakeland Power Limited (UK company) (inactive) 100% [See 4.EME20]
                    Address:  Roosecote Power Station, Barrow-In-Furness, Cumbria, England LA13 OPQ
08                  Lakeland Power Development Company Limited (UK company) (inactive) 100%
                    Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
06            Mission Energy Italia s.r.l. (Italian company) 100% Rep Office in Italy
              Address:  Villa Brasini, Via Flaminia 497, 00191 Rome Italy
06            Mission NZ Operations B.V. (Netherlands company) 100% (inactive)
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            Pride Hold Limited (UK company) 1%
              Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Lakeland Power Development Company Limited (UK company) (inactive) 100%
                 Address:  Lansdowne House, Berkeley Square, London W1X 5DH England
07               Lakeland Power Limited (UK company) (inactive) 100% [See 4.EME20]
                 Address:  Roosecote Power Station, Barrow-In-Furness, Cumbria, England LA13 OPQ
06            Southwestern Generation B.V. (Netherlands company) (inactive) 100%
              Address:  Level 2, De Lairessestraat 111-115, 1075 HH Amsterdam, Netherlands
06            Traralgon Power Pty. Ltd. (Australian company) 99%
              Address:  Southgate Complex, Level 20, HWT Tower, 40 City Road, South Melbourne, 3205 Victoria,
              Australia
07               Mission Victoria Partnership (Australian partnership) 46.69% (100% w/ Latrobe PPL 52.31% and
                 MEVALP 1%)
08                  Latrobe Power Partnership (Australian partnership) 99%
09                      Loy Yang B Joint Venture 51% [See 4.EME06]


Prepared by Bonita J. Smith, Program/Project Analyst
Corporate Governance, SCE Law Department
Telephone:  (626) 302-1930   FAX:  (626) 302-2610
Email:  Bonita.Smith@SCE.com

EX-23

                                                                                                EXHIBIT 23


                                        Consent of Independent Accountants



We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-82293
and 333-08115) and Registration Statements on Form S-8 (Nos. 333-50443, 333-101038 and 333-88526) of Edison
International of our report dated March 10, 2004 relating to the financial statements, which appears in the
Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report dated March 10, 2004 relating to the financial statement schedules,
which appears in this Form 10-K.



/s/ PricewaterhouseCoopers LLC

Los Angeles, California
March 10, 2004

EX-24.1

                                               EDISON INTERNATIONAL

                                                 POWER OF ATTORNEY


                  The undersigned, EDISON INTERNATIONAL, a California corporation, and certain of its officers
and/or directors do each hereby constitute and appoint, BRYANT C. DANNER, THEODORE F. CRAVER, JR., THOMAS M.
NOONAN, BEVERLY P. RYDER, KENNETH S. STEWART, MARY C. SIMPSON, PAIGE W. R. WHITE, TIMOTHY W. ROGERS, DEBORAH M.
FESTA, LOWELL B. REINSTEIN, DARLA F. FORTE, EILEEN B. GUERRERO, BONITA J. SMITH, POLLY L. GAULT, and DOUGLAS G.
GREEN, or any of them, to act as attorney-in-fact, for and in their respective names, places, and steads, to
execute, sign, and file or cause to be filed an Annual Report on Form 10-K for the fiscal year ended December 31,
2003, Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2004, any Current
Reports on Form 8-K from time to time during 2004 and through January 20, 2005, or in the event this Board of
Directors does not meet on January 20, 2005, through the next succeeding date on which this Board holds a regular
meeting, and any and all supplements and amendments thereto, to be filed by Edison International with the
Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, (the "Act"), for the
purpose of complying with Sections 13 or 15(d) of the Act, granting unto said attorneys-in-fact, and each of
them, full power and authority to do and perform all and every act and thing whatsoever requisite, necessary and
appropriate to be done in and about the premises as fully and to all intents and purposes as the undersigned or
any of them might or could do if personally present, hereby ratifying and approving the acts of each of said
attorneys-in-fact.

                  Executed at Rosemead, California, as of this 15th day of January, 2004.

                                                 EDISON INTERNATIONAL


                                                 By:   /s/ JOHN E. BRYSON
                                                       ---------------------------------
                                                       JOHN E. BRYSON
                                                       Chairman of the Board, President,
                                                       and Chief Executive Officer


Attest:


/s/ BEVERLY P. RYDER
- ----------------------------------------
BEVERLY P. RYDER
Vice President and Secretary



Page 1

                                             2004 Edison International
                                       10-K, 10-Q, and 8-K Power of Attorney


Principal Executive Officer:

/s/ John E. Bryson
- ---------------------------------------------------
John E. Bryson                                                    Chairman of the Board,
                                                                  President, Chief Executive Officer, and Director


Principal Financial Officer:

/s/ Theodore F. Craver, Jr.
- -----------------------------------------------
Theodore F. Craver, Jr.                                           Executive Vice President,
                                                                  Chief Financial Officer,
                                                                  and Treasurer


Controller and Principal Accounting Officer:

/s/ Thomas M. Noonan
- ---------------------------------------
Thomas M. Noonan                       Vice President and Controller


Additional Directors:


/s/ Bradford M. Freeman                Director               /s/ Richard T. Schlosberg, III      Director
- --------------------------------------                        -----------------------------------
Bradford M. Freeman                                           Richard T. Schlosberg, III


/s/ Bruce Karatz                       Director               /s/ Robert H. Smith                 Director
- --------------------------------------                        -----------------------------------
Bruce Karatz                                                  Robert H. Smith


/s/ Luis G. Nogales                    Director               /s/ Thomas C. Sutton                Director
- --------------------------------------                        -----------------------------------
Luis G. Nogales                                               Thomas C. Sutton


/s/ Ronald L. Olson                    Director               /s/ Daniel M. Tellep                Director
- --------------------------------------                        -----------------------------------
Ronald L. Olson                                               Daniel M. Tellep

/s/ James M. Rosser                    Director
- --------------------------------------
James M. Rosser

EX-24.2

                  I, Bonita J. Smith, Assistant Secretary of Edison International, certify that the attached is
an accurate and complete copy of a resolution of the Board of Directors of the corporation, duly adopted at a
meeting of its Board of Directors held on January 15, 2004.

                  Dated:  January 20, 2004




                                                     /s/ Bonita J. Smith
                                                     ------------------------------
                                                     Bonita J. Smith
                                                     Assistant Secretary
                                                     Edison International



Page 1


                                      RESOLUTION OF THE BOARD OF DIRECTORS OF
                                               EDISON INTERNATIONAL
                                             Adopted: January 15, 2004
                                           RE: FORMS 10-K, 10-Q, AND 8-K

                  WHEREAS, the Securities Exchange Act of 1934, as amended, and regulations thereunder, require
that Annual, Quarterly, and Current Reports be filed with the Securities and Exchange Commission ("Commission"),
and it is desirable to effect such filings over the signatures of attorneys-in-fact;

                  NOW, THEREFORE, BE IT RESOLVED, that each of the officers of this corporation is hereby
authorized to file or cause to be filed with the Commission the Annual Report on Form 10-K of this corporation
for the fiscal year ended December 31, 2003, Quarterly Reports on Form 10-Q for each of the first three quarters
of fiscal year 2004, Current Reports on Form 8-K from time to time during 2004 and through January 20, 2005, or
in the event this Board of Directors does not meet on January 20, 2005, through the next succeeding date on which
this Board holds a regular meeting, and any required or appropriate supplements or amendments to such reports,
all in such forms as the officer acting or counsel for this corporation considers appropriate.

                  BE IT FURTHER RESOLVED, that each of the officers of this corporation is hereby authorized to
execute and deliver on behalf of this corporation and in its name a power of attorney appointing Bryant C.
Danner, Theodore F. Craver, Jr., Thomas M. Noonan, Beverly P. Ryder, Kenneth S. Stewart, Mary C. Simpson,


Page 2



Paige W. R. White, Timothy W. Rogers, Deborah M. Festa, Lowell B. Reinstein, Darla F. Forte, Eileen B. Guerrero,
Bonita J. Smith, Polly L. Gault, and Douglas G. Green, and each of them, to act severally as attorney-in-fact for
this corporation for the purpose of executing and filing with the Commission the above-described reports and any
amendments and supplements thereto.


APPROVED:


/s/ John E. Bryson
- -------------------------------------
John E. Bryson
Chairman of the Board


/s/ Bryant C. Danner
- -------------------------------------
Bryant C. Danner
Executive Vice President and General Counsel

EX-31.1

                                                CERTIFICATION

I, JOHN E. BRYSON, certify that:

1.   I have reviewed this annual report on Form 10-K for the year ended December 31, 2003, of Edison
International;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant
and have:

     (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

     (c) disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):

     (a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

     (b) any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.

Date:  March 15, 2004

                                                /s/ JOHN E. BRYSON
                                         --------------------------------
                                                  JOHN E. BRYSON
                                       Chairman of the Board, President and
                                              Chief Executive Officer

EX-31.2

                                        CERTIFICATION


I, THEODORE F. CRAVER, JR., certify that:

1.   I have reviewed this annual report on Form 10-K for the year ended December 31, 2003, of Edison
International;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant
and have:

     (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

     (c) disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrants' most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):

     (a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

     (b) any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.

Date:  March 15, 2004
                                             /s/ THEODORE F. CRAVER, JR.
                                      ---------------------------------------
                                              THEODORE F. CRAVER, JR.
                                 Executive Vice President, Chief Financial Officer
                                                   and Treasurer

EX-32

                                 STATEMENT PURSUANT TO 18 U.S.C. SECTION 1350, AS
                             ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the accompanying Annual Report on Form 10-K for the year ended December 31, 2003 (the Annual
Report) of Edison International (the "Company"), and pursuant to 18 U.S.C. Section 1350, as enacted by Section
906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies, to the best of his or her knowledge,
that:

1.       The Annual Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
         Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

2.       The information contained in the Annual Report fairly presents, in all material respects, the financial
         condition and results of operations of the Company.


Date:  March 15, 2004


                                                      /s/ John E. Bryson
                                                      ---------------------------------------------
                                                      John E. Bryson
                                                      Chief Executive Officer
                                                      Edison International


                                                      /s/ Theodore F. Craver, Jr.
                                                      ---------------------------------------------
                                                      Theodore F. Craver, Jr.
                                                      Chief Financial Officer
                                                      Edison International


This statement accompanies the Annual Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to Edison International and
will be retained by Edison International and furnished to the Securities and Exchange Commission or its staff
upon request.