Revenue

6 Months Ended

Jun. 30, 2023

Revenue

Revenue

Note 7.Revenue

SCE's revenue is disaggregated by two revenue sources:

● Earning activities – representing revenue authorized by the CPUC and FERC, which is intended to provide SCE with 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.

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

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

	Three months ended June 30, 2023						Three months ended June 30, 2022
			Cost-						Cost-
	Earning		Recovery		Total		Earning		Recovery		Total
(in millions)	Activities		Activities		Consolidated		Activities		Activities		Consolidated
Revenue from contracts with customers1,2	$	2,043	$	1,546	$	3,589	$	1,978	$	2,022	$	4,000
Alternative revenue programs and other operating revenue3		124		236		360		186		(190)		(4)
Total operating revenue	$	2,167	$	1,782	$	3,949	$	2,164	$	1,832	$	3,996

	Six months ended June 30, 2023						Six months ended June 30, 2022
			Cost-						Cost-
	Earning		Recovery		Total		Earning		Recovery		Total
(in millions)	Activities		Activities		Consolidated		Activities		Activities		Consolidated
Revenues from contracts with customers1,2	$	4,119	$	3,206	$	7,325	$	3,963	$	3,397	$	7,360
Alternative revenue programs and other operating revenue3		281		293		574		468		129		597
Total operating revenue	$	4,400	$	3,499	$	7,899	$	4,431	$	3,526	$	7,957

1 SCE recorded CPUC revenue based on an annual revenue requirement set by a methodology established in the GRC proceeding and FERC revenue authorized through a formula rate. For further information, see Note 1.

2 At June 30, 2023 and December 31, 2022, SCE's receivables related to contracts from customers were $2.3 billion for both periods, which include accrued unbilled revenue of $756 million and $638 million, respectively.

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

Deferred Revenue

As of June 30, 2023, SCE has deferred revenue of $374 million related to sale of the use of transfer capability of West of Devers transmission line, of which $13 million and $361 million are included in "Other current liabilities" and "Other deferred credits and other long-term liabilities," respectively, on SCE's consolidated balance sheets. The deferred revenue is amortized straight-line over a period of 30 years starting 2021.