Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value by Level

The following table sets forth assets and liabilities that were accounted for at fair value by level within the fair value hierarchy:

	March 31, 2012
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	1,222	$	—	$	—		$	—		$	1,222
Derivative contracts:
Electricity	—		144		143			(93		)	194
Natural gas	6		4		—			(10		)	—
Fuel oil	7		—		—			(7		)	—
Tolling	—		—		13			—			13
Subtotal of derivative contracts	13		148		156			(110		)	207
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	2,124		—		—			—			2,124
Municipal bonds	—		696		—			—			696
U.S. government and agency securities	481		161		—			—			642
Corporate bonds4	—		369		—			—			369
Short-term investments, primarily cash equivalents5	2		34		—			—			36
Subtotal of nuclear decommissioning trusts	2,607		1,260		—			—			3,867
Total assets6	3,850		1,408		156			(110		)	5,304
Liabilities at Fair Value
Derivative contracts:
Electricity	—		13		99			(28		)	84
Natural gas	—		258		48			(81		)	225
Tolling	—		—		671			—			671
Subtotal of derivative contracts	—		271		818			(109		)	980
Interest rate contracts	—		78		—			—			78
Total liabilities	—		349		818			(109		)	1,058
Net assets (liabilities)	$	3,850	$	1,059	$	(662	)	$	(1	)	$	4,246

	December 31, 2011
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	1,321	$	—	$	—		$	—		$	1,321
Derivative contracts:
Electricity	—		66		218			(62		)	222
Natural gas	4		5		—			(7		)	2
Fuel oil	4		—		—			(4		)	—
Tolling	—		—		10			—			10
Subtotal of commodity contracts	8		71		228			(73		)	234
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	1,899		—		—			—			1,899
Municipal bonds	—		756		—			—			756
U.S. government and agency securities	433		147		—			—			580
Corporate bonds4	—		317		—			—			317
Short-term investments, primarily cash equivalents5	—		15		—			—			15
Subtotal of nuclear decommissioning trusts	2,332		1,235		—			—			3,567
Total assets6	3,669		1,306		228			(73		)	5,130
Liabilities at Fair Value
Derivative contracts:
Electricity	—		13		77			(21		)	69
Natural gas	—		234		23			(52		)	205
Tolling	—		—		451			—			451
Subtotal of commodity contracts	—		247		551			(73		)	725
Interest rate contracts	—		90		—			—			90
Total liabilities	—		337		551			(73		)	815
Net assets (liabilities)	$	3,669	$	969	$	(323	)	$	—		$	4,315

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 and cash equivalents on Edison International's consolidated balance sheets.

³  Approximately 69% and 70% of the equity investments were located in the United States at March 31, 2012 and December 31, 2011, respectively.

⁴  At March 31, 2012 and December 31, 2011, corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $38 million and $22 million, respectively.

⁵  Excludes net payables of $14 million and net receivables of $25 million at March 31, 2012 and December 31, 2011, respectively, of interest and dividend receivables as well as receivables and payables related to pending securities sales and purchases.

⁶  Excludes $30 million and $31 million at March 31, 2012 and December 31, 2011, respectively, of cash surrender value of life insurance investments for deferred compensation.

Summary of Changes in Fair Value of Level 3 Assets and Liabilities

The following table sets forth a summary of changes in the fair value of Level 3 net derivative assets and liabilities:

	March 31,
(in millions)	2012				2011
Fair value of net assets (liabilities) at beginning of period	$	(323	)		$	97
Total realized/unrealized gains (losses):
Included in earnings1	(15		)		—
Included in regulatory assets and liabilities2	(293		)	3	(134		)
Included in accumulated other comprehensive income4	2				1
Purchases	27				5
Settlements	(9		)		(11		)
Transfers out of Level 35	(51		)		(2		)
Fair value of net liabilities at end of period	$	(662	)		$	(44	)
Change during the period in unrealized losses related to assets and liabilities held at the end of the period6	$	(295	)		$	(139	)

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  Included in reclassification adjustments in Edison International's consolidated statements of other comprehensive income.

⁵  Transfers out of Level 3 into Level 2 occurred due to significant observable inputs becoming available as the transactions near maturity.

⁶  Amounts reported in "Competitive power generation" revenue on Edison International's consolidated statements of income were $(7) million and $(6) million for the years ended March 31, 2012 and 2011, respectively. The remainder of the unrealized losses relate to SCE. See 2 above.

Valuation Techniques and Significant Unobservable Inputs Used to Determine Fair Value for Level 3 Assets and Liabilities

The following table sets forth the valuation techniques and significant unobservable inputs used to determine fair value for Level 3 assets and liabilities:

March 31, 2012				Quantitative Information About Level 3 Fair Value Measurements
	Fair Value (in millions)								Range
	Assets			Liabilities			Valuation Technique(s)	Unobservable Input	(Weighted Average)
Electricity:
Options	$	12		$	86		Option model	Volatility of gas prices	25% – 48% (38%)
								Volatility of power prices	29% – 60% (43%)
								Power prices	$24.50 – $52.30 ($35.40)
Forwards	37			56			Discounted cash flow	Power prices	$2.10 – $54.00 ($30.96)
Congestion contracts	101			—			Market simulation model	Load forecast	7,645 MW – 26,334 MW
								Power prices	$(46.19) – $240.30
								Gas prices	$3.79 – $9.32
Congestion contracts	49			13			Discounted cash flow	Congestion prices	$(8.20) – $10.32 ($0.21)
Gas options	—			48			Option model	Volatility of gas prices	26% – 48% (41%)
Tolling	13			671			Option model	Volatility of gas prices	18% – 48% (23%)
								Volatility of power prices	26% – 60% (30%)
								Power prices	$20.00 – $89.50 ($53.40)
Netting	(56		)	(56		)
Total derivative contracts	$	156		$	818

Carrying Amounts and Fair Values of Long-term Debt, Including Current Portion

The carrying value and fair value of long-term debt are:

	March 31, 2012				December 31, 2011
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	14,192	$	14,194	$	13,746	$	14,264