Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Edison International is the parent holding company of Southern California Edison Company ("SCE") and Edison Energy Group, Inc. ("Edison Energy Group"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of Southern California. Edison Energy Group is an indirect wholly-owned subsidiary of Edison International and a holding company for Edison Energy, LLC ("Edison Energy") which is engaged in the competitive business of providing data driven energy solutions to commercial, institutional and industrial customers. Edison Energy's business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE, and other wholly owned and controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE, its wholly owned and controlled subsidiaries and a variable interest entity of which SCE is the primary beneficiary, SCE Recovery Funding LLC. All intercompany transactions have been eliminated from the consolidated financial statements.

Edison International's and SCE's significant accounting policies were described in the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2020 Form 10-K.

In the opinion of management, all adjustments, consisting only of adjustments of a normal recurring nature, have been made that are necessary to fairly state the consolidated financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the six-month periods ended June 30, 2021 are not necessarily indicative of the operating results for the full year. Certain prior period amounts have been conformed to the current period's presentation.

The December 31, 2020 financial statement data was derived from audited financial statements but does not include all disclosures required by GAAP.

Cash and Cash Equivalents

Cash, Cash Equivalents and Restricted Cash

Cash equivalents include investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows:

	Edison International				SCE
	June 30,		December 31,		June 30,		December 31,
(in millions)	2021		2020		2021		2020
Money market funds	$	47	$	62	$	20	$	38

Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period as follows:

	Edison International				SCE
	June 30,		December 31,		June 30,		December 31,
(in millions)	2021		2020		2021		2020
Book balances reclassified to accounts payable	$	61	$	69	$	61	$	69

The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:

	June 30,		December 31,
(in millions)	2021		2020
Edison International:
Cash and cash equivalents	$	84	$	87
Short-term restricted cash1		1		2
Total cash, cash equivalents, and restricted cash	$	85	$	89
SCE:
Cash and cash equivalents	$	51	$	55
Short-term restricted cash1		—		1
Total cash, cash equivalents, and restricted cash	$	51	$	56

1 Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.

Allowance for Uncollectible Accounts

Allowance for Uncollectible Accounts

The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California and exposes SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical amounts written-off, assessment of customer collectability and current economic trends, including unemployment rates and any likelihood of recession for the region. At June 30, 2021, this included the estimated impacts of the COVID-19 pandemic.

The following tables set forth the changes in allowance for uncollectible accounts for SCE:

	Three months ended						Three months ended
	June 30, 2021						June 30, 2020
(in millions)	Customers			All others		Total	Customers			All others		Total
Beginning balance	$	210	$	16	$	226	$	47	$	13	$	60
Plus: current period provision for uncollectible accounts
Included in operation and maintenance expenses		12		3		15		12		5		17
Deferred to regulatory assets		32		—		32		21		—		21
Less: write-offs, net of recoveries		—		3		3		5		3		8
Ending balance	$	254	$	16	$	270	$	75	$	15	$	90

	Six months ended						Six months ended
	June 30, 2021						June 30, 2020
(in millions)	Customers			All others		Total	Customers			All others		Total
Beginning balance	$	175	$	13	$	188	$	35	$	14	$	49
Plus: current period provision for uncollectible accounts
Included in operation and maintenance expenses		18		7		25		28		7		35
Deferred to regulatory assets		66		—		66		21		—		21
Less: write-offs, net of recoveries		5		4		9		9		6		15
Ending balance	$	254	$	16	$	270	$	75	$	15	$	90

Revenue Recognition

Revenue Recognition

Regulatory Proceedings

2021 General Rate Case

In July 2021, the CPUC issued a proposed decision on track 1 of the 2021 GRC, which if adopted, would result in a base rate revenue requirement of $6.9 billion in 2021, an increase of $342 million over revenue requirement authorized for 2020.

If adopted, the proposed decision would lead to an impairment of utility property, plant and equipment of up to $78 million ($56 million after-tax) related to disallowed historical capital expenditures.

The CPUC has approved the establishment of a memorandum account making the authorized revenue requirement changes effective January 1, 2021. SCE cannot predict the revenue requirement the CPUC will ultimately authorize. SCE is recognizing revenue based on the 2020 authorized revenue requirement until a GRC decision is issued.

Employee Stock Purchase Plan

Employee Stock Purchase Plan

In April 2021, the Edison International Employee Stock Purchase Plan ("ESPP") was approved by the shareholders and was effective beginning July 1, 2021. The maximum aggregate numbers of shares of Edison International's common stock that may be issued under the ESPP is 3,000,000 shares. The ESPP is administered by the SCE Benefits Committee and allows eligible employees to purchase shares of common stock. Eligible employees may authorize payroll deductions of between 1% and 10% of their compensation, up to a maximum of $25,000, to purchase shares of common stock at 97% of the market price of the common stock on the date of purchase, which is the last day of each six months offering period. The ESPP is considered non-compensatory and stock issuances under the ESPP will be recorded directly in equity.

Earnings Per Share

Earnings Per Share

Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards, payable in common shares, which earn dividend equivalents on an equal basis with common shares once the awards are vested. See Note 13 for further information.

EPS attributable to Edison International common shareholders was computed as follows:

	Three months ended June 30,				Six months ended June 30,
(in millions, except per-share amounts)	2021		2020		2021		2020
Basic earnings per share:
Net income attributable to common shareholders	$	318	$	318	$	577	$	501
Participating securities dividends		—		—		—		—
Net income available to common shareholders	$	318	$	318	$	577	$	501
Weighted average common shares outstanding		380		375		379		367
Basic earnings per share	$	0.84	$	0.85	$	1.52	$	1.37
Diluted earnings per share:
Net income attributable to common shareholders	$	318	$	318	$	577	$	501
Participating securities dividends		—		—		—		—
Net income available to common shareholders	$	318	$	318	$	577	$	501
Income impact of assumed conversions		—		—		—		—
Net income available to common shareholders and assumed conversions	$	318	$	318	$	577	$	501
Weighted average common shares outstanding		380		375		379		367
Incremental shares from assumed conversions		—		1		1		1
Adjusted weighted average shares – diluted		380		376		380		368
Diluted earnings per share	$	0.84	$	0.85	$	1.52	$	1.36

In addition to the participating securities discussed above, Edison International also may award stock options, which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 11,327,374 and 9,187,178 shares of common stock for the three months ended June 30, 2021 and 2020, respectively, and 11,369,725 and 8,587,661 shares of common stock for the six months ended June 30, 2021 and 2020, respectively were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

New Accounting Guidance

New Accounting Guidance

Accounting Guidance Adopted

In August 2020, the FASB issued an accounting standards update to simplify the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update affect entities that issue convertible instruments indexed to or potentially settled in an entity's own equity. This guidance also simplifies an entity's application of the derivatives scope exception for contracts in its own equity and amends certain aspects of the EPS guidance. Edison International and SCE have adopted this standard on January 1, 2021 using modified retrospective adoption approach. The adoption of this standard did not have a material impact on Edison International's and SCE's financial position or results of operations.