XML 138 R38.htm IDEA: XBRL DOCUMENT v2.4.0.6
Compensation and Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2012
Pension and Other Postretirement Benefits  
Employee Savings Plan Employer Contributions
The following employer contributions were made for continuing operations:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2012
$
85

 
$
84

2011
84

 
83

2010
77

 
76
Black-Sholes Option-Pricing Model Assumptions
The Black-Scholes option-pricing model requires various assumptions noted in the following table:
 
Years ended December 31,
 
2012
 
2011
 
2010
Expected terms (in years)
6.9
 
7.0
 
7.3
Risk-free interest rate
1.1% – 1.7%
 
1.4% – 3.1%
 
2.0% – 3.2%
Expected dividend yield
2.8% – 3.1%
 
3.1% – 3.5%
 
3.3% – 4.0%
Weighted-average expected dividend yield
3.0%
 
3.4%
 
3.8%
Expected volatility
17.4% – 18.3%
 
18.2% – 19.0%
 
18.8% – 19.8%
Weighted-average volatility
18.3%
 
18.9%
 
19.8%
Summary of Stock Options Activity
The following is a summary of the status of Edison International stock options:
 
 
 
Weighted-Average
 
 
 
Stock options
 
Exercise
Price
 
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic Value
(in millions)
Edison International:
 
 
 
 
 
 
 
Outstanding at December 31, 2011
19,714,214

 
$
34.86

 
 
 
 

Granted
3,769,948

 
43.18

 
 
 
 

Expired
(219,983
)
 
48.21

 
 
 
 

Forfeited
(223,458
)
 
40.08

 
 
 
 

Exercised
(3,808,998
)
 
26.35

 
 
 
 

Outstanding at December 31, 2012
19,231,723

 
37.96

 
6.11
 
 

Vested and expected to vest at December 31, 2012
18,958,712

 
37.99

 
6.04
 
$
146

Exercisable at December 31, 2012
10,642,547

 
38.09

 
4.57
 
88

SCE:
 
 
 
 
 
 
 
Outstanding at December 31, 2011
10,526,540

 
$
34.60

 
 
 
 

Granted
2,072,892

 
43.21

 
 
 
 

Expired
(107,854
)
 
49.06

 
 
 
 

Forfeited
(176,938
)
 
39.79

 
 
 
 

Exercised
(2,173,557
)
 
26.90

 
 
 
 

Affiliate transfers, net
167,378

 
35.42

 
 
 
 
Outstanding at December 31, 2012
10,308,461

 
37.73

 
6.14
 
 

Vested and expected to vest at December 31, 2012
9,952,333

 
37.74

 
6.08
 
$
81

Exercisable at December 31, 2012
5,683,815

 
37.12

 
4.51
 
48
Schedule of Unrecognized Compensation Expense
At December 31, 2012, total unrecognized compensation cost related to stock options and the weighted-average period the cost is expected to be recognized are as follows:
(in millions)
Edison International
 
SCE
Unrecognized compensation cost, net of expected forfeitures
$
14

 
$
11

Weighted-average period (in years)
2

 
2

At December 31, 2012, total unrecognized compensation cost related to restricted stock units is expected to be recognized as follows:
(in millions)
Edison International
 
SCE
Unrecognized compensation cost, net of expected forfeitures
$
6

 
$
4

Cost to be recognized in 2013
4

 
3

Cost to be recognized in 2014
2

 
1

At December 31, 2012, total unrecognized compensation cost related to performance shares (based on the December 31, 2012 fair value of performance shares classified as equity awards) and the weighted-average period the cost is expected to be recognized are as follows:
(in millions)
Edison International
 
SCE
Unrecognized compensation cost
$
4

 
$
2

Weighted-average period (in years)
2

 
2
Performance Shares Fair Value Model Assumptions
The Monte Carlo simulation valuation model requires various assumptions noted in the following table:
 
Years ended December 31,
 
2012
 
2011
 
2010
Equity awards
 
 
 
 
 
Grant date risk-free interest rate
0.4
%
 
1.2
%
 
1.3
%
Grant date expected volatility
13.2
%
 
20.4
%
 
21.6
%
Liability awards1
 

 
 

 
 

Expected volatility
12.1
%
 
15.9
%
 
20.6
%
Risk-free interest rate:
 

 
 

 
 

2012 awards
0.4
%
 
*

 
*

2011 awards
0.2
%
 
0.3
%
 
*

2010 awards
*

 
0.2
%
 
0.6
%
*
Not applicable
1 
The portion of performance shares classified as share-based liability awards are revalued at each reporting period.
Summary of Nonvested Share Activity
The following is a summary of the status of Edison International nonvested performance shares:
 
Equity Awards
 
Liability Awards
 
Shares
 
Weighted-Average
Grant Date
Fair Value
 
Shares
 
Weighted-Average
Fair Value
Edison International:
 
 
 
 
 
 
 
Nonvested at December 31, 20111
287,693

 
$
31.60

 
287,471

 
$
34.26

Granted
95,862

 
51.43

 
95,619

 
 

Forfeited
(6,010
)
 
40.85

 
(5,942
)
 
 
Vested2
(135,124
)
 
32.23

 
(135,077
)
 
 

Nonvested at December 31, 2012
242,421

 
38.86

 
242,071

 
46.23

SCE:
 
 
 
 
 
 
 
Nonvested at December 31, 20111
160,225

 
$
31.62

 
160,225

 
$
34.52

Granted
52,684

 
51.48

 
52,512

 
 

Forfeited
(4,296
)
 
41.76

 
(4,363
)
 
 
Vested2
(79,124
)
 
32.05

 
(79,133
)
 
 

Affiliate transfers, net
2,451

 
32.16

 
2,450

 
 
Nonvested at December 31, 2012
131,940

 
38.87

 
131,691

 
46.19

1 
Excludes performance shares that were paid in 2012 as performance targets were met at December 31, 2011.
2 
Relates to performance shares that expired with zero value as performance targets were not met at December 31, 2012.
Summary of Nonvested Restricted Stock Units Activity
The following is a summary of the status of Edison International nonvested restricted stock units:
 
Edison International
 
SCE
 
Restricted
Stock Units
 
Weighted-Average
Grant Date
Fair Value
 
Restricted
Stock Units
 
Weighted-Average
Grant Date
Fair Value
Nonvested at December 31, 2011
737,635

 
$
32.20

 
411,566

 
$
32.14

Granted
227,902

 
43.17

 
125,217

 
43.20

Forfeited
(12,139
)
 
39.94

 
(9,071
)
 
40.23

Vested
(273,930
)
 
26.37

 
(166,352
)
 
26.85

Affiliate transfers, net
—

 
—

 
7,193

 
31.43

Nonvested at December 31, 2012
679,468

 
$
38.09

 
368,553

 
$
38.07
Supplemental Data on Stock-Based Compensation
Supplemental Data on Stock-Based Compensation
 
Edison International
 
SCE
 
Years ended December 31,
(in millions, except per award amounts)
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Stock-based compensation expense1:
 
 
 
 
 
 
 
 
 
 
 
Stock options
$
18

 
$
14

 
$
14

 
$
10

 
$
9

 
$
10

Performance shares
7

 
5

 
8

 
4

 
3

 
6

Restricted stock units
9

 
6

 
6

 
5

 
4

 
5

Other
1

 
5

 
7

 
—

 
4

 
6

Total stock-based compensation expense
$
35

 
$
30

 
$
35

 
$
19

 
$
20

 
$
27

Income tax benefits related to stock compensation expense
$
14

 
$
12

 
$
13

 
$
8

 
$
8

 
$
11

Excess tax benefits (expense)2
(6
)
 
12

 
7

 
(13
)
 
11

 
4

Stock options:
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value per option granted
$
5.22

 
$
5.61

 
$
4.89

 
$
5.22

 
$
5.61

 
$
4.87

Fair value of options vested
17

 
18

 
18

 
10

 
10

 
11

Cash used to purchase shares to settle options
169

 
90

 
61

 
96

 
46

 
27

Cash from participants to exercise stock options
101

 
59

 
38

 
59

 
28

 
18

Value of options exercised
68

 
31

 
23

 
37

 
18

 
9

Tax benefits from options exercised
27

 
12

 
9

 
15

 
7

 
4

Performance shares classified as equity awards:
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value per share granted
$
51.43

 
$
29.97

 
$
32.25

 
$
51.48

 
$
29.40

 
$
32.19

Fair value of shares vested
4

 
4

 
4

 
3

 
2

 
3

Value of shares settled
4

 
—

 
—

 
2

 
—

 
—

Tax benefits realized from settlement of awards
2

 
—

 
—

 
1

 
—

 
—

Performance shares classified as liability awards:
 
 
 
 
 
 
 
 
 
 
 
Value of shares settled
4

 
—

 
—

 
2

 
—

 
—

Tax benefits realized from settlement of awards
2

 
—

 
—

 
1

 
—

 
—

Restricted stock units:
 
 
 
 
 
 
 
 
 
 
 
Values of shares settled
$
7

 
$
6

 
$
—

 
$
4

 
$
5

 
$
—

Tax benefits realized from settlement of awards
3

 
3

 
—

 
2

 
2

 
—

Weighted average grant date fair value per unit granted
43.17

 
38.01

 
32.12

 
43.20

 
38.07

 
33.38

1 
Reflected in "Operations 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.
Pension Plans
  
Pension and Other Postretirement Benefits  
Information on plan assets and benefit obligations
Information on plan assets and benefit obligations for continuing and discontinued operations is shown below:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2012
 
2011
 
2012
 
2011
Change in projected benefit obligation
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
4,493

 
$
4,080

 
$
4,112

 
$
3,732

Service cost
179

 
165

 
156

 
145

Interest cost
196

 
210

 
176

 
192

Liability transferred to Edison International
23

 
—

 
(92
)
 
—

Actuarial loss
370

 
327

 
318

 
311

Curtailment
(26
)
 
—

 
—

 
—

Benefits paid
(253
)
 
(289
)
 
(236
)
 
(268
)
Deconsolidation of EME1
(34
)
 
—

 
—

 
—

Projected benefit obligation at end of year
$
4,948

 
$
4,493

 
$
4,434

 
$
4,112

Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
3,153

 
$
3,235

 
$
2,971

 
$
3,066

Actual return on plan assets
460

 
61

 
431

 
58

Employer contributions
182

 
146

 
154

 
115

Benefits paid
(253
)
 
(289
)
 
(236
)
 
(268
)
Fair value of plan assets at end of year
$
3,542

 
$
3,153

 
$
3,320

 
$
2,971

Funded status at end of year
$
(1,406
)
 
$
(1,340
)
 
$
(1,114
)
 
$
(1,141
)
Amounts recognized in the consolidated balance sheets consist of:
 
 
 
 
 
 
 
Current liabilities
$
(19
)
 
$
(11
)
 
$
(6
)
 
$
(6
)
Long-term liabilities
(1,387
)
 
(1,329
)
 
(1,108
)
 
(1,135
)
 
$
(1,406
)
 
$
(1,340
)
 
$
(1,114
)
 
$
(1,141
)
Amounts recognized in accumulated other comprehensive loss consist of:
 
 
 
 
 
 
 
Prior service cost
$
—

 
$
1

 
$
—

 
$
—

Net loss
127

 
139

 
40

 
41

 
$
127

 
$
140

 
$
40

 
$
41

Amounts recognized as a regulatory asset:
 
 
 
 
 
 
 
Prior service cost
$
30

 
$
34

 
$
30

 
$
34

Net loss
999

 
955

 
999

 
955

 
$
1,029

 
$
989

 
$
1,029

 
$
989

Total not yet recognized as expense
$
1,156

 
$
1,129

 
$
1,069

 
$
1,030

Accumulated benefit obligation at end of year
$
4,609

 
$
4,157

 
$
4,171

 
$
3,817

Pension plans with an accumulated benefit obligation in excess of plan assets:
 
 
 
 
 
 
 
Projected benefit obligation
$
4,948

 
$
4,493

 
$
4,434

 
$
4,112

Accumulated benefit obligation
4,609

 
4,157

 
4,171

 
3,817

Fair value of plan assets
3,542

 
3,153

 
3,320

 
2,971

Weighted-average assumptions used to determine obligations at end of year:
 
 
 
 
 
 
 
Discount rate
3.75
%
 
4.5
%
 
3.75
%
 
4.5
%
Rate of compensation increase
4.5
%
 
4.5
%
 
4.5
%
 
4.5
%

1
The retirement plan liabilities of EME have been deconsolidated as a result of the bankruptcy filing by EME, except for qualified pension plans that Edison International is jointly liable with EME under the Internal Revenue Code. See Note 17 for further information.
Expense Components for Plans
Expense components for continuing operations are:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Service cost
$
163

 
$
149

 
$
133

 
$
160

 
$
145

 
$
132

Interest cost
183

 
196

 
196

 
180

 
192

 
193

Expected return on plan assets
(217
)
 
(226
)
 
(200
)
 
(217
)
 
(225
)
 
(201
)
Settlement costs
5

 
—

 
—

 
4

 
—

 
—

Amortization of prior service cost
3

 
7

 
8

 
3

 
7

 
8

Amortization of net loss
61

 
25

 
20

 
57

 
22

 
17

Expense under accounting standards
$
198

 
$
151

 
$
157

 
$
187

 
$
141

 
$
149

Regulatory adjustment (deferred)
(19
)
 
(28
)
 
(52
)
 
(19
)
 
(28
)
 
(52
)
Total expense recognized
$
179

 
$
123

 
$
105

 
$
168

 
$
113

 
$
97
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Other changes in plan assets and benefit obligations recognized in other comprehensive income for continuing operations:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Net loss
$
36

 
$
13

 
$
18

 
$
20

 
$
8

 
$
15

Amortization of prior service cost
—

 
—

 
(1
)
 
—

 
—

 
—

Amortization of net loss
(10
)
 
(11
)
 
(8
)
 
(6
)
 
(7
)
 
(4
)
Total recognized in other comprehensive loss
$
26

 
$
2

 
$
9

 
$
14

 
$
1

 
$
11

Total recognized in expense and other comprehensive income
$
205

 
$
125

 
$
114

 
$
182

 
$
114

 
$
108
Schedule of Amounts in Accumulated Other Comprehensive Loss to be Recognized During 2013
The estimated amounts that will be amortized to expense in 2013 and the net loss expected to be reclassified from accumulated other comprehensive loss for continuing operations are as follows:
(in millions)
Edison International
 
SCE
Unrecognized net loss to be amortized
$
61

 
$
56

Unrecognized prior service cost to be amortized
3

 
3

Net loss to be reclassified
13

 
8
Weighted Average Assumptions Utilized to Determine Expense
Edison International and SCE used the following weighted-average assumptions to determine expense for continuing operations:
 
Years ended December 31,
 
2012
 
2011
 
2010
Discount rate
4.5
%
 
5.25
%
 
6.0
%
Rate of compensation increase
4.5
%
 
5.0
%
 
5.0
%
Expected long-term return on plan assets
7.5
%
 
7.5
%
 
7.5
%
Schedule of Expected Future Benefit Payments
The following benefit payments, which reflect expected future service, are expected to be paid:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2013
$
327

 
$
295

2014
322

 
295

2015
372

 
303

2016
349

 
310

2017
350

 
311

2018 – 2022
1,736

 
1,568
Schedule of Fair Value of Pension Plan Assets by Hierarchy Levels
The following table sets forth the Master Trust investments for Edison International and SCE that were accounted for at fair value as of December 31, 2012 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Corporate stocks1
$
743

 
$
—

 
$
—

 
$
743

Common/collective funds2
—

 
635

 
—

 
635

U.S. government and agency securities3
242

 
350

 
—

 
592

Partnerships/joint ventures4
—

 
166

 
414

 
580

Corporate bonds5
—

 
508

 
—

 
508

Other investment entities6
—

 
271

 
—

 
271

Registered investment companies7
98

 
28

 
—

 
126

Interest-bearing cash
24

 
—

 
—

 
24

Other
1

 
100

 
—

 
101

Total
$
1,108

 
$
2,058

 
$
414

 
$
3,580

Receivables and payables, net
 

 
 

 
 

 
(38
)
Net plan assets available for benefits
 

 
 

 
 

 
$
3,542

SCE's share of net plan assets
 
 
 
 
 
 
$
3,320

Edison International Parent and Other's share of net plan assets
 
 
 
 
 
 
7

EME's share of net plan assets
 
 
 
 
 
 
215

The following table sets forth the Master Trust investments that were accounted for at fair value as of December 31, 2011 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Corporate stocks1
$
642

 
$
—

 
$
—

 
$
642

Common/collective funds2
—

 
582

 
—

 
582

U.S. government and agency securities3
104

 
351

 
—

 
455

Partnerships/joint ventures4
—

 
140

 
448

 
588

Corporate bonds5
—

 
497

 
—

 
497

Other investment entities6
—

 
247

 
—

 
247

Registered investment companies7
79

 
29

 
—

 
108

Interest-bearing cash
5

 
—

 
—

 
5

Other
(1
)
 
69

 
—

 
68

Total
$
829

 
$
1,915

 
$
448

 
$
3,192

Receivables and payables, net
 

 
 

 
 

 
(39
)
Net plan assets available for benefits
 

 
 

 
 

 
$
3,153

SCE's share of net plan assets
 
 
 
 
 
 
$
2,971

Edison International Parent and Other's share of net plan assets
 
 
 
 
 
 
5

EME's share of net plan assets
 
 
 
 
 
 
177

1 
Corporate stocks are diversified. For 2012 and 2011, respectively, performance is primarily benchmarked against the Russell Indexes (60% and 60%) and Morgan Stanley Capital International (MSCI) index (40% and 40%).
2 
At December 31, 2012 and 2011, 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 (29% and 29%), Russell 200 and Russell 1000 indexes (28% and 27%) and the MSCI Europe, Australasia and Far East (EAFE) Index (11% and 10%). A non-index U.S. equity fund representing 25% and 23% of this category for 2012 and 2011, respectively, is actively managed. Another fund representing 6% and 8% of this category for 2012 and 2011, respectively, is a global asset allocation fund.
3 
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.
4 
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, 2012 and 2011, respectively, approximately 56% and 55% 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.
5 
Corporate bonds are diversified. At December 31, 2012 and 2011, respectively, this category includes $65 million and $53 million for collateralized mortgage obligations and other asset backed securities of which $7 million and $10 million are below investment grade.
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 government inflation-indexed bonds and a short-term bond fund.
Schedule of Changes in Fair Value of Level 3 Investments
The following table sets forth a summary of changes in the fair value of Edison International's and SCE's Level 3 investments:
(in millions)
2012
 
2011
Fair value, net at beginning of period
$
448

 
$
345

Actual return on plan assets:
 
 
 
Relating to assets still held at end of period
88

 
6

Relating to assets sold during the period
13

 
22

Purchases
98

 
130

Dispositions
(233
)
 
(55
)
Transfers in and/or out of Level 3
—

 
—

Fair value, net at end of period
$
414

 
$
448
Postretirement Benefits Other Than Pensions
  
Pension and Other Postretirement Benefits  
Information on plan assets and benefit obligations
Information on plan assets and benefit obligations for continuing and discontinuing operations is shown below:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2012
 
2011
 
2012
 
2011
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
2,553

 
$
2,425

 
$
2,415

 
$
2,295

Service cost
47

 
43

 
47

 
40

Interest cost
108

 
121

 
108

 
114

Other costs
2

 
—

 
2

 
—

Actuarial (gain) loss
(86
)
 
47

 
(86
)
 
46

Plan participants' contributions
16

 
18

 
16

 
18

Medicare Part D subsidy received
4

 
5

 
4

 
5

Benefits paid
(54
)
 
(106
)
 
(54
)
 
(103
)
Deconsolidation of EME1
(130
)
 
—

 
—

 
—

Benefit obligation at end of year
$
2,460

 
$
2,553

 
$
2,452

 
$
2,415

Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
1,570

 
$
1,606

 
$
1,570

 
$
1,606

Actual return on assets
212

 
11

 
212

 
10

Employer contributions
52

 
36

 
52

 
34

Plan participants' contributions
16

 
18

 
16

 
18

Medicare Part D subsidy received
4

 
5

 
4

 
5

Benefits paid
(54
)
 
(106
)
 
(54
)
 
(103
)
Fair value of plan assets at end of year
$
1,800

 
$
1,570

 
$
1,800

 
$
1,570

Funded status at end of year
$
(660
)
 
$
(983
)
 
$
(652
)
 
$
(845
)
Amounts recognized in the consolidated balance sheets consist of:
 
 
 
 
 
 
 
Current liabilities
$
(18
)
 
$
(19
)
 
$
(18
)
 
$
(16
)
Long-term liabilities
(642
)
 
(964
)
 
(634
)
 
(829
)
 
$
(660
)
 
$
(983
)
 
$
(652
)
 
$
(845
)
Amounts recognized in accumulated other comprehensive loss (income) consist of:
 
 
 
 
 
 
 
Prior service cost (credit)
$
—

 
$
8

 
$
—

 
$
—

Net loss
5

 
27

 
—

 
—

 
$
5

 
$
35

 
$
—

 
$
—

Amounts recognized as a regulatory asset (liability):
 
 
 
 
 
 
 
Prior service credit
$
(89
)
 
$
(125
)
 
$
(89
)
 
$
(125
)
Net loss
610

 
839

 
610

 
839

 
$
521

 
$
714

 
$
521

 
$
714

Total not yet recognized as expense
$
526

 
$
749

 
$
521

 
$
714

Weighted-average assumptions used to determine obligations at end of year:
 
 
 
 
 
 
 
Discount rate
4.25
%
 
4.75
%
 
4.25
%
 
4.75
%
Assumed health care cost trend rates:
 
 
 
 
 
 
 
Rate assumed for following year
8.5
%
 
9.5
%
 
8.5
%
 
9.5
%
Ultimate rate
5.0
%
 
5.25
%
 
5.0
%
 
5.25
%
Year ultimate rate reached
2020

 
2019

 
2020

 
2019

1
The postretirement plan liabilities of EME have been deconsolidated as a result of the bankruptcy filing by EME. See Note 17 for further information.
Expense Components for Plans
Expense components for continuing operations are:
 
Edison International
 
SCE
 
Years ended December 31,
(in millions)
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Service cost
$
47

 
$
40

 
$
35

 
$
47

 
$
40

 
$
34

Interest cost
108

 
115

 
121

 
108

 
114

 
121

Expected return on plan assets
(108
)
 
(111
)
 
(101
)
 
(109
)
 
(111
)
 
(100
)
Other costs
2

 
—

 
—

 
2

 
—

 
—

Amortization of prior service credit
(35
)
 
(35
)
 
(36
)
 
(35
)
 
(35
)
 
(37
)
Amortization of net loss
39

 
26

 
35

 
39

 
26

 
35

Total expense
$
53

 
$
35

 
$
54

 
$
52

 
$
34

 
$
53
Schedule of Amounts in Accumulated Other Comprehensive Loss to be Recognized During 2013
The estimated amounts that will be amortized to expense in 2013 for continuing operations are as follows:
(in millions)
Edison International
 
SCE
Unrecognized net loss to be amortized
$
28

 
$
28

Unrecognized prior service credit to be amortized
(36
)
 
(36
)
Weighted Average Assumptions Utilized to Determine Expense
Edison International and SCE used the following weighted-average assumptions to determine expense for continuing operations:
 
Years ended December 31,
 
2012
 
2011
 
2010
Discount rate
4.75
%
 
5.5
%
 
6.0
%
Expected long-term return on plan assets
7.0
%
 
7.0
%
 
7.0
%
Assumed health care cost trend rates:
 
 
 
 
 
Current year
9.5
%
 
9.75
%
 
8.25
%
Ultimate rate
5.25
%
 
5.5
%
 
5.5
%
Year ultimate rate reached
2019

 
2019

 
2016
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rate
A one-percentage-point change in assumed health care cost trend rate would have the following effects on continuing operations:
 
Edison International
 
SCE
(in millions)
One-Percentage-Point Increase
 
One-Percentage-Point Decrease
 
One-Percentage-Point Increase
 
One-Percentage-Point Decrease
Effect on accumulated benefit obligation as of December 31, 2012
$
276

 
$
(228
)
 
$
275

 
$
(227
)
Effect on annual aggregate service and interest costs
13

 
(11
)
 
13

 
(11
)
Schedule of Expected Future Benefit Payments
The following benefit payments are expected to be paid:
 
Edison International
 
SCE
(in millions)
Years ended December 31,
2013
$
91

 
$
90

2014
97

 
97

2015
103

 
103

2016
109

 
109

2017
116

 
116

2018 – 2022
662

 
659
Postretirement Benefits Other than Pension Plan Assets by Hierarchy Levels
The following table sets forth the PBOP Plan's financial assets for SCE that were accounted for at fair value as of December 31, 2012 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Common/collective funds1
$
—

 
$
723

 
$
—

 
$
723

Corporate stocks2
361

 
—

 
—

 
361

Corporate notes and bonds3
—

 
210

 
—

 
210

Partnerships4
—

 
17

 
166

 
183

U.S. government and agency securities5
131

 
31

 
—

 
162

Registered investment companies6
68

 
—

 
—

 
68

Interest bearing cash
24

 
—

 
—

 
24

Other7
6

 
104

 
—

 
110

Total
$
590

 
$
1,085

 
$
166

 
$
1,841

Receivables and payables, net
 

 
 

 
 

 
(41
)
Combined net plan assets available for benefits
 

 
 

 
 

 
$
1,800

The following table sets forth the PBOP Plan's financial assets for SCE that were accounted for at fair value as of December 31, 2011 by asset class and level within the fair value hierarchy:
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Common/collective funds1
$
—

 
$
642

 
$
—

 
$
642

Corporate stocks2
319

 
—

 
—

 
319

Corporate notes and bonds3
—

 
177

 
—

 
177

Partnerships4
—

 
16

 
130

 
146

U.S. government and agency securities5
100

 
42

 
—

 
142

Registered investment companies6
80

 
—

 
—

 
80

Interest bearing cash
12

 
—

 
—

 
12

Other7
4

 
71

 
—

 
75

Total
$
515

 
$
948

 
$
130

 
$
1,593

Receivables and payables, net
 

 
 

 
 

 
(23
)
Combined net plan assets available for benefits
 

 
 

 
 

 
$
1,570

1 
At December 31, 2012 and 2011, respectively, 60% and 63% of the common/collective assets are invested in a large cap index fund which seeks to track performance of the Russell 1000 index. 23% and 21% 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. 6% and 6% of this category are invested in a privately managed bond fund and 6% and 6% 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 (50% and 53%) and the MSCI All Country World (ACWI) index (50% and 47%) for 2012 and 2011, respectively.
3 
Corporate notes and bonds are diversified and include approximately $20 million and $14 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2012 and 2011, respectively.
4 
At December 31, 2012 and 2011, respectively, 82% and 81% 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 $73 million and $60 million of municipal securities at December 31, 2012 and 2011, respectively.
Changes in Fair Value of Level 3 Investments
The following table sets forth a summary of changes in the fair value of PBOP Level 3 investments:
(in millions)
2012
 
2011
Fair value, net at beginning of period
$
130

 
$
92

Actual return on plan assets
 
 
 
Relating to assets still held at end of period
20

 
(3
)
Relating to assets sold during the period
5

 
6

Purchases
35

 
48

Dispositions
(24
)
 
(13
)
Transfers in and/or out of Level 3
—

 
—

Fair value, net at end of period
$
166

 
$
130