Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

Leases as Lessee

SCE enters into various agreements to purchase power, electric capacity and other energy products that may be accounted for as leases when SCE has dispatch rights that determine when and how a plant runs. SCE also leases property and equipment primarily related to vehicles, office space and other equipment. The terms of the contracts included in the table below are primarily 3 to 20 years for PPA leases, 5 to 72 years for office leases, and 5 to 13 years for the remaining other operating leases.

The following table summarizes SCE's lease payments for operating and finance leases as of December 31, 2020:

(in millions)	PPA Operating Leases1		Other Operating Leases2		PPA Finance Leases1
2021	$	204	$	39	$	1
2022	208		32		1
2023	159		26		1
2024	47		21		—
2025	47		18		—
Thereafter	443		104		5
Total lease payments	1,108		240		8
Amount representing interest3	203		60		4
Lease liabilities	$	905	$	180	$	4

1Excludes expected purchases from most renewable energy contracts, which do not meet the definition of a lease payment since renewable power generation is contingent on external factors.

2Excludes escalation clauses based on consumer price or other indices and residual value guarantees that are not considered probable at the commencement date of the lease.

3Lease payments are discounted to their present value using SCE's incremental borrowing rates.

Supplemental balance sheet information related to SCE's leases was as follows:

(in millions)	December 31, 2020		December 31, 2019
Operating leases:
Operating lease ROU assets1	$	1,085	$	689
Current portion of operating lease liabilities	214		79
Operating lease liabilities	871		610
Total operating lease liabilities1	$	1,085	$	689
Finance leases included in:
Utility property, plant and equipment, gross	$	4	$	14
Accumulated depreciation	—		(5)
Utility property, plant and equipment, net	4		9
Other current liabilities	—		1
Other long-term liabilities	4		8
Total finance lease liabilities	$	4	$	9

1During the year ended 2020, a PPA operating lease commenced and one PPA was amended resulting in a total of $463 million additions in ROU assets and lease liabilities.

The timing of SCE's recognition of the lease expense conforms to ratemaking treatment for SCE's recovery of the cost of electricity and is included in purchased power for operating leases and interest and amortization expense for finance leases. The following table summarizes the components of SCE's lease expense:

(in millions)	Year ended December 31, 2020		Year ended December 31, 2019
PPA leases:
Operating lease cost	$	111	$	118
Finance lease cost	1		1
Variable lease cost1	1,917		2,087
Total PPA lease cost	2,029		2,206
Other operating leases cost	47		46
Total lease cost	$	2,076	$	2,252

1Includes lease costs from renewable energy contracts where payments are based on contingent external factors such as wind, hydro and solar power generation.

Other information related to leases was as follows:

(in millions, except lease term and discount rate)	Year ended December 31, 2020			Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
PPA leases	$	111		$	118
Other leases	44			44
Financing cash flows from PPA finance leases	1			1
ROU assets obtained in exchange for lease obligations:
PPA operating leases	$	463		—
Other operating leases	58			34
Weighted average remaining lease term (in years):
Operating leases
PPA leases	9.75			16.05
Other leases	12.13			12.73
PPA Finance leases	16.67			11.51
Weighted average discount rate:
Operating leases
PPA leases	3.12		%	4.46		%
Other leases	3.63		%	3.88		%
PPA Finance leases	11.29		%	8.76		%

Leases as Lessor

SCE also enters into operating leases to rent certain land and facilities as a lessor. These leases primarily have terms that range from 15 to 65 years. During the twelve months ended December 31, 2020 and December 31, 2019, SCE recognized $17 million and $18 million, respectively, in lease income, which is included in operating revenue on the consolidated statements of income. At December 31, 2020, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:

(in millions)
2021	$	11
2022	10
2023	8
2024	7
2025	6
Thereafter	128
Total	$	170

EME, a wholly-owned subsidiary of Edison International, emerged from bankruptcy in 2014 and retained a lease investment in a hydroelectric power plant in Vidalia, Louisiana. In November 2020, the lessee exercised an option in the lease agreement and purchased the asset upon expiration of the lease term. Edison International recognized the net proceeds of $132 million as a pre-tax gain and has no remaining investment balance as of December 31, 2020 related to the lease investment. The revenue recognized for the lease in 2020 is immaterial to Edison International's consolidated financial statements.

Leases

Leases

Leases as Lessee

SCE enters into various agreements to purchase power, electric capacity and other energy products that may be accounted for as leases when SCE has dispatch rights that determine when and how a plant runs. SCE also leases property and equipment primarily related to vehicles, office space and other equipment. The terms of the contracts included in the table below are primarily 3 to 20 years for PPA leases, 5 to 72 years for office leases, and 5 to 13 years for the remaining other operating leases.

The following table summarizes SCE's lease payments for operating and finance leases as of December 31, 2020:

(in millions)	PPA Operating Leases1		Other Operating Leases2		PPA Finance Leases1
2021	$	204	$	39	$	1
2022	208		32		1
2023	159		26		1
2024	47		21		—
2025	47		18		—
Thereafter	443		104		5
Total lease payments	1,108		240		8
Amount representing interest3	203		60		4
Lease liabilities	$	905	$	180	$	4

1Excludes expected purchases from most renewable energy contracts, which do not meet the definition of a lease payment since renewable power generation is contingent on external factors.

2Excludes escalation clauses based on consumer price or other indices and residual value guarantees that are not considered probable at the commencement date of the lease.

3Lease payments are discounted to their present value using SCE's incremental borrowing rates.

Supplemental balance sheet information related to SCE's leases was as follows:

(in millions)	December 31, 2020		December 31, 2019
Operating leases:
Operating lease ROU assets1	$	1,085	$	689
Current portion of operating lease liabilities	214		79
Operating lease liabilities	871		610
Total operating lease liabilities1	$	1,085	$	689
Finance leases included in:
Utility property, plant and equipment, gross	$	4	$	14
Accumulated depreciation	—		(5)
Utility property, plant and equipment, net	4		9
Other current liabilities	—		1
Other long-term liabilities	4		8
Total finance lease liabilities	$	4	$	9

1During the year ended 2020, a PPA operating lease commenced and one PPA was amended resulting in a total of $463 million additions in ROU assets and lease liabilities.

The timing of SCE's recognition of the lease expense conforms to ratemaking treatment for SCE's recovery of the cost of electricity and is included in purchased power for operating leases and interest and amortization expense for finance leases. The following table summarizes the components of SCE's lease expense:

(in millions)	Year ended December 31, 2020		Year ended December 31, 2019
PPA leases:
Operating lease cost	$	111	$	118
Finance lease cost	1		1
Variable lease cost1	1,917		2,087
Total PPA lease cost	2,029		2,206
Other operating leases cost	47		46
Total lease cost	$	2,076	$	2,252

1Includes lease costs from renewable energy contracts where payments are based on contingent external factors such as wind, hydro and solar power generation.

Other information related to leases was as follows:

(in millions, except lease term and discount rate)	Year ended December 31, 2020			Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
PPA leases	$	111		$	118
Other leases	44			44
Financing cash flows from PPA finance leases	1			1
ROU assets obtained in exchange for lease obligations:
PPA operating leases	$	463		—
Other operating leases	58			34
Weighted average remaining lease term (in years):
Operating leases
PPA leases	9.75			16.05
Other leases	12.13			12.73
PPA Finance leases	16.67			11.51
Weighted average discount rate:
Operating leases
PPA leases	3.12		%	4.46		%
Other leases	3.63		%	3.88		%
PPA Finance leases	11.29		%	8.76		%

Leases as Lessor

SCE also enters into operating leases to rent certain land and facilities as a lessor. These leases primarily have terms that range from 15 to 65 years. During the twelve months ended December 31, 2020 and December 31, 2019, SCE recognized $17 million and $18 million, respectively, in lease income, which is included in operating revenue on the consolidated statements of income. At December 31, 2020, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:

(in millions)
2021	$	11
2022	10
2023	8
2024	7
2025	6
Thereafter	128
Total	$	170

EME, a wholly-owned subsidiary of Edison International, emerged from bankruptcy in 2014 and retained a lease investment in a hydroelectric power plant in Vidalia, Louisiana. In November 2020, the lessee exercised an option in the lease agreement and purchased the asset upon expiration of the lease term. Edison International recognized the net proceeds of $132 million as a pre-tax gain and has no remaining investment balance as of December 31, 2020 related to the lease investment. The revenue recognized for the lease in 2020 is immaterial to Edison International's consolidated financial statements.