Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes

Components of Income Tax (Benefit) Expense

The components of income tax (benefit) expense by location of taxing jurisdiction are:

	Edison International						SCE
	Years ended December 31,
(in millions)	2022		2021		2020		2022		2021		2020
Current:
Federal	$	2	$	—	$	13	$	—	$	—	$	12
State		13		(179)		(22)		2		(45)		(26)
		15		(179)		(9)		2		(45)		(14)
Deferred:
Federal		(103)		83		(230)		(44)		83		(207)
State		(74)		(40)		(66)		(67)		(21)		(56)
		(177)		43		(296)		(111)		62		(263)
Total	$	(162)	$	(136)	$	(305)	$	(109)	$	17	$	(277)

Components of Net Accumulated Deferred Income Tax Liability

	Edison International						SCE
	Years ended December 31,
(in millions)	2022		2021		2020		2022		2021		2020
Current:
Federal	$	2	$	—	$	13	$	—	$	—	$	12
State		13		(179)		(22)		2		(45)		(26)
		15		(179)		(9)		2		(45)		(14)
Deferred:
Federal		(103)		83		(230)		(44)		83		(207)
State		(74)		(40)		(66)		(67)		(21)		(56)
		(177)		43		(296)		(111)		62		(263)
Total	$	(162)	$	(136)	$	(305)	$	(109)	$	17	$	(277)

Summary of Net Operating Loss and Tax Credit Carryforwards

The amounts of net operating loss and tax credit carryforwards (after-tax) are as follows:

	Edison International				SCE
	December 31, 2022
	Loss		Credit		Loss		Credit
(in millions)	Carryforwards		Carryforwards		Carryforwards		Carryforwards
Expire in 2023	$	10	$	—	$	6	$	—
Expire between 2024 to 2027		26		—		25		—
Expire between 2029 to 2042		1,670		544		870		60
No expiration date1		1,529		10		1,450		—
Total	$	3,235	$	554	$	2,351	$	60

1 Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), that it was an event vs. net operating losses generated after December 31, 2017 can carryforward indefinitely.

Reconciliation of Income Tax Expense

The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:

	Edison International									SCE
	Years ended December 31,
(in millions)	2022			2021			2020			2022			2021			2020
Income from operations before income taxes	$	662		$	789		$	566		$	845		$	952		$	665
Provision for income tax at federal statutory rate of 21%		139			166			119			177			200			140
Increase (decrease) in income tax from:
State tax, net of federal benefit		(70)			(47)			(61)			(57)			(33)			(52)
Property-related		(219)			(233)			(320)			(219)			(233)			(320)
Change related to uncertain tax position1		—			(147)			(15)			—			(37)			(19)
Wildfire related charges2		—			31			—			—			31			—
Average rate assumption method ("ARAM") adjustment3		—			87			—			—			87			—
Corporate-owned life insurance cash surrender value		(9)			(8)			(8)			(9)			(8)			(8)
Other		(3)			15			(20)			(1)			10			(18)
Total income tax (benefit) expense	$	(162)		$	(136)		$	(305)		$	(109)		$	17		$	(277)
Effective tax rate		(24.5)	%		(17.2)	%		(53.9)	%		(12.9)	%		1.8	%		(41.7)	%

1 In 2021, Edison International and SCE recognized tax benefits related to a settlement with the California Franchise Tax Board "FTB" for tax years 2007 – 2012. See further discussion in Tax Disputes below. In 2020, Edison International and SCE recognized tax expense and benefit, respectively, primarily due to the re-measurement of uncertain tax positions related to the 2010 – 2012 California state tax filings currently under audit.

2 Relates to the non-tax deductible portions of the SED Agreement (as defined in Note 12). See Note 12 for further discussion under 2017/2018 Wildfire/Mudslide Events.

3 In July 2021, SCE received the IRS' response to its private letter ruling request, regarding the scope of the deferred tax normalization requirements and the computations required to comply with the average rate assumption method. As a result, SCE's estimate changed and a cumulative true-up of $87 million reduction in tax benefits was recorded in the third quarter of 2021, for the period of January 1, 2018 to June 30, 2021.

Reconciliation of Unrecognized Tax Benefits

The following table provides a reconciliation of unrecognized tax benefits:

	Edison International						SCE
(in millions)	2022		2021		2020		2022		2021		2020
Balance at January 1,	$	613	$	679	$	370	$	340	$	320	$	282
Tax positions taken during the current year:
Increases		54		53		55		54		53		56
Tax positions taken during a prior year:
Increases1		—		3		274		—		1		4
Decreases2		(21)		(118)		(20)		(20)		(29)		(22)
Settlements with taxing authorities3		—		(4)		—		—		(5)		—
Balance at December 31,	$	646	$	613	$	679	$	374	$	340	$	320

1 Edison International recorded favorable tax positions in 2020 in connection with the Edison Mission Energy bankruptcy that required a revaluation of the reserve for uncertain tax positions.

2 Decrease in 2021 was related to re-measurement as a result of a settlement with the FTB for tax years 2007 – 2012.

3 In 2021, Edison International reached a settlement with the FTB for tax years 2007 – 2012.

Schedule of Interest and Penalties Related to Income Tax Liabilities

The total amount of accrued interest and penalties related to income tax liabilities are:

	Edison International				SCE
	December 31,
(in millions)	2022		2021		2022		2021
Accrued interest and penalties	$	—	$	—	$	23	$	20

The net after-tax interest and penalties recognized in income tax (benefit) expense are:

	Edison International						SCE
	Years ended December 31,
(in millions)	2022		2021		2020		2022		2021		2020
Net after-tax interest and penalties tax (benefit) expense	$	—	$	(41)	$	4	$	2	$	(2)	$	6