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Fair Value Measurements (Tables)
9 Months Ended
Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Carrying Amounts and Fair Values of Long-term Debt, Including Current Portion
The carrying value and fair value of Edison International's and SCE's long-term debt (including current portion of long-term debt) are as follows:
 
 
September 30, 2014
 
December 31, 2013
(in millions)
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
 
Fair
Value
SCE
 
$
10,023

 
$
11,295

 
$
10,022

 
$
10,656

Edison International
 
10,837

 
12,134

 
10,426

 
11,084

Southern California Edison
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value by Level
The following table sets forth assets and liabilities of SCE that were accounted for at fair value by level within the fair value hierarchy:
 
September 30, 2014
(in millions)
Level 1
 
Level 2
 
Level 3
 
Netting
and
Collateral1
 
Total
Assets at fair value
 
 
 
 
 
 
 
 
 
Derivative contracts
$

 
$
5

 
$
343

 
$

 
$
348

Other
35

 

 

 

 
35

Nuclear decommissioning trusts:
 
 
 
 
 
 
 
 
 
Stocks2
1,970

 

 

 

 
1,970

Fixed Income3
744

 
1,336

 

 

 
2,080

Short-term investments, primarily cash equivalents
665

 
21

 

 

 
686

Subtotal of nuclear decommissioning trusts4
3,379

 
1,357

 

 

 
4,736

Total assets
3,414

 
1,362

 
343

 

 
5,119

Liabilities at fair value
 
 
 
 
 
 
 
 
 
Derivative contracts

 
6

 
1,101

 
(6
)
 
1,101

Total liabilities

 
6

 
1,101

 
(6
)
 
1,101

Net assets (liabilities)
$
3,414

 
$
1,356

 
$
(758
)
 
$
6

 
$
4,018

 
December 31, 2013
(in millions)
Level 1
 
Level 2
 
Level 3
 
Netting
and
Collateral1
 
Total
Assets at fair value
 
 
 
 
 
 
 
 
 
Derivative contracts
$

 
$
11

 
$
372

 
$
(10
)
 
$
373

Other
39

 

 

 

 
39

Nuclear decommissioning trusts:
 
 
 
 
 
 
 
 
 
Stocks2
2,208

 

 

 

 
2,208

Fixed Income3
841

 
1,102

 

 

 
1,943

Short-term investments, primarily cash equivalents
331

 

 

 

 
331

Subtotal of nuclear decommissioning trusts4
3,380

 
1,102

 

 

 
4,482

Total assets
3,419

 
1,113

 
372

 
(10
)
 
4,894

Liabilities at fair value
 
 
 
 
 
 
 
 
 
Derivative contracts

 
37

 
1,177

 
(20
)
 
1,194

Total liabilities

 
37

 
1,177

 
(20
)
 
1,194

Net assets (liabilities)
$
3,419

 
$
1,076

 
$
(805
)
 
$
10

 
$
3,700

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 
Approximately 69% and 70% of SCE's equity investments were located in the United States at September 30, 2014 and December 31, 2013, respectively.
3 
At September 30, 2014 and December 31, 2013, SCE's corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $58 million and $47 million, respectively.
4 
Excludes net receivables of $5 million and net receivables of $12 million at September 30, 2014 and December 31, 2013, respectively, of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.
Summary of Changes in Fair Value of Level 3 Net Derivative Assets and Liabilities
The following table sets forth a summary of changes in SCE's fair value of Level 3 net derivative assets and liabilities:
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
(in millions)
 
2014
 
2013
 
2014
 
2013
Fair value of net liabilities at beginning of period
 
$
(878
)
 
$
(967
)
 
$
(805
)
 
$
(791
)
Total realized/unrealized gains (losses):
 
 
 
 
 
 
 
 
Included in regulatory assets and liabilities1
 
120

 
(50
)
 
43

 
(205
)
Purchases
 
7

 
19

 
22

 
56

Settlements
 
(7
)
 
(33
)
 
(18
)
 
(91
)
Fair value of net liabilities at end of period
 
$
(758
)
 
$
(1,031
)
 
$
(758
)
 
$
(1,031
)
Change during the period in unrealized gains and losses related to assets and liabilities held at the end of the period
 
$
71

 
$
(65
)
 
$
(12
)
 
$
(198
)

1 
Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.
Valuation Techniques and Significant Unobservable Inputs Used to Determine Fair Value for Level 3 Assets and Liabilities
The following table sets forth SCE's valuation techniques and significant unobservable inputs used to determine fair value for significant Level 3 assets and liabilities:
 
Fair Value (in millions)
 
Significant
Range
 
Assets
 
Liabilities
Valuation Technique(s)
Unobservable Input
(Weighted Average)
Congestion revenue rights
 
 
 
 
 
September 30, 2014
$
339

 
$

Market simulation model
Load forecast
7,630 MW - 25,431 MW
 
 
 
 
 
Power prices1
$1.65 - $109.95
 
 
 
 
 
Gas prices2
$3.65 - $6.53
December 31, 2013
366

 

Market simulation model
Load forecast
7,603 MW - 24,896 MW
 
 
 
 
 
Power prices1
$(9.86) - $108.56
 
 
 
 
 
Gas prices2
$3.50 - $7.10
Tolling
 
 
 
 
 
 
September 30, 2014

 
1,095

Option model
Volatility of gas prices
12% - 40% (19%)
 
 
 
 
 
Volatility of power prices
26% - 45% (31%)
 
 
 
 
 
Power prices
$36.80 - $65.60 ($48.90)
December 31, 2013
5

 
1,175

Option model
Volatility of gas prices
16% - 35% (21%)
 
 
 
 
 
Volatility of power prices
25% - 45% (30%)
 
 
 
 
 
Power prices
$38.00 - $63.90 ($47.40)