Revenue

12 Months Ended

Dec. 31, 2022

Revenue

Revenue

Note 7.Revenue

SCE's revenue is disaggregated by two revenue sources:

● 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 revenue 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 a 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 a 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:

	2022						2021						2020
			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	$	8,327		8,433	$	16,760	$	7,523	$	6,824		14,347	$	6,920	$	5,539	$	12,459
Alternative revenue programs and other operating revenue3		681		(269)		412		349		178		527		548		539		1,087
Total operating revenue	$	9,008	$	8,164	$	17,172	$	7,872	$	7,002	$	14,874	$	7,468	$	6,078	$	13,546

1 SCE recorded CPUC revenue based on an 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, 2022 and 2021, SCE's receivables related to contracts from customers were $2.3 billion and $2.3 billion, which included accrued unbilled revenue of $638 million and $794 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 for a period of 30 years. SCE recognized the entire proceeds as deferred revenue and is amortizing deferred revenue 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. As of December 31, 2022, the deferred revenue was $381 million, of which $13 million and $368 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 years ended December 31, 2022 and 2021, SCE has recognized revenue of $13 million and $6 million, respectively.