(Mark One) | ||
S | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended September 30, 2011 | ||
£ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
California | 95-4137452 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2244 Walnut Grove Avenue (P. O. Box 976) Rosemead, California | 91770 | |
(Address of principal executive offices) | (Zip Code) | |
(626) 302-2222 (Registrant's telephone number, including area code) |
Large accelerated filer S | Accelerated filer £ | Non-accelerated filer £ (Do not check if a smaller reporting company) | Smaller reporting company £ |
Class | Outstanding at October 31, 2011 | |
Common Stock, no par value | 325,811,206 |
2010 Form 10-K | Edison International's Annual Report on Form 10-K for the year-ended December 31, 2010 | |
2010 Tax Relief Act | Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 | |
AFUDC | allowance for funds used during construction | |
Ambit project | American Bituminous Power Partners, L.P. | |
AOI | Adjusted Operating Income (Loss) | |
APS | Arizona Public Service Company | |
ARO(s) | asset retirement obligation(s) | |
BACT | best available control technology | |
BART | best available retrofit technology | |
Bcf | billion cubic feet | |
Big 4 | Kern River, Midway-Sunset, Sycamore and Watson natural gas power projects | |
Btu | British thermal units | |
CAA | Clean Air Act | |
CAIR | Clean Air Interstate Rule | |
CAISO | California Independent System Operator | |
CAMR | Clean Air Mercury Rule | |
CARB | California Air Resources Board | |
CDWR | California Department of Water Resources | |
CEC | California Energy Commission | |
coal plants | Midwest Generation coal plants and Homer City plant | |
Commonwealth Edison | Commonwealth Edison Company | |
CPS | Combined Pollutant Standard | |
CPUC | California Public Utilities Commission | |
CSAPR | Cross-State Air Pollution Rule | |
CRRs | congestion revenue rights | |
DOE | U.S. Department of Energy | |
EME | Edison Mission Energy | |
EMG | Edison Mission Group Inc. | |
EMMT | Edison Mission Marketing & Trading, Inc. | |
EPS | earnings per share | |
ERRA | energy resource recovery account | |
EWG | Exempt Wholesale Generator | |
Exelon Generation | Exelon Generation Company LLC | |
FASB | Financial Accounting Standards Board | |
FERC | Federal Energy Regulatory Commission | |
FGIC | Financial Guarantee Insurance Company | |
FIP(s) | federal implementation plan(s) | |
Four Corners | coal fueled electric generating facility located in Farmington, New Mexico in which SCE holds a 48% ownership interest | |
GAAP | generally accepted accounting principles | |
GHG | greenhouse gas | |
Global Settlement | A settlement between Edison International and the IRS that resolved federal tax disputes related to Edison Capital's cross-border, leveraged leases through 2009, and all other outstanding federal tax disputes and affirmative claims for tax years 1986 through 2002 and related matters with state tax authorities. |
GRC | general rate case | |
GWh | gigawatt-hours | |
Homer City | EME Homer City Generation L.P., a Pennsylvania limited partnership that leases and operates three coal-fired electric generating units and related facilities located in Indiana County, Pennsylvania | |
Illinois EPA | Illinois Environmental Protection Agency | |
IRS | Internal Revenue Service | |
ISO | Independent System Operator | |
kWh(s) | kilowatt-hour(s) | |
LIBOR | London Interbank Offered Rate | |
MD&A | Management's Discussion and Analysis of Financial Condition and Results of Operations in this report | |
Midwest Generation | Midwest Generation, LLC, a Delaware limited liability company that owns and/or leases, and that operates, the Midwest Generation plants | |
Midwest Generation plants | Midwest Generation's power plants (fossil fuel) located in Illinois | |
MMBtu | million British thermal units | |
Mohave | two coal fueled electric generating facilities that no longer operate located in Clark County, Nevada in which SCE holds a 56% ownership interest | |
Moody's | Moody's Investors Service | |
MRTU | Market Redesign and Technology Upgrade | |
MW | megawatts | |
MWh | megawatt-hours | |
NAAQS | national ambient air quality standards | |
NAPP | Northern Appalachian | |
NERC | North American Electric Reliability Corporation | |
Ninth Circuit | U.S. Court of Appeals for the Ninth Circuit | |
NOV | notice of violation | |
NOx | nitrogen oxide | |
NRC | Nuclear Regulatory Commission | |
NSR | New Source Review | |
NYISO | New York Independent System Operator | |
PADEP | Pennsylvania Department of Environmental Protection | |
Palo Verde | large pressurized water nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest | |
PBOP(s) | postretirement benefits other than pension(s) | |
PBR | performance-based ratemaking | |
PG&E | Pacific Gas & Electric Company | |
PJM | PJM Interconnection, LLC | |
PRB | Powder River Basin | |
PSD | Prevention of Significant Deterioration | |
QF(s) | qualifying facility(ies) | |
ROE | return on equity | |
RPM | Reliability Pricing Model | |
RTO(s) | Regional Transmission Organization(s) | |
S&P | Standard & Poor's Ratings Services | |
San Onofre | large pressurized water nuclear electric generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest | |
SCE | Southern California Edison Company | |
SNCR | selective non-catalytic reduction |
SDG&E | San Diego Gas & Electric | |
SEC | U.S. Securities and Exchange Commission | |
SIP(s) | state implementation plan(s) | |
SO2 | sulfur dioxide | |
US EPA | U.S. Environmental Protection Agency | |
VIE(s) | variable interest entity(ies) | |
year-ended 2010 MD&A | Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2010 Form 10-K |
Consolidated Statements of Income | Edison International | ||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions, except per-share amounts, unaudited) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Electric utility | $ | 3,385 | $ | 3,097 | $ | 8,060 | $ | 7,502 | |||||||
Competitive power generation | 596 | 691 | 1,686 | 1,838 | |||||||||||
Total operating revenue | 3,981 | 3,788 | 9,746 | 9,340 | |||||||||||
Fuel | 352 | 328 | 866 | 877 | |||||||||||
Purchased power | 1,264 | 1,118 | 2,422 | 2,337 | |||||||||||
Operations and maintenance | 1,119 | 1,102 | 3,531 | 3,287 | |||||||||||
Depreciation, decommissioning and amortization | 436 | 378 | 1,288 | 1,127 | |||||||||||
Total operating expenses | 3,171 | 2,926 | 8,107 | 7,628 | |||||||||||
Operating income | 810 | 862 | 1,639 | 1,712 | |||||||||||
Interest and dividend income | 4 | 4 | 38 | 27 | |||||||||||
Equity in income from unconsolidated affiliates – net | 56 | 62 | 68 | 101 | |||||||||||
Other income | 27 | 33 | 110 | 103 | |||||||||||
Interest expense | (203 | ) | (175 | ) | (601 | ) | (518 | ) | |||||||
Other expenses | (11 | ) | (12 | ) | (37 | ) | (39 | ) | |||||||
Income from continuing operations before income taxes | 683 | 774 | 1,217 | 1,386 | |||||||||||
Income tax expense | 242 | 247 | 369 | 261 | |||||||||||
Income from continuing operations | 441 | 527 | 848 | 1,125 | |||||||||||
Income (loss) from discontinued operations – net of tax | — | (4 | ) | (3 | ) | 4 | |||||||||
Net income | 441 | 523 | 845 | 1,129 | |||||||||||
Dividends on preferred and preference stock of utility | 15 | 13 | 44 | 39 | |||||||||||
Other noncontrolling interests | — | — | (1 | ) | — | ||||||||||
Net income attributable to Edison International common shareholders | $ | 426 | $ | 510 | $ | 802 | $ | 1,090 | |||||||
Amounts attributable to Edison International common shareholders: | |||||||||||||||
Income from continuing operations, net of tax | $ | 426 | $ | 514 | $ | 805 | $ | 1,086 | |||||||
Income (loss) from discontinued operations, net of tax | — | (4 | ) | (3 | ) | 4 | |||||||||
Net income attributable to Edison International common shareholders | $ | 426 | $ | 510 | $ | 802 | $ | 1,090 | |||||||
Basic earnings per common share attributable to Edison International common shareholders: | |||||||||||||||
Weighted-average shares of common stock outstanding | 326 | 326 | 326 | 326 | |||||||||||
Continuing operations | $ | 1.31 | $ | 1.57 | $ | 2.47 | $ | 3.32 | |||||||
Discontinued operations | — | (0.01 | ) | (0.01 | ) | 0.01 | |||||||||
Total | $ | 1.31 | $ | 1.56 | $ | 2.46 | $ | 3.33 | |||||||
Diluted earnings per common share attributable to Edison International common shareholders: | |||||||||||||||
Weighted-average shares of common stock outstanding, including effect of dilutive securities | 329 | 328 | 329 | 328 | |||||||||||
Continuing operations | $ | 1.30 | $ | 1.57 | $ | 2.46 | $ | 3.30 | |||||||
Discontinued operations | — | (0.01 | ) | (0.01 | ) | 0.01 | |||||||||
Total | $ | 1.30 | $ | 1.56 | $ | 2.45 | $ | 3.31 | |||||||
Dividends declared per common share | $ | 0.320 | $ | 0.315 | $ | 0.960 | $ | 0.945 |
Consolidated Statements of Comprehensive Income | Edison International | ||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions, unaudited) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net income | $ | 441 | $ | 523 | $ | 845 | $ | 1,129 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Pension and postretirement benefits other than pensions: | |||||||||||||||
Net gain arising during the period, net of income tax expense of $2 for the nine months ended September 30, 2010 | — | 1 | — | 13 | |||||||||||
Amortization of net (gain) loss included in net income, net of income tax expense (benefit) of $1 and $1 for the three months and $4 and $(3) for the nine months ended September 30, 2011 and 2010, respectively | 3 | 1 | 7 | (5 | ) | ||||||||||
Prior service credit arising during the period, net of income tax expense of $1 for the nine months ended September 30, 2010 | — | — | — | 2 | |||||||||||
Amortization of prior service credit, net of income tax benefit of $1 for the nine months ended September 30, 2010 | — | — | — | (2 | ) | ||||||||||
Unrealized gain (loss) on derivatives qualified as cash flow hedges: | |||||||||||||||
Unrealized holding gain (loss) arising during the period, net of income tax expense (benefit) of $(19) and $29 for the three months and $(24) and $41 for the nine months ended September 30, 2011 and 2010, respectively | (30 | ) | 43 | (38 | ) | 61 | |||||||||
Reclassification adjustments included in net loss, net of income tax benefit of none and $5 for the three months and $12 and $54 for the nine months ended September 30, 2011 and 2010, respectively | — | (7 | ) | (17 | ) | (80 | ) | ||||||||
Other comprehensive income (loss) | (27 | ) | 38 | (48 | ) | (11 | ) | ||||||||
Comprehensive income | 414 | 561 | 797 | 1,118 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interests | 15 | 13 | 43 | 39 | |||||||||||
Comprehensive income attributable to Edison International | $ | 399 | $ | 548 | $ | 754 | $ | 1,079 |
Consolidated Balance Sheets | Edison International | ||||||
(in millions, unaudited) | September 30, 2011 | December 31, 2010 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,384 | $ | 1,389 | |||
Receivables, less allowances of $97 and $85 for uncollectible accounts at respective dates | 1,218 | 931 | |||||
Accrued unbilled revenue | 709 | 442 | |||||
Inventory | 592 | 568 | |||||
Prepaid taxes | 72 | 390 | |||||
Derivative assets | 100 | 133 | |||||
Restricted cash | 15 | 2 | |||||
Margin and collateral deposits | 54 | 65 | |||||
Regulatory assets | 454 | 378 | |||||
Other current assets | 153 | 124 | |||||
Total current assets | 4,751 | 4,422 | |||||
Nuclear decommissioning trusts | 3,393 | 3,480 | |||||
Investments in unconsolidated affiliates | 569 | 559 | |||||
Other investments | 231 | 223 | |||||
Total investments | 4,193 | 4,262 | |||||
Utility property, plant and equipment, less accumulated depreciation of $6,745 and $6,319 at respective dates | 26,490 | 24,778 | |||||
Competitive power generation and other property, plant and equipment, less accumulated depreciation of $2,083 and $1,865 at respective dates | 5,579 | 5,406 | |||||
Total property, plant and equipment | 32,069 | 30,184 | |||||
Derivative assets | 191 | 437 | |||||
Restricted deposits | 43 | 47 | |||||
Rent payments in excess of levelized rent expense under plant operating leases | 1,320 | 1,187 | |||||
Regulatory assets | 4,486 | 4,347 | |||||
Other long-term assets | 619 | 644 | |||||
Total long-term assets | 6,659 | 6,662 | |||||
Total assets | $ | 47,672 | $ | 45,530 |
Consolidated Balance Sheets | Edison International | ||||||
(in millions, except share amounts, unaudited) | September 30, 2011 | December 31, 2010 | |||||
LIABILITIES AND EQUITY | |||||||
Short-term debt | $ | 560 | $ | 115 | |||
Current portion of long-term debt | 51 | 48 | |||||
Accounts payable | 1,224 | 1,362 | |||||
Accrued taxes | 128 | 52 | |||||
Accrued interest | 207 | 205 | |||||
Customer deposits | 203 | 217 | |||||
Derivative liabilities | 290 | 217 | |||||
Regulatory liabilities | 734 | 738 | |||||
Other current liabilities | 764 | 998 | |||||
Total current liabilities | 4,161 | 3,952 | |||||
Long-term debt | 13,010 | 12,371 | |||||
Deferred income taxes | 6,003 | 5,625 | |||||
Deferred investment tax credits | 89 | 122 | |||||
Customer advances | 133 | 112 | |||||
Derivative liabilities | 344 | 468 | |||||
Pensions and benefits | 2,293 | 2,260 | |||||
Asset retirement obligations | 2,658 | 2,561 | |||||
Regulatory liabilities | 4,481 | 4,524 | |||||
Other deferred credits and other long-term liabilities | 2,454 | 2,041 | |||||
Total deferred credits and other liabilities | 18,455 | 17,713 | |||||
Total liabilities | 35,626 | 34,036 | |||||
Commitments and contingencies (Note 9) | |||||||
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at each date) | 2,346 | 2,331 | |||||
Accumulated other comprehensive loss | (124 | ) | (76 | ) | |||
Retained earnings | 8,793 | 8,328 | |||||
Total Edison International's common shareholders' equity | 11,015 | 10,583 | |||||
Preferred and preference stock of utility | 1,029 | 907 | |||||
Other noncontrolling interests | 2 | 4 | |||||
Total noncontrolling interests | 1,031 | 911 | |||||
Total equity | 12,046 | 11,494 | |||||
Total liabilities and equity | $ | 47,672 | $ | 45,530 |
Consolidated Statements of Cash Flows | Edison International | ||||||
Nine months ended September 30, | |||||||
(in millions, unaudited) | 2011 | 2010 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 845 | $ | 1,129 | |||
Less: Income (loss) from discontinued operations | (3 | ) | 4 | ||||
Income from continuing operations | 848 | 1,125 | |||||
Adjustments to reconcile to net cash provided by operating activities: | |||||||
Depreciation, decommissioning and amortization | 1,288 | 1,127 | |||||
Regulatory impacts of net nuclear decommissioning trust earnings | 131 | 106 | |||||
Other amortization | 112 | 90 | |||||
Stock-based compensation | 22 | 20 | |||||
Equity in income from unconsolidated affiliates – net | (68 | ) | (101 | ) | |||
Distributions from unconsolidated entities | 52 | 76 | |||||
Deferred income taxes and investment tax credits | 373 | 414 | |||||
Proceeds from U.S. treasury grants | 310 | 92 | |||||
Income from leveraged leases | (4 | ) | (3 | ) | |||
Changes in operating assets and liabilities: | |||||||
Receivables | (205 | ) | (184 | ) | |||
Inventory | (20 | ) | (27 | ) | |||
Margin and collateral deposits – net of collateral received | 6 | 32 | |||||
Prepaid taxes | 318 | 33 | |||||
Other current assets | (319 | ) | (224 | ) | |||
Rent payments in excess of levelized rent expense | (133 | ) | (148 | ) | |||
Accounts payable | 178 | 28 | |||||
Accrued taxes | 76 | (23 | ) | ||||
Other current liabilities | (189 | ) | (129 | ) | |||
Derivative assets and liabilities – net | 137 | 1,079 | |||||
Regulatory assets and liabilities – net | (73 | ) | (530 | ) | |||
Other assets | (14 | ) | (40 | ) | |||
Other liabilities | 1 | (67 | ) | ||||
Operating cash flows from discontinued operations | (3 | ) | 4 | ||||
Net cash provided by operating activities | 2,824 | 2,750 | |||||
Cash flows from financing activities: | |||||||
Long-term debt issued | 686 | 1,652 | |||||
Long-term debt issuance costs | (24 | ) | (35 | ) | |||
Long-term debt repaid | (97 | ) | (371 | ) | |||
Bonds purchased | (86 | ) | — | ||||
Preference stock issued – net | 123 | — | |||||
Short-term debt financing – net | 573 | 13 | |||||
Settlements of stock-based compensation – net | (14 | ) | (7 | ) | |||
Dividends and distributions to noncontrolling interests | (43 | ) | (39 | ) | |||
Dividends paid | (313 | ) | (308 | ) | |||
Net cash provided by financing activities | $ | 805 | $ | 905 |
Consolidated Statements of Cash Flows | Edison International | ||||||
Nine months ended September 30, | |||||||
(in millions, unaudited) | 2011 | 2010 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | $ | (3,491 | ) | $ | (3,129 | ) | |
Purchase of interest in acquired companies | (3 | ) | (4 | ) | |||
Proceeds from sale of nuclear decommissioning trust investments | 2,108 | 903 | |||||
Purchases of nuclear decommissioning trust investments and other | (2,254 | ) | (1,036 | ) | |||
Proceeds from partnerships and unconsolidated subsidiaries, net of investment | 6 | 35 | |||||
Investments in other assets | — | 3 | |||||
Effect of consolidation and deconsolidation of variable interest entities | — | (91 | ) | ||||
Net cash used by investing activities | (3,634 | ) | (3,319 | ) | |||
Net increase (decrease) in cash and cash equivalents | (5 | ) | 336 | ||||
Cash and cash equivalents, beginning of period | 1,389 | 1,673 | |||||
Cash and cash equivalents, end of period | $ | 1,384 | $ | 2,009 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Coal, gas, fuel oil and other raw materials | $ | 191 | $ | 184 | |||
Spare parts, materials and supplies | 401 | 384 | |||||
Total inventory | $ | 592 | $ | 568 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Basic earnings per share – continuing operations: | |||||||||||||||
Income from continuing operations attributable to common shareholders, net of tax | $ | 426 | $ | 514 | $ | 805 | $ | 1,086 | |||||||
Participating securities dividends | — | (3 | ) | — | (5 | ) | |||||||||
Income from continuing operations available to common shareholders | $ | 426 | $ | 511 | $ | 805 | $ | 1,081 | |||||||
Weighted average common shares outstanding | 326 | 326 | 326 | 326 | |||||||||||
Basic earnings per share – continuing operations | $ | 1.31 | $ | 1.57 | $ | 2.47 | $ | 3.32 | |||||||
Diluted earnings per share – continuing operations: | |||||||||||||||
Income from continuing operations available to common shareholders | $ | 426 | $ | 511 | $ | 805 | $ | 1,081 | |||||||
Income impact of assumed conversions | 1 | 2 | 3 | 3 | |||||||||||
Income from continuing operations available to common shareholders and assumed conversions | $ | 427 | $ | 513 | $ | 808 | $ | 1,084 | |||||||
Weighted average common shares outstanding | 326 | 326 | 326 | 326 | |||||||||||
Incremental shares from assumed conversions | 3 | 2 | 3 | 2 | |||||||||||
Adjusted weighted average shares – diluted | 329 | 328 | 329 | 328 | |||||||||||
Diluted earnings per share – continuing operations | $ | 1.30 | $ | 1.57 | $ | 2.46 | $ | 3.30 |
Equity Attributable to Edison International | Noncontrolling Interests | ||||||||||||||||||||||||||
(in millions) | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Subtotal | Other | Preferred and Preference Stock | Total Equity | ||||||||||||||||||||
Balance at December 31, 2010 | $ | 2,331 | $ | (76 | ) | $ | 8,328 | $ | 10,583 | $ | 4 | $ | 907 | $ | 11,494 | ||||||||||||
Net income (loss) | — | — | 802 | 802 | (1 | ) | 44 | 845 | |||||||||||||||||||
Other comprehensive loss | — | (48 | ) | — | (48 | ) | — | — | (48 | ) | |||||||||||||||||
Common stock dividends declared ($0.96 per share) | — | — | (313 | ) | (313 | ) | — | — | (313 | ) | |||||||||||||||||
Dividends, distributions to noncontrolling interests and other | — | — | — | — | (1 | ) | (44 | ) | (45 | ) | |||||||||||||||||
Stock-based compensation and other | 7 | — | (21 | ) | (14 | ) | — | — | (14 | ) | |||||||||||||||||
Noncash stock-based compensation and other | 22 | — | (3 | ) | 19 | — | (1 | ) | 18 | ||||||||||||||||||
Purchase of noncontrolling interests1 | (14 | ) | — | — | (14 | ) | — | — | (14 | ) | |||||||||||||||||
Issuance of preference stock | — | — | — | — | — | 123 | 123 | ||||||||||||||||||||
Balance at September 30, 2011 | $ | 2,346 | $ | (124 | ) | $ | 8,793 | $ | 11,015 | $ | 2 | $ | 1,029 | $ | 12,046 |
1 | During the nine months ended September 30, 2011, EMG purchased the remaining interests in Pinnacle Wind Force, LLC, and Broken Bow I, LLC and all assets of the Crofton Bluffs project. All three projects are now 100% owned by EMG. The purchases of the noncontrolling interests were accounted for as equity transactions between controlling and noncontrolling interest holders. |
Equity Attributable to Edison International | Noncontrolling Interests | ||||||||||||||||||||||||||
(in millions) | Common Stock | Accumulated Other Comprehensive Income | Retained Earnings | Subtotal | Other | Preferred and Preference Stock | Total Equity | ||||||||||||||||||||
Balance at December 31, 2009 | $ | 2,304 | $ | 37 | $ | 7,500 | $ | 9,841 | $ | 258 | $ | 907 | $ | 11,006 | |||||||||||||
Net income | — | — | 1,090 | 1,090 | — | 39 | 1,129 | ||||||||||||||||||||
Other comprehensive loss | — | (11 | ) | — | (11 | ) | — | — | (11 | ) | |||||||||||||||||
Deconsolidation of variable interest entities | — | — | — | — | (249 | ) | — | (249 | ) | ||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax | — | — | 15 | 15 | — | — | 15 | ||||||||||||||||||||
Common stock dividends declared ($0.945 per share) | — | — | (308 | ) | (308 | ) | — | — | (308 | ) | |||||||||||||||||
Dividends, distributions to noncontrolling interests and other | — | — | — | — | (4 | ) | (39 | ) | (43 | ) | |||||||||||||||||
Stock-based compensation and other | 5 | — | (12 | ) | (7 | ) | — | — | (7 | ) | |||||||||||||||||
Noncash stock-based compensation and other | 16 | — | (2 | ) | 14 | — | — | 14 | |||||||||||||||||||
Balance at September 30, 2010 | $ | 2,325 | $ | 26 | $ | 8,283 | $ | 10,634 | $ | 5 | $ | 907 | $ | 11,546 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Current assets | $ | 40 | $ | 26 | |||
Net property, plant and equipment | 702 | 739 | |||||
Other long-term assets | 6 | 6 | |||||
Total assets | $ | 748 | $ | 771 | |||
Current liabilities | $ | 28 | $ | 25 | |||
Long-term debt net of current portion | 67 | 71 | |||||
Deferred revenues | 69 | 71 | |||||
Other long-term liabilities | 21 | 21 | |||||
Total liabilities | $ | 185 | $ | 188 | |||
Noncontrolling interests | $ | 2 | $ | 4 |
September 30, 2011 | |||||||
(in millions) | Investment | Maximum Exposure | |||||
Natural gas-fired projects | $ | 340 | $ | 340 | |||
Renewable energy projects | 228 | 228 |
As of September 30, 2011 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting and Collateral1 | Total | ||||||||||||||
Assets at Fair Value | |||||||||||||||||||
Money market funds2 | $ | 1,056 | $ | — | $ | — | $ | — | $ | 1,056 | |||||||||
Derivative contracts: | |||||||||||||||||||
Electricity | — | 43 | 213 | (36 | ) | 220 | |||||||||||||
Natural gas | 2 | 61 | 10 | (6 | ) | 67 | |||||||||||||
Fuel oil | 2 | — | — | (2 | ) | — | |||||||||||||
Tolling | — | — | 4 | — | 4 | ||||||||||||||
Coal | — | 1 | — | (1 | ) | — | |||||||||||||
Subtotal of commodity contracts | 4 | 105 | 227 | (45 | ) | 291 | |||||||||||||
Long-term disability plan | 9 | — | — | — | 9 | ||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Stocks3 | 1,721 | — | — | — | 1,721 | ||||||||||||||
Municipal bonds | — | 767 | — | — | 767 | ||||||||||||||
U.S. government and agency securities | 378 | 123 | — | — | 501 | ||||||||||||||
Corporate bonds4 | — | 318 | — | — | 318 | ||||||||||||||
Short-term investments, primarily cash equivalents5 | 2 | 151 | — | — | 153 | ||||||||||||||
Subtotal of nuclear decommissioning trusts | 2,101 | 1,359 | — | — | 3,460 | ||||||||||||||
Total assets6 | 3,170 | 1,464 | 227 | (45 | ) | 4,816 | |||||||||||||
Liabilities at Fair Value | |||||||||||||||||||
Derivative contracts: | |||||||||||||||||||
Electricity | — | 17 | 84 | (18 | ) | 83 | |||||||||||||
Natural gas | — | 240 | 12 | (12 | ) | 240 | |||||||||||||
Fuel oil | 1 | — | — | (1 | ) | — | |||||||||||||
Tolling | — | — | 231 | — | 231 | ||||||||||||||
Subtotal of commodity contracts | 1 | 257 | 327 | (31 | ) | 554 | |||||||||||||
Interest rate contracts | — | 80 | — | — | 80 | ||||||||||||||
Total liabilities | 1 | 337 | 327 | (31 | ) | 634 | |||||||||||||
Net assets (liabilities) | $ | 3,169 | $ | 1,127 | $ | (100 | ) | $ | (14 | ) | $ | 4,182 |
As of December 31, 2010 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting and Collateral1 | Total | ||||||||||||||
Assets at Fair Value | |||||||||||||||||||
Money market funds2 | $ | 1,100 | $ | — | $ | — | $ | — | $ | 1,100 | |||||||||
Derivative contracts: | |||||||||||||||||||
Electricity | — | 70 | 363 | (61 | ) | 372 | |||||||||||||
Natural gas | 1 | 69 | 11 | (1 | ) | 80 | |||||||||||||
Fuel oil | 8 | — | — | (8 | ) | — | |||||||||||||
Tolling | — | — | 118 | — | 118 | ||||||||||||||
Subtotal of commodity contracts | 9 | 139 | 492 | (70 | ) | 570 | |||||||||||||
Long-term disability plan | 9 | — | — | — | 9 | ||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Stocks3 | 2,029 | — | — | — | 2,029 | ||||||||||||||
Municipal bonds | — | 790 | — | — | 790 | ||||||||||||||
Corporate bonds4 | — | 346 | — | — | 346 | ||||||||||||||
U.S. government and agency securities | 215 | 73 | — | — | 288 | ||||||||||||||
Short-term investments, primarily cash equivalents5 | 1 | 31 | — | — | 32 | ||||||||||||||
Subtotal of nuclear decommissioning trusts | 2,245 | 1,240 | — | — | 3,485 | ||||||||||||||
Total assets6 | 3,363 | 1,379 | 492 | (70 | ) | 5,164 | |||||||||||||
Liabilities at Fair Value | |||||||||||||||||||
Derivative contracts: | |||||||||||||||||||
Electricity | — | 13 | 40 | (21 | ) | 32 | |||||||||||||
Natural gas | — | 286 | 11 | (4 | ) | 293 | |||||||||||||
Tolling | — | — | 344 | — | 344 | ||||||||||||||
Coal | — | 1 | — | (1 | ) | — | |||||||||||||
Subtotal of commodity contracts | — | 300 | 395 | (26 | ) | 669 | |||||||||||||
Interest rate contracts | — | 16 | — | — | 16 | ||||||||||||||
Total liabilities | — | 316 | 395 | (26 | ) | 685 | |||||||||||||
Net assets (liabilities) | $ | 3,363 | $ | 1,063 | $ | 97 | $ | (44 | ) | $ | 4,479 |
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 | Money market funds are included in cash and cash equivalents and restricted cash on Edison International's consolidated balance sheets. |
3 | Approximately 69% and 67% of the equity investments were located in the United States at September 30, 2011 and December 31, 2010, respectively. |
4 | At September 30, 2011 and December 31, 2010, corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $21 million and $27 million, respectively. |
5 | Excludes net liabilities of $67 million and $5 million at September 30, 2011 and December 31, 2010, respectively, of interest and dividend receivables and receivables related to pending securities sales and payables related to pending securities purchases. |
6 | Excludes $31 million at both September 30, 2011 and December 31, 2010, of cash surrender value of life insurance investments for deferred compensation. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Fair value, net asset (liabilities) at beginning of period | $ | (275 | ) | $ | (703 | ) | $ | 97 | $ | 62 | |||||
Total realized/unrealized gains (losses): | |||||||||||||||
Included in earnings1 | (4 | ) | 24 | 14 | 51 | ||||||||||
Included in regulatory assets and liabilities2 | 162 | 3 | (142 | ) | (220 | ) | 3 | (924 | ) | ||||||
Included in accumulated other comprehensive income | 1 | 1 | (2 | ) | 5 | ||||||||||
Purchases | 24 | 15 | 51 | 48 | |||||||||||
Settlements | (8 | ) | (76 | ) | (38 | ) | (128 | ) | |||||||
Transfers in or out of Level 3 | — | (12 | ) | (2 | ) | (7 | ) | ||||||||
Fair value, net liability at end of period | $ | (100 | ) | $ | (893 | ) | $ | (100 | ) | $ | (893 | ) | |||
Change during the period in unrealized losses related to assets and liabilities held at the end of the period4 | $ | (110 | ) | $ | (163 | ) | $ | (425 | ) | $ | (882 | ) |
1 | Reported in "Competitive power generation" revenue on Edison International's consolidated statements of income. |
2 | Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities. |
3 | Includes the elimination of the fair value of derivatives with SCE's consolidated affiliates. |
4 | Amounts reported in "Competitive power generation" revenue on Edison International's consolidated statements of income was a loss of $3 million for the three months ended September 30, 2010, and gains of $7 million and $1 million for the nine months ended September 30, 2011 and 2010, respectively. The remainder of the unrealized losses relate to SCE. See 2 above. |
September 30, 2011 | December 31, 2010 | ||||||||||||||
(in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Long-term debt, including current portion | $ | 13,061 | $ | 13,500 | $ | 12,419 | $ | 12,360 |
Economic Hedges | |||||
Commodity | Unit of Measure | September 30, 2011 | December 31, 2010 | ||
Electricity options, swaps and forwards | GWh | 30,143 | 32,138 | ||
Natural gas options, swaps and forwards | Bcf | 266 | 250 | ||
CRRs | GWh | 146,628 | 181,291 | ||
Tolling arrangements | GWh | 104,822 | 114,599 |
Derivative Assets | Derivative Liabilities1 | ||||||||||||||||||||||||||
(in millions) | Short- Term | Long- Term | Subtotal | Short- Term | Long- Term | Subtotal | Net Liability | ||||||||||||||||||||
Non-trading activities | |||||||||||||||||||||||||||
Economic hedges | $ | 82 | $ | 145 | $ | 227 | $ | 305 | $ | 577 | $ | 882 | $ | 655 | |||||||||||||
Netting and collateral | (14 | ) | (13 | ) | (27 | ) | (18 | ) | (23 | ) | (41 | ) | (14 | ) | |||||||||||||
Total | $ | 68 | $ | 132 | $ | 200 | $ | 287 | $ | 554 | $ | 841 | $ | 641 |
1 | Includes the fair value of derivatives with SCE's consolidated affiliates; however, in Edison International’s consolidated financial statements, the fair value of such derivatives is eliminated. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||||||
(in millions) | Short- Term | Long- Term | Subtotal | Short- Term | Long- Term | Subtotal | Net Liability | ||||||||||||||||||||
Non-trading activities | |||||||||||||||||||||||||||
Economic hedges | $ | 87 | $ | 367 | $ | 454 | $ | 216 | $ | 449 | $ | 665 | $ | 211 | |||||||||||||
Netting and collateral | — | — | — | (4 | ) | — | (4 | ) | (4 | ) | |||||||||||||||||
Total | $ | 87 | $ | 367 | $ | 454 | $ | 212 | $ | 449 | $ | 661 | $ | 207 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Realized losses | $ | (58 | ) | $ | (53 | ) | $ | (132 | ) | $ | (116 | ) | |||
Unrealized losses | (110 | ) | (165 | ) | (433 | ) | (1,022 | ) |
September 30, 2011 | ||||||||||||||||||
Hedging Activities | ||||||||||||||||||
Commodity | Instrument | Classification | Unit of Measure | Cash Flow Hedges | Economic Hedges | Trading Activities | ||||||||||||
Electricity | Forwards/Futures | Sales | GWh | 15,910 | 1 | 13,353 | 3 | 36,597 | ||||||||||
Electricity | Forwards/Futures | Purchases | GWh | 101 | 1 | 13,230 | 3 | 42,429 | ||||||||||
Electricity | Capacity | Sales | MW-Day (in thousands) | 134 | 2 | — | 12 | 2 | ||||||||||
Electricity | Capacity | Purchases | MW-Day (in thousands) | 12 | 2 | — | 219 | 2 | ||||||||||
Electricity | Congestion | Sales | GWh | — | 90 | 4 | 15,910 | 4 | ||||||||||
Electricity | Congestion | Purchases | GWh | — | 4,023 | 4 | 253,688 | 4 | ||||||||||
Natural gas | Forwards/Futures | Sales | bcf | — | — | 55.3 | ||||||||||||
Natural gas | Forwards/Futures | Purchases | bcf | — | — | 53.4 | ||||||||||||
Fuel oil | Forwards/Futures | Sales | barrels | — | — | 100,000 | ||||||||||||
Fuel oil | Forwards/Futures | Purchases | barrels | — | 240,000 | 140,000 | ||||||||||||
Coal | Forwards/Futures | Sales | tons | — | — | 1,485,000 | ||||||||||||
Coal | Forwards/Futures | Purchases | tons | — | — | 1,485,000 |
(in millions) | ||||||||||
Instrument | Purpose | Type of Hedge | Notional Amount | Expiration Date | ||||||
Accreting forward starting interest rate swap | Convert floating rate (1-month LIBOR debt to fixed rate (0.8135%) debt | Cash flow | $ | 39 | May 2013 | |||||
Accreting interest rate swap | Convert floating rate (1-month LIBOR debt to fixed rate (0.79%) debt | Cash flow | 24 | May 2013 | ||||||
Amortizing interest rate swap | Convert floating rate (6-month LIBOR debt to fixed rate (3.175%) debt | Cash flow | 84 | June 2016 | ||||||
Amortizing interest rate swap | Convert floating rate (6-month LIBOR debt to fixed rate (3.415%) debt | Cash flow | 110 | December 2020 | ||||||
Amortizing forward starting interest rate swap | Convert floating rate (3-month LIBOR debt to fixed rate (3.5429%) debt | Cash flow | 398 | May 2023 | ||||||
Amortizing forward starting interest rate swap | Convert floating rate (3-month LIBOR debt to fixed rate (4.0025%) debt | Cash flow | 48 | May 2023 | ||||||
Amortizing interest rate swap | Convert floating rate (3-month LIBOR debt to fixed rate (4.29%) debt | Cash flow | 119 | December 2025 | ||||||
Amortizing interest rate swap | Convert floating rate (3-month LIBOR) debt to fixed rate (3.46%) debt | Cash flow | 67 | March 2026 |
December 31, 2010 | ||||||||||||||||||
Hedging Activities | ||||||||||||||||||
Commodity | Instrument | Classification | Unit of Measure | Cash Flow Hedges | Economic Hedges | Trading Activities | ||||||||||||
Electricity | Forwards/Futures | Sales | GWh | 16,799 | 1 | 22,456 | 3 | 34,630 | ||||||||||
Electricity | Forwards/Futures | Purchases | GWh | 408 | 1 | 22,931 | 3 | 37,669 | ||||||||||
Electricity | Capacity | Sales | MW-Day (in thousands) | 190 | 2 | — | 136 | 2 | ||||||||||
Electricity | Capacity | Purchases | MW-Day (in thousands) | 8 | 2 | — | 419 | 2 | ||||||||||
Electricity | Congestion | Sales | GWh | — | 136 | 4 | 12,020 | 4 | ||||||||||
Electricity | Congestion | Purchases | GWh | — | 1,143 | 4 | 187,689 | 4 | ||||||||||
Natural gas | Forwards/Futures | Sales | bcf | — | — | 30.6 | ||||||||||||
Natural gas | Forwards/Futures | Purchases | bcf | — | — | 34.3 | ||||||||||||
Fuel oil | Forwards/Futures | Sales | barrels | — | 250,000 | 10,000 | ||||||||||||
Fuel oil | Forwards/Futures | Purchases | barrels | — | 490,000 | 10,000 | ||||||||||||
Coal | Forwards/Futures | Sales | tons | — | — | 2,630,500 | ||||||||||||
Coal | Forwards/Futures | Purchases | tons | — | — | 2,645,500 |
(in millions) | ||||||||||
Instrument | Purpose | Type of Hedge | Notional Amount | Expiration Date | ||||||
Amortizing interest rate swap | Convert floating rate (6-month LIBOR) debt to fixed rate (3.175%) debt | Cash flow | $ | 138 | June 2016 | |||||
Amortizing forward starting interest rate swap | Convert floating rate (3-month LIBOR) debt to fixed rate (4.29%) debt | Cash flow | 122 | December 2025 | ||||||
Amortizing forward starting interest rate swap | Convert floating rate (3-month LIBOR) debt to fixed rate (3.46%) debt | Cash flow | 68 | March 2026 |
1 | EMG's hedge products include forward and futures contracts that qualify for hedge accounting. This category excludes power contracts for the coal plants which meet the normal purchases and sales exception and are accounted for on the accrual method. |
2 | EMG's hedge transactions for capacity result from bilateral trades. Capacity sold in the PJM Reliability Pricing Model (RPM) auction is not accounted for as a derivative. |
3 | EMG also entered into transactions that adjust financial and physical positions, or day-ahead and real-time positions to reduce costs or increase gross margin. These positions largely offset each other. The net sales positions of these categories are primarily related to hedge transactions that are not designated as cash flow hedges. |
4 | Congestion contracts include financial transmission rights, transmission congestion contracts or congestion revenue rights. These positions are similar to a swap, where the buyer is entitled to receive a stream of revenues (or charges) based on the hourly day-ahead price differences between two locations. |
September 30, 2011 | |||||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | Net Assets (Liabilities) | |||||||||||||||||||||||||
(in millions) | Short-term | Long-term | Subtotal | Short-term | Long-term | Subtotal | |||||||||||||||||||||
Non-trading activities | |||||||||||||||||||||||||||
Cash flow hedges | $ | 34 | $ | 8 | $ | 42 | $ | 16 | $ | 90 | $ | 106 | $ | (64 | ) | ||||||||||||
Economic hedges | 29 | 3 | 32 | 31 | 2 | 33 | (1 | ) | |||||||||||||||||||
Trading activities | 132 | 102 | 234 | 96 | 37 | 133 | 101 | ||||||||||||||||||||
195 | 113 | 308 | 143 | 129 | 272 | 36 | |||||||||||||||||||||
Netting and collateral received1 | (163 | ) | (54 | ) | (217 | ) | (140 | ) | (49 | ) | (189 | ) | (28 | ) | |||||||||||||
Total | $ | 32 | $ | 59 | $ | 91 | $ | 3 | $ | 80 | $ | 83 | $ | 8 |
December 31, 2010 | |||||||||||||||||||||||||||
Non-trading activities | |||||||||||||||||||||||||||
Cash flow hedges | $ | 54 | $ | 2 | $ | 56 | $ | 10 | $ | 25 | $ | 35 | $ | 21 | |||||||||||||
Economic hedges | 77 | 2 | 79 | 71 | — | 71 | 8 | ||||||||||||||||||||
Trading activities | 184 | 103 | 287 | 148 | 29 | 177 | 110 | ||||||||||||||||||||
315 | 107 | 422 | 229 | 54 | 283 | 139 | |||||||||||||||||||||
Netting and collateral received1 | (269 | ) | (37 | ) | (306 | ) | (223 | ) | (35 | ) | (258 | ) | (48 | ) | |||||||||||||
Total | $ | 46 | $ | 70 | $ | 116 | $ | 6 | $ | 19 | $ | 25 | $ | 91 |
1 | Netting of derivative receivables and derivative payables and the related cash collateral received and paid is permitted when a legally enforceable master netting agreement exists with a derivative counterparty. |
Cash Flow Hedge Activity1 Nine Months Ended September 30, | Income Statement Location | ||||||||
(in millions) | 2011 | 2010 | |||||||
Beginning of period derivative gains | $ | 27 | $ | 175 | |||||
Effective portion of changes in fair value | (62 | ) | 102 | ||||||
Reclassification to net income | (29 | ) | (134 | ) | Competitive power generation revenue | ||||
End of period derivative gains (losses) | $ | (64 | ) | $ | 143 |
1 | Unrealized derivative gains (losses) are before income taxes. The after-tax amounts recorded in accumulated other comprehensive income (loss) at September 30, 2011 and 2010 were $(39) million and $86 million, respectively. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
(in millions) | Income Statement Location | 2011 | 2010 | 2011 | 2010 | |||||||||||||
Economic hedges | Competitive power generation revenue | $ | (6 | ) | $ | 7 | $ | 20 | $ | — | ||||||||
Fuel | (3 | ) | 2 | 1 | — | |||||||||||||
Trading activities | Competitive power generation revenue | 11 | 28 | 68 | 108 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Collateral provided to counterparties: | |||||||
Offset against derivative liabilities | $ | 16 | $ | 8 | |||
Reflected in margin and collateral deposits | 53 | 65 | |||||
Collateral received from counterparties: | |||||||
Offset against derivative assets | 30 | 52 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Income from continuing operations before income taxes | $ | 683 | $ | 774 | $ | 1,217 | $ | 1,386 | |||||||
Provision for income tax at federal statutory rate of 35% | 239 | 271 | 426 | 485 | |||||||||||
Increase (decrease) in income tax from: | |||||||||||||||
Items presented with related state income tax, net: | |||||||||||||||
Global Settlement related1 | — | (37 | ) | — | (175 | ) | |||||||||
Change in tax accounting method for asset removal costs2 | — | — | — | (40 | ) | ||||||||||
State tax – net of federal benefit | 30 | 34 | 43 | 57 | |||||||||||
Health care legislation3 | — | — | — | 39 | |||||||||||
Production and housing credits | (12 | ) | (14 | ) | (48 | ) | (48 | ) | |||||||
Property-related and other | (15 | ) | (7 | ) | (52 | ) | (57 | ) | |||||||
Total income tax expense from continuing operations | $ | 242 | $ | 247 | $ | 369 | $ | 261 | |||||||
Effective tax rate | 35 | % | 32 | % | 30 | % | 19 | % |
1 | During the nine months ended September 30, 2010, Edison International recognized a $175 million earnings benefit resulting from the |
2 | During the second quarter of 2010, the IRS approved Edison International's request to change its tax accounting method for asset removal costs primarily related to SCE's infrastructure replacement program. As a result, Edison International recognized a $40 million earnings benefit (of which $28 million relates to asset removal costs incurred prior to 2010) from deducting asset removal costs earlier in the construction cycle. These deductions were recorded on a flow-through basis. |
3 | During the first quarter of 2010, Edison International recorded a $39 million non-cash charge to reverse previously recognized federal tax benefits eliminated by the federal health care legislation enacted in March 2010. The health care law eliminated the federal tax deduction for retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies. |
(in millions) | 2011 | 2010 | |||||
Balance at January 1, | $ | 565 | $ | 664 | |||
Tax positions taken during the current year: | |||||||
Increases | 53 | 60 | |||||
Tax positions taken during a prior year: | |||||||
Increases | 60 | 251 | |||||
Decreases | (37 | ) | (86 | ) | |||
Decreases for settlements during the period | — | (82 | ) | ||||
Balance at September 30, | $ | 641 | $ | 807 |
• | A proposed adjustment increasing the taxable gain on the 2004 sale of EMG's international assets, which if sustained, would result in a federal tax payment of approximately $191 million, including interest and penalties through September 30, 2011 (the IRS has asserted a 40% penalty for understatement of tax liability related to this matter). |
• | A proposed adjustment to disallow a component of SCE's repair allowance deduction, which if sustained, would result in a federal tax payment of approximately $92 million, including interest through September 30, 2011. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Service cost | $ | 43 | $ | 34 | $ | 129 | $ | 102 | |||||||
Interest cost | 52 | 54 | 156 | 162 | |||||||||||
Expected return on plan assets | (60 | ) | (52 | ) | (180 | ) | (156 | ) | |||||||
Amortization of prior service cost | 2 | 2 | 6 | 6 | |||||||||||
Amortization of net loss | 6 | 7 | 18 | 21 | |||||||||||
Expense under accounting standards | 43 | 45 | 129 | 135 | |||||||||||
Regulatory adjustment – deferred | (6 | ) | (14 | ) | (18 | ) | (42 | ) | |||||||
Total expense recognized | $ | 37 | $ | 31 | $ | 111 | $ | 93 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Service cost | $ | 11 | $ | 8 | $ | 33 | $ | 24 | |||||||
Interest cost | 33 | 31 | 99 | 93 | |||||||||||
Expected return on plan assets | (28 | ) | (25 | ) | (84 | ) | (75 | ) | |||||||
Amortization of prior service credit | (9 | ) | (9 | ) | (27 | ) | (27 | ) | |||||||
Amortization of net loss | 9 | 8 | 27 | 24 | |||||||||||
Total expense | $ | 16 | $ | 13 | $ | 48 | $ | 39 |
Weighted-Average | |||||||||||||
Stock options | Exercise Price | Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in millions) | ||||||||||
Outstanding at December 31, 2010 | 19,142,209 | $ | 33.28 | ||||||||||
Granted | 3,394,229 | 37.95 | |||||||||||
Expired | (113,348 | ) | 48.52 | ||||||||||
Forfeited | (369,267 | ) | 33.03 | ||||||||||
Exercised | (1,557,548 | ) | 26.22 | ||||||||||
Outstanding at September 30, 2011 | 20,496,275 | 34.51 | 6.07 | ||||||||||
Vested and expected to vest at September 30, 2011 | 20,021,144 | 34.53 | 6.02 | $ | 123 | ||||||||
Exercisable at September 30, 2011 | 12,043,993 | 34.93 | 4.52 | 84 |
Equity Awards | Liability Awards | ||||||||||||
Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Fair Value | ||||||||||
Nonvested at December 31, 2010 | 415,028 | $ | 30.99 | 415,028 | $ | 34.74 | |||||||
Granted | 153,067 | 30.19 | 153,067 | ||||||||||
Forfeited1 | (119,835 | ) | 42.64 | (119,835 | ) | ||||||||
Nonvested at September 30, 2011 | 448,260 | 27.96 | 448,260 | 23.26 |
Restricted Stock Units | Weighted-Average Grant Date Fair Value | |||||
Nonvested at December 31, 2010 | 644,796 | $ | 32.18 | |||
Granted | 251,890 | 37.95 | ||||
Forfeited | (27,114 | ) | 32.05 | |||
Paid Out | (133,958 | ) | 47.60 | |||
Nonvested at September 30, 2011 | 735,614 | $ | 32.15 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Stock based compensation expense1 | $ | 8 | $ | 9 | $ | 25 | $ | 26 | |||||||
Income tax benefits related to stock compensation expense | 3 | 3 | 10 | 10 | |||||||||||
Excess tax benefits2 | 3 | 3 | 7 | 5 | |||||||||||
Stock options | |||||||||||||||
Cash used to purchase shares to settle options | 20 | 17 | 59 | 30 | |||||||||||
Cash from participants to exercise stock options | 16 | 10 | 41 | 19 | |||||||||||
Value of options exercised | 4 | 7 | 18 | 11 | |||||||||||
Restricted stock units | |||||||||||||||
Value of shares settled | 1 | — | 6 | — | |||||||||||
Tax benefits realized from settlement of awards | — | — | 2 | — |
1 | Reflected in "Operations and maintenance" on the consolidated statements of income. |
2 | Reflected in "Settlements of stock based compensation—net" in the financing section of the consolidated statements of cash flows. |
(in millions) | Unrealized Gain (Loss) on Cash Flow Hedges | Pension and PBOP – Net Gain (Loss) | Pension and PBOP – Prior Service Cost | Accumulated Other Comprehensive Loss | |||||||||||
Balance at December 31, 2010 | $ | 16 | $ | (87 | ) | $ | (5 | ) | $ | (76 | ) | ||||
Current period change | (55 | ) | 7 | — | (48 | ) | |||||||||
Balance at September 30, 2011 | $ | (39 | ) | $ | (80 | ) | $ | (5 | ) | $ | (124 | ) |
Nine months ended September 30, | |||||||
(in millions) | 2011 | 2010 | |||||
Cash payments (receipts) for interest and taxes: | |||||||
Interest – net of amounts capitalized | $ | 529 | $ | 486 | |||
Tax payments (refunds) – net | (330 | ) | 44 | ||||
Noncash investing and financing activities: | |||||||
Accrued capital expenditures | $ | 393 | $ | 421 | |||
Details of debt exchange: | |||||||
Pollution-control bonds redeemed | $ | (86 | ) | $ | (303 | ) | |
Pollution-control bonds issued | 86 | 303 | |||||
Consolidation of variable interest entities: | |||||||
Assets other than cash | $ | — | $ | (94 | ) | ||
Liabilities and noncontrolling interests | — | 99 | |||||
Deconsolidation of variable interest entities: | |||||||
Assets other than cash | $ | — | $ | 380 | |||
Liabilities and noncontrolling interests | — | (476 | ) | ||||
Dividends declared but not paid: | |||||||
Common stock | $ | 104 | $ | 103 | |||
Preferred and preference stock | 12 | 9 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Current: | |||||||
Regulatory balancing accounts | $ | 191 | $ | 213 | |||
Energy derivatives | 262 | 162 | |||||
Other | 1 | 3 | |||||
Total Current | 454 | 378 | |||||
Long-term: | |||||||
Deferred income taxes – net | 1,938 | 1,855 | |||||
Pensions and other postretirement benefits | 1,084 | 1,097 | |||||
Unamortized generation investment – net | 323 | 355 | |||||
Unamortized loss on reacquired debt | 253 | 268 | |||||
Energy derivatives | 214 | 177 | |||||
Nuclear-related investment – net | 160 | 154 | |||||
Unamortized transmission and distribution investment – net | 153 | 105 | |||||
Regulatory balancing accounts | 62 | 56 | |||||
Other | 299 | 280 | |||||
Total Long-term | 4,486 | 4,347 | |||||
Total Regulatory Assets | $ | 4,940 | $ | 4,725 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Current: | |||||||
Regulatory balancing accounts | $ | 728 | $ | 733 | |||
Other | 6 | 5 | |||||
Total Current | 734 | 738 | |||||
Long-term: | |||||||
Costs of removal | 2,663 | 2,623 | |||||
Asset Retirement Obligations | 944 | 1,099 | |||||
Regulatory balancing accounts | 873 | 802 | |||||
Other | 1 | — | |||||
Total Long-term | 4,481 | 4,524 | |||||
Total Regulatory Liabilities | $ | 5,215 | $ | 5,262 |
Amortized Cost | Fair Value | ||||||||||||||||
(in millions) | Longest Maturity Dates | September 30, 2011 | December 31, 2010 | September 30, 2011 | December 31, 2010 | ||||||||||||
Stocks | — | $ | 861 | $ | 895 | $ | 1,721 | $ | 2,029 | ||||||||
Municipal bonds | 2051 | 644 | 706 | 767 | 790 | ||||||||||||
U.S. government and agency securities | 2041 | 445 | 270 | 501 | 288 | ||||||||||||
Corporate bonds | 2054 | 266 | 288 | 318 | 346 | ||||||||||||
Short-term investments and receivables/payables | One-year | 81 | 26 | 86 | 27 | ||||||||||||
Total | $ | 2,297 | $ | 2,185 | $ | 3,393 | $ | 3,480 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Balance at beginning of period | $ | 3,657 | $ | 3,083 | $ | 3,480 | $ | 3,140 | |||||||
Realized gains – net | 41 | 14 | 76 | 48 | |||||||||||
Unrealized gains (losses) – net | (305 | ) | 233 | (199 | ) | 90 | |||||||||
Other-than-temporary impairments | (22 | ) | (5 | ) | (35 | ) | (16 | ) | |||||||
Interest, dividends, contributions and other | 22 | 22 | 71 | 85 | |||||||||||
Balance at end of period | $ | 3,393 | $ | 3,347 | $ | 3,393 | $ | 3,347 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Other income: | |||||||||||||||
Equity Available Funds Used During Construction | $ | 18 | $ | 24 | $ | 74 | $ | 76 | |||||||
Increase in cash surrender value of life insurance policies | 6 | 7 | 19 | 19 | |||||||||||
Other | 2 | 2 | 10 | 8 | |||||||||||
Total utility other income | 26 | 33 | 103 | 103 | |||||||||||
Competitive power generation and other income | 1 | — | 7 | — | |||||||||||
Total other income | $ | 27 | $ | 33 | $ | 110 | $ | 103 | |||||||
Other expenses: | |||||||||||||||
Civic, political and related activities and donations | $ | 6 | $ | 7 | $ | 21 | $ | 21 | |||||||
Other | 4 | 3 | 14 | 18 | |||||||||||
Total utility other expenses | 10 | 10 | 35 | 39 | |||||||||||
Competitive power generation and other expenses | 1 | 2 | 2 | — | |||||||||||
Total other expenses | $ | 11 | $ | 12 | $ | 37 | $ | 39 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Operating Revenue: | |||||||||||||||
Electric utility | $ | 3,386 | $ | 3,098 | $ | 8,063 | $ | 7,504 | |||||||
Competitive power generation | 596 | 691 | 1,686 | 1,838 | |||||||||||
Parent and other2 | (1 | ) | (1 | ) | (3 | ) | (2 | ) | |||||||
Consolidated Edison International | $ | 3,981 | $ | 3,788 | $ | 9,746 | $ | 9,340 | |||||||
Net Income (Loss) attributable to Edison International: | |||||||||||||||
Electric utility | $ | 406 | $ | 394 | $ | 838 | $ | 858 | |||||||
Competitive power generation1 | 33 | 110 | (17 | ) | 214 | ||||||||||
Parent and other2 | (13 | ) | 6 | (19 | ) | 18 | |||||||||
Consolidated Edison International | $ | 426 | $ | 510 | $ | 802 | $ | 1,090 |
(in millions) | September 30, 2011 | December 31, 2010 | |||||
Total Assets: | |||||||
Electric utility | $ | 38,122 | $ | 35,906 | |||
Competitive power generation | 9,881 | 9,597 | |||||
Parent and other2 | (331 | ) | 27 | ||||
Consolidated Edison International | $ | 47,672 | $ | 45,530 |
• | cost of capital and the ability of Edison International or its subsidiaries to borrow funds and access the capital markets on reasonable terms; |
• | environmental laws and regulations, at both state and federal levels, or changes in the application of those laws, that could require additional expenditures or otherwise affect the cost and manner of doing business, including compliance with CPS at Midwest Generation and the CSAPR and the proposed National Emission Standards for Hazardous Air Pollutants at Midwest Generation and Homer City; |
• | ability of SCE to recover its costs in a timely manner from its customers through regulated rates; |
• | decisions and other actions by the CPUC, the FERC and other regulatory authorities and delays in regulatory actions; |
• | possible customer bypass or departure due to technological advancements or cumulative rate impacts that make self-generation or use of alternative energy sources economically viable; |
• | risks associated with the operation of transmission and distribution assets and nuclear and other power generating facilities including: nuclear fuel storage issues, public safety issues, failure, availability, efficiency, output, cost of repairs and retrofits of equipment and availability and cost of spare parts; |
• | cost and availability of electricity including the ability to procure sufficient resources to meet expected customer needs in the event of significant counterparty defaults under power purchase agreements; |
• | changes in the fair value of investments and other assets; |
• | changes in interest rates and rates of inflation, including those rates which may be adjusted by public utility regulators; |
• | governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market and price mitigation strategies adopted by Independent System Operators and Regional Transmission Organizations; |
• | availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations; |
• | cost and availability of labor, equipment and materials; |
• | ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and to recover the costs of such insurance; |
• | ability to recover uninsured losses in connection with wildfire-related liability; |
• | effects of legal proceedings, changes in or interpretations of tax laws, rates or policies, and changes in accounting standards; |
• | potential for penalties or disallowances caused by non-compliance with applicable laws and regulations; |
• | cost and availability of coal, natural gas, fuel oil, and nuclear fuel, and related transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts; |
• | cost and availability of emission credits or allowances for emission credits; |
• | transmission congestion in and to each market area and the resulting differences in prices between delivery points; |
• | ability to provide sufficient collateral in support of hedging activities and power and fuel purchased; |
• | risks inherent in the development of generation projects and transmission and distribution infrastructure replacement and expansion projects, including those related to project site identification, construction, permitting, and governmental approvals; |
• | risks that competing transmission systems will be built by merchant transmission providers in SCE's territory; and |
• | weather conditions and natural disasters. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
(in millions) | 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||
Net Income (Loss) attributable to Edison International | |||||||||||||||||||||||
SCE | $ | 406 | $ | 394 | $ | 12 | $ | 838 | $ | 858 | $ | (20 | ) | ||||||||||
EMG | 33 | 110 | (77 | ) | (17 | ) | 214 | (231 | ) | ||||||||||||||
Edison International Parent and Other | (13 | ) | 6 | (19 | ) | (19 | ) | 18 | (37 | ) | |||||||||||||
Edison International Consolidated | 426 | 510 | (84 | ) | 802 | 1,090 | (288 | ) | |||||||||||||||
Less: Non-Core Items | |||||||||||||||||||||||
Global Settlement: | |||||||||||||||||||||||
SCE | — | 42 | (42 | ) | — | 95 | (95 | ) | |||||||||||||||
EMG | — | (6 | ) | 6 | — | 52 | (52 | ) | |||||||||||||||
Edison International Parent and Other | — | 1 | (1 | ) | — | 28 | (28 | ) | |||||||||||||||
SCE – tax impact of health care legislation | — | — | — | — | (39 | ) | 39 | ||||||||||||||||
EMG discontinued operations | — | (4 | ) | 4 | (3 | ) | 4 | (7 | ) | ||||||||||||||
Total non-core items | — | 33 | (33 | ) | (3 | ) | 140 | (143 | ) | ||||||||||||||
Core Earnings (Losses) | |||||||||||||||||||||||
SCE | 406 | 352 | 54 | 838 | 802 | 36 | |||||||||||||||||
EMG | 33 | 120 | (87 | ) | (14 | ) | 158 | (172 | ) | ||||||||||||||
Edison International Parent and Other | (13 | ) | 5 | (18 | ) | (19 | ) | (10 | ) | (9 | ) | ||||||||||||
Edison International Consolidated | $ | 426 | $ | 477 | $ | (51 | ) | $ | 805 | $ | 950 | $ | (145 | ) |
• | An earnings benefit of $175 million recorded in 2010 relating to the California impact of the federal Global Settlement, including $138 million in the second quarter resulting from acceptance by the Franchise Tax Board of the tax positions finalized with the IRS in 2009 and $37 million in the third quarter resulting from receipt of the final interest determination from the Franchise Tax Board. |
• | An after tax earnings charge of $39 million recorded in the first quarter of 2010 to reverse previously recognized federal tax benefits eliminated by federal health care legislation enacted in 2010. The health care law eliminated the federal tax deduction for retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies. |
• | Utility earning activities – representing CPUC and FERC-authorized base rates, including the opportunity to earn the authorized return; and |
• | Utility cost-recovery activities – representing CPUC and FERC-authorized balancing accounts which allow for recovery of costs incurred or provide for mechanisms to track and recover or refund differences in forecasted and actual amounts. |
Three months ended September 30, 2011 | Three months ended September 30, 2010 | ||||||||||||||||||||||
(in millions) | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | |||||||||||||||||
Operating revenue | $ | 1,697 | $ | 1,689 | $ | 3,386 | $ | 1,601 | $ | 1,497 | $ | 3,098 | |||||||||||
Fuel and purchased power | — | 1,374 | 1,374 | — | 1,218 | 1,218 | |||||||||||||||||
Operations and maintenance | 541 | 278 | 819 | 541 | 262 | 803 | |||||||||||||||||
Depreciation, decommissioning and amortization | 323 | 35 | 358 | 300 | 16 | 316 | |||||||||||||||||
Property taxes and other | 69 | 2 | 71 | 64 | 1 | 65 | |||||||||||||||||
Total operating expenses | 933 | 1,689 | 2,622 | 905 | 1,497 | 2,402 | |||||||||||||||||
Operating income | 764 | — | 764 | 696 | — | 696 | |||||||||||||||||
Net interest expense and other | (98 | ) | — | (98 | ) | (84 | ) | — | (84 | ) | |||||||||||||
Income before income taxes | 666 | — | 666 | 612 | — | 612 | |||||||||||||||||
Income tax expense | 245 | — | 245 | 205 | — | 205 | |||||||||||||||||
Net income | 421 | — | 421 | 407 | — | 407 | |||||||||||||||||
Dividends on preferred and preference stock | 15 | — | 15 | 13 | — | 13 | |||||||||||||||||
Net income available for common stock | $ | 406 | $ | — | $ | 406 | $ | 394 | $ | — | $ | 394 | |||||||||||
Core Earnings1 | $ | 406 | $ | 352 | |||||||||||||||||||
Non-Core Earnings: | |||||||||||||||||||||||
Global Settlement | — | 42 | |||||||||||||||||||||
Total SCE GAAP Earnings | $ | 406 | $ | 394 |
1 | See use of Non-GAAP financial measures in "Edison International Management Overview—Highlights of Operating Results." |
• | Higher operating revenue of $96 million primarily due to the following: |
• | $50 million increase primarily due to a 4.35% increase in 2011 authorized revenue approved in the 2009 CPUC GRC decision. |
• | $25 million increase in FERC-related revenue primarily due to CWIP incentive revenue for the Tehachapi transmission project. |
• | $15 million increase related to capital-related revenue requirements primarily related to the steam generator replacement project and EdisonSmartConnectTM. |
• | Higher depreciation, decommissioning and amortization expense of $23 million primarily related to increased transmission and distribution investments. |
• | Higher net interest expense and other of $14 million primarily due to higher outstanding balances on long-term debt. |
• | Higher income taxes primarily due to a benefit recorded in 2010 related to the Global Settlement. See "—Income Taxes" below for further information. |
• | Higher purchased power expense of $146 million primarily driven by the cost to replace CDWR contracts that expired in 2011 . |
• | Higher operation and maintenance expense of $16 million resulting primarily from increased energy efficiency program costs. |
• | Higher depreciation, decommissioning and amortization expense of $19 million primarily related to the steam generator replacement project and the EdisonSmartConnect™ project. |
Nine months ended September 30, 2011 | Nine months ended September 30, 2010 | ||||||||||||||||||||||
(in millions) | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | |||||||||||||||||
Operating revenue | $ | 4,442 | $ | 3,621 | $ | 8,063 | $ | 4,175 | $ | 3,329 | $ | 7,504 | |||||||||||
Fuel and purchased power | — | 2,691 | 2,691 | — | 2,612 | 2,612 | |||||||||||||||||
Operations and maintenance | 1,619 | 831 | 2,450 | 1,598 | 674 | 2,272 | |||||||||||||||||
Depreciation, decommissioning and amortization | 964 | 94 | 1,058 | 905 | 40 | 945 | |||||||||||||||||
Property taxes and other | 212 | 5 | 217 | 193 | 2 | 195 | |||||||||||||||||
Gain on sale of assets | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Total operating expenses | 2,795 | 3,621 | 6,416 | 2,696 | 3,327 | 6,023 | |||||||||||||||||
Operating income | 1,647 | — | 1,647 | 1,479 | 2 | 1,481 | |||||||||||||||||
Net interest expense and other | (269 | ) | — | (269 | ) | (244 | ) | (2 | ) | (246 | ) | ||||||||||||
Income before income taxes | 1,378 | — | 1,378 | 1,235 | — | 1,235 | |||||||||||||||||
Income tax expense | 496 | — | 496 | 338 | — | 338 | |||||||||||||||||
Net income | 882 | — | 882 | 897 | — | 897 | |||||||||||||||||
Dividends on preferred and preference stock | 44 | — | 44 | 39 | — | 39 | |||||||||||||||||
Net income available for common stock | $ | 838 | $ | — | $ | 838 | $ | 858 | $ | — | $ | 858 | |||||||||||
Core Earnings1 | $ | 838 | $ | 802 | |||||||||||||||||||
Non-Core Earnings: | |||||||||||||||||||||||
Global Settlement | — | 95 | |||||||||||||||||||||
Tax impact of health care legislation | — | (39 | ) | ||||||||||||||||||||
Total SCE GAAP Earnings | $ | 838 | $ | 858 |
1 | See use of Non-GAAP financial measures in "Edison International Management Overview—Highlights of Operating Results." |
• | Higher operating revenue of $267 million primarily due to the following: |
• | $130 million increase primarily due to a 4.35% increase in 2011 authorized revenue approved in the 2009 CPUC GRC decision. |
• | $90 million increase in FERC-related revenue primarily due to CWIP incentive revenue for the Tehachapi transmission project and the implementation of the 2010 FERC rate case effective March 1, 2010. |
• | $50 million increase related to capital-related revenue requirements primarily related to the steam generator replacement project and EdisonSmartConnectTM. |
• | Higher depreciation, decommissioning and amortization expense of $59 million primarily related to increased transmission and distribution investments. |
• | Higher net interest expense and other of $25 million primarily due to higher outstanding balances on long-term debt. |
• | Higher income taxes primarily due to benefits recorded in 2010 related to the Global Settlement. See "—Income Taxes" below for more information. |
• | Higher purchased power expense of $85 million primarily driven by the cost to replace CDWR contracts that expired in 2011 and higher average prices from a shift to renewable contracts. The increase was partially offset by increased purchased power in 2010 during the outages at San Onofre and Four Corners. |
• | Higher operation and maintenance expense of $157 million resulting primarily from increased energy efficiency program costs. |
• | Higher depreciation, decommissioning and amortization expense of $54 million primarily related to the steam generator replacement project and the EdisonSmartConnect™ project. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Income before income taxes | $ | 666 | $ | 612 | $ | 1,378 | $ | 1,235 | |||||||
Provision for income tax at federal statutory rate of 35% | $ | 233 | $ | 214 | $ | 482 | $ | 433 | |||||||
Increase (decrease) in income tax from: | |||||||||||||||
Items presented with related state income tax, net | |||||||||||||||
Global settlement related1 | — | (42 | ) | — | (95 | ) | |||||||||
Change in tax accounting method for asset removal costs2 | — | — | — | (40 | ) | ||||||||||
State tax – net of federal benefit | 31 | 26 | 61 | 47 | |||||||||||
Health care legislation3 | — | — | — | 39 | |||||||||||
Property-related and other | (19 | ) | 7 | (47 | ) | (46 | ) | ||||||||
Total income tax expense | $ | 245 | $ | 205 | $ | 496 | $ | 338 | |||||||
Effective tax rate | 37 | % | 33 | % | 36 | % | 27 | % |
1 | During the nine months ended September 30, 2010, SCE recognized a $95 million earnings benefit relating to the California impact of the federal Global Settlement, including $53 million in the second quarter resulting from the acceptance by the California Franchise Tax |
2 | During the second quarter of 2010, the IRS approved SCE's request to change its tax accounting method for asset removal costs primarily related to its infrastructure replacement program. As a result, SCE recognized a $40 million earnings benefit (of which $28 million relates to asset removal costs incurred prior to 2010) from deducting asset removal costs earlier in the construction cycle. These deductions are recorded on a flow-through basis. |
3 | During the first quarter of 2010, SCE recorded a $39 million non-cash charge to reverse previously recognized federal tax benefits eliminated by the federal health care legislation enacted in March 2010. The health care law eliminated the federal tax deduction for retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies. |
(in millions) | Credit Facilities | ||
Commitment | $ | 2,894 | |
Outstanding borrowings supported by credit facilities | (550 | ) | |
Outstanding letters of credit | (83 | ) | |
Amount available | $ | 2,261 |
(in millions) | |||
Collateral posted as of September 30, 20111 | $ | 106 | |
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade | 135 | ||
Posted and potential collateral requirements2 | $ | 241 |
1 | Collateral provided to counterparties and other brokers consisted of $14 million which was offset against net derivative liabilities and $92 million, which consisted of $9 million in cash reflected in “Other current assets” on the consolidated balance sheets and $83 million in letters of credit. |
2 | Total posted and potential collateral requirements may increase by an additional $2 million based on SCE's forward positions as of September 30, 2011 due to adverse market price movements over the remaining lives of the existing power procurement contracts using a 95% confidence level. |
Nine months ended September 30, | |||||||
(in millions) | 2011 | 2010 | |||||
Net cash provided by operating activities | $ | 2,272 | $ | 2,656 | |||
Net cash provided by financing activities | 672 | 622 | |||||
Net cash used by investing activities | (3,136 | ) | (2,883 | ) | |||
Net increase (decrease) in cash and cash equivalents | $ | (192 | ) | $ | 395 |
• | Issued $500 million of 3.875% first and refunding mortgage bonds due in 2021. The proceeds from these bonds were used to repay commercial paper borrowings and to fund SCE's capital program. |
• | Issued $550 million of commercial paper supported by SCE's line of credit to fund interim working capital requirements. |
• | Issued $125 million of 6.5% Series D preference stock. The proceeds from the issuance were used for general corporate purposes. |
• | Paid $345 million of dividends to Edison International. |
• | Purchased $86 million of its variable rate tax-exempt bonds. |
• | Issued $1 billion of first refunding mortgage bonds due in 2040 to fund SCE's capital program. |
• | Reissued $144 million of tax-exempt pollution control bonds due in 2035 to fund SCE's capital program. |
• | Repaid $250 million of senior unsecured notes. |
• | Paid $200 million in dividends to Edison International. |
September 30, 2011 | |||||||||||
(in millions) | Exposure2 | Collateral | Net Exposure | ||||||||
S&P Credit Rating1 | |||||||||||
A or higher | $ | 98 | $ | — | $ | 98 | |||||
Not rated3 | 5 | (1 | ) | 4 | |||||||
Total | $ | 103 | $ | (1 | ) | $ | 102 |
1 | SCE assigns a credit rating based on the lower of a counterparty's S&P or Moody's rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the two credit ratings. |
2 | Exposure excludes amounts related to contracts classified as normal purchases and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheets, except for any related net accounts receivable. |
3 | The exposure in this category relates to long-term power purchase agreements. SCE's exposure is mitigated by regulatory treatment. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Competitive power generation operating revenues | $ | 596 | $ | 691 | $ | 1,686 | $ | 1,838 | |||||||
Fuel | 242 | 228 | 597 | 602 | |||||||||||
Operation and maintenance | 221 | 224 | 832 | 794 | |||||||||||
Depreciation and amortization | 78 | 62 | 229 | 182 | |||||||||||
Other | — | — | 8 | 3 | |||||||||||
Total operating expenses | 541 | 514 | 1,666 | 1,581 | |||||||||||
Operating income | 55 | 177 | 20 | 257 | |||||||||||
Interest and dividend income | 1 | 4 | 31 | 28 | |||||||||||
Equity in income from unconsolidated affiliates – net | 56 | 62 | 68 | 101 | |||||||||||
Other income, net | 1 | — | 7 | — | |||||||||||
Interest expense | (81 | ) | (65 | ) | (244 | ) | (198 | ) | |||||||
Income (loss) from continuing operations before income taxes | 32 | 178 | (118 | ) | 188 | ||||||||||
Income tax expense (benefit) | (1 | ) | 64 | (103 | ) | (22 | ) | ||||||||
Income (loss) from continuing operations | 33 | 114 | (15 | ) | 210 | ||||||||||
Income (loss) from discontinued operations – net of tax | — | (4 | ) | (3 | ) | 4 | |||||||||
Net income (loss) | 33 | 110 | (18 | ) | 214 | ||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (1 | ) | — | ||||||||||
Net income (loss) available for common shareholder | $ | 33 | $ | 110 | $ | (17 | ) | $ | 214 | ||||||
Core Earnings (Losses)1 | $ | 33 | $ | 120 | $ | (14 | ) | $ | 158 | ||||||
Non-Core Earnings (Losses) | |||||||||||||||
Global Settlement | — | (6 | ) | — | 52 | ||||||||||
Discontinued Operations | — | (4 | ) | (3 | ) | 4 | |||||||||
Total EMG GAAP Earnings (Losses) | $ | 33 | $ | 110 | $ | (17 | ) | $ | 214 |
1 | See use of Non-GAAP financial measures in "Edison International Management Overview—Highlights of Operating Results." |
• | $81 million decrease in Midwest Generation adjusted operating income primarily due to lower capacity revenues, average realized energy prices and generation, and a gain in 2010 from the sale of bankruptcy claims against Lehman Brothers Commodity Services, Inc. and Lehman Brothers Holdings Inc. (“Lehman”). |
• | $22 million decrease in Homer City adjusted operating income primarily due to lower capacity revenues and higher coal costs. |
• | $16 million increase in interest expense primarily due to higher interest related to the new energy projects financings in 2011 of $6 million and lower capitalized interest of $11 million. |
• | $16 million decrease in energy trading revenues partially due to reduced revenues from power trading activities. The |
• | $10 million decrease in renewable energy adjusted operating income primarily due to lower capacity factors driven by wind conditions. |
• | $126 million decrease in Midwest Generation adjusted operating income primarily due to lower average realized energy prices and generation, and a gain in 2010 from the sale of bankruptcy claims against Lehman. |
• | $85 million decrease in Homer City adjusted operating income primarily due to lower energy revenues driven by lower generation, lower capacity revenues and higher plant maintenance costs from outages. Partially offsetting the decrease were unrealized derivative gains of $3 million in 2011 compared to losses of $13 million in 2010. |
• | $46 million increase in interest expense due to higher interest expense primarily related to the new energy projects financings in 2011 of $28 million and lower capitalized interest of $18 million. |
• | $38 million decrease in energy trading revenue partially due to reduced revenues from power trading activities. The decrease is also partially due to the allocation to Homer City the benefit of an arrangement that allows EMMT to deliver power into the NYISO from Homer City. However, such decrease resulting from that allocation is offset by the increase recognized at Homer City due to the arrangement. |
• | $12 million decrease in adjusted operating income from the Big 4 projects due to lower capacity prices under Midway-Sunset's new power purchase agreement and lower capacity and energy sales margin. |
• | $11 million higher income from a distribution received from the Doga project in 2011, compared to 2010. |
• | $6 million increase in renewable energy adjusted operating income due to the increase in wind projects in operation coupled with higher generation, partially offset by lower realized energy prices at the merchant wind projects. |
• | An earnings benefit of $52 million recorded in the nine months ended September 30, 2010 related to the acceptance by the California Franchise Tax Board of the tax positions finalized with the Internal Revenue Service in 2009 for tax years 1986 through 2002 as part of the federal settlement of tax disputes and a revision to the interest on federal disputed tax items. See “-Income Taxes” below for more information. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Midwest Generation plants | $ | 69 | $ | 150 | $ | 72 | $ | 198 | |||||||
Homer City plant1 | 26 | 48 | — | 85 | |||||||||||
Renewable energy projects | (2 | ) | 8 | 43 | 37 | ||||||||||
Energy trading1 | 11 | 27 | 67 | 105 | |||||||||||
Big 4 projects | 26 | 33 | 37 | 49 | |||||||||||
Sunrise | 29 | 27 | 28 | 30 | |||||||||||
Doga | — | — | 26 | 15 | |||||||||||
Other projects2 | 1 | — | 10 | 24 | |||||||||||
Leveraged lease income | 1 | 2 | 4 | 4 | |||||||||||
Other operating income (expense) | (1 | ) | (3 | ) | 1 | (2 | ) | ||||||||
160 | 292 | 288 | 545 | ||||||||||||
Corporate administrative and general | (32 | ) | (37 | ) | (101 | ) | (111 | ) | |||||||
Corporate depreciation and amortization | (6 | ) | (5 | ) | (18 | ) | (13 | ) | |||||||
AOI3 | $ | 122 | $ | 250 | $ | 169 | $ | 421 |
1 | Effective April 1, 2011, EMMT allocated to Homer City the benefit of an arrangement that allows EMMT to deliver power into the NYISO from Homer City. |
2 | Includes March Point which was sold in 2010. |
3 | AOI is equal to operating income (loss) under GAAP, plus equity in income (loss) of unconsolidated affiliates, dividend income from projects, production tax credits, other income and expenses, and net (income) loss attributable to noncontrolling interests. Production tax credits are recognized as wind energy is generated based on a per-kilowatt-hour rate prescribed in applicable federal and state statutes. AOI is a non-GAAP performance measure and may not be comparable to those of other companies. Management believes that inclusion of earnings of unconsolidated affiliates, dividend income from projects, production tax credits, other income and expenses, and net (income) loss attributable to noncontrolling interests in AOI is meaningful for investors as these components are integral to the operating results of EMG. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
AOI | $ | 122 | $ | 250 | $ | 169 | $ | 421 | |||||||
Less: | |||||||||||||||
Equity in income of unconsolidated affiliates | 56 | 61 | 68 | 100 | |||||||||||
Dividend income from projects | — | — | 27 | 18 | |||||||||||
Production tax credits | 10 | 12 | 47 | 45 | |||||||||||
Other income, net | 1 | — | 7 | 1 | |||||||||||
Operating Income | $ | 55 | $ | 177 | $ | 20 | $ | 257 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Operating Revenues | $ | 366 | $ | 444 | $ | 997 | $ | 1,104 | |||||||
Operating Expenses | |||||||||||||||
Fuel1 | 157 | 151 | 390 | 390 | |||||||||||
Plant operations | 86 | 93 | 368 | 358 | |||||||||||
Plant operating leases | 19 | 19 | 56 | 56 | |||||||||||
Depreciation and amortization | 29 | 28 | 87 | 84 | |||||||||||
Asset retirements | — | — | 9 | 3 | |||||||||||
Administrative and general | 6 | 3 | 17 | 15 | |||||||||||
Total operating expenses | 297 | 294 | 927 | 906 | |||||||||||
Operating Income | 69 | 150 | 70 | 198 | |||||||||||
Other Income | — | — | 2 | — | |||||||||||
AOI | $ | 69 | $ | 150 | $ | 72 | $ | 198 | |||||||
Statistics | |||||||||||||||
Generation (in GWh) | 7,957 | 8,449 | 20,987 | 22,091 |
1 | Included in fuel costs were $1 million and $5 million during the third quarters of 2011 and 2010, respectively, and $3 million and $10 million during the nine months ended September 30, 2011 and 2010, respectively, related to the net cost of emission allowances. Transfers of emission allowances between Midwest Generation and Homer City are made at fair market value. Transfers of NOx emission allowances to Midwest Generation were $0.4 million during each of the nine months ended September 30, 2011 and 2010, respectively. Transfers of SO2 emission allowances from Midwest Generation were none and $5 million during the nine months ended September 30, 2011 and 2010, respectively. For more information regarding the price of emission allowances, see "EMG: Market Risk Exposures—Commodity Price Risk—Emission Allowances Price Risk." |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Operating Revenues1 | $ | 159 | $ | 173 | $ | 410 | $ | 477 | |||||||
Operating Expenses | |||||||||||||||
Fuel2 | 81 | 74 | 196 | 201 | |||||||||||
Plant operations | 21 | 20 | 118 | 95 | |||||||||||
Plant operating leases | 25 | 25 | 76 | 77 | |||||||||||
Depreciation and amortization | 6 | 5 | 16 | 14 | |||||||||||
Asset retirements | — | — | — | 1 | |||||||||||
Administrative and general | — | 1 | 4 | 4 | |||||||||||
Total operating expenses | 133 | 125 | 410 | 392 | |||||||||||
Operating Income | 26 | 48 | — | 85 | |||||||||||
AOI | $ | 26 | $ | 48 | $ | — | $ | 85 | |||||||
Statistics | |||||||||||||||
Generation (in GWh) | 2,800 | 2,984 | 6,969 | 8,227 |
1 | Effective April 1, 2011, EMMT allocated to Homer City the benefit of an arrangement that allows EMMT to deliver power into the NYISO from Homer City. |
2 | Included in fuel costs were $2 million and $1 million during the third quarters of 2011 and 2010, respectively, and $3 million and $6 million during the nine months ended September 30, 2011 and 2010, respectively, related to the net cost of emission allowances. Transfers of emission allowances between Midwest Generation and Homer City are made at fair market value. Transfers of SO2 emission allowances to Homer City were none and $5 million during the nine months ended September 30, 2011 and 2010, respectively. Transfers of NOx emission allowances from Homer City were $0.4 million during each of the nine months ended September 30, 2011 and 2010. For more information regarding the price of emission allowances, see "EMG: Market Risk Exposures—Commodity Price Risk—Emission Allowances Price Risk." |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Operating Revenues | $ | 44 | $ | 29 | $ | 155 | $ | 93 | |||||||
Production Tax Credits | 10 | 12 | 47 | 45 | |||||||||||
54 | 41 | 202 | 138 | ||||||||||||
Operating Expenses | |||||||||||||||
Plant operations | 20 | 11 | 56 | 35 | |||||||||||
Depreciation and amortization | 35 | 21 | 103 | 64 | |||||||||||
Administrative and general | 1 | 1 | 3 | 2 | |||||||||||
Total operating expenses | 56 | 33 | 162 | 101 | |||||||||||
Equity in loss from unconsolidated affiliates | (1 | ) | — | — | — | ||||||||||
Other Income | 1 | — | 3 | — | |||||||||||
AOI1 | $ | (2 | ) | $ | 8 | $ | 43 | $ | 37 | ||||||
Statistics | |||||||||||||||
Generation (in GWh)2 | 953 | 764 | 3,893 | 2,599 |
1 | AOI is equal to operating income (loss) under GAAP plus equity in income (loss) of unconsolidated affiliates, dividend income from projects, production tax credits, other income and expense, and net (income) loss attributable to noncontrolling interests. Production tax credits are recognized as wind energy is generated based upon a per-kilowatt-hour rate prescribed in applicable federal and state statutes. Under GAAP, production tax credits generated by wind projects are recorded as a reduction in income taxes. Accordingly, AOI represents a non-GAAP performance measure which may not be comparable to those of other companies. Management believes that inclusion of production tax credits in AOI for wind projects is meaningful for investors as federal and state subsidies are an integral part of the economics of these projects. |
2 | Includes renewable energy projects that are unconsolidated at EME. Generation, excluding unconsolidated projects, was 819 GWh and 643 GWh in the third quarters of 2011 and 2010, respectively, and 3,356 GWh and 2,156 GWh in the nine months ended September 30, 2011 and 2010, respectively. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Interest expense, net of capitalized interest | |||||||||||||||
EME debt | $ | (66 | ) | $ | (56 | ) | $ | (191 | ) | $ | (174 | ) | |||
Non-recourse debt | (15 | ) | (9 | ) | (53 | ) | (24 | ) | |||||||
$ | (81 | ) | $ | (65 | ) | $ | (244 | ) | $ | (198 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Income (loss) from continuing operations before income taxes | $ | 32 | $ | 178 | $ | (118 | ) | $ | 188 | ||||||
Provision (benefit) for income taxes at federal statutory rate of 35% | $ | 11 | $ | 62 | $ | (41 | ) | $ | 66 | ||||||
Increase (decrease) in income tax from: | |||||||||||||||
State tax – net of federal provision (benefit) | 1 | 8 | (8 | ) | 9 | ||||||||||
Tax credits, net | (12 | ) | (16 | ) | (49 | ) | (50 | ) | |||||||
Global Settlement related | — | 6 | — | (52 | ) | ||||||||||
Other | (1 | ) | 4 | (5 | ) | 5 | |||||||||
Total income tax expense (benefit) | $ | (1 | ) | $ | 64 | $ | (103 | ) | $ | (22 | ) | ||||
Effective tax rate | (3 | )% | 36 | % | 87 | % | (12 | )% |
(in millions) | Cash and Cash Equivalents | Available Under Credit Facilities | Total Available Liquidity | ||||||||
EME as a holding company | $ | 539 | $ | 499 | $ | 1,038 | |||||
EME subsidiaries without contractual dividend restrictions | 195 | — | 195 | ||||||||
EME corporate cash and cash equivalents | 734 | 499 | 1,233 | ||||||||
EME subsidiaries with contractual dividend restrictions | |||||||||||
Midwest Generation1 | 333 | 497 | 830 | ||||||||
Homer City | 108 | — | 108 | ||||||||
Other EME subsidiaries | 60 | — | 60 | ||||||||
Other EMG subsidiaries | 41 | 41 | |||||||||
Total | $ | 1,276 | $ | 996 | $ | 2,272 |
1 | Cash and cash equivalents are available to meet Midwest Generation's operating and capital expenditure requirements. |
(in millions) | EME | Midwest Generation | |||||
Commitments | $ | 564 | $ | 500 | |||
Outstanding borrowings | — | — | |||||
Outstanding letters of credit | (65 | ) | (3 | ) | |||
Amount available | $ | 499 | $ | 497 |
(in millions) | October through December 2011 | 2012 | 2013 | |||||||||
Midwest Generation Plants | ||||||||||||
Environmental1 | $ | 26 | $ | 172 | $ | 316 | ||||||
Plant capital | 5 | 22 | 29 | |||||||||
Homer City Plant | ||||||||||||
Environmental1 | 13 | — | — | |||||||||
Plant capital | 1 | 26 | 16 | |||||||||
Walnut Creek Project | 78 | 223 | 72 | 72 | ||||||||
Renewable Energy Projects | ||||||||||||
Capital and construction | 92 | 108 | — | |||||||||
Other capital | 5 | 14 | 14 | |||||||||
Total | $ | 220 | $ | 565 | $ | 447 |
1 | For additional information, see "Edison International Management Overview—Management Overview of EMG—Cross-State Air Pollution Rule." |
Nine months ended September 30, | |||||||
(in millions) | 2011 | 2010 | |||||
Operating cash flow from continuing operations | $ | 567 | $ | 289 | |||
Operating cash flow from discontinued operations | (3 | ) | 4 | ||||
Net cash provided by operating activities | 564 | 293 | |||||
Net cash provided by financing activities | 112 | 83 | |||||
Net cash used by investing activities | (498 | ) | (443 | ) | |||
Net increase (decrease) in cash and cash equivalents | $ | 178 | $ | (67 | ) |
Moody's Rating | S&P Rating | Fitch Rating | |||
EME1 | Caa1 | B- | CCC | ||
Midwest Generation2 | Ba3 | B+ | BB- | ||
EMMT | Not Rated | B- | Not Rated |
1 | Senior unsecured rating. |
2 | First priority senior secured rating. |
Twelve months ended | |||||
September 30, 2011 | December 31, 2010 | ||||
Ratio | 2.49 | 2.07 | |||
Covenant threshold (not less than) | 1.20 | 1.20 |
September 30, 2011 | December 31, 2010 | ||||
Corporate-debt-to-capital ratio | 0.52 | 0.52 | |||
Covenant threshold (not more than) | 0.75 | 0.75 |
Subsidiary | Financial Ratio | Covenant | Actual | ||
Midwest Generation (Midwest Generation plants) | Debt to Capitalization Ratio | Less than or equal to 0.60 to 1 | 0.13 to 1 | ||
Homer City (Homer City plant) | Senior Rent Service Coverage Ratio | Greater than 1.7 to 1 | 1.64 to 1 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Midwest Generation plants | |||||||||||||||
Non-qualifying hedges | $ | (8 | ) | $ | (12 | ) | $ | (7 | ) | $ | (18 | ) | |||
Ineffective portion of cash flow hedges | 1 | (2 | ) | — | 1 | ||||||||||
Homer City plant | |||||||||||||||
Non-qualifying hedges | (6 | ) | — | (3 | ) | — | |||||||||
Ineffective portion of cash flow hedges | 4 | 1 | 6 | (13 | ) | ||||||||||
Total unrealized losses | $ | (9 | ) | $ | (13 | ) | $ | (4 | ) | $ | (30 | ) |
24-Hour Average Historical Market Prices1 | |||||||
2011 | 2010 | ||||||
Midwest Generation plants | |||||||
Northern Illinois Hub | $ | 35.39 | $ | 35.02 | |||
Homer City plant | |||||||
PJM West Hub | 46.38 | 46.65 | |||||
Homer City Busbar | 42.14 | 39.80 |
1 | Energy prices were calculated at the Northern Illinois Hub and Homer City Busbar delivery points and the PJM West Hub using historical hourly real-time prices as published by PJM or provided on the PJM web-site. |
24-Hour Forward Energy Prices1 | |||||||
Northern Illinois Hub | PJM West Hub | ||||||
2011 | |||||||
October | $ | 26.05 | $ | 38.10 | |||
November | 27.27 | 38.97 | |||||
December | 31.10 | 46.02 | |||||
2012 calendar "strip"2 | 33.67 | 45.46 | |||||
2013 calendar "strip"2 | 36.48 | 48.46 |
1 | Energy prices were determined by obtaining broker quotes and information from other public sources relating to the Northern Illinois Hub and PJM West Hub delivery points. |
2 | Market price for energy purchases for the entire calendar year. |
2011 | 2012 | 2013 | ||||||||||||||||||
MWh (in thousands) | Average price/ MWh1 | MWh (in thousands) | Average price/ MWh1 | MWh (in thousands) | Average price/ MWh1 | |||||||||||||||
Midwest Generation plants2 | ||||||||||||||||||||
Northern Illinois | 3,959 | $ | 38.61 | 8,206 | $ | 37.60 | 1,020 | $ | 39.11 | |||||||||||
Homer City plant3,4 | ||||||||||||||||||||
PJM West Hub | 1,145 | 51.37 | 1,319 | 51.79 | 204 | 51.85 | ||||||||||||||
Total | 5,104 | 9,525 | 1,224 |
1 | The above hedge positions include forward contracts for the sale of power and futures contracts during different periods of the year and the day. Market prices tend to be higher during on-peak periods and during summer months, although there is significant variability of power prices during different periods of time. Accordingly, the above hedge positions are not directly comparable to the 24-hour Northern Illinois Hub or PJM West Hub prices set forth above. |
2 | Includes hedging transactions primarily at the Northern Illinois Hub and to a lesser extent the AEP/Dayton and Cinergy Hubs. |
3 | Includes hedging transactions primarily at the PJM West Hub and to a lesser extent at other trading locations. Years 2011 and 2012 include hedging activities entered into by EMMT for the Homer City plant that are not designated under the intercompany agreements with Homer City due to limitations under the sale-leaseback transaction documents. |
4 | The average price/MWh includes 165 MW of capacity for periods ranging from October 1, 2011 to May 31, 2012 at Homer City sold in conjunction with load requirements services contracts. |
Installed Capacity MW | Unsold Capacity1 MW | Capacity Sold2 MW | RPM Capacity Sold in Base Residual Auction | Other Capacity Sales, Net of Purchases3 | Aggregate Average Price per MW-day | ||||||||||||||||||||||
MW | Price per MW-day | MW | Average Price per MW-day | ||||||||||||||||||||||||
October 1, 2011 to May 31, 2012 | |||||||||||||||||||||||||||
Midwest Generation | 5,477 | (495 | ) | 4,982 | 4,582 | $ | 110.00 | 400 | $ | 85.00 | $ | 107.99 | |||||||||||||||
Homer City | 1,884 | (163 | ) | 1,721 | 1,771 | 110.00 | (50 | ) | 30.00 | 112.32 | |||||||||||||||||
June 1, 2012 to May 31, 2013 | |||||||||||||||||||||||||||
Midwest Generation | 5,477 | (773 | ) | 4,704 | 4,704 | 16.46 | — | — | 16.46 | ||||||||||||||||||
Homer City | 1,884 | (232 | ) | 1,652 | 1,736 | 133.37 | (84 | ) | 16.46 | 139.31 | |||||||||||||||||
June 1, 2013 to May 31, 2014 | |||||||||||||||||||||||||||
Midwest Generation | 5,477 | (827 | ) | 4,650 | 4,650 | 27.73 | — | — | 27.73 | ||||||||||||||||||
Homer City | 1,884 | (104 | ) | 1,780 | 1,780 | 226.15 | — | — | 221.03 | 4 | |||||||||||||||||
June 1, 2014 to May 31, 2015 | |||||||||||||||||||||||||||
Midwest Generation | 5,477 | (852 | ) | 4,625 | 4,625 | 125.99 | — | — | 125.99 | ||||||||||||||||||
Homer City | 1,884 | (190 | ) | 1,694 | 1,694 | 136.50 | — | — | 136.50 |
1 | Capacity not sold arises from: (i) capacity retained to meet forced outages under the RPM auction guidelines, and (ii) capacity that PJM does not purchase at the clearing price resulting from the RPM auction. |
2 | Excludes 165 MW of capacity for periods ranging from October 1, 2011 to May 31, 2012 at Homer City sold in conjunction with load requirements services contracts. |
3 | Other capacity sales and purchases, net includes contracts executed in advance of the RPM base residual auction to hedge the price risk related to such auction, participation in RPM incremental auctions and other capacity transactions entered into to manage capacity risks. |
4 | Includes the impact of a 100 MW capacity swap transaction executed prior to the base residual auction at $135 per MW-day. |
Amount of Coal Under Contract in Millions of Equivalent Tons1 | |||||||||||
October through December 2011 | 2012 | 2013 | 2014 | ||||||||
Midwest Generation plants | 5.0 | 13.7 | 9.8 | 9.8 | |||||||
Homer City plant | 1.8 | 2.2 | 0.8 | — |
1 | The amount of coal under contract in equivalent tons is calculated based on contracted tons and applying an 8,800 Btu equivalent for the Midwest Generation plants and 13,000 Btu equivalent for the Homer City plant. |
September 30, 2011 | |||||||||||
(in millions) | Exposure2 | Collateral | Net Exposure | ||||||||
Credit Rating1 | |||||||||||
A or higher | $ | 105 | $ | (7 | ) | $ | 98 | ||||
A- | 2 | — | 2 | ||||||||
BBB+ | 15 | — | 15 | ||||||||
BBB- | 7 | — | 7 | ||||||||
Below investment grade | 24 | (23 | ) | 1 | |||||||
Total | $ | 153 | $ | (30 | ) | $ | 123 |
1 | EMG assigns a credit rating based on the lower of a counterparty's S&P or Moody's rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the two credit ratings. |
2 | Exposure excludes amounts related to contracts classified as normal purchase and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheet, except for any related accounts receivable. |
(in millions) | Edison International (parent) | ||
Commitment | $ | 1,426 | |
Outstanding borrowings | (10 | ) | |
Outstanding letters of credit | — | ||
Amount available | $ | 1,416 |
Nine months ended September 30, | |||||||
(in millions) | 2011 | 2010 | |||||
Net cash used by operating activities | $ | (13 | ) | $ | (200 | ) | |
Net cash provided by financing activities | 21 | 200 | |||||
Net cash provided by investing activities | 1 | 7 | |||||
Net increase in cash and cash equivalents | $ | 9 | $ | 7 |
• | Paid $313 million of dividends to Edison International common shareholders. |
• | Received $345 million of dividend payments from SCE. |
• | Repaid $9 million under Edison International's line of credit. |
• | Issued $400 million of senior notes due in 2017. The proceeds from these bonds were used to repay short-term borrowings under the revolving credit facility and the remainder for corporate liquidity purposes. |
• | Paid $308 million of dividends to Edison International common shareholders. |
• | Received $200 million of dividend payments from SCE. |
• | Repaid $85 million under Edison International's line of credit. |
Period | (a) Total Number of Shares (or Units) Purchased1 | (b) Average Price Paid per Share (or Unit)1 | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||
July 1, 2011 to July 31, 2011 | 160,830 | $ | 38.44 | — | — | |||||||
August 1, 2011 to August 31, 2011 | 1,017,331 | $ | 36.48 | — | — | |||||||
September 1, 2011 to September 30, 2011 | 485,092 | $ | 36.66 | — | — | |||||||
Total | 1,663,253 | $ | 36.72 | — | — |
1 | The shares were purchased by agents acting on Edison International's behalf for delivery to plan participants to fulfill requirements in connection with Edison International's: (i) 401(k) Savings Plan; (ii) Dividend Reinvestment and Direct Stock Purchase Plan; and (iii) long-term incentive compensation plans. The shares were purchased in open-market transactions pursuant to plan terms or participant elections. The shares were never registered in Edison International's name and none of the shares purchased were retired as a result of the transactions. |
3.1 | Bylaws of Edison International, as amended October 27, 2011 | |
31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
32 | Statement Pursuant to 18 U.S.C. Section 1350 | |
101 | Financial statements from the quarterly report on Form 10-Q of Edison International for the quarter ended September 30, 2011, filed on November 2, 2011, formatted in XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements |
EDISON INTERNATIONAL (Registrant) | ||
By: | /s/ Mark C. Clarke | |
Mark C. Clarke Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer) |
INDEX | ||
Page | ||
ARTICLE I - PRINCIPAL OFFICE | ||
Section 1. Principal Office | 1 | |
ARTICLE II - SHAREHOLDERS | ||
Section 1. Meeting Locations | 1 | |
Section 2. Annual Meetings | 1 | |
Section 3. Special Meetings | 2 | |
Section 4. Notice of Annual or Special Meeting | 2 | |
Section 5. Quorum | 3 | |
Section 6. Adjourned Meeting and Notice Thereof | 4 | |
Section 7. Voting | 4 | |
Section 8. Record Date | 6 | |
Section 9. Consent of Absentees | 7 | |
Section 10. Action Without Meeting | 7 | |
Section 11. Proxies | 8 | |
Section 12. Inspectors of Election | 8 | |
ARTICLE III - DIRECTORS | ||
Section 1. Powers | 9 | |
Section 2. Number of Directors | 9 | |
Section 3. Election and Term of Office | 10 | |
Section 4. Vacancies | 10 | |
Section 5. Place of Meeting | 11 | |
Section 6. Organization Meeting | 11 | |
Section 7. Special Meetings and Other Regular Meetings | 11 | |
Section 8. Quorum | 12 | |
Section 9. Participation in Meetings by Conference Telephone | 12 | |
Section 10. Waiver of Notice | 12 | |
Section 11. Adjournment | 12 | |
Section 12. Fees and Compensation | 12 | |
Section 13. Action Without Meeting | 13 | |
Section 14. Rights of Inspection | 13 | |
Section 15. Committees | 13 | |
ARTICLE IV - OFFICERS | ||
Section 1. Officers | 14 | |
Section 2. Election | 14 | |
Section 3. Eligibility of Chairman | 14 | |
Section 4. Removal and Resignation | 14 | |
Section 5. Appointment of Other Officers | 15 | |
Section 6. Vacancies | 15 | |
Section 7. Salaries | 15 | |
Section 8. Furnish Security for Faithfulness | 15 | |
Section 9. Chairman's Duties; Succession to | ||
Such Duties in Chairman's Absence or Disability | 15 | |
Section 11. Chief Financial Officer | 16 | |
Section 12. Vice Presidents' Duties | 16 | |
Section 13. General Counsel's Duties | 16 | |
Section 14. Associate General Counsel's and Assistant General | ||
Counsel's Duties | 16 | |
Section 15. Controller's Duties | 17 | |
Section 16. Assistant Controllers' Duties | 17 | |
Section 17. Treasurer's Duties | 17 | |
Section 18. Assistant Treasurers' Duties | 17 | |
Section 19. Secretary's Duties | 17 | |
Section 20. Assistant Secretaries' Duties | 18 | |
Section 21. Secretary Pro Tempore | 18 | |
Section 22. Election of Acting Treasurer or Acting Secretary | 18 | |
Section 23. Performance of Duties | 19 | |
ARTICLE V - OTHER PROVISIONS | ||
Section 1. Inspection of Corporate Records | 19 | |
Section 2. Inspection of Bylaws | 20 | |
Section 3. Contracts and Other Instruments, Loans, Notes | ||
and Deposits of Funds | 20 |
Section 4. Certificates of Stock and Uncertificated Stock | 21 | |
Section 5. Transfer Agent, Transfer Clerk and Registrar | 22 | |
Section 6. Representation of Shares of Other Corporations | 22 | |
Section 7. Stock Purchase Plans | 22 | |
Section 8. Fiscal Year and Subdivisions | 22 | |
Section 9. Construction and Definitions | 23 | |
ARTICLE VI - INDEMNIFICATION | ||
Section 1. Indemnification of Directors and Officers | 23 | |
Section 2. Indemnification of Employees and Agents | 24 | |
Section 3. Right of Directors and Officers to Bring Suit | 25 | |
Section 4. Successful Defense | 25 | |
Section 5. Non-Exclusivity of Rights | 25 | |
Section 6. Insurance | 25 | |
Section 7. Expenses as a Witness | 25 | |
Section 8. Indemnity Agreements | 26 | |
Section 9. Separability | 26 | |
Section 10. Effect of Repeal or Modification | 26 | |
ARTICLE VII - EMERGENCY PROVISIONS | ||
Section 1. General | 26 | |
Section 2. Notice of Meetings | 27 | |
Section 3. Quorum | 27 | |
ARTICLE VIII - AMENDMENTS | ||
Section 1. Amendments | 27 |
(i) | If only one votes, such act binds all; |
(ii) | If more than one vote, the act of the majority so voting binds all; |
(iii) | If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately. |
Section 9. | Chairman's Duties; Succession to Such Duties in Chairman's Absence or Disability. |
Section 14. | Associate General Counsel's and Assistant General Counsel's Duties. |
Section 3. | Contracts and Other Instruments, Loans, Notes and Deposits of Funds. |
/s/ THEODORE F. CRAVER, JR. |
THEODORE F. CRAVER, JR. Chief Executive Officer |
/s/ W. JAMES SCILACCI |
W. JAMES SCILACCI Chief Financial Officer |
1. | The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ THEODORE F. CRAVER, JR. |
THEODORE F. CRAVER, JR. Chief Executive Officer Edison International |
/s/ W. JAMES SCILACCI |
W. JAMES SCILACCI Chief Financial Officer Edison International |
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Millions | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Net gain arising during the period, income tax expense | $ 0 | $ 0 | $ 0 | $ 2 |
Amortization of net (gain) loss included in net income, income tax expense (benefit) | 1 | 1 | 4 | (3) |
Prior service credit arising during the period, income tax expense | 0 | 0 | 0 | 1 |
Amortization of prior service credit, income tax benefit | 0 | 0 | 0 | (1) |
Unrealized holding gain (loss) arising during the period, income tax expense (benefit) | (19) | 29 | (24) | 41 |
Reclassification adjustments included in net income, income tax benefit | $ 0 | $ 5 | $ 12 | $ 54 |
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | 9 Months Ended | 6 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2011
Southern California Edison Company
New Contract [Member]
Purchased power | Oct. 30, 2011
Edison Mission Group Inc.
New Contract [Member]
Turbine commitments | Sep. 30, 2011
Southern California Edison Company
Transmission Agreement [Member] | Sep. 30, 2011
Southern California Edison Company
Environmental Indemnities | Sep. 30, 2011
Southern California Edison Company
Operating Leases - Purchase Power Contracts | Jun. 30, 2011
Edison Mission Group Inc.
Turbine commitments | Oct. 08, 2010
Edison Mission Group Inc.
Mitsubishi Power Systems Americans, Inc. and Mitsubishi Heavy Industries, Ltd.
mW | Sep. 30, 2011
Edison Mission Group Inc.
Capital Expenditures | Sep. 30, 2011
Edison Mission Energy
Indemnities under International Asset Sale Agreements | Sep. 30, 2011
Midwest Generation and EME Homer City Generation L.P. (Homer City)
Purchase of fuel and transportation of gas and coal | Feb. 20, 2003
Midwest Generation LLC.
Environmental Indemnities under Acquisition Agreement | Sep. 30, 2011
Midwest Generation LLC.
Environmental Indemnities under Acquisition Agreement | |
Third-Party Power Purchase Agreements | ||||||||||||
Estimated additional commitments in 2012 | $ 116,000,000 | |||||||||||
Estimated additional commitments in 2013 | 116,000,000 | |||||||||||
Estimated additional commitments in 2014 | 116,000,000 | |||||||||||
Estimated additional commitments in 2015 | 116,000,000 | |||||||||||
Estimated additional commitments for the period remaining thereafter | 1,900,000,000 | |||||||||||
Subsequent Long-term Purchase Commitment Amount Year One | 5,000,000 | |||||||||||
Subsequent Long-term Purchase Commitment Amount Year Two | 81,000,000 | |||||||||||
Subsequent Long-term Purchase Commitment Amount Year Three | 178,000,000 | |||||||||||
Subsequent Long-term Purchase Commitment Amount Year Four | 240,000,000 | |||||||||||
Other Commitments | ||||||||||||
Purchase commitments, remainder of 2011 | 1,000,000 | 245,000,000 | ||||||||||
Purchase commitments, 2012 | 4,000,000 | 332,000,000 | ||||||||||
Purchase commitments, 2013 | 4,000,000 | 198,000,000 | ||||||||||
Purchase commitments, 2014 | 4,000,000 | 150,000,000 | ||||||||||
Purchase commitments, 2015 | 4,000,000 | |||||||||||
Purchase commitments, Thereafter | 78,000,000 | |||||||||||
Purchase commitments, aggregate | 925,000,000 | |||||||||||
Turbine Commitments | ||||||||||||
Charges for default of termination of turbine commitments | 29,000,000 | |||||||||||
Long-term Purchase Commitment, Amount | 39,000,000 | |||||||||||
Additional wind turbines to be deployed in future | 60 | |||||||||||
Additional power generating capacity of turbines to be deployed in future (in megawatts) | 144 | |||||||||||
Payment obligation to be made following the end of three year period from date of settlement agreement | 30,000,000 | |||||||||||
Period after which payment may be due (in years) | 3 | |||||||||||
Capital Commitments | ||||||||||||
Wind turbine payment commitments in remainder of 2011 | 157,000,000 | |||||||||||
Wind turbine payment commitments in 2012 | 235,000,000 | |||||||||||
Wind turbine payment commitments in 2013 | 19,000,000 | |||||||||||
Guarantees and Indemnities | ||||||||||||
Percentage reimbursement obligation for asbestos claims (as a percent) | 50.00% | |||||||||||
Term of asbestos supplemental agreement | The supplemental agreement had an initial five-year term with an automatic renewal provision for subsequent one-year terms (subject to the right of either party to terminate); pursuant to the automatic renewal provision, it has been extended until February 2012. | |||||||||||
Number of cases not settled and dismissed creating potential liability | 230 | |||||||||||
Liability under indemnities | 43,000,000 | 55,000,000 | ||||||||||
Maximum liability under indemnity per Mountainview purchase agreement for damages and other amounts | $ 60,000,000 |
Other Income and Expenses | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses | Other Income and Expenses Other income and expenses are as follows:
|
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Oct. 31, 2011 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | EDISON INTERNATIONAL | |
Entity Central Index Key | 0000827052 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 325,811,206 |
Derivative Instruments and Hedging Activities (Details 2) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Electric Utility | Electricity options, swaps and forwards in gigawatts per hour (GWh) | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 30,143 | 32,138 |
Electric Utility | Natural gas options, swaps and forwards, Bcf | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 266 | 250 |
Electric Utility | CRRs | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 146,628 | 181,291 |
Electric Utility | Tolling arrangements (GWh) | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 104,822 | 114,599 |
Competitive power generation | Electricity Forwards/Futures, Sales, GWh | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 15,910 | 16,799 |
Competitive power generation | Electricity Forwards/Futures, Sales, GWh | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 13,353 | 22,456 |
Competitive power generation | Electricity Forwards/Futures, Sales, GWh | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 36,597 | 34,630 |
Competitive power generation | Electricity Forwards/Futures, Purchases, GWh | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 101 | 408 |
Competitive power generation | Electricity Forwards/Futures, Purchases, GWh | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 13,230 | 22,931 |
Competitive power generation | Electricity Forwards/Futures, Purchases, GWh | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 42,429 | 37,669 |
Competitive power generation | Electricity Capacity, Sales, MW-Day (in thousands) | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 134,000 | 190,000 |
Competitive power generation | Electricity Capacity, Sales, MW-Day (in thousands) | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Electricity Capacity, Sales, MW-Day (in thousands) | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 12,000 | 136,000 |
Competitive power generation | Electricity Capacity, Purchases, MW-Day (in thousands) | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 12,000 | 8,000 |
Competitive power generation | Electricity Capacity, Purchases, MW-Day (in thousands) | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Electricity Capacity, Purchases, MW-Day (in thousands) | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 219,000 | 419,000 |
Competitive power generation | Electricity Congestion, Sales, GWh | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Electricity Congestion, Sales, GWh | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 90 | 136 |
Competitive power generation | Electricity Congestion, Sales, GWh | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 15,910 | 12,020 |
Competitive power generation | Electricity Congestion, Purchases, GWh | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Electricity Congestion, Purchases, GWh | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 4,023 | 1,143 |
Competitive power generation | Electricity Congestion, Purchases, GWh | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 253,688 | 187,689 |
Competitive power generation | Natural Gas Forwards/Futures, Sales, billion cubic feet | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Natural Gas Forwards/Futures, Sales, billion cubic feet | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Natural Gas Forwards/Futures, Sales, billion cubic feet | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 55.3 | 30.6 |
Competitive power generation | Natural Gas Forwards/Futures, Purchases, billion cubic feet | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Natural Gas Forwards/Futures, Purchases, billion cubic feet | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Natural Gas Forwards/Futures, Purchases, billion cubic feet | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 53.4 | 34.3 |
Competitive power generation | Fuel Oil Forwards/Futures, Sales, Barrels | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Fuel Oil Forwards/Futures, Sales, Barrels | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 250,000 |
Competitive power generation | Fuel Oil Forwards/Futures, Sales, Barrels | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 100,000 | 10,000 |
Competitive power generation | Fuel Oil Forwards/Futures, Purchases, Barrels | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | |
Competitive power generation | Fuel Oil Forwards/Futures, Purchases, Barrels | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 240,000 | 490,000 |
Competitive power generation | Fuel Oil Forwards/Futures, Purchases, Barrels | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 140,000 | 10,000 |
Competitive power generation | Coal Forwards/Futures, Sales, tons | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Coal Forwards/Futures, Sales, tons | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Coal Forwards/Futures, Sales, tons | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 1,485,000 | 2,630,500 |
Competitive power generation | Coal Forwards/Futures, Purchases, tons | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Coal Forwards/Futures, Purchases, tons | Economic hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 | 0 |
Competitive power generation | Coal Forwards/Futures, Purchases, tons | Trading Activities [Member] | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 1,485,000 | 2,645,500 |
Competitive power generation | Cash flow hedges | ||
Derivatives | ||
Notional Volumes of Derivative Instruments | 0 |
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Components |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EPS computation | EPS attributable to Edison International common shareholders was computed as follows:
|
Derivative Instruments and Hedging Activities (Details) (USD $) In Millions | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Dec. 31, 2010 | Sep. 30, 2011
Electric Utility
Commodity contracts | Dec. 31, 2010
Electric Utility
Commodity contracts | Sep. 30, 2011
Electric Utility
Commodity contracts
Economic hedges | Dec. 31, 2010
Electric Utility
Commodity contracts
Economic hedges | Sep. 30, 2011
Electric Utility
Commodity contracts
Netting and Collateral | Dec. 31, 2010
Electric Utility
Commodity contracts
Netting and Collateral | Sep. 30, 2011
Competitive power generation | Dec. 31, 2010
Competitive power generation | Sep. 30, 2011
Competitive power generation
Trading and Non-trading activities | Dec. 31, 2010
Competitive power generation
Trading and Non-trading activities | Sep. 30, 2011
Competitive power generation
Cash flow hedges | Dec. 31, 2010
Competitive power generation
Cash flow hedges | Sep. 30, 2011
Competitive power generation
Economic hedges | Dec. 31, 2010
Competitive power generation
Economic hedges | Sep. 30, 2011
Competitive power generation
Economic hedges
Competitive power generation revenues | Sep. 30, 2010
Competitive power generation
Economic hedges
Competitive power generation revenues | Sep. 30, 2011
Competitive power generation
Economic hedges
Competitive power generation revenues | Sep. 30, 2010
Competitive power generation
Economic hedges
Competitive power generation revenues | Sep. 30, 2011
Competitive power generation
Economic hedges
Fuel | Sep. 30, 2010
Competitive power generation
Economic hedges
Fuel | Sep. 30, 2011
Competitive power generation
Economic hedges
Fuel | Sep. 30, 2010
Competitive power generation
Economic hedges
Fuel | Sep. 30, 2011
Competitive power generation
Trading activities | Dec. 31, 2010
Competitive power generation
Trading activities | Sep. 30, 2011
Competitive power generation
Trading activities
Operating revenues | Sep. 30, 2010
Competitive power generation
Trading activities
Operating revenues | Sep. 30, 2011
Competitive power generation
Trading activities
Operating revenues | Sep. 30, 2010
Competitive power generation
Trading activities
Operating revenues | Sep. 30, 2011
Competitive power generation
Netting and Collateral | Dec. 31, 2010
Competitive power generation
Netting and Collateral | Sep. 30, 2011
Cash flow hedges
Competitive power generation revenues | Sep. 30, 2010
Cash flow hedges
Competitive power generation revenues | Dec. 31, 2010
Cash flow hedges
Competitive power generation revenues | Dec. 31, 2009
Cash flow hedges
Competitive power generation revenues | |
Fair Value of Derivative Instruments | ||||||||||||||||||||||||||||||||||||
Short-Term, Derivative Assets | $ 100 | $ 133 | $ 68 | $ 87 | $ 82 | $ 87 | $ 14 | $ 32 | $ 46 | $ 195 | $ 315 | $ 34 | $ 54 | $ 29 | $ 77 | $ 132 | $ 184 | $ (163) | $ (269) | |||||||||||||||||
Long-Term, Derivative Assets | 191 | 437 | 132 | 367 | 145 | 367 | 13 | 59 | 70 | 113 | 107 | 8 | 2 | 3 | 2 | 102 | 103 | (54) | (37) | |||||||||||||||||
Derivative Assets, Total | 200 | 454 | 227 | 454 | 27 | 91 | 116 | 308 | 422 | 42 | 56 | 32 | 79 | 234 | 287 | (217) | (306) | |||||||||||||||||||
Short-Term, Derivative Liabilities | 290 | 217 | 287 | 212 | 305 | 216 | 18 | 4 | 3 | 6 | 143 | 229 | 16 | 10 | 31 | 71 | 96 | 148 | (140) | (223) | ||||||||||||||||
Long-Term, Derivative Liabilities | 344 | 468 | 554 | 449 | 577 | 449 | 23 | 80 | 19 | 129 | 54 | 90 | 25 | 2 | 0 | 37 | 29 | (49) | (35) | |||||||||||||||||
Derivative Liabilities, Total | 841 | 661 | 882 | 665 | 41 | 4 | 83 | 25 | 272 | 283 | 106 | 35 | 33 | 71 | 133 | 177 | (189) | (258) | ||||||||||||||||||
Net Asset (Liability) | (641) | (207) | (655) | (211) | (14) | (4) | 8 | 91 | 36 | 139 | (64) | 21 | (1) | 8 | 101 | 110 | (28) | (48) | ||||||||||||||||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | (62) | 102 | ||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (29) | (134) | ||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges Effect Pretax | (64) | 143 | 27 | 175 | ||||||||||||||||||||||||||||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (6) | $ 7 | $ 20 | $ 0 | $ (3) | $ 2 | $ 1 | $ 0 | $ 11 | $ 28 | $ 68 | $ 108 |
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Debt and Credit Agreements | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Debt Disclosure [Abstract] | |
Debt and Credit Agreements | Debt and Credit Agreements Long-Term Debt In May 2011, SCE issued $500 million of 3.875% first and refunding mortgage bonds due in 2021. The proceeds from these bonds were used to repay commercial paper borrowings and to fund SCE's capital program. In October 2011, SCE issued $150 million of floating rate first and refunding mortgage bonds due in 2014. The proceeds from these bonds were used to finance fuel inventories. In May 2011 and September 2011, SCE purchased $56 million and $30 million, respectively, of its variable rate tax-exempt bonds. Project Financings Walnut Creek On July 27, 2011, EMG completed, through wholly owned subsidiaries, non-recourse financings to fund construction of the Walnut Creek project, a 479 MW natural gas-fired peaker plant in southern California. The financings included floating rate construction loans totaling $495 million that will convert to 10-year amortizing term loans by June 30, 2013, subject to meeting specified conditions, and also included $122 million of letter of credit ($40 million outstanding at September 30, 2011) and working capital facilities. The non-recourse financings were completed in two parts. A construction plus term loan financing of $442 million that initially accrues interest at the London Interbank Offered Rate (LIBOR) plus 2.25% and increases by 0.25% after the third, sixth and ninth anniversaries of the term conversion date. An interest rate swap agreement for a portion of the construction loan fixed the floating rate at 0.81% beginning November 30, 2011 through March 31, 2013. The effective rate for the outstanding loan of $44 million was 2.48% at September 30, 2011. Under the swap agreement for majority of the term loan, the fixed interest rate will be 3.54% beginning June 28, 2013 through May 31, 2023 and the effective rate is expected to be 5.84%. A second construction plus term loan financing of $53 million was obtained by a holding company that accrues interest at LIBOR plus 4.00% over the entire term. An interest rate swap agreement for a portion of the construction loan fixed the floating rate at 0.79% beginning July 29, 2011 through May 31, 2013. The effective rate for the outstanding loan of $49 million was 4.94% at September 30, 2011. Under the swap agreement for the majority of the term loan, the fixed interest rate will be 4.00% beginning June 28, 2013 through May 31, 2023 and the effective rate is expected to be 8.00%, Both outstanding loans were recorded in long-term debt on Edison International's consolidated balance sheet at September 30, 2011. Viento Funding II Wind Financing Amendment In February 2011, EME completed, through its subsidiary, Viento Funding II, Inc., an amendment of its 2009 non-recourse financing of its interests in the Wildorado, San Juan Mesa and Elkhorn Ridge wind projects. The amendment increased the financing amount to $255 million, which included a $227 million ten-year term loan (expiring in December 2020), a $23 million seven-year letter of credit facility and a $5 million seven-year working capital facility. At September 30, 2011, $216 million was outstanding under this loan. The amount of outstanding letters of credit was $23 million. Interest under the term loan accrues at LIBOR plus 2.75% initially with the rate increasing 0.25% on every fourth anniversary. Credit Agreements and Short-Term Debt At September 30, 2011, SCE's outstanding short-term debt was $550 million at a weighted-average interest rate of 0.34%. This short-term debt was supported by a $2.4 billion credit facility. At December 31, 2010, there was no outstanding short-term debt. At September 30, 2011, letters of credit issued under SCE's credit facilities aggregated $83 million and are scheduled to expire in twelve months or less. At September 30, 2011, Edison International (Parent)'s outstanding short-term debt was $10 million at a weighted-average interest rate of 0.60%. At December 31, 2010, the outstanding short-term debt was $19 million at a weighted-average interest rate of 0.63%. Letters of Credit At September 30, 2011, standby letters of credit under EME's credit facility aggregated $65 million and were scheduled to expire as follows: $1 million in 2011 and $64 million in 2012. In addition, letters of credit under EME's subsidiaries' credit facilities aggregated $98 million and were scheduled to expire as follows: $7 million in 2011, $63 million in 2012, $10 million in 2017, and $18 million in 2018. |
Consolidated Statements of Changes in Equity (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in equity | The following table provides the changes in equity for the nine months ended September 30, 2011.
The following table provides the changes in equity for the nine months ended September 30, 2010.
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Variable Interest Entities (Details 2) (USD $) In Millions, unless otherwise specified | 9 Months Ended | 12 Months Ended |
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Sep. 30, 2011 | Dec. 31, 2010 | |
Maximum [Member] | Variable Interest Entity Not Primary Beneficiary Holds Significant Interest [Member] | EMG Domestic Energy Projects | ||
Details of projects or entities | ||
Equity Interest in Domestic Energy Projects (less than as a percent) | 100.00% | |
Variable Interest Entity, Primary Beneficiary [Member] | EMG Wind Projects | ||
Details of projects or entities | ||
Number of projects | 13 | 14 |
Variable Interest Entity, Not Primary Beneficiary | ||
Details of projects or entities | ||
Number of projects operated by the subsidiary | three of the four Big 4 projects and the Sunrise project | |
Variable Interest Entity, Not Primary Beneficiary | EMG Domestic Energy Projects | ||
Details of projects or entities | ||
Projects having secured long-term debt to finance the assets constructed and/or acquired by entity | 1 | |
Indebtedness of projects accounted for under equity method | 64 | |
Indebtedness of projects accounted for under equity method, amount proportionate to ownership interest | 16 | |
Variable Interest Entity, Deconsolidated | EMG Domestic Energy Projects | ||
Details of projects or entities | ||
Number of projects | 5 | 5 |
Variable Interest Entity, Deconsolidated | EMG Wind Projects | ||
Details of projects or entities | ||
Interests in number of wind projects | 3 | 2 |
EMG Natural Gas-Fired Projects | ||
Details of projects or entities | ||
Investment | 340 | |
Maximum Exposure, Total | 340 | |
EMG Renewable energy projects | ||
Details of projects or entities | ||
Investment | 228 | |
Maximum Exposure, Total | 228 |
Business Segments (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment income statement information |
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Segment balance sheet information |
1 Includes earnings (losses) from discontinued operations of none and $(4) million for the three months ended September 30, 2011 and 2010, respectively, and $(3) million and $4 million for the nine months ended September 30, 2011 and 2010, respectively. 2 Includes amounts from Edison International (parent) and other Edison International subsidiaries that are not significant as a reportable segment, as well as intercompany eliminations. |
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
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Sep. 30, 2011 | |
Accounting Policies [Abstract] | |
Cash Equivalents | Cash Equivalents Cash equivalents included investments in money market funds totaling $1.1 billion at both September 30, 2011 and December 31, 2010. Generally, the carrying value of cash equivalents equals the fair value, as these investments have maturities of three months or less. Edison International temporarily invests the ending daily cash balance in its primary disbursement accounts until required for check clearing. Edison International reclassified $215 million and $197 million of checks issued against these accounts, but not yet paid by the financial institution, from cash to accounts payable at September 30, 2011 and December 31, 2010, respectively. |
Inventory | Inventory Inventory is stated at the lower of cost or market, cost being determined by the weighted-average cost method for fuel, and the average cost method for materials and supplies. |
Earnings Per Share | Earnings Per Share Edison International computes earnings per 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, including stock options, performance shares and restricted stock units, which earn dividend equivalents on an equal basis with common shares. Stock options awarded during the period 2003 through 2006 received dividend equivalents. |
Regulatory and Environmental Developments | 9 Months Ended |
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Sep. 30, 2011 | |
Regulatory And Environmental Developments Disclosure [Abstract] | |
Regulatory and Environmental Developments | Regulatory and Environmental Developments Environmental Developments Cross-State Air Pollution Rule On July 6, 2011, the US EPA adopted the Cross-State Air Pollution Rule ("CSAPR"). CSAPR is the final form of a previously proposed replacement for the Clean Air Interstate Rule ("CAIR"), originally called the Clean Air Transport Rule that was released in 2010. CSAPR establishes emissions reductions for annual sulfur dioxide ("SO2") emissions and annual and ozone season nitrogen oxide ("NOx") emissions in two phases: a first phase effective January 1, 2012 and, in most states subject to the program (including Illinois and Pennsylvania), a second phase effective January 1, 2014 that requires additional reductions in annual SO2 emissions. CSAPR, like the CAIR, is an allowance-based regulation that provides for emissions trading. Under CSAPR, the amount of actual SO2 or NOx emissions from operations will need to be matched by a sufficient amount of SO2 or NOx allowances that are either allocated or purchased in the open market. In connection with CSAPR, the US EPA has, for each phase, established SO2 and NOx allowance allocations for each state and each generating unit subject to the regulation, and at the close of the annual or seasonal compliance period, units must surrender allowances for each ton of SO2 and NOx emitted or face penalties. While trading of allowances is permitted within designated groups of states, the rule provides for penalties against a unit with emissions in excess of its predefined "assurance level," but only if the state in which it is located also exceeds its budgeted emissions level. On October 6, 2011, the US EPA announced a proposed revision to the rule that would effectively eliminate such penalties in the first phase. EMG believes that Midwest Generation's current environmental remediation plan developed to comply with the CPS, along with the allowances allocated to it under CSAPR, will be sufficient to comply with the requirements of CSAPR and the US EPA's proposed regulation on hazardous air pollutant emissions. In order to achieve compliance, Midwest Generation has begun work to install SO2 controls at certain of its plants. The SO2 allowances allocated to Homer City in CSAPR Phase I (25,797 tons in 2012 and 2013) are significantly lower than the amount that would be required based on Homer City's historical emissions (2010 SO2 emissions were 112,951 tons). Therefore, pending installation of additional equipment for Units 1 and 2 (Homer City's Unit 3 is equipped with a wet scrubber flue gas desulfurization system to meet environmental standards), Homer City expects that it will be required to procure additional allowances. It is unclear at this time whether Homer City will be able to acquire allowances for 2012 and 2013 in sufficient quantity to cover its normal operations and whether it will be able to pass through the cost of such allowances in the marketplace. Also, Homer City's SO2 emissions could exceed its assurance level, and, therefore, unless the proposed revision to the rule is adopted, Homer City could be subject to penalties depending on whether, collectively, emissions from all of the subject electrical generating facilities in Pennsylvania exceed the state's budgeted emissions level. Accordingly, Homer City is evaluating alternative options, including reduced dispatch and fuel modifications, for complying with Phase I of CSAPR. The cost of allowances, together with possible operational impacts or reductions of output that may be required to comply with Phase I of CSAPR, could have a material effect on Homer City. Homer City has begun work on designing SO2 and particulate emissions control equipment for Units 1 and 2. While the Phase II SO2 emission allowances under CSAPR (11,068 tons) are less than were contemplated under the proposed Clean Air Transport Rule, the additional reductions are not expected to materially change the design for the SO2 controls at Units 1 and 2. The installation of those SO2 controls will require capital commitments for the Homer City plant well in advance of the 2014 effective date, including some expenditures in 2011, in order to meet regulatory deadlines. Given the relatively short period of time before Phase II of CSAPR takes effect in 2014, there is no assurance that Homer City will be able to complete all the work that will be required before the deadline. Homer City is continuing to review technologies available to reduce SO2 and mercury emissions; however, it has not determined the most effective and efficient technology to meet all requirements that may be imposed on it. Consequently, the timing, selection of technology and ultimate capital costs remain uncertain. Based on preliminary estimates, Homer City currently believes the cost of such equipment may be between $600 million and $700 million. An application for a construction permit to install the additional controls was filed on October 3, 2011 with the Pennsylvania Department of Environmental Protection. Homer City does not currently have sufficient capital and does not expect to generate sufficient funds from operations to complete such retrofits and will have to seek third-party financing, which will be subject to decisions by Homer City's lessors, holders of bonds who provided financing for the sale-leaseback transaction and new providers of capital funding. There is no assurance that sufficient financing will be obtained or will not result in significant dilution of Homer City's interest in the Homer City plant. In July 2011, EME asked the US EPA to stay the effectiveness of CSAPR pending judicial review, and in October 2011, Homer City asked the US EPA to reconsider the rule. In August 2011, Homer City asked the United States Court of Appeals for the District of Columbia to review CSAPR and requested a stay of the rule while its motion is pending. Numerous similar challenges have been filed by other industry participants and by several states. Proposed Hazardous Air Pollutant Regulations In March 2011, the US EPA proposed National Emission Standards for Hazardous Air Pollutants, limiting emissions of hazardous air pollutants from coal- and oil-fired electrical generating units. This regulation is expected to be finalized by December 2011. Based on its continuing review, EMG does not expect that these standards, if adopted as proposed, would require Midwest Generation to make material changes to the approach to compliance with state and federal environmental regulations that it contemplates for CPS compliance. EMG also does not expect that these standards, if adopted as proposed, would require Homer City to make additional capital requirements beyond those that would be required to comply with CSAPR. Ozone and Particulates In September 2011, President Obama announced that the proposed revision to the National Ambient Air Quality Standards ("NAAQS") for ozone, which was expected to have set a more stringent standard for primary ozone and a distinct secondary standard to protect sensitive vegetation and ecosystems, was being withdrawn. The ozone NAAQS established in 2008 remains in place, but the implementation process must be completed before the 0.075 parts-per-million standard can be enforced. The US EPA has indicated that it intends to issue initial area designations of attainment, nonattainment, and unclassifiable areas across the nation in 2012. States will then be required develop and submit state implementation plans outlining how compliance with the 2008 NAAQS will be achieved. New primary and secondary ozone standards are expected in 2014. Water Quality Once-Through Cooling Issues In March 2011, the US EPA proposed standards under the federal Clean Water Act which would affect cooling water intake structures at generating facilities. The standards are intended to protect aquatic organisms by reducing capture in screens attached to cooling water intake structures (impingement) and in the water volume brought into the facilities (entrainment). The regulations are expected to be finalized by July 2012. Edison International is evaluating the proposed standards and believes, from a preliminary review, that compliance with the proposed standards regarding impingement will be achievable for both the Midwest Generation plants and the Homer City plant without incurring material additional capital expenditures or operating costs. The required measures to comply with the proposed standards regarding entrainment are subject to the discretion of the permitting authority, and Edison International is unable at this time to assess potential costs of compliance, which could be significant for the Midwest Generation plants and San Onofre, but are not expected to be material for the Homer City plant, which already has cooling towers. In addition to the proposed draft US EPA standards, the existing California once-through cooling policy may result in significant capital expenditures at San Onofre and may affect its operations. If other coastal power plants in California that rely on once-through cooling are forced to shut down or limit operations, the California policy may also significantly impact SCE's ability to procure generating capacity from those plants, which could have an adverse effect on system reliability and the cost of electricity. Greenhouse Gas Regulation California Air Resources Board's ("CARB") regulations implementing a California cap-and-trade program continue to be the subject of litigation. In June 2011, the CARB announced that initial cap-and-trade program compliance for the electricity sector would be delayed until January 2013. In April 2011, California enacted a law requiring California utilities to procure 33% of their electricity requirements from renewable resources, as defined in the statute. The impact of the new 33% law will depend on how the CPUC and CEC implement the law, which remains uncertain. Greenhouse Gas Litigation Developments In June 2011, the U.S. Supreme Court dismissed public nuisance claims against five power companies, ruling that the CAA and the US EPA actions it authorizes displace federal common law nuisance claims that might arise from the emission of greenhouse gases. The court also affirmed the Second Circuit's determination that at least some of the plaintiffs had standing to bring the case. The court did not address whether the CAA also preempts state law claims arising from the same circumstances. Parties to the case brought by the Alaskan Native Village of Kivalina against Edison International and other defendants, the appeal of which was deferred before the Ninth Circuit Court of Appeals pending the Supreme Court's ruling described above, have requested that the appeal recommence and have asked for permission to file additional briefs on the impact of the Supreme Court's ruling. The stay of the appeal has now been lifted and argument before the Ninth Circuit is scheduled for November 2011. Kivalina is seeking damages of up to $400 million for the cost of relocating the village. On May 27, 2011, private citizens filed a purported class action complaint in the United States District Court for the Southern District of Mississippi, naming among a large number of defendants, Edison International and its subsidiaries, including SCE and EME. Plaintiffs allege that the defendants' activities resulted in emissions of substantial quantities of greenhouse gases that have contributed to climate change and sea level rise, which in turn are alleged to have increased the destructive force of Hurricane Katrina. The lawsuit alleges causes of action for negligence, public and private nuisance, and trespass, and seeks unspecified compensatory and punitive damages. The claims in this lawsuit are nearly identical to a subset of the claims that were raised against many of the same defendants in a previous lawsuit that was filed in, and dismissed by, the same federal district court where the current case has been filed. Edison International was dismissed as a defendant in this complaint in July 2011, but SCE and EME remain defendants. |
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Edison International has two business segments for financial reporting purposes: an electric utility operation segment (SCE) and a competitive power generation segment (EMG). SCE is an investor-owned public utility primarily engaged in the business of supplying electricity to an approximately 50,000 square mile area of southern California. EMG is the holding company for its principal wholly owned subsidiary, EME. EME is a holding company with subsidiaries and affiliates engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also engages in hedging and energy trading activities in competitive power markets through its Edison Mission Marketing & Trading, Inc. ("EMMT") subsidiary. Basis of Presentation Edison International's significant accounting policies were described in Note 1 of "Edison International Notes to Consolidated Financial Statements" included in the 2010 Form 10-K. Edison International follows the same accounting policies for interim reporting purposes, with the exception of accounting principles adopted as of January 1, 2011, discussed below in "—New Accounting Guidance." This quarterly report should be read in conjunction with the financial statements and notes included in the 2010 Form 10-K. In the opinion of management, all adjustments, including recurring accruals, 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 of America ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three- and nine-month periods ended September 30, 2011 are not necessarily indicative of the operating results for the full year. The December 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Cash Equivalents Cash equivalents included investments in money market funds totaling $1.1 billion at both September 30, 2011 and December 31, 2010. Generally, the carrying value of cash equivalents equals the fair value, as these investments have maturities of three months or less. Edison International temporarily invests the ending daily cash balance in its primary disbursement accounts until required for check clearing. Edison International reclassified $215 million and $197 million of checks issued against these accounts, but not yet paid by the financial institution, from cash to accounts payable at September 30, 2011 and December 31, 2010, respectively. Inventory Inventory is stated at the lower of cost or market, cost being determined by the weighted-average cost method for fuel, and the average cost method for materials and supplies. Inventory consisted of the following:
Earnings Per Share Edison International computes earnings per 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, including stock options, performance shares and restricted stock units, which earn dividend equivalents on an equal basis with common shares. Stock options awarded during the period 2003 through 2006 received dividend equivalents. EPS attributable to Edison International common shareholders was computed as follows:
Stock-based compensation awards to purchase 5,943,378 and 9,700,218 shares of common stock for the three months ended September 30, 2011 and 2010, respectively, and 8,970,290 and 6,154,826 shares of common stock for the nine months ended September 30, 2011 and 2010 respectively, were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the awards was greater than the average market price of the common shares during the respective periods and, therefore, the effect would have been antidilutive. New Accounting Guidance Accounting Guidance Adopted in 2011 Revenue—Multiple-Deliverables In October 2009, the Financial Accounting Standards Board ("FASB") issued amended guidance for identifying separate deliverables in a revenue-generating transaction where multiple deliverables exist, and provides guidance for allocating and recognizing revenues based on those separate deliverables. This update also requires additional disclosure related to the significant assumptions used to determine the revenue recognition of the separate deliverables. This guidance is required to be applied prospectively to new or significantly modified revenue arrangements. Edison International adopted this guidance effective January 1, 2011. The adoption of this accounting standards update did not have a material impact on Edison International's consolidated results of operations, financial position or cash flows. Fair Value Measurements and Disclosures The FASB issued an accounting standards update modifying the disclosure requirements related to fair value measurements. Under these requirements, purchases and settlements for Level 3 fair value measurements are presented on a gross basis, rather than net. Edison International adopted this guidance effective January 1, 2011. Accounting Guidance Not Yet Adopted Fair Value Measurement In May 2011, the FASB issued an accounting standards update modifying the fair value measurement and disclosure guidance. This guidance prohibits grouping of financial instruments for purposes of fair value measurement and requires the value be based on the individual security. This amendment also results in new disclosures primarily related to Level 3 measurements including quantitative disclosure about unobservable inputs and assumptions, a description of the valuation processes and a narrative description of the sensitivity of the fair value to changes in unobservable inputs. Edison International will adopt this guidance effective January 1, 2012 and does not expect the adoption of this standard will have a material impact on Edison International's consolidated statements of income, financial position or cash flows. Presentation of Comprehensive Income In June 2011, the FASB issued an accounting standards update on the presentation of comprehensive income. An entity can elect to present items of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate but consecutive statements. Edison International will adopt this guidance effective January 1, 2012. Edison International currently presents the statement of comprehensive income immediately following the statement of income and expects to continue to do so. The adoption of this accounting standards update does not change the items that constitute net income and other comprehensive income. |
Regulatory Assets and Liabilities (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Regulatory Assets and Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory assets included on the consolidated balance sheets |
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Regulatory liabilities included on the consolidated balance sheets |
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Income Taxes | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Effective Tax Rate The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision from continuing operations.
The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. The accounting treatment for these temporary differences results in recording regulatory assets and liabilities for amounts that would otherwise be recorded to deferred income tax expense. Accounting for Uncertainty in Income Taxes Authoritative guidance related to accounting for uncertainty in income taxes requires an enterprise to recognize, in its financial statements, the best estimate of the impact of a tax position by determining if the weight of the available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained upon examination. The guidance requires the disclosure of all unrecognized tax benefits, which includes both the reserves recorded for tax positions on filed tax returns and the unrecognized portion of affirmative claims. Unrecognized Tax Benefits The following table provides a reconciliation of unrecognized tax benefits:
As of September 30, 2011 and December 31, 2010, $500 million and $455 million, respectively, of the unrecognized tax benefits, if recognized, would impact the effective tax rate. Edison International's federal income tax returns and its California combined franchise tax returns are currently open for years subsequent to 2002. In addition, specific California refund claims made by Edison International for years 1991 through 2002 are currently under review by the Franchise Tax Board. The IRS examination phase of tax years 2003 through 2006 was completed in the fourth quarter of 2010, which included proposed adjustments for the following two items:
Edison International disagrees with the proposed adjustments and filed a protest with the IRS in the first quarter of 2011. Accrued Interest and Penalties The total amount of accrued interest and penalties related to Edison International's income tax liabilities was $230 million and $213 million as of September 30, 2011 and December 31, 2010, respectively. The net after-tax interest and penalties recognized in income tax expense was $5 million and $10 million for the three- and nine-month periods ended September 30, 2011, respectively, compared to a benefit of $7 million and $95 million for the same periods in 2010. |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flows Information | Supplemental Cash Flows Information Edison International's supplemental cash flows information is:
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Compensation and Benefit Plans | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Benefit Plans | Compensation and Benefit Plans Pension Plans and Postretirement Benefits Other Than Pensions Pension Plans During the nine months ended September 30, 2011, Edison International made contributions of $113 million and during the remainder of 2011, expects to make $30 million of additional contributions. In 2011, annual contributions made to most of SCE's pension plans are recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the annual expense. Expense components are:
Postretirement Benefits Other Than Pensions During the nine months ended September 30, 2011, Edison International made contributions of $18 million and during the remainder of 2011, expects to make $38 million of additional contributions. Annual contributions made to SCE's plans are recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the annual expense. Expense components are:
Stock-Based Compensation During 2011, Edison International granted stock-based compensation awards, which included stock options, performance shares and restricted stock units. Stock Options The following is a summary of the status of Edison International stock options:
At September 30, 2011, there was $23 million of total unrecognized compensation cost related to stock options, net of expected forfeitures. That cost is expected to be recognized over a weighted-average period of approximately three years. Performance Shares The following is a summary of the status of Edison International nonvested performance shares:
1 Includes performance shares that expired with zero value as performance targets were not met. The current portion of nonvested performance shares classified as liability awards is reflected in "Other current liabilities" and the long-term portion is reflected in "Pensions and benefits" on the consolidated balance sheets. At September 30, 2011, there was $5 million of total unrecognized compensation cost related to performance shares. That cost is expected to be recognized over a weighted-average period of approximately two years. Restricted Stock Units The following is a summary of the status of Edison International nonvested restricted stock units:
At September 30, 2011, there was $10 million of total unrecognized compensation cost related to restricted stock units, net of expected forfeitures, which is expected to be recognized as follows: $2 million in 2011, $5 million in 2012 and $3 million in 2013. Supplemental Data on Stock Based Compensation
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense components for pension plan |
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Expense components for postretirement benefits other than pension |
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Summary of the status of stock options |
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Summary of nonvested performance shares |
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Summary of nonvested restricted stock units |
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Schedule of Supplemental Data on Stock Based Compensation |
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Derivative Instruments and Hedging Activities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Electric Utility Commodity Price Risk SCE is exposed to commodity price risk which represents the potential impact that can be caused by a change in the market value of a particular commodity. SCE's hedging program reduces ratepayer exposure to variability in market prices related to SCE's power and gas activities. As part of this program, SCE enters into options, swaps, forwards, tolling arrangements and CRRs. These transactions are pre-approved by the California Public Utilities Commission ("CPUC") or executed in compliance with CPUC-approved procurement plans. SCE recovers its related hedging costs through the energy resource recovery account ("ERRA") balancing account, and as a result, exposure to commodity price risk is not expected to impact earnings, but may impact cash flows. SCE's electricity price exposure arises from electricity purchased from and sold to the California and other wholesale markets as a result of differences between SCE's load requirements and the amount of energy delivered from its generating facilities, power purchase agreements and California Department of Water Resources ("CDWR") contracts allocated to SCE. SCE's natural gas price exposure arises from natural gas purchased for generation at the Mountainview power plant and peaker plants, QF contracts where pricing is based on a monthly natural gas index and power purchase agreements in which SCE has agreed to provide the natural gas needed for generation, referred to as tolling arrangements. Notional Volumes of Derivative Instruments The following table summarizes the notional volumes of derivatives used for hedging activities:
Fair Value of Derivative Instruments The following table summarizes the gross and net fair values of commodity derivative instruments at September 30, 2011:
The following table summarizes the gross and net fair values of commodity derivative instruments at December 31, 2010:
Income Statement Impact of Derivative Instruments SCE recognizes realized gains and losses on derivative instruments as purchased-power expense and expects that such gains or losses will be part of the purchased power costs recovered from ratepayers. As a result, realized gains and losses are not reflected in earnings, but may temporarily affect cash flows. Due to expected future recovery from ratepayers, unrealized gains and losses are recorded as regulatory assets and liabilities and therefore are also not reflected in earnings. The results of derivative activities and related regulatory offsets are recorded in cash flows from operating activities in the consolidated statements of cash flows. The following table summarizes the components of economic hedging activity:
Contingent Features/Credit Related Exposure Certain derivative instruments and power procurement contracts under SCE's power and natural gas hedging activities contain collateral requirements. SCE has historically provided collateral in the form of cash and/or letters of credit for the benefit of counterparties. These requirements can vary depending upon the level of unsecured credit extended by counterparties, changes in market prices relative to contractual commitments and other factors. Certain of these power contracts contain a provision that requires SCE to maintain an investment grade credit rating from each of the major credit rating agencies, referred to as a credit-risk-related contingent feature. If SCE's credit rating were to fall below investment grade, SCE may be required to pay the derivative liability or post additional collateral. The aggregate fair value of all derivative liabilities with these credit-risk-related contingent features was $162 million and $67 million as of September 30, 2011 and December 31, 2010, respectively, for which SCE has posted no collateral and $4 million of collateral to its counterparties for the respective periods. If the credit-risk-related contingent features underlying these agreements were triggered on September 30, 2011, SCE would be required to post $23 million of collateral. Counterparty Default Risk Exposure As part of SCE's procurement activities, SCE contracts with a number of utilities, energy companies, financial institutions, and other companies, collectively referred to as counterparties. If a counterparty were to default on its contractual obligations, SCE could be exposed to potentially volatile spot markets for buying replacement power or selling excess power. In addition, SCE would be exposed to the risk of non-payment of accounts receivable, primarily related to sales of excess energy and realized gains on derivative instruments. All of the contracts that SCE has entered into with counterparties are either entered into under SCE's short-term or long-term procurement plan which has been approved by the CPUC, or the contracts are approved by the CPUC before becoming effective. As a result of regulatory recovery mechanisms, losses from non-performance are not expected to affect earnings, but may temporarily affect cash flows. To manage credit risk, SCE looks at the risk of a potential default by counterparties. Credit risk is measured by the loss that would be incurred if counterparties failed to perform pursuant to the terms of their contractual obligations. To mitigate credit risk from counterparties, master netting agreements are used whenever possible and counterparties may be required to pledge collateral when deemed necessary. Competitive Power Generation EMG uses derivative instruments to reduce its exposure to market risks that arise from price fluctuations of electricity, capacity, fuel, emission allowances, and transmission rights. Additionally, EMG's financial results can be affected by fluctuations in interest rates. The derivative financial instruments vary in duration, ranging from a few days to several years, depending upon the instrument. To the extent that EMG does not use derivative instruments to hedge these market risks, the unhedged portions will be subject to the risks and benefits of spot market price movements. Risk management positions may be designated as cash flow hedges or economic hedges, which are derivatives that are not designated as cash flow hedges. Economic hedges are accounted for at fair value on EMG's consolidated balance sheets with offsetting changes recorded on the consolidated statements of operations. For derivative instruments that qualify for hedge accounting treatment, the fair value is recognized, to the extent effective, on EMG's consolidated balance sheets with offsetting changes in fair value recognized in accumulated other comprehensive loss until the related forecasted transaction occurs. The results of derivative activities are recorded in cash flows from operating activities on the consolidated statements of cash flows. Derivative instruments that are utilized for trading purposes are measured at fair value and included on the consolidated balance sheets as derivative assets or liabilities. Changes in fair value are recognized in operating revenues on the consolidated statements of operations. Where EMG's derivative instruments are subject to a master netting agreement and the criteria of authoritative guidance are met, EMG presents its derivative assets and liabilities on a net basis on its consolidated balance sheets. Notional Volumes of Derivative Instruments The following table summarizes the notional volumes of derivatives used for hedging and trading activities:
Fair Value of Derivative Instruments The following table summarizes the fair value of derivative instruments reflected on EMG's consolidated balance sheets:
Income Statement Impact of Derivative Instruments The following table provides the cash flow hedge activity as part of accumulated other comprehensive loss:
For additional information, see Note 11—Accumulated Other Comprehensive Loss. The portion of a cash flow hedge that does not offset the change in the value of the transaction being hedged, which is commonly referred to as the ineffective portion, is immediately recognized in earnings. EMG recorded net gains of $4 million during each of the third quarters of 2011 and 2010, and $6 million and $5 million during the nine months ended September 30, 2011 and 2010, respectively, in operating revenues on the consolidated statements of operations representing the amount of cash flow hedge ineffectiveness. The effect of realized and unrealized gains (losses) from derivative instruments used for economic hedging and trading purposes on the consolidated statements of operations is presented below:
Contingent Features Certain derivative instruments contain margin and collateral deposit requirements. Since EMG's subsidiaries' credit ratings are below investment grade, EMG's subsidiaries have provided collateral in the form of cash and letters of credit for the benefit of derivative counterparties. Future increases in power prices could expose EMG's subsidiaries to additional collateral postings. Margin and Collateral Deposits Margin and collateral deposits include cash deposited with counterparties and brokers, and cash received from counterparties and brokers as credit support under energy contracts. The amount of margin and collateral deposits generally varies based on changes in the fair value of the related positions. Edison International nets counterparty receivables and payables where balances exist under master netting agreements. Edison International presents the portion of its margin and collateral deposits netted with its derivative positions on its consolidated balance sheets. The following table summarizes margin and collateral deposits provided to and received from counterparties:
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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
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Receivables, allowances for uncollectible accounts (in dollars) | $ 97 | $ 85 |
Utility property, plant and equipment, accumulated depreciation (in dollars) | 6,745 | 6,319 |
Competitive power generation and other property, plant and equipment, accumulated depreciation (in dollars) | $ 2,083 | $ 1,865 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 325,811,206 | 325,811,206 |
Common stock, shares outstanding | 325,811,206 | 325,811,206 |
Consolidated Statements of Changes in Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Changes in Equity | Consolidated Statements of Changes in Equity The following table provides the changes in equity for the nine months ended September 30, 2011.
The following table provides the changes in equity for the nine months ended September 30, 2010.
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Income Taxes (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Income Tax Expense |
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Reconciliation of Unrecognized Tax Benefits |
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Preferred and Preference Stock of Utility (Details) (USD $) | 1 Months Ended |
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Mar. 31, 2011 | |
Preferred And Preference Stock Of Utility Disclosure [Abstract] | |
Shares issued (in shares) | 1,250,000 |
Preference stock (as a percent) | 6.50% |
Preference share, liquidation value (in dollars per share) | $ 100 |
Compensation and Benefit Plans (Details) (USD $) In Millions | 3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Pension Plans | ||||
Pension and Other Postretirement Benefits | ||||
Additional plan year contributions | $ 30 | $ 30 | ||
Employer contributions | 113 | |||
Expense components are: | ||||
Service cost | 43 | 34 | 129 | 102 |
Interest cost | 52 | 54 | 156 | 162 |
Expected return on plan assets | (60) | (52) | (180) | (156) |
Amortization of prior service cost (credit) | 2 | 2 | 6 | 6 |
Amortization of net loss | 6 | 7 | 18 | 21 |
Expense under accounting standards | 43 | 45 | 129 | 135 |
Regulatory adjustment - deferred | (6) | (14) | (18) | (42) |
Total expense recognized | 37 | 31 | 111 | 93 |
Postretirement Benefits Other Than Pensions | ||||
Pension and Other Postretirement Benefits | ||||
Additional plan year contributions | 38 | 38 | ||
Employer contributions | 18 | |||
Expense components are: | ||||
Service cost | 11 | 8 | 33 | 24 |
Interest cost | 33 | 31 | 99 | 93 |
Expected return on plan assets | (28) | (25) | (84) | (75) |
Amortization of prior service cost (credit) | (9) | (9) | (27) | (27) |
Amortization of net loss | 9 | 8 | 27 | 24 |
Total expense recognized | $ 16 | $ 13 | $ 48 | $ 39 |
Variable Interest Entities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities A variable interest entity ("VIE") is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE. Commercial and operating activities are generally the factors that most significantly impact the economic performance of VIEs in which Edison International has a variable interest. Commercial and operating activities include construction, operation and maintenance, fuel procurement, dispatch and compliance with regulatory and contractual requirements. Categories of Variable Interest Entities Projects or Entities that are Consolidated At September 30, 2011 and December 31, 2010, EMG consolidated 13 and 14 projects, respectively, with a total generating capacity of 570 MW and 580 MW, respectively, that have interests held by others. In April 2011, EMG sold its 75% ownership interest in a Minnesota wind project. The following table presents summarized financial information of the projects that were consolidated by EMG:
At September 30, 2011 and December 31, 2010, assets serving as collateral for the debt obligations had a carrying value of $160 million and $163 million, respectively, and primarily consist of property, plant and equipment. Variable Interest in VIEs that are not Consolidated Power Purchase Contracts SCE has 16 power purchase agreements ("PPAs") that have variable interests in VIEs, including 6 tolling agreements through which SCE provides the natural gas to fuel the plants and 10 contracts with qualifying facilities ("QFs") that contain variable pricing provisions based on the price of natural gas. SCE has concluded that it is not the primary beneficiary of these VIEs since it does not control the commercial and operating activities of these entities. In general, because payments for capacity are the primary source of income, the most significant economic activity for SCE's VIEs is the operation and maintenance of the power plants. As of the balance sheet date, the carrying amount of assets and liabilities in SCE's consolidated balance sheet that relate to its involvement with VIEs result from amounts due under the PPAs or the fair value of those derivative contracts. Under these contracts, SCE recovers the costs incurred under its approved long-term power procurement plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 9. As a result, there is no significant potential exposure to loss as a result of SCE's involvement with these VIEs. The aggregate capacity dedicated to SCE for these VIE projects was 3,820 MW at September 30, 2011 and the amounts that SCE paid to these projects were $178 million and $205 million for the three months ended September 30, 2011 and 2010, respectively, and $347 million and $447 million for the nine months ended September 30, 2011 and 2010, respectively. These amounts are recovered in customer rates. Equity Interests EMG accounts for domestic gas and wind energy projects in which it has less than a 100% ownership interest, and cannot exercise unilateral control, under the equity method. At September 30, 2011 and December 31, 2010, EMG had five significant variable interests in natural gas projects that are not consolidated, consisting of the Big 4 projects (Kern River, Midway-Sunset, Sycamore and Watson) and the Sunrise project. A subsidiary of EMG operates three of the four Big 4 projects and the Sunrise project and EMG's partner provides the fuel management services for the Big 4 projects. In addition, the executive director of these projects is provided by EMG's partner. Commercial and operating activities are jointly controlled by a management committee of each VIE. Accordingly, EMG accounts for its variable interests under the equity method. EMG accounts for its interest in three renewable wind generating facilities under the equity method. At December 31, 2010, EMG had interests in 2 renewable wind generating facilities, the Elkhorn Ridge and San Juan Mesa projects. In addition to these 2 projects, at September 30, 2011, EMG had interests in Community Wind North, which achieved commercial operation on May 28, 2011. The commercial and operating activities of these entities are jointly directed by representatives of each partner. Thus, EMG is not the primary beneficiary of these projects. The following table presents the carrying amount of EMG's investments in unconsolidated VIEs and the maximum exposure to loss for each investment:
EMG's maximum exposure to loss in its VIEs accounted for under the equity method is generally limited to its investment in these entities. One of EMG's domestic energy projects has long-term debt that is secured by a pledge of project entity assets, but does not provide for recourse to EMG. Accordingly, a default under the project financing could result in foreclosure on the assets of the project entity resulting in a loss of some or all of EMG's investment, but would not require EMG to contribute additional capital. At September 30, 2011, entities which EMG has accounted for under the equity method had indebtedness of $64 million, of which $16 million is proportionate to EMG's ownership interest in this project. |
Variable Interest Entities (Details) (USD $) In Millions, unless otherwise specified | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Dec. 31, 2010 | Sep. 30, 2011
Variable Interest Entity, Primary Beneficiary | Dec. 31, 2010
Variable Interest Entity, Primary Beneficiary | Apr. 30, 2011
Variable Interest Entity, Primary Beneficiary
EMG Wind Projects | Sep. 30, 2011
Variable Interest Entity, Primary Beneficiary
EMG Wind Projects
mW | Dec. 31, 2010
Variable Interest Entity, Primary Beneficiary
EMG Wind Projects
mW | Sep. 30, 2011
Variable Interest Entity, Not Primary Beneficiary
SCE Power Purchase Contracts
mW | Sep. 30, 2010
Variable Interest Entity, Not Primary Beneficiary
SCE Power Purchase Contracts | Sep. 30, 2011
Variable Interest Entity, Not Primary Beneficiary
SCE Power Purchase Contracts
mW | Sep. 30, 2010
Variable Interest Entity, Not Primary Beneficiary
SCE Power Purchase Contracts | |
Details of projects or entities | |||||||||||
Number of projects | 13 | 14 | 16 | 16 | |||||||
Number of Projects Consolidated | 0 | 14 | |||||||||
Power generating capacity for majority interest (in megawatts) | 570 | 580 | 3,820 | 3,820 | |||||||
Sale of ownership interest (as a percent) | 75.00% | ||||||||||
Summarized balance sheet information of VIEs | |||||||||||
Current assets | $ 4,751 | $ 4,422 | $ 40 | $ 26 | |||||||
Net property, plant and equipment | 5,579 | 5,406 | 702 | 739 | |||||||
Other long-term assets | 619 | 644 | 6 | 6 | |||||||
Total assets | 47,672 | 45,530 | 748 | 771 | |||||||
Current liabilities | 4,161 | 3,952 | 28 | 25 | |||||||
Long-term debt net of current portion | 13,010 | 12,371 | 67 | 71 | |||||||
Deferred revenues | 69 | 71 | |||||||||
Other long-term liabilities | 2,454 | 2,041 | 21 | 21 | |||||||
Total liabilities | 35,626 | 34,036 | 185 | 188 | |||||||
Noncontrolling interests | 1,031 | 911 | 2 | 4 | |||||||
Assets serving as collateral for the debt obligations | 160 | 163 | |||||||||
Power Purchase Agreement With Tolling Agreement | 6 | 6 | |||||||||
Power Purchase Agreement With Qualified Facilities | 10 | 10 | |||||||||
Payments to unconsolidated VIEs, power purchase contracts | $ 178 | $ 205 | $ 347 | $ 447 |
Variable Interest Entities (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized financial information of the consolidated projects | The following table presents summarized financial information of the projects that were consolidated by EMG:
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Carrying amount of investments in unconsolidated variable interest entities and the maximum exposure to loss for each investment | The following table presents the carrying amount of EMG's investments in unconsolidated VIEs and the maximum exposure to loss for each investment:
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Business Segments (Details) | 9 Months Ended |
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Sep. 30, 2011 | |
Segment Reporting [Abstract] | |
Segment Reporting, Number of Segments | 2 |
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive loss |
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Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Volumes of Derivative Instruments for Electric Utility Segment |
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Fair Value of Derivative Instruments of Electric Utility Segment | The following table summarizes the gross and net fair values of commodity derivative instruments at September 30, 2011:
The following table summarizes the gross and net fair values of commodity derivative instruments at December 31, 2010:
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Summarization of economic hedging activities of Electric Utility |
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Notional Volumes of Derivative Instruments for Competitive Power Generation Segment |
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Fair Value of Derivative Instruments of Competitive Power Generation Segment |
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Activity of accumulated other comprehensive income for Competitive Power Generation Segment |
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Effect of realized and unrealized gains (losses) from derivative instruments on Competitive Power Generation Segment |
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Summary of margin and collateral deposits provided to and received from counterparties |
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Accumulated Other Comprehensive Loss | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Edison International's accumulated other comprehensive loss consists of:
Included in accumulated other comprehensive loss at September 30, 2011 was $10 million, net of tax, of unrealized gains on commodity-based cash flow hedges; and $49 million, net of tax, of unrealized losses related to interest rate hedges. The maximum period over which a commodity cash flow hedge is designated is May 31, 2014. Unrealized gains on commodity hedges consist of futures and forward electricity contracts that qualify for hedge accounting. These gains arise because current forecasts of future electricity prices in these markets are lower than the contract prices. Approximately $11 million of unrealized gains on cash flow hedges, net of tax, are expected to be reclassified into earnings during the next 12 months. Management expects that reclassification of net unrealized gains will increase energy revenues recognized at market prices. Actual amounts ultimately reclassified into earnings over the next 12 months could vary materially from this estimated amount as a result of changes in market conditions. |
Accumulated Other Comprehensive (Loss) (Details) (USD $) In Millions | 3 Months Ended | 9 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011
Unrealized Gain (Loss) on Cash Flow Hedges | Sep. 30, 2011
Pension and PBOP- Net Gain (Loss) | Sep. 30, 2011
Pension and PBOP- Prior Service Cost | Dec. 31, 2010
Pension and PBOP- Prior Service Cost | Sep. 30, 2011
Commodity contracts | Sep. 30, 2011
Interest rate contracts | |
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||||||||
Balance, at the beginning of period | $ (76) | $ 16 | $ (87) | $ (5) | $ (5) | |||||
Current period change | (27) | 38 | (48) | (11) | (55) | 7 | ||||
Balance, at the end of period | (124) | (124) | (39) | (80) | (5) | (5) | ||||
Unrealized derivative gains (losses) after taxes recorded in accumulated other comprehensive income | 10 | (49) | ||||||||
Unrealized gains on cash flow hedges, net of tax, expected to be reclassified into earnings during the next 12 months | $ 11 | |||||||||
Cash Flow Hedge Gain (Loss) Reclassification Period | 12 months |
Other Income and Expenses (Details) (USD $) In Millions | 3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Other income: | ||||
Equity Available Funds Used During Construction | $ 18 | $ 24 | $ 74 | $ 76 |
Increase in cash surrender value of life insurance policies | 6 | 7 | 19 | 19 |
Other | 2 | 2 | 10 | 8 |
Total utility other income | 26 | 33 | 103 | 103 |
Competitive power generation and other income | 1 | 0 | 7 | 0 |
Total other income | 27 | 33 | 110 | 103 |
Other expenses: | ||||
Civic, political and related activities and donations | 6 | 7 | 21 | 21 |
Other | 4 | 3 | 14 | 18 |
Total utility other expenses | 10 | 10 | 35 | 39 |
Competitive power generation and other expenses | 1 | 2 | 2 | 0 |
Total other expenses | $ 11 | $ 12 | $ 37 | $ 39 |
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Recurring Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, referred to as an exit price. Fair value of an asset or liability should consider assumptions that market participants would use in pricing the asset or liability, including assumptions about nonperformance risk. Edison International categorizes financial assets and liabilities into a fair value hierarchy based on valuation inputs used to determine fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The following table sets forth assets and liabilities that were accounted for at fair value by level within the fair value hierarchy:
The following table sets forth a summary of changes in the fair value of Level 3 assets and liabilities:
Edison International determines the fair value for transfers in and transfers out of each level at the end of each reporting period. There were no significant transfers between levels during 2011 and 2010. Valuation Techniques Used to Determine Fair Value Level 1 Includes financial assets and liabilities where fair value is determined using unadjusted quoted prices in active markets that are available at the measurement date for identical assets and liabilities. Financial assets and liabilities classified as Level 1 include exchange-traded equity securities, exchange traded derivatives, U.S. treasury securities and money market funds. Level 2 Pricing inputs include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the derivative instrument. Financial assets and liabilities utilizing Level 2 inputs include fixed-income securities and over-the-counter derivatives. Derivative contracts that are over-the-counter traded are valued using pricing models to determine the net present value of estimated future cash flows and are generally classified as Level 2. Inputs to the pricing models include forward published or posted clearing prices from exchanges (New York Mercantile Exchange and Intercontinental Exchange) for similar instruments and discount rates. A primary source that best represents traded activity for each market is used to develop observable forward market prices in determining the fair value of these positions. Broker quotes or prices from exchanges are used to validate and corroborate the primary source. These price quotations reflect mid-market prices (average of bid and ask) and are obtained from sources believed to provide the most liquid market for the commodity. Broker quotes are incorporated when corroborated with other information which may include a combination of prices from exchanges, other brokers and comparison to executed trades. Level 3 Includes financial assets and liabilities where fair value is determined using techniques that require significant unobservable inputs. Over-the-counter options, bilateral contracts, capacity contracts, QF contracts, derivative contracts that trade infrequently (such as congestion revenue rights ("CRRs") in the California market), long-term power agreements, and derivative contracts with counterparties that have significant nonperformance risks are generally valued using pricing models that incorporate unobservable inputs and are classified as Level 3. Assumptions are made in order to value derivative contracts in which observable inputs are not available. In circumstances where Edison International cannot verify fair value with observable market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. As markets continue to develop and more pricing information becomes available, Edison International continues to assess valuation methodologies used to determine fair value. For derivative contracts that trade infrequently (illiquid financial transmission rights and CRRs), changes in fair value are based on models forecasting the value of those contracts. The models' inputs are reviewed and the fair value is adjusted when it is concluded that a change in inputs would result in a new valuation that better reflects the fair value of those derivative contracts. For illiquid long-term power agreements, fair value is based upon the discounting of future electricity and natural gas prices derived from a proprietary model using the risk free discount rate for a similar duration contract, adjusted for credit risk and market liquidity. Changes in fair value are based on changes to forward market prices, including forecasted prices for illiquid forward periods. The fair value of the majority of SCE's derivatives that are classified as Level 3 is determined using uncorroborated non-binding broker quotes and models which may require SCE to extrapolate short-term observable inputs in order to calculate fair value. Broker quotes are obtained from several brokers and compared against each other for reasonableness. Nonperformance Risk The fair value of the derivative assets and liabilities are adjusted for nonperformance risk. To assess nonperformance risks, SCE considers the probability of and the estimated loss incurred if a party to the transaction were to default. SCE also considers collateral, netting agreements, guarantees and other forms of credit support when assessing nonperformance. EMG reviews credit ratings of counterparties (and related default rates based on such credit ratings) and prices of credit default swaps. The market price (or premium) for credit default swaps represents the price that a counterparty would pay to transfer the risk of default, typically bankruptcy, to another party. A credit default swap is not directly comparable to the credit risks of derivative contracts, but provides market information of the related risk of nonperformance. The nonperformance risk adjustment represented an insignificant amount at both September 30, 2011 and December 31, 2010. Nuclear Decommissioning Trusts SCE's nuclear decommissioning trust investments include equity securities, U.S. treasury securities and other fixed-income securities. Equity and treasury securities are classified as Level 1 as fair value is determined by observable market prices in active or highly liquid and transparent markets. The remaining fixed-income securities are classified as Level 2. The fair value of these financial instruments is based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Fair Value of Long-Term Debt Recorded at Carrying Value The carrying value and fair value of long-term debt are:
Fair values of long-term debt are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes of new issue prices and relevant credit information. The carrying value of trade receivables, payables and short-term debt approximates fair value. |
Regulatory Assets and Liabilities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Regulatory Assets and Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Assets and Liabilities | Regulatory Assets and Liabilities Regulatory assets included on the consolidated balance sheets are:
Regulatory liabilities included on the consolidated balance sheets are:
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Business Segments (Details 2) (USD $) In Millions | 3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | |
Reportable Segments Information | |||||
Operating Revenue: | $ 3,981 | $ 3,788 | $ 9,746 | $ 9,340 | |
Net Income (Loss) attributable to Edison International: | 426 | 510 | 802 | 1,090 | |
Total Assets: | 47,672 | 47,672 | 45,530 | ||
Income (loss) from discontinued operations, net of tax | 0 | (4) | (3) | 4 | |
Electric Utility | |||||
Reportable Segments Information | |||||
Operating Revenue: | 3,386 | 3,098 | 8,063 | 7,504 | |
Net Income (Loss) attributable to Edison International: | 406 | 394 | 838 | 858 | |
Total Assets: | 38,122 | 38,122 | 35,906 | ||
Competitive power generation | |||||
Reportable Segments Information | |||||
Operating Revenue: | 596 | 691 | 1,686 | 1,838 | |
Net Income (Loss) attributable to Edison International: | 33 | 110 | (17) | 214 | |
Total Assets: | 9,881 | 9,881 | 9,597 | ||
Parent and other | |||||
Reportable Segments Information | |||||
Operating Revenue: | (1) | (1) | (3) | (2) | |
Net Income (Loss) attributable to Edison International: | (13) | 6 | (19) | 18 | |
Total Assets: | $ (331) | $ (331) | $ 27 |
Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Dec. 31, 2010 | |
Summary of Significant Accounting Policies [Line Items] | ||
Segment Reporting, Number of Segments | 2 | |
Cash Equivalents | ||
Money market funds | $ 1,100 | $ 1,100 |
Maximum maturity period of cash equivalent investments (in months) | 3 | |
Cash reclassified to accounts payable under cash management program | 215 | 197 |
Inventory | ||
Coal, gas, fuel oil and other raw materials | 191 | 184 |
Spare parts, materials and supplies | 401 | 384 |
Total inventory | $ 592 | $ 568 |
Electric Utility [Member] | ||
Summary of Significant Accounting Policies [Line Items] | ||
Supply of Electricity Area Covered | 50,000 |
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value by level |
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Summary of changes in fair value of Level 3 assets and liabilities |
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Carrying amounts and fair values of long-term debt, including current portion |
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Other Investments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulated Entity, Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Investments | Other Investments Nuclear Decommissioning Trusts Future decommissioning costs of removal of nuclear assets are expected to be funded from independent decommissioning trusts, which currently receive contributions of approximately $23 million per year included in SCE customer rates. Contributions to the decommissioning trusts are reviewed every three years by the CPUC. If additional funds are needed for decommissioning, it is probable that the additional funds will be recoverable through customer rates. Funds collected, together with accumulated earnings, will be utilized solely for decommissioning. The CPUC has set certain restrictions related to the investments of these trusts. The following table sets forth amortized cost and fair value of the trust investments:
Trust fund earnings (based on specific identification) increase the trust fund balance and the asset retirement obligations ("ARO") regulatory liability. Proceeds from sales of securities (which are reinvested) were $962 million and $302 million for the three months ended September 30, 2011 and 2010, respectively, and $2.1 billion and $903 million for the nine months ended September 30, 2011 and 2010, respectively. Unrealized holding gains, net of losses, were $1.1 billion and $1.3 billion at September 30, 2011 and December 31, 2010, respectively. The following table sets forth a summary of changes in the fair value of the trust:
Due to regulatory mechanisms, earnings and realized gains and losses (including other-than-temporary impairments) have no impact on operating revenue or earnings. |
Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | Jun. 30, 2011 | Jun. 30, 2010 | Dec. 31, 2009 | Sep. 30, 2011
Level 1 | Dec. 31, 2010
Level 1 | Sep. 30, 2011
Level 1
Stocks | Dec. 31, 2010
Level 1
Stocks | Sep. 30, 2011
Level 1
U.S. government and agency securities | Dec. 31, 2010
Level 1
U.S. government and agency securities | Sep. 30, 2011
Level 1
Short-term investments, primarily cash equivalents | Dec. 31, 2010
Level 1
Short-term investments, primarily cash equivalents | Sep. 30, 2011
Level 1
Commodity contracts. | Dec. 31, 2010
Level 1
Commodity contracts. | Sep. 30, 2011
Level 1
Natural gas | Dec. 31, 2010
Level 1
Natural gas | Sep. 30, 2011
Level 1
Fuel oil | Dec. 31, 2010
Level 1
Fuel oil | Sep. 30, 2011
Level 2 | Dec. 31, 2010
Level 2 | Sep. 30, 2011
Level 2
Municipal bonds | Dec. 31, 2010
Level 2
Municipal bonds | Sep. 30, 2011
Level 2
U.S. government and agency securities | Dec. 31, 2010
Level 2
U.S. government and agency securities | Sep. 30, 2011
Level 2
Corporate bonds | Dec. 31, 2010
Level 2
Corporate bonds | Sep. 30, 2011
Level 2
Short-term investments, primarily cash equivalents | Dec. 31, 2010
Level 2
Short-term investments, primarily cash equivalents | Sep. 30, 2011
Level 2
Commodity contracts. | Dec. 31, 2010
Level 2
Commodity contracts. | Sep. 30, 2011
Level 2
Electricity | Dec. 31, 2010
Level 2
Electricity | Sep. 30, 2011
Level 2
Natural gas | Dec. 31, 2010
Level 2
Natural gas | Sep. 30, 2011
Level 2
Coal | Dec. 31, 2010
Level 2
Coal | Sep. 30, 2011
Level 2
Interest rate contracts. | Dec. 31, 2010
Level 2
Interest rate contracts. | Sep. 30, 2011
Level 3 | Sep. 30, 2010
Level 3 | Sep. 30, 2011
Level 3 | Sep. 30, 2010
Level 3 | Dec. 31, 2010
Level 3 | Sep. 30, 2011
Level 3
Commodity contracts. | Dec. 31, 2010
Level 3
Commodity contracts. | Sep. 30, 2011
Level 3
Electricity | Dec. 31, 2010
Level 3
Electricity | Sep. 30, 2011
Level 3
Natural gas | Dec. 31, 2010
Level 3
Natural gas | Sep. 30, 2011
Level 3
Tolling | Dec. 31, 2010
Level 3
Tolling | Sep. 30, 2011
Netting and Collateral | Dec. 31, 2010
Netting and Collateral | Sep. 30, 2011
Netting and Collateral
Commodity contracts. | Dec. 31, 2010
Netting and Collateral
Commodity contracts. | Sep. 30, 2011
Netting and Collateral
Electricity | Dec. 31, 2010
Netting and Collateral
Electricity | Sep. 30, 2011
Netting and Collateral
Natural gas | Dec. 31, 2010
Netting and Collateral
Natural gas | Sep. 30, 2011
Netting and Collateral
Fuel oil | Dec. 31, 2010
Netting and Collateral
Fuel oil | Sep. 30, 2011
Netting and Collateral
Coal | Dec. 31, 2010
Netting and Collateral
Coal | Sep. 30, 2011
Total | Dec. 31, 2010
Total | Sep. 30, 2011
Total
Stocks | Dec. 31, 2010
Total
Stocks | Sep. 30, 2011
Total
Municipal bonds | Dec. 31, 2010
Total
Municipal bonds | Sep. 30, 2011
Total
U.S. government and agency securities | Dec. 31, 2010
Total
U.S. government and agency securities | Sep. 30, 2011
Total
Corporate bonds | Dec. 31, 2010
Total
Corporate bonds | Sep. 30, 2011
Total
Short-term investments, primarily cash equivalents | Dec. 31, 2010
Total
Short-term investments, primarily cash equivalents | Sep. 30, 2011
Total
Commodity contracts. | Dec. 31, 2010
Total
Commodity contracts. | Sep. 30, 2011
Total
Electricity | Dec. 31, 2010
Total
Electricity | Sep. 30, 2011
Total
Natural gas | Dec. 31, 2010
Total
Natural gas | Sep. 30, 2011
Total
Tolling | Dec. 31, 2010
Total
Tolling | Sep. 30, 2011
Total
Interest rate contracts. | Dec. 31, 2010
Total
Interest rate contracts. | Sep. 30, 2011
Stocks | Dec. 31, 2010
Stocks | Sep. 30, 2011
Municipal bonds | Dec. 31, 2010
Municipal bonds | Sep. 30, 2011
U.S. government and agency securities | Dec. 31, 2010
U.S. government and agency securities | Sep. 30, 2011
Corporate bonds | Dec. 31, 2010
Corporate bonds | |
Assets at Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Money market funds | $ 1,100 | $ 1,100 | $ 1,056 | $ 1,100 | $ 1,056 | $ 1,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative contracts | 4 | 9 | 2 | 1 | 2 | 8 | 105 | 139 | 43 | 70 | 61 | 69 | 1 | 227 | 492 | 213 | 363 | 10 | 11 | 4 | 118 | (45) | (70) | (36) | (61) | (6) | (1) | (2) | (8) | (1) | 291 | 570 | 220 | 372 | 67 | 80 | 4 | 118 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term disability plan | 9 | 9 | 9 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nuclear decommissioning trusts | 3,347 | 3,393 | 3,347 | 3,480 | 3,657 | 3,083 | 3,140 | 2,101 | 2,245 | 1,721 | 2,029 | 378 | 215 | 2 | 1 | 1,359 | 1,240 | 767 | 790 | 123 | 73 | 318 | 346 | 151 | 31 | 3,460 | 3,485 | 1,721 | 2,029 | 767 | 790 | 501 | 288 | 318 | 346 | 153 | 32 | 1,721 | 2,029 | 767 | 790 | 501 | 288 | 318 | 346 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 3,170 | 3,363 | 1,464 | 1,379 | 227 | 227 | 492 | (45) | (70) | 4,816 | 5,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities at Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments, Liabilities, Fair Value Disclosure | 1 | 1 | 257 | 300 | 17 | 13 | 240 | 286 | 1 | 80 | 16 | 327 | 395 | 84 | 40 | 12 | 11 | 231 | 344 | (31) | (26) | (18) | (21) | (12) | (4) | (1) | (1) | 554 | 669 | 83 | 32 | 240 | 293 | 231 | 344 | 80 | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 1 | 337 | 316 | 327 | 327 | 395 | (31) | (26) | 634 | 685 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets (liabilities) | 3,169 | 3,363 | 1,127 | 1,063 | (100) | (100) | 97 | (14) | (44) | 4,182 | 4,479 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of equity investments located in the United States (as a percent) | 69.00% | 67.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations and other asset backed securities | 21 | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables (payables) net related to investments | 67 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash surrender value of life insurance | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value, net asset (liabilities) at beginning of period | (275) | (703) | 97 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total realized/unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | (4) | 24 | 14 | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in regulatory assets and liabilities | 162 | (142) | (220) | (924) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in accumulated other comprehensive income | 1 | 1 | (2) | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 24 | 15 | 51 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlements | (8) | (76) | (38) | (128) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers in or out of Level 3 | 0 | (12) | (2) | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value, net liability at end of period | (100) | (893) | (100) | (893) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change during the period in unrealized losses related to assets and liabilities held at the end of the period | (110) | (163) | (425) | (882) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain loss related to Level 3 financial instruments reported within competitive power generation revenue | $ (3) | $ 7 | $ 1 |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments Edison International has two business segments for financial reporting purposes: an electric utility operation segment (SCE) and a competitive power generation segment (EMG). The significant accounting policies of the segments are the same as those described in Note 1. Reportable Segments Information The following is information (including the elimination of intercompany transactions) related to Edison International's reportable segments:
Segment balance sheet information was:
1 Includes earnings (losses) from discontinued operations of none and $(4) million for the three months ended September 30, 2011 and 2010, respectively, and $(3) million and $4 million for the nine months ended September 30, 2011 and 2010, respectively. 2 Includes amounts from Edison International (parent) and other Edison International subsidiaries that are not significant as a reportable segment, as well as intercompany eliminations. |
Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Third-Party Power Purchase Agreements During the nine months ended September 30, 2011, additional renewable energy power purchase contracts became effective and were classified as operating leases. SCE's additional commitments under these contracts are estimated to be: $116 million each year in 2012 – 2015 and $1.9 billion for the period remaining thereafter. In October 2011, SCE completed its 2011 annual request for offers and entered into new power purchase contracts with commitments estimated to be: $5 million in 2012, $81 million in 2013, $178 million in 2014 and $240 million in 2015. Other Commitments Firm Transmission Commitments During the nine months ended September 30, 2011, SCE had a firm transmission agreement with additional commitments estimated to be: $1 million in 2011, $4 million each year in 2012 – 2015 and $78 million for the period remaining thereafter. Fuel Supply Contracts and Coal Transportation Agreements At September 30, 2011, Midwest Generation and EME Homer City Generation L.P. ("Homer City") had commitments to purchase coal from third-party suppliers at fixed prices, subject to adjustment clauses. These commitments, together with estimated transportation costs under existing agreements, are estimated to aggregate $925 million, which consists of: $245 million for the remainder of 2011, $332 million in 2012, $198 million in 2013 and $150 million in 2014. Turbine Commitments Based upon a June 2011 contract amendment, EMG was required to schedule turbine deliveries by September 2011 or incur a termination obligation equal to its turbine deposit of $29 million. Under the terms of a September 2011 contract amendment, EMG scheduled turbine deliveries for the Broken Bow I wind project which will utilize the $29 million turbine deposit. In October 2011, EMG entered into a contractual agreement for the purchase of additional turbines with commitments of $39 million through 2012 for the Crofton Bluffs wind project. On October 8, 2010, an agreement was reached to settle disputes included in the complaint filed by EMG against Mitsubishi Power Systems Americas, Inc. and Mitsubishi Heavy Industries, Ltd. with respect to a wind turbine generator supply agreement. As a result of this agreement, EMG may elect to deploy up to 60 additional wind turbines (aggregating 144 MW) that were part of the original contract, or may be obligated to make a payment of up to $30 million following the end of the three-year period, which commenced on October 8, 2010, if it has not elected to deploy the additional turbines and if certain other criteria apply. Capital Commitments At September 30, 2011, EMG's subsidiaries had firm commitments to spend approximately $157 million during the remainder of 2011, $235 million in 2012 and $19 million in 2013 for capital expenditures. These expenditures primarily relate to the Walnut Creek project and the construction of wind projects. EMG intends to fund these expenditures through project level financing, U.S. Treasury grants, Midwest Generation and EME lines of credit, if available, cash on hand and cash generated from operations. Guarantees and Indemnities Edison International's subsidiaries have various financial and performance guarantees and indemnity agreements which are issued in the normal course of business. The contracts discussed below included performance guarantees. Environmental Indemnities Related to the Midwest Generation Plants In connection with the acquisition of the Midwest Generation plants, EME agreed to indemnify Commonwealth Edison Company ("Commonwealth Edison") with respect to specified environmental liabilities before and after December 15, 1999, the date of sale. The indemnification obligations are reduced by any insurance proceeds and tax benefits related to such indemnified claims and are subject to a requirement that Commonwealth Edison takes all reasonable steps to mitigate losses related to any such indemnification claim. Also, in connection with the sale-leaseback transaction related to the Powerton and Joliet Stations in Illinois, EME agreed to indemnify the lessors for specified environmental liabilities. These indemnities are not limited in term or amount. Due to the nature of the obligations under these indemnities, a maximum potential liability cannot be determined. Commonwealth Edison has advised EME that Commonwealth Edison believes it is entitled to indemnification for all liabilities, costs, and expenses that it may be required to bear as a result of the litigation discussed below under "—Contingencies—Midwest Generation New Source Review and Other Litigation." Except as discussed below, EME has not recorded a liability related to these environmental indemnities. Midwest Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation Company LLC on February 20, 2003 to resolve a dispute regarding interpretation of Midwest Generation's reimbursement obligation for asbestos claims under the environmental indemnities set forth in the Asset Sale Agreement. Under this supplemental agreement, Midwest Generation agreed to reimburse Commonwealth Edison and Exelon Generation for 50% of specific asbestos claims pending as of February 2003 and related expenses less recovery of insurance costs, and agreed to a sharing arrangement for liabilities and expenses associated with future asbestos-related claims as specified in the agreement. The obligations under this agreement are not subject to a maximum liability. The supplemental agreement had an initial five-year term with an automatic renewal provision for subsequent one-year terms (subject to the right of either party to terminate); pursuant to the automatic renewal provision, it has been extended until February 2012. There were approximately 230 cases for which Midwest Generation was potentially liable that had not been settled and dismissed at September 30, 2011. Midwest Generation had recorded a liability of $55 million at September 30, 2011 related to this contractual indemnity. The amounts recorded by Midwest Generation for the asbestos-related liability are based upon a number of assumptions. Future events, such as the number of new claims to be filed each year, the average cost of disposing of claims, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual costs to be higher or lower than projected. Environmental Indemnity Related to the Homer City Plant In connection with the acquisition of the Homer City plant, Homer City agreed to indemnify the sellers with respect to specified environmental liabilities before and after the date of sale. EME guaranteed this obligation of Homer City. Also, in connection with the sale-leaseback transaction related to the Homer City plant, Homer City agreed to indemnify the lessors for specified environmental liabilities. Due to the nature of the obligations under these indemnity provisions, they are not subject to a maximum potential liability and do not have expiration dates. EME has not recorded a liability related to this indemnity. For discussion of the New Source Review lawsuit filed against Homer City, see "—Contingencies—Homer City New Source Review and Other Litigation." Indemnities Provided under Asset Sale and Sale-Leaseback Agreements The asset sale agreements for the sale of EME's international assets contain indemnities from EME to the purchasers, including indemnification for taxes imposed with respect to operations of the assets prior to the sale and for pre-closing environmental liabilities. Not all indemnities under the asset sale agreements have specific expiration dates. At September 30, 2011, EME had recorded a liability of $43 million related to these matters. In connection with the sale of various domestic assets, EME has from time to time provided indemnities to the purchasers for taxes imposed with respect to operations of the assets prior to the sale. EME has also provided indemnities to purchasers for items specified in each agreement (for example, specific pre-existing litigation matters and/or environmental conditions). Not all indemnities under the asset sale agreements have specific expiration dates. Due to the nature of these potential obligations, a maximum potential liability cannot be determined and has not been recorded as a liability related to these indemnities. In connection with the sale-leaseback transactions related to the Homer City plant in Pennsylvania, the Powerton and Joliet Stations in Illinois and, previously, the Collins Station in Illinois, EME and several of its subsidiaries entered into tax indemnity agreements. Under these tax indemnity agreements, the lessees in the sale-leaseback transactions agreed to indemnify the lessors for specified adverse tax consequences that could result from certain situations set forth in each tax indemnity agreement, including specified defaults under the respective leases. Although the Collins Station lease terminated in April 2004, Midwest Generation's indemnities in favor of its former lease equity investors are still in effect. EME provided similar indemnities in the sale-leaseback transactions related to the Powerton and Joliet Stations in Illinois. The potential indemnity obligations under these tax indemnity agreements could be significant. Due to the nature of these potential obligations, EME cannot determine a maximum potential liability which would be triggered by a valid claim from the lessors. EME has not recorded a liability for these matters. EME agreed to indemnify the lessors in the sale-leaseback transaction related to the Homer City plant for certain negative federal income tax consequences should the rent payments be “levelized” for tax purposes and for potential foreign tax credit losses in the event that the lessor's debt is characterized as recourse, rather than non-recourse. This indemnity covers a limited range of possible tax consequences that are unrelated to performance under the lease. Indemnity Provided as Part of the Acquisition of Mountainview In connection with the acquisition of the Mountainview power plant, SCE agreed to indemnify the seller with respect to specific environmental claims related to SCE's previously owned San Bernardino Generating Station, divested by SCE in 1998 and reacquired as part of the Mountainview acquisition. SCE retained certain responsibilities with respect to environmental claims as part of the original divestiture of the station. The aggregate liability for either party to the purchase agreement for damages and other amounts is a maximum of $60 million. This indemnification for environmental liabilities expires on or before March 12, 2033. SCE has not recorded a liability related to this indemnity. Mountainview Filter Cake Indemnity The Mountainview power plant utilizes water from on-site groundwater wells and City of Redlands ("City") recycled water for cooling purposes. Unrelated to the operation of the plant, the groundwater contains perchlorate. The pumping of the water removes perchlorate from the aquifer beneath the plant and concentrates it in the plant's wastewater treatment "filter cake." Use of this impacted groundwater for cooling purposes was mandated by Mountainview's California Energy Commission permit. SCE has indemnified the City for cleanup or associated actions related to groundwater contaminated by perchlorate due to the disposal of filter cake at the City's solid waste landfill. The obligations under this agreement are not limited to a specific time period or subject to a maximum liability. SCE has not recorded a liability related to this indemnity. Other Edison International Indemnities Edison International provides other indemnifications through contracts entered into in the normal course of business. These are primarily indemnifications against adverse litigation outcomes in connection with underwriting agreements, and indemnities for specified environmental liabilities and income taxes with respect to assets sold. Edison International's obligations under these agreements may or may not be limited in terms of time and/or amount, and in some instances Edison International may have recourse against third parties. Edison International has not recorded a liability related to these indemnities. The overall maximum amount of the obligations under these indemnifications cannot be reasonably estimated. Contingencies In addition to the matters disclosed in these Notes, Edison International is involved in other legal, tax and regulatory proceedings before various courts and governmental agencies regarding matters arising in the ordinary course of business. Edison International believes the outcome of these other proceedings will not materially affect its results of operations or liquidity. Midwest Generation New Source Review and Other Litigation In August 2009, the United States Environmental Protection Agency ("US EPA") and the State of Illinois filed a complaint in the Northern District of Illinois alleging that Midwest Generation or Commonwealth Edison performed repair or replacement projects at six Illinois coal-fired electric generating stations in violation of the Prevention of Significant Deterioration ("PSD") requirements and of the New Source Performance Standards of the Clean Air Act ("CAA"), including alleged requirements to obtain a construction permit and to install controls sufficient to meet best available control technology ("BACT") emission rates. The US EPA also alleged that Midwest Generation and Commonwealth Edison violated certain operating permit requirements under Title V of the CAA. Finally, the US EPA alleged violations of certain opacity and particulate matter standards at the Midwest Generation plants. In addition to seeking penalties ranging from $25,000 to $37,500 per violation, per day, the complaint calls for an injunction ordering Midwest Generation to install controls sufficient to meet BACT emission rates at all units subject to the complaint; to obtain new PSD or New Source Review permits for those units; to amend its applications under Title V of the CAA; to conduct audits of its operations to determine whether any additional modifications have occurred; and to offset and mitigate the harm to public health and the environment caused by the alleged CAA violations. The remedies sought by the plaintiffs in the lawsuit could go well beyond the requirements of the Combined Pollutant Standard ("CPS"). Several Chicago-based environmental action groups have intervened in the case. Nine of ten PSD claims have been dismissed, along with claims related to alleged violations of Title V of the CAA to the extent based on the dismissed PSD claims. The court has also dismissed all claims asserted against Commonwealth Edison and EME. The court denied a motion to dismiss a claim by the Chicago-based environmental action groups for civil penalties in the remaining PSD claim, but noted that the plaintiffs will be required to convince the court that the statute of limitations should be equitably tolled. The court did not address other counts in the complaint that allege violations of opacity and particulate matter limitations under the Illinois State Implementation Plan and Title V of the CAA. Trial of the liability portion of the case is scheduled to commence June 3, 2013. A motion filed by the plaintiffs requesting that the dismissals be certified as “partial final judgments” capable of appeal, and requesting that the remaining claims be stayed pending such an appeal, is pending. In May 2011, two complaints were filed against Midwest Generation in the Northern District of Illinois by residents living near the Crawford and Fisk facilities on behalf of themselves and all others similarly situated, each asserting claims of nuisance, negligence, trespass, and strict liability. The plaintiffs sought to have their suits certified as a class action and requested injunctive relief, as well as compensatory and punitive damages. In October 2011, the complaints were dismissed for lack of federal jurisdiction. EME does not know whether the plaintiffs will appeal the dismissal or file a complaint in state court. Adverse decisions in these cases could involve penalties and remedial actions that could have a material impact on the financial condition and results of operations of Midwest Generation and EME. EME cannot predict the outcome of these matters or estimate the impact on the Midwest Generation plants, or its and Midwest Generation's results of operations, financial position or cash flows. Homer City New Source Review and Other Litigation In January 2011, the US EPA filed a complaint in the Western District of Pennsylvania against Homer City, the sale-leaseback owner participants of the Homer City plant, and two prior owners of the Homer City plant. The complaint alleged violations of the PSD and Title V provisions of the CAA, as a result of projects in the 1990s performed by prior owners without PSD permits and the subsequent failure to incorporate emissions limitations that meet BACT into the station's Title V operating permit. In addition to seeking penalties ranging from $32,500 to $37,500 per violation, per day, the complaint called for an injunction ordering Homer City to install controls sufficient to meet BACT emission rates at all units subject to the complaint and for other remedies. The Pennsylvania Department of Environmental Protection, the State of New York and the State of New Jersey intervened in the lawsuit. Also in January 2011, two residents filed a complaint in the Western District of Pennsylvania, on behalf of themselves and all others similarly situated, against Homer City, the sale-leaseback owner participants of the Homer City plant, two prior owners of the Homer City plant, EME, and Edison International, claiming that emissions from the Homer City plant had adversely affected their health and property values. The plaintiffs sought to have their suit certified as a class action and requested injunctive relief, the funding of a health assessment study and medical monitoring, as well as compensatory and punitive damages. On October 12, 2011, all of the claims in the US EPA's lawsuit were dismissed with prejudice. On October 13, 2011, the claims in the purported class action lawsuit that were based on the federal CAA were dismissed with prejudice, while state law statutory and common law claims were dismissed without prejudice to re-file in state court should the plaintiffs choose to do so. EME does not know whether the US EPA and the other plaintiffs in these cases will appeal the dismissal of these cases, or whether plaintiffs in the purported class action lawsuit will file a complaint in state court. If the plaintiffs are able to revive the lawsuits, adverse decisions in these cases could involve penalties, remedial actions and damages that could have a material impact on the financial condition and results of operations of Homer City and EME. Four Corners New Source Review Litigation In October 2011, four private environmental organizations filed a CAA citizens' lawsuit against the co-owners of Four Corners. The complaint alleges that certain work performed at the Four Corners generating units 4 and 5, over the approximate periods of 1985-1986 and 2007-present, constituted plant “major modifications” for which the plant should have, but did not, obtain permits and install BACT in violation of the PSD requirements and of the New Source Performance Standards of the CAA. The complaint also alleges subsequent and continuing violation of BACT air emissions limits. The lawsuit seeks injunctive and declaratory relief, civil penalties, including a mitigation project and litigation costs. In November 2010, SCE entered into an agreement to sell its ownership interest in generating units 4 and 5 to APS. The sale is subject to regulatory approvals and is expected to close in late 2012. Under the agreement SCE would remain responsible for its pro rata share of certain environmental liabilities, including penalties arising from environmental violations prior to the sale, but SCE would not be liable for any costs of installing BACT or other costs related to continuing or extending Four Corners operations. SCE cannot predict the outcome of these matters or estimate the impact on its financial statements. Concurrently, the US EPA has proposed a regional haze federal implementation plan based on an APS proposal that would require shut down of units 1, 2 and 3 by 2016 and the installation of selective catalytic reduction technology on units 4 and 5 by 2018. APS' proposal contemplated that these actions would both satisfy the federal regional haze requirements and resolve any New Source Review claims the US EPA might have. A final federal implementation plan is expected in early 2012. Malibu Fire Order Instituting Investigation ("OII") Following a 2007 wildfire in Malibu, California, the CPUC issued an OII to determine if any statutes, CPUC general orders, rules or regulations were violated by SCE or telecomm providers (“OII Respondents”) that shared the use of three failed power poles in the wildfire area. The CPUC's Consumer Protection and Safety Division (“CPSD”) has alleged, among other things, that the poles were overloaded, that the OII Respondents violated the CPUC's rules governing the design, construction and inspection of poles and misled the CPUC during its investigation of the fire, and that SCE failed to preserve evidence relevant to the investigation. In October 2011, the CPSD proposed that the OII Respondents be assessed penalties of approximately $99 million, with SCE being allocated approximately $50 million of the total. SCE has denied the allegations and believes the proposed penalties are excessive. CPSD's allegations will likely be set for hearing in the first quarter of 2012. SCE cannot predict the amount, if any, of penalties that the CPUC may ultimately impose on SCE. Navajo Nation Litigation On August 1, 2011, SCE and the other defendants entered into a comprehensive settlement with the Navajo Nation of the litigation filed in June 1999 against SCE and others concerning royalty payments to the Navajo for the coal supplied to the Mohave Generating Station. Pursuant to the settlement, the Navajo Nation lawsuit was dismissed. The settlement agreement reached with the Navajo Nation did not have a material impact on SCE's financial statements. Environmental Remediation Edison International records its environmental remediation liabilities when site assessments and/or remedial actions are probable and a range of reasonably likely cleanup costs can be estimated. Edison International reviews its sites and measures the liability quarterly, by assessing a range of reasonably likely costs for each identified site using currently available information, including existing technology, presently enacted laws and regulations, experience gained at similar sites, and the probable level of involvement and financial condition of other potentially responsible parties. These estimates include costs for site investigations, remediation, operations and maintenance, monitoring and site closure. Unless there is a single probable amount, Edison International records the lower end of this reasonably likely range of costs (reflected in "Other long-term liabilities") at undiscounted amounts as timing of cash flows is uncertain. As of September 30, 2011, Edison International's recorded estimated minimum liability to remediate its 27 identified material sites (sites in which the upper end of the range of costs is at least $1 million) at SCE (24 sites) and EMG (3 sites primarily related to Midwest Generation) was $60 million, of which $51 million was related to SCE, including $15 million related to San Onofre. In addition to its identified material sites, SCE also has 33 immaterial sites for which the total minimum recorded liability was $3 million. The ultimate costs to clean up Edison International's identified sites may vary from its recorded liability due to numerous uncertainties inherent in the estimation process, such as: the extent and nature of contamination; the scarcity of reliable data for identified sites; the varying costs of alternative cleanup methods; developments resulting from investigatory studies; the possibility of identifying additional sites; and the time periods over which site remediation is expected to occur. Edison International believes that, due to these uncertainties, it is reasonably possible that cleanup costs at these identified material sites and immaterial sites could exceed its recorded liability by up to $195 million and $7 million, respectively, all of which is related to SCE. The upper limit of this range of costs was estimated using assumptions least favorable to Edison International among a range of reasonably possible outcomes. The CPUC allows SCE to recover 90% of its environmental remediation costs at certain sites, representing $32 million of its recorded liability, through an incentive mechanism (SCE may request to include additional sites). In addition, SCE expects to recover 100% of environmental remediation costs incurred at the majority of the remaining sites through customer rates, representing $18 million of its recorded liability. SCE has recorded a regulatory asset of $50 million at September 30, 2011 for its estimated minimum environmental cleanup costs expected to be recovered through customer rates. Edison International's identified sites include several sites for which there is a lack of currently available information, including the nature and magnitude of contamination, and the extent, if any, that Edison International may be held responsible for contributing to any costs incurred for remediating these sites. Thus, no reasonable estimate of cleanup costs can be made for these sites. SCE expects to clean up its identified sites over a period of up to 30 years. Remediation costs in each of the next several years are expected to range from $7 million to $17 million. Costs incurred for the nine months ended September 30, 2011 and 2010, were $9 million and $7 million, respectively. Based upon the CPUC's regulatory treatment of environmental remediation costs incurred at SCE, Edison International believes that costs ultimately recorded will not materially affect its results of operations, financial position or cash flows. There can be no assurance, however, that future developments, including additional information about existing sites or the identification of new sites, will not require material revisions to estimates. Nuclear Insurance Federal law limits public liability claims from a nuclear incident to the amount of available financial protection, which is currently approximately $12.6 billion. SCE and other owners of San Onofre and Palo Verde have purchased the maximum private primary insurance available ($375 million). The balance is covered by a loss sharing program among nuclear reactor licensees. If a nuclear incident at any licensed reactor in the United States results in claims and/or costs which exceed the primary insurance at that plant site, all nuclear reactor licensees could be required to contribute their share of the liability in the form of a deferred premium. Based on its ownership interests, SCE could be required to pay a maximum of approximately $235 million per nuclear incident. However, it would have to pay no more than approximately $35 million per incident in any one year. If the public liability limit above is insufficient, federal law contemplates that additional funds may be appropriated by Congress. This could include an additional assessment on all licensed reactor operators as a measure for raising further federal revenue. Property damage insurance covers losses up to $500 million, including decontamination costs, at San Onofre and Palo Verde. Decontamination liability and property damage coverage exceeding the primary $500 million also has been purchased in amounts greater than federal requirements. Additional insurance covers part of replacement power expenses during an accident-related nuclear unit outage. A mutual insurance company owned by entities with nuclear facilities issues these policies. If losses at any nuclear facility covered by the arrangement were to exceed the accumulated funds for these insurance programs, SCE could be assessed retrospective premium adjustments of up to approximately $48 million per year. Insurance premiums are charged to operating expense. Spent Nuclear Fuel Under federal law, the Department of Energy ("DOE") is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE did not meet its contractual obligation to begin acceptance of spent nuclear fuel by January 31, 1998. Extended delays by the DOE have led to the construction of costly alternatives and associated siting and environmental issues. Currently, both San Onofre and Palo Verde have interim storage for spent nuclear fuel on site sufficient for the current license period. In June 2010, the United States Court of Federal Claims issued a decision granting SCE and its co-owners damages of approximately $142 million to recover costs incurred through December 31, 2005 for the DOE's failure to meet its obligation to begin accepting spent nuclear fuel from San Onofre. The DOE's appeal of the decision was denied in August 2011. Additional legal action would be necessary to recover damages incurred after December 31, 2005. Any damages recovered are subject to CPUC review as to what amounts would be returned to SCE ratepayers or used to offset past or future fuel decommissioning or storage costs for the benefit of ratepayers. |
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Supplemental Cash Flows Information |
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Preferred and Preference Stock of Utility | 9 Months Ended |
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Sep. 30, 2011 | |
Preferred And Preference Stock Of Utility Disclosure [Abstract] | |
Preferred and Preference Stock of Utility | Preferred and Preference Stock of Utility In March 2011, SCE issued 1,250,000 shares of 6.5% Series D preference stock (cumulative, $100 liquidation value). The Series D preference stock may not be redeemed prior to March 1, 2016. After March 1, 2016, SCE may, at its option, redeem the shares, in whole or in part for a price of $100 per share plus accrued and unpaid dividends, if any. These shares are not subject to mandatory redemption. The proceeds from the sale of these shares were used for general corporate purposes. |
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Regulated Entity, Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost and fair value of the trust investments: |
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Summary of changes in the fair value of trust |
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