Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

Note 13.Leases

Leases as Lessee

SCE enters into various agreements to purchase power, electric capacity and other energy products that may be accounted for as leases when SCE has dispatch rights that determine when and how a plant runs. SCE also leases property and equipment primarily related to vehicles, office space and other equipment. The terms of the lease contracts included in the table below are primarily 15 to 20 years for PPA leases, 3 to 72 years for office leases, and 5 to 13 years for the remaining other operating leases. Finance leases are immaterial to the periods presented.

The following table summarizes SCE's future lease payments for operating leases as of December 31, 2023:

	PPA Operating		Other Operating
(in millions)	Leases1		Leases2
2024	$	111	$	55
2025		99		50
2026		89		46
2027		84		41
2028		84		36
Thereafter		782		111
Total lease payments		1,249		339
Amount representing interest		302		72
Lease liabilities	$	947	$	267

1 Excludes expected purchases from most renewable energy contracts, which do not meet the definition of a lease payment since renewable power generation is contingent on external factors.

2 Excludes escalation clauses based on consumer price or other indices and residual value guarantees that are not considered probable at the commencement date of the lease.

The timing of SCE's recognition of the lease expense conforms to ratemaking treatment for SCE's recovery of the cost of electricity and is included in purchased power for operating leases. The following table summarizes the components of SCE's lease expense:

	Years ended December 31,
(in millions)	2023		2022			2021
PPA leases:
Operating lease cost	$	503	$	580	$	305
Variable lease cost1		2,277		2,661		2,098
Short term lease cost		—		—		539
Total PPA lease cost		2,780		3,241		2,942
Other operating leases cost		56		52		47
Total lease cost	$	2,836	$	3,293	$	2,989

1 Includes lease costs from renewable energy contracts where payments are based on contingent external factors such as wind, hydro and solar power generation.

Other information related to leases was as follows:

	Years ended December 31,
(in millions, except lease term and discount rate)	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from:
PPA operating leases	$	503		$	580		$	305
Other operating leases		55			50			45
ROU assets obtained in exchange for lease obligations:
PPA operating leases	$	226		$	20		$	1,084
Other operating leases		69			76			71
Weighted average remaining lease term (in years):
PPA operating leases		13.37			9.42			8.16
Other operating leases		9.56			10.38			11.14
Weighted average discount rate:
PPA operating leases		4.30	%		2.95	%		2.43	%
Other operating leases		4.22	%		3.78	%		3.34	%

Leases as Lessor

SCE also enters into operating leases to rent certain land and facilities as a lessor. These leases primarily have terms that range from 15 to 65 years. During the years ended December 31, 2023, 2022 and 2021, SCE recognized lease income of $17 million, $18 million and $16 million, respectively, which is included in operating revenue on the consolidated statements of income. At December 31, 2023, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:

(in millions)
2024	$	13
2025		12
2026		8
2027		8
2028		7
Thereafter		124
Total	$	172