Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rate

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

	Three months ended June 30,						Six months ended June 30,
(in millions)	2012			2011			2012			2011
Income before income taxes	$	322		$	354		$	622		$	713
Provision for income tax at federal statutory rate of 35%	113			124			218			249
Increase (decrease) in income tax from:
State tax – net of federal benefit	10			18			20			30
Property-related	(10		)	(10		)	(20		)	(21		)
Other	(5		)	(4		)	(10		)	(7		)
Total income tax expense	$	108		$	128		$	208		$	251
Effective tax rate	33.5		%	36.2		%	33.4		%	35.2		%

The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. The accounting treatment for these temporary differences results in recording regulatory assets and liabilities for amounts that would otherwise be recorded to deferred income tax expense.

Tax Dispute

Edison International's federal income tax returns and its California combined franchise tax returns are currently open for years subsequent to 2002. In addition, specific California refund claims made by Edison International for years 1991 through 2002 are currently under review by the Franchise Tax Board. The IRS examination phase of tax years 2003 through 2006 was completed in the fourth quarter of 2010. This included a proposed adjustment to disallow a component of SCE's repair allowance deduction, which if sustained, would result in a federal tax payment of approximately $95 million, including interest through June 30, 2012. Edison International disagrees with the proposed adjustment and filed a protest with the IRS in the first quarter of 2011.