Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

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



	September 30, 2013
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral¹			Total
Assets at fair value
Money market funds	$	453	$	—	$	—		$	—		$	453
Mutual funds	29		—		—			—			29
Derivative contracts:
Congestion revenue rights	—		—		245			—			245
Electricity	—		1		—			—			1
Natural gas	—		1		—			(1		)	—
Tolling	—		—		8			—			8
Subtotal of derivative contracts	—		2		253			(1		)	254
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks²	2,027		—		—			—			2,027
U.S. government and agency securities	823		101		—			—			924
Municipal bonds	—		796		—			—			796
Corporate bonds	—		221		—			—			221
Short-term investments, primarily cash equivalents⁴	322		45		—			—			367
Subtotal of nuclear decommissioning trusts	3,172		1,163		—			—			4,335
Total assets	3,662		1,165		253			(1		)	5,079
Liabilities at fair value
Derivative contracts:
Electricity	—		5		12			(3		)	14
Natural gas	—		43		—			(18		)	25
Tolling	—		—		1,272			—			1,272
Subtotal of derivative contracts	—		48		1,284			(21		)	1,311
Total liabilities	—		48		1,284			(21		)	1,311
Net assets (liabilities)	$	3,662	$	1,117	$	(1,031	)	$	20		$	3,768



	December 31, 2012
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral¹			Total
Assets at fair value
Money market funds	$	5	$	—	$	—		$	—		$	5
Derivative contracts:
Congestion revenue rights	—		—		186			—			186
Electricity	—		—		31			(13		)	18
Natural gas	—		8		—			(2		)	6
Tolling	—		—		4			—			4
Subtotal of derivative contracts	—		8		221			(15		)	214
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks²	2,271		—		—			—			2,271
Municipal bonds	—		644		—			—			644
U.S. government and agency securities	477		126		—			—			603
Corporate bonds	—		410		—			—			410
Short-term investments, primarily cash equivalents⁴	121		—		—			—			121
Subtotal of nuclear decommissioning trusts	2,869		1,180		—			—			4,049
Total assets	2,882		1,188		221			(15		)	4,276
Liabilities at fair value
Derivative contracts:
Electricity	—		2		5			(2		)	5
Natural gas	—		113		2			(60		)	55
Tolling	—		—		1,005			—			1,005
Subtotal of derivative contracts	—		115		1,012			(62		)	1,065
Total liabilities	—		115		1,012			(62		)	1,065
Net assets (liabilities)	$	2,882	$	1,073	$	(791	)	$	47		$	3,211


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 69% and 66% of SCE's equity investments were located in the United States at September 30, 2013 and December 31, 2012, respectively.


³	At September 30, 2013 and December 31, 2012, SCE's corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $32 million and $56 million, respectively.


⁴	Excludes net payables of $3 million and $1 million at September 30, 2013 and December 31, 2012, respectively, of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.

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

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



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2013			2012			2013			2012
Fair value of net liabilities at beginning of period	$	(967	)	$	(739	)	$	(791	)	$	(754	)
Total realized/unrealized gains (losses):
Included in regulatory assets and liabilities¹	(50		)	(180		)	(205		)	(203		)
Purchases	19			33			56			84
Settlements	(33		)	(44		)	(91		)	(57		)
Fair value of net liabilities at end of period	$	(1,031	)	$	(930	)	$	(1,031	)	$	(930	)
Change during the period in unrealized losses related to assets and liabilities held at the end of the period	$	(65	)	$	(222	)	$	(198	)	$	(244	)


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

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

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



	Fair Value (in millions)							Significant	Range
September 30, 2013	Assets			Liabilities			Valuation Technique(s)	Unobservable Input	(Weighted Average)
Electricity:
Options	$	2		$	10		Option model	Volatility of gas prices	24% - 30% (28%)
								Volatility of power prices	28% - 45% (39%)
								Power prices	$40.60 - $49.80 ($43.50)
Forwards	—			4			Discounted cash flow	Power prices	$7.70 - $40.80 ($31.40)
CRRs	245			—			Market simulation model	Load forecast	7,603 MW - 24,896 MW
								Power prices	$(9.86) - $108.56
								Gas prices	$3.50 - $7.10
Tolling	8			1,272			Option model	Volatility of gas prices	16% - 30% (19%)
								Volatility of power prices	25% - 45% (29%)
								Power prices	$35.90 - $62.60 ($46.90)
Netting	(2		)	(2		)
Total derivative contracts	$	253		$	1,284



	Fair Value (in millions)							Significant	Range
December 31, 2012	Assets			Liabilities			Valuation Technique(s)	Unobservable Input	(Weighted Average)
Electricity:
Options	$	40		$	12		Option model	Volatility of gas prices	25% - 36% (33%)
								Volatility of power prices	29% - 64% (42%)
								Power prices	$41.70 - $59.20 ($47.00)
Forwards	2			4			Discounted cash flow	Power prices	$23.10 - $44.90 ($31.10)
CRRs	186			—			Market simulation model	Load forecast	7,597 MW - 26,612 MW
								Power prices	$(13.90) - $226.75
								Gas prices	$2.95 - $7.78
Gas options	—			2			Option model	Volatility of gas prices	28% - 36% (34%)
Tolling	4			1,005			Option model	Volatility of gas prices	17% - 36% (22%)
								Volatility of power prices	26% - 64% (29%)
								Power prices	$35.00 - $84.10 ($55.40)
Netting	(11		)	(11		)
Total derivative contracts	$	221		$	1,012

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

The carrying value and fair value of Edison International and SCE's long-term debt is as follows:



	September 30, 2013				December 31, 2012
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
SCE	$	8,828	$	9,590	$	8,828	$	10,505
Edison International	9,232		10,016		9,231		10,944

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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