Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value by Level

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

	September 30, 2012
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	933	$	—	$	—		$	—		$	933
Derivative contracts:
Electricity	—		85		148			(44		)	189
Natural gas	1		—		—			(1		)	—
Fuel Oil	2		—		—			(2		)	—
Tolling	—		—		4			—			4
Subtotal of derivative contracts	3		85		152			(47		)	193
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	2,227		—		—			—			2,227
Municipal bonds	—		654		—			—			654
U.S. government and agency securities	467		122		—			—			589
Corporate bonds4	—		374		—			—			374
Short-term investments, primarily cash equivalents5	—		145		—			—			145
Subtotal of nuclear decommissioning trusts	2,694		1,295		—			—			3,989
Total assets6	3,638		1,380		152			(47		)	5,123
Liabilities at Fair Value
Derivative contracts:
Electricity	—		8		17			(15		)	10
Natural gas	1		115		6			(48		)	74
Tolling	—		—		617			—			617
Subtotal of derivative contracts	1		123		640			(63		)	701
Interest rate contracts	—		125		—			—			125
Total liabilities	1		248		640			(63		)	826
Net assets (liabilities)	$	3,637	$	1,132	$	(488	)	$	16		$	4,297

	December 31, 2011
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	1,293	$	—	$	—		$	—		$	1,293
Derivative contracts:
Electricity	—		65		218			(58		)	225
Natural gas	4		5		—			(7		)	2
Fuel oil	4		—		—			(4		)	—
Tolling	—		—		10			—			10
Subtotal of derivative contracts	8		70		228			(69		)	237
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	1,899		—		—			—			1,899
Municipal bonds	—		756		—			—			756
U.S. government and agency securities	433		147		—			—			580
Corporate bonds4	—		317		—			—			317
Short-term investments, primarily cash equivalents5	—		15		—			—			15
Subtotal of nuclear decommissioning trusts	2,332		1,235		—			—			3,567
Total assets6	3,641		1,305		228			(69		)	5,105
Liabilities at Fair Value
Derivative contracts:
Electricity	—		10		77			(17		)	70
Natural gas	—		234		23			(52		)	205
Tolling	—		—		451			—			451
Subtotal of derivative contracts	—		244		551			(69		)	726
Interest rate contracts	—		90		—			—			90
Total liabilities	—		334		551			(69		)	816
Net assets (liabilities)	$	3,641	$	971	$	(323	)	$	—		$	4,289

¹  Represents the netting of assets and liabilities under master netting agreements and cash collateral across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.

²  Money market funds are included in cash and cash equivalents and restricted cash and cash equivalents on Edison International's consolidated balance sheets.

³  Approximately 67% and 70% of the equity investments were located in the United States at September 30, 2012 and December 31, 2011, respectively.

⁴  At September 30, 2012 and December 31, 2011, corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $42 million and $22 million, respectively.

⁵  Excludes net receivables of $8 million and $25 million at September 30, 2012 and December 31, 2011, respectively, of interest and dividend receivables as well as receivables and payables related to pending securities sales and purchases.

⁶  Excludes other investments of $70 million and $81 million at September 30, 2012 and December 31, 2011, respectively, primarily related to the cash surrender value of company owned life insurance investments which are used to fund certain executive benefits including deferred compensation. Also excludes other investments of $77 million and $118 million at September 30, 2012 and December 31, 2011, respectively, primarily related to leveraged leases

Summary of Changes in Fair Value of Level 3 Assets and Liabilities

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

	Three months ended September 30,								Nine months ended September 30,
(in millions)	2012				2011				2012				2011
Fair value of net assets (liabilities) at beginning of period	$	(343	)		$	(275	)		$	(323	)		$	97
Total realized/unrealized gains (losses):
Included in earnings1	12				(4		)		20				14
Included in regulatory assets and liabilities2	(124		)	3	162			3	(140		)	3	(220		)	3
Included in accumulated other comprehensive income4	(1		)		1				1				(2		)
Purchases	41				24				111				51
Settlements	(73		)		(8		)		(106		)		(38		)
Transfers into Level 3	—				—				—				—
Transfers out of Level 35	—				—				(51		)		(2		)
Fair value of net liabilities at end of period	$	(488	)		$	(100	)		$	(488	)		$	(100	)
Change during the period in unrealized losses related to assets and liabilities held at the end of the period6	$	(173	)		$	(110	)		$	(181	)		$	(425	)

¹  Reported in "Competitive power generation" revenue on Edison International's consolidated statements of income.

²  Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.

³  Includes the elimination of the fair value of derivatives with SCE's consolidated affiliates.

⁴  Included in reclassification adjustments in Edison International's consolidated statements of other comprehensive income.

⁵  Transfers out of Level 3 into Level 2 occurred due to significant observable inputs becoming available as the transactions near maturity.

⁶  Amounts reported in "Competitive power generation" revenue on Edison International's consolidated statements of income was a loss of $7 million for three months ended September 30, 2012, and a gain of $7 million for the nine months ended September 30, 2011. The remainder of the unrealized losses relate to SCE. See 2 above.

Valuation Techniques and Significant Unobservable Inputs Used to Determine Fair Value for Level 3 Assets and Liabilities

The following table sets forth the valuation techniques and significant unobservable inputs used to determine fair value for Level 3 assets and liabilities at September 30, 2012:

	Fair Value (in millions)							Significant	Range
	Assets			Liabilities			Valuation Technique(s)	Unobservable Input	(Weighted Average)
Electricity:
Options	$	23		$	26		Option model	Volatility of gas prices	23% - 41% (31%)
								Volatility of power prices	28% - 60% (39%)
								Power prices	$38.10 - $58.80 ($45.30)
Forwards	15			20			Discounted cash flow	Power prices	$18.25 - $64.50 ($34.57)
Congestion contracts	100			—			Market simulation model	Load forecast	7,597 MW - 26,612 MW
								Power prices	$(13.90) - $226.75
								Gas prices	$2.95 - $7.78
Congestion contracts	62			24			Latest auction pricing	Congestion prices	$(5.39) - $11.87 ($0.13)
Gas options	—			6			Option model	Volatility of gas prices	24% - 41% (35%)
Tolling	5			617			Option model	Volatility of gas prices	17% - 41% (21%)
								Volatility of power prices	26% - 60% (28%)
								Power prices	$33.20 - $100.80 ($56.10)
Netting	(53		)	(53		)
Total derivative contracts	$	152		$	640

Carrying Amounts and Fair Values of Long-term Debt, Including Current Portion

The carrying value and fair value of long-term debt are:

	September 30, 2012				December 31, 2011
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	14,273	$	14,452	$	13,746	$	14,264