Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value by Level

The following table sets forth assets and liabilities that were accounted for at fair value by level within the fair value hierarchy:

	June 30, 2012
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	5	$	—	$	—		$	—		$	5
Derivative contracts:
Electricity	—		2		21			(11		)	12
CRRs	—		—		92						92
Subtotal of derivative contracts	—		2		113			(11		)	104
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	2,090		—		—			—			2,090
Municipal bonds	—		714		—			—			714
U.S. government and agency securities	389		160		—			—			549
Corporate bonds4	—		382		—			—			382
Short-term investments, primarily cash equivalents5	2		90		—			—			92
Subtotal of nuclear decommissioning trusts	2,481		1,346		—			—			3,827
Total assets6	2,494		1,348		113			(11		)	3,944
Liabilities at Fair Value
Derivative contracts:
Electricity	—		—		21			(11		)	10
Natural gas	—		194		28			(66		)	156
Tolling	—		—		803			—			803
Subtotal of derivative contracts	—		194		852			(77		)	969
Total liabilities	—		194		852			(77		)	969
Net assets (liabilities)	$	2,494	$	1,154	$	(739	)	$	66		$	2,975

	December 31, 2011
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral1			Total
Assets at Fair Value
Money market funds2	$	21	$	—	$	—		$	—		$	21
Derivative contracts:
Electricity	—		—		1			—			1
Natural gas	—		5		—			(3		)	2
CRRs	—		—		122			—			122
Tolling	—		—		10			—			10
Subtotal of derivative contracts	—		5		133			(3		)	135
Long-term disability plan	8		—		—			—			8
Nuclear decommissioning trusts:
Stocks3	1,899		—		—			—			1,899
Municipal bonds	—		756		—			—			756
U.S. government and agency securities	433		147		—			—			580
Corporate bonds4	—		317		—			—			317
Short-term investments, primarily cash equivalents5	—		15		—			—			15
Subtotal of nuclear decommissioning trusts	2,332		1,235		—			—			3,567
Total assets6	2,361		1,240		133			(3		)	3,731
Liabilities at Fair Value
Derivative contracts:
Electricity	—		5		65			(2		)	68
Natural gas	—		234		23			(53		)	204
Tolling	—		—		799			—			799
Subtotal of derivative contracts	—		239		887			(55		)	1,071
Total liabilities	—		239		887			(55		)	1,071
Net assets (liabilities)	$	2,361	$	1,001	$	(754	)	$	52		$	2,660

¹  Represents the netting of assets and liabilities under master netting agreements and cash collateral across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.

²  Money market funds are included in cash and cash equivalents on SCE's consolidated balance sheets.

³  Approximately 67% and 70% of the equity investments were located in the United States at June 30, 2012 and December 31, 2011, respectively.

⁴  At June 30, 2012 and December 31, 2011, corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $44 million and $22 million, respectively.

⁵  Excludes net payables of $17 million and net receivables of $25 million at June 30, 2012 and December 31, 2011, respectively, of interest and dividend receivables as well as receivables and payables related to pending securities sales and purchases.

⁶  Excludes other investments of $98 million and $81 million at June 30, 2012 and December 31, 2011, respectively, primarily related to the cash surrender value of company owned life insurance investments which are used to fund certain executive benefits including deferred compensation.

Summary of Changes in Fair Value of Level 3 Assets and Liabilities

The following table sets forth a summary of changes in the fair value of Level 3 net derivative assets and liabilities:

	Three months ended June 30,						Six months ended June 30,
(in millions)	2012			2011			2012			2011
Fair value of net assets (liabilities) at beginning of period	$	(1,097	)	$	(127	)	$	(754	)	$	6
Total realized/unrealized gains (losses), net:
Included in regulatory assets1	341			(247		)	(23		)	(382		)
Purchases	29			16			50			17
Settlements	(12		)	(1		)	(12		)	—
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Fair value of net liabilities at end of period	$	(739	)	$	(359	)	$	(739	)	$	(359	)
Change during the period in unrealized gains (losses) related to assets and liabilities held at the end of the period	$	335		$	(240	)	$	(8	)	$	(376	)

¹  Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.

Valuation Techniques and Significant Unobservable Inputs Used to Determine Fair Value for Level 3 Assets and Liabilities

The following table sets forth the valuation techniques and significant unobservable inputs used to determine fair value for Level 3 assets and liabilities:

June 30, 2012				Quantitative Information About Level 3 Fair Value Measurements
	Fair Value (in millions)							Significant	Range
	Assets			Liabilities			Valuation Technique(s)	Unobservable Input	(Weighted Average)
Electricity:
Options	$	42		$	40		Option model	Volatility of gas prices	24% – 57% (41%)
								Volatility of power prices	30% – 97% (54%)
								Power prices	$34.17 – $56.92 ($42.70)
Forwards	2			4			Discounted cash flow	Power prices	$13.00 – $47.10 ($28.70)
Gas Options	—			28			Option model	Volatility of gas prices	27% – 57% (47%)
CRRs	92			—			Market simulation model	Load forecast	7,645 MW – 26,334 MW
								Power prices	$(46.19) – $240.30
								Gas prices	$3.79 – $9.32
Tolling	—			803			Option model	Volatility of gas prices	18% – 57% (23%)
								Volatility of power prices	26% – 97% (31%)
								Power prices	$29.89 – $88.04 ($57.30)
Netting	(23		)	(23		)
Total derivative contracts	$	113		$	852

Carrying Amounts and Fair Values of Long-Term Debt, Including Current Portion

The carrying value and fair value of long-term debt are:

	June 30, 2012				December 31, 2011
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	8,827	$	10,368	$	8,431	$	10,129