Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 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:

	June 30, 2012
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	982	$	—	$	—		$	—		$	982
Derivative contracts:
Electricity	—		108		164			(70		)	202
Natural gas	4		—		—			(4		)	—
Subtotal of derivative contracts	4		108		164			(74		)	202
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	2,090		—		—			—			2,090
Municipal bonds	—		714		—			—			714
U.S. government and agency securities	389		160		—			—			549
Corporate bonds4	—		382		—			—			382
Short-term investments, primarily cash equivalents5	2		90		—			—			92
Subtotal of nuclear decommissioning trusts	2,481		1,346		—			—			3,827
Total assets6	3,475		1,454		164			(74		)	5,019
Liabilities at Fair Value
Derivative contracts:
Electricity	—		7		31			(28		)	10
Natural gas	—		194		28			(66		)	156
Tolling	—		—		448			—			448
Subtotal of derivative contracts	—		201		507			(94		)	614
Interest rate contracts	—		114		—			—			114
Total liabilities	—		315		507			(94		)	728
Net assets (liabilities)	$	3,475	$	1,139	$	(343	)	$	20		$	4,291

	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 67% and 70% of the equity investments were located in the United States at June 30, 2012 and December 31, 2011, respectively.

⁴  At June 30, 2012 and December 31, 2011, corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $44 million and $22 million, respectively.

⁵  Excludes net payables of $17 million and net receivables of $25 million at June 30, 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 other investments of $98 million and $81 million at June 30, 2012 and December 31, 2011, respectively, primarily related to the cash surrender value of company owned life insurance investments which are used to fund certain executive benefits including deferred compensation. Also excludes other investments of $110 million and $118 million at June 30, 2012 and December 31, 2011, respectively, primarily related to leveraged leases.

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:

	Three months ended June 30,							Six months ended June 30,
(in millions)	2012				2011			2012				2011
Fair value of net assets (liabilities) at beginning of period	$	(662	)		$	(44	)	$	(323	)		$	97
Total realized/unrealized gains (losses):
Included in earnings1	23				18			8				18
Included in regulatory assets and liabilities2	285			3	(247		)	(16		)	3	(382		)
Included in accumulated other comprehensive income4	—				(4		)	2				(3		)
Purchases	42				22			69				28
Settlements	(31		)		(20		)	(32		)		(31		)
Transfers out of Level 35	—				—			(51		)		(2		)
Fair value of net liabilities at end of period	$	(343	)		$	(275	)	$	(343	)		$	(275	)
Change during the period in unrealized losses related to assets and liabilities held at the end of the period6	$	293			$	(226	)	$	7			$	(368	)

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 $14 million and for both the three months ended June 30, 2012 and 2011, and were $8 million for both the six months ended June 30, 2012 and 2011. 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:

June 30, 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	$	42		$	40		Option model	Volatility of gas prices	24% – 57% (41%)
								Volatility of power prices	30% – 97% (54%)
								Power prices	$34.17 – $56.92 ($42.70)
Forwards	21			31			Discounted cash flow	Power prices	$13.00 – $58.23 ($32.61)
Congestion contracts	92			—			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	73			24			Discounted cash flow	Congestion prices	$(15.52) – $23.03 ($0.15)
Gas options	—			28			Option model	Volatility of gas prices	27% – 57% (47%)
Tolling	—			448			Option model	Volatility of gas prices	18% – 57% (23%)
								Volatility of power prices	26% – 97% (31%)
								Power prices	$29.89 – $88.04 ($57.30)
Netting	(64		)	(64		)
Total derivative contracts	$	164		$	507

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

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

	June 30, 2012				December 31, 2011
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	14,223	$	14,160	$	13,746	$	14,264