Compensation and Benefit Plans

6 Months Ended

Jun. 30, 2013

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Compensation and Benefit Plans

Compensation and Benefit Plans

Pension Plans

Edison International made contributions of $104 million during the six months ended June 30, 2013, which includes contributions of $94 million by SCE. Edison International expects to make $86 million during the remainder of 2013, which includes $70 million from SCE. Annual contributions made to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms. Annual contributions to these plans are expected to be, at a minimum, equal to the related annual expense.

Expense components for continuing operations are:

	Three months ended June 30,						Six months ended June 30,
(in millions)	2013			2012			2013			2012
Edison International:
Service cost	$	38		$	39		$	76		$	77
Interest cost	42			45			84			91
Expected return on plan assets	(57		)	(55		)	(114		)	(111		)
Settlement costs	49			—			49			—
Amortization of prior service cost	1			1			2			2
Amortization of net loss1	15			16			30			33
Expense under accounting standards	$	88		$	46		$	127		$	92
Regulatory adjustment (deferred)	(31		)	27			(14		)	54
Total expense recognized	$	57		$	73		$	113		$	146
SCE:
Service cost	$	37		$	37		$	74		$	74
Interest cost	41			45			82			90
Expected return on plan assets	(57		)	(55		)	(114		)	(110		)
Settlement costs	48			—			48			—
Amortization of prior service cost	1			1			2			2
Amortization of net loss1	14			15			28			30
Expense under accounting standards	$	84		$	43		$	120		$	86
Regulatory adjustment (deferred)	(31		)	27			(14		)	54
Total expense recognized	$	53		$	70		$	106		$	140

¹  Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was $4 million and $3 million for the three months ended June 30, 2013, respectively, and $7 million and $5 million for the six months ended June 30, 2013, respectively.

Under GAAP, a settlement is recorded when lump-sum payments exceed estimated annual service and interest costs. As of May 31, 2013, lump-sum payments to employees retiring in 2013 from the SCE Retirement Plan (primary due to workforce reductions described below) exceeded the estimated service and interest costs for the year. A settlement requires remeasurement of both the plan pension obligations and plan assets as of the date of the settlement. The remeasurement of the SCE Retirement Plan as of May 31, 2013 resulted in an actuarial gain of $369 million, including $362 million for SCE. The actuarial gain is primarily due to an increase in the discount rate to 4.25% from 3.75% (due to higher interest rates) and performance of the plan assets from January 1 to May 31, 2013.

After remeasurement, GAAP requires an acceleration of a portion of unrecognized net losses attributable to such lump-sum payments as additional pension expense. The additional pension expense from acceleration of the portion of unrecognized net losses during the second quarter of 2013 was $49 million, including $48 million for SCE. The additional pension expense related to SCE did not impact net income as such amounts are probable of recovery through future rates.

The projected benefit obligations exceeded the fair value of the SCE Retirement Plan assets by $658 million at May 31, 2013 compared to $1.1 billion at December 31, 2012.

Postretirement Benefits Other Than Pensions

Edison International made contributions of $15 million during the six months ended June 30, 2013 and expects to make $20 million during the remainder of 2013, all of which are expected to be made by SCE. Annual contributions made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans. Benefits under these plans, with some exceptions, are generally unvested and subject to change.

Expense components for continuing operations are:

	Three months ended June 30,						Six months ended June 30,
(in millions)	2013			2012			2013			2012
Edison International:
Service cost	$	14		$	12		$	28		$	24
Interest cost	26			29			52			57
Expected return on plan assets	(30		)	(27		)	(60		)	(54		)
Special termination benefits1	10			—			10			—
Amortization of prior service credit	(9		)	(9		)	(18		)	(18		)
Amortization of net loss2	7			11			14			23
Total expense	$	18		$	16		$	26		$	32
SCE:
Service cost	$	14		$	12		$	27		$	24
Interest cost	26			28			52			56
Expected return on plan assets	(30		)	(27		)	(60		)	(54		)
Special termination benefits1	10			—			10			—
Amortization of prior service credit	(9		)	(9		)	(18		)	(18		)
Amortization of net loss2	7			11			14			22
Total expense	$	18		$	15		$	25		$	30

¹  Due to the reduction in workforce, SCE has incurred costs for extended retiree health care coverage.

²  Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was less than $1 million and zero for the three- and six-months ended June 30, 2013, respectively.

Workforce Reductions

In 2012, SCE commenced multiple efforts to reduce its workforce, which were largely completed by the end of the second quarter of 2013, in order to reflect SCE's strategic direction to optimize its cost structure, moderate customer rate increases and align its cost structure with its peers. In addition, in June 2013, SCE announced plans to permanently retire San Onofre. This announcement will result in a further reduction of the San Onofre workforce by approximately 960 employees and support organizations by approximately 175 employees. The majority of such reductions are expected to occur in 2013. See Note 9 for further details. The following table provides a summary of changes in the accrued severance liability associated with these reductions:

(in millions)
Balance at January 1, 2013	$	104
Additions	109
Payments	(88		)
Balance at June 30, 2013	$	125

The liability presented in the table above is reflected in "Other current liabilities" on the consolidated balance sheets. The severance costs are included in "Operation and maintenance" on the consolidated income statements.