Revenue

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Earning activities – representing revenue authorized by the CPUC and FERC, which is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission, and distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs, depreciation, taxes, and a return consistent with the capital structure. Also, included in earnings activities are revenue or penalties related to incentive mechanisms, other operating revenue, and regulatory charges or disallowances.

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Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards. Cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs), and certain operation and maintenance expenses. SCE earns no return on these activities.

The following table is a summary of SCE's revenue:



	Three months ended March 31, 2019						Three months ended March 31, 2018
(in millions)	Earning Activities		Cost- Recovery Activities		Total Consolidated		Earning Activities			Cost-Recovery Activities			Total Consolidated
Revenues from contracts with customers^1,2,3	$	1,502	$	957	$	2,459	$	1,536		$	1,192		$	2,728
Alternative revenue programs and other operating revenue⁴	48		309		357		(23		)	(151		)	(174		)
Total operating revenue	$	1,550	$	1,266	$	2,816	$	1,513		$	1,041		$	2,554

In the absence of a 2018 GRC decision, SCE recognized CPUC revenue in 2018 and the three months ended March 31, 2019 based on the 2017 authorized revenue requirement adjusted mainly for the July 2017 cost of capital decision and Tax Reform. In April 2019, the CPUC issued a proposed decision, which, if adopted would result in 2018 and 2019 base rate revenue requirements of $5.102 billion and $5.422 billion, respectively. For further information, see Note 1.


²	At March 31, 2019 and December 31, 2018, SCE's receivables related to contracts from customers were $1.0 billion and $1.1 billion, respectively, which include accrued unbilled revenue of $459 million and $482 million, respectively.


³	Includes SCE's franchise fees billed to customers of $28 million for both the three months ended March 31, 2019 and 2018.


⁴	Includes differences between amounts billed and authorized levels for both CPUC and FERC.