Revenue

12 Months Ended

Dec. 31, 2021

Revenue

Revenue

Note 7.Revenue

● Earning activities – representing revenue authorized by the CPUC and FERC, which is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission and distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs, depreciation, taxes and a return consistent with the capital structure. Also, included in earnings activities are revenues or penalties related to incentive mechanisms, other operating revenue and regulatory charges or disallowances.

● Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards as well as non-bypassable rates collected for SCE Recovery Funding LLC. Cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs), certain operation and maintenance expenses, and repayment of bonds and financing costs of SCE Recovery Funding LLC. SCE earns no return on these activities.

The following table is a summary of SCE's revenue:

	2021						2020						2019
			Cost-						Cost-						Cost-
	Earning		Recovery		Total		Earning		Recovery		Total		Earning		Recovery		Total
(in millions)	Activities		Activities		Consolidated		Activities		Activities		Consolidated		Activities		Activities		Consolidated
Revenues from contracts with customers1,2	$	7,523		6,824	$	14,347	$	6,920	$	5,539		12,459	$	6,512	$	4,655	$	11,167
Alternative revenue programs and other operating revenue3		349		178		527		548		539		1,087		166		973		1,139
Total operating revenue	$	7,872	$	7,002	$	14,874	$	7,468	$	6,078	$	13,546	$	6,678	$	5,628	$	12,306

1 SCE recorded CPUC revenue based on annual revenue requirement set by a methodology established in the GRC proceeding and FERC revenue authorized through a formula rate. For further information, see Note 1.

2 At December 31, 2021 and 2020, SCE's receivables related to contracts from customers were $2.3 billion and $1.5 billion, which included accrued unbilled revenue of $794 million and $521 million, respectively.

3 Includes differences between amounts billed and authorized levels for both the CPUC and FERC.

Deferred Revenue

In July 2021, Morongo Transmission LLC ("Morongo") paid SCE $400 million for the use of a portion of the West of Devers transmission line transfer capability. Under the terms of the agreement with Morongo, SCE will provide Morongo with the use of a portion of the West of Devers transmission line transfer capability for a period of 30 years, commencing in August 2021. After the 30-year contract term, the transfer capability will revert back to SCE. SCE recognized the entire proceeds as deferred revenue and will amortize deferred revenues from the use of the transfer capability over the 30-year term on a straight-line basis resulting in revenue of $13 million per year. The depreciation of the transmission line is also amortized over the same period on a straight-line basis. As of December 31, 2021, the deferred revenue was $394 million, of which $13 million and $381 million are included in "Other current liabilities" and "Other deferred credits and other long-term liabilities," respectively, on SCE's consolidated balance sheets. For the year ended December 31, 2021, SCE has recognized revenue of $6 million.