10-K
EDISON INTERNATIONAL (EIX)
Table ofContents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| (Mark One) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | For the fiscal year ended | December 31, 2024 | ||||||||
| --- | --- | ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| --- | --- | --- | --- | |||||||
| For the transition period from to | ||||||||||
| Commission<br><br>File Number | Exact Name of Registrant<br><br>as specified in its charter | State or Other Jurisdiction of<br><br>Incorporation or Organization | IRS Employer<br><br>Identification Number | |||||||
| 1-9936 | EDISON INTERNATIONAL | California | 95-4137452 | |||||||
| 1-2313 | SOUTHERN CALIFORNIA EDISON COMPANY | California | 95-1240335 | EDISON INTERNATIONAL | SOUTHERN CALIFORNIA EDISON COMPANY | |||||
| --- | --- | |||||||||
| 2244 Walnut Grove Avenue | 2244 Walnut Grove Avenue | |||||||||
| (P.O. Box 976) | (P.O. Box 800) | |||||||||
| Rosemead, CA 91770 | Rosemead, CA 91770 | |||||||||
| (Address of principal executive offices) | (Address of principal executive offices) | |||||||||
| (626) 302-2222 | (626) 302-1212 | |||||||||
| (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) | Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| --- | --- | --- | --- | |||||||
| Edison International: | ||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
| Common Stock, no par value | EIX | NYSE | LLC | |||||||
| Southern California Edison Company: None | ||||||||||
| Securities registered pursuant to Section 12(g) of the Act: None | Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | |||||||||
| --- | --- | --- | --- | |||||||
| Edison International | Yes þ No ☐ | Southern California Edison Company | Yes þ No ☐ | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | Yes ☐ No þ | Southern California Edison Company | Yes ☐ No þ | Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | Yes þ No ☐ | Southern California Edison Company | Yes þ No ☐ | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | Yes þ No ☐ | Southern California Edison Company | Yes þ No ☐ | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-12 of the Exchange Act. (Check One): | ||||||
| --- | --- | --- | --- | --- | --- | |||||
| Edison International | Large Accelerated Filer | Accelerated Filer | Non-accelerated Filer | Smaller Reporting Company | Emerging growth company | |||||
| ☑ | ☐ | ☐ | ☐ | ☐ | ||||||
| Southern California Edison Company | Large Accelerated Filer | Accelerated Filer | Non-accelerated Filer | Smaller Reporting Company | Emerging growth company | |||||
| ☐ | ☐ | ☑ | ☐ | ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | |||||
| --- | --- | --- | --- | |||||||
| Edison International | ☐ | Southern California Edison Company | ☐ | Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | ☑ | Southern California Edison Company | ☐ | If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | ☐ | Southern California Edison Company | ☐ | Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | ☐ | Southern California Edison Company | ☐ | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | Yes ☐ No þ | Southern California Edison Company | Yes ☐ No þ | Aggregate market value of voting and non-voting common equity held by non-affiliates of the registrants as of June 28, 2024, the last business day of the most recently completed second fiscal quarter: | ||||||
| --- | --- | --- | --- | |||||||
| Edison International | Approximately $27.7 billion | Southern California Edison Company | Wholly owned by Edison International | Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: | ||||||
| --- | --- | --- | ||||||||
| Common Stock outstanding as of February 20, 2025: | ||||||||||
| Edison International | 385,023,526 | shares | ||||||||
| Southern California Edison Company | 434,888,104 | shares (wholly owned by Edison International) | OMISSION OF CERTAIN INFORMATION | |||||||
| --- | ||||||||||
| Southern California Edison Company meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format allowed under the General Instruction. | DOCUMENTS INCORPORATED BY REFERENCE | |||||||||
| --- | ||||||||||
| Designated portions of the Edison International Proxy Statement relating to Edison International's 2025 Annual Meeting of Shareholders are incorporated by reference into Part III of this report. |
Table ofContents
TABLE OF CONTENTS
| SEC Form 10-K | ||
|---|---|---|
| Reference Number | ||
| GLOSSARY | v | |
| FORWARD-LOOKING STATEMENTS | 1 | |
| MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 3 | Part II, Item 7 |
| MANAGEMENT OVERVIEW | 3 | |
| Highlights of Operating Results | 3 | |
| Electricity Industry Trends | 5 | |
| 2025 General Rate Case | 6 | |
| Cost of Capital | 7 | |
| Capital Program | 7 | |
| Southern California Wildfires and Mudslides | 8 | |
| RESULTS OF OPERATIONS | 11 | |
| Southern California Edison Company | 11 | |
| Years ended December 31, 2024, 2023 and 2022 | 12 | |
| 2024 vs 2023 | 12 | |
| 2023 vs 2022 | 14 | |
| Edison International Parent and Other | 15 | |
| Loss from Operations | 15 | |
| LIQUIDITY AND CAPITAL RESOURCES | 16 | |
| Southern California Edison Company | 16 | |
| Available Liquidity | 16 | |
| Regulatory Proceedings | 17 | |
| Capital Investment Plan | 18 | |
| Decommissioning of San Onofre | 20 | |
| Margin and Collateral Deposits | 21 | |
| Edison International Parent and Other | 21 | |
| Edison International Income Taxes | 22 | |
| Historical Cash Flows | 23 | |
| Southern California Edison Company | 23 | |
| Edison International Parent and Other | 25 | |
| Contractual Obligations and Contingencies | 26 | |
| Contractual Obligations | 26 | |
| Contingencies | 26 | |
| Off-Balance Sheet Arrangements | 26 | |
| MARKET RISK EXPOSURES | 26 | |
| Interest Rate Risk | 26 | |
| Commodity Price Risk | 27 | |
| Investment Price Risk | 27 | |
| Credit Risk | 28 | |
| CRITICAL ACCOUNTING ESTIMATES AND POLICIES | 28 | |
| Accounting for Contingencies | 28 | |
| Rate Regulated Enterprises | 29 | |
| Income Taxes | 30 |
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| Nuclear Decommissioning – Asset Retirement Obligation | 31 | |
|---|---|---|
| Pensions and Postretirement Benefits Other than Pensions | 32 | |
| Contributions to the Wildfire Insurance Fund | 33 | |
| NEW ACCOUNTING GUIDANCE | 34 | |
| RISK FACTORS | 34 | Part I, Item 1A |
| RISKS RELATING TO EDISON INTERNATIONAL | 34 | |
| RISKS RELATING TO SOUTHERN CALIFORNIA EDISON COMPANY | 35 | |
| Regulatory and Legislative Risks | 35 | |
| Operating Risks | 36 | |
| Financing Risks | 40 | |
| Competitive and Market Risks | 40 | |
| RISKS RELATING TO EDISON INTERNATIONAL AND SOUTHERN CALIFORNIA EDISON COMPANY | 41 | |
| Cybersecurity and Physical Security Risks | 41 | |
| Global and Regional Risks | 42 | |
| QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 42 | Part II, Item 7A |
| FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 42 | Part II, Item 8 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 238) | 43 | |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 238) | 43 | |
| CONSOLIDATED FINANCIAL STATEMENTS | 49 | |
| Consolidated Statements of Income for Edison International | 49 | |
| Consolidated Statements of Comprehensive Income for Edison International | 50 | |
| Consolidated Balance Sheets for Edison International | 51 | |
| Consolidated Statements of Cash Flows for Edison International | 53 | |
| Consolidated Statements of Changes in Equity for Edison International | 54 | |
| Consolidated Statements of Income for Southern California Edison Company | 56 | |
| Consolidated Statements of Comprehensive Income for Southern California Edison Company | 56 | |
| Consolidated Balance Sheets for Southern California Edison Company | 57 | |
| Consolidated Statements of Cash Flows for Southern California Edison Company | 59 | |
| Consolidated Statements of Changes in Equity for Southern California Edison Company | 60 | |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | 61 | |
| Note 1. Summary of Significant Accounting Policies | 61 | |
| Note 2. Property, Plant and Equipment | 71 | |
| Note 3. Variable Interest Entities | 72 | |
| Note 4. Fair Value Measurements | 73 | |
| Note 5. Debt and Credit Agreements | 76 | |
| Note 6. Derivative Instruments | 77 | |
| Note 7. Revenue | 79 | |
| Note 8. Income Taxes | 79 | |
| Note 9. Compensation and Benefit Plans | 83 | |
| Note 10. Investments | 96 |
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| Note 11. Regulatory Assets and Liabilities | 96 | |
|---|---|---|
| Note 12. Commitments and Contingencies | 100 | |
| Note 13. Leases | 111 | |
| Note 14. Equity | 113 | |
| Note 15. Accumulated Other Comprehensive Loss | 116 | |
| Note 16. Other Income, Net | 116 | |
| Note 17. Supplemental Cash Flows Information | 117 | |
| Note 18. Related-Party Transactions | 117 | |
| CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 118 | Part II, Item 9 |
| CONTROLS AND PROCEDURES | 118 | Part II, Item 9A |
| BUSINESS | 119 | Part I, Item 1 |
| CORPORATE STRUCTURE, INDUSTRY AND OTHER INFORMATION | 119 | |
| Subsidiaries of Edison International | 119 | |
| Regulation of Edison International as a Holding Company | 119 | |
| Human Capital | 120 | |
| Insurance | 122 | |
| SOUTHERN CALIFORNIA EDISON COMPANY | 122 | |
| Regulation | 122 | |
| Overview of Ratemaking Process | 124 | |
| Purchased Power and Fuel Supply | 126 | |
| Competition | 127 | |
| Properties | 129 | |
| Seasonality | 129 | |
| SOUTHERN CALIFORNIA WILDFIRES | 129 | |
| Recovery of Wildfire-Related Costs | 130 | |
| Safety Certification and Wildfire Mitigation Plan | 131 | |
| Public Safety Power Shutoffs | 131 | |
| ENVIRONMENTAL CONSIDERATIONS | 132 | |
| Greenhouse Gas Regulation | 132 | |
| Environmental Risks | 133 | |
| UNRESOLVED STAFF COMMENTS | 133 | Part I, Item 1B |
| CYBERSECURITY | 133 | Part I, Item 1C |
| PROPERTIES | 134 | Part I, Item 2 |
| LEGAL PROCEEDINGS | 134 | Part I, Item 3 |
| 2017/2018 Wildfire/Mudslide Events | 134 | |
| Environmental Proceedings | 135 | |
| MINE SAFETY DISCLOSURES | 136 | Part I, Item 4 |
| CERTAIN INFORMATION ABOUT EDISON INTERNATIONAL | 136 | |
| INFORMATION ABOUT OUR EXECUTIVE OFFICERS | 136 | Part I |
| DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 137 | Part III, Item 10 |
| EXECUTIVE COMPENSATION | 138 | Part III, Item 11 |
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 138 | Part III, Item 12 |
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 138 | Part III, Item 13 |
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| PRINCIPAL ACCOUNTANT FEES AND SERVICES | 138 | Part III, Item 14 |
|---|---|---|
| MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 140 | Part II, Item 5 |
| Edison International | 140 | |
| Southern California Edison Company | 140 | |
| Purchases of Equity Securities by Edison International and Affiliated Purchasers | 140 | |
| Comparison of Five-Year Cumulative Total Return | 141 | |
| OTHER INFORMATION | 141 | Part II, Item 9B<br><br>Part II, Item 6 |
| Insider Trading Arrangements | 141 | |
| FORM 10-K SUMMARY | 141 | Part IV, Item 16 |
| DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 141 | Part II, Item 9C |
| EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 142 | Part IV, Item 15 |
| EXHIBIT INDEX | 143 | |
| SCHEDULES SUPPLEMENTING FINANCIAL STATEMENTS | 149 | |
| SIGNATURES | 154 |
This combined Form 10-K is separately filed by Edison International and SCE. Information contained in this document relating to SCE is filed by Edison International and separately by SCE. SCE makes no representation as to information relating to Edison International or its subsidiaries, except as it may relate to SCE and its subsidiaries.
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GLOSSARY
The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
| 2017/2018 Wildfire/Mudslide Events | the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire, collectively |
|---|---|
| AB 1054 | California Assembly Bill 1054, executed by the governor of California on July 12, 2019 |
| AB 1054 Excluded Capital Expenditures | $1.6 billion in wildfire risk mitigation capital expenditures that SCE has excluded from the equity portion of SCE's rate base as required under AB 1054 |
| AB 1054 Liability Cap | a cap on the aggregate requirement to reimburse the Wildfire Insurance Fund over a trailing three calendar year period which applies if certain conditions are met and is equal to 20% of the equity portion of the utility's transmission and distribution rate base, excluding general plant and intangibles, in the year of the applicable prudency determination |
| ARO(s) | asset retirement obligation(s) |
| CAISO | California Independent System Operator |
| Cal Advocates | the California Public Advocates Office |
| CAL FIRE | the California Department of Forestry and Fire Protection |
| CAL OES | the California Governor's Office of Emergency Services |
| Capistrano Wind | a group of wind projects referred to as Capistrano Wind |
| Capital Structure Compliance Period | January 1, 2023 to December 31, 2025, the current compliance period for SCE's CPUC authorized capital structure |
| CCAs | community choice aggregators which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses |
| CPUC | California Public Utilities Commission |
| CSRP | Customer Service Re-platform, a customer service system implemented in April 2021 |
| DART | a Days Away Restricted or Transferred incident, which is a work-related Occupational Safety and Health Administration recordable injury or illness that results in days away from work, restricted duty or transfer of duties |
| DERs | distributed energy resources |
| DGC | the decommissioning general contractor engaged by SCE to undertake a significant scope of decommissioning activities at San Onofre |
| Eaton Fire | a wind-driven fire that originated in Los Angeles County in January 2025 |
| ECS | SCE commercial telecommunications services operated under the name of Edison Carrier Solutions |
| Edison International Proxy Statement | Proxy Statement to be filed with the SEC in connection with Edison International's Annual Meeting of Shareholders to be held on April 24, 2025 |
| EEI Serious Injury | a work-related injury that is categorized as a "serious injury" by Edison Electric Institute |
| EEI SIF | a work-related fatality or an EEI Serious Injury |
| EIS | Edison Insurance Services, Inc., a wholly-owned subsidiary of Edison International licensed to provide insurance to Edison International and its subsidiaries |
| Electric Service Provider | an entity other than an investor-owned utility or CCA that provides electric power and ancillary services to retail customers |
| ERRA | Energy Resource Recovery Account |
| Fast curve settings | protective settings, used to mitigate the risk of wildfires in high fire risk areas, that enable SCE to more quickly shut off power when an electrical fault occurs than under traditional settings |
| FERC | Federal Energy Regulatory Commission |
| Fitch | Fitch Ratings, Inc. |
| GAAP | generally accepted accounting principles in the United States |
| GHG | greenhouse gas |
| GRC | general rate case |
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| IRA | Inflation Reduction Act of 2022 |
|---|---|
| Koenigstein Fire | a wind-driven fire that originated near Koenigstein Road in the City of Santa Paula in Ventura County, California, on December 4, 2017 |
| LAFD | the Los Angeles Fire Department |
| MD&A | Management's Discussion and Analysis of Financial Condition and Results of Operations in this report |
| Montecito Mudslides | the debris flows and flooding in Montecito, Santa Barbara County, California, that occurred in January 2018 |
| Moody's | Moody's Investors Service, Inc. |
| MW | Megawatt(s) |
| NDCTP | Nuclear Decommissioning Cost Triennial Proceeding, a CPUC proceeding to review decommissioning costs |
| NEM | net energy metering |
| NERC | North American Electric Reliability Corporation |
| NRC | United States Nuclear Regulatory Commission |
| OEIS | Office of Energy Infrastructure Safety of the California Natural Resources Agency |
| Other Wildfire Events | Collectively, all the wildfires that originated in Southern California in and after 2017 but before 2025 where SCE's equipment has been or may be alleged to be associated with the fire's ignition, except for the Thomas Fire, the Koenigstein Fire and the Woolsey Fire |
| PABA | Portfolio Allocation Balancing Account |
| Palo Verde | nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest |
| PBOP(s) | postretirement benefits other than pension(s) |
| PG&E | Pacific Gas & Electric Company |
| PSPS | Public Safety Power Shutoff(s) |
| ROE | return on common equity |
| RPS | California's Renewables Portfolio Standard |
| S&P | Standard & Poor's Financial Services LLC |
| Safety Tier 1 Contractors | individuals assigned to contracted work activities that may be high risk and, without implementation of appropriate safety measures, may be potentially hazardous or life threatening |
| San Onofre | retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest |
| SCE | Southern California Edison Company, a wholly-owned subsidiary of Edison International |
| SDG&E | San Diego Gas & Electric Company |
| SEC | U.S. Securities and Exchange Commission |
| SED | Safety and Enforcement Division of the CPUC |
| SED Agreement | an agreement dated October 21, 2021 between SCE and the SED regarding the 2017/2018 Wildfire/Mudslide Events and three other 2017 wildfires |
| SoCalGas | Southern California Gas Company |
| Thomas Fire | a wind-driven fire that originated in the Anlauf Canyon area of Ventura County, California, on December 4, 2017 |
| TKM | collectively, the Thomas Fire, the Koenigstein Fire and the Montecito Mudslides |
| TKM Settlement Agreement | a settlement agreement entered into between SCE and the California Public Advocates Office in August 2024 in the CPUC-jurisdictional rate recovery proceeding related to TKM |
| Track 4 | Track 4 of the 2021 GRC, which addressed SCE's revenue requirement for 2024 |
| Trio | Edison Energy, LLC, an indirect wholly-owned non-utility subsidiary of Edison International doing business as "Trio" |
| Turnover Rate | the number of employees (other than interns) who leave Edison International Parent or SCE for voluntary or involuntary reasons, divided by the average number of employees during the relevant period |
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| WCCP | Wildfire Covered Conductor Program |
|---|---|
| WMP | a wildfire mitigation plan required to be filed under AB 1054 to describe a utility's plans to construct, operate, and maintain electrical lines and equipment that will help minimize the risk of catastrophic wildfires caused by such electrical lines and equipment |
| Wildfire Insurance Fund | the insurance fund established under AB 1054 |
| Woolsey Fire | a wind-driven fire that originated in Ventura County in November 2018 |
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's and SCE's current expectations and projections about future events based on Edison International's and SCE's knowledge of present facts and circumstances and assumptions about future events and include any statements that do not directly relate to a historical or current fact. Other information distributed by Edison International and SCE that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," "targets," and variations of such words and similar expressions, or discussions of strategy or plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact Edison International and SCE, include, but are not limited to the:
•ability of SCE to recover its costs through regulated rates, timely or at all, including uninsured wildfire-related and debris flow-related costs (including amounts paid for self-insured retention and co-insurance), and costs incurred to mitigate the risk of utility equipment causing future wildfires;
•the cybersecurity of Edison International's and SCE's critical information technology systems for grid control and business, employee and customer data, and the physical security of Edison International's and SCE's critical assets and personnel;
•risks associated with the operation and maintenance of electrical facilities, including worker, contractor, and public safety issues, the risk of utility assets causing or contributing to wildfires, failure, availability, efficiency, and output of equipment and facilities, and availability and cost of spare parts;
•impact of affordability of customer rates on SCE's ability to execute its strategy, including the impact of affordability on SCE's ability to obtain regulatory approval of, or cost recovery for, operations and maintenance expenses, proposed capital investment projects, and increased costs due to supply chain constraints, tariffs, inflation and rising interest rates;
•ability of SCE to update its grid infrastructure to maintain system integrity and reliability, and meet electrification needs;
•ability of SCE to implement its operational and strategic plans, including its WMP and capital investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, contractor performance, changes in the CAISO's transmission plans, and governmental approvals;
•risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to mitigate wildfire risk, including PSPS and fast curve settings, when conditions warrant or would otherwise limit SCE's operational practices relative to wildfire risk mitigation;
•ability of SCE to obtain safety certifications from OEIS;
•risk that AB 1054 does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where utility facilities are alleged to be a substantial cause, including the longevity of the Wildfire Insurance Fund and the CPUC's interpretation of and actions under AB 1054, including its interpretation of the prudency standard clarified by AB 1054;
•ability of Edison International and SCE to effectively attract, manage, develop and retain a skilled workforce, including its contract workers;
•decisions and other actions by the CPUC, the FERC, the NRC and other governmental authorities, including decisions and actions related to nationwide or statewide crisis, approval of regulatory proceeding settlements, determinations of authorized rates of return or return on equity, the recoverability of wildfire-related and debris flow-related costs, issuance of SCE's wildfire safety certification, wildfire mitigation efforts, approval and implementation of electrification programs, and delays in executive, regulatory and legislative actions;
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•governmental, statutory, regulatory, or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market adopted by the NERC, CAISO, Western Electricity Coordinating Council, and similar regulatory bodies in adjoining regions, and changes in the United States' and California's environmental priorities that lessen the importance placed on GHG reduction and other climate related priorities;
•potential for penalties or disallowances for non-compliance with applicable laws and regulations, including fines, penalties and disallowances related to wildfires where SCE's equipment is alleged to be associated with ignition;
•extreme weather-related incidents (including events caused, or exacerbated, by climate change), such as wildfires, debris flows, flooding, droughts, high wind events and extreme heat events and other natural disasters (such as earthquakes), which could cause, among other things, worker and public safety issues, property damage, outages and other operational issues (such as issues due to damaged infrastructure), PSPS activations and unanticipated costs;
•risks associated with the decommissioning of San Onofre, including those related to worker and public safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive material, delays, contractual disputes, and cost overruns;
•risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure for other electricity providers such as CCAs and Electric Service Providers;
•actions by credit rating agencies to downgrade Edison International or SCE's credit ratings or to place those ratings on negative watch or negative outlook;
•changes in tax laws and regulations, at both the state and federal levels, or changes in the application of those laws, that could affect recorded deferred tax assets and liabilities, effective tax rates and cash flows;
•changes in rates of inflation (including whether inflation-related adjustments to SCE's authorized revenues allowed by the public utility regulators are commensurate with inflation rates), and changes in interest rates and potential future adjustments to SCE's ROE based on changes in Moody's utility bond rate index;
•availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations; and
•cost of fuel for generating facilities and related transportation, which could be impacted by, among other things, disruption of natural gas storage facilities, to the extent not recovered, timely or at all, through regulated rate cost escalation provisions or balancing accounts.
Additional information about risks and uncertainties, including more detail about the factors described in this report, is contained throughout this report. Readers are urged to read this entire report, including information incorporated by reference, and carefully consider the risks, uncertainties, and other factors that affect Edison International's and SCE's businesses. Forward-looking statements speak only as of the date they are made and neither Edison International nor SCE are obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by Edison International and SCE with the SEC. Edison International and SCE post or provide direct links to (i) certain SCE and other parties' regulatory filings and documents with the CPUC and the FERC and certain agency rulings and notices in open proceedings in a section titled "SCE Regulatory Highlights," (ii) certain documents and information related to Southern California wildfires which may be of interest to investors in a section titled "Southern California Wildfires," and (iii) presentations, documents and information that may be of interest to investors in a section titled "Presentations and Updates" at www.edisoninvestor.com in order to publicly disseminate such information. The reports, presentations, documents and information contained on, or connected to, the Edison International investor website are not deemed part of, and are not incorporated by reference into, this report.
Except when otherwise stated, references to each of Edison International or SCE mean each such company with its subsidiaries on a consolidated basis. References to "Edison International Parent and Other" mean Edison International Parent and its subsidiaries other than SCE and its subsidiaries and "Edison International Parent" mean Edison International on a stand-alone basis, not consolidated with its subsidiaries. Unless otherwise described, all the information contained in this report relates to both filers.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion related to the changes in financial condition for 2023 compared to 2022 is incorporated by reference to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC in February 2024.
MANAGEMENT OVERVIEW
Highlights of Operating Results
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.
Edison International's earnings are prepared in accordance with GAAP. Management uses core earnings (loss) internally for financial planning and for analysis of performance. Core earnings (loss) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the company's performance from period to period. Core earnings (loss) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (loss) are defined as earnings attributable to Edison International shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax, regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing.
Beginning July 1, 2023, SCE implemented a customer-funded wildfire self-insurance program. With the commencement of this program, Edison International and SCE no longer consider claims-related losses for wildfires to be representative of ongoing earnings and treat such costs as non-core items.
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| (in millions) | 2024 | 2023 | 2024 vs. 2023<br><br>Change | 2022 | ||||
|---|---|---|---|---|---|---|---|---|
| Net income (loss) attributable to Edison International | ||||||||
| SCE | $ | 1,619 | $ | 1,474 | $ | 145 | $ | 847 |
| Edison International Parent and Other | (335) | (277) | (58) | (235) | ||||
| Edison International | 1,284 | 1,197 | 87 | 612 | ||||
| Less: Non-core items | ||||||||
| SCE | ||||||||
| 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries | (493) | (634) | 141 | (1,248) | ||||
| Other Wildfire Events claims and expenses, net of recoveries1 | (162) | (34) | (128) | — | ||||
| Wildfire Insurance Fund expense | (146) | (213) | 67 | (214) | ||||
| Severance costs, net of recovery | (50) | — | (50) | — | ||||
| 2021 NDCTP disallowance | — | (30) | 30 | — | ||||
| Customer cancellations of certain ECS data services | — | (17) | 17 | — | ||||
| Employment litigation matter, net of recoveries | — | 10 | (10) | (23) | ||||
| Upstream lighting program decision | — | — | — | (81) | ||||
| Impairments | — | — | — | (64) | ||||
| Organizational realignment charge | — | — | — | (14) | ||||
| Sale of San Onofre nuclear fuel | — | — | — | 10 | ||||
| Income tax benefit2 | 238 | 257 | (19) | 452 | ||||
| SCE non-core items | (613) | (661) | 48 | (1,182) | ||||
| Edison International Parent and Other | ||||||||
| Customer revenues for EIS insurance contract, net of (claims) | (4) | 42 | (46) | 36 | ||||
| Income tax expense (benefit)2 | 1 | (9) | 10 | (7) | ||||
| Edison International Parent and Other non-core items | (3) | 33 | (36) | 29 | ||||
| Total non-core items | (616) | (628) | 12 | (1,153) | ||||
| Core earnings (loss) | ||||||||
| SCE | 2,232 | 2,135 | 97 | 2,029 | ||||
| Edison International Parent and Other | (332) | (310) | (22) | (264) | ||||
| Edison International | $ | 1,900 | $ | 1,825 | $ | 75 | $ | 1,765 |
1Charges of $4 million and $6 million related to claims from wildfires ignited prior to July 1, 2023 were included in core earnings in 2023 and 2022, respectively. Core earnings in periods before the third quarter of 2023 have not been recast to exclude these charges.
2SCE and Edison International Parent and Other non-core items are tax-effected at an estimated statutory rate of approximately 28%; customer revenues (claims) for EIS insurance contract are tax-effected at the federal statutory rate of 21%.
Edison International's 2024 earnings increased $87 million, driven by an increase in SCE's earnings of $145 million, offset by an increase in Edison International Parent and Other loss of $58 million. SCE's higher net income consisted of $97 million of higher core earnings and $48 million of lower non-core loss. Edison International Parent and Other's higher loss consisted of $22 million of higher core loss and $36 million of lower non-core earnings.
The increase in SCE's core earnings was primarily due to higher revenue authorized in Track 4 and an increase in the authorized rate of return resulting from the cost of capital adjustment mechanism, partially offset by higher interest expense.
The increase in Edison International Parent and Other's core loss was primarily due to higher interest expense.
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Consolidated non-core items for 2024 and 2023 for Edison International included:
•Charges of $493 million ($355 million after-tax) recorded in 2024 and $634 million ($457 million after-tax) recorded in 2023 for 2017/2018 Wildfire/Mudslide Events claims and related legal expenses, net of expected FERC recoveries. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" for further information.
•Charges of $162 million ($117 million after-tax) recorded in 2024 and $34 million ($25 million after-tax) recorded in 2023 for wildfire claims and related legal expenses, net of expected insurance and regulatory recoveries, related to the Other Wildfire Events. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" for further information.
•Charges of $146 million ($105 million after-tax) recorded in 2024 and $213 million ($153 million after-tax) recorded in 2023 from the amortization of SCE's contributions to the Wildfire Insurance Fund. See "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" for further information.
•Severance costs of $50 million ($36 million after-tax), net of expected FERC recovery, recorded in 2024 due to current and probable reductions in workforce. See "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" for further information.
•A charge of $30 million ($21 million after-tax) recorded in 2023 for a disallowance related to the 2021 NDCTP. See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" for more information.
•A charge of $17 million ($12 million after-tax) recorded in 2023 related to customer cancellations of certain ECS data services.
•Insurance recovery of $10 million ($7 million after-tax) recorded in 2023, related to settlement of an employment litigation matter. SCE and Edison International settled the matter following an atypical jury award.
•Expected wildfire claims of $4 million ($3 million after-tax) insured by EIS recorded in 2024 and net earnings of $42 million ($33 million after-tax) recorded in 2023, related to customer revenues for an EIS insurance contract offset by expected wildfire claims insured by EIS. See "Notes to Consolidated Financial Statements— Note 12. Commitments and Contingencies"
See "Results of Operations" for discussion of SCE and Edison International Parent and Other results of operations.
Electricity Industry Trends
The electric power industry is undergoing urgent and fundamental changes to how energy infrastructure is planned and built, driven by: state government actions to reduce GHG emissions; new sources of demand, such as electric vehicles, data centers, and building electrification; and technological innovations that support clean energy adoption, such as distributed generation and energy storage. These factors, coupled with the increasing impacts of climate change, are altering the way in which electricity is generated and delivered. The impacts of climate change are apparent and accelerating. In 2024, the Earth experienced its hottest year on record. This spike in temperature is making extreme weather events commonplace. In California alone, climate-related disasters have cost the state tens of billions of dollars since 2018, with the 2025 wildfires being particularly devastating. Climate change is expected to have far-reaching effects on society, necessitating industry-wide solutions to enhance grid resilience and support a clean, reliable and affordable grid.
California is committed to reducing its GHG emissions, improving local air quality and supporting continued economic growth. The state codified into law goals to reduce GHG emissions by 40% from 1990 levels by 2030 and 85% from the same baseline by 2045, as well as to be carbon neutral by 2045. State and local air quality plans also call for substantial improvements including reducing smog-causing nitrogen oxides 90% below 2010 levels by 2032 in the most polluted areas of the state.
While these policy goals cannot be achieved by the electric sector alone, the electric grid is a critical enabler of the adoption of energy technologies that support California's GHG reduction objectives. California has set RPS targets which require California retail sellers of electricity to provide 60% of power from renewable resources by 2030. California also requires sellers of electricity to deliver 100% of retail sales from carbon-free sources by 2045, including interim targets of 90% by 2035 and 95% by 2040. In 2024, approximately 46% of SCE's customer deliveries came from carbon-free resources. SCE continues to make progress towards meeting its long-term RPS and carbon-free power goals and interim targets. In addition, Edison International is committed to achieving net-zero GHG emissions by 2045, in alignment with economy-wide climate actions planned by California. This commitment covers the power SCE delivers to customers and Edison International's enterprise-wide operations. To further support these goals, Edison International and SCE are investing in building a more resilient grid to reduce climate- and weather-related vulnerabilities. Since 2018, SCE has been
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adapting to climate change through system hardening to reduce wildfire risk. In its 2025 GRC, SCE proposed climate adaptation investments to address wildfire and physical risks that could occur by 2030.
Edison International believes that California's 2045 goals can be achieved most economically through emissions reductions enabled by clean electricity to serve 100% of retail sales, electrifying approximately 90% of light-duty vehicles, 90% of medium-duty vehicles, 54% of heavy-duty vehicles, 80% of buses and 95% of buildings. Additionally, reducing emissions to near zero in the electric sector hinges on developing clean firm resources to replace natural gas. Clean firm resources, such as next-generation geothermal, small modular reactors, natural gas with carbon capture and storage, and clean hydrogen, produce constant power through any weather conditions or season with little or no greenhouse gas emissions. By 2045, electricity demand is projected to increase by at least 80% as compared to 2022 per Edison International's analysis. In SCE’s service area, the increase in electricity demand is materializing sooner than expected. SCE’s most recent 10-year load growth forecast has increased by 35% compared to its 2022 distribution system plan. The key drivers of this increase are commercial developments, transportation electrification, and new residential housing. California has demonstrated strong long-term support of transportation electrification as shown by the approval of SCE's Charge Ready programs and 2022 legislation banning sales of new gas vehicles by 2035. However, Edison International believes that more state policy support, along with public and private investment, is needed to enable California to reach its 2030 and 2045 GHG reduction targets. Additional policy and regulatory support is also needed to de-risk the development of clean firm resources, adjust planning processes to enable proactive grid build-out, and streamline permitting processes. The current federal administration has declared a national emergency on energy, stressing the need for a reliable, diversified, and affordable supply of energy. The integrity and expansion of energy infrastructure is an immediate and pressing priority.
Edison International's vision is to lead the transformation of the electric power industry and the company is focused on opportunities in delivering clean energy, advancing electrification, building a modernized and more reliable grid, and enabling customers' technology choices. SCE's ongoing focus to drive operational and service excellence is intended to allow it to achieve these objectives safely while controlling costs and customer rates. SCE expects its bundled system average rate will rise at or below a 2.6% compound annual growth rate from 2024 through 2028, which is near the projected rate of local inflation. This projected rate growth incorporates the requested increases in SCE’s 2025 GRC, and also assumes a full recovery of costs associated with the 2017/2018 Wildfire/Mudslide Events (See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" for further information, including TKM Settlement). Partially offsetting these increases are historical costs rolling out of rates and rising electricity consumption. SCE projects that, even as electricity bills increase over time, total energy costs for the average SCE household will be reduced by approximately 40% by 2045 due to the efficiency of electrified technologies among other drivers.
SCE’s investments in the grid, utility owned storage capacity, and contracts for substantial new clean energy resources are key enablers of reliable economy-wide electrification. See "—Capital Program," "Liquidity and Capital Resources—Capital Investment Plan," and "Business—SCE—Purchased Power and Fuel Supply—CAISO Wholesale Energy Market" for further details. SCE also continues to implement its transportation electrification programs. As of December 31, 2024, SCE had completed construction at 386 sites to support 6,520 charge ports under its suite of light-duty Charge Ready programs, and 99 sites to support the electrification of 2,251 medium and heavy-duty vehicles through its Charge Ready Transport program. Subject to regulatory approval, SCE plans to invest approximately $13 billion in infrastructure replacement between 2023 and 2028 to ensure the grid is reliable, resilient, and ready for widespread electrification. This represents approximately 30% of the capital plan for that same time period, as discussed in "—Capital Program."
Changes in the electric power industry are impacting customers and jurisdictions outside California as well. Many other states and countries are also pursuing climate change and GHG reduction objectives, and large commercial and industrial customers are continuing to pursue cost reduction and sustainability goals. Trio is a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial and institutional customers who may be impacted by these changes.
To better engage in this broader transformation and provide a view of developments outside of SCE, Edison International has also made several investments in emerging companies in areas related to the technology and business model changes that are driving industry transformation and may make additional investments in the future. These investments are not financially material to Edison International.
2025 General Rate Case
SCE filed its 2025 GRC application with the CPUC in May 2023, for the four-year period of 2025 – 2028. In its application, SCE requested that the CPUC authorize a test year 2025 revenue requirement of approximately $10.3 billion. This represents a $1.9 billion, or 23%, increase over the approximately $8.4 billion 2024 revenue requirement adopted in Track 4, prior to adjustments for updated operations and maintenance escalation rates, the CPUC's decisions to adopt SCE's 2023 - 2025 cost of capital, and the expanded use of customer-funded self-insurance for wildfire-related claims.
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In February 2024, intervenors to the 2025 GRC proceeding, including Cal Advocates and The Utility Reform Network ("TURN"), submitted testimony in response to SCE's application. Cal Advocates and TURN recommended reductions to SCE's requests for load growth investments, infrastructure replacement, targeted undergrounding of conductors, and other areas of SCE's application.
Cal Advocates in its testimony proposed a test year 2025 revenue requirement of approximately $9.3 billion, representing an increase of approximately 11% over the 2024 revenue requirement adopted in Track 4, before the adjustments described above. While TURN did not calculate a test year 2025 revenue requirement in connection with its proposals in its testimony, SCE estimates that TURN's proposals would result in a test year 2025 revenue requirement of approximately 12% over the 2024 revenue requirement adopted in Track 4, before the adjustments described above.
In June 2024, following amendments and other revisions to rebuttal testimony, SCE updated its 2025 revenue requirement request to $10.5 billion, and proposed post-test year revenue requirement increases of approximately $670 million, $750 million and $730 million in 2026, 2027, and 2028, respectively. The updated 2025 revenue requirement included a $220 million increase associated with the cost of capital adjustment authorized by the CPUC in a separate proceeding, which was subsequently modified by a CPUC decision in October 2024, as discussed in "—Cost of Capital."
In July 2024, the CPUC issued a decision approving SCE's request in the 2025 GRC to extend the customer-funded wildfire self-insurance through the 2025 GRC period.
In October 2024, the CPUC approved the establishment of a memorandum account to track changes in the revenue requirement between January 1, 2025, and the implementation date of the final decision. 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. SCE expects to recognize revenue based on the 2024 authorized revenue requirement, adjusted to reflect the 2025 CPUC-authorized ROE as discussed in "—Cost of Capital," until a GRC decision is issued.
Cost of Capital
The cost of capital adjustment mechanism set by the CPUC provides for an adjustment to SCE's authorized cost of capital that, when triggered, will impact SCE's results of operations and cash flows. In 2023, the cost of capital adjustment mechanism was triggered and resulted in an increase to SCE's CPUC-authorized ROE from 10.05% to 10.75% effective January 1, 2024. The resulting increase to SCE's 2024 GRC-related revenue requirement was $201 million. The cost of capital adjustment mechanism was not triggered in 2024. In October 2024, the CPUC issued a decision modifying the cost of capital adjustment mechanism that changed the mechanism's adjustment ratio from 50% to 20%. This modification was also applied to the increase that was most recently triggered in 2023, effective on January 1, 2025. As a result, SCE's 2025 CPUC-authorized ROE was adjusted to 10.33%. The decision reduces SCE's updated 2025 GRC-related revenue requirement by approximately $117 million. For further information, see "—2025 General Rate Case." For additional information on cost of capital and the ratemaking process, see "Business—SCE—Overview of Ratemaking Process—CPUC."
SCE expects to file its regularly scheduled cost of capital application in March 2025 for rates effective for 2026 – 2028.
Capital Program
Capital Expenditures
Total capital expenditures (including accruals) were $5.7 billion in 2024 and $5.4 billion in 2023.
In connection with the 2025 GRC, SCE forecasts capital expenditures of $26.6 billion to $31.5 billion for 2025 – 2028. In the absence of a 2025 GRC decision, SCE has developed, and is executing against, a capital expenditure plan that is expected to allow SCE to meet what is ultimately authorized in the 2025 GRC decision while minimizing the associated risk of unauthorized spending.
The table below reflects forecast capital expenditures for 2025 – 2028 based on planned CPUC jurisdictional spending and current management expectations of FERC-jurisdictional spending. CPUC jurisdictional spending includes amounts requested in the 2025 GRC, and other approved non-GRC CPUC capital spending. The forecast CPUC jurisdictional capital spending will be dependent upon amounts approved in the 2025 GRC. Forecasted expenditures for FERC capital projects are subject to change due to factors such as timeliness of permitting, licensing, regulatory approvals, contractor bids, supply chain issues and other operational considerations.
Based on management's judgment of potential capital spending variability informed by historical precedent of previously authorized amounts, potential permitting delays, and other operational considerations, a range case was prepared reflecting reductions to GRC capital expenditures, CPUC non-GRC capital expenditures, and FERC capital expenditures.
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The following table sets forth a summary of capital expenditures for 2024 actual spend and a forecast for 2025 – 2028 on the basis described above:
| (in billions) | 2024 | 2025 | 2026 | 2027 | 2028 | Total<br><br>2025 – 2028 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Traditional capital expenditures | ||||||||||||
| Distribution | $ | 4.1 | $ | 5.2 | $ | 5.6 | $ | 5.5 | $ | 5.5 | $ | 21.8 |
| Transmission | 0.3 | 0.8 | 0.9 | 1.0 | 0.7 | 3.4 | ||||||
| Generation | 0.2 | 0.2 | 0.2 | 0.2 | 0.1 | 0.7 | ||||||
| Subtotal | 4.6 | 6.2 | 6.7 | 6.7 | 6.3 | 25.9 | ||||||
| Wildfire mitigation-related capital expenditures | 1.1 | 1.3 | 1.4 | 1.5 | 1.4 | 5.6 | ||||||
| Total capital expenditures | $ | 5.7 | $ | 7.5 | $ | 8.1 | $ | 8.2 | $ | 7.7 | $ | 31.5 |
| Total capital expenditures using range case | * | $ | 6.6 | $ | 6.8 | $ | 6.8 | $ | 6.4 | $ | 26.6 |
*Not applicable
In addition to the amounts presented in the table above, SCE expects to make additional CPUC capital investments, the recovery of which will be subject to future regulatory approval. This includes non-GRC programs including additional spending on an enterprise resource planning ("ERP") software implementation, an advanced metering infrastructure program and other potential investments in the grid supporting restoration, reliability, resilience and readiness. SCE expects the total expenditures of these programs to be at least $3 billion, some of which will be incurred beyond 2028. In the first half of 2025, SCE intends to file an application with the CPUC for approval of the ERP implementation and expects to include approximately $1 billion of capital expenditures through 2029.
In May 2023, the CAISO released its 2022 – 2023 Transmission Plan based on the CPUC's projections that more than 40 gigawatts of new resources need to be added in California by 2032. As the incumbent transmission owner for a portion of these transmission projects, SCE expects to construct projects requiring capital investment of at least $2.0 billion, most of which will be incurred beyond 2028. In May 2024, the CAISO released its 2023 – 2024 Transmission Plan which identified additional transmission projects expected to be constructed by SCE by 2030 with anticipated capital expenditures of approximately $80 million.
In addition to projects awarded to incumbent transmission owners, the CAISO also identified projects eligible for competitive solicitation. In May 2024, SCE, in association with Lotus Infrastructure Global Operations, LLC, was selected as the approved project sponsor for a 30-mile overhead transmission line project connecting San Diego and Orange Counties. The project is expected to be in-service in 2032 and SCE expects to place approximately $244 million into its transmission rate base in 2032.
Rate Base
SCE's year-end rate base was $45.7 billion at December 31, 2024, compared to $42.7 billion at December 31, 2023.
Reflected below is SCE's weighted average annual rate base for 2024 – 2028, encompassing GRC capital expenditures as incorporated in the requests in the 2025 GRC application, approved non-GRC projects or programs, and FERC capital expenditures.
| (in billions) | 2024 | 2025 | 2026 | 2027 | 2028 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Rate base for expected capital expenditures | $ | 42.8 | $ | 49.4 | $ | 53.0 | $ | 56.8 | $ | 60.6 |
| Rate base for expected capital expenditures using range case discussed above | * | $ | 48.1 | $ | 50.4 | $ | 52.8 | $ | 55.3 |
*Not applicable
Southern California Wildfires and Mudslides
Unprecedented weather conditions in California due to climate change have contributed to wildfires, including those where SCE's equipment has been alleged to be associated with the fire's ignition, that have caused loss of life and substantial damage in SCE's service area, including as recently as January 2025.
SCE continues to implement its WMP to reduce the risk of SCE equipment contributing to the ignition of wildfires. Further to the investments SCE is making as part of its WMP, SCE also uses its PSPS program to proactively de-energize power
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lines as a last resort to mitigate the risk of significant wildfires during extreme weather events. In addition, California has increased its investment in wildfire prevention and fire suppression capabilities. Yet, the potential for catastrophic wildfire activity in SCE's service area still exists.
Eaton Fire
In January 2025, several wind-driven wildfires impacted portions of SCE's service area, causing loss of life, substantial damage and service outages for SCE customers. One of the largest of these wildfires, the Eaton Fire, ignited in SCE's service area in Los Angeles County and spread under conditions of an extreme Santa Ana windstorm.
According to preliminary information provided by CAL FIRE, the Eaton Fire burned approximately 14,000 acres; destroyed approximately 6,018 single residence structures, 3,146 other minor structures, 96 multiple residences and 158 mixed commercial/residential and nonresidential commercial structures; damaged approximately 750 residential structures, 260 other minor structures, 28 multiple residences and 35 mixed commercial/residential and nonresidential commercial structures and resulted in 17 confirmed civilian fatalities and 9 confirmed fire personnel injuries/illnesses. In addition, fire authorities have estimated suppression costs at approximately $100 million.
The Los Angeles County Fire Department is leading the investigation into the origin and cause of the Eaton Fire, with the assistance of CAL FIRE, and has identified a preliminary area of origin of the fire. SCE has transmission facilities in the preliminary area of origin. As part of its investigation, the Los Angeles County Fire Department has requested that SCE preserve in-place its equipment in the preliminary area of origin. The SED is also conducting an investigation with respect to the Eaton Fire.
Multiple lawsuits related to the Eaton Fire have been initiated against SCE and Edison International. SCE’s ongoing internal review into the facts and circumstances of the Eaton Fire is complex and will require significant time. SCE's review includes ongoing inspections of its facilities and records and of third-party information, including analysis of concerning images and videos that suggest a possible link to SCE's transmission facilities in the preliminary area of origin. As of February 27, 2025, based on the information it has reviewed, SCE has not determined whether its equipment was associated with the ignition of the Eaton Fire.
SCE has $1.0 billion of customer-funded self-insurance coverage available for wildfires ignited between January 1, 2025 and December 31, 2025, subject to a shareholder contribution of up to $12.5 million. If SCE incurs losses in excess of $1.0 billion for claims for third-party damages related to the Eaton Fire, SCE will be reimbursed for such losses from the Wildfire Insurance Fund, subject to approval of the fund administrator and the Wildfire Insurance Fund’s claims-paying capacity, initially approximately $21 billion for all three participating utilities. PG&E is seeking reimbursement from the Wildfire Insurance Fund for losses related to the 2021 Dixie Fire and has disclosed that, as of December 31, 2024, it had recorded aggregate recoveries from the Wildfire Insurance Fund of $925 million, of which it had received $169 million. Until the fund administrator determines that the fund will be terminated, it is expected to reimburse eligible claims on a first come, first served basis, subject to the fund administrator's review.
A utility that has received reimbursement of eligible claims from the Wildfire Insurance Fund would file an application with the CPUC for review of its costs and expenses after it has resolved all or, if authorized by the CPUC, substantially all third-party damage claims related to a wildfire, or upon earlier request of the fund administrator. A utility that held a valid safety certification at the time of the relevant wildfire, like SCE did at the time of the Eaton Fire, will be presumed to have acted prudently unless a party in the proceeding creates "serious doubt" as to the reasonableness of the utility's conduct, in which case the utility will have the burden of dispelling that doubt and proving its conduct was prudent. The prudency standard does not necessitate perfect conduct and AB 1054 requires that the CPUC find that a utility is prudent if it determines that the utility's conduct related to the relevant ignition was consistent with actions of a reasonable utility. SCE believes that the CPUC's determination regarding the reasonableness of a utility's ignition-related conduct should be based on an evaluation of the reasonableness of the utility’s overall policies, systems, and practices. The CPUC has not applied the AB 1054 prudency framework to a wildfire cost-recovery proceeding.
SCE believes that it is a reasonable operator of its electric system. Neither SCE nor any fire agency has determined the cause of the Eaton Fire, including whether SCE’s transmission equipment was associated with its ignition. If it is determined that SCE’s transmission equipment was associated with the ignition of the Eaton Fire, based on the information it has reviewed as of February 27, 2025, SCE believes that it would be able to make a good faith showing that its conduct with respect to its transmission facilities in the preliminary area of origin was consistent with the actions of a reasonable utility.
The CPUC will determine the prudency of a utility’s ignition-related conduct in a formal proceeding. If the CPUC finds that a utility’s conduct was not prudent, it may nevertheless allow cost recovery in full or in part taking into account factors both within and beyond the utility's control that may have exacerbated the costs and expenses, including humidity, temperature and winds. A utility that held a safety certification at the time of the ignition will be required to reimburse the
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fund only for amounts disallowed by the CPUC up to the AB 1054 Liability Cap in the year that the disallowance occurs, unless the fund administrator finds that the utility's actions or inactions relative to the ignition of the fire constitute conscious or willful disregard of the rights and safety of others, in which case the utility will be required to reimburse the fund for all amounts withdrawn. The AB 1054 Liability Cap is a cap on the aggregate requirement to reimburse the Wildfire Insurance Fund over a trailing three calendar year period and is equal to 20% of the equity portion of the utility's transmission and distribution rate base, excluding general plant and intangibles, in the year of the applicable prudency determination. Utilities will be able to seek recovery of prudently incurred uninsured wildfire costs not covered by the Wildfire Insurance Fund, assessed under the prudency standard clarified under AB 1054, through electric rates.
2017/2018 Wildfire/Mudslide Events
Multiple lawsuits and investigations related to the 2017/2018 Wildfire/Mudslide Events have been initiated against SCE and Edison International. SCE has previously entered into settlements with a number of local public entities, subrogation and individual plaintiffs in the TKM and Woolsey Fire litigations and under the SED Agreement. As of February 20, 2025, in addition to the outstanding claims of approximately 290 of the approximately 15,000 initial individual plaintiffs, there were alleged and potential claims of certain public entity plaintiffs, including CAL OES, outstanding.
In 2024, SCE recorded estimated losses of $490 million for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. As a result, SCE also recorded expected recoveries through FERC electric rates of $27 million against the charge, and the resulting net charge to earnings was $463 million ($333 million after-tax).
Through December 31, 2024, SCE has recorded estimated losses of $9.9 billion, recoveries from insurance of $2.0 billion, all of which have been collected, and expected recoveries through FERC electric rates of $440 million, $376 million of which has been collected subject to refund, related to the 2017/2018 Wildfire/Mudslide Events claims. The cumulative after-tax net charges to earnings recorded through December 31, 2024, have been $5.4 billion.
As of December 31, 2024, SCE had paid $9.5 billion under executed settlements and had $86 million to be paid under executed settlements, including $57 million to be paid under the SED Agreement, related to the 2017/2018 Wildfire/Mudslide Events. After giving effect to all payment obligations under settlements entered into through December 31, 2024, Edison International's and SCE's best estimate of expected losses for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events was $340 million.
Estimated losses for the 2017/2018 Wildfire/Mudslide Events litigation are based on a number of assumptions and are subject to change as additional information becomes available. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged. Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events.
CPUC-Jurisdictional Rate Recovery
In August 2023, SCE filed an application to seek CPUC-jurisdictional rate recovery of prudently incurred losses related to the Thomas Fire, the Koenigstein Fire and the Montecito Mudslides. SCE also sought recovery of approximately $65 million in restoration costs in the proceeding. In January 2025, the CPUC approved the TKM Settlement Agreement and closed the proceeding. Parties to the proceeding may file an application for rehearing through March 10, 2025. Under the TKM Settlement Agreement, SCE is authorized to recover 60%, or approximately $1.6 billion, of approximately $2.7 billion of losses, consisting of approximately $1.3 billion of uninsured claims paid as of May 31, 2024, and $0.3 billion of associated costs, composed of legal and financing costs incurred as of May 31, 2024, and estimated ongoing financing costs. SCE is also authorized to recover 60% of claims paid and related costs incurred after May 31, 2024, other than for $125 million of uninsured claims and related financing costs which SCE waived its right to seek recovery of under the SED Agreement. SCE will record a regulatory asset for recoveries permitted under the TKM Settlement Agreement in the first quarter of 2025 and will request approval from the CPUC to finance the amounts authorized under the TKM Settlement Agreement through the issuance of securitized bonds.
Under the TKM Settlement Agreement, SCE is also authorized to recover approximately $55 million of approximately $65 million in restoration costs incurred. Further, SCE will use shareholder funds to offset $50 million of wildfire mitigation expenses recorded in memorandum accounts between 2024 and 2028. Under the TKM Settlement Agreement, SCE is allowed to permanently exclude from SCE's CPUC regulatory capital structure any after-tax charges to equity associated with the costs disallowed or funded by shareholders in the TKM Settlement Agreement and the debt issued to finance those costs (For further details about SCE's CPUC authorized capital structure, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends"). In October 2024, SCE filed an application to seek CPUC-jurisdictional rate recovery of $5.4 billion of prudently incurred losses related to the Woolsey Fire, consisting of approximately $4.4 billion of uninsured claims paid as of August 31, 2024, and $1.0 billion of associated costs, composed of legal and financing costs incurred as of August 31, 2024, and estimated ongoing financing
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costs. SCE is also seeking recovery of approximately $84 million in restoration costs in the proceeding. SCE will not record a regulatory asset for recoveries related to the Woolsey Fire in connection with the approval of the TKM Settlement Agreement. SCE will continue to evaluate the facts and circumstances of the Woolsey Fire cost recovery proceeding in determining if and when a regulatory asset may be recorded.
Other Wildfire Events
In addition to the 2017/2018 Wildfire/Mudslide Events, several other wildfires significantly impacted portions of SCE's service area prior to 2025, including the 2017 Creek Fire, the 2019 Saddle Ridge Fire, the 2020 Bobcat Fire, the 2020 Silverado Fire, the 2022 Coastal Fire and the 2022 Fairview Fire.
In 2024, SCE recorded estimated losses of $253 million for claims related to the Other Wildfire Events. As a result, SCE also recorded expected recoveries from insurance of $96 million and expected recoveries through electric rates of $9 million against the charge, and the resulting net charge to earnings was $148 million ($106 million after-tax).
Through December 31, 2024, SCE has recorded total estimated losses of $1.1 billion, expected recoveries from insurance and third parties of $718 million and expected recoveries through electric rates of $177 million related to the Other Wildfire Events claims. The cumulative after-tax net charges to earnings recorded through December 31, 2024, have been $175 million.
As of December 31, 2024, SCE had paid or is obligated to pay approximately $576 million under executed settlements related to the Other Wildfire Events and Edison International's and SCE's estimated losses for remaining alleged and potential claims (established at the low end of the estimated range of reasonably possible losses) related to the Other Wildfire Events was $563 million. As of the same date, SCE had assets for expected recoveries through insurance and third parties of $434 million and through electric rates of $149 million on its consolidated balance sheets related to the Other Wildfire Events.
Edison International and SCE may incur material losses in excess of the amounts accrued for certain of the Other Wildfire Events. Edison International and SCE expect that additional losses incurred in connection with any such fire, other than for the Creek Fire, will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such additional losses after expected recoveries from insurance and through electric rates will not be material. For information on the Creek Fire, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" in this report.
In light of the prudency standard the CPUC is required to apply under AB 1054 to utilities holding a safety certification at the time a wildfire ignited after July 12, 2019, SCE has concluded, at this time, that both uninsured CPUC-jurisdictional and uninsured FERC-jurisdictional wildfire-related costs related to the Other Wildfire Events that ignited after July 2019 for which it has deferred as regulatory assets are probable of recovery through electric rates. SCE will continue to evaluate the probability of recovery based on available evidence, including regulatory decisions, including any CPUC decisions illustrating the interpretation and/or application of the prudency standard under AB 1054, and, for each applicable fire, evidence that could cast serious doubt as to the reasonableness of SCE's conduct relative to that fire.
For further information on Southern California Wildfires and Mudslides, see "Risk Factors," "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill 1054," "Business—Southern California Wildfires" and "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" in this report.
RESULTS OF OPERATIONS
SCE
The table below shows SCE's consolidated statements of income for 2024, 2023 and 2022. In general, expenses SCE is authorized to pass through directly to customers (such as purchased power and fuel expenses, flow-through taxes, as well as costs incurred for various programs and activities, such as public purpose programs and vegetation management activities) and the corresponding amount of revenues collected to recover those pass-through costs do not impact net income.
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Years ended December 31, 2024, 2023 and 2022
The following table is a summary of SCE's results of operations for the periods indicated:
| Years ended December 31, | Favorable (Unfavorable) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | 2024 to 2023 | 2023 to 2022 | |||||
| Operating revenue | $ | 17,547 | $ | 16,275 | $ | 17,172 | $ | 1,272 | $ | (897) |
| Purchased power and fuel | 5,209 | 5,486 | 6,375 | 277 | 889 | |||||
| Operation and maintenance | 5,064 | 4,071 | 4,659 | (993) | 588 | |||||
| Wildfire-related claims, net of insurance recoveries | 647 | 665 | 1,305 | 18 | 640 | |||||
| Wildfire Insurance Fund expense | 146 | 213 | 214 | 67 | 1 | |||||
| Depreciation and amortization | 2,865 | 2,633 | 2,559 | (232) | (74) | |||||
| Property and other taxes | 620 | 566 | 497 | (54) | (69) | |||||
| Impairment, net of other operating income | — | 1 | 50 | 1 | 49 | |||||
| Total operating expenses | 14,551 | 13,635 | 15,659 | (916) | 2,024 | |||||
| Operating income | 2,996 | 2,640 | 1,513 | 356 | 1,127 | |||||
| Interest expense | (1,575) | (1,356) | (1,005) | (219) | (351) | |||||
| Other income, net | 493 | 497 | 337 | (4) | 160 | |||||
| Income before income taxes | 1,914 | 1,781 | 845 | 133 | 936 | |||||
| Income tax expense (benefit) | 120 | 184 | (109) | 64 | (293) | |||||
| Net income | 1,794 | 1,597 | 954 | 197 | 643 | |||||
| Less: Preference stock dividend requirements | 175 | 123 | 107 | (52) | (16) | |||||
| Net income available for common stock | $ | 1,619 | $ | 1,474 | $ | 847 | $ | 145 | $ | 627 |
2024 vs 2023
Operating Revenue
Higher operating revenue of $1,272 million is primarily due to:
•An increase in CPUC-related revenues of $617 million primarily due to higher revenue authorized in Track 4 and an increase in the authorized rate of return resulting from the cost of capital adjustment mechanism. See "Management Overview—Cost of Capital" for more information.
•An increase in operating revenues of $51 million primarily due to recognition of previously unrecognized return on rate base related to emergency restoration related capital expenditures.
•A net increase in revenues of $604 million related to higher expenses that are passed through to customers. The increase in pass-through revenues is primarily offset by increases in the following:
◦Operation and maintenance expense of $809 million
◦Depreciation and amortization expense of $111 million
◦Interest expense of $66 million
◦Property and other taxes of $28 million
These pass-through increases were offset by the decreases in the following:
◦Purchased power and fuel expense of $277 million
◦Income tax expense of $134 million
Purchased Power and Fuel
A decrease in purchased power and fuel costs of $277 million, primarily due to lower purchased power and gas prices, partially offset by an increase in purchased power volume and higher losses in hedging activities (offset in "Operating Revenue" above).
Operation and Maintenance
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An increase in operation and maintenance expense of $993 million is primarily due to:
•A net increase in expense of $809 million related to operating expenses that are passed through to customers and offset in "Operating Revenue" above. The increase is mainly driven by:
◦$462 million due to higher previously deferred wildfire mitigation, vegetation management, and emergency restoration costs authorized for recovery in 2024 than in 2023. See "Liquidity and Capital Resources—SCE—Regulatory Proceedings" for more information
◦$301 million higher vegetation management expenses
◦$196 million higher public purpose program expenses
◦$144 million higher uncollectible accounts expense
◦$116 million higher transmission access charges
These increases are partially offset by:
◦$209 million previously deferred wildfire insurance premium authorized for recovery in 2023
◦$195 million lower insurance costs due to SCE's expanded use of customer-funded self-insurance since July 2023
•$90 million higher expenses primarily related to plant maintenance
•$62 million higher wildfire mitigation expenses
•Severance costs of $53 million recorded in 2024 due to current and probable reductions in workforce
•$25 million higher expenses related to IT software maintenance and capital-related expense
•The 2023 recognition of a $30 million disallowance related to the 2021 NDCTP
•The 2023 recognition of $17 million related to customer cancellations of certain ECS data services
Wildfire-related Claims, Net of Insurance Recoveries
Charges for wildfire-related claims, net of insurance recoveries, were $647 million and $665 million in 2024 and 2023, respectively, related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Wildfire Insurance Fund Expense
A decrease in wildfire insurance fund amortization expense of $67 million due to the change in the estimated life of the Wildfire Insurance Fund in the beginning of 2024, which increased the amortization period of SCE's Wildfire Insurance Fund contributions assets. See "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" for further information.
Depreciation and Amortization
An increase in depreciation and amortization expense of $232 million due to an increase of $121 million primarily driven by higher plant balances and $111 million of pass-through costs (offset in "Operating Revenue" above). The pass-through costs are mainly related to emergency restoration and wildfire mitigation activities.
Property and Other Taxes
An increase in property and other taxes of $54 million due to an increase of $26 million primarily related to higher assessed property values and $28 million of pass-through costs (offset in "Operating Revenue" above).
Interest Expense
An increase in interest expense of $219 million due to an increase of $153 million primarily related to higher interest rates on long-term debt and balancing account overcollections, and additional long-term borrowings, and $66 million of pass-through costs mainly related to emergency restoration activities and AB 1054 Excluded Capital Expenditures financed through securitization (offset in "Operating Revenue" above).
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Preference Stock Dividend Requirements
An increase in preference stock dividend requirements of $52 million primarily due to additional preference stock outstanding.
Income Taxes
A decrease in income tax expense of $64 million, primarily due to $97 million higher flow-through tax benefits that are passed through to customers, partially offset by an increase in tax expense on pre-tax income. See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for a reconciliation of the federal statutory rate to the effective income tax rate.
2023 vs 2022
Operating Revenue
An increase in operating revenue of $897 million is primarily due to:
•A net decrease in revenues of $1,231 million related to lower expenses that are passed through to customers. The decrease in pass-through revenues are offset by decreases in the following:
◦Purchased power and fuel expense of $889 million
◦Operation and maintenance expense of $482 million
◦Wildfire-related claims, net of insurance recoveries of $37 million
These pass-through decreases are partially offset by increases in the following:
◦Income tax expense of $43 million
◦Interest expense of $39 million
◦Property and other taxes of $38 million
◦Other income, net, of $37 million
◦Depreciation and amortization expense of $17 million
•An increase in CPUC-related revenues of $320 million primarily due to the escalation mechanism set forth in the 2021 GRC decision.
Purchased Power and Fuel
A decrease in purchased power and fuel costs of $889 million, primarily lower prices and volumes for both purchased power and gas, partially offset by hedging activities (offset in "Operating Revenue" above).
Operation and Maintenance
A decrease in operation and maintenance expense of $588 million is primarily due to:
•A net decrease in expense of $482 million related to the operating expenses that are passed through to customers and offset in "Operating Revenue" above. The decrease is mainly driven by:
◦$463 million due to lower previously deferred wildfire mitigation and emergency restoration costs authorized for recovery in 2023 than in 2022
◦$218 million lower insurance costs due to SCE's expanded use of customer-funded self-insurance since July 2023
◦$79 million lower uncollectible accounts expense primarily due to the recognition of $109 million previously deferred uncollectible accounts expense in 2022
◦$56 million lower transmission access charges
The decreases are partially offset by:
◦$209 million previously deferred wildfire insurance premium authorized for recovery in 2023
◦$125 million higher public purpose program expenses
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•The 2022 charges of $95 million related to the CPUC's decision on SCE's Upstream Lighting Program, consisting of $76 million in disallowed costs and $19 million in fines
•$40 million lower uncollectible accounts expense due to expense recognized in 2022 not subject to cost recovery
•The 2023 recognition of a $30 million probable disallowance related to the 2021 NDCTP
Wildfire-related Claims, Net of Insurance Recoveries
Charges for wildfire-related claims, net of insurance recoveries, were $665 million and $1.3 billion in 2023 and 2022, respectively, related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events.
Depreciation and Amortization
An increase in depreciation and amortization expense of $74 million due to an increase of $57 million primarily driven by higher plant balances and $17 million of pass-through costs (offset in "Operating Revenue" above).
Property and Other Taxes
An increase in property and other taxes of $69 million due to an increase of $31 million primarily related to higher assessed property values and $38 million of pass-through costs (offset in "Operating Revenue" above).
Impairment, net of other operating income
Impairments were recorded in 2022, of which $17 million related to disallowed capital expenditure and $47 million related to a settlement agreement between SCE and TURN in the CSRP proceeding.
Interest Expense
An increase in interest expense of $351 million due to an increase of $312 million primarily related to higher interest rates on long-term debt and balancing account overcollections and additional long-term borrowings, and $39 million of pass-through costs primarily related to AB 1054 Excluded Capital Expenditures financed through securitization (offset in "Operating Revenue" above).
Other income, net
An increase in other income, net of $160 million primarily due to higher interest rates applied to balancing account undercollections and increased equity allowance for funds used during construction, partially offset by lower net periodic benefit income related to the non-service cost components for SCE's pension and PBOP.
Preference Stock Dividend Requirements
An increase in preference stock dividend requirements of $16 million primarily due to dividends paid on Series E preference stock at a higher rate.
Income Taxes
An increase in tax expense of $293 million in 2023 compared to a tax benefit recorded in 2022, primarily due to higher taxable income and $42 million lower flow-through tax benefits that are passed through to customers.
Edison International Parent and Other
Results of operations for Edison International Parent and Other include amounts from other subsidiaries that are not reportable segments, as well as intercompany eliminations.
Loss from Operations
The following table summarizes the results of Edison International Parent and Other:
| Years ended December 31, | Favorable (Unfavorable) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | 2024 to 2023 | 2023 to 2022 | |||||
| Edison International Parent and Other net loss | $ | (248) | $ | (190) | $ | (130) | $ | (58) | $ | (60) |
| Less: Preferred stock dividend requirements | 87 | 87 | 105 | — | 18 | |||||
| Edison International Parent and Other net loss attributable to common shareholders | $ | (335) | $ | (277) | $ | (235) | $ | (58) | $ | (42) |
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The net loss attributable to common shareholders from operations of Edison International Parent and Other increased $58 million in 2024 compared to 2023 primarily due to lack of earnings from an EIS insurance contract and higher interest expense.
The net loss attributable to common shareholders from operations of Edison International Parent and Other increased $42 million in 2023 compared to 2022 primarily due to higher interest expense, partially offset by gains on preferred stock repurchases of $16 million.
LIQUIDITY AND CAPITAL RESOURCES
SCE
SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its operating cash flow and access to the bank and capital markets. SCE's overall cash flows fluctuate based on, among other things, its ability to recover its costs in a timely manner from its customers through regulated rates, changes in commodity prices and volumes, collateral requirements, interest obligations, dividend payments to and equity contributions from Edison International, obligations to preference shareholders, and the outcome of tax, regulatory and legal matters.
In the next 12 months, SCE expects to fund its cash requirements through operating cash flows, and capital market and bank financings. SCE also has availability under its credit facility to fund cash requirements. SCE expects to issue additional debt for general corporate purposes, and to securitize the recovery of 2017/2018 Wildfire/Mudslide Events as permitted by the TKM Settlement Agreement subject to the filing and approval of a securitization financing order.
SCE issued securitized bonds in the amounts of $775 million and $533 million in 2023 and 2022, respectively, to finance the required AB 1054 Excluded Capital Expenditures and related financing costs. For more information, see "Notes to Consolidated Financial Statements––Note 5. Debt and Credit Agreements."
The following table summarizes SCE's current long-term issuer credit ratings and outlook from the major credit rating agencies, and SCE's credit rating outlook as of February 20, 2025:
| Moody's | Fitch | S&P | |
|---|---|---|---|
| Credit Rating | Baa1 | BBB | BBB |
| Outlook | Stable | Stable | Negative |
SCE's credit ratings may be affected if, among other things, regulators fail to successfully implement AB 1054 in a consistent and credit supportive manner, or the Wildfire Insurance Fund is materially depleted, or a persistent increase in the frequency of severe wildfires in California leads the credit rating agencies to believe the Wildfire Insurance Fund is at risk of a material depletion. Credit rating downgrades increase the cost and may impact the availability of short-term and long-term borrowings, including commercial paper, credit facilities, bond financings or other borrowings. In addition, some of SCE's power procurement contracts and environmental remediation obligations would require SCE to pay related liabilities or post additional collateral if SCE's credit rating were to fall below investment grade. For further details, see "—Margin and Collateral Deposits."
For restrictions on SCE's ability to pay dividends, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends."
Available Liquidity
At December 31, 2024, SCE had cash on hand of $78 million and approximately $2.1 billion available to borrow on its $3.4 billion revolving credit facility. The credit facility is available for borrowing needs until May 2028. The aggregate maximum principal amount under the SCE revolving credit facility may be increased up to $4.0 billion, provided that additional lender commitments are obtained. SCE also had standby letters of credit with total capacity of $625 million, and the unused amount was $507 million as of December 31, 2024. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
At December 31, 2024, SCE had $1.3 billion outstanding commercial paper, net of discount, at a weighted average interest rate of 4.95% supported by the revolving credit facility. In January 2025, SCE issued $850 million and $650 million of first and refunding mortgage bonds due in 2035 and 2055, respectively. The proceeds were used to repay commercial paper borrowings outstanding as of December 31, 2024 and for general corporate purposes.
SCE may finance balancing account undercollections and working capital requirements to support operations and capital expenditures with commercial paper, its credit facilities or other borrowings, subject to availability in the capital markets. As necessary, SCE will utilize its available liquidity, capital market financings, other borrowings or parent company equity
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contributions in order to meet its obligations as they become due, including costs related to wildfire events. For further information, see "Management Overview—Southern California Wildfires and Mudslides."
Debt Covenant
SCE's credit facilities and term loan require a debt to total capitalization ratio as defined in the applicable agreements of less than or equal to 0.65 to 1. At December 31, 2024, SCE's debt to total capitalization ratio was 0.58 to 1.
At December 31, 2024, SCE was in compliance with all financial covenants that affect access to capital.
Regulatory Proceedings
Wildfire Related Regulatory Proceedings
In response to the increase in wildfire activity and faster progression of and increase in damage from wildfires across SCE's service area and throughout California, SCE has incurred wildfire mitigation and wildfire and drought restoration related spending at levels significantly exceeding amounts authorized in SCE's GRCs. For regulatory proceedings related to the 2017/2018 Wildfire/Mudslide Events, see "Management Overview—Southern California Wildfires and Mudslides."
2021 GRC Wildfire Mitigation Memorandum Account Balances
In June 2022, SCE filed an application with the CPUC requesting reasonableness review of the incremental costs incurred in 2021 related to non-WCCP wildfire mitigation and vegetation management activities, requesting a total revenue requirement of approximately $327 million plus an ongoing capital-related revenue requirement. In March 2024, the CPUC issued a decision fully authorizing SCE's requested revenue requirement. The revenue requirement is being recovered in rates over 12 months starting June 1, 2024.
In October 2023, SCE requested authority to recover a revenue requirement of $384 million, including interest associated with 2022 operations and maintenance and capital expenditures above levels authorized in wildfire mitigation accounts and the vegetation management balancing account. In July 2024, the CPUC approved SCE's request for interim rate recovery of $210 million of this revenue requirement, subject to refund. The revenue requirement for interim rate recovery is being recovered in rates over 17 months starting October 1, 2024. A final decision for the total authorized revenue requirement is expected in the second quarter of 2025 according to the CPUC adopted schedule.
2020 Emergency Wildfire Restoration
SCE filed a catastrophic event memorandum account application in 2022, primarily related to restoration efforts related to multiple 2020 wildfires. In May 2024, the CPUC issued a decision approving the recovery of SCE's capital request of $312 million and operation and maintenance expenses of $200 million, resulting in a revenue requirement of $191 million plus its ongoing capital-related revenue requirement. The revenue requirement is being recovered in rates over a 12-month period starting October 1, 2024.
Multi-year Wildfire Mitigation and Catastrophic Events Filing ("WMCE Filing")
In April 2024, SCE filed its WMCE Filing, seeking to recover incremental operating and maintenance expenses of $320 million and incremental capital expenditures of $702 million, primarily associated with 2019 – 2023 WCCP capital expenditures recorded in the wildfire risk mitigation balancing account, 2023 operations and maintenance and capital expenditures incremental to amounts authorized in wildfire mitigation accounts and the vegetation management balancing account, storm-related costs associated with certain 2020 – 2022 events recorded in the catastrophic event memorandum account, and certain wildfire liability insurance premium expenses recorded in the wildfire expense memorandum account, which were denied without prejudice in a previous decision. In July 2024, the CPUC adopted a schedule with a proposed decision expected in the third quarter of 2025.
ERRA Trigger Application
SCE recovers its fuel and purchased power-related costs through various balancing accounts, primarily the ERRA and the PABA. SCE sets rates based on an annual forecast of the costs that it expects to incur during the subsequent year. The aggregate overcollection in the ERRA and the eligible portion of the PABA at April 30, 2024 resulted in SCE triggering an established mechanism, which required SCE to file an expedited application for the CPUC's approval to reduce bundled service generation rates (see "Business—SCE—Overview of Ratemaking Process" for further information about the trigger
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mechanism). The CPUC approved this application in August 2024, resulting in a $742 million reduction in the revenue requirement, returned through rates over a 12-month period starting October 1, 2024.
2025 FERC Formula Rate Annual 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 rates. The increase is primarily due to 2024 rates including a return of prior year overcollections.
Capital Investment Plan
Major Transmission Projects
A summary of SCE's most significant transmission and substation construction projects is presented below. The timing of the projects below is subject to timely receipt of permitting, licensing, and regulatory approvals.
| Project Name | Project<br>Lifecycle Phase | Direct<br><br>Expenditures<br><br>(in millions)1 | Inception to Date<br><br>(in millions)1 | Scheduled In-<br>Service Date |
|---|---|---|---|---|
| Riverside Transmission Reliability2 | Licensing | 726 | 35 | 2029 |
| Alberhill System3 | Licensing | 472 | 50 | 2029 |
| Eldorado-Lugo-Mohave Upgrade | Construction | 383 | 277 | 2025 |
1Direct expenditures include direct labor, land, and contract costs incurred for the respective projects and exclude overhead costs that are included in the capital expenditures forecast discussed in "Management Overview—Capital Program."
2Direct expenditures were adjusted for inflation with no change to the scope of the project.
3In June 2023, SCE filed an amended application for a certificate of public convenience and necessity ("CPCN") with technical design modifications and engineering refinements to the proposed project that decreases project costs and reduces GHG emissions. Accordingly, the direct expenditures of the project are estimated to be reduced from $486 million to $472 million. SCE is unable to predict the final project costs for the Alberhill System Project.
Riverside Transmission Reliability Project
The Riverside Transmission Reliability Project is a joint project between SCE and Riverside Public Utilities ("RPU"), the municipal utility department of the City of Riverside. While RPU will be responsible for constructing some of the project's facilities within Riverside, SCE's portion of the project consists of constructing upgrades to its system, including a new 230 kV substation; certain interconnection and telecommunication facilities and overhead transmission lines in the cities of Riverside, Jurupa Valley and Norco and in portions of unincorporated Riverside County. In May 2022, the Riverside City Council ("RCC") voted to investigate alternatives to the CPUC approved project. Consequently, SCE suspended all major activities on the project. In January 2023, the RCC voted to establish a working group to pursue funding for additional undergrounding. In October 2023, the City of Norco filed a petition for modification ("PFM") to modify the CPUC decision approving the project and reopen the record to reconsider full undergrounding. In November 2023, SCE filed a response opposing the PFM. In March 2024, the CPUC denied the PFM. In May 2024, the RCC voted to move forward with the original scope of the project and SCE restarted its work on the project. In July 2024, SCE initiated construction bid solicitations with awards expected in the first half of 2025.
Alberhill System Project
The Alberhill System Project consists of constructing a new 500 kV substation, two 500 kV transmission lines to connect the proposed substation to the existing Serrano-Valley 500 kV transmission line, telecommunication equipment, and subtransmission lines in western Riverside County. The project was designed to meet long-term forecasted electrical demand in the proposed Alberhill System Project area and to increase electrical system reliability and resiliency. In April 2018 and July 2018, the CPUC issued a proposed decision and an alternate proposed decision, both denying SCE's ability to construct the Alberhill System Project based on a perceived lack of need. SCE filed comments on both proposed decisions requesting that the CPUC grant the CPCN for the Alberhill System Project. In August 2018, the CPUC issued a decision that did not deny or approve the Alberhill System Project but directed SCE to submit supplemental information on the Alberhill System Project, including, but not limited to, a load forecast and cost benefit analysis of several alternatives to the proposed project. In January 2020, SCE submitted a supplemental analysis to the CPUC for the Alberhill System Project including several alternatives to the proposed project as well as an update to the original project cost. In June 2023, SCE filed an amended CPCN with technical design modifications and engineering refinements to the proposed project that decrease project costs and reduce GHG emissions. In June 2024, the CPUC issued an addendum to its 2017 Final
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Environmental Impact Report, concluding its California Environmental Quality Act review. The project is now seeking final CPUC approval to begin construction. SCE is expecting the final CPUC decision in the second half of 2025.
Approximately 48% of the Alberhill System Project costs spent to date would be subject to recovery through CPUC revenue and 52% through FERC revenue. In October 2017, SCE obtained approval from the FERC for abandoned plant treatment for the Alberhill System Project, which allows SCE to seek recovery of 100% of all prudently incurred costs after the approval date and 50% of prudently incurred costs prior to the approval date. As of December 31, 2024, SCE had incurred approximately $69 million of capital expenditures, which excludes land costs that may be recovered through sale to a third party and includes overhead costs, of which approximately $48 million may not be recoverable if the project is cancelled.
Eldorado-Lugo-Mohave Upgrade Project
The Eldorado-Lugo-Mohave Upgrade Project will increase capacity on existing transmission lines to allow additional renewable energy to flow from Nevada to southern California. The project would modify SCE's existing Eldorado, Lugo, and Mohave electrical substations to accommodate the increased power flows from Nevada to southern California; increase the power flow through the existing 500 kV transmission lines by constructing two new capacitors along the lines; raise transmission tower heights to meet ground clearance requirements; and install fiber optics on the transmission lines to provide communications between existing SCE substations. In August 2020, the CPUC approved the CPCN for the project.
Construction for the project began in November 2020. The total costs for the Eldorado-Lugo-Mohave Upgrade Project are expected to exceed amounts currently approved in the CPCN granted by the CPUC due to delays in regulatory approvals, contractor performance issues, supply chain constraints, COVID-19 impacts, and the availability of CAISO outage windows. In May 2023, SCE filed a PFM of the decision that approved the project to increase the maximum reasonable and prudent cost for the project, which increased the direct expenditures from $247 million to $319 million. SCE expects the project to be in service in 2025, subject to the completion of environmental agency review of the mitigation work. Additional work after the in-service date is required to mitigate the impact of the project on nearby natural gas transmission lines. SCE's current estimate of the additional work is $64 million. SCE anticipates filing a second PFM or amending the existing PFM to address the additional costs of the mitigation work once the scope and cost of this work is finalized.
Utility Owned Storage Projects
In October 2021, SCE contracted with Ameresco, Inc. ("Ameresco") for the construction of utility owned energy storage projects at three sites in SCE's service area with an aggregate capacity of 537.5 MW, consisting of a 225 MW project, a 200 MW project, and a 112.5 MW project, and an in-service date of August 1, 2022. The 200 MW and 112.5 MW projects went in-service during the third quarter of 2024, and Ameresco has advised SCE that it currently expects the 225 MW project to be in-service by the first quarter of 2025. SCE believes that there is risk of delay beyond Ameresco's projected in-service date.
In April 2022, SCE received a force majeure event notice from Ameresco in which Ameresco asserted that both manufacturing delays related to COVID-19 shut-downs in China and new shipping restrictions imposed by Chinese governmental authorities were then impacting the supply of batteries from China necessary for timely completion of the projects. Ameresco subsequently supplemented its force majeure notice noting additional supply chain issues related to COVID-19. Permitting delays and engineering issues and certain changes requested by SCE also impacted the projects in 2022. In January 2023, SCE received a force majeure event notice from Ameresco in which Ameresco asserted that severe winter storms in Southern California had impacted the timely completion of the projects.
In April 2023, Ameresco discovered damage to some of the equipment at the 225 MW project. Ameresco has sent SCE a notice of potential force majeure event and has concluded that the damage was caused by soil heave and that the soil heave was caused by extreme rainstorms at the project site in the winter of 2022 – 2023. Ameresco is performing corrective action in response to the damage discovered in 2023.
SCE is continuing to evaluate the force majeure event notices and is awaiting additional information from Ameresco on the underlying events. If there is a valid force majeure event under the contracts with Ameresco, subject to certain conditions, the project schedules and any related triggers of liquidated damages may be extended, and the contract prices may be increased to account for the impact of the force majeure event.
SCE currently expects these storage projects to result in $1.0 billion of capital expenditures of which approximately $800 million has been incurred, as of December 31, 2024. SCE also expects to receive in aggregate approximately $380 million of tax credits available under the IRA for all three projects, which will accrue to the benefit of its customers (see "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for further information). Because Ameresco did not achieve an in-service date of August 1, 2022, SCE is entitled to liquidated damages under the terms of the contracts subject to any relief Ameresco may be entitled to under the contracts, including any relief for any valid force majeure
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events. Once triggered, delay-related liquidated damages accrue daily for up to 60 days up to a maximum of $89 million in aggregate for all three projects.
Ameresco has obtained surety bonds to secure its obligations to complete the construction of the projects, and is also required to obtain surety bonds or letters of credit after completion of the projects to secure its performance obligations, including its warranty obligations. If Ameresco is unable to fulfill its obligations and the amounts available under any surety bonds or letters of credit are insufficient or the issuer of any such surety bonds or letters of credit disputes coverage or otherwise does not perform or pay for the performance of Ameresco’s obligations, SCE will incur additional costs beyond its contractual obligations.
In December 2021, the CPUC approved recovery of the capital expenditures and establishment of a balancing account for the associated revenue requirement, which have been reflected in rates beginning in the first quarter of 2022. Authorized revenue requirements have been and will continue to be included in the annual ERRA review proceeding and can only be disallowed upon a finding that SCE failed to prudently administer the contracts.
Decommissioning of San Onofre
The decommissioning of a nuclear plant requires the management of three related activities: radiological decommissioning, non-radiological decommissioning, and the management of spent nuclear fuel. SCE is the operating agent of San Onofre and has engaged the DGC to undertake a significant scope of decommissioning activities for Units 1, 2, and 3 at San Onofre. The decommissioning of San Onofre is expected to take many years. SCE funds decommissioning costs, including costs associated with storing spent nuclear fuel, with assets that are currently held in nuclear decommissioning trusts.
Under federal law, the U.S. Department of Energy ("DOE") is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE has not met its contractual obligation to accept spent nuclear fuel. Extended delays by the DOE have led to the construction of costly alternatives and associated siting and environmental issues. Two Independent Spent Fuel Storage Installations ("ISFSI") store nuclear fuel onsite at San Onofre. The first stores nuclear fuel from all three Units ("ISFSI 1") and the second stores nuclear fuel from Units 2 and 3 ("ISFSI 2").
SCE's Coastal Development Permits, the principal discretionary permits required for maintaining the ISFSIs onsite, currently extend through 2035.
Decommissioning of San Onofre Unit 1 began in 1999 and the transfer of spent nuclear fuel from Unit 1 to dry cask storage in ISFSI 1 was completed in 2005. Major decommissioning work for Unit 1 has been completed except for certain underground work.
Decommissioning of San Onofre Units 2 and 3 began in June 2013 and the transfer of spent nuclear fuel from San Onofre Units 2 and 3 to dry cask storage in the two ISFSIs was completed in August 2020. In August 2020, SCE commenced, and is currently conducting, major decommissioning activities in accordance with the terms of the Coastal Developmental Permit for decommissioning San Onofre Units 2 and 3.
SCE's share of the San Onofre Units 2 and 3 decommissioning costs recorded for the years ended December 31, 2024 and 2023 were $218 million (in 2024 dollars) and $226 million (in 2023 dollars), respectively. The CPUC conducts a reasonableness review of recorded decommissioning costs in NDCTPs, which are submitted every three years.
SCE filed the 2021 NDCTP with the CPUC in February 2022 to request reasonableness review of approximately $570 million (SCE share in 2022 dollars) of recorded San Onofre Units 2 and 3 decommissioning costs incurred during the period 2018 to 2020, and subsequently agreed to a $30 million disallowance under a settlement with the relevant intervenors. In the third quarter of 2024, the CPUC approved the 2021 NDCTP, as modified by the settlement agreement, and SCE made a contribution accordingly to the non-qualified nuclear decommissioning trust to effectuate the disallowance.
SCE filed its 2024 NDCTP in December 2024. In the 2024 NDCTP, SCE requests reasonableness review of approximately $538 million (SCE share in 2024 dollars) of recorded San Onofre Units 2 and 3 decommissioning costs incurred during the period 2021 to 2023. SCE also requests approval of an updated decommissioning cost estimate for decommissioning activities to be completed at San Onofre Units 2 and 3 of $3.0 billion, of which $2.3 billion is SCE's share (in 2024 dollars). The decommissioning cost estimate includes costs through the expected decommissioning completion date, currently estimated to be in 2056.
Decommissioning cost estimates are subject to a number of uncertainties including the cost and timing of nuclear waste disposal, the time it will take to obtain required permits, cost of removal of property, site remediation costs, as well as a number of other assumptions and estimates, including when the federal government will provide for either interim or permanent off-site storage of spent nuclear fuel enabling the removal and transport of spent fuel canisters from the San
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Onofre site, as to which there can be no assurance. Cost estimates are subject to change as decommissioning proceeds and such changes may be material.
SCE had nuclear decommissioning trust funds for San Onofre Units 2 and 3 of $2.1 billion at December 31, 2024 and $2.2 billion at December 31, 2023. Based upon the resolution of a number of uncertainties, including the uncertainties of decommissioning discussed above, the financial performance of the nuclear decommissioning trust fund investments, as well as the resolution of a number of other assumptions and estimates, additional contributions to the nuclear decommissioning trust's funds may be required. If additional contributions to the nuclear decommissioning trust funds become necessary, SCE will seek recovery of additional contributions to the decommissioning trust through electric rates and any such recovery will be subject to a reasonableness review by the CPUC. Cost increases resulting from contractual disputes, delays in performance by the contractor, elevated levels of inflation, or permitting delays, among other things, could cause SCE to materially overrun the decommissioning cost estimate and could materially impact the sufficiency of trust funds.
In December 2024, the CPUC approved disbursements from SCE's nuclear decommissioning trusts to cover forecasted 2025 decommissioning costs for San Onofre Units 2 and 3, of which SCE's share is approximately $245 million in 2025 dollars.
Margin and Collateral Deposits
Certain derivative instruments, power and energy procurement contracts, and other contractual arrangements contain collateral requirements. In addition, certain environmental remediation obligations require financial assurance that may be in the form of collateral postings. Future collateral requirements may differ from the requirements at December 31, 2024 due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, the impact of changes in wholesale power and natural gas prices on SCE's contractual obligations, and the impact of SCE's credit ratings falling below investment grade.
The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral that would have been required as of December 31, 2024, if SCE's credit rating had been downgraded to below investment grade as of that date. The table below also provides the potential collateral that could be required due to adverse changes in wholesale power and natural gas prices over the remaining lives of existing power and fuel derivative contracts.
In addition to amounts shown in the table, power and fuel contract counterparties may also institute new collateral requirements, applicable to future transactions to allow SCE to continue trading in power and fuel contracts at the time of a downgrade or upon significant increases in market prices. Furthermore, SCE may also be required to post up to $50 million in collateral in connection with its environmental remediation obligations, within 120 days of the end of the fiscal year in which a downgrade below investment grade occurs.
| (in millions) | ||
|---|---|---|
| Collateral posted as of December 31, 20241 | $ | 209 |
| Incremental collateral requirements for purchased power and fuel contracts resulting from a potential downgrade of SCE's credit rating to below investment grade2 | 73 | |
| Incremental collateral requirements for SCE's financial hedging activities resulting from adverse market price movement3 | 47 | |
| Posted and potential collateral requirements | $ | 329 |
1Net collateral provided to counterparties and other brokers consisted of $128 million in letters of credit and surety bonds and $81 million of cash collateral.
2Represents potential collateral requirements for accounts payable and mark-to-market valuation at December 31, 2024. Requirement varies throughout the period and is generally lower at the end of the month.
3Incremental collateral requirements were based on potential changes in SCE's forward positions as of December 31, 2024 due to adverse market price movements over the remaining lives of the existing power and fuel derivative contracts using a 95% confidence level.
Edison International Parent and Other
In the next 12 months, Edison International Parent expects to fund its net cash requirements through cash on hand, dividends from SCE, and capital market and bank financings. Edison International Parent may finance its ongoing cash requirements, including dividends, working capital requirements, payment of obligations, and capital investments, including capital contributions to subsidiaries, with short-term or other financings, subject to availability in the bank and capital markets.
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At December 31, 2024, Edison International Parent had cash on hand of $115 million and $1.1 billion available to borrow on its $1.5 billion revolving credit facility. The credit facility is available for borrowing needs until May 2028. The aggregate maximum principal amount under the Edison International Parent revolving credit facility may be increased up to $2.0 billion, provided that additional lender commitments are obtained. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
At December 31, 2024, Edison International Parent had $444 million outstanding commercial paper, net of discount, at a weighted-average interest rate of 4.86% supported by the revolving credit facility.
Edison International Parent has $800 million of debt maturities arising in the next 12 months. Edison International expects to issue debt to refinance these maturities.
On February 27, 2025, Edison International declared a dividend of $0.8275 per share to be paid on April 30, 2025. Edison International Parent and Other's liquidity and its ability to pay operating expenses and pay dividends to common shareholders are dependent on access to the bank and capital markets, dividends from SCE, realization of tax benefits and its ability to meet California law requirements for the declaration of dividends. Prior to declaring dividends, the Edison International Board of Directors evaluates available information, including when applicable, information pertaining to wildfire events, to ensure that the California law requirements for the declarations are met. For information on the California law requirements on the declaration of dividends, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends." Edison International intends to maintain its target payout ratio of 45% – 55% of SCE's core earnings, subject to the factors identified above.
Edison International's ability to declare and pay common dividends may be restricted under the terms of its Series A and Series B Preferred Stock. For further information see "Notes to Consolidated Financial Statements—Note 14. Equity."
Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the applicable agreements of less than or equal to 0.70 to 1. At December 31, 2024, Edison International's consolidated debt to total capitalization ratio was 0.65 to 1.
At December 31, 2024, Edison International Parent was in compliance with all financial covenants that affect access to capital.
The following table summarizes Edison International Parent's current long-term issuer credit ratings and outlook from the major credit rating agencies, and Edison International Parent's credit rating outlook as of February 20, 2025:
| Moody's | Fitch | S&P | |
|---|---|---|---|
| Credit Rating | Baa2 | BBB | BBB |
| Outlook | Stable | Stable | Negative |
Edison International Parent's credit ratings may be affected if, among other things, regulators fail to successfully implement AB 1054 in a consistent and credit supportive manner, or the Wildfire Insurance Fund is materially depleted, or a persistent increase in the frequency of severe wildfires in California leads the credit rating agencies to believe the Wildfire Insurance Fund is at risk of a material depletion. Credit rating downgrades increase the cost and may impact the availability of short-term and long-term borrowings, including commercial paper, credit facilities, note financings or other borrowings.
Edison International Income Taxes
Net Operating Loss and Tax Credit Carryforwards
Edison International has approximately $3.6 billion of tax effected net operating losses and tax credit carryforwards at December 31, 2024 (after excluding $107 million of Capistrano Wind attributes and offsetting $397 million of unrecognized tax benefits), which are available to offset future consolidated tax liabilities.
See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for further information regarding taxes payable to Capistrano Wind.
Inflation Reduction Act of 2022
The IRA imposes a 15% corporate alternative minimum tax ("CAMT") on adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1.0 billion over a specified 3-year period. The CAMT was effective beginning January 1, 2023. Based on the current interpretation of the law and historical financial data, Edison International estimates that it will exceed the $1.0 billion threshold and be subject to CAMT on its consolidated federal tax returns beginning in 2026. SCE expects to be subject to CAMT on its stand-alone Federal return beginning in 2026.
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The law also includes significant extensions, expansions, and enhancements of numerous energy-related investment tax credits, as well as creating new credits applicable to electricity production which may apply to SCE's capital expenditures. Under the IRA, as of December 31, 2024, SCE generated investment tax credits of approximately $231 million related to two utility owned storage projects, which will be recognized and returned to customers, as the credits are utilized.
Historical Cash Flows
SCE
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Net cash provided by operating activities | $ | 5,383 | $ | 3,681 | $ | 3,319 |
| Net cash provided by financing activities | 314 | 1,182 | 2,724 | |||
| Net cash used in investing activities | (5,530) | (5,231) | (5,557) | |||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 167 | $ | (368) | $ | 486 |
Net Cash Provided by Operating Activities
The following table summarizes major categories of net cash provided by operating activities as provided in more detail in SCE's consolidated statements of cash flows for 2024, 2023, and 2022:
| Years ended December 31, | Change | |||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | 2024/2023 | ||||
| Net income | $ | 1,794 | $ | 1,597 | $ | 954 | ||
| Non-cash items1 | 3,013 | 2,979 | 2,701 | |||||
| Subtotal | 4,807 | 4,576 | 3,655 | $ | 231 | |||
| Contributions to Wildfire Insurance Fund | (95) | (95) | (95) | — | ||||
| Changes in cash flow resulting from working capital2 | (221) | (762) | 327 | 541 | ||||
| Regulatory assets and liabilities | 1,219 | 576 | (51) | 643 | ||||
| Wildfire related claims3 | (397) | (410) | (56) | 13 | ||||
| Other noncurrent assets and liabilities4 | 70 | (204) | (461) | 274 | ||||
| Net cash provided by operating activities | $ | 5,383 | $ | 3,681 | $ | 3,319 | $ | 1,702 |
1Non-cash items include depreciation and amortization, allowance for equity during construction, impairment and other income, Wildfire Insurance Fund amortization expense, deferred income taxes, and other.
2Changes in working capital items include receivables, accrued unbilled revenue, inventory, amortization of prepaid expenses, accounts payable, tax receivables and payables, derivative assets and liabilities, and other current assets and liabilities.
3The amount in 2024 represents payments of $779 million for 2017/2018 Wildfire/Mudslide Events and $361 million for Other Wildfire Events, partially offset by an increase in wildfire estimated losses of $743 million. The amount in 2023 represents payments of $1.0 billion for 2017/2018 Wildfire/Mudslide Events and $190 million for Other Wildfire Events, partially offset by an increase in wildfire estimated losses of $814 million.
4Includes nuclear decommissioning trusts. See “Nuclear Decommissioning Activities” below for further information. The amount in 2024 also includes cash received from customers to fund certain construction projects and cash received for a state incentive program to pass on to customers. The amount in 2023 also includes outflow from the increases in wildfire insurance receivables.
Net cash provided by operating activities was impacted by the following:
Net income and non-cash items increased in 2024 by $231 million primarily due to higher revenue authorized in Track 4 and an increase in the authorized rate of return resulting from the cost of capital adjustment mechanism, partially offset by higher interest expense.
The net outflows in cash resulting from working capital were $221 million and $762 million in 2024 and 2023, respectively. Net cash outflows for both 2024 and 2023 were primarily due to increases in unbilled revenue and power procurement related receivables. The higher outflow in 2023 was also due to payments of power purchase contracts that had high gas prices from December 2022, as well as an increase in customer receivables due to various customer protection programs in place.
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Net cash provided by regulatory assets and liabilities, including changes in net over or undercollections recorded in balancing accounts, was $1,219 million and $576 million in 2024 and 2023, respectively. SCE has a number of balancing and memorandum accounts, which impact cash flows based on differences between timing of collection through rates and incurring expenditures. Cash inflows in 2024 and 2023 were both due to recovery of prior year undercollections. The higher inflow in 2024 compared to 2023 was driven by higher prior year undercollections implemented into rates in 2024, higher sales volume due to hotter weather in 2024, and higher overcollection from funds collected for customer-funded wildfire self-insurance in 2024.
Net Cash Provided by Financing Activities
The following table summarizes cash provided by financing activities for 2024, 2023, and 2022. Issuances of debt is discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Issuances of long-term debt, net of discount and insurance costs | $ | 4,214 | $ | 3,588 | $ | 5,032 |
| Long-term debt repaid | (2,201) | (2,098) | (385) | |||
| Short-term debt borrowed | — | 706 | — | |||
| Short-term debt repaid | (386) | (1,051) | (1,543) | |||
| Commercial paper financing, net | 94 | 963 | (406) | |||
| Preference stock issued, net of issuance cost | 345 | 542 | — | |||
| Preference stock redeemed | (628) | — | — | |||
| Capital contributions from Edison International Parent | 500 | — | 1,400 | |||
| Payment of common stock dividends to Edison International Parent | (1,440) | (1,400) | (1,300) | |||
| Payment of preference stock dividends | (168) | (117) | (110) | |||
| Other | (16) | 49 | 36 | |||
| Net cash provided by financing activities | $ | 314 | $ | 1,182 | $ | 2,724 |
Net Cash Used in Investing Activities
Cash flows used in investing activities are primarily due to capital expenditures and funding of nuclear decommissioning trusts. Cash used in capital expenditures were $5.7 billion, $5.4 billion, and $5.8 billion for 2024, 2023, and 2022, respectively, primarily related to transmission, distribution and generation investments. SCE had a net redemption of nuclear decommissioning trust investments of $121 million, $180 million, and $123 million in 2024, 2023, and 2022, respectively. See "Nuclear Decommissioning Activities" below for further discussion.
Nuclear Decommissioning Activities
SCE's consolidated statements of cash flows include nuclear decommissioning activities, which are reflected in the following line items:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Net cash used in operating activities: | ||||||
| Net earnings from nuclear decommissioning trust investments | $ | 40 | $ | 42 | $ | 78 |
| SCE's decommissioning costs | (222) | (229) | (189) | |||
| (182) | (187) | (111) | ||||
| Net cash provided by investing activities: | ||||||
| Proceeds from sale of investments | 5,019 | 4,597 | 4,177 | |||
| Purchases of investments | (4,898) | (4,417) | (4,054) | |||
| 121 | 180 | 123 | ||||
| Net cash (outflow) inflow | $ | (61) | $ | (7) | $ | 12 |
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Net cash used in operating activities relates to interest and dividends less administrative expenses, taxes and SCE's decommissioning costs. Investing activities represent the purchase and sale of investments within the nuclear decommissioning trusts, including the reinvestment of earnings from nuclear decommissioning trust investments.
Funds for decommissioning costs are requested from the nuclear decommissioning trusts one month in advance. Decommissioning disbursements are funded from sales of investments of the nuclear decommissioning trusts. The net cash impact reflects timing of decommissioning payments ($222 million, $229 million, and 189 million in 2024, 2023, and 2022, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($214 million, $222 million, and $201 million in 2024, 2023, and 2022, respectively). The net cash outflow in 2024 also primarily includes $19 million of tax benefits received and a $30 million disallowance under the 2021 NDCTP (For further details, see "—Decommissioning of San Onofre), both contributed by SCE to the decommissioning trust.
Edison International Parent and Other
The table below sets forth condensed historical cash flow from operations for Edison International Parent and Other, including intercompany eliminations.
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Net cash used in operating activities | $ | (369) | $ | (280) | $ | (103) |
| Net cash provided by financing activities | 360 | 265 | 157 | |||
| Net cash used in investing activities | (6) | (2) | (17) | |||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (15) | $ | (17) | $ | 37 |
Net Cash Used in Operating Activities
Net cash used in operating activities increased by $89 million in 2024 compared to 2023, primarily due to cash outflows of $318 million in 2024 and $280 million in 2023 for interest and operating costs. Additionally, there was $51 million cash outflow in 2024 related to a California state income tax payment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was as follows:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Dividends paid to Edison International common shareholders | $ | (1,198) | $ | (1,112) | $ | (1,050) |
| Dividends paid to Edison International preferred shareholders | (88) | (108) | (99) | |||
| Dividends received from SCE | 1,440 | 1,400 | 1,300 | |||
| Capital contributions to SCE | (500) | — | (1,400) | |||
| Receipt from stock option exercises | 206 | 71 | 71 | |||
| Repurchase of common stock | (200) | — | — | |||
| Long-term debt issuance, net of discount and issuance costs | 1,042 | 1,533 | 939 | |||
| Long-term debt repayments | (500) | (400) | (700) | |||
| Issuance of short-term debt | — | 370 | 1,000 | |||
| Repayments of short-term debt | (15) | (1,356) | — | |||
| Preferred stock repurchased | (28) | (289) | — | |||
| Commercial paper financing, net | 214 | 139 | 89 | |||
| Other | (13) | 17 | 7 | |||
| Net cash provided by financing activities | $ | 360 | $ | 265 | $ | 157 |
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Contractual Obligations and Contingencies
Contractual Obligations
SCE and Edison International Parent and Other have various contractual obligations, which are recorded as liabilities in the consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts, are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes to the financial statements.
For details on long-term debt, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Certain power purchase agreements which SCE entered into with independent power producers are treated as operating or finance leases. In addition, SCE has other operating lease obligations primarily related to vehicles, office space and other equipment. For further discussion, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" and "—Note 13. Leases."
SCE also has other purchase obligations primarily related to maintaining reliability and expanding SCE's transmission and distribution system and nuclear fuel supply contracts. For further discussion, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies."
Edison International Parent and Other and SCE have estimated contributions to the pension and PBOP plans. These amounts represent estimates that are based on assumptions that are subject to change. See "Notes to Consolidated Financial Statements—Note 9. Compensation and Benefit Plans" for further information.
Edison International and SCE have a total net liability recorded for uncertain tax positions. Edison International and SCE cannot make reliable estimates of the cash flows by period due to uncertainty surrounding the timing of resolving these open tax issues with the tax authorities. See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for further information.
For details on derivative obligations and asset retirement obligations, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments" and "—Note 1. Summary of Significant Accounting Policies," respectively.
Contingencies
Edison International's and SCE's material contingencies are discussed in "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies."
Off-Balance Sheet Arrangements
SCE has variable interests in power purchase contracts with variable interest entities. See "Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities."
MARKET RISK EXPOSURES
Edison International's and SCE's primary market risks include fluctuations in interest rates, commodity prices and volumes, and counterparty credit. Derivative instruments are used to manage market risks including market risks to SCE's customers. For further discussion of market risk exposures, including commodity price risk, credit risk and interest rate risk, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments" and "—Note 4. Fair Value Measurements."
Interest Rate Risk
Edison International and SCE are exposed to changes in interest rates primarily as a result of financing, investing and borrowing activities used for liquidity purposes, and to fund business operations and capital investments. The nature and amount of Edison International's and SCE's long-term and short-term debt can be expected to vary as a result of future business requirements, market conditions and other factors. Fluctuations in interest rates can affect earnings and cash flows. Changes in interest rates may impact SCE's authorized rate of return for the period beyond 2025 through a CPUC cost of capital proceeding, see "Management Overview—Cost of Capital" and "Business—SCE—Overview of Ratemaking
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Process" for further discussion. The following table summarizes the increase or decrease to the fair value of long-term debt including the current portion, if the market interest rates were changed while leaving all other assumptions the same:
| (in millions) | Carrying Value | Fair Value | 10% Increase | 10% Decrease | ||||
|---|---|---|---|---|---|---|---|---|
| Edison International: | ||||||||
| December 31, 2024 | $ | 35,583 | $ | 33,160 | $ | 31,845 | $ | 34,596 |
| December 31, 2023 | 33,013 | 31,315 | 30,060 | 32,684 | ||||
| SCE: | ||||||||
| December 31, 2024 | 30,515 | 27,994 | 26,827 | 29,267 | ||||
| December 31, 2023 | 28,494 | 26,712 | 25,593 | 27,930 |
Commodity Price Risk
SCE and its customers are exposed to the risk of a change in the market price of natural gas, electric power and transmission congestion. Due to regulatory mechanisms, exposure to commodity prices is not expected to impact earnings but may impact timing of cash flows. SCE's hedging program is designed to reduce exposure to variability in market prices related to SCE's purchases and sales of electric power and natural gas. As part of this program, SCE enters into energy options, swaps, forward arrangements, and congestion revenue rights ("CRRs"). The transactions are pre-approved by the CPUC or executed in compliance with CPUC-approved procurement plans. Therefore, SCE expects recovery of its related hedging costs, as well as procurement costs, through the ERRA balancing account or CPUC-approved procurement plans. For more details of the ERRA balancing account, see "Business—SCE—Overview of Ratemaking Process."
Fair Value of Derivative Instruments
The fair value of derivative instruments is included in the consolidated balance sheets unless subject to an exception under the applicable accounting guidance. Realized gains and losses from derivative instruments are expected to be recovered from or refunded to customers through regulatory mechanisms and, accordingly, changes in the fair value of derivative instruments have no impact on earnings. SCE does not use hedge accounting for these transactions due to this regulatory accounting treatment. For further discussion on fair value measurements and the fair value hierarchy, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements."
The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was a net asset of $212 million and $91 million at December 31, 2024 and 2023, respectively.
The following table summarizes the increase or decrease to the fair values of the net asset of derivative instruments included in the consolidated balance sheets, if the electricity prices or gas prices were changed while leaving all other assumptions constant:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Increase in electricity prices by 10% | $ | 34 | $ | 26 |
| Decrease in electricity prices by 10% | (34) | (26) | ||
| Increase in gas prices by 10% | 1 | 5 | ||
| Decrease in gas prices by 10% | (1) | (5) |
Investment Price Risk
Edison International and SCE are subject to investment price risk due to securities held as investments in the nuclear decommissioning trust and various pension and other post-retirement benefit plan trusts.
Nuclear Decommissioning Trust
As of December 31, 2024, SCE's nuclear decommissioning trust investments include equity investments of $1.6 billion and fixed income investments of $2.6 billion. These investments are exposed to price fluctuations in equity markets and changes in interest rates. SCE's investment policies and CPUC requirements place limitations on the types and investment grade ratings of the securities that may be held by the nuclear decommissioning trust. These policies restrict the trust from holding alternative investments and limit the trust funds' exposures to investments in highly illiquid markets. Due to regulatory mechanisms, investment earnings and realized and unrealized gains and losses increase or decrease the trust assets and the related regulatory asset or liability, and do not materially affect earnings. For further discussion on the
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nuclear decommissioning trust investments, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "—Note 10. Investments."
PBOP and Pension Plan Assets
The PBOP Plan and the Southern California Edison Company Retirement Plan Trust assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. These investments are exposed to price fluctuations in equity markets and changes in interest rates. The investment of plan assets is overseen by a fiduciary investment committee. Risk is managed through diversification among multiple asset classes, managers, styles, and securities. See "Notes to Consolidated Financial Statements—Note 9. Compensation and Benefit Plans" for additional information regarding investment strategy of plan assets.
Contributions related to SCE employees made to SCE pension plan are anticipated to be recovered through CPUC-approved regulatory mechanisms.
Credit Risk
Credit risk exposure from counterparties for power and gas trading activities is measured as the sum of net accounts receivable (accounts receivable less accounts payable) and the current fair value of net derivative assets (derivative assets less derivative liabilities) reflected on the consolidated balance sheets. SCE enters into master agreements which typically provide for a right of set-off. Accordingly, SCE's credit risk exposure from counterparties is based on a net exposure under these arrangements. SCE manages the credit risk on the portfolio of counterparties based on credit ratings and other publicly disclosed information, such as financial statements, regulatory filings and press releases, to guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting agreements. Based on SCE's policies and risk exposures related to credit, SCE does not anticipate a material adverse effect on their financial statements as a result of counterparty nonperformance. At December 31, 2024, SCE's power and gas trading counterparty credit risk exposure was $110 million, 99.8% of which was associated with entities with an investment grade rating of A or higher. SCE assigns a credit rating to counterparties based on the lowest of a counterparty's S&P's, Moody's, and Fitch's rating.
For more information related to credit risks, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments."
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The accounting policies described below are considered critical to obtaining an understanding of Edison International's and SCE's consolidated financial statements because their application requires the use of significant estimates and judgments by management in preparing the consolidated financial statements. Management estimates and judgments are inherently uncertain and may differ significantly from actual results achieved. Management considers an accounting estimate to be critical if the estimate requires significant assumptions and changes in the estimate or, the use of alternative estimates, could have a material impact on Edison International's and SCE's results of operations or financial position. For more information on Edison International's and SCE's accounting policies, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies."
Accounting for Contingencies
Nature of Estimates Required. Edison International and SCE record loss contingencies when management determines that the outcome of future events is probable of occurring and when the amount of the loss can be reasonably estimated. Gain contingencies are recognized in the financial statements when they are realized.
Key Assumptions and Approach Used. The determination of an accrual for a loss contingency is based on management judgment and estimates with respect to the likely outcome of the matter, including the analysis of different scenarios. Liabilities are recorded or adjusted when events or circumstances cause these judgments or estimates to change. In assessing whether a loss is a reasonable possibility, Edison International and SCE may consider the following factors, among others: the nature of the litigation, claim or assessment, opinions or views of legal counsel and other advisors, and the experience gained from similar cases. Edison International and SCE provide disclosures for material contingencies when there is a reasonable possibility that a loss or an additional loss may be incurred.
Effect if Different Assumptions Used. Actual amounts realized upon settlement of contingencies may be different than amounts recorded and disclosed and could have a significant impact on the liabilities, revenue and expenses recorded on the consolidated financial statements. For a discussion of contingencies, guarantees, and indemnities, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies."
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Application to Wildfires
As discussed in "Management Overview," wildfires in SCE's service area have caused loss of life, substantial damage to both residential and business properties, and service outages for SCE customers.
The extent of legal liability for wildfire-related damages in actions against utilities depends on a number of factors, including whether the utility substantially caused or contributed to the damages and whether parties seeking recovery of damages will be required to show negligence in addition to causation. Final determinations of legal liability for wildfire events, including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes and settlements may be reached before determinations of legal liability are ever made.
Edison International and SCE have incurred material losses in connection with several wildfires. Estimated losses for wildfire litigation are based on a number of assumptions and are subject to change as additional information becomes available. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged. For instance, SCE will receive additional information with respect to damages claimed as the claims mediation and trial processes progress. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to reach settlements and the outcomes of settlements reached through the ongoing claims mediation and trial processes, uncertainties related to the sufficiency of insurance held by plaintiffs, uncertainties related to the litigation processes, including whether plaintiffs will ultimately pursue claims, uncertainty as to the legal and factual determinations to be made during litigation, including uncertainty as to the contributing causes of certain wildfires, and the uncertainty as to how these factors impact future settlements.
For more information related to the loss contingencies of the wildfires, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Rate Regulated Enterprises
Nature of Estimate Required. SCE follows the accounting principles for rate-regulated enterprises which are required for entities whose rates are set by regulators at levels intended to recover the estimated costs of providing service, plus a return on net investment, or rate base. Regulators may also impose penalties or grant incentives. Due to timing and other differences in the collection of revenue, these accounting principles allow a cost that would otherwise be charged as an expense by an unregulated entity to be capitalized as a regulatory asset if it is probable that such cost is recoverable through future rates; conversely the accounting principles require creation of a regulatory liability for amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and refundable to customers. In addition, SCE recognizes revenue and regulatory assets from alternative revenue programs, which enables the utility to adjust future rates in response to past activities or completed events, if certain criteria are met.
Accounting principles for rate-regulated enterprises also require recognition of an impairment loss if it becomes probable that the regulated utility will abandon a plant investment or the cost of a recently completed plant will be disallowed for ratemaking purposes, and a reasonable estimate of the amount of the disallowance can be made.
Key Assumptions and Approach Used. SCE's management assesses at the end of each reporting period whether regulatory assets are probable of future recovery by considering factors such as the current regulatory environment, the issuance of rate orders on recovery of the specific or a similar incurred cost to SCE or other rate-regulated entities, and other factors that would indicate that the regulator will treat an incurred cost as allowable for ratemaking purposes. Using these factors, management has determined that existing regulatory assets are probable of future recovery or settlement, and regulatory liabilities are properly identified. This determination reflects the current regulatory climate and is subject to change in the future. SCE also considers whether any plant investments are probable of abandonment or disallowance.
Effect if Different Assumptions Used. Significant management judgment is required to evaluate the anticipated recovery of regulatory assets and plant investments, the recognition of incentives and revenue subject to refund, as well as the anticipated cost of regulatory liabilities or penalties. If future recovery of costs ceases to be probable, all or part of the regulatory assets and/or plant investments would have to be written off against current period earnings, and additional regulatory liabilities would have to be recognized. At December 31, 2024, the consolidated balance sheets included regulatory assets of $11.6 billion and regulatory liabilities of $11.5 billion. If different judgments were reached on recovery of costs and timing of income recognition, SCE's earnings may vary from the amounts reported.
Application to Southern California Wildfires
Application to pre-AB 1054 fires
Regulatory recovery of SCE's losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance is subject to approval by regulators. Under accounting standards for rate-regulated enterprises, SCE defers costs as regulatory assets in the period it concludes that such costs are probable of future recovery in electric rates.
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SCE utilizes objectively determinable evidence to form its view on probability of future recovery. The only directly comparable precedent, in which a California investor-owned utility sought recovery for uninsured wildfire claims related costs and the CPUC made a prudency determination, is SDG&E's requests for cost recovery related to 2007 wildfire activity. The FERC allowed recovery of all FERC-jurisdictional wildfire claims related costs, while the CPUC rejected recovery of all CPUC-jurisdictional wildfire claims related costs based on a determination that SDG&E did not meet the CPUC's prudency standard.
In January 2025, the CPUC approved the TKM Settlement Agreement and closed the proceeding. However, the CPUC did not make a determination regarding SCE's prudency when it approved the TKM Settlement Agreement. Therefore, notwithstanding CPUC approval of the TKM Settlement Agreement, SCE believes that the CPUC's interpretation and application of the prudency standard to SDG&E continues to create substantial uncertainty regarding how that standard will be applied to an investor-owned utility in wildfire cost-recovery proceedings for fires ignited prior to July 12, 2019. Consequently, SCE is unable to estimate the uninsured CPUC-jurisdictional claims related costs related to the Woolsey Fire or Creek Fire, both pre-AB 1054 events, that are probable of future recovery, and will not record a regulatory asset for recoveries related to the Woolsey Fire or Creek Fire in connection with the approval of the TKM Settlement Agreement. SCE will continue to evaluate the facts and circumstances of the pre-AB 1054 cost recovery proceeding to determine if and when a regulatory asset for pre-AB 1054 events may be recorded.
Through the operation of its FERC Formula Rate, and based upon the precedent established in SDG&E's recovery of FERC-jurisdictional wildfire-related costs, SCE believes it is probable it will recover its FERC-jurisdictional wildfire and mudslide related costs and has recorded total expected recoveries within the FERC balancing account.
Application to post-AB-1054 Other Wildfire Events
Management judgment is required to assess the probability of recovery of SCE's losses realized, in excess of available insurance, in connection with wildfires ignited after the adoption of AB 1054 in July 2019.
The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such losses were not reasonably or prudently incurred. On July 12, 2019, AB 1054 clarified that the CPUC must allow recovery of costs and expenses arising from a covered wildfire if the utility's conduct related to the ignition was consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the relevant point in time, and based on the information available at that time. Further, utilities with a valid safety certification at the time of the relevant wildfire will be presumed to have acted prudently related to a wildfire ignition unless a party in the cost recovery proceeding creates "serious doubt" as to the reasonableness of the utility's conduct, at which time, the burden shifts back to the utility to dispel that doubt and prove its conduct was prudent. The serious doubt standard in AB 1054 is modeled after the FERC cost recovery standard. SCE evaluates the probability of recovery of costs related to the Other Wildfire Events that ignited after the adoption of AB 1054 in the context of the prudency standard laid out by AB 1054 above, including how the FERC applies the serious doubt standard. SCE’s evaluation also relies on its status as a holder of a valid safety certification, facts and other evidence known to date related to the ignition, and any regulatory decisions illustrating the interpretation and/or application of the prudency framework under AB 1054, which as of December 31, 2024, has not been applied by the CPUC to an actual cost recovery application filed by any California investor-owned utility. SCE also considers which costs are eligible for recovery based on precedent from other CPUC cost recovery proceedings. Management's assessment of the probability of recovery may change, related to changes in any of these factors in the future.
See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" for further discussion of regulatory assets recorded for wildfire as of December 31, 2024.
Income Taxes
Nature of Estimates Required. As part of the process of preparing its consolidated financial statements, Edison International and SCE are required to estimate income taxes for each jurisdiction in which they operate. This process involves estimating actual current period tax expense together with assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within Edison International's and SCE's consolidated balance sheets, including net operating loss and tax credit carryforwards. Certain estimates and assumptions are required to determine whether deferred tax assets can and will be utilized in future periods. Based on currently enacted tax laws, Edison International expects to generate sufficient taxable income to fully utilize all loss and credit carryovers set to expire beyond 2024.
Edison International and SCE take certain tax positions they believe are in accordance with the applicable tax laws. However, these tax positions are subject to interpretation by the Internal Revenue Service, state tax authorities and the courts. Edison International and SCE determine uncertain tax positions in accordance with the authoritative guidance.
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Key Assumptions and Approach Used. In determining whether it is more likely than not that all or some portion of net operating loss and tax credit carryforwards can be utilized, management analyzes the trend of GAAP earnings and then estimates the impact of future taxable income, reversing temporary differences and available prudent and feasible tax planning strategies based on currently enacted tax laws.
Accounting for tax obligations requires management judgment. Edison International's and SCE's management use judgment in determining whether the evidence indicates it is more likely than not, based solely on the technical merits, that a tax position will be sustained, and to determine the amount of tax benefits to be recognized. Judgment is also used in determining the likelihood a tax position will be settled and possible settlement outcomes. In assessing uncertain tax positions Edison International and SCE consider, among others, the following factors: the facts and circumstances of the position, regulations, rulings, case law, opinions or views of legal counsel and other advisers, and the experience gained from similar tax positions. Edison International and SCE evaluate uncertain tax positions at the end of each reporting period and make adjustments when warranted based on changes in fact or law.
Effect if Different Assumptions Used. Should a change in facts or circumstances, including a change in enacted tax legislation, lead to a change in judgment about the ultimate realizability of a deferred tax asset, Edison International and SCE would record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in the provision for income taxes.
Actual income taxes may differ from the estimated amounts which could have a significant impact on the liabilities, revenue, and expenses recorded in the financial statements. Edison International and SCE continue to be under audit or subject to audit for multiple years in various jurisdictions. Significant judgment is required to determine the tax treatment of particular tax positions that involve interpretations of complex tax laws. Such liabilities are based on judgment and a final determination could take many years from the time the liability is recorded. Furthermore, settlement of tax positions included in open tax years may be resolved by compromises of tax positions based on current factors and business considerations that may result in material adjustments to income taxes previously estimated. For a discussion of current and deferred taxes, net operating losses and tax credit carryforwards, accounting for uncertainty in income taxes, unrecognized tax benefits, and tax disputes, see "Notes to Consolidated Financial Statements—Note 8. Income Taxes."
Nuclear Decommissioning – Asset Retirement Obligation
Key Assumptions and Approach Used. San Onofre Units 1, 2, and 3 decommissioning cost estimates are updated in each NDCTP and when there are material changes to the timing or amount of estimated future cash flows. Palo Verde decommissioning cost estimates are updated by the operating agent, Arizona Public Services, every three years and when there are material changes to the timing or amount of estimated future cash flows. SCE estimates that it will spend approximately $7.6 billion, undiscounted through 2098, to decommission its nuclear facilities.
The current ARO estimates for San Onofre and Palo Verde are based on:
•Decommissioning Costs. The estimated costs for labor, material, equipment and other, and low-level radioactive waste costs are included in each of the NRC decommissioning stages: license termination, site restoration and spent fuel storage. The liability to decommission SCE's nuclear power facilities is based on a 2024 decommissioning study, filed as part of the 2024 NDCTP, for San Onofre Unit 1, 2, and 3 and a 2023 decommissioning study for Palo Verde.
•Escalation Rates. Annual escalation rates are used to convert the decommissioning cost estimates in base year dollars to decommissioning cost estimates in future-year dollars. Escalation rates are primarily used for labor, material, equipment, and low-level radioactive waste burial costs. SCE's current estimates are based upon SCE's decommissioning cost methodology used for ratemaking purposes. Average escalation rates range from 2.1% to 7.5% (depending on the cost element) annually.
•Timing. Initial decommissioning activities at San Onofre Unit 1 started in 1999 and at Units 2 and 3 in 2013. Cost estimates for San Onofre Units are currently based on completion of decommissioning activities by 2056. Cost estimates for Palo Verde are based on an assumption that decommissioning will commence promptly after the current NRC operating licenses expire. The Palo Verde 1, 2, and 3 operating licenses currently expire in 2045, 2046, and 2047, respectively.
•Spent Fuel Dry Storage Costs. Cost estimates, including the impact of escalations, are based on an assumption that the U.S. Department of Energy will begin to take spent fuel from the nuclear industry in 2034 and will remove the last spent fuel from the San Onofre and Palo Verde sites by 2054 and 2097, respectively.
•Changes in Decommissioning Technology, Regulation and Economics. The current cost studies assume the use of current technologies under current regulations and at current cost levels.
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See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" for further discussion of the plans for decommissioning of San Onofre.
Effect if Different Assumptions Used. The ARO for decommissioning SCE's nuclear facilities was $2.1 billion as of December 31, 2024, based on the most recent decommissioning studies performed and the subsequent cost estimate updates. Changes in the estimated costs, execution strategy or timing of decommissioning, or in the assumptions and judgments by management underlying these estimates, could cause material revisions to the estimated total cost to decommission these facilities which could have a material effect on the recorded liability.
The following table illustrates the increase to the ARO liability if the cost escalation rate was adjusted while leaving all other assumptions constant:
| (in millions) | Increase to ARO at<br><br>December 31, 2024 | |
|---|---|---|
| Uniform increase in escalation rate of 1 percentage point | $ | 579 |
The increase in the ARO liability driven by an increase in the escalation rate would result in a decrease in the regulatory liability for recoveries in excess of ARO liabilities. As of December 31, 2024, the regulatory liability for recoveries in excess of ARO liabilities was $1.7 billion.
Pensions and Postretirement Benefits Other than Pensions
Nature of Estimate Required. Authoritative accounting guidance requires companies to recognize the overfunded or underfunded status of defined benefit pension and other postretirement plans as assets and liabilities in the balance sheet; the assets and/or liabilities are normally offset through other comprehensive income (loss). In accordance with authoritative guidance for rate-regulated enterprises, regulatory assets and liabilities are recorded instead of charges and credits to other comprehensive income (loss) for its postretirement benefit plans that are recoverable in utility rates. Edison International and SCE have a fiscal year-end measurement date for all of their postretirement plans.
Key Assumptions of Approach Used. Pension and other postretirement benefit obligations and the related effects on results of operations are calculated using actuarial models. Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense, and the discount rate is important to liability measurement. Other assumptions, which require management judgment, include the rate of compensation increases, and rates of retirement, turnover and termination. Additionally, health care cost trend rates are critical assumptions for postretirement health care plans. These critical assumptions are evaluated periodically and updated to reflect actual experience, as appropriate.
As of December 31, 2024, Edison International's and SCE's pension plans had a $3.6 billion and $3.3 billion projected benefit obligation, respectively, and total 2024 expense for these plans was $27 million and $24 million, respectively. As of December 31, 2024, the accumulated benefit obligation for Edison International's and SCE's PBOP plans were $741 million and $737 million, respectively, and there were no expenses for Edison International's and SCE's PBOP plans for 2024. The majority of annual contributions made to SCE's pension and PBOP plan are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the related annual expense.
Pension expense is recorded for SCE based on the amount funded to the trusts, as calculated using an actuarial method required for ratemaking purposes, in which the impact of market volatility on plan assets is recognized in earnings on a more gradual basis. Any difference between pension expense calculated in accordance with ratemaking methods and pension expense calculated in accordance with authoritative accounting guidance for pension is accumulated as a regulatory asset or liability, and is expected, over time, to be recovered from or returned to customers. As of December 31, 2024, this cumulative difference amounted to $132 million, meaning that the ratemaking method has recognized less in expense than the accounting method since implementation of authoritative guidance for employers' accounting for pensions in 1987, which was offset by a regulatory liability for the current funding level of SCE's pension plan.
Edison International and SCE used the following critical assumptions to determine expense for pension and PBOP for 2024:
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| (in millions) | Pension<br>Plans | PBOP<br>Plans | ||
|---|---|---|---|---|
| Discount rate1 | 5.04 | % | 5.06 | % |
| Expected long-term return on plan assets2 | 6.75 | % | 4.88 | % |
| Assumed health care cost trend rates3 | * | 6.50 | % |
*Not applicable to pension plans.
1The discount rate enables Edison International and SCE to state expected future cash flows at a present value on the measurement date. Edison International and SCE select its discount rate by performing a yield curve analysis. This analysis determines the equivalent discount rate on projected cash flows by matching the timing and amount of expected future benefit payments to the corresponding yields from the Willis Towers Watson RATE: Link 10th – 90th percentile yield curve model on the measurement date.
2To determine the expected long-term rate of return on pension plan assets, current and expected asset allocations are considered, as well as historical and expected returns on plan assets. A portion of PBOP trusts asset returns are subject to taxation, so the 5% rate of return on plan assets above is determined on an after-tax basis. Actual time-weighted, annualized returns on the pension plan assets were 5.6%, 5.2% and 6.6% for the one-year, five-year and ten-year periods ended December 31, 2024, respectively. Actual time-weighted, annualized returns on the PBOP plan assets were 3.5%, 1.8% and 4.3% over these same periods. Accounting principles provide that differences between expected and actual returns are recognized over the average future service of employees.
3The health care cost trend rate gradually declines to 5.00% for 2029 and beyond.
As of December 31, 2024, Edison International and SCE had unrecognized net pension gains of $138 million and $120 million, respectively, and unrecognized PBOP gains of $1.5 billion. The unrecognized pension and PBOP gains primarily consisted of the cumulative impact of the increased discount rates on the respective benefit obligations and the cumulative difference between the expected and actual rate of return on plan assets. Of these deferred gains, $133 million of SCE's pension gains and $1.5 billion of SCE's PBOP gains are recorded as regulatory liabilities, respectively, and are expected to be amortized to expense over the expected future service of the employees (subject to regulatory adjustment) or refunded to ratepayers at the termination or completion of the plan.
Edison International's and SCE's pension and PBOP plans are subject to limits established for federal tax deductibility. SCE funds its pension and PBOP plans in accordance with amounts allowed by the CPUC. Executive pension plans have no plan assets.
Effect if Different Assumptions Used. Changes in the estimated costs or timing of pension and other postretirement benefit obligations, or the assumptions and judgments used by management underlying these estimates, could have a material effect on the recorded expenses and liabilities.
The following table summarizes the increase or decrease to projected benefit obligation for pension and the accumulated benefit obligation for PBOP if the discount rate were changed while leaving all other assumptions constant:
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Increase in<br>discount rate<br>by 1% | Decrease in<br>discount rate<br>by 1% | Increase in<br>discount rate<br>by 1% | Decrease in<br>discount rate<br>by 1% | ||||
| Change to projected benefit obligation for pension | $ | (123) | $ | 143 | $ | (100) | $ | 116 |
| Change to accumulated benefit obligation for PBOP | (69) | 83 | (69) | 82 |
A one percentage point increase in the expected rate of return on pension plan assets would decrease Edison International's and SCE's current year expense by $35 million and $33 million, respectively, and a one percentage point increase in the expected rate of return on PBOP plan assets would decrease both Edison International's and SCE's current year expense by $23 million.
Contributions to the Wildfire Insurance Fund
Nature of Estimates Required. At December 31, 2024, Edison International and SCE have a $1.9 billion long-term asset and a $138 million current asset reflected as "Wildfire Insurance Fund contributions" in the consolidated balance sheets for the initial $2.4 billion contribution made during 2019 and the present value of annual contributions SCE committed to make to the Wildfire Insurance Fund, reduced by amortization. At December 31, 2024, a long-term liability of $363 million has been reflected in "Other deferred credits and other long-term liabilities" for the present value of unpaid contributions. Contributions were discounted to the present value using US treasury interest rates at the date SCE committed to participate in the Wildfire Insurance Fund.
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Management concluded it would be most appropriate to account for the contributions to the Wildfire Insurance Fund similar to prepaid insurance, ratably allocating the expense to periods based on an estimated period of coverage.
Key Assumptions and Approach Used. 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. Management reassesses the period of coverage of the fund at least annually in the first quarter each year and adjustments are applied on a prospective basis. The determination of the correct period in which to record an expense in relation to contributions to the Wildfire Insurance Fund depends, among other factors, on management's assessment of: the future occurrence and magnitude of wildfires; the involvement of SCE, or other electrical corporations which could access the Wildfire Insurance Fund, in the ignition of those fires; the probable future outcomes of CPUC cost recovery proceedings for wildfire claims, which may require reimbursement of the fund by electrical corporations; and the use of the contributions by the administrator of the Wildfire Insurance Fund. Further information regarding these factors may become available due to the actions of the fund administrator, or other entities, which could require management to reassess the period of coverage.
Edison International and SCE assess the Wildfire Insurance Fund contribution asset for impairment each reporting period. An impairment will be recorded if the Wildfire Insurance Fund contribution asset exceeds SCE's ability to benefit from the remaining coverage provided by the Wildfire Insurance Fund.
In January 2024, Edison International and SCE used Monte Carlo simulations for the annual assessment to estimate the period of coverage of the fund. This assessment was based on ten years (2014 – 2023) of historical data from wildfires caused by electrical utility equipment to estimate expected loss, resulting in an estimated fund life of 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 estimates related to claims by SCE, PG&E, and SDG&E against the fund have been applied to the expected loss simulations to estimate the period of coverage of the fund. The most sensitive inputs to the estimated period of coverage are the expected frequency of wildfire events caused by investor-owned utility electrical equipment and the estimated costs associated with those forecasted events. These inputs are most affected by the historical data used in estimating expected losses. Using a 17-year period (2007 – 2023) of historical data would further increase the period of coverage. There were fires in the service area of SCE, PG&E and SDG&E since the inception of the Wildfire Insurance Fund, including fires for which the cause is unknown, which may in the future be determined to be covered by the Wildfire Insurance Fund and have not been reflected or estimated at this time. As of the date of this filing, SCE is continuing to perform its annual assessment for 2025 to reassess its estimate of the life of the Wildfire Insurance Fund.
Effect if Different Assumptions Used. Changes in the estimated life of the insurance fund, including impairment of the fund, could have a material impact on the expense recognition.
NEW ACCOUNTING GUIDANCE
New accounting guidance is discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."
RISK FACTORS
RISKS RELATING TO EDISON INTERNATIONAL
Edison International's liquidity and ability to pay dividends depends on its ability to borrow funds, access to bank and capital markets, monetization of tax benefits held by Edison International, and SCE's ability to pay dividends and tax allocation payments to Edison International. Edison International is a holding company and, as such, it has no material operations of its own. Edison International's ability to meet its financial obligations, make investments, and to pay dividends on its common stock is primarily dependent on the earnings and cash flows of SCE and SCE's ability to make upstream distributions. If SCE does not make upstream distributions to Edison International and Edison International is unable to access the bank and capital markets on reasonable terms, Edison International may be unable to continue to pay dividends to its shareholders or meet its financial obligations.
Prior to paying dividends to Edison International, SCE has financial and regulatory obligations that must be satisfied, including, among others, debt service and preference stock dividends. Further, Edison International and SCE cannot pay dividends if California law requirements for the declaration of dividends are not met. For information on CPUC and California law requirements related to the declaration of dividends, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends." SCE may also owe tax-allocation payments to Edison International under applicable tax-allocation agreements.
Edison International's ability to obtain financing, as well as its ability to refinance debt and make scheduled payments of principal and interest, are dependent on numerous factors, including its levels of indebtedness, maintenance of acceptable credit ratings, financial performance, liquidity and cash flow, and other market conditions. In addition, the factors affecting
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SCE's business will impact Edison International's ability to obtain financing. Edison International's inability to borrow funds from time to time could have a material effect on Edison International's liquidity and operations.
See "Risks Relating to Southern California Edison Company" below for further discussion.
RISKS RELATING TO SOUTHERN CALIFORNIA EDISON COMPANY
Regulatory and Legislative Risks
SCE's financial results depend upon its ability to recover its costs and to earn a reasonable rate of return on capital investments in a timely manner from its customers through regulated rates.
SCE's ongoing financial results depend on its ability to recover its costs from its customers, including the costs of electricity purchased for its customers, through the rates it charges its customers as approved by the CPUC and FERC. SCE's financial results also depend on its ability to earn a reasonable return on capital, including long-term debt and equity. SCE's ability to recover its costs and earn a reasonable rate of return can be affected by many factors, including the time lag between when costs are incurred and when those costs are recovered in customers' rates and differences between the forecast or authorized costs embedded in rates (which are set on a prospective basis) and the amount of actual costs incurred.
The CPUC or the FERC may not allow SCE to recover costs on the basis that such costs were not reasonably or prudently incurred or for other reasons. Further, SCE may incur expenses before the relevant regulatory agency approves the recovery of such costs. For example, SCE has incurred, and expects to further incur, wildfire mitigation expenses before it is clear whether such costs will be recoverable from customers. Also, the CPUC may deny recovery of costs incurred by SCE, including uninsured wildfire-related costs, if the CPUC determines that SCE was not prudent. For further information on recovery of uninsured wildfire-related costs see "Business—Southern California Wildfires—Recovery of Wildfire-Related Costs" and "Management Overview—Southern California Wildfires and Mudslides" in the MD&A. In addition, while SCE supports California's environmental goals, it may be prevented from fully executing on its strategy to support such goals by regulatory delay or lack of approval of cost-recovery for the costs of such strategic actions and electrification programs from the relevant regulatory agencies, including as a result of customer affordability concerns. For example, the CPUC issued a decision denying SCE’s Building Electrification Program Application, citing, among other things, a desire to avoid increasing rates.
SCE's CPUC authorized return on investment is established by multiplying an authorized rate of return, determined by the CPUC in standalone cost of capital proceedings, by SCE's authorized CPUC rate base. SCE's CPUC-authorized cost of capital is subject to potential adjustment should interest rates move substantially in years between cost of capital proceedings. SCE's authorized return on its transmission assets is established by multiplying an authorized rate of return, determined by the FERC, by SCE's transmission rate base. For further information see "Business—SCE—Overview of Ratemaking Process."
SCE's capital investment plan, increasing procurement of renewable power and energy storage, inflation, commodity price volatility, increasing self-generation, load departures to CCAs or Electric Service Providers, and increasing environmental regulations, among other things, collectively place continuing upward pressure on customer rates. As customer rates increase, the CPUC may face greater pressure to approve lesser amounts in SCE’s ratemaking or cost recovery proceedings. To relieve some of this upward rate pressure, the CPUC may authorize lower revenues, or increase the period over which SCE is allowed to recover amounts, or disallow the recovery of SCE’s cost which could impact SCE’s ability to recover its operating costs timely or at all. If SCE is unable to obtain a sufficient rate increase or modify its rate design to recover its costs and an adequate return on capital in rates in a timely manner, its financial condition and results of operations could be materially affected.
SCE is subject to extensive regulation and the risk of adverse regulatory and legislative decisions, delays in regulatory or legislative decisions, and changes in applicable regulations or legislation.
SCE operates in a highly regulated environment. SCE's business is subject to extensive federal, state and local energy, environmental and other laws and regulations. Among other things, the CPUC regulates SCE's retail rates and capital structure, and the FERC regulates SCE's wholesale rates and capital structure. The NRC regulates the decommissioning of San Onofre in addition to the local and state agencies that require permits. The construction, planning, siting and operation of SCE's power plants, energy storage projects, and transmission lines in California are also subject to regulation by the CPUC and other local, state and federal agencies.
SCE must periodically apply for licenses and permits from these various regulatory authorities, including environmental regulatory authorities, and must abide by their respective rules, regulations and orders. Should SCE be unsuccessful in obtaining necessary licenses or permits or should these regulatory authorities initiate any investigations or enforcement actions or impose fines, penalties or disallowances on SCE, SCE may be prevented from executing its strategy and its
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business could be materially affected. The process of obtaining licenses and permits from regulatory authorities may be delayed or defeated by opponents and such delay or defeat could have a material effect on SCE's business.
The Wildfire Insurance Fund and other provisions of AB 1054 may not be sufficient or effectively mitigate the significant risk faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where utility facilities are a substantial cause, which could have a detrimental effect on SCE's business and financial condition. The effectiveness of AB 1054 to mitigate the wildfire-related risk faced by SCE is conditioned in part on the performance of OEIS and various entities formed under AB 1054 and related legislation to, among other things, administer the Wildfire Insurance Fund, approve WMPs, issue safety certifications, oversee and enforce compliance with wildfire safety standards, and develop metrics to reduce risk and measure compliance with risk reduction.
In addition, CPUC approval is required to recover the costs SCE is incurring to strengthen its wildfire mitigation and prevention efforts described in SCE's WMPs. See "Business—Southern California Wildfires" and "Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings" in the MD&A.
In addition, existing regulations may be revised or re-interpreted and new laws and regulations may be adopted or become applicable to SCE, or its facilities or operations, in a manner that may have a detrimental effect on SCE's business or result in significant additional costs. In addition, regulations adopted via the public initiative or legislative process may apply to SCE, or its facilities or operations, in a manner that may have a detrimental effect on SCE's business or result in significant additional costs.
SCE's energy procurement activities are subject to regulatory and market risks, including availability, that could materially affect its financial condition and liquidity.
SCE obtains energy, capacity, environmental credits and ancillary services needed to serve its customers from its own generating plants and through contracts with energy producers and sellers. California law and CPUC decisions allow SCE to recover, through the rates it is allowed to charge its customers, reasonable procurement costs incurred in compliance with an approved procurement plan. Nonetheless, SCE's cash flows remain subject to volatility primarily resulting from changes in commodity prices, including as a result of gas supply constraints. Additionally, significant and prolonged gas use restrictions may adversely impact the reliability of the electric grid if critical generation resources are limited in their operations. For further information, see "Business—SCE—Purchased Power and Fuel Supply." SCE is also subject to the risks of unfavorable or untimely CPUC decisions about the compliance with SCE's energy procurement plan and the reasonableness of certain procurement-related costs.
SCE may not be able to hedge its risk for commodities on economic terms or fully recover the costs of hedges through the rates it is allowed to charge its customers, which could materially affect SCE's liquidity and results of operations, see "Market Risk Exposures" in the MD&A.
Operating Risks
Damage claims against SCE for wildfire-related losses may materially affect SCE's financial condition and results of operations.
Prolonged drought conditions and shifting weather patterns in California resulting from climate change as well as, among other things, buildup of dry vegetation in areas severely impacted by years of historic drought and lack of adequate clearing of hazardous fuels by responsible parties have increased the duration of the wildfire season and the risk of severe wildfire events.
Severe wildfires and urban development in and near high fire risk areas in California have given rise to large damage claims against California utilities for fire-related losses alleged to be the result of utility practices and/or the failure of electric and other utility equipment. Catastrophic wildfires can occur in SCE's service area even if SCE effectively implements its WMPs. California courts have previously found utilities to be strictly liable for property damage, regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that caused the property damage. An inability to recover uninsured wildfire-related costs could materially affect SCE's business, financial condition and results of operations. For example, if SCE is unable to, or believes that it may be unable to, recover damages related to catastrophic wildfires through insurance, the Wildfire Insurance Fund (which is only available for fires ignited after July 12, 2019) or electric rates, or access the bank and capital markets on reasonable terms, SCE may not have sufficient cash or equity to pay dividends or may be restricted from declaring such dividends because it does not meet CPUC or California law requirements related to the declaration of dividends. For information on the California law requirements on the declaration of dividends, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends." Also see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
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Edison International's and SCE's costs of accessing capital markets has increased due to the risks associated with wildfires in Southern California. Edison International's and SCE's access to the bank and capital markets could also be constrained and/or the costs of accessing those markets could increase further as a result of wildfire risk, including if Edison International's and/or SCE's credit ratings are downgraded or placed on negative watch due to concerns about Edison International and/or SCE's financial health as a result of wildfires.
SCE's insurance coverage for wildfires may not be sufficient.
SCE may not be able to recover uninsured losses (including amounts paid for self-insured retention and co-insurance) in electric rates. Additionally, SCE’s contractors may experience coverage reductions and/or increased wildfire insurance costs in future years. For losses associated with claims occurring before the authorization of SCE’s CPUC-authorized customer-funded self-insurance program, no assurance can be given that losses will not exceed the limits of SCE's or its contractors' insurance coverage. Losses which are not fully insured or cannot be recovered from contractors, through the Wildfire Insurance Fund or electric rates, including any such losses that exceed funds available through the Wildfire Insurance Fund and are ultimately not authorized to be recovered through rates, could materially affect Edison International's and SCE's financial condition and results of operations. For more information on wildfire insurance risk, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
SCE may not effectively implement its wildfire mitigation plans.
SCE will face a higher likelihood of catastrophic wildfires in its service area if it cannot effectively implement its WMPs. For example, SCE may not be able to effectively implement its WMPs if it experiences unanticipated difficulties relative to permitting delays, sourcing, engaging, and retaining effectively trained contract workers or procuring materials it needs to fulfill its mitigation obligations under the WMPs. In addition, if SCE does not have an approved WMP, SCE will not be issued a safety certification from the CPUC and will consequently not benefit from the presumption of prudency or the AB 1054 Liability Cap.
The CPUC may assess penalties on SCE if it finds that SCE has failed to substantially comply with its WMP. In addition, SCE may be subject to mandated changes to, or restrictions on, its operational wildfire mitigation practices or be subject to regulatory fines and penalties or claims for damages and reputational harm if SCE does not execute its wildfire mitigation practices in compliance with applicable rules and regulations. SCE's wildfire mitigation practices include PSPS and using fast-curve settings. In addition, SCE has been and may be further subject to regulatory fines and penalties or claims for damages and reputational harm if it is determined that SCE has placed excessive or unreasonable reliance on PSPS or has failed to maintain compliance with notification and post event reporting requirements related to PSPS. For information regarding SCE’s PSPS activities and related fines, see "Business—Southern California Wildfires—Public Safety Power Shutoff."
SCE establishes the criteria under which it implements PSPS in its service area. To the extent SCE's criteria for implementing PSPS are not sufficient to mitigate the risk of wildfires during high wind events, SCE does not fully implement PSPS when criteria are met due to other overriding conditions or SCE's regulators or others mandate changes to, or restrictions on, its criteria or other operational PSPS practices, SCE will face a higher likelihood of catastrophic wildfires in its service area during high wind events. Similarly, if SCE is prohibited by the CPUC from implementing its desired fast-curve settings, SCE will face a higher likelihood of catastrophic wildfires in its service area.
For more information on AB 1054, see "Business—Southern California Wildfires—Recovery of Wildfire-Related Costs—2019 Wildfire Legislation."
SCE will not benefit from all of the features of AB 1054 if the Wildfire Insurance Fund is exhausted.
Catastrophic wildfires could rapidly exhaust the Wildfire Insurance Fund and SCE will not be reimbursed by the Wildfire Insurance Fund or benefit from the AB 1054 Liability Cap if the fund has been exhausted as a result of damage claims previously incurred by SCE or the other participating utilities. AB 1054 does not have a mechanism for adding to or replenishing the Wildfire Insurance Fund.
For more information on AB 1054, see "Business—Southern California Wildfires and Mudslides—Recovery of Wildfire-Related Costs—2019 Wildfire Legislation."
Climate change exacerbated weather-related incidents and other natural disasters have and could continue to materially affect SCE's financial condition and results of operations.
Weather-related incidents, including storms and events caused, or exacerbated, by climate change, such as wildfires, flooding and debris flows, and other natural disasters such as earthquakes can disrupt the generation and transmission of
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electricity, and can seriously damage the infrastructure necessary to deliver power to SCE's customers. The impacts of climate change continue to evolve and remain dynamic and unpredictable.
Climate change has caused, and exacerbated, extreme weather events and wildfires in southern California, and wildfires could cause, among other things, public safety issues, property damage and operational issues. In addition, the risk of flooding and debris flows occurring as a result of rain may be heightened. For example, the Eaton Fire that ignited in Los Angeles County in January 2025 resulted in loss of life, property damage and loss of service and subsequent extreme weather events such as increased rain or flooding could further impact the affected areas. For more information on liabilities related to wildfire events, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Extreme heat events have and can continue to lead to prolonged widespread outages due to, among other things, state-wide capacity supply shortages or equipment failure. Extreme weather events can also lead to use of PSPS. Weather-related events, such as debris flows, flooding and melting of a significantly higher than normal snowpack, and earthquakes can cause over-topping or failure at an SCE dam resulting in a rapid release of water that could cause public safety issues, property damage and operational issues.
Weather-related incidents and other natural disasters can lead to lost revenue and increased expense, including higher maintenance and repair costs, which SCE may not be able to recover from its customers. These incidents can also result in regulatory penalties and disallowances, particularly if SCE encounters difficulties in restoring power to its customers on a timely basis or if fire-related losses are found to be the result of utility practices and/or the failure of electric and other utility equipment. In addition, these occurrences could lead to significant claims for damages, including for loss of life and property damage. These occurrences could materially affect SCE's business, financial condition and results of operations, and the inability to restore power to SCE's customers could also materially damage the business reputation of SCE and Edison International.
For additional information related to climate related risks, see "Business—Environmental Considerations—Environmental Risks."
The generation, transmission and distribution of electricity are dangerous and involve inherent risks of damage to private property and injury to SCE's workforce and the general public.
Electricity poses hazards for SCE's workforce and the general public should they come in contact with electrical current or equipment, including through energized downed power lines or if equipment malfunctions. In addition, the risks associated with the operation of transmission and distribution assets and power generation and storage facilities include public and workforce safety issues and the risk of utility assets causing or contributing to wildfires.
Injuries and property damage caused by such events can subject SCE to liability that, despite the existence of insurance coverage, can be significant. In addition, SCE may be held responsible for the actions of its contractors and from time to time, SCE is named as a party in legal proceedings involving claims related to its contractors and their employees. No assurance can be given that future losses will not exceed the limits of SCE's or its contractors' insurance coverage. Litigation and other legal processes are subject to inherent uncertainties, including, costs of litigation, unpredictable court or jury decisions, and the differing laws and sentiments regarding damage awards in regions where SCE operates.
The CPUC has increased its focus on public safety with an emphasis on heightened compliance with construction and operating standards and the potential for penalties being imposed on utilities. Additionally, the CPUC has delegated to its staff the authority to issue citations to electric utilities, which can impose fines of up to $100,000 per violation per day (capped at a maximum of $8 million), pursuant to the CPUC's jurisdiction for violations of safety rules found in statutes, regulations, and the CPUC's General Orders. The CPUC also can issue fines greater than $8 million outside of the citation program. Such penalties and liabilities could be significant and materially affect SCE's liquidity and results of operations.
SCE's financial condition and results of operations could be materially affected if it is unable to successfully manage the risks inherent in constructing, operating, and maintaining its facilities and workforce.
SCE's infrastructure is aging and could pose a risk to system reliability if not sufficiently maintained and expanded to meet load growth and electrification needs. In addition, as described above, natural disasters such as wildfires in SCE's service area can cause significant public safety issues, property damage and operational issues. SCE is engaged in a significant and ongoing infrastructure investment program. This investment program, which includes transmission projects and constructing utility owned storage to mitigate possible state-wide capacity shortages in 2025 and later years, has inherent operational risks and elevates the need for effective execution in SCE's activities. For example, utility owned storage facilities utilize lithium-ion battery technology that in certain circumstances can and have caused a thermal event that can ignite nearby materials, including other lithium-ion cells particularly when deployed in indoor facilities. SCE's financial condition and results of operations could be materially affected if it is unable to successfully manage these risks as well as the risks inherent in constructing, operating, and maintaining its facilities, the operation of which can be hazardous and
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important for system reliability. SCE's inherent operating risks include such matters as the risks of human performance, availability of skilled workforce and workforce capabilities, contractor management, data and records accuracy, public opposition to infrastructure projects, delays, environmental remediation and mitigation costs, difficulty in estimating costs or in recovering costs that are above original estimates, system limitations and degradation, maintaining physical security of workforce and assets, maintaining cybersecurity of data and assets, and delays and interruptions in necessary supplies, including key components necessary for the timely construction of utility owned storage. For example, SCE's financial condition may be materially affected as a result of safety incidents, delays, permitting violations and violations of regulatory requirements, among other things, caused by SCE's failure to appropriately manage its contractor workforce or from contractual violations by SCE's contractors and the inability for SCE to recover through contractual indemnities or insurance held by the contractor. SCE's financial condition may also be materially affected as a result of data or records inaccuracies, for example, inaccurate records could lead to missing or delayed compliance with SCE's policies and regulatory requirements, and could contribute to safety incidents.
SCE's financial condition and results of operations could also be materially affected if SCE is unable to attract, train and retain a qualified workforce, and provide safe working conditions for its workforce, including its operations and management personnel. Constrained labor market in California and nationally and SCE's relations with its unionized workforce also impact SCE's ability to maintain its workforce. For example, the increased electrification efforts in California and nationally have led to greater competition for certain skilled workers.
There are inherent risks associated with owning and decommissioning nuclear power generation facilities and obtaining cost reimbursement, including, among other things, insufficiency of nuclear decommissioning trust funds, costs exceeding current estimates, execution risks, potential harmful effects on the environment and human health and the hazards of storage, handling and disposal of radioactive materials. Existing insurance and ratemaking arrangements may not protect SCE fully against losses from a nuclear incident.
SCE funds decommissioning costs with assets that are currently held in nuclear decommissioning trusts. Based upon the financial performance of the nuclear decommissioning trust fund investments, as well as the resolution of a number of other uncertainties, assumptions and estimates, additional contributions to the nuclear decommissioning trust's funds may be required. If additional contributions to the nuclear decommissioning trust funds become necessary, recovery of any such additional funds through electric rates is subject to the CPUC's review and approval.
The costs of decommissioning San Onofre are subject to reasonableness reviews by the CPUC. These costs may not be recoverable through regulatory processes or otherwise unless SCE can establish that the costs were reasonably incurred. In addition, SCE faces inherent execution risks including such matters as the risks of human performance, workforce capabilities, public opposition, permitting delays, and governmental approvals. Decommissioning costs ultimately incurred could exceed the current estimates and cost increases resulting from contractual disputes, delays in performance by DCG, elevated levels of inflation, or permitting delays, among other things, could cause SCE to materially overrun current decommissioning cost estimates and could materially impact the sufficiency of trust funds. See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" in the MD&A.
Even though San Onofre is being decommissioned, the presence of spent nuclear fuel still poses a potential risk of a nuclear incident. Federal law limits public liability claims from a nuclear incident to the amount of available financial protection, which is currently approximately $16.3 billion for Palo Verde and $560 million for San Onofre. SCE and other owners of San Onofre and Palo Verde have purchased the maximum private primary insurance available of $500 million per site. In the case of San Onofre, the balance is covered by a U.S. Government indemnity. In the case of Palo Verde, the balance is covered by a loss sharing program among nuclear reactor licensees. There is no assurance that the CPUC would allow SCE to recover the required contribution made pursuant to this loss sharing program in the case of one or more nuclear incidents with claims that exceeded $500 million at a nuclear reactor which is participating in the program. If this public liability limit of $16.3 billion is insufficient, federal law contemplates that additional funds may be appropriated by Congress. There can be no assurance of SCE's ability to recover uninsured costs in the event the additional federal appropriations are insufficient. For more information on nuclear insurance risk, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Nuclear Insurance."
SCE's distribution of water and propane gas on Catalina Island involves inherent risks of damage to private property and the environment and injury to employees and the general public.
SCE owns and operates the water distribution system that serves Catalina Island, California and a propane gas distribution system that serves the City of Avalon on Catalina Island, California. Production, storage, treatment and distribution of water for human use and the transportation, storage, distribution and use of gas can be hazardous, and can cause damage to private property and the environment and injury to employees and the general public if equipment fails or does not perform as anticipated. For example, the risks of operating a water distribution system include the potential for burst pipes and water contamination and the risks of operating gas distribution system include the potential for gas leaks, fire or explosion. The risks related to SCE's operation of its water and gas distribution systems may be exacerbated due to aging
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infrastructure. SCE has, in the past, requested that the CPUC allow SCE to include certain water system costs in electric rates and may make similar requests for the water and gas systems in the future. If such requests are denied, significant costs may not be recoverable from customers. In addition, SCE may have to pay fines, penalties and remediation costs if it does not comply with laws and regulations in the operation of the water and gas distribution systems. An inability to recover costs associated with any such damages or injuries or any fines, penalties or remediation costs, from insurance or through electric rates, could materially affect SCE's business, financial condition and results of operations.
Financing Risks
As a capital-intensive company, SCE relies on access to the bank and capital markets. If SCE were unable to access these markets or the cost of financing were to substantially increase, its liquidity and operations could be materially affected.
SCE regularly accesses the bank and capital markets to finance its activities and is expected to do so by its regulators as part of its obligation to serve its customers. SCE needs substantial capital for its ongoing infrastructure investment program and for financing wildfire related losses. SCE's ability to obtain financing, as well as its ability to refinance debt and make scheduled payments of principal and interest, are dependent on numerous factors, including SCE's levels of indebtedness, maintenance of acceptable credit ratings, financial performance, liquidity and cash flow, increases in interest rates and credit spreads due to inflationary pressures, and other market conditions. In addition, the actions of other California investor-owned utilities and legal, regulatory and legislative decisions impacting investor-owned utilities can affect market conditions and therefore, SCE's ability to obtain financing. SCE's inability to obtain additional capital from time to time could have a material effect on SCE's liquidity and operations.
Competitive and Market Risks
If SCE is unable to operate efficiently and to effectively and timely respond to the changes that the electricity industry is undergoing, as a result of increased load requirements, competition, technological advances, and changes to the regulatory environment, SCE's business model, financial condition and results of operations could be materially impacted.
SCE’s ability to efficiently operate and implement process changes has a direct impact on its ability to execute its strategy, its customer rates and affordability of electricity. Even if SCE’s costs are recoverable, the necessary costs of operations and investments supporting safety, reliability, resilience and being ready to meet California’s clean energy goals will negatively impact the affordability of SCE’s customer rates, may cause reputational harm and cause increased load departures.
Customers and third parties are increasingly deploying DERs, such as solar generation, energy storage, energy efficiency and demand response technologies. California's environmental policy objectives are accelerating the pace and scope of industry change. This change will require modernization of the electric distribution grid to, among other things, accommodate two-way flows of electricity and increase the grid's capacity to interconnect DERs. In addition, enabling California's clean energy economy goals will require sustained investments in grid modernization, renewable integration projects, energy efficiency programs, energy storage options and electric vehicle infrastructure. If SCE is unable to operate efficiently and adapt to these changes, its business model, its ability to execute on its strategy, and ultimately its financial condition and results of operations could be materially impacted.
Customer-owned generation and load departures to CCAs or Electric Service Providers each reduce the amount of electricity that customers purchase from utilities and have the effect of increasing utility rates unless customer rates are designed to allocate the costs of the distribution grid across all customers that benefit from its use. For example, some customers in California who generate their own power are not currently required to pay all transmission and distribution charges and non-bypassable charges, subject to limitations, which results in increased costs for other customers. If there are not updates in regulations to further support the need for customers pay their share of transmission and distribution costs and non-bypassable charges, for example through a higher fixed charge, and the demand for electricity reduces so significantly that SCE is no longer effectively able to recover such costs from its customers, SCE's business, financial condition and results of operations will be materially impacted.
In addition, the FERC has opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities.
For more information. See "Business—SCE—Competition."
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RISKS RELATING TO EDISON INTERNATIONAL AND SOUTHERN CALIFORNIA EDISON COMPANY
Cybersecurity and Physical Security Risks
Successful attacks on SCE information and operational technology systems and infrastructure could have a material impact on SCE's operations or financial condition
Edison International and SCE systems, assets and personnel are targets for physical and cyber attacks. Regulators such as NERC and U.S. Government agencies, including the Departments of Defense, Homeland Security, and Energy, have increasingly stressed that threat sources continue to seek to identify and exploit vulnerabilities in the U.S. national electric grid and other critical energy infrastructures, and that such attacks and disruptions, both physical and cyber, are highly sophisticated and dynamic. Several U.S. Government agencies have highlighted the increasing risks related to physical and cybersecurity attacks, including ransomware attacks, related to the electric sector, including its supply chain, and that the risks may escalate during periods of heightened geopolitical tensions.
SCE requires the uninterrupted use of sophisticated information and operational technology systems and infrastructure to monitor and operate the electric grid. In the regular course of SCE’s business, it also handles a range of sensitive infrastructure, security, employee, customer, and business systems information. If SCE's information technology and operational technology systems' security were to be compromised by physical or electronic means or a critical system or technology failure were to occur without timely recovery, including failure of new technology to be implemented as designed, SCE could be unable to fulfill critical business functions and/or sensitive information could be misappropriated or compromised. Such events could result in violations of privacy and other laws, material financial loss to SCE and/or to its customers, loss of confidence in SCE's security risk management, customer dissatisfaction, and significant litigation and/or regulatory exposure, all of which could materially affect Edison International’s and SCE's financial condition, operations, and the business reputation of Edison International and SCE.
SCE's security program cannot prevent all attacks or incidents
SCE's systems have experienced, and will continue to face, cyber and physical security events involving malicious code, unauthorized access attempts, vandalism and other illicit activities. No security program can completely shield its systems, infrastructure, and data from attacks, intrusions, or other catastrophic events that could result in their failure or reduced functionality. There is no guarantee that SCE's security program, including prevention, detection, mitigation, and remediation of risks, will prevent all future cyber and physical security incidents that could materially impact its operations or financial condition.
SCE is not able to anticipate and prevent all physical and cyber attacks or information security breaches, and its investments in security resources, talent, and business practices may not be effective against all threat actors, particularly nation-state actors. Voluntary cybersecurity guidelines and practices cannot be applied to all businesses equally due to system capability, complexity, and resources for implementation. SCE's security tools and controls, including those supporting configuration management, identity and access management, network segmentation, and boundary defenses, may not fully protect against unauthorized access from internal and external threats. SCE's current security controls and defenses may also not protect against insider threats, including deliberate and unintentional actions (e.g., human error) and other emerging cybersecurity risks created by artificial intelligence, quantum computing, cyber skills shortages, and regulatory constraints.
SCE's security program is prioritized based on known risks, available resources, and regulatory requirements, and therefore all SCE assets are not equally protected. For example, not all of SCE's information technology assets are inventoried, which could result in unmitigated vulnerabilities or slow the detection, investigation, and recovery of an incident. Known vulnerabilities in SCE's information technology and operational technology environments may not be remediated before an adversary could discover or exploit them. Attackers can also exploit new, unknown vulnerabilities (e.g., zero day) and vulnerabilities where a patch or other remediation measure is not yet available.
SCE's transition to a more network-connected grid and increased deployment of new technologies increases the number of systems adversaries can target
SCE's operations require the continuous availability and deployment of critical information and operational technology systems, sensitive customer and employee data and infrastructure information, all of which are targets for malicious actors. New cyber and physical threats arise as SCE moves to an increasingly digital electric grid. For example, SCE's grid modernization efforts and the transition to a more connected grid, including the integration of new technologies and increased networking of operational technology assets such as substations, increases the threat surface and potential vulnerabilities that an adversary can target. As new systems are developed or procured by SCE, software development practices may not comprehensively prevent the introduction of new software vulnerabilities. Additionally, certain existing or legacy information technology, operational technology, and communications infrastructure use less secure protocols or configurations.
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Vendors and other third parties may be used to target and attack SCE
SCE interacts with a wide array of third parties and depends on vendors to provide it with products and services. Malicious actors may attack vendors to disrupt the services they provide to SCE, or to use those vendors as a conduit to attack SCE. SCE system data and architecture are also disclosed, either voluntarily or by mandate, to third parties and the public by regulators, employees, contractors, and vendors. This system data may be used by malicious actors to understand SCE’s systems to prepare for a cyber or physical attack.
The products and services provided by SCE's vendors may contain vulnerabilities or otherwise not adhere to SCE's enterprise cybersecurity standards (e.g., lack of encryption). Additionally, SCE's operational technology vendors have increasingly been targeted by threat actors. A compromise of equipment and/or exfiltration of SCE data, whether by physical or by electronic means, could result in loss or changes to confidential or sensitive information and interruption of business processes. For example, compromises to widely-used products and services may affect the supply chains of many industries, including companies in SCE’s supply chain. While SCE vendors have experienced cybersecurity incidents, such incidents have not, to SCE's knowledge, resulted in a material impact to SCE to date.
Global and Regional Risks
Edison International's and SCE's financial condition and results of operations could be materially impacted by catastrophic, macroeconomic and geopolitical events that cause significant disruption to workforces, supply chains, economies, or societies on a regional, statewide, national or global basis.
Edison International and SCE could be materially and adversely impacted by catastrophic, macroeconomic and geopolitical events, such as the effects of increased inflationary pressures and interest rates, potential economic downturns or recessions, geopolitical pressures, and pandemics and regional health emergencies. For example, the global spread of COVID-19, which was declared a pandemic by the World Health Organization in March 2020, created significant uncertainty, volatility and disruption globally that resulted in, among other things, disruption to supply chains, economies, and workforce and impacted the operations of Edison International and SCE. Additionally, the geopolitical developments involving the Russia-Ukraine conflict, China and the Middle East, could cause delays and disruptions in the supply chain and the availability and timely delivery of services, materials and components used in SCE’s operations. Political changes following the United States presidential election could lead to changes in economic conditions or economic uncertainties in the United States and globally, including impacts to infrastructure investments, tariffs, taxes, and energy, environmental and social policies.
Many of the risks and uncertainties identified in this Form 10-K have, and will be, exacerbated by the impacts of a catastrophic event and the actions taken by governmental entities, businesses, individuals and others in response to such an event. In addition, impacts of international conflict, recession, pandemic or similar events on SCE's customers and third parties could also result in SCE facing, among other things, significant reductions in demand for electricity and payment delays and/or defaults from customers which could result in significant under-collections. Edison International and SCE access to the bank and capital markets and/or the costs of accessing those markets could be constrained and could also face payment delays and/or defaults from insurers and other counterparties. These impacts, among others, could materially and adversely impact Edison International's and SCE's business, operations, cash flows, liquidity and financial results.
Edison International's and SCE's business activities are concentrated in one industry and in one region.
Substantially all of Edison International's and all of SCE's business activities are concentrated in the electric utility industry. Edison International's principal subsidiary, SCE, serves customers only in southern and central California. As a result, Edison International's and SCE's future performance may be affected by events and economic factors unique to California or by regional regulation, legislation or judicial decisions. For example, California courts have applied strict liability to investor-owned utilities in wildfire and other litigation matters. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responding to this section is included in the MD&A under the heading "Market Risk Exposures."
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Edison International
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Edison International and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of condensed financial information of parent as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Wildfire-Related Claims - 2017/2018 Wildfire/Mudslide Events
As described in Note 12 to the consolidated financial statements, the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire (collectively, the "2017/2018 Wildfire/Mudslide Events") within the Company's service area caused loss of life, substantial damage to both residential and business properties, and service outages for the Company's customers. Numerous claims related to wildfire events have been initiated against the Company. The Company has incurred material losses in connection with the 2017/2018 Wildfire/Mudslide Events. As disclosed by management, management records loss contingencies when it determines that the outcome of future events is probable of occurring and when the amount of the loss can be reasonably estimated. As of December 31, 2024, the Company had paid $9.5 billion under executed settlements, had $86 million to be paid under executed settlements, including $57 million to be paid under the Safety and Enforcement Division agreement, and had $340 million of estimated losses for remaining alleged and potential claims reflected on its consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, the Company had assets for expected recoveries through Federal Energy Regulatory Commission (FERC) electric rates of $64 million on its consolidated balance sheets and had exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Each reporting period, management reviews the Company’s loss estimates for remaining alleged and potential claims related to wildfire events. The process for estimating losses associated with alleged and potential wildfire related claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling wildfire litigation claims. As additional information becomes available, management's estimates and assumptions regarding the causes and financial impact of wildfire events may change. For the year ended December 31, 2024 management recorded charges for wildfire claims of $490 million and expected revenue from FERC customers of $27 million. The resulting pre-tax charge to earnings was $463 million ($333 million after-tax).
The principal considerations for our determination that performing procedures relating to the wildfire-related claims from the 2017/2018 Wildfire/Mudslide Events is a critical audit matter are (i) the significant judgment by management when determining whether the outcome of future events is probable of occurring and whether the amount of the loss can be reasonably estimated as well as in estimating losses associated with alleged and potential claims related to wildfire events and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's significant assumptions related to estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, and prior experience litigating and settling wildfire litigation claims.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's assessment of loss contingencies associated with alleged and potential claims related to wildfire events. These procedures also included, among others (i) obtaining and evaluating the letters of audit inquiry with internal and external legal counsel; (ii) assessing the reasonableness of management's assessment regarding whether the outcome of future events is probable of occurring and whether the amount of the loss can be reasonably estimated; (iii) evaluating the appropriateness of the methods used by management in estimating losses associated with alleged and potential claims related to wildfire events; (iv) evaluating the reasonableness of the significant assumptions related to estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, and prior experience litigating and settling wildfire litigation claims; and (v) testing, on a sample basis, damage claim settlements. Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) current damage claim settlements; (ii) past wildfire litigation history; and (iii) third-party source data.
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Accounting for the Effects of Rate Regulation
As described in Notes 1 and 11 to the consolidated financial statements, the Company's accounting policies conform to accounting principles generally accepted in the United States of America, including the accounting principles for rate-regulated enterprises, which reflect the ratemaking policies of the California Public Utility Commission (CPUC) and the FERC. Management applies authoritative guidance for rate-regulated enterprises to the portion of the Company’s operations in which regulators set rates at levels intended to recover the estimated costs of providing service, plus a return on net investments in assets, or rate base. Regulators may also impose certain penalties or grant certain incentives. Due to timing and other differences in the collection of electric utility revenue, these accounting principles require an incurred cost that would otherwise be charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable that the cost is recoverable through future rates; and conversely the accounting principles require recording of a regulatory liability for amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and refundable to customers. As disclosed by management, management assesses at the end of each reporting period whether regulatory assets are probable of future recovery by considering factors such as the current regulatory environment, the issuance of rate orders on recovery of the specific or a similar incurred cost to the Company or other rate-regulated entities, and other factors that would indicate that the regulator will treat an incurred cost as allowable for ratemaking purposes. As of December 31, 2024, $11.6 billion was recorded in regulatory assets and $11.5 billion was recorded in regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company's accounting for the effects of rate regulation is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to (i) accounting for the effect of rate regulation on regulatory assets and liabilities and (ii) management’s assessment of the recoverability and settlement of existing and new regulatory assets and liabilities.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company's regulatory accounting process, including controls over management’s assessment of the recoverability and settlement of existing and new regulatory assets and liabilities. These procedures also included, among others (i) obtaining and evaluating the Company's correspondence with regulators; (ii) evaluating management's assessment regarding the probability of recovery of regulatory assets and settlement of regulatory liabilities at the balance sheet date; (iii) evaluating the appropriateness of the accounting for the effects of the rate regulation; (iv) evaluating the sufficiency of the disclosure; and (v) testing, on a sample basis, the calculation of regulatory assets and regulatory liabilities based on provisions outlined in the rate orders.
/s/PricewaterhouseCoopers LLP
Los Angeles, California
February 27, 2025
We have served as the Company’s auditor since 2002.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Southern California Edison Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Southern California Edison Company and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Wildfire-Related Claims - 2017/2018 Wildfire/Mudslide Events
As described in Note 12 to the consolidated financial statements, the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire (collectively, the "2017/2018 Wildfire/Mudslide Events") within the Company's service area caused loss of life, substantial damage to both residential and business properties, and service outages for the Company's customers. Numerous claims related to wildfire events have been initiated against the Company. The Company has incurred material losses in connection with the 2017/2018 Wildfire/Mudslide Events. As disclosed by management, management records loss contingencies when it determines that the outcome of future events is probable of occurring and when the amount of the loss can be reasonably estimated. As of December 31, 2024, the Company had paid $9.5 billion under executed settlements, had $86 million to be paid under executed settlements, including $57 million to be paid under the Safety and Enforcement Division agreement, and had $340 million of estimated losses for remaining alleged and potential claims reflected on its consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, the Company had assets for expected recoveries through Federal Energy Regulatory Commission (FERC) electric rates of $64 million on its consolidated balance sheets and had exhausted expected insurance recoveries related to
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the 2017/2018 Wildfire/Mudslide Events. Each reporting period, management reviews the Company’s loss estimates for remaining alleged and potential claims related to wildfire events. The process for estimating losses associated with alleged and potential wildfire related claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling wildfire litigation claims. As additional information becomes available, management's estimates and assumptions regarding the causes and financial impact of wildfire events may change. For the year ended December 31, 2024 management recorded charges for wildfire claims of $490 million and expected revenue from FERC customers of $27 million. The resulting pre-tax charge to earnings was $463 million ($333 million after-tax).
The principal considerations for our determination that performing procedures relating to the wildfire-related claims from the 2017/2018 Wildfire/Mudslide Events is a critical audit matter are (i) the significant judgment by management when determining whether the outcome of future events is probable of occurring and whether the amount of the loss can be reasonably estimated as well as in estimating losses associated with alleged and potential claims related to wildfire events and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's significant assumptions related to estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, and prior experience litigating and settling wildfire litigation claims.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's assessment of loss contingencies associated with alleged and potential claims related to wildfire events. These procedures also included, among others (i) obtaining and evaluating the letters of audit inquiry with internal and external legal counsel; (ii) assessing the reasonableness of management's assessment regarding whether the outcome of future events is probable of occurring and whether the amount of the loss can be reasonably estimated; (iii) evaluating the appropriateness of the methods used by management in estimating losses associated with alleged and potential claims related to wildfire events; (iv) evaluating the reasonableness of the significant assumptions related to estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, and prior experience litigating and settling wildfire litigation claims; and (v) testing, on a sample basis, damage claim settlements. Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) current damage claim settlements; (ii) past wildfire litigation history; and (iii) third-party source data.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 11 to the consolidated financial statements, the Company's accounting policies conform to accounting principles generally accepted in the United States of America, including the accounting principles for rate-regulated enterprises, which reflect the ratemaking policies of the California Public Utility Commission (CPUC) and the FERC. Management applies authoritative guidance for rate-regulated enterprises to the portion of the Company’s operations in which regulators set rates at levels intended to recover the estimated costs of providing service, plus a return on net investments in assets, or rate base. Regulators may also impose certain penalties or grant certain incentives. Due to timing and other differences in the collection of electric utility revenue, these accounting principles require an incurred cost that would otherwise be charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable that the cost is recoverable through future rates; and conversely the accounting principles require recording of a regulatory liability for amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and refundable to customers. As disclosed by management, management assesses at the end of each reporting period whether regulatory assets are probable of future recovery by considering factors such as the current regulatory environment, the issuance of rate orders on recovery of the specific or a similar incurred cost to the Company or other rate-regulated entities, and other factors that would indicate that the regulator will treat an incurred cost as allowable for ratemaking purposes. As of December 31, 2024, $11.6 billion was recorded in regulatory assets and $11.5 billion was recorded in regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company's accounting for the effects of rate regulation is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to (i) accounting for the effect of rate regulation on regulatory assets and liabilities and (ii) management’s assessment of the recoverability and settlement of existing and new regulatory assets and liabilities.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company's regulatory accounting process, including controls over management’s assessment of the recoverability and settlement of existing and new regulatory assets and liabilities. These procedures also included, among
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others (i) obtaining and evaluating the Company's correspondence with regulators; (ii) evaluating management's assessment regarding the probability of recovery of regulatory assets and settlement of regulatory liabilities at the balance sheet date; (iii) evaluating the appropriateness of the accounting for the effects of the rate regulation; (iv) evaluating the sufficiency of the disclosure; and (v) testing, on a sample basis, the calculation of regulatory assets and regulatory liabilities based on provisions outlined in the rate orders.
/s/PricewaterhouseCoopers LLP
Los Angeles, California
February 27, 2025
We have served as the Company’s auditor since 2002.
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CONSOLIDATED FINANCIAL STATEMENTS
| Consolidated Statements of Income | Edison International | | --- | --- || | Years ended December 31, | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in millions, except per-share amounts) | 2024 | | 2023 | | 2022 | | | Operating revenue | $ | 17,599 | $ | 16,338 | $ | 17,220 | | Purchased power and fuel | 5,209 | | 5,486 | | 6,375 | | | Operation and maintenance | 5,172 | | 4,138 | | 4,724 | | | Wildfire-related claims, net of insurance recoveries | 652 | | 667 | | 1,313 | | | Wildfire Insurance Fund expense | 146 | | 213 | | 214 | | | Depreciation and amortization | 2,866 | | 2,635 | | 2,561 | | | Property and other taxes | 624 | | 571 | | 501 | | | Impairment, net of other operating income | — | | 1 | | 49 | | | Total operating expenses | 14,669 | | 13,711 | | 15,737 | | | Operating income | 2,930 | | 2,627 | | 1,483 | | | Interest expense | (1,869) | | (1,612) | | (1,169) | | | Other income, net | 502 | | 500 | | 348 | | | Income before income taxes | 1,563 | | 1,515 | | 662 | | | Income tax expense (benefit) | 17 | | 108 | | (162) | | | Net income | 1,546 | | 1,407 | | 824 | | | Less: Preference stock dividend requirements of SCE | 175 | | 123 | | 107 | | | Preferred stock dividend requirements of Edison International | 87 | | 87 | | 105 | | | Net income available to Edison International common shareholders | 1,284 | | 1,197 | | 612 | | | Basic earnings per share: | | | | | | | | Weighted average shares of common stock outstanding | 386 | | 383 | | 381 | | | Basic earnings per common share available to Edison International common shareholders | $ | 3.33 | $ | 3.12 | $ | 1.61 | | Diluted earnings per share: | | | | | | | | Weighted average shares of common stock outstanding, including effect of dilutive securities | 388 | | 385 | | 383 | | | Diluted earnings per common share available to Edison International common shareholders | $ | 3.31 | $ | 3.11 | $ | 1.60 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Comprehensive Income | Edison International | | --- | --- || | Years ended December 31, | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | 2022 | | | Net income | $ | 1,546 | $ | 1,407 | $ | 824 | | Other comprehensive income (loss), net of tax: | | | | | | | | Pension and postretirement benefits other than pensions | 9 | | (1) | | 43 | | | Foreign currency translation adjustments | — | | 3 | | — | | | Other comprehensive income, net of tax | 9 | | 2 | | 43 | | | Comprehensive income | 1,555 | | 1,409 | | 867 | | | Less: Comprehensive income attributable to noncontrolling interests | 175 | | 123 | | 107 | | | Comprehensive income attributable to Edison International | $ | 1,380 | $ | 1,286 | $ | 760 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Balance Sheets | Edison International | | --- | --- || | December 31, | | | | | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | | ASSETS | | | | | | Cash and cash equivalents | $ | 193 | $ | 345 | | Receivables, less allowances of $352 and $360 for uncollectible accounts at respective dates | 2,169 | | 2,016 | | | Accrued unbilled revenue | 848 | | 742 | | | Inventory | 538 | | 527 | | | Prepaid expenses | 103 | | 112 | | | Regulatory assets | 2,748 | | 2,524 | | | Wildfire Insurance Fund contributions | 138 | | 204 | | | Other current assets | 418 | | 341 | | | Total current assets | 7,155 | | 6,811 | | | Nuclear decommissioning trusts | 4,286 | | 4,173 | | | Other investments | 57 | | 54 | | | Total investments | 4,343 | | 4,227 | | | Utility property, plant and equipment, less accumulated depreciation and amortization of $14,207 and $12,910 at respective dates | 59,047 | | 55,877 | | | Nonutility property, plant and equipment, less accumulated depreciation of $124 and $114 at respective dates | 207 | | 207 | | | Total property, plant and equipment | 59,254 | | 56,084 | | | Receivables, less allowances of $43 and $4 for uncollectible accounts at respective dates | 62 | | 4 | | | Regulatory assets (include $1,512 and $1,558 related to a Variable Interest Entity "VIE" at respective dates) | 8,886 | | 8,897 | | | Wildfire Insurance Fund contributions | 1,878 | | 1,951 | | | Operating lease right-of-use assets | 1,180 | | 1,221 | | | Long-term insurance receivables | 418 | | 501 | | | Other long-term assets | 2,403 | | 2,062 | | | Total other assets | 14,827 | | 14,636 | | | Total assets | $ | 85,579 | $ | 81,758 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Balance Sheets | Edison International | | --- | --- || | December 31, | | | | | --- | --- | --- | --- | --- | | (in millions, except share amounts) | 2024 | | 2023 | | | LIABILITIES AND EQUITY | | | | | | Short-term debt | $ | 998 | $ | 1,077 | | Current portion of long-term debt | 2,049 | | 2,697 | | | Accounts payable | 2,000 | | 1,983 | | | Wildfire-related claims | 60 | | 30 | | | Accrued interest | 422 | | 390 | | | Regulatory liabilities | 1,347 | | 763 | | | Current portion of operating lease liabilities | 124 | | 120 | | | Other current liabilities | 1,439 | | 1,538 | | | Total current liabilities | 8,439 | | 8,598 | | | Long-term debt (include $1,468 and $1,515 related to a VIE at respective dates) | 33,534 | | 30,316 | | | Deferred income taxes and credits | 7,180 | | 6,672 | | | Pensions and benefits | 384 | | 415 | | | Asset retirement obligations | 2,580 | | 2,666 | | | Regulatory liabilities | 10,159 | | 9,420 | | | Operating lease liabilities | 1,056 | | 1,101 | | | Wildfire-related claims | 941 | | 1,368 | | | Other deferred credits and other long-term liabilities | 3,566 | | 3,258 | | | Total deferred credits and other liabilities | 25,866 | | 24,900 | | | Total liabilities | 67,839 | | 63,814 | | | Commitments and contingencies (Note 12) | | | | | | Preferred stock (50,000,000 shares authorized; 1,159,317 shares of Series A and 503,454 and 532,454 shares of Series B issued and outstanding at respective dates) | 1,645 | | 1,673 | | | Common stock, no par value (800,000,000 shares authorized; 384,784,719 and 383,924,912 shares issued and outstanding at respective dates) | 6,353 | | 6,338 | | | Accumulated other comprehensive loss | — | | (9) | | | Retained earnings | 7,567 | | 7,499 | | | Total Edison International's shareholders' equity | 15,565 | | 15,501 | | | Noncontrolling interests – preference stock of SCE | 2,175 | | 2,443 | | | Total equity | 17,740 | | 17,944 | | | Total liabilities and equity | $ | 85,579 | $ | 81,758 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Cash Flows | Edison International | | --- | --- || | Years ended December 31, | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | 2022 | | | Cash flows from operating activities: | | | | | | | | Net income | $ | 1,546 | $ | 1,407 | $ | 824 | | Adjustments to reconcile to net cash provided by operating activities: | | | | | | | | Depreciation and amortization | 2,939 | | 2,721 | | 2,633 | | | Allowance for equity during construction | (187) | | (157) | | (137) | | | Impairment, net of other operating income | — | | 1 | | 49 | | | Deferred income taxes | 9 | | 108 | | (177) | | | Wildfire Insurance Fund amortization expense | 146 | | 213 | | 214 | | | Other | 81 | | 57 | | 80 | | | Nuclear decommissioning trusts | (174) | | (180) | | (123) | | | Contributions to Wildfire Insurance Fund | (95) | | (95) | | (95) | | | Changes in operating assets and liabilities: | | | | | | | | Receivables | (278) | | (349) | | (252) | | | Inventory | (14) | | (63) | | (58) | | | Accounts payable | 53 | | (408) | | 367 | | | Tax receivables and payables | (43) | | 9 | | 18 | | | Other current assets and liabilities | (42) | | 185 | | 207 | | | Derivative assets and liabilities, net | 28 | | (174) | | 115 | | | Regulatory assets and liabilities, net | 1,219 | | 576 | | (51) | | | Wildfire-related insurance receivable | 83 | | (36) | | (390) | | | Wildfire-related claims | (397) | | (410) | | (56) | | | Other noncurrent assets and liabilities | 140 | | (4) | | 48 | | | Net cash provided by operating activities | 5,014 | | 3,401 | | 3,216 | | | Cash flows from financing activities: | | | | | | | | Long-term debt issued, net of discount and issuance costs of $44, $54, and $62 for the respective years | 5,256 | | 5,121 | | 5,971 | | | Long-term debt repaid | (2,701) | | (2,498) | | (1,085) | | | Short-term debt issued | — | | 1,076 | | 1,000 | | | Short-term debt repaid | (401) | | (2,407) | | (1,543) | | | Common stock repurchased | (200) | | — | | — | | | Preferred and preference stock issued, net of issuance cost | 345 | | 542 | | — | | | Preferred and preference stock repurchased and redeemed | (656) | | (289) | | — | | | Commercial paper borrowing (repayments), net | 308 | | 1,102 | | (317) | | | Dividends and distribution to noncontrolling interests | (168) | | (117) | | (110) | | | Common stock dividends paid | (1,198) | | (1,112) | | (1,050) | | | Preferred stock dividends paid | (88) | | (108) | | (99) | | | Other | 177 | | 137 | | 114 | | | Net cash provided by financing activities | 674 | | 1,447 | | 2,881 | | | Cash flows from investing activities: | | | | | | | | Capital expenditures | (5,707) | | (5,448) | | (5,778) | | | Proceeds from sale of nuclear decommissioning trust investments | 5,019 | | 4,597 | | 4,177 | | | Purchases of nuclear decommissioning trust investments | (4,898) | | (4,417) | | (4,054) | | | Other | 50 | | 35 | | 81 | | | Net cash used in investing activities | (5,536) | | (5,233) | | (5,574) | | | Net increase (decrease) in cash, cash equivalents and restricted cash | 152 | | (385) | | 523 | | | Cash, cash equivalents and restricted cash at beginning of year | 532 | | 917 | | 394 | | | Cash, cash equivalents and restricted cash at end of year | $ | 684 | $ | 532 | $ | 917 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Changes in Equity | Edison International | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Attributable to Edison International Shareholders | Noncontrolling<br>Interests | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in millions, except per share amounts) | Preferred<br>Stock | Common<br>Stock | Accumulated<br>Other<br>Comprehensive<br>Loss | Retained<br>Earnings | Subtotal | Preference<br>Stock | Total<br>Equity | |||||||
| Balance at December 31, 2021 | $ | 1,977 | $ | 6,071 | $ | (54) | $ | 7,894 | $ | 15,888 | $ | 1,901 | $ | 17,789 |
| Net income | — | — | — | 717 | 717 | 107 | 824 | |||||||
| Other comprehensive income | — | — | 43 | — | 43 | — | 43 | |||||||
| Common stock issued | — | 87 | — | — | 87 | — | 87 | |||||||
| Common stock dividends declared ($2.8375 per share) | — | — | — | (1,083) | (1,083) | — | (1,083) | |||||||
| Preferred stock dividend accrued ($53.75 per share for Series A and $42.08333 per share for Series B) | — | — | — | (74) | (74) | — | (74) | |||||||
| Dividends to noncontrolling interests ($65.1098 - $143.75 per share for preference stock) | — | — | — | — | — | (107) | (107) | |||||||
| Noncash stock-based compensation | — | 42 | — | — | 42 | — | 42 | |||||||
| Other | 1 | — | — | — | 1 | — | 1 | |||||||
| Balance at December 31, 2022 | 1,978 | 6,200 | (11) | 7,454 | 15,621 | 1,901 | 17,522 | |||||||
| Net income | — | — | — | 1,284 | 1,284 | 123 | 1,407 | |||||||
| Other comprehensive income | — | — | 2 | — | 2 | — | 2 | |||||||
| Common stock issued | — | 92 | — | — | 92 | — | 92 | |||||||
| Common stock dividends declared ($2.9925 per share) | — | — | — | (1,147) | (1,147) | — | (1,147) | |||||||
| Preferred stock dividend declared ($53.75 per share for Series A and $50.00 per share for Series B) | — | — | — | (108) | (108) | — | (108) | |||||||
| Dividends to noncontrolling interests ($96.823 - $143.75 per share for preference stock) | — | — | — | — | — | (123) | (123) | |||||||
| Noncash stock-based compensation | — | 46 | — | — | 46 | — | 46 | |||||||
| Preference stock issued, net of issuance cost | — | — | — | — | — | 542 | 542 | |||||||
| Preferred stock repurchased | (305) | — | — | 16 | (289) | — | (289) | |||||||
| Balance at December 31, 2023 | 1,673 | 6,338 | (9) | 7,499 | 15,501 | 2,443 | 17,944 | |||||||
| Net income | — | — | — | 1,371 | 1,371 | 175 | 1,546 | |||||||
| Other comprehensive income | — | — | 9 | — | 9 | — | 9 | |||||||
| Common stock issued | — | 158 | — | — | 158 | — | 158 | |||||||
| Common stock repurchased | — | (200) | — | — | (200) | — | (200) | |||||||
| Common stock dividends declared ($3.1675 per share) | — | — | — | (1,221) | (1,221) | — | (1,221) | |||||||
| Preferred stock dividend declared ($53.75 per share for Series A and $50.00 per share for Series B) | — | — | — | (88) | (88) | — | (88) | |||||||
| Dividends to noncontrolling interests ($24.418 - $199.479 per share for preference stock) | — | — | — | 6 | 6 | (160) | (154) | |||||||
| Noncash stock-based compensation | — | 57 | — | — | 57 | — | 57 | |||||||
| Preference stock issued, net of issuance cost | — | — | — | — | — | 345 | 345 | |||||||
| Preference stock redeemed | — | — | — | — | — | (628) | (628) | |||||||
| Preferred stock repurchased | (28) | — | — | — | (28) | — | (28) | |||||||
| Balance at December 31, 2024 | $ | 1,645 | $ | 6,353 | $ | — | $ | 7,567 | $ | 15,565 | $ | 2,175 | $ | 17,740 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Income | Southern California Edison Company | | --- | --- || | Years ended December 31, | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | 2022 | | | Operating revenue | $ | 17,547 | $ | 16,275 | $ | 17,172 | | Purchased power and fuel | 5,209 | | 5,486 | | 6,375 | | | Operation and maintenance | 5,064 | | 4,071 | | 4,659 | | | Wildfire-related claims, net of insurance recoveries | 647 | | 665 | | 1,305 | | | Wildfire Insurance Fund expense | 146 | | 213 | | 214 | | | Depreciation and amortization | 2,865 | | 2,633 | | 2,559 | | | Property and other taxes | 620 | | 566 | | 497 | | | Impairment, net of other operating income | — | | 1 | | 50 | | | Total operating expenses | 14,551 | | 13,635 | | 15,659 | | | Operating income | 2,996 | | 2,640 | | 1,513 | | | Interest expense | (1,575) | | (1,356) | | (1,005) | | | Other income, net | 493 | | 497 | | 337 | | | Income before income taxes | 1,914 | | 1,781 | | 845 | | | Income tax expense (benefit) | 120 | | 184 | | (109) | | | Net income | 1,794 | | 1,597 | | 954 | | | Less: Preference stock dividend requirements | 175 | | 123 | | 107 | | | Net income available for common stock | $ | 1,619 | $ | 1,474 | $ | 847 |
The accompanying notes are an integral part of these consolidated financial statements.
| Consolidated Statements of Comprehensive Income | Southern California Edison Company | | --- | --- || | Years ended December 31, | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | 2022 | | | Net income | $ | 1,794 | $ | 1,597 | $ | 954 | | Other comprehensive income (loss), net of tax: | | | | | | | | Pension and postretirement benefits other than pensions | 3 | | (4) | | 24 | | | Other comprehensive income (loss), net of tax | 3 | | (4) | | 24 | | | Comprehensive income | $ | 1,797 | $ | 1,593 | $ | 978 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Balance Sheets | Southern California Edison Company | | --- | --- || | December 31, | | | | | --- | --- | --- | --- | --- | | (in millions) | 2024 | | 2023 | | | ASSETS | | | | | | Cash and cash equivalents | $ | 78 | $ | 214 | | Receivables, less allowances of $347 and $360 for uncollectible accounts at respective dates | 2,160 | | 1,981 | | | Accrued unbilled revenue | 845 | | 741 | | | Inventory | 538 | | 527 | | | Prepaid expenses | 102 | | 111 | | | Regulatory assets | 2,748 | | 2,524 | | | Wildfire Insurance Fund contributions | 138 | | 204 | | | Other current assets | 415 | | 331 | | | Total current assets | 7,024 | | 6,633 | | | Nuclear decommissioning trusts | 4,286 | | 4,173 | | | Other investments | 38 | | 38 | | | Total investments | 4,324 | | 4,211 | | | Utility property, plant and equipment, less accumulated depreciation and amortization of $14,207 and $12,910 at respective dates | 59,047 | | 55,877 | | | Nonutility property, plant and equipment, less accumulated depreciation of $108 and $100 at respective dates | 199 | | 201 | | | Total property, plant and equipment | 59,246 | | 56,078 | | | Receivables, less allowances of $43 and $4 for uncollectible accounts at respective dates | 62 | | 4 | | | Regulatory assets (include $1,512 and $1,558 related to a VIE at respective dates) | 8,886 | | 8,897 | | | Wildfire Insurance Fund contributions | 1,878 | | 1,951 | | | Operating lease right-of-use assets | 1,174 | | 1,214 | | | Long-term insurance receivables | 131 | | 157 | | | Long-term insurance receivables due from affiliate | 303 | | 355 | | | Other long-term assets | 2,317 | | 1,983 | | | Total other assets | 14,751 | | 14,561 | | | Total assets | $ | 85,345 | $ | 81,483 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Balance Sheets | Southern California Edison Company | | --- | --- || | December 31, | | | | | --- | --- | --- | --- | --- | | (in millions, except share amounts) | 2024 | | 2023 | | | LIABILITIES AND EQUITY | | | | | | Short-term debt | $ | 553 | $ | 831 | | Current portion of long-term debt | 1,249 | | 2,197 | | | Accounts payable | 2,078 | | 1,966 | | | Wildfire-related claims | 60 | | 30 | | | Accrued interest | 385 | | 355 | | | Regulatory liabilities | 1,347 | | 763 | | | Current portion of operating lease liabilities | 123 | | 118 | | | Other current liabilities | 1,495 | | 1,535 | | | Total current liabilities | 7,290 | | 7,795 | | | Long-term debt (include $1,468 and $1,515 related to a VIE at respective dates) | 29,266 | | 26,297 | | | Deferred income taxes and credits | 8,697 | | 8,126 | | | Pensions and benefits | 92 | | 105 | | | Asset retirement obligations | 2,580 | | 2,666 | | | Regulatory liabilities | 10,159 | | 9,420 | | | Operating lease liabilities | 1,051 | | 1,096 | | | Wildfire-related claims | 941 | | 1,368 | | | Other deferred credits and other long-term liabilities | 3,518 | | 3,206 | | | Total deferred credits and other liabilities | 27,038 | | 25,987 | | | Total liabilities | 63,594 | | 60,079 | | | Commitments and contingencies (Note 12) | | | | | | Preference stock | 2,220 | | 2,495 | | | Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at respective dates) | 2,168 | | 2,168 | | | Additional paid-in capital | 8,950 | | 8,446 | | | Accumulated other comprehensive loss | (9) | | (12) | | | Retained earnings | 8,422 | | 8,307 | | | Total equity | 21,751 | | 21,404 | | | Total liabilities and equity | $ | 85,345 | $ | 81,483 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Cash Flows | Southern California Edison Company | |||||
|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (in millions) | 2024 | 2023 | 2022 | |||
| Cash flows from operating activities: | ||||||
| Net income | $ | 1,794 | $ | 1,597 | $ | 954 |
| Adjustments to reconcile to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 2,929 | 2,710 | 2,626 | |||
| Allowance for equity during construction | (187) | (157) | (137) | |||
| Impairment, net of other operating income | — | 1 | 50 | |||
| Deferred income taxes | 69 | 179 | (111) | |||
| Wildfire Insurance Fund amortization expense | 146 | 213 | 214 | |||
| Other | 56 | 33 | 59 | |||
| Nuclear decommissioning trusts | (174) | (180) | (123) | |||
| Contributions to Wildfire Insurance Fund | (95) | (95) | (95) | |||
| Changes in operating assets and liabilities: | ||||||
| Receivables | (298) | (336) | (245) | |||
| Inventory | (14) | (63) | (58) | |||
| Accounts payable | 148 | (413) | 366 | |||
| Tax receivables and payables | (44) | 4 | (1) | |||
| Other current assets and liabilities | (41) | 220 | 150 | |||
| Derivative assets and liabilities, net | 28 | (174) | 115 | |||
| Regulatory assets and liabilities, net | 1,219 | 576 | (51) | |||
| Wildfire-related insurance receivable | 78 | (39) | (398) | |||
| Wildfire-related claims | (397) | (410) | (56) | |||
| Other noncurrent assets and liabilities | 166 | 15 | 60 | |||
| Net cash provided by operating activities | 5,383 | 3,681 | 3,319 | |||
| Cash flows from financing activities: | ||||||
| Long-term debt issued, net of discount and issuance costs of $36, $37 and $51 for the respective years | 4,214 | 3,588 | 5,032 | |||
| Long-term debt repaid | (2,201) | (2,098) | (385) | |||
| Short-term debt borrowed | — | 706 | — | |||
| Short-term debt repaid | (386) | (1,051) | (1,543) | |||
| Capital contributions from Edison International Parent | 500 | — | 1,400 | |||
| Preference stock issued, net of issuance cost | 345 | 542 | — | |||
| Preference stock redeemed | (628) | — | — | |||
| Commercial paper borrowing (repayments), net | 94 | 963 | (406) | |||
| Common stock dividends paid | (1,440) | (1,400) | (1,300) | |||
| Preference stock dividends paid | (168) | (117) | (110) | |||
| Other | (16) | 49 | 36 | |||
| Net cash provided by financing activities | 314 | 1,182 | 2,724 | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (5,703) | (5,446) | (5,776) | |||
| Proceeds from sale of nuclear decommissioning trust investments | 5,019 | 4,597 | 4,177 | |||
| Purchases of nuclear decommissioning trust investments | (4,898) | (4,417) | (4,054) | |||
| Other | 52 | 35 | 96 | |||
| Net cash used in investing activities | (5,530) | (5,231) | (5,557) | |||
| Net increase (decrease) in cash and cash equivalents | 167 | (368) | 486 | |||
| Cash, cash equivalents and restricted cash at beginning of year | 398 | 766 | 280 | |||
| Cash, cash equivalents and restricted cash at end of year | $ | 565 | $ | 398 | $ | 766 |
The accompanying notes are an integral part of these consolidated financial statements.
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| Consolidated Statements of Changes in Equity | Southern California Edison Company | | --- | --- || (in millions, except per share amounts) | Preference<br>Stock | | Common<br>Stock | | Additional<br>Paid-in<br>Capital | | Accumulated<br>Other<br>Comprehensive<br>Loss | | Retained<br>Earnings | | Total<br>Equity | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at December 31, 2021 | $ | 1,945 | $ | 2,168 | $ | 7,033 | $ | (32) | $ | 8,721 | $ | 19,835 | | Net income | — | | — | | — | | — | | 954 | | 954 | | | Other comprehensive income | — | | — | | — | | 24 | | — | | 24 | | | Capital contribution from Edison International Parent | — | | — | | 1,400 | | — | | — | | 1,400 | | | Dividends declared on common stock ($3.0468 per share) | — | | — | | — | | — | | (1,325) | | (1,325) | | | Dividends declared on preference stock ($65.1098 - $143.75 per share) | — | | — | | — | | — | | (107) | | (107) | | | Stock-based compensation | — | | — | | (14) | | — | | — | | (14) | | | Noncash stock-based compensation | — | | — | | 22 | | — | | — | | 22 | | | Balance at December 31, 2022 | $ | 1,945 | $ | 2,168 | $ | 8,441 | $ | (8) | $ | 8,243 | $ | 20,789 | | Net income | — | | — | | — | | — | | 1,597 | | 1,597 | | | Other comprehensive income | — | | — | | — | | (4) | | — | | (4) | | | Dividends declared on common stock ($3.2422 per share) | — | | — | | — | | — | | (1,410) | | (1,410) | | | Dividends declared on preference stock ($96.823 - $143.75 per share) | — | | — | | — | | — | | (123) | | (123) | | | Stock-based compensation | — | | — | | (13) | | — | | — | | (13) | | | Noncash stock-based compensation | — | | — | | 26 | | — | | — | | 26 | | | Preference stock issued | 550 | | — | | (8) | | — | | — | | 542 | | | Balance at December 31, 2023 | $ | 2,495 | $ | 2,168 | $ | 8,446 | $ | (12) | $ | 8,307 | $ | 21,404 | | Net income | — | | — | | — | | — | | 1,794 | | 1,794 | | | Other comprehensive income | — | | — | | — | | 3 | | — | | 3 | | | Capital contribution from Edison International Parent | — | | — | | 500 | | — | | — | | 500 | | | Dividends declared on common stock ($3.4722 per share) | — | | — | | — | | — | | (1,510) | | (1,510) | | | Dividends declared on preference stock ($24.418 - $199.479 per share) | — | | — | | — | | — | | (154) | | (154) | | | Stock-based compensation | — | | — | | (35) | | — | | — | | (35) | | | Noncash stock-based compensation | — | | — | | 32 | | — | | — | | 32 | | | Preference stock issued | 350 | | — | | (5) | | — | | — | | 345 | | | Preference stock redeemed | (625) | | — | | 12 | | — | | (15) | | (628) | | | Balance at December 31, 2024 | $ | 2,220 | $ | 2,168 | $ | 8,950 | $ | (9) | $ | 8,422 | $ | 21,751 |
The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization and Basis of Presentation
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 consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's 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 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 consolidated financial statements.
Edison International's and SCE's accounting policies conform to GAAP, including the accounting principles for rate-regulated enterprises, which reflect the ratemaking policies of the CPUC and the FERC. SCE applies authoritative guidance for rate-regulated enterprises to the portion of its operations in which regulators set rates at levels intended to recover the estimated costs of providing service, plus a return on net investments in assets, or rate base. Regulators may also impose certain penalties or grant certain incentives. Due to timing and other differences in the collection of electric utility revenue, these accounting principles require an incurred cost that would otherwise be charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable that the cost is recoverable through future rates; and conversely the accounting principles require recording of a regulatory liability for amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and refundable to customers. In addition, SCE recognizes revenue and regulatory assets from alternative revenue programs, which enables the utility to adjust future rates in response to past activities or completed events, if certain criteria are met. SCE assesses at the end of each reporting period whether regulatory assets are probable of future recovery. See Note 11 for the composition of regulatory assets and liabilities.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Certain prior period amounts have been conformed to the current period's presentation, including the separate presentation of accrued interest on Edison International's and SCE's consolidated balance sheets.
Segment Information
The President and Chief Executive Officer ("CEO") of Edison International, as the chief operating decision maker ("CODM"), assesses Edison International’s performance and allocates resources based on its net income. This measure is reported as "Net income attributable to Edison International common shareholders" on Edison International's consolidated statements of income. The President and CEO of SCE, as its CODM, evaluates SCE's performance and allocates resources based on "Net income available for common stock" reported on SCE's consolidated statements of income. These net income measures are used by the Edison International and SCE CODMs to compare earnings from period to period and facilitate their respective assessment of performance of Edison International and SCE. The CODMs also use core earnings (loss) for financial planning and for additional analyses of performance. Core earnings (loss) is a non-GAAP financial measure which is defined as earnings attributable to shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings. Edison International's and SCE's significant segment expenses agree to those disclosed in the consolidated statements of income. The measures of Edison International's and SCE's segment assets are reported on Edison International's and SCE's consolidated balance sheets, respectively, as total assets.
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Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows:
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | ||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||
| Money market funds | $ | 101 | $ | 199 | $ | — | $ | 78 |
Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period.
The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Edison International: | ||||
| Cash and cash equivalents | $ | 193 | $ | 345 |
| Short-term restricted cash1 | 40 | 35 | ||
| Long-term restricted cash2 | 451 | 152 | ||
| Total cash, cash equivalents and restricted cash | $ | 684 | $ | 532 |
| SCE: | ||||
| Cash and cash equivalents | $ | 78 | $ | 214 |
| Short-term restricted cash1 | 36 | 33 | ||
| Long-term restricted cash2 | 451 | 151 | ||
| Total cash, cash equivalents and restricted cash | $ | 565 | $ | 398 |
1Includes SCE Recovery Funding LLC's restricted cash for payments of senior secured recovery bonds and is reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.
2The SCE amount represents cash collected for customer-funded wildfire self-insurance and is reflected in "Other long-term assets" on Edison International's and SCE's consolidated balance sheets. See Note 12 for further information.
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 year ended December 31, 2024, is driven primarily by consumer protection programs.
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The following table sets forth the changes in allowance for uncollectible accounts for SCE:
| (in millions) | Customers | All others | Total | |||
|---|---|---|---|---|---|---|
| Balance at December 31, 2021 | $ | 293 | $ | 16 | $ | 309 |
| Current period provision for uncollectible accounts1 | 111 | 11 | 122 | |||
| Write-offs, net of recoveries | (70) | (7) | (77) | |||
| Balance at December 31, 2022 | $ | 334 | $ | 20 | $ | 354 |
| Current period provision for uncollectible accounts1 | 109 | 6 | 115 | |||
| Write-offs, net of recoveries | (96) | (9) | (105) | |||
| Balance at December 31, 2023² | $ | 347 | $ | 17 | $ | 364 |
| Current period provision for uncollectible accounts1 | 278 | 12 | 290 | |||
| Write-offs, net of recoveries | (253) | (11) | (264) | |||
| Balance at December 31, 2024² | $ | 372 | $ | 18 | $ | 390 |
1This includes $222 million, $78 million, and $40 million of incremental costs for the years ended December 31, 2024, 2023, and 2022, respectively, which were probable of recovery from customers and recorded as regulatory assets.
2Approximately $43 million and $4 million of allowance for uncollectible accounts are included in "Other long-term assets" on SCE's consolidated balance sheets as of December 31, 2024 and 2023 respectively.
Inventory
SCE's inventory is primarily composed of materials, supplies and spare parts, and generally stated at weighted average cost or net realizable value when appropriate.
Emission Allowances and Energy Credits
SCE is allocated GHG allowances annually which it is then required to sell into quarterly auctions. GHG proceeds from the auctions are recorded as a regulatory liability to be refunded to customers. SCE purchases GHG allowances in quarterly auctions or from counterparties to satisfy its GHG emission compliance obligations and recovers such costs of GHG allowances from customers. GHG allowances held for use are classified as "Other current assets" on the consolidated balance sheets and are stated, similar to an inventory method, at the lower of weighted average cost or market. SCE will evaluate GHG allowances for impairment upon a triggering event that would indicate SCE might not recover the full cost of an allowance. SCE had GHG allowances held for use of $66 million and $128 million at December 31, 2024 and 2023, respectively. GHG emission obligations were $22 million and $117 million at December 31, 2024 and 2023, respectively, and are classified as "Other current liabilities" on the consolidated balance sheets.
SCE is allocated low carbon fuel standard ("LCFS") credits which it sells to market participants. Proceeds from the sales, net of selling fees and program administration expenses, are recorded in a balancing account to be refunded to eligible customers. SCE's net proceeds from the sale of these LCFS credits were $243 million and $248 million at December 31, 2024 and 2023, respectively. LCFS credits are classified as "Regulatory liabilities" on the consolidated balance sheets.
Property, Plant and Equipment
SCE plant additions, including replacements and betterments, are capitalized. Direct material and labor and indirect costs such as construction overhead, administrative and general costs, employee benefits, and property taxes are capitalized as part of plant additions. The CPUC authorizes a capitalization rate for each of the indirect costs which are allocated to each project based on either labor or total costs.
Estimated useful lives authorized by the CPUC in the 2021 GRC and weighted average useful lives of SCE's property, plant and equipment, are as follows:
| Estimated Useful Lives | Weighted Average<br>Useful Lives | |
|---|---|---|
| Generation plant | 10 years to 54 years | 39 years |
| Distribution plant | 20 years to 67 years | 50 years |
| Transmission plant | 30 years to 65 years | 53 years |
| General plant and other | 5 years to 60 years | 19 years |
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Depreciation of utility property, plant and equipment is computed on a straight-line, remaining-life basis. SCE's depreciation expense was $2.8 billion, $2.5 billion and $2.5 billion for 2024, 2023 and 2022, respectively. Depreciation expense stated as a percentage of average original cost of depreciable utility plant was, on a composite basis, 4.3%, 4.1% and 4.2% for 2024, 2023 and 2022, respectively. The original costs of retired property are charged to accumulated depreciation. See Note 2 for further information.
Nuclear fuel for Palo Verde is recorded as utility plant (nuclear fuel in the fabrication and installation phase is recorded as construction in progress) in accordance with CPUC ratemaking procedures. Palo Verde nuclear fuel is amortized using the units of production method.
Allowance for funds used during construction ("AFUDC") represents the estimated cost of debt and equity funds that finance utility-plant construction and is capitalized during certain plant construction. AFUDC is recovered in rates through depreciation expense over the useful life of the related asset. Equity AFUDC represents a method to compensate SCE for the estimated cost of equity used to finance utility plant additions and is recorded as part of construction in progress.
The following table summarizes SCE's AFUDC related to debt and equity:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Debt AFUDC1 | $ | 82 | $ | 74 | $ | 53 |
| Equity AFUDC2 | 187 | 157 | 137 |
1Reflected as a reduction of "Interest expense" on the consolidated statements of income.
2Reflected in "Other income" on the consolidated statements of income.
Major Maintenance
Major maintenance costs for SCE's facilities and equipment are expensed as incurred.
Impairment of Long-Lived Assets
Impairments of long-lived assets are evaluated based on a review of estimated future cash flows expected to be generated whenever events or changes in circumstances indicate that the carrying amount of such investments or assets may not be recoverable. If the carrying amount of a long-lived asset exceeds expected future cash flows, undiscounted and without interest charges, an impairment loss is recognized in the amount of the excess of fair value over the carrying amount. Fair value is determined via market, cost and income-based valuation techniques, as appropriate.
Accounting principles for rate-regulated enterprises also require recognition of an impairment loss if it becomes probable that the regulated utility will abandon a plant investment, or if it becomes probable that the cost of a recently completed plant will be disallowed, either directly or indirectly, for ratemaking purposes, and a reasonable estimate of the disallowance amount can be made.
Upon approval of the TKM Settlement Agreement, SCE will record an impairment charge of approximately $10 million in the first quarter of 2025. For further information on the TKM Settlement Agreement, see "Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill 1054 (the "Wildfire Insurance Fund" and "AB 1054")
Edison International and SCE accounted for the contributions to the Wildfire Insurance Fund similarly to prepaid insurance. No period of coverage was provided in AB 1054, therefore expense is being allocated to periods ratably based on an estimated period of coverage. At December 31, 2024 and 2023, Edison International and SCE had a $1.9 billion and a $2.0 billion long-term asset, respectively, as well as a $138 million and $204 million current asset, respectively, reflected as "Wildfire Insurance Fund contributions" in their consolidated balance sheets for the initial $2.4 billion contribution made during 2019 and the present value of annual contributions SCE committed to make to the Wildfire Insurance Fund, reduced by amortization. At December 31, 2024 and 2023, long-term liabilities of $363 million and $450 million, respectively, have been reflected in "Other deferred credits and other long-term liabilities" for the present value of unpaid contributions. Contributions were discounted to the present value using US treasury interest rates at the date SCE committed to participate in the Wildfire Insurance Fund.
Edison International and SCE reassesses the period of coverage of the fund at least annually in the first quarter each year, and adjustments are applied on a prospective basis. At December 31, 2024, 2023 and 2022, the asset was amortized based on an estimated period of coverage of 20 years, 15 years, and 15 years, respectively. All expenses related to the
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contributions are being reflected in "Wildfire Insurance Fund Expense" in the consolidated statements of income. Changes in the estimated period of coverage provided by the Wildfire Insurance Fund could lead to material changes in future expense recognition. In estimating the period of coverage, Edison International and SCE used Monte Carlo simulations based on historical data from wildfires caused by electrical utility equipment to estimate expected losses, using ten years (2014 – 2023) of available historical data in 2024, nine years (2014 – 2022) of available historical data in 2023, and eight years (2014 – 2021) of available historical data in 2022. The details of the operation of the Wildfire Insurance Fund and estimates related to claims by SCE, PG&E, and SDG&E against the fund have been applied to the expected loss simulations to estimate the period of coverage of the fund. The most sensitive inputs to the estimated period of coverage are the expected frequency of wildfire events caused by investor-owned utility electrical equipment and the estimated costs associated with those forecasted events. These inputs are most affected by the historical data used in estimating expected losses. There were fires in the service area of SCE, PG&E and SDG&E since the inception of the Wildfire Insurance Fund, including fires for which the cause is unknown, which may in the future be determined to be covered by the Wildfire Insurance Fund and have not been reflected or estimated in this analysis will be included in this analysis at that time.
As of the date of this filing, SCE is continuing to perform its annual assessment for 2025 to reassess its estimate of the life of the Wildfire Insurance Fund. Edison International and SCE assess the Wildfire Insurance Fund contribution assets for impairment each reporting period. An impairment will be recorded if the recorded asset exceeds SCE's ability to benefit from the remaining coverage provided by the Wildfire Insurance Fund.
Nuclear Decommissioning and Asset Retirement Obligations
The fair value of a liability for an ARO is recorded in the period in which it is incurred, including a liability for the fair value of a conditional ARO, if the fair value can be reasonably estimated even though uncertainty exists about the timing and/or method of settlement. When an ARO liability is initially recorded, SCE capitalizes the cost by increasing the carrying amount of the related long-lived asset. For each subsequent period, the liability is increased for accretion expense and the capitalized cost is depreciated over the useful life of the related asset.
SCE has not recorded an ARO for assets that are expected to operate indefinitely or where SCE cannot estimate a settlement date (or range of potential settlement dates). As such, ARO liabilities are not recorded for certain retirement activities, including certain hydroelectric facilities.
The following table summarizes the changes in SCE's ARO liability:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Beginning balance | $ | 2,666 | $ | 2,754 |
| Accretion1 | 137 | 144 | ||
| Revisions | (2) | (3) | ||
| Liabilities settled | (221) | (229) | ||
| Ending balance | $ | 2,580 | $ | 2,666 |
1An ARO represents the present value of a future obligation. Accretion is an increase in the liability to account for the time value of money resulting from discounting.
AROs related to decommissioning of SCE's nuclear power facilities are based on site-specific studies conducted as part of each NDCTP conducted before the CPUC. ARO are revised when updated site-specific decommissioning cost estimates are available.
The ARO for decommissioning SCE's San Onofre and Palo Verde nuclear power facilities was $2.1 billion as of December 31, 2024. The liability to decommission SCE's nuclear power facilities is based on a 2024 decommissioning study, filed as part of the 2024 NDCTP, for San Onofre Unit 1, 2, and 3 and a 2023 decommissioning study for Palo Verde.
Decommissioning of San Onofre Unit 1 began in 1999 and the transfer of spent nuclear fuel from Unit 1 to dry cask storage in the Independent Spent Fuel Storage Installation ("ISFSI") 1 was completed in 2005. Major decommissioning work for Unit 1 has been completed except for certain underground work.
Decommissioning of San Onofre Units 2 and 3 began in June 2013 and the transfer of spent nuclear fuel from San Onofre Units 2 and 3 to dry cask storage in the two ISFSIs was completed in August 2020. In August 2020, SCE commenced, and is currently conducting major decommissioning activities in accordance with the terms of the Coastal Developmental Permit for San Onofre Units 2 and 3.
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Due to regulatory recovery of SCE's nuclear decommissioning expense, prudently incurred costs for nuclear decommissioning activities do not affect SCE's earnings. Through the ratemaking process, SCE has substantially collected in rates, as a component of depreciation expense, all amounts for the future decommissioning of its nuclear assets and has placed those amounts in independent trusts. Amounts collected in rates in excess of the ARO liability are classified as ARO regulatory liabilities. See Note 11 for further information. Amortization of the ARO asset (included within the unamortized nuclear investment) and accretion of the ARO liability are deferred as decreases to the ARO regulatory liability account, resulting in no impact on earnings.
Changes in the estimated costs, timing of decommissioning or the assumptions underlying these estimates could cause material revisions to the estimated total cost to decommission. SCE currently estimates that it will spend approximately $7.6 billion through 2098 to decommission its nuclear facilities. This estimate is based on SCE's decommissioning cost methodology used for ratemaking purposes, escalated at rates ranging from 2.1% to 7.5% (depending on the cost element) annually. These costs are expected to be funded from independent decommissioning trusts. SCE estimates annual after-tax earnings on the decommissioning funds of 3.6% to 5.7% dependent on asset class. If the estimated costs increase, the assumed return on trust assets is not earned, or costs escalate at higher rates, SCE expects that additional funds needed for decommissioning will be recoverable through future rates, subject to a reasonableness review. See Note 10 for further information.
SCE's nuclear decommissioning costs are subject to CPUC review through the triennial regulatory proceedings. SCE's nuclear decommissioning trust investments primarily consist of fixed income investments that are classified as available-for-sale and equity investments. Due to regulatory mechanisms, investment earnings and realized gains and losses have no impact on earnings. Unrealized gains and losses on decommissioning trust funds, including impairment, increase or decrease the trust assets and the related regulatory asset or liability and have no impact on electric utility revenue or decommissioning expense. SCE reviews each fixed income security for impairment on the last day of each month. If the fair value on the last day of the month is less than the amortized cost for that security, SCE impairs the disclosed amortized cost. If the fair value is greater or less than the carrying value for that security at the time of sale, SCE recognizes a related realized gain or loss, respectively.
Deferred Financing Costs
Debt premium, discount, and issuance expenses incurred in connection with obtaining financing are deferred and amortized over the life of each debt issue. These deferred amounts are recorded as an offset to long-term debt. See Note 5 for further details. Under CPUC ratemaking procedures, SCE's debt reacquisition expenses are amortized over the remaining life of the reacquired debt, or if refinanced, the life of the new debt. The unamortized losses on reacquired debt are reflected as long-term "Regulatory assets" in the consolidated balance sheets. See Note 11 for further details.
Amortization of deferred financing costs charged to interest expense is as follows:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Amortization of deferred financing costs charged to interest expense | $ | 41 | $ | 39 | $ | 37 | $ | 34 | $ | 32 | $ | 31 |
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.
SCE's Revenue from Contracts with Customers
Provision of Electricity
SCE principally generates revenue through supplying and delivering electricity to its customers. Rates charged to customers are based on tariff rates, approved by the CPUC and FERC. Starting with SCE's 2021 GRC, revenue is authorized through quadrennial GRC proceedings, which are intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its CPUC-jurisdictional rate base. The CPUC sets an annual revenue requirement for the base year and the remaining three years are set by a methodology established in the GRC proceeding. As described above, SCE also earns revenue, with no return, to recover costs for power procurement, certain wildfire related expenses and other activities.
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Revenue is authorized by the FERC through a formula rate which is intended to provide SCE a reasonable opportunity to recover transmission capital and operating costs that are prudently incurred, including a return on its FERC-jurisdictional rate base. Under the operation of the formula rate, transmission revenue is updated to actual cost of service annually.
For SCE's electricity sales for both residential and non-residential customers, SCE satisfies the performance obligation of delivering electricity over time as the customers simultaneously receive and consume the delivered electricity.
Energy sales are typically on a month-to-month implied contract for transmission, distribution and generation services. Revenue is recognized over time as the energy is supplied and delivered to customers and the respective revenue is billed and paid on a monthly basis.
CPUC and FERC rates decouple authorized revenue from the volume of electricity sales and the price of energy procured so that SCE has the opportunity to receive revenue equal to amounts authorized by the relevant regulatory agencies. As a result, the volume of electricity sold does not have a direct impact on SCE's financial results. See Note 7 for further information on SCE's revenue.
Sales and Use Taxes
SCE bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and use taxes are franchise fees, which SCE pays to various municipalities (based on contracts with these municipalities) in order to operate within the limits of the municipality. SCE bills these franchise fees to its customers based on a CPUC-authorized rate. These franchise fees, which are required to be paid regardless of SCE's ability to collect from the customer, are accounted for on a gross basis. SCE's franchise fees billed to customers were $183 million, $168 million, and $172 million for the years ended December 31, 2024, 2023, and 2022, respectively. When SCE acts as an agent for sales and use tax, the taxes are accounted for on a net basis. Amounts billed to and collected from customers for these taxes are remitted to the taxing authorities and are not recognized as electric utility revenue.
SCE's Alternative Revenue Programs
The CPUC and FERC have authorized additional, alternative revenue programs which adjust billings for the effects of broad external factors or provide for additional billings if the utility achieves certain objectives. These alternative revenue programs allow SCE to recover costs that SCE has been authorized to pass on to customers, including costs of certain capital and operations and maintenance activities, costs to purchase electricity and natural gas, and to fund public purpose, demand response, and customer energy efficiency programs, and earn a reasonable return. In general, revenue is recognized for these alternative revenue programs at the time the costs are incurred, or at the time when specific events permitting billing of the additional revenues have been completed. SCE begins recognizing revenues for these programs when a program has been established by an order from either the CPUC or FERC that allows for automatic adjustment of future rates, the amount of revenue for the period is objectively determinable and probable of recovery and the revenue will be collected within 24 months following the end of the annual period.
Power Purchase Agreements
SCE enters into power purchase agreements ("PPAs") in the normal course of business. A power purchase agreement may be considered a variable interest in a variable interest entity ("VIE"). If SCE is the primary beneficiary in the VIE, SCE is required to consolidate the VIE. None of SCE's PPAs resulted in consolidation at December 31, 2024 and 2023. See Note 3 for further discussion of PPAs that are considered variable interests.
A PPA may also contain a lease for accounting purposes. See "Leases" below and Note 12 and Note 13 for further discussion of SCE's PPAs. A PPA that does not contain a lease may be classified as a derivative which is recorded at fair value on the consolidated balance sheets, unless the PPA is eligible for an election to designate as a normal purchase or sale, which is accounted for on an accrual basis as an executory contract.
PPAs that do not meet the above classifications are accounted for on an accrual basis.
Derivative Instruments
SCE records derivative instruments on its consolidated balance sheets as either assets or liabilities measured at fair value unless otherwise exempted from derivative treatment as normal purchases or sales. The normal purchases and sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business.
Realized gains and losses from SCE's derivative instruments are expected to be recovered from or refunded to customers through regulatory mechanisms and, therefore, SCE's fair value changes have no impact on purchased power expense or earnings. SCE does not use hedge accounting for derivative transactions due to regulatory accounting treatment.
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Where SCE's derivative instruments are subject to a master netting agreement and certain criteria are met, SCE presents its derivative assets and liabilities on a net basis on its consolidated balance sheets. In addition, derivative positions are offset against margin and cash collateral deposits. The results of derivative activities are recorded as part of cash flows from operating activities on the consolidated statements of cash flows. See Note 6 for further information on derivative instruments.
Leases
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a period of time in exchange for consideration. An entity controls the use when it has a right to obtain substantially all of the benefits from the use of the asset and has the right to direct the use. SCE determines if an arrangement is a lease at contract inception. For all classes of underlying assets, except battery storage assets where each component is separately accounted for, SCE accounts for lease and non-lease components as a single lease component. Lease liabilities are recognized based on the present value of the lease payments over the lease term at the commencement date. SCE calculates and uses the rate implicit in the lease if the information is readily available or if not available, SCE uses its incremental borrowing rate in determining the present value of lease payments. Incremental borrowing rates are comprised of underlying risk-free rates and secured credit spreads relative to first mortgage bonds with like tenors of lease term durations. Lease right-of-use ("ROU") assets are based on the liability, subject to adjustments, such as lease incentives. The ROU assets also include any lease payments made at or before the commencement date. SCE excludes variable lease payments in measuring lease assets and lease liabilities. SCE's lease terms include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. SCE elected to exclude from the balance sheet short-term leases of one year or less.
SCE enters into power purchase agreements that may contain leases. This occurs when a power purchase agreement designates a specific power plant, SCE obtains substantially all of the economic benefits from the use of the plant and has the right to direct the use of the plant. SCE also enters into a number of agreements to lease property and equipment in the normal course of business, primarily related to vehicles, office space and other equipment. See Note 13 for further information on leases.
Edison International Parent and Other's leases primarily relate to Trio, which are immaterial to Edison International.
Stock-Based Compensation
Stock options, performance shares, deferred stock units, and restricted stock units have been granted under Edison International's long-term incentive compensation programs. For equity awards that are settled in common stock, Edison International either issues new common stock, or uses a third party to purchase shares from the market and deliver such shares for the settlement of the awards. Stock options, performance shares, deferred stock units and restricted stock units are settled in common stock. For awards that are otherwise settled entirely in common stock, Edison International withholds or sells shares or substitutes cash awards to the extent necessary to satisfy applicable tax withholding obligations or government levies.
Stock-based compensation expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period based on estimated fair values. For equity awards paid in common stock, fair value is determined at the grant date. For equity awards that have market conditions defined in the grants, expense is recognized based on grant date fair value if the requisite service period is fulfilled. However, with respect to the portion of the performance shares payable in common stock that are subject to financial performance conditions defined in the grants, the number of performance shares expected to be earned is subject to revision and updated at each reporting period, with a related adjustment to compensation expense.
For awards granted to retirement-eligible participants, stock compensation expense is recognized on a prorated basis over the initial year. For awards granted to participants who become eligible for retirement during the requisite service period, stock compensation expense is recognized over the period between the date of grant and the date the participant first becomes eligible for retirement. Edison International and SCE estimate the number of awards that are expected to vest rather than account for forfeitures when they occur. Share-based payments may create a permanent difference between the amount of compensation expense recognized for book and tax purposes. The tax impact of this permanent difference is recognized in earnings in the period it is created. See Note 9 for further information.
Employee Stock Purchase Plan
The Edison International Employee Stock Purchase Plan ("ESPP"), effective beginning July 2021, allows eligible employees to make purchases of Edison International's common stock. The maximum aggregate numbers of shares that may be issued under the ESPP is 3,000,000 shares. Eligible employees may authorize payroll deductions of between 1% and 10% of their eligible base compensation, to purchase shares of common stock at 97% of the market price on the last day of each six months offering period. An eligible employee may purchase up to $25,000 worth of Edison International's
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common stock per calendar year under the ESPP. The ESPP is considered noncompensatory and stock issuances under the ESPP are recorded directly in equity.
SCE Dividends
CPUC holding company rules require that SCE's dividend policy be established by the SCE Board of Directors on the same basis as if SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of both Edison International and SCE. In addition, the CPUC regulates SCE's capital structure which limits the dividends it may pay to its shareholders.
The common equity component of SCE's CPUC authorized capital structure is 52% on a weighted average basis over the January 1, 2023 to December 31, 2025 compliance period ("Capital Structure Compliance Period"). The CPUC authorized capital structure differs from the capital structure calculated based on GAAP due to certain exclusions allowed by CPUC, including the impact of SCE's contributions to the Wildfire Insurance Fund under AB 1054.
In August 2023, the CPUC issued a decision on SCE's application to the CPUC for an extension of the waiver of compliance with its equity ratio requirement that allows SCE to exclude from its equity ratio calculations (i) net charges accrued in connection with the 2017/2018 Wildfire/Mudslide Events and (ii) debt issued for the purpose of paying claims, and associated expenses, related to the 2017/2018 Wildfire/Mudslide Events up to an amount equal to the net charges accrued in connection with the 2017/2018 Wildfire/Mudslide Events. Under the decision, effective as of the beginning of the new cost of capital cycle on January 1, 2023, the CPUC also authorized SCE to exclude from its equity ratio calculations debt that exceeds the net charges accrued in connection with the 2017/2018 Wildfire/Mudslide Events due to the timing difference between the wildfire claims payment and the realization of the cash tax benefits. The temporary exclusion will lapse on August 31, 2025, or when determinations regarding cost recovery for both TKM and the Woolsey Fire are made, whichever comes earlier. In January 2025, the CPUC approved the TKM Settlement Agreement, under which SCE is allowed to permanently exclude any after-tax charges to equity associated with the costs disallowed or funded by shareholders in the TKM Settlement Agreement and the debt issued to finance those costs. If the CPUC has not made a determination regarding cost recovery related to the Woolsey Fire by August 31, 2025, SCE will file another application for a waiver of compliance with its equity ratio requirement. While the temporary exclusion is in place, SCE is required to notify the CPUC if an adverse financial event reduces SCE's spot equity ratio by more than one percent from the level most recently filed with the CPUC in the proceeding. The last spot equity ratio SCE filed with the CPUC in the proceeding did not exclude the then $1.8 billion net charge and was 45.2% as of December 31, 2018 (at the time the common equity component of SCE's CPUC authorized capital structure was required to remain at or above 48% on a weighted average basis over the applicable 37-month period). SCE's spot equity ratio on December 31, 2018, would have been 48.7% had the $1.8 billion net charge at December 31, 2018 been excluded, therefore SCE will notify the CPUC if its spot ratio drops below 47.7% in any quarter.
SCE monitors its compliance with the CPUC's equity ratio requirement based on the weighted average of the common equity component of SCE's CPUC authorized capital structure over the Capital Structure Compliance Period using its actual capital structure from the beginning of the Capital Structure Compliance Period through the reporting date together with forecasted performance and expected financing activities for the remainder of the Capital Structure Compliance Period. SCE expects to be compliant with its CPUC authorized capital structure at the end of the Capital Structure Compliance Period.
SCE's ability to declare and pay common dividends may be restricted under the terms of its outstanding series of preference stock. For further information see Note 14.
As a California corporation, SCE's ability to pay dividends is also governed by the California General Corporation Law. California law requires that for a dividend to be declared: (a) retained earnings must equal or exceed the proposed dividend, or (b) immediately after the dividend is made, the value of the corporation's assets must exceed the value of its liabilities plus amounts required to be paid, if any, in order to liquidate stock senior to the shares receiving the dividend. Additionally, a California corporation may not declare a dividend if it is, or as a result of the dividend would be, likely to be unable to meet its liabilities as they mature. Prior to declaring dividends, the SCE Board of Directors evaluates available information, including when applicable, information pertaining to wildfire events, to ensure that the California law requirements for the declarations are met. On February 27, 2025, SCE declared a dividend to Edison International of $430 million.
The timing and amount of future dividends are also dependent on a number of other factors including SCE's requirements to fund other obligations and capital expenditures, and its ability to access the capital markets and generate operating cash flows and earnings. If SCE incurs significant costs related to catastrophic wildfires and is unable to recover such costs through insurance, the Wildfire Insurance Fund (for fires after July 12, 2019), or from customers or is unable to access
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capital markets on reasonable terms, SCE may be limited in its ability to pay future dividends to Edison International and its preference shareholders.
Edison International Dividend
Edison International's ability to declare and pay common dividends may be restricted under the terms of its outstanding preferred stock. For further information see Note 14.
In December 2024, Edison International declared a 6.1% increase to the annual dividend rate from $3.12 per share to $3.31 per share. On February 27, 2025, Edison International declared a dividend of $0.8275 per share to be paid on April 30, 2025. Edison International intends to maintain its target payout ratio of 45% – 55% of SCE's core earnings.
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 9 and Note 14 for further information.
EPS attributable to Edison International common shareholders was computed as follows:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions, except per-share amounts) | 2024 | 2023 | 2022 | |||
| Basic earnings per share: | ||||||
| Net income available to common shareholders | $ | 1,284 | $ | 1,197 | $ | 612 |
| Weighted average common shares outstanding | 386 | 383 | 381 | |||
| Basic earnings per share | $ | 3.33 | $ | 3.12 | $ | 1.61 |
| Diluted earnings per share: | ||||||
| Net income available to common shareholders | $ | 1,284 | $ | 1,197 | $ | 612 |
| Income impact of assumed conversions | 1 | 1 | 1 | |||
| Net income available to common shareholders and assumed conversions | $ | 1,285 | $ | 1,198 | $ | 613 |
| Weighted average common shares outstanding | 386 | 383 | 381 | |||
| Incremental shares from assumed conversions | 2 | 2 | 2 | |||
| Adjusted weighted average shares – diluted | 388 | 385 | 383 | |||
| Diluted earnings per share | $ | 3.31 | $ | 3.11 | $ | 1.60 |
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 1,533,982, 3,771,766, and 5,839,549 of common stock for the years ended December 31, 2024, 2023, and 2022, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.
Income Taxes
Edison International and SCE estimate their income taxes for each jurisdiction in which they operate. This involves estimating current period tax expense along with assessing temporary differences resulting from the differing treatment of items (such as depreciation) for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheets.
Income tax expense includes the current tax liability from operations and the change in deferred income taxes during the year. Interest income, interest expense, and penalties associated with income taxes are generally reflected in "Income tax expense (benefit)" on the consolidated statements of income.
Investment tax credits are generally deferred and amortized to income tax expense over the lives of the related properties. The scope of projects eligible for investment tax credits was expanded in 2023 to include standalone energy storage projects. The Inflation Reduction Act provided an election that permits investment tax credits related to standalone energy storage projects to be returned to utility customers over a period that is shorter than the life of the related property.
Edison International's eligible subsidiaries are included in Edison International's consolidated federal income tax and combined state tax returns. Edison International has tax-allocation and payment agreements with certain of its subsidiaries.
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Pursuant to an income tax-allocation agreement approved by the CPUC, SCE's tax liability is computed as if it filed its federal and state income tax returns on a separate return basis.
Severance Costs
Severance costs are recorded when it is probable that employees will be entitled to benefits under an existing plan and the amount can be reasonably estimated. As a result of current and probable reductions in workforce, SCE recorded estimated severance costs of $53 million for the year ended December 31, 2024. Severance costs are included in "Operation and maintenance" on the consolidated statements of income. The severance costs are partially offset by $3 million expected FERC recovery, which is recorded in "Operating Revenue" on the consolidated statements of income.
New Accounting Guidance
Accounting Guidance Adopted
In November 2023, the FASB issued an accounting standards update to enhance the disclosures related to public entities' reportable segments. The new guidance requires an entity with only one reportable segment to include all the required segment disclosures. Edison International and SCE each have one reportable segment, and have adopted this guidance for the year ended December 31, 2024. See "Segment Information" above for further information.
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 are currently evaluating the impact of the new guidance.
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.
Note 2. Property, Plant and Equipment
SCE's utility property, plant and equipment included in the consolidated balance sheets is composed of the following:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Distribution | $ | 37,093 | $ | 34,573 |
| Transmission | 19,189 | 18,526 | ||
| Generation | 4,217 | 3,593 | ||
| General plant and other | 7,046 | 6,383 | ||
| Accumulated depreciation | (14,207) | (12,910) | ||
| 53,338 | 50,165 | |||
| Construction work in progress | 5,585 | 5,590 | ||
| Nuclear fuel, at amortized cost | 124 | 122 | ||
| Total utility property, plant and equipment | $ | 59,047 | $ | 55,877 |
Capitalized Software Costs
SCE capitalizes costs incurred during the application development stage of internal use software projects to property, plant and equipment. SCE amortizes capitalized software costs ratably over their useful lives, primarily 5 and 7 year lives, commencing upon operational use. Capitalized software costs, included in general plant and other above, was $2.5 billion and $2.1 billion at December 31, 2024 and 2023, respectively, and accumulated amortization was $1.1 billion and $0.9 billion, at December 31, 2024 and 2023, respectively. Amortization expense for capitalized software was $416 million, $358 million, and $344 million in 2024, 2023, and 2022, respectively. At December 31, 2024, amortization expense is estimated to be $428 million, $371 million, $288 million, $186 million, and $72 million for 2025 through 2029, respectively.
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Jointly Owned Utility Projects
SCE owns undivided interests in transmission and generating assets for which each participant provides its own financing. SCE's proportionate share of these assets is reflected in the consolidated balance sheets and included in the above table. SCE's proportionate share of expenses for each project is reflected in the consolidated statements of income.
The following is SCE's investment in each asset as of December 31, 2024:
| (in millions) | Plant in<br>Service | Construction<br>Work in<br>Progress | Accumulated<br>Depreciation | Nuclear Fuel<br>(at amortized cost) | Total | Ownership<br>Interest | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Transmission systems: | ||||||||||||
| Eldorado | $ | 448 | $ | 40 | $ | (71) | $ | — | $ | 417 | 71 | % |
| Pacific Intertie | 356 | 8 | (121) | — | 243 | 50 | % | |||||
| Generating station: | ||||||||||||
| Palo Verde (nuclear) | 2,249 | 62 | (1,694) | 124 | 741 | 16 | % | |||||
| Total | $ | 3,053 | $ | 110 | $ | (1,886) | $ | 124 | $ | 1,401 |
In addition to the jointly owned assets in the table above, SCE has ownership interests in jointly owned power poles with other companies.
Note 3. Variable Interest Entities
A VIE is defined as a legal entity that meets any of the following conditions: (1) the total equity investment at risk is not sufficient to fund the entity's activities without additional subordinated financial support, (2) the equity holders as a group, lack any of the following characteristics: the power to direct activities that most significantly impact the entity's economic performance, substantive voting rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE. Commercial and operating activities are generally the factors that most significantly impact the economic performance of such VIEs.
Variable Interest in VIEs that are Consolidated
SCE Recovery Funding LLC is a bankruptcy remote, wholly owned special purpose subsidiary of SCE, formed for the purpose of issuing securitized bonds related to SCE's AB 1054 Excluded Capital Expenditures. This entity is a VIE because its equity investment is insufficient to support its operations. The most significant activity of SCE Recovery Funding LLC is to service the securitized bonds according to the decisions made by SCE. Therefore, SCE is determined to be the primary beneficiary and consolidates SCE Recovery Funding LLC.
SCE Recovery Funding LLC issued a total of $1.6 billion of securitized bonds. The proceeds were used to acquire SCE's right, title and interest in and to non-bypassable rates and other charges to be collected from certain existing and future customers in SCE's service area ("Recovery Property"), associated with the AB 1054 Excluded Capital Expenditures, until the bonds are paid in full, and all financing costs have been recovered. The securitized bonds are secured by the Recovery Property and cash collections from the non-bypassable rates and other charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to SCE. For further details, see Note 5.
The following table summarizes the impact of SCE Recovery Funding LLC on SCE's and Edison International's consolidated balance sheets.
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Other current assets | $ | 49 | $ | 53 |
| Regulatory assets: non-current | 1,512 | 1,558 | ||
| Regulatory liabilities: current | 30 | 34 | ||
| Current portion of long-term debt1 | 49 | 47 | ||
| Other current liabilities | 6 | 6 | ||
| Long-term debt1 | 1,468 | 1,515 |
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1The bondholders have no recourse to SCE. The long-term debt balance is net of unamortized debt issuance costs.
Variable Interest in VIEs that are not Consolidated
Power Purchase Agreements
SCE has certain PPAs where the counterparty entities meet one or both of the VIE conditions discussed above and in which SCE has variable interests, including: agreements through which SCE provides natural gas to fuel the plants, fixed price contracts for renewable energy, and resource adequacy agreements that allow purchase of energy at fixed prices upon the seller's election. Since payments for capacity are the primary source of income, the most significant economic activity for these VIEs is typically the operation and maintenance of the power plants, which SCE does not perform. Therefore, SCE has concluded that it is not the primary beneficiary of any of these VIEs because it does not control the commercial and operating activities that most significantly impact the economic performance of these entities.
As of the balance sheet date, the carrying amount of assets and liabilities included in SCE's consolidated balance sheet that relate to involvement with VIEs that are not consolidated, result from amounts due under the PPAs. Under these contracts, SCE recovers the costs incurred through demonstration of compliance with its CPUC-approved long-term power procurement plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees, or other commitments associated with these contracts other than the purchase commitments described in Note 12. As a result, there is no significant potential exposure to loss to SCE from its variable interest in these VIEs. The aggregate contracted capacity dedicated to SCE from these VIE projects was 5,200 MW and 3,343 MW at December 31, 2024 and 2023, respectively, and the amounts that SCE paid to these projects were $778 million and $528 million for the years ended December 31, 2024 and 2023, respectively. These amounts are recoverable in customer rates, subject to a reasonableness review.
Note 4. Fair Value Measurements
Recurring Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an "exit price"). Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including assumptions about nonperformance risk. As of December 31, 2024 and 2023, nonperformance risk was not material for Edison International or SCE.
Assets and liabilities are categorized into a three-level fair value hierarchy based on valuation inputs used to determine fair value.
Level 1 – The fair value of Edison International's and SCE's Level 1 assets and liabilities is determined using unadjusted quoted prices in active markets that are available at the measurement date for identical assets and liabilities. This level includes exchange-traded equity securities, U.S. treasury securities, mutual funds, and money market funds.
Level 2 – Edison International's and SCE's Level 2 assets and liabilities include fixed income securities, primarily consisting of U.S. government and agency bonds, municipal bonds and corporate bonds, and over-the-counter commodity derivatives. The fair value of fixed income securities is determined using a market approach by obtaining quoted prices for similar assets and liabilities in active markets and inputs that are observable, either directly or indirectly, for substantially the full term of the instrument.
The fair value of SCE's over-the-counter commodity derivative contracts is determined using an income approach. SCE uses standard pricing models to determine the net present value of estimated future cash flows. Inputs to the pricing models include forward published or posted clearing prices from an exchange (Intercontinental Exchange) for similar instruments and discount rates. A primary price source that best represents trade activity for each market is used to develop observable forward market prices in determining the fair value of these positions. Broker quotes, prices from exchanges or comparison to executed trades are used to validate and corroborate the primary price source. These price quotations reflect mid-market prices (average of bid and ask) and are obtained from sources believed to provide the most liquid market for the commodity.
Level 3 – This level consists of CRRs, which are derivative contracts that trade infrequently with significant unobservable inputs (CAISO CRR auction prices). SCE employs a market valuation approach of utilizing historical CRR prices as a proxy for forward prices. Edison International Parent and Other does not have any Level 3 assets and liabilities.
Assumptions are made in order to value derivative contracts in which observable inputs are not available. In circumstances where fair value cannot be verified with observable market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. Modeling methodologies, inputs, and techniques are reviewed and assessed as markets continue to develop and more pricing information becomes available and the fair value is adjusted
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when it is concluded that a change in inputs or techniques would result in a new valuation that better reflects the fair value of those derivative contracts. See Note 6 for a discussion of derivative instruments.
SCE
The following table sets forth assets and liabilities of SCE that were accounted for at fair value by level within the fair value hierarchy:
| December 31, 2024 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Level 1 | Level 2 | Level 3 | Netting<br><br>and<br><br>Collateral1 | Total | |||||||||||||||||
| Assets at fair value | ||||||||||||||||||||||
| Derivative contracts | $ | — | $ | 1 | $ | 212 | $ | (1) | $ | 212 | ||||||||||||
| Other | — | 22 | — | — | 22 | |||||||||||||||||
| Nuclear decommissioning trusts: | ||||||||||||||||||||||
| Stocks2 | 1,631 | — | — | — | 1,631 | |||||||||||||||||
| Fixed Income3 | 975 | 1,618 | — | — | 2,593 | |||||||||||||||||
| Short-term investments, primarily cash equivalents | 128 | 39 | — | — | 167 | |||||||||||||||||
| Subtotal of nuclear decommissioning trusts4 | 2,734 | 1,657 | — | — | 4,391 | |||||||||||||||||
| Total assets | 2,734 | 1,680 | 212 | (1) | 4,625 | |||||||||||||||||
| Liabilities at fair value | ||||||||||||||||||||||
| Derivative contracts | — | 47 | — | (47) | — | |||||||||||||||||
| Total liabilities | — | 47 | — | (47) | — | |||||||||||||||||
| Net assets | $ | 2,734 | $ | 1,633 | $ | 212 | $ | 46 | $ | 4,625 | December 31, 2023 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | Netting<br><br>and<br><br>Collateral1 | Total | |||||||||||||||||
| Assets at fair value | ||||||||||||||||||||||
| Derivative contracts | $ | — | $ | 3 | $ | 91 | $ | (3) | $ | 91 | ||||||||||||
| Money market funds and other | 78 | 22 | — | — | 100 | |||||||||||||||||
| Nuclear decommissioning trusts: | ||||||||||||||||||||||
| Stocks2 | 1,658 | — | — | — | 1,658 | |||||||||||||||||
| Fixed Income3 | 923 | 1,421 | — | — | 2,344 | |||||||||||||||||
| Short-term investments, primarily cash equivalents | 169 | 104 | — | — | 273 | |||||||||||||||||
| Subtotal of nuclear decommissioning trusts4 | 2,750 | 1,525 | — | — | 4,275 | |||||||||||||||||
| Total assets | 2,828 | 1,550 | 91 | (3) | 4,466 | |||||||||||||||||
| Liabilities at fair value | ||||||||||||||||||||||
| Derivative contracts | — | 77 | — | (77) | — | |||||||||||||||||
| Total liabilities | — | 77 | — | (77) | — | |||||||||||||||||
| Net assets | $ | 2,828 | $ | 1,473 | $ | 91 | $ | 74 | $ | 4,466 |
1Represents the netting of assets and liabilities under master netting agreements and cash collateral.
2Approximately 75% of SCE's equity investments were in companies located in the United States at December 31, 2024 and 2023.
3Includes corporate bonds, which were diversified by the inclusion of collateralized mortgage obligations and other asset backed securities of $94 million and $106 million at December 31, 2024 and 2023, respectively.
4Excludes net payables of $105 million and $102 million at December 31, 2024 and 2023, respectively, which consist of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.
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SCE Fair Value of Level 3
The following table sets forth a summary of changes in SCE's fair value of Level 3 net derivative assets and liabilities:
| Years ended December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Fair value of net assets at beginning of period | $ | 91 | $ | 63 |
| Sales | (1) | (1) | ||
| Settlements | 14 | (40) | ||
| Total realized/unrealized gains, net of losses1 | 108 | 69 | ||
| Fair value of net assets at end of period | $ | 212 | $ | 91 |
1Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.
There were no material transfers into or out of Level 3 during 2024 and 2023.
The following table sets forth the significant unobservable inputs used to determine fair value for Level 3 CRR assets and liabilities:
| Fair Value<br>(in millions) | Significant<br>Unobservable<br>Input | Range<br>(per MWh) | Weighted<br>Average<br>(per MWh) | |||||
|---|---|---|---|---|---|---|---|---|
| Assets | Liabilities | |||||||
| December 31, 2024 | $ | 212 | $ | — | CAISO CRR auction prices | $(4.64) - $50,048.16 | $ | 27.20 |
| December 31, 2023 | 91 | — | CAISO CRR auction prices | (6.44) - 16,574.36 | 2.74 |
Level 3 Fair Value Uncertainty
For CRRs, increases or decreases in CAISO auction prices would result in higher or lower fair value, respectively.
Nuclear Decommissioning Trusts
SCE's nuclear decommissioning trust investments include equity securities, U.S. treasury securities and other fixed income securities. Equity and treasury securities are classified as Level 1 as fair value is determined by observable market prices in active or highly liquid and transparent markets. The remaining fixed income securities are classified as Level 2. The fair value of these financial instruments is based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. There are no securities classified as Level 3 in the nuclear decommissioning trusts.
SCE's investment policies and CPUC requirements place limitations on the types and investment grade ratings of the securities that may be held by the nuclear decommissioning trust funds. These policies restrict the trust from holding alternative investments and limit the trust funds' exposures to investments in highly illiquid markets. With respect to equity and fixed income securities, the trustee obtains prices from third-party pricing services which SCE is able to independently corroborate as described below. The trustee monitors prices supplied by pricing services, including reviewing prices against defined parameters' tolerances and performs research and resolves variances beyond the set parameters. SCE corroborates the fair values of securities by comparison to other market-based price sources obtained by SCE's investment managers. Differences outside established thresholds are followed-up with the trustee and resolved. For each reporting period, SCE reviews the trustee determined fair value hierarchy and overrides the trustee level classification when appropriate. See Note 10 for more information on nuclear decommissioning trusts.
Edison International Parent and Other
Edison International Parent and Other assets measured at fair value and classified as Level 1 consisted of money market funds of $101 million and $121 million at December 31, 2024 and 2023, respectively. Assets measured at fair value and classified as Level 2 were immaterial at December 31, 2024 and 2023. There were no securities classified as Level 3 for Edison International Parent and Other at December 31, 2024 and 2023.
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Fair Value of Debt Recorded at Carrying Value
The carrying value and fair value of Edison International's and SCE's long-term debt (including current portion of long-term debt) are as follows:
| December 31, 2024 | December 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Carrying<br><br>Value1 | Fair<br><br>Value2 | Carrying<br><br>Value1 | Fair<br><br>Value2 | ||||
| Edison International | $ | 35,583 | $ | 33,160 | $ | 33,013 | $ | 31,315 |
| SCE | 30,515 | 27,994 | 28,494 | 26,712 |
1Carrying value is net of debt issuance costs.
2The fair value of long-term debt is classified as Level 2.
Note 5. Debt and Credit Agreements
Long-Term Debt
The following table summarizes long-term debt (rates and terms are as of December 31, 2024) of Edison International and SCE:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Edison International Parent and Other: | ||||
| Debentures and notes: | ||||
| 2025 – 2054 (4.125% to 8.125%) | $ | 5,100 | $ | 4,550 |
| Current portion of long-term debt | (800) | (500) | ||
| Unamortized debt discount/premium and issuance costs, net | (32) | (31) | ||
| Total Edison International Parent and Other | 4,268 | 4,019 | ||
| SCE: | ||||
| First and refunding mortgage bonds: | ||||
| 2025 – 2053 (1.20% to 6.05%) | 27,400 | 24,700 | ||
| Pollution-control bonds: | ||||
| 2028 – 2035 (1.45% to 4.50%) | 752 | 752 | ||
| Debentures and notes: | ||||
| 2029 – 2053 (5.06% to 6.65%) | 306 | 306 | ||
| Senior secured recovery bonds1: | ||||
| 2028 – 2047 (0.86% to 5.11%) | 1,532 | 1,579 | ||
| Other long-term debt2 | 706 | 1,322 | ||
| Current portion of long-term debt | (1,249) | (2,197) | ||
| Unamortized debt discount/premium and issuance costs, net | (181) | (165) | ||
| Total SCE | 29,266 | 26,297 | ||
| Total Edison International | $ | 33,534 | $ | 30,316 |
1The senior secured recovery bonds are payable only from and secured by the Recovery Property at SCE Recovery Funding LLC, and do not constitute a debt or other legal obligation of, or interest in, SCE or any of its affiliates, except for SCE Recovery Funding LLC. For further details, see Note 3.
2Subsequent to December 31, 2024 and 2023, SCE issued first and refunding mortgage bonds which were used to partially pay down its commercial paper balance. As a result, SCE included the paydown amount of $706 million and $722 million in other long-term debt at December 31, 2024 and 2023, respectively. The 2023 amount also includes a $600 million term loan with an interest rate of adjusted term secured overnight financing rate ("SOFR") plus 0.90% that matured in 2024.
Edison International and SCE long-term debt maturities over the next five years are as follows:
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| (in millions) | Edison<br>International | SCE | ||
|---|---|---|---|---|
| 2025 | $ | 2,049 | $ | 1,249 |
| 2026 | 1,900 | 1,900 | ||
| 2027 | 2,501 | 1,901 | ||
| 2028 | 2,942 | 1,792 | ||
| 2029 | 3,363 | 2,313 |
Debt Financing Subsequent to December 31, 2024
In January 2025, SCE issued $850 million of 5.45% first and refunding mortgage bonds due in 2035 and $650 million of 5.90% first and refunding mortgage bonds due in 2055. The proceeds were used to repay commercial paper borrowings and for general corporate purposes.
Liens and Security Interests
Almost all of SCE's properties are subject to a trust indenture lien. SCE has pledged first and refunding mortgage bonds as collateral for borrowed funds obtained from pollution-control bonds issued by government agencies. SCE has a debt covenant that requires a debt to total capitalization ratio to be less than or equal to 0.65 to 1. At December 31, 2024, SCE's debt to total capitalization ratio was 0.58 to 1 and was in compliance with all other financial covenants that affect access to capital. Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the applicable agreements of less than or equal to 0.70 to 1. At December 31, 2024, Edison International consolidated debt to total capitalization ratio was 0.65 to 1.
Credit Agreements and Short-Term Debt
The following table summarizes the status of the credit facilities at December 31, 2024:
| (in millions, except for rates) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Borrower | Termination Date | SOFR plus (bps) | Commitment | Outstanding borrowings | Outstanding letters of credit | Amount available | ||||
| Edison International Parent1, 3 | May 2028 | 128 | $ | 1,500 | $ | 445 | $ | — | $ | 1,055 |
| SCE2, 3 | May 2028 | 108 | 3,350 | 1,260 | 6 | 2,084 | ||||
| Total Edison International | $ | 4,850 | $ | 1,705 | $ | 6 | $ | 3,139 |
1At December 31, 2024 and 2023, Edison International Parent had $444 million and $246 million outstanding commercial paper, net of discount of $1 million and zero, at a weighted-average interest rate of 4.86% and 5.82%, respectively.
2At December 31, 2024 and 2023, SCE had $1,259 million and $1,554 million outstanding commercial paper, net of discount of $1 million and $4 million, at a weighted-average interest rate of 4.95% and 5.82%, respectively. This includes $706 million and $722 million, at December 31, 2024 and 2023, respectively, outstanding commercial paper reclassified from "Short-term debt" to "Long-term debt" on the consolidated balance sheets, due to subsequent debt refinancing.
3 The aggregate maximum principal amount under the Edison International Parent and SCE revolving credit facilities may be increased up to $2.0 billion and $4.0 billion, respectively, provided that additional lender commitments are obtained. In May 2024, Edison International Parent and SCE amended their credit facilities to extend the maturity date to May 2028, with additional one-year extension options.
Uncommitted Letters of Credit
SCE has agreements with certain lenders for bilateral unsecured standby letters of credit ("SBLC") with a total capacity of $625 million that is uncommitted and supported by reimbursement agreements. The SBLCs are not subject to any collateral or security requirements. At December 31, 2024, SCE had $118 million in standby letters of credit outstanding under these agreements, which expire between January and December 2025. The unused capacity under these agreements was $507 million.
Note 6. Derivative Instruments
Derivative financial instruments are used to manage exposure to commodity price risk resulting from SCE's electricity and natural gas procurement activities. The risks of fluctuating commodity prices are managed in part by entering into forward commodity transactions, including options, swaps, and futures. To mitigate credit risk from counterparties in the event of
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nonperformance, master netting agreements are used whenever possible, and counterparties may be required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with the transaction.
Certain power and gas contracts contain a provision that requires SCE to maintain an investment grade rating from the major credit rating agencies, referred to as a credit-risk-related contingent feature. If SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover derivative liabilities and the related outstanding payables. The fair value of these derivative contracts and any related collateral were immaterial as of December 31, 2024 and 2023.
SCE presents its derivative assets and liabilities, recorded at fair value, on a net basis on its consolidated balance sheets when subject to master netting agreements or similar agreements. Derivative positions are also offset against margin and cash collateral deposits. See Note 4 for a discussion of fair value of derivative instruments.
The following table summarizes the gross and net fair values of SCE's commodity derivative instruments:
| December 31, 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Derivative Assets<br><br>Short-Term1 | Derivative Liabilities<br><br>Short-Term2 | ||||||||
| Commodity derivative contracts | ||||||||||
| Gross amounts recognized | $ | 213 | $ | 47 | ||||||
| Gross amounts offset in the consolidated balance sheets | (1) | (1) | ||||||||
| Cash collateral posted | — | (46) | ||||||||
| Net amounts presented in the consolidated balance sheets | $ | 212 | $ | — | December 31, 2023 | |||||
| --- | --- | --- | --- | --- | ||||||
| (in millions) | Derivative Assets<br><br>Short-Term1 | Derivative Liabilities<br><br>Short-Term2 | ||||||||
| Commodity derivative contracts | ||||||||||
| Gross amounts recognized | $ | 94 | $ | 77 | ||||||
| Gross amounts offset in the consolidated balance sheets | (3) | (3) | ||||||||
| Cash collateral posted | — | (74) | ||||||||
| Net amounts presented in the consolidated balance sheets | $ | 91 | $ | — |
1Included in "Other current assets" on SCE's consolidated balance sheets.
2Included in "Other current liabilities" on SCE's consolidated balance sheets.
At December 31, 2024, SCE posted $74 million of cash collateral, of which $46 million was offset against derivative liabilities and $28 million was reflected in "Other current assets" on the consolidated balance sheets.
Financial Statement Impact of Derivative Instruments
SCE recognizes realized gains and losses on derivative instruments as purchased power expense and unrealized gains and losses as regulatory assets or liabilities. Both realized and unrealized gains and losses are expected to be recovered from customers and therefore do not affect earnings. Cash flows from derivative activities, including cash collateral, are reported in cash flows from operating activities in SCE's consolidated statements of cash flows.
The following table summarizes the gains/(losses) of SCE's economic hedging activity:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Realized | $ | (409) | $ | (14) | $ | 178 |
| Unrealized | 149 | (322) | 310 |
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Notional Volumes of Derivative Instruments
The following table summarizes the notional volumes of derivatives used for SCE's economic hedging activities:
| Economic Hedges | |||||
|---|---|---|---|---|---|
| Unit of<br>Measure | December 31, | ||||
| Commodity | 2024 | 2023 | |||
| Electricity options, swaps and forwards | Gigawatt hours | 3,295 | 3,494 | ||
| Natural gas options, swaps and forwards | Billion cubic feet | 4 | 31 | ||
| Congestion revenue rights | Gigawatt hours | 8,141 | 35,011 |
Note 7. Revenue
The following table is a summary of SCE's revenue:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Revenue from contracts with customers | ||||||
| Commercial | $ | 8,000 | $ | 7,333 | $ | 7,028 |
| Residential | 7,060 | 6,421 | 6,707 | |||
| Other | 3,335 | 3,266 | 3,025 | |||
| Total revenue from contracts with customer1 | 18,395 | 17,020 | 16,760 | |||
| Alternative revenue program and other2 | (848) | (745) | 412 | |||
| Total operating revenue | $ | 17,547 | $ | 16,275 | $ | 17,172 |
1At December 31, 2024 and 2023, SCE's receivables related to contracts from customers were $2.9 billion and $2.5 billion, which included accrued unbilled revenue of $845 million and $741 million, respectively.
2Includes differences between revenues from contracts with customers and authorized levels for certain CPUC and FERC revenues.
Deferred Revenue
As of December 31, 2024, SCE has deferred revenue of $354 million related to the sale of the use of transfer capability of West of Devers transmission line, of which $13 million and $341 million are included in "Other current liabilities" and "Other deferred credits and other long-term liabilities," respectively, on SCE's consolidated balance sheets. The deferred revenue is amortized straight-line over a period of 30 years starting 2021.
Note 8. Income Taxes
Current and Deferred Taxes
The components of income tax expense (benefit) by location of taxing jurisdiction are:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Current: | ||||||||||||
| Federal | $ | 1 | $ | — | $ | 2 | $ | 3 | $ | — | $ | — |
| State | 7 | — | 13 | 48 | 5 | 2 | ||||||
| 8 | — | 15 | 51 | 5 | 2 | |||||||
| Deferred: | ||||||||||||
| Federal | 59 | 101 | (103) | 118 | 149 | (44) | ||||||
| State | (50) | 7 | (74) | (49) | 30 | (67) | ||||||
| 9 | 108 | (177) | 69 | 179 | (111) | |||||||
| Total | $ | 17 | $ | 108 | $ | (162) | $ | 120 | $ | 184 | $ | (109) |
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The components of net accumulated deferred income tax liability are:
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | ||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||
| Deferred tax assets: | ||||||||
| Property | $ | 943 | $ | 894 | $ | 929 | $ | 877 |
| Wildfire-related1 | 254 | 356 | 251 | 354 | ||||
| Nuclear decommissioning trust assets in excess of nuclear ARO liability | 373 | 380 | 373 | 380 | ||||
| Loss and credit carryforwards2 | 3,703 | 3,486 | 2,242 | 2,103 | ||||
| Regulatory balances | 610 | 626 | 610 | 626 | ||||
| Pension and postretirement benefits other than pensions, net | 117 | 127 | 21 | 25 | ||||
| Leases | 335 | 345 | 335 | 345 | ||||
| Other | 177 | 159 | 167 | 147 | ||||
| Sub-total | 6,512 | 6,373 | 4,928 | 4,857 | ||||
| Less: valuation allowance3 | 17 | 17 | — | — | ||||
| Total | 6,495 | 6,356 | 4,928 | 4,857 | ||||
| Deferred tax liabilities: | ||||||||
| Property | 11,220 | 10,627 | 11,202 | 10,611 | ||||
| Regulatory balances | 1,299 | 1,450 | 1,299 | 1,450 | ||||
| Nuclear decommissioning trust assets | 373 | 380 | 373 | 380 | ||||
| Leases | 335 | 345 | 335 | 345 | ||||
| Other | 187 | 187 | 155 | 158 | ||||
| Total | 13,414 | 12,989 | 13,364 | 12,944 | ||||
| Accumulated deferred income tax liability, net4 | $ | 6,919 | $ | 6,633 | $ | 8,436 | $ | 8,087 |
1Relates to estimated losses accrual for wildfire-related claims, net of expected recoveries from insurance and FERC customers, and contributions to the Wildfire Insurance Fund. For further information, see Note 12 and Note 1.
2As of December 31, 2024, unrecognized tax benefits of $397 million and $327 million for Edison International and SCE, respectively, are presented net against the deferred tax asset for the loss and tax credit carryforwards. As of December 31, 2023, the unrecognized tax benefits netted against deferred tax assets and tax credit carryforwards were $363 million and $299 million for Edison International and SCE, respectively.
3As of December 31, 2024 and 2023, Edison International has recorded $17 million valuation allowance on deferred tax assets. The $17 million valuation allowance is related to non-California state net operating loss carryforwards which are expected to expire before being utilized.
4Included in "Deferred income taxes and credits" on the consolidated balance sheets.
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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, 2024 | ||||||||
| (in millions) | Loss<br>Carryforwards | Credit<br>Carryforwards | Loss<br>Carryforwards | Credit<br>Carryforwards | ||||
| Expire in 2025 | $ | 7 | $ | — | $ | 7 | $ | — |
| Expire between 2026 to 2029 | 28 | — | 12 | — | ||||
| Expire between 2030 to 2044 | 1,719 | 699 | 786 | 290 | ||||
| No expiration date1 | 1,623 | 24 | 1,448 | 26 | ||||
| Total | $ | 3,377 | $ | 723 | $ | 2,253 | $ | 316 |
1Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), net operating losses generated after December 31, 2017 can carryforward indefinitely.
Edison International consolidates for federal income tax purposes, but not for financial accounting purposes, a group of wind projects referred to as Capistrano Wind. The amount of net operating loss and tax credit carryforwards recognized as part of deferred income taxes includes $107 million and $106 million related to Capistrano Wind for 2024 and 2023, respectively. The tax attributes not utilized as of December 31, 2024 will be available for the Edison International consolidated group to utilize in the future. When the remaining Capistrano tax attributes are used in the future by Edison International, payments will be made to those entities under a tax allocation agreement. Under the tax allocation agreement, Edison International has recorded a corresponding liability as part of other long-term liabilities related to its obligation to make payments to Capistrano Wind when these tax benefits are realized.
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:
| Edison International | SCE | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||||||||
| Income from operations before income taxes | $ | 1,563 | $ | 1,515 | $ | 662 | $ | 1,914 | $ | 1,781 | $ | 845 | ||||||
| Provision for income tax at federal statutory rate of 21% | 328 | 318 | 139 | 402 | 374 | 177 | ||||||||||||
| (Decrease) increase in income tax from: | ||||||||||||||||||
| State tax, net of federal income tax effect | (24) | 3 | (70) | — | 23 | (57) | ||||||||||||
| Property-related | (279) | (205) | (219) | (279) | (205) | (219) | ||||||||||||
| Corporate-owned life insurance cash surrender value | (9) | (8) | (9) | (9) | (8) | (9) | ||||||||||||
| Other | 1 | — | (3) | 6 | — | (1) | ||||||||||||
| Total income tax expense (benefit) | $ | 17 | $ | 108 | $ | (162) | $ | 120 | $ | 184 | $ | (109) | ||||||
| Effective tax rate | 1.1 | % | 7.1 | % | (24.5) | % | 6.3 | % | 10.3 | % | (12.9) | % |
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. Flow-through items reduce current authorized revenue requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods. The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to be recovered in future rates. For further information, see Note 11.
In the third quarter of 2024, SCE generated an investment tax credit of approximately $231 million, primarily from 200MW and 112.5MW utility owned storage projects. The tax benefits associated with these credits will be recognized and returned to customers as the credits are utilized.
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Under the Inflation Reduction Act of 2022, 15% corporate alternative minimum tax ("CAMT") is imposed on corporations with average adjusted financial statement income exceeding $1.0 billion over a specified 3-year period. Both Edison International and SCE are not subject to CAMT in 2024.
Accounting for Uncertainty in Income Taxes
Authoritative guidance related to accounting for uncertainty in income taxes requires an enterprise to recognize, in its financial statements, the best estimate of the impact of a tax position by determining if the weight of available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained upon examination. The guidance requires the disclosure of all unrecognized tax benefits, which includes both the reserves recorded for tax positions on filed tax returns and the unrecognized portion of affirmative claims.
Unrecognized Tax Benefits
The following table provides a reconciliation of unrecognized tax benefits:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Balance at January 1, | $ | 430 | $ | 646 | $ | 613 | $ | 418 | $ | 374 | $ | 340 |
| Tax positions taken during the current year: | ||||||||||||
| Increases | 66 | 65 | 54 | 66 | 65 | 54 | ||||||
| Tax positions taken during a prior year: | ||||||||||||
| Increases | 1 | 13 | — | — | 4 | — | ||||||
| Decreases1 | (34) | (294) | (21) | (27) | (25) | (20) | ||||||
| Balance at December 31, | $ | 463 | $ | 430 | $ | 646 | $ | 457 | $ | 418 | $ | 374 |
1The Edison International decrease in 2023 was mainly related to a write-off of a reserve for a claim related to the Edison Mission Energy bankruptcy.
As of December 31, 2024, if recognized, $72 million of unrecognized tax benefits would impact Edison International's effective tax rate and $66 million of the unrecognized tax benefits would impact SCE's effective tax rate.
Tax Disputes
Tax years that remain open for examination by the Internal Revenue Service and Franchise Tax Board are 2021 – 2023 and 2013 – 2018 & 2020 - 2023, respectively.
Accrued Interest and Penalties
The total amount of accrued interest and penalties related to income tax liabilities are:
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | ||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||
| Accrued interest and penalties | $ | — | $ | — | $ | 36 | $ | 28 |
The net after-tax interest and penalties recognized in income tax (benefit) expense are:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Net after-tax interest and penalties tax expense | $ | — | $ | — | $ | — | $ | 7 | $ | 4 | $ | 2 |
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Note 9. Compensation and Benefit Plans
Employee Savings Plan
The 401(k) defined contribution savings plan is designed to supplement employees' retirement income. The employer contributions were as follows:
| Edison<br>International | SCE | |||
|---|---|---|---|---|
| (in millions) | Years ended December 31, | |||
| 2024 | $ | 136 | $ | 134 |
| 2023 | 121 | 119 | ||
| 2022 | 103 | 101 |
Pension Plans and Postretirement Benefits Other Than Pensions
Pension Plans
Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting minimum service requirements. Employees hired by the participating companies on or after December 31, 2017 are no longer eligible to participate in the pension plan. In lieu of that, an additional non-contributory employer contribution is deposited into the Edison 401(k) Savings Plan. SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking. The expected contributions (all by the employer) for Edison International and SCE are approximately $44 million and $15 million, respectively, for the year ending December 31, 2025. The majority of annual contributions made by SCE to its pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms.
The funded position of Edison International's pension is sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's pension are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, unrealized losses equal to the unfunded status are recorded to a regulatory asset and unrealized gains equal to the funded status are recorded to a regulatory liability. See Note 11 for further information.
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Information on pension plan assets and benefit obligations is shown below.
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||
| Change in projected benefit obligation | ||||||||
| Projected benefit obligation at beginning of year | $ | 3,647 | $ | 3,524 | $ | 3,278 | $ | 3,159 |
| Service cost | 103 | 101 | 99 | 97 | ||||
| Interest cost | 175 | 180 | 157 | 162 | ||||
| Actuarial (gain) loss | (59) | 96 | (47) | 82 | ||||
| Benefits paid | (230) | (254) | (198) | (222) | ||||
| Projected benefit obligation at end of year | $ | 3,636 | $ | 3,647 | $ | 3,289 | $ | 3,278 |
| Change in plan assets | ||||||||
| Fair value of plan assets at beginning of year | $ | 3,609 | $ | 3,462 | $ | 3,415 | $ | 3,275 |
| Actual return on plan assets | 192 | 369 | 182 | 349 | ||||
| Employer contributions | 37 | 32 | 17 | 13 | ||||
| Benefits paid | (230) | (254) | (198) | (222) | ||||
| Fair value of plan assets at end of year | 3,608 | 3,609 | 3,416 | 3,415 | ||||
| (Underfunded)/Overfunded status at end of year | $ | (28) | $ | (38) | $ | 127 | $ | 137 |
| Amounts recognized in the consolidated balance sheets consist of 1: | ||||||||
| Long-term assets | $ | 166 | $ | 169 | $ | 137 | $ | 149 |
| Current liabilities | (27) | (30) | (1) | (2) | ||||
| Long-term liabilities | (167) | (177) | (9) | (10) | ||||
| $ | (28) | $ | (38) | $ | 127 | $ | 137 | |
| Amounts recognized in accumulated other comprehensive loss consist of: | ||||||||
| Net loss | $ | 8 | $ | 21 | $ | 13 | $ | 8 |
| Amounts recognized as a regulatory liability | (146) | (159) | (133) | (159) | ||||
| Accumulated benefit obligation at end of year | $ | 3,508 | $ | 3,495 | $ | 3,172 | $ | 3,136 |
| Pension plans with plan assets in excess of an accumulated benefit obligation: | ||||||||
| Projected benefit obligation | 3,636 | 3,647 | 3,289 | 3,278 | ||||
| Accumulated benefit obligation | 3,508 | 3,495 | 3,172 | 3,136 | ||||
| Fair value of plan assets | 3,608 | 3,609 | 3,416 | 3,415 | ||||
| Weighted average assumptions used to determine obligations at end of year: | ||||||||
| Discount rate | 5.56% | 5.04% | 5.56% | 5.04% | ||||
| Rate of compensation increase | 4.00% | 4.00% | 4.00% | 4.00% |
1The SCE liability excludes a long-term payable due to Edison International Parent of $88 million and $94 million at December 31, 2024 and 2023, respectively, related to certain SCE postretirement benefit obligations transferred to Edison International Parent.
For Edison International and SCE, respectively, the 2024 actuarial gains are primarily related to $159 million and $146 million from an increase of 52 basis points in the discount rate (from 5.04% as of December 31, 2023 to 5.56% as of December 31, 2024). For Edison International and SCE, respectively, the 2023 actuarial losses are primarily related to $96 million and $92 million in losses from a decrease of 32 basis points in the discount rate (from 5.36% as of December 31, 2022 to 5.04% as of December 31, 2023).
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Net periodic pension expense components are:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Service cost | $ | 103 | $ | 101 | $ | 120 | $ | 101 | $ | 99 | $ | 118 |
| Non-service cost (benefit) | ||||||||||||
| Interest cost | 175 | 180 | 111 | 162 | 166 | 101 | ||||||
| Expected return on plan assets | (232) | (214) | (227) | (219) | (202) | (215) | ||||||
| Settlement costs | — | — | 4 | — | — | 4 | ||||||
| Amortization of prior service cost | — | — | — | — | — | — | ||||||
| Amortization of net loss | 4 | 3 | 5 | 2 | 2 | 2 | ||||||
| Regulatory adjustment | (23) | (47) | 6 | (22) | (47) | 6 | ||||||
| Total non-service benefit1 | (76) | (78) | (101) | (77) | (81) | (102) | ||||||
| Total expense | $ | 27 | $ | 23 | $ | 19 | $ | 24 | $ | 18 | $ | 16 |
1Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.
Other changes in pension plan assets and benefit obligations recognized in other comprehensive income:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Net (gain) loss | $ | (9) | $ | 6 | $ | (45) | $ | (2) | $ | 6 | $ | (24) |
| Settlement charges | — | — | (4) | — | — | (4) | ||||||
| Amortization of net gain | (4) | (2) | (8) | (2) | (2) | (5) | ||||||
| Total (gain) loss recognized in other comprehensive income | (13) | 4 | (57) | (4) | 4 | (33) | ||||||
| Total recognized in expense and other comprehensive income | $ | 14 | $ | 27 | $ | (38) | $ | 20 | $ | 22 | $ | (17) |
In accordance with authoritative guidance on rate-regulated enterprises, SCE records amortization of net gains and losses into regulatory assets and liabilities instead of charges and credits to other comprehensive income for the portion of SCE's postretirement benefit plans that are recoverable in utility rates.
Edison International and SCE used the following weighted average assumptions to determine pension expense:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| Discount rate | 5.04 | % | 5.36 | % | 2.75 | % |
| Rate of compensation increase | 4.00 | % | 4.00 | % | 4.00 | % |
| Expected long-term return on plan assets | 6.75 | % | 6.50 | % | 5.50 | % |
| Interest crediting rate for cash balance account1: | ||||||
| Starting rate | 5.54 | % | 5.86 | % | 3.12 | % |
| Ultimate rate | 5.54 | % | 5.86 | % | 4.50 | % |
| Year ultimate rate is reached | 2024 | 2023 | 2026 |
1Edison International and SCE were using a graduated assumption for interest crediting rate for cash balance account, where current interest rate gradually increased to an ultimate rate at a certain year. Starting 2023, Edison International and SCE changed to use single interest crediting rate assumption to determine the pension expense for cash balance account.
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The following benefit payments, which reflect service rendered and expected future service, are expected to be paid:
| (in millions) | Edison<br>International | SCE | ||
|---|---|---|---|---|
| 2025 | $ | 332 | $ | 291 |
| 2026 | 344 | 301 | ||
| 2027 | 338 | 304 | ||
| 2028 | 332 | 299 | ||
| 2029 | 324 | 294 | ||
| 2030 – 2034 | 1,496 | 1,370 |
PBOP(s)
Employees hired prior to December 31, 2017 who retire at or after age 55 with at least 10 years of service may be eligible for postretirement healthcare benefits. Eligibility for a company contribution toward the cost of these benefits in retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date. Employees hired on or after December 31, 2017 are no longer eligible for retiree healthcare benefits. In lieu of those benefits, Edison International will provide a health reimbursement account of $200 per month available only after meeting certain age and service year requirements. Under the terms of the Edison International Welfare Benefit Plan ("PBOP Plan"), each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of PBOP Plan benefits with respect to its employees and former employees that exceed the participants' share of contributions. A participating employer may terminate the PBOP Plan benefits with respect to its employees and former employees, as may SCE (as PBOP Plan sponsor), and, accordingly, the participants' PBOP Plan benefits are not vested benefits.
There are no expected contributions for PBOP benefits for the year ended December 31, 2025. Annual contributions related to SCE employees made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans.
SCE has three voluntary employees' beneficiary association trusts ("VEBA Trusts") that can only be used to pay for retiree health care benefits of SCE and its subsidiaries. Once funded into the VEBA Trusts, neither SCE nor Edison International can subsequently recover the remaining amounts in the VEBA Trusts. Participants of the PBOP Plan do not have a beneficial interest in the VEBA Trusts. The VEBA Trust assets are sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's other postretirement benefits are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, the funded status is offset by a regulatory liability.
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Information on PBOP Plan assets and benefit obligations is shown below:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Change in benefit obligation | ||||||||||||
| Benefit obligation at beginning of year | $ | 773 | $ | 1,331 | $ | 769 | $ | 1,323 | ||||
| Service cost | 14 | 20 | 14 | 20 | ||||||||
| Interest cost | 38 | 67 | 38 | 67 | ||||||||
| Change in plan provisions | 23 | — | 23 | — | ||||||||
| Actuarial gain | (34) | (567) | (34) | (563) | ||||||||
| Plan participants' contributions | 26 | 28 | 26 | 28 | ||||||||
| Benefits paid | (99) | (106) | (99) | (106) | ||||||||
| Benefit obligation at end of year | $ | 741 | $ | 773 | $ | 737 | $ | 769 | ||||
| Change in plan assets | ||||||||||||
| Fair value of plan assets at beginning of year | $ | 2,275 | $ | 2,187 | $ | 2,275 | $ | 2,187 | ||||
| Actual return on assets | 78 | 162 | 78 | 162 | ||||||||
| Employer contributions | 1 | 4 | 1 | 4 | ||||||||
| Plan participants' contributions | 26 | 28 | 26 | 28 | ||||||||
| Benefits paid | (99) | (106) | (99) | (106) | ||||||||
| Fair value of plan assets at end of year | 2,281 | 2,275 | 2,281 | 2,275 | ||||||||
| Overfunded status at end of year | $ | 1,540 | $ | 1,502 | $ | 1,544 | $ | 1,506 | ||||
| Amounts recognized in the consolidated balance sheets consist of: | ||||||||||||
| Long-term assets | $ | 1,544 | $ | 1,506 | $ | 1,544 | $ | 1,506 | ||||
| Current liabilities | (1) | — | — | — | ||||||||
| Long-term liabilities | (3) | (4) | — | — | ||||||||
| $ | 1,540 | $ | 1,502 | $ | 1,544 | $ | 1,506 | |||||
| Amounts recognized in accumulated other comprehensive loss consist of: | ||||||||||||
| Net gain | $ | (4) | $ | (5) | $ | — | $ | — | ||||
| Amounts recognized as a regulatory liability | (1,544) | (1,505) | (1,544) | (1,505) | ||||||||
| Weighted average assumptions used to determine obligations at end of year: | ||||||||||||
| Discount rate | 5.60 | % | 5.06 | % | 5.60 | % | 5.06 | % | ||||
| Assumed health care cost trend rates: | ||||||||||||
| Rate assumed for following year | 6.25 | % | 6.50 | % | 6.25 | % | 6.50 | % | ||||
| Ultimate rate | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | ||||
| Year ultimate rate reached | 2029 | 2029 | 2029 | 2029 |
For both Edison International and SCE, the 2024 actuarial gains are primarily related to $41 million in gains from the change in discount rate. For Edison International and SCE, the 2023 actuarial gains are primarily related to $553 million and $550 million in gains from the change in postretirement medical carrier and retiree medical delivery mechanism effective in 2024, respectively.
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Net periodic PBOP expense components are:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Service cost | $ | 14 | $ | 20 | $ | 34 | $ | 14 | $ | 20 | $ | 34 |
| Non-service cost (benefit) | ||||||||||||
| Interest cost | 38 | 67 | 56 | 38 | 67 | 55 | ||||||
| Expected return on plan assets | (113) | (107) | (97) | (113) | (107) | (97) | ||||||
| Amortization of prior service cost | (1) | (1) | (2) | (1) | (1) | (2) | ||||||
| Amortization of net gain | (95) | (50) | (45) | (95) | (50) | (45) | ||||||
| Regulatory adjustment | 157 | 71 | 55 | 157 | 71 | 55 | ||||||
| Total non-service benefit1 | (14) | (20) | (33) | (14) | (20) | (34) | ||||||
| Total expense | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | — |
1Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.
In accordance with authoritative guidance on rate-regulated enterprises, SCE records amortization of net gains and losses to regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates.
Edison International and SCE used the following weighted average assumptions to determine PBOP expense:
| Years ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | 2022 | |
| Discount rate | 5.06% | 5.43% | 2.95% |
| Expected long-term return on plan assets | 4.88% | 5.00% | 3.50% |
| Assumed health care cost trend rates: | |||
| Current year | 6.50% | 6.75% | 6.25% |
| Ultimate rate | 5.00% | 5.00% | 5.00% |
| Year ultimate rate reached | 2029 | 2029 | 2029 |
The following benefit payments (net of plan participants' contributions) are expected to be paid:
| (in millions) | Edison<br>International | SCE | ||
|---|---|---|---|---|
| 2025 | $ | 49 | $ | 48 |
| 2026 | 50 | 50 | ||
| 2027 | 54 | 54 | ||
| 2028 | 55 | 54 | ||
| 2029 | 55 | 55 | ||
| 2030 – 2034 | 282 | 281 |
Plan Assets
Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies
The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes and may have active and passive investment strategies within asset classes. Target allocations for 2024 pension plan assets were 17.3% for U.S. equities, 9.7% for non-U.S. equities, 55% for fixed income and 18% for opportunistic and/or alternative investments. Target allocations for 2024 PBOP plan assets (except for Represented VEBA which is 95% for fixed income and 5% for U.S. and non-U.S. equities) are 29% for U.S. and non-U.S. equities, 65% for fixed income and 6% for opportunistic and/or alternative investments. Edison International employs multiple investment management firms. Investment managers within each asset class cover a range of investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers, styles and securities. Plan asset classes and
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individual manager performances are measured against targets. Edison International also monitors the stability of its investment managers' organizations.
Allowable investment types under CPUC investment guidelines include:
•United States equities: common and preferred stocks of large, medium, and small companies which are predominantly United States-based.
•Non-United States equities: equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies.
•Fixed income: fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade.
•Opportunistic, alternative and other investments: Opportunistic investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid. Alternative investments are limited partnerships that invest in non-publicly traded entities. Other investments are diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid or illiquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns.
Asset class portfolio weights are permitted to range within plus or minus 5%. Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions. Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios.
Determination of the Expected Long-Term Rate of Return on Assets
The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns is subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis.
Capital Markets Return Forecasts
Edison International's capital markets return forecast methodologies primarily use a combination of historical market data, current market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts, and a building block approach. The forecasts are developed using variables such as real risk-free interest, inflation and asset class specific risk premiums. For equities, the risk premium is based on an implied average equity risk premium of 4% over cash. The forecasted return on private equity and opportunistic investments are estimated at a 3% premium above public equity, reflecting a premium for higher volatility and lower liquidity. For fixed income, the risk premium is based on a comprehensive modeling of credit spreads.
Fair Value of Plan Assets
The PBOP Plan and the Southern California Edison Company Retirement Plan Trust assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S. treasury securities, and mutual and money market funds are classified as Level 1 as fair value is determined by observable, unadjusted quoted market prices in active or highly liquid and transparent markets. The fair value of the underlying investments in equity mutual funds are based on stock-exchange prices. The fair value of the underlying investments in fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers, and relevant credit information. Foreign exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. No investment is classified as Level 3 as of December 31, 2024 and 2023. Common/collective funds and partnerships are measured at fair value using the net asset value per share ("NAV") and have not been classified in the fair value hierarchy. Other investment entities are valued similarly to common/collective funds and are therefore classified as NAV. The Level 1 registered investment companies are either mutual or money market funds. The remaining funds in this category are readily redeemable and classified as NAV and are discussed further in the below pension plan trust investments table's note 8.
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Edison International reviews the process/procedures of both the pricing services and the trustee to gain an understanding of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and Edison International's validation procedures for pension and PBOP equity and fixed income securities are the same as the nuclear decommissioning trusts. For further discussion, see Note 4. The values of Level 1 mutual and money market funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's investment managers corroborate the trustee fair values.
Pension Plan
The following table sets forth the investments for Edison International and SCE that were accounted for at fair value as of December 31, 2024 and 2023, respectively, by asset class and level within the fair value hierarchy:
| December 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Level 1 | Level 2 | NAV1 | Total | ||||
| U.S. government and agency securities2 | $ | 244 | $ | 353 | $ | — | $ | 597 |
| Corporate stocks3 | 148 | 4 | — | 152 | ||||
| Corporate bonds4 | — | 1,084 | — | 1,084 | ||||
| Common/collective funds5 | — | — | 652 | 652 | ||||
| Partnerships/joint ventures6 | — | — | 680 | 680 | ||||
| Other investment entities7 | — | — | 58 | 58 | ||||
| Registered investment companies8 | 238 | — | 142 | 380 | ||||
| Interest-bearing cash | 14 | — | — | 14 | ||||
| Other | — | 57 | 8 | 65 | ||||
| Total | $ | 644 | $ | 1,498 | $ | 1,540 | $ | 3,682 |
| Receivables and payables, net | (74) | |||||||
| Combined net plan assets available for benefits | 3,608 | |||||||
| SCE's share of net plan assets | $ | 3,416 | ||||||
| December 31, 2023 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in millions) | Level 1 | Level 2 | NAV1 | Total | ||||
| U.S. government and agency securities2 | $ | 256 | $ | 352 | $ | — | $ | 608 |
| Corporate stocks3 | 176 | 5 | — | 181 | ||||
| Corporate bonds4 | — | 1,057 | — | 1,057 | ||||
| Common/collective funds5 | — | — | 584 | 584 | ||||
| Partnerships/joint ventures6 | — | — | 657 | 657 | ||||
| Other investment entities7 | — | — | 58 | 58 | ||||
| Registered investment companies8 | 212 | — | 153 | 365 | ||||
| Interest-bearing cash | 10 | — | — | 10 | ||||
| Other | — | 46 | 8 | 54 | ||||
| Total | $ | 654 | $ | 1,460 | $ | 1,460 | $ | 3,574 |
| Receivables and payables, net | 35 | |||||||
| Combined net plan assets available for benefits | 3,609 | |||||||
| SCE's share of net plan assets | $ | 3,415 |
1These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
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3Corporate stocks are diversified. At December 31, 2024 and 2023, respectively, performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (33% and 36%) and Morgan Stanley Capital International (MSCI) index (67% and 64%).
4Corporate bonds are diversified. At December 31, 2024 and 2023, respectively, this category includes $77 million and $78 million for collateralized mortgage obligations and other asset backed securities.
5The common/collective assets are invested in equity index funds that seek to track performance of the Standard and Poor's 500 Index (38% and 41% at December 31, 2024 and 2023). In addition, at December 31, 2024 and 2023, respectively, 38% and 40% of the assets in this category are in index funds which seek to track performance in the MSCI All Country World Index ex-US and 19% and 16% of this category are in a non-index U.S. equity fund, which is actively managed.
6At December 31, 2024 and 2023, respectively, 69% and 74% are invested in private equity funds with investment strategies that include branded consumer products and clean technology companies, 16% and 17% are invested in ABS including distressed mortgages and commercial and residential loans, 9% and zero are invested in fixed income securities, and 5% are invested in a broad range of financial assets in all global markets at both December 31, 2024 and 2023.
7At December 31, 2024 and 2023, respectively, 70% and 68% are invested in domestic mortgage backed securities and 30% and 32% in high yield debt securities.
8At December 31, 2024 and 2023, respectively, 56% and 57% are invested in Level 1 corporate bond funds, 10% and 13% in a fixed income fund used for cash management, and 34% and 28% in a US equity fund.
At December 31, 2024 and 2023, respectively, approximately 64% and 62% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.
Postretirement Benefits Other than Pensions
The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair value as of December 31, 2024 and 2023, respectively, by asset class and level within the fair value hierarchy:
| December 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Level 1 | Level 2 | NAV1 | Total | ||||
| U.S. government and agency securities2 | $ | 489 | $ | 51 | $ | — | $ | 540 |
| Corporate stocks3 | 81 | 2 | — | 83 | ||||
| Corporate notes and bonds4 | — | 1,126 | — | 1,126 | ||||
| Common/collective funds5 | — | — | 235 | 235 | ||||
| Partnerships6 | — | — | 119 | 119 | ||||
| Registered investment companies7 | 52 | — | — | 52 | ||||
| Interest bearing cash | — | 45 | — | 45 | ||||
| Other8 | — | 95 | — | 95 | ||||
| Total | $ | 622 | $ | 1,319 | $ | 354 | $ | 2,295 |
| Receivables and payables, net | (14) | |||||||
| Net plan assets available for benefits | $ | 2,281 |
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| December 31, 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Level 1 | Level 2 | NAV1 | Total | ||||
| U.S. government and agency securities2 | $ | 569 | $ | 84 | $ | — | $ | 653 |
| Corporate stocks3 | 85 | 2 | — | 87 | ||||
| Corporate notes and bonds4 | — | 1,064 | — | 1,064 | ||||
| Common/collective funds5 | — | — | 222 | 222 | ||||
| Partnerships6 | — | — | 124 | 124 | ||||
| Registered investment companies7 | 47 | — | — | 47 | ||||
| Interest bearing cash | — | 29 | — | 29 | ||||
| Other8 | 2 | 70 | — | 72 | ||||
| Total | $ | 703 | $ | 1,249 | $ | 346 | $ | 2,298 |
| Receivables and payables, net | (23) | |||||||
| Net plan assets available for benefits | $ | 2,275 |
1These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.
3Corporate stock performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (78% and 74% at December 31, 2024 and 2023, respectively) and the MSCI All Country World Index (22% and 26% at December 31, 2024 and 2023, respectively).
4Corporate notes and bonds are diversified and include approximately $343 million and $237 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2024 and 2023, respectively.
5At December 31, 2024 and 2023, respectively, 47% and 45% of the common/collective assets are invested in index funds which seek to track performance in the MSCI All Country World Investable Market Index, 41% and 40% are invested in a non-index U.S. equity fund which is actively managed. The remaining assets in this category are primarily invested in emerging market fund and fixed income funds.
6At December 31, 2024 and 2023, respectively, 71% and 65% of the partnerships are invested in private equity and venture capital funds. Investment strategies for these funds include branded consumer products, clean and information technology and healthcare. Of the remaining partnerships category, 22% and 28% are invested in asset backed securities including distressed mortgages, distressed companies and commercial and residential loans and debt and equity of banks; 7% are invested in a broad range of financial assets in all global markets at both December 31, 2024 and 2023.
7At December 31, 2024 and 2023, respectively, registered investment companies were primarily invested in a money market fund (73% and 70%) and exchange rate traded funds which seek to track performance of MSCI Emerging Market Index, Russell 2000 Index and international small cap equities (27% and 30%).
8Other includes $52 million and $58 million of municipal securities at December 31, 2024 and 2023, respectively.
At both December 31, 2024 and 2023, approximately 78% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.
Stock-Based Compensation
Edison International maintains a shareholder-approved incentive plan (the "2007 Performance Incentive Plan") that includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended, is approximately 71 million shares. As of December 31, 2024, Edison International had approximately 13 million shares remaining available for new award grants under its stock-based compensation plans.
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The following table summarizes total expense and tax benefits associated with stock-based compensation:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Stock-based compensation expense1: | ||||||||||||
| Stock options | $ | 13 | $ | 12 | $ | 13 | $ | 7 | $ | 6 | $ | 7 |
| Performance shares | 21 | 15 | 13 | 10 | 8 | 6 | ||||||
| Restricted stock units | 21 | 17 | 14 | 15 | 12 | 9 | ||||||
| Other | 2 | 2 | 2 | — | — | — | ||||||
| Total stock-based compensation expense | $ | 57 | $ | 46 | $ | 42 | $ | 32 | $ | 26 | $ | 22 |
| Income tax benefits related to stock-based compensation expense | $ | 23 | $ | 7 | $ | 9 | $ | 14 | $ | 5 | $ | 5 |
1Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income.
Stock Options
Under the 2007 Performance Incentive Plan, Edison International has granted stock options at exercise prices equal to the closing price at the grant date. Edison International may grant stock options and other awards related to, or with a value derived from, its common stock to directors and certain employees. Options generally expire 10 years after the grant date and vest over a period of three or four years of continuous service in equal annual increments, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.
The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires various assumptions noted in the following table:
| Years ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | 2022 | |
| Expected terms (in years) | 4.7 | 4.8 | 5.0 |
| Risk-free interest rate | 3.7% - 4.5% | 3.6% - 4.7% | 1.6% - 4.1% |
| Expected dividend yield | 3.6% - 4.7% | 4.2% - 4.7% | 4.0% - 5.0% |
| Weighted average expected dividend yield | 4.7% | 4.2% | 4.0% |
| Expected volatility | 23.6% - 30.4% | 29.0% - 29.6% | 27.8% - 28.6% |
| Weighted average volatility | 30.3% | 29.1% | 27.8% |
The expected term represents the period of time for which the options are expected to be outstanding and is primarily based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate for periods within the contractual life of the option is based on a zero-coupon U.S. Treasury STRIPS (separate trading of registered interest and principal of securities) whose maturity corresponds to the option's expected term on the measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the length of the option's expected term. The volatility period used was 56 months, 58 months, and 60 months at December 31, 2024, 2023, and 2022, respectively.
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The following is a summary of the status of Edison International's stock options:
| Weighted Average | ||||||
|---|---|---|---|---|---|---|
| Shares | Exercise<br>Price | Remaining<br>Contractual<br>Term (years) | Aggregate<br>Intrinsic Value<br>(in millions) | |||
| Edison International: | ||||||
| Outstanding at December 31, 2023 | 11,418,243 | $ | 64.30 | |||
| Granted | 749,968 | 66.70 | ||||
| Forfeited or expired | (107,158) | 71.89 | ||||
| Exercised1 | (3,417,478) | 64.49 | ||||
| Outstanding at December 31, 2024 | 8,643,575 | 64.33 | 5.01 | |||
| Exercisable and expected to vest at December 31, 2024 | 8,438,864 | 64.40 | 4.95 | $ | 130 | |
| Exercisable at December 31, 2024 | 6,651,227 | $ | 64.79 | 4.19 | $ | 100 |
| SCE: | ||||||
| Outstanding at December 31, 2023 | 5,192,275 | $ | 64.22 | |||
| Granted | 390,760 | 66.82 | ||||
| Forfeited or expired | (98,077) | 71.44 | ||||
| Exercised1 | (1,892,980) | 64.49 | ||||
| Affiliate transfers, net | 14,472 | 64.22 | ||||
| Outstanding at December 31, 2024 | 3,606,450 | 64.18 | 5.27 | |||
| Exercisable and expected to vest at December 31,2024 | 3,508,129 | 64.25 | 5.21 | $ | 55 | |
| Exercisable at December 31, 2024 | 2,609,173 | $ | 64.66 | 4.33 | $ | 40 |
1Edison International and SCE recognized tax benefits of $13 million and $7 million, respectively, from stock options exercised in 2024.
At December 31, 2024, total unrecognized compensation cost related to stock options and the weighted average period the cost is expected to be recognized are as follows:
| Edison International | SCE | |||
|---|---|---|---|---|
| Unrecognized compensation cost, net of expected forfeitures (in millions) | $ | 7 | $ | 4 |
| Weighted average period (in years) | 1.3 | 1.3 |
The following is a summary of supplemental data on stock options:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions, except per award amounts) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Weighted average grant date fair value per option granted | $ | 13.32 | $ | 12.69 | $ | 9.92 | $ | 13.36 | $ | 12.71 | $ | 9.92 |
| Fair value of options vested | 14 | 8 | 8 | 7 | 7 | 5 | ||||||
| Value of options exercised | 45 | 14 | 17 | 25 | 11 | 12 |
Performance Shares
A target number of contingent performance shares were awarded to executives in 2024, 2023, and 2022 and vest as of December 31, 2026, 2025, and 2024, respectively. The vesting of the grants is dependent upon market and financial performance and service conditions as defined in the grants for each of the years. The number of performance shares earned from each year's grants could range from zero to twice the target number (plus additional units credited as dividend equivalents).
The fair value of market condition performance shares is determined using a Monte Carlo simulation valuation model for the total shareholder return. The fair value of financial performance condition performance shares is determined (i) at grant
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as the target number of shares (which Edison International determined to be the probable outcome) valued at the closing price on the grant date of Edison International common stock and (ii) subsequently using Edison International's earnings per share compared to pre-established targets.
The following is a summary of the status of Edison International's nonvested performance shares:
| Equity Awards | |||
|---|---|---|---|
| Shares | Weighted Average<br>Fair Value | ||
| Edison International: | |||
| Nonvested at December 31, 2023 | 496,841 | $ | 71.93 |
| Granted | 276,838 | 72.21 | |
| Forfeited | (5,872) | 72.57 | |
| Vested | (249,287) | 67.90 | |
| Nonvested at December 31, 2024 | 518,520 | $ | 74.01 |
| SCE: | |||
| Nonvested at December 31, 2023 | 249,091 | $ | 71.99 |
| Granted | 144,339 | 72.37 | |
| Forfeited | (5,282) | 72.23 | |
| Vested | (123,197) | 67.73 | |
| Affiliate transfers, net | 23 | 71.99 | |
| Nonvested at December 31, 2024 | 264,974 | $ | 74.17 |
Restricted Stock Units
Restricted stock units were awarded to executives in 2024, 2023, and 2022 and vest and become payable on January 4, 2027, January 2, 2026, and January 2, 2025, respectively. Each restricted stock unit awarded includes a dividend equivalent feature and is a contractual right to receive one share of Edison International common stock, if vesting requirements are satisfied. The vesting of Edison International's restricted stock units is dependent upon continuous service through the end of the vesting period, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.
The following is a summary of the status of Edison International's nonvested restricted stock units:
| Edison International | SCE | |||||
|---|---|---|---|---|---|---|
| Shares | Weighted Average<br>Grant Date<br>Fair Value | Shares | Weighted Average<br>Grant Date<br>Fair Value | |||
| Nonvested at December 31, 2023 | 892,412 | $ | 61.19 | 645,549 | $ | 61.17 |
| Granted | 325,501 | 66.88 | 233,112 | 66.88 | ||
| Forfeited | (22,886) | 65.24 | (18,908) | 65.34 | ||
| Vested | (318,579) | 55.71 | (238,921) | 55.89 | ||
| Affiliate transfers, net | — | — | (105) | 61.17 | ||
| Nonvested at December 31, 2024 | 876,448 | $ | 65.19 | 620,727 | $ | 65.22 |
The fair value for each restricted stock unit awarded is determined as the closing price of Edison International common stock on the grant date.
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Note 10. Investments
Nuclear Decommissioning Trusts
Future decommissioning costs related to SCE's nuclear assets are expected to be funded from independent decommissioning trusts.
The following table sets forth amortized cost and fair value of the trust investments (see Note 4 for a discussion on fair value of the trust investments):
| Amortized Costs | Fair Values | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Longest Maturity Dates | December 31,<br>2024 | December 31,<br>2023 | December 31,<br>2024 | December 31,<br>2023 | ||||
| Municipal bonds | 2067 | $ | 729 | $ | 636 | $ | 860 | $ | 757 |
| Government and agency securities | 2074 | 1,201 | 1,072 | 1,341 | 1,186 | ||||
| Corporate bonds | 2072 | 346 | 361 | 392 | 401 | ||||
| Short-term investments and receivables/payables1 | One-year | 152 | 164 | 62 | 171 | ||||
| Total debt securities and other | 2,428 | 2,233 | 2,655 | 2,515 | |||||
| Equity securities | 1,631 | 1,658 | |||||||
| Total2 | $ | 4,286 | $ | 4,173 |
1Short-term investments include $18 million and $38 million of repurchase agreements payable by financial institutions which earn interest, were both fully secured by U.S. Treasury securities and mature by January 2, 2025 and January 2, 2024 as of December 31, 2024 and 2023, respectively.
2Represents amounts before reduction for deferred tax liabilities on net unrealized gains of $373 million and $380 million as of December 31, 2024 and 2023, respectively.
Trust fund earnings (based on specific identification) increase the trust fund balance and the ARO regulatory liability. Unrealized holding gains, net of losses, were $1.7 billion and $1.8 billion at December 31, 2024 and 2023, respectively.
The following table summarizes the gains and losses for the trust investments:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| Gross realized gains | $ | 326 | $ | 323 | $ | 150 |
| Gross realized losses | (24) | (73) | (127) | |||
| Net unrealized (losses) gains for equity securities | (19) | 103 | (369) |
Due to regulatory mechanisms, changes in the assets of the trusts from income or loss items do not materially affect earnings.
Note 11. Regulatory Assets and Liabilities
Included in SCE's regulatory assets and liabilities are regulatory balancing accounts. CPUC-authorized balancing account mechanisms require SCE to refund or recover any differences between forecasted and actual costs. The CPUC has authorized balancing accounts for specified costs or programs such as fuel, purchased power, demand-side management programs, wildfire related costs, nuclear decommissioning and public purpose programs. Certain of these balancing accounts include a return on rate base of 7.87% and 7.44% in 2024 and 2023, respectively. The CPUC authorizes the use of a balancing account to recover from or refund to customers differences in revenue resulting from actual and forecasted electricity sales.
Amounts included in regulatory assets and liabilities are generally recorded with corresponding offsets to the applicable income statement accounts.
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Regulatory Assets
SCE's regulatory assets included on the consolidated balance sheets are:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Current: | ||||
| Regulatory balancing and memorandum accounts | $ | 2,723 | $ | 2,502 |
| Other | 25 | 22 | ||
| Total current | 2,748 | 2,524 | ||
| Long-term: | ||||
| Deferred income taxes | 5,982 | 5,533 | ||
| Unamortized investments, net of accumulated amortization | 115 | 110 | ||
| Unamortized losses on reacquired debt | 88 | 99 | ||
| Regulatory balancing and memorandum accounts | 867 | 1,257 | ||
| Environmental remediation | 222 | 226 | ||
| Recovery assets | 1,512 | 1,558 | ||
| Other | 100 | 114 | ||
| Total long-term | 8,886 | 8,897 | ||
| Total regulatory assets | $ | 11,634 | $ | 11,421 |
In accordance with the accounting standards applicable to rate-regulated enterprises, SCE defers costs as regulatory assets that are probable of future recovery from customers and has recorded regulatory assets for these incremental costs at December 31, 2024. While SCE believes such costs are probable of future recovery, there is no assurance that SCE will collect all amounts currently deferred as regulatory assets.
SCE's regulatory assets related to deferred income taxes represent tax benefits passed through to customers. The CPUC requires SCE to flow through certain deferred income tax benefits to customers by reducing electricity rates, thereby deferring recovery of such amounts to future periods. Based on current regulatory ratemaking and income tax laws, SCE expects to recover its regulatory assets related to deferred income taxes over the life of the assets that give rise to the accumulated deferred income taxes, approximately from 1 to 60 years. For further information, see Note 8.
SCE has long-term unamortized investments which include nuclear assets related to Palo Verde and the beyond the meter program. Nuclear assets related to Palo Verde and the beyond the meter program are expected to be recovered by 2046 and 2031, respectively, and both earned returns of 7.87% and 7.44% in 2024 and 2023, respectively.
SCE's net regulatory asset related to its unamortized losses on reacquired debt will be recovered over the original amortization period of the reacquired debt over periods ranging from 10 to 40 years or the life of the new issuance if the debt is refunded or refinanced.
SCE's regulatory assets related to environmental remediation represent a portion of the costs incurred at certain sites that SCE is allowed to recover through customer rates. See "Environmental Remediation" discussed in Note 12.
Recovery assets represent the balance associated with the Recovery Property and prudently incurred financing costs securitized with issuance of the associated bond. The recovery period is until 2047, when the bonds and interest are paid in full. For further details, see Note 3.
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Regulatory Liabilities
SCE's regulatory liabilities included on the consolidated balance sheets are:
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Current: | ||||
| Regulatory balancing and memorandum accounts | $ | 1,144 | $ | 704 |
| Energy derivatives | 165 | 16 | ||
| Other | 38 | 43 | ||
| Total current | 1,347 | 763 | ||
| Long-term: | ||||
| Costs of removal | 2,520 | 2,635 | ||
| Deferred income taxes | 2,163 | 2,211 | ||
| Recoveries in excess of ARO liabilities | 1,748 | 1,498 | ||
| Regulatory balancing and memorandum accounts | 2,023 | 1,395 | ||
| Pension and other postretirement benefits | 1,690 | 1,664 | ||
| Other | 15 | 17 | ||
| Total long-term | 10,159 | 9,420 | ||
| Total regulatory liabilities | $ | 11,506 | $ | 10,183 |
SCE's regulatory liabilities related to energy derivatives are primarily an offset to unrealized gains on derivatives.
SCE's regulatory liabilities related to costs of removal represent differences between asset removal costs recorded and amounts collected in rates for those costs.
SCE's regulatory liabilities include excess deferred income taxes resulting from statutory income tax rate changes. The regulatory liabilities are generally expected to be refunded to customers over the lives of the assets and liabilities that gave rise to the deferred income taxes.
SCE's regulatory liabilities related to recoveries in excess of ARO liabilities represent the cumulative differences between ARO obligations and amounts collected in rates primarily for the decommissioning of SCE's nuclear generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments. See Note 10 for further discussion.
SCE's regulatory liabilities related to pension and other post-retirement plans represent the net overfunded status of the plans. This amount is expected to be amortized over the expected future service of the employees (subject to regulatory adjustment) or refunded to ratepayers at the termination or completion of the plan. See "Pension Plans and Postretirement Benefits Other than Pensions" discussion in Note 9.
Net Regulatory Balancing and Memorandum Accounts
Balancing accounts track amounts that the CPUC or FERC have authorized for recovery. Balancing account over and under collections represent differences between cash collected in current rates for specified forecasted costs and such costs that are actually incurred. Undercollections are recorded as regulatory balancing account assets. Overcollections are recorded as regulatory balancing account liabilities. With some exceptions, SCE seeks to adjust rates on an annual basis or at other designated times to recover or refund the balances recorded in its balancing accounts. Memorandum accounts are authorized to track costs for potential future recovery.
Regulatory balancing and memorandum accounts that SCE does not expect to collect or refund in the next 12 months are reflected in the long-term section of the consolidated balance sheets. Regulatory balancing and memorandum accounts that do not have the right of offset are presented gross in the consolidated balance sheets. Under and over collections in balancing accounts and amounts recorded in memorandum accounts typically accrue interest based on a three-month commercial paper rate published by the Federal Reserve.
The following table summarizes the significant components of regulatory balancing and memorandum accounts included in the above tables of regulatory assets and liabilities:
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| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Asset (liability) | ||||
| Energy procurement related costs | $ | (97) | $ | 397 |
| Public purpose and energy efficiency | (1,708) | (1,736) | ||
| GRC related balancing accounts1 | 976 | 1,361 | ||
| FERC related balancing accounts | 125 | (211) | ||
| Wildfire risk mitigation and insurance2 | 741 | 1,169 | ||
| Wildfire and drought restoration3 | 238 | 417 | ||
| Tax accounting memorandum account | (40) | 108 | ||
| Other | 188 | 155 | ||
| Assets, net of liabilities | $ | 423 | $ | 1,660 |
1The GRC related balancing accounts primarily consist of the base revenue requirement balancing account ("BRRBA"), the vegetation management balancing account ("VMBA"), the Wildfire Risk Mitigation balancing account ("WRMBA") and the risk management balancing account ("RMBA").
The 2021 GRC decision approved the establishment of the VMBA to track vegetation management expenses up to 115% of amounts authorized, the WRMBA to track the costs of SCE's Wildfire Covered Conductor Program up to 110% of amounts authorized and the RMBA to track the authorized costs of wildfire insurance. If spending is less than authorized, SCE will refund those amounts to customers. If spending is within the specified threshold, if any, for each balancing account, SCE will recover those costs from customers. Amounts above the specified threshold, or above amounts authorized if a higher threshold was not established, for each balancing account may be eligible for deferral to wildfire risk mitigation and insurance accounts.
2The wildfire risk mitigation and insurance regulatory assets represent wildfire-related costs that are probable of future recovery from customers, subject to a reasonableness review. The Fire Hazard Prevention Memorandum Account was used to track costs related to fire safety and to implement fire prevention corrective action measures in extreme and very high fire threat areas. The Wildfire Expense Memorandum Account ("WEMA") is used to track incremental wildfire insurance costs and uninsured wildfire-related financing, legal and claims costs related to the Other Wildfire Events that SCE believes are probable of recovery. See Note 12 for further details. The Wildfire Mitigation Plan Memorandum Account is used to track costs incurred to implement SCE's wildfire mitigation plan that are not currently reflected in SCE's revenue requirements. The Fire Risk Mitigation Memorandum Account is used to track costs related to the reduction of fire risk that are incremental to costs approved for recovery in SCE's GRCs that are not tracked in any other wildfire-related memorandum account. The balance also includes vegetation management spending in excess of the 115% threshold for the VMBA described above.
3The wildfire and drought restoration regulatory assets represent restoration costs that are recorded in a Catastrophic Event Memorandum Account.
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Note 12. Commitments and Contingencies
Power Purchase Agreements
SCE entered into various agreements to purchase power, electric capacity and other energy products. At December 31, 2024, the undiscounted future expected minimum payments for the SCE PPAs (primarily related to renewable energy contracts), which were approved by the CPUC and met other critical contract provisions (including completion of major milestones for construction), were as follows:
| (in millions) | Total | |
|---|---|---|
| 2025 | $ | 2,986 |
| 2026 | 3,139 | |
| 2027 | 2,704 | |
| 2028 | 2,423 | |
| 2029 | 2,421 | |
| Thereafter | 16,493 | |
| Total future commitments1 | $ | 30,166 |
1Certain power purchase agreements are treated as operating leases. For further discussion, see Note 13. Includes long-term lease contracts commencing in 2024 with total future minimum lease payments of $57 million.
Additionally, as of December 31, 2024, SCE has executed contracts that have not met the critical contract provisions that would increase contractual obligations by $25 million in 2025, $140 million in 2026, $274 million in 2027, $381 million in 2028, $450 million in 2029 and $5,370 million thereafter, if all critical contract provisions are completed.
Costs incurred for PPAs were $4.0 billion in 2024, $4.5 billion in 2023 and $5.1 billion in 2022, which include costs associated with contracts with terms of less than one year.
Other Commitments
The following summarizes the estimated minimum future commitments for SCE's other commitments:
| (in millions) | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Other contractual obligations | $ | 62 | $ | 59 | $ | 59 | $ | 59 | $ | 48 | $ | 142 | $ | 429 |
Costs incurred for other commitments were $65 million in 2024, $60 million in 2023 and $58 million in 2022. Other commitments include fuel supply contracts for Palo Verde which require payment only if the fuel is made available for purchase. Also included are commitments related to maintaining reliability and expanding SCE's transmission and distribution system.
The table above does not include asset retirement obligations, which are discussed in Note 1.
Indemnities
Edison International and SCE have agreed to provide indemnifications through contracts entered into in the normal course of business. These are primarily indemnifications against adverse litigation outcomes in connection with underwriting agreements, indemnities for specified environmental liabilities and income taxes or other contractual arrangements. Edison International's and SCE's obligations under these agreements may or may not be limited in terms of time and/or amount, and in some instances Edison International and SCE may have recourse against third parties. Edison International and SCE have not recorded a liability related to these indemnities. The overall maximum amount of the obligations under these indemnifications cannot be reasonably estimated.
Contingencies
In addition to the matters disclosed in these Notes, Edison International and SCE are involved in other legal, tax, and regulatory proceedings before various courts and governmental agencies regarding matters arising in the ordinary course of business. Edison International and SCE believe the outcome of each of these other proceedings will not materially affect its financial position, results of operations and cash flows. Legal costs expected to be incurred by Edison International and SCE in connection with loss contingencies are expensed as incurred.
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Southern California Wildfires and Mudslides
Unprecedented weather conditions in California due to climate change have contributed to wildfires, including those where SCE's equipment has been alleged to be associated with the fire's ignition, that have caused loss of life and substantial damage in SCE's service area, including as recently as January 2025.
Numerous claims related to wildfire events have been initiated against SCE and Edison International. Edison International and SCE have, or may, incur material losses in connection with the 2017/2018 Wildfire/Mudslide Events, the Other Wildfire Events that are described below, and the January 2025 Eaton Fire. Of the Other Wildfire Events described below, only the 2017 Creek Fire ignited prior to the adoption of AB 1054 in July 2019. SCE's equipment has been, and may further be, alleged to be associated with other wildfires that have originated in Southern California, and SCE's service area remains susceptible to additional wildfire activity.
Liability Overview
The extent of legal liability for wildfire-related damages in actions against utilities depends on a number of factors, including whether the utility substantially caused or contributed to the damages and whether parties seeking recovery of damages will be required to show negligence in addition to causation. California courts have previously found utilities to be strictly liable for property damage along with associated interest and attorneys' fees, regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that caused the property damage. If inverse condemnation is held to be inapplicable to SCE in connection with a wildfire, SCE still could be held liable for property damages and associated interest if the property damages were found to have been proximately caused by SCE's negligence. If SCE were to be found negligent, SCE could also be held liable for, among other things, fire suppression costs, business interruption losses, evacuation costs, clean-up costs, medical expenses, and personal injury/wrongful death claims, including claims for non-economic damages. Additionally, SCE could potentially be subject to fines and penalties for alleged violations of CPUC rules and state laws investigated in connection with the ignition of a wildfire.
While investigations into the cause of a wildfire event are conducted by one or more fire agencies, fire agency findings do not determine legal causation of or assign legal liability for a wildfire event. Final determinations of legal causation and liability for wildfire events, including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes, and settlements may be reached before determinations of legal liability are ever made. Even when investigations are still pending or legal liability is disputed, an assessment of likely outcomes, including through future settlement of disputed claims, may require estimated losses to be accrued under accounting standards. Each reporting period, management reviews its loss estimates for remaining alleged and potential claims related to wildfire events. The process for estimating losses associated with alleged and potential wildfire related claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling wildfire litigation claims. As additional information becomes available, management's estimates and assumptions regarding the causes and financial impact of wildfire events may change. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged and in estimating settlement outcomes.
Estimates and Assumptions
Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events. Due to the number of uncertainties and possible outcomes related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events litigation, Edison International and SCE cannot estimate the upper end of the range of reasonably possible losses that may be incurred in connection with the 2017/2018 Wildfire/Mudslide Events or the Other Wildfire Events.
Estimated losses for wildfire litigation are based on a number of assumptions and are subject to change as additional information becomes available. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged and uncertainty in estimating settlement outcomes. For instance, SCE receives additional information with respect to damages claimed as claims mediation and trial processes progress. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to reach settlements and the outcomes of settlements reached through claims mediation processes, uncertainties related to the impact of outcomes of wildfire litigation against other parties and increasingly negative jury sentiments in general litigation, uncertainties related to the sufficiency of insurance held by plaintiffs, uncertainties related to litigation processes, including whether plaintiffs will ultimately pursue claims, uncertainty as to the legal and factual determinations to be made during litigation, including uncertainty as to the contributing causes of wildfire events, the complexities associated with fires that merge, as applicable for the Thomas and Koenigstein Fires, and, for the Montecito Mudslides,
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whether inverse condemnation will be held applicable to SCE with respect to damages caused by the mudslides, and the uncertainty as to how these factors impact future settlements.
Litigation
2017/2018 Wildfire/Mudslide Events
Wildfires in SCE's service area in December 2017 and November 2018 caused loss of life, substantial damage to both residential and business properties, and service outages for SCE customers. The investigating government agencies, the Ventura County Fire Department ("VCFD") and CAL FIRE, have determined that the largest of the 2017 fires in SCE's service area originated on December 4, 2017, in the Anlauf Canyon area of Ventura County, followed shortly thereafter by a second fire that originated near Koenigstein Road in the City of Santa Paula. According to CAL FIRE, the Thomas and Koenigstein Fires, collectively, burned over 280,000 acres, destroyed or damaged an estimated 1,343 structures and resulted in two confirmed fatalities. The largest of the November 2018 fires in SCE's service area, the Woolsey Fire, originated in Ventura County. According to CAL FIRE, the Woolsey Fire burned almost 100,000 acres, destroyed an estimated 1,643 structures, damaged an estimated 364 structures and resulted in three confirmed fatalities. Four additional fatalities are alleged to have been associated with the Woolsey Fire.
Multiple lawsuits related to the Thomas and Koenigstein Fires and the Woolsey Fire have been initiated against SCE and Edison International. Some of the Thomas and Koenigstein Fires lawsuits claim that SCE and Edison International have responsibility for the damages caused by debris flows and flooding in Montecito and surrounding areas in January 2018 based on a theory alleging that SCE has responsibility for the Thomas and/or Koenigstein Fires and further alleging that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides. According to Santa Barbara County initial reports, the Montecito Mudslides destroyed an estimated 135 structures, damaged an estimated 324 structures, and resulted in 21 confirmed fatalities, with two additional fatalities presumed but not officially confirmed.
The lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed by three categories of plaintiffs: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. A number of the lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions. As of February 20, 2025, in addition to the outstanding claims of approximately 290 individual plaintiffs, there were alleged and potential claims of certain public entity plaintiffs, including CAL OES, outstanding. SCE has settled all fire suppression claims and subrogation plaintiffs' claims related to the 2017/2018 Wildfire/Mudslide Events.
In January 2019, SCE filed a cross-complaint against certain local public entities alleging that failures by these entities, such as failure to adequately plan for flood hazards and build and maintain adequate debris basins, roads, bridges and other channel crossings, among other things, caused, contributed to or exacerbated the losses that resulted from the Montecito Mudslides. Some of SCE's cross-claims are still outstanding.
The litigation could take a number of years to be completely resolved because of the complexity of the matters and number of plaintiffs. As of February 20, 2025, SCE has entered into settlements with approximately 13,600 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation. The statutes of limitations for individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events have expired. As of February 20, 2025, SCE has received demands for approximately 94% and 100% of outstanding individual plaintiff claims in the TKM litigation and Woolsey Fire litigation, respectively.
In October 2021, SCE and the SED executed an agreement to resolve the SED's investigations into the 2017/2018 Wildfire/Mudslide Events and three other 2017 wildfires for, among other things, aggregate costs of $550 million. The $550 million in costs was composed of a $110 million fine to be paid to the State of California General Fund, $65 million of shareholder-funded safety measures, and an agreement by SCE to waive its right to seek cost recovery in CPUC-jurisdictional rates for $125 million and $250 million of third-party uninsured claims payments (and related financing costs) in the TKM litigation and the Woolsey Fire litigation, respectively. The SED Agreement provides that SCE may, on a permanent basis, exclude from its ratemaking capital structure any after-tax charges to equity or debt borrowed to finance costs incurred under the SED Agreement. The SED Agreement also imposes other obligations on SCE, including reporting requirements and safety-focused studies. SCE did not admit imprudence, negligence, or liability with respect to the 2017/2018 Wildfire/Mudslide Events in the SED Agreement.
2017 Creek Fire
The Creek Fire originated near Sylmar in Los Angeles County in December 2017 and burned approximately 16,000 acres, destroyed an estimated 123 structures, damaged an estimated 81 structures, and resulted in 3 civilian injuries. While the United States Forest Service's ("USFS") January 2018 report of investigation concluded that the Los Angeles Department of Water and Power ("LADWP") long-span transmission lines slapping together in high winds resulted in arcing and ignition of the fire, in August 2024, the USFS issued a supplemental report concluding that the fire was caused by SCE power lines. In 2023, the USFS dismissed its claim against LADWP and filed a claim against SCE to recover over $40 million for fire-suppression costs incurred by the USFS and environmental damage to U.S. lands. A trial in the USFS
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litigation is currently set for September 2025. Other than for the claims of 7 individual plaintiffs related to one property that were damaged by the Creek Fire, SCE has entered into settlements or settlements in principle on all claims filed by individual and subrogation plaintiffs who filed complaints against SCE related to the fire. A damages-only bench trial is currently set for June 2025 in one of the outstanding individual plaintiff cases. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. The SED is conducting an investigation with respect to the Creek Fire. SCE has accrued charges for potential losses relating to the Creek Fire.
2019 Saddle Ridge Fire
The "Saddle Ridge Fire," originated in Los Angeles County in October 2019 and burned approximately 9,000 acres, destroyed an estimated 19 structures, damaged an estimated 88 structures, and resulted in one fatality and injuries to eight fire fighters. In August 2023, SCE received a signed report of investigation from the LAFD, in which the LAFD stated with respect to the Saddle Ridge Fire that the cause of ignition was unintentional, the form of heat was undetermined, the item first ignited was undetermined and the material type first ignited was undetermined. The LAFD report noted that no other competent ignition sources other than SCE's transmission lines were found in the specific origin area of the Saddle Ridge Fire. The SED is conducting an investigation with respect to the Saddle Ridge Fire. There are currently no trials scheduled in the Saddle Ridge Fire litigation. Based on pending litigation and without considering insurance recoveries, it is reasonably possible that SCE will incur a material loss in connection with the Saddle Ridge Fire, but the range of reasonably possible losses that could be incurred cannot be estimated at this time. SCE has not determined that losses in connection with the Saddle Ridge Fire are probable and consequently has not accrued a charge for potential losses relating to the Saddle Ridge Fire.
2020 Bobcat Fire
The "Bobcat Fire" was reported in the vicinity of Cogswell Dam in Los Angeles County in September 2020. The USFS has reported that the Bobcat Fire burned approximately 116,000 acres in Los Angeles County, destroyed an estimated 87 homes, one commercial property and 83 minor structures, damaged an estimated 28 homes and 19 minor structures, and resulted in injuries to six firefighters. In addition, fire authorities have estimated suppression costs at approximately $80 million. An investigation into the cause of the Bobcat Fire was led by the USFS. In May 2023, SCE received a report of investigation from the USFS, in which the USFS finds that the Bobcat Fire was caused when an SCE electrical wire made contact with a tree limb. The SED has concluded its investigation of the Bobcat Fire and found no violations of its rules and regulations by SCE related to the Bobcat Fire. SCE has settled subrogation plaintiff claims and a claim brought by the United States of America against SCE and one of its contractors to recover fire-suppression costs, property and natural resource losses, and emergency response costs. Individual plaintiffs have also filed complaints against SCE related to the Bobcat Fire. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued charges for potential losses relating to the Bobcat Fire.
2020 Silverado Fire
The "Silverado Fire" originated in Orange County in October 2020 and burned over 12,000 acres. The Orange County Fire Authority ("OCFA"). OCFA jointly with CAL FIRE have reported that the Silverado Fire destroyed five structures, damaged nine other structures and resulted in two firefighter injuries. There were also four other structures damaged or destroyed. In addition, methane re-generation pipelines were destroyed and approximately 200 acres of avocado orchards were damaged in the fire. Fire authorities have estimated suppression costs at approximately $20 million. An investigation into the cause of the Silverado Fire was conducted by the OCFA and CAL FIRE. OCFA and CAL FIRE concluded in their October 2020 report of investigation that contact between an SCE conductor and a T-Mobile USA, Inc. ("T-Mobile") line resulted in ignition of the Silverado Fire. In 2024, SCE paid a fine of approximately $2 million imposed by the SED for failure to comply with maintenance requirements with respect to two conductors. Multiple lawsuits related to the Silverado Fire have been filed by individual and subrogation plaintiffs, CAL FIRE, T-Mobile, County of Orange and Cal OES naming SCE as a defendant. T-Mobile has also been named as a defendant and maintains a cross-complaint against SCE and Edison International. A trial in the Silverado Fire litigation has been set for May 2025. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued charges for potential losses relating to the Silverado Fire.
2022 Coastal Fire
The "Coastal Fire" originated in Orange County in May 2022 and burned approximately 200 acres. The Orange County Fire Authority ("OCFA") has reported that the Coastal Fire destroyed 20 residential structures and damaged 11 residential structures. Two firefighters also reportedly sustained minor injuries. In addition, fire authorities have estimated suppression costs at approximately $3 million. While SCE's investigation remains ongoing, SCE's information reflects that a SCE circuit in the area experienced an anomaly (a relay) approximately 2 minutes prior to the reported time of the fire. An
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investigation into the cause of the Coastal Fire was led by the OCFA. The OCFA has retained SCE equipment in connection with its investigation. In September 2024, SCE received a report of investigation from the OCFA, in which the OCFA finds that the Coastal Fire was unintentionally caused by sparks from overhead SCE electrical equipment igniting vegetation under the equipment. The SED is conducting an investigation with respect to the Coastal Fire. One damages only trial for one individual plaintiff household is currently scheduled for May 2025 in the Coastal Fire litigation. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued charges for potential losses relating to the Coastal Fire.
2022 Fairview Fire
The "Fairview Fire" originated in Riverside County in September 2022 and burned approximately 28,000 acres. CAL FIRE has reported that the Fairview Fire destroyed 22 residential structures, damaged five residential structures, and destroyed or damaged 17 minor structures. CAL FIRE also reported two civilian fatalities, one civilian injury and two injuries to responding fire personnel. In addition, fire authorities have estimated suppression costs at $39 million. While SCE's investigation remains ongoing, SCE's information reflects that a SCE circuit in the area experienced an anomaly (a relay) approximately 8 minutes prior to the reported start time of the fire. In November 2023, SCE received a report of investigation conducted by CAL FIRE, in which CAL FIRE finds that the Fairview Fire was caused when a sagging SCE electrical conductor came in contact with a communication line, causing sparks to fall and ignite surrounding vegetation. In July 2024, the SED issued a notice of violation alleging that SCE failed to comply with clearance requirements with respect to its electrical conductor. Jury trials for bellwether plaintiffs in the Fairview Fire litigation have been set for May 2025. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued charges for potential losses relating to the Fairview Fire.
Settlement of Claims
The following table presents settlements paid.
| (in millions) | Inception to December 31, 2024 | 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|---|---|
| 2017/2018 Wildfire/Mudslide Events | $ | 9,454 | $ | 779 | $ | 1,034 | $ | 1,911 |
| Other Wildfire Events | 564 | 361 | 190 | 13 | ||||
| Total | $ | 10,018 | $ | 1,140 | $ | 1,224 | $ | 1,924 |
Edison International and SCE has not admitted wrongdoing or liability as part of any settlements related to the 2017/2018 Wildfire/Mudslide Events or the Other Wildfire Events. SCE continues to explore reasonable settlement opportunities with plaintiffs in outstanding wildfire litigation.
Loss Estimates
The following table presents changes in estimated losses since December 31, 2023:
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||
|---|---|---|---|---|---|---|
| Balance at December 31, 2023 | $ | 715 | $ | 683 | $ | 1,398 |
| Increase in accrued estimated losses | 490 | 253 | 743 | |||
| Amounts paid | (779) | (361) | (1,140) | |||
| Balance at December 31, 2024 | $ | 426 | $ | 575 | $ | 1,001 |
Edison International's and SCE's consolidated balance sheets included fixed payments to be made under executed settlement agreements and accrued estimated losses presented in the tables below:
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||
|---|---|---|---|---|---|---|
| Current portion of Wildfire-related claims liabilities1 | $ | 48 | $ | 12 | $ | 60 |
| Long term wildfire-related claims liabilities2 | 378 | 563 | 941 | |||
| Total Balance at December 31, 2024 | $ | 426 | $ | 575 | $ | 1,001 |
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| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||
|---|---|---|---|---|---|---|
| Current portion of Wildfire-related claims liabilities1 | $ | 30 | $ | — | $ | 30 |
| Long term wildfire-related claims liabilities2 | 685 | 683 | 1,368 | |||
| Total Balance at December 31, 2023 | $ | 715 | $ | 683 | $ | 1,398 |
1.At December 31, 2024, current liabilities related to 2017/2018 Wildfire/Mudslide Events consisted of $29 million of settlements executed and $19 million of short-term payables under the SED Agreement. At December 31, 2023, current liabilities related to 2017/2018 Wildfire/Mudslide Events consisted of $16 million of settlements executed and $14 million of short-term payables under the SED Agreement.
2.At December 31, 2024, long-term wildfire-related claims related to 2017/2018 Wildfire/Mudslide Events consisted of $38 million of long-term payables under the SED Agreement and $340 million of estimate of expected losses for remaining alleged and potential claims. At December 31, 2023, long-term wildfire-related claims related to 2017/2018 Wildfire/Mudslide Events consisted of $48 million of long-term payables under the SED Agreement and $637 million of estimate of expected losses for remaining alleged and potential claims.
Edison International and SCE have accrued their best estimate of expected losses for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events and at the low end of the estimated range of reasonably possible losses for each of the Other Wildfire Events as no amount within the range of reasonably possible losses for each such fire appears, at this time, to be a better estimate than any other amount within the range. While Edison International and SCE may incur a material loss in excess of the amounts accrued, they cannot estimate the upper end of the range of reasonably possible losses that may be incurred in connection with the 2017/2018 Wildfire/Mudslide Events or the Other Wildfire Events.
The estimated losses for the 2017/2018 Wildfire/Mudslide Events do not include estimates of potential losses related to certain potential public entity plaintiff claims, including CAL OES's claim in the TKM litigation, for which the statute of limitations has been tolled, and for an individual plaintiff demand received in the first quarter of 2024 that continues to be analyzed and has not been substantiated, as losses from these alleged and potential claims are not estimable at this time.
Management reviews its loss estimates for remaining alleged and potential claims related to wildfire litigation quarterly. The first quarter 2024 analysis with respect to the 2017/2018 Wildfire/Mudslide Events included a review of information received during the first quarter of 2024 about outstanding claims, including demands from most of the individual plaintiffs who had opted into the Woolsey Fire mediation program, and from settling claims through that quarter. As a result of management's reviews, SCE recorded an increase in estimated losses of $490 million for the 2017/2018 Wildfire/Mudslide Events during the first quarter of 2024.
For the years ended December 31, 2024, 2023 and 2022, SCE's consolidated statements of income included charges for the estimated losses, net of expected recoveries, as follows:
| Year ended December 31, 2024 | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||
| Charge for wildfire-related claims | $ | 490 | $ | 253 | $ | 743 |
| Expected insurance recoveries1 | — | (96) | (96) | |||
| Expected recoveries through electric rates | (27) | (9) | (36) | |||
| Total pre-tax charge | 463 | 148 | 611 | |||
| Income tax benefit | (130) | (42) | (172) | |||
| Total after-tax charge | $ | 333 | $ | 106 | $ | 439 |
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| Year ended December 31, 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||||||||||
| Charge for wildfire-related claims | $ | 630 | $ | 184 | $ | 814 | ||||||||
| Expected insurance recoveries1 | — | (149) | (149) | |||||||||||
| Expected recoveries through electric rates | (37) | (2) | (39) | |||||||||||
| Total pre-tax charge | 593 | 33 | 626 | |||||||||||
| Income tax benefit | (165) | (9) | (174) | |||||||||||
| Total after-tax charge | $ | 428 | $ | 24 | $ | 452 | Year ended December 31, 2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||||||||||
| Charge for wildfire-related claims | $ | 1,296 | $ | 572 | $ | 1,868 | ||||||||
| Expected insurance recoveries1 | — | (399) | (399) | |||||||||||
| Expected recoveries through electric rates | (76) | (162) | (238) | |||||||||||
| Total pre-tax charge | 1,220 | 11 | 1,231 | |||||||||||
| Income tax benefit | (341) | (3) | (344) | |||||||||||
| Total after-tax charge | $ | 879 | $ | 8 | $ | 887 |
1.In 2024, 2023 and 2022, Edison Insurance Services, Inc. ("EIS"), a wholly-owned subsidiary of Edison International, incurred $4 million, $3 million and $9 million insurance expenses, respectively. These amounts were included in the insurance recoveries of SCE but were excluded from those of Edison International.
In total, through December 31, 2024, SCE has recorded estimated losses of $11 billion, expected recoveries from insurance and third parties of $2.7 billion and expected recoveries through electric rates of $617 million related to the 2017/2018 Wildfire/Mudslide Events and the Other Wildfire Events. The after-tax net charges to earnings recorded through December 31, 2024, have been $5.6 billion.
Recoveries
SCE has exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Expected recoveries from insurance recorded for the Other Wildfire Events are supported by SCE's insurance coverage for multiple policy years. Edison International and SCE record a receivable for insurance recoveries when recovery of a recorded loss is determined to be probable.
Recovery of SCE's losses realized in connection with the Woolsey Fire and the Other Wildfire Events in excess of available insurance is subject to approval by regulators. The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates, including by requiring refund of amounts recovered, if it is determined that such losses were not prudently incurred. Under accounting standards for rate-regulated enterprises, SCE defers costs as regulatory assets in the period it concludes that such costs are probable of future recovery in electric rates. SCE utilizes objectively determinable evidence to form its view on the probability of future recovery.
While Edison International and SCE may incur material losses in excess of the amounts accrued for certain of the Other Wildfire Events, Edison International and SCE expect that additional losses incurred in connection with any such fire, other than for the Creek Fire, will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such additional losses after expected recoveries from insurance and through electric rates will not be material.
As of December 31, 2024, SCE has recorded total expected recoveries of $2.7 billion from insurance, of $152 million within the WEMA and RMBA and $465 million within the FERC related balancing account related to the 2017/2018 Wildfire/Mudslide Events and the Other Wildfire Events.
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The following table sets forth total expected recoveries SCE has recorded since inception through December 31, 2024:
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||
|---|---|---|---|---|---|---|
| Insurance recoveries | $ | 2,000 | $ | 718 | $ | 2,718 |
| FERC recoveries | 440 | 25 | 465 | |||
| CPUC- RMBA recoveries | — | 12 | 12 | |||
| CPUC-WEMA deferral | — | 140 | 140 | |||
| Total | $ | 2,440 | $ | 895 | $ | 3,335 |
The following tables summarize expected recoveries from insurance and through electric rates as of December 31, 2024 and 2023:
| December 31, 2024 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||||||||||
| Long-term insurance receivables | $ | — | $ | 434 | $ | 434 | ||||||||
| FERC related balancing accounts | 64 | 9 | 73 | |||||||||||
| CPUC-WEMA | — | 140 | 140 | |||||||||||
| Total | $ | 64 | $ | 583 | $ | 647 | December 31, 2023 | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| (in millions) | 2017/2018 Wildfire/Mudslide Events | Other Wildfire Events | Total | |||||||||||
| Long-term insurance receivables | $ | — | $ | 512 | $ | 512 | ||||||||
| FERC related balancing accounts | 37 | 14 | 51 | |||||||||||
| CPUC-WEMA | — | 140 | 140 | |||||||||||
| Total | $ | 37 | $ | 666 | $ | 703 |
For events that occurred in 2017 and early 2018, principally the Thomas and Koenigstein Fires and Montecito Mudslides, SCE had $1.0 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence. For the Woolsey Fire, SCE had an additional $1.0 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence. SCE has recovered $2.0 billion from its insurance carriers in relation to the claims related to the 2017/2018 Wildfire/Mudslide Events. SCE has recorded recoveries from insurance of $18 million related to the Creek Fire. No additional insurance is available for the Creek Fire because wildfire insurance for the period in which the fire was ignited has been almost fully exhausted as a result of the TKM litigation.
SCE has approximately $1.2 billion of wildfire-specific insurance coverage for events that occurred during the period June 1, 2019 through June 30, 2020, subject to up to $165 million of co-insurance and self-insured retention, which resulted in net coverage of approximately $1.0 billion.
SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that occurred during the period July 1, 2020 through June 30, 2021, subject to up to $130 million of self-insured retention and co-insurance per fire, which results in net coverage of approximately $870 million.
SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that occurred during the period July 1, 2021 through June 30, 2022, subject to up to $163 million of self-insured retention and co-insurance per fire, which resulted in net coverage of approximately $837 million.
SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that occurred during the period July 1, 2022 through June 30, 2023, subject to up to $63 million of self-insured retention and co-insurance per fire, which results in net coverage of approximately $937 million.
SCE's wildfire insurance expense for the July 1, 2022 through June 30, 2023 policy period was approximately $450 million, of which $357 million was paid to commercial insurance carriers (commercial insurance carriers other than EIS are referred to herein as "Third-Party Commercial Insurers"). The difference between the Third-Party Commercial Insurer cost and total cost for the July 1, 2022 through June 30, 2023 policy period was paid in premiums to EIS (See Note
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18 for further information). Wildfire insurance premiums paid for the July 1, 2022 through June 30, 2023 policy period are being recovered through customer rates. In February 2025, an amendment was made to one of the EIS wildfire liability insurance policies. This amendment does not change the the amount of premiums paid to EIS and does not change the policy's total available insurance limit, but modifies how the limit is applied under the policy. As a result of this amendment, $50 million of the self-insured retention for a wildfire occurring during the July 1, 2022 through June 30, 2023 policy period, recorded in WEMA as of December 31, 2024, is now eligible for insurance reimbursement. Consequently, in 2025, EIS will record a $50 million wildfire insurance expense (by utilizing the premiums already collected as discussed above), and SCE will record the corresponding insurance recovery from EIS by applying a required credit to the WEMA.
In May 2023, the CPUC allowed SCE to establish an expanded self-insurance program for wildfire-related costs that will be funded through CPUC-jurisdictional rates, in lieu of obtaining wildfire liability insurance from the commercial insurance market. Beginning on July 1, 2023, SCE implemented its customer-funded wildfire self-insurance program. In 2023 and 2024 SCE collected $150 million and $300 million, respectively, through CPUC-jurisdictional rates in support of SCE's customer-funded wildfire self-insurance program.
In July 2024, the CPUC issued a decision in the 2025 GRC proceeding authorizing this self-insurance framework to continue through at least 2028, supporting a self-insurance fund of up to $1.0 billion per policy year. Through 2028, $300 million will be collected annually until a total available self-insurance accrual amount of $1.0 billion is achieved. If losses are accrued for wildfire-related claims for wildfires that occur between July 1, 2023 and the end of 2028, customer rates will be increased in subsequent years, as needed, to allow for full recovery of the amounts accrued up to $1.0 billion per policy year, subject to a shareholder contribution of 2.5% of any self-insurance costs ultimately paid exceeding $500 million in any policy year, up to a maximum annual contribution of $12.5 million per policy year. SCE's self-insurance program meets its obligation to maintain reasonable insurance coverage under AB 1054 for the January 1, 2025 through December 31, 2025 period.
Recoveries through Electric Rates
CPUC recoveries pre-AB 1054
Regulatory recovery of SCE's losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance is subject to approval by regulators. Under accounting standards for rate-regulated enterprises, SCE defers costs as regulatory assets in the period it concludes that such costs are probable of future recovery in electric rates. SCE utilizes objectively determinable evidence to form its view on probability of future recovery. The only directly comparable precedent in which a California investor-owned utility sought recovery for uninsured wildfire claims related costs and the CPUC made a prudency determination is SDG&E's requests for cost recovery related to 2007 wildfire activity, where the FERC allowed recovery of all FERC-jurisdictional wildfire claims related costs while the CPUC rejected recovery of all CPUC-jurisdictional wildfire claims related costs based on a determination that SDG&E did not meet the CPUC's prudency standard ("SDG&E Decision"). The SDG&E Decision is evidence of a California investor-owned utility seeking recovery for uninsured wildfire-related costs and FERC allowing recovery of all FERC-jurisdictional wildfire-related costs while the CPUC rejected recovery of all CPUC-jurisdictional wildfire-related costs based on a determination that the utility did not meet the CPUC's prudency standard.
In August 2023, SCE filed an application to seek CPUC-jurisdictional rate recovery of prudently incurred losses related to the Thomas Fire, the Koenigstein Fire and the Montecito Mudslides, consisting of uninsured claims and associated costs, including legal costs and financing costs. In January 2025, the CPUC approved the TKM Settlement Agreement and closed the proceeding. Parties to the proceeding may file an application for rehearing through March 10, 2025. Under the TKM Settlement Agreement, SCE is authorized to recover 60%, or approximately $1.6 billion, of approximately $2.7 billion of losses, consisting of approximately $1.3 billion of uninsured claims paid as of May 31, 2024 and $0.3 billion of associated costs, composed of legal fees and financing costs incurred as of May 31, 2024 and estimated ongoing financing costs. SCE is also authorized to recover 60% of claims paid and related costs incurred after May 31, 2024, other than for $125 million of uninsured claims and related financing costs which SCE waived its right to seek recovery of under the SED Agreement. SCE will record a regulatory asset for recoveries permitted under the TKM Settlement Agreement in the first quarter of 2025. Under the TKM Settlement Agreement, SCE is also authorized to recover approximately $55 million of approximately $65 million in incremental restoration costs, inclusive of operations and maintenance expenses, incurred related to the Thomas and Koenigstein Fires.
In October 2024, SCE filed an application (the "Woolsey Application") to seek CPUC-jurisdictional rate recovery of $5.4 billion of prudently incurred losses related to the Woolsey Fire, consisting of approximately $4.4 billion of uninsured claims paid as of August 31, 2024 and $1.0 billion of associated costs, composed of legal and financing costs incurred as of August 31, 2024 and estimated ongoing financing costs. The CPUC may not allow SCE to recover uninsured losses related to the Woolsey Fire and through electric rates if it is determined that such losses were not prudently incurred. SCE is also
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seeking recovery of approximately $84 million in restoration costs in the proceeding. These assets are impaired if the restoration costs are permanently disallowed by the CPUC.
The CPUC did not make a determination regarding SCE's prudency when it approved the TKM Settlement Agreement. Therefore, notwithstanding CPUC approval of the TKM Settlement Agreement, SCE believes that the CPUC's interpretation and application of the prudency standard to SDG&E continues to create substantial uncertainty regarding how that standard will be applied to an investor-owned utility in wildfire cost-recovery proceedings for fires ignited prior to July 12, 2019. Consequently, SCE is unable to estimate the uninsured CPUC-jurisdictional claims related costs related to the Woolsey Fire or Creek Fire, both pre-AB 1054 events, that are probable of future recovery, and will not record a regulatory asset for recoveries related to the Woolsey Fire or Creek Fire in connection with the approval of the TKM Settlement Agreement. SCE will continue to evaluate the facts and circumstances of cost recovery proceedings applicable to pre-AB 1054 wildfires to determine if and when a regulatory asset for pre-AB 1054 wildfire events may be recorded.
CPUC recoveries post-AB 1054
The SDG&E Decision was prior to the adoption of AB 1054 on July 12, 2019, after which date AB 1054 clarified that the CPUC must find a utility to be prudent if the utility's conduct related to the ignition was consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the relevant point in time, and based on the information available at that time. Further, utilities with a valid safety certification at the time of the relevant wildfire will be presumed to have acted prudently related to a wildfire ignition unless a party in the cost recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at which time, the burden shifts back to the utility to prove its conduct was prudent.
Each of the Other Wildfire Events discussed above, with the exception of the Creek Fire, was ignited after July 12, 2019, and SCE has held a valid safety certification since July 15, 2019. While a California investor-owned utility has not yet sought a prudency review related to recovery for uninsured claims and other costs related to wildfires ignited after the adoption of AB 1054, SCE believes that for fires ignited after July 12, 2019, and for investor-owned utilities holding a safety certification at the time of the fire, the CPUC will apply a standard of review similar to that applied by the FERC which presumes all costs requested by an investor-owned utility are reasonable and prudent unless serious doubt as to the reasonableness of the utility's conduct is created. As such, SCE has concluded, at this time, that uninsured CPUC-jurisdictional wildfire-related costs related to those Other Wildfire Events occurring after AB 1054 that it has deferred as regulatory assets are probable of recovery through electric rates. SCE will continue to evaluate the probability of recovery based on available evidence, including regulatory decisions, including any CPUC decisions illustrating the interpretation and/or application of the prudency standard under AB 1054, and, for each applicable fire, evidence that could create serious doubt as to the reasonableness of SCE's conduct relative to that fire. The CPUC may not allow SCE to recover uninsured losses related to the Other Wildfire Events through electric rates if it is determined that such losses were not prudently incurred.
FERC recoveries
Through the operation of its FERC Formula Rate, and based upon the precedent established in SDG&E's recovery of FERC-jurisdictional wildfire-related costs, SCE believes it is probable it will recover its FERC-jurisdictional costs related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events. FERC recoveries are subject to refund, and SCE will continue to evaluate the probability of recovery of FERC-jurisdictional costs related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events based on available evidence, including any FERC decisions to allow or disallow recovery of FERC-jurisdictional wildfire related costs based on a state regulator's decision on whether to permit recovery of related costs. FERC recoveries related to the 2017/2018 Wildfire/Mudslide Events and Other Wildfire Events are subject to refund.
Subsequent events Eaton Fire
In January 2025, several wind-driven wildfires impacted portions of SCE's service area, causing loss of life, substantial damage and service outages for SCE customers. One of the largest of these wildfires, the Eaton Fire, ignited in SCE's service area in Los Angeles County and spread under conditions of an extreme Santa Ana windstorm.
According to preliminary information provided by CAL FIRE, the Eaton Fire burned approximately 14,000 acres; destroyed approximately 6,018 single residence structures, 3,146 other minor structures, 96 multiple residences and 158 mixed commercial/residential and nonresidential commercial structures; damaged approximately 750 residential structures, 260 other minor structures, 28 multiple residences and 35 mixed commercial/residential and nonresidential commercial structures and resulted in 17 confirmed civilian fatalities and 9 confirmed fire personnel injuries/illnesses. In addition, fire authorities have estimated suppression costs at approximately $100 million.
The Los Angeles County Fire Department is leading the investigation into the origin and cause of the Eaton Fire, with the assistance of CAL FIRE, and has identified a preliminary area of origin of the fire. SCE has transmission facilities in the
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preliminary area of origin. As part of its investigation, the Los Angeles County Fire Department has requested that SCE preserve in-place its equipment in the preliminary area of origin. The SED is also conducting an investigation with respect to the Eaton Fire.
Multiple lawsuits related to the Eaton Fire have been initiated against SCE and Edison International. SCE’s ongoing internal review into the facts and circumstances of the Eaton Fire is complex and will require significant time. SCE's review includes ongoing inspections of its facilities and records and of third-party information, including analysis of concerning images and videos that suggest a possible link to SCE's transmission facilities in the preliminary area of origin. As of February 27, 2025, based on the information it has reviewed, SCE has not determined whether its equipment was associated with the ignition of the Eaton Fire.
As required by applicable accounting standards, SCE is continuing to assess the likelihood of potential losses related to the Eaton Fire and cannot estimate the range of reasonably possible losses that could be incurred in connection with the Eaton Fire.
Environmental Remediation
SCE records its environmental remediation liabilities when site assessments and/or remedial actions are probable and a range of reasonably likely cleanup costs can be estimated. SCE reviews its sites and measures the liability quarterly, by assessing a range of reasonably likely costs for each identified site using currently available information, including existing technology, presently enacted laws and regulations, experience gained at similar sites, and the probable level of involvement and financial condition of other potentially responsible parties. These estimates include costs for site investigations, remediation, operation and maintenance, monitoring and site closure. Unless there is a single probable amount, SCE records the low end of this reasonably likely range of costs (reflected in "Other long-term liabilities") at undiscounted amounts as timing of cash flows is uncertain.
At December 31, 2024, SCE's recorded estimated minimum liability to remediate its 21 identified material sites (sites with a liability balance as of December 31, 2024, in which the upper end of the range of the costs is at least $1 million) was $232 million, including $154 million related to San Onofre. In addition to these sites, SCE also has 19 immaterial sites with a liability balance on December 31, 2024 for which the total minimum recorded liability was $3 million. Of the $235 million total environmental remediation liability for SCE, $222 million has been recorded as a regulatory asset. SCE expects to recover $35 million through an incentive mechanism that allows SCE to recover 90% of its environmental remediation costs at certain sites (SCE may request to include additional sites in this mechanism), and $187 million through proceedings that allow SCE to recover up to 100% of the costs incurred at certain sites through customer rates. SCE's identified sites include several sites for which there is a lack of currently available information, including the nature and magnitude of contamination, and the extent, if any, that SCE may be held responsible for contributing to any costs incurred for remediating these sites. Thus, no reasonable estimate of cleanup costs can be made for these sites.
The ultimate costs to clean up SCE's identified sites may vary from its recorded liability due to numerous uncertainties inherent in the estimation process, such as: the extent and nature of contamination; the scarcity of reliable data for identified sites; the varying costs of alternative cleanup methods; developments resulting from investigatory studies; the possibility of identifying additional sites; and the time periods over which site remediation is expected to occur. SCE believes that, due to these uncertainties, it is reasonably possible that cleanup costs at the identified material sites and immaterial sites could exceed its recorded liability by up to $118 million and $2 million, respectively. The upper limit of this range of costs was estimated using assumptions least favorable to SCE among a range of reasonably possible outcomes.
SCE expects to clean up and mitigate its identified sites over a period of up to approximately 35 years, though some sites may require a longer time period. Remediation costs for each of the next 5 years are expected to range from $9 million to $21 million. Costs incurred for years ended December 31, 2024, 2023 and 2022 were $17 million, $11 million and $7 million, respectively, and were included in the "Operation and maintenance" expense on the consolidated statements of income.
Based upon the CPUC's regulatory treatment of environmental remediation costs incurred at SCE, SCE believes that costs ultimately recorded will not materially affect its results of operations, financial position or cash flows. There can be no assurance, however, that future developments, including additional information about existing sites or the identification of new sites, will not require material revisions to estimates.
Nuclear Insurance
Federal law limits public offsite liability claims for bodily injury and property damage from a nuclear incident to the amount of available financial protection, which is currently approximately $560 million for San Onofre and $16.3 billion for Palo Verde. As of January 1, 2024, SCE and other owners of San Onofre and Palo Verde have purchased the maximum
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private primary insurance available ($500 million) through a Facility Form issued by American Nuclear Insurers ("ANI"). In the case of San Onofre, the balance is covered by a US Government indemnity. In the case of Palo Verde, the balance is covered by a loss sharing program among nuclear reactor licensees. If a nuclear incident at any licensed reactor in the United States, which is participating in the loss sharing program, results in claims and/or costs which exceed the primary insurance at that plant site, all participating nuclear reactor licensees could be required to contribute their share of the liability in the form of a deferred premium.
The ANI Facility Form coverage includes broad liability protection for bodily injury or offsite property damage caused by the nuclear energy hazard at San Onofre or Palo Verde, or while radioactive material is in transit to or from San Onofre or Palo Verde. The Facility Form, however, includes several exclusions. First, it excludes onsite property damage to the nuclear facility itself and onsite cleanup costs, but as discussed below SCE maintains separate Nuclear Electric Insurance Limited ("NEIL") property damage coverage for such events. Second, tort claims of onsite workers are excluded, but SCE also maintains an ANI Master Worker Form policy that can provide coverage for non-licensee workers. This program provides a shared industry aggregate limit of $500 million. Industry losses covered by this program could reduce limits available to SCE. Third, offsite environmental costs arising out of government orders or directives, including those issued under the Comprehensive Environmental Response, Compensation and Liability Act, also known as CERCLA, are excluded, with exceptions from clearly identifiable accidents.
SCE withdrew from participation in the secondary insurance pool for San Onofre for offsite liability insurance effective January 5, 2018. Based on its ownership interests in Palo Verde, SCE could be required to pay a maximum of approximately $79 million per nuclear incident for future incidents. However, it would have to pay no more than approximately $12 million per future incident in any one year. Based on its ownership interests in San Onofre and Palo Verde prior to January 5, 2018, SCE could be required to pay a maximum of approximately $255 million per nuclear incident and a maximum of $38 million per year per incident for liabilities arising from events prior to January 5, 2018, although SCE is not aware of any such events. If the public liability limit above is insufficient, federal law contemplates that additional funds may be appropriated by Congress. This could include an additional assessment on all licensed reactor operators as a measure for raising further federal revenue.
SCE is a member of NEIL, a mutual insurance company owned by entities with nuclear facilities. NEIL provides insurance for nuclear property damage, including damages caused by acts of terrorism up to specified limits, and for accidental outages for active facilities. The amount of nuclear property damage insurance purchased for San Onofre and Palo Verde exceeds the minimum federal requirement of $50 million and $1.1 billion, respectively. These policies include coverage for decontamination liability. Additional outage insurance covers part of replacement power expenses during an accident-related nuclear unit outage. The accidental outage insurance at San Onofre has been canceled as a result of the permanent retirement, but that insurance continues to be in effect at Palo Verde.
If NEIL losses at any nuclear facility covered by the arrangement were to exceed the accumulated funds for these insurance programs, SCE could be assessed retrospective premium adjustments of up to approximately $17 million per year. Insurance premiums are charged to operating expense.
Note 13. Leases
Leases as Lessee
SCE enters into various agreements to purchase power, electric capacity and other energy products that may be accounted for as leases when SCE has dispatch rights that determine when and how a plant runs. SCE also leases property and equipment primarily related to vehicles, office space and other equipment. The terms of the lease contracts included in the table below are primarily 15 to 20 years for PPA leases, 3 to 72 years for office leases, and 5 to 13 years for the remaining other operating leases. Finance leases are immaterial to the periods presented.
The following table summarizes SCE's future lease payments for operating leases as of December 31, 2024:
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| (in millions) | PPA Operating Leases | Other Operating Leases1 | ||
|---|---|---|---|---|
| 2025 | $ | 106 | $ | 64 |
| 2026 | 89 | 58 | ||
| 2027 | 84 | 54 | ||
| 2028 | 84 | 48 | ||
| 2029 | 85 | 41 | ||
| Thereafter | 698 | 104 | ||
| Total lease payments | 1,146 | 369 | ||
| Amount representing interest | 265 | 76 | ||
| Lease liabilities | $ | 881 | $ | 293 |
1Excludes escalation clauses based on consumer price or other indices and residual value guarantees that are not considered probable at the commencement date of the lease.
The timing of SCE's recognition of the lease expense conforms to ratemaking treatment for SCE's recovery of the cost of electricity and is included in purchased power for PPA operating leases. The following table summarizes the components of SCE's lease expense:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| PPA leases: | ||||||
| Operating lease cost | $ | 115 | $ | 503 | $ | 580 |
| Variable lease cost1 | 1,700 | 2,277 | 2,661 | |||
| Total PPA lease cost | 1,815 | 2,780 | 3,241 | |||
| Other operating leases cost | 64 | 56 | 52 | |||
| Total lease cost | $ | 1,879 | $ | 2,836 | $ | 3,293 |
1Includes lease costs from legacy renewable energy contracts where payments are based on contingent external factors such as wind, hydro and solar power generation.
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Other information related to leases was as follows:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions, except lease term and discount rate) | 2024 | 2023 | 2022 | |||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||
| Operating cash flows from: | ||||||
| PPA operating leases | $ | 115 | $ | 503 | $ | 580 |
| Other operating leases | 62 | 55 | 50 | |||
| ROU assets obtained in exchange for lease obligations: | ||||||
| PPA operating leases | $ | 11 | $ | 226 | $ | 20 |
| Other operating leases | 79 | 69 | 76 | |||
| Weighted average remaining lease term (in years): | ||||||
| PPA operating leases | 12.50 | 13.37 | 9.42 | |||
| Other operating leases | 8.86 | 9.56 | 10.38 | |||
| Weighted average discount rate: | ||||||
| PPA operating leases | 4.30% | 4.30% | 2.95% | |||
| Other operating leases | 4.50% | 4.22% | 3.78% |
Leases as Lessor
SCE also enters into operating leases to rent certain land and facilities as a lessor. These leases primarily have terms that range from 15 to 65 years. During the years ended December 31, 2024, 2023 and 2022, SCE recognized lease income of $18 million, $17 million and $18 million, respectively, which is included in operating revenue on the consolidated statements of income. At December 31, 2024, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:
| (in millions) | ||
|---|---|---|
| 2025 | $ | 12 |
| 2026 | 8 | |
| 2027 | 8 | |
| 2028 | 8 | |
| 2029 | 7 | |
| Thereafter | 118 | |
| Total | $ | 161 |
Note 14. Equity
Common Stock
Stock Repurchase Programs
On December 12, 2024, the Edison International Board of Directors authorized a stock repurchase program effective February 20, 2025 for repurchase of up to $75 million of its common stock until February 18, 2026 ("2025 Repurchase Program"). The Repurchase Program will be used to offset dilution from common stock issued under Edison International's long-term incentive compensation programs and will be funded using Edison International's working capital.
The timing and the amount of any repurchased common stock will be determined by Edison International's management based on their evaluation of market conditions and other factors. The 2025 Repurchase Program may be executed through various methods, including open market purchases, privately negotiated transactions, and other transactions in accordance with applicable securities laws. Any repurchased shares of common stock will be retired. The 2025 Repurchase Program does not obligate Edison International to acquire any particular amount of common stock, and it may be suspended or discontinued at any time at its discretion.
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On July 25, 2024, Edison International announced a stock repurchase program effective July 29, 2024 for repurchase of up to $200 million of its common stock until December 31, 2025 ("2024 Repurchase Program"). The 2024 Repurchase Program was used to offset dilution from common stock issued under Edison International's long-term incentive compensation programs and was funded using Edison International's working capital.
During the year ended December 31, 2024, Edison International repurchased and retired 2,412,203 shares under the 2024 Repurchase Program for an average price of $82.91 per share. As of December 31, 2024, no authorized repurchase amount remained under the 2024 Share Repurchase Program.
At-the-market Program
As of December 31, 2024, Edison International had not issued any shares through its "at-the-market" ("ATM") program established in August 2022. Under the ATM program, Edison International may sell shares of its common stock having an aggregate sales price of up to $500 million. Edison International has no obligation to sell the remaining shares available under the ATM program. On February 21, 2025, Edison International delivered notice to the agents to terminate the ATM program, which was effective February 24, 2025.
Preferred Stock
As of December 31, 2024, Edison International had 1,159,317 shares of 5.375% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series A ("Series A Preferred Stock") and 503,454 shares of 5.00% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series B ("Series B Preferred Stock") outstanding, each with a liquidation value of $1,000 per share. The dividends are payable on a semi-annual basis and will be reset every five years beginning on March 15, 2026 and March 15, 2027, for Series A Preferred Stock and Series B Preferred Stock, respectively, to equal the then-current five-year U.S. Treasury rate plus a spread.
In the first and second quarter of 2024, Edison International repurchased 20,000 shares and 9,000 shares, respectively, of its Series B Preferred Stock via open market repurchases for $19 million (at an average price of $952) and $9 million (at an average price of $967), respectively, including accrued and unpaid dividends. In December 2023, Edison International repurchased 29,186 shares of its Series A Preferred Stock and 133,323 shares of its Series B Preferred Stock via open market repurchases for $28 million (at an average price of $971) and $127 million (at an average price of $955), respectively, including accrued and unpaid dividends. In November 2023, Edison International, through a tender offer, repurchased 61,497 shares of its Series A Preferred Stock and 84,223 shares of its Series B Preferred Stock for $57 million (at an average price of $925) and $76 million (at an average price of $904), respectively, including accrued and unpaid dividends. Edison International recognized a total net gain of $1 million and $16 million for the years ended December 31, 2024 and 2023, respectively, from the repurchases as reflected in "Preferred stock dividend requirements of Edison International" on the consolidated statements of income.
Edison International may, at its option, redeem its preferred stocks in whole or in part during certain periods of time prior to each of the dividend reset dates at a price equal to $1,000 per share plus any accumulated and unpaid dividends. Edison International may also, at its option, redeem the preferred stocks in whole but not in part at a price equal to $1,020 per share plus any accumulated and unpaid dividends within a certain period of time following any change in the criteria rating agencies use that would have adverse effects on the equity credit attributed by rating agencies to the preferred stocks.
The preferred stocks rank senior to Edison International's common stock with respect to dividends rights and distribution rights upon liquidation. The preferred stocks are not subject to any mandatory sinking fund, retirement fund, purchase fund or other similar provisions. Holders of the shares of the preferred stocks do not have the right to require Edison International to repurchase or redeem shares of the preferred stocks.
Preferred and Preference Stock of Utility
SCE's authorized shares are: $100 cumulative preferred – 12 million shares, $25 cumulative preferred – 24 million shares and preference with no par value – 50 million shares. There were no preferred shares issued or outstanding as of December 31, 2024 and 2023.
Shares of SCE's preference stock rank senior to SCE's common stock with respect to dividend rights and distribution rights upon liquidation. SCE's outstanding preference shares are not subject to mandatory redemption and there is no sinking fund requirement for redemptions or repurchases of preference shares. There are no dividends in arrears for the preference shares.
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The following table summarizes preference stocks (dividends declared per share are for 2024):
| Issue Date | Shares<br>Outstanding | Redemption<br>Price per<br>Share | Dividends<br>Declared per<br>Share | December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except shares and per share amounts) | 2024 | 2023 | ||||||||||
| No par value (cumulative): | ||||||||||||
| 3-month SOFR+4.199% Series E | 2012 | — | $ | 1,000 | $ | 24.418 | $ | — | $ | 350 | ||
| 5.10% Series G | 2013 | 88,004 | 2,500 | 127.500 | 220 | 220 | ||||||
| 3-month SOFR+2.99% Series H | 2014 | — | 2,500 | 187.776 | — | 275 | ||||||
| 5.375% Series J | 2015 | 130,004 | 2,500 | 134.375 | 325 | 325 | ||||||
| 5.45% Series K | 2016 | 120,004 | 2,500 | 136.250 | 300 | 300 | ||||||
| 5.00% Series L | 2017 | 190,004 | 2,500 | 125.000 | 475 | 475 | ||||||
| 7.50% Series M | 2023 | 220,004 | 2,500 | 199.479 | 550 | 550 | ||||||
| 6.95% Series N | 2024 | 140,004 | 2,500 | 102.319 | 350 | — | ||||||
| SCE's preference stock | 2,220 | 2,495 | ||||||||||
| Less: issuance costs | (45) | (52) | ||||||||||
| Edison International's preference stock of utility | $ | 2,175 | $ | 2,443 |
Shares of Series E, G, H and L preference stock may be redeemed at par, in whole or in part. Shares of Series J, K, and M preference stock may be redeemed at par, in whole, but not in part, at any time prior to September 15, 2025, March 15, 2026, and November 22, 2028, respectively, if certain changes in tax or investment company law or interpretation (or applicable rating agency equity credit criteria for Series L and M only) occur and certain other conditions are satisfied. On or after September 15, 2025, March 15, 2026, and November 22, 2028, SCE may redeem the Series J, K, and M shares, respectively, at par, in whole or in part. For shares of Series J and K preference stock, distributions will accrue and be payable at a floating rate from and including September 15, 2025 and March 15, 2026, respectively. In May 2024, $350 million Series N preference stock was issued. The proceeds were used to redeem all of the Series E preference stock. In November 2024, Series H preference stock was redeemed.
Shares of Series G, H, J, K, L, M and N preference stock were issued to SCE Trust II, SCE Trust III, SCE Trust IV, SCE Trust V, SCE Trust VI, SCE Trust VII and SCE Trust VIII, respectively, special purpose entities formed to issue trust securities to the public. The trust securities do not have a maturity date and upon redemption of any shares of the series of preference stock, a corresponding dollar amount of the trust securities will be redeemed by the applicable trust. The applicable trust will make distributions at the same rate and on the same dates on the applicable series of trust securities, if and when the SCE's Board of Directors declares and makes dividend payments on the related preference stock.
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Note 15. Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, consist of:
| Edison International | SCE | |||||||
|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||
| Beginning balance | $ | (9) | $ | (11) | $ | (12) | $ | (8) |
| Pension and PBOP: | ||||||||
| Other comprehensive (loss) income before reclassifications | 7 | (2) | 1 | (5) | ||||
| Reclassified from accumulated other comprehensive loss1 | 2 | 1 | 2 | 1 | ||||
| Foreign currency translation adjustments | — | 3 | — | — | ||||
| Change | 9 | 2 | 3 | (4) | ||||
| Ending balance | $ | — | $ | (9) | $ | (9) | $ | (12) |
1These items are included in the computation of net periodic pension and PBOP Plan expense. See Note 9 for additional information.
Note 16. Other Income, Net
Other income net of expenses is as follows:
| Years ended December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 | |||
| SCE other income (expense): | ||||||
| Equity AFUDC | $ | 187 | $ | 157 | $ | 137 |
| Increase in cash surrender value of life insurance policies and life insurance benefits | 42 | 37 | 42 | |||
| Interest income | 250 | 261 | 80 | |||
| Net periodic benefit income – non-service components | 91 | 100 | 136 | |||
| Civic, political and related activities and donations | (63) | (42) | (42) | |||
| Other | (14) | (16) | (16) | |||
| Total SCE other income, net | 493 | 497 | 337 | |||
| Other income (expense) of Edison International Parent and Other: | ||||||
| Net (losses) gains on equity securities | — | (3) | 1 | |||
| Interest income and other | 9 | 6 | 10 | |||
| Total Edison International other income, net | $ | 502 | $ | 500 | $ | 348 |
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Note 17. Supplemental Cash Flows Information
Supplemental cash flows information is:
| Edison International | SCE | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Years ended December 31, | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||
| Cash payments (receipts): | ||||||||||||
| Interest, net of amounts capitalized | $ | 1,588 | $ | 1,401 | $ | 1,001 | $ | 1,306 | $ | 1,155 | $ | 864 |
| Income taxes, net | 51 | — | (49) | 78 | — | (49) | ||||||
| Non-cash financing and investing activities: | ||||||||||||
| Dividends declared but not paid: | ||||||||||||
| Common stock | 318 | 299 | 282 | 430 | 360 | 350 | ||||||
| Preference stock of SCE | — | 9 | 8 | — | 9 | 8 | ||||||
| Details of debt exchange: | ||||||||||||
| Pollution-control bonds redeemed (2.625%) | — | (135) | — | — | (135) | — | ||||||
| Pollution-control bonds remarketed (4.50%) | — | 135 | — | — | 135 | — |
SCE's accrued capital expenditures for the years ended December 31, 2024, 2023, and 2022 were $644 million, $680 million, and $652 million, respectively. Accrued capital expenditures are included in investing activities in the consolidated statements of cash flows in the period paid.
Note 18. Related-Party Transactions
Edison International and SCE provide and receive various services to and from its subsidiaries and affiliates. Services provided to Edison International by SCE are priced at fully loaded cost (i.e., direct cost of goods or service and allocation of overhead cost). Specified administrative services performed by Edison International or SCE employees, such as payroll and employee benefit programs, are shared among all affiliates of Edison International. Costs are allocated based on one of the following formulas: percentage of time worked, equity in investment and advances, number of employees, or multi-factor (operating revenue, operating expenses, total assets and number of employees). Edison International allocates various corporate administrative and general costs to SCE and other subsidiaries using established allocation factors.
For the years ended December 31, 2024 and 2023, SCE did not purchase wildfire liability insurance from EIS. Beginning on July 1, 2023, in lieu of obtaining wildfire liability insurance from the commercial insurance market, SCE implemented its customer-funded wildfire self-insurance program. For the year ended December 31, 2022, SCE purchased wildfire liability insurance for premiums of $273 million from EIS. EIS fully reinsured the exposure for these policies through the commercial reinsurance market, with reinsurance limits and premiums equal to those of the insurance purchased by SCE, except for a contract for a premium of $93 million for the 12 months ended June 30, 2023 under which EIS provided insurance protection to SCE. SCE recorded the premium as insurance expense and recorded an equal amount of revenue due to customer funding through regulatory cost recovery mechanisms, therefore there was no earnings impact on SCE's consolidated statements of income. EIS recorded the premium as insurance revenue. On the Edison International consolidated statements of income, the EIS insurance revenue was eliminated with SCE's insurance expense, therefore the SCE customer revenues increased the earnings of Edison International. The amount of insurance expense and corresponding revenue was $44 million for the year ended December 31, 2023. The expected insurance recoveries from previously purchased wildfire-related insurance from EIS included in SCE's consolidated balance sheets were $303 million and $355 million at December 31, 2024 and December 31, 2023, respectively. The expense for wildfire-related insurance premiums paid to EIS was $132 million and $213 million for the years ended December 31, 2023 and 2022, respectively.
Edison International Foundation ("EIXF") is an unconsolidated not-for-profit organization. Edison International does not have title to, and cannot receive contributions back from, EIXF. Edison International made contributions to EIXF of $19 million for the year ended December 31, 2024, which was reflected in "Other income, net" on Edison International's consolidated statements of income. There were no contributions in 2023 and 2022.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Based on an evaluation of Edison International's and SCE's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December 31, 2024, Edison International's and SCE's respective principal executive officers and principal financial officers have concluded that such controls and procedures are effective to ensure that information required to be disclosed by Edison International and SCE in reports that the companies file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms. In addition, Edison International's and SCE's respective principal executive officers and principal financial officers have concluded that such controls and procedures were effective in ensuring that information required to be disclosed by Edison International and SCE in the reports that Edison International and SCE file or submit under the Exchange Act is accumulated and communicated to Edison International's and SCE's management, including Edison International's and SCE's respective principal executive officers and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Edison International's and SCE's respective management are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for Edison International and its subsidiaries and SCE, respectively. Under the supervision and with the participation of their respective principal executive officer and principal financial officer, Edison International's and SCE's management conducted an evaluation of the effectiveness of their respective internal controls over financial reporting based on the framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on their evaluations under the COSO framework, Edison International's and SCE's respective management concluded that Edison International's and SCE's respective internal controls over financial reporting were effective as of December 31, 2024. Edison International's internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included in this filing, which is incorporated herein by this reference. This annual report does not include an attestation report of SCE's independent registered public accounting firm regarding internal control over financial reporting. Management's report for SCE is not subject to attestation by the independent registered public accounting firm.
Changes in Internal Control Over Financial Reporting
There were no changes in Edison International's or SCE's internal control over financial reporting during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, Edison International's or SCE's internal control over financial reporting.
Jointly Owned Utility Plant
Edison International's and SCE's respective scope of evaluation of internal control over financial reporting includes their Jointly Owned Utility Projects.
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BUSINESS
CORPORATE STRUCTURE, INDUSTRY AND OTHER INFORMATION
Edison International was incorporated in 1987 as the parent holding company of SCE, a California public utility incorporated in 1909. Edison International also owns Trio, a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial and institutional customers.
The principal executive office of Edison International is located at 2244 Walnut Grove Avenue, P.O. Box 976, Rosemead, California 91770, and Edison International's telephone numbers is (626) 302-2222. The principal executive office of SCE is located at 2244 Walnut Grove Avenue, P.O. Box 800, Rosemead, California 91770, and SCEs telephone numbers is (626) 302-1212.
This is a combined Annual Report on Form 10-K for Edison International and SCE. Edison International and SCE make available at www.edisoninvestor.com: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, as soon as reasonably practicable after Edison International and SCE electronically file such material with, or furnishes it to, the SEC. Such reports are also available on the SEC's internet website at www.sec.gov. The information contained on, or connected to, the Edison investor website is not incorporated by reference into this report.
Subsidiaries of Edison International
SCE – Public Utility
SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity through SCE's electrical infrastructure to an approximately 50,000 square-mile area of southern California. SCE serves approximately 5 million customers in its service area. As of December 31, 2024, SCE's total number of customers by class were as follows:
| (in thousands) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Residential | 4,618 | 4,576 | 4,541 |
| Commercial | 611 | 610 | 609 |
| Industrial | 5 | 5 | 6 |
| Public authorities | 69 | 69 | 69 |
| Agricultural and other | 18 | 19 | 19 |
| Total | 5,321 | 5,279 | 5,244 |
CPUC and FERC rates decouple authorized revenue from the volume of electricity sales and the price of energy procured so that SCE has the opportunity to receive revenue equal to amounts authorized by the relevant regulatory agencies. As a result, the volume of electricity sold does not have a direct impact on SCE's financial results. See "SCE—Overview of Ratemaking Process—CPUC" and "—FERC" for further information.
Trio – Energy Service Provider
Trio is a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial and institutional customers. Trio aims to provide energy solutions that address cost, carbon and complex choices for its customers.
Regulation of Edison International as a Holding Company
As a public utility holding company, Edison International is subject to the Public Utility Holding Company Act. The Public Utility Holding Company Act primarily obligates Edison International and its utility subsidiaries to provide access to their books and records to the FERC and the CPUC for ratemaking purposes.
Edison International is not a public utility and its capital structure is not regulated by the CPUC. The 1988 CPUC decision authorizing SCE to reorganize into a holding company structure, however, imposed certain obligations on Edison International and its affiliates. These obligations include a requirement that SCE's dividend policy continue to be established by the SCE Board of Directors as though SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of Edison International and SCE. The CPUC has also promulgated Affiliate Transaction Rules, which, among other requirements, prohibit holding companies from (1) being used as a conduit to provide non-public information to a utility's affiliates and (2) causing or abetting a utility's violation of the rules, including providing preferential treatment to its affiliates.
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Human Capital
At December 31, 2024, Edison International had an aggregate of 14,013 employees (excluding interns and employees on leaves of absence), of which 13,483 were full-time employees of SCE or its subsidiaries. In addition to employees, SCE's workforce includes a significant number of contract workers who support SCE's operations. Among these contract workers are Safety Tier 1 Contractors. SCE estimates, based on contractors' self-reported hours worked and a 2,080-hour work year, that there were approximately 8,798 full-time equivalent Safety Tier 1 Contractors supporting SCE operations during 2024. All Safety Tier 1 Contractors engaged in decommissioning activities at San Onofre are managed by the DGC. In addition to Safety Tier 1 Contractors, SCE also uses other contract workers to support its transmission and distribution, vegetation management, information technology and customer service activities.
Approximately 4,300 of SCE's employees are represented by the International Brotherhood of Electrical Workers ("IBEW"). In February 2023, the IBEW membership ratified new collective bargaining agreements for the period January 1, 2023 through December 31, 2025. SCE continues to negotiate agreements with additional employee groups who subsequently certified IBEW as their bargaining representative. A substantial number of SCE's contract workers are also unionized.
Edison International focuses on various human capital measures and objectives in managing its business, including measures and objectives related to safety, diversity, equity and inclusion and workforce continuity.
Safety
Safety is the first of Edison International’s core values. Edison International is committed to fostering and maintaining a safe environment for its employees, contract workers, customers, and the public. Over the past several years, Edison International has intensified its efforts to improve workforce safety, including an increased focus on, and investment in, maturing a culture of safety ownership among its workforce that empowers employees and contract workers to own their safety, support their team members' safety and contribute to a safe work environment.
Edison International takes efforts to eliminate fatalities and serious injuries, and reduce all injuries in our employee and contractor workforce. Edison International also continues to enhance its workforce safety culture. For instance, SCE uses safety culture assessments for both employee and contractors to measure progress toward improving safety culture. Additionally, all full-time employees are provided with regular safety-related training, particularly for those who work in proximity to high-voltage electrical equipment and other high-risk activities.
SCE has implemented a people and systems safety plan for high hazard organizations. This plan is driven by SCE’s Safety Management System (“SMS”) and safety culture improvement efforts. Foundational to the SMS is the safety risk management pillar that identifies and prioritizes risks and mitigations based on several factors, including worker and leader input. The SMS strives to enable safety culture improvements for leader ownership and accountability. Examples of key risk mitigations targeted by the SMS include reducing the risk of electrical contact in underground structures and implementing new work methods to reduce fall risk.
In 2024, SCE increased oversight of its contracted workforce through hiring of additional safety advisors and utilization of third-party observers. Similar to prior years, SCE implemented contractor initiatives to provide additional education on safe work practices, enhance risk awareness and better streamline understanding of SCE expectations. As part of SCE’s safety protocols and contractor safety efforts, it forms incident review teams to address all contractor serious injury incidents, and related corrective actions. The respective contractors are then required to perform a cause evaluation to determine causes and learnings for each incident. Incident review outcomes including any work practice changes, rule updates, and new tools are shared and communicated to SCE employees and contractors for their knowledge, awareness, and implementation.
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Edison International also uses various measures to assess safety performance, including, without limitation, fatalities and serious injury rates for employees and contract workers. The following represents data for 2024:
| Employee work-related fatalities | 0 |
|---|---|
| Employee EEI Serious Injuries | 18 |
| Employee EEI SIF Rate1 | 0.126 |
| Employee DART Rate2 | 1.53 |
| Contractor work-related fatalities3 | 5 |
| Safety Tier 1 Contractor EEI Serious Injuries3 | 13 |
| Safety Tier 1 Contractor EEI SIF Rate1,3 | 0.20 |
| Safety Tier 1 Contractor DART Rate2,3 | 0.34 |
1EEI SIF Rate is calculated by multiplying the total number of 2024 EEI SIF incidents (classified by SCE on or before January 16, 2025) by 200,000 and then dividing by the total number of reported hours worked.
2DART Rate is calculated by multiplying the number of 2024 DARTs (reported to SCE on or before January 10, 2025 for Safety Tier 1 Contractors and classified as a DART by SCE on or before January 16, 2025 for employees) by 200,000 and then dividing by the total number of reported hours worked. The 2025 DART Rates may change based on information received by SCE after January 10, 2025, for Safety Tier 1 Contractors and after January 16, 2025 for employees.
3Represents SCE contractor safety data and data provided by the DGC for contractors that undertake a significant scope of decommissioning activities at San Onofre.
Diversity, Equity and Inclusion
Edison International believes that a merit-based work environment that includes people with diverse skills, experiences and perspectives is an important driver of success. This merit-based inclusive approach supports a workforce that reflects the customers and communities it serves and enables Edison International to continue to earn public trust and drive better business outcomes. At Edison International, on average, employees in the same role regardless of race/ethnicity or gender identification receive equal pay for equal work. Similar to broader society, when looking at gender or race/ethnicity-specific groups across Edison International without regard to role, female employees and Black and Hispanic employees do not receive comparable pay to male and White employees, respectively, due to lower representation of female, Black and Hispanic employees in higher paying jobs. Edison International is committed to broad recruitment and use of merit-based hiring practices to attract and retain top talent.
The table below provides Edison International's employee diversity data1 as of December 31, 2024:
| Employees2 | Leaders3 | Executives4 | ||||
|---|---|---|---|---|---|---|
| Females | 31 | % | 28 | % | 41 | % |
| Racially/ethnically diverse5 | 64 | % | 56 | % | 37 | % |
| Racially/ethnically or gender diverse5 | 73 | % | 64 | % | 61 | % |
1Calculated using the guidelines SCE uses to calculate the diversity data it reports to the United States Equal Employment Opportunity Commission.
2Excludes interns and employees on a leave of absence.
3"Leaders" represents all non-executive manager and supervisor level employees.
4"Executives" represents all officers and all director level employees.
5Excludes employees of Trio's subsidiary Alfa Energy Ltd. Alfa Energy Ltd.’s workforce is based in the United Kingdom and does not track race/ethnicity data due to regulatory restrictions.
To support Edison International's diversity, equity and inclusion efforts, Executives and Leaders are offered training and tools to promote teams that include people with diverse skills, experiences and perspectives. Edison International uses various measures to assess success of its workforce development initiatives, including without limitation, monitoring hiring, promotion and turnover rates.
Workforce Continuity
Edison International is committed to identifying and developing the talents of its workforce and takes a variety of steps to increase employee engagement and provide employees opportunities for growth. Employees are offered training
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opportunities, including an onboarding program, technical training, required ethics and compliance training and optional trainings to support career development. SCE estimates that over 95% of active SCE employees completed all assigned training required to be completed in 2024 as part of SCE's enterprise-wide training program. Employees may also be required to take additional trainings based on their job function.
Employees receive competitive compensation packages which include a wide selection of health plans, a 401(k) savings plan with a company match, wellness programs and initiatives, tuition reimbursement, competitive vacation/holiday program, professional development, volunteer programs, employee assistance program, and a philanthropy and matching contribution program.
Edison International uses various measures to assess employee engagement and satisfaction, including, without limitation, conducting regular employee engagement surveys and monitoring turnover. Edison International Parent and SCE's combined Turnover Rate was 7.9% and 5.4% in 2024 and 2023, respectively.
Executives engage in succession planning for leadership positions within the organization. Edison International's and SCE's Boards of Directors also engage in succession planning and talent development discussions for senior officers.
Edison International's Sustainability Report is available at http://www.edison.com/sustainability. The report and any other information contained on, or connected to, this website are not deemed part of, and are not incorporated by reference into, this Annual Report on Form 10-K.
Insurance
Edison International maintains a property and casualty insurance program for itself and its subsidiaries and excess liability insurance covering liabilities to third parties for bodily injury or property damage resulting from operations. These policies are subject to specific retentions, sub-limits and deductibles, which are comparable to those carried by other utility companies of similar size. Catastrophic events, such as hurricanes and storms, that have not impacted Edison International or its subsidiaries directly have had an impact, and can have future impacts, on insurance markets overall.
While SCE maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and may be insufficient to offset any losses, costs or damage experienced.
SCE also has separate insurance programs for nuclear property and liability, workers compensation and wildfires. For further information on nuclear and wildfire insurance, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies."
SCE
Regulation
CPUC
The CPUC has the authority to regulate, among other things, retail rates, utility distribution-level equipment and assets, energy purchases on behalf of retail customers, SCE capital structure, rate of return, issuance of securities, disposition of utility assets and facilities, oversight of nuclear decommissioning funding and costs, and aspects of the transmission system planning, site identification and construction, including safety and environmental mitigation. The CPUC can assess penalties on any public utility that violates or fails to comply with its rules and requirements, of up to $100,000, for each offense, which could be assessed daily for a continuing violation. The CPUC's enforcement policy authorizes the staff of the CPUC to draft proposed Administrative Consent Orders and Administrative Enforcement Orders, both of which can include fines and serve as alternatives to issuance of a citation or formal investigation proceeding, for CPUC consideration and approval.
FERC
The FERC has the authority to regulate wholesale rates as well as other matters, including unbundled transmission service pricing, rate of return, accounting practices, and licensing of hydroelectric projects. The FERC also has jurisdiction over a portion of the retail rates and associated rate design.
CAISO
The CAISO operates a wholesale energy market primarily in California through which competing electricity generators offer their electricity output to market participants, including electricity retailers. SCE has placed its transmission system under the operational control of the CAISO.
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Major transmission projects required for reliability, economic and other policy reasons are identified and approved through the CAISO's annual transmission planning process. Depending on the nature of the project identified, it may be assigned to SCE or set for competitive bid.
The CAISO is conducting transmission planning studies to identify transmission needed to meet a 30 million metric ton GHG emissions target by 2030 set by the CPUC for California's electricity sector to support California's target of reducing overall GHG emissions statewide.
NERC
The FERC assigned administrative responsibility to the NERC to establish and enforce reliability standards and critical infrastructure protection standards, which protect the bulk power system against potential disruptions from cyber and physical security breaches. The critical infrastructure protection standards focus on controlling access to critical physical and cybersecurity assets, including supervisory control and data acquisition systems for the electric grid. The reliability standards define the requirements for planning and operating the bulk power system. Compliance with these standards is mandatory. As of the date of this filing, the maximum penalty that may be levied for violating a NERC reliability or critical infrastructure protection standard is approximately $1.5 million per violation, per day.
OEIS
Effective July 1, 2021, the OEIS became the successor to the CPUC's Wildfire Safety Division ("WSD"), and was vested with the powers, duties, and responsibilities of the WSD, as well as other statutory authority. OEIS is responsible for, among other things, approving and overseeing compliance with WMPs. As part of overseeing WMP compliance, OEIS can issue notices of violation and recommend that the Commission pursue an enforcement action against an electrical corporation for noncompliance with its approved WMP. Other OEIS tasks include conducting safety culture assessments, approving executive compensation structures, and issuing safety certifications.
NRC
The NRC has jurisdiction with respect to the safety of San Onofre and Palo Verde Nuclear Generating Stations. The NRC regulates commercial nuclear power plants through licensing, oversight and inspection, performance assessment, and enforcement of its requirements. In June 2013, SCE decided to permanently retire and decommission San Onofre. The NRC regulates the decommissioning of San Onofre. For further information, see "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" in the MD&A.
Other Regulatory Agencies
The construction, planning and project site identification of SCE's transmission lines and substation facilities require compliance with various laws and approval of many governmental agencies in addition to the CPUC and FERC. These include various state regulatory agencies depending on the project location; the U.S. Environmental Protection Agency and other environmental, land management and resource agencies such as the Bureau of Land Management, the U.S. Forest Service, the California Department of Fish and Wildlife, the California Coastal Commission, and the State Water Resources Control Board. In addition, to the extent that SCE transmission line projects pass through lands owned or controlled by Native American tribes, consent and approval from the affected tribes and the Bureau of Indian Affairs are also necessary for the project to proceed.
Compliance with Government Regulations
SCE incurs significant costs to comply with government regulations. These costs, which include operation and maintenance expenses and capital expenses, include without limitation: costs incurred to maintain wildfire insurance coverage required under AB 1054; comply with environmental regulations, including licensing requirements, regulations governing California's renewable energy standards and regulations governing the decommissioning of San Onofre; land use and construction regulations; privacy and cybersecurity regulations; and Occupational Safety and Health Administration regulations. SCE also incurs operation and maintenance expenses and capital expenses to comply with requirements set forth in various regulatory decisions, including costs incurred to implement its approved capital projects and safety programs such as its WMPs.
Most costs incurred by SCE to comply with government regulations are authorized in its CPUC and FERC general rate cases and, are therefore, recovered through electric rates. To the extent SCE incurs costs to comply with government regulations above those that are authorized, or prior to obtaining authorization for recovery through rates (for instance certain costs incurred in line with SCE's obligations under its WMPs and tracked in wildfire mitigation-related memorandum accounts), SCE will seek recovery of such costs through electric rates to the extent they are eligible for recovery. There is no assurance that SCE will be allowed to fully recover these costs. For further information on wildfire
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mitigation and wildfire insurance costs, see "Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings."
SCE earns a rate of return on its authorized capital expenditures included in its rate base. Approximately $1.6 billion of spending by SCE on wildfire risk mitigation capital expenditures made after August 1, 2019 are not included in rate base under the terms of AB 1054.
Overview of Ratemaking Process
CPUC
Revenue authorized by the CPUC through GRC proceedings is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investments in generation and distribution assets and general plant (also referred to as "rate base") on a forecast basis. Revenue is authorized through quadrennial GRC proceedings where the CPUC sets an annual revenue requirement for the base year which is made up of the operation and maintenance costs, depreciation, taxes and a return consistent with the authorized cost of capital (discussed below). In the GRC proceedings, the CPUC also generally approves the level of capital spending on a forecast basis. Following the base year, the revenue requirements for the remaining three years will be set by a methodology established in the GRC proceeding, which has generally, among other items, included annual allowances for escalation in operation and maintenance costs and additional changes in capital-related investments.
SCE's 2021 GRC authorized revenue requirements for 2021, 2022, 2023 and 2024 of $6.9 billion, $7.3 billion, $7.7 billion and $8.4 billion, with the approved revenue requirement for 2024 being subject to adjustments for SCE's 2024 cost of capital and expanded customer-funded self-insurance for wildfire-related claims. In May 2023, SCE filed its 2025 GRC application for the four-year period of 2025 – 2028. For further discussion of the 2025 GRC, see "Management Overview – 2025 General Rate Case" in the MD&A.
By May 15 in the year preceding each GRC application filing date, SCE is required to file a Risk Assessment and Mitigation Phase ("RAMP") application with the CPUC to provide information about SCE's assessment of its key safety risks and its proposed programs and spending for mitigating those risks. SCE filed its RAMP application for the 2025 GRC in May 2022. The information developed during the RAMP informs SCE's proposed projects and funding requests in the subsequent phase of the GRC.
The CPUC regulates SCE's cost of capital, including its capital structure and authorized rates of return. SCE's currently authorized capital structure is 43% long-term debt, 5% preferred equity and 52% common equity. SCE’s authorized capital structure is subject to certain exclusions, for example the waiver of certain expenses and debt related to the 2017/2018 Wildfire/Mudslide Events. For further information on the exclusion related to the 2017/2018 Wildfire/Mudslide Events, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends."
SCE's currently authorized cost of capital for 2025 consists of: cost of long-term debt of 4.58%, cost of preferred equity of 6.42% and ROE of 10.33%. Based on these cost factors and the capital structure discussed above, SCE’s weighted average return on rate base will be 7.66% for 2025.
CPUC rates decouple authorized revenue from the volume of electricity sales so that SCE receives revenue equal to amounts authorized. Differences between amounts collected and authorized levels are either collected from or refunded to customers, and, therefore, such differences do not impact operating revenue. Accordingly, SCE is neither benefited nor burdened by the volume of retail electricity sales.
Cost-recovery balancing accounts track the difference between actual expenditures associated with the account, revenue authorized for recovery by the CPUC (authorized revenue requirement), and the actual revenues collected within customer rates to cover those specific expenditures. These balancing accounts are used to track and recover, among other things, SCE's decoupled costs of fuel and purchased power, as well as certain operation and maintenance expenses. SCE earns no return on these activities and although differences between forecasted and actual costs do not impact earnings, such differences do impact cash flows and can change rapidly. SCE also has capital-related balancing accounts on which it earns a return, such as the pole loading balancing account. Costs tracked in balancing accounts are not subject to after-the-fact reasonableness review unless the balancing accounts are one-way balancing accounts or otherwise subject to a cost cap. SCE also has memorandum accounts, which track costs above authorized levels eligible for cost recovery upon a future reasonableness review. To the extent SCE does not have a tracking mechanism, SCE cannot recover expenses that exceed authorized amounts. However, every subsequent GRC allows SCE to reflect its prior actual investment in plant as a part of the forecast for the next test year.
Under the 2021 GRC final decision, SCE can recover WCCP expenditures up to 110% of authorized WCCP amounts and up to 115% of authorized vegetation management expenses without being subject to after-the fact reasonableness review. SCE can seek recovery of WCCP amounts above 110% of authorized levels and vegetation management expenses above
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115% of authorized levels through reasonableness review applications. "Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings—2021 GRC Wildfire Mitigation Memorandum Account Balances."
SCE's cost-recovery mechanism for its fuel and purchased power-related costs is facilitated in three main balancing accounts, the ERRA, the PABA, and the new system generation balancing account ("NSGBA"). For all three accounts, SCE sets rates based on an annual forecast of the costs that it expects to incur during the subsequent year. In addition, the CPUC has established a "trigger" mechanism for the ERRA and the PABA. The trigger mechanism requires SCE to request an expeditious rate change if the sum of the ERRA balance and the bundled service customers' pro-rata share of the PABA balance exceeds 4% of SCE's prior year generation rate revenue and SCE does not expect the aggregate overcollection or undercollection to fall below 5% of SCE's prior year generation rate revenue within 120 days. For 2025, SCE estimates the 4% and 5% trigger amounts to be approximately $234 million and $292 million, respectively.
For 2024, the 4% and 5% trigger amounts were approximately $258 million and $323 million, respectively. As of December 31, 2024, the ERRA was overcollected by approximately $854 million, the PABA was undercollected by approximately $800 million, and the NSGBA was undercollected by approximately $54 million. In December 2024, the CPUC approved SCE incorporating these year-end balances into customer rates in January 2025.
The majority of fuel and purchased power procurement-related costs eligible for recovery through cost-recovery rates are pre-approved by the CPUC through specific decisions and a procurement plan with predefined standards that establish the eligibility for cost-recovery. If such costs are subsequently found to be non-compliant with this procurement plan, then this could negatively impact SCE's earnings and cash flows. In addition, the CPUC retrospectively reviews outages associated with utility-owned generation and SCE's power procurement contract administration activities through the annual ERRA review proceeding. A CPUC finding that SCE was unreasonable or imprudent with respect to its utility-owned generation outages and contract administration activities, could negatively impact SCE's earnings and cash flows. The ERRA review proceeding is also used as a venue to review costs in various memorandum and balancing accounts including the Pole Loading and Deteriorated Pole Programs Balancing Account.
A California law adopted in 2022 has directed the CPUC to develop a definition of energy affordability and to use energy affordability metrics to guide the development of any protections, incentives, discounts, or new programs to assist residential customers facing hardships or disconnections due to electricity or gas bills and to assess the impact of proposed rate increases on different types of residential customers.
FERC
Transmission capital and operating costs that are prudently incurred, including a return on its net investment in transmission assets, are recovered through revenue authorized by the FERC. Since 2012, SCE has used a formula rate to determine SCE's FERC transmission revenue requirement, including its construction work in progress (CWIP) revenue requirement. Under operation of the formula rate, transmission revenue will be updated to actual cost of service annually. The transmission revenue requirement and rates are updated each December, to reflect a forecast of costs for the upcoming rate period, as well as a true up of the transmission revenue to actual costs incurred by SCE in the prior calendar year on its formula rate.
The FERC ROE is currently fixed at 10.3% and does not separately reflect any adders. The FERC ROE would only change if a different ROE is approved by the FERC in a new proceeding. For further information on the FERC formula rates, related transmission revenue requirements and rate changes, see "Liquidity and Capital Resources—SCE—Regulatory Proceedings—2025 FERC Formula Rate Annual Update" in the MD&A.
Retail Rates Structure and Residential Rate Design
To develop retail rates, the authorized revenue requirements are allocated among all customer classes (residential, commercial, industrial, agricultural and street lighting) on a functional basis (i.e., generation, distribution, transmission, etc.). Specific rate components are designed to recover the authorized revenue allocated to each customer class.
SCE has a two-tier residential rate structure. The first tier is priced below the average rate and is intended to cover the customer's essential electricity needs. The second tier is priced at 29% more than the first tier. The CPUC has ordered a transition from tiered to time-of-use ("TOU") rates for most residential customers unless they opt to stay on the tiered rate structure. The TOU rate structure is the current default rate and also incorporates the two-tier structure through a baseline credit applied to approximately 300 kWh a month. Under a TOU rate structure, rates are based on the time of day and the season. TOU rates are typically lower early in the day, overnight, and on the weekends when energy resources are less in demand. SCE completed a multi-year transition to TOU rates in June 2022, and, as of December 31, 2024, approximately 60% of residential customers are on TOU rates. To recover a portion of the fixed costs of serving no- or low-usage residential customers, SCE assesses both fixed charges of less than $1 per month, and a minimum charge of $10 per month ($5 for low-income customers). In May 2024, the CPUC authorized a residential class Basic Service Charge (i.e., fixed
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charge) with three tier level graduations. The Basic Service Charge graduations are based on participation in income-qualified programs. Customers in the California Alternative Rates for Energy (CARE) and Family Electric Rates Assistance (FERA) programs receive Basic Service Charges that are respectively 25% and 50% of the $24.15 fixed charge applicable to all other residential customers. The newly adopted fixed charges will be implemented in the fourth quarter of 2025. SCE will continue to offer financial assistance programs (CARE and FERA) that provide significant discounts to customers who qualify for bill assistance based on their household size and income. For information on residential rates for customers with renewable generation systems, see "—Competition" below.
Purchased Power and Fuel Supply
SCE obtains the power, energy, and local grid support needed to serve its customers primarily from purchases from external parties. SCE estimates that approximately 19% of power delivered to SCE's customers in 2024 came from SCE's own generating facilities.
Natural Gas Supply
SCE requires natural gas to fuel its Mountainview and peaker plants, which are generation units that operate in response to wholesale market signals related to power prices and reliability needs. The physical natural gas purchased by SCE is sourced in competitive interstate markets at trading points on the SoCalGas local distribution company system. SoCalGas is the primary provider of intrastate pipeline transportation service to the gas-fueled generation stations that SCE controls. In 2015 – 2016, SoCalGas experienced a significant natural gas fuel leak at its Aliso Canyon underground gas storage facility that resulted in reduced capacity and usage of the facility. Currently, Aliso Canyon is authorized to operate at up to 79% of its maximum capacity. CPUC has established a biennial assessment process to evaluate the reliability and cost impacts of minimizing or eliminating reliance on Aliso Canyon. To date, SCE has found that gas storage-use restrictions combined with SoCalGas pipeline maintenance constraints contributed to increased electricity costs for customers but did not impact grid reliability. However, there is no certainty that these restrictions or pipeline constraints will not impact grid reliability in the future. Price increases faced by customers would not affect SCE's earnings because SCE expects recovery of these costs through the ERRA balancing account or other CPUC approved procurement plans. However, these higher prices may impact cash flow due to the timing of those recoveries. For more information on cost-recovery mechanisms, see "—Overview of Ratemaking Process" above. SCE is actively monitoring legislative and regulatory processes that are addressing pipeline and electric grid operations impacted by the Aliso Canyon leak, including an Order Instituting Investigation issued by the CPUC in February 2017 to consider the feasibility of minimizing or eliminating the use of the Aliso Canyon facility. SCE has also made additional procurement efforts to alleviate the impact of the partial closure of Aliso Canyon, including accelerating existing contracts for new capacity, procuring energy storage from third-parties, contracting for design, build, and transfer of utility-owned storage, procuring additional demand response and contracting for firm gas transportation capacity.
CAISO Wholesale Energy Market
The CAISO operates a wholesale energy market primarily in California through which competing electricity generators offer their electricity output to market participants, including electricity retailers. The CAISO schedules power in hourly increments with hourly prices through a day-ahead market in California and schedules power in fifteen-minute and five-minute increments with fifteen-minute and five-minute prices through two real-time markets that cover California and portions of ten neighboring states through the Western Energy Imbalance Market. Both markets optimize energy procurement, ancillary service procurement, unit commitment and congestion management. SCE participates in the day-ahead and real-time markets for the sale of its own generation and generation under contract and for purchases for its load requirements. In December 2023, the FERC approved an Extended Day-Ahead Market ("EDAM"), giving utilities in the Western Energy Imbalance Market the option of joining a centralized day-ahead market run by the CAISO. The EDAM gives utilities an opportunity to lock in energy prices a day in advance, and thereby substantially avoid volatility in the real-time energy market.
The CPUC's Resource Adequacy program imposes resource adequacy requirements on load-serving entities like SCE that are designed to provide sufficient resources to the CAISO to ensure the safe and reliable operation of the grid in real time. The CPUC has adopted a central procurement structure in SCE's distribution service area for local resource adequacy that transfers the responsibility for procuring local resource adequacy from other local load-serving entities to SCE as a central procurement entity ("CPE") for its distribution service area. Under this structure, while SCE procures local resource adequacy to meet the local resource adequacy requirement for its distribution service area, other load-serving entities can also procure their own local resources. Load-serving entities that procure their own local resources can: (i) sell the capacity to SCE, (ii) utilize the resources, or (iii) voluntarily show the resources to meet their own needs, thereby reducing the amount of local resource adequacy the CPE will need to procure and reducing the total CPE procurement costs shared by all load-serving entities in that distribution service area.
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Following state-wide rotating outages in August 2020 that impacted a significant number of SCE's customers, the CPUC has taken action towards ensuring reliable electric service in the event that an extreme heat events occur during summer. The CPUC has issued decisions requiring at least an aggregate of 15,500 MW of additional net qualifying renewable or zero-emitting capacity to be procured collectively by all of the load-serving entities subject to the CPUC’s Integrated Resource Planning purview. The aggregate additional capacity is required by 2028, with 2,000 MW required by 2023, an additional 6,000 MW required by 2024, an additional 1,500 MW required by 2025, an additional 2,000 MW required by 2026, an additional 2,000 MW required by 2027, and an additional 2,000 MW of long-lead time resources, comprised of 1,000 MW of long-duration storage and 1,000 MW of firm zero-emitting resources required by 2028; 2,500 MW of the aggregate procurement requirement through 2025 must be through generation or generation paired with storage.
SCE's allocation of the requirements is 705 MW by 2023, 2,114 MW by 2024, 529 MW by 2025, 684 MW by 2026, 684 MW by 2027, and 705 MW of long-lead time resources, comprised of 353 MW of long-duration storage and 352 MW of firm zero-emitting resources by 2028, for a total of 5,421 MW; 880 MW of the aggregate procurement requirement through 2025 must be through generation or generation paired with storage.
SCE has met its capacity requirements through 2027, and its long-duration storage requirement for 2028. SCE expects to meet its firm zero-emitting requirement in the first quarter of 2025, which will fully satisfy SCE’s overall procurement requirements. As of December 31, 2024, SCE had procured approximately 5,583 MW of additional qualifying renewable or zero-emitting capacity with expected online dates in 2023 through 2028; approximately 1,900 MW of this capacity has come online. SCE has procured approximately 658 MW (and expects to have 729 MW, fully meeting the requirements, in the first quarter of 2025) of qualifying capacity with expected online dates by 2028 toward the long-duration storage and firm-zero emitting resource procurement requirements. SCE has procured the capacity and generation needed to meet its 880 MW aggregate procurement requirement for generation or generation paired with storage by 2025, but some of that generation is not expected to come online until 2026 and 2027. In September 2024, the CPUC issued a decision allowing temporary zero-emitting or RPS-eligible incremental bridge resources to meet the 2025 procurement requirement for generation or generation paired with storage. This allows SCE to use certain temporary bridge resources for up to three years to meet its 880 MW procurement requirement for generation or generation paired with storage by 2025, until its contracted resources expected to come online in 2026 and 2027 are online. SCE has procured sufficient temporary bridge resources to meet the 880 MW procurement requirement by 2025 until its other contracted resources come online in 2026 and 2027.
In February 2024, the CPUC adopted a decision approving SCE’s integrated resource plan identifying the resources needed to meet California’s greenhouse gas emissions and reliability targets and authorizing SCE to procure the resource needs identified in its plan. Additionally, the CPUC approved a process to request extensions of the 2028 procurement requirement for long-duration storage and firm zero-emitting resources to no later than 2031. The CPUC also denied SCE’s request for extension of the 2025 aggregate procurement requirement for generation or generation paired with storage to 2027, although a subsequent decision issued in September 2024 allowed temporary zero-emitting or RPS-eligible bridge resources to meet the requirement as discussed above.
Competition
SCE faces retail competition in the sale of electricity to the extent that federal and California laws permit other sources to provide electricity and related services to retail customers within SCE's service area. While retail competition impacts customer rates it does not impact SCE's earnings activities because the volume of electricity sales is decoupled from authorized revenue. The increased retail competition is from governmental entities formed by cities, counties, and certain other public agencies to generate and/or purchase electricity for their local residents and businesses, known as CCAs. While California law provides only limited opportunities for customers in SCE's service area to choose to purchase power directly from an Electric Service Provider, a limited, phased-in expansion of customer choice ("Direct Access") for nonresidential customers was authorized beginning in 2009, and an additional limited expansion of Direct Access was authorized in 2018. When a customer who had previously taken bundled service from SCE converts to taking retail electricity service from an Electric Service Provider or a CCA, SCE remains that customer's transmission and distribution provider. Other forms of departing load include customer generation, and load that departs SCE service entirely to take electricity service from a publicly owned utility or a tribal utility.
California law requires bundled service customers to remain financially indifferent to departing load customers and to the mass return of departing load customers in the event of an Electric Service Provider or CCA's failure or other service termination. The CPUC has issued a series of decisions designed to avoid cost shifting in the context of departing load, including revising the power charge indifference adjustment methodology to effectively address the cost shifts to bundled service customers.
Investor-owned utilities serve as the default providers of last resort in their respective service areas and can be significantly impacted by the Electric Service Providers or CCAs failing or otherwise exiting the market. In March 2021, the CPUC initiated a rulemaking to examine the risks of catastrophic failures by Electric Service Providers or CCAs on investor-
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owned utilities and the need for any changes in the regulatory framework to increase consumer protections and financial security requirements, among other measures. As part of this rulemaking, the CPUC will also examine under what requirements a CCA or Electric Service Provider may assume the provider of last resort obligation from an investor-owned electric utility in some or all of the utility’s service area.
As of year-end 2024, SCE had twelve CCAs serving customers in its service area that represented approximately 21% of SCE's total service load. While one CCA terminated service and mass returned its customers to SCE’s bundled service in 2024, one CCA expanded in SCE's service area in 2024 and two CCAs expanded in SCE's service area in 2023. One expanded CCA has been approved by the CPUC to serve customers in SCE's service area in 2025. Based on recent load statistics, SCE anticipates that Direct Access and CCA load will be approximately 16% and 21% of its total service load by the end of 2025, respectively.
Customer-owned power generation and storage alternatives, such as rooftop solar facilities and battery systems, are increasingly installed by SCE's customers behind SCE's revenue meter as a result of technological developments, federal and state subsidies, and declining costs of such alternatives. Beginning in 2020, and subject to certain exceptions, most newly built homes in California are required to have solar installations.
California legislation passed in 1995 encouraged private residential and commercial investment in renewable energy resources by requiring SCE and other investor-owned electric utilities to offer a NEM billing option to customers who install eligible power generation systems to supply all or part of their energy needs. NEM customers are interconnected to SCE's grid and credited for the net difference between the electricity SCE supplied to them through the grid and the electricity the customer exported to SCE over a 12-month period. SCE is required to credit the NEM customer for most of the power they sell back to SCE at the retail rate. Through the credit they receive, NEM customers effectively avoid paying certain grid-related costs. NEM customers are also exempted from some non-bypassable, standby and departing load charges and interconnection fees. Electric Service Providers and CCAs may, but are not required by law to, offer NEM rates.
In January 2016, the CPUC issued a decision adopting a new standard NEM tariff for customers with renewable generation systems. The changes that the CPUC decision made to the existing NEM tariff did not significantly impact the NEM subsidy. Specifically, the decision required customers that take service on SCE's NEM tariff after June 2017 to continue to be compensated at the retail rate, minus certain non-bypassable charges. NEM customers also continued to be exempted from standby and departing load charges but were required to pay a $75 interconnection fee and to select a time-of-use retail rate.
In August 2020, the CPUC initiated a rulemaking to develop a successor to the NEM tariffs. In December 2022, the CPUC issued a final decision adopting a Net Billing Tariff (NBT) that decoupled export compensation from the retail rate, which lowers the subsidy compared to NEM. Under the final decision, the CPUC deferred consideration of whether to assess a grid participation charge to address the costs participating customers avoid by reducing the electricity they purchase from SCE and whether to adopt other mechanisms that would allow SCE to recover its cost of service and the costs of many public policy programs to another pending proceeding. The final decision also provides an enhanced subsidy for lower income customers and customers who pair rooftop solar with energy storage systems. The final decision does not apply to existing NEM customers until after they have completed twenty years on their existing NEM tariff, at which time they will move to the new, reduced NBT tariff.
The effect of these types of competition on SCE generally is to reduce the amount of electricity purchased from SCE by retail customers. Customers who use alternative electricity sources typically continue to use and pay for SCE's transmission and distribution services; however, current NEM customers use, but do not pay the full cost for, those services. While changes in volume or rates generally do not impact SCE's earnings activities, decreased retail electricity sales by SCE has the effect of increasing utility rates because the costs of the distribution grid are not currently borne by all customers that benefit from its use. However, in a recent Decision, issued in May of 2024, the CPUC authorized a Base Service Charge for all residential rates, which will be implemented starting in late 2025. The Base Service Charge recovers a portion of the fixed costs of providing service. See "Risk Factors—Risks Relating to Southern California Edison Company—Competitive and Market Risks."
In the area of transmission infrastructure, SCE has experienced increased competition from independent transmission providers under the FERC's transmission planning requirements rules, effective in 2011, that removed the incumbent public utility transmission owners' federally-based right of first refusal to construct certain new transmission facilities and mandated regional and interregional transmission planning. Regional entities, such as independent system operators, have processes for regional and interregional transmission planning and the competitive solicitation and selection of developers (including incumbent utilities) to build and own certain types of new transmission projects. The CAISO has held competitive solicitations pursuant to these rules and independent service providers were selected.
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Properties
SCE supplies electricity to its customers through extensive transmission and distribution networks. Its transmission facilities, which are located primarily in California but also in Nevada and Arizona, deliver power from generating sources to the distribution network and consist of approximately 13,000 circuit-miles of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations. SCE's distribution system, which takes power from distribution substations to customers, consists of approximately 38,000 circuit-miles of overhead lines, approximately 32,000 circuit-miles of underground lines and approximately 730 distribution substations.
At December 31, 2024, SCE had ownership interests in generating and energy storage facilities, primarily located in California, with approximately 7,000 MW of net physical capacity, of which SCE's pro-rata share is approximately 3,500 MW. SCE's pro rata share includes approximately 63 MW of capacity from facilities that were not operational or out of service at December 31, 2024 and excludes retired facilities. In addition, SCE owns two utility storage facilities in SCE’s service area with an aggregate capacity of 312.5 MW and a third 225 MW facility is expected to be in-service in 2025. See "Liquidity and Capital Resources—Capital Investment Plan—Utility Owned Storage Projects " in the MD&A.
Certain of SCE's substations, and portions of its transmission, distribution and communication systems are located on lands owned by the federal, state or local governments under licenses, permits, easements or leases, or on public streets or highways pursuant to franchises. Certain of the documents evidencing such rights obligate SCE, under specified circumstances and at its expense, to relocate such transmission, distribution, and communication facilities located on lands owned or controlled by federal, state, or local governments.
SCE owns and operates hydroelectric plants and related reservoirs, the majority of which are located in whole or in part on U.S.-owned lands and are subject to FERC licenses. Slightly over half of these plants have FERC licenses that expire at various times through 2046. FERC licenses impose numerous restrictions and obligations on SCE, including the right of the United States to acquire projects upon payment of specified compensation. When existing licenses expire, the FERC has the authority to issue new licenses to third parties that have filed competing license applications, but only if their license application is superior to SCE's and then only upon payment of specified compensation to SCE. New licenses issued to SCE are expected to contain more restrictions and obligations than the expired licenses because laws enacted since the existing licenses were issued require the FERC to give environmental objectives greater consideration in the licensing process. In addition, SCE expects additional opposition to new licenses by environmental stakeholder groups. If, in the future, SCE decides to, or is forced to, decommission one or more hydroelectric projects, the costs related to the decommissioning will be substantial. The CPUC approved SCE recovering a portion of estimated decommissioning costs for hydroelectric projects in the 2021 GRC. SCE intends to sell, subject to regulatory approval, a portion of its hydroelectric facilities comprising of approximately 17 MW of capacity by 2027.
Substantially all of SCE's properties are subject to the lien of a trust indenture securing first and refunding mortgage bonds. See "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Seasonality
Due to warm weather during the summer months and SCE's rate design, operating revenue during the third quarter of each year is generally higher than the other quarters. However, as discussed above, SCE earnings are not affected by changes in retail electricity sales. See "Overview of Ratemaking Process" above.
SOUTHERN CALIFORNIA WILDFIRES
Unprecedented weather conditions in California due to climate change have contributed to wildfires, including those where SCE's equipment has been alleged to be associated with the fire's ignition, that have caused loss of life and substantial damage in SCE's service area, including as recently as January 2025. Multiple factors have contributed to increased wildfire activity and faster progression of wildfires across SCE's service area and in other areas of California in recent years. These include the buildup of dry vegetation in areas severely impacted by years of historic drought, lack of adequate clearing of hazardous fuels by responsible parties, higher temperatures, lower humidity, increased incidence of dry lightning, and strong Santa Ana winds. At the same time that wildfire risk has been increasing in Southern California, residential and commercial development has occurred and is occurring in some of the highest-risk areas. Such factors can increase the likelihood and extent of damage caused by wildfires. SCE has determined that approximately 27% of its service area is in areas identified as high fire risk, and SCE's service area remains susceptible to additional wildfire activity.
In response to worsening conditions and wildfire activity in its service area, SCE has been, and will continue to be, focused on developing and implementing plans aimed at reducing the risk of SCE equipment contributing to the ignition of wildfires. In addition, California must also continue to increase its investment in wildfire prevention and fire suppression capabilities.
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Multiple lawsuits related to wildfire events have been initiated against SCE and Edison International. For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides," "Risk Factors" and "Management Overview—Southern California Wildfires and Mudslides" in the MD&A.
Recovery of Wildfire-Related Costs
Pre-AB 1054 Cost Recovery
California courts have previously found investor-owned utilities to be strictly liable for property damage, regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that caused the property damage. The rationale stated by these courts for applying this theory to investor-owned utilities is that property damages resulting from a public improvement, such as the distribution of electricity, can be spread across the larger community that benefited from such improvement through recovery of uninsured wildfire-related costs in electric rates. However, in November 2017, the CPUC issued a decision denying SDG&E's request to include in its rates uninsured wildfire-related costs arising from several 2007 wildfires, finding that SDG&E did not meet the prudency standard because it did not prudently manage and operate its facilities prior to or at the outset of the 2007 wildfires. In July 2018, the CPUC denied both SDG&E's application for rehearing on its cost recovery request and a joint application for rehearing filed by SCE and PG&E limited to the applicability of inverse condemnation principles in the same proceeding. The California Court of Appeal, the California Supreme Court and the United States Supreme Court denied SDG&E's petitions for review of the CPUC's denial of SDG&E's application.
2019 Wildfire Legislation
In July 2019, AB 1054 was signed by the Governor of California and became effective immediately. In addition to a revised prudency standard, AB 1054 provided for the Wildfire Insurance Fund for the benefit of the three California investor-owned utilities participating in the fund, PG&E, SCE and SDG&E. The summary of the wildfire legislation below and elsewhere within this report is based on SCE's interpretation of AB 1054.
AB 1054 Prudency Standard
Under AB 1054, the CPUC must apply a revised framework when assessing the prudency of a utility in connection with a request for recovery of wildfire costs for wildfires ignited after July 12, 2019. Under AB 1054, the CPUC is required to find a utility to be prudent if the utility's conduct related to the ignition was consistent with actions that a reasonable utility would have undertaken under similar circumstances, at the relevant point in time, and based on the information available at that time. Prudent conduct under the AB 1054 standard is not limited to the optimum practice, method, or act to the exclusion of others, but rather encompasses a spectrum of possible practices, methods, or acts consistent with utility system needs, the interest of ratepayers, and the requirements of governmental agencies. AB 1054 also clarifies that the CPUC may determine that wildfire costs may be recoverable, in whole or in part, by taking into account factors within and outside the utility's control, including humidity, temperature, and winds. Further, utilities with a valid safety certification will be presumed to have acted prudently related to a wildfire ignition unless a party in the cost recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at which time, the burden shifts back to the utility to prove its conduct was prudent. If a utility does not have a valid safety certification, it will have the burden to prove, based on a preponderance of evidence, that its conduct was prudent. The new prudency framework will survive the termination of the Wildfire Insurance Fund.
Utilities participating in the Wildfire Insurance Fund that are found to be prudent are not required to reimburse the fund for amounts withdrawn from the fund. Participating utilities can request recovery of wildfire costs through electric rates if the fund has been exhausted.
Wildfire Insurance Fund
AB 1054 provided for the Wildfire Insurance Fund to reimburse a participating utility for payment of third-party damages claims arising from certain wildfires that exceed, in aggregate in a calendar year, the greater of $1.0 billion or the insurance coverage required to be maintained under AB 1054. The Wildfire Insurance Fund was established in September 2019 and is available for claims related to wildfires ignited after July 12, 2019 that are determined by the responsible government investigatory agency or a court to have been caused by a utility or are asserted to have been caused by a utility and result in a court-approved dismissal resulting from the settlement of third-party damage claims.
SCE and SDG&E collectively made their initial contributions totaling approximately $2.7 billion (SCE share is $2.4 billion) to the Wildfire Insurance Fund in September 2019. Upon its emergence from bankruptcy, on July 1, 2020, PG&E made its initial contribution of approximately $4.8 billion to the Wildfire Insurance Fund. PG&E, SCE and SDG&E are also collectively expected to make aggregate contributions of approximately $3.0 billion (SCE share is $950 million) to the Wildfire Insurance Fund through annual contributions to the fund over a 10-year period by no later than January 1 of
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each year, of which they have made six annual contributions totaling approximately $1.8 billion (SCE share is approximately $570 million). In addition to PG&E's, SCE's and SDG&E's contributions to the Wildfire Insurance Fund, PG&E, SCE and SDG&E are expected to collect $6.1 billion, $6.1 billion and $1.3 billion, respectively, from their customers over a 15-year period through a dedicated rate component. The amount collected from customers may be directly contributed to the Wildfire Insurance Fund or used to support the issuance of up to $10.5 billion in bonds by the California Department of Water Resources, the proceeds of which would be contributed to the fund. In addition to funding contributions to the Wildfire Insurance Fund, the amount collected from utility customers will pay for, among other things, any interest and financing costs related to any bonds that are issued by the California Department of Water Resources to support the contributions to the Wildfire Insurance Fund.
SCE's contributions to the Wildfire Insurance Fund are not recoverable through electric rates and will be excluded from the measurement of SCE's CPUC-jurisdictional authorized capital structure. SCE will also not be entitled to cost recovery for any borrowing costs incurred in connection with its contributions to the Wildfire Insurance Fund. For information on the accounting impact of SCE's contributions to the Wildfire Insurance Fund see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill 1054 " in this report.
Reimbursement from Wildfire Insurance Fund and AB 1054 Liability Cap
Until the fund administrator determines that the fund will be terminated, participating investor-owned utilities are expected to be reimbursed from the Wildfire Insurance Fund for eligible claims, on a first come, first served basis, subject to the fund administrator's review. SCE will reimburse the fund for any withdrawn amounts if SCE receives payment of such amounts under an indemnification agreement or from an insurance provider or other third-party. SCE will also be required to reimburse the fund for withdrawn amounts that the CPUC disallows, subject to the AB 1054 Liability Cap. If the utility has maintained a valid safety certification and its actions or inactions that resulted in the wildfire are not found to constitute conscious or willful disregard of the rights and safety of others, the aggregate requirement to reimburse the fund over a trailing three calendar year period is capped at 20% of the equity portion of the utility's transmission and distribution rate base in the year of the prudency determination. Based on SCE's weighted-average 2024 transmission and distribution rate base, excluding general plant and intangibles, and using the equity portion of SCE's CPUC authorized capital structure of 52%, SCE's requirement to reimburse the Wildfire Insurance Fund for amounts disallowed in 2024 would have been capped at approximately $3.9 billion. SCE will calculate the AB 1054 Liability Cap for amounts disallowed in 2025 after a final decision in the 2025 GRC is approved.
SCE will not be allowed to recover borrowing costs incurred to reimburse the fund for amounts that the CPUC disallows. The Wildfire Insurance Fund and, consequently, the AB 1054 Liability Cap will terminate when the administrator determines that the fund has been exhausted.
Safety Certification and Wildfire Mitigation Plan
Under AB 1054, SCE can obtain an annual safety certification upon approval by OEIS of certain requirements, including an approved WMP. Under AB 1054, SCE is also required to submit a comprehensive WMP to the CPUC at least once every three years for review and approval. Each such comprehensive plan is required to cover at least a three-year period. In addition, SCE anticipates updating its comprehensive three-year plans annually in the intervening years.
SCE submitted its 2023 – 2025 WMP in March 2023. The OEIS approved SCE's 2023 – 2025 WMP in October 2023 and the CPUC ratified the OEIS approval in November 2023. The OEIS approved SCE's 2025 WMP update in October 2024 and the CPUC ratified the OEIS approval in January 2025.
On December 11, 2024, OEIS issued SCE's safety certification, which will be valid for 12 months from the date of issuance. Notwithstanding its 12-month term, if SCE requests a new safety certification by September 12, 2025, then its current safety certification will remain valid until OEIS acts on SCE's request.
Public Safety Power Shutoffs
In addition to the investments SCE is making as part of its WMP, SCE also uses Public Safety Power Shutoffs ("PSPS") to proactively de-energize power lines as a last resort to mitigate the risk of catastrophic wildfires during extreme weather events.
SCE initiated PSPS 12 times in 2020 as part of its wildfire mitigation efforts resulting in an aggregate of approximately 268 million customer minutes interrupted. Since 2020, on a risk informed basis, SCE has made and continues to make significant investments and progress in improving its PSPS protocols. SCE initiated PSPS 21 times in 2024 resulting in approximately 224 million customer minutes interrupted. As of February 20, 2025, SCE initiated PSPS two times in 2025 resulting in approximately one billion customer minutes interrupted primarily in Los Angeles, Riverside, San Bernardino, and Ventura counties under conditions of severe windstorm events.
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In June 2021, the CPUC issued a final decision which, among other things, will reduce future authorized revenue for the volumetric reductions in electricity sales resulting from PSPS events initiated after June 2021 until the CPUC determines that improvements in the PSPS program have been made.
In June 2022, the SED issued an Administrative Enforcement Order ("AEO") against SCE proposing penalties of $10 million for alleged noncompliance with customer notification requirements related to PSPS events in 2020. In October 2022, the SED and SCE reached a settlement agreement under which SCE agreed to a penalty of $7 million, inclusive of a $6 million disallowance of PSPS program-related costs. SCE also agreed to complete certain corrective actions to resolve the AEO. SCE certified completion of the AEO corrective actions in June 2023. SCE did not admit wrongdoing or liability as part of the settlement. SCE's obligations under the settlement agreement commenced in August 2023 when CPUC approval of the agreement became final and non-appealable.
SCE may be subject to penalties for noncompliance with customer notification and post event reporting requirements related to PSPS events initiated after 2020. In April 2023, the SED issued a Notice of Violation to SCE for noncompliance with customer notification and other CPUC requirements related to PSPS events in 2021. In November 2024, the CPUC approved an Administrative Consent Order and Agreement between SED and SCE to resolve all issues involving the 2021 PSPS events, resulting in financial penalties totaling $2.4 million. SCE has made and continues to make significant investments and progress in improving its PSPS protocols, including through increased automation of customer notifications.
ENVIRONMENTAL CONSIDERATIONS
Greenhouse Gas Regulation
Edison International recognizes that its industry and the global economy are in the midst of a profound transformation toward a low-carbon future as a response to climate change. SCE plans to be a key enabler of the adoption of new energy technologies that benefit its customers. See "Management Overview—Electricity Industry Trends" in the MD&A.
Approximately 73% of SCE's sources of utility-owned generation were carbon-free in 2024. SCE estimates that approximately 19% of power delivered to SCE's customers in 2024 came from SCE's own generating facilities, with approximately 9% nuclear, 4% large hydroelectric, less than 1% small hydroelectric, and less than 1% solar generation. Approximately 5% were natural gas sources. Since 2010, SCE has reported its annual GHG emissions from utility-owned generation each year to the U.S Environmental Protection Agency by March 31 of the following year. SCE's 2024 GHG emissions from utility-owned generation are estimated to be approximately 1,100,000 metric tons.
California is committed to reducing its GHG emissions, improving local air quality and supporting continued economic growth. California's major initiatives for reducing GHG emissions include a law that targets the reduction of GHG emissions across the entire state economy to 40% below 1990 levels by 2030 and a California cap-and-trade program established by the California Air Resources Board ("CARB"). Other major policy measures include the Low Carbon Fuel Standard program established by CARB. In 2022, the California Climate Crisis Act declared the policy of the state to achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045, to achieve and maintain net negative greenhouse gas emissions thereafter, and to ensure that by 2045, statewide anthropogenic greenhouse gas emissions are reduced to at least 85% below the 1990 levels. Edison International is committed to achieving net-zero GHG emissions by 2045, in alignment with economywide climate actions planned by California. This commitment covers the power SCE delivers to customers and Edison International's enterprise-wide operations.
In the California cap-and-trade program, all covered GHG emitters, including SCE, are subject to an annually declining program "cap" on emissions designed to encourage entities to reduce emissions from their operations. Covered entities must remit a compliance instrument for each ton of carbon dioxide equivalent gas emitted and can do so buying state-issued emission allowances at auction or purchasing them in the secondary allowance market. From 2013 to 2020, GHG emitters could have met up to 8% of their cap-and-trade obligations by procuring GHG offset credits from verified offset programs, such as reforestation, that have recognized effects on reducing atmospheric GHGs. The offset usage limit has decreased to 4% for 2021 – 2025 emissions and will then increase to 6% for 2026 – 2030 emissions. Starting with 2021 emissions, no more than one-half of the quantitative offset usage limit may be sourced from projects that do not provide direct environmental benefits in California.
California has adopted RPS targets that require California retail sellers of electricity to provide certain percentages of energy sales from renewable resources defined in the statute, including 33% of retail sales by December 2020; 44% of retail sales by December 2024, 52% of retail sales by December 2027, and 60% of retail sales by December 2030. Approximately 35% of SCE's supply portfolio in 2020 came from renewable sources eligible under California's RPS, of which 32% was delivered to customers and 3% was sold for resale. As such, SCE met California's 2020 RPS target. Approximately 38% of SCE's supply portfolio in 2024 came from renewable sources eligible under California's RPS, of which 34% was delivered to customers and 4% was sold for resale. With the use of excess procurement from prior years, as
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allowed under the RPS program, SCE expects to meet California’s 44% RPS requirement for 2024. SCE's climate change objectives align with California's requirements. Separate from RPS targets, California requires the following percentages of retail sales of electricity to California end-use customers must be from carbon-free resources by the following deadlines: 90% by December 31, 2035, 95% by December 31, 2040, and 100% by December 31, 2045. California also requires each state agency to ensure that carbon-free resources supply 100% of electricity procured on its behalf by December 31, 2035. SCE plans to propose for CPUC approval new programs to help state agency customers meet their accelerated 100% clean power needs. SCE estimates that approximately 46% of SCE's customer deliveries in 2024 came from carbon-free resources.
Additionally, the CPUC and the California Energy Commission adopted GHG emission performance standards that apply to California investor-owned and publicly owned utilities' long-term arrangements for the purchase of electricity. The standards prohibit these entities, including SCE, from owning or entering into long-term financial commitments with generators, such as coal plants, that emit more GHG than a combined-cycle natural gas turbine generator. California also supports climate action to meet the December 2015 Paris Agreement.
Edison International supports these California environmental initiatives and has undertaken analysis which, consistent with third-party analysis, shows that electrification across multiple sectors, including transportation and industrial sectors, is among the most cost-effective ways to achieve California's requirements and goals. Edison International and SCE believe that these initiatives will lead to increased electrification across the economy and SCE is investing in grid technologies and charging infrastructure to support California's goals.
Environmental Risks
Climate change has, and continues to, impact California. According to the National Centers for Environmental Information, since 1980, California has faced 46 weather-related disasters costing over $1 billion each. In 2023, the Earth experienced its hottest year on record. This spike in temperature is making extreme weather events commonplace, with ripple effects that put people around the world in harm’s way. Severe droughts and windstorms contributed to the devastating wildfires that swept through parts of California in recent years, demonstrating the serious threat that weather extremes caused by climate change pose to California's communities and the environment. See "Management Overview—Southern California Wildfires and Mudslides" in the MD&A and "Business—Southern California Wildfires."
Severe weather events, including drought, increasingly severe windstorms and rising sea-levels, pose risks to SCE's infrastructure and SCE and Edison International are investing in building a more resilient grid to reduce climate- and weather-related vulnerabilities. See "Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings" in the MD&A.
In May 2022, SCE provided its climate adaptation vulnerability assessment ("CAVA") to the CPUC. The CAVA addresses the projected climate impacts of temperature, sea level, precipitation, wildfire, and cascading impacts (such as rain on snow or debris flow) on SCE in the 2030, 2050, and 2070 timeframes. SCE's CAVA will inform planning related to SCE assets, operations, and services, with the goal of maintaining a resilient electric grid in the face of climate change and will inform future investment in the grid.
For more information on risks related to climate change, environmental regulation and SCE's business strategy, see "Risk Factors—Risks Relating to Southern California Edison Company—Operating Risks."
UNRESOLVED STAFF COMMENTS
None.
CYBERSECURITY
Overview
Cybersecurity presents an ever-evolving challenge to the electric power industry and Edison International and SCE have identified cybersecurity as a key enterprise risk. SCE's operations require the continuous availability of critical information and operational technology systems, sensitive customer and employee data, and infrastructure information, all of which are targets for malicious actors. Cybersecurity attacks, which can arise from external actors, internal threats, or through SCE's supply chain, are continually becoming more frequent and more sophisticated. SCE's grid modernization efforts and the transition to a more connected grid, including incorporating communication and operating technologies aimed at enabling SCE to respond faster, operate its systems more efficiently and reliably, and incorporate DERs at a greater level, also increases SCE’s vulnerability to cybersecurity attacks. To SCE's knowledge it has not experienced a material cybersecurity incident to date.
SCE’s increased reliance on technology necessarily increases cybersecurity risk. Cybersecurity incidents that may cause a major disruption of SCE's operations, and therefore may materially affect Edison International and SCE's financial
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condition, operations, and business reputation, include cyber attacks designed to compromise or exfiltrate data (e.g., ransomware attacks), damage or destroy systems, interrupt availability, conduct future malicious actions, and/or gain control of or otherwise interrupt the operation of SCE’s electric grid. For additional information on risks from cybersecurity threats that may have a material effect on Edison International and SCE, see the "Risks Relating to Edison International and Southern California Edison Company—Cybersecurity and Physical Security Risks."
Risk Management, Strategy and Oversight
SCE assesses and monitors cybersecurity risks to current infrastructure, new projects, and third parties, including vendors. SCE maintains incident response plans, utilizes cybersecurity incident response exercises, performs targeted audits, leverages third party assessments and uses the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) as a guideline to identify, evaluate and manage material risks from cybersecurity threats. SCE also engages consultants, and coordinates with the Federal government and industry peers, to assist in identifying, evaluating and managing its cybersecurity risks, and uses contractual terms to establish cybersecurity requirements with certain third parties. Identified cybersecurity risks are documented and presented to management to review and advise on cybersecurity strategies and mitigation measures. Based on management reviews, cybersecurity strategies and remediation plans are developed or adjusted to address pertinent risks. Edison International and SCE leverage training, policies, technical and procedural controls, and mitigation plans to address risks from cybersecurity threats.
Management has established a cybersecurity oversight group comprised of a multidisciplinary senior management team, including its Vice President of Enterprise Risk Management, to monitor and provide strategic direction for the prevention, detection, mitigation, and remediation of risks from cybersecurity threats. A Boards of Directors’ liaison regularly attends meetings of the cybersecurity oversight group and provides reports to the Safety and Operations Committees of the Boards of Directors. Other members of the Boards of Directors are invited to attend meetings and typically attend at least one meeting annually.
The Edison International and SCE Audit and Finance Committees of the Boards of Directors oversee enterprise risk management, including risks from cybersecurity threats. Annually, Edison International and SCE’s enterprise risk management team conducts a review of enterprise risks, including risks from cybersecurity threats, and presents the results of its review to management and the Audit and Finance Committees. In addition, the Boards of Directors have assigned primary responsibility for cybersecurity operations oversight to the Edison International and SCE Safety and Operations Committees, which receive regular cybersecurity updates from SCE’s Chief Security Officer on specific topics, including the dynamic cybersecurity landscape and defense and risk mitigation strategies. To inform its oversight over cybersecurity threats, SCE’s Chief Security Officer also presents to the full Boards of Directors annually. The Boards of Directors also receive a periodic cybersecurity report from an external SCE consultant that includes an assessment of SCE's cybersecurity program and organization.
SCE’s Chief Security Officer has primary responsibility for assessing and managing risks from cybersecurity threats, and serves as Edison International and SCE’s chief information security officer. SCE’s Chief Security Officer has extensive experience in the cybersecurity industry, including previous experience in cybersecurity roles at Southern Company, the MITRE Corporation, the National Institute of Standards and Technology (NIST), and the Federal Bureau of Investigation (FBI). SCE's Chief Security Officer earned a bachelor’s degree in computer information systems from Clemson University and is a Certified Information Systems Security Professional (CISSP).
For additional information on the Edison International Board of Directors cybersecurity related experience and oversight of cybersecurity risk management, see Edison International’s Proxy Statement under the headings "Director Skills Matrix" and "Board Oversight of Strategy, Risk and ESG."
PROPERTIES
As a holding company, Edison International does not directly own any significant properties other than the stock of its subsidiaries. The principal properties of SCE are described above under "Business—SCE—Properties."
LEGAL PROCEEDINGS
2017/2018 Wildfire/Mudslide Events
The lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed by three categories of plaintiffs: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. A number of the lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions. As of February 20, 2025, in addition to the outstanding claims of approximately 290 claims of approximately 15,000 initial individual plaintiffs, there were alleged and potential claims of certain public entity plaintiffs, including CAL OES, outstanding. SCE has settled all fire suppression claims and subrogation plaintiffs' related to the 2017/2018 Wildfire/Mudslide Events.
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The litigation could take a number of years to be completely resolved because of the complexity of the matters and number of plaintiffs. The statutes of limitations for individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events have expired. As of February 20, 2025, SCE has received demands for approximately 94% and 100% of outstanding individual plaintiff claims in the TKM litigation and Woolsey Fire litigation, respectively.
As of February 20, 2025, SCE was aware of approximately 30 pending unsettled lawsuits representing approximately 70 individual plaintiffs related to the Thomas and Koenigstein Fires and the Montecito Mudslides naming SCE as a defendant. Approximately 10 of the approximately 30 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. One of the lawsuits was filed as a purported class action. The lawsuits, which have been filed in the superior courts of Ventura, Santa Barbara and Los Angeles Counties allege, among other things, negligence, inverse condemnation, trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and certain of the individual plaintiffs in the Thomas and Koenigstein Fire litigation have been pursuing settlements of claims under a mediation program adopted to promote an efficient and orderly settlement process. As of February 20, 2025, damages only trials have been set for June and August 2025 for two individual plaintiff households in the TKM litigation.
As of February 20, 2025, SCE was aware of approximately 70 currently pending unsettled lawsuits representing approximately 220 individual plaintiffs related to the Woolsey Fire naming SCE as a defendant. Approximately 60 of the 70 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. The lawsuits, which have been filed in the superior courts of Ventura and Los Angeles Counties allege, among other things, negligence, inverse condemnation, personal injury, wrongful death, trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and certain of the individual plaintiffs in the Woolsey Fire litigation have been pursuing settlements of claims under a mediation program adopted to promote an efficient and orderly settlement process. As of February 20, 2025, a damages only trial has been set for May 2025 for one individual plaintiff household in the Woolsey Fire litigation.
The Thomas and Koenigstein Fires and Montecito Mudslides lawsuits are being coordinated in the Los Angeles Superior Court. The Woolsey Fire lawsuits have also been coordinated in the Los Angeles Superior Court.
Eaton Fire
In January 2025, several wind-driven wildfires impacted portions of SCE's service area, causing loss of life, substantial damage and service outages for SCE customers. One of the largest of these wildfires, the Eaton Fire, ignited in SCE's service area in Los Angeles County and spread under conditions of an extreme Santa Ana windstorm.
As of February 20, 2025, SCE was aware of approximately 90 currently pending unsettled lawsuits representing approximately 1,400 individual plaintiffs related to the Eaton Fire naming SCE and Edison International as defendants.
For information on the 2017/2018 Wildfire/Mudslide Events and the Eaton Fire, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" in this report.
Environmental Proceedings
Each of Edison International and SCE have elected to disclose environmental proceedings described in Item 103(c)(3)(iii) of Regulation SK unless it reasonably believes that such proceeding will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $1.0 million.
Mission Canyon
SCE performed 1.6 miles of access road grading and vegetation clearing in the Mission Canyon area of Santa Barbara County in December 2019, resulting in debris moving downslope into a creek bed and other impacts in the area (the "Mission Canyon Incident"). Several state and federal environmental agencies and the County and City of Santa Barbara have investigated the unpermitted grading and discharges to the creek, and SCE has received Notices of Violation from the Army Corps of Engineers, the County of Santa Barbara, the California Department of Fish & Wildlife and the Regional Water Quality Control Board. In December 2020, SCE and the Santa Barbara County District Attorney entered into a settlement regarding alleged criminal and civil violations related to the Mission Canyon Incident. Under the settlement, SCE pled no contest to a single misdemeanor charge for violation of the California Water Code and agreed to pay a $10,000 fine. SCE also agreed to pay a civil penalty of $3.5 million and is subject to an injunction compelling it to complete planned remediation work related to the Mission Canyon Incident and not commit similar violations for five years. It is presently unknown whether any regulatory agencies will impose additional fines or penalties on SCE with respect to the Mission Canyon Incident and, if so, in what amounts. SCE does not expect fines or penalties that are imposed in connection with the Mission Canyon Incident to be material.
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MINE SAFETY DISCLOSURE
Not applicable.
CERTAIN INFORMATION ABOUT EDISON INTERNATIONAL
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
| Executive Officer | Age at<br><br>February 20, 2025 | Company Position |
|---|---|---|
| Pedro J. Pizarro | 59 | President and Chief Executive Officer |
| Maria Rigatti | 61 | Executive Vice President and Chief Financial Officer |
| Adam S. Umanoff | 65 | Executive Vice President, General Counsel and Corporate Secretary |
| Caroline Choi | 56 | Senior Vice President, Corporate Affairs and Public Policy |
| Natalie K. Schilling | 65 | Senior Vice President and Chief Human Resources Officer |
| Erica S. Bowman | 47 | Vice President, Strategy, Planning and Performance |
| Steven D. Powell | 46 | President and Chief Executive Officer, SCE |
| Jill C. Anderson | 44 | Executive Vice President and Chief Operating Officer, SCE |
| J. Andrew Murphy | 63 | President and Chief Executive Officer, Trio |
As set forth in Article IV of Edison International's Bylaws, the elected officers of Edison International are chosen annually by, and serve at the pleasure of, the Edison International Board of Directors and hold their respective offices until their resignation, removal, other disqualification from service, or until their respective successors are elected. All of the officers of Edison International have been actively engaged in the business of Edison International and its subsidiaries for more than five years, except for Ms. Schilling, and have served in their present positions for the periods stated below. Additionally, those officers who have had other or additional principal positions in the past five years had the following business experience during that period:
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| Executive Officers | Company Position | Effective Dates |
|---|---|---|
| Pedro J. Pizarro | President and Chief Executive Officer, Edison International | October 2016 to present |
| Maria Rigatti | Executive Vice President and Chief Financial Officer, Edison International | October 2016 to present |
| Adam S. Umanoff | Corporate Secretary, Edison International and SCE<br><br>Executive Vice President and General Counsel, Edison International | December 2023 to present<br><br>January 2015 to present |
| Caroline Choi | Senior Vice President, Corporate Affairs and Public Policy, Edison International and SCE<br><br>Senior Vice President, Corporate Affairs, Edison International and SCE | February 2024 to present<br><br><br><br>February 2019 to February 2024 |
| Natalie K. Schilling | Senior Vice President and Chief Human Resources Officer, Edison International and SCE<br><br>Vice President, Human Resources, Edison International and SCE<br><br>Chief Human Resources Officer, Aerojet Rocketdyne Holdings, Inc.1 | March 2022 to present<br><br><br><br>April 2020 to February 2022<br><br>April 2018 to January 2020 |
| Erica S. Bowman | Vice President, Strategy, Planning and Performance, Edison International and SCE<br><br>Managing Director, Regulatory Policy and Strategic Analysis, SCE<br><br>Director, CEO's Office, Edison International<br><br>Director, Resource & Environmental Policy Strategy, SCE | February 2024 to Present<br><br>August 2022 to February 2024<br><br>November 2020 to July 2022<br><br>July 2018 to November 2020 |
| Steven D. Powell | President and Chief Executive Officer, SCE<br><br>Executive Vice President, Operations, SCE | December 2021 to present<br><br>September 2019 to December 2021 |
| Jill C. Anderson | Executive Vice President and Chief Operating Officer, SCE<br><br>Senior Vice President, Customer Service, SCE<br><br>Senior Vice President, Strategic Planning and Power Supply, SCE | December 2021 to present<br><br>March 2020 to December 2021<br><br>September 2019 to March 2020 |
| J. Andrew Murphy | President and Chief Executive Officer, Trio<br><br>Senior Vice President, Strategy and Corporate Development, Edison International | July 2023 to present<br>September 2015 to July 2023 |
1Aerojet Rocketdyne Holdings, Inc. was an aerospace and defense firm acquired by L3Harris Technologies, Inc. on July 28, 2023, and is not a parent, affiliate or subsidiary of Edison International
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning executive officers of Edison International is set forth above under "Information about our Executive Officers." Other information responding to this section will appear in the Edison International Proxy
Statement under the headings "Our Director Nominees," "Director Skills Matrix," "Director Biographies," and is incorporated herein by this reference.
Code of Ethics
The Edison International Employee Code of Conduct is applicable to all officers and employees of Edison International and its subsidiaries. The Code is available on Edison International's Internet website at www.edisoninvestor.com at "Corporate Governance." Any amendments or waivers of Code provisions for the Company's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, will be posted on Edison International's Internet website at www.edisoninvestor.com.
Insider Trading Policy and Procedures
Edison International has adopted an insider trading policy that governs the purchase, sale and other dispositions of all securities of Edison International and its subsidiaries by Edison International and SCE directors, officers, employees and certain third parties. The adopted policy is designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to Edison International and SCE.
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The insider trading policy also restricts trading and other transactions for a limited group of covered persons who include Edison International and SCE directors, executive officers, and certain employees whose duties involve access to material non-public information, to defined window periods that follow the Edison International and SCE quarterly earnings releases. A copy of Edison International's insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19. In addition, with regard to the Edison International trading in its own securities, it is Edison International’s policy to comply with the federal securities laws and the applicable exchange listing requirements.
EXECUTIVE COMPENSATION
Information responding to this section will appear in the Edison International Proxy Statement under the headings "Compensation Discussion and Analysis," "Executive Compensation" (other than "—Pay Versus Performance”) and "Director Compensation" and is incorporated herein by this reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information responding to this section will appear in the Edison International Proxy Statement under the heading "Stock Ownership" and is incorporated herein by this reference.
Equity Compensation Plan Information
All of Edison International's equity compensation plans that were in effect as of December 31, 2024 have been approved by security holders. The following table sets forth, for each of Edison International's equity compensation plans, the number of shares of Edison International Common Stock subject to outstanding options, warrants and rights to acquire such stock, the weighted average exercise price of those outstanding options, warrants and rights, and the number of shares remaining available for future award grants as of December 31, 2024.
| Plan Category | Number of securities to<br>be issued upon exercise<br>of outstanding options,<br> warrants and rights<br>(a) | Weighted average<br>exercise price of<br>outstanding options,<br>warrants and rights<br>(b) | Number of securities remaining for<br>future issuance under equity<br>compensation plans (excluding<br>securities reflected in column<br>(a)(c) |
|---|---|---|---|
| Equity compensation plans approved by security holders | 10,239,8741 | $64.33 | 12,595,7822 |
1This amount includes 8,643,575 shares covered by outstanding stock options, 876,448 shares covered by outstanding restricted stock unit awards, 201,331 shares covered by outstanding deferred stock unit awards, and 518,520 shares covered by outstanding performance share awards (calculated at 100% of the target number of shares subject to each performance share award; the actual payout for each award will be zero to twice the target number of shares for the award, depending on performance), with the outstanding shares covered by outstanding restricted stock unit, deferred stock unit, and performance share awards including the crediting of dividend equivalents through December 31, 2024. The weighted average exercise price of awards outstanding under equity compensation plans approved by security holders reflected in column (b) above is calculated based on the outstanding stock options under these plans as the other forms of awards outstanding have no exercise price. Awards payable solely in cash are not reflected in this table.
2This amount is the aggregate number of shares available for new awards under the Edison International 2007 Performance Incentive Plan and the Edison International Employee Stock Purchase Plan as of December 31, 2024, consisting of 9,723,890 shares and 2,871,892 shares, respectively. The maximum number of shares of Edison International Common Stock authorized for issuances or transfers pursuant to awards under the Edison International 2007 Performance Incentive Plan is 71,031,524. Shares available under the Edison International 2007 Performance Incentive Plan may generally, subject to certain limits set forth in the plan, be used for any type of award authorized under that plan, including stock options, restricted stock, performance shares, restricted or deferred units, and stock bonuses. The maximum number of shares of Edison International Common Stock authorized under the Edison International Employee Stock Purchase Plan is 3,000,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information responding to this section will appear in the Edison International Proxy Statement under the headings "Governance Structure and Processes—Certain Relationships and Related Party Transactions," and "Governance Structure and Processes—Director Independence," and is incorporated herein by this reference.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP ("PwC") served as Edison International's and SCE's principal accountant in 2024. Information responding to this section for Edison International will appear in the Edison International Proxy Statement under the heading "Independent Auditor Fees," and is incorporated herein by this reference.
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The following table sets forth the aggregate fees billed by PwC to SCE for the fiscal years ended December 31, 2024 and 2023:
| SCE (000) | |||
|---|---|---|---|
| Type of Fee | 2024 | 2023 | |
| Audit Fees1 | $ | 5,975 | |
| Audit-Related Fees2 | 15 | — | |
| Tax Fees3 | 247 | 229 | |
| All Other Fees4 | 632 | 232 | |
| Total | $ | 6,436 |
All values are in US Dollars.
1Represent fees for professional services provided in connection with the audit of SCE's annual financial statements and reviews of SCE's quarterly financial statements and for services regularly provided by PwC in connection with regulatory filings or engagements.
2These represent fees for assurance and related services related to the performance of the audit or review of the financial statements and not reported under "Audit Fees" above.
3Represent fees for tax-related compliance and other tax-related services to support compliance with federal and state tax reporting and payment requirements, including tax return review and review of tax laws, regulations or case precedent.
4Represent fees for miscellaneous services. "All Other Fees" included fees for attestation services related to a CPUC required report on wildfire memorandum accounts and to securitizations for the year ended December 31, 2024. "All Other Fees" included fees for attestation services related to securitizations for the year ended December 31, 2023.
The SCE Audit and Finance Committee annually approves all proposed audit fees in executive session without PwC present, considering several factors, including a breakdown of the services to be provided, proposed staffing and hourly rates, and changes in SCE and industry from the prior year. The audit fees are the culmination of a process which included a comparison of the prior year's proposed fees to actual fees incurred and fee proposals for known and anticipated 2024 services in the audit, audit-related, tax and other categories. The committee's deliberations consider balancing the design of an audit scope that will achieve a high-quality audit with driving efficiencies from both SCE and PwC while compensating PwC fairly.
The SCE Audit and Finance Committee is required to pre-approve all audit and permitted non-audit services performed by PwC to ensure these services will not impair the firm's independence. The SCE Audit and Finance Committee has delegated to the Committee Chair the authority to pre-approve services between committee meetings, provided that any pre-approval decisions are presented to the committee at its next meeting. PwC must assure that all audit and non-audit services provided to SCE have been approved by the SCE Audit and Finance Committee.
During the fiscal year ended December 31, 2024, all services performed by PwC were pre-approved by the SCE Audit and Finance Committee, irrespective of whether the services required pre-approval under the Securities Exchange Act of 1934.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Edison International
Edison International Common Stock is traded on the New York Stock Exchange under the symbol "EIX."
There are restrictions on the ability of SCE to transfer funds to Edison International that materially limit the ability of Edison International to pay cash dividends. Such restrictions are discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends." The number of common stockholders of record of Edison International was 23,501 on February 20, 2025. In addition, Edison International cannot pay dividends if it does not meet California law requirements on retained earnings and solvency.
Southern California Edison Company
As a result of the formation of a holding company described under the heading "Business" above, all of the issued and outstanding common stock of SCE is owned by Edison International and there is no market for such stock. There are restrictions on SCE's ability to pay dividends to Edison International and to its preference shareholders. Such restrictions are discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends."
Purchases of Equity Securities by Edison International and Affiliated Purchasers
The following table contains information about all purchases of Edison International's common stock made by or on behalf of Edison International in the fourth quarter of 2024. For further information about Edison International's common stock repurchase programs, see "Notes to Consolidated Financial Statements—Note 14. Equity."
| Period | (a) Total Number of Shares (or Units Purchased) | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs1 | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |
|---|---|---|---|---|---|
| October 1, 2024 to October 31, 2024 | — | — | — | — | |
| November 1, 2024 to November 30, 2024 | 2,412,203 | $ | 82.91 | 2,412,203 | — |
| December 1, 2024 to December 31, 2024 | — | — | — | — | |
| Total | 2,412,203 | 2,412,203 |
1Purchases were made pursuant to Edison International's common stock repurchase program announced on July 25, 2024.
Table ofContents
Comparison of Five-Year Cumulative Total Return
| At December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |||||||
| Edison International | $ | 100 | $ | 87 | $ | 99 | $ | 97 | $ | 113 | $ | 131 |
| S & P 500 Index | $ | 100 | $ | 118 | $ | 152 | $ | 125 | $ | 157 | $ | 197 |
| PHLX Utility Sector Index | $ | 100 | $ | 103 | $ | 121 | $ | 122 | $ | 111 | $ | 134 |
Note: Assumes $100 invested on December 31, 2019, in stock or index including reinvestment of dividends. Performance of the PHLX Utility Sector Index is regularly reviewed by management and the Board of Directors in understanding Edison International's relative performance and is used in conjunction with elements of Edison International's compensation program.
OTHER INFORMATION
Insider Trading Arrangements
During the quarter ended December 31, 2024, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
PART II, ITEM 6. Reserved.
This item no longer requires disclosure.
FORM 10-K SUMMARY
None.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Table ofContents
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
See Consolidated Financial Statements listed in the Table of Contents of this report.
(a) (2) Report of Independent Registered Public Accounting Firm and Schedules Supplementing Financial Statements
Edison International
The following documents may be found in this report at the indicated page numbers under the headings "Financial Statements and Supplementary Data—Reports of Independent Registered Accounting Firm" and "Exhibits and Financial Statement Schedules—Schedules Supplementing Financial Statements" in the Table of Contents of this report.
Report of Independent Registered Public Accounting Firm - Edison International
Schedule I – Condensed Financial Information of Edison International Parent
Schedules II through V, inclusive, for Edison International are omitted as not required or not applicable.
Southern California Edison Company
The following documents may be found in this report at the indicated page numbers under the headings "Financial Statements and Supplementary Data—Reports of Independent Registered Accounting Firm" and "Exhibits and Financial Statement Schedules—Schedules Supplementing Financial Statements" in the Table of Contents of this report.
Report of Independent Registered Public Accounting Firm - SCE
Schedules I through V, inclusive, for SCE are omitted as not required or not applicable.
(a) (3) Exhibits
Table ofContents
EXHIBIT INDEX
Table ofContents
Table ofContents
Table ofContents
Table ofContents
Table ofContents
| Exhibit<br>Number | Description |
|---|---|
| 101.2 | Financial statements from the annual report on Form 10-K of Southern California Edison Company for the year ended December 31, 2024, filed on February 27, 2025, formatted in Inline XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; (v) Consolidated Statements of Changes in Equity and (vi) the Notes to Consolidated Financial Statements |
| 104 | The cover page of this report formatted in Inline XBRL (included as Exhibit 101) |
*Incorporated by reference pursuant to Rule 12b-32.
**Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)(3).
Edison International and SCE will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written request and upon payment to Edison International or SCE of their reasonable expenses of furnishing such exhibit, which shall be limited to photocopying charges and, if mailed to the requesting party, the cost of first-class postage.
Table ofContents
SCHEDULES SUPPLEMENTING FINANCIAL STATEMENTS
EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
| December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2024 | 2023 | ||
| Assets: | ||||
| Cash and cash equivalents | $ | 4 | $ | 1 |
| Other current assets | 606 | 441 | ||
| Total current assets | 610 | 442 | ||
| Investments in subsidiaries | 20,630 | 20,026 | ||
| Deferred income taxes | 760 | 700 | ||
| Other long-term assets | 67 | 58 | ||
| Total assets | $ | 22,067 | $ | 21,226 |
| Liabilities and equity: | ||||
| Short-term debt | $ | 445 | $ | 246 |
| Current portion of long-term debt | 800 | 500 | ||
| Other current liabilities | 639 | 598 | ||
| Total current liabilities | 1,884 | 1,344 | ||
| Long-term debt | 4,268 | 4,019 | ||
| Other long-term liabilities | 350 | 362 | ||
| Total equity | 15,565 | 15,501 | ||
| Total liabilities and equity | $ | 22,067 | $ | 21,226 |
Table ofContents
EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31, 2024, 2023 and 2022
| (in millions) | 2024 | 2023 | 2022 | |||
|---|---|---|---|---|---|---|
| Interest income | $ | 3 | $ | 2 | $ | 3 |
| Operating, interest and other expenses | 342 | 299 | 209 | |||
| Loss before equity in earnings of subsidiaries | (339) | (297) | (206) | |||
| Equity in earnings of subsidiaries | 1,610 | 1,498 | 867 | |||
| Income before income taxes | 1,271 | 1,201 | 661 | |||
| Income tax benefit | (100) | (83) | (56) | |||
| Net income | 1,371 | 1,284 | 717 | |||
| Preferred stock dividend requirements of Edison International | 87 | 87 | 105 | |||
| Net income available to Edison International common shareholders | $ | 1,284 | $ | 1,197 | $ | 612 |
Table ofContents
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2024, 2023 and 2022
| (in millions) | 2024 | 2023 | 2022 | |||
|---|---|---|---|---|---|---|
| Net income | $ | 1,371 | $ | 1,284 | $ | 717 |
| Other comprehensive income, net of tax | 9 | 2 | 43 | |||
| Comprehensive income | $ | 1,380 | $ | 1,286 | $ | 760 |
Table ofContents
EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2024, 2023 and 2022
| (in millions) | 2024 | 2023 | 2022 | |||
|---|---|---|---|---|---|---|
| Net cash provided by operating activities | $ | 1,097 | $ | 1,148 | $ | 1,133 |
| Cash flows from financing activities: | ||||||
| Long-term debt issued | 1,049 | 1,549 | 945 | |||
| Long-term debt issuance costs | (7) | (16) | (6) | |||
| Long-term debt repaid | (500) | (400) | (700) | |||
| Short-term debt issued | — | 370 | 1,000 | |||
| Short-term debt repaid | (15) | (1,356) | — | |||
| Common stock issued | 12 | 20 | 13 | |||
| Common stock repurchased | (200) | — | — | |||
| Preferred stock repurchased | (28) | (289) | — | |||
| Payable due to affiliates | — | (3) | (14) | |||
| Commercial paper borrowing (repayments), net | 214 | 139 | 89 | |||
| Payments for stock-based compensation | (24) | (5) | (8) | |||
| Receipts for stock-based compensation | 206 | 71 | 72 | |||
| Common stock dividends paid | (1,198) | (1,112) | (1,050) | |||
| Preferred stock dividends paid | (88) | (108) | (99) | |||
| Net cash (used in) provided by financing activities | (579) | (1,140) | 242 | |||
| Cash flows from investing activities: | ||||||
| Capital contributions to affiliate | (516) | (15) | (1,426) | |||
| Dividends from affiliate | 1 | 4 | 3 | |||
| Net cash used in investing activities: | (515) | (11) | (1,423) | |||
| Net increase (decrease) in cash and cash equivalents | 3 | (3) | (48) | |||
| Cash and cash equivalents, beginning of year | 1 | 4 | 52 | |||
| Cash and cash equivalents, end of year | $ | 4 | $ | 1 | $ | 4 |
Table ofContents
Note 1. Basis of Presentation
The accompanying condensed financial statements of Edison International Parent should be read in conjunction with the consolidated financial statements and notes thereto of Edison International and subsidiaries ("Registrant") included in this Form 10-K. Edison International Parent's significant accounting policies are consistent with those of the Registrant, SCE and other wholly owned and controlled subsidiaries.
Dividends Received
Edison International Parent received cash dividends from SCE of $1.4 billion, $1.4 billion and $1.3 billion in 2024, 2023 and 2022, respectively.
Dividend Restrictions
For information on Edison International Parent dividend restrictions, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends" and "—Edison International Dividends."
Note 2. Debt and Equity Financing
Long-Term Debt
The following table summarizes Edison International Parent's long-term debt at December 31, 2024:
| (in millions) | ||
|---|---|---|
| 4.95% Senior Note due 2025 | $ | 400 |
| 4.70% Senior Note due 2025 | 400 | |
| 5.75% Senior Note due 2027 | 600 | |
| 4.125% Senior Note due 2028 | 550 | |
| 5.25% Senior Note due 2028 | 600 | |
| 6.95% Senior Note due 2029 | 550 | |
| 5.45% Senior Note due 2029 | 500 | |
| 5.25% Senior Note due 2032 | 550 | |
| 8.125% Junior Subordinated Note due 2053 | 500 | |
| 7.875% Junior Subordinated Note due 2054 | 450 |
For information on Edison International Parent's material provisions on long-term debt and credit facility, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Liens and Security Interests" and "—Credit Agreements and Short-Term Debt."
Common and Preferred Stock
For information on Edison International Parent common stock and preferred stock, see "Notes to Consolidated Financial Statements—Note 14. Equity."
Note 3. Related-Party Transactions
Edison International's Parent expense from services provided by SCE was $2 million in 2024, $2 million in 2023 and $2 million in 2022. Edison International Parent's interest expense from loans due to affiliates was $2 million in 2024, $2 million in 2023 and $3 million in 2022. Edison International Parent had current related-party receivables of $571 million and $400 million and current related-party payables of $186 million and $185 million at December 31, 2024 and 2023, respectively. Edison International Parent had long-term related-party payables of $98 million and $112 million at December 31, 2024 and 2023, respectively. For a discussion of Edison International Parent's contribution to Edison International Foundation for the year ended December 31, 2024, see "Notes to Consolidated Financial Statements—Note 18. Related Party Transactions".
Note 4. Contingencies
For a discussion of material contingencies see "Notes to Consolidated Financial Statements—Note 8. Income Taxes" and "—Note 12. Commitments and Contingencies."
Table ofContents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
| EDISON INTERNATIONAL | SOUTHERN CALIFORNIA EDISON COMPANY | ||
|---|---|---|---|
| By: | /s/ Kara G. Ryan | By: | /s/ Kara G. Ryan |
| Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller<br><br>(Duly Authorized Officer and<br><br>Principal Accounting Officer) | Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller<br><br>(Duly Authorized Officer and<br><br>Principal Accounting Officer) | ||
| Date: | February 27, 2025 | Date: | February 27, 2025 |
Table ofContents
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrants and in the capacities and on the date indicated.
| Signature | Title | |||||
|---|---|---|---|---|---|---|
| A. Principal Executive Officers | ||||||
| Pedro J. Pizarro* | President, Chief Executive Officer and Director<br><br>(Edison International) | |||||
| Steven D. Powell* | President and Chief Executive Officer and Director (Southern California Edison Company) | |||||
| B. Principal Financial Officers | ||||||
| Maria Rigatti* | Executive Vice President and Chief Financial Officer<br><br>(Edison International) | |||||
| Aaron D. Moss* | Senior Vice President and Chief Financial Officer<br><br>(Southern California Edison Company) | |||||
| C. Principal Accounting Officers | ||||||
| /s/ Kara G. Ryan | Vice President, Chief Accounting Officer and Controller<br><br>(Edison International) | |||||
| Kara G. Ryan | ||||||
| /s/ Kara G. Ryan | Vice President, Chief Accounting Officer and Controller<br><br>(Southern California Edison Company) | |||||
| Kara G. Ryan | ||||||
| D. Directors (Edison International and Southern California Edison Company, unless otherwise noted) | ||||||
| Jeanne Beliveau-Dunn* | Director | |||||
| Michael C. Camuñez* | Director | |||||
| Vanessa C.L. Chang* | Director | |||||
| James T. Morris* | Director | |||||
| Timothy T. O'Toole* | Director | |||||
| Pedro J. Pizarro* | Director | |||||
| Steven D. Powell (SCE only)* | Director | |||||
| Marcy L. Reed* | Director | |||||
| Carey A. Smith* | Director | |||||
| Linda G. Stuntz* | Director | |||||
| Peter J. Taylor* | Chair of the Edison International Board and Director | |||||
| Keith Trent* | Director | *By: | /s/ Kara G. Ryan | *By: | /s/ Kara G. Ryan | |
| --- | --- | --- | --- | |||
| Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller<br><br>(Attorney-in-fact for EIX Directors and Officers) | Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller<br><br>(Attorney-in-fact for SCE Directors and Officers) | |||||
| Date: | February 27, 2025 | Date: | February 27, 2025 |
155
Document
Exhibit 4.3
____________________________________________
EDISON INTERNATIONAL
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
Trustee
____________________________________________
Subordinated Indenture
Dated as of March 1, 2023
____________________________________________
| CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939: | |
|---|---|
| TRUST INDENTURE | |
| ACT SECTION | INDENTURE SECTION |
| Section 310(a)(1) | 609 |
| (a)(2) | 609 |
| (a)(3) | Not Applicable |
| (a)(4) | Not Applicable |
| (b) | 608 |
| 610 | |
| Section 311(a) | 613 |
| (b) | 613 |
| Section 312(a) | 701 |
| 702 | |
| (b) | 702 |
| (c) | 702 |
| Section 313(a) | 703 |
| (b) | 703 |
| (c) | 703 |
| (d) | 703 |
| Section 314(a) | 704 |
| (a)(4) | 101 |
| 1005 | |
| (b) | Not Applicable |
| (c)(1) | 102 |
| (c)(2) | 102 |
| (c)(3) | Not Applicable |
| (d) | Not Applicable |
| (e) | 102 |
| Section 315(a) | 601 |
| (b) | 602 |
| (c) | 601 |
| (d) | 601 |
| (e) | 514 |
| Section 316(a) | 101 |
| (a)(1)(A) | 502 |
| 512 | |
| (a)(1)(B) | 513 |
| (a)(2) | Not Applicable |
| (b) | 508 |
| (c) | 104 |
| Section 317(a)(1) | 503 |
| (a)(2) | 504 |
| (b) | 1003 |
| Section 318(a) | 107 |
_____________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
i
TABLE OF CONTENTS
| Page | |
|---|---|
| Parties | 1 |
| Recitals of the Corporation | 1 |
| ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION | 1 |
| Section 101. Definitions. | 1 |
| Section 102. Compliance Certificates and Opinions | 7 |
| Section 103. Form of Documents Delivered to Trustee | 8 |
| Section 104. Acts of Holders; Record Dates. | 9 |
| Section 105. Notices, Etc., to Trustee and Corporation | 11 |
| Section 106. Notice to Holders; Waiver | 12 |
| Section 107. Conflict with Trust Indenture Act | 12 |
| Section 108. Effect of Headings and Table of Contents | 13 |
| Section 109. Successors and Assigns | 13 |
| Section 110. Separability Clause | 13 |
| Section 111. Benefits of Indenture | 13 |
| Section 112. Governing Law | 13 |
| Section 113. Legal Holidays | 13 |
| Section 114. No Security Interest Created. | 14 |
| Section 115. Waiver of Jury Trial | 14 |
| Section 116. Force Majeure. | 14 |
| Section 117. Submission to Jurisdiction | 14 |
| Section 118. Sanctions Representations | 15 |
| Section 119. FATCA | 15 |
| ARTICLE II. SECURITY FORMS | 15 |
| Section 201. Forms Generally | 15 |
| Section 202. Form of Face of Security | 15 |
| Section 203. Form of Reverse of Security | 17 |
| Section 204. Form of Legend for Global Securities | 22 |
| Section 205. Form of Trustee’s Certificate of Authentication.. | 22 |
| ARTICLE III. THE SECURITIES | 23 |
| Section 301. Amount Unlimited; Issuable in Series | 23 |
| Section 302. Denominations. | 26 |
| Section 303. Execution, Authentication, Delivery and Dating | 26 |
| Section 304. Temporary Securities. | 28 |
| Section 305. Registration, Registration of Transfer and Exchange | 29 |
| Section 306. Mutilated, Destroyed, Lost and Stolen Securities | 31 |
| Section 307. Payment of Interest; Interest Rights Preserved | 31 |
| Section 308. Persons Deemed Owners. | 33 |
| Section 309. Cancellation | 33 |
| Section 310. Computation of Interest. | 34 |
| Section 311. CUSIP Numbers | 34 |
| ARTICLE IV. SATISFACTION AND DISCHARGE | 34 |
ii
| Section 401. Satisfaction and Discharge of Indenture | 34 |
|---|---|
| Section 402. Application of Trust Money. | 35 |
| ARTICLE V. REMEDIES. | 36 |
| Section 501. Events of Default | 36 |
| Section 502. Acceleration of Maturity; Rescission and Annulment | 37 |
| Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee | 39 |
| Section 504. Trustee May File Proofs of Claim | 39 |
| Section 505. Trustee May Enforce Claims Without Possession of Securities | 40 |
| Section 506. Application of Money Collected | 40 |
| Section 507. Limitation on Suits | 41 |
| Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest | 41 |
| Section 509. Restoration of Rights and Remedies | 42 |
| Section 510. Rights and Remedies Cumulative | 42 |
| Section 511. Delay or Omission Not Waiver | 42 |
| Section 512. Control By Holders | 42 |
| Section 513. Waiver of Past Defaults | 43 |
| Section 514. Undertaking for Costs | |
| Section 515. Waiver of Stay or Extension Laws | 43 |
| ARTICLE VI. THE TRUSTEE | 44 |
| Section 601. Certain Duties and Responsibilities | 44 |
| Section 602. Notice of Defaults | 44 |
| Section 603. Certain Rights of Trustee | 44 |
| Section 604. Not Responsible for Recitals or Issuance of Securities | 46 |
| Section 605. May Hold Securities | 46 |
| Section 606. Money Held in Trust | 46 |
| Section 607. Compensation and Reimbursement | 46 |
| Section 608. Conflicting Interests | 46 |
| Section 609. Corporate Trustee Required; Eligibility | 47 |
| Section 610. Resignation and Removal; Appointment of Successor | 47 |
| Section 611. Acceptance of Appointment by Successor | 48 |
| Section 612. Merger, Conversion, Consolidation or Succession to Business | 49 |
| Section 613. Preferential Collection of Claims Against Corporation | 50 |
| Section 614. Appointment of Authenticating Agent | 50 |
| Section 615. Trustee’s Application for Instructions from the Corporation | 51 |
| ARTICLE VII. HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND CORPORATION | 52 |
| Section 701. Corporation to Furnish Trustee Names and Addresses of Holders | 52 |
| Section 702. Preservation of Information; Communications to Holders | 53 |
| Section 703. Reports by Trustee. | 53 |
| Section 704. Reports by Corporation | 53 |
| ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER | 54 |
| Section 801. Corporation May Consolidate, Etc., Only on Certain Terms | 54 |
| Section 802. Successor Substituted | 55 |
| ARTICLE IX. SUPPLEMENTAL INDENTURES | 56 |
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| Section 901. Supplemental Indentures Without Consent of Holders. | 56 |
|---|---|
| Section 902. Supplemental Indentures With Consent of Holders | 5 |
| Section 903. Execution of Supplemental Indentures | 58 |
| Section 904. Effect of Supplemental Indentures | 58 |
| Section 905. Conformity with Trust Indenture Act | 59 |
| Section 906. Reference in Securities to Supplemental Indentures | 59 |
| Section 907. Subordination Unimpaired | 59 |
| ARTICLE X. COVENANTS | 59 |
| Section 1001. Payment of Principal, Premium and Interest. | 59 |
| Section 1002. Maintenance of Office or Agency | 59 |
| Section 1003. Money for Securities Payments to Be Held in Trust | 60 |
| Section 1004. Corporate Existence | 61 |
| Section 1005. Statement by Officers as to Default. | 61 |
| Section 1006. Waiver of Certain Covenants | 61 |
| Section 1007. Calculation of Original Issue Discount | 62 |
| ARTICLE XI. REDEMPTION OF SECURITIES | 62 |
| Section 1101. Applicability of Article | 62 |
| Section 1102. Election to Redeem; Notice to Trustee | 62 |
| Section 1103. Selection by Trustee of Securities to Be Redeemed | 62 |
| Section 1104. Notice of Redemption | 63 |
| Section 1105. Deposit of Redemption Price | 64 |
| Section 1106. Securities Payable on Redemption Date | 64 |
| Section 1107. Securities Redeemed in Part. | 65 |
| ARTICLE XII. SINKING FUNDS. | 65 |
| Section 1201. Applicability of Article | 65 |
| Section 1202. Satisfaction of Sinking Fund Payments with Securities | 65 |
| Section 1203. Redemption of Securities for Sinking Fund | 66 |
| ARTICLE XIII. DEFEASANCE AND COVENANT DEFEASANCE | 66 |
| Section 1301. Applicability of Article | 66 |
| Section 1302. Defeasance and Discharge.. | 67 |
| Section 1303. Covenant Defeasance | 67 |
| Section 1304. Conditions to Defeasance or Covenant Defeasance | 67 |
| Section 1305 Deposited Money and Government Obligations to Be Held in Trust Miscellaneous Provisions | 69 |
| Section 1306. Reinstatement | 69 |
| Section 1307. Effect on Subordination Provisions | 70 |
| ARTICLE XIV. SUBORDINATION | 70 |
| Section 1401. Securities Subordinated to Senior Indebtedness | 70 |
| Section 1402. Disputes with Holders of Certain Senior Indebtedness | 72 |
| Section 1403. Subrogation | 73 |
| Section 1404. Obligation of Corporation Unconditional | 73 |
| Section 1405. Payments on Securities Permitted | 74 |
| Section 1406. Effectuation of Subordination by Trustee | 74 |
| Section 1407. Knowledge of Trustee | 74 |
iv
| Section 1408. Trustee May Hold Senior Indebtedness. | 75 |
|---|---|
| Section 1409. Rights of Holders of Senior Indebtedness Not Impaired | 75 |
| Section 1410. Article Applicable to Paying Agents | 75 |
| Section 1411. Trustee; Compensation Not Prejudiced | 75 |
| ARTICLE XV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS | 76 |
| Section 1501. Indenture and Securities Solely Corporate Obligations | 76 |
| Signatures | 65 |
| 65 |
v
INDENTURE, dated as of March 1, 2023, between Edison International, a corporation duly organized and existing under the laws of the State of California (herein called the “Corporation”), having its principal office at 2244 Walnut Grove Avenue, Rosemead, California 91770, and The Bank of New York Mellon Trust Company, N.A., a national banking association, as Trustee (herein called the “Trustee”).
RECITALS OF THE CORPORATION
The Corporation has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness (herein called the “Securities,” which term includes subordinated, senior subordinated and junior subordinated Securities and subordinated Securities of any other relative ranking), to be issued in one or more series as in this Indenture provided. All things necessary to make this Indenture a valid agreement of the Corporation, in accordance with its terms, have been done. The foregoing recitals are made as representations and statements of fact by the Corporation and not by the Trustee.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America;
(4) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture; and
(5) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.
“Act,” when used with respect to any Holder, has the meaning specified in Section 104.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series.
“Board of Directors” means either the board of directors of the Corporation or any duly authorized committee of that board.
“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“Business Day,” when used with respect to any Place of Payment, means a day other than (i) a Saturday or a Sunday, (ii) a day on which banking institutions in that Place of Payment or Los Angeles, California, are authorized or obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
“Commission” means the Securities and Exchange Commission, from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
“Corporation” means the Person named as the “Corporation” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Corporation” shall mean such successor Person.
“Company Request” or “Company Order” means a written request or order signed in the name of the Corporation by any one of its Chairman of the Board, its President, its Chief Financial Officer, any Vice President, its Treasurer or any Assistant Treasurer, and delivered to the Trustee.
“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date hereof is located at 2 N. LaSalle Street, Suite 700, Chicago, IL 60602, Attn: Corporate Trust Administration – Edision International Subordinated Notes.
“corporation” means a corporation, association, company, joint-stock company or business trust.
“Covenant Defeasance” has the meaning specified in Section 1303.
“Defaulted Interest” has the meaning specified in Section 307.
“Defeasance” has the meaning specified in Section 1302.
“Depositary” means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301.
"Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder.
“Event of Default” has the meaning specified in Section 501.
“Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time.
“Expiration Date” has the meaning specified in Section 104.
“Global Security” means a Security that evidences all or part of the Securities of any series which is issued to a Depositary or a nominee thereof for such series in accordance with Section 301(17).
“Government Obligation” has the meaning specified in Section 1304.
“Holder” means a Person in whose name a Security is registered in the Security Register.
“Indenture” means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term “Indenture” shall also include the terms of particular series of Securities established as contemplated by Section 301.
“interest,” when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
“Interest Payment Date,” when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
“Investment Company Act” means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time.
“Maturity,” when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“Notice of Default” means a written notice of the kind specified in Section 501(4).
“Officer's Certificate” means a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or any Assistant Secretary, of the Corporation, and delivered to the Trustee. One of the officers signing an Officer's Certificate given pursuant to Section 1005 shall be the principal executive, financial or accounting officer of the Corporation.
“Opinion of Counsel” means a written opinion of counsel, who may be counsel for the Corporation, or other counsel. Any such Opinion of Counsel may be subject to customary conditions and exceptions.
“Original Issue Discount Security” means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.
“Outstanding,” when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
(2) Securities for whose payment or redemption the necessary amount of money or money’s worth has been theretofore deposited with the Trustee or any Paying Agent (other than the Corporation) in trust or set aside and segregated in trust by the Corporation (if the Corporation shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Corporation;
provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable at the Stated Maturity of a Security is not determinable, the principal amount of such Security which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 301, (C) the principal amount of a Security denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 301, of the principal amount of such Security (or, in the case of a Security described in Clause (A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by the Corporation or any other obligor upon the Securities or any Affiliate of the Corporation or of such other obligor, whether of record or beneficially, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Corporation or any other obligor upon the Securities or any Affiliate of the Corporation or of such other obligor.
“Paying Agent” means any Person authorized by the Corporation to pay the principal of or any premium or interest on any Securities on behalf of the Corporation.
“Periodic Offering” means an offering of Securities of a series from time to time the specific terms of which Securities, including without limitation the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Corporation upon the issuance of such Securities.
“Person” means any individual, corporation, partnership, limited liability company or corporation, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Place of Payment,” when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by Section 301.
“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
“Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
“Redemption Price,” when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
“Regular Record Date” for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.
“Responsible Officer,” when used with respect to the Trustee, means any vice president, any assistant vice president, any senior trust officer or assistant trust officer, any trust officer, or any other officer associated with the corporate trust department of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject.
“Securities” has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.
“Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time.
“Security Register” and “Security Registrar” have the respective meanings specified in Section 305.
“Senior Indebtedness” means, with respect to any series of Securities, unless otherwise provided pursuant to Section 301(20) with respect to the Securities of such series, (i) indebtedness of the Corporation, whether outstanding at the date of this Indenture or incurred, created or assumed after such date, (a) in respect of money borrowed by the Corporation (including any financial derivative, hedging or futures contract or similar instrument, to the extent any such item is primarily a financing transaction) and (b) evidenced by debentures, bonds, notes, credit or loan agreements or other similar instruments or agreements issued or entered into by the Corporation; (ii) all finance lease obligations of the Corporation; (iii) all obligations of the Corporation issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Corporation and all obligations of the Corporation under any title retention agreement (but excluding, for the avoidance of doubt, trade accounts payable arising in the ordinary course of business and long-term purchase obligations); (iv) all obligations of the Corporation for the reimbursement of any letter of credit, banker’s acceptance, security purchase facility or similar credit transaction; and (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Corporation is responsible or liable as obligor, guarantor or otherwise, except for any obligations, instruments or agreements of the type referred to in any of clauses (i) through (v) above that, by the terms of the instruments or agreements creating or evidencing the same or pursuant to which the same is outstanding, are subordinated or equal in right of payment to the Securities of such series.
“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.
“Stated Maturity,” when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the date on which the principal of such Security or such installment of principal or interest is due and payable, in the case of such principal, as such date may be advanced or extended as provided pursuant to the terms of such Security and this Indenture.
“Subordination Provisions,” when used with respect to the Securities of any series, shall have the meaning set forth herein or established pursuant to Section 301(20), as applicable, with respect to the Securities of such series.
“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” shall mean, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.
“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
“Vice President,” when used with respect to the Corporation or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.”
Section 102. Compliance Certificates and Opinions
Upon any application or request by the Corporation to the Trustee to take any action under any provision of this Indenture, the Corporation shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officer's Certificate, if to be given by an officer of the Corporation, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.
Except as otherwise expressly provided herein, every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee
.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Corporation may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such Officer’s Certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Corporation stating that the information with respect to such factual matters is in the possession of the Corporation, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer's Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally filed in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Anything in this Indenture to the contrary notwithstanding, if any such corrective document or instrument indicates that action has been taken by or at the request of the Corporation which could not have been taken had the original document or instrument not contained such error or omission, the action so taken shall not be invalidated or otherwise rendered ineffective but shall be and remain in full force and effect, except to the extent that such action was a result of willful misconduct or bad faith. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Corporation entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities, except as aforesaid.
Section 104. Acts of Holders; Record Dates
.
Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Corporation. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Corporation, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than the signer’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of the signer’s authority. The fact and
date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be conclusively proved, to the extent permitted by law, by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Corporation in reliance thereon, whether or not notation of such action is made upon such Security.
The Corporation may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series; provided that the Corporation may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take or revoke the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Corporation from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Corporation, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction or to revoke the same, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by
Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Corporation’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be sent to the Corporation in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party hereto which sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
Section 105. Notices, Etc., to Trustee and Corporation
.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Corporation shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing (which may be made via facsimile) to or with the Trustee at its Corporate Trust Office, Attention: Indenture Trust, or
(2) the Corporation by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Corporation addressed to it at the address of its
principal office specified in the first paragraph of this instrument, Attention: Treasurer, or at any other address previously furnished in writing to the Trustee by the Corporation.
Any communication to the Trustee or the Corporation pursuant to this Section 105 shall be deemed to have been made, given, furnished or filed, as applicable, if personally delivered or delivered by commercial courier or delivery service, on the date of delivery; if transmitted by facsimile transmission or other direct written electronic means, on the date of transmission; and if transmitted by first-class mail, on the date of receipt.
The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means; provided, however, that the Corporation shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Corporation whenever a person is to be added or deleted from the listing. If the Corporation elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Corporation understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Corporation shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Corporation and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Corporation. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Corporation agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Corporation; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
Notwithstanding any other provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its
designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.
Section 106. Notice to Holders; Waiver
.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if (i) with respect to any series of Securities issued in book-entry form, if given to the Depositary in accordance its procedures, or (ii) with respect to registered Holders, in writing and mailed, first-class postage prepaid, or delivered via Electronic Means, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail or otherwise sent, neither the failure to mail such notice, nor any defect in any notice so mailed or otherwise sent, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act
.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents
.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns
.
All covenants and agreements in this Indenture by the Corporation shall bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause
.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture
.
Unless otherwise specified pursuant to Section 301 and Section 1404 with respect to the Securities of any series, nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 112. Governing Law
.
This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.
Section 113. Legal Holidays
.
Unless otherwise specified pursuant to Section 301 with respect to the Securities of any series, in any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day, unless that Business Day is in a different calendar year, in which case the payment will be made on the preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity.
Section 114. No Security Interest Created
.
Nothing in this Indenture or in the Securities expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Corporation or its subsidiaries is located.
Section 115. Waiver of Jury Trial.
EACH OF THE CORPORATION, THE TRUSTEE AND THE HOLDERS BY THEIR ACCEPTANCE OF THE SECURITIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THEM ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.
Section 116. Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, epidemics or pandemics, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services affecting the banking industry generally; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 117. Submission to Jurisdiction.
The parties hereto irrevocably submit to the jurisdiction of any New York State court sitting in the Borough of Manhattan in the City of New York or any federal court sitting in the Borough of Manhattan in the City of New York in respect of any suit, action or proceeding arising out of or relating to this Indenture and the Securities, and irrevocably accepts for itself and in respect of its property, generally and unconditionally, jurisdiction of the aforesaid courts.
Section 118. Sanctions Representations.
(a) The Corporation represents that neither they nor any of their affiliates, subsidiaries, directors or officers are the target or subject of any sanctions enforced by the US Government, (including, the Office of Foreign Assets Control of the US Department of the Treasury (“OFAC”)), the United Nations Security Council, the European Union, or HM Treasury, or other relevant sanctions authority (collectively “Sanctions”).
(b) The Corporation covenants that neither they nor any of their affiliates, subsidiaries, directors or officers will use any payments made pursuant to the Indenture in connection with the Notes, (i) to fund or facilitate any prohibited activities of or business with any person who, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any prohibited activities of or business with any country or territory that is the target or subject of Sanctions, or (iii) in any other manner that will result in a violation of Sanctions by any person.
Section 119. FATCA.
The Corporation agrees (i) to provide the Trustee with such reasonable information as it has in its possession and that is specifically requested by the Trustee to enable the Trustee to determine whether any payments pursuant to this Indenture are subject to the withholding requirements described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any
regulations, or agreements thereunder or official interpretations thereof (“Applicable Law”), and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under this Indenture to the extent necessary to comply with Applicable Law, for which the Trustee shall not have any liability.
ARTICLE
SECURITY FORMS
Section 201. Forms Generally
.
The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to one or more Board Resolutions or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Corporation or an Officer's Certificate pursuant to Section 301 and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
Section 202. Form of Face of Security
.
[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]
EDISON INTERNATIONAL
_____________________
| No. _________ | $ __________<br>CUSIP No. ____ |
|---|
Edison International, a corporation duly organized and existing under the laws of the State of California (herein called the “Corporation,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
______________________, or registered assigns, the principal sum of ________ Dollars on _________________________ [if the Security is to bear interest prior to Maturity and interest payment periods are not extendable, insert - , and to pay interest thereon from __________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, [insert - semi-annually, quarterly, monthly or other description of the relevant payment period] on [________, ________,] and __________ in each year, commencing _______________, at the rate of ____% per annum, until the principal hereof is paid or made available for payment [if applicable, insert - , provided that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of ___% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the [___________________] (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert - The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any overdue premium shall bear interest at the rate of ____% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment. Interest on any overdue principal or premium shall be payable on demand. Any such interest on overdue principal or premium which is not paid on demand shall bear interest at the rate of ____% per annum (to the extent that the payment of such interest on interest shall be legally enforceable), from the date of such demand until the amount so demanded is paid or made available for payment. Interest on any overdue interest shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable, insert - any such] interest on this Security will be made at the office or agency of the Corporation maintained for that purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert - ; provided, however, that at the option of the Corporation payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer at such place and to such account at a banking institution in the United States as
may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto].
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual, facsimile or electronic signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By
Section 203. Form of Reverse of Security
.
This Security is one of a duly authorized issue of securities of the Corporation (herein called the “Securities”), issued and to be issued in one or more series under a Subordinated Indenture, dated as of ________, ______ (herein called the “Indenture,” which term shall have the meaning assigned to it in such instrument [and shall include the _______ Supplemental Indenture, dated as of _______________), between the Corporation and The Bank of New York Mellon Trust Company, N,.A., as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Corporation, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert - , limited in aggregate principal amount to $__________].
[If applicable, insert – The Corporation may at its option redeem the Securities of this series, in whole or from time to time in part, on any day during any Par Call Period (as defined below) at a Redemption Price in cash equal to ___% of the principal amount of the Securities of this series to be redeemed, plus (subject to the provisions set forth below regarding the payment of installments of interest on Securities of this series that are due and payable on any Interest
Payment Date falling on or prior to a Redemption Date) accrued and unpaid interest on the Securities of this series to be redeemed to, but excluding, the Redemption Date.
“Par Call Period” means any period from and including the ________immediately preceding a Reset Date through and including such Reset Date.]
[If applicable, insert – The Corporation may at its option redeem the Securities of this series, in whole but not in part, at any time within 120 days after a Tax Event (as defined below) at a Redemption Price in cash equal to ___% of the principal amount of the Securities of this series, plus (subject to the provisions set forth below regarding the payment of installments of interest on Securities of this series that are due and payable on any Interest Payment Date falling on or prior to a Redemption Date) accrued and unpaid interest on the Securities of this series to, but excluding, the Redemption Date.
A “Tax Event” means that the Corporation has received an opinion of counsel experienced in such matters to the effect that, as a result of:
(a) any amendment to, clarification of, or change, including any announced prospective change, in the laws or treaties of the United States or any of its political subdivisions or taxing authorities, or any regulations under those laws or treaties;
(b) an administrative action, which means any judicial decision or any official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to issue or adopt any administrative pronouncement, ruling, regulatory procedure or regulation;
(c) any amendment to, clarification of, or change in the official position or the interpretation of any administrative action or judicial decision or any interpretation or pronouncement that provides for a position with respect to an administrative action or judicial decision that differs from the previously generally accepted position, in each case by any legislative body, court, governmental authority or regulatory body, regardless of the time or manner in which that amendment, clarification or change is introduced or made known; or
(d) a threatened challenge asserted in writing in connection with a tax audit of the Corporation or any of the Corporation’s subsidiaries, or a publicly-known threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Securities of this series,
which amendment, clarification or change is effective or the administrative action is taken or judicial decision, interpretation or pronouncement is issued or threatened challenge is asserted or becomes publicly-known after ________________, there is more than an insubstantial risk that interest payable by the Corporation on the Securities of this series is not deductible, or within 90 days would not be deductible, in whole or in part, by the Corporation for United States federal income tax purposes.]
[If applicable, insert - The Corporation may at its option redeem the Securities of this series, in whole but not in part, at any time within 120 days after a Rating Agency Event (as defined below) at a Redemption Price in cash equal to ___% of the principal amount of the Securities of this series, plus (subject to the provisions set forth below regarding the payment of installments of interest on Securities of this series that are due and payable on any Interest Payment Date falling on or prior to a Redemption Date) accrued and unpaid interest on the Securities of this series to, but excluding, the Redemption Date.
“Rating Agency Event” means, as of any date, a change, clarification or amendment in the methodology published by any nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Securities Exchange Act of 1934, as amended (or any successor provision thereto), that then publishes a rating for the Corporation (together with any successor thereto, a “rating agency”) in assigning equity credit to securities such as the Securities of this series, (a) as such methodology was in effect on _____________, in the case of any rating agency that published a rating for the Corporation as of _____________, or (b) as such methodology was in effect on the date such rating agency first published a rating for the Corporation, in the case of any rating agency that first publishes a rating for the Corporation after _____________ (in the case of either clause (a) or (b), the “current methodology”), that results in (i) any shortening of the length of time for which a particular level of equity credit pertaining to the Securities of this series by such rating agency would have been in effect had the current methodology not been changed or (ii) a lower equity credit (including up to a lesser amount) being assigned by such rating agency to the Securities of this series as of the date of such change, clarification or amendment than the equity credit that would have been assigned to the Securities of this series by such rating agency had the current methodology not been changed.]
[If applicable, insert - Notwithstanding the foregoing, the Corporation may not, prior to _________, redeem any Securities of this series as contemplated by [if applicable, insert - Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Corporation (calculated in accordance with generally accepted financial practice) of less than ____% per annum.]
[If applicable, insert - The sinking fund for this series provides for the redemption on __________ in each year beginning with the year _______ and ending with the year ______ of [if applicable, insert - not less than $___________ (“mandatory sinking fund”) and not more than] $____________ aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by the Corporation otherwise than through [if applicable, insert - mandatory] sinking fund payments may be credited against subsequent [if applicable, insert - mandatory] sinking fund payments otherwise required to be made [if applicable, insert - , in the inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert - In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert - The Indenture contains provisions for defeasance at any time of [the entire indebtedness of this Security] [or] [certain restrictive covenants and Events of Default with respect to this Security] [, in each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert - If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert - If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to [insert formula for determining the amount]. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Corporation’s obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.]
The indebtedness represented by the Securities of this series is, to the extent and in a manner set forth in the Indenture, expressly subordinated in right of payment to the prior payment in full of all Senior Indebtedness, as defined in the Indenture with respect to this series, and this Security is issued subject to such provisions, and each Holder of this Security, by acceptance thereof, agrees to and shall be bound by such provisions and authorizes and directs the Trustee on his, her or its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and appoints the Trustee his, her or its attorney-in-fact, as the case may be, for any and all such purposes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Corporation and the rights of the Holders of the Securities of all series affected under the Indenture at any time by the Corporation and the Trustee with the consent of the Holders of a majority in principal amount of the Securities of all series at the time Outstanding affected thereby (voting as one class). The Indenture contains provisions permitting the Holders of not less than a majority in principal amount of the Securities of all series at the time Outstanding with respect to which a default under the Indenture shall have occurred and be continuing (voting as one class), on behalf of the Holders of the Securities of all such series, to waive, with certain exceptions, such past default with respect to all such series and its consequences. The Indenture also permits the Holders of not less than a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Corporation with certain provisions of the Indenture. Any such consent or waiver by the Holder
of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 33% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity and/or security satisfactory to it, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Corporation in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $2,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Corporation, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
The Indenture and the Securities issued thereby shall be governed by and construed in accordance with the laws of the State of New York.
Section 204. Form of Legend for Global Securities
.
Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following applicable form:
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[INSERT THE FOLLOWING LEGEND IF A GLOBAL SECURITY AND THE DEPOSITARY TRUST COMPANY SERVES AS THE DEPOSITARY WITH RESPECT TO THE GLOBAL SECURITY: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Section 205. Form of Trustee’s Certificate of Authentication
.
The Trustee’s certificate of authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
The Bank of New York Mellon Trust Company, N.A.,
As Trustee
By: Authorized Signatory
Dated: _________________
ARTICLE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series
.
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series with the Securities of each series issued hereunder being subordinated in right of payment, to the extent and in the manner set forth in the Subordination Provisions applicable to the Securities of such series, to all Senior Indebtedness (as defined with respect to the Securities of such series) of the Corporation. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officer's Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1106 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the series is payable or the method by which such date shall be determined and the right, if any, to shorten or extend the date on which the principal of any Securities of the series is payable and the conditions to any such change;
(5) the rate or rates at which any Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined; the date or dates from which any such interest shall accrue; the Interest Payment Dates on which any such interest shall be payable; the manner (if any) of determination of such Interest Payment Dates; and the Regular Record Date, if any, for any such interest payable on any Interest Payment Date;
(6) the right, if any, to extend the interest payment periods and the terms of, or to defer the payment of interest on, the Securities of the series and the terms of any such extension or deferral, including, without limitation, whether any such right to extend or defer, as applicable, may be exercised on one or more occasions, whether the Corporation shall have the right to shorten or further extend, on one or more occasions, the period of any such extension or deferral, the date or dates on which such extended or deferred interest shall be payable and the record dates, if any, for any such payments, the rate at which interest shall accrue on the Securities of such series during any such extension or deferral period, and whether compound interest will be payable, to the extent permitted by applicable law, on any extended or deferred interest and, if so, the rate at which such compound interest will be payable;
(7) the place or places where the principal of and any premium and interest on any Securities of the series shall be payable and whether, if acceptable to the Trustee, any principal of such Securities shall be payable without presentation or surrender thereof;
(8) the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Corporation and, if other than by a Board Resolution, the manner in which any election by the Corporation to redeem the Securities shall be evidenced;
(9) the obligation, if any, of the Corporation to redeem or purchase any Securities of the series pursuant to any sinking fund, purchase fund or analogous provisions or at the option of the Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(10) if other than denominations of $2,000 and any integral multiple $1,000 in excess thereof, the denominations in which any Securities of the series shall be issuable;
(11) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined;
(12) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for purposes of the definition of “Outstanding” in Section 101;
(13) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Corporation or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined);
(14) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;
(15) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined);
(16) if either or both of Sections 1302 and 1303 do not apply to any Securities of the series;
(17) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositary or Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof;
(18) any addition, modification or deletion of any Events of Default or covenants provided with respect to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article Ten which applies to Securities of the series; and
(20) the definition of “Senior Indebtedness” applicable to the Securities of the series (which, unless otherwise expressly provided with respect to the Securities of such series pursuant to this Section 301(20), shall be the definition set forth in Section 101 of this Indenture) and the terms and provisions (the “Subordination Provisions”) pursuant to which the Securities of the series shall be subordinated in right of payment to such Senior Indebtedness (which, unless otherwise expressly provided with respect to the Securities of such series pursuant to this Section 301(20), shall be the terms and provisions sets forth in Article Fourteen of this Indenture) and, if the definition of “Senior Indebtedness” set forth in Section 101 of this indenture or the Subordination Provisions set forth in Article Fourteen of this indenture shall be applicable to the Securities of such series, any additions to, modifications of or deletions from (a) the definition of “Senior Indebtedness” set forth in Section 101 or (b) any of the terms and provisions of Article Fourteen of this Indenture, as the case may be, in each case that shall be applicable to the Securities of such series; and
(21) any other terms of the series, including any other additions to, modifications of or deletions from this Indenture.
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officer's Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Corporation and delivered to the Trustee at or prior to the delivery of the Officer's Certificate setting forth the terms or the manner of determining the terms of the series.
With respect to Securities of a series offered in a Periodic Offering, the Board Resolution (or action taken pursuant thereto), Officer's Certificate or supplemental indenture referred to above may provide general terms or parameters for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a Company Order or that such terms shall be determined by the Corporation in accordance with other procedures specified in a Company Order as contemplated by the third paragraph of Section 303.
Notwithstanding Section 301(2) herein and unless otherwise expressly provided with respect to a series of Securities, the aggregate principal amount of a series of Securities may be increased and additional Securities of such series may be issued up to the maximum aggregate principal amount authorized with respect to such series as increased.
Section 302. Denominations
.
The Securities of each series shall be issuable only in fully registered form without coupons and only in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $2,000 and any integral multiples of $1,000 in excess thereof.
Section 303. Execution, Authentication, Delivery and Dating
.
The Securities shall be executed on behalf of the Corporation by its Chairman of the Board, its Chief Executive Officer, its President, a Vice President or the Treasurer,. The signature of any of these officers on the Securities may be manual, facsimile or electronic.
Securities bearing the manual, facsimile or electronic signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Corporation may deliver Securities of any series executed by the Corporation to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities, provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including, without limitation, the receipt by the Trustee of electronic instructions from the Corporation or its duly authorized agents) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered to the Trustee prior to the time of the first authentication of Securities of such series. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering, will be, established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been, or in the case of Securities of a series offered in a Periodic Offering, will be, established in conformity with the provisions of this Indenture, subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel;
(3) that such Securities, when issued and executed by the Corporation and when authenticated and delivered by the Trustee in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Corporation enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
(4) that authentication and delivery of the Securities by the Trustee will not violate the terms of this Indenture nor cause an Event of Default, that there exists no Event of Default under this Indenture, and that all conditions precedent provided for in this Indenture relating to the authentication and delivery of Securities have been complied with; and
(5) such other matters as the Trustee may reasonably request.
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officer's Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the Corporation of any of such Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Sections 201 and 301 and this Section, as applicable, in connection with the first authentication of Securities of such series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual, facsimile or electronic signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Corporation, and the Corporation shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities
.
Pending the preparation of definitive Securities of any series, the Corporation may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, typewrittenor otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Corporation will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Corporation in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Corporation shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange
.
The Corporation shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office or in any other office or agency of the Corporation in a Place of Payment being herein sometimes referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Corporation shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed “Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at the office or agency of the Corporation in a Place of Payment for that series, the Corporation shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Corporation shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Corporation, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Corporation or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1106 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are to be redeemed, the Corporation shall not be required (A) to issue, register the transfer of or exchange any Securities of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary has notified the Corporation that it is unwilling or unable to continue as Depositary for such Global Security and a successor Depositary has not been appointed by the Corporation within 90 days of receipt by the Corporation of such notification, (B) if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Corporation within 90 days after it became aware of such cessation, or (C) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301. Notwithstanding the foregoing, the Corporation may at any time in its sole discretion determine that Securities issued in the form of a Global Security shall no longer be represented in whole or in part by such Global Security, and the Trustee, upon receipt of a Company Order therefor, shall authenticate and deliver definitive Securities in exchange in whole or in part for such Global Security.
(3) Subject to Clause (2) above, any exchange or transfer of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for or upon transfer of a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 304, 306, 906 or 1106 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities
.
If any mutilated Security is surrendered to the Trustee, the Corporation shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Corporation and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Corporation or the Trustee that such Security has been acquired by a bona fide purchaser, the Corporation shall execute and the Trustee shall authenticate and deliver,
in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Corporation in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Corporation may require the payment of a sum sufficient to cover any tax, fee, assessment or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and its agents and counsel) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Corporation, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved
.
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest such payment to be made at the office or agency maintained for such purpose pursuant to Section 1002; provided, however, that, at the option of the Corporation, interest on any series of Securities that bear interest may be paid (i) by check mailed to the address of the Persons entitled thereto as such addresses shall appear on the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 15 days prior to the date for payment by the Persons entitled thereto. Any such instructions given pursuant to clause (ii) shall remain in effect until revoked by written notice to the Trustee at least 15 days prior to any payment date by the Person entitled to such payment.
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Corporation, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Corporation may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Corporation shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Corporation shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Corporation of such Special Record Date and, in the name and at the expense of the Corporation, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner set forth in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Corporation may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Corporation to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners
.
Prior to due presentment of a Security for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307) any interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and neither the Corporation, the Trustee nor any agent of the Corporation or the Trustee shall be affected by notice to the contrary.
None of the Corporation, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interest of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent the Corporation, the Trustee, or any agent of the Corporation or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any depositary, as a Holder, with respect to such Global Security or impair, as between such depositary and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such depositary as Holder of such Global Security.
Section 309. Cancellation
.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Corporation may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Corporation may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Corporation has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of in its customary manner or as directed by a Company Order; provided, however, that the Trustee shall not be required to destroy such canceled Securities.
Section 310. Computation of Interest
.
Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers
.
The Corporation in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture
.
This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Corporation, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Corporation and thereafter repaid to the Corporation or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Corporation,
and the Corporation, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose (i) money in an amount, (ii) Government Obligations (as defined in Section 1304) which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any
payment, money in an amount, or (iii) a combination thereof, sufficient, in the case of (ii) or (iii), in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Corporation has paid or caused to be paid all other sums payable hereunder by the Corporation; and
(3) the Corporation has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Corporation to the Trustee under Section 607, the obligations of the Corporation to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive such satisfaction and discharge.
Section 402. Application of Trust Money
.
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Corporation acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.
ARTICLE
REMEDIES
Section 501. Events of Default
.
“Event of Default,” wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless it is inapplicable to a particular series or is specifically deleted or
modified in the Board Resolution (or action taken pursuant thereto), Officer's Certificate or supplemental indenture under which such series of Securities is issued or has been deleted or modified in an indenture supplemental hereto:
(1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days (whether or not such payment is prohibited by the Subordination Provisions applicable to the Securities of such series); provided, however, that if the Corporation is permitted by the terms of the Securities of such series to extend or defer the payment in question, the date on which such payment is due and payable shall be the date on which the Corporation is required to make payment following such extension or deferral, if such extension or deferral has been elected pursuant to the terms of the Securities, then a failure to pay interest prior to the end of such extension period or deferral period, as the case may be, shall not constitute an Event of Default with respect to the Securities of such series unless the Corporation is required, by or pursuant to the terms of the Securities of such series, to make a payment of interest on a Redemption Date or other date during such extension or deferral period and fails to make such payment within 30 days of the due date (whether or not such payment is prohibited by the Subordination Provisions applicable to the Securities of such series), in which case such failure shall be an Event of Default with respect to the Securities of such series; or
(2) default in the payment of the principal of or any premium on any Security of that series when it becomes due and payable, whether at Stated Maturity, upon purchase by the Corporation at the option of the Holder, upon call for redemption, by declaration or otherwise (whether or not such payment is prohibited by the Subordination Provisions applicable to the Securities of such series); or
(3) default in the making of any sinking fund payment, when and as due by the terms of a Security of that series, and continuance of such default for a period of 60 days (whether or not such payment is prohibited by the Subordination Provisions applicable to the Securities of such series); or
(4) default in the performance, or breach, of any covenant of the Corporation in this Indenture (other than a covenant a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Corporation by the Trustee or to the Corporation and the Trustee by the Holders of at least 33% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder, unless the Trustee, or the Trustee and the Holders of a principal amount of Securities of such series not less than the principal amount of Securities the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its
expiration; provided, however, that the Trustee, or the Trustee and the Holders of such principal amount of Securities of such series, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Corporation within such period and is being diligently pursued; or
(5) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Corporation in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Corporation a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Corporation under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Corporation or of any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Corporation of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Corporation in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Corporation or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of any such action by the Board of Directors; or
(7) any other Event of Default provided with respect to Securities of that series.
Section 502. Acceleration of Maturity; Rescission and Annulment
.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 33% in principal amount of the Outstanding Securities of that series may declare the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) and accrued and unpaid interest, if any, thereon (including, without limitation, if the terms of the Securities of such series established pursuant to Section 301 permit the Corporation to extend the
interest payment periods or defer any payments of interest on the Securities of such series, any extended or deferred interest and, if so provided pursuant to the terms of the Securities of that series and to the extent permitted by applicable law, compound interest) to be due and payable immediately, by a notice in writing to the Corporation (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. If an Event of Default described in clauses (5) or (6) above occurs and is continuing with respect to all series of Securities at the time Outstanding, then either the Trustee or the Holders of not less than 33% in principal amount of all Securities Outstanding under this Indenture may declare the principal amount of all Outstanding Securities to be due and payable immediately.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of such series, by written notice to the Corporation and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Corporation has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 607;
and
(2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee
.
The Corporation covenants that if
(1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,
the Corporation will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Corporation fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Corporation or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Corporation or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim
.
In case of any judicial proceeding relative to the Corporation (or any other obligor upon the Securities), its property or its creditors, the Trustee (irrespective of whether the principal of such Securities shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand on the Corporation for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee (irrespective of whether the principal of such Securities shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand on the Corporation for the payment of overdue principal, premium, if any, or interest) shall be
authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities
.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected
.
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 607;
Second: to the payment of Senior Indebtedness (as defined with respect to the Securities of such series), to the extent required pursuant to the Subordination Provisions applicable to the Securities of such series;
Third: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal and any premium and interest, respectively; and
Fourth: To the payment of the balance, if any, to the Corporation.
Section 507. Limitation on Suits
.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 33% in principal amount of the Outstanding Securities of all affected series, considered as one class, or, in the case of an Event of Default of the character specified above in Section 501(1), (2) or (3), that series, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of all affected series, considered as one class, or, in the case of an Event of Default of the character specified above in Section 501(1), (2) or (3), that series,
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest
.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies
.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Corporation, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative
.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver
.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control By Holders
.
The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided that
(1) such direction shall not be in conflict with any rule of law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and
(3) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability.
If an Event of Default is continuing with respect to all Outstanding Securities, the Holders of a majority in principal amount of all the Outstanding Securities, considered as one class, shall have the right to make such direction, and not the Holders of Securities of any one series.
Section 513. Waiver of Past Defaults
.
The Holders of not less than a majority in principal amount of the Outstanding Securities of all series with respect to which any default under the Indenture shall have occurred and be continuing (voting as one class) may, on behalf of the Holders of all Securities of all such series, waive such past default under the Indenture and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of the series affected.
Upon any such waiver, such default shall cease to exist and be deemed not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 514. Undertaking for Costs
.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs, including legal fees and expenses of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in (i) any suit instituted by the Trustee, (ii) any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or (iii) any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Stay or Extension Laws
.
The Corporation covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Corporation (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE
THE TRUSTEE
Section 601. Certain Duties and Responsibilities
.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults
.
If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.
Section 603. Certain Rights of Trustee
.
Subject to the provisions of Section 601:
(1) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Corporation mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or as otherwise expressly provided herein, and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate;
(4) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, at reasonable times previously notified to the Corporation, to examine the relevant books, records and premises of the Corporation, personally or by agent or attorney at the sole cost of the Corporation and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(8) in no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;
(9) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security and/or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(10) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;
(11) the Trustee shall not be deemed to have notice of any default or Event of Default unless written notice of any event which is in fact such a default is received by a Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; and
(12) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities
.
The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Corporation, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Corporation of Securities or the proceeds thereof.
Section 605. May Hold Securities
.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Corporation, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the
Corporation with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
Section 606. Money Held in Trust
.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Corporation.
Section 607. Compensation and Reimbursement
.
The Corporation agrees
(1) to pay to the Trustee from time to time such compensation as shall be agreed to in writing between the Corporation and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any and all loss, liability, damage, charge, claim or expense, including taxes (other than taxes based on the income of the Trustee) incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim whether asserted by the Corporation, a Holder or any other Person or liability in connection with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities upon all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Securities.
Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(5) or Section 501(6), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this Indenture.
Section 608. Conflicting Interests
.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility
.
There shall at all times be a Trustee hereunder with respect to the Securities of each series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor
.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Corporation. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Corporation, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Corporation. Upon such removal, the Corporation may
petition, at its expense, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Corporation or by any Holder who has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Corporation or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Corporation by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Corporation, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Corporation and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Corporation. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Corporation or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Corporation shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with
respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor
.
In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Corporation and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Corporation or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Corporation, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Corporation or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Corporation shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Corporation
.
If and when the Trustee shall be or become a creditor of the Corporation (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Corporation (or any such other obligor).
Section 614. Appointment of Authenticating Agent
.
The Trustee may appoint an Authenticating Agent or Agents acceptable to the Corporation with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Corporation and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital
and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided that such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Corporation. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Corporation. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Corporation and shall give notice of such appointment in the manner provided in Section 106 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Corporation agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
The Bank of New York Mellon Trust Company, N.A., As Trustee
By: As Authenticating Agent
By: Authorized Signatory
Section 615. Trustee’s Application for Instructions from the Corporation
.
Any application by the Trustee for written instructions from the Corporation may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable to the Corporation for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Corporation actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted.
ARTICLE
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND CORPORATION
Section 701. Corporation to Furnish Trustee Names and Addresses of Holders
.
The Corporation will furnish or cause to be furnished to the Trustee
(1) 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Corporation of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders
.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Corporation and the Trustee that neither the Corporation nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee
.
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within 60 days after each May 15 following the date of this Indenture, deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee, with each stock exchange upon which any Securities are listed, with the Commission and with the Corporation. The Corporation will promptly notify the Trustee when any Securities are listed on any stock exchange or any delisting thereof.
Section 704. Reports by Corporation
.
The Corporation shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. All required
information, documents and other reports referred to in this Section 704 shall be deemed filed with the Trustee and transmitted to the Holders at the time such information, documents or other reports are publicly filed with the Commission via the Commission's Electronic-Data Gathering, Analysis and Retrieval system (or any successor system, including the Commission's Interactive Data Electronic Application system). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Corporation’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates).
ARTICLE
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 801. Corporation May Consolidate, Etc., Only on Certain Terms
.
The Corporation shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Corporation or convey, transfer or lease its properties and assets substantially as an entirety to the Corporation, unless:
(1) in case the Corporation shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Corporation is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Corporation substantially as an entirety shall be a corporation, partnership, limited liability company or trust organized and existing under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Corporation to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice of lapse of time, or both, would become an Event of Default, shall have occurred and be continuing;
(3) such other conditions as may be specified pursuant to Section 301 with respect to the Securities of any series shall have been satisfied; and
(4) the Corporation shall deliver to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance or transfer and, if a supplemental indenture is required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee, subject to Section 601, may rely upon such Officer's Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 801.
Notwithstanding the foregoing, the Corporation may merge or consolidate with or transfer all or substantially all of its assets to an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Corporation or the form of organization of the Corporation; provided that the amount of indebtedness of the Corporation is not increased thereby; and provided, further that the successor assumes all obligations of the Corporation under this Indenture.
Section 802. Successor Substituted
.
Upon any consolidation of the Corporation with, or merger of the Corporation into, any other Person or any conveyance or transfer of the properties and assets of the Corporation as an entirety or substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Corporation is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation under this Indenture with the same effect as if such successor Person had been named as the Corporation herein, and thereafter the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.
Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Corporation, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Corporation and delivered to the Trustee; and, upon the order of such successor Person instead of the Corporation, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Corporation to the Trustee for authentication pursuant to such provisions and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate.
ARTICLE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders
.
Without the consent of any Holders, the Corporation, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Corporation and the assumption by any such successor of the covenants of the Corporation herein and in the Securities; or
(2) to add to the covenants of the Corporation for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Corporation; or
(3) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities registrable or not registrable as to principal, and with or without interest coupons, or to facilitate the issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities; provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611; or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture; provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or
(10) to comply with the rules or regulations of any securities exchange or automated quotation system on which any of the Securities may be listed or traded; or
(11) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly required by the Trust Indenture Act; or
(12) to conform the Indenture or the Securities to the description thereof in the related prospectus or disclosure document.
Section 902. Supplemental Indentures With Consent of Holders
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With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected by such supplemental indenture (voting as one class), by Act of said Holders delivered to the Corporation and the Trustee, the Corporation, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture, or modifying in any manner the rights of the Holders of Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security (other than pursuant to the terms of such Security), or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 or change the coin or currency in which any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or, if the Corporation has the right to extend or defer the payment of interest on any Security, to increase the maximum time period of any such extension or deferral or increase the maximum number of times the Corporation may extend or defer any such interest payment, or
(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or Section 1006, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this Clause 3 shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section and Section 1006, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8), or
(4) modify, delete or supplement any of the Subordination Provisions or the definition of Senior Indebtedness applicable to the Securities of any series then Outstanding in a manner adverse to Holders of such Securities.
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures
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In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture complies with the applicable provisions of this Indenture and is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures
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Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act
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Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act, as then in effect.
Section 906. Reference in Securities to Supplemental Indentures
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Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Corporation shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Corporation, to any such supplemental indenture may be prepared and executed by the Corporation and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
Section 907. Subordination Unimpaired.
No supplemental indenture entered into under this Article IX shall modify, directly or indirectly, the provisions of Article XIV or the definition of Senior Indebtedness in Section 101 in any manner that might alter or impair the subordination of the Securities with respect to Senior Indebtedness then outstanding unless each holder of such Senior Indebtedness has consented thereto in writing.
ARTICLE
COVENANTS
Section 1001. Payment of Principal, Premium and Interest
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The Corporation covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency
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The Corporation will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Corporation in respect of the Securities of that series and this Indenture may be served. The Corporation will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Corporation shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Corporation hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Corporation may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Corporation of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Corporation will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust
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If the Corporation shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Corporation shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Corporation will promptly notify the Trustee of its action or failure so to act.
The Corporation will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided, (2) give the Trustee notice of any default by the Corporation (or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest, (3) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (4) during the continuance of any default by the Corporation (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such- Paying Agent for payment in respect of the Securities of that series.
The Corporation may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust hereunder by the Corporation or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Corporation or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Corporation, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Corporation on Company Request, or (if then held by the Corporation) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Corporation for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Corporation as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Corporation cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Corporation.
Section 1004. Corporate Existence
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Subject to Article Eight, the Corporation will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises.
Section 1005. Statement by Officers as to Default
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The Corporation will deliver to the Trustee, on or before October 15 of each calendar year or on or before such other day in each calendar year as the Corporation and the Trustee may from time to time agree upon, an Officer's Certificate, stating whether or not to the best knowledge of the signers thereof the Corporation is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Corporation shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
Section 1006. Waiver of Certain Covenants
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Except as otherwise specified as contemplated by Section 301 for Securities of such series, the Corporation may, with respect to the Securities of any series, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such series if before the time for such compliance the Holders of not less than a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Corporation and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
Section 1007. Calculation of Original Issue Discount
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The Corporation shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time.
ARTICLE
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article
.
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for such Securities) in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee
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The election of the Corporation to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Corporation, the Corporation shall, at least 45
days prior to the Redemption Date fixed by the Corporation (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities (A) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (B) pursuant to an election of the Corporation which is subject to a condition specified in the terms of such Securities or elsewhere in this Indenture, the Corporation shall furnish the Trustee with an Officer's Certificate evidencing compliance with such restriction or condition.
Section 1103. Selection by Trustee of Securities to Be Redeemed
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If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by lot; provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security, and provided further that for as long as any Security is in the form of a Global Security, any selection of Securities to be redeemed shall be done in accordance with the policies and procedures of the Depositary.
The Trustee shall promptly notify the Corporation in writing of the Securities selected for redemption as aforesaid and, in the case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
Section 1104. Notice of Redemption
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Notice of redemption shall be given by first-class mail, postage prepaid, or otherwise sent not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed (including CUSIP number(s)) and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series and of a specified tenor consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series and of a specified tenor consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed;
(4) that on the Redemption Date the Redemption Price, together with accrued interest, if any, to the Redemption Date, will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date;
(5) the place or places where each such Security is to be surrendered for payment of the Redemption Price and accrued interest, if any, unless it shall have been specified as contemplated by Section 301 with respect to such Securities that such surrender shall not be required;
(6) that the redemption is for a sinking fund, if such is the case; and
(7) such other matters as the Corporation shall deem desirable or appropriate.
Unless otherwise specified with respect to any Securities in accordance with Section 301, with respect to any redemption of Securities at the election of the Corporation, unless, upon the giving of notice of such redemption, Defeasance shall have been effected with respect to such Securities pursuant to Section 1302, such notice may state that such redemption shall be conditional upon the receipt by the Trustee or the Paying Agent(s) for such Securities, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and any premium and interest on such Securities and that if such money shall not have been so received such notice shall be of no force or effect and the Corporation shall not be required to redeem such Securities. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and within a reasonable time thereafter notice shall be given, in the manner in which the notice of redemption was given, that such money was not so received and such redemption was not required to be made, and the Trustee or Paying Agent(s) for the Securities otherwise to have been redeemed shall promptly return to the Holders thereof any of such Securities which had been surrendered for payment upon such redemption.
Notice of redemption of Securities to be redeemed at the election of the Corporation, and any notice of non-satisfaction of redemption as aforesaid, shall be given by the Corporation or, at the Corporation’s request, by the Trustee in the name and at the expense of the Corporation. Subject to the preceding paragraph, any such notice of redemption shall be irrevocable.
Section 1105. Deposit of Redemption Price
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On or prior to the Redemption Date specified in the notice of redemption given as provided in Section 1104, the Corporation will deposit with the Trustee or with one or more Paying Agents (or if the Corporation is acting as its own Paying Agent, the Corporation will segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of; and any accrued interest on, all the Securities which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date
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Notice of redemption having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Securities or portions thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless, in the case of an unconditional notice of redemption, the Corporation shall default in the payment of the Redemption Price and accrued interest, if any) such Securities or portions thereof, if interest-bearing, shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security or portion thereof shall be paid by the Corporation at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that no such surrender shall be a condition to such payment if so specified as contemplated by Section 301 with respect to such Security, and provided further that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
Section 1107. Securities Redeemed in Part
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Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Corporation or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Corporation and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Corporation
shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE
SINKING FUNDS
Section 1201. Applicability of Article
.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of any Securities is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of such Securities is herein referred to as an “optional sinking fund payment.” If provided for by the terms of any Securities, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities as provided for by the terms of such Securities.
Section 1202. Satisfaction of Sinking Fund Payments with Securities
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The Corporation (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Corporation pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as and to the extent provided for by the terms of such Securities; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund
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Not less than 45 days prior to each sinking fund payment date for any Securities, the Corporation will deliver to the Trustee an Officer's Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the
portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 1202 and stating the basis for such credit and that such Securities have not been previously so credited and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Corporation in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1105 and 1106.
ARTICLE
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Applicability of Article
.
Unless, pursuant to Section 301, provision is made that either or both of (A) defeasance of any Securities or any series of Securities under Section 1302 and (B) covenant defeasance of any Securities or any series of Securities under Section 1303 shall not apply to such Securities of a series, then the provisions of either or both of Sections 1302 and Section 1303, as the case may be, together with Sections 1304 and 1305, shall be applicable to the Outstanding Securities of such series upon compliance with the conditions set forth below in this Article. Unless otherwise specified pursuant to Section 301, defeasance under Section 1302 and covenant defeasance under Section 1303 may be effected only with respect to all, and not less than all, the Securities of any series. To the extent that the Corporation is permitted, pursuant to Section 301, to extend interest payment periods or defer interest payments, change the time for interest payments, or change the Stated Maturity, of the Securities of any series or any installment of principal thereof or interest thereon, or otherwise change the time of any payment of principal thereof or premium, if any, or interest thereon, any such right shall terminate upon defeasance or covenant defeasance of the Securities of that series as described below or upon satisfaction and discharge with respect to the Securities of that series pursuant to Section 401.
Section 1302. Defeasance and Discharge
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The Corporation may cause itself to be discharged from its obligations with respect to any Securities or any series of Securities on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called “Defeasance”). For this purpose, such Defeasance means that the Corporation shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Corporation, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 1304 and as more
fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (2) the Corporation’s obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003 and with respect to the Trustee under Section 607, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, Defeasance with respect to any Securities or any series of Securities by the Corporation is permitted under this Section 1302 notwithstanding the prior exercise by the Corporation of its rights under Section 1303 with respect to such Securities. Following a Defeasance, payment of such Securities may not be accelerated because of an Event of Default.
Section 1303. Covenant Defeasance
.
The Corporation may cause itself to be released from its obligations under any covenants provided pursuant to Section 301(19), 901(2), 901(6) or 901(7) with respect to any Securities or any series of Securities for the benefit of the Holders of such Securities and the occurrence of any event specified in Sections 501(4) (with respect to any such covenants provided pursuant to Section 301(19), 901(2), 901(6) or 901(7)) or 501(7) shall be deemed not to be or result in an Event of Default with respect to such Securities as provided in this Section, in each case on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Corporation may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(4)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance
.
The following shall be the conditions to the application of Section 1302 or Section 1303 to any Securities or any series of Securities, as the case may be:
(1) The Corporation shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount, or (B) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the case of (B) or (C), in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, the principal of and any premium and interest on such Securities on the respective Stated Maturities or on any Redemption
Date established pursuant to Clause (3) below, in accordance with the terms of this Indenture and such Securities. As used herein, “Government Obligation” means (x) any security which is (i) a direct obligation of the United States of America or the government which issued the foreign currency in which such Securities are payable, for the payment of which its full faith and credit is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such government which issued the foreign currency in which such Securities are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation which is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
(2) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 501(5) and (6), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day).
(3) If the Securities are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments), notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made.
(4) The Corporation shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with.
Section 1305. Deposited Money and Government Obligations to Be Held in Trust; Miscellaneous Provisions
.
Subject to the provisions of the last paragraph of Section 1003, all money and Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 1304 in respect of any Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Corporation acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law.
The Corporation shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Corporation from time to time upon Company Request any money or Government Obligations held by it as provided in Section 1304 with respect to any Securities which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities.
Section 1306. Reinstatement
If the Trustee or any Paying Agent is unable to apply any moneys or Government Obligations deposited pursuant to Section 401 or 1304 to pay any principal of or premium, if any, or interest, if any, on the Securities of any series by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Corporation’s obligations under this Indenture and the Securities of such series shall be revived and reinstated as though no such deposit had occurred, until such time as the Trustee or Paying Agent is permitted to apply all such moneys and Government Obligations to pay the principal of and premium, if any, and interest, if any, on the Securities of such series as contemplated by Section 402 or 1305, as the case may be, provided, however, that if the Corporation makes any payment of the principal of or premium, if any, or interest, if any, on the Securities of such series following the reinstatement of its obligations as aforesaid, the Corporation shall be subrogated to the rights of the Holders of such Securities to receive such payment from the funds held by the Trustee or Paying Agent, but shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal of, and premium, if any, and interest, if any, on all Securities of that series shall have been paid in full.
Section 1307. Effect on Subordination Provisions
Unless otherwise expressly provided pursuant to Section 301 with respect to the Securities of any series, the Subordination Provisions applicable to the Securities of each series are hereby expressly made subject to the provisions for satisfaction and discharge set forth in Section 401 hereof and the provisions for Defeasance and Covenant Defeasance set forth in this Article Thirteen and, anything herein to the contrary notwithstanding, upon the satisfaction of the conditions to and effectiveness of such satisfaction and discharge pursuant to Section 401, or any such Defeasance or Covenant Defeasance pursuant to this Article Thirteen, in each case with respect to the Securities of such series, such Securities shall thereupon cease to be subordinated
in right of payment to Senior Indebtedness (as defined with respect to the Securities of such series) and shall no longer be subject to the Subordination Provisions which would otherwise be applicable to the Securities of such series and, without limitation to the foregoing, all moneys and Government Obligations deposited with the Trustee in trust in connection with such satisfaction and discharge, Defeasance or Covenant Defeasance, as the case may be, and all proceeds therefrom may be applied to pay the principal of, premium, if any, and interest, if any, on, the Securities of such series as and when the same shall become due and payable (including, without limitation, payment of the Redemption Price of any Securities of such series which have been or are to be called for redemption on a Redemption Date on or after the date on which such satisfaction and discharge, Defeasance or Covenant Defeasance, as the case may be, shall have become effective, together with accrued and unpaid interest thereon) without regard to the Subordination Provisions that would otherwise have been applicable to the Securities of such series.
ARTICLE
SUBORDINATION
Section 1401. Securities Subordinated to Senior Indebtedness
Except as otherwise specified as contemplated by Section 301 for any series of Securities, the Corporation covenants and agrees, and each Holder of a Security of any series, by his acceptance thereof, likewise covenants and agrees, that (a) the indebtedness represented by the Securities of such series and the payment of the principal of and any premium or interest on each and all of the Securities of such series is subordinate, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Indebtedness (as defined with respect to the Securities of such series); and (b) Senior Indebtedness (as defined with respect to the Securities of such series) shall continue to be Senior Indebtedness with respect to the Securities of such series irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness or extension or renewal of such Senior Indebtedness (other than any such amendment, modification or waiver that makes any such Senior Indebtedness subordinated or equal in right of payment to the Securities of such series).
With respect to the Securities of each series (unless otherwise provided pursuant to Section 301 with respect to the Securities of such series), in the event (a) of any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of the Corporation, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other similar proceedings, or (b) subject to the provisions of Section 1402, that (i) a default shall have occurred and be continuing with respect to the payment of principal, interest or any other monetary amounts due and payable on any Senior Indebtedness (as defined with respect to the Securities of such series) and such default shall have continued beyond the period of grace, if any, specified in the instrument evidencing such Senior Indebtedness (and the Trustee shall have received written notice thereof from the Corporation or one or more holders of such Senior Indebtedness or their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued), or (ii) the maturity of any such Senior Indebtedness shall have been accelerated because of a default in respect of such Senior Indebtedness (and the Trustee shall have received written notice thereof from the Corporation or one or more holders of such Senior Indebtedness or their representative or representatives or the trustee or trustees under any indenture pursuant to which any such Senior Indebtedness may have been issued), then:
(1) the holders of all such Senior Indebtedness shall first be entitled to receive, in the case of clause (a) above, payment of all amounts due or to become due upon all such Senior Indebtedness or, in the case of subclauses (i) and (ii) of clause (b) above, payment of all amounts due upon all such Senior Indebtedness, or provision shall be made for such payment in money or money’s worth, before the Holders of any of the Securities of such series are entitled to receive any payment on account of the principal of or any premium or interest on the indebtedness evidenced by the Securities of such series, including, without limitation but subject to the provisions of Section 1307, any payments made pursuant to Article Eleven or Article Twelve of this Indenture;
(2) so long as any of the events in clause (a) or subclauses (i) or (ii) of clause (b) above has occurred and is continuing, any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, to which the Holders of any of the Securities of such series would be entitled except for the provisions of this Article, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Securities of such series, shall be paid or distributed, as the case may be, by the Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness held or represented by each, to the extent necessary to make payment, in the case of clause (a) above, of all amounts due and to become due upon all such Senior Indebtedness, or, in the case of subclauses (i) and (ii) of clause (b) above, of all amounts due upon all such Senior Indebtedness, in each case remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Securities of such series; and
(3) so long as any of the events in clause (a) or subclauses (i) or (ii) of clause (b) above has occurred and is continuing, in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Securities of such series, in respect of principal of or any premium or interest on any of the Securities of such series or in connection with the repurchase by the Corporation of any of the Securities of such series, shall be received by the Trustee or the Holders of any of the
Securities of such series before, in the case of clause (a) above, all amounts due or to become due upon all such Senior Indebtedness or, in the case of subclauses (i) or (ii) of clause (b) above, all amounts due upon all such Senior Indebtedness is paid in full (or provision is made for such payment), then such payment or distribution shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of , in the case of clause (a) above, all amounts due and to become due upon all such Senior Indebtedness or, in the case of subclauses (i) or (ii) of clause (b) above, all amounts due upon all such Senior Indebtedness, in each case until all such amounts shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness.
For purposes of this Article Fourteen, the words “cash, property or securities” shall not be deemed to include shares of stock of the Corporation as reorganized or readjusted, or securities of the Corporation or any other Person provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article with respect to the Securities of the applicable series to the payment of all Senior Indebtedness (as defined respect to the Securities of such series) which may at the time be outstanding; provided that (i) all such Senior Indebtedness is assumed by the Person, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of each such holder adversely affected thereby, altered by such reorganization or readjustment. The consolidation of the Corporation with, or the merger of the Corporation into, another Person or the liquidation or dissolution of the Corporation following the conveyance or transfer of its properties and assets as an entirety, or substantially as an entirety, to another Person upon the terms and conditions provided for in Article Eight hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other Person shall, as part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eight hereof. Nothing in this Section 1401 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607 of this Indenture.
Section 1402. Disputes with Holders of Certain Senior Indebtedness
Any failure by the Corporation to make any payment of or on or perform any other obligation under any Senior Indebtedness, other than any Senior Indebtedness incurred by the Corporation or assumed or guaranteed, directly or indirectly, by the Corporation for money borrowed (or any deferral, renewal, extension or refunding thereof) or any indebtedness or obligation as to which the provisions of this Section shall have been waived by the Corporation in the instrument or instruments by which the Corporation incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default or event of default with respect to such Senior Indebtedness under clause (b) of the second paragraph of Section 1401 if (i) the Corporation shall be disputing its obligation to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Corporation which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) in the event of a judgment that is subject to further review or appeal has been issued, the Corporation shall in good faith be prosecuting an appeal or other proceeding for review and a stay of execution shall have been obtained pending such appeal or review.
Section 1403. Subrogation
Subject to the payment in full, in the case of clause (a) of the second paragraph of Section 1401, of all amounts due and to become due on all Senior Indebtedness (as defined with respect to the Securities of the applicable series) or, in the case of subclauses (i) or (ii) of clause (b) of the second paragraph of Section 1401, of all amounts due on all such Senior Indebtedness, as the case may be, the Holders of the Securities of such series shall be subrogated (equally and ratably with the holders of all obligations of the Corporation which are subordinated in right of payment to Senior Indebtedness of the Corporation to the same extent as the Securities of such series are subordinated, or which by their express terms rank equally in right of payment with the Securities of such series with regard to Senior Indebtedness, and which in each case are entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Corporation applicable to such Senior Indebtedness. Such subrogation shall continue until all amounts owing on the Securities of such series shall be paid in full, and as between the Corporation, its creditors other than holders of such Senior Indebtedness and the Holders of the Securities of such series, no such payment or distribution made to the holders of such Senior Indebtedness by virtue of this Article that otherwise would have been made to the Holders of Securities of such series shall be deemed to be a payment by the Corporation on account of such Senior Indebtedness. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of Securities of the applicable series, on the one hand, and the holders of Senior Indebtedness (as defined with respect to the Securities of such series), on the other hand.
Section 1404. Obligation of Corporation Unconditional
Nothing contained in this Article or elsewhere in this Indenture or in the Securities of any series is intended to or shall impair, as among the Corporation, its creditors other than the holders of Senior Indebtedness (as defined with respect to the Securities of such series) and the Holders of the Securities of such series, the obligation of the Corporation, which is absolute and unconditional, to pay to such Holders the principal of and any premium and interest on the Securities of such series as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of such Holders and the creditors of the Corporation other than the holders of such Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder of Securities of such series from exercising all remedies otherwise permitted by this Indenture or applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of such Senior Indebtedness in respect of cash, property or securities of the Corporation received by the Trustee or the holders of Securities of such series upon the exercise of any such remedy and the rights of the holders of such Senior Indebtedness to enforce the provisions of subparagraph (3) of the second paragraph of Section 1401 against the Trustee and the Holders of the Securities of such series.
Upon payment or distribution of assets of the Corporation referred to in this Article, the Trustee and the Holders of Securities of each series shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any such dissolution, winding-up, liquidation or reorganization proceeding affecting the affairs of the Corporation is pending or upon a certificate of the trustee in bankruptcy, receiver, assignee for the benefit of creditors, liquidating trustee or agent or other person making any payment or distribution, delivered to the Trustee or to the Holders of the Securities of such series, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness (as defined with respect to the Securities of such series) and other indebtedness of the Corporation, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and, if such evidence is not furnished, the Trustee may defer payment to such Person pending judicial determination as to the right of such Person to receive such payment.
Section 1405. Payments on Securities Permitted
Nothing contained in this Article or elsewhere in this Indenture or in the Securities shall affect the obligations of the Corporation to make, or prevent the Corporation from making, payment of the principal of or any premium or interest on the Securities in accordance with the provisions hereof and thereof, except as otherwise provided in this Article.
Section 1406. Effectuation of Subordination by Trustee
Each Holder of Securities, by his acceptance thereof, authorizes and directs the Trustee in his, her or its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his, her or its attorney-in-fact, as the case may be, for any and all such purposes.
Section 1407. Knowledge of Trustee
The Corporation shall give prompt written notice to the Trustee of any fact known to the Corporation which would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities of any series pursuant to the provisions of this Article. Notwithstanding the provisions of this Article or any other provisions of this Indenture or the Securities of any series, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee, or the taking of any other
action by the Trustee, unless and until the Trustee shall have received written notice thereof mailed or delivered to the Trustee at its Corporate Trust Office from the Corporation, any Holder of Securities of such series, any paying agent or the holder or representative of any Senior Indebtedness (as defined with respect to the Securities of such series); provided that if at least two Business Days prior to the date upon which by the terms of this Indenture or the Securities of such series any such moneys may become payable for any purpose (including, without limitation, the payment of the principal or any premium or interest on any such Security) the Trustee shall not have received with respect to such moneys the notice provided for in this Section with respect to the Securities of such series, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such moneys and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to or on or after such date.
Section 1408. Trustee May Hold Senior Indebtedness
The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.
Section 1409. Rights of Holders of Senior Indebtedness Not Impaired
No right of any present or future holder of any Senior Indebtedness shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any noncompliance by the Corporation with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
With respect to the holders of Senior Indebtedness, (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture; (ii) the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture; (iii) no implied covenants or obligations shall be read into this Indenture against the Trustee; and (iv) the Trustee shall not be deemed to be a fiduciary as to such holders of Senior Indebtedness.
Section 1410. Article Applicable to Paying Agents
In case at any time any paying agent other than the Trustee shall have been appointed by the Corporation and be then acting hereunder, the term “Trustee” as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such paying agent within its meaning as fully for all intents and purposes as if such paying agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 1407, 1408 and 1411 shall not apply to the Corporation if it acts as its own paying agent; and provided, further, that references to the “Trustee” in Section 1404 shall not include the paying agent except that a paying agent shall be entitled to rely, to the same extent as the Trustee, on any order or decree made by a court of competent jurisdiction or upon a written
notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee or representative thereof), in each case as set forth in the second paragraph of Section 1404, if and to the extent that such order, decree or written notice shall have been approved by the Trustee.
Section 1411. Trustee; Compensation Not Prejudiced
Nothing in this Article shall apply to claims of, or payments to, the Trustee pursuant to Section 607 and such rights of the Trustee are not subordinated to the payment of Senior Indebtedness.
ARTICLE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1501. Indenture and Securities Solely Corporate Obligations
.
No recourse for the payment of the principal of or any premium or interest on any Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Corporation in this Indenture or in any supplemental indenture, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Corporation or of any successor corporation, either directly or through the Corporation or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture to be duly executed, as of the day and year first above written.
| EDISON INTERNATIONAL | |
|---|---|
| By: | /s/ Brendan Bond |
| Brendan Bond | |
| Vice President and Treasurer |
[EIX Subordinated Indenture Company Signature Page]
| THE BANK OF NEW YORK MELLON | |
|---|---|
| TRUST COMPANY, N.A., | |
| as Trustee | |
| By: | /s/ Ann Dolezal |
| Ann Dolezal |
[EIX Subordinated Indenture Trustee Signature Page]
Document
Exhibit 10.3
EDISON INTERNATIONAL
2008 EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated Effective
January 1, 2025 (except as otherwise provided)
PREAMBLE
The purpose of this Plan is to provide Eligible Employees of participating Affiliates with the opportunity to defer payment and taxation of some elements of their compensation.
This Plan applies to amounts arising from deferrals of compensation earned or determined after December 31, 2004 and to amounts that vested after December 31, 2004, and is intended to comply with Section 409A of the Internal Revenue Code and the regulations issued thereunder.
ARTICLE 1 DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
Administrator means the Compensation and Executive Personnel Committee of the Board of Directors of EIX.
Affiliate means EIX or any corporation or entity which (i) along with EIX, is a component member of a "controlled group of corporations" within the meaning of Section 414(b) of the Code, and (ii) has approved the participation of its Executives in the Plan.
Beneficiary means the person or persons or entity designated as such in accordance with Article 7 of the Plan.
Board means the Board of Directors of EIX.
Bonus means the dollar amount of bonus awarded by the Employer to the Participant pursuant to the terms of the Executive Incentive Compensation Plan, the 2007 Performance Incentive Plan, or a successor plan governing annual executive bonuses, before reductions for deferrals under the Plan.
Change in Control means a Change in Control of EIX as defined in the Severance Plan.
Code means the Internal Revenue Code of 1986, as amended.
Contingent Event means the Participant’s Disability or death while employed by an Affiliate or Separation from Service for other reasons if such event occurs prior to the Participant’s Retirement.
Contingent Payment Election means an election regarding the time and form of payment made or deemed made in accordance with Section 5.2.
Crediting Rate means the rate at which interest will be credited to Deferral Accounts. The rate will be determined annually in advance of the calendar year and will be equal to the average monthly Moody’s Corporate Bond Yield for Baa Public Utility Bonds for the 60 months
preceding November 1st of the prior year. Effective with calendar year 2015, the rate will be determined annually in advance of the calendar year and will be equal to the average monthly Moody’s Corporate Bond Yield for Baa Public Utility Bonds for the 60 months preceding September 1st of the prior year. EIX reserves the right to prospectively change the definition of Crediting Rate.
Deferral Account means the notional account established for record keeping purposes for a Participant pursuant to Article 4 of the Plan.
Deferral Election means the Participant's election to defer amounts under the Plan. Deferral Elections shall be made in the manner prescribed by the Administrator, which may include electronic elections.
Deferral Period means the Plan Year covered by a valid Deferral Election previously submitted by a Participant, or in the case of a newly eligible Participant, the balance of the Plan Year following the date of the Deferral Election.
Disability means the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under a plan covering employees of the Employer.
Dividend Equivalent means an amount equal to the dividend declared by the Board on one share of EIX common stock for any calendar quarter.
EIX means Edison International.
Eligible Employee means an Executive of an Affiliate, who (i) is a U.S. employee or an expatriate who is based and paid in the U.S., (ii) is designated by the Administrator as eligible to participate in the Plan (subject to the restriction in Section 8.2 of the Plan), and (iii) qualifies as a member of a "select group of management or highly compensated employees" under ERISA; provided that an individual first designated as an Executive on or after December 1, 2020 shall not be an Eligible Employee until the first day of the calendar quarter following the calendar quarter in which the Executive satisfies such criteria, except as otherwise specified in writing by the Administrator.
Employer means the Affiliate employing the Participant. Notwithstanding the foregoing, with respect to a particular Participant’s benefits under the Plan, for purposes of determining which Affiliate is obligated to pay such benefits, Employer as to such Participant and benefits means the Affiliate employing the Participant upon the Participant’s Separation from Service (or, as to any distribution of any benefit under the Plan prior to the Participant’s Separation from Service, the Affiliate employing the Participant at the time of such distribution).
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Executive means an employee of an Affiliate who is designated an Executive by the CEO of that Affiliate or who is elected as a Vice President or officer of higher rank by the board of that Affiliate or by the Board.
Executive Salary Deferral means the percentage deferred from Salary under this Plan. The Executive Salary Deferral is subtracted from Salary before Savings Plan contributions are calculated.
Matching Credits means the credits added to the Participant's Deferral Account under Article 3.
Matching Base means the amount of the Executive Salary Deferral plus the amount, if any, by which the Participant’s Salary in a calendar year minus the Executive Salary Deferral for that calendar year exceeds the Code Section 401(a)(17) compensation limit.
Participant means an Eligible Employee who has completed a Deferral Election with respect to future payments pursuant to Article 2 of the Plan, or an employee or former employee who has a Deferral Account balance.
Payment Election means a Primary Payment Election or a Contingent Payment Election, or a payment election pursuant to Section 5.1.1 or 5.1.2, as the case may be, subject to change pursuant to Section 5.3. Payment Elections shall be made in the manner prescribed by the Administrator, or its delegate, which may include electronic elections.
Payment Event as to a Participant means: (i) as to amounts deferred for Deferral Periods prior to 2021, the Participant’s Separation from Service for any reason other than death or Disability; and (ii) as to amounts deferred for Deferral Periods after 2020, the Participant’s Separation from Service for any reason other than death.
Plan means this EIX 2008 Executive Deferred Compensation Plan.
Plan Year means the calendar year.
Primary Payment Election means an election regarding the time and form of payments made or deemed made in accordance with Section 5.1.
Qualifying Award means an award granted to an Eligible Employee under the EIX Management Long-Term Incentive Compensation Plan, the EIX Officer Long-Term Incentive Compensation Plan, the EIX Equity Compensation Plan, or the EIX 2007 Performance Incentive Plan, other than an EIX nonqualified stock option, and evidenced in writing that provides (or is amended to provide) that the award may be deferred under this Plan.
Qualifying Bonus means a Bonus that constitutes “performance-based compensation” within the meaning of Treasury Regulation Section 1.409A-1(e).
Retirement means a Separation from Service under terms constituting a retirement for purposes of the EIX 2008 Executive Retirement Plan.
Salary means the Participant's basic pay from the Employer (excluding Bonuses, Special Awards, commissions, severance pay, and other non-regular forms of compensation) before reductions for deferrals under the Plan or the Savings Plan. Notwithstanding the foregoing, the Administrator, or its delegate, may prescribe a different definition of Salary for a Plan Year (or part thereof) if such definition is set forth in the form or instructions for the Deferral Election for such Plan Year.
Savings Plan means the Edison 401(k) Savings Plan.
Separation from Service occurs: (i) with respect to an individual who is a Participant on or prior to December 31, 2023, when such Participant dies, retires, or otherwise has a termination of
employment from the Employer that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder; and (ii) with respect to an individual who becomes a Participant following December 31, 2023, when such Participant dies, retires, or otherwise has a termination of employment from the Employer that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), provided that a termination of employment from the Employer constituting such a “separation from service” shall be deemed to occur on the date on which it is reasonably anticipated that the level of bona fide services that the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to less than 50 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months), all as determined in accordance with Treasury Regulation Section 1.409A-1(h).
Severance Plan means the EIX 2008 Executive Severance Plan (or any similar successor plan).
Similar Plan means a plan required to be aggregated with this Plan under Treasury Regulation Section 1.409A-1(c)(2)(i).
Special Award means an award other than Salary, Bonus or a Qualifying Award that is payable in cash at a future date.
Specified Employee means a Participant who is designated as an elected Vice President or above by the Administrator, using the identification date and methods determined by the Administrator.
Termination of Employment means the voluntary or involuntary Separation from Service for any reason other than Retirement or death.
Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s Beneficiary, or the Participant’s spouse or dependent (as defined in Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control.
Valuation Date means the last day of the month in which the final day of employment falls prior to Separation from Service, unless distribution is scheduled or required to commence on a date other than the first day of the month following Separation from Service, in which latter case Valuation Date means the day before distribution is scheduled or required to commence.
Years of Service. Years of vesting service credited under the terms of the EIX 2008 Executive Retirement Plan.
ARTICLE 2 DEFERRAL ELECTIONS1
2.1 Elections
(a) Salary. An Eligible Employee may elect to defer Salary under the Plan by submitting a Salary Deferral Election to the Administrator specifying the whole percentage of Salary to be deferred prior to the beginning of the Plan Year during which the Eligible Employee performs the services for which such Salary is to be earned. The maximum Salary Deferral is 75% of Salary (or such other amount as prescribed by the Administrator and set forth in the form or instructions for the applicable Salary Deferral Election).
Once made, a Salary Deferral Election (except as provided below and in Section 2.1(f); including any election regarding time and form of payment) will continue to apply for subsequent Deferral Periods (“Evergreen Salary Election”) unless (i) the Eligible Employee submits a new Salary Deferral Election during a subsequent enrollment period changing the deferral amount or revoking the existing election, or (ii) the Participant is not an Eligible Employee on the last day of a subsequent enrollment period. Notwithstanding any provisions of Section 5.1.1 to the contrary, if a Participant who has a Primary Payment Election in effect with respect to Salary deferrals for the 2018 Plan Year (including a deemed election) does not make a new Payment Election for Salary deferrals for the 2019 Plan Year, then the preceding sentence and the payment rules of Sections 5.1 and 5.2 shall continue to apply to such Participant; as a result, the Primary Payment Election and the Contingent Payment Election for Salary deferrals for the 2018 Plan Year (including deemed elections) shall apply for Salary deferrals for the 2019 Plan Year and for subsequent Plan Years unless prior to a subsequent Plan Year the Participant timely submits a new Payment Election for the subsequent Plan Year. Notwithstanding any provisions to the contrary in this Plan, except as prescribed by the Administrator and set forth in the form or instructions for the applicable Salary Deferral Election, there will be no Evergreen Salary Elections for 2021 and subsequent Plan Years, and any Evergreen Salary Election in effect at the end of 2020 shall not apply as to any Salary for 2021 or any subsequent Plan Year.
Effective with the final payroll period in 2014, Salary paid solely for services performed during a payroll period (as described in Section 3401(b) of the Code) that includes the last day of a Plan Year, and for which payment is made or scheduled to be made in the immediately following Plan Year, shall be treated for purposes of this Plan as compensation for services earned in the immediately following Plan Year.
(b) Bonus. An Eligible Employee may elect to defer a portion of his or her Bonus (up to the maximum noted below) by submitting a Bonus Deferral Election to the Administrator as follows:
(i) With respect to a Bonus that is not a Qualifying Bonus, such a Bonus Deferral Election must be submitted prior to the beginning of the Plan Year during which the Eligible Employee performs the services for which such Bonus is to be earned.
1 For purposes of clarity, the provisions of this Plan regarding Deferral and Payment Elections for the 2021 Plan Year are effective beginning with Deferral and Payment Elections made in 2020 for the 2021 Plan Year.
(ii) With respect to a Bonus that is a Qualifying Bonus, such a Bonus Deferral Election must be submitted prior to the date that is six months before the end of the performance period and in no event later than the date the Qualifying Bonus has become readily ascertainable. Notwithstanding the foregoing, either generally or as to a particular Qualifying Bonus, the Administrator may, but need not, require that Bonus Deferral Elections for Qualifying Bonuses be submitted to the Administrator prior to the beginning of the Plan Year during which the Eligible Employee performs the services for which such Qualifying Bonus is to be earned.
The maximum Bonus Deferral is: 100% of Bonus if the Plan Year for which such Bonus is to be earned is the 2018 Plan Year or an earlier Plan Year; or 85% of Bonus (or such other amount as prescribed by the Administrator and set forth in the form or instructions for the applicable Bonus Deferral Election) if the Plan Year for which such Bonus is to be earned is the 2019 Plan Year or a subsequent Plan Year.
Once made, a Bonus Deferral Election (except as provided below and in Section 2.1(f); including any election regarding time and form of payment) will continue to apply for subsequent Deferral Periods (“Evergreen Bonus Election”) unless (i) the Eligible Employee submits a new Bonus Deferral Election during a subsequent enrollment period changing the deferral amount or revoking the existing election, or (ii) the Participant is not an Eligible Employee on the last day of a subsequent enrollment period. Notwithstanding any provisions of this Section 2.1(b) to the contrary, if a Participant who has a Deferral Election to defer 100% of Bonus, net of taxes, for the 2018 Plan Year does not make a new Deferral Election for Bonus deferrals for the 2019 Plan Year, then the Participant’s Deferral Election for the 2019 Plan Year shall be to defer 85% of Bonus for the 2019 Plan Year. Notwithstanding any provisions of Section 5.1.1 to the contrary, if a Participant who has a Primary Payment Election in effect with respect to Bonus deferrals for the 2018 Plan Year (including a deemed election) does not make a new Payment Election for Bonus deferrals for the 2019 Plan Year, then the first sentence of this paragraph and the payment rules of Sections 5.1 and 5.2 shall continue to apply to such Participant; as a result, the Primary Payment Election and the Contingent Payment Election for Bonus deferrals for the 2018 Plan Year (including deemed elections) shall apply for Bonus deferrals for the 2019 Plan Year and for subsequent Plan Years unless prior to a subsequent Plan Year the Participant timely submits a new Payment Election for the subsequent Plan Year. Notwithstanding any provisions to the contrary in this Plan, except as prescribed by the Administrator and set forth in the form or instructions for the applicable Bonus Deferral Election, there will be no Evergreen Bonus Elections for 2021 and subsequent Plan Years, and any Evergreen Salary Election in effect at the end of 2020 shall not apply as to any Bonus for 2021 or any subsequent Plan Year.
(c) Initial Eligibility. Notwithstanding the foregoing, an employee who first becomes an Eligible Employee during a Plan Year may make an initial Deferral Election for the deferral of Salary for such Plan Year and the Administrator may allow any such employee to make an initial Deferral Election for the deferral of Bonus for such Plan Year, provided in each case that such Eligible Employee has not previously become eligible to participate in this or any Similar Plan. Any such initial Salary Deferral Election must be made within thirty days (or such shorter period as may be prescribed by the Administrator) after the date the employee becomes an Eligible Employee and shall apply to Salary earned for services performed on and after the first day of the
first payroll period applicable to the Eligible Employee that commences after the last day of such thirty-day period (or such shorter period as may be prescribed by the Administrator). If the employee first becomes an Eligible Employee prior to establishment of the performance criteria for a Qualifying Bonus, the Administrator may allow the Eligible Employee to make the initial Bonus Deferral Election prior to the date that is six months before the end of the performance period but not later than the date the Bonus has become readily ascertainable. Otherwise, or with respect to a Bonus that is not a Qualifying Bonus, any initial Bonus Deferral Election permitted by the Administrator under this Section 2.1(c) must be made within thirty days (or such shorter period as may be prescribed by the Administrator) after the date the employee becomes an Eligible Employee and shall apply to that portion of the Bonus earned during the Plan Year multiplied by the ratio of (i) the number of days remaining in the calendar year after the election is submitted to the Administrator (or if the Administrator specifies in the form or instructions for such initial Bonus Deferral Election, the number of days remaining in the calendar year after the last day of the thirty-day period—or such shorter period as may be prescribed by the Administrator—for making such initial Bonus Deferral Election) to (ii) the total number of days during the Plan Year that such Employee is employed by an Affiliate.
(d) Qualifying Awards. An Eligible Employee may elect to defer payment of a portion of his or her Qualifying Awards (up to the Maximum Qualifying Award Deferral as defined below) by submitting a Qualifying Award Deferral Election to the Administrator specifying the whole percentage of his or her Qualifying Awards to be deferred. With respect to a Qualifying Award that was granted on or before December 31, 2012 with respect to a performance period scheduled to end on or after December 31, 2013, and that is “performance-based compensation” within the meaning of Treasury Regulation Section 1.409A-1(e), the Eligible Employee must submit his or her Qualifying Award Deferral Election to the Administrator not later than December 31, 2012. Otherwise, the Participant must submit his or her Qualifying Award Deferral Election to the Administrator prior to the beginning of the Plan Year in which such Qualifying Award is granted. The “Maximum Qualifying Award Deferral” is: 100% of the Qualifying Award if the Qualifying Award was granted in the 2018 Plan Year or an earlier Plan Year; or 85% of the Qualifying Award (or such other amount as prescribed by the Administrator and set forth in the form or instructions for the applicable Qualifying Award Deferral Election) if the Qualifying Award is granted in the 2019 Plan Year or a subsequent Plan Year.
In the circumstances provided in the next two sentences, the Administrator may, but need not, extend the applicable Qualifying Award Deferral Election deadlines either generally or as to a particular Qualifying Award. With respect to any Qualifying Award that qualifies as “performance-based compensation,” within the meaning of Treasury Regulation Section 1.409A-1(e), the Administrator may permit the Qualifying Award Deferral Election to be made prior to the date that is six months before the end of the performance period and in no event later than the date the Qualifying Award has become readily ascertainable. With respect to any Qualifying Award that is subject to a substantial risk of forfeiture at grant, the Administrator may permit the Qualifying Award Deferral Election to be made not more than thirty days following the date the Qualifying Award is granted, provided that the Deferral Election is not made later than the date that is twelve months before the Qualifying Award could cease to be subject to a substantial risk of forfeiture other than due to death, Disability or a change in the
ownership or effective control or a change in the ownership of a substantial portion of the assets of EIX within the meaning of Treasury Regulation Section 1.409A-3(i)(5).
Notwithstanding the foregoing, the Administrator may allow an employee who first becomes an Eligible Employee during a Plan Year to make an initial Deferral Election for the deferral of a portion of his or her Qualifying Awards (up to the Maximum Qualifying Award Deferral), provided that such Eligible Employee has not previously become eligible to participate in this or any Similar Plan. Such initial Qualifying Award Deferral Election must be made within thirty days after the date the employee becomes an Eligible Employee. The initial Deferral Election shall apply to the entire specified portion of the Qualifying Award to which it relates if either (i) the Qualifying Award qualifies as “performance-based compensation,” within the meaning of Treasury Regulation Section 1.409A-1(e), the Eligible Employee is employed by an Affiliate from the later of the beginning of the performance period applicable to the Qualifying Award or the date the performance criteria are established for the Qualifying Award through the date the initial Qualifying Award Deferral Election is made, and the initial Qualifying Award Deferral Election is made prior to the date that is six months before the end of the performance period and in no event later than the date the Qualifying Award has become readily ascertainable, or (ii) the Qualifying Award is subject to a substantial risk of forfeiture at grant and the initial Qualifying Award Deferral Election is made not more than thirty days following the date the Qualifying Award is granted, provided that the initial Deferral Election is not made later than the date that is twelve months before the Qualifying Award could cease to be subject to a substantial risk of forfeiture other than due to death, Disability or a change in the ownership or effective control or a change in the ownership of a substantial portion of the assets of EIX within the meaning of Treasury Regulation Section 1.409A-3(i)(5). If the preceding sentence does not apply, the initial Qualifying Award Deferral Election may not result in a deferral of a portion of the related Qualifying Award greater than that portion of the Qualifying Award determined by dividing the number of days remaining in the applicable performance period (or the number of days remaining in the applicable service period if the Qualifying Award is not a performance-based vesting award) after the election is submitted to the Administrator by the total number of days during that performance period (or that service period, as the case may be) that such Employee is employed by an Affiliate.
The Qualifying Award remains subject to all applicable limitations as to the time or times during which it may become payable or the conditions for payment as provided in the terms and conditions of the Qualifying Award.
Once made, a Qualifying Award Deferral Election (except as provided below and in Section 2.1(f); including any election regarding time and form of payment) will continue to apply for subsequent Deferral Periods (“Evergreen Qualifying Award Election”) unless (i) the Eligible Employee submits a new Qualifying Award Deferral Election during a subsequent enrollment period changing the deferral amount or revoking the existing election, or (ii) the Participant is not an Eligible Employee on the last day of a subsequent enrollment period; provided that a Deferral Election made prior to December 1, 2012 shall not be given effect as to any Qualifying Award to the extent that the Participant had the ability on or after December 1, 2012 to make a new Deferral Election as to that Qualifying Award. Notwithstanding any provisions of Section 5.1.1 to the contrary, if a Participant who has a Primary Payment Election in effect with respect
to a Qualifying Award granted in the 2018 Plan Year (including a deemed election) does not make a new Payment Election for a Qualifying Award granted in the 2019 Plan Year, then the preceding sentence and the payment rules of Sections 5.1 and 5.2 shall continue to apply to such Participant; as a result, the Primary Payment Election and the Contingent Payment Election for the Qualifying Award granted in the 2018 Plan Year (including deemed elections) shall apply for the Qualifying Award granted in the 2019 Plan Year and for subsequent Plan Years unless prior to a subsequent Plan Year the Participant timely submits a new Payment Election for the subsequent Plan Year. Notwithstanding any provisions to the contrary in this Plan, except as prescribed by the Administrator and set forth in the form or instructions for the applicable Qualifying Award Deferral Election, there will be no Evergreen Qualifying Award Elections for 2021 and subsequent Plan Years, and any Evergreen Qualifying Award Election in effect at the end of 2020 shall not apply as to any Qualifying Award granted in 2021 or any subsequent Plan Year.
(e) Special Awards. An Eligible Employee may elect to defer payment of a portion of his or her Special Awards (up to the maximum specified prescribed by the Administrator and set forth in the form or instructions for the applicable Special Award Deferral Election) by submitting a Special Award Deferral Election to the Administrator specifying the whole percentage of his or her Special Awards to be deferred. A Special Award Deferral Election shall apply to the Special Award to which it relates if either (i) the Special Award qualifies as “performance-based compensation,” within the meaning of Treasury Regulation Section 1.409A-1(e), the Eligible Employee makes the Special Award Deferral Election prior to the date that is six months before the end of the performance period, the Eligible Employee has been employed by an Affiliate from the later of the beginning of the performance period applicable to the Special Award or the date the performance criteria are established for the Special Award through the date the Special Award Deferral Election is made, and the Special Award Deferral Election is made no later than the date the Special Award has become readily ascertainable; (ii) the Special Award is subject to a substantial risk of forfeiture at grant, the Special Award Deferral Election is made within thirty days following the date the Special Award is granted, and the Special Award Deferral Election is made no later than the date that is twelve months before the Special Award could cease to be subject to a substantial risk of forfeiture other than due to death, Disability or a change in the ownership or effective control or a change in the ownership of a substantial portion of the assets of EIX within the meaning of Treasury Regulation Section 1.409A-3(i)(5); or (iii) the Special Award Deferral Election is made prior to the beginning of the Plan Year in which such Special Award is given.
In addition, an employee who first becomes an Eligible Employee during a Plan Year may make an initial Deferral Election for the deferral of some or all of his or her Special Awards, provided that such Eligible Employee has not previously become eligible to participate in this or any Similar Plan. Such Special Award Deferral Election must either (i) comply with the timing provisions set forth in the preceding paragraph, or (ii) be made within thirty days after the date the employee becomes an Eligible Employee and not result in a deferral of a portion of the related Special Award greater than that portion of the Special Award determined by dividing the number of days remaining in the applicable performance period (or the number of days remaining in the applicable service period if the Special Award is not a performance-based vesting award) after the election is submitted to the Administrator by the total number of days
during that performance period (or that service period, as the case may be) that such Employee is employed by an Affiliate.
Notwithstanding the foregoing, either generally or as to a particular Special Award, the Administrator may, but need not, require that Special Award Deferral Elections be submitted to the Administrator prior to the beginning of the Plan Year in which such Special Award is given.
The Special Award remains subject to all applicable limitations as to the time or times during which it may become payable or the conditions for payment as provided in the terms and conditions of the Special Award.
Once made, a Special Award Deferral Election (except as provided below and in Section 2.1(f); including any election regarding time and form of payment) will continue to apply for subsequent Deferral Periods (“Evergreen Special Award Election”) unless (i) the Eligible Employee submits a new Special Award Deferral Election during a subsequent enrollment period changing the deferral amount or revoking the existing election, or (ii) the Participant is not an Eligible Employee on the last day of a subsequent enrollment period; provided that a Deferral Election made prior to December 1, 2012 shall not be given effect as to any Special Award to the extent that the Participant had the ability on or after December 1, 2012 to make a new Deferral Election as to that Special Award. Notwithstanding any provisions to the contrary in this Plan, except as prescribed by the Administrator and set forth in the form or instructions for the applicable Special Award Deferral Election, there will be no Evergreen Special Award Elections for 2021 and subsequent Plan Years, and any Evergreen Special Award Election in effect at the end of 2020 shall not apply as to any Special Award granted in 2021 or any subsequent Plan Year.
(f) Evergreen Specified Date Payout Election. If a Deferral Election in effect with respect to one Plan Year (the first Plan Year) carries over and applies to the next Plan Year (the second Plan Year) pursuant to this Section 2.1, and the Participant’s Payment Election in effect with respect to the first Plan Year includes a specified date payout election, then:
(i) if the second Plan Year is a Plan Year before the 2019 Plan Year, one additional year will be added to the specified date when the Payment Election is applied to the second Plan Year; or
(ii) if the second Plan Year is the 2019 Plan Year or a subsequent Plan Year, then (x) an additional year will not be added to the specified date when the Payment Election is applied to the second Plan Year, and (y) if the specified date payout election in effect with respect to the first Plan Year is a date in the first or second Plan Year, the Participant shall be deemed to have made a Payment Election for the second Plan Year of a single lump sum upon the earliest of the Participant’s Payment Event or death (or , if the second Plan Year is the 2019 Plan Year or the 2020 Plan Year, the earliest of the Participant’s Payment Event, death, or Disability); provided, however, that
(iii) the Administrator, or its delegate, may prescribe a different payout rule that will be applied for the second Plan Year if such different rule is set forth in the form or instructions for the Payment Election for the second Plan Year.
Notwithstanding any provisions in this Section 2.1(f) to the contrary, if the first Plan Year is 2020 or any subsequent year, the Deferral Election and Payment Election in effect for the first Plan Year shall not carry over and apply to the second Plan Year (except as prescribed by the Administrator and set forth in the form or instructions for the Deferral Election and Payment Election for the second Plan Year).
2.2 Vesting
Amounts deferred under this Article 2 and any earnings thereon will be 100% vested at all times. Notwithstanding the foregoing, any Special Award deferred under Section 2.1(e) and any earnings thereon may be subject to vesting terms. Any such deferred Special Award shall fully vest upon the Participant’s Separation from Service if the Participant is entitled to receive benefits under the Severance Plan and has satisfied all conditions for such benefits. Notwithstanding the foregoing or anything in Section 3.2 to the contrary, Plan deferrals and credits (together with any earnings thereon) are subject to forfeiture and/or recoupment in accordance with applicable law, pursuant to any recoupment, “clawback” or similar policy maintained by EIX or its Affiliates, or under the terms of the award to which the deferral relates.
ARTICLE 3 MATCHING CREDITS
3.1 Amount
Matching Credits in each calendar year (through and including Matching Credits for 2017 Salary and 2017 Bonus) will be added by the Employer to the Participant's Deferral Account under this Plan equal to (i) the lesser of the amount of Salary earned in the calendar year and deferred under the Plan or 6% of the Participant’s Matching Base for the calendar year, plus (ii) the lesser of one-half of the amount of Bonus deferred under the Plan or 3% of the Bonus. Matching Credits added to the Participant’s Deferral Account shall be subject to the payment election provisions of Article 5 (and, for the avoidance of doubt, will become payable pursuant to the Deferral Election made or deemed made in the year prior to the calendar year the Matching Credits are added to the Participant’s Deferral Account).
3.2 Vesting
The Participant's Matching Credits and earnings thereon will vest (i) when the Participant has completed five Years of Service with an Affiliate, (ii) upon the Participant’s Disability while employed with an Affiliate, (iii) upon the Participant’s death while employed with an Affiliate, or (iv) upon the Participant’s Separation from Service if the Participant is entitled to benefits under the Severance Plan and has satisfied all conditions for such benefits. A Participant’s unvested Matching Credits and earnings thereon will terminate and be forfeited and the Participant will have no right thereto or in respect thereof on the first to occur of:
(a) any Separation from Service of the Participant not listed in clauses (ii), (iii), or (iv) of the preceding sentence, or
(b) as to any Matching Credits (and earnings thereon) with respect to Salary or Bonus deferred for any Plan Year after 2013, any specified payment date elected by the Participant as to the deferrals to which such Matching Credits (and earnings thereon) relate.
3.3 Cessation of Matching Credits
Effective January 1, 2018, the Matching Credits feature of the Plan will terminate, and no Matching Credits will be made to any Participant’s Deferral Account at any time thereafter (other than any amounts still to be credited as Matching Credits for 2017 Salary or 2017 Bonus). Matching Credits added to a Participant’s Deferral Account with respect to a calendar year prior to 2018 shall continue to be subject to applicable Plan provisions, including without limitation provisions pertaining to vesting, crediting of interest, and payment.
ARTICLE 4 DEFERRAL ACCOUNTS
4.1 Deferral Accounts
Solely for record keeping purposes, the Administrator will maintain a Deferral Account for each Participant with such subaccounts as the Administrator or its record keeper finds necessary or convenient in the administration of the Plan. For Deferral Periods after 2020, the subaccounts shall be the Payment Accounts described in Section 5.1.2.
4.2 Timing of Credits
(a) Salary, Bonus and Special Award Deferrals. The Administrator will credit to the Participant’s Deferral Account the Salary, Bonus and Special Award deferrals under Article 2 at the time such amounts would otherwise have been paid to the Participant but for the Deferral Election.
(b) Matching Credits. Matching Credits under Article 3 will be credited (conditionally until vested) to the Deferral Account at the same time the related deferrals are credited to the Deferral Account.
(c) Qualifying Awards. As of the first day immediately following the vesting or performance period of a Qualifying Award that the New York Stock Exchange is open for trading, or as of the ex-dividend date in the case of Dividend Equivalents, a Participant’s Deferral Account will be credited with the deferred amount.
(d) Interest Crediting Dates. The Administrator will credit interest at the Crediting Rate to the Participant's Deferral Account on a daily basis, compounded annually.
4.3 Statement of Accounts
The Administrator will periodically either provide or make available to each Participant a statement setting forth the balance of the Deferral Account maintained for the Participant.
ARTICLE 5 PAYMENT ELECTIONS
5.1 Primary Payment Election for Deferral Periods Prior to 2019 (except as otherwise provided)
(a) As part of a Deferral Election for Deferral Periods prior to 2019, a Participant may make a Primary Payment Election specifying the payment schedule for each subaccount that will be created as a result of the Deferral Election. The choices available for a Primary Payment Election are as follows:
(i) Monthly installments for 60 to 180 months, as provided in the applicable Primary Payment Election form; or
(ii) A single lump sum; or
(iii) Two to fifteen installments paid annually, as provided in the applicable Primary Payment Election form; or
(iv) Any combination of the preceding three choices, as provided in the applicable Primary Payment Election form.
Payments under this Primary Payment Election may commence upon (i) the first day of a specified month and year that may be no later than the month and year in which the Participant attains age 75; (ii) the Participant’s Retirement; or (iii) the first day of the month that is a specified number of months following the Participant’s Retirement or the first day of a specified month a specified number of years following the calendar year in which Retirement occurs (provided that if the date otherwise determined pursuant to this clause (iii) is later than the month and year in which the Participant attains age 75, the date pursuant to this clause (iii) shall be the later of the Participant’s Retirement or the month and year in which the Participant attains age 75).
(b) Subject to Section 5.5, lump sum payments or initial installment payments will be made within 90 days (60 days in the case of a payment triggered by a specified payment date) of the scheduled dates. Interest will be added to the payment amount for the days elapsed between the scheduled payment date and the actual date of payment. Notwithstanding anything to the contrary in a Participant Deferral Election, payments from a Participant’s Deferral Account will be subject to the following earliest payment date rules: (i) no subaccount relating to a Bonus Deferral Election may be scheduled to commence payment or be paid until the first day of the fourth month in the Plan Year immediately following the Plan Year for which the Bonus was awarded (for example, April 1, 2014 as to a Bonus awarded for 2013); and (ii) no subaccount relating to a Qualifying Award Deferral Election or Special Award Deferral Election with respect to “performance-based compensation” within the meaning of Treasury Regulation Section 1.409A-1(e) may be scheduled to commence payment or be paid until the first day of the fourth month in the Plan Year immediately following the Plan Year in which the corresponding performance period is scheduled to end. If the foregoing earliest payment date rules apply to any payment to be paid in installments, the first installment shall be paid on the applicable earliest
payment date and subsequent installments shall be paid over the applicable installment period. The foregoing earliest payment date rules shall apply to payments under both Primary Payment Elections and Contingent Payment Elections. If the Participant’s delivery of a release would change the amount of his or her Plan benefit that is payable, and the period for the Participant to consider, execute and revoke such release spans two different Plan Years, and the 90- or 60-day period, as applicable, specified above for the payment of any benefit contingent on such release also spans those two Plan Years, payment of the portion of the benefit contingent upon such release (and earnings thereon) shall be made in the time period otherwise specified above but in the second of those two Plan Years.
If paid in installments, the installments will be paid as follows:
(i)For purposes of calculating installments, the Deferral Account or subaccount will be valued as of the Valuation Date and subsequently as of December 31 each year, with installments for the next calendar year adjusted according to procedures established by the Administrator.
(ii)For Deferral Periods prior to 2021, the installments will be paid in amounts that will amortize the Deferral Account or subaccount balance with interest credited at the Crediting Rate over the period of time benefits are to be paid.
(iii)For Deferral Periods after 2020, annual installment amounts shall be determined by dividing (a) by (b), where (a) equals the Payment Account as of the last valuation under clause (i) above and (b) equals the remaining number of installment payments. The Payment Account balance will continue to be credited with interest at the Crediting Rate until the last installment payment is made.
Notwithstanding anything herein to the contrary, distribution in installments shall be treated as a single payment as of the date of the initial installment for purposes of Section 409A of the Code. If paid in monthly installments, the installments may be paid in a single check each month or in more than one check for any given month, provided that in either such case the total amount of the monthly payment shall not change.
(c) If no Primary Payment Election has been made, the Primary Payment Election shall be deemed to be a single lump sum upon the Participant’s Retirement (or, if earlier, the Participant’s death or Disability).
5.1.1 Payment Election for 2019 and 2020 Deferral Periods
(a) As part of a Deferral Election for Deferral Periods after 2018, a Participant may elect, subject to the conditions set forth in this paragraph, that payment of amounts deferred pursuant to such Deferral Election will be scheduled to commence upon: (i) January 1 of a specified year that may be no later than the year in which the Participant attains age 75; (ii) the Participant’s Payment Event; (iii) January 1 of the year following the Payment Event; or (iv) January 1 of the fifth year following the Payment Event. If a Participant dies or, while employed by an Affiliate, becomes Disabled before payments have commenced, then payment shall be made in a lump sum upon (or within 90 days following) the Participant’s death or Disability. If a Participant dies or,
while employed by an Affiliate, becomes Disabled after payments have commenced but before all payments have been completed, then all of the Participant’s remaining benefits shall be paid in a lump sum upon (or within 90 days following) the Participant’s death or Disability. If a Participant elects payment to commence pursuant to clause (iii) or clause (iv) above, the Payment Event occurs, and the date otherwise determined pursuant to clause (iii) or clause (iv), as applicable under the Deferral Election, would be later than the month and year in which the Participant attains age 75, then the commencement date shall instead be the later of the Participant’s Payment Event or the month and year in which the Participant attains age 75.
Unless otherwise provided by the Administrator, or its delegate, in the applicable Deferral Election form, the choices available for a Payment Election are a single lump sum or five, ten or fifteen installments paid annually.
(b) The provisions in Section 5.1(b) also apply to this Section 5.1.1.
(c) If no Payment Election has been made by a Participant with respect to a Deferral Period, the Participant’s Payment Election for that Deferral Period shall be deemed to be a single lump sum upon the earliest of the Participant’s Payment Event, death, or Disability.
(d) Notwithstanding anything to the contrary in this Section 5.1.1, the Administrator, or its delegate, may prescribe rules in the form or instructions for any Payment Election that are different than the rules set forth in this Section 5.1.1 as to the benefits covered by such Payment Election, including expanding or limiting the forms of payment and payment commencement dates available for the Payment Election and prescribing different payment rules for death and Disability.
5.1.2 Payment Election for Deferral Periods After 2020
(a) Unless otherwise provided by the Administrator, or its delegate, in the applicable Deferral Election form or instructions for a Deferral Period after 2020, each Participant may establish up to six “Payment Accounts” for the payment of amounts deferred for Deferral Periods after 2020, with each Payment Account specifying a Payment Start Date and a Form of Payment from among the following choices:
(i)Payment Start Date Choices: (x) the later of January 1 of the year following the Participant’s Payment Event or the first day of the seventh month following the Participant’s Payment Event; or (y) January 1 of a specified year (“Specified Date”). At least one of a Participant’s Payment Accounts must specify a Payment Start Date that commences payment pursuant to clause (x). If a Payment Account specifies a Specified Date pursuant to clause (y), then that Payment Account shall no longer count against the Participant’s maximum number of Payment Accounts after that Specified Date has occurred and all Plan benefits have been paid to the Participant with respect to that Payment Account.
(ii)Form of Payment Choices: (x) a single lump sum; or (y) two to ten installments paid annually.
As part of a Deferral Election for a Deferral Period after 2020, the Participant may elect, subject to the conditions set forth in this paragraph, that payment of amounts deferred pursuant to such Deferral Election be paid pursuant to Payment Account(s) established by the Participant; provided, however, that a Participant may not select a Specified Date Payment Account for a Deferral Period that is the Plan Year prior to the Specified Date corresponding to that Payment Account (for example, a January 1, 2025 Specified Date Payment Account could not be elected as a Payment Account for the 2024 Deferral Period). If a Participant elects more than one Payment Account for the payment of amounts deferred pursuant to a Deferral Election, the Participant must specify the portion of such deferrals to be allocated to each Payment Account elected by the Participant and the total of such allocations must equal one hundred percent (100%).
Notwithstanding any provisions of the preceding two paragraphs in this Section 5.1.2(a) to the contrary, benefits accrued with respect to the 2021 Deferral Period or any subsequent Deferral Period shall be subject to the following payment rules: (i) if the Participant dies before payments have commenced for a Payment Account, then payment of the Payment Account shall be made in a lump sum upon (or within 90 days following) the Participant’s death; and (ii) if the Participant dies after payments have commenced for a Payment Account but before all payments have been completed, then the remainder of the Payment Account shall be paid in a lump sum upon (or within 90 days following) the Participant’s death.
(b) The provisions in Section 5.1(b), with the exception of the earliest payment date rules in Section 5.1(b), also apply to this Section 5.1.2.
(c) Notwithstanding anything to the contrary in this Section 5.1.2, the Administrator, or its delegate, may prescribe rules in the form or instructions for any Payment Election that are different than the rules set forth in this Section 5.1.2 as to the benefits covered by such Payment Election, including expanding or limiting Payment Start Date Choices and Form of Payment Choices available for the Payment Election, prescribing different payment rules for death, or prescribing a deemed Payment Election if a Participant is allowed to make a Deferral Election for a Deferral Period after 2020 without specifying a Payment Election.
5.2 Contingent Payment Election for Deferral Periods Prior to 2019 (except as otherwise provided)
As part of a Deferral Election for Deferral Periods prior to 2019, a Participant may make a Contingent Payment Election for each of the Contingent Events of (1) the Participant’s death while employed by an Affiliate, (2) the Participant’s Disability while employed by an Affiliate, and (3) Termination of Employment, for each subaccount that will be created as a result of the Deferral Election, which Contingent Payment Election will take effect upon the first Contingent Event, if any, that occurs before the Participant’s Retirement (if the Participant specified a payment schedule determined by reference to Retirement in Section 5.1) or the first day of a specified month and year elected by the Participant pursuant to Section 5.1. The choices available for the Contingent Payment Election are those specified in Section 5.1 except that the references to Retirement shall instead refer to the applicable Contingent Event.
If the Participant has made no Contingent Payment Election and a Contingent Event occurs prior to Retirement (if the Participant specified a payment schedule determined by reference to Retirement in Section 5.1) or the first day of a specified month and year elected by the Participant pursuant to Section 5.1, the Administrator will pay the benefit as specified in the Participant’s Primary Payment Election, except that payments scheduled for payment or commencement of payment “upon Retirement,” or with a payment date determined by reference to “Retirement,” will be paid, commence, or have payment determined by a reference to, the first day of the month following the month in which the Contingent Event occurs. If the Participant has made neither a Contingent Payment Election nor a Primary Payment Election and a Contingent Event occurs prior to Retirement, the Payment Election shall be deemed to be a single lump sum upon the Participant’s Contingent Event, subject to the earliest payment date rules in Section 5.1.
5.3 Changes to Payment Elections
A Participant may change an existing Payment Election, including a deemed Payment Election, after the period allowed for the related Deferral Election by submitting a new written Payment Election to the Administrator in the manner prescribed by the Administrator, subject to the following conditions: (1) the new Payment Election shall not be effective unless made at least twelve months before the payment or commencement date scheduled under the prior Payment Election; (2) the new Payment Election must defer a lump sum payment or commencement of installment payments for a period of at least five years from the date that the lump sum would have been paid or installment payments would have commenced under the prior Payment Election; and (3) the election shall not be effective until twelve months after it is submitted to the Administrator. For Payment Election changes submitted before 2021, a Payment Election change will not be effective if, at the time such new Payment Election is made, the imposition of the five-year delay would require that the benefits to be paid pursuant to such Payment Election would not begin until after the Participant’s 75th birthday. Except as otherwise provided by the Administrator, or its delegate, in the form or instructions for a Payment Election change submitted after 2020, any such Payment Election change as to a Payment Event or (in the case of a change to a Contingent Payment Election) death (or, in either case, a date determined with reference to a Payment Event or death) will not be effective unless the new Payment Election defers the applicable payment start date by exactly five years from the start date under the prior Payment Election (for clarity, to the extent a Payment Election provides for payment to commence upon a specified date, rather than a date determined with reference to a Payment Event or death, the new Payment Election may defer the specified date by five or more years). After 2018, a Participant will only be given one opportunity per Deferral Account to change the Payment Election for that Deferral Account (for Deferral Periods after 2020, a Participant will only be given one opportunity per Payment Account to change the Payment Election for that Payment Account), and the payment schedules available for such new Payment Election are those prescribed by the Administrator, or its delegate, in the form or instructions for the Payment Election change, subject to the conditions specified in this paragraph.
5.4 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole discretion and as determined by it in writing, pay the benefits in a single lump sum if the sum of all benefits payable to the Participant under this Plan and all Similar Plans is less than or equal to the applicable dollar amount under Section 402(g)(1)(B) of the Code.
5.5 Six-Month Delay in Payment for Specified Employees
Notwithstanding anything herein to the contrary, in the event that a Participant who is a Specified Employee is entitled to a distribution from the Plan due to the Participant’s Separation from Service, the lump sum payment or the commencement of installment payments, as the case may be, may not be scheduled to occur or occur before the date that is the earlier of (1) six months following the Participant’s Separation from Service for reasons other than death or (2) the Participant’s death.
5.6 Conflict of Interest Exception, Etc.
Notwithstanding the foregoing, the Administrator may, in its sole discretion, pay benefits in a single lump sum if permitted under Treasury Regulation Section 1.409A-3(j)(4)(iii). In addition, the Administrator may, in its sole discretion, accelerate the payment of benefits, and pay such benefits in a single lump sum, if and to the extent permitted under any of the other exceptions specified in Treasury Regulation Section 1.409A-3(j)(4) to the general rule in Section 409A of the Code prohibiting accelerated payments, provided that the terms of Section 5.4 of the Plan shall govern whether benefits will be paid in a single lump sum pursuant to the small benefit exception contained in Treasury Regulation Section 1.409A-3(j)(4)(v).
ARTICLE 6 SURVIVOR BENEFITS
Following the Participant’s death, payment of the Participant’s Deferral Account will be made to the Participant’s Beneficiary or Beneficiaries according to the payment schedule elected or deemed elected according to Article 5, subject to the payment provisions (if applicable) of Sections 5.1.1 and 5.1.2.
ARTICLE 7 BENEFICIARY DESIGNATION
The Participant will have the right, at any time, to designate any person or persons or entity as Beneficiary (both primary and contingent) to whom payment under the Plan will be made in the event of the Participant's death. The Beneficiary designation will be effective when it is submitted to the Administrator during the Participant's lifetime in accordance with procedures established by the Administrator.
The submission of a new Beneficiary designation will cancel all prior Beneficiary designations. Any finalized divorce or marriage of a Participant subsequent to the date of a Beneficiary
designation will revoke such designation, unless in the case of divorce the previous spouse was not designated as a Beneficiary, and unless in the case of marriage the Participant's new spouse has previously been designated as the sole primary Beneficiary. The spouse of a married Participant must consent in writing to any designation of a Beneficiary other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant (and no entity is named as a Beneficiary, or an entity was named but no longer exists at the time of the Participant’s death), then the Administrator will direct the distribution of the benefits to the Participant's estate. If a primary Beneficiary dies after the Participant’s death but prior to completion of benefits under this Plan, and no contingent Beneficiary has been designated by the Participant, any remaining payments will be paid to the primary Beneficiary’s Beneficiary, if one has been designated, or to the Beneficiary’s estate.
ARTICLE 8 CONDITIONS RELATED TO BENEFITS
8.1 Nonassignability
The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or any manner whatsoever. These benefits will be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law. Notwithstanding the foregoing, the benefit payable to a Participant may be assigned in full or in part, pursuant to a domestic relations order of a court of competent jurisdiction.
8.2 Unforeseeable Emergency Distribution
A Participant may submit a hardship distribution request to the Administrator in writing setting forth the reasons for the request. The Administrator (or its delegate) will have the sole authority to approve or deny such requests. Upon a finding that the Participant has suffered an Unforeseeable Emergency, the Administrator (or its delegate) may in its discretion, permit the Participant to cease any on-going deferrals and accelerate distributions of benefits under the Plan in the amount reasonably necessary to alleviate the Unforeseeable Emergency. If a distribution is to be made to a Participant on account of an Unforeseeable Emergency, the Participant may not make deferrals under the Plan until one entire Plan Year following the Plan Year in which a distribution based on an Unforeseeable Emergency was made has elapsed.
8.3 No Right to Assets
A Participant’s benefits paid under the Plan will be paid from the general funds of the Participant’s Employer, and the Participant and any Beneficiary will be no more than unsecured general creditors of that Employer with no special or prior right to any assets of the Employer for payment of any obligations hereunder. Neither the Participant nor the Beneficiary will have a
claim to benefits from any other Affiliate. Plan benefits are available to Eligible Employees of EIX and its participating Affiliates. Amounts of compensation deferred by Participants pursuant to this Plan accrue as liabilities of the Employer under the terms and conditions set forth herein. By electing to defer compensation under the Plan, Participants consent to EIX sponsorship of the Plan, but acknowledge that EIX is not a guarantor of the benefit obligations of other participating Affiliates. Each Affiliate is responsible for payment of the accrued benefits under the Plan with respect to its own Eligible Employees subject to the terms and conditions set forth herein. Notwithstanding the foregoing or anything in the definition of “Employer” to the contrary, and at the sole discretion of EIX, EIX may determine that for purposes of benefits payable under the Plan, EIX shall be deemed to be the Employer obligated to pay such benefits. Such an election by EIX may be made, in EIX’s sole discretion, as to all Plan benefits, as to only certain benefits, and/or as to only certain Affiliates or Participants, and will be deemed an assumption of the specified benefit obligations of the applicable Affiliates. Subject to the further provisions hereof, EIX will be solely obligated to pay any such benefits and no Participant (or Beneficiary) will have a claim as to any other Affiliate with respect to such benefits. Upon an election by EIX under this Section 8.3, benefits covered by the election will be paid from the general funds of EIX (and not the Affiliate that would otherwise pay the benefits), provided that EIX may require that as between EIX and the Affiliate that would otherwise pay such benefits, the Affiliate will be responsible to pay EIX for the assumption of such obligations in accordance with funding arrangements determined by EIX at the time of election or any time thereafter. To the extent such Affiliate fails to comply with such funding arrangements or obtains any refund or offset of payments made from the Affiliate to EIX without the consent of EIX, the Affiliate that would otherwise be responsible for payment of benefits to the applicable Participant will remain responsible for such benefits. EIX will effectuate any such election pursuant to this Section 8.3 by providing written notice to the Administrator and the applicable Affiliates regarding the effective date of such election, and the benefits, Affiliates and Participants for which the election is applicable. The funding arrangements established by EIX at the time of its election, or from time to time thereafter, will set forth the method by which the Affiliates will remit funds to EIX in consideration of compensation that would otherwise be paid by the Affiliate but which has been deferred and is or becomes a Plan benefit obligation of EIX or other Plan benefit obligations that are assumed by EIX. Such a method may include, but is not limited to, lump sum payment by an Affiliate to EIX of relevant benefits accrued through the date of EIX’s election with regular periodic payments to EIX of continuing accruals; regular periodic payments by an Affiliate to EIX beginning with the date of EIX’s election through the date such benefits become due under the Plan; lump sum payment by an Affiliate to EIX at the time benefits become due under the Plan; or intercompany payables and receivables used with funding on a “pay-as-you-go” basis.
8.4 Protective Provisions
The Participant will cooperate with the Administrator by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and signing such consents to insure or taking such other actions as may be requested by the Administrator. If the Participant refuses to cooperate, the Administrator and the Employer will have no further obligation to the Participant under the Plan.
8.5 Constructive Receipt
Notwithstanding anything to the contrary in this Plan, in the event the Administrator determines that amounts deferred under the Plan have failed to comply with Section 409A and must be recognized as income for federal income tax purposes, distribution of the amounts included in a Participant’s income will be made to such Participant. The determination of the Administrator under this Section 8.5 will be binding and conclusive.
8.6 Withholding
The Participant or the Beneficiary will make appropriate arrangements with the Administrator for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the accrual or payment of benefits under the Plan. If no other arrangements are made, the Administrator may provide, at its discretion, for such withholding and tax payments as may be required.
8.7 Incapacity
If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, EIX may direct that payments (or any portion) be made to that person’s legal guardian or conservator, or that person’s spouse, as an alternative to payment to the person unable to use the payments. EIX will have no obligation to supervise the use of such payments, and court-appointed guardianship or conservatorship may be required.
ARTICLE 9 PLAN ADMINISTRATION
9.1 Plan Interpretation
The Administrator will administer the Plan and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to management, staff, or contractors to whom day-to-day Plan operations may be delegated. The Administrator will establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Administrator will interpret and construe the Plan and the prior version of the Plan to comply with Section 409A of the Code. All decisions of the Administrator will be final and binding.
9.2 Limited Liability
Neither the Administrator, nor any of its members or designees, will be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan.
ARTICLE 10 AMENDMENT OR TERMINATION OF PLAN
10.1 Amendment of Plan
Subject to the terms of Section 10.3, EIX may at any time amend the Plan in whole or in part, provided, however, that the amendment (i) will not decrease the balance of the Participant's Deferral Account at the time of the amendment and (ii) will not retroactively decrease the applicable Crediting Rates of the Plan prior to the time of the amendment. EIX may amend the Crediting Rates of the Plan prospectively, in which case the Administrator will notify the Participant of the amendment in writing within 30 days after the amendment.
10.2 Termination of Plan
Subject to the terms of Section 10.3, EIX may at any time terminate the Plan. If EIX terminates the Plan, distributions to the Participants or their Beneficiaries shall be made on the dates on which the Participants or Beneficiaries would receive benefits hereunder without regard to the termination of the Plan except that payments may be made upon termination of the Plan if the requirements for accelerated payment under Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) are satisfied.
10.3 Amendment or Termination after Change in Control
Notwithstanding the foregoing, EIX will not amend or terminate the Plan without the prior written consent of affected Participants for a period of two calendar years following a Change in Control and will not thereafter amend or terminate the Plan in any manner which affects any Participant (or Beneficiary of a deceased Participant) who commences receiving payment of benefits under the Plan prior to the end of the two year period following a Change in Control.
10.4 Exercise of Power to Amend or Terminate
EIX’s power to amend or terminate the Plan will be exercisable by the Compensation and Executive Personnel Committee of the EIX Board of Directors.
ARTICLE 11 CLAIMS AND REVIEW PROCEDURES
11.1 Claims Procedure for Claims Other Than due to Disability
(a) Except for claims due to Disability, the Administrator will notify a Participant or his or her Beneficiary (or person submitting a claim on behalf of the Participant or Beneficiary) (a “claimant”) in writing, within 90 days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a claimant is not eligible for benefits or full benefits, the notice will set forth (1) the specific reasons for the denial, (2) a specific reference to the provisions of the Plan on which the denial is based, (3) a description of any additional information or material necessary for the claimant to
perfect his or her claim, and a description of why it is needed, and (4) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the claimant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator will notify the claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period.
(b) If a claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant will have the opportunity to have the claim reviewed by the Administrator by filing a petition for review with the Administrator within 60 days after receipt of the notice issued by the Administrator. Said petition will state the specific reasons which the claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Administrator of the petition, the Administrator will afford the claimant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the claimant (or counsel) will have the right to review the pertinent documents. The Administrator will notify the claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the claimant and the specific provisions of the Plan on which the decision is based. If, due to special circumstances (for example, because of the need for a hearing), the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Administrator, but notice of this deferral will be given to the claimant. In the event of the death of the Participant, the same procedures will apply to the Participant's Beneficiaries.
11.2 Claims Procedure for Claims due to Disability
(a) For purposes of Section 11.1, this Section 11.2 and Section 11.3, a claim shall not be considered to be due to Disability if the existence of the Participant’s Disability is determined by reference to whether the Participant is eligible for benefits under his or her Employer’s long-term disability plan applicable to the Participant, as determined by the Employer. A claim due to Disability will be approved or denied by the Administrator or its delegate, as it deems appropriate in its discretion, based on its interpretation of the Plan, medical evidence, and the analysis and conclusions of a physician selected by the Administrator or its delegate. Within a reasonable period of time, but not later than 45 days after receipt of a claim due to Disability, the Administrator or its delegate shall notify the claimant of any adverse benefit determination on the claim, unless circumstances beyond the Plan’s control require an extension of time for processing the claim. Except as contemplated by this Section 11.2, in no event may the extension period exceed 30 days from the end of the initial 45-day period. If an extension is necessary, the Administrator or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 45-day period. The notice shall describe the circumstances requiring the extension and the date by which the Administrator or its delegate expects to render a determination on the claim. If, prior to the end of the first 30-day extension period, the Administrator or its delegate determines that, due to circumstances beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for an additional 30 days, so long as the Administrator or its delegate notifies the claimant, prior to the expiration of the first 30-day extension period, of the
circumstances requiring the extension and the date as of which the Administrator or its delegate expects to render a decision. This notice of extension shall specifically describe the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and that the claimant has at least 45 days within which to provide the specified information. Furthermore, in the event that a period of time is extended as permitted due to a claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
(b) In the case of an adverse benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 11.2(c) below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and (viii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan.
(c) Any good-faith determination by the Administrator or its delegate will be final and binding on the Plan and the claimant unless appealed in accordance with this Section 11.2(c). Within 180 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or the claimant’s duly authorized representative, upon written application to the Administrator, may request that the Plan fully and fairly review the adverse benefit determination (also sometimes referred to herein as an “appeal”). Upon request and free of charge, the claimant pursuing an appeal shall have reasonable access to, and be provided copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The claimant shall have the opportunity to submit written comments, documents, records, and
other information relating to the claim for benefits. The review: (i) shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously submitted or considered in the initial adverse benefit determination; (ii) shall not afford deference to the initial adverse benefit determination; (iii) shall be conducted, at the direction of the Administrator, by an appropriate fiduciary of the Plan who is neither the individual who made the adverse benefit determination that is the subject of the review, nor the subordinate of such individual; (iv) shall identify medical and vocational experts whose advice was obtained on behalf of the Plan in connection with the initial adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (v) where based in whole or in part on medical evidence or medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, shall include consultation with a physician, with appropriate training and experience in the field of medicine involved in the medical judgment, who was neither consulted in connection with the initial adverse benefit determination, nor the subordinate of any such professional.
The appeal will then be approved or denied by the Administrator or its delegate, as it deems appropriate, based on its interpretation of the Plan in light of the medical evidence.
Before an adverse benefit determination on review of a claim due to Disability is issued, the claimant shall be provided, free of charge, with any new or additional evidence considered, relied upon, or generated by the Administrator or its delegate making the benefit determination (or at the direction of the Administrator) in connection with the claim; such evidence will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
Also before an adverse benefit determination on review based on a new or additional rationale is issued, the claimant shall be provided, free of charge, the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
A final benefit determination will be made by the Administrator or its delegate, and the Administrator or its delegate shall provide the claimant with written or electronic notification of the final benefit determination within a reasonable period of time, but no later than 45 days immediately following receipt of claimant’s request for review, unless special circumstances require a further extension of time for processing the claim, which extension may be up to an additional 45 days. If such an extension of time for review is required because of special circumstances, the Administrator or its delegate shall provide the claimant with a written notice of the extension prior to the commencement of the extension. The notice shall describe the special circumstances requiring the extension and the date as of which the final benefit determination shall be made. In the event that a period of time is extended due to a claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional
information. In the case of an adverse final benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant and in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse final benefit determination; (ii) reference to the specific Plan provisions on which the adverse final benefit determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and mandatory arbitration in accordance with Section 11.3 below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan; and (viii) the following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.” As described above, there shall be only one level of review of an adverse benefit determination, followed by mandatory arbitration under Section 11.3, before a claimant may bring a civil action pursuant to Section 502 of ERISA.
11.3 Dispute Arbitration
(a) Effective as to any claims filed on or after June 19, 2014, final and binding arbitration under this Section 11.3 shall be the sole remedy available to a claimant after he or she has exhausted the claim and review procedures set forth in Section 11.1. Furthermore, exhaustion by the claimant of the claim and review procedures set forth in Section 11.1 is a mandatory prerequisite for binding arbitration under this Section 11.3. Any arbitration or civil action brought prior to the exhaustion of the claim and review procedures set forth in Section 11.1 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted.
(b) After a claimant has exhausted the claim and review procedures set forth in Section 11.1, if the claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant may submit his or her claim to final and binding arbitration under this Section 11.3.
Any arbitration under this Section 11.3 will be held in Los Angeles County, California, in accordance with the then-current JAMS Arbitration Rules and Procedures for Employment Disputes (“JAMS Rules”) and under the Federal Arbitration Act. The arbitration shall be before a single neutral arbitrator licensed to practice law and experienced employee benefits law as well as the laws governing nonqualified deferred compensation plans, selected by mutual agreement of the parties. If the parties are unable to agree upon an arbitrator, the arbitrator shall be selected by striking in accordance with the then-current JAMS Rules from a list of arbitrators supplied by JAMS. Any and all claims and/or defenses that would otherwise be available in a court of law will be fully available to the parties. The arbitrator selected pursuant to this paragraph (the “Arbitrator”) may order such discovery as is necessary for a full and fair exploration of the issues and dispute, consistent with the expedited nature of arbitration. The Arbitrator shall apply applicable substantive law to resolve the dispute. To the fullest extent provided by federal law, the decision rendered by the Administrator pursuant to the claim and review procedures set forth in Section 11.1 shall be upheld by the Arbitrator unless the Arbitrator determines that the Administrator abused its discretion. Notwithstanding the preceding sentence, if a Change in Control occurs, then a claim review decision rendered by the Administrator within the three years following the Change in Control shall, if it is challenged by the claimant in accordance with this Section 11.3, be subject to de novo review by the Arbitrator. Subject to the applicable standard of review in the preceding two sentences, the Arbitrator may grant any award or relief available under applicable law that the Arbitrator deems just and equitable.
At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator's award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto, and may be enforced by any court of competent jurisdiction. The Administrator will pay the Arbitrator’s fees and all other costs that are unique to the arbitration process, to the extent required by law. Otherwise, each party shall be solely responsible for paying his/her/their/its own costs/fees for the arbitration, including but not limited to attorneys’ fees. However, the Arbitrator in his or her discretion may allow reasonable attorney’s fees and costs of action to either party to the same extent as would be permissible if the claim(s) were filed in a court of law in lieu of arbitration.
(c) Notwithstanding any contrary provisions of this Section 11.3, if the claim is due to Disability, the following rules apply: (1) arbitration under this Section 11.3 shall be the mandatory second level of appeal following the exhaustion by the claimant of the claim and review procedures set forth in Section 11.2, and such exhaustion is a mandatory prerequisite for arbitration under this Section 11.3—any arbitration or civil action brought with respect to a claim due to Disability prior to the exhaustion of the claim and review procedures set forth in Section 11.2 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted; (2) arbitration of a claim due to Disability under this Section 11.3 shall not be binding, and the claimant shall not be precluded from challenging the decision of the Arbitrator in a civil action brought pursuant to Section 502(a) of ERISA; and (3) except as specifically set forth in this Section 11.3(c), if the claim is due to Disability, the arbitration shall be conducted as set forth in Section 11.3(b).
(d) The Eligible Employee, Participant, or Beneficiary must bring any dispute in arbitration on an individual basis only, and not on a class, collective or representative basis and must waive the right to commence, be a party to, or be an actual or putative class member of any class, collective or representative action arising out of or relating to the Plan, including, but not limited to, any claims related to the Plan (“class action waiver”). However, if this class action waiver is found to be unenforceable by a court of competent jurisdiction, then any claim on a class, collective or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration. Except as provided in the preceding sentence, this Section 11.3 is intended to make mandatory individual arbitration apply, as described above, to the maximum extent permissible under ERISA; if any feature of this arbitration requirement is impermissible under ERISA, arbitration as described above shall remain required with the minimum change necessary to allow the arbitration requirement to be permissible under ERISA. This Section 11.3(d) shall apply as follows: (1) it shall apply to any claim filed on or after January 1, 2024 with respect to an Eligible Employee or Participant hired (including those rehired) by an Employer on or after January 1, 2024 and to any Beneficiary thereof and (2) it shall apply to any claim filed on or after January 1, 2025 with respect to an Eligible Employee or Participant hired (including those last rehired) by an Employer prior to January 1, 2024 and to any Beneficiary thereof.
ARTICLE 12 MISCELLANEOUS
12.1 Successors
The rights and obligations of each Employer under the Plan will inure to the benefit of, and will be binding upon, the successors and assigns of the Employer.
12.2 Trust
The Employers will be responsible for the payment of all benefits under the Plan. At their discretion, the Employers may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. The trust or trusts may be irrevocable, but an Employer’s share of the assets thereof will be subject to the claims of the Employer’s creditors. Benefits paid to the Participant from any such trust will be considered paid by the Employer for purposes of meeting the obligations of the Employer under the Plan.
12.3 Employment Not Guaranteed
Nothing contained in the Plan nor any action taken hereunder will be construed as a contract of employment or as giving any Participant any right to continue in employment with the Employer or any other Affiliate.
12.4 Gender, Singular and Plural
All pronouns and variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
12.5 Captions
The captions of the articles and sections of the Plan are for convenience only and will not control or affect the meaning or construction of any of its provisions.
12.6 Validity
If any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
12.7 Waiver of Breach
The waiver by EIX or the Administrator of any breach of any provision of the Plan by the Participant will not operate or be construed as a waiver of any subsequent breach by the Participant.
12.8 Applicable Law
The Plan will be governed and construed in accordance with the laws of California except where the laws of California are preempted by ERISA.
12.9 Notice
Any notice or filing required or permitted to be given to the Administrator under the Plan will be sufficient if in writing and hand-delivered, or sent by first class mail to the principal office of EIX, directed to the attention of the Administrator. The notice will be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
12.10 ERISA Plan
The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA. EIX is the named fiduciary.
12.11 Statutes and Regulations
Any reference to a statute or regulation herein shall include any successor to such statute or regulation.
IN WITNESS WHEREOF, EIX has amended and restated this Plan on the 11th day of December, 2024.
EDISON INTERNATIONAL
/s/ Natalie Schilling
Natalie Schilling
Senior Vice President, Human Resources
30
Document
Exhibit 10.4.1
EDISON INTERNATIONAL
2008 EXECUTIVE RETIREMENT PLAN
Amended and Restated Effective
January 1, 2025 (except as otherwise provided)
PREAMBLE
The purpose of this Plan is to provide supplemental retirement benefits to Participants and surviving spouses or other designated Beneficiaries of such Participants.
This Plan applies to benefits that are accrued or vested after December 31, 2004, and is intended to comply with Section 409A of the Internal Revenue Code and the regulations promulgated thereunder. Benefits that were accrued and vested prior to 2005 shall be paid under the Predecessor Plan in accordance with the terms therein, and shall not be subject to any of the terms of this Plan. In no event shall a Participant receive benefits under this Plan and the Predecessor Plan with respect to the same years of service.
ARTICLE 1 DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
401(k) Earnings means the Participant’s “Earnings” taken into account for purposes of determining “Deferrals” under the Savings Plan, with “Earnings” and “Deferrals” having the meanings set forth in the Savings Plan, provided however, that as to a Non-Cash Balance Participant who first commences participation in the Plan on or after January 1, 2021 and as to a True-Up Participant who first commences participation in the Plan on or after January 1, 2019, the Participant’s 401(k) Earnings taken into account as to the first Plan Year the individual is a Participant shall be limited to 401(k) Earnings earned by the Participant on and after the first day of the first payroll period applicable to the Participant that commences after the last day of the thirty-day period (or such shorter period as may be prescribed by the Administrator) for the individual to make an initial Payment Election after first becoming a Participant.
Administrator means the Compensation and Executive Personnel Committee of the Board of Directors of EIX.
Affiliate means EIX or any corporation or entity which (i) along with EIX, is a component member of a “controlled group of corporations” within the meaning of Section 414(b) of the Code, and (ii) has approved the participation of its Executives in the Plan.
Beneficiary means the person or persons or entity designated as such in accordance with Article 6 of the Plan.
Benefit Feature means one of the levels of benefit under the Plan as described in Section 3.2(a).
Board means the Board of Directors of EIX.
Bonus means (i) the dollar amount of bonus (if any) awarded by the Employer to the Participant pursuant to the terms of the Executive Incentive Compensation Plan, the 2007 Performance Incentive Plan, or a successor plan governing annual executive bonuses (collectively, the “Executive Bonus Plan”) and (ii) for a Qualifying Severance in connection with a Separation from Service that occurs on or after January 1, 2023, the dollar amount of the Participant’s target bonus under the Executive Bonus Plan for the calendar year preceding the year of the Separation from Service if a bonus is not paid to the Participant under the Executive Bonus Plan for such preceding calendar year because the Separation from Service occurs before the vesting date under the Executive Bonus Plan for such bonus. Notwithstanding the foregoing, effective for any Bonus for 2018 or a later year, the Administrator shall have discretion to provide that, for purposes of determining benefits under this Plan, a Participant shall be treated as having received (i) the Bonus that would otherwise be taken into account pursuant to the preceding sentence or (ii) such other amount as determined by the Administrator that is no greater than the Participant’s target bonus for the year under the Executive Bonus Plan. As to a Non-Cash Balance Participant who first commences participation in the Plan on or after January 1, 2021 and as to a True-Up Participant who first commences participation in the Plan on or after January 1, 2019, the Participant’s Bonus taken into account as to the first Plan Year the individual is a Participant shall be the Participant’s Bonus earned during the Plan Year multiplied by the ratio of (i) the number of full payroll periods remaining in the Plan Year after the last day of the thirty-day period (or such shorter period as may be prescribed by the Administrator) for the individual to make an initial Payment Election after first becoming a Participant to (ii) the total number of full payroll periods during the Plan Year that such individual is an Executive.
Cash Balance Pay Credits means the Participant’s “Pay Credits” for purposes of the Qualified Plan, as defined in the Qualified Plan. As to an individual who first commences participation in the Plan on or after January 1, 2019, the Participant’s Cash Balance Pay Credits taken into account as to the first Plan Year the individual is a Participant shall equal the Participant’s Pay Credits for purposes of the Qualified Plan for that Plan Year multiplied by the ratio of (i) the number of full payroll periods remaining in the Plan Year after the last day of the thirty-day period (or such shorter period as may be prescribed by the Administrator) for the individual to make an initial Payment Election after first becoming a Participant to (ii) the total number of full payroll periods during the Plan Year that such individual is employed by an Affiliate.
Change in Control means a Change in Control of EIX as defined in the Severance Plan.
Code means the Internal Revenue Code of 1986, as amended.
Contingent Event means the Participant’s Disability or death while employed by an Affiliate or Separation from Service for other reasons if such event occurs prior to the Participant’s Retirement.
Contingent Payment Election means an election regarding the time and form of payment made or deemed made in accordance with Section 4.2.
Crediting Rate means the rate at which interest will be credited when interest at the “Crediting Rate” is specified pursuant the Plan. If the Valuation Date for a Participant is before 2018, the Crediting Rate will be the interest crediting rate in effect for the Qualified Plan. If the Valuation Date for a Participant is after 2017, the Crediting Rate will be determined annually in advance of the calendar year and will be equal to the average monthly Moody’s Corporate Bond Yield for Baa Public Utility Bonds for the 60 months preceding September 1st of the prior year. Notwithstanding the foregoing, EIX reserves the right to prospectively change the definition of Crediting Rate.
Disability means the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under a plan covering employees of the Employer.
EIX means Edison International.
Employer means the Affiliate employing the Participant. Notwithstanding the foregoing, with respect to a particular Participant’s benefits under the Plan, for purposes of determining which Affiliate is obligated to pay such benefits, Employer as to such Participant and benefits means the Affiliate employing the Participant upon the Participant’s Separation from Service (or, as to any distribution of any benefit under the Plan prior to the Participant’s Separation from Service, the Affiliate employing the Participant at the time of such distribution).
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Executive means an employee of an Affiliate who is designated an Executive by the Chief Executive Officer (“CEO”) of that Affiliate or who is elected as a Vice President or officer of higher rank by the board of that Affiliate or by the Board.
Executive Profit Sharing Credits mean the amounts the Employer would have contributed to the Savings Plan if the Participant were not subject to Sections 415 and 401(a)(17) of the Code and if the Participant’s elective deferrals under the EIX 2008 Executive Deferred Compensation Plan or predecessor or successor plans governing nonqualified deferrals were included in the definition of Earnings under the Savings Plan.
Executive Retirement Account or ERA means the notional cash balance account established for record keeping purposes for a Participant pursuant to Section 3.4 of the Plan.
Executive Retirement Account Credits or ERA Credits means the amounts credited to a Participant’s Executive Retirement Account under Section 3.4 of the Plan.
Executive Retirement Account Salary Base or ERA Salary Base means (i) for a Non-Cash Balance Participant, the amount (if any) by which the Participant’s Salary for the applicable calendar year exceeds his or her 401(k) Earnings for that year, and (ii) for any other Participant, the amount (if any) by which the Participant’s Salary for the applicable calendar year exceeds the compensation limit for that year set by the Secretary of the Treasury for purposes of Section 401(a)(17) of the Internal Revenue Code.
Executive Retirement Account Salary Base Differential or ERA Salary Base Differential means (i) for a Non-Cash Balance Participant, the amount (if any) by which (1) the Participant’s annual rate of Salary in effect immediately prior to the Participant’s Separation from Service exceeds (2) the Participant’s annual rate of 401(k) Earnings in effect immediately prior to the Participant’s Separation from Service, and (ii) for any other Participant, the amount (if any) by which (1) the Participant’s annual rate of Salary in effect immediately prior to the Participant’s Separation from Service exceeds (2) the compensation limit set by the Secretary of the Treasury for purposes of Section 401(a)(17) of the Internal Revenue Code for the year in which the Participant’s Separation from Service occurs.
Non-Cash Balance Participant means a Participant who is described either in Section 3.1(c) below (other than a Participant who was employed by an Affiliate before January 1, 2018 but is not described in Section 3.1(d)) or in Section 3.1(d) below.
Officer means the CEOs, Presidents, Executive Vice Presidents, Senior Vice Presidents and elected Vice Presidents of EIX and its Affiliates. Other employees of EIX and its Affiliates, including officers who are not elected Vice Presidents or above, shall not be treated as Officers for purposes of the Plan, unless the Administrator specifically designates any such employee as an Officer for purposes of the Plan.
Participant means an individual who either (1) is an employee of an Affiliate, who (i) is a U.S. employee or an expatriate and is based and paid in the U.S.; (ii) has been designated as an Executive by the Administrator, the Affiliate’s board or the Affiliate’s CEO for purposes of the Plan; and (iii) qualifies as a member of the “select group of management or highly compensated employees” under ERISA, provided that an individual first designated as an Executive on or after December 1, 2020 shall not be a Participant until the first day of the calendar quarter following the calendar quarter in which the Executive satisfies such criteria, except as otherwise specified in writing by the Administrator; or (2) is a person who has a vested benefit under the Plan by virtue of prior employment as an Executive of an Affiliate, which vested benefit has not yet been completely distributed.
Payment Election means a Primary Payment Election or a Contingent Payment Election, or a payment election pursuant to Section 4.1.1, as the case may be, subject to change pursuant to Section 4.3. Payment Elections shall be made in the manner prescribed by the Administrator, or its delegate, which may include electronic elections.
Payment Event means: (i) as to an individual who first commenced participation in the Plan prior to 2021, the Participant’s Separation from Service for any reason other than death or
Disability; and (ii) as to an individual who first commenced participation in the Plan after 2020, the Participant’s Separation from Service for any reason other than death.
Plan means the EIX 2008 Executive Retirement Plan.
Predecessor Plan means the Southern California Edison Company Executive Retirement Plan.
Primary Payment Election means an election regarding the time and form of payments made or deemed made in accordance with Section 4.1.
Profit Sharing means the programs under which some Affiliates have made profit sharing or gain sharing contributions to the Savings Plan.
Profit Sharing Modifier Percentage means
(i) Zero percent (0%) as to a Participant hired by an Employer on or after December 31, 2017 and prior to July 1, 2024;
(ii) Zero percent (0%) as to a Participant hired (whether a new hire or a rehire) by an Employer on or after July 1, 2024 whose Profit Sharing Contribution Percentage is equal to six percent (6%); and
(iii) An amount equal to the difference between six percent (6%) and the applicable Profit Sharing Contribution Percentage as to a Participant hired (whether a new hire or a rehire) by an Employer on or after July 1, 2024 whose Profit Sharing Contribution Percentage is less than six percent (6%).
Profit Sharing Contribution Percentage means, as to a Participant hired (whether a new hire or a rehire) by an Employer on or after July 1, 2024, the percent taken from the following schedule with the term “Age and Service Points” having the meaning set forth in the Savings Plan and with the determination of Age and Service Points and the applicable contribution percent determined in accordance with the provisions of the Savings Plan applicable to determining the “Fixed Profit Sharing Contribution” contribution percent for employees who are not represented for collective bargaining purposes:
| If the Participant’s<br><br>Age and Service Points Equal: | The Participant’s Profit Sharing<br><br>Contribution Percent is: |
|---|---|
| 45 or less | 4% |
| 46 – 59 | 5% |
| 60 or more | 6% |
Qualified Plan means the Southern California Edison Company Retirement Plan, or a successor plan, intended to qualify under Section 401(a) of the Code.
Qualifying Severance means a Participant is entitled to benefits under the Severance Plan or any similar successor plan as in effect upon the Participant’s Separation from Service, and has satisfied all conditions for such benefits.
Retirement means Separation from Service upon attainment of at least age 55 with at least five Years of Service.
Salary means (i) for purposes of determining the ERA Salary Base on a payroll period basis for (x) a Non-Cash Balance Participant for any Plan Year or (y) for any other Executive for the 2018 Plan Year, the product of the Executive’s hourly Basic Pay (determined by dividing annualized Basic Pay by 2,080 hours) on the last day of the payroll period on which the Executive is employed by the Employer, times 80 hours, (ii) for purposes of True-Up Participants, the sum of the True-Up Participant’s Salary for the payroll periods for the Plan Year in which he or she serves at least one day as an Executive, with the Salary for each such payroll period determined in the same manner as clause (i) above, and (iii) for other purposes, the Executive’s Basic Pay. “Basic Pay” means the Executive’s basic pay from the Employer (excluding Bonuses, special awards, commissions, severance pay, and other non-regular forms of compensation) before reductions for deferrals under the Savings Plan or the EIX 2008 Executive Deferred Compensation Plan or predecessor or successor plans governing deferral of salary. As to a Non-Cash Balance Participant who first commences participation in the Plan on or after January 1, 2021 and as to a True-Up Participant who first commences participation in the Plan on or after January 1, 2019, the Participant’s Salary taken into account as to the first Plan Year the individual is a Participant shall be limited to the Salary earned by the Participant on and after the first day of the first payroll period applicable to the Participant that commences after the last day of the thirty-day period (or such shorter period as may be prescribed by the Administrator) for the individual to make an initial Payment Election after first becoming a Participant. Notwithstanding the foregoing, the Administrator, or its delegate, may prescribe a different definition of Salary for a Plan Year (or part thereof) if such definition is set forth in the form or instructions for the Payment Election for such Plan Year.
Savings Plan means the Edison 401(k) Savings Plan, or a successor plan.
Separation from Service occurs: (i) with respect to an individual who is a Participant on or prior to December 31, 2023, when such Participant dies, retires, or otherwise has a termination of employment from the Employer that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder; and (ii) with respect to an individual who becomes a Participant following December 31, 2023, when such Participant dies, retires, or otherwise has a termination of employment from the Employer that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), provided that a termination of employment from the Employer constituting such a “separation from service” shall be deemed to occur on the date on which it is reasonably anticipated that the level of bona fide services that the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to less than 50 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months), all as determined in accordance with Treasury Regulation Section 1.409A-1(h).
Severance Plan means the EIX 2008 Executive Severance Plan (or any similar successor plan).
Similar Plan means a plan required to be aggregated with this Plan under Treasury Regulation Section 1.409A-1(c)(2)(i).
Specified Employee means a Participant who is designated as an elected Vice President or above by the Administrator, using the identification date and methods determined by the Administrator.
Target Bonus Amount means, as to a particular Participant, the amount obtained by multiplying (1) the stated target bonus percentage (as a percentage of salary) in effect immediately prior to the Participant’s Separation from Service (or, if the Participant first commenced participation in the Plan prior to 2021, the earlier of the Participant’s Separation from Service or Disability) for the bonus to be awarded to the Participant pursuant to the terms of the Executive Bonus Plan, multiplied by (2) the Participant’s annual rate of Salary in effect immediately prior to the Participant’s Separation from Service (or, if the Participant first commenced participation in the Plan prior to 2021, the earlier of the Participant’s Separation from Service or Disability).
Termination of Employment means the voluntary or involuntary Separation from Service for any reason other than Retirement or death.
Total Compensation means (i) for Participants not eligible for Benefit Feature (iii), the monthly average Salary based on the Participant’s 36 highest consecutive months of Salary, and (ii) for Participants eligible for Benefit Feature (iii), the monthly average Salary plus Bonus based on the 36 consecutive months in which the Participant had the highest combination of Salary and Bonus. The 36 months need not be consecutive for individuals who were Participants in the Predecessor Plan and eligible for Benefit Feature (iii) before January 1, 2008. For purposes of determining the highest 36 months for Participants eligible for Benefit Feature (iii), each of the Participant’s annual Bonuses will be spread evenly over the months worked in the years in which the Bonuses were earned. If a vested individual terminates prior to Retirement and was no longer an Officer or designated Executive at the time employment was terminated, the Plan benefit described in Section 3.3(a) will be based on the Participant’s Total Compensation and service determined as of the last date of the Participant’s status as an Officer or designated Executive.
True-Up Participant means a Participant who is an Officer or other designated Executive on or after January 1, 2019, but is not a Non-Cash-Balance Participant.
Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s Beneficiary, or the Participant’s
spouse or dependent (as defined in Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control.
Valuation Date means the date as of which the Participant’s benefit will be calculated, and is the first day of the month following the month in which the final day of employment falls prior to Separation from Service (or if the Participant first commenced participation in the Plan prior to 2021, the earlier of the Participant’s Separation from Service or Disability), except that if the Participant’s Separation from Service is a Termination of Employment, the Valuation Date is the later of (1) the first day of the month of the Participant’s 55th birthday or (2) the first day of the month following the month in which the Participant’s final day of employment occurs prior to Termination of Employment.
Year of Service means a year of service as determined in accordance with the terms of the Qualified Plan (in the case of a Participant who does not actually participate in the Qualified Plan, determined in accordance with the terms of the Qualified Plan as though the Participant was a participant in the Qualified Plan). For Participants grandfathered in the defined-benefit final average pay benefit feature of the Qualified Plan (other than any such grandfathered Participants who were hired by an Affiliate or its subsidiaries in 1999 from Commonwealth Edison Company), years of service will be determined according to the same rules applicable to such benefit. For all other Participants, years of service will be determined according to the rules applicable to the cash-balance feature of the Qualified Plan. A Participant’s prior service with Commonwealth Edison Company will be recognized for purposes of this Plan if the individual was a Participant on or before April 1, 2012 and was hired by an Affiliate (or its subsidiaries) in 1999 from Commonwealth Edison Company in connection with an acquisition transaction involving Edison Mission Energy. A Participant’s prior service with Citizens Power LLC will be recognized for purposes of this Plan if the individual was a Participant on or before April 1, 2012 and was hired by an Affiliate (or its subsidiaries) in 2000 in connection with the acquisition of Citizens Power LLC by Edison Mission Energy.
ARTICLE 2 PARTICIPATION
Individuals are eligible to participate in the Plan when they become Officers or are designated as Executives by the Affiliate’s board or the Affiliate’s CEO for purposes of this Plan. Participation in the Plan will continue as long as the individual remains an Officer or a designated Executive (subject to any applicable Plan restrictions) or has a vested benefit under the Plan that has not been completely paid out.
ARTICLE 3 BENEFIT DETERMINATION AND VESTING
3.1 Overview
(a) Benefits under the Plan will be payable with respect to any vested Participant following Retirement or the occurrence of a Contingent Event to the extent a benefit under the Plan is determined to exist by calculations as provided under the applicable provisions of this Article 3. Effective January 1, 2018, an ERA Credits feature has been added to the Plan as provided in Section 3.4 below. Prior to such date, a Participant’s benefit under the Plan will be determined as provided in Sections 3.2 and 3.3 hereof. From and after such date, a Participant’s benefit under the Plan will be determined as provided below in this Section 3.1. In each case, the Participant’s benefit will be subject to vesting, as provided in Section 3.5, and to the provisions of Sections 3.6 and 3.7.
(b) If a Participant was an Officer or a designated Executive at any time prior to January 1, 2018, the Participant’s benefit under the Plan (subject to vesting as provided in Section 3.5) will be equal to the lesser of the amounts determined under paragraphs (i) and (ii) of this Section 3.1(b), determined based on lump sum values as of the applicable Valuation Date.
(i) The Participant’s total benefit as determined under Sections 3.2 and 3.3 below, taking into account the Participant’s Total Compensation and Years of Service accrued at any time (whether before or after January 1, 2018). Such determination will be made without regard to Section 3.3(c) and will not include any ERA Credits under Section 3.4.
(ii) The Participant’s total benefit determined as the sum of (x) the Participant’s total benefit as determined under Sections 3.2 and 3.3 below (giving effect to Section 3.3(c) below), and (y) the amounts credited to the Participant’s Executive Retirement Account.
(c) If a Participant first becomes an Officer or a designated Executive on or after January 1, 2018, the Participant will be eligible only to receive ERA Credits (and earnings thereon) to the Participant’s Executive Retirement Account as provided in Section 3.4 and will not be eligible for any benefits under Sections 3.2 and 3.3.
(d) Notwithstanding any Plan provisions to the contrary, if a Participant who has experienced a Separation from Service is rehired on or after January 1, 2018 and becomes an Officer or designated Executive, the Participant will be treated for additional benefit accrual purposes as if he or she was a new participant in the Plan: he or she will be eligible to receive additional ERA Credits (and earnings thereon) as provided in Section 3.4, but will not be eligible for any additional benefit accruals under Sections 3.2 and 3.3.
3.2 Benefit Features
(a) The Plan provides a supplemental retirement benefit calculated in accordance with Section 3.3 below. This supplemental retirement benefit incorporates the following Benefit Features:
(i) Recognition of the amount of Salary that is not recognized for purposes of calculating benefits under the Qualified Plan or Profit Sharing contributions to the Savings Plan due to limits imposed by the Code under Sections 415(b) or 401(a)(17).
(ii) Recognition of deferred Salary that is not recognized for purposes of calculating benefits under the Qualified Plan or Profit Sharing contributions to the Savings Plan.
(iii) Recognition of Bonuses that are not recognized for purposes of calculating benefits under the Qualified Plan.
(b) Participants who are Officers on the date of their termination of employment are eligible for all three Benefit Features. Other Participants are eligible for Benefit Features (i) and (ii) only; provided, however, as to a Participant who was once an Officer but who is not described in the immediately preceding sentence, such Participant shall be eligible for Benefit Features (i) and (ii) only, but his or her benefits shall not be less than if the Participant had terminated employment on December 11, 2012 and had Bonuses recognized for purposes of determining his or her benefits as of December 11, 2012.
(c) Participants in the Predecessor Plan on December 31, 1994 and Participants who were CEOs, Presidents, Executive Vice Presidents or Senior Vice Presidents of EIX or its Affiliates or elected Vice Presidents of EIX, Southern California Edison Company or Edison Capital prior to January 1, 2006, are also eligible for all three Benefit Features and an additional 0.75% benefit accrual for each Year of Service up to ten Years of Service (this additional 0.75% benefit accrual is taken into account when calculating the value of the single life annuity benefit for purposes of Section 3.3(b)), unless they were participants in the Predecessor Plan on December 31, 1992 and elected not to participate in the Executive Disability and Survivor Benefit Program, in which case they are eligible for all three Benefit Features but not for the additional 0.75% benefit accrual.
(d) Notwithstanding the above, elected Vice Presidents of Edison Mission Energy, Edison Mission Marketing and Trading, and Midwest Generation whose Separation from Service occurred prior to January 1, 2006, are eligible for Benefit Features (i) and (ii) only.
(e) Notwithstanding anything to the contrary in this Section 3.2, the three Benefit Features in this Section 3.2 and the additional 0.75% benefit accrual in Section 3.2(c) are subject to the provisions of Section 3.1.
3.3 Benefit Computation
(a) EIX will calculate at the time of a Participant’s Disability (if the Participant first commenced participation in the Plan prior to 2021) or Separation from Service the amount of any benefit payable under the Plan. The benefit payable under this Section 3.3 will be the greater of (1) the value of the single life annuity calculated pursuant to Section 3.3(b), reduced by (i) the value of the single life annuity (unreduced for a contingent annuitant) payable to the Participant under the terms of the Qualified Plan, or other Affiliate defined benefit plan, after taking into account any applicable restrictions or limitations as to such payments required by the Code or other applicable law or the terms of the Qualified Plan, or other applicable Affiliate defined benefit plan; (ii) the actuarial single life annuity value, as defined in the Qualified Plan, of the Participant’s Profit Sharing Account under the Savings Plan, or a successor plan; and (iii) the portion of the Participant’s Social Security benefit specified in the Qualified Plan or (2) the actuarial single life annuity value of the notional account derived from any Executive Profit Sharing Credits allocated to the Participant plus earnings thereon.
(b) The Participant’s Total Compensation and Years of Service will be used to calculate the value of the single life annuity benefit based on the “Supplemental A” formula set forth in Section 4.02(a) of the Qualified Plan, including Subsection (1) but excluding Subsection (2), and Section 4.12(b) of the Qualified Plan (provided, however, that individuals who become Participants after December 31, 2016 shall not be entitled to a benefit in this Plan based on the benefit formula in Section 4.12(b) of the Qualified Plan), and also, in the case of Disability or Death, Exhibit B of the Qualified Plan, or, in the case of Termination of Employment, Exhibit G of the Qualified Plan, notwithstanding the Participant’s eligibility for such benefits under the terms of the Qualified Plan.
(c) Notwithstanding the foregoing, for purposes of determining a Participant’s benefit under clause (x) of Section 3.1(b)(ii), the “Supplemental A” formula set forth in Section 4.02(a) of the Qualified Plan used to determine the value of the Participant’s single life annuity benefit as provided in Section 3.3(b) with respect to any Years of Service accrued after December 31, 2017 shall be modified as follows: “one percent (1%)” shall replace “one and three-quarters percent (1-3/4%)” as applied to the Participant’s Total Compensation for each of the Participant’s first thirty (30) Years of Service; and “one-half of one percent (0.5%)” shall replace “one percent (1%)” as applied to the Participant’s Total Compensation for each of the Participant’s Years of Service in excess of thirty (30).
(d) If a Participant who was an Executive prior to January 1, 2022 (for clarity, this Section 3.3(d) does not apply to any Participant who first became an Executive on or after January 1, 2022) experiences a Qualifying Severance, then an additional Year of Service credit (in the case of a Qualifying Termination Event associated with a Change in Control as defined in the Severance Plan, two years for Senior Vice Presidents and Executive Vice Presidents of EIX or Southern California Edison Company, but three years for the most senior officer of EIX, the most senior officer of Southern California Edison Company, the General Counsel of EIX, and the Chief Financial Officer of EIX) and an additional year of age (in the case of a Qualifying Termination Event associated with a Change in Control as defined in the Severance Plan, two
years for Senior Vice Presidents and Executive Vice Presidents of EIX or Southern California Edison Company, but three years for the most senior officer of EIX, the most senior officer of Southern California Edison Company, the General Counsel of EIX, and the Chief Financial Officer of EIX) shall be included for purposes of the benefit calculation under Section 3.3(b), including in applying the benefit formula under the Qualified Plan for grandfathered employees who are not yet age 55 but who have 68 points. The value added by this severance enhancement shall be the difference between (i) the gross benefit calculated as described in Section 3.3(b) but with the additional age and service credits, before any reduction for benefits under other plans pursuant to Section 3.3(a), and (ii) the unenhanced gross benefit calculated under Section 3.3(b). Notwithstanding anything to the contrary in this Section 3.3(d), if a Participant becomes entitled to benefits under the Severance Plan or any similar successor plan and is subsequently rehired as an Executive prior to the date lump sum payments or initial installment or annuity payments commence, the Participant shall not be entitled to any additional Year of Service or age credits under this Section 3.3.
(e) Participants who are also eligible for Profit Sharing may receive Executive Profit Sharing Credits. If any Profit Sharing contribution is reduced because a portion of the Participant’s Salary is excluded either because of nonqualified Salary deferrals or the limits imposed by Sections 415 and 401(a)(17) of the Code, the amount by which the contribution was reduced will be credited to a notional Executive Profit Sharing Credit account under the Plan as of the date of the Profit Sharing contribution. Amounts in this notional account will earn notional interest at the rates in effect for cash balance interest credits in the Qualified Plan, credited daily and compounded annually. The resulting notional Executive Profit Sharing Credit amount will be taken into account in calculating the benefit described in Section 3.3(a).
(f) The lump sum value of the benefit payable under Sections 3.3 as of the Valuation Date will be actuarially determined as the present value of the Participant’s single life annuity benefit under Section 3.3 as of that date, using the discount rate and mortality table then in effect for lump sum determination in the Qualified Plan, except that the lump sum value may not be less than the value of the notional Executive Profit Sharing Credit account balance as of that date.
(g) A vested Participant who remains employed with an Affiliate until Retirement but is no longer an Officer or designated Executive will retain a Section 3.3 benefit based on the Participant’s Total Compensation and service determined as of the last date of the Participant’s eligible status and reduced by the amounts specified in Section 3.3(a) determined upon the Participant’s Retirement.
(h) As to a Participant whose Separation from Service (or if earlier, Disability) occurs after December 31, 2016, the following additional rules shall apply in calculating the amount of any benefit payable under the Plan with respect to the Participant’s accrued but unused Sick Time Allowance Credits (as that term is used in the Qualified Plan):
(i) In applying the benefit formula set forth in Section 4.12(b) of the Qualified Plan, the Participant’s accrued but unused Sick Time Allowance Credits taken into account for purposes of this Section 3.3 shall be the lesser of (a) the Participant’s
accrued but unused Sick Time Allowance Credits as of December 31, 2016, or (b) the Participant’s accrued but unused Sick Time Allowance Credits as of the Participant’s Separation from Service (or if earlier, Disability).
(ii) The form and timing of payment of the benefit attributable to such accrued but unused Sick Time Allowance Credits shall be deemed to be calculated under Section 4.12(b) of the Qualified Plan as in effect on January 1, 2015 (disregarding, for example, any change in the Qualified Plan that takes effect after that date to provide for such benefit to be paid in a single lump sum).
(i) Notwithstanding anything to the contrary in this Section 3.3, the benefits calculated pursuant to this Section 3.3 are subject to the provisions of Section 3.1.
3.4 Executive Retirement Account Credits
This Section 3.4 shall be effective January 1, 2018.
(a) ERA Credits for Non-Cash-Balance Participants. For each calendar year (commencing with 2018), ERA Salary Credits will be added by the Administrator to the Non-Cash-Balance Participant's Executive Retirement Account in an amount equal to the sum of (i) twelve percent (12%) of the Non-Cash-Balance Participant’s ERA Salary Base for the calendar year plus (ii) the product of such Participant’s Profit Sharing Modifier Percentage multiplied by such Participant’s 401(k) Earnings for that calendar year. Beginning with the 2018 Bonus (which is payable in 2019), ERA Bonus Credits will be added by the Administrator to the Non-Cash-Balance Participant's Executive Retirement Account in an amount equal to twelve percent (12%) of the Non-Cash-Balance Participant’s Bonus. ERA Credits will be credited (conditionally until vesting and subject to Section 3.4(c)) to the Executive Retirement Account effective as of the time the ERA Salary Base or Bonus to which the ERA Credits relate is actually paid. If a Non-Cash-Balance Participant has his or her employment transferred from an Affiliate to a non-participating affiliate of EIX, then ERA Bonus Credits will be added for the Non-Cash-Balance Participant’s Bonus with respect to the Non-Cash-Balance Participant’s employment by the Affiliate during the year in which the transfer occurred. As to a Non-Cash Balance Participant who is first employed by an Affiliate on or after January 1, 2021 and who commences participation in the Plan in the calendar year the individual is first employed by an Affiliate, ERA Salary Credits will be added by the Administrator to the Non-Cash-Balance Participant's Executive Retirement Account for the calendar year in which the Participant is first employed by an Affiliate, in an amount equal to the result of the following formula, but only if the result is a positive number: (i) six percent (6%) of the Participant’s 401(k) Earnings for that calendar year, minus (ii) the maximum matching contribution that could be made to the Participant under the Savings Plan for that calendar year assuming that the Participant maximized the Participant’s “Deferrals” to the Savings Plan for that calendar year and taking into account, without limitation, (x) the limits under Section 402(g) of the Code and (y) the Participant’s substantiated elective deferrals for that calendar year to any plan sponsored by an entity that is not a component member of EIX’s “controlled group of corporations” within the meaning of Section 414(b) of the Code. Any ERA Credits pursuant to the preceding sentence will be credited (conditionally until vesting and subject to Section 3.4(c)) to the Participant’s
Executive Retirement Account effective as of the last day of the calendar year with respect to which such amounts are being credited.
ERA Credits for 2018 for Other Participants. For purposes of the 2018 calendar year for Participants who are not Non-Cash-Balance Participants, ERA Credits will be added by the Administrator to the Participant's Executive Retirement Account in an amount equal to twelve percent (12%) of the Participant’s ERA Salary Base for 2018. In addition, ERA Credits will be added by the Administrator to the Participant's Executive Retirement Account in an amount equal to twelve percent (12%) of the Participant’s 2018 Bonus (which is payable in 2019). ERA Credits will be credited (conditionally until vesting and subject to Section 3.4(c)) to the Executive Retirement Account effective as of the time the ERA Salary Base or Bonus to which the ERA Credits relate is actually paid. If a Participant has his or her employment transferred from an Affiliate to a non-participating affiliate of EIX, then ERA Bonus Credits will be added for the Participant’s Bonus with respect to the Participant’s employment by the Affiliate during the year in which the transfer occurred.
ERA Credits for True-Up Participants. For True-Up Participants, the amount of ERA Salary Credits for a calendar year after 2018 will be the result of the following formula: twelve percent (12%) of the Participant’s Salary for the calendar year, minus the sum of (i) the Participant’s Cash Balance Pay Credits for the calendar year and (ii) six percent (6%) of the Participant’s 401(k) Earnings for the calendar year. The amount of ERA Bonus Credits for a calendar (beginning with the 2019 Bonus payable in 2020) will equal twelve percent (12%) of the Participant’s Bonus for the calendar year, subject to the following reduction: if the equation for a Participant’s ERA Salary Credits for a calendar year results in a negative number (the “Adjustment”), then the Participant’s ERA Salary Credits for that calendar year will be zero and the Adjustment will be applied to the Participant’s ERA Bonus Credits for that calendar year, thereby reducing the ERA Bonus Credits; if the Adjustment would reduce the Participant’s ERA Bonus Credits for that calendar year below zero, then the Participant’s ERA Bonus Credits for that calendar year will be zero and the remainder of the Adjustment (i.e., the amount of the Adjustment remaining when ERA Bonus Credits are reduced to zero) will be disregarded. ERA Credits will be added by the Administrator to the True-Up Participant's Executive Retirement Account by April 30 of the following year. ERA Salary Credits for a calendar year will be credited (conditionally until vesting and subject to Section 3.4(c)) to the True-Up Participant's Executive Retirement Account effective as of December 31 of the calendar year; provided, however, for a calendar year in which a True-Up Participant experiences a Separation from Service or Disability, the True-Up Participant’s ERA Salary Credits for that calendar year will be added to his or her Executive Retirement Account within 60 days of, and will be credited effective as of, the Separation from Service or Disability. ERA Bonus Credits for a calendar year will be credited (conditionally until vesting and subject to Section 3.4(c)) to the True-Up Participant's Executive Retirement Account effective as of the date the Bonus to which the ERA Credits relate is actually paid. If a Participant has his or her employment transferred from an Affiliate to a non-participating affiliate of EIX, then ERA Credits will be added to the Participant's Executive Retirement Account with respect to Salary and Bonus attributable to the Participant’s employment by the Affiliate during the year in which the transfer occurred.
(b) ERA Interest Credits for Non-Cash-Balance Participants. The Administrator will credit interest at the Crediting Rate (conditionally until vesting and subject to Section 3.4(c)) to a Non-Cash-Balance Participant’s Executive Retirement Account on a daily basis, compounded annually, until the Valuation Date. No interest will be credited on ERA Credits for any date on or before the date when the ERA Salary Base or Bonus to which the ERA Credit relates is actually paid (for example, if a Participant’s 2018 Bonus is paid on February 28, 2019, the related ERA Credits will be credited as of that date and interest will begin being credited on those ERA Credits on a go-forward basis as of March 1, 2019). After the Valuation Date, interest will be credited in accordance with Section 3.7.
ERA Interest Credits for 2018 Salary and Bonus for Other Participants. With respect to ERA Credits for Salary and Bonus for 2018 for a Participant who is not a Non-Cash Balance Participant, the Administrator will credit interest at the Crediting Rate (conditionally until vesting and subject to Section 3.4(c)) to the Participant’s Executive Retirement Account on a daily basis, compounded annually, commencing on the date described in the next sentence and continuing until the Valuation Date. Interest will be credited commencing the day following the date when the ERA Salary Base or Bonus to which the ERA Credit relates is actually paid (for example, if a Participant’s 2018 Bonus is paid on February 28, 2019, the related ERA Credits will be credited as of that date and interest will begin being credited on those ERA Credits on a go-forward basis as of March 1, 2019). After the Valuation Date, interest will be credited in accordance with Section 3.7.
ERA Interest Credits for True-Up Participants. With respect to ERA Credits for Salary and Bonus for 2019 and subsequent years for True-Up Participants, the Administrator will credit interest (conditionally until vesting and subject to Section 3.4(c)) in the manner described in this paragraph. With respect to ERA Salary Credits for a Plan Year, the Administrator will credit interest as follows: the ERA Salary Credits for the Plan Year (after the Adjustment, if any) will be multiplied by the annual Crediting Rate (converted into a decimal format) and the result will be multiplied by a fraction, the numerator of which is the number of months in the Plan Year during which the True-Up Participant served at least one day as an Executive, and the denominator of which is twenty-four (24); the resulting simplified interest will be credited on the “Simplified Interest Crediting Date,” which shall be December 31 of the Plan Year or, if earlier, the last day of the month in which the Participant’s Separation from Service or Disability occurs; commencing the day after the Simplified Interest Crediting Date, interest will be credited at the Crediting Rate on a daily basis, compounded annually, until the Valuation Date. With respect to ERA Bonus Credits for a Plan Year, no interest will be credited for the date as of which the ERA Bonus Credits (after the Adjustment, if any) are credited, but commencing as of the following day, the Administrator will credit interest at the Crediting Rate on a daily basis, compounded annually, until the Valuation Date. After the Valuation Date, all interest will be credited in accordance with Section 3.7.
Prospective Changes. Notwithstanding anything to the contrary in this Section 3.4(b), the Administrator, or its delegate, may prospectively change the methodology for calculating ERA Interest Credits.
(c) In the event a Participant is entitled to the benefit specified in Section 3.1(b)(i), the Participant’s Executive Retirement Account shall be disregarded and automatically cancelled.
(d) In the event a Participant is entitled to the benefit specified in Section 3.1(b)(ii) or Section 3.1(c), the benefit attributable to the Participant’s Executive Retirement Account shall be subject to the payment election provisions of Article 4 and, if the Participant’s benefit is determined under Section 3.1(b)(ii), the Participant’s Executive Retirement Account shall be paid on the same schedule as the Participant’s benefit determined under Sections 3.2 and 3.3.
(e) If a Participant who was an Executive prior to January 1, 2022 (for clarity, this Section 3.4(e) does not apply to any Participant who first became an Executive on or after January 1, 2022) experiences a Qualifying Severance, then ERA Credits will be added by the Administrator to the Participant's Executive Retirement Account in an amount equal to twelve percent (12%) times the sum of (i) the Participant’s ERA Salary Base Differential plus (ii) the Participant’s Target Bonus Amount. In the case of a Qualifying Termination Event associated with a Change in Control as defined in the Severance Plan, “twelve percent (12%)” in the preceding sentence will be replaced by: “twenty-four percent (24%)” if the Participant is a Senior Vice President or Executive Vice President of EIX or Southern California Edison Company; “thirty-six percent (36%)” if the Participant is the most senior officer of EIX, the most senior officer of Southern California Edison Company, the General Counsel of EIX, or the Chief Financial Officer of EIX. Such ERA credits will be credited effective as of the date of the Separation from Service. Notwithstanding anything to the contrary in this Section 3.4(e), if a Participant becomes entitled to benefits under the Severance Plan or any similar successor plan and is subsequently rehired as an Executive prior to the date lump sum payments or initial installment or annuity payments commence, any additional ERA credits under this Section 3.4(e) shall be disregarded and automatically cancelled.
(f) Notwithstanding anything to the contrary in this Section 3.4, the Administrator, or its delegate, may prescribe rules in the form or instructions for any Payment Election for a Plan Year that are different than the rules set forth in this Section 3.4 for purposes of determining Executive Retirement Account credits for the Plan Year. For clarity, no ERA Credits will be credited with respect to a Participant for any Plan Year prior to the Plan Year in which the individual is first a Participant.
3.5 Vesting
Subject to the provisions of Section 3.4, the right to receive benefits under the Plan (including any amounts credited to a Participant’s Executive Retirement Account, if a Participant is entitled to such amounts under Section 3.1) will vest (i) when the Participant has completed five Years of Service with an Affiliate, (ii) upon the Participant’s Disability while employed with an Affiliate, (iii) upon the Participant’s death while employed with an Affiliate, or (iv) upon the Participant’s Separation from Service if the Participant experiences a Qualifying Severance. Notwithstanding the foregoing, credits and benefits under the Plan (together with any earnings or interest credited thereon pursuant to the Plan) shall be subject to recoupment and/or forfeiture to the extent that they are calculated or based upon a Bonus or other incentive-based compensation that is subject to forfeiture and/or recoupment in accordance with applicable law, pursuant to any
recoupment, “clawback” or similar policy maintained by EIX or its Affiliates, or pursuant to the terms of the Bonus award or incentive-based compensation award to which the credits or benefits relate.
3.6 Adjustment for Final Bonus
If the final Bonus is determined after benefits under the Plan are paid or commenced, the benefit will be recalculated from inception (as a point of clarity, ERA Credits for the final Bonus will be credited, in accordance with and subject to Section 3.4, as of the date the Bonus is actually paid, but for purposes of Section 3.1(b) the value of those ERA Credits will be calculated as of the Valuation Date using the discount rate in effect for lump sum determination in the Qualified Plan as of the Valuation Date) and a one-time adjustment will be made to true-up payments already made, and future payments, if any, will be adjusted accordingly. Any true-up payment will be made within two and one-half months of the date the final Bonus is determined.
3.7 Valuation Date Notional Account
A notional account will be established as the Plan benefit as of the Valuation Date, with an initial value equal to the lump sum value calculated pursuant Article 3. The account will be credited with interest at the Crediting Rate on a daily basis, compounded annually, until the account has been fully paid out (or annuity payments commence, as the case may be) according to the terms of the Plan and the Participant’s Payment Election.
ARTICLE 4 PAYMENT ELECTIONS1
4.1 Primary Payment Election for Plan Years Prior to 2019 (except as otherwise provided)
(a) Each year (through December 31, 2017), a Participant may make a Primary Payment Election specifying the payment schedule for the benefits to be accrued in the following Plan Year (concluding with the 2018 Plan Year) by submitting an election to the Administrator in such time and manner established by the Administrator. By way of example, benefits attributable to Bonus compensation will be treated as accrued during the Plan Year when the relevant services are performed (and not any later year when the Bonus is actually paid), and any benefits attributable to additional Year of Service or age credits triggered by a Participant’s Separation from Service under the Severance Plan will be treated as accrued during the Plan Year when the Participant’s Separation from Service occurs.
(b) Except as otherwise provided in this paragraph, a Primary Payment Election made for one Plan Year shall apply for subsequent Plan Years unless prior to a subsequent Plan Year the Participant submits a new Primary Payment Election for the subsequent Plan Year. If (i) a Primary Payment Election in effect with respect to one Plan Year (the first Plan Year) carries over and applies to the next Plan Year (the second Plan Year) pursuant to the preceding sentence,
1 For purposes of clarity, the provisions of this Plan regarding Payment Elections for the 2021 Plan Year are effective beginning with Payment Elections made in 2020 for the 2021 Plan Year.
and (ii) the Participant’s Primary Payment Election in effect with respect to the first Plan Year is that payments shall commence upon the later of the Participant’s Retirement or the first day of a specific month and year, then the same Primary Payment Election (including the same specified date) will apply to the second Plan Year; provided that if the specified date payout election in effect with respect to the first Plan Year is a date in the first or second Plan Year, the Participant shall be deemed to have made a Primary Payment Election for the second Plan Year that the benefits accrued in the second Plan Year shall commence payment upon the Participant’s Retirement.
(c) On or before December 31, 2008, Participants may make a special Primary Payment Election in accordance with the transition rule under Section 409A of the Code for Plan benefits previously scheduled to commence payment after the calendar year in which the special Primary Payment Election is made.
(d) The choices available for a Primary Payment Election are as provided in the applicable Primary Payment Election form, but may include the following:
(i) Joint and survivor life annuity paid in monthly installments; or
(ii) Contingent life annuity paid in monthly installments; or
(iii) Monthly installments for 60 to 180 months; or
(iv) A single lump sum; or
(v) Two to fifteen installments paid annually; or
(vi) Any combination of the choices listed in (iii), (iv) and (v).
Payments under a Primary Payment Election may commence upon (i) the Participant’s Retirement, (ii) the later of the Participant’s Retirement or the first day of a specific month and year, or (iii) the first day of the month that is a specified number of months and/or years following the Participant’s Retirement or the first day of a specified month a specified number of years following the calendar year in which the Participant’s Retirement occurs (provided that if the date otherwise determined pursuant to clauses (ii) and (iii) is later than the later of the Participant’s Retirement or the month and year in which the Participant attains age 75, the date pursuant to clauses (ii) and (iii) shall be the later of the Participant’s Retirement or the month and year in which the Participant attains age 75). If the Participant elects under a Primary Payment Election to receive payment pursuant to clause (ii) and the Participant dies prior to the later of Retirement or the specified payment date, payment shall be made pursuant to the Participant’s Contingent Payment Election (if any) for the Participant’s death (regardless of whether the Participant’s death occurs while the Participant is employed by an Affiliate or thereafter).
(e) If no Primary Payment Election has been made, the Primary Payment Election shall be deemed to be a joint and survivor annuity paid in monthly installments commencing upon the Participant’s Retirement (or, if earlier, the Participant’s death or Disability); provided,
however, that if a Participant first becomes an Officer or a designated Executive on or after January 1, 2018, the Primary Payment Election shall be deemed (if no Primary Payment Election has been made) to be a lump sum payable upon Retirement (or, if earlier, the Participant’s death or Disability).
(f) Subject to Section 4.5, lump sum payments or initial installment or annuity payments will be made within 90 days (60 days in the case of a payment triggered by a specified payment date) of the scheduled dates, and interest will be added at the Crediting Rate to the payment amount for the days elapsed between the scheduled payment date and the actual date of payment. If the Participant’s delivery of a release would change the amount of his or her Plan benefit, and the period for the Participant to consider, execute, and revoke such release spans two different calendar years, and the 90- or 60-day period, as applicable, specified above for the payment of any benefit contingent on such release also spans those two years, payment of the portion of the benefit contingent upon such release (and earnings thereon) shall be made in the time period otherwise specified above but in the second of those two years.
If paid in installments, the installments will be paid as follows:
(i) For purposes of calculating installments, the account will be valued as of the Valuation Date and subsequently as of December 31 each year, with installments for the next calendar year adjusted according to procedures established by the Administrator.
(ii) For individuals who first commenced participation in the Plan prior to 2021, the installments will be paid in amounts that will amortize the balance with interest credited at the Crediting Rate on a daily basis, compounded annually, over the period of time benefits are to be paid.
(iii) For individuals who first commenced participation in the Plan after 2020, annual installment amounts shall be determined by dividing (a) by (b), where (a) equals the account value as of the last valuation under clause (i) above and (b) equals the remaining number of installment payments. The balance will continue to be credited with interest at the Crediting Rate until the last installment payment is made.
Notwithstanding anything herein to the contrary, distribution in installments shall be treated as a single payment as of the date of the initial installment for purposes of Section 409A of the Code. If paid in monthly installments, the installments may be paid in a single check or in more than one check for any given month, provided that in either such case the total amount of the monthly payment shall not change.
If the applicable Payment Election or deemed Payment Election is for payment in the form of an annuity, the annuity value of the Plan benefit will be calculated in a manner consistent with the provisions of the Qualified Plan except that this Plan will govern where its provisions under Section 3.3 (which shall also apply to Section 3.4(d) for purposes of calculating the
applicable annuity value of any benefit derived from an Executive Retirement Account) are inconsistent with those of the Qualified Plan.
4.1.1 Payment Election for 2019 and Later Plan Years
(a) If a Participant first commenced participation in the Plan prior to 2021, the Participant may elect, as part of a Payment Election for each Plan Year from 2019 through 2021, and subject to the conditions set forth in this Section 4.1.1, that payments commence upon: (i) the Participant’s Payment Event; (ii) the later of the Participant’s Payment Event or January 1 of a specified year that may be no later than the year in which the Participant attains age 75; (iii) January 1 of the year following the Payment Event; or (iv) January 1 of the fifth year following the Payment Event. If the date otherwise determined pursuant to clauses (iii) and (iv) above is later than the later of the Participant’s Payment Event or the month and year in which the Participant attains age 75, the commencement date pursuant to clauses (iii) and (iv) shall be the later of the Participant’s Payment Event or the month and year in which the Participant attains age 75. If the Payment Event is a Separation from Service prior to Retirement (other than due to death), the commencement date pursuant to clauses (i) through (iv) above shall be determined as if the Payment Event was the later of the Participant’s Separation from Service or the first day of the month of the Participant’s 55th birthday.
If a Participant first commenced participation in the Plan after 2020, the Participant may elect, as part of a Payment Election that applies to all Plan benefits accrued by the Participant in the Plan Year of initial participation and all subsequent Plan Years, and subject to the conditions set forth in this Section 4.1.1, that payments commence upon: (i) the later of January 1 of the year following the Participant’s Payment Event or the first day of the seventh month following the Participant’s Payment Event; or (ii) the later of the first day of the seventh month following the Participant’s Payment Event or January 1 of a specified year; provided, however, that if the Payment Event is a Separation from Service prior to Retirement (other than due to death), the commencement date shall be determined as if the Payment Event was the later of the Participant’s Separation from Service or the first day of the month of the Participant’s 55th birthday.
Notwithstanding any provisions to the contrary in this Plan, a Participant’s Payment Election for the 2021 Plan Year (or for the first Plan Year that the individual participates in the Plan, if the individual is not a Participant for the 2021 Plan Year) shall also apply to all benefits accrued by the Participant under the Plan in all subsequent Plan Years (the “Single Payment Election for 2021 and Later Years”).
Unless otherwise provided by the Administrator, or its delegate, in the applicable Payment Election form or instructions, the choices available for a Payment Election are as follows: a single lump sum; five, ten or fifteen installments paid annually; a joint and survivor life annuity paid in monthly installments; or Contingent life annuity paid in monthly installments.
Notwithstanding any provisions of the preceding paragraphs in this Section 4.1.1(a) to the contrary, benefits accrued with respect to the 2019 Plan Year or any subsequent Plan Year by an
individual who first commenced participation in the Plan prior to 2021 shall (except as provided in the next paragraph) be subject to the following payment rules: (i) if a Participant dies or, while employed by an Affiliate, becomes Disabled before payments have commenced, then payments shall be made in a lump sum upon (or within 90 days following) the Participant’s death or Disability; (ii) if a Participant dies or, while employed by an Affiliate, becomes Disabled after payments have commenced but before all payments have been completed, then all of the Participant’s remaining benefits shall be made in a lump sum upon (or within 90 days following) the Participant’s death or Disability; provided, however, that (iii) if a Participant who dies had elected either a joint and survivor annuity or a Contingent life annuity with a survivor benefit, then the survivor benefit shall be paid in accordance with the terms of the Participant’s Payment Election. Notwithstanding any provisions of the preceding paragraphs in this Section 4.1.1(a) to the contrary, benefits accrued by an individual who first commenced participation in the Plan after 2020 shall (except as provided in the next paragraph) be subject to the following payment rules: (i) if a Participant dies before payments have commenced, then payments shall be made in a lump sum upon (or within 90 days following) the Participant’s death; (ii) if a Participant dies after payments have commenced but before all payments have been completed, then all of the Participant’s remaining benefits shall be made in a lump sum upon (or within 90 days following) the Participant’s death; provided, however, that (iii) if a Participant who dies had elected either a joint and survivor annuity or a Contingent life annuity with a survivor benefit, then the survivor benefit shall be paid in accordance with the terms of the Participant’s Payment Election.
Notwithstanding any provisions of this Section 4.1.1 to the contrary, if a Participant who has a Primary Payment Election in effect with respect to the 2018 Plan Year (including a deemed election) does not make a new Payment Election for benefits accrued for the 2019 Plan Year, then Sections 4.1(b) and 4.2(b) (and not the preceding provisions of this Section 4.1.1) shall continue to apply to such Participant and the Primary Payment Election (including a deemed election) for the 2018 Plan Year and the Contingent Payment Election (including a deemed election) for the 2018 Plan Year (such Primary Payment Election and Contingent Payment Election, the “2018 Elections”) shall apply for the 2019 Plan Year and then for the 2020 Plan Year and then for the Single Payment Election for 2021 and Later Years, unless prior to such subsequent Plan Year (but no later than 2020 for the Single Payment Election for 2021 and Later Years) the Participant submits a new Payment Election pursuant to this Section 4.1.1 for the subsequent Plan Year. For clarity, as to any benefits accrued for a Plan Year as to which a Participant’s 2018 Elections apply, such benefits shall be paid in accordance with Sections 4.1(b) and 4.2(b) and such 2018 Elections, and the preceding paragraphs of this Section 4.1.1 (including, without limitation, the death and Disability payment rules of the preceding paragraph) shall not apply.
(b) Except as otherwise provided in this Section 4.1.1, a Payment Election made for one Plan Year shall apply for subsequent Plan Years unless prior to such subsequent Plan Year (but no later than 2020 for the Single Payment Election for 2021 and Later Years) the Participant submits a new Payment Election for the subsequent Plan Year. If a Payment Election in effect with respect to one Plan Year (the first Plan Year) carries over and applies to the next Plan Year (the second Plan Year) pursuant to this paragraph, and the Participant’s Payment Election in effect with respect to the first Plan Year includes a specified date payout election pursuant to
clause (ii) of Section 4.1.1(a), that date will apply to the second Plan Year; provided that if the specified date payout election in effect with respect to the first Plan Year is a date in the first or second Plan Year, the Participant shall be deemed to have made a Payment Election for the second Plan Year that the benefits accrued in the second Plan Year shall commence payment upon the Participant’s Payment Event.
(c) A Payment Election with respect to a Plan Year shall be made in such time and manner established by the Administrator, but in all events (except as provided in the next sentence) prior to the start of the Plan Year with respect to which the election is made. An individual who is first selected as a Participant in this Plan may make a Payment Election within thirty days (or such shorter period as may be prescribed by the Administrator) after the date the individual first becomes a Participant. In each case, if no Payment Election has been made by the Participant, the Participant’s Payment Election shall be deemed to be a lump sum payable, for Participants who first commenced participation in the Plan prior to 2021, upon the earliest of the Participant’s Payment Event, death, or Disability, and for Participants who first commenced participation in the Plan after 2020, upon the earlier of (i) death or (ii) the later of January 1 of the year following the Participant’s Payment Event or the first day of the seventh month following the Participant’s Payment Event; provided, however, that if the Payment Event is a Separation from Service prior to the first day of the month of the Participant’s 55th birthday, the commencement date shall be the first day of the month of the Participant’s 55th birthday.
(d) The provisions in Section 4.1(f) also apply to this Section 4.1.1.
(e) Notwithstanding anything to the contrary in this Section 4.1.1, the Administrator, or its delegate, may prescribe rules in the form or instructions for any Payment Election that are different than the rules set forth in this Section 4.1.1 as to the benefits covered by such Payment Election, including expanding or limiting the forms of payment and payment commencement dates available for the Payment Election and prescribing different payment rules for death and Disability.
4.2 Contingent Payment Elections for Plan Years Prior to 2019 (except as otherwise provided)
(a) Each year (through December 31, 2017), a Participant may make Contingent Payment Elections for each of the Contingent Events of (1) the Participant’s death while employed by an Affiliate, (2) the Participant’s Disability while employed by an Affiliate, and (3) Termination of Employment for the benefits to be accrued in the following Plan Year (concluding with the 2018 Plan Year), which election will take effect upon the first Contingent Event that occurs before the Participant’s Retirement, by submitting an election to the Administrator in such time and manner established by the Administrator.
(b) Except as otherwise provided in this paragraph, a Contingent Payment Election made for one Plan Year shall apply for subsequent Plan Years unless prior to a subsequent Plan Year the Participant submits a new Contingent Payment Election for the subsequent Plan Year. If (i) a Contingent Payment Election in effect with respect to one Plan Year (the first Plan Year) carries over and applies to the next Plan Year (the second Plan Year) pursuant to the preceding
sentence, and (ii) the Participant’s Contingent Payment Election in effect with respect to the first Plan Year is that payments shall commence upon the later of the Participant’s Contingent Event or the first day of a specific month and year, then the same Contingent Payment Election (including the same specified date) will apply to the second Plan Year; provided that if the specified date payout election in effect with respect to the first Plan Year is a date in the first or second Plan Year, the Participant shall be deemed to have made a Contingent Payment Election for the Second Plan Year that the benefits accrued in the second Plan Year shall commence payment upon the Participant’s Contingent Event.
(c) The choices available for the Contingent Payment Elections are those specified in Section 4.1 except that the references to Retirement shall instead be the applicable Contingent Event if the event is death or Disability or the first day of the month of the Participant’s 55th birthday (or, if later, Termination of Employment) if the Contingent Event is Termination of Employment.
If the Participant has made no Contingent Payment Election and a Contingent Event occurs prior to Retirement, the Administrator will pay the benefit as specified in the Participant’s Primary Payment Election, except that payments scheduled for payment or commencement of payment “upon Retirement,” or with a payment date determined by reference to Retirement, will be paid, commence or have payment determined by reference to the first day of the month following the date of the Contingent Event if the Contingent Event is the Participant’s death or Disability, but will be the first day of the month of the Participant’s 55th birthday (or, if later, Termination of Employment) if the Contingent Event is Termination of Employment. If a Contingent Event occurs prior to Retirement and the Participant has made neither a Primary Payment Election nor a Contingent Payment Election, the Payment Election shall be deemed to be a joint and survivor life annuity payable on the first day of the month following the date of the Contingent Event if the Contingent Event is the Participant’s death or Disability, but payable on the first day of the month of the Participant’s 55th birthday (or, if later, the first day of the month following the month in which the Participant’s final day of employment occurs prior to Termination of Employment) if the Contingent Event is Termination of Employment. Notwithstanding the foregoing, if a Participant first becomes an Officer or a designated Executive in 2018, the Contingent Payment Election shall be deemed to be a lump sum payable upon on the first day of the month following the date of the Contingent Event if the Contingent Event is the Participant’s death or Disability, but payable on the first day of the month of the Participant’s 55th birthday (or, if later, Termination of Employment) if the Contingent Event is Termination of Employment.
4.3 Changes to Payment Elections
Participants may change an existing Payment Election, including a deemed Payment Election, by submitting a new written Payment Election to the Administrator, subject to the following conditions: (1) the new Payment Election shall not be effective unless made at least twelve months before the payment or commencement date scheduled under the prior Payment Election, (2) the new Payment Election must defer a lump sum payment or commencement of installment or life annuity payments for a period of at least five years from the date that the lump
sum would have been paid or installment or life annuity payments would have commenced under the prior Payment Election, and (3) the election shall not be effective until twelve months after it is filed with the Administrator. For Payment Election changes submitted before 2021, a Payment Election change will not be effective if at the time such new Payment Election is made, the imposition of the five-year delay would require that the benefits to be paid pursuant to such Payment Election would not begin until Participant’s 75th birthday. Except as otherwise provided by the Administrator, or its delegate, in the form or instructions for a Payment Election change submitted after 2020, any such Payment Election change as to a Payment Event or (in the case of a change to a Contingent Payment Election) death (or, in either case, a date determined with reference to a Payment Event or death) will not be effective unless the new Payment Election defers the applicable payment start date by exactly five years from the start date under the prior Payment Election (for clarity, to the extent a Payment Election provides for payment to commence upon a specified date, rather than a date determined with reference to a Payment Event or death, the new Payment Election may defer the specified date by five or more years). After 2018, the payment schedules available under a new Payment Election are those prescribed by the Administrator, or its delegate, in the form or instructions for the Payment Election change, subject to the conditions specified in this paragraph. After 2018, a Participant will only be given one opportunity to change a Payment Election for benefit accruals with respect to each of the following (i) each Plan Year prior to 2021 and (ii) the Single Payment Election for 2021 and Later Years.
Participants who have elected a form of life annuity as their Primary Payment Election or Contingent Payment Election (including any deemed Payment Election) may change such election from one form of life annuity to another form of life annuity otherwise permitted by the Plan (to the extent applicable) by submitting a new written Payment Election to the Administrator, subject to the following conditions: (1) the new Payment Election shall not be effective unless made before the payment or commencement date scheduled under the prior Payment Election, (2) the payment or commencement date under the prior Payment Election is not changed (or the change is made pursuant to the provisions of the preceding paragraph), and (3) the annuities are actuarially equivalent (within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(ii).
4.4 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole discretion and as determined by it in writing, pay the benefits in a single lump sum if the sum of all benefits payable to the Participant under this Plan and all Similar Plans is less than or equal to the applicable dollar amount under Section 402(g)(1)(B) of the Code.
4.5 Six-Month Delay in Payment for Specified Employees
Notwithstanding anything herein to the contrary, in the event that a Participant who is a Specified Employee is entitled to a distribution from the Plan due to the Participant’s Separation from Service, the lump sum payment or the commencement of installment or life annuity payments, as the case may be, may not be scheduled to occur or occur before the date that is the
earlier of (1) six months following the Participant’s Separation from Service for reasons other than death or (2) the Participant’s death.
4.6 Conflict of Interest Exception, Etc.
Notwithstanding the foregoing, the Administrator may, in its sole discretion, pay benefits in a single lump sum if permitted under Treasury Regulation Section 1.409A-3(j)(4)(iii). In addition, the Administrator may, in its sole discretion, accelerate benefits, and pay such benefits in a single lump sum, if and to the extent permitted under any of the other exceptions specified in Treasury Regulation Section 1.409A-3(j)(4) to the general rule in Section 409A of the Code prohibiting accelerated payments, provided that the terms of Section 4.4 of the Plan shall govern whether benefits will be paid in a single lump sum pursuant to the small benefit exception contained in Treasury Regulation Section 1.409A-3(j)(4)(v).
ARTICLE 5 SURVIVOR BENEFITS
5.1 Payment
Following the Participant’s death, payment of the Participant’s benefit will be made to the Participant’s Beneficiary or Beneficiaries according to the payment schedule elected or deemed elected according to Article 4, subject to the payment provisions (if applicable) of Section 4.1.1.
5.2 Benefit Computation
In addition, if the applicable Payment Election or deemed Payment Election is for a joint and survivor life annuity, the survivor benefit is 50% of the Participant’s annuity amount, payable only to the spouse married to the Participant at the earlier of the commencement of Plan benefit payments to the Participant or the Participant’s death, but actuarially reduced if that spouse is more than five years younger than the Participant. If the election is for a contingent life annuity, the survivor benefit will be as elected. The survivor benefit associated with a life annuity will be calculated in a manner consistent with the survivor benefit provisions of the Qualified Plan except that this Plan will govern where its provisions under Sections 3.3 and 3.4(d) are inconsistent with those of the Qualified Plan. Notwithstanding the preceding provisions of this Section 5.2, if the Payment Election or deemed Payment Election is for a joint and survivor annuity, or a contingent life annuity, and the Participant dies on or after December 8, 2021 and while employed by an Affiliate, the survivor benefit as to any distribution of Plan benefits triggered by such Separation from Service will equal 100% of the Participant’s benefit (i.e., not reduced to 50% or 75% of the Participant’s annuity amount), but such benefit shall still be actuarially reduced (as otherwise provided above) for the age of the spouse or contingent annuitant, as applicable.
ARTICLE 6 BENEFICIARY DESIGNATION
The Participant will have the right, at any time, to designate any person or persons or entity as Beneficiary (both primary and contingent) to whom payment under the Plan will be made in the event of the Participant’s death; provided that if the Participant has elected (or is deemed to have elected) a Payment Election in the form of a joint and survivor life annuity or a contingent life annuity and designates a new person or entity as Beneficiary after annuity payments have commenced, the annuity payments to such newly designated Beneficiary must be made in the same amounts and at the same times as payments would have been made to the designated Beneficiary immediately preceding the commencement of payments. The Beneficiary designation will be effective when it is submitted to the Administrator during the Participant’s lifetime in accordance with procedures established by the Administrator.
The submission of a new Beneficiary designation will cancel all prior Beneficiary designations. Any finalized divorce or marriage of a Participant subsequent to the date of a Beneficiary designation will revoke such designation, unless in the case of divorce the previous spouse was not designated as a Beneficiary, and unless in the case of marriage the Participant’s new spouse has previously been designated as the sole primary Beneficiary. The spouse of a married Participant must consent in writing to any designation of a Beneficiary other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant, then the Administrator will direct the distribution of the benefits to the Participant’s estate. If a primary Beneficiary dies after the Participant’s death but prior to completion of the distribution of benefits under this Plan, and no contingent Beneficiary has been designated by the Participant, any remaining payments will be made to the primary Beneficiary’s Beneficiary, if one has been designated, or to the Beneficiary’s estate.
ARTICLE 7 CONDITIONS RELATED TO BENEFITS
7.1 Nonassignability
The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or any manner whatsoever. These benefits will be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law. Notwithstanding the foregoing, the benefit payable to a Participant may be assigned in full or in part, pursuant to a domestic relations order of a court of competent jurisdiction.
7.2 Unforeseeable Emergency
A Retired Participant, a Participant who has a Disability, or a Participant who is age 55 or older may submit a hardship distribution request to the Administrator in writing setting forth the reasons for the request. The Administrator will have the sole authority to approve or deny such requests. Upon a finding that the Participant has suffered an Unforeseeable Emergency, the Administrator may in its discretion, permit the Participant to accelerate distributions of benefits under the Plan in the amount reasonably necessary to alleviate the Unforeseeable Emergency.
7.3 No Right to Assets
A Participant’s benefits paid under the Plan will be paid from the general funds of the Participant’s Employer, and the Participant and any Beneficiary will be no more than unsecured general creditors of that Employer with no special or prior right to any assets of the Employer for payment of any obligations hereunder. Neither the Participant nor the Beneficiary will have a claim to benefits from any other Affiliate. Notwithstanding the foregoing or anything in the definition of “Employer” to the contrary, and at the sole discretion of EIX, EIX may determine that for purposes of benefits payable under the Plan, EIX shall be deemed to be the Employer obligated to pay such benefits. Such an election by EIX may be made, in EIX’s sole discretion, as to all Plan benefits, as to only certain benefits, and/or as to only certain Affiliates or Participants, and will be deemed an assumption of the specified benefit obligations of the applicable Affiliates. Subject to the further provisions hereof, EIX will be solely obligated to pay any such benefits and no Participant (or Beneficiary) will have a claim as to any other Affiliate with respect to such benefits. Upon an election by EIX under this Section 7.3, benefits covered by the election will be paid from the general funds of EIX (and not the Affiliate that would otherwise pay the benefits), provided that EIX may require that as between EIX and the Affiliate that would otherwise pay such benefits, the Affiliate will be responsible to pay EIX for the assumption of such obligations in accordance with funding arrangements determined by EIX at the time of election or any time thereafter. To the extent such Affiliate fails to comply with such funding arrangements or obtains any refund or offset of payments made from the Affiliate to EIX without the consent of EIX, the Affiliate that would otherwise be responsible for payment of benefits to the applicable Participant will remain responsible for such benefits. EIX will effectuate any such election pursuant to this Section 7.3 by providing written notice to the Administrator and the applicable Affiliates regarding the effective date of such election, and the benefits, Affiliates and Participants for which the election is applicable. The funding arrangements established by EIX at the time of its election, or from time to time thereafter, will set forth the method by which the Affiliates will remit funds to EIX in consideration of Plan benefit obligations that are assumed by EIX. Such a method may include, but is not limited to, lump sum payment by an Affiliate to EIX of relevant benefits accrued through the date of EIX’s election based on the Projected Benefit Obligation (“PBO”) with regular periodic payments to EIX of continuing accruals; regular periodic payments by an Affiliate to EIX of benefits accrued based on the PBO beginning with the date of EIX’s election through the date such benefits become due under the Plan; lump sum payment by an Affiliate to EIX at the time benefits become due under the Plan; or intercompany payables and receivables used with funding on a “pay-as-you-go” basis.
7.4 Protective Provisions
The Participant will cooperate with the Administrator by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and signing such consents to insure or taking such other actions as may be requested by the Administrator. If the Participant refuses to cooperate, the Administrator and the Employer will have no further obligation to the Participant under the Plan.
7.5 Constructive Receipt
Notwithstanding anything to the contrary in this Plan, in the event the Administrator determines that amounts deferred under the Plan have failed to comply with Section 409A and must be recognized as income for federal income tax purposes, distribution of the amounts included in a Participant’s income will be made to such Participant. The determination of the Administrator under this Section 7.5 will be binding and conclusive.
7.6 Withholding
The Participant or the Beneficiary will make appropriate arrangements with the Administrator for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the accrual or payment of benefits under the Plan. If no other arrangements are made, the Administrator may provide, at its discretion, for such withholding and tax payments as may be required.
7.7 Incapacity
If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, EIX may direct that payments (or any portion) be made to that person’s legal guardian or conservator, or that person’s spouse, as an alternative to payment to the person unable to use the payments. EIX will have no obligation to supervise the use of such payments, and court-appointed guardianship or conservatorship may be required.
ARTICLE 8 PLAN ADMINISTRATION
8.1 Plan Interpretation
The Administrator will administer the Plan and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to management, staff, or contractors to whom day-to-day Plan operations may be delegated. The Administrator will establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Administrator will interpret and construe the Plan to comply with Section 409A of the Code. All decisions of the Administrator will be final and binding.
8.2 Limited Liability
Neither the Administrator, nor any of its members or designees, will be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan.
ARTICLE 9 AMENDMENT OR TERMINATION OF PLAN
9.1 Authority to Amend or Terminate
The Administrator will have full power and authority to prospectively modify or terminate this Plan, and the Administrator’s interpretations, constructions and actions, including any determination of the Participant’s account or benefits, or the amount or recipient of the payment to be made, will be binding and conclusive on all persons for all purposes. Absent the consent of the Participant, however, the Administrator will in no event have any authority to modify this section. However, no such amendment or termination will apply to any person who has then qualified for or is receiving benefits under this Plan.
9.2 Limitations
In the event of Plan amendment or termination which has the effect of eliminating or reducing a benefit under the Plan, the benefit payable on account of a retired Participant or Beneficiary will not be impaired, and the benefits of other Participants will not be less than the benefit to which each such Participant would have been entitled if he or she had retired immediately prior to such amendment or termination.
ARTICLE 10 CLAIMS AND REVIEW PROCEDURES
10.1 Claims Procedure for Claims Other Than Due to Disability
(a) Except for claims due to Disability, the Administrator will notify a Participant or his or her Beneficiary (or person submitting a claim on behalf of the Participant or Beneficiary) (a “claimant”) in writing, within 90 days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a claimant is not eligible for benefits or full benefits, the notice will set forth (1) the specific reasons for the denial, (2) a specific reference to the provisions of the Plan on which the denial is based, (3) a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of the Plan’s claims review procedure and other appropriate information as to the steps to be taken if the claimant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator will notify the claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period.
(b) If a claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant will have the opportunity to have the claim reviewed by the Administrator by filing a petition for review with the Administrator within 60 days after receipt of the notice issued by the Administrator. Said petition will state the specific reasons which the claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Administrator of the petition, the Administrator will afford the claimant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the claimant (or counsel) will have the right to review the pertinent documents. The Administrator will notify the claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the claimant and the specific provisions of the Plan on which the decision is based. If, due to special circumstances (for example, because of the need for a hearing), the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Administrator, but notice of this deferral will be given to the claimant. In the event of the death of the Participant, the same procedures will apply to the Participant’s Beneficiaries.
10.2 Claims Procedure for Claims Due to Disability
(a) For purposes of Section 10.1, this Section 10.2 and Section 10.3, a claim shall not be considered to be due to Disability if the existence of the Participant’s Disability is determined by reference to whether the Participant is eligible for benefits under his or her Employer’s long-term disability plan applicable to the Participant, as determined by the Employer. A claim due to Disability will be approved or denied by the Administrator or its delegate, as it deems appropriate in its discretion, based on its interpretation of the Plan, medical evidence, and the analysis and conclusions of a physician selected by the Administrator or its delegate. Within a reasonable period of time, but not later than 45 days after receipt of a claim due to Disability, the Administrator or its delegate shall notify the claimant of any adverse benefit determination on the claim, unless circumstances beyond the Plan’s control require an extension of time for processing the claim. Except as contemplated by this Section 10.2, in no event may the extension period exceed 30 days from the end of the initial 45-day period. If an extension is necessary, the Administrator or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 45-day period. The notice shall describe the circumstances requiring the extension and the date by which the Administrator or its delegate expects to render a determination on the claim. If, prior to the end of the first 30-day extension period, the Administrator or its delegate determines that, due to circumstances beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for an additional 30 days, so long as the Administrator or its delegate notifies the claimant, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the Administrator or its delegate expects to render a decision. This notice of extension shall specifically describe the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and that the claimant has at least 45 days within which to provide the specified information. Furthermore, in the event that a period of time is extended as permitted due to a claimant’s failure to submit information
necessary to decide a claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
(b) In the case of an adverse benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 10.2(c) below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and (viii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan.
(c) Any good-faith determination by the Administrator or its delegate will be final and binding on the Plan and the claimant unless appealed in accordance with this Section 10.2(c). Within 180 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or the claimant’s duly authorized representative, upon written application to the Administrator, may request that the Plan fully and fairly review the adverse benefit determination (also sometimes referred to herein as an “appeal”). Upon request and free of charge, the claimant pursuing an appeal shall have reasonable access to, and be provided copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The review: (i) shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously submitted or considered in the initial adverse benefit determination; (ii) shall not afford deference to the initial adverse benefit determination; (iii) shall be conducted, at the direction of the Administrator, by an appropriate fiduciary of the
Plan who is neither the individual who made the adverse benefit determination that is the subject of the review, nor the subordinate of such individual; (iv) shall identify medical and vocational experts whose advice was obtained on behalf of the Plan in connection with the initial adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (v) where based in whole or in part on medical evidence or medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, shall include consultation with a physician, with appropriate training and experience in the field of medicine involved in the medical judgment, who was neither consulted in connection with the initial adverse benefit determination, nor the subordinate of any such professional.
The appeal will then be approved or denied by the Administrator or its delegate, as it deems appropriate, based on its interpretation of the Plan in light of the medical evidence.
Before an adverse benefit determination on review of a claim due to Disability is issued, the claimant shall be provided, free of charge, with any new or additional evidence considered, relied upon, or generated by the Administrator or its delegate making the benefit determination (or at the direction of the Administrator) in connection with the claim; such evidence will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
Also before an adverse benefit determination on review based on a new or additional rationale is issued, the claimant shall be provided, free of charge, the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
A final benefit determination will be made by the Administrator or its delegate, and the Administrator or its delegate shall provide the claimant with written or electronic notification of the final benefit determination within a reasonable period of time, but no later than 45 days immediately following receipt of claimant’s request for review, unless special circumstances require a further extension of time for processing the claim, which extension may be up to an additional 45 days. If such an extension of time for review is required because of special circumstances, the Administrator or its delegate shall provide the claimant with a written notice of the extension prior to the commencement of the extension. The notice shall describe the special circumstances requiring the extension and the date as of which the final benefit determination shall be made. In the event that a period of time is extended due to a claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information. In the case of an adverse final benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant and in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse final benefit determination;
(ii) reference to the specific Plan provisions on which the adverse final benefit determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and mandatory arbitration in accordance with Section 10.3 below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan; and (viii) the following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.” As described above, there shall be only one level of review of an adverse benefit determination, followed by mandatory arbitration under Section 10.3, before a claimant may bring a civil action pursuant to Section 502 of ERISA.
10.3 Dispute Arbitration
(a) Effective as to any claims filed on or after June 19, 2014, final and binding arbitration under this Section 10.3 shall be the sole remedy available to a claimant after he or she has exhausted the claim and review procedures set forth in Section 10.1. Furthermore, exhaustion by the claimant of the claim and review procedures set forth in Section 10.1 is a mandatory prerequisite for binding arbitration under this Section 10.3. Any arbitration or civil action brought prior to the exhaustion of the claim and review procedures set forth in Section 10.1 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted.
(b) After a claimant has exhausted the claim and review procedures set forth in Section 10.1, if the claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant may submit his or her claim to final and binding arbitration under this Section 10.3.
Any arbitration under this Section 10.3 will be held in Los Angeles County, California, in accordance with the then-current JAMS Arbitration Rules and Procedures for Employment Disputes (“JAMS Rules”) and under the Federal Arbitration Act. The arbitration shall be before
a single neutral arbitrator licensed to practice law and experienced in employee benefits law as well as the laws governing nonqualified deferred compensation plans, selected by mutual agreement of the parties. If the parties are unable to agree upon an arbitrator, the arbitrator shall be selected by striking in accordance with the then-current JAMS Rules from a list of arbitrators supplied by JAMS. Any and all claims and/or defenses that would otherwise be available in a court of law will be fully available to the parties. The arbitrator selected pursuant to this paragraph (the “Arbitrator”) may order such discovery as is necessary for a full and fair exploration of the issues and dispute, consistent with the expedited nature of arbitration. The Arbitrator shall apply applicable substantive law to resolve the dispute. To the fullest extent provided by federal law, the decision rendered by the Administrator pursuant to the claim and review procedures set forth in Section 10.1 shall be upheld by the Arbitrator unless the Arbitrator determines that the Administrator abused its discretion. Notwithstanding the preceding sentence, if a Change in Control occurs, then a claim review decision rendered by the Administrator within the three years following the Change in Control shall, if it is challenged by the claimant in accordance with this Section 10.3, be subject to de novo review by the Arbitrator. Subject to the applicable standard of review in the preceding two sentences, the Arbitrator may grant any award or relief available under applicable law that the Arbitrator deems just and equitable.
At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto, and may be enforced by any court of competent jurisdiction. The Administrator will pay the Arbitrator’s fees and all other costs that are unique to the arbitration process, to the extent required by law. Otherwise, each party shall be solely responsible for paying his/her/their/its own costs/fees for the arbitration, including but not limited to attorneys’ fees. However, the Arbitrator in his or her discretion may allow reasonable attorney’s fees and costs of action to either party to the same extent as would be permissible if the claim(s) were filed in a court of law in lieu of arbitration.
(c) Notwithstanding any contrary provisions of this Section 10.3, if the claim is due to Disability, the following rules apply: (1) arbitration under this Section 10.3 shall be the mandatory second level of appeal following the exhaustion by the claimant of the claim and review procedures set forth in Section 10.2, and such exhaustion is a mandatory prerequisite for arbitration under this Section 10.3—any arbitration or civil action brought with respect to a claim due to Disability prior to the exhaustion of the claim and review procedures set forth in Section 10.2 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted; (2) arbitration of a claim due to Disability under this Section 10.3 shall not be binding, and the claimant shall not be precluded from challenging the decision of the Arbitrator in a civil action brought pursuant to Section 502(a) of ERISA; and (3) except as specifically set forth in this Section 10.3(c), if the claim is due to Disability, the arbitration shall be conducted as set forth in Section 10.3(b).
(d) The Officer, Executive, Participant, or Beneficiary must bring any dispute in arbitration on an individual basis only, and not on a class, collective or representative basis and must waive the right to commence, be a party to, or be an actual or putative class member of any
class, collective or representative action arising out of or relating to the Plan, including, but not limited to, any claims related to the Plan (“class action waiver”). However, if this class action waiver is found to be unenforceable by a court of competent jurisdiction, then any claim on a class, collective or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration. Except as provided in the preceding sentence, this Section 10.3 is intended to make mandatory individual arbitration apply, as described above, to the maximum extent permissible under ERISA; if any feature of this arbitration requirement is impermissible under ERISA, arbitration as described above shall remain required with the minimum change necessary to allow the arbitration requirement to be permissible under ERISA. This Section 10.3(d) shall apply as follows: (1) it shall apply to any claim filed on or after January 1, 2024 with respect to an Officer, Executive or Participant hired (including those rehired) by an Employer on or after January 1, 2024 and to any Beneficiary thereof and (2) it shall apply to any claim filed on or after January 1, 2025 with respect to an Officer, Executive or Participant hired (including those last rehired) by an Employer prior to January 1, 2024 and to any Beneficiary thereof.
ARTICLE 11 MISCELLANEOUS
11.1 Participation in Other Plans
Participation in this Plan will not limit a Participant’s ability to continue to participate in any other employee benefit program of an Employer, subject to and in accordance with the terms of the applicable employee benefit program.
11.2 Relationship to Qualified Plan
This Plan will to the fullest extent possible under currently applicable law be administered in accordance with, and where practicable according to the terms of the Qualified Plan and/or Savings Plan. Notwithstanding the foregoing, the terms of this Plan shall control benefits payable under this Plan whenever the terms of the Qualified Plan and/or Savings Plan differ from this Plan.
11.3 Forfeiture
The payments to be made pursuant to the Plan require the Participant, for so long as the Participant remains in the active employ of the Employer, to devote substantially all of his or her time, skill, diligence and attention to the business of the Employer and not to actively engage, either directly or indirectly, in any business or other activity adverse to the best interests of the business of the Employer. In addition, the Participant will remain available during Retirement for consultation in any matter related to the affairs of the Employer. Any breach of these conditions by a Participant will result in complete forfeiture by the Participant of any further benefits under the Plan. If the Participant fails to observe any of the above conditions, or if he or she is discharged by the Employer for malfeasance or willful neglect of duty, then in any of said events, the Participant’s benefits under this Plan will terminate and will not be paid, and EIX and the Employer will have no further liability therefor.
11.4 Successors
The rights and obligations of each Employer under the Plan will inure to the benefit of, and will be binding upon, the successors and assigns of the Employer.
11.5 Trust
The Employers will be responsible for the payment of all benefits under the Plan. At their discretion, the Employers may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. The trust or trusts may be irrevocable, but an Employer’s share of the assets thereof will be subject to the claims of the Employer’s creditors. Benefits paid to the Participant from any such trust will be considered paid by the Employer for purposes of meeting the obligations of the Employer under the Plan.
11.6 Employment Not Guaranteed
Nothing contained in the Plan nor any action taken hereunder will be construed as a contract of employment or as giving any Participant any right to continue in employment with the Employer or any other Affiliate.
11.7 Gender, Singular and Plural
All pronouns and variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
11.8 Captions
The captions of the articles and sections of the Plan are for convenience only and will not control or affect the meaning or construction of any of its provisions.
11.9 Validity
If any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
11.10 Waiver of Breach
The waiver by EIX or the Administrator of any breach of any provision of the Plan by the Participant will not operate or be construed as a waiver of any subsequent breach by the Participant.
11.11 Applicable Law
The Plan will be governed and construed in accordance with the laws of California except where the laws of California are preempted by ERISA.
11.12 Notice
Any notice or filing required or permitted to be given to the Administrator under the Plan will be sufficient if in writing and hand-delivered, or sent by first class mail to the principal office of EIX, directed to the attention of the Administrator. The notice will be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
11.13 ERISA Plan
The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for “a select group of management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA. EIX is the named fiduciary.
11.14 Statutes and Regulations
Any reference to a statute or regulation herein shall include any successor to such statute or regulation.
IN WITNESS WHEREOF, EIX has amended and restated this Plan on the 11th day of December, 2024.
EDISON INTERNATIONAL
/s/ Natalie Schilling
Natalie Schilling
Senior Vice President, Human Resources
37
Document
Exhibit 10.5
EDISON INTERNATIONAL
EXECUTIVE INCENTIVE COMPENSATION PLAN
As Amended and Restated Effective January 1, 2025
WHEREAS, it has been determined that it is in the best interest of Edison International ("EIX") and its affiliates to offer and maintain competitive executive compensation programs designed to attract and retain qualified executives;
WHEREAS, it has been determined that providing financial incentives to executives that reinforce and recognize corporate, organizational and individual performance and accomplishments will enhance the financial and operational performance of EIX and its affiliates; and
WHEREAS, it has been determined that an incentive compensation program would encourage the attainment of short-term corporate goals and objectives;
NOW, THEREFORE, the Edison International Executive Incentive Compensation Plan has been established by the Compensation and Executive Personnel Committee of the Board of Directors originally effective January 1, 1997, and made available to eligible executives of EIX and its participating affiliates subject to the following terms and conditions:
- Definitions. When capitalized herein, the following terms are defined as indicated:
“Board” means the Board of Directors of a Company (or a committee thereof acting within its delegated authority).
“CEO” means the chief executive officer of a Company.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means EIX or a participating affiliate.
“Committee” means the Compensation and Executive Personnel Committee of the EIX Board of Directors. Where the context requires with respect to officers and other participating employees of SCE, “Committee” shall also mean the Compensation and Executive Personnel Committee of the SCE Board.
“Covered Officer” means an individual who is a “Covered Officer” of EIX or SCE as defined in the EIX or SCE Committee Charter.
“Covered Participant” means an individual who is or was (i) a vice president or officer with a more senior title at EIX, SCE or Edison Energy Support Services, LLC (“EESS”), (ii) the chief financial officer or the general counsel of Edison Energy, LLC (d/b/a Trio) (“Trio”), or (iii) a senior vice president or officer with a more senior title at Trio.
“EIX CEO” means the chief executive officer of EIX.
“Misconduct” as to a Covered Participant means (a) the occurrence of any act or omission by the Covered Participant that could reasonably be expected to result in (or has resulted in) such Covered Participant’s conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or for any indictable offense or crime involving moral turpitude; (b) the Covered Participant’s commission of an act of fraud, embezzlement, misappropriation, or breach of fiduciary duty against a Company or any of its subsidiaries or affiliates or any of their officers, directors, employees, customers, suppliers, insurers or agents; or (c) any violation by the Covered Participant of a provision in the EIX Code of Conduct, as in effect from time to time (or, as to a Covered Participant employed by an affiliate of EIX who is subject to a Code of Conduct maintained by an affiliate of EIX at the applicable time, the Covered Participant’s violation of a provision of such affiliate’s Code of Conduct as then in effect).
“Participant” means the CEO, president, executive vice presidents, senior vice presidents, elected vice presidents, and senior managers whose participation in this Plan has been approved by the Committee, the EIX CEO or the Board.
“Plan” means this Edison International Executive Incentive Compensation Plan.
“Recoupment Administrator” means the Committee or other body, individual or individuals, as the case may be, to whom the authority to determine whether to recoup compensation due to misconduct has been delegated by the Committee for purposes of this Plan.
“SCE” means Southern California Edison Company.
- Eligibility. Except as otherwise expressly provided herein, to be eligible for any incentive award with respect to a particular calendar year (the “Performance Year”), an individual must (a) have been employed by the Company as a Participant for the entire Performance Year, and (b) continue to be employed by EIX, SCE, or one of their respective subsidiaries through the date that the Company pays incentive awards under the Plan with respect to that Performance Year generally (which, as provided in Section 5 below, occurs within two and one-half months following the end of the Performance Year) (the “Vesting Date”). Except as otherwise expressly provided herein, in no event will a Participant or any other individual be entitled to, or be considered to have earned all or any portion of, an incentive award under the Plan with respect to a particular Performance Year unless (x) the Participant satisfies both of the eligibility requirements
set forth in the preceding sentence and (y) solely with respect to a Participant who is a Covered Participant, the Covered Participant does not engage in Misconduct during or following the particular Performance Year.
In the event an individual first becomes a Participant after the start of the Performance Year but the individual otherwise satisfies the eligibility requirements set forth in the preceding paragraph, a pro-rata award may be made at the discretion of the Committee or an individual (and, if applicable, Board) having the authority to approve the Participant's award pursuant to Section 5 below. Pro-rata awards may be distributed to Participants who during the Performance Year retired, died, or had their employment transferred between a Company and a non-participating affiliate of EIX. A full award may be distributed to a Participant who was employed by the Company as a Participant for the entire Performance Year but who was not employed by EIX, SCE, or one of their respective subsidiaries through the applicable Vesting Date due to retirement or death. The determination of whether any pro-rata or full award will be paid in any such circumstances will be determined in the discretion of the Committee or an individual (and, if applicable, Board) having the authority to approve the Participant's award pursuant to Section 5 below had such retirement, death, or transfer of employment not occurred.
Company Performance Goals. The CEOs will develop recommended Company performance goals. In consultation with the EIX CEO, the Committee will select specific performance goals for the Performance Year. The performance goals should represent relatively optimistic, but reasonably attainable goals, the accomplishment of which is intended to contribute significantly to the attainment of Company strategic objectives. In the event a Covered Officer provides services to a Company that is not such Covered Officer’s employer (the “Non-Employing Entity”), then the Committee may delegate to the EIX CEO the selection of specific performance goals of the Non-Employing Entity with respect to such Covered Officer but only to the extent that the Committee determines that such specific performance goals for such officer may be based on the performance of the Non-Employing Entity.
Individual Incentive Award Levels. Company, organizational and individual performance relative to the pre-established goals will determine the award a Participant can receive. The Committee, the CEO of a Company, or a designee, as permitted in accordance with the Committee Charter or other applicable controlling document, will establish target award levels for the Performance Year as a percentage of base salary. If a Participant is promoted during the Performance Year or otherwise becomes entitled to receive a higher/lower base salary and/or target award level during the Performance Period, that Participant’s incentive award for that Performance Year may be calculated based on the Participant's weighted average base salary and target award level, taking into account the base salary and target award level during the portion of the Performance Year preceding the promotion and/or change in base salary and/or target award level, and the base salary and target award level(s) during the remainder of such Performance Year. Notwithstanding any provisions in this Plan to the contrary, if a participant is on a
disability leave for all or a portion of a Performance Year, any incentive award for the Participant for that Performance Year will (unless otherwise required by applicable law) be calculated by excluding the Participant’s base salary for the period(s) on such leave (for clarity, compensation pursuant to a disability plan or program is never taken into account for determining an award under this Plan). All awards are discretionary.
- Approval and Payment of Individual Awards. During the first quarter of the year following the completion of the Performance Year, the EIX CEO, in consultation with the other CEOs, will assess the degree to which individual and corporate goals and objectives have been achieved. Incentive award recommendations for Participants will be developed. The Committee will receive a report from the EIX CEO as to Company performance, will deliberate on management recommendations, and will approve awards for Covered Officers. Awards to other Participants will be approved by the CEO of the respective Company, or a designee, as permitted in accordance with the Committee Charter or other applicable controlling document; provided, however, that if the selection of performance goals for a Company has been delegated to the EIX CEO, then the awards to officers of that Company who are not also officers of EIX or SCE will require the approval of the EIX CEO and the Board of the applicable Company. All decisions of the Committee, the EIX CEO, and the other CEOs regarding individual incentive awards will be final and conclusive (in the case of the EIX CEO and the other CEOs, as to awards for which the particular CEO has the authority to approve).
Incentive award payments will be made as soon as practical following the appropriate approval (and in all events within two and one-half months after the end of the Performance Year to which the award relates). Payment will be made in cash except to the extent an eligible Participant has previously elected to defer payment of some or all of the award pursuant to the terms of a deferred compensation plan of the Company. Award payments made will be subject to any income or payroll tax withholding or other deductions as may be required by Federal, State or local law. Any such payment shall be deemed an unearned advance, and, with respect to a Covered Participant, any such unearned advance shall be subject to recoupment pursuant to Section 15 of this Plan. Any incentive award amount deferred pursuant to the terms of a deferred compensation plan of the Company by a Covered Participant shall be subject to forfeiture pursuant to Section 15 of the Plan. By continuing to be employed by EIX, SCE, or one of their respective subsidiaries after the terms of this Plan have been communicated to a Covered Participant, such Covered Participant agrees and consents to the enforcement and implementation of the provisions set forth in Section 15 of the Plan without further consent or action being required of the Covered Participant, and the Covered Participant further agrees that none of the Companies (nor any of their respective subsidiaries) shall indemnify such Covered Participant against the loss of any amounts recouped pursuant to Section 15 of the Plan.
Awards under this Plan will not be considered to be salary or other compensation for the purpose of computing benefits to which the Participant may be entitled under any qualified Company retirement plan, including but not limited to the SCE Retirement Plan,
the Edison 401(k) Savings Plan, or any other plan or arrangement of the Company for the benefit of its employees if such plan or arrangement is a plan qualified under Section 401(a) of the Code and is a trust exempt from Federal income tax under Section 501(a) of the Code. Awards may be considered compensation for nonqualified plan purposes depending on the terms and conditions of the particular nonqualified plan.
No Right to Assets. An award payable to a Participant under this Plan shall constitute an unsecured general obligation of the Participant’s employer (EIX or its affiliate, as the case may be, or, in the case of a former employee, the affiliate that last employed the Participant) (the applicable entity, the "Employer"), and no special fund or trust will be created, nor will any notes or securities be issued with respect to any awards. Participants will be no more than unsecured general creditors of the Employer with no special or prior right to any assets of the Employer for payment of any obligations hereunder. No Participant (or beneficiary of a Participant) will have a claim to benefits from any other affiliate. EIX is not a guarantor of the benefit obligations of other participating affiliates. By participating in, and by accepting any benefits under, this Plan, Participants consent to EIX sponsorship of this Plan, but acknowledge that EIX is not a guarantor of the benefit obligations of other participating affiliates. Each affiliate is responsible for payment of the accrued benefits under this Plan with respect to its own employees subject to the terms and conditions set forth herein. Notwithstanding the foregoing or anything in the definition of “Employer” to the contrary, and at the sole discretion of EIX, EIX may determine that for purposes of benefits payable under this Plan, EIX shall be deemed to be the Employer obligated to pay such benefits. Such an election by EIX may be made, in EIX’s sole discretion, as to all Plan benefits, as to only certain benefits, and/or as to only certain affiliates or Participants, and will be deemed an assumption of the specified benefit obligations of the applicable affiliates. Subject to the further provisions hereof, EIX will be solely obligated to pay any such benefits and no Participant (or beneficiary) will have a claim as to any other affiliate with respect to such benefits. Upon an election by EIX under this Section 6, benefits covered by the election will be paid from the general funds of EIX (and not the affiliate that would otherwise pay the benefits), provided that EIX may require that as between EIX and the affiliate that would otherwise pay such benefits, the affiliate will be responsible to pay EIX for the assumption of such obligations in accordance with funding arrangements determined by EIX at the time of election or any time thereafter. To the extent such affiliate fails to comply with such funding arrangements or obtains any refund or offset of payments made from the affiliate to EIX without the consent of EIX, the affiliate that would otherwise be responsible for payment of benefits to the applicable Participant will remain responsible for such benefits. EIX will effectuate any such election pursuant to this Section 6 by providing written notice to the Committee and the applicable affiliates regarding the effective date of such election, and the benefits, affiliates and Participants for which the election is applicable. The funding arrangements established by EIX at the time of its election, or from time to time thereafter, will set forth the method by which the affiliates will remit funds to EIX in consideration of benefit obligations that are assumed by EIX.
Plan Modifications and Adjustments. In order to ensure the incentive features of the Plan, avoid distortion in its operation and compensate for or reflect extraordinary changes which may have occurred during the Performance Year, the Committee may make adjustments to the Company performance goals or results or other Plan terms and conditions before, during or after the end of the Performance Year to the extent it determines appropriate in its sole discretion. If, pursuant to Section 3 above, the Committee has delegated the selection of performance goals for a Company to the EIX CEO, then this Section 7 authorizes the EIX CEO to make adjustments to that Company’s performance goals or results at any time in his or her sole discretion. Adjustments to performance goals, performance results, and other Plan terms and conditions made pursuant to the preceding provisions of this Section 7 shall be conclusive and binding upon all parties concerned. The Plan may be modified or terminated by the Committee at any time.
Plan Administration. Except as otherwise provided in other Sections of this Plan, administration of the Plan is delegated to the senior officer of EIX responsible for Human Resources (and to the EIX director responsible for executive compensation (the “EIX EC Director”) if EIX does not have an officer responsible for Human Resources other than the EIX CEO) and designees acting under his/her (or the EIX EC Director’s) direction. Such officer is authorized (and the EIX EC Director is authorized) to approve ministerial amendments to the Plan, to interpret Plan provisions, and to approve changes as may be required by law or regulation. Any decision or determination under or with respect to the Plan, as well as any interpretation of the Plan, by any Board, Committee or CEO, or by the senior officer of EIX responsible for Human Resources (or the EIX EC Director), in each case within its, his or her authority under or with respect to the Plan, shall be conclusive and binding upon all parties concerned. No Company, Board, Committee or individual shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan.
Successors and Assigns. This Plan shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and assigns of the Company and Participant.
Notwithstanding the foregoing, any right to receive payment hereunder is hereby expressly declared to be personal, nonassignable and nontransferable, except by will, intestacy, or as otherwise required by law, and in the event of any attempted assignment, alienation or transfer of such rights contrary to the provisions hereof, the Company shall have no further liability for payments hereunder.
Beneficiaries. Any award approved following the death of a Participant will be made to the Participant's most recently designated beneficiary or beneficiaries under the 2007 Performance Incentive Plan (or any successor equity incentive plan) of the Company. If no beneficiary has been designated by the Participant, or if no beneficiary survives the Participant, or if a designated beneficiary should die after surviving the Participant but before the award has been paid, any award approved will be paid in a lump-sum payment to the Participant's estate as soon as practicable.
Capacity. If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, the Company may direct that payments (or any portion) be made to that person's legal guardian or conservator, or that person's spouse, as an alternative to the payment to the person unable to use the payments. Court-appointed guardianship or conservatorship may be required by the Company before payment is made. The Company shall have no obligation to supervise the use of such payments.
No Right of Employment. Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the employ of the Company as an officer or manager of the Company or in any other capacity.
Severability and Controlling Law. The various provisions of this Plan are severable in their entirety. Any determination of invalidity or unenforceability of any one provision will have no effect on the continuing force and effect of the remaining provisions. This Plan shall be governed by the laws of the State of California.
Section 409A. The Company’s intent is that any payments and benefits paid under this Plan be exempt from, or comply with, Section 409A of the Code so as to not result in any tax, penalty or interest thereunder. To the maximum extent permitted, this Plan will be interpreted and administered consistent with such intent.
Recoupment. Notwithstanding any provision of this Plan to the contrary, any award to a Covered Participant under this Plan, and any payment that may be made in respect of an award under this Plan to such Covered Participant, shall be subject to recoupment by the Company or forfeiture by such Covered Participant in the event that (a) such Covered Participant’s employment with EIX, SCE, and their respective subsidiaries is terminated by the Employer or if such Covered Participant is placed on unpaid leave by the Employer and (b) the applicable Recoupment Administrator determines that such termination or unpaid leave placement arose from such Covered Participant having engaged in Misconduct. In such circumstances, the applicable Recoupment Administrator shall determine the extent (if any) to which an award to the Covered Participant under this Plan and/or any payment that may be made to the Covered Participant in respect of an award under this Plan shall be forfeited or recouped. To the extent a payment made to the Covered Participant in respect of an award under this Plan is to be recouped, the Covered Participant shall promptly pay to the Company the amount of the required recoupment. In addition, any award under this Plan, and any payment that may be made in respect of an award under this Plan, shall also be subject to any recoupment, “clawback” or similar provisions of applicable law, as well as the EIX and SCE Incentive Compensation Recoupment Policy for Accounting Restatements, as in effect from time to time (such policy, the “Mandatory Recoupment Policy”), and any other recoupment or similar policies of the Company that may be in effect from time to time; provided, however, that any portion of an award or payment under this Plan that is recouped pursuant to the Mandatory Recoupment Policy or as required by applicable law
shall not be subject to further recoupment or forfeiture under this Section 15 or any other recoupment, “clawback” or similar policies of the Company that may be in effect from time to time.
IN WITNESS WHEREOF, EIX has amended this Plan as of the 11th day of December, 2024.
EDISON INTERNATIONAL
/s/ Natalie K. Schilling
Natalie K. Schilling Senior Vice President, Human Resources
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Document
Exhibit 10.6
EDISON INTERNATIONAL
2008 EXECUTIVE DISABILITY PLAN
Amended and Restated Effective January 1, 2025
PREAMBLE
The purpose of this Plan is to provide supplemental disability benefits to Eligible Employees of participating Affiliates of EIX.
ARTICLE 1 DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
Administrator means the Compensation and Executive Personnel Committee of the Board of Directors of EIX.
Affiliate means EIX or any corporation or entity which (i) along with EIX, is a component member of a "controlled group of corporations" within the meaning of Section 414(b) of the Code, and (ii) has approved the participation of its Executives in the Plan.
Board means the Board of Directors of EIX.
Change in Control means a Change in Control of EIX as defined in the EIX 2008 Executive Severance Plan (or any similar successor plan).
Code means the Internal Revenue Code of 1986, as amended.
EIX means Edison International.
Eligible Employee means an Executive of an Affiliate.
Employee Disability Plan means an Employer Funded Short Term Disability Plan, a Jointly Funded Short Term Disability Plan, or a Long Term Disability Plan.
Employer means the Affiliate employing the Eligible Employee. Notwithstanding the foregoing, with respect to a particular Eligible Employee’s benefits under the Plan, for purposes of determining which Affiliate is obligated to pay such benefits, Employer as to such Eligible Employee and benefits means the Affiliate last employing the Eligible Employee.
Employer Funded Short Term Disability Plan means any plan, program, policy or arrangement (other than this Plan) sponsored, maintained or administered by EIX or its Affiliates that (i) provides salary-replacement benefits for short-term disability or illness (or an analogous form of benefits) and (ii) where such benefits are, at least in part, funded by or tied to direct or indirect contributions or payments by EIX or its Affiliates without any contributions or payments by participants therein.
Executive means an employee of an Affiliate who is designated an Executive by the CEO of that Affiliate or who is elected as a Vice President or officer of higher rank by the board of that Affiliate or by the Board of EIX.
Jointly Funded Short Term Disability Plan means any plan, program, policy or arrangement (other than this Plan) whether sponsored, maintained or administered by EIX, its Affiliates or an entity that is not EIX or an Affiliate that (i) provides salary-replacement benefits for short-term disability or illness (or an analogous form of benefits) and (ii) such benefits are, at least in part, funded by or tied to direct or indirect contributions by participants therein (or participants have the option, as the case may be, of funding all or a portion of such benefits).
Long Term Disability Plan means any plan, program, policy or arrangement (other than this Plan) sponsored, maintained or administered by EIX or its Affiliates that provides salary-replacement benefits for long-term disability or illness.
Plan means the EIX 2008 Executive Disability Plan.
Salary Rate means the basic rate of pay as fixed by the Employer (excluding bonuses, equity-based awards, other incentive-based compensation, employer contributions to a qualified plan or nonqualified deferred compensation plan, special awards, commissions, severance pay, and other non-regular forms of compensation).
ARTICLE 2 BENEFITS
To the extent that a salary replacement benefit is payable to an Eligible Employee from any Employee Disability Plan because of an Eligible Employee’s absence from work for one or more days because of his or her own illness or disability, the Plan will supplement the aggregate benefit payable to the Eligible Employee from (i) all Jointly Funded Short Term Disability Plans (with the Eligible Employee’s aggregate benefit under each such plan calculated for purposes of the Plan as though the Eligible Employee enrolled and elected to receive the maximum benefit available to the Eligible Employee under each such plan, including any optional coverage, and disregarding any coverage waived by the Eligible Employee), (ii) all Long Term Disability Plans, (iii) full-pay sick leave, and (iv) all Employer Funded Short Term Disability Plans, as necessary to ensure that the Eligible Employee will receive a total salary replacement benefit amount (i.e., the supplemental benefit under the Plan plus the amounts taken into account under clauses (i), (ii), (iii) and (iv) above) for each such day of absence from work equal to his or her
full daily Salary Rate, for up to one year from the date of initial absence for any single period of disability or illness, as such period of disability or illness is defined under the applicable Employee Disability Plan. Payment will be made on regularly scheduled paydays over such period of disability or illness and, to the extent administratively practicable, in the same manner as benefits are paid under the applicable Employee Disability Plan. An Eligible Employee shall cease to be eligible to participate in the Plan if he or she ceases to be employed by an Affiliate (regardless of the reason for the termination of employment); provided that, if at the time of such termination of employment the Eligible Employee has an illness or disability and is receiving (or is in the process of qualifying for) long term salary-replacement benefits under the applicable Employee Disability Plan, then the Eligible Employee’s benefits under the Plan as to that illness or disability shall continue (or, if the Eligible Employee is in the process of qualifying for long-term salary-replacement benefits, benefits under the Plan shall commence if such qualification occurs and shall continue) until the first to occur of (1) one year after the date of initial absence for the period of disability or illness in effect at termination of employment, as such period of disability or illness is defined under the applicable Employee Disability Plan or (2) the date a salary replacement benefit is no longer payable from the applicable Employee Disability Plan.
ARTICLE 3 CONDITIONS RELATED TO BENEFITS
3.1 Nonassignability
The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or in any manner whatsoever. These benefits will be exempt from the claims of creditors of any Eligible Employee or other claimants and from all orders, decrees, levies, garnishment or executions against any Eligible Employee to the fullest extent allowed by law. Notwithstanding the foregoing, the benefit payable to an Eligible Employee may be assigned in full or in part, pursuant to a domestic relations order of a court of competent jurisdiction.
3.2 No Right to Assets
An Eligible Employee’s benefits paid under the Plan will be paid from the general funds of the Eligible Employee’s Employer, and the Eligible Employee will be no more than an unsecured general creditor of that Employer with no special or prior right to any assets of the Employer for payment of any obligations hereunder. The Eligible Employee will have no claim to benefits from any other Affiliate. Notwithstanding the foregoing or anything in the definition of “Employer” to the contrary, and at the sole discretion of EIX, EIX may determine that for purposes of benefits payable under the Plan, EIX shall be deemed to be the Employer obligated to pay such benefits. Such an election by EIX may be made, in EIX’s sole discretion, as to all Plan benefits, as to only certain benefits, and/or as to only certain Affiliates or Eligible Employees, and will be deemed an assumption of the specified benefit obligations of the applicable Affiliates. Subject to the further provisions hereof, EIX will be solely obligated to pay any such benefits and no Eligible Employee will have a claim as to any other Affiliate with respect to such benefits. Upon an election by EIX under this Section 3.2, benefits covered by the election will be paid from the general funds of EIX (and not the Affiliate that would otherwise pay the benefits), provided that EIX may require that as between EIX and the Affiliate that
would otherwise pay such benefits, the Affiliate will be responsible to pay EIX for the assumption of such obligations in accordance with funding arrangements determined by EIX at the time of election or any time thereafter. To the extent such Affiliate fails to comply with such funding arrangements or obtains any refund or offset of payments made from the Affiliate to EIX without the consent of EIX, the Affiliate that would otherwise be responsible for payment of benefits to the applicable Eligible Employee will remain responsible for such benefits. EIX will effectuate any such election pursuant to this Section 3.2 by providing written notice to the Administrator and the applicable Affiliates regarding the effective date of such election, and the benefits, Affiliates and Eligible Employees for which the election is applicable. The funding arrangements established by EIX at the time of its election, or from time to time thereafter, will set forth the method by which the Affiliates will remit funds to EIX in consideration of Plan benefit obligations that are assumed by EIX.
3.3 Protective Provisions
The Eligible Employee will cooperate with the Administrator by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and signing such consents to insure or taking such other actions as may be requested by the Administrator. If the Eligible Employee refuses to cooperate, the Administrator and the Employer will have no further obligation under the Plan.
3.4 Incapacity
If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, EIX may direct that payments (or any portion) be made to that person’s legal guardian or conservator, or that person’s spouse, as an alternative to payment to the person unable to use the payments. EIX will have no obligation to supervise the use of such payments, and court-appointed guardianship or conservatorship may be required.
ARTICLE 4 PLAN ADMINISTRATION
4.1 Plan Interpretation
The Administrator will administer the Plan and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to management, staff, or contractors to whom day-to-day Plan operations may be delegated. The Administrator will establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. All decisions of the Administrator will be final and binding.
4.2 Limited Liability
Neither the Administrator, nor any of its members or designees, will be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan.
ARTICLE 5 AMENDMENT OR TERMINATION OF PLAN
- 1 Authority to Amend or Terminate
The Administrator will have full power and authority to prospectively modify or terminate this Plan, and the Administrator's interpretations, constructions and actions, including any determination of the amount or recipient of the payment to be made, will be binding and conclusive on all persons for all purposes. However, no such amendment or termination will apply to any person who has then qualified for or is receiving benefits under this Plan, absent such person’s prior written consent. No provision of this Plan may be waived as to an Eligible Employee unless such waiver is agreed to in writing and signed by the Eligible Employee (or the Eligible Employee’s legal representative) and by an authorized member of the Administrator or its designee or legal representative.
5.2 Limitations
In the event of Plan amendment or termination which has the effect of eliminating or reducing a benefit under the Plan, the benefits of Eligible Employees will not be less than the benefits to which such Eligible Employees would have been entitled immediately prior to such amendment or termination of the Plan.
ARTICLE 6 CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure
(a) Within a reasonable period of time, but not later than 45 days after receipt of a claim, the Administrator or its delegate shall notify the Eligible Employee (or person submitting a claim on behalf of the Eligible Employee) (a “claimant”) of any adverse benefit determination on the claim, unless circumstances beyond the Plan’s control require an extension of time for processing the claim. In no event may the extension period exceed 30 days from the end of the initial 45-day period. If an extension is necessary, the Administrator or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 45-day period. The notice shall describe the circumstances requiring the extension and the date by which the Administrator or its delegate expects to render a determination on the claim. If, prior to the end of the first 30-day extension period, the Administrator or its delegate determines that, due to circumstances beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for an additional 30 days, so long as the Administrator or its delegate notifies the claimant, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the Administrator or its delegate expects to render a decision. This notice of extension shall specifically describe the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and that the claimant has at least 45 days within which to provide the specified information. Furthermore, in the event that a period of time is extended as permitted due to a
claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
(b) In the case of an adverse benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 6.2 below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and (viii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan.
(c) Any good-faith determination by the Administrator or its delegate will be final and binding on the Plan and the claimant unless appealed in accordance with this Section 6.1(c). Within 180 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or the claimant’s duly authorized representative, upon written application to the Administrator, may request that the Plan fully and fairly review the adverse benefit determination (also sometimes referred to herein as an “appeal”). Upon request and free of charge, the claimant pursuing an appeal shall have reasonable access to, and be provided copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The review: (i) shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously submitted or considered in the initial adverse benefit determination; (ii) shall not afford deference to the initial adverse benefit determination; (iii) shall be conducted,
at the direction of the Administrator, by an appropriate fiduciary of the Plan who is neither the individual who made the adverse benefit determination that is the subject of the review, nor the subordinate of such individual; (iv) shall identify medical and vocational experts whose advice was obtained on behalf of the Plan in connection with the initial adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (v) where based in whole or in part on medical evidence or medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, shall include consultation with a physician, with appropriate training and experience in the field of medicine involved in the medical judgment, who was neither consulted in connection with the initial adverse benefit determination, nor the subordinate of any such professional.
The appeal will then be approved or denied by the Administrator or its delegate, as it deems appropriate, based on its interpretation of the Plan in light of the medical evidence.
Before an adverse benefit determination on review of a claim due to Disability is issued, the claimant shall be provided, free of charge, with any new or additional evidence considered, relied upon, or generated by the Administrator or its delegate making the benefit determination (or at the direction of the Administrator) in connection with the claim; such evidence will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
Also before an adverse benefit determination on review based on a new or additional rationale is issued, the claimant shall be provided, free of charge, the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
A final benefit determination will be made by the Administrator or its delegate, and the Administrator or its delegate shall provide the claimant with written or electronic notification of the final benefit determination within a reasonable period of time, but no later than 45 days immediately following receipt of claimant’s request for review, unless special circumstances require a further extension of time for processing the claim, which extension may be up to an additional 45 days. If such an extension of time for review is required because of special circumstances, the Administrator or its delegate shall provide the claimant with a written notice of the extension prior to the commencement of the extension. The notice shall describe the special circumstances requiring the extension and the date as of which the final benefit determination shall be made. In the event that a period of time is extended due to a claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information. In the case of an adverse final benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant and in a culturally and linguistically appropriate
manner: (i) the specific reason or reasons for the adverse final benefit determination; (ii) reference to the specific Plan provisions on which the adverse final benefit determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and mandatory arbitration in accordance with Section 6.2 below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan; and (viii) the following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.” As described above, there shall be only one level of review of an adverse benefit determination, followed by mandatory arbitration under Section 6.2, before a claimant may bring a civil action pursuant to Section 502 of ERISA.
6.2 Dispute Arbitration
(a) Effective as to any claims filed on or after June 19, 2014, final and binding arbitration under this Section 6.2 shall be the sole remedy available to a claimant after he or she has exhausted the claim and review procedures set forth in Section 6.1. Furthermore, exhaustion by the claimant of the claim and review procedures set forth in Section 6.1 is a mandatory prerequisite for binding arbitration under this Section 6.2. Any arbitration or civil action brought prior to the exhaustion of the claim and review procedures set forth in Section 6.1 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted.
(b) After a claimant has exhausted the claim and review procedures set forth in Section 6.1, if the claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant may submit his or her claim to final and binding arbitration under this Section 6.2.
Any arbitration under this Section 6.2 will be held in Los Angeles County, California, in accordance with the then-current JAMS Arbitration Rules and Procedures for Employment Disputes (“JAMS Rules”) and under the Federal Arbitration Act. The arbitration shall be before a single neutral arbitrator licensed to practice law and experienced in employee benefits law as
well as laws governing disability plans, selected by mutual agreement of the parties. If the parties are unable to agree upon an arbitrator, the arbitrator shall be selected by striking in accordance with the then-current JAMS Rules from a list of arbitrators supplied by JAMS. Any and all claims and/or defenses that would otherwise be available in a court of law will be fully available to the parties. The arbitrator selected pursuant to this paragraph (the “Arbitrator”) may order such discovery as is necessary for a full and fair exploration of the issues and dispute, consistent with the expedited nature of arbitration. The Arbitrator shall apply applicable substantive law to resolve the dispute. To the fullest extent provided by federal law, the decision rendered by the Administrator pursuant to the claim and review procedures set forth in Section 6.1 shall be upheld by the Arbitrator unless the Arbitrator determines that the Administrator abused its discretion. Notwithstanding the preceding sentence, if a Change in Control occurs, then a claim review decision rendered by the Administrator within the three years following the Change in Control shall, if it is challenged by the claimant in accordance with this Section 6.2, be subject to de novo review by the Arbitrator. Subject to the applicable standard of review in the preceding two sentences, the Arbitrator may grant any award or relief available under applicable law that the Arbitrator deems just and equitable.
At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto, and may be enforced by any court of competent jurisdiction. The Administrator will pay the Arbitrator’s fees and all other costs that are unique to the arbitration process, to the extent required by law. Otherwise, each party shall be solely responsible for paying his/her/their/its own costs/fees for the arbitration, including but not limited to attorneys’ fees. However, the Arbitrator in his or her discretion may allow reasonable attorney’s fees and costs of action to either party to the same extent as would be permissible if the claim(s) were filed in a court of law in lieu of arbitration.
(c) Notwithstanding any contrary provisions of this Section 6.2, if the claim is for disability benefits, the following rules apply: (1) arbitration under this Section 6.2 shall be the mandatory second level of appeal following the exhaustion by the claimant of the claim and review procedures set forth in Section 6.1, and such exhaustion is a mandatory prerequisite for arbitration under this Section 6.2—any arbitration or civil action brought with respect to a claim for disability benefits prior to the exhaustion of the claim and review procedures set forth in Section 6.1 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted; (2) arbitration of a claim for disability benefits under this Section 6.2 shall not be binding, and the claimant shall not be precluded from challenging the decision of the Arbitrator in a civil action brought pursuant to Section 502(a) of ERISA; and (3) except as specifically set forth in this Section 6.2(c), if the claim is for disability benefits, the arbitration shall be conducted as set forth in Section 6.2(b).
ARTICLE 7 MISCELLANEOUS
7.1 Participation in Other Plans
The Eligible Employee will continue to be entitled to participate in all employee benefit programs of the Employer as may, from time to time, be in effect.
7.2 Forfeiture
The payments to be made pursuant to the Plan require the Eligible Employee to devote substantially all of his or her time, skill, diligence and attention to the business of the Employer and not to actively engage, either directly or indirectly, in any business or other activity adverse to the best interests of the business of the Employer. Any breach of these conditions will result in complete forfeiture of benefits under the Plan, and EIX and the Employer will have no further liability therefor.
7.3 Successors
The rights and obligations of each Employer under the Plan will inure to the benefit of, and will be binding upon, the successors and assigns of the Employer.
7.4 Employment Not Guaranteed
Nothing contained in the Plan nor any action taken hereunder will be construed as a contract of employment or as giving any Eligible Employee any right to continue in employment with the Employer or any other Affiliate.
7.5 Gender, Singular and Plural
All pronouns and variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
7.6 Captions
The captions of the articles and sections of the Plan are for convenience only and will not control or affect the meaning or construction of any of its provisions.
7.7 Validity
If any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
7.8 Waiver of Breach
The waiver by EIX or the Administrator of any breach of any provision of the Plan by the Eligible Employee will not operate or be construed as a waiver of any subsequent breach by the Eligible Employee.
7.9 Applicable Law
The Plan will be governed and construed in accordance with the laws of California except where the laws of California are preempted by ERISA.
7.10 Notice
Any notice or filing required or permitted to be given to the Administrator under the Plan will be sufficient if in writing and hand-delivered, or sent by first class mail to the principal office of EIX, directed to the attention of the Administrator. The notice will be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
7.11 Statutes and Regulations
Any reference to a statute or regulation herein shall include any successor to such statute or regulation.
IN WITNESS WHEREOF, EIX has adopted this amended and restated Plan on 11th day of December, 2024.
EDISON INTERNATIONAL
/s/ Natalie Schilling
Natalie Schilling
Senior Vice President, Human Resources
11
Document
Exhibit 10.8
EDISON INTERNATIONAL
2008 EXECUTIVE SEVERANCE PLAN
Amended and Restated Effective January 1, 2025
PREAMBLE
Edison International hereby amends and restates the Edison International Executive Severance Plan effective January 1, 2025. This Plan is intended to be an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
The purpose of this Plan is to provide for continuity in the management and operations of the Employers by offering Eligible Employees of the Affiliates employment protection and financial security.
ARTICLE 1 DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
Administrator means the Compensation and Executive Personnel Committee of the Board of Directors of EIX.
Affiliate means EIX or any corporation or entity which (i) along with EIX, is a component member of a “controlled group of corporations’ within the meaning of Section 414(b) of the Code, and (ii) has approved the participation of its Executives in the Plan.
Beneficiary means the person or persons or entity designated as such in accordance with Article 5 of the Plan.
Board means the Board of Directors of EIX.
Cash Severance Policy means the policy attached hereto as Exhibit A.
Cause means the occurrence of either or both of the following:
(1) The Eligible Employee’s conviction for, or pleading guilty or nolo contendere to, committing an act of fraud, embezzlement, theft, or other act constituting a felony; or
(2) The willful engaging by the Eligible Employee in misconduct that:
i. if the event giving rise to the termination of the Eligible Employee’s employment does not occur during a Protected Period, is in violation of EIX’s and/or the Eligible
Employee’s Employer’s policies and practices applicable to the Eligible Employee from time to time; or
ii. if the event giving rise to the termination of the Eligible Employee’s employment occurs during a Protected Period, would have resulted in the termination of the Eligible Employee’s employment by EIX or the Eligible Employee’s Employer under EIX’s and/or the Eligible Employee’s Employer’s policies and practices applicable to the Eligible Employee in effect immediately prior to the start of the Protected Period.
However, no act or failure to act, on the Eligible Employee’s part, shall be considered “willful” unless done, or omitted to be done, by the Eligible Employee not in good faith and without reasonable belief that his or her action or omission was in the best interest of EIX and his or her Employer.
CEO means the Chief Executive Officer of EIX.
Change in Control means a change in control shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:
(1) Any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of an Affiliate) becomes the Beneficial Owner, directly or indirectly, of securities of EIX representing thirty percent (30%) or more of the combined voting power of EIX’s then outstanding securities. For purposes of this clause, “Person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except that such term shall not include one or more underwriters acquiring newly-issued voting securities (or securities convertible into voting securities) directly from EIX with a view towards distribution; and the term “Beneficial Owner” shall mean as defined under Rule 13d-3 promulgated under the Exchange Act.
(2) On any day after the Effective Date (the “Reference Date”) Continuing Directors cease for any reason to constitute a majority of the Board. A director is a “Continuing Director” if he or she either:
i. was a member of the Board on the applicable Initial Date (an “Initial Director”); or
ii. was elected to the Board, or was nominated for election by EIX’s shareholders, by a vote of at least two-thirds (2/3) of the Initial Directors then in office.
A member of the Board who was not a director on the applicable Initial Date shall be deemed to be an Initial Director for purposes of clause (ii) above if his or her election, or nomination for election by EIX’s shareholders, was approved by a vote of at least two-thirds (2/3) of the Initial Directors (including directors elected after the applicable Initial Date who are deemed to be Initial Directors by application of this provision) then in office. For these purposes, “Initial Date” means the later of (i) the Effective Date or (ii) the date that is two years before the Reference Date.
(3) EIX is liquidated; all or substantially all of EIX’s assets are sold in one or a series of related transactions; or EIX is merged, consolidated, or reorganized with or involving any other corporation, other than a merger, consolidation, or reorganization that results in the voting securities of EIX outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of EIX (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. Notwithstanding the foregoing, a bankruptcy of EIX or a sale or spin-off of an affiliate of EIX (short of a dissolution of EIX or a liquidation of substantially all of EIX’s assets, determined on an aggregate basis) will not constitute a Change in Control of EIX.
(4) The consummation of such other transaction that the Board may, in its discretion in the circumstances, declare to be a Change in Control of EIX for purposes of this Plan.
COBRA means the health care continuation coverage requirements set forth in Section 4980B of the Code.
Code means the Internal Revenue Code of 1986, as amended.
Disability means the Eligible Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under a plan covering employees of the Employer.
Effective Date means December 31, 2008.
EIX means Edison International, or any successor thereto as provided in Section 8.1.
Eligible Employee means (i) an Executive of an Affiliate or (ii) an employee of an Affiliate who was an Executive of an Affiliate after a Potential Change in Control (unless and until the Board declares in good faith that the circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control or an actual Change in Control occurs) or during a Protected Period.
Employer means the Affiliate employing the Eligible Employee. As the context may require, an Eligible Employee’s Employer means the Employer that employs or last employed the Eligible Employee.
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Executive means an Employee of an Affiliate who is designated an Executive by the chief executive officer of that Affiliate or who is elected as a Vice President or officer of higher rank by the board of that Affiliate or the Board of EIX.
Executive Bonus Plan means the Executive Incentive Compensation Plan, the 2007 Performance Incentive Plan, or a successor plan governing annual bonuses for Executives of the Employer.
Executive Retirement Plan means the EIX 2008 Executive Retirement Plan, as amended from time to time, or any similar or successor plan sponsored by an Employer.
Good Reason means, without the Eligible Employee’s express written consent, the occurrence of any one or more of the following during the Protected Period:
(1) A material diminution in the Eligible Employee’s authorities, duties, and/or responsibilities.
(2) A material diminution by the Eligible Employee’s Employer of the Eligible Employee’s Salary as in effect on the Effective Date, or as the same shall be increased from time to time.
(3) The relocation of the Eligible Employee’s principal office more than 50 miles from the Eligible Employee’s principal office and which results in an increased commute for the Eligible Employee.
(4) Any other action or inaction that constitutes a material breach by the Employer of the agreement under which the Eligible Employee provides services.
The foregoing events shall only constitute “Good Reason” if the Eligible Employee provides notice to the Employer of the existence of the condition within 90 days of its initial existence and the Employer does not remedy the condition within 30 days.
Person shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as contemplated by Sections 13(d)(3) and 14(d)(2) thereof.
Plan means the EIX 2008 Executive Severance Plan.
Potential Change in Control shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:
(1) Any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of EIX or of an EIX affiliate):
i. announces an intention to take action which, if consummated, would result in a Change in Control; or
ii. becomes the Beneficial Owner, directly or indirectly, of securities of EIX representing fifteen percent (15%) or more of the combined voting power of EIX’s then outstanding securities. For purposes of this clause, “Person” (and “group” as used in the definition of Person) shall not include one or more underwriters acquiring newly-issued
voting securities (or securities convertible into voting securities) directly from EIX with a view towards distribution.
(2) EIX enters into an agreement that, if consummated, would result in a Change in Control.
(3) The Board declares that a Potential Change in Control has occurred for purposes of this Plan.
Prior Calendar Year means the calendar year immediately preceding the Termination Year.
Protected Period means the period related to a Change in Control that is deemed to commence on the date that is six months before the date of the actual Change in Control and end on the date that is two years after the Change in Control.
Qualifying Termination Event means, as to an Eligible Employee, the occurrence of one or both of the following events within the Protected Period corresponding to a Change in Control:
(1) A termination of the Eligible Employee’s employment by his or her Employer, without the Eligible Employee’s consent, for reasons other than Cause or Disability; or
(2) A termination of employment by the Eligible Employee for Good Reason; provided that the termination of employment is in no event later than two years following the initial existence of the Good Reason condition.
Retiree Health Care Program means, as to an Eligible Employee, the Eligible Employee’s Employer’s retiree health care program (if any).
Salary means the Eligible Employee’s basic pay from the Employer (excluding bonuses, long-term incentives, special awards, commissions, severance pay, and other non-regular forms of compensation).
SCE means Southern California Edison Company.
Separation from Service occurs when an Eligible Employee dies, retires, or otherwise has a termination of employment from the Employer that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.
Target Bonus Percentage means the target, stated as a percentage of salary, fixed by the Administrator (or by a board, committee, or officer with applicable authority under the terms of the Executive Bonus Plan) for the bonus that may be awarded to the Eligible Employee pursuant to the terms of the Executive Bonus Plan.
Termination Date means, in the case of an Eligible Employee who becomes entitled to benefits under this Plan, the day on which the Eligible Employee incurs a Separation from Service in connection with the event that entitles the Eligible Employee to such benefits.
Termination Year means the calendar year in which the Termination Date occurs.
ARTICLE 2 SEVERANCE BENEFITS
2.1 Right to Severance Benefits
Subject to Sections 2.6, 8.2, 10.1, and 10.9, an Eligible Employee shall be entitled to receive from his or her Employer the benefits described in Section 2.3 if the Eligible Employee’s employment by his or her Employer is terminated by the Employer without Cause (and other than due to the Eligible Employee’s Disability). Notwithstanding anything else contained herein to the contrary, an Eligible Employee shall not be entitled to receive the benefits described in Section 2.3 if the Eligible Employee is entitled to benefits under or as described in Section 2.2.
2.2 Right to Change in Control Severance Benefits
Subject to Sections 2.6, 8.2, 10.1, and 10.9, an Eligible Employee shall be entitled to receive the benefits described in Section 2.4 if the Eligible Employee incurs a Qualifying Termination Event. If more than one Qualifying Termination Event occurs with respect to an Eligible Employee, such events shall constitute a single Qualifying Termination Event and the provisions of Section 2.4 shall apply with respect to the Eligible Employee only once. An Eligible Employee’s continued employment shall not constitute a consent to, or a waiver of rights with respect to, any circumstances constituting Good Reason for purposes of determining if a Qualifying Termination Event has occurred with respect to the Eligible Employee.
2.3 Severance Benefit - Termination by Employer Without Cause (Other than a Qualifying Termination Event or Termination due to the Eligible Employee’s Disability)
In the event that an Eligible Employee becomes entitled to receive benefits in accordance with Section 2.1, then the Eligible Employee shall be entitled to the benefits described in Sections 2.3.1 through 2.3.6 below.
2.3.1 Cash Benefit
The Eligible Employee’s Employer shall pay to the Eligible Employee a non-discounted cash amount equal to the sum of the following:
(a) an amount equal to one times the annualized rate of the Eligible Employee’s Salary in effect on the Eligible Employee’s Termination Date;
(b) as to an Eligible Employee who is covered by the Executive Bonus Plan for the Prior Calendar Year, but is not eligible to receive an award for the Prior Calendar Year under the Executive Bonus Plan (the “Prior Year Bonus”) because the Termination Date occurs before the vesting date for the Prior Year Bonus under the Executive Bonus Plan, then the cash benefit under this Section 2.3.1 shall include an amount equal to the Eligible Employee’s Salary earned
for the Prior Calendar Year times the Eligible Employee’s Target Bonus Percentage for the Prior Calendar Year under the Executive Bonus Plan;
(c) as to an Eligible Employee who is covered by the Executive Bonus Plan for the Termination Year, but is not eligible to receive an award for the Termination Year under the Executive Bonus Plan (the “Termination Year Bonus”) because the Termination Date occurs before the vesting date for the Termination Year Bonus under the Executive Bonus Plan, then the cash benefit under this Section 2.3.1 shall include a pro rata portion (based on the number of calendar days that elapsed in the calendar year in which the Eligible Employee’s Termination Date occurs between the start of that calendar year and the Eligible Employee’s Termination Date) of the Eligible Employee’s Target Bonus Percentage in effect on the Eligible Employee’s Termination Date multiplied by the Eligible Employee’s annualized Salary in effect on the Eligible Employee’s Termination Date; and
(d) an amount equal to one times the Eligible Employee’s annualized Salary in effect on the Eligible Employee’s Termination Date times the Eligible Employee’s Target Bonus Percentage in effect on the Eligible Employee’s Termination Date.
The amounts described in Section 2.3.1(a) and Section 2.3.1(d) shall be subject to the Cash Severance Cap set forth in the Cash Severance Policy. The amount determined under this Section 2.3.1 (after giving effect to any adjustment pursuant to the Cash Severance Cap or Section 2.4, if applicable in the circumstances) shall be paid as a lump sum without notice or demand within 65 days following the date of the Eligible Employee’s Separation from Service, but only if EIX has timely received from the Eligible Employee the agreement referenced in Section 10.1.
2.3.2 Health Care Coverage Benefit
(a) The Eligible Employee will be eligible to participate in the Retiree Health Care Program if, under the terms of the non-executive severance plan (if any) maintained by the Eligible Employee’s Employer and as in effect on the Eligible Employee’s Termination Date, the Eligible Employee would otherwise have been eligible (if he or she had not been an Executive) for participation in the Retiree Health Care Program by virtue of his or her age and service. For purposes of clarity, any healthcare benefits and subsidy (as opposed to eligibility) will be determined under the Retiree Health Care Program and not the non-executive severance plan.
(b) If the Eligible Employee is not eligible for the Retiree Health Care Program in accordance with Section 2.3.2(a), is not otherwise eligible for the Retiree Health Care Program, or his or her Employer does not maintain a retiree health care program, the Eligible Employee will receive an extension of health care coverage for a period following the Eligible Employee’s Termination Date that is the greater of 12 months or the extension period for which the Eligible Employee would have been eligible (if he or she had not been an Executive) under the non-executive severance program (if any) maintained by the Eligible Employee’s Employer and as in effect on the Eligible Employee’s Termination Date but in no event longer than the maximum period the Eligible Employee would be entitled to continuation coverage under COBRA. Any continued coverage in accordance with the preceding sentence shall be on terms similar to those
as in effect under the Eligible Employee’s Employer’s health care program in effect with respect to the Eligible Employee immediately before the termination of his or her employment and based on the Eligible Employee’s coverage elections in effect at such time, provided that the actual healthcare benefits and subsidy will be determined under the Eligible Employee’s Employer’s healthcare program as it may be amended from time to time. Notwithstanding Section 6.3 to the contrary, EIX and/or the Eligible Employee’s Employer, as applicable, shall not be obligated to continue such coverage if the Eligible Employee obtains similar coverage from any successor employer or from a health insurance exchange. EIX and/or the Eligible Employee’s Employer, as applicable, shall give the Eligible Employee the required COBRA benefit continuation notice prior to (and the Eligible Employee’s eligibility for continuation benefits under COBRA shall commence as of) the end of the applicable period determined as set forth above.
(c) An Eligible Employee’s coverage under the Retiree Health Care Program pursuant to Section 2.3.2(a) is subject to the Eligible Employee’s Employer’s ability to amend and/or terminate coverage under its Retiree Health Care Program from time to time. In the event that an Eligible Employee is covered under a Retiree Health Care Program pursuant to Section 2.3.2(a) and, in the period of time contemplated by Section 2.3.2(b) for the extension of health care coverage pursuant to such section, the Eligible Employee’s Employer terminates its Retiree Health Care Program, the Eligible Employee shall be entitled to an extension of coverage under and pursuant to Section 2.3.2(b) for the balance of the extension period contemplated by Section 2.3.2(b) and following the cessation of the Eligible Employee’s coverage under the Retiree Health Care Program.
2.3.3 [Reserved]
2.3.4 [Reserved]
2.3.5 Outplacement Benefit
The Eligible Employee shall be entitled to reimbursement of up to $20,000 for reasonable outplacement costs incurred in the two-year period commencing on his or her Termination Date. Any such reimbursements shall be paid to the Eligible Employee by the end of the third taxable year of the Eligible Employee following the taxable year in which the Eligible Employee’s Separation from Service occurred.
2.3.6 Educational Assistance Benefit
The Eligible Employee shall be entitled to the educational assistance benefit to which he or she would have been entitled (if he or she had not been an executive) under the non-executive severance plan, if any, maintained by his or her Employer and as in effect on the Eligible Employee’s Termination Date. To the extent any educational assistance benefits or reimbursements are taxable to the Eligible Employee and provide for a deferral of compensation within the meaning of Section 409A of the Code, any such reimbursements or benefits shall be paid to the Eligible Employee on or before the last day of the Eligible Employee’s taxable year following the taxable year in which the expense was incurred, shall not be subject to liquidation or exchange for other benefits and the reimbursements or benefits that the Eligible Employee
receives in one taxable year shall not affect the amount of reimbursements or benefits that the Eligible Employee receives in any other taxable year.
2.3.7 [Reserved]
2.4 Change in Control Severance Benefits
If an Eligible Employee incurs a Qualifying Termination Event, the Eligible Employee shall be entitled to the benefits described in Sections 2.3.1 through 2.3.6 above, subject to the following subsections of this Section 2.4. The adjustments applicable to Section 2.3.1(a) and Section 2.3.1(d) under this Section 2.4 shall be subject to the Cash Severance Cap set forth in the Cash Severance Policy.
2.4.1 Senior Officer Enhanced Benefit
If the Eligible Employee was a Senior Vice President or an officer of higher rank of EIX or SCE within the 12 month period preceding his or her Termination Date but is not covered by Section 2.4.2, then the Eligible Employee will be entitled to the benefit modifications described in this Section 2.4.1. “Two times” will be substituted for “one times” in Section 2.3.1(a) and Section 2.3.1(d). “$30,000” will be substituted for “$20,000” in Section 2.3.5. Benefits under Section 2.3.2 will be extended to the maximum period permitted under COBRA.
2.4.2 Certain Additional Enhanced Benefits
If the Eligible Employee was the most senior officer of EIX, the most senior officer of SCE, the General Counsel of EIX, or the Chief Financial Officer of EIX within the 12 month period preceding his or her Termination Date, then the Eligible Employee will be entitled to the benefit modifications described in this Section 2.4.2. “2.99 times” will be substituted for “one times” in Section 2.3.1(a) and Section 2.3.1(d). “$50,000” will be substituted for “$20,000” in Section 2.3.5. Benefits under Section 2.3.2 will be extended to the maximum period permitted under COBRA.
2.5 Termination for Other Reasons
Except as expressly provided below, EIX and an Eligible Employee’s Employer shall have no obligations (or no further obligations, as the case may be) to the Eligible Employee under this Plan if:
(a) the Eligible Employee’s employment is terminated by his or her Employer for Cause;
(b) the Eligible Employee terminates his or her employment with his or her Employer during a Protected Period other than for Good Reason;
(c) the Eligible Employee’s employment by his or her Employer terminates due to the Eligible Employee’s Disability or death;
(d) the Eligible Employee terminates his or her employment with his or her Employer for any reason if the termination occurs outside of a Protected Period; or
(e) the Eligible Employee is employed by an Employer that is sold, spun off, or liquidated and the Eligible Employee is no longer covered by this Plan as provided in Section 8.2 or the Eligible Employee does not timely comply with Section 10.1.
Notwithstanding anything else contained herein to the contrary, a termination of an Eligible Employee’s employment on account of the Eligible Employee reaching mandatory retirement age, as such age may be defined from time to time in policies adopted by EIX or his or her Employer prior to the commencement of the Protected Period, to the extent such policies are applicable to the Eligible Employee immediately prior to the commencement of the Protected Period and to the extent such policies are consistent with applicable law, shall not entitle the Eligible Employee to the benefits described in Section 2.3 and shall not be a Qualifying Termination Event unless the Eligible Employee was otherwise able to terminate employment for Good Reason immediately prior to his or her retirement and his or her retirement occurred during a Protected Period.
2.6 Termination and Repayment of Benefits
EIX or the Eligible Employee’s Employer may terminate (or cause there to be terminated, as the case may be) any benefits otherwise payable or to be paid (or to be provided, as the case may be) to the Eligible Employee under this Plan, and/or may require the Eligible Employee to repay any benefits previously paid or provided to the Eligible Employee under this Plan, and EIX and the Eligible Employee’s Employer shall have no obligations (or no further obligations, as the case may be) to the Eligible Employee with respect thereto, if:
(a) at the time of the termination of the Eligible Employee’s employment, there existed Cause for the Eligible Employee’s Employer to terminate the Eligible Employee’s employment (regardless of whether such Employer knew of the circumstances that constituted Cause at the time of such termination or first became aware of such circumstances after such termination, and regardless of whether the termination of employment was characterized as being for Cause at the time of such termination); or
(b) during the period of the Eligible Employee’s employment by his or her Employer or at any time thereafter, the Eligible Employee committed or engaged in a breach of confidentiality, or an unauthorized disclosure or use of inside information, trade secrets or other confidential information of EIX or any of its affiliates; or
(c) during the period of the Eligible Employee’s employment by his or her Employer or at any time thereafter, the Eligible Employee breached any no-solicitation obligation owed to EIX or any of its affiliates. (For purposes of clarity, the no-solicitation obligations covered by this Section 2.6(c) include, without limitation, those obligations set forth in Section 7 of the form of Severance Agreement attached hereto as Exhibit B, as those obligations are set forth in the Eligible Employee’s Severance Agreement.)
Any determination by EIX or the Eligible Employee’s Employer that the Eligible Employee’s benefits are to be terminated and/or repaid pursuant to this Section 2.6 shall be communicated to the Eligible Employee in writing. Such writing shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such determination.
However, as to an Eligible Employee who is otherwise eligible for benefits pursuant to Section 2.3 or 2.4, and who satisfies the requirements of Section 10.1, the Eligible Employee’s minimum aggregate benefit pursuant to Section 2.3.1 (“Minimum Benefit”) shall be the lesser of (i) Ten Thousand Dollars ($10,000), or (ii) the amount of the Eligible Employee’s benefit otherwise determined pursuant to Section 2.3.1 (giving effect to any adjustment thereto pursuant to Section 2.4, if applicable in the circumstances, and any limitation applicable under the Cash Severance Policy). A termination of benefits pursuant to this Section 2.6 shall not cause the Eligible Employee’s aggregate benefit pursuant to Section 2.3.1 to be less than the applicable Minimum Benefit, nor shall a repayment of benefits required under this Section 2.6 require the Eligible Employee to repay the amount of his or her Minimum Benefit.
The provisions of this Section 2.6 are not in any way in limitation of any other right or remedy, (at law or otherwise, to obtain specific performance, injunctive relief, other appropriate relief and/or damages) otherwise available to EIX or any of its affiliates in the circumstances. Furthermore, the provisions of this Section 2.6 do not in any way limit any obligation (confidentiality, no-solicitation or otherwise) owed by any Eligible Employee to EIX or any of its affiliates.
2.7 Notice of Termination
Any termination of an Eligible Employee’s employment by his or her Employer for Cause or by an Eligible Employee for Good Reason shall be communicated by Notice of Termination. For purposes of this Plan, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Plan relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Eligible Employee’s employment under the provision so indicated. The Notice of Termination shall be effective on the date specified in Section 10.7 of this Plan. Any Notice of Termination remains subject to the provisions of Section 2.6.
ARTICLE 3 TAXES
EIX and/or the Eligible Employee’s Employer, as applicable, has the right to withhold from any amount otherwise payable to an Eligible Employee under or pursuant to this Plan the amount of any taxes that EIX or such Employer may legally be required to withhold with respect to such payment (including, without limitation, any United States Federal taxes, and any other state, city, or local taxes). In the event that tax withholding is required with respect to amounts or benefits payable or deliverable by EIX or the Eligible Employee’s Employer to an Eligible Employee and EIX or the Employer cannot satisfy its tax withholding obligations in the manner described in the preceding sentence, EIX or the Employer may require the Eligible Employee to pay or provide for the payment of such required tax withholding as a condition to the payment or delivery of
such amounts or benefits. Each Eligible Employee, former Eligible Employee and Beneficiary shall be solely responsible for all income and employment taxes arising in connection with participation in this Plan or benefits hereunder.
ARTICLE 4 [RESERVED]
ARTICLE 5 BENEFICIARY DESIGNATION
The Eligible Employee will have the right, at any time, to designate any person or persons as Beneficiary (both primary and contingent) to whom payment under the Plan will be made in the event of the Eligible Employee’s death. The Beneficiary designation will be effective when it is submitted to the Administrator during the Eligible Employee’s lifetime in accordance with procedures established by the Administrator.
The submission of a new Beneficiary designation will cancel all prior Beneficiary designations. Any finalized divorce or marriage of an Eligible Employee subsequent to the date of a Beneficiary designation will revoke such designation, unless in the case of divorce the previous spouse was not designated as a Beneficiary, and unless in the case of marriage the Eligible Employee’s new spouse has previously been designated as Beneficiary. The spouse of a married Eligible Employee must consent in writing to any designation of a Beneficiary other than the spouse.
If an Eligible Employee fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Eligible Employee, then the Administrator will direct the distribution of the benefits to the Eligible Employee’s estate. If a primary Beneficiary dies after commencement of payments to the Beneficiary but prior to completion of benefits under this Plan, and no contingent Beneficiary has been designated by the Eligible Employee, any remaining payments will be paid to the primary Beneficiary’s Beneficiary, if one has been designated, or to the Beneficiary’s estate.
ARTICLE 6 CONDITIONS RELATED TO BENEFITS
6.1 Nonassignability
The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or any manner whatsoever. These benefits will be exempt from the claims of creditors of any Eligible Employee or other claimants and from all orders, decrees, levies, garnishment or executions against any Eligible Employee to the fullest extent allowed by law.
6.2 No Right to Assets
The benefits paid under the Plan will be paid from the general funds of the Employer who last employs the Eligible Employee immediately prior to the time that the Eligible Employee becomes entitled to benefits hereunder, and the Eligible Employee and any Beneficiary will be no more than unsecured general creditors of the Employer with no special or prior right to any assets of the Employer for payment of any obligations hereunder. Neither the Eligible Employee nor the Beneficiary will have a claim to benefits from any other Affiliate. EIX is not a guarantor of the benefit obligations of other participating Affiliates. By participating in, and by accepting any benefits under, this Plan, Eligible Employees consent to EIX sponsorship of this Plan, but acknowledge that EIX is not a guarantor of the benefit obligations of other participating Affiliates. Each Affiliate is responsible for payment of the accrued benefits under this Plan with respect to its own Eligible Employees subject to the terms and conditions set forth herein. Notwithstanding the foregoing or anything in the definition of “Employer” to the contrary, and at the sole discretion of EIX, EIX may determine that for purposes of benefits payable under this Plan, EIX shall be deemed to be the Employer obligated to pay such benefits. Such an election by EIX may be made, in EIX’s sole discretion, as to all Plan benefits, as to only certain benefits, and/or as to only certain Affiliates or Eligible Employees, and will be deemed an assumption of the specified benefit obligations of the applicable Affiliates. Subject to the further provisions hereof, EIX will be solely obligated to pay any such benefits and no Eligible Employee (or Beneficiary) will have a claim as to any other Affiliate with respect to such benefits. Upon an election by EIX under this Section 6.2, benefits covered by the election will be paid from the general funds of EIX (and not the Affiliate that would otherwise pay the benefits), provided that EIX may require that as between EIX and the Affiliate that would otherwise pay such benefits, the Affiliate will be responsible to pay EIX for the assumption of such obligations in accordance with funding arrangements determined by EIX at the time of election or any time thereafter. To the extent such Affiliate fails to comply with such funding arrangements or obtains any refund or offset of payments made from the Affiliate to EIX without the consent of EIX, the Affiliate that would otherwise be responsible for payment of benefits to the applicable Eligible Employee will remain responsible for such benefits. EIX will effectuate any such election pursuant to this Section 6.2 by providing written notice to the Administrator and the applicable Affiliates regarding the effective date of such election, and the benefits, Affiliates and Eligible Employees for which the election is applicable. The funding arrangements established by EIX at the time of its election, or from time to time thereafter, will set forth the method by which the Affiliates will remit funds to EIX in consideration of benefit obligations that are assumed by EIX.
6.3 Payment of Obligations Absolute
Subject to the Eligible Employee’s timely compliance with Section 10.1 and the agreement contemplated thereby, each Employer’s obligation to make the payments and the arrangements provided for herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Employer may have against the Eligible Employee or anyone else. Each and every payment made hereunder by an Employer shall be final, and the Employer shall not seek to recover all or any part of such payment from the Eligible Employee or from whomsoever
may be entitled thereto, for any reasons whatsoever, except as otherwise provided in Article 7 and subject to the Eligible Employee’s timely compliance with Section 10.1 and the agreement contemplated thereby. Eligible Employees shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Plan, and the obtaining of any such other employment shall in no event effect any reduction of an Employer’s obligations to make the payments and arrangements required to be made under this Plan except as provided in Section 2.3.2(b). The foregoing provisions of this Section 6.3 are subject to the provisions of Section 2.6 and Section 10.9.
6.4 Other Benefit Plans
All payments, benefits and amounts provided under this Plan shall be in addition to and not in substitution for any pension rights under EIX’s or other Employer’s tax-qualified pension plans in which the Eligible Employee participates, and any disability, workers’ compensation or EIX or other Employer benefit plan distribution that an Eligible Employee is entitled to, under the terms of any such plan, at the time his or her employment by his or her Employer terminates. Notwithstanding the foregoing, this Plan shall not create an inference that any duplicate payments shall be required, and notwithstanding anything else contained herein to the contrary, any severance benefits otherwise payable or deliverable under this Plan to a Participant shall be offset or reduced by the amount of severance benefits payable or deliverable to the Participant under any other plan, program, or agreement of or with EIX, the Participant’s Employer, or their respective Affiliates. Payments received by a person under this Plan shall not be deemed a part of the person’s compensation for purposes of determining the person’s benefits under any employee welfare, pension or other benefit plan or arrangement, if any, provided by an Employer, except where explicitly provided under the terms of such plan or arrangement.
6.5 Incapacity
If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, EIX may direct that payments (or any portion) be made to that person’s legal guardian or conservator, or that person’s spouse, as an alternative to payment to the person unable to use the payments. EIX will have no obligation to supervise the use of such payments, and court-appointed guardianship or conservatorship may be required.
6.6 Six Month Delay
Notwithstanding any other provisions of this Plan, any payment or benefit otherwise required to be made after an Eligible Employee’s Separation from Service that the Employer reasonably determines is subject to Section 409A(a)(2)(B)(i) of the Code shall be subject to a six-month delay so that it is paid as soon as practicable for the Employer (and in all events within ninety (90) days) after the date that is six (6) months after the Eligible Employee’s Separation From Service (or, if earlier, the date of the Eligible Employee’s death). The provisions of this Section 6.6 shall only apply if, and to the extent, required to comply with Section 409A of the Code.
6.7 Termination of Employment
Notwithstanding anything else contained herein to the contrary, a Participant shall not be deemed to have terminated employment or had a Separation from Service if his or her employment by an Employer terminates but he or she continues as an employee of another Affiliate.
6.8 Re-Employment
Notwithstanding anything else contained herein to the contrary, a Participant shall have no right to severance benefits hereunder (pursuant to Sections 2.3 or 2.4 or otherwise) with respect to a termination of his or her employment if, in connection with such termination, he or she is otherwise entitled to severance benefits under this Plan but, prior to the payment or delivery (or commencement of payment or delivery, as the case may be) of such benefits, the Participant becomes re-employed by his or her Employer or by another Affiliate. Notwithstanding anything else contained herein to the contrary, a Participant’s right to continuing or additional benefits under this Plan (including any right to continue participating in or receive benefits under a plan as provided for in Section 2.3) shall automatically terminate (but the Participant shall have no obligation to re-pay benefits previously paid) if the Participant becomes re-employed by his or her Employer or by another Affiliate. If a Participant is re-employed and his or her employment is subsequently terminated and the Participant again becomes entitled to severance benefits under the terms of this Plan in connection with such later termination of employment, the amount of cash severance payments otherwise payable to the Participant pursuant to Section 2.3.1 in connection with such later termination of employment shall be reduced by the amount of any severance payments paid under this Plan to the Participant within the 24 months prior to such later termination of employment in connection with any prior termination of his or her employment.
ARTICLE 7 CLAIMS AND REVIEW PROCEDURES
7.1 Claims Procedure for Claims Other Than Due to Disability
(a) Except for claims due to Disability, the Administrator will notify an Eligible Employee or his or her Beneficiary (or person submitting a claim on behalf of an Eligible Employee or Beneficiary) (a “claimant”) in writing, within 90 days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a claimant is not eligible for benefits or full benefits, the notice will set forth (1) the specific reasons for the denial, (2) a specific reference to the provisions of the Plan on which the denial is based, (3) a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of the Plan’s claims review procedure and other appropriate information as to the steps to be taken if the claimant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator will notify the claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period.
(b) If a claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant will have the opportunity to have the claim reviewed by the Administrator by filing a petition for review with the Administrator within 60 days after receipt of the notice issued by the Administrator. Said petition will state the specific reasons which the claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Administrator of the petition, the Administrator will afford the claimant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the claimant (or counsel) will have the right to review the pertinent documents. The Administrator will notify the claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the claimant and the specific provisions of the Plan on which the decision is based. If, due to special circumstances (for example, because of the need for a hearing), the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Administrator, but notice of this deferral will be given to the claimant. In the event of the death of the Eligible Employee, the same procedures will apply to the Eligible Employee’s Beneficiaries.
7.2 Claims Procedure for Claims Due to Disability
(a) For purposes of Section 7.1, this Section 7.2 and Section 7.3, a claim shall not be considered to be due to Disability if the existence of the Eligible Employee’s Disability is determined by reference to whether the Eligible Employee is eligible for benefits under his or her Employer’s long-term disability plan applicable to the Eligible Employee, as determined by the Employer. A claim due to Disability will be approved or denied by the Administrator or its delegate, as it deems appropriate in its discretion, based on its interpretation of the Plan, medical evidence, and the analysis and conclusions of a physician selected by the Administrator or its delegate. Within a reasonable period of time, but not later than 45 days after receipt of a claim due to Disability, the Administrator or its delegate shall notify the claimant of any adverse benefit determination on the claim, unless circumstances beyond the Plan’s control require an extension of time for processing the claim. Except as contemplated by this Section 7.2, in no event may the extension period exceed 30 days from the end of the initial 45-day period. If an extension is necessary, the Administrator or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 45-day period. The notice shall describe the circumstances requiring the extension and the date by which the Administrator or its delegate expects to render a determination on the claim. If, prior to the end of the first 30-day extension period, the Administrator or its delegate determines that, due to circumstances beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for an additional 30 days, so long as the Administrator or its delegate notifies the claimant, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the Administrator or its delegate expects to render a decision. This notice of extension shall specifically describe the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and that the claimant has at least 45 days within which to provide the specified information. Furthermore, in the event that a period of time is extended as permitted due to a claimant’s failure to submit information
necessary to decide a claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
(b) In the case of an adverse benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 7.2(c) below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and (viii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan.
(c) Any good-faith determination by the Administrator or its delegate will be final and binding on the Plan and the claimant unless appealed in accordance with this Section 7.2(c). Within 180 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or the claimant’s duly authorized representative, upon written application to the Administrator, may request that the Plan fully and fairly review the adverse benefit determination (also sometimes referred to herein as an “appeal”). Upon request and free of charge, the claimant pursuing an appeal shall have reasonable access to, and be provided copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The review: (i) shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously submitted or considered in the initial adverse benefit determination; (ii) shall not afford deference to the initial adverse benefit determination; (iii) shall be conducted, at the direction of the Administrator, by an appropriate fiduciary of the Plan who is neither the
individual who made the adverse benefit determination that is the subject of the review, nor the subordinate of such individual; (iv) shall identify medical and vocational experts whose advice was obtained on behalf of the Plan in connection with the initial adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (v) where based in whole or in part on medical evidence or medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, shall include consultation with a physician, with appropriate training and experience in the field of medicine involved in the medical judgment, who was neither consulted in connection with the initial adverse benefit determination, nor the subordinate of any such professional.
The appeal will then be approved or denied by the Administrator or its delegate, as it deems appropriate, based on its interpretation of the Plan in light of the medical evidence.
Before an adverse benefit determination on review of a claim due to Disability is issued, the claimant shall be provided, free of charge, with any new or additional evidence considered, relied upon, or generated by the Administrator or its delegate making the benefit determination (or at the direction of the Administrator) in connection with the claim; such evidence will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
Also before an adverse benefit determination on review based on a new or additional rationale is issued, the claimant shall be provided, free of charge, the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.
A final benefit determination will be made by the Administrator or its delegate, and the Administrator or its delegate shall provide the claimant with written or electronic notification of the final benefit determination within a reasonable period of time, but no later than 45 days immediately following receipt of claimant’s request for review, unless special circumstances require a further extension of time for processing the claim, which extension may be up to an additional 45 days. If such an extension of time for review is required because of special circumstances, the Administrator or its delegate shall provide the claimant with a written notice of the extension prior to the commencement of the extension. The notice shall describe the special circumstances requiring the extension and the date as of which the final benefit determination shall be made. In the event that a period of time is extended due to a claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information. In the case of an adverse final benefit determination, the Administrator or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant and in a culturally and linguistically appropriate manner: (i) the specific reason or reasons for the adverse final benefit determination;
(ii) reference to the specific Plan provisions on which the adverse final benefit determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and mandatory arbitration in accordance with Section 10.3 below; (v) either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; (vi) if the determination is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or a statement that such explanation shall be provided free of charge upon request; (vii) a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (a) the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant; (b) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (c) a disability determination made by the Social Security Administration regarding the claimant presented by the claimant to the Plan; and (viii) the following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.” As described above, there shall be only one level of review of an adverse benefit determination, followed by mandatory arbitration under Section 10.3, before a claimant may bring a civil action pursuant to Section 502 of ERISA.
7.3 Dispute Arbitration
(a) Effective as to any claims filed on or after June 19, 2014, final and binding arbitration under this Section 7.3 shall be the sole remedy available to a claimant after he or she has exhausted the claim and review procedures set forth in Section 7.1. Furthermore, exhaustion by the claimant of the claim and review procedures set forth in Section 7.1 is a mandatory prerequisite for binding arbitration under this Section 7.3. Any arbitration or civil action brought prior to the exhaustion of the claim and review procedures set forth in Section 7.1 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted.
(b) After a claimant has exhausted the claim and review procedures set forth in Section 7.1, if the claimant is determined by the Administrator not to be eligible for benefits, or if the claimant believes that he or she is entitled to greater or different benefits, the claimant may submit his or her claim to final and binding arbitration under this Section 7.3.
Any arbitration under this Section 7.3 will be held in Los Angeles County, California, in accordance with the then-current JAMS Arbitration Rules and Procedures for Employment Disputes (“JAMS Rules”) and under the Federal Arbitration Act. The arbitration shall be before a single neutral arbitrator licensed to practice law and experienced in employee benefits law as
well as laws governing severance plans, selected by mutual agreement of the parties. If the parties are unable to agree upon an arbitrator, the arbitrator shall be selected by striking in accordance with the then-current JAMS Rules from a list of arbitrators supplied by JAMS. Any and all claims and/or defenses that would otherwise be available in a court of law will be fully available to the parties. The arbitrator selected pursuant to this paragraph (the “Arbitrator”) may order such discovery as is necessary for a full and fair exploration of the issues and dispute, consistent with the expedited nature of arbitration. The Arbitrator shall apply applicable substantive law to resolve the dispute. To the fullest extent provided by federal law, the decision rendered by the Administrator pursuant to the claim and review procedures set forth in Section 7.1 shall be upheld by the Arbitrator unless the Arbitrator determines that the Administrator abused its discretion. Notwithstanding the preceding sentence, if (1) a Change in Control occurs, then a claim review decision rendered by the Administrator within the three years following the Change in Control shall, if it is challenged by the claimant in accordance with this Section 7.3, be subject to de novo review by the Arbitrator, or (2) if the claimant is determined by the Administrator not to be eligible for benefits on account of the Administrator’s determination as to whether Cause, Disability or Good Reason exists, then such decision rendered by the Administrator as to whether Cause, Disability or Good Reason exists shall, if it is challenged by the claimant in accordance with this Section 7.3, be subject to de novo review by the Arbitrator. Subject to the applicable standard of review in the preceding two sentences, the Arbitrator may grant any award or relief available under applicable law that the Arbitrator deems just and equitable.
At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto, and may be enforced by any court of competent jurisdiction. The Administrator will pay the Arbitrator’s fees and all other costs that are unique to the arbitration process, to the extent required by law. Otherwise, each party shall be solely responsible for paying his/her/their/its own costs/fees for the arbitration, including but not limited to attorneys’ fees. However, the Arbitrator in his or her discretion may allow reasonable attorney’s fees and costs of action to either party to the same extent as would be permissible if the claim(s) were filed in a court of law in lieu of arbitration.
(c) Notwithstanding any contrary provisions of this Section 7.3, if the claim is due to Disability, the following rules apply: (1) arbitration under this Section 7.3 shall be the mandatory second level of appeal following the exhaustion by the claimant of the claim and review procedures set forth in Section 7.2, and such exhaustion is a mandatory prerequisite for arbitration under this Section 7.3—any arbitration or civil action brought with respect to a claim due to Disability prior to the exhaustion of the claim and review procedures set forth in Section 7.2 shall be remanded to the Administrator to permit the claim and review procedures to be exhausted; (2) arbitration of a claim due to Disability under this Section 7.3 shall not be binding, and the claimant shall not be precluded from challenging the decision of the Arbitrator in a civil action brought pursuant to Section 502(a) of ERISA; and (3) except as specifically set forth in this Section 7.3(c), if the claim is due to Disability, the arbitration shall be conducted as set forth in Section 7.3(b).
(d) Effective as to any claims filed on or after January 1, 2025, the Eligible Employee, Participant, or Beneficiary must bring any dispute in arbitration on an individual basis only, and not on a class, collective or representative basis and must waive the right to commence, be a party to, or be an actual or putative class member of any class, collective or representative action arising out of or relating to the Plan, including, but not limited to, any claims related to the Plan (“class action waiver”). However, if this class action waiver is found to be unenforceable by a court of competent jurisdiction, then any claim on a class, collective or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration. Except as provided in the preceding sentence, this Section 7.3 is intended to make mandatory individual arbitration apply, as described above, to the maximum extent permissible under ERISA; if any feature of this arbitration requirement is impermissible under ERISA, arbitration as described above shall remain required with the minimum change necessary to allow the arbitration requirement to be permissible under ERISA.
ARTICLE 8 SUCCESSORS AND ASSIGNMENT
8.1 Successors to an Employer
Subject to Section 8.2, each Employer will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the business and/or assets of the Employer or of any division or subsidiary thereof (the business and/or assets of which constitute at least fifty percent (50%) of the total business and/or assets of the Employer) to expressly assume and agree to perform the Employer’s obligations under this Plan in the same manner and to the same extent that the Employer would be required to perform them if such succession had not taken place.
8.2 Sale, Spin-Off, or Liquidation of an Employer
Except as provided in the following two sentences, if EIX sells (regardless of whether pursuant to a stock sale or sale of all or substantially all of the business and/or assets of the Employer), spins-off or liquidates an Employer (other than EIX), this Plan shall be deemed to have been terminated as to all Eligible Employees employed by that Employer and such Eligible Employees shall have no further rights under this Plan and shall have no right to any payment or benefits under this Plan in respect of such termination. If such a sale, spin-off or liquidation occurs after a Potential Change in Control has occurred (and the Board has not declared in good faith that the circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control) or during a Protected Period, the preceding sentence shall not apply with respect to any Eligible Employee who was employed immediately prior to the Potential Change in Control or start of the Protected Period, as applicable, by EIX or an Employer other than the Employer that is sold, spun off, or liquidated. The first sentence of this Section 8.2 will not apply to an Eligible Employee if (i) the Employer has entered a written agreement with the Eligible Employee, (ii) the agreement has been approved by the CEO or the senior officer of EIX responsible for Human Resources (or by EIX’s director responsible for executive compensation if EIX does not have an officer responsible for Human Resources other than the CEO), (iii) the agreement provides specific conditions under which the Eligible Employee will be eligible for
the benefits described in Section 2.3 in connection with the sale or spin-off of the Employer, and (iv) those conditions are met.
ARTICLE 9 ADMINISTRATION OF THE PLAN
9.1 Administrator Action
The Administrator shall act at meetings by affirmative vote of a majority of the members of the Administrator. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a written consent to the action is signed by all members of the Administrator and such written consent is filed with the minutes of the proceedings of the Administrator. A member of the Administrator shall not vote or act upon any matter which relates solely to himself or herself as an Eligible Employee. The Chair of the Administrator or any other member or members of the Administrator designated by the Chair of the Administrator may execute any certificate or other written direction on behalf of the Administrator.
9.2 Powers and Duties of the Administrator
The Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the power and authority to do the following:
(a) To determine eligibility for and participation in this Plan;
(b) To construe and interpret the terms and provisions of this Plan;
(c) To compute and certify to the amount and kind of benefits payable to Eligible Employees and their Beneficiaries, and to determine the amount of withholding taxes to be deducted pursuant to Article 3;
(d) To maintain all records that may be necessary for the administration of this Plan;
(e) To provide for the disclosure of all information and the filing or provision of all reports and statements to Eligible Employees, Beneficiaries or governmental agencies as shall be required by law;
(f) To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistent with the terms hereof; and
(g) To appoint a plan administrator or any other agent (which may include, without limitation, one or more employees of EIX), and to delegate to them such powers and duties in connection with the administration of this Plan as the Administrator may from time to time prescribe.
9.3 Plan Interpretation
The Administrator will administer the Plan and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to management, staff, or contractors to whom day-to-day Plan operations may be delegated. The Administrator will establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Administrator will interpret and construe the Plan to comply with Section 409A of the Code. All decisions of the Administrator will be final and binding.
9.4 Information
To enable the Administrator to perform its functions, each Employer shall supply full and timely information to the Administrator on all matters relating to the compensation of all Eligible Employees, their death or other cause of termination, and such other pertinent facts as the Administrator may require.
9.5 Compensation, Expenses and Indemnity
The members of the Administrator shall serve without additional compensation for their services hereunder beyond that which they are entitled as authorized by the Board. The Administrator is authorized at the expense of EIX to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. EIX shall pay expenses and fees in connection with the administration of this Plan. To the extent permitted by applicable law, EIX shall indemnify and save harmless the Administrator and each member thereof, the Board and each member thereof, and delegates of the Administrator who are employees of EIX against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to this Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by EIX or provided by EIX under any bylaw, agreement or otherwise, as such indemnities are permitted under state law.
ARTICLE 10 MISCELLANEOUS
10.1 Release and Agreement
Notwithstanding anything else contained herein to the contrary, each Employer’s obligation to pay benefits to an Eligible Employee is subject to the condition precedent that the Eligible Employee execute, not later than 45 days after the Eligible Employee’s receipt of the Severance Agreement, a valid and effective Severance Agreement in the form attached hereto as Exhibit B (or such other form, which is substantially the same as the form attached hereto as Exhibit B, as determined by an officer of EIX who engages in day-to-day Plan operations in accordance with Section 9.3 or the General Counsel of EIX) and such executed agreement is received by EIX and the Eligible Employee’s Employer no later than 52 days after the Eligible Employee’s receipt of the Severance Agreement and is not revoked by the Eligible Employee or otherwise rendered
unenforceable by the Eligible Employee. EIX will provide the applicable form of Severance Agreement to the Eligible Employee on or before the seventh day following the Eligible Employee’s Termination Date. EIX may modify the form of Severance Agreement from time to time to comply with applicable laws, rules and regulations. If the 45-day period for the Eligible Employee to consider the Severance Agreement plus any revocation period afforded by applicable law (together, the “Release Period”) spans two different calendar years, payment of the cash severance benefits pursuant to Section 2.3.1 (including any enhancement thereto pursuant to Section 2.4), shall be made within the period of time prescribed by Section 2.3.1 but in the second of those two calendar years and, to the extent required to avoid any tax, penalty or interest under Section 409A of the Code, any benefit payment or reimbursement pursuant to Sections 2.3.2 through 2.3.6 (including any enhancement thereto pursuant to Sections 2.4.1 and 2.4.2) that would otherwise be paid in the first of those two years shall not be paid until the second of those two years.
10.2 Term of the Plan
(a) This Plan will commence on the Effective Date and shall continue in effect through December 31, 2009. However, at the end of such initial period and, if extended, at the end of each additional year thereafter, the term of this Plan shall be extended automatically for one additional year, unless the Administrator (or the Board) delivers written notice at least six months prior to the end of such term, or extended term, to each Eligible Employee that this Plan will not be extended, and if such notice is timely given this Plan will terminate at the end of the term then in progress; provided, however, that this provision for automatic extension shall have no application following a Potential Change in Control (unless and until the Board declares in good faith that the circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control) or a Change in Control, in which case the provisions of Section 10.2(b) or Section 10.2(c), respectively, shall apply.
(b) If a Potential Change in Control occurs, the Administrator (or the Board) may not give notice that the term of this Plan will not be extended, or will not be further extended, as the case may be, unless and until the Board declares in good faith that the circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control or an actual Change in Control occurs.
(c) In the event a Change in Control occurs during the initial or any extended term, this Plan will remain in effect for the longer of: twenty-four months beyond the month in which such Change in Control occurred; or
(1) as to any Eligible Employee who incurs a Qualifying Termination Event, until all obligations of each Employer hereunder to that Eligible Employee have been fulfilled. Any subsequent Change in Control (“Subsequent Change in Control”) that occurs during the initial or any extended term shall also continue the term of this Plan until the later of:
(i) twenty-four months beyond the month in which such Subsequent Change in Control occurred; or
(ii) as to any Eligible Employee who incurs a Qualifying Termination Event, until all obligations of each Employer hereunder have been fulfilled to that Eligible Employee; provided, however, that if a Subsequent Change in Control occurs, it shall only be considered a Change in Control under this Plan if it occurs no later than twenty-four months after the immediately preceding Change in Control or Subsequent Change in Control.
(d) The foregoing provisions of this Section 10.2 are subject to the provisions of Section 8.2 as to any Eligible Employee that is employed by an Employer that is sold or spun-off by EIX.
10.3 Employment Status
Except as may be provided under any other written agreement between an Eligible Employee and his or her Employer, the employment of the Eligible Employee by his or her Employer is “at will,” and may be terminated by either the Eligible Employee or the Employer at any time, subject to applicable law. Payments made under this Plan shall not give any person the right to any benefits provided to persons retained in an Employer’s employ (such as, without limitation, health and dental benefits). Except as may otherwise be required by law or set forth specifically in such plans or as otherwise expressly provided in this Plan, such benefits shall terminate as of the date the Eligible Employee’s employment by an Employer terminates.
10.4 Gender, Singular and Plural
All pronouns and variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
10.5 Validity
If any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
10.6 Modification
The Administrator or the Board may from time to time amend this Plan in any way it determines to be advisable; provided, however, that no such amendment shall be effective without the consent of each affected Eligible Employee (or the Eligible Employee’s legal representative) if it is adopted (a) after a Potential Change in Control (unless and until the Board determines in good faith that the circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control or an actual Change in Control occurs), or (b) during a Protected Period. No provision of this Plan may be waived as to an Eligible Employee unless such waiver is agreed to in writing and signed by the Eligible Employee (or the Eligible Employee’s legal representative) and by an authorized member of the Administrator (or the Board) or its designee or legal representative. Neither the Administrator nor the Board may amend the Cash Severance Policy without seeking ratification from the shareholders of EIX of such amendment.
10.7 Notice
For purposes of this Plan, notices, including Notice of Termination, and all other communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when delivered or on the date stamped as received by the U.S. Postal Service for delivery by certified or registered mail, postage prepaid and addressed:
(a) if to the Eligible Employee, to his or her latest address as reflected on the records of EIX or his or her Employer, and
(b) if to an Employer, to the attention of EIX’s Corporate Secretary at the address of EIX’s principal executive offices; or to such other address as either party may furnish to the other in writing for the delivery of notices to that party, with specific reference to this Plan and the importance of the notice, except that a notice of change of address shall be effective only upon receipt by the other party.
10.8 Applicable Law
The Plan will be governed and construed in accordance with the laws of California except where the laws of California are preempted by ERISA.
10.9 WARN Act
Benefits payable under this Plan are intended to satisfy, where applicable, any EIX or other Employer’s obligations under the Federal Worker Adjustment and Retraining Notification Act (“WARN”) and any similar obligations that EIX or any other Employer may have under any successor or other federal or state severance pay or pay continuation benefit statute (“Similar Severance Pay Law”). If it is determined that severance or pay continuation obligations to or for the benefit of the Eligible Employee exist under WARN or Similar Severance Pay Law that are in addition to benefits payable under this Plan (the “Additional Payments”), then the Eligible Employee’s entitlement to benefits payable in cash pursuant to Section 2.3 or 2.4 shall be reduced by an aggregate amount equal to the aggregate Additional Payments that it is determined the Eligible Employee is entitled to receive, provided that the reduction shall not cause the Eligible Employee’s aggregate benefit pursuant to Section 2.3.1 (giving effect to any adjustment thereto pursuant to Section 2.4, if applicable under the circumstances) to be less than the applicable Minimum Benefit. The Eligible Employee shall repay any amounts paid under this Plan to which he or she was not entitled after giving effect to the preceding sentence.
10.10 Statutes and Regulations
Any reference to a statute or regulation herein shall include any successor to such statute or regulation.
IN WITNESS WHEREOF, EIX has amended and restated this Plan on the 11th day of December, 2024.
EDISON INTERNATIONAL
/s/ Natalie Schilling
Natalie Schilling
Senior Vice President, Human Resources
EXHIBIT A
This Cash Severance Policy (the “Cash Severance Policy”) is effective as of January 1, 2025 (the “Policy Effective Date”). Capitalized terms used herein that are otherwise not defined herein shall have the meanings ascribed to such terms in the EIX 2008 Executive Severance Plan (the “Plan”) to which this Exhibit A is attached.
On or after the Policy Effective Date, neither EIX nor any other Affiliate will enter into any new employment agreement, severance agreement or separation agreement with any Section 16 Officer, or establish any new severance plan or policy covering any Section 16 Officer, or amend the Plan, in each case, so as to provide Cash Severance to a Section 16 Officer that exceeds the Cash Severance Cap for such Section 16 Officer, without seeking ratification from the shareholders of EIX of any such agreement, plan, policy, or amendment.
The Administrator will administer this Policy and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to management, staff, or contractors to whom day-to-day Policy operations may be delegated. The Administrator will establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Policy. All decisions of the Administrator will be final and binding.
As used in this Policy, the following capitalized terms are defined as follows:
Cash Severance means cash payments: (i) in respect of the termination of the Section 16 Officer’s employment; (ii) to secure an agreement not to compete with EIX and the other Affiliates; or (iii) to offset any tax liability in respect of any of the foregoing. For the avoidance of doubt, “Cash Severance” does not include (a) the vesting, acceleration, settlement, payment (in any form of consideration permitted by the applicable plan or award agreement) or other handling of equity or equity-based awards granted or purchased under shareholder-approved plans, including, without limitation, awards granted under the Edison International 2007 Performance Incentive Plan or the Edison International Employee Stock Purchase Plan, in each case, as such plan is amended from time to time or any successor plan thereto, (b) payment of deferred compensation, earned retirement benefits or other vested employee benefits, in each case in accordance with the terms of the applicable plan or consistent with the Employer’s normal practices, (c) the provision of perquisites, outplacement services (including reimbursement of outplacement costs), educational assistance, insurance, disability, health and welfare plan coverage and other non-cash benefits, including, without limitation, any cash payments provided to cover the cost of obtaining such benefits or coverage or to continue health care benefits under the Employer's health care benefits program pursuant to COBRA, (d) any interest required to be paid pursuant to the terms of any Employer plan or policy between the termination date and the payment date, (e) amounts paid for consulting services that the Section 16 Officer has agreed to provide after such officer’s termination of employment for a period not to exceed two years; (f) any unpaid cash bonus for any previously completed performance or service period (including, without limitation, the payments described in Section 2.3.1(b) of the Plan), (g) accrued but unpaid Salary, vacation pay or other paid time off through the termination date
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and reimbursement for any expenses validly incurred prior to the termination date, (h) any payment in respect of the Section 16 Officer’s prorated cash bonus for the year of termination based on target or actual performance (including, without limitation, the payments described in Section 2.3.1(c) of the Plan), (i) payments made in settlement of litigation or claims made against EIX or the other Affiliates by the Section 16 Officer or indemnification payments made or expenses advanced under the governing documents of EIX or an Affiliate or any indemnification agreement with the Section 16 Officer, or (j) any other benefit or payment required by law.
Cash Severance Cap means an amount equal to (i) 2.99 times (ii) the sum of (a) the Eligible Employee’s annualized Salary in effect on the Eligible Employee’s Termination Date plus (b) the Eligible Employee’s annualized Salary in effect on the Eligible Employee’s Termination Date times the Eligible Employee’s Target Bonus Percentage in effect on the Eligible Employee’s Termination Date.
Section 16 Officer means an Eligible Employee who is subject to Section 16 of the Securities Exchange Act of 1934, as amended.
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EXHIBIT B
SEVERANCE AGREEMENT
This Severance Agreement (this “Agreement”) is made as of the _____ day of __________, 20___, by and between [name], an individual (the “Individual”), and Edison International, a California corporation (the “Company”), it provides for a termination date of [date—usually the day after the last day on payroll] (the “Termination Date”), and it is a severance agreement that includes a release, a confidentiality agreement, and an agreement not to solicit employees, and certain other terms and conditions.
RECITALS
A. The Individual and the Company have reached agreement on the termination of the Individual’s employment by the Company and/or one or more of its current or former subsidiaries or affiliates, including but not limited to Southern California Edison Company (collectively, the Company and its current or former subsidiaries and affiliates are referred to herein as the “Company Group”).
B. The Individual and the Company further desire to resolve all pending and potential actions and issues between the Individual and each member of the Company Group without the further expenditure of time and expense of litigation and, for that reason, have entered into this Agreement.
C. The Company maintains the Edison International 2008 Executive Severance Plan (the “Plan”). The Company's (and/or another member of the Company Group’s) obligation to pay or continue paying severance benefits to the Individual under and in accordance with the terms of the Plan, which benefits are summarized and attached to this Agreement as Exhibit A (the “Severance Benefits”), is subject to the requirement that the Company timely receive this Agreement from the Individual and that the Individual does not revoke or otherwise render this Agreement unenforceable.
AGREEMENT
In consideration of the covenants undertaken and the releases contained in this Agreement, and the Individual’s right to receive the Severance Benefits, the Individual and the Company agree as follows:
1. Termination of Employment
The Individual and the Company agree that the Individual’s employment by the Company and/or one or more of the other members of the Company Group is terminated effective the Termination Date. Accordingly, the Individual hereby resigns any and all of his or her positions, offices, and/or directorships with each entity in the Company Group and any employment agreement(s) between the Individual and one or more members of the Company Group will be, and they hereby are, terminated effective the Termination Date.
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2. Severance Benefit
The Company and/or the appropriate member of the Company Group will pay to the Individual the Severance Benefits in accordance with the terms of the Plan.
3. Release by the Individual
Except for those obligations created by or arising out of this Agreement, the Individual on behalf of himself or herself, his or her descendants, dependents, heirs, executors, administrators, assigns, and successors, and each of them, hereby covenants not to sue and fully releases and discharges the Company, its parent (if any), the Company’s subsidiaries and affiliates, past and present, and each of them, as well as its and their trustees, directors, officers, agents, attorneys, insurers, employees, benefit plans, benefit plan fiduciaries, stockholders, representatives, assigns, and successors, past and present, and each of them, hereinafter together and collectively referred to as “Releasees,” with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which he or she now owns or holds or he or she has at any time heretofore owned or held or may in the future hold as against said Releasees, arising out of or in any way connected with the Individual’s employment relationship with any member of the Company Group, or the termination of his or her employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them, committed or omitted prior to the date of this Agreement including, without limiting the generality of the foregoing, any claim under Section 1981 of the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, the California Family Rights Act, the California Worker Adjustment and Retraining Notification Act, the California Labor Code, the California Business and Professions Code, any other claim under any other federal, state or local law or regulation, and any other claim for severance pay, bonus or incentive pay, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other fringe benefit, medical expenses, or disability (except vested benefits that the Individual may be entitled to receive as outlined in Exhibit A hereto, or vested benefits that the Individual may be entitled to receive, if any, under and in accordance with the terms of the Southern California Edison Company Retirement Plan or other qualified Company Group pension plan, Edison 401(k) Savings Plan, Medical Program, Dental Program, Vision Care Plan, Health Care Reimbursement Account Program, Dependent Care Reimbursement Account Program, and Employee Assistance Program). Exhibit A is incorporated herein by this reference. Without limiting the generality of the foregoing release, the Individual agrees that effective as of the Termination Date (i) he or she is not eligible for benefits under the Southern California Edison Company Comprehensive Disability Plan (the “CDP”) except to the extent (if any) the Individual is entitled to benefits under the CDP in the same amount and payable at the same time as would otherwise be payable under California State
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Disability Insurance, and (ii) he or she is not eligible for benefits under the Edison International 2008 Executive Disability Plan (the “Executive Disability Plan”) unless the Individual qualifies for and receives long-term disability benefits under the Southern California Edison Company Long Term Disability Plan (the “LTD Plan”), and the amount and duration of CDP, LTD or Executive Disability Plan benefits provided to the Individual on and after the Termination Date (if any) shall be determined under the terms of the respective disability plan. Nothing in this Agreement should be construed to release claims that cannot be released as a matter of law.
4. Known and Unknown Claims
It is the intention of the Individual and the Company in executing this instrument that the same shall be effective as a bar to each and every claim, demand and cause of action hereinabove specified. In furtherance of this intention, the Individual hereby expressly waives any and all rights and benefits conferred upon him or her by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly consents that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action hereinabove specified. SECTION 1542 provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
The Individual acknowledges that he or she may hereafter discover claims or facts in addition to or different from those which he or she now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected this settlement. Nevertheless, the Individual hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts. The Individual acknowledges that he or she understands the significance and consequence of such release and such specific waiver of SECTION 1542.
5. Other Waiver by the Individual
The Individual expressly acknowledges and agrees that, by entering into this Agreement, he or she is waiving any and all rights or claims that he or she may have arising under the Age Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of execution of this Agreement.
6. Confidentiality
The Individual represents and covenants that he or she has not previously and that he or she will not at any time, unless compelled by process of law, disclose or use for his or her own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint
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venture, association, corporation or other business organization, entity or enterprise other than the Company, any trade secrets, or other confidential data or information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, or plans of any member of the Company Group; provided that the foregoing shall not apply to information which is generally known to the industry or the public other than as a result of the Individual's breach of this covenant. The Individual agrees that he or she will return to the Company immediately all electronic files, memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of any entity within the Company Group, except that he or she may retain personal notes, notebooks and diaries that do not contain confidential information of the type described in the preceding sentence. The Individual further agrees that he or she will not retain or use for his or her account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of any entity within the Company Group. Nothing in this Agreement shall be construed to prohibit the Individual from discussing the terms, wages, and working conditions of the Individual’s employment to the extent such communication is protected by applicable labor law. To the extent the Individual has a right to engage in concerted activity under Section 7 of the National Labor Relations Act (hereafter “Section 7 rights”), nothing in this Agreement shall be construed to limit or restrict such activity. Furthermore, nothing in this Agreement shall be construed to prevent the Individual from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Individual has reason to believe is unlawful. In addition, nothing in this Agreement shall be construed to prohibit the Individual from filing a complaint or reporting any concern (including any safety concern) to any federal or state agency or legislature, including, but not limited to, the United States Nuclear Regulatory Commission, the Equal Employment Opportunity Commission, the Securities and Exchange Commission, and the National Labor Relations Board, or prohibit the Individual from communicating with or otherwise participating in any proceeding or investigation by a federal or state agency or legislature regarding such concern, without notice to the Company. The Individual acknowledges, however, his or her release shall remain effective and binding, and Individual shall take nothing as a result of any such investigation or proceeding from any person or entity released in paragraph 3. This Agreement does not limit the Individual’s right to receive an award from a government agency for information provided to that agency. Further, this Section 6 does not, in any way, restrict or impede the Individual from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order.
Pursuant to the Defend Trade Secrets Act of 2016, the Individual acknowledges that he or she may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of confidential information that: (a) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed in a lawsuit or other proceeding, provided that such filing is made under seal. Further, the Individual understands that the Company Group will not retaliate against the Individual in any way for any such disclosure made in accordance with the law. In the event
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a disclosure is made, and the Individual files any type of proceeding against any member of the Company Group alleging that a member of the Company Group retaliated against the Individual because of the Individual’s disclosure, the Individual may disclose the relevant confidential information to the Individual’s attorney and may use the confidential information in the proceeding if (x) the Individual files any document containing the confidential information under seal, and (y) the Individual does not otherwise disclose the confidential information except pursuant to court or arbitral order.
7. No Solicitation
The Individual represents and covenants that he or she has not previously and that he or she will not at any time during the period commencing on the date hereof and ending on the first anniversary of the date hereof (the “Limitation Period”) directly or indirectly solicit any person who is then, or at any time within six months prior to the Limitation Period was, an employee of an entity within the Company Group (as it may now or in the future be composed) who earned annually $25,000 or more as an employee of such entity during the last six months of his or her own employment, to work for any business, individual, partnership, firm, corporation, or other entity then in competition in the Specified Counties with the business of any entity within the Company Group. The Specified Counties are the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara, Kern, Tulare, Inyo, Mono, and Fresno.
8. Representations by the Individual
The Individual further expressly acknowledges, represents, and agrees that:
a. He or she was not otherwise entitled to the Severance Benefits (in the event that the Individual is entitled to severance or pay continuation benefits under any federal or state law, including without limitation the Worker Adjustment and Retraining Notification Act ("WARN") or similar state law, the Individual acknowledges, represents and agrees that he or she was not otherwise entitled the level of Severance Benefits being offered and that such benefits exceed the minimum required statutory level of benefits that he or she may have otherwise been entitled to);
b. His or her right to receive the Severance Benefits is consideration for his or her agreements herein and the Severance Benefits (to the extent that they exceed any minimum required statutory level of benefits under WARN or otherwise) would not be paid if he or she did not execute and deliver this Agreement;
c. If, despite the Individual’s release of claims as stated herein, it is determined that other severance or pay continuation obligations to or for the benefit of the Individual exist under WARN or similar state law (the “Additional Payments”), the Individual’s entitlement to the Severance Benefits payable in cash shall be reduced by an aggregate amount equal to the aggregate Additional Payments that it is determined the Individual is entitled to receive, provided that the Individual will be entitled to the Minimum Benefit specified in Section
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2.6 of the Plan, which Minimum Benefit the Individual agrees is, in and of itself, good and sufficient consideration for the Individual’s agreements and releases set forth in this Agreement;
d. To the extent the Individual receives cash Severance Benefits that the Individual was not entitled to receive for any reason (including, without limitation, due to reduction for the Additional Payments), the Individual acknowledges, represents and agrees that he or she will promptly return the full amount of the excess payments;
e. The restrictions on him or her which are set forth in Sections 6 and 7 are reasonable;
f. The Severance Benefits are subject to termination or reduction pursuant to Sections 2.6 and 10.9 of the Plan, provided that in all cases the Individual will be entitled to the Minimum Benefit specified in Section 2.6 of the Plan, which Minimum Benefit the Individual agrees is, in and of itself, good and sufficient consideration for the Individual’s agreements and releases set forth in this Agreement;
g. He or she was orally advised by the Company and is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
h. He or she was given a copy of this Agreement prior to the date of its execution, and informed that he or she had up to forty-five (45) days within which to consider the Agreement; if he or she signs this Agreement before the end of such forty-five (45) day period, he or she will have done so voluntarily and with full knowledge that he or she is waiving his or her right to have forty-five (45) days to consider this Agreement; and in the event that there are any changes to this Agreement, he or she agrees that no changes, whether material or immaterial, will restart the running of the forty-five (45) day period;
i. He or she was informed that he or she has seven (7) days following the date of execution of the Agreement in which to revoke the Agreement; and
j. He or she has had the opportunity to consult with his or her advisors and attorneys regarding this Agreement (including, without limitation, its terms, conditions, and effects) and represents that he or she has so consulted with such advisors and attorneys.
9. Confidentiality of the Agreement
The Individual shall not disclose this Agreement, or any of its terms and conditions, including but not limited to the consideration for this Agreement, to any person other than the Individual’s spouse, attorneys, medical providers, accountants, tax preparers, financial advisors, and tax advisors (collectively, the “Confidants”). Before the Individual discloses to a Confidant this Agreement, or any of its terms or conditions, the Confidant must explicitly state in writing to the Individual that the Confidant will keep such information confidential as required by this Agreement. Notwithstanding the foregoing, to the extent the Individual has Section 7 rights, the Individual may disclose the terms of this Agreement to the extent necessary for the exercise of such rights. The Individual or his/her counsel may also disclose information
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concerning the financial terms of this Agreement to the Internal Revenue Service and/or California Franchise Tax Board, as may be necessary to support or explain any tax return that may be filed with either agency by the Individual or his/her counsel.
Except as set forth in Section 6 and above in this Section 9, any inquiry made to the Individual or the Confidants about this Agreement, or the settlement terms and conditions referred to herein, shall be met only by a statement that the claim has been resolved.
The Individual hereby agrees that disclosure by the Individual or any Confidant of any of the terms and conditions of this Agreement in violation of the foregoing shall constitute and be treated as a material breach of this Agreement by the Individual.
10. No Prior Assignment or Transfer
The Individual warrants and represents to the Company that he or she has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof and he or she shall defend, indemnify and hold harmless the Releasees from and against any claim (including the payment of attorneys' fees and costs actually incurred whether or not litigation is commenced) based on or in connection with or arising out of any such assignment or transfer made, purported or claimed.
11. No Right to Reinstatement; Inquiries from Prospective Employers
The Individual and the Company acknowledge that any employment relationship between the Individual and the Company Group terminated on the Termination Date; that they have no further employment or contractual relationship except as may arise out of this Agreement; that the Individual has not filed a claim against his or her employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process; and that the Individual waives any right or claim to reinstatement as an employee of any member of the Company Group. In the event any member of the Company Group receives inquiries about the Individual from prospective employers, such member shall provide to such persons or entities only the following information: confirmation of the Individual's employment dates; position history; that the Individual’s employment with the Company Group was mutually terminated; and salary history if the Individual approves the provision of salary history information.
12. Taxes
The Individual agrees that he or she shall be exclusively liable for the payment of all federal and state taxes which may be due as the result of the consideration that he or she receives pursuant to this Agreement and the Individual hereby represents that he or she shall make payments on such taxes at the time and in the amount required of him or her. In addition, the Individual hereby agrees fully to defend, indemnify and hold harmless Releasees and each of them from payment of taxes or penalties that are required of them by any government agency at any time as the result of payment of the consideration set forth herein. The Individual further
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agrees to provide the Releasees and each of them with any tax information that they or it may reasonably request.
13. Beneficiaries and Successors
Each Releasee shall be deemed to be a beneficiary of the Individual’s promises and representations made herein. In the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity, this Agreement shall inure to the benefit of such successor. In the event of a merger, transfer or sale of the stock or assets of an entity in the Company Group that results in such entity not continuing as a member of the Company Group, the Individual's promises and representations made herein shall continue to inure to the benefit of such entity as well as the Company.
14. Entire Agreement
This instrument constitutes and contains the entire agreement and understanding concerning the Individual’s relationship with the Company Group, the termination of the Individual’s employment, and the other subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters hereof. This is an integrated document.
Notwithstanding the foregoing paragraph, any obligations of the Individual regarding confidentiality, trade secrets, inventions, no solicitation, or similar matters under an existing agreement or policy to which the Individual is a party or otherwise bound (“Additional Obligations”) shall continue in effect and, to that end, such Additional Obligations are outside of the scope of the foregoing paragraph. The provisions of this Agreement pertaining to confidentiality, trade secrets, inventions, no solicitation, or similar matters are in addition to (and not in lieu of) any such Additional Obligations.
15. Revocability
The Individual may revoke this Agreement in its entirety during the seven (7) days following execution of this Agreement by the Individual. Any revocation of this Agreement must be in writing, clearly state that it is a revocation of this Agreement, and be hand delivered to, or delivered in such a manner to ensure receipt by, the General Counsel of the Company during the revocation period. This Agreement will become effective, enforceable, and irrevocable upon seven (7) days following its execution by the Individual, unless it is revoked during the seven-day period.
16. Severability
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
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17. Governing Law
This Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of California without regard to principles of conflict of laws.
18. Mandatory Arbitration
Except for claims for temporary injunctive relief to prevent irreparable harm and claims that, after application of the Federal Arbitration Act (“FAA”) and FAA preemption principles, are not subject to arbitration or pre-dispute arbitration agreements as a matter of law (including but not limited to claims for unemployment compensation, workers’ compensation, and sexual abuse or sexual harassment), any dispute or controversy between the Individual, on the one hand, and the Company (or any other Releasee), on the other hand, in any way arising out of, related to, or connected with this Agreement or the subject matter thereof, or arising out of or related to any other dispute between the Individual and the Company or any other member of the Company Group or any other Releasee, now or in the future, shall be resolved through: (a) the claims and arbitration provisions contained in Article 7 of the Plan, to the extent the dispute or controversy involves the Severance Benefits or any other benefits under the Plan; (b) the claims and dispute resolution provisions of the applicable benefit plan, to the extent the dispute or controversy involves any claim not released under this Agreement with respect to a benefit plan that is (i) sponsored or maintained by the Company or any other member of the Company Group and (ii) subject to the Employee Retirement Income Security Act of 1974; or (c) final and binding arbitration in accordance with the arbitration provisions in the following paragraph, for other disputes or controversies.
Any arbitration under this Section 18 will be held in Los Angeles County, California, in accordance with the then-current JAMS Arbitration Rules and Procedures for Employment Disputes (“JAMS Rules”), which are currently available at https://www.jamsadr.com/rules-employment-arbitration/english, and the FAA. The arbitration shall be before a sole arbitrator, selected by mutual agreement of the parties. If the parties are unable to agree upon an arbitrator, the arbitrator shall be selected by ranking and striking in accordance with the then-current JAMS Rules from a list of arbitrators supplied by JAMS. Any and all claims and/or defenses that would otherwise be available in a court of law will be fully available to the parties; provided, however, that all claims are to be resolved on an individual basis only and no class, collective, or representative arbitration will be permitted under any circumstances, and any representative claim that cannot be waived as a matter of law (e.g., a representative claim under the Private Attorneys General Act of 2004) may proceed in court but must be stayed pending the conclusion of the arbitration of individual claims to the maximum extent permitted by law. The enforceability of the waiver of class, collective, and representative proceedings in the preceding sentence is to be determined by a court of competent jurisdiction, not by an arbitrator.
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The arbitrator selected pursuant to this paragraph (the “Arbitrator”) may order such discovery as is necessary for a full and fair exploration of the issues and dispute, consistent with the expedited nature of arbitration. The Arbitrator shall apply applicable substantive law to resolve the dispute (including the applicable statute(s) of limitations). At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto, and may be enforced by any court of competent jurisdiction. All costs unique to arbitration (e.g., the Arbitrator’s fees and room fees) shall be paid by the Company. The parties shall otherwise bear their own costs (e.g., attorneys’ fees, expert fees, witness fees, etc.). If, however, any party prevails on a statutory claim that affords the prevailing party attorneys’ fees and costs, then the Arbitrator may award reasonable fees and costs to the prevailing party.
19. Counterparts, Headings
This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose. The headings in this Agreement are only for convenience and ease of reference and are not to be considered in construction or interpretation.
20. Waiver, Amendment
Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. No waiver shall be binding unless in writing and signed by the party waiving the breach. No amendment of any term or provision of this Agreement shall be binding unless in writing and signed by all parties to this Agreement.
21. No Presumption
In entering this Agreement, the parties represent that they have had full opportunity to consult with attorneys of their own choice, that the parties have completely read and understood the terms of this Agreement and voluntarily accepted such terms. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party because it or its representatives drafted any of the provisions of this Agreement.
22. Additional Acts
All parties agree to cooperate fully and to execute any and all supplementary documents and to take all additional actions that may be necessary or appropriate to give full
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force to the basic terms and intent of this Agreement and which are not inconsistent with its terms.
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I have read the foregoing Agreement and I accept and agree to the provisions it contains and hereby execute it voluntarily with full understanding of its consequences.
EXECUTED on this ______ day of _________________ at ______________________ (County and State where agreement is signed).
The Individual Signature: Print Name:
EXECUTED on this ______ day of _________________ at ______________________ (County and State where agreement is signed).
Edison International
By: Print Name: Title:
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Document
Exhibit 19.1
| Insider Trading Policy | | --- || POLICY SYNOPSIS | | --- |
•Insider trading is buying or selling a company’s securities while in possession of Material Non-public Information about that company
•“Material” information is any positive or negative information that a reasonable investor would consider important when deciding whether to buy or sell securities or that is likely to affect the price of securities
•Information is “non-public” if it has not been disclosed to the general public or has been only partially disclosed
•The prohibition of insider trading applies to all securities of Edison International and its subsidiaries (the “Company” or “Companies”), including stocks, bonds, stock options and interests held in the 401(k) EIX Stock Fund, and all securities of other companies if you learn Material Non-public Information about another company while working for Edison International or one of its subsidiaries
•Never buy or sell Company securities if you know of Material Non-public Information about the Company or its subsidiaries
•Never disclose Material Non-public Information to anyone other than a director, officer, or employee of Edison International or its subsidiaries who legitimately needs to know the information to conduct company business
•Individuals holding specified roles are subject to additional restrictions regarding the trading and/or pledging of company securities
| 1.0 APPLICABILITY |
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This policy applies to all Covered Persons, consisting of all directors, officers, and employees of the Companies and certain third parties.
| 2.0 POLICY DETAIL |
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Except as set forth in section 2.9, Edison International and its subsidiaries prohibit all directors, officers, and employees of the Companies and applicable third parties from buying, selling, or otherwise trading in Company securities while in possession of Material Non-public Information about the Companies. The policy also prohibits buying or selling securities of any other company if a Covered Person learns Material Non-public Information about that other company in the course of working for Edison International or one of its subsidiaries.
Failure by a Covered Person to strictly comply with this policy could result in serious disciplinary consequences, including termination and possible criminal and civil legal action.
Any questions regarding this policy should be directed to the Clearance Officer.
2.1 Trading While in Possession of Material Non-public Information is Strictly Prohibited
Except as set forth in section 2.9, Covered Persons are prohibited from trading in Covered Securities while in possession of Material Non-public Information. Such trades are a serious violation of securities laws for any Covered Person. This prohibition includes:
a.Giving instructions, directly or indirectly through another person, to buy or to sell Covered Securities
b.Taking any 401(k)-plan action that decreases any investment in the EIX Stock Fund
c.Making an election to participate or increase the level of participation in EIX’s Dividend Reinvestment and Direct Stock Purchase Plan or any other dividend reinvestment program
d.Making or increasing an election to reinvest dividends in any plan or account
e.Making an election to participate in or increase the payroll deduction percentage for EIX’s Employee Stock Purchase Plan
f.Exercising stock options, unless you hold the shares acquired upon exercise or
g.Pledging Covered Securities
2.1.1 Examples of Material Information
While it is not possible to provide an exhaustive list, the following are some types of information that may be considered material:
a.Financial results, especially preliminary and final quarterly and year-end earnings (and projections of future earnings or losses), and significant changes in financial results or liquidity
b.Changes to previously announced earnings guidance or the decision to suspend earnings guidance
c.A pending or proposed acquisition, disposition, or other business combination
d.Changes in senior management
e.Actual or threatened major litigation, or the resolution of such litigation
f.Significant interruption of operations or changes in operating circumstances
g.Changes in dividend policy or rates
h.Cybersecurity incidents
i.Wildfire investigation information and damage estimates
j.Significant labor disputes
k.Significant developments in rate cases or other major regulatory matters and
l.Bank borrowings or other financing transactions out of the ordinary course
2.2 When Material Non-public Information is Considered Public
It is our policy that, unless otherwise determined by the Clearance Officer, Material Non-public Information does not become public until the beginning of the second Trade Day after the day of disclosure of the information in (i) a Form 10-K, Form 10-Q, Form 8-K or other filing made with the Securities and Exchange Commission (SEC), (ii) a press release to a national wire service or a national news service or (iii) a national newspaper. Information released before the market opens is deemed to be disclosed on the prior day.
For example:
| If the Material Non-public Information is Disclosed on this Day ... | ... You May Generally Begin Trading on this Day ... |
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| Monday after market open | Wednesday of the same week |
| Friday after market open | Tuesday of the next week |
| Friday before a Monday holiday after market open | Wednesday of the next week |
| Monday before market open | Tuesday of the same week |
2.3 Discussing Material Non-public Information is Prohibited
Covered Persons are prohibited from disclosing Material Non-public Information relating to the Companies except to Covered Persons and others with a need to know the information to conduct Company business. Covered Persons could also violate securities laws if they disclose any Material Non-public Information relating to the Companies to other persons, including family members, members of their household (whether related or unrelated), friends and acquaintances, or anyone else, and these other persons then purchase or sell Covered Securities or share the information with others.
2.4 Prohibited Transactions
To avoid even the appearance of impropriety, Covered Persons are prohibited from engaging in the following activities with respect to Covered Securities whether or not in possession of Material Non-public Information relating to the Companies:
2.4.1 Hedging Related to Covered Securities
Hedging is highly speculative and gives the appearance of a lack of confidence in the Companies’ future prospects, and therefore is prohibited for Covered Persons. Examples of hedging transactions include:
a.Selling security futures contracts related to Covered Securities
b.Entering into prepaid variable forward contracts, equity swaps, or zero-cost collars related to Covered Securities and
c.Contributing a Covered Security to an exchange fund in exchange for an interest in the fund
2.4.2 Buying or Selling Options or Derivatives Related to Covered Securities
Trading in these securities is highly speculative and therefore prohibited for Covered Persons.
2.4.3 Purchases of Covered Securities on Margin
Any Covered Securities purchased in the open market shall be paid for fully at the time of purchase and may not be purchased on margin (borrowing money to fund the stock purchase). This prohibition does not apply to cashless exercises of employee stock options.
2.4.4 Short Sales of Covered Securities
Any Covered Securities sold must be owned by the Covered Person at the time of sale. Short sales, meaning the sale of borrowed Covered Securities, are prohibited. Cashless exercises of employee stock options are not considered short sales.
2.5 Pledging
In addition to those transactions prohibited under section 2.4, EIX Section 16 Persons, SCE Directors, SCE Executive Officers, and all executives at the Vice President level or above who report directly to the Chief Financial Officer of EIX or SCE are prohibited from Pledging Covered Securities whether or not in possession of Material Non-public Information relating to the Companies.
2.6 Trading Restrictions — Blackouts and Preclearance Requirements
Periodically, the Companies may deem it necessary or advisable to impose blackouts or preclearance requirements on trading in Covered Securities by one or more Covered Persons. The failure of the Companies to designate a person as being subject to a trading restriction does not relieve that person of the obligation not to trade while in possession of Material Non-public Information.
Any Covered Persons subject to a trading restriction will be notified, and those persons may not trade or disclose the trading restriction to any other person not subject to the trading restriction for as long as the trading restriction is imposed.
Any Covered Persons subject to a preclearance requirement may not trade in Covered Securities without obtaining preclearance from the Clearance Officer for as long as the requirement is imposed. If any such Covered Person receives preclearance, he or she will have until the end of two Trade Days following the day preclearance is received to provide trading instructions, unless extended or shortened by the Clearance Officer. For example, if a Covered Person is precleared on a Tuesday, that person will have until the end of market hours on Thursday of the same week to provide trading instructions. If for any reason the instruction is not given within the required time period or the type of proposed transaction is changed, preclearance must be obtained again before any Covered Securities can be traded.
Even if a proposed transaction is precleared, you are prohibited from trading in any Covered Securities if you possess Material Non-public Information relating to the Companies, except as set forth in section 2.9.
2.7 Material Non-public Information Relating to Other Companies
Covered Persons, who while working for the Companies learn of Material Non-public Information relating to another company, such as a customer or supplier, may not trade in that company’s securities or disclose the information, except to Covered Persons and others with a need to know the information to conduct Company business, until the information becomes public or is no longer material.
2.8 Assistance
The ultimate responsibility for complying with securities laws and this policy rests with each Covered Person. It can be difficult to know whether information is considered material or non-public or whether a potential transaction complies with the law and this policy. When any doubt exists, you should assume that the information you possess is Material Non-public Information.
If a Covered Person’s securities transaction becomes the subject of scrutiny, the transaction will be viewed after the fact and with the benefit of hindsight. As a result, before engaging in any transaction, Covered Persons should carefully consider how regulators, law enforcement officials, officers of the Companies and others might view such a transaction in hindsight.
Any person who has any questions about specific transactions or complying with the law and this policy should not hesitate to contact the Clearance Officer. However, any action by the Companies, the Clearance Officer, or any other Covered Person pursuant to this policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws.
2.9 Permitted Transactions When in Possession of Material Non-public Information
Covered Persons may engage in the following activities with respect to Covered Securities when in possession of Material Non-public Information relating to the Companies:
a.Certain Stock Option Exercises
Covered Persons are permitted to exercise stock options when in possession of Material Non-public Information provided the exercise will not result in a market sale of the underlying stock by the Covered Person.
b.Gifts and Similar Transfers
Certain acquisitions, dispositions, or transfers of Covered Securities for no consideration, other than charitable donations, may take place when in possession of Material Non-public Information. Examples of such transfers include bona fide gifts, inheritances, and changes in the nature of your ownership including transferring stock held in your name to a broker, family member, or family trust.
For avoidance of doubt, EIX Section 16 Persons remain subject to the preclearance requirements of section 2.11 for the activities covered by this section.
2.10 Additional Trade Restrictions for “Designated Insiders”
2.10.1 Trading Windows
To ensure compliance with securities laws and this policy, all Designated Insiders, in addition to complying with the prohibition against trading while possessing Material Non-public Information relating to the Companies, shall not trade in Covered Securities, including any of the transactions described in section 2.1, unless a Trading Window is open. The Clearance Officer notifies all Designated Insiders when the Trading Window closes and opens.
For illustrative purposes:
| Fiscal Period | If the results of the Fiscal Period are released on this day and date ...* | ... the Trading Window opens on this date ...* | ... and the Trading Window closes on this date ... |
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| Quarter Ended March 31 | Friday, April 30 | Tuesday, May 4 | June 15 |
| Quarter Ended June 30 | Wednesday, July 28 | Friday, July 30 | Sept. 15 |
| Quarter Ended Sept. 30 | Monday, Oct. 25 | Wednesday, Oct. 27 | Dec. 15 |
| Year Ended Dec. 31 | Thursday, Feb. 26 | Monday, March 2 | March 15 |
* Assumes the information is released after the market opens. Windows open a day earlier if the information is released before market open.
The dates above are for illustrative purposes only. The Companies cannot determine in advance the date the Companies will actually release results for any fiscal period. If you have any questions whether a Trading Window is open or closed, you should contact the Clearance Officer.
2.10.2 Trading May Be Prohibited Even When the Trading Window is Open
Even if a Trading Window is open, a Designated Insider is not permitted to trade in Covered Securities, other than as described below, if that person possesses Material Non-public Information relating to the Companies. Trading during a Trading Window should not be considered a “safe harbor.” Each person is individually responsible for compliance with the prohibitions against insider trading.
2.10.3 Permitted Transactions When the Trading Window is Closed
If you are a Designated Insider, you may engage in the transactions listed in section 2.9 outside a Trading Window provided that you contact the Clearance Officer beforehand to assure the transaction is exempt.
2.10.4 Certain Former Designated Insiders Will Continue to be Subject to this Policy from the Day they are No Longer a Designated Insider Until the Next Time the Trading Window Opens
In the event that, during a period when the Trading Window is closed, a person ceases to be a Designated Insider but remains employed with the Companies, he or she will be subject to the Insider Trading Policy for Designated Insiders only until the next Trading Window opens. He or she will, of course, thereafter remain subject to this policy as a Covered Person.
2.11 Further Additional Restrictions for EIX Section 16 Persons
2.11.1 Preclearance Requirements for EIX Section 16 Persons
a.Your Transaction and Ownership Changes
Before any EIX Section 16 Person trades in Covered Securities, he or she is required to preclear the proposed transaction with the Clearance Officer. EIX Section 16 Persons are also required to preclear all changes in their beneficial ownership of Covered Securities, including, but not limited to, any changes in beneficial ownership through a gift to a charitable organization or a transfer to a family trust. EIX Section 16 Persons shall be permitted to exercise stock options provided that the exercise will not result in a market sale of the underlying stock by the EIX Section 16 Person and the EIX Section 16 Person confirms with the Clearance Officer through the preclearance process that the transaction is exempt under Section 16.
b. Transactions and Ownership Changes by Others Attributable to You
Under Section 16, certain Covered Securities held by the spouse or minor children of an EIX Section 16 Person, held by other persons who are members of the EIX Section 16 Person's household or financially supported by the EIX Section 16 Person (regardless of whether these other persons are related or unrelated to the EIX Section 16 Person), held by trusts for which the EIX Section 16 Person or any immediate family member is a settlor, trustee, beneficiary or remainderman, or held by a corporation in which such person has a controlling interest or a partnership in which such person has an interest, may be regarded as beneficially owned by the EIX Section 16 Person. Therefore, EIX Section 16 Persons are required to preclear with the Clearance Officer any proposed transactions and ownership changes by such persons or entities in EIX equity securities. Ownership interests that are not attributable to you do not require preclearance. For example, ownership interests held in Covered Securities through diversified mutual funds, broad-based market basket or securities index exchange traded funds (generally having more than nine component securities), and other similar broad-based registered investment companies are not attributable to you and therefore, changes in those interests do not require preclearance. Additionally, purchasing such interests does not require preclearance if the ownership interest is not paid for in whole or in part with Covered Securities. Dependent upon the facts, other ownership interests may not be attributable to you. However, due to the complexity of the applicable laws, we request that you preclear where you have any question to allow the Clearance Officer to review the facts and make the appropriate determination.
c. Preclearance Conditions
Until the Clearance Officer provides preclearance, EIX Section 16 Persons may not trade in Covered Securities. If any such Covered Person receives preclearance, he or she will have until the end of two Trade Days following the day preclearance is received to provide trading instructions, unless extended or shortened by the Clearance Officer. For example, if a Covered Person is precleared on a Tuesday, that person will have until the end of market hours on Thursday of the same week to provide trading instructions. If for any reason the instruction is not given within the required time period or the type of proposed transaction is changed, preclearance must be obtained again before any Covered Securities can be traded.
Remember, even if a proposed transaction is precleared, you are prohibited from trading in any Covered Securities while in possession of Material Non-public Information relating to the Companies, except as set forth in section 2.9.
2.11.2 Former EIX Section 16 Persons May Be Required to Preclear All Proposed Transactions in Certain Covered Securities for Up to Six Months From the Day They are No Longer an EIX Section 16 Person
In the event that an EIX Section 16 Person retires, resigns, is terminated, or undergoes any other change in his or her relationship with EIX and/or SCE, such that the person is no longer an EIX Section 16 Person, he or she must continue to preclear any proposed transaction in EIX equity securities, including stock option exercises, with the Clearance Officer for up to six months from the day he or she ceases being an EIX Section 16 Person. You will be notified of the date when the preclearance requirement no longer applies.
2.11.3 Prohibition Against Short-Swing Profits
One purpose of the preclearance requirement is to help you avoid “short-swing” trading liability. EIX Section 16 Persons are subject to liability under Section 16 for their “Short-Swing Profits” and the “Short-Swing Profits” of their spouses, minor children, members of their household, or others financially supported by them (whether related or unrelated) and others whose transactions are attributable to them. In other words, if an EIX Section 16 Person purchases EIX equity securities, he or she must wait at least six months before selling EIX equity securities. If an EIX Section 16 Person sells EIX equity securities, he or she must refrain from purchasing EIX equity securities for at least six months. An EIX Section 16 Person should consider any future anticipated or required transactions before giving an investment instruction or executing a proposed transaction.
2.11.4 Section 16 Stock Ownership Reporting Requirements
Another purpose of the preclearance requirement is to help you comply with your SEC reporting obligations. All EIX Section 16 Persons are required to report publicly their initial beneficial ownership, and most changes to their beneficial ownership, of EIX equity securities to the SEC on Forms 3, 4, or 5. Reporting may be required with respect to EIX equity securities held by other persons described in section 2.11.1.b. Reportable transactions include acquisitions and dispositions of EIX equity securities through gifts, inheritances, stock option grants and exercises, and stock awards under incentive or bonus plans. Furthermore, changes in the nature of such ownership (e.g., from direct to indirect) of EIX equity securities, including through the transfer of shares to or from a family member or family trust, are reportable. The Corporate Governance staff will assist in preparing and filing most forms. You or your broker should not file Forms 3, 4, or 5 without consulting with the Clearance Officer.
2.11.5 Form 144 Stock Ownership Reporting Requirements
Sales of any Covered Securities by EIX Section 16 Persons who are Rule 144 Affiliates and by those whose holdings of Covered Securities may be attributed to such person, including those by a spouse or relatives living in such person’s home or possibly financially supported by the person, should generally be made in compliance with Rule 144 for 90 days after ceasing to be a Rule 144 Affiliate. Rule 144 has requirements relating to the length of time you may be required to hold the securities and the volume you may sell in any three-month period, among other limitations. Further, there are reporting requirements that you or others must strictly comply with if Rule 144 is relied on to sell Covered Securities. In general, if the number of securities to be sold by a Rule 144 Affiliate or others during any three-month period exceeds 5,000 shares or other units or has an aggregate sale price in excess of $50,000, such person must file a Form 144 with the SEC disclosing sale details.
A knowledgeable broker should help you file any required Forms 144 and comply with other requirements of Rule 144. If you exercise EIX stock options, the broker administering the EIX option program is required to assist you with preparing and filing Forms 144. For other transactions, we recommend you contact your broker in advance to confirm their assistance. Equiniti Trust Company, LLC, our transfer agent, does not file Forms 144. We recommend you transfer shares you and certain family members own directly to your broker before selling, if a Form 144 is required.
2.11.6 Filing Responsibilities: The Ultimate Responsibility Rests with You
While this policy is intended to help EIX Section 16 Persons comply with the requirements of the federal securities laws, EIX Section 16 Persons should recognize that legally it remains their obligation
to see that their filings are made correctly and on time, and that they do not engage in unlawful short-swing or insider trading transactions.
2.12 Certain Ownership Interests Not Attributable to a Covered Person
Ownership interests held in Covered Securities through diversified mutual funds, broad-based market basket or securities index exchange traded funds (generally having more than nine component securities), and other similar broad-based registered investment companies are not attributable to you and, therefore, changes in those interests are not prohibited by this policy. Additionally, purchasing such interests is not prohibited under this policy if the ownership interest is not paid for in whole or in part with Covered Securities. You are encouraged to contact the Clearance Officer with any questions regarding whether or not holdings will be attributed to you.
2.13 10b5-1 Trading Plans.
Covered Persons may establish a 10b5-1 Trading Plan under which transactions in Covered Securities may take place at any time, including outside of a Trading Window and when the Covered Person is in possession of Material Non-public Information. A 10b5-1 Trading Plan may only be adopted or amended when the Covered Person does not possess Material Non-public Information and, only for Designated Insiders, when the Trading Window is open. All 10b5-1 Trading Plans must strictly comply with applicable SEC rules and are subject to the additional limitations and restrictions that may be established by the Company from time to time. All 10b5-1 Trading Plans for Covered Persons trading Covered Securities must be approved by the Clearance Officer. Covered Persons should contact the Clearance Officer if they are interested in establishing such a plan.
| 3.0 IMPLEMENTATION DOCUMENTS |
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Window Periods and Preclearance Standard
| 4.0 DEFINITIONS |
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Definitions of important terms used in this policy are listed below. These terms are capitalized in this policy.
10b5-1 Trading Plan: A written plan that either instructs a broker to trade securities in accordance with the plan or vests in an independent person (e.g., a broker, a trustee, or an asset manager) all discretion as to how, when or whether to effect transactions in the securities.
Clearance Officer: The EIX General Counsel shall appoint an individual to serve as the Clerance Officer. The Clearance Officer may delegate their responsibilities and authorities under this policy to any attorney in the Law Department.
Company or Companies: EIX and its consolidated subsidiaries for accounting purposes.
Covered Person(s): All directors, officers and employees of the Companies. Third parties, including independent contractors, consultants, auditors, and attorneys, who have access to Material Non-public Information, may be subject to this policy and deemed a Covered Person as determined by the Companies. If a person ceases to be a Covered Person, he or she remains subject to the securities law restrictions on insider trading.
Covered Securities: All the Companies’ securities, including common, preferred and preference stocks or other equity securities; debt securities; and derivative, convertible and exchangeable securities related to these securities, whether or not issued by the Companies.
Designated Insiders: (a) All EIX Section 16 Persons, SCE Directors and SCE Executive Officers; (b) all Board-elected Officers who are executives of EIX or SCE; (c) all director-level executives who report directly to the Chief Executive Officer or President of EIX or SCE; (d) all director-level executives who report directly or indirectly to the Chief Financial Officer of EIX or SCE; and (e) any other person designated by the Clearance Officer and notified in writing.
EIX: Edison International.
EIX Directors: An EIX Director is any member of the board of directors of EIX.
EIX Section 16 Officers: An EIX Section 16 Officer is:
a. any member of the EIX Managing Committee and the EIX Controller, and
b. any other person designated as an EIX Section 16 Officer by the EIX board of directors and notified in writing.
EIX Section 16 Persons: EIX Directors and EIX Section 16 Officers.
Material Non-public Information: Information, positive or negative, is material if there is a likelihood that a reasonable investor would consider the information important in deciding whether to buy or sell Covered Securities, or the information would likely affect the price of the Covered Securities. The information is non-public if it is not already disclosed to the general public or is only partially disclosed.
Pledging: Covered Securities are pledged if a debt (e.g., a loan) or other obligation is owed or incurred, and the creditor or other party has a right of recourse to Covered Securities or the creditor’s or other party’s consent is required to encumber Covered Securities. Examples include:
a.Holding Covered Securities in a margin brokerage account and purchasing securities on margin through that account and
b.Obtaining an unsecured loan and the loan agreement requires the lender’s consent to convey Covered Securities as collateral for a secured loan
Pledging does not include depositing Covered Securities in a brokerage account under terms permitting Covered Securities to be used and sold to satisfy unpaid fees and similar obligations under the account.
Rule 144: Rule 144 under the Securities Exchange Act of 1934.
Rule 144 Affiliate: A person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the issuer of the Covered Securities. The issuer’s board of directors and Chief Executive Officer are usually Rule 144 Affiliates, although other persons may be deemed Rule 144 Affiliates.
SCE: Southern California Edison Company.
SCE Directors: An SCE Director is any member of the board of directors of SCE.
SCE Executive Officers: An SCE Executive Officer is any person designated as an SCE executive officer by the SCE board of directors for purposes of Rule 3b-7 of the Securities Exchange Act of 1934 and Item 401(b) of Regulation S-K and notified in writing. Some SCE Executive Officers are also EIX Section 16 Officers.
Section 16: Section 16 of the Securities Exchange Act of 1934.
Short-Swing Profit: Any profit that is realized from the purchase and then sale, or sale and then purchase, of the common, preferred stocks or other equity securities, including derivative, convertible and exchangeable securities relating to such equity securities, of EIX or SCE, as applicable, within a six-month period.
Trade Day: A full day (from the opening to the close of market hours) on which EIX’s common stock trades on the New York Stock Exchange.
Trading Window: Unless notified otherwise, the time period beginning on the second Trade Day (or if the information is released before the market opens, beginning on the first Trade Day) after the release of the Companies’ financial results to the public for the prior quarter or year, and ending at the close of business on the 15th day of the final month of the then-current fiscal quarter (e.g., March 15, June 15, Sept. 15, or Dec. 15).
WINDOW PERIOD AND PRE-CLEARANCE STANDARD
| 1.0 STANDARD STATEMENT |
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This standard establishes measures to help prevent inadvertent violation of the window period trading and pre-clearance requirements for Transactions under the Edison International Companies’ Insider Trading Policy (the “Policy”).
| 2.0 APPLICABILITY |
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This standard applies to Designated Insiders, Section 16 Persons, other Company personnel, and third-parties as specified in this document. Compliance with the Policy is governed by the Clearance Officer and Ethics and Compliance.
This standard is intended to increase assurance that Designated Insiders do not inadvertently violate the Policy’s window period trading requirements and that Section 16 Persons do not inadvertently violate the Policy’s pre-clearance requirements.
Where more stringent specific policies and/or standards related to these controls exist, they may supersede all or part of the requirements stated in this document.
| 3.0 STANDARD DETAIL |
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3.1 Notice of Policy, Standard, and Window Periods
To help prevent inadvertent violation of the Policy, it is the usual practice of the Clearance Officer to provide notices to Designated Insiders as follows.
3.1.1 Designated Insiders who are not Outside Directors
The Clearance Officer provides quarterly notices of the open and close of Trading Windows and a semi-annual Policy reminder preferably on the first business day of January and July.
3.1.2 Designated Insiders who are Outside Directors
The Clearance Officer provides notices at his or her discretion of the open and close of Trading Windows and a semi-annual Policy reminder preferably on the first business day of January and July.
3.1.3 New Designated Insiders
The Clearance Officer provides notice of the Policy, including the Trading Window restrictions, and this Standard if applicable, to new Designated Insiders after the effective date of their election or designation.
3.2 Trade Blocks
To help prevent inadvertent violation of the Policy, “blocks” will be placed on Specified Designated Insiders’ and Section 16 Persons’ accounts.
3.2.1 Company-controlled Accounts
Edison International (EIX) and/or Southern California Edison Company (SCE) will place and remove “blocks” as follows.
a. Edison 401(k) Savings Plan
Company personnel reporting to the Clearance Officer will work with the internal company plan administrator(s), and as necessary the third party plan administrator(s), to place “blocks” on Specified Designated Insiders’ and on EIX Section 16 Persons’ accounts to prevent enrollment and prohibited elections under the Policy that involve the EIX Stock Fund. As soon as administratively feasible, “blocks” placed on the Specified Designated Insiders’ accounts will be removed after a Trading Window opens and reinstated upon the close of the then-open Trading Window. “Blocks” on EIX Section 16 Persons’ accounts will be removed for two trade
days after pre-clearance, unless a shorter or longer period is approved by the Clearance Officer.
b. Stock Option Exercises and EIX Stock Benefits Access Accounts
Company personnel reporting to the Clearance Officer will work with the internal company plan administrator(s), and as necessary the third-party plan administrator(s), to place “blocks” on Specified Designated Insiders’ stock option exercises and EIX stock benefits access accounts during closed windows and on EIX Section 16 Persons’ accounts at all times. As soon as administratively feasible, “ blocks” placed on exercises by Specified Designated Insiders’ and benefits access accounts will be removed after a Trading Window opens and reinstated upon the close of the then-open Trading Window. “Blocks” placed on exercises by EIX Section 16 Persons and benefits access accounts will be removed for two trade days after pre-clearance, unless a shorter or longer period is approved by the Clearance Officer.
c. Direct Registration. Company personnel reporting to the Clearance Officer will notify the third-party transfer agent(s) for EIX and SCE stocks to place “blocks” on Specified Designated Insiders’ direct registration accounts during closed windows and on Section 16 Persons’ accounts, including stock held in the Dividend Reinvestment and Direct Stock Purchase Plan, at all times. As soon as administratively feasible, “blocks” placed on Specified Designated Insiders’ accounts will be removed after a Trading Window opens and reinstated upon the close of the then-open Trading Window. “Blocks” placed on EIX Section 16 Persons’ accounts will be removed for two trade days after pre-clearance, unless a shorter or longer period is approved by the Clearance Officer.
3.2.2 Other Accounts
The Clearance Officer will not be responsible for informing persons, other than EIX, SCE or others acting for EIX or SCE, who process or manage Transactions, of any trade restrictions, including pre-clearance, imposed on Specified Designated Insiders and Section 16 Persons under the Policy.
3.2.3 Removal of Blocks during a Closed Trading Window
If the Clearance Officer pre-clears a Transaction when a Trading Window is closed, “blocks” will be removed on Specified Designated Insiders’ and EIX Section 16 Persons’ accounts only for such time period as determined by the Clearance Officer.
3.2.4 Failure to Implement Blocks
Specified Designated Insiders and Section 16 Persons remain directly and solely responsible for compliance with the Policy, regardless of whether EIX and/or SCE have implemented or failed to implement “blocks.”
3.3 Pre-Clearance
The Clearance Officer is the initial contact for pre-clearance of Transactions by Section 16 Persons, even during open Trading Windows, as further described in the Policy.
3.3.1 The Clearance Officer has sole authority to determine whether pre-clearance can be approved for Rule 10b-5 purposes. However, in making this determination and prior to pre-clearance, if the following persons request pre-clearance for a Transaction, the Clearance Officer will confirm pre-clearance with the following people:
a.For pre-clearance requests by the EIX Chief Executive Officer, confirm with the EIX General Counsel and the EIX Chief Financial Officer;
b.For pre-clearance requests by the EIX General Counsel, confirm with the EIX Chief Executive Officer; and
c.For pre-clearance requests by any other Section 16 Persons to whom he or she directly or indirectly reports, other than Section 16 Directors, confirm with the EIX General Counsel.
If the Clearance Officer requests a Transaction when a Trading Window is closed, the EIX General Counsel will pre-clear the Clearance Officer.
3.3.2 The Clearance Officer may authorize other designated individuals to pre-clear Transactions.
| 4.0 Definitions |
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Definitions are in the EIX Companies’ Insider Trading Policy, unless otherwise defined below.
Rule 10b-5: A federal securities rule that makes it illegal to trade the Companies’ securities while possessing Material, Non-Public Information relating to the Companies.
Section 16: Federal securities laws that require certain persons to report holdings and changes in beneficial ownership of equity securities of EIX or SCE, as applicable, and impose liability for “Short-swing Profits” for purchases and sales of such securities within a six-month period.
Section 16 Persons: EIX Section 16 Persons, SCE Section 16 Persons, and other Designated Insiders required to pre-clear Transactions under the Policy.
Specified Designated Insiders: All Designated Insiders who are not EIX Section 16 Persons and otherwise have not been notified by the Clearance Officer that they are subject to pre-clearance requirements under the Policy.
Transactions: The provision of instructions to acquire, dispose of, and/or to change beneficial ownership in, Covered Securities or only EIX and/or SCE equity securities as specified in the Policy.
Document
Exhibit 21.1
SIGNIFICANT SUBSIDIARIES
| Parent of Significant Subsidiary | Name of Significant Subsidiary | Jurisdiction of Formation of Subsidiary | Names under which Significant Subsidiary does business |
|---|---|---|---|
| Edison International | Southern California Edison Company | CA | Southern California Edison Company; SCE |
Document
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-275248, and 333-281010) and Form S-8 (No. 333-162989, 333-176108, 333-211070 and 333-255759) of Edison International of our report dated February 27, 2025 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP Los Angeles, California February 27, 2025
Document
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-281011) of Southern California Edison Company of our report dated February 27, 2025 relating to the financial statements, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP Los Angeles, California February 27, 2025
Document
Exhibit 24.1
2025 EDISON INTERNATIONAL
10-K, 10-Q, AND 8-K POWER OF ATTORNEY
The undersigned, EDISON INTERNATIONAL, a California corporation, and each of its undersigned officers and directors do each hereby constitute and appoint, ADAM S. UMANOFF, MARIA RIGATTI, KARA G. RYAN, BRENDAN BOND, TRICIA YOUNG, MICHAEL A. HENRY, RUSHIKA DE SILVA, and DIETRICK MILLER, or any of them, to act as attorney-in-fact, for and in their respective names, places, and steads, to execute, sign, and file or cause to be filed an Annual Report on Form 10-K for the fiscal year ended December 31, 2024, Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2025, any Current Reports on Form 8-K from time to time during 2025 from the date hereof through December 31, 2025, or in the event this Board of Directors does not hold a regular meeting in December 2025, through the last day of the month in which this Board holds the next succeeding regular meeting, and any and all supplements and amendments thereto, to be filed by Edison International with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, (the “Act”), for the purpose of complying with Sections 13 or 15(d) of the Act, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform all and every act and thing whatsoever requisite, necessary and appropriate to be done in and about the premises as fully and to all intents and purposes as the undersigned or any of them might or could do if personally present, hereby ratifying and approving the acts of each of said attorneys-in-fact.
| Executed as of this 7th day of January, 2025. | ||
|---|---|---|
| EDISON INTERNATIONAL | ||
| By: | /s/ Pedro J. Pizarro | |
| Pedro J. Pizarro | ||
| President and Chief Executive Officer |
Attest:
/s Michael A. Henry
Michael A. Henry
Assistant General Counsel and Assistant Corporate Secretary
2025 Edison International
10-K, 10-Q, and 8-K Power of Attorney
| Principal Executive Officer:<br><br><br><br><br><br>/s/ Pedro J. Pizarro | Controller and Principal Accounting Officer:<br><br><br><br><br><br>/s/ Kara G. Ryan |
|---|---|
| Pedro J. Pizarro<br><br>Chief Executive Officer, President and Director | Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller |
| Principal Financial Officer:<br><br><br><br><br><br>/s/ Maria Rigatti | |
| Maria Rigatti<br><br>Executive Vice President and Chief Financial Officer | |
| Additional Directors: | |
| /s/ Jeanne M. Beliveau-Dunn | /s/ Marcy L. Reed |
| Jeanne M. Beliveau-Dunn<br><br>Director | Marcy L. Reed<br><br>Director |
| /s/ Michael C. Camuñez | /s/ Carey A. Smith |
| Michael C. Camuñez<br><br>Director | Carey A. Smith<br><br>Director |
| /s/ Vanessa C.L. Chang | /s/ Linda G. Stuntz |
| Vanessa C.L. Chang<br><br>Director | Linda G. Stuntz<br><br>Director |
| /s/ James T. Morris | /s/ Peter J. Taylor |
| James T. Morris<br><br>Director | Peter J. Taylor<br><br>Director |
| /s/ Timothy T. O’Toole | /s/ Keith Trent |
| Timothy T. O’Toole<br><br>Director | Keith Trent<br><br>Director |
2025 SOUTHERN CALIFORNIA EDISON COMPANY
10-K, 10-Q, AND 8-K POWER OF ATTORNEY
The undersigned, SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation, and each of its undersigned officers and directors do each hereby constitute and appoint, JENNIFER R. HASBROUCK, AARON D. MOSS, KARA G. RYAN,
BRENDAN BOND, TRICIA YOUNG, MICHAEL A. HENRY, RUSHIKA DE SILVA, and DIETRICK MILLER, or any of them, to act as attorney-in-fact, for and in their respective names, places, and steads, to execute, sign, and file or cause to be filed an Annual Report on Form 10-K for the fiscal year ended December 31, 2024, Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2025, any Current Reports on Form 8-K from time to time during 2025 from the date hereof through December 31, 2025, or in the event this Board of Directors does not hold a regular meeting in December 2025, through the last day of the month in which this Board holds the next succeeding regular meeting, and any and all supplements and amendments thereto, to be filed by Southern California Edison Company with the Securities and Exchange Commission, under the Securities Exchange Act of 1934 as amended, (the “Act”), for the purpose of complying with Sections 13 or 15(d) of the Act, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform all and every act and thing whatsoever requisite, necessary and appropriate to be done in and about the premises as fully and to all intents and purposes as the undersigned or any of them might or could do if personally present, hereby ratifying and approving the acts of each of said attorneys-in-fact.
| Executed as of this 7th day of January, 2025. | ||
|---|---|---|
| SOUTHERN CALIFORNIA EDISON COMPANY | ||
| By: | /s/ Steven D. Powell | |
| Steven D. Powell | ||
| President and Chief Executive Officer |
Attest:
/s/ Michael A. Henry
Michael A. Henry
Assistant General Counsel and Assistant Corporate Secretary
2025 Southern California Edison Company
10-K, 10-Q, and 8-K Power of Attorney
| Principal Executive Officer:<br><br><br><br><br><br>/s/ Steven D. Powell | Controller and Principal Accounting Officer:<br><br><br><br><br><br>/s/ Kara G. Ryan |
|---|---|
| Steven D. Powell<br><br>Chief Executive Officer, President and Director | Kara G. Ryan<br><br>Vice President, Chief Accounting Officer and Controller |
| Principal Financial Officer:<br><br><br><br><br><br>/s/ Aaron D. Moss | |
| Aaron D. Moss<br><br>Senior Vice President and Chief Financial Officer | |
| Additional Directors: | |
| /s/ Jeanne M. Beliveau-Dunn | /s/ Marcy L. Reed |
| Jeanne M. Beliveau-Dunn<br><br>Director | Marcy L. Reed<br><br>Director |
| /s/ Michael C. Camuñez | /s/ Carey A. Smith |
| Michael C. Camuñez<br><br>Director | Carey A. Smith<br><br>Director |
| /s/ Vanessa C.L. Chang | /s/ Linda G. Stuntz |
| Vanessa C.L. Chang<br><br>Director | Linda G. Stuntz<br><br>Director |
| /s/ James T. Morris | /s/ Peter J. Taylor |
| James T. Morris<br><br>Director | Peter J. Taylor<br><br>Director |
| /s/ Timothy T. O’Toole | /s/ Keith Trent |
| Timothy T. O’Toole<br><br>Director | Keith Trent<br><br>Director |
| /s/ Pedro J. Pizarro | |
| --- | |
| Pedro J. Pizarro<br><br>Director |
Document
Exhibit 24.2
RESOLUTION OF THE BOARD OF DIRECTORS OF
EDISON INTERNATIONAL
Adopted: December 12, 2024
RE: FORMS 10-K, 10-Q, AND 8-K
WHEREAS, the Securities Exchange Act of 1934, as amended, and regulations thereunder, require that Annual, Quarterly, and Current Reports be filed by this corporation with the Securities and Exchange Commission (“Commission”), and it is desirable to effect such filings utilizing the signatures of attorneys-in-fact;
NOW, THEREFORE, BE IT RESOLVED, that each of the officers of this corporation is hereby authorized to execute and file or cause to be filed with the Commission the Annual Report on Form 10-K of this corporation for the fiscal year ended December 31, 2024, Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2025, Current Reports on Form 8-K from time to time during 2025 through December 31, 2025, or in the event this Board of Directors does not hold a regular meeting in December 2025, through the last day of the month in which this Board holds the next succeeding regular meeting, and any required or appropriate supplements or amendments to such reports, all in such forms as the officer acting or counsel for this corporation considers appropriate.
BE IT FURTHER RESOLVED, that each of the officers of this corporation is hereby authorized to execute and deliver on behalf of this corporation a power or powers of attorney appointing Adam S. Umanoff, Maria Rigatti, Kara G. Ryan, Brendan Bond,
Tricia Young, Michael A. Henry, Rushika de Silva, and Dietrick Miller, and each of them, to act severally as attorney-in-fact in their respective names, places and steads, and on behalf of this corporation, for the purpose of executing and filing with the Commission the above-described reports and any amendments and supplements thereto.
ADOPTED:
/s/ Michael A. Henry
Assistant Corporate Secretary
RESOLUTION OF THE BOARD OF DIRECTORS OF
SOUTHERN CALIFORNIA EDISON COMPANY
Adopted: December 12, 2024
RE: FORMS 10-K, 10-Q, AND 8-K
WHEREAS, the Securities Exchange Act of 1934, as amended, and regulations thereunder, require that Annual, Quarterly, and Current Reports be filed by this corporation with the Securities and Exchange Commission (“Commission”), and it is desirable to effect such filings utilizing the signatures of attorneys-in-fact;
NOW, THEREFORE, BE IT RESOLVED, that each of the officers of this corporation is hereby authorized to execute and file or cause to be filed with the Commission the Annual Report on Form 10-K of this corporation for the fiscal year ended December 31, 2024, Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2025, Current Reports on Form 8-K from time to time during 2025 through December 31, 2025, or in the event this Board of Directors does not hold a regular meeting in December 2025, through the last day of the month in which this Board holds the next succeeding regular meeting, and any required or appropriate supplements or amendments to such reports, all in such forms as the officer acting or counsel for this corporation considers appropriate.
BE IT FURTHER RESOLVED, that each of the officers of this corporation is hereby authorized to execute and deliver on behalf of this corporation a power or powers of attorney appointing Jennifer R. Hasbrouck, Aaron D. Moss, Kara G. Ryan,
Brendan Bond, Tricia Young, Michael A. Henry, Rushika de Silva, and Dietrick Miller, and each of them, to act severally as attorney-in-fact in their respective names, places and steads, and on behalf of this corporation, for the purpose of executing and filing with the Commission the above-described reports and any amendments and supplements thereto.
ADOPTED:
/s/ Michael A. Henry
Assistant Corporate Secretary
2
Document
Exhibit 31.1
CERTIFICATION
I, PEDRO J. PIZARRO, certify that:
1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of Edison International;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 27, 2025
| /s/ PEDRO J. PIZARRO |
|---|
| PEDRO J. PIZARRO<br><br>Chief Executive Officer |
CERTIFICATION
I, MARIA RIGATTI, certify that:
1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of Edison International;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 27, 2025
| /s/ MARIA RIGATTI |
|---|
| MARIA RIGATTI<br><br>Chief Financial Officer |
Document
Exhibit 31.2
CERTIFICATION
I, STEVEN D. POWELL, certify that:
1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of Southern California Edison Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 27, 2025
| /s/ STEVEN D. POWELL |
|---|
| STEVEN D. POWELL<br><br>Chief Executive Officer |
CERTIFICATION
I, AARON D. MOSS, certify that:
1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of Southern California Edison Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 27, 2025
| /s/ AARON D. MOSS |
|---|
| AARON D. MOSS<br><br>Chief Financial Officer |
Document
Exhibit 32.1
STATEMENT PURSUANT TO 18 U.S.C. SECTION 1350, AS
ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), of Edison International (the “Company”), and pursuant to 18 U.S.C. Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies, to the best of his or her knowledge, that:
1.The Annual Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
2.The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 27, 2025
| /s/ PEDRO J. PIZARRO |
|---|
| PEDRO J. PIZARRO<br><br>Chief Executive Officer<br><br>Edison International |
| /s/ MARIA RIGATTI |
| MARIA RIGATTI<br><br>Chief Financial Officer<br><br>Edison International |
This statement accompanies the Annual Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Document
Exhibit 32.2
STATEMENT PURSUANT TO 18 U.S.C. SECTION 1350, AS
ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), of Southern California Edison Company (the “Company”), and pursuant to 18 U.S.C. Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies, to the best of his knowledge, that:
1.The Annual Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
2.The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 27, 2025
| /s/ STEVEN D. POWELL |
|---|
| STEVEN D. POWELL<br><br>Chief Executive Officer<br><br>Southern California Edison Company |
| /s/ AARON D. MOSS |
| AARON D. MOSS<br><br>Chief Financial Officer<br><br>Southern California Edison Company |
This statement accompanies the Annual Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.