Edison International is the ultimate parent holding company of Southern California Edison Company ("SCE") and Edison Energy, LLC ("Edison Energy Group"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of Southern California. Edison Energy Group is an indirect wholly-owned subsidiary of Edison International and a holding company for Edison Energy, LLC ("Edison Energy") which is engaged in the competitive business of providing integrated decarbonization and energy solutions to commercial, institutional and industrial customers. Edison Energy's business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE, and other wholly owned and controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE, its wholly owned and controlled subsidiaries and a variable interest entity of which SCE is the primary beneficiary, SCE Recovery Funding LLC. All intercompany transactions have been eliminated from the consolidated financial statements.

Edison International's and SCE's significant accounting policies were described in the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2021 Form 10-K.

In the opinion of management, all adjustments, consisting only of adjustments of a normal recurring nature, have been made that are necessary to fairly state the consolidated financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three-month period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.

The December 31, 2021 financial statement data was derived from audited financial statements but does not include all disclosures required by GAAP.

Cash equivalents include investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows:

Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period.

The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:

1	Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.

Allowance for Uncollectible Accounts

The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California and exposes SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical amounts written-off, assessment of customer collectibility and current economic trends, including unemployment rates and any likelihood of recession for the region. At March 31, 2022, this included the estimated impacts of the COVID-19 pandemic.

The following table sets forth the changes in allowance for uncollectible accounts for SCE:


	Three months ended							Three months ended
	March 31, 2022							March 31, 2021
(in millions)	Customers			All others		Total		Customers			All others		Total
Beginning balance	$	293	$	16	$	309	³	$	175	$	13	$	188
Plus: current period provision for uncollectible accounts
Included in operation and maintenance expenses in earning activities¹		13		7		20			6		4		10
Included in operation and maintenance expenses in cost-recovery activities²		38		—		38			32		—		32
Deferred to regulatory memorandum accounts		3		—		3			2		—		2
Less: write-offs, net of recoveries		10		7		17			5		1		6
Ending balance	$	337	$	16	$	353	³	$	210	$	16	$	226

1	Earning activities is one of SCE's disaggregated revenue sources. See Note 7 for further details.

2	Cost-recovery activities is one of SCE's disaggregated revenue sources. See Note 7 for further details. This portion of costs from the allowance for uncollectible expenses is recovered through the residential uncollectibles balancing account.

3	Approximately $99 million and $116 million of allowance for uncollectible accounts are included in "Long-term account receivables" on Edison International's and SCE's consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively.

Earnings Per Share

Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards, payable in common shares, which earn dividend equivalents on an equal basis with common shares once the awards are vested. See Note 13 for further information.

EPS attributable to Edison International common shareholders was computed as follows:


	Three months ended March 31,
(in millions, except per-share amounts)	2022		2021
Basic earnings per share:
Net income attributable to common shareholders	$	84	$	259
Net income available to common shareholders	$	84	$	259
Weighted average common shares outstanding		381		379
Basic earnings per share	$	0.22	$	0.68
Diluted earnings per share:
Net income attributable to common shareholders	$	84	$	259
Net income available to common shareholders	$	84	$	259
Net income available to common shareholders and assumed conversions	$	84	$	259
Weighted average common shares outstanding		381		379
Incremental shares from assumed conversions		1		1
Adjusted weighted average shares – diluted		382		380
Diluted earnings per share	$	0.22	$	0.68

In addition to the participating securities discussed above, Edison International also may award stock options, which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 6,533,558 and 11,412,075 shares of common stock for the three months ended March 31, 2022 and 2021, respectively were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

Revenue Recognition

Regulatory Proceedings

Cost of Capital

In August 2021, SCE filed an application with the CPUC for authority to establish its authorized cost of capital for utility operations for 2022 and to reset the related annual cost of capital mechanism that can adjust authorized cost of capital between SCE's cost of capital proceedings based on changes in Moody's utility bond rate index. In the absence of a decision SCE is continuing to recognize revenue based on its pre-2022 cost of capital, subject to refund. If the CPUC ultimately finds that the cost of capital mechanism adjustment should have been implemented effective January 1, 2022, revenue recorded in the first quarter would be reduced by approximately $43 million.

FERC 2022 Formula Rate Update

In November 2021, SCE filed its 2022 annual update with the FERC with the proposed rates effective January 1, 2022, subject to settlement procedures and refund. SCE requested an increase in SCE's transmission revenue requirement of $326 million or 30% higher than amounts included in the 2021 annual rates. Pending resolution of the FERC formula rate proceedings, SCE recognized revenue in the first quarter of 2022 based on the FERC formula rate, subject to refund.

New Accounting Guidance

Accounting Guidance Adopted

In November 2021, the FASB issued an accounting standards update to require business entities that account for transactions with a government by analogizing to a grant or contribution accounting model to make certain annual disclosures. Edison International and SCE have adopted this standard on January 1, 2022 using the prospective adoption approach. The adoption of this standard did not have a material impact on Edison International's and SCE's annual disclosure.