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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Abstract]  
Sources of income (loss) before income taxes
The sources of income (loss) before income taxes are:
 
Years ended December 31,
(in millions)
2011
 
2010
 
2009
Income (loss) from continuing operations before income taxes
$
(264
)
 
$
1,657

 
$
854

Discontinued operations before income taxes
1

 
13

 
(7
)
Income (loss) before income tax
$
(263
)
 
$
1,670

 
$
847
Components of income tax expense (benefit) by location of taxing jurisdiction
The components of income tax expense (benefit) by location of taxing jurisdiction are:
 
Years ended December 31,
(in millions)
2011
 
2010
 
2009
Current:
 
 
 
 
 
Federal
$
(223
)
 
$
(432
)
 
$
1,211

State
36

 
(86
)
 
361

 
(187
)
 
(518
)
 
1,572

Deferred:
 
 
 
 
 
Federal
(9
)
 
892

 
(1,638
)
State
(92
)
 
(20
)
 
(32
)
 
(101
)
 
872

 
(1,670
)
Total continuing operations
(288
)
 
354

 
(98
)
Discontinued operations
4

 
9

 
(2
)
Total
$
(284
)
 
$
363

 
$
(100
)
Schedule of deferred tax assets and liabilities
The components of net accumulated deferred income tax liability are:
 
December 31,
(in millions)
2011
 
2010
Deferred tax assets:
 
 
 
Property and software related
$
728

 
$
655

Unrealized gains and losses
385

 
400

Loss and credit carryforwards
689

 
97

Regulatory balancing accounts
89

 
230

Pension and PBOPs
179

 
183

Other
1,028

 
890

Total
$
3,098

 
$
2,455

Deferred tax liabilities:
 
 
 
Property-related
$
7,140

 
$
6,637

Leveraged leases
150

 
177

Capitalized software costs
324

 
293

Regulatory balancing accounts
301

 
293

Unrealized gains and losses
374

 
389

Other
296

 
315

Total
$
8,585

 
$
8,104

Accumulated deferred income tax liability – net
$
5,487

 
$
5,649

Classification of accumulated deferred income taxes – net:
 
 
 
Included in deferred credits and other liabilities
$
5,396

 
$
5,625

Included in current liabilities
$
91

 
$
24
Reconciliation of Income Tax Expense
The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision from continuing operations.
 
Years ended December 31,
(in millions)
2011
 
2010
 
2009
Income (loss) from continuing operations before income taxes
$
(264
)
 
$
1,657

 
$
854

Net income attributable to noncontrolling interests in the Big 4 projects
—

 
—

 
(48
)
Adjusted income (loss) from continuing operations before income taxes
$
(264
)
 
$
1,657

 
$
806

Provision for income tax at federal statutory rate of 35%
(92
)
 
580

 
282

Increase (decrease) in income tax from:
 
 
 
 
 
Items presented with related state income tax, net:
 
 
 
 
 
Global Settlement related1
—

 
(175
)
 
(318
)
Change in tax accounting method for asset removal costs2
—

 
(40
)
 
—

State tax – net of federal benefit
(19
)
 
60

 
48

Employee benefits
(16
)
 
—

 
—

Health care legislation3
—

 
39

 
—

Production and housing credits
(68
)
 
(66
)
 
(63
)
Property-related
(76
)
 
(47
)
 
(57
)
Other
(17
)
 
3

 
10

Total income tax expense from continuing operations
$
(288
)
 
$
354

 
$
(98
)
Effective tax rate
*

 
21.4
%
 
*

* 
Not meaningful
1 
Edison International and the IRS finalized the terms of a Global Settlement on May 5, 2009. The Global Settlement resolved federal tax disputes related to Edison Capital's cross-border, leveraged leases through 2009, and all other outstanding federal tax disputes and affirmative claims for tax years 1986 through 2002. Pursuant to the Global Settlement, Edison Capital terminated its interests in the cross-border leases and received net proceeds of $1.385 billion. The Global Settlement and termination of the Edison Capital cross-border leases resulted in a consolidated after-tax earnings charge of $254 million recorded in 2009. During 2010, Edison International recognized a $175 million earnings benefit from the acceptance by the California Franchise Tax Board of the IRS tax positions finalized in 2009 and receipt of the final interest determination from the Franchise Tax Board.
2 
During the second quarter of 2010, the IRS approved Edison International's request to change its tax accounting method for asset removal costs primarily related to SCE's infrastructure replacement program. As a result, Edison International recognized a $40 million earnings benefit (of which $28 million relates to asset removal costs incurred prior to 2010) from deducting asset removal costs earlier in the construction cycle. These deductions were recorded on a flow-through basis as required by the CPUC.
3 
During the first quarter of 2010, Edison International recorded a $39 million non-cash charge to reverse previously recognized federal tax benefits eliminated by the federal health care legislation enacted in March 2010. The health care law eliminated the federal tax deduction for retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies.
Reconciliation of Unrecognized Tax Benefits
The following table provides a reconciliation of unrecognized tax benefits:
(in millions)
2011
 
2010
 
2009
Balance at January 1,
$
565

 
$
664

 
$
2,237

Tax positions taken during the current year:
 
 
 
 
 
Increases
39

 
42

 
102

Tax positions taken during a prior year:
 
 
 
 
 
Increases
102

 
273

 
201

Decreases
(75
)
 
(332
)
 
(224
)
Decreases for settlements during the period
—

 
(82
)
 
(1,652
)
Balance at December 31,
$
631

 
$
565

 
$
664