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•	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, the NRC and other regulatory authorities and delays in regulatory actions, including potential for penalties or disallowances caused by non-compliance with applicable laws and regulations;

•	ability of Edison International or SCE to borrow funds and access the capital markets on reasonable terms;

•	extent of technological change in the generation, storage, transmission, distribution and use of electricity;

•	risks associated with the operation of transmission and distribution assets and power generating facilities including: public safety issues, failure, availability, efficiency, and output of equipment and availability and cost of spare parts;

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risks inherent in the construction of transmission and distribution infrastructure replacement and expansion projects, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there are delays in the construction of transmission that impact the ability to accept power delivery), and governmental approvals;

•	physical security of SCE's critical assets and personnel and the cyber security of SCE's critical industrial control systems for the operation of the electric grid and other assets and information technology systems for business and customer data;

•	risks associated with the retirement and decommissioning of nuclear generating facilities;

•	cost and availability of electricity, including the ability to procure sufficient resources to meet expected customer needs in the event of power plant outages or significant counterparty defaults under power-purchase agreements;

•	environmental and other public policy laws and regulations, at both the 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;

•	changes in interest rates and rates of inflation, including escalation 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 the California Independent System Operator, Regional Transmission Organizations, and adjoining regions;

•	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 or disruptions from labor disputes;

•	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 or in the absence of insurance the ability to recover uninsured losses;

•	effects of legal proceedings, changes in or interpretations of tax laws, rates or policies;

•	cost and availability of fuel for generating facilities and related transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts;

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•	cost and availability of emission credits or allowances for emission credits;

•	increasing competition in building new transmission systems in SCE's service territory due to FERC Order 1000 that may result in a decrease in new transmission investments by SCE; and

•	weather conditions and natural disasters.

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Impairment and other charges of $163 million ($72 million after-tax) in 2014 related to the San Onofre OII Settlement Agreement (as discussed below) and $575 million ($365 million after-tax) in 2013 related to the permanent retirement of San Onofre Units 2 and 3. During the fourth quarter of 2014, SCE revised its estimated impact of the San Onofre OII Settlement by $68 million ($24 million after-tax) consistent with the advice filing for reimbursement of recorded costs. The total 2014 and 2013 charges resulting from the San Onofre issues and settlement were $738 million ($437 million after-tax). Such amounts do not reflect any recoveries from third parties by SCE. For further information, see "—Permanent Retirement of San Onofre and San Onofre OII Settlement" and "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Impairment of Long-Lived Assets."

•	Income from discontinued operations, net of tax, included:

•	Income of $168 million in 2014 related to the impact of completing the transactions called for in the EME Settlement Agreement (as defined below).

•	Income tax benefits of $39 million during the fourth quarter of 2014 from resolution of uncertain tax positions from settlement of 2003 – 2006 tax years with the IRS and other tax impacts related to EME. See "Notes to Consolidated Financial Statements—Note 7. Income Taxes" for further information.

•	Income tax loss of $22 million in 2014 compared to a benefit of $36 million in 2013 from revised estimates of the tax impact of a tax deconsolidation of EME from Edison International as originally contemplated prior to the EME Settlement. For further information, see "—Resolution of Uncertainty Related to EME in Bankruptcy."

•

An income tax benefit of $7 million in the first quarter of 2013 from reduction in state income taxes related to the sale of Edison Capital's interest in Unit No. 2 of the Beaver Valley Power plant. The sale of Edison Capital's lease interest was completed in 2012. However, the final determination of state income taxes paid was not completed until the first quarter of 2013 which resulted in a change in the estimate of state income taxes due.

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Income of $2 million related to losses allocated to tax equity investors under the HLBV accounting method. For further information, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies." Edison International reflected in core earnings the operating results of the solar rooftop projects, related financings and the priority return to tax equity investor. The losses allocated to the tax equity investor under HLBV method results in income allocated to subsidiaries of Edison International, neither of which is due to the performance of the projects but rather due to the allocation of income tax attributes under the tax equity financing. Accordingly, Edison International has included the non-operating allocation of income as a non-core item.

•	leveling of demand due to slower population growth, demand side management of energy and an increase in customer-owned generation;

•	public policy initiatives such as reducing GHG emissions and encouraging competition for the sale and delivery of electricity;

•	increased need for infrastructure replacement and grid development to accommodate new technologies; and

•	technological and financing innovation that facilitate conservation and customer-owned generation and changes in electricity generation, transmission and distribution.

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•	approval of SCE's request to classify the majority of costs incurred at San Onofre since June 7, 2013 as decommissioning costs and provide reimbursement from SCE's nuclear decommissioning trust; and

•	approval of SCE's 2015 ERRA forecast application, with implementation of revised rates occurring during the first quarter of 2015.

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

•

Utility cost-recovery activities – representing CPUC- and FERC-authorized balancing accounts which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards. Utility cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs) and certain operation and maintenance expenses.

1	See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results."

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•	Higher operating revenue of $229 million due to:

•	An increase in CPUC-related revenue of $370 million primarily related to the increase in authorized revenue to support rate base growth, including $30 million of additional revenue from revisions to its 2012 – 2014 GRC revenue requirement related to deferred income taxes.

•	An increase in FERC-related revenue of $130 million primarily related to rate base growth and higher operating costs, including $19 million of additional revenue from a change in estimate under the FERC formula rate mechanism.

•	Energy efficiency incentive awards were $22 million in 2014 compared to $14 million in 2013.

•	Generator settlements of $15 million. See "Notes to Consolidated Financial Statements—Note 10. Regulatory Assets and Liabilities—Regulatory Balancing Accounts."

•	A decrease in San Onofre-related estimated revenue of $188 million, as discussed below.

•	A decrease in Four Corners-related revenue of $105 million due to the sale of SCE's ownership interest in the Four Corners Generating Station in December 2013 (primarily offset in operation and maintenance and depreciation expense as indicated below).

•	Lower operation and maintenance expense of $242 million primarily due to:

•	A decrease in San Onofre-related expense of $179 million as discussed below and a decrease in Four Corners-related expense of $60 million due to the sale in December 2013.

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A decrease in severance costs of $34 million (excluding San Onofre). In 2014 and 2013, SCE commenced multiple efforts to reduce its workforce in order to reflect SCE's strategic direction to optimize its cost structure, moderate customer rate increases and align its cost structure with its peers. Severance costs related to workforce reductions (excluding severance related to the permanent retirement of San Onofre Unit 2 and 3 recovered in the San Onofre OII Settlement Agreement) were $4 million in 2014 and $38 million in 2013 (See "Notes to Consolidated Financial Statements—Note 8. Compensation and Benefit Plans—Workforce Reductions"). SCE is continuing its efforts to improve operational efficiency. These efforts may lead to additional severance or other charges which cannot be estimated at this time.

•	A decrease of $30 million primarily related to lower customer service and outside service costs, as well as $20 million of planned outage costs at Mountainview in 2013.

•	An increase of $85 million of higher operating costs primarily related to transmission and distribution, information technology, legal, safety and insurance costs.

•	Higher depreciation, decommissioning and amortization expense of $98 million due to a $155 million increase in depreciation mainly related to transmission and distribution investments, partially offset by a decrease in San Onofre-related expense of $14 million discussed below and lower Four Corners-related expense of $45 million due to the sale in December 2013.

•	Impairment charge of $163 million ($72 million after-tax) in 2014 related to the San Onofre OII Settlement Agreement, as discussed below.

•	Higher interest expense of $9 million primarily due to lower capitalized interest (AFUDC debt) and higher long-term debt balances to support rate base growth.

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Lower other income and expenses of $5 million primarily due to lower AFUDC equity income related to lower AFUDC rates and lower construction work in progress balances in 2014, lower interest income and higher other expenses, offset by $7 million in sales tax refund related to San Onofre discussed below and lower penalties. In 2014 and 2013, SCE incurred penalties of $15 million and $20 million, respectively, resulting from the San Bernardino and San Gabriel settlements in 2014 and Malibu Fire Order Instituting Investigation settlement in 2013. See "Notes to Consolidated Financial Statements—Note 14. Interest and Other Income and Other Expenses."

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•	Higher income taxes of $195 million primarily due to higher pre-tax income. See "—Income Taxes" below for more information.

•	Higher preferred and preference stock dividends of $12 million related to a new issuance in 2014.

1	Includes a 2014 revenue adjustment of $11 million related to a CPUC decision to refund Unit 1 decommissioning costs to the Nuclear Decommissioning Trusts.

2	Represents amortization of the San Onofre regulatory asset beginning October 1, 2014.

3	Includes property and sales tax refunds of $5 million and $7 million related to replacement steam generators for the year ended December 31, 2014. The sales tax refund is included in "Interest and other income" on the consolidated income statements.

4	During the fourth quarter of 2014, SCE revised its estimated impact of the San Onofre OII Settlement by $68 million ($24 million after-tax) consistent with advice filing for reimbursement of recorded costs.

5	Includes severance costs of $63 million for the year ended December 31, 2013.

•	Lower operating revenue of $80 million was primarily due to the following:

•	A decrease in San Onofre-related estimated revenue of $303 million primarily due to lower operating costs, no longer recognizing the return on San Onofre rate base and ceasing depreciation, beginning in June 2013.

•	An increase in CPUC-related revenue of $60 million primarily related to the increase in authorized revenue to support rate base growth and operating expenses which was partially offset by the lower CPUC-adopted 2013 return on common equity and Edison SmartConnect® revenue, resulting from the full deployment of the program in 2012.

•	An increase in FERC-related revenue of $170 million primarily related to rate base growth and higher operating costs.

•	Energy efficiency earnings were $14 million in 2013 compared to $15 million in 2012.

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•	Lower operation and maintenance expense of $170 million was primarily due to the following:

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A decrease in San Onofre-related expense of $170 million primarily due to lower operating costs of $109 million resulting from the early retirement of Units 2 and 3 in June 2013 and $35 million in 2012 related to the scheduled outage at Unit 2. In addition, SCE had lower incremental inspection and repair costs of $53 million (net of SCE's share of payments received from MHI in 2012), which were not offset in revenue above. These factors were partially offset by additional severance costs of $27 million ($63 million and $36 million in 2013 and 2012, respectively).

•	A decrease of $95 million in expense in 2013 due to the full deployment of the Edison SmartConnect® program in 2012.

•	A decrease in severance costs of $40 million due to the reductions in workforce (excluding San Onofre) that commenced in 2012.

•	An increase of $85 million of higher operating costs primarily related to information technology, safety, legal and insurance costs.

•	$45 million of planned outage costs at Mountainview, repair costs at Four Corners, and higher operating costs on CPUC- and FERC-related projects.

•	Higher depreciation, decommissioning and amortization expense of $60 million was primarily related to increased transmission and distribution investments, including capitalized software costs, offset by the impact of $67 million from ceasing depreciation on the San Onofre assets, beginning in June 2013.

•	$575 million impairment charge ($365 million after-tax) in 2013 related to the permanent retirement of San Onofre Units 2 and 3.

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Lower interest income and other of $46 million primarily due to lower AFUDC equity related to lower rates and construction work in progress balances in 2013. In addition, SCE had higher other expenses due to a $20 million penalty that resulted from the Malibu Fire Order Instituting Investigation settlement that was imposed by the CPUC in 2013. See "Notes to Consolidated Financial Statements—Note 14. Interest and Other Income and Other Expenses."

•	Higher interest expense of $25 million primarily due to higher balances on long-term debt to support rate base growth and lower AFUDC debt due to lower rates and construction work in progress balances in 2013.

•	Higher income taxes of $65 million primarily due to lower income tax benefits, including lower repair deductions (as determined for income tax purposes). See "—Income Taxes" below for more information.

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Higher purchased power and fuel expense of $702 million was primarily driven by an increased load related to warmer weather and higher power and gas prices experienced in 2014 relative to 2013, partially offset by lower fuel expense in 2014 due to the sale of Four Corners in December 2013 and generator settlements refunded to customers (see "Notes to Consolidated Financial Statements—Note 10. Regulatory Assets and Liabilities" for more information). In addition, in 2014, the CAISO issued invoices implementing a FERC order which revised FERC tariffs for costs associated with scheduling coordinator activities. The impact of implementing the order and revised invoices resulted in a transmission refund of $106 million reflected in operation and maintenance expense and a generation surcharge of $83 million reflected in purchased power expense. These transactions did not impact earnings as the net refund was provided to customers through a FERC balancing account mechanism. Fuel costs were $256 million in 2014 and $324 million in 2013.

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Lower operation and maintenance expense of $117 million primarily due to the CAISO refund of $106 million mentioned above, a decrease in pension and postretirement benefit expenses and lower costs for the GHG cap-and-trade program related to utility owned generation, partially offset by higher spending on various public purpose programs and higher transmission access charges. See "Notes to Consolidated Financial Statements—Note 8. Compensation and Benefit Plans" for more information.

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Higher purchased power and fuel expense of $752 million was primarily driven by higher power and gas prices in 2013, partially offset by lower realized losses on economic hedging activities ($56 million in 2013 compared to $227 million in 2012) and by a $43 million credit received from the ISO for SCE’s share of a settlement between the FERC and an ISO participant. Fuel costs were $324 million in 2013 and $308 million in 2012.

•	Higher operation and maintenance expense of $42 million primarily due to costs for the GHG cap-and-trade program related to utility owned generation, higher costs related to transmission and distribution expenses, higher pension expenses, partially offset by lower spending on various public purpose programs.

•	An increase of $428 million primarily due to the implementation of the 2014 ERRA rate increase in June 2014 and the increase in GRC authorized revenue, partially offset by the greenhouse gas auction revenue refunded to customers in April and October 2014, and

•	A sales volume increase of $226 million due to higher load requirements related to warmer weather experienced in 2014 compared to 2013.

•	An increase of $435 million and a sales volume decrease of $29 million. The increase is primarily due to the implementation of the 2012 GRC decision.

•	A sales volume increase of $1.4 billion, primarily due to SCE providing power that was previously provided by California Department of Water Resources (CDWR) contracts partially offset by:

•	A decrease of $344 million, resulting from rate adjustments in June 2011 and August 2012, primarily reflecting lower natural gas prices and refunds to customers of overcollected fuel and power procurement-related costs recorded through the ERRA balancing account.

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•	An increase in the loss of Edison International Parent and Other primarily due to higher corporate expenses.

•	An increase in income from EMG and subsidiaries of $12 million primarily due to higher income from affordable housing projects, including asset sales and income tax benefits. EMG’s subsidiary, Edison Capital, continues to wind down its remaining affordable housing investments. Earnings from Edison Capital were $34 million in 2014 and $24 million in 2013.

•	A slight increase in losses of Edison Energy. Edison Energy and subsidiaries' 2014 operating activities primarily relate to construction of 26 megawatts of solar rooftop projects, including projects that will sell their output to third parties under long-term power sales agreements.

•	Higher losses in 2012 due to a $37 million charge resulting from Edison International's update to its estimated long-term California apportionment rate applicable to deferred income taxes as a result of changes related to EME.

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The results for EMG include earnings from Edison Capital of $24 million in 2013 and $22 million in 2012. Edison Capital's 2013 results included income from the wind down of its asset portfolio while Edison Capital's 2012 results included higher income taxes. In addition, during 2012, Edison Capital sold its lease interest in Unit No. 2 of the Beaver Valley Nuclear Plant resulting in a $31 million benefit in 2012 and an additional income tax benefit of $7 million in 2013 from a revised estimate of state income taxes related to the sale. The results for EMG in 2012 also include a write-down of an investment.

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1	Included in SCE's capital expenditures plan are projected environmental capital expenditures of approximately 15% for each year presented. The projected environmental capital expenditures are to comply with laws, regulations, and other nondiscretionary requirements.

1	Direct expenditures include direct labor, land and contract costs incurred for the respective projects and exclude overhead costs that are included in the capital expenditures forecasted for 2015 – 2017.

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1	Net collateral provided to counterparties and other brokers consisted of $61 million of cash which was offset against net derivative liabilities on the consolidated balance sheets, $36 million of cash reflected in "Other current assets" on the consolidated balance sheets and $111 million in letters of credit and surety bonds.

2	SCE's total posted and potential collateral requirements may increase by $41 million based on SCE's forward positions as of December 31, 2014 due to adverse market price movements over the remaining lives of the existing power procurement contracts using a 95% confidence level.

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1	Non cash items include depreciation, decommissioning and amortization, allowance for equity during construction, impairment and other charges, deferred income taxes and investment tax credits and other.

2	Changes in working capital items include receivables, inventory, accounts payable, prepaid and accrued taxes, and other current assets and liabilities.

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•

ERRA undercollections for fuel and power procurement-related costs for 2014 and 2013 were $1.03 billion and $1.0 billion, respectively, due to the amount and price of power and fuel being higher than forecasted (see "—Regulatory Proceedings—ERRA Forecast Filing – 2015" above). In 2012, SCE had ERRA overcollections of $135 million. In December 2014, SCE reclassified $540 million from regulatory liabilities to ERRA for collection of GRC revenue in excess of cost of service related to San Onofre consistent with its advice filing in November 2014.

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The base rate revenue account ("BRRBA") tracks differences between amounts authorized by the CPUC in the GRC proceedings and amounts billed to customers. SCE had BRRBA overcollections of $5 million and $247 million in 2014 and 2013, respectively, and undercollections of $505 million in 2012. During 2014, the BRRBA account decreased by $242 million due primarily to refunds to customers of approximately $150 million, related to the sale of Four Corners in December 2013. During 2013, the BRRBA account impacted cash flows by $752 million primarily due to the implementation of the 2012 GRC decision which resulted in a rate increase in January 2013 to collect both the 2012 and 2013 rate increases. During 2012, the BRRBA account decreased cash flows by $267 million primarily due to the delay in the 2012 GRC decision which was not received until November 2012.

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•	$225 million initial cash payment to the Reorganization Trust in April 2014 related to the EME Settlement Agreement, see "Management Overview—Resolution of Uncertainty Related to EME in Bankruptcy" for further information;

•	Net payments of $120 million to the IRS, which included a $189 million deposit related to open tax years 2003 through 2006; and

•	The timing of payments and receipts relating to interest and operating costs.

1	Includes $5.1 million debt financing for Edison Energy, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Project Financings."

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1	For additional details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements." Amount includes interest payments totaling $8.75 billion and $36 million over applicable period of the debt for SCE and Edison International Parent and Other, respectively.

2	Certain power purchase agreements entered into with independent power producers are treated as operating or capital leases. For further discussion, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies."

3	At December 31, 2014, SCE's minimum other operating lease payments were primarily related to vehicles, office space, nuclear fuel storage space and other equipment. For further discussion, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies."

4	For additional details, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies." At December 31, 2014, other commitments were primarily related to maintaining reliability and expanding SCE's transmission and distribution system.

5

At December 31, 2014, Edison International Parent and Other and SCE had estimated contributions to the pension and PBOP plans. SCE estimated contributions are $151 million, $156 million and $166 million in 2015, 2016 and 2017, respectively. Edison International Parent and Other estimated contributions are $27 million, $26 million and $23 million for the same respective periods. The estimated contributions are not available beyond 2017. These amounts represent estimates that are based on assumptions that are subject to change. See "Notes to Consolidated Financial Statements—Note 8. Compensation and Benefit Plans" for further information.

6	At December 31, 2014, Edison International and SCE had a total net liability recorded for uncertain tax positions of $576 million and $441 million, respectively, which is excluded from the table. Edison International and SCE cannot make reliable estimates of the cash flows by period due to uncertainty surrounding the timing of resolving these open tax issues with the IRS.

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7	In August 2014, Edison International entered into an amendment of the Settlement Agreement to finalize the remaining matters related to the EME Settlement including setting the amount of the 2 installment payments, see "Notes to Consolidated Financial Statements—Note 15. Discontinued Operations."

8	The contractual obligations table does not include derivative obligations and asset retirement obligations, which are discussed in "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments," and "—Note 1. Summary of Significant Accounting Policies," respectively.

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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.

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•	Decommissioning Costs. The estimated costs for labor, dismantling and disposal costs, site remediation, energy and miscellaneous costs.

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Escalation Rates. Annual escalation rates are used to convert the decommissioning cost estimates in base year dollars to decommissioning cost estimates in future-year dollars. Escalation rates are primarily used for labor, material, equipment, energy and low level radioactive waste burial costs. SCE's current estimate is based on SCE's decommissioning cost methodology used for ratemaking purposes, escalated at rates ranging from 1.0% to 7.3% (depending on the cost element) annually.

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Timing. Cost estimates for Palo Verde are based on an assumption that decommissioning will commence promptly after the current NRC operating licenses expire. The Palo Verde 1, 2, 3 operating licenses currently expire in 2045, 2046 and 2047 respectively. Cost estimates for San Onofre are based on an assumption that decommissioning commenced in 2013. For further information, see "Management Overview—Permanent Retirement of San Onofre and San Onofre OII Settlement."

•	Spent Fuel Dry Storage Costs. Cost estimates are based on an assumption that the DOE will begin to take spent fuel in 2024, and will remove the last spent fuel from the San Onofre and Palo Verde sites by 2049 and 2075, respectively. Costs for spent fuel monitoring are included until 2049 and 2075, respectively.

•	Changes in Decommissioning Technology, Regulation, and Economics. The current cost studies assume the use of current technologies under current regulations and at current cost levels.

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*	Not applicable to pension plans.

1

The discount rate enables Edison International and SCE to state expected future cash flows at a present value on the measurement date. Edison International and SCE select its discount rate by performing a yield curve analysis. This analysis determines the equivalent discount rate on projected cash flows, matching the timing and amount of expected benefit payments. The AON-Hewitt yield curve is considered in determining the discount rate.

2

To determine the expected long-term rate of return on pension plan assets, current and expected asset allocations are considered, as well as historical and expected returns on plan assets. A portion of PBOP trusts asset returns are subject to taxation, so the 5.5% rate of return on plan assets above is determined on an after-tax basis. Actual time-weighted, annualized returns on the pension plan assets were 8.1%, 11.3% and 7.4% for the one-year, five-year and ten-year periods ended December 31, 2014, respectively. Actual time-weighted, annualized returns on the PBOP plan assets were 8.7%, 10.8% and 6.3% over these same periods. Accounting principles provide that differences between expected and actual returns are recognized over the average future service of employees.

3	The health care cost trend rate gradually declines to 5.0% for 2021 and beyond.

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1	An ARO represents the present value of a future obligation. Accretion is an increase in the liability to account for the time value of money resulting from discounting.

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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	Approximately 73% and 70% of SCE's equity investments were located in the United States at December 31, 2014 and 2013, respectively.

3	Includes corporate bonds, which were diversified and included collateralized mortgage obligations and other asset backed securities of $49 million and $47 million at December 31, 2014 and 2013, respectively.

4	Excludes net payables of $57 million at December 31, 2014 and net receivables of $12 million at 2013, which consist of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.

1	Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.

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1	In addition, at December 31, 2014 and 2013, SCE had posted $36 million and $19 million, respectively, of collateral that is not offset against derivative liabilities and is reflected in "Other current assets" on the consolidated balance sheets.

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1	See Note 15 for a discussion of discontinued operations related to EME.

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1	Includes incremental repair benefit recorded in 2012 to 2014. See discussion of repair deductions below.

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1	Decreases in prior year tax positions relate primarily to re-measurement of uncertain tax positions in connection with the settlement of the 2003 – 2006 IRS audit.

2

Unrecognized tax benefits of EME have been deconsolidated as a result of the bankruptcy filing by EME, except for tax liabilities for which Edison International and EME are jointly liable under the Internal Revenue Code and applicable state statutes. See Note 15 for further information. During 2013, Edison International increased the amount of unrecognized tax benefits related to the taxable gain on sale of EME’s international assets by approximately $50 million as a result of unfavorable developments during the fourth quarter of 2013.

3	In the fourth quarter of 2014, Edison International has settled all open tax positions with the IRS for taxable year 2003 through 2006. Edison International has previously made cash deposits which are sufficient to settle all outstanding liabilities for this audit cycle. Total liabilities included tax reserves, previously settled issues and the associated interest and penalties.

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1	The SCE liability excludes a long-term payable due to Edison International Parent of $121 million and $95 million at December 31, 2014 and 2013, respectively, related to certain SCE postretirement benefit obligations transferred to Edison International Parent.

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1	Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International was $3 million and $2 million for the years ended December 31, 2014 and 2013, respectively.

2	Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was $9 million and $4 million, respectively, for the year ended December 31, 2014. The amount reclassified for Edison International and SCE was $11 million and $7 million, respectively, for the year ended December 31, 2013.

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1	The amount of net loss expected to be reclassified from other comprehensive loss for Edison International's continuing operations and SCE is $12 million and $8 million, respectively.

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1	Due to the reduction in workforce, SCE has incurred costs for extended retiree health care coverage.

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•	United States Equities: Common and preferred stocks of large, medium, and small companies which are predominantly United States-based.

•	Non-United States Equities: Equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies.

•	Fixed Income: Fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade.

•	Opportunistic: Investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid.

•	Alternative: Limited partnerships that invest in non-publicly traded entities.

•	Other: Investments diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns.

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1	Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

2	Corporate stocks are diversified. For 2014 and 2013, respectively, performance is primarily benchmarked against the Russell Indexes (59% and 51%) and Morgan Stanley Capital International (MSCI) index (41% and 49%).

3	Corporate bonds are diversified. At December 31, 2014 and 2013, respectively, this category includes $102 million and $78 million for collateralized mortgage obligations and other asset backed securities of which $15 million and $15 million are below investment grade.

4

At December 31, 2014 and 2013, respectively, the common/collective assets were invested in equity index funds that seek to track performance of the Standard and Poor's (S&P 500) Index (32% and 27%), Russell 1000 indexes (18% and 28%) and the MSCI Europe, Australasia and Far East (EAFE) Index (20% and 15%). A non-index U.S. equity fund representing 27% and 23% of this category for 2014 and 2013, respectively, is actively managed. Another fund representing 3% and 6% of this category for 2014 and 2013, respectively, is a global asset allocation fund.

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5

Partnerships/joint venture Level 2 investments consist primarily of a partnership which invests in publicly traded fixed income securities, primarily from the banking and finance industry and U.S. government agencies. At December 31, 2014 and 2013, respectively, approximately 55% and 64% of the Level 3 partnerships are invested in (1) asset backed securities, including distressed mortgages and (2) commercial and residential loans and debt and equity of banks. The remaining Level 3 partnerships are invested in small private equity and venture capital funds. Investment strategies for these funds include branded consumer products, early stage technology, California geographic focus, and diversified US and non-US fund-of-funds.

6	Other investment entities were primarily invested in (1) emerging market equity securities, (2) a hedge fund that invests through liquid instruments in a global diversified portfolio of equity, fixed income, interest rate, foreign currency and commodities markets, and (3) domestic mortgage backed securities.

7	Level 1 of registered investment companies primarily consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index. Level 2 primarily consisted of a short-term bond fund.

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1

At December 31, 2014 and 2013, respectively, 38% and 60% of the common/collective assets are invested in a large cap index fund which seeks to track performance of the Russell 1000 index. 41% and 23% of the assets in this category are in index funds which seek to track performance in the MSCI Europe, Australasia and Far East (EAFE) Index. 4% and 6% of this category are invested in a privately managed bond fund and 17% and 7% in a fund which invests in equity securities the fund manager believes are undervalued.

2	Corporate stock performance is primarily benchmarked against the Russell Indexes (47% and 50%) and the MSCI All Country World (ACWI) index (53% and 50%) for 2014 and 2013, respectively.

3	Corporate notes and bonds are diversified and include approximately $31 million and $29 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2014 and 2013, respectively.

4	At December 31, 2014 and 2013, respectively, 50% and 78% of the Level 3 partnerships category is invested in (1) asset backed securities including distressed mortgages, (2) distressed companies and (3) commercial and residential loans and debt and equity of banks.

5	Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.

6	Level 1 registered investment companies consist of an investment grade corporate bond mutual fund and a money market fund.

7	Other includes $111 million and $76 million of municipal securities at December 31, 2014 and 2013, respectively.

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1	Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income.

2	Reflected in "Settlements of stock-based compensation, net" in the financing section of Edison International's and SCE's consolidated statements of cash flows and in "Common stock" in Edison International's consolidated balance sheets and "Additional paid-in capital" in SCE's consolidated balance sheets.

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1	Relates to performance shares that will be paid in 2015 as performance targets were met at December 31, 2014.

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•	Renewable Energy Contracts – California law requires retail sellers of electricity to comply with an RPS by delivering renewable energy, primarily through power purchase contracts. Renewable energy contract payments generally consist of payments based on a fixed price per megawatt hour. As of December 31, 2014, SCE had 168 renewable energy contracts which expire at various dates through 2038.

•	Qualifying Facility Power Purchase Agreements – Under the Public Utility Regulatory Policies Act of 1978 ("PURPA"), electric utilities are required, with exceptions, to purchase energy and capacity from independent power producers that are qualifying co-generation facilities and qualifying small power production facilities ("QFs"). As of December 31, 2014, SCE had 130 QF contracts.

•	Other Power Purchase Agreements – SCE has entered into capacity agreements with third parties, including 11 combined heat and power contracts, 11 tolling arrangements, 11 transmission and fuel contracts and 13 resource adequacy contracts. SCE's obligations under a portion of these agreements are limited to payments for the availability of such resources.

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1	These items are included in the computation of net periodic pension and PBOP expense. See Note 8 for additional information.

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1	In the first quarter of 2014, SCE recorded an impairment charge of $231 million ($96 million after-tax) in 2014. During the fourth quarter of 2014, SCE reduced its estimated impact of the San Onofre OII Settlement by $68 million ($24 million after-tax) consistent with the advice filing for reimbursement of recorded costs.

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1	During the second quarter of 2013, SCE recorded an impairment charge of $575 million ($365 million after-tax) related to the permanent retirement of San Onofre Units 2 and 3.

1	In the first quarter of 2014, SCE recorded an impairment charge of $231 million ($96 million after-tax) in 2014. During the fourth quarter of 2014, SCE reduced its estimated impact of the San Onofre OII Settlement by $68 million ($24 million after-tax) consistent with the advice filing for reimbursement of recorded costs.

1	During the second quarter of 2013, SCE recorded an impairment charge of $575 million ($365 million after-tax) related to the permanent retirement of San Onofre Units 2 and 3.

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1	Total assets includes assets from continuing and discontinued operations.

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1	Akin Gump Strauss Hauer & Feld is a global law firm and is not a parent, affiliate or subsidiary of Edison International.

2	Chadbourne & Parke, LLP is a global law firm and is not a parent, affiliate or subsidiary of Edison International.

3	Think Cure is a community-based nonprofit organization that raises funds to accelerate collaborative research to cure cancer and is not a parent, affiliate or subsidiary of Edison International.

4	EMG is the holding company for EME, a wholly-owned subsidiary of Edison International and an affiliate of SCE. EME filed for bankruptcy on December 17, 2012.

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1	Entergy Nuclear Operations, Inc. is a subsidiary of Entergy Corporation, an integrated energy company and is not a parent, affiliate or subsidiary of SCE.

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1

This amount includes 13,614,273 shares covered by outstanding stock options, 256,275 shares that could be delivered for outstanding performance share awards, 433,319 shares covered by outstanding restricted stock unit awards, and 235,472 shares covered by outstanding deferred stock unit awards. The weighted-average exercise price of awards outstanding under equity compensation plan approved by security holders reflected in column (b) above is calculated based on the outstanding stock options under these plans as the other forms of wards outstanding have no exercise price.

2

This amount is the aggregate number of shares available for new awards under the Edison International 2007 Performance Incentive Plan as of December 31, 2014, and includes shares that have become available from the Edison International Equity Compensation Plan and the Edison International 2000 Equity Plan (together, the "Prior Plans"). However, no additional awards have been granted under the Prior Plans since April 26, 2007, and all awards granted since that date have been made under the Edison International 2007 Performance Incentive Plan. The maximum number of shares or Edison International Common Stock that may be issued or transferred pursuant to awards under the Edison International 2007 Performance Incentive Plan is 49,500,000 shares, plus the number of any shares subject to awards issued under the Prior Plans and outstanding as of April 26, 2007 that expire, cancel or terminate without being exercised or shares being issued. Shares available under the Edison International 2007 Performance Incentive Plan may generally, subject to certain limits set forth in the plan, be used for any type of award authorized under that plan, including stock options, restricted stock, performance shares, restricted or deferred units, and stock bonuses.

3

The Edison International 2000 Equity Plan is a broad-based stock option plan that did not require shareholder approval. It was adopted in May 2000 by Edison International with an original authorization of 10,000,000 shares. The Edison International Compensation and Executive Personnel Committee is the plan administrator. Edison International nonqualified stock options were granted to employees of the Edison International companies under this plan, but the granting authority expired on April 26, 2007. Any outstanding shares as of that date that expire, cancel or terminate without being exercised or shares being issued increase the maximum shares that may be delivered under the Edison International 2007 Performance Incentive Plan as described in footnote (2) above. The exercise price was not less than the fair market value of a share of Edison International Common Stock on the date of grant and the stock options cannot be exercised more than 10 years after the date of grant.

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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.

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a	Accounts written off, net.

b

Edison International recorded deferred tax assets of $2.2 billion related to net operating losses and tax carryforwards that pertain to Edison International's consolidated or combined federal and state tax returns, including approximately $1.6 billion related to EME. Edison International continues to consolidate EME for federal and certain combined state tax returns. EME's Plan of Reorganization, filed in December 2013 ("December Plan of Reorganization"), provides for the transfer of EIX's ownership interest to the creditors, which would result in a tax deconsolidation of EME. Under federal and state tax regulations, the tax deconsolidation of EME would reduce the amounts of net operating loss and tax credits carryforwards that Edison International would be eligible to use in future periods. As a result of the EME's December Plan of Reorganization, which would result in a tax deconsolidation of EME, Edison International has recorded a $1.380 billion valuation allowance based on the estimated amount of such benefits as calculated under the applicable federal and state tax regulations as of December 31, 2013. The deferred income tax benefits recognized by Edison International less the valuation allowance for amounts that would no longer be available upon tax deconsolidation of EME was approximately $220 million.

c

On April 1, 2014, under the Amended Plan of Reorganization, EME emerged from bankruptcy free of liabilities but remained an indirect wholly-owned subsidiary of Edison International, which will continue to be consolidated with Edison International for income tax purposes. Edison International anticipates realization of the federal and California tax benefits before they expire. Therefore, the valuation allowance on federal and California tax benefits that Edison International recorded in 2013 was released in 2014. The remaining valuation allowance is related to non California state tax benefits.

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a	Accounts written off, net.

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*	Incorporated by reference pursuant to Rule 12b-32.

**	Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)(3).