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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2025

Edison International is the ultimate parent holding company of SCE and Edison Energy, LLC, doing business as Trio. 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 across Southern, Central, and Coastal California. Trio is a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial, and institutional customers. Trio's business activities are currently not material to report as a separate business segment, and SCE is the single reportable segment. See "Segment Information" below for further discussion.

These combined notes to the condensed consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's condensed consolidated financial statements include the accounts of Edison International, SCE, and other 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 condensed consolidated financial statements include the accounts of SCE, its controlled subsidiaries and a variable interest entity, SCE Recovery Funding LLC, of which SCE is the primary beneficiary. All intercompany transactions have been eliminated from the condensed 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, 2024 (the "2024 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2024 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 condensed 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 interim periods presented are not necessarily indicative of the operating results for the full year.

The December 31, 2024 financial statement data was derived from the audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements.

Consolidation

Organization and Basis of Presentation

The December 31, 2024 financial statement data was derived from the audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements.

Segment Information

For information on Edison International's and SCE's segment information, see Note 1 in the 2024 Form 10-K. In addition, for the three months ended March 31, 2025 and 2024, Edison International's and SCE's significant segment expenses agree to those disclosed in the condensed consolidated statements of income. As of March 31, 2025 and 2024, the measures of Edison International's and SCE's segment assets are reported on Edison International's and SCE's condensed consolidated balance sheets, respectively, as total assets.

Cash, Cash Equivalents and Restricted Cash

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 which 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 collectibility and current economic trends, including unemployment rates and any likelihood of recession for the region. The increase in the provision of uncollectible accounts and write-offs for the three months ended March 31, 2025, is driven primarily by consumer protection programs.

Wildfire Insurance Fund

The Wildfire Insurance Fund does not have a defined life. Instead, the Wildfire Insurance Fund will terminate when the administrator determines that the fund has been exhausted. Therefore, estimating the period of coverage of the fund is subject to significant accounting judgments and estimates. Management reassesses the period of coverage of the fund at least annually in the first quarter each year and when new or additional information becomes available. Edison International and SCE apply adjustments to the period of coverage on a prospective basis and amortize the Wildfire Insurance Fund contribution asset ratably over the remaining estimated life of the fund. An impairment will be recorded to the Wildfire Insurance Fund contribution asset, if the asset exceeds SCE's ability to benefit from the remaining coverage provided by the Wildfire Insurance Fund.

As of March 31, 2025, management has determined that the period of coverage for the Wildfire Insurance Fund, based on available historical data from wildfires caused by electrical utility equipment to estimate expected loss, continues to be an estimated 20 years from the date SCE committed to participate in the Wildfire Insurance Fund. The details of the operation of the Wildfire Insurance Fund and claims by participating electrical corporations against the fund have been considered to estimate the fund period of coverage. Significant factors in determining the estimated period of coverage are the frequency of wildfire events caused by investor-owned utility electrical equipment and the disclosed estimated costs associated with these events. There have been fires in the service areas of SCE, PG&E and SDG&E since the inception of the Wildfire

Insurance Fund, including fires where the cause is unknown or losses are not reasonably estimable, such as the Eaton Fire, which in the future may be covered by the Wildfire Insurance Fund but have not been reflected or estimated at this time.

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 available to Edison International common shareholders was computed as follows:


	Three months ended March 31,
(in millions, except per-share amounts)	2025		2024
Basic earnings per share:
Net income (loss) attributable to common shareholders	$	1,436	$	(11)
Participating securities dividends	(1)		—
Net income (loss) available to common shareholders	$	1,435	$	(11)
Weighted average common shares outstanding	385		385
Basic earnings (loss) per share	$	3.73	$	(0.03)
Diluted earnings per share:
Net income (loss) available to common shareholders	$	1,435	$	(11)
Income impact of assumed conversions	1		—
Net income (loss) available to common shareholders and assumed conversions	$	1,436	$	(11)
Weighted average common shares outstanding	385		385
Incremental shares from assumed conversions1	1		—
Adjusted weighted average shares – diluted	386		385
Diluted earnings (loss) per share	$	3.72	$	(0.03)

1Due to the loss reported for the quarter ended March 31, 2024, incremental shares were not included as the effect would be antidilutive.

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 8,203,681 and 4,202,791 shares of common stock for the three months ended March 31, 2025 and 2024, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

Revenue Recognition

Revenue is recognized by Edison International and SCE when a performance obligation to transfer control of the promised goods is satisfied or when services are rendered to customers. This typically occurs when electricity is delivered to customers, which includes amounts for services rendered but unbilled at the end of a reporting period.

Regulatory Proceedings

2025 General Rate Case

As discussed in the 2024 Form 10-K, SCE requested a revenue requirement of approximately $10.3 billion for the test year 2025 in the 2025 GRC. This represents a $1.9 billion, or 23%, increase over the 2024 revenue requirement of approximately $8.4 billion, which was adopted in Track 4 and prior to certain subsequent adjustments. This test year 2025 revenue requirement was subsequently updated to $10.4 billion, reflecting 2025 CPUC-authorized ROE and additional amendments and other revisions to rebuttal testimony.

Since January 1, 2025, and until a GRC decision is issued, SCE is recognizing revenue based on the 2024 authorized revenue requirement, adjusted to reflect the 2025 CPUC-authorized ROE. The CPUC has also approved the establishment of a memorandum account to track changes in the authorized revenue requirement effective January 1, 2025. While SCE and certain parties have entered into stipulations to resolve certain contested areas in the 2025 GRC, SCE cannot predict the revenue requirement the CPUC will ultimately authorize or forecast the timing of a final decision.

FERC 2025 Formula Rate Update

In November 2024, SCE filed its 2025 annual transmission revenue requirement update with the FERC, with rates effective January 1, 2025. The update reflects a 2025 transmission revenue requirement of $1.3 billion, which is a $220 million, or 20%, increase from the 2024 annual revenue requirement. The lower revenue in 2024 was due to a return of prior year overcollections. Pending resolution of the FERC formula rate proceedings, SCE recognized revenue in the first three months of 2025 based on the FERC 2025 annual update rate, subject to refund.

New Accounting Guidance

Accounting Guidance Adopted

No material accounting standards were adopted in three months ended in March 31, 2025.

Accounting Guidance Not Yet Adopted

In December 2023, the FASB issued an accounting standards update requiring public entities to provide more disclosures primarily related to the income tax rate reconciliation and income taxes paid. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for annual periods after January 1, 2025 with early adoption permitted. The guidance is applied prospectively. Edison International and SCE will apply this standard for their annual filings for the year ended December 31, 2025 and do not expect the adoption of this standard to materially affect the annual disclosures.

In November 2024, the FASB issued an accounting standards update requiring public entities to provide disaggregated disclosure of income statement expenses. The guidance does not change the expense captions an entity presents on the face of the income statement, rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The guidance is effective for annual disclosure for the year ended December 31, 2027 and subsequent interim periods with early adoption permitted. The guidance is applied prospectively. Edison International and SCE are currently evaluating the impact of the new guidance.