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<SEC-DOCUMENT>/in/edgar/work/20000811/0000092103-00-000016/0000092103-00-000016.txt : 20000921
<SEC-HEADER>0000092103-00-000016.hdr.sgml : 20000921
ACCESSION NUMBER:		0000092103-00-000016
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20000811

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOUTHERN CALIFORNIA EDISON CO
		CENTRAL INDEX KEY:			0000092103
		STANDARD INDUSTRIAL CLASSIFICATION:	 [4911
]		IRS NUMBER:				951240335
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	002-26323
			FILM NUMBER:		694490
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		2244 WALNUT GROVE AVE
				STREET 2:		P O BOX 800
				CITY:			ROSEMEAD
				STATE:			CA
				ZIP:			91770
				BUSINESS PHONE:		6263021212
</BUSINESS-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>SCE 2ND QUARTER 10Q
<TEXT>


===============================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

     /X/  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
Exchange Act of 1934

     For the quarterly period ended June 30, 2000 OR

     / /  Transition  report  pursuant to Section 13 or 15(d) of the  Securities
Exchange Act of 1934

     For the transition  period from --------------- to -----------------

                          Commission File Number 1-2313

                       SOUTHERN CALIFORNIA EDISON COMPANY

             (Exact name of registrant as specified in its charter)

               CALIFORNIA                             95-1240335
     (State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)               Identification No.)

        2244 Walnut Grove Avenue
             (P.O. Box 800)
          Rosemead, California
          (Address of principal                          91770
           executive offices)                         (Zip Code)

                                  (626) 302-1212
              (Registrant's telephone number, including area code)

       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 (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.

Yes   X          No ___

       Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

            Class                        Outstanding at August 9, 2000
- ----------------------------------------------------------------------------
    Common Stock, no par value                    434,888,104

===============================================================================

<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

INDEX

                                                                         Page

                                                                          No.

Part I.  Financial Information:

     Item 1. Consolidated Financial Statements:

     Report of Independent Public Accountants                              1

     Consolidated Statements of Income - Three, Six and
     Twelve Months Ended June 30, 2000, and 1999                           2

     Consolidated  Statements of  Comprehensive  Income - Three,
     Six and Twelve Months Ended June 30, 2000, and 1999                   2

     Consolidated  Balance  Sheets - June 30, 2000,
     December 31, 1999, and June 30, 1999                                  3

     Consolidated  Statements of Common  Shareholder's Equity - Three,
     Six and Twelve Months Ended June 30, 2000, and 1999                   5

     Consolidated  Statements of Cash Flows - Three, Six and
     Twelve Months Ended June 30, 2000, and 1999                           7

     Notes to Consolidated Financial Statements                            8

     Item 2.  Management's  Discussion and Analysis of Results
              of Operations and Financial Condition                       28


Part II. Other Information:

     Item 1. Legal Proceedings                                            38

     Item 6. Exhibits and Reports on Form 8-K                             40


<PAGE>

PART I  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

Report of Independent Public Accountants

To Southern California Edison Company:

We have audited the accompanying consolidated balance sheets of Southern
California Edison Company (SCE) and its subsidiaries as of June 30, 2000,
December 31, 1999, and June 30, 1999, and the related consolidated statements of
income, comprehensive income, common shareholder's equity and cash flows for
each of the three-, six- and twelve-month periods ended June 30, 2000, and 1999.
These financial statements are the responsibility of SCE's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SCE and its subsidiaries as of
June 30, 2000, December 31, 1999, and June 30, 1999, and the results of their
operations and their cash flows for each of the three-, six- and twelve-month
periods ended June 30, 2000, and 1999, in conformity with accounting principles
generally accepted in the United States.

                                                     ARTHUR ANDERSEN LLP



Los Angeles, California
August 10, 2000


                                       1
<PAGE>

SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
In thousands
                                                       3 Months Ended           6 Months Ended         12 Months Ended
                                                          June 30,                 June 30,                June 30,
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>        <C>         <C>          <C>         <C>
                                                     2000          1999       2000        1999         2000        1999
 --------------------------------------------------------------------------------------------------------------------------
Operating revenue                                $1,853,029   $1,725,716  $3,682,723   $3,410,598  $7,819,956  $7,693,175
- ---------------------------------------------------------------------------------------------------------------------------
Fuel                                                 22,032       43,098      81,237       95,118     201,092     215,314
Purchased power - contracts                         435,429      422,754     863,603    1,032,660   2,250,091   2,556,698
Purchased power - PX / ISO - net                    251,641       99,246     323,686      224,546     869,714     846,527
Provisions for regulatory adjustment clauses - net  (97,291)     (80,632)      5,662     (360,268)   (396,721)   (990,575)
Other operating expenses                            374,410      448,785     698,313      855,417   1,412,190   1,662,693
Maintenance                                          82,530      106,744     167,004      195,628     335,299     406,304
Depreciation, decommissioning and amortization      370,811      377,365     747,142      763,984   1,530,896   1,551,434
Income taxes                                        134,961       81,983     257,949      164,777     544,422     388,163
Property and other taxes                             29,033       29,255      68,411       67,603     122,436     125,364
Net (gain) loss on sale of utility plant               (308)        (724)     (6,531)      (2,925)     (6,643)     73,502
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses                          1,603,248    1,527,874   3,206,476    3,036,540   6,862,776   6,835,424
- ---------------------------------------------------------------------------------------------------------------------------
Operating income                                    249,781      197,842     476,247      374,058     957,180     857,751
- ---------------------------------------------------------------------------------------------------------------------------
Allowance for equity funds used during construction   3,067        3,056       6,684        5,889      13,800      12,174
Interest and dividend income                         24,096       16,823      43,947       30,971      82,366      64,179
Other nonoperating income - net                       9,782       10,489       2,986       19,504      27,469      17,109
- ---------------------------------------------------------------------------------------------------------------------------
Total other income - net                             36,945       30,368      53,617       56,364     123,635      93,462
- ---------------------------------------------------------------------------------------------------------------------------
Income before interest expense                      286,726      228,210     529,864      430,422   1,080,815     951,213
- ---------------------------------------------------------------------------------------------------------------------------
Interest and amortization on long-term debt          94,267       99,819     189,513      198,460     383,947     404,451
Other interest expense                               34,380       19,469      66,597       43,603     114,550      74,062
Allowance for borrowed funds used
   during construction                               (2,670)      (2,652)     (5,819)      (5,113)    (11,993)     (9,288)
Capitalized interest                                   (184)        (272)       (319)      (1,068)       (462)     (2,080)
- ---------------------------------------------------------------------------------------------------------------------------
Total interest and amortization expense - net       125,793      116,364     249,972      235,882     486,042     467,145
- ---------------------------------------------------------------------------------------------------------------------------
Net income                                          160,933      111,846     279,892      194,540     594,773     484,068
Dividends on preferred stock                          4,571        5,609      10,219       11,808      24,300      23,032
- ---------------------------------------------------------------------------------------------------------------------------
Net income available for common stock             $ 156,362    $ 106,237   $ 269,673    $ 182,732   $ 570,473   $ 461,036
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
In thousands
                                                  3 Months Ended            6 Months Ended           12 Months Ended
                                                     June 30,                  June 30,                 June 30,
 -------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>             <C>          <C>        <C>          <C>
                                                2000        1999            2000         1999       2000         1999
 -------------------------------------------------------------------------------------------------------------------------
Net income                                  $ 160,933    $ 111,846      $ 279,892    $ 194,540  $ 594,773    $ 484,068
Unrealized gain (loss) on securities - net      1,974       (1,002)         4,788       (7,217)    40,014      (10,384)
Reclassification adjustment for gains
   included in net income                     (24,487)     (14,874)       (24,487)     (32,245)   (38,162)     (50,081)
- --------------------------------------------------------------------------------------------------------------------------
Comprehensive income                        $ 138,420    $  95,970      $ 260,193    $ 155,078  $ 596,625    $ 423,603
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       2
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
In thousands
                                                                 June 30,          December 31,         June 30,
                                                                   2000                1999               1999
- ------------------------------------------------------------------------------------------------------------------
ASSETS

   Utility plant, at original cost:
<S>                                                           <C>                <C>                <C>
     Transmission and distribution                            $ 12,696,730       $ 12,439,059       $11,975,779
     Generation                                                  1,743,415          1,717,676         1,705,009
  Accumulated provision for depreciation and decommissioning    (7,701,822)        (7,520,036)       (7,175,966)
  Construction work in progress                                    684,221            562,651           654,516
  Nuclear fuel, at amortized cost                                  110,378            132,197           163,281
- ------------------------------------------------------------------------------------------------------------------

Total utility plant                                              7,532,922          7,331,547         7,322,619
- ------------------------------------------------------------------------------------------------------------------

Nonutility property - less accumulated
   provision for depreciation of $8,333, $6,797
   and $8,307 at respective dates                                  105,246            103,644            73,225
Nuclear decommissioning trusts                                   2,546,090          2,508,904         2,357,155
Other investments                                                  187,750            160,241           124,375
- ------------------------------------------------------------------------------------------------------------------

Total investments and other assets                               2,839,086          2,772,789         2,554,755
- ------------------------------------------------------------------------------------------------------------------

Cash and equivalents                                               105,917             26,046            72,439
Receivables, including unbilled revenue, less
   allowances of $21,793, $24,665 and $23,266
   for uncollectible accounts at respective dates                1,130,734          1,013,661         1,062,376
Fuel inventory                                                      35,604             49,989            52,963
Materials and supplies, at average cost                            130,357            122,866           116,191
Accumulated deferred income taxes - net                            524,910            188,143            92,795
Regulatory balancing accounts - net                                     --                 --           278,095
Prepayments and other current assets                                50,203            111,151            17,470
- ------------------------------------------------------------------------------------------------------------------

Total current assets                                             1,977,725          1,511,856         1,692,329
- ------------------------------------------------------------------------------------------------------------------

Unamortized nuclear investment - net                               978,262          1,365,848         1,763,390
Income tax-related deferred charges                              1,234,694          1,272,947         1,440,617
Regulatory balancing accounts - net                              2,258,452          1,714,973           825,670
Unamortized debt issuance and reacquisition expense                323,107            335,044           343,126
Other deferred charges                                           1,100,286          1,352,302         1,032,117
- ------------------------------------------------------------------------------------------------------------------

Total deferred charges                                           5,894,801          6,041,114         5,404,920
- ------------------------------------------------------------------------------------------------------------------

Total assets                                                  $ 18,244,534       $ 17,657,306      $ 16,974,623
- ------------------------------------------------------------------------------------------------------------------
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
In thousands, except share amounts
                                                                 June 30,          December 31,         June 30,
                                                                   2000                1999               1999
- ----------------------------------------------------------------------------------------------------------------

CAPITALIZATION AND LIABILITIES

Common shareholder's equity:
   Common stock (434,888,104 shares
<S>                                                           <C>                 <C>              <C>
      outstanding at each date)                               $ 2,168,054         $ 2,168,054      $ 2,168,054
   Additional paid-in capital                                     334,031             335,038          334,031
   Accumulated other comprehensive income                           1,852              21,551               --
   Retained earnings                                              690,347             608,453          694,161
- ----------------------------------------------------------------------------------------------------------------

                                                                3,194,284           3,133,096        3,196,246
- ----------------------------------------------------------------------------------------------------------------

Preferred stock:
   Not subject to mandatory redemption                            128,755             128,755          128,755
   Subject to mandatory redemption                                255,700             255,700          255,700
Long-term debt                                                  4,850,460           5,136,681        5,297,014
- ----------------------------------------------------------------------------------------------------------------

Total capitalization                                            8,429,199           8,654,232        8,877,715
- ----------------------------------------------------------------------------------------------------------------

Current portion of long-term debt                                 647,781             571,300          569,229
Short-term debt                                                   855,357             795,988          407,115
Accounts payable                                                  558,055             573,919          385,763
Accrued taxes                                                     607,675             500,709          698,505
Accrued interest                                                   88,821              82,554          115,456
Dividends payable                                                  91,889              94,407           94,347
Regulatory balancing accounts - net                               472,032              75,693               --
Deferred unbilled revenue                                         355,520             300,339          286,825
Other current liabilities                                       1,138,616           1,140,048          872,663
- ---------------------------------------------------------------------------------------------------------------

Total current liabilities                                       4,815,746           4,134,957        3,429,903
- ---------------------------------------------------------------------------------------------------------------

Accumulated deferred income taxes - net                         3,150,397           2,938,661        2,877,011
Accumulated deferred investment tax credits                       184,157             205,197          228,586
Customer advances and other deferred credits                      787,951             823,992          818,785
Power purchase contracts                                          505,604             563,459          342,911
Other long-term liabilities                                       371,133             336,473          399,387
- ---------------------------------------------------------------------------------------------------------------

Total deferred credits and other liabilities                    4,999,242           4,867,782        4,666,680
- ---------------------------------------------------------------------------------------------------------------

Minority interest                                                     347                 335              325
- ---------------------------------------------------------------------------------------------------------------

Commitments and contingencies
   (Notes 2, 10 and 11)

Total capitalization and liabilities                         $ 18,244,534        $ 17,657,306     $ 16,974,623
- ---------------------------------------------------------------------------------------------------------------
</TABLE>


    The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
In thousands

                                                                           Accumulated                    Total
                                                          Additional          Other                      Common
                                              Common        Paid-in       Comprehensive   Retained    Shareholder's
                                               Stock        Capital          Income       Earnings       Equity
- ---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>             <C>          <C>            <C>
Balance at March 31, 1999                  $ 2,168,054      $ 334,031       $ 15,876     $ 700,146      $ 3,218,107
- ---------------------------------------------------------------------------------------------------------------------
   Net income                                                                              111,846          111,846
   Unrealized gain on securities                                              (1,686)                        (1,686)
      Tax effect                                                                 684                            684
   Reclassified adjustment for gain
      included in net income                                                 (25,019)           --          (25,019)
      Tax effect                                                              10,145                         10,145
   Dividends declared on common stock                                                     (111,279)        (111,279)
   Dividends declared on preferred stock                                                    (5,609)          (5,609)
   Stock option appreciation                                                                  (943)            (943)
- ---------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999                   $ 2,168,054      $ 334,031       $     --     $ 694,161      $ 3,196,246
- ---------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000                  $ 2,168,054      $ 335,073       $ 24,365     $ 625,514      $ 3,153,006
- ---------------------------------------------------------------------------------------------------------------------
   Net income                                                                              160,933          160,933
   Unrealized gain on securities                                               3,322                          3,322
      Tax effect                                                              (1,348)                        (1,348)
   Reclassified adjustment for gain
      included in net income                                                 (41,190)                       (41,190)
      Tax effect                                                              16,703                         16,703
   Dividends declared on common stock                                                      (91,225)         (91,225)
   Dividends declared on preferred stock                                                    (4,571)          (4,571)
   Stock option appreciation                                                                  (305)            (305)
   Capital stock expense                                       (1,042)                                       (1,042)
   Required capital stock expense and other                                                      1                1
- ---------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2000                   $ 2,168,054      $ 334,031       $  1,852     $ 690,347      $ 3,194,284
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998               $ 2,168,054      $ 334,031       $ 39,462     $ 793,625      $ 3,335,172
- ---------------------------------------------------------------------------------------------------------------------
   Net income                                                                              194,540          194,540
   Unrealized gain on securities                                             (10,323)                       (10,323)
      Tax effect                                                               3,106                          3,106
   Reclassified adjustment for gains
      included in net income                                                 (54,238)                       (54,238)
      Tax effect                                                              21,993                         21,993
   Dividends declared on common stock                                                     (280,393)        (280,393)
   Dividends declared on preferred stock                                                   (11,808)         (11,808)
   Stock option appreciation                                                                (1,804)          (1,804)
   Reacquired capital stock expense and other                                                    1                1
- ---------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999                   $ 2,168,054      $ 334,031       $     --     $ 694,161      $ 3,196,246
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999               $ 2,168,054      $ 335,038       $ 21,551     $ 608,453      $ 3,133,096
- ---------------------------------------------------------------------------------------------------------------------
   Net income                                                                              279,892          279,892
   Unrealized gain on securities                                               8,056                          8,056
      Tax effect                                                              (3,268)                        (3,268)
   Reclassified adjustment for gain
      included in net income                                                 (41,190)                       (41,190)
      Tax effect                                                              16,703                         16,703
   Dividends declared on common stock                                                     (186,741)        (186,741)
   Dividends declared on preferred stock                                                   (10,219)         (10,219)
   Stock option appreciation                                                                (1,039)          (1,039)
   Capital stock expense                                       (1,007)                                       (1,007)
   Reacquired capital stock expense and other                                                    1                1
- ---------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2000                   $ 2,168,054      $ 334,031       $  1,852     $ 690,347      $ 3,194,284
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
In thousands
                                                                           Accumulated                    Total
                                                          Additional          Other                      Common
                                              Common        Paid-in       Comprehensive   Retained    Shareholder's
                                               Stock        Capital          Income       Earnings       Equity
- ----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>             <C>        <C>              <C>
Balance at June 30, 1998                   $ 2,168,054      $ 334,032       $ 60,465   $ 1,078,982      $ 3,641,533
- ----------------------------------------------------------------------------------------------------------------------

   Net income                                                                              484,068          484,068
   Unrealized gain on securities                                             (16,560)                       (16,560)
      Tax effect                                                               6,176                          6,176
   Reclassified adjustment for gain
      included in net income                                                 (84,240)                       (84,240)
      Tax effect                                                              34,159                         34,159
   Dividends declared on common stock                                                     (843,302)        (843,302)
   Dividends declared on preferred stock                                                   (23,032)         (23,032)
   Stock option appreciation                                                                (2,555)          (2,555)
   Reacquired capital stock expenses and other                   (1)                                             (1)
- ----------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1999                   $ 2,168,054      $ 334,031       $     --   $  694,161       $ 3,196,246
- ----------------------------------------------------------------------------------------------------------------------

   Net income                                                                              594,773          594,773
   Unrealized gain on securities                                              64,192                         64,192
      Tax effect                                                             (24,178)                       (24,178)
   Reclassified adjustment for gain
      included in net income                                                 (64,192)                       (64,192)
      Tax effect                                                              26,030                         26,030
   Dividends declared on common stock                                                     (572,233)        (572,233)
   Dividends declared on preferred stock                                                   (24,300)         (24,300)
   Stock option appreciation                                                                (2,054)          (2,054)
- ----------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2000                   $ 2,168,054      $ 334,031       $  1,852   $   690,347      $ 3,194,284
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>


Authorized common stock is 560 million shares with no par value.


   The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>

SOUTHERN CALIFORNIA EDISON COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
In thousands
                                                         3 Months Ended          6 Months Ended        12 Months Ended
                                                            June 30,                June 30,               June 30,
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>         <C>         <C>         <C>        <C>         <C>
                                                        2000        1999        2000        1999       2000        1999
 --------------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:

Net income                                          $ 160,933   $ 111,846    $ 279,892   $ 194,540   $ 594,773   $ 484,068
Adjustments for non-cash items:
   Depreciation, decommissioning and amortization     370,811     377,365      747,142     763,984   1,530,896   1,551,434
   Other amortization                                  24,995      22,506       50,491      43,124     102,427      94,915
   Deferred income taxes and investment
      tax credits                                     (68,863)    (15,549)    (107,818)     67,016       2,765     179,537
   Other long-term liabilities                         21,579      28,788       34,472      81,311     (15,726)     52,717
   Regulatory balancing accounts - long-term         (451,570)   (135,170)    (543,479)   (464,267) (1,432,782)   (967,697)
   Regulatory asset related to sale of generating plants   51          --           49         241         (13)   (112,000)
   Net loss (gain) on sale of oil and gas plants          (45)         14          (26)     (1,110)        147      74,606
   Other - net                                        (33,922)      4,117      (77,064)    (20,202)   (132,987)      2,912
Changes in working capital:
   Receivables                                       (139,881)    (14,272)    (117,073)     50,254     (68,358)    (31,584)
   Regulatory balancing accounts                      275,831       5,595      396,339       9,283     750,127     (85,834)
   Fuel inventory, materials and supplies              (1,070)      2,656        6,894      (1,596)      3,193      (1,511)
   Prepayments and other current assets                 5,423      37,395       60,948      74,522     (32,733)     (2,330)
   Accrued interest and taxes                          23,421      40,091      113,232      45,178    (117,466)   (175,959)
   Accounts payable and other current liabilities     230,858      (5,187)     155,886       1,435     506,940      99,580
- ----------------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities             418,551     460,195      999,885     843,713   1,691,203   1,162,854
- ----------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:

Long-term debt issued                                      --     355,540      247,698     355,540     382,998     355,540
Long-term debt repaid                                    (580)   (217,462)    (325,000)   (217,462)   (470,410)   (389,037)
Rate reduction notes repaid                           (52,227)    (49,229)    (113,179)   (119,760)   (239,719)   (288,886)
Preferred stock redeemed                                   --          --           --          --          --      (1,000)
Nuclear fuel financing - net                           (7,561)       (180)     (21,923)     (9,016)    (50,195)     26,099
Short-term debt financing - net                         6,203    (222,082)      59,369     (62,450)    448,242     285,560
Dividends paid                                       (100,269)   (116,890)    (200,484)   (289,015)   (597,201)   (865,804)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities                (154,434)   (250,303)    (353,519)   (342,163)   (526,285)   (877,528)
- ----------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:

Additions to property and plant                      (268,837)   (244,640)    (522,043)   (475,826) (1,031,840) (1,000,229)
Proceeds from sale of generating plants                    --          --           --          --          --      58,000
Funding of nuclear decommissioning trusts             (36,219)    (29,298)     (59,401)    (66,424)   (108,914)   (152,467)
Unrealized gain (loss) on securities - net            (22,512)    (15,876)     (19,699)    (39,462)      1,852     (60,465)
Other - net                                            38,360      30,051       34,648      71,101       7,462     111,332
- ----------------------------------------------------------------------------------------------------------------------------

Net cash used by investing activities                (289,208)   (259,763)    (566,495)   (510,611) (1,131,440) (1,043,829)
- ----------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and equivalents       (25,091)    (49,871)      79,871      (9,061)     33,478    (758,503)
Cash and equivalents, beginning of period             131,008     122,310       26,046      81,500      72,439     830,942
- ----------------------------------------------------------------------------------------------------------------------------

Cash and equivalents, end of period                  $105,917   $  72,439     $105,917   $  72,439    $105,917   $  72,439
- ----------------------------------------------------------------------------------------------------------------------------

Cash payments for interest and taxes:

Interest - net of amounts capitalized              $   71,106  $   49,695    $ 145,173   $ 117,313   $ 314,811   $ 255,390
Taxes                                                 202,958          --      202,958          12     635,570     407,919
</TABLE>

  The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Summary of Significant Accounting Policies

Nature of Operations

Southern California Edison Company (SCE) is a rate-regulated electric utility
which supplies electric energy for nearly 4.4 million customers in central,
coastal and southern California. SCE also produces electricity. All power
generated by SCE is sold through the California Power Exchange (PX) and
delivered by SCE to its customers. Utility rate-regulation is changing as
California transitions toward a more competitive utility environment.

Basis of Presentation

SCE's accounting policies conform with accounting principles generally accepted
in the United States, including the accounting principles for rate-regulated
enterprises which reflect the rate-making policies of the California Public
Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC).
As a result of industry restructuring, state legislation and related changes in
the rate-recovery of generation-related assets, SCE accounts for its investment
in generation facilities in accordance with accounting principles applicable to
enterprises in general. Application of such accounting principles to SCE's
generation assets began in 1997 and did not result in any adjustment of their
carrying value; however, the carrying value of SCE's nuclear investments
(excluding decommissioning) was reduced by $2.6 billion and a regulatory asset
was established for the same amount in 1998.

The consolidated financial statements include SCE and its subsidiaries.
Intercompany transactions have been eliminated. Certain prior-period amounts
were reclassified to conform to the June 30, 2000, financial statement
presentation.

SCE's outstanding common stock is owned entirely by its parent company, Edison
International.

Estimates

Financial statements prepared in compliance with accounting principles generally
accepted in the United States require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
disclosure of contingencies. Actual results could differ from those estimates.
Certain significant estimates related to regulatory matters, decommissioning and
contingencies are further discussed in Notes 2, 10 and 11 to the Consolidated
Financial Statements, respectively.

Cash Equivalents

Cash equivalents include tax-exempt investments and time deposits and other
investments with original maturities of three months or less.

Fuel Inventory

Fuel inventory is valued under the last-in, first-out method for fuel oil and
under the first-in, first-out method for coal.

Revenue

Operating revenue includes amounts for services rendered but unbilled at the end
of each period.


                                       8
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments

Net unrealized gains (losses) on equity securities are recorded as a separate
component of shareholder's equity under the caption "Accumulated other
comprehensive income." Unrealized gains and losses on decommissioning trust
funds are recorded in the accumulated provision for decommissioning.

All investments are classified as available-for-sale.

Regulation of Utility Business

SCE, which is subject to rate-regulation by the CPUC and the FERC, operates in a
highly regulated environment in which it has an obligation to deliver electric
service to customers in return for an exclusive franchise within its service
territory. This regulatory environment has changed over recent years and
continues to change as California moves toward a more competitive climate.

SCE's rates are unbundled into separate charges for energy, transmission,
distribution, the non-bypassable competition transition charge (CTC), public
benefit programs and nuclear decommissioning. The transmission component is
being collected through FERC-approved rates, subject to refund. Revenue related
to distribution operations is being determined through a performance-based
rate-making mechanism, and the distribution assets have the opportunity to earn
a CPUC-authorized 9.49% return. SCE's costs associated with its hydroelectric
plants are also being recovered through a performance-based mechanism. This
mechanism sets the hydroelectric revenue requirement and establishes a formula
for extending it through the duration of the electric industry restructuring
transition period (March 31, 2002), or until market valuation of the
hydroelectric facilities, whichever occurs first. (See Hydroelectric Market
Value Filing discussion in Note 2.) Revenue from hydroelectric facilities in
excess of the hydroelectric revenue requirement is credited against the costs to
transition to a competitive market. Nuclear decommissioning costs are being
recovered through a CPUC-authorized non-bypassable charge.

California law and regulation provide SCE the opportunity to recover its costs
to transition to a competitive market. Transition costs related to
power-purchase contracts are being recovered through the terms of the contracts
while most other transition costs will be recovered through 2001. A portion of
the stranded costs that residential and small commercial customers would have
paid between 1998 and 2001 has been financed by the issuance of rate reduction
notes, allowing SCE to reduce rates by at least 10% to these customers,
effective January 1, 1998. The notes allow for the rate reduction by lowering
the carrying cost on a portion of the transition costs and by deferring recovery
of a portion of these transition costs until after the transition period.
Additionally, California law contains provisions for the recovery (through 2006)
of reasonable employee-related transition costs, incurred and projected, for
retraining, severance, early retirement, outplacement and related expenses.

There are three sources of revenue available to SCE for transition cost
recovery: CTC revenue, revenue from the sale or valuation of generation assets
in excess of book values, and net market revenue from sale of SCE-controlled
generation into the California Independent System Operator (ISO) and PX markets.
CTC revenue is determined residually, (i.e., CTC revenue is the residual amount
remaining from monthly gross customer revenue under the rate freeze after
subtracting the revenue requirements for transmission, distribution, nuclear
decommissioning and public benefit programs, and ISO payments and power
purchases from the PX). During second quarter 2000, SCE experienced negative CTC
revenue for the first time; there was insufficient revenue from customers under
the frozen rates to cover all costs of providing service during the quarter.
This undercollection in the transition revenue account was due to unusually high
PX market prices. Under existing CPUC decisions, SCE may carry over transition
revenue account undercollections, and recover such undercollections from future
positive CTC revenue until the end of the rate freeze. To date, the CPUC has
denied SCE requests to allow recovery of such


                                       9
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

undercollections after the end of the rate freeze. SCE is reassessing the
significance of the current undercollections and may renew requests to the CPUC
to modify certain ratemaking practices.

Since April 1, 1998, when the new market structure began, SCE has been selling
all of its electric generation through the PX and scheduling delivery through
the ISO, as mandated by the CPUC's 1995 restructuring decision. Through the PX
and ISO, SCE satisfies the electric energy needs of customers who did not choose
an alternative energy provider. These transactions are reported as "Purchased
power - PX/ISO - net."

Transactions through the PX and ISO were:

<TABLE>
<CAPTION>
                                              3 Months Ended          6 Months Ended          12 Months Ended
                                                 June 30,                June 30,                June 30,
- ----------------------------------------------------------------------------------------------------------------

<S>                                           <C>         <C>         <C>         <C>         <C>         <C>
     In millions                              2000        1999        2000        1999        2000        1999
- ----------------------------------------------------------------------------------------------------------------

     Purchases                             $ 1,529       $ 459     $ 2,041       $ 867     $ 3,664     $ 2,533
     Generation sales                        1,277         360       1,717         642       2,794       1,686
- ----------------------------------------------------------------------------------------------------------------

     Purchased power - PX/ISO - net        $   252       $  99     $   324       $ 225     $   870     $   847
- ----------------------------------------------------------------------------------------------------------------
</TABLE>


The CPUC regulates SCE's capital structure, limiting the dividends it may pay
Edison International. At June 30, 2000, SCE had the capacity to pay $89 million
in additional dividends and continue to maintain its authorized capital
structure.

Regulatory Assets and Liabilities

In accordance with accounting principles for rate-regulated enterprises, SCE
records regulatory assets, which represent probable future revenue associated
with certain costs that will be recovered from customers through the rate-making
process, and regulatory liabilities, which represent probable future reductions
in revenue associated with amounts that are to be credited to customers through
the rate-making process. SCE's discontinuance of accounting principles for
rate-regulated enterprises to its generation assets did not result in a
write-off of its generation-related regulatory assets since the CPUC has
approved recovery of these assets through the CTC.


                                       10
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Regulatory assets and liabilities included in the consolidated balance sheets
are:

<TABLE>
<CAPTION>
                                                                   June 30,        December 31,       June 30,
       In millions                                                   2000              1999             1999
- ---------------------------------------------------------------------------------------------------------------
       Generation-related:
<S>                                                              <C>                 <C>             <C>
       Unamortized nuclear investment - net                      $    978            $ 1,366         $ 1,763
       Flow-through taxes                                             170                306             407
       Unamortized loss on sale of plant                               91                122             152
       Purchased-power settlements                                    474                531             311
       Transition-related balancing accounts                          424              1,044             591
       Transition revenue account                                     644                 --              --
       Other - net                                                     41                 47              52
- ---------------------------------------------------------------------------------------------------------------

       Subtotal                                                     2,822              3,416           3,276
- ---------------------------------------------------------------------------------------------------------------

       Rate reduction notes - transition cost deferral                887                707             515
- ---------------------------------------------------------------------------------------------------------------

       Other:
       Flow-through taxes                                           1,065                967           1,034
       Unamortized loss on reacquired debt                            283                295             303
       Environmental remediation                                       55                111             118
       Regulatory balancing accounts and other                        (85)               (36)             81
- ---------------------------------------------------------------------------------------------------------------

       Subtotal                                                     1,318              1,337           1,536
- ---------------------------------------------------------------------------------------------------------------

       Total                                                      $ 5,027            $ 5,460         $ 5,327
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

Generation-related regulatory assets and liabilities are being recovered through
the CTC. The regulatory asset related to the rate reduction notes will be
recovered over the terms of the rate reduction notes. The other regulatory
assets and liabilities are being recovered through other components of the
unbundled rates.

The unamortized nuclear investment regulatory asset was created during the
second quarter of 1998. SCE reduced its remaining nuclear plant investment by
$2.6 billion (as of June 30, 1998) and recorded a regulatory asset on its
balance sheet for the same amount in accordance with asset impairment accounting
standards. For this impairment assessment, the fair value of the investment was
calculated by discounting expected future net cash flows. This reclassification
had no effect on SCE's results of operations.

Despite the rate freeze, SCE expects to recover its revenue requirement during
the transition period. If during the transition period events were to occur that
made the recovery of any of SCE's costs no longer probable, SCE would be
required to write off the unrecoverable portion as a one-time charge against
earnings.

Regulatory Balancing Accounts

The difference between generation-related revenue and generation-related costs
is being accumulated in the transition cost balancing account. Additionally,
gains resulting from the sale of the 12 generating plants during 1998 were
credited to the transition cost balancing account; the losses are being
amortized over the remaining transition period and accumulated in the transition
cost balancing account. These transition costs are being recovered from utility
customers (with interest) through the CTC mechanism.

Income tax effects on all balancing account changes are deferred.


                                       11
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nuclear

SCE is recovering its investments in San Onofre Nuclear Generating Station Units
2 and 3 and Palo Verde Nuclear Generating Station on an accelerated basis, as
authorized by the CPUC. The accelerated recovery will continue through December
2001, earning a 7.35% fixed rate of return. San Onofre's operating costs,
including nuclear fuel and nuclear fuel financing costs, and incremental capital
expenditures, are recovered through an incentive pricing plan which allows SCE
to receive about 4(cent) per kilowatt-hour through 2003. Any differences between
these costs and the incentive price will flow through to the shareholders. Palo
Verde's accelerated plant recovery, as well as operating costs, including
nuclear fuel and nuclear fuel financing costs, and incremental capital
expenditures, are subject to balancing account treatment through 2001.

The San Onofre incentive pricing plan and accelerated plant recovery and the
Palo Verde balancing account are part of the transition cost balancing account.
The benefits of operation of the San Onofre units will be shared equally with
ratepayers beginning in 2004. Palo Verde's existing nuclear unit incentive
procedure will continue only for purposes of calculating a reward for
performance of any unit above an 80% capacity factor for a fuel cycle. SCE has
entered into an agreement to sell its investment in Palo Verde (see further
discussion in Note 2).

Utility Plant

Plant additions, including replacements and betterments, are capitalized. Such
costs include direct material and labor, construction overhead and an allowance
for funds used during construction (AFUDC). AFUDC represents the estimated cost
of debt and equity funds that finance utility-plant construction. AFUDC is
capitalized during plant construction and reported in current earnings. AFUDC is
recovered in rates through depreciation expense over the useful life of the
related asset. Depreciation of utility plant is computed on a straight-line,
remaining-life basis.

Replaced or retired property and removal costs less salvage are charged to the
accumulated provision for depreciation. Depreciation expense stated as a percent
of average original cost of depreciable utility plant was 3.3%, 3.5% and 3.7%
for the three, six and twelve months ended June 30, 2000, respectively, and 3.7%
for the three, six and twelve months ended June 30, 1999, respectively.

SCE's net investment in generation-related utility plant was approximately $1
billion at both June 30, 2000, and December 31, 1999, and $1.1 billion at
June 30, 1999.

Note 2.    Regulatory Matters

FERC Transmission Rate Case

SCE filed its first FERC transmission rate case in March 1997. The filing
proposed a transmission revenue requirement of $211 million. In March 1999, a
proposed FERC decision was issued recommending a return on equity of 9.68%
(compared to SCE's current CPUC rate for distribution of 11.6%) and a lower
revenue requirement. On July 26, 2000, the FERC issued its final decision
adopting SCE's requested return on equity (11.6%). The FERC decision rejected
SCE's proposed approach for the recovery of a portion of administrative and
general and plant costs related to transmission and, instead, suggested that SCE
seek recovery of such costs through distribution rates.

Generating Plant Divestiture

In October 1999, SCE filed an application with the CPUC to approve an auction
process to sell its 56% interest in Mohave Generating Station. On April 6, 2000,
the CPUC approved the auction process. On


                                       12
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 10, 2000, SCE agreed to sell its interest in Mohave to AES Corporation
for  approximately  $533 million.  The transaction is subject to approval by the
CPUC and various federal regulatory agencies.  On June 28, 2000, SCE submitted a
compliance filing with the CPUC, seeking approval of the auction results and the
sale to AES. The sale is expected to close within the next twelve months.

On April 27, 2000, SCE agreed to sell its 16% interest in Palo Verde and its 48%
interest in Four Corners Generating Station to Pinnacle West Energy for a total
price of $550 million, subject to certain adjustments. The sale of assets at
Palo Verde will be accompanied by an assignment of SCE's interest in the related
decommissioning fund. Palo Verde is located in Arizona and Four Corners is
located in New Mexico. The transaction is subject to the approval of the CPUC,
the Nuclear Regulatory Commission, the FERC and other state and federal
entities, and to the receipt of a favorable ruling from the Internal Revenue
Service. The Utility Reform Network has filed a protest with the CPUC
recommending that the CPUC reject the sale and require SCE to retain these
generating assets. There can be no assurance that other protests will not be
filed with the CPUC. The transaction is expected to close by mid-2001. Until the
end of November, competing offers may be solicited by SCE, subject to certain
conditions, and any superior offers obtained are subject to matching rights by
Pinnacle West Energy.

Hydroelectric Market Value Filing

In December 1999, SCE filed an application with the CPUC establishing a market
value for its hydroelectric generation-related assets at approximately $1.0
billion (almost twice the assets' book value) and proposing to retain and
operate the hydroelectric assets under a performance-based, revenue-sharing
mechanism. The application has broad-based support from labor, ratepayer and
environmental groups. If approved by the CPUC, SCE would be allowed to recover
an authorized, inflation-indexed operations and maintenance allowance, as well
as a reasonable return on capital investment. A revenue-sharing arrangement
would be activated if revenue from the sale of hydroelectricity exceeds or falls
short of the authorized revenue requirement. SCE would then refund 90% of the
excess revenue to ratepayers or recover 90% of any shortfalls from ratepayers. A
final CPUC decision is expected in 2001.

Note 3.    Financial Instruments

Derivative Financial Instruments

SCE's risk management policy allows the use of derivative financial instruments
to manage financial exposure on its investments and fluctuations in interest
rates, but prohibits the use of these instruments for speculative or trading
purposes.

SCE uses the hedge accounting method to record its derivative financial
instruments, except for gas call options. Hedge accounting requires an
assessment that the transaction reduces risk, that the derivative be designated
as a hedge at the inception of the derivative contract, and that the changes in
the market value of a hedge move in an inverse direction to the item being
hedged. Under hedge accounting, the derivative itself is not recorded on SCE's
balance sheet. Mark-to-market accounting would be used if the hedge accounting
criteria were not met. Interest rate differentials and amortization of premiums
for interest rate caps are recorded as adjustments to interest expense. If the
derivatives were terminated before the maturity of the corresponding debt
issuance, the realized gain or loss on the transaction would be amortized over
the remaining term of the debt.

SCE has gas call options that mitigate its exposure to increases in energy
prices. Increases in natural gas prices tend to increase the price of
electricity purchased from the PX. The options cover various periods through
2001. Additionally, SCE participates in the PX block forward market. The PX
block forward market allows SCE to purchase monthly blocks of energy and
ancillary services for six days a week (excluding Sundays and holidays) for 8 to
16 hours a day. Purchases from the PX forward markets can


                                       13
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be made up to 12 months in advance of the delivery date. The CPUC has
increased SCE's PX block forward market participation limits to a maximum of
5,200 MW in summer months. In April 2000, the CPUC approved SCE's request to
begin a demand responsiveness program that would allow customers to be paid to
curtail their load during times of very high PX energy prices. On August 3,
2000, the CPUC approved SCE's request to enter into bilateral contracts for
delivery of electricity.

SCE uses the mark-to-market accounting method for its gas call options. Gains
and losses from monthly changes in market prices are recorded as income or
expense. However, costs of the options and the market price changes are included
in the transition cost balancing account. As a result, the mark-to-market gains
or losses have no effect on earnings.

Interest rate swaps are used to reduce the potential impact of interest rate
fluctuations on floating-rate long-term debt. At June 30, 2000, December 31,
1999, and June 30, 1999, SCE had an interest rate swap agreement which fixed the
interest rate at 5.585% for $196 million of debt due 2008. The swap agreement
expires February 28, 2008. The interest rate swap agreement requires the parties
to pledge collateral according to bond rating and market interest rate changes.
At June 30, 2000, SCE had pledged $8 million as collateral due to a decline in
market interest rates. SCE is exposed to credit loss in the event of
nonperformance by the counterparty to the agreement, but does not expect the
counterparty to fail to meet its obligation.

Fair Value of Financial Instruments

Fair values of financial instruments were:

<TABLE>
<CAPTION>
                                                June 30,               December 31,              June 30,
       In millions                                2000                     1999                    1999
- ----------------------------------------------------------------------------------------------------------------
                                             Cost       Fair          Cost       Fair         Cost       Fair
       Instrument                            Basis      Value         Basis      Value        Basis      Value
- ----------------------------------------------------------------------------------------------------------------

       Financial assets:
<S>                                       <C>        <C>           <C>        <C>          <C>        <C>
       Decommissioning trusts             $ 1,710    $ 2,546       $ 1,650    $ 2,509      $ 1,601    $ 2,357
       Equity investments                      --         --            --         33           --         --
       Gas call options                        22         99            28         20           34         21

       Financial liabilities:
       DOE decommissioning and

          decontamination fees                 40         33            40         35           45         39
       Interest rate swap                      --         12            --         13           --         19
       Long-term debt                       4,850      4,712         5,137      5,044        5,297      5,337
       Preferred stock subject to
          mandatory redemption                256        256           256        259          256        264
- ----------------------------------------------------------------------------------------------------------------
</TABLE>


Financial assets are carried at their fair value based on quoted market prices
for decommissioning trusts and equity investments and on financial models for
gas call options. Financial liabilities are recorded at cost. Financial
liabilities' fair values are based on: termination costs for the interest rate
swap; brokers' quotes for long-term debt and preferred stock; and discounted
future cash flows for U.S. Department of Energy (DOE) decommissioning and
decontamination fees. Due to their short maturities, amounts reported for cash
equivalents and short-term debt approximate fair value.


                                       14
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Gross unrealized holding gains on debt and equity investments were:

                                 June 30,    December 31,  June 30,
 In millions                       2000          1999        1999
- -----------------------------------------------------------------------

 Decommissioning trusts:
 Municipal bonds                 $  230        $  239       $  190
 Stocks                             420           454          401
 U.S. government issues             132           119          132
 Short-term and other                54            47           34
- -----------------------------------------------------------------------

                                    836           859          757
 Equity investments                  --            33          (13)
- -----------------------------------------------------------------------

 Total                           $  836        $  892       $  744
- -----------------------------------------------------------------------


There were no unrealized holding losses for the periods presented.

In June 1998, a new accounting standard for derivative instruments and hedging
activities was issued. The new standard, which as amended SCE will be required
to implement on January 1, 2001, requires all derivatives to be recognized on
the balance sheet at fair value. Gains or losses from changes in fair value
would be recognized in earnings in the period of change unless the derivative is
designated as a hedging instrument. Gains or losses from hedges of a forecasted
transaction or foreign currency exposure would be reflected in other
comprehensive income. Gains or losses from hedges of a recognized asset or
liability or a firm commitment would be reflected in earnings for the
ineffective portion of the hedge. SCE anticipates that most of its derivatives
under the new standard would qualify for hedge accounting. SCE expects to
recover in rates any market price changes from its derivatives that could
potentially affect earnings. Accordingly, implementation of this new standard is
not expected to affect earnings.

Note 4.    Long-Term Debt

California law prohibits SCE from incurring or guaranteeing debt for its
nonutility affiliates.

Almost all SCE properties are subject to a trust indenture lien. SCE has pledged
first and refunding mortgage bonds as security for borrowed funds obtained from
pollution control bonds issued by government agencies. SCE uses these proceeds
to finance construction of pollution control facilities. Bondholders have
limited discretion in redeeming certain pollution control bonds, and SCE has
arranged with securities dealers to remarket or purchase them if necessary.

Debt premium, discount and issuance expenses are amortized over the life of each
issue. Under CPUC rate-making procedures, debt reacquisition expenses are
amortized over the remaining life of the reacquired debt or, if refinanced, the
life of the new debt.

Commercial paper intended to be refinanced for a period exceeding one year and
used to finance nuclear fuel scheduled to be used more than one year after the
balance sheet date is classified as long-term debt.

Long-term debt maturities and sinking-fund requirements for the five
twelve-month periods following June 30, 2000, are: 2001 - $648 million; 2002 -
$246 million; 2003 - $572 million; 2004 - $247 million; and 2005 - $372 million.

In December 1997, $2.5 billion of rate reduction notes were issued on behalf of
SCE by SCE Funding LLC, a special purpose entity. These notes were issued to
finance the 10% rate reduction mandated by state law. The proceeds of the rate
reduction notes were used by SCE Funding LLC to purchase from SCE an enforceable
right known as transition property. Transition property is a current property
right


                                       15
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

created by the restructuring legislation and a financing order of the CPUC
and consists generally of the right to be paid a specified amount from
non-bypassable rates charged to residential and small commercial customers. The
rate reduction notes are being repaid over 10 years through these non-bypassable
residential and small commercial customer rates which constitute the transition
property purchased by SCE Funding LLC. The notes are secured by the transition
property and are not secured by, or payable from, assets of SCE or Edison
International. SCE used the proceeds from the sale of the transition property to
retire debt and equity securities. Although, as required by generally accepted
accounting principles, SCE Funding LLC is consolidated with SCE and the rate
reduction notes are shown as long-term debt in the consolidated financial
statements, SCE Funding LLC is legally separate from SCE. The assets of SCE
Funding LLC are not available to creditors of SCE or Edison International and
the transition property is legally not an asset of SCE or Edison International.

Long-term debt consisted of:

<TABLE>
<CAPTION>
                                                        June 30,     December 31,      June 30,
    In millions                                           2000           1999            1999
- --------------------------------------------------------------------------------------------------

    First and refunding mortgage bonds:

<S>                                                    <C>            <C>             <C>
       2002 - 2026 (5.625% to 7.25%)                   $ 1,175        $ 1,400         $ 1,400
    Rate reduction notes:
      2001 - 2007 (6.17% to 6.42%)                       1,857          1,970           2,096
    Pollution control bonds:
       2008 - 2031 (5.125% to 7.2% and variable)         1,196          1,196           1,201
    Funds held by trustees                                  (2)            (2)             (2)
    Debentures and notes:
       2001 - 2029 (5.875% to 7.625%)                    1,150          1,000           1,000
    Subordinated debentures:
       2044 (8.375%)                                       100            100             100
    Commercial paper for nuclear fuel                       49             71              99
    Long-term debt due within one year                    (648)          (571)           (569)
    Unamortized debt discount - net                        (27)           (27)            (28)
- --------------------------------------------------------------------------------------------------

    Total                                              $ 4,850        $ 5,137         $ 5,297
- --------------------------------------------------------------------------------------------------
</TABLE>


On July 19, 2000, SCE issued $144 million of pollution control bonds at an
interest rate that is reset daily, due in June 2035. The proceeds are held in a
trust until October 2000, at which time the funds will be used for the early
retirement of $144 million of pollution control bonds.

Note 5.    Short-Term Debt

SCE has lines of credit totaling $1.25 billion (that can be used at negotiated
or bank index rates) with $1 million available for general purpose short-term
debt and $515 million available for the refinancing of certain variable-rate
pollution control debt.

Short-term debt includes commercial paper used to finance fuel inventories,
balancing account undercollections and general cash requirements. Commercial
paper intended to finance nuclear fuel scheduled to be used more than one year
after the balance sheet date is classified as long-term debt in connection with
refinancing terms under five-year term lines of credit with commercial banks.
Weighted-average interest rates were 6.6%, 5.3%, and 5.0% at June 30, 2000,
December 31, 1999, and June 30, 1999, respectively.


                                       16
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Short-term debt consisted of:
                                          June 30,   December 31,    June 30,
 In millions                                2000         1999          1999
- -----------------------------------------------------------------------------

 Commercial paper                         $  734        $  696       $  508
 Floating rate notes                         175           175           --
 Amount reclassified as long-term debt       (49)          (71)         (99)
 Unamortized discount                         (5)           (4)          (2)
- -----------------------------------------------------------------------------

 Total                                    $  855        $  796       $  407
- -----------------------------------------------------------------------------


Note 6.    Preferred Stock

Authorized shares of preferred and preference stock are: $25 cumulative
preferred - 24 million; $100 cumulative preferred - 12 million; and preference-
50 million. All cumulative preferred stocks are redeemable. Mandatorily
redeemable preferred stocks are subject to sinking-fund provisions. When
preferred shares are redeemed, the premiums paid are charged to common equity.

Preferred stock redemption requirements for the five twelve-month periods
following June 30, 2000, are: 2001 - zero; 2002 - $105 million; 2003 - $9
million; 2004 - $9 million; and 2005 - $9 million.

Cumulative preferred stock consisted of:

<TABLE>
<CAPTION>
                                                                         June 30,        December 31,       June 30,
Dollars in millions, except per share amounts                              2000              1999             1999
- --------------------------------------------------------------------------------------------------------------------
                                                 June 30, 2000
                                       ----------------------------------
                                           Shares         Redemption
                                       Outstanding            Price
                                       ---------------    ---------------
Not subject to mandatory redemption:
$25 par value:

<S>                                      <C>            <C>               <C>            <C>              <C>
4.08% Series                             1,000,000      $   25.50         $   25         $   25           $  25
4.24                                     1,200,000          25.80             30             30              30
4.32                                     1,653,429          28.75             41             41              41
4.78                                     1,296,769          25.80             33             33              33
- ------------------------------------------------------------------------------------------------------------------
Total                                                                     $  129         $  129           $ 129
- ------------------------------------------------------------------------------------------------------------------

Subject to mandatory redemption:
$100 par value:

6.05% Series                               750,000      $  100.00         $   75         $   75           $  75
6.45                                     1,000,000         100.00            100            100             100
7.23                                       807,000         100.00             81             81              81
- ------------------------------------------------------------------------------------------------------------------
Total                                                                     $  256         $  256           $ 256
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

In third quarter 1998, 10,000 shares of Series 7.23% preferred stock were
redeemed. There were no preferred stock issuances for the periods presented.


                                       17
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 7.    Income Taxes

SCE and its subsidiaries are included in Edison International's consolidated
federal income tax and combined state franchise tax returns. Under income tax
allocation agreements, each subsidiary calculates its own tax liability.

Income tax expense includes the current tax liability from operations and the
change in deferred income taxes during the year. Investment tax credits are
amortized over the lives of the related properties.

The components of the net accumulated deferred income tax liability were:

<TABLE>
<CAPTION>
                                                           June 30,       December 31,        June 30,
In millions                                                  2000             1999              1999
- ------------------------------------------------------------------------------------------------------
Deferred tax assets:
<S>                                                       <C>              <C>               <C>
Property-related                                          $   188          $   184           $   194
Unrealized gains or losses - decommissioning                  470              453               402
Investment tax credits                                         98              113               140
Regulatory balancing accounts                                  69               67               122
Decommissioning-related                                       131              127               128
Fixed costs                                                   294              247               157
Unbilled revenue                                              116              122               103
Other                                                          81               92               164
- -----------------------------------------------------------------------------------------------------
Total                                                     $ 1,447          $ 1,405           $ 1,410
- -----------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Property-related                                          $ 2,490          $ 2,629           $ 2,817
Capitalized software costs                                    241              225               221
Regulatory balancing accounts                                 518              448               337
Unrealized gains and losses - decommissioning                 367              351               300
Other                                                         456              502               519
- -----------------------------------------------------------------------------------------------------
Total                                                     $ 4,072          $ 4,155           $ 4,194
- -----------------------------------------------------------------------------------------------------
Accumulated deferred income taxes - net                   $ 2,625          $ 2,750           $ 2,784
- -----------------------------------------------------------------------------------------------------
Classification of accumulated deferred income taxes:

Included in deferred credits                              $ 3,150          $ 2,938           $ 2,877
Included in current assets                                    525              188                93
</TABLE>


                                       18
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The current and deferred components of income tax expense were:

<TABLE>
<CAPTION>
                                                3 Months Ended           6 Months Ended           12 Months Ended
In millions                                        June 30,                 June 30,                 June 30,
- -----------------------------------------------------------------------------------------------------------------
<S>                                            <C>          <C>        <C>          <C>         <C>         <C>
                                               2000         1999       2000         1999        2000        1999
- -----------------------------------------------------------------------------------------------------------------
Current:

Federal                                       $ 151        $  70      $ 283        $  64       $ 518       $ 159
State                                            39           21         69           18         130          41
- ----------------------------------------------------------------------------------------------------------------
                                                190           91        352           82         648         200
- ----------------------------------------------------------------------------------------------------------------
Deferred - federal and state:
Accrued charges                                 (40)         (34)       (49)          15        (139)        (14)
Contributions in aid of construction             (6)          (4)        (1)          --         (11)         (8)
Property related                                (45)         (50)       (92)         (96)       (190)       (181)
Investment and energy tax credits - net         (11)         (11)       (21)         (22)        (44)        (80)
Regulatory assets                                13            9         14           12           9          86
Regulatory balancing accounts                    44           92         34          137         269         430
State tax privilege year                        (13)          (7)         3           28         (17)         20
Unbilled revenue                                 (3)           1          5           14         (14)        (55)
Other                                             8           (1)        12            4          10          (1)
- -----------------------------------------------------------------------------------------------------------------
                                                (53)          (5)       (95)          92        (127)        197
- -----------------------------------------------------------------------------------------------------------------

Total income tax expense                      $ 137        $  86      $ 257        $ 174       $ 521       $ 397
- -----------------------------------------------------------------------------------------------------------------

Classification of income taxes:

Included in operating income                 $  135        $  82     $  258       $  165      $  544       $ 388
Included in other income                          2            4         (1)           9         (23)          9
</TABLE>


The composite federal and state statutory income tax rate was 40.551% for all
periods presented.

The federal statutory income tax rate is reconciled to the effective tax rate
below:

<TABLE>
<CAPTION>
                                              3 Months Ended           6 Months Ended            12 Months Ended
                                                 June 30,                 June 30,                  June 30,
- ------------------------------------------------------------------------------------------------------------------

<S>                                           <C>         <C>          <C>         <C>         <C>          <C>
                                              2000        1999         2000        1999        2000         1999
- ------------------------------------------------------------------------------------------------------------------

Federal statutory rate                         35.0%       35.0%        35.0%       35.0%       35.0%        35.0%
Capitalized software                           (0.9)       (1.7)        (0.9)       (1.3)       (2.1)        (0.8)
Property-related and other                      3.0         1.4          7.4         7.6         8.4          2.4
Investment and energy tax credits              (3.5)       (5.2)        (3.9)       (5.6)       (3.7)        (8.7)
Regulatory asset amortization                   3.7         4.0          2.3         3.0         0.7          9.5
State tax - net of federal deduction            8.6         9.9          7.8         8.2         8.2          7.5
- ------------------------------------------------------------------------------------------------------------------

Effective tax rate                             45.9%       43.4%        47.7%       46.9%       46.5%        44.9%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Note 8.    Employee Compensation and Benefit Plans

Employee Savings Plan

SCE has a 401(k) defined contribution savings plan designed as a source of
employees' retirement income. The plan received employer contributions of $6
million, $15 million and $27 million for the three-, six- and twelve-month
periods ended June 30, 2000, respectively, and $7 million, $12 million and $21
million for the three-, six- and twelve-month periods ended June 30, 1999,
respectively.


                                       19
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Pension Plan

SCE has a noncontributory, defined-benefit pension plan that covers employees
meeting minimum service requirements. SCE recognizes pension expense as
calculated by the actuarial method used for ratemaking. In April 1999, SCE
adopted a cash balance feature for its pension plan.

Information on plan assets and benefit obligations is shown below:

<TABLE>
<CAPTION>
                                                        6 Months Ended         Year Ended         6 Months Ended
                                                           June 30,           December 31,           June 30,
In millions                                                  2000                 1999                 1999
- ----------------------------------------------------------------------------------------------------------------

Change in benefit obligation
<S>                                                        <C>                  <C>                  <C>
Benefit obligation at beginning of period                  $ 2,075              $ 2,251              $ 2,251
Service cost                                                    32                   66                   34
Interest cost                                                   78                  146                   76
Plan amendment                                                  --                  (22)                 (25)
Actuarial loss (gain)                                           --                 (224)                  --
Benefits paid                                                  (89)                (142)                 (66)
- ---------------------------------------------------------------------------------------------------------------

Benefit obligation at end of period                        $ 2,096              $ 2,075              $ 2,270
- ---------------------------------------------------------------------------------------------------------------

Change in plan assets

Fair value of plan assets at beginning of period           $ 3,078              $ 2,552              $ 2,552
Actual return on plan assets                                   226                  620                  218
Employer contributions                                          29                   48                   34
Benefits paid                                                  (89)                (142)                 (66)
- ---------------------------------------------------------------------------------------------------------------

Fair value of plan assets at end of period                 $ 3,244              $ 3,078              $ 2,738
- ---------------------------------------------------------------------------------------------------------------

Funded status                                              $ 1,148              $ 1,003             $    468
Unrecognized net loss (gain)                                (1,104)              (1,018)                (490)
Unrecognized transition obligation                              26                   28                   31
Unrecognized prior service cost                                124                  132                  136
- ---------------------------------------------------------------------------------------------------------------

Recorded asset                                            $    194             $    145             $    145
- ---------------------------------------------------------------------------------------------------------------

Discount rate                                                 7.75%                7.75%                6.75%
Rate of compensation increase                                 5.0%                 5.0%                 5.0%
Expected return on plan assets                                7.5%                 7.5%                 7.5%
</TABLE>


The components of pension expense were:

<TABLE>
<CAPTION>
                                              3 Months Ended          6 Months Ended             12 Months Ended
In millions                                      June 30,                June 30,                   June 30,
- -------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>         <C>         <C>           <C>         <C>
                                              2000        1999        2000        1999          2000        1999
- -------------------------------------------------------------------------------------------------------------------
Service cost                                 $  16       $  16       $  32       $  34         $  64       $  65
Interest cost                                   39          38          78          76           148         147
Expected return on plan assets                 (57)        (48)       (114)        (96)         (206)       (176)
Net amortization and deferral                   (8)          2         (16)          5            (9)         11
- -------------------------------------------------------------------------------------------------------------------
Pension expense (benefit) under
   accounting standards                        (10)          8         (20)         19            (3)         47
Regulatory adjustment - deferred                10           5          20           7            27           8
- -------------------------------------------------------------------------------------------------------------------
Net pension expense recognized                $ --       $  13        $ --       $  26         $  24       $  55
- -------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       20
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Postretirement Benefits Other Than Pensions

Employees retiring at or after age 55 with at least 10 years of service are
eligible for postretirement health and dental care, life insurance and other
benefits.

Information on plan assets and benefit obligations is shown below:

<TABLE>
<CAPTION>
                                                6 Months Ended     Year Ended    6 Months Ended
                                                   June 30,       December 31,      June 30,
In millions                                          2000             1999            1999
- ------------------------------------------------------------------------------------------------

Change in benefit obligation
<S>                                              <C>              <C>             <C>
Benefit obligation at beginning of period        $  1,462         $  1,545        $  1,545
Service cost                                           18               46              22
Interest cost                                          58              109              52
Actuarial loss (gain)                                  --             (185)             --
Benefits paid                                         (30)             (53)            (30)
- ------------------------------------------------------------------------------------------------

Benefit obligation at end of period              $  1,508         $  1,462        $  1,589
- ------------------------------------------------------------------------------------------------

Change in plan assets
Fair value of plan assets at beginning of period $  1,283         $  1,029        $  1,029
Actual return on plan assets                           46              185              38
Employer contributions                                 42              122              50
Benefits paid                                         (30)             (53)            (30)
- ------------------------------------------------------------------------------------------------

Fair value of plan assets at end of period       $  1,341         $  1,283        $  1,087
- ------------------------------------------------------------------------------------------------

Funded status                                    $   (167)        $   (179)       $   (502)
Unrecognized net loss (gain)                         (205)            (207)             84
Unrecognized transition obligation                    335              349             362
- ------------------------------------------------------------------------------------------------

Recorded asset (liability)                       $    (37)        $    (37)       $    (56)
- ------------------------------------------------------------------------------------------------

Discount rate                                         8.0%             8.0%           6.75%
Expected return on plan assets                        7.5%             7.5%           7.5%
</TABLE>


Expense components were:

<TABLE>
<CAPTION>
                                         3 Months Ended          6 Months Ended             12 Months Ended
In millions                                 June 30,                June 30,                   June 30,
- --------------------------------------------------------------------------------------------------------------

<S>                                     <C>         <C>         <C>          <C>          <C>         <C>
                                        2000        1999        2000         1999         2000        1999
- --------------------------------------------------------------------------------------------------------------

Service cost                          $    9       $  11       $  18        $  22        $  42       $  45
Interest cost                             29          26          58           52          115          99
Expected return on plan assets           (23)        (19)        (46)         (38)         (87)        (68)
Net amortization and deferral              6           7          12           14           25          26
- --------------------------------------------------------------------------------------------------------------

Total expense                          $  21       $  25       $  42        $  50        $  95       $ 102
- --------------------------------------------------------------------------------------------------------------
</TABLE>


The assumed rate of future increases in the per-capita cost of health care
benefits is 11.75% for 2000, gradually decreasing to 5.0% for 2008 and beyond.
Increasing the health care cost trend rate by one percentage point would
increase the accumulated obligation as of June 30, 2000, by $234 million and
annual aggregate service and interest costs by $29 million. Decreasing the
health care cost trend rate by one percentage point would decrease the
accumulated obligation as of June 30, 2000, by $189 million and annual aggregate
service and interest costs by $23 million.


                                       21
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Option Plans

In 1998, Edison International shareholders approved the Edison International
Equity Compensation Plan, replacing the Long-Term Incentive Compensation Program
(prior program), which had been adopted by shareholders in 1992. Under the prior
program, options on 1.6 million shares of Edison International common stock
remain outstanding to officers and senior managers of SCE. The 1998 plan
authorizes a limited annual award of Edison International common shares and
options on shares. The annual authorization is cumulative, allowing subsequent
issuance of previously unutilized awards. In May 2000, Edison International
adopted an additional plan, the 2000 Equity Plan, which did not require
shareholder approval.

Under the 1998 and 2000 plans, options on 8.6 million shares of Edison
International common stock are currently outstanding to officers and senior
managers of SCE.

Each option may be exercised to purchase one share of Edison International
common stock, and is exercisable at a price equivalent to the fair market value
of the underlying stock at the date of grant. Options expire 10 years after date
of grant, and vest over a period of up to five years. Edison International stock
options awarded prior to 2000 include a dividend equivalent feature. Dividend
equivalents on stock options issued after 1993 are subject to reduction unless
certain performance criteria are met. The 2000 awards include performance shares
which are earned as a combination of Edison International common stock and cash.
Performance shares awarded in 2000 could result in the issuance of up to 258,000
shares of Edison International common stock. A special grant of stock options
only was awarded in May 2000 to officers and senior managers of SCE in lieu of
the regular option grants for 2001 and 2002. Performance share grants may still
be awarded in 2001 and 2002. No special stock option grant shares may be
exercised before five years have passed unless the stock price appreciates to
$25 (based on the average of 20 consecutive trading day closing prices).

The performance shares values are accrued ratably over a three-year performance
period. Performance shares are valued based on Edison International's stock
performance relative to the stock performance of other such entities comprising
the Dow Jones Electric Utility Index.

SCE measures compensation expense related to stock-based compensation by the
intrinsic value method. Compensation expense recorded under the
stock-compensation programs was $1 million, $2 million and $5 million for the
three, six and twelve months ended June 30, 2000, respectively, and $2 million,
$3 million and $5 million for the three, six and twelve months ended June 30,
1999, respectively.

Stock-based compensation expense under the fair-value method of accounting would
have resulted in pro forma earnings of $156 million, $270 million and $569
million for the three, six and twelve months ended June 30, 2000, respectively,
and $106 million, $182 million and $460 million for the three, six and twelve
months ended June 30, 1999, respectively.

The fair value for each option granted, reflecting the basis for the above pro
forma disclosures, was determined on the date of grant using the Black-Scholes
option-pricing model. The following assumptions were used in determining fair
value through the model:

                                       12 Months Ended
                                           June 30,
- ------------------------------------------------------------------
                                   2000                  1999
- ------------------------------------------------------------------
  Expected life                 7-10 years             7 years
  Risk-free interest rate       4.7% - 6.0%          4.7% - 5.6%
  Expected volatility            17% - 38%            17% - 18%
- ------------------------------------------------------------------


                                       22
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The application of fair-value accounting to calculate the pro forma disclosures
above is not an indication of future income statement effects. The pro forma
disclosures do not reflect the effect of fair-value accounting on stock-based
compensation awards granted prior to 1995.

Note 9.    Jointly Owned Utility Projects

SCE owns interests in several generating stations and transmission systems for
which each participant provides its own financing. SCE's share of expenses for
each project is included in the consolidated statements of income.

The investment in each project, as included in the consolidated balance sheet as
of June 30, 2000, was:

<TABLE>
<CAPTION>
                                          Original      Accumulated
                                           Cost of    Depreciation and        Under        Ownership
In millions                               Facility      Amortization      Construction     Interest
- ------------------------------------------------------------------------------------------------------
Transmission systems:
<S>                                      <C>              <C>               <C>               <C>
  Eldorado                               $     40         $    10           $    1            60%
  Pacific Intertie                            231              77                6            50%

Generating stations:
  Four Corners Units 4 and 5 (coal)           459             345                7            48%
  Mohave (coal)                               326             235                1            56%
  Palo Verde (nuclear)(1)                   1,618           1,276               15            16%
  San Onofre (nuclear)(1)                   4,267           3,507               16            75%
- ------------------------------------------------------------------------------------------------------

Total                                    $  6,941         $   5,450         $   46            --
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) Reported as "Unamortized nuclear investment - net."


Note 10.   Commitments

Leases

SCE has operating leases, primarily for vehicles, with varying terms, provisions
and expiration dates.

Estimated remaining commitments for noncancelable leases at June 30, 2000, were:

         Year ended December 31,                 In millions
- ---------------------------------------------------------------
         2000                                     $   8
         2001                                        14
         2002                                        10
         2003                                         9
         2004                                         7
         Thereafter                                  14
- ---------------------------------------------------------------
         Total                                     $ 62
- ---------------------------------------------------------------


Nuclear Decommissioning

Decommissioning is estimated to cost $2.1 billion in current-year dollars, based
on site-specific studies performed in 1998 for San Onofre and Palo Verde.
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 in the near term. SCE estimates that it will spend
approximately $8.6 billion through 2060 to decommission its nuclear facilities.
This estimate is based on SCE's current dollar decommissioning costs, escalated
at rates ranging from 0.3% to 10.0% (depending on the cost


                                       23
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

element) annually. These costs are expected to be funded from independent
decommissioning trusts, which, effective 1999, receive contributions of
approximately $25 million per year. SCE estimates annual after-tax earnings on
the decommissioning funds of 3.9% to 4.9%.

SCE plans to decommission its nuclear generating facilities by a prompt removal
method authorized by the Nuclear Regulatory Commission. Decommissioning is
expected to begin after the plants' operating licenses expire. The operating
licenses expire in 2022 for San Onofre Units 2 and 3, and 2028 for Palo Verde.
Decommissioning costs, which are recovered through non-bypassable customer
rates, are recorded as a component of depreciation expense.

Decommissioning of San Onofre Unit 1 (shutdown in 1992 per CPUC agreement)
commenced in 1999 and will continue through 2008. All of SCE's San Onofre Unit 1
decommissioning costs will be paid from its nuclear decommissioning trust funds.

Decommissioning expense was $38 million, $61 million and $115 million for the
three, six and twelve months ended June 30, 2000, respectively, and $31 million,
$70 million and $157 million for the three, six and twelve months ended June 30,
1999, respectively. The accumulated provision for decommissioning, excluding San
Onofre Unit 1, was $1.4 billion at June 30, 2000, and $1.3 billion at both
December 31, 1999, and June 30, 1999. The estimated costs to decommission San
Onofre Unit 1 (approximately $350 million) are recorded as a liability.

Decommissioning funds collected in rates are placed in independent trusts,
which, together with accumulated earnings, will be utilized solely for
decommissioning.

Trust investments (cost basis) include:

<TABLE>
<CAPTION>
                                 Maturity          June 30,     December 31,      June 30,
    In millions                    Dates             2000           1999            1999
- --------------------------------------------------------------------------------------------
<S>                             <C>    <C>       <C>            <C>             <C>
    Municipal bond              2000 - 2033      $    668       $    684        $    554
    Stocks                          --                473            482             533
    U.S. government issues      2000 - 2030           401            351             417
    Short-term and other        2002 - 2040           168            133              97
- --------------------------------------------------------------------------------------------

    Total                                         $ 1,710        $ 1,650         $ 1,601
- --------------------------------------------------------------------------------------------
</TABLE>


Trust fund earnings (based on specific identification) increase the trust fund
balance and the accumulated provision for decommissioning. Net earnings were $22
million, $31 million and $65 million for the three, six and twelve months ended
June 30, 2000, respectively, and $10 million, $24 million and $59 million for
the three, six and twelve months ended June 30, 1999, respectively. Proceeds
from sales of securities (which are reinvested) were $807 million, $2.5 billion
and $4.1 billion for the three, six and twelve months ended June 30, 2000,
respectively, and $689 million, $1.1 billion and $1.7 billion for the three, six
and twelve months ended June 30, 1999, respectively. Approximately 90% of the
trust fund contributions were tax-deductible.

Other Commitments

SCE has fuel supply contracts which require payment only if the fuel is made
available for purchase. Additionally, SCE's gas and coal fuel contracts require
payment of certain fixed charges whether or not gas or coal is delivered.

SCE has power-purchase contracts with certain qualifying facilities
(cogenerators and small power producers) and other utilities. These contracts
provide for capacity payments if a facility meets certain


                                       24
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

performance obligations and energy payments based on actual power supplied
to SCE. There are no requirements to make debt-service payments. As a result of
the utility industry restructuring, SCE has entered into purchased-power
settlements to end its contract obligations with certain qualifying facilities.
The settlements are reported as long-term liabilities. Settlement payments are
being recovered through the CTC.

SCE has unconditional purchase obligations for part of a power plant's
generating output, as well as firm transmission service from another utility.
Minimum payments are based, in part, on the debt-service requirements of the
provider, whether or not the plant or transmission line is operable. SCE's
minimum commitment under both contracts is approximately $166 million through
2017. The purchased-power contract (approximately $30 million) is expected to
provide approximately 5.5% of current or estimated future operating capacity,
and is reported as a long-term liability. The transmission service contract
requires a minimum payment of approximately $6 million a year.

Certain commitments for the years 2000 through 2004 are estimated below:

<TABLE>
<CAPTION>
   In millions                                 2000       2001       2002       2003       2004
- -------------------------------------------------------------------------------------------------

<S>                                         <C>        <C>          <C>        <C>        <C>
   Projected construction expenditures      $ 1,149    $ 1,072      $ 923      $ 905      $ 921
   Fuel supply contracts                        192        123        130        141        122
   Purchased-power capacity payments            637        647        644        637        635
- -------------------------------------------------------------------------------------------------
</TABLE>


Note 11.   Contingencies

In addition to the matters disclosed in these notes, SCE is involved in other
legal, tax and regulatory proceedings before various courts and governmental
agencies regarding matters arising in the ordinary course of business. SCE
believes the outcome of these proceedings will not materially affect its results
of operations or liquidity.

Environmental Protection

SCE is subject to numerous environmental laws and regulations, which require it
to incur substantial costs to operate existing facilities, construct and operate
new facilities, and mitigate or remove the effect of past operations on the
environment.

SCE records its environmental 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, operations and maintenance, monitoring and site closure. Unless
there is a probable amount, SCE records the lower end of this reasonably likely
range of costs (classified as other long-term liabilities at undiscounted
amounts).

SCE's recorded estimated minimum liability to remediate its 45 identified sites
is $104 million. 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 could exceed its
recorded liability by up to $281 million. The upper limit of this range of costs
was estimated using assumptions least favorable to SCE among a range of
reasonably


                                       25
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

possible outcomes. In 1998, SCE sold all of its gas- and oil-fueled
generation plants but has retained some liability associated with the divested
properties.

The CPUC allows SCE to recover environmental-cleanup costs at 44 of its sites,
representing $34 million of its recorded liability, through an incentive
mechanism (SCE may request to include additional sites). Under this mechanism,
SCE will recover 90% of cleanup costs through customer rates; shareholders fund
the remaining 10%, with the opportunity to recover these costs from insurance
carriers and other third parties. SCE has successfully settled insurance claims
with all responsible carriers. Costs incurred at SCE's remaining sites are
expected to be recovered through customer rates. SCE has recorded a regulatory
asset of $71 million for its estimated minimum environmental-cleanup costs
expected to be recovered 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 now be made for these sites.

SCE expects to clean up its identified sites over a period of up to 30 years.
Remediation costs in each of the next several years are expected to range from
$5 million to $15 million. Recorded costs for the twelve-month period ended
June 30, 2000, were $13 million.

Based on currently available information, SCE believes it is unlikely that it
will incur amounts in excess of the upper limit of the estimated range and,
based upon the CPUC's regulatory treatment of environmental-cleanup costs, SCE
believes that costs ultimately recorded will not materially affect its results
of operations or financial position. 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 such
estimates.

Nuclear Insurance

Federal law limits public liability claims from a nuclear incident to $9.5
billion. SCE and other owners of San Onofre and Palo Verde have purchased the
maximum private primary insurance available ($200 million). The balance is
covered by the industry's retrospective rating plan that uses deferred premium
charges to every reactor licensee if a nuclear incident at any licensed reactor
in the U.S. results in claims and/or costs which exceed the primary insurance at
that plant site. Federal regulations require this secondary level of financial
protection. The Nuclear Regulatory Commission exempted San Onofre Unit 1 from
this secondary level, effective June 1994. The maximum deferred premium for each
nuclear incident is $88 million per reactor, but not more than $10 million per
reactor may be charged in any one year for each incident. Based on its ownership
interests, SCE could be required to pay a maximum of $175 million per nuclear
incident. However, it would have to pay no more than $20 million per incident in
any one year. Such amounts include a 5% surcharge if additional funds are needed
to satisfy public liability claims and are subject to adjustment for inflation.
If the public liability limit above is insufficient, federal regulations may
impose further revenue-raising measures to pay claims, including a possible
additional assessment on all licensed reactor operators.

Property damage insurance covers losses up to $500 million, including
decontamination costs, at San Onofre and Palo Verde. Decontamination liability
and property damage coverage exceeding the primary $500 million also has been
purchased in amounts greater than federal requirements. Additional insurance
covers part of replacement power expenses during an accident-related nuclear
unit outage. These policies are issued by a mutual insurance company owned by
utilities with nuclear facilities. If losses at any nuclear facility covered by
the arrangement were to exceed the accumulated funds for these


                                       26
<PAGE>


SOUTHERN CALIFORNIA EDISON COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

insurance programs, SCE could be assessed retrospective premium adjustments
of up to $19  million per year.  Insurance  premiums  are  charged to  operating
expense.

Spent Nuclear Fuel

Under federal law, the DOE is responsible for the selection and development of a
facility for disposal of spent nuclear fuel and high-level radioactive waste.
Such a facility was to be in operation by January 1998. However, the DOE did not
meet its obligation. It is not certain when the DOE will begin accepting spent
nuclear fuel from San Onofre or from other nuclear power plants.

SCE has primary responsibility for the interim storage of its spent nuclear fuel
at San Onofre. Current capability to store spent fuel is estimated to be
adequate through 2005. Meeting spent-fuel storage requirements beyond that
period would require additional on-site storage capability, the costs for which
have not been determined. Extended delays by the DOE could lead to consideration
of costly alternatives involving siting and environmental issues. SCE has paid
the DOE the required one-time fee applicable to nuclear generation at San Onofre
through April 6, 1983 (approximately $24 million, plus interest). SCE is also
paying the required quarterly fee equal to one mill per kilowatt-hour of
nuclear-generated electricity sold after April 6, 1983.

Palo Verde on-site spent fuel storage capacity will accommodate needs until 2003
for Unit 2, and until 2004 for Units 1 and 3. Arizona Public Service Company,
operating agent for Palo Verde, is constructing an interim fuel storage facility
that is expected to be completed in 2002.

SCE and other owners of nuclear power plants may be able to recover interim
storage costs arising from DOE delays in the acceptance of utility spent nuclear
fuel by pursuing relief under the terms of the contracts, as directed by the
courts, or through other court actions.


                                       27
<PAGE>


Item 2.   Management's Discussion and Analysis of Results of Operations and
          Financial Condition

Results of Operations

Earnings

Southern California Edison Company's (SCE) earnings for the three, six and
twelve months ended June 30, 2000, were $156 million, $270 million and $570
million, respectively, compared with $106 million, $183 million and $461 million
for the same periods in 1999. The increases were primarily due to the planned
refueling outages at San Onofre Nuclear Generating Station during the first half
of 1999 (no outages in 2000), combined with superior operating performance at
San Onofre and higher kilowatt-hour sales.

Operating Revenue

As a result of industry restructuring, customers have an option to buy power
from SCE or directly from the California Power Exchange (PX), thus becoming
direct access customers. Most direct access customers continue to be billed by
SCE, but are given a credit for the generation portion of their bills. Operating
revenue increased for the three and six months ended June 30, 2000, compared to
the year-earlier periods, almost completely due to warmer weather in the second
quarter of 2000 as compared to the same period in 1999. For the twelve months
ended June 30, 2000, operating revenue increased less than 2%. Over 92% of
operating revenue was from retail sales. Retail rates are regulated by the
California Public Utilities Commission (CPUC) and wholesale rates are regulated
by the Federal Energy Regulatory Commission (FERC).

Due to warmer weather during the summer months, operating revenue during the
third quarter of each year is significantly higher than other quarters.

Operating Expenses

Fuel expense decreased for the three, six and twelve months ended June 30, 2000,
compared with the same periods in 1999, mainly due to a second quarter 2000
refund for a fuel-related settlement with another utility, partially offset by
an increase in San Onofre's fuel expense. During the first half of 1999, both of
the San Onofre units had a planned refueling outage. There have been no
refueling outages in 2000.

Purchased-power expense - contracts decreased for the six and twelve months
ended June 30, 2000, compared to the year-earlier periods, primarily due to SCE
entering into settlements to end its contractual obligations with certain
nonutility generators (known as qualifying facilities, or QFs) and the terms in
some of the QF contracts reverting to lower prices. Prior to April 1998, SCE was
required under federal law and CPUC orders to enter into contracts to purchase
power from QFs at CPUC-mandated prices even though energy and capacity prices
under many of these contracts are generally higher than other sources. For the
twelve months ended June 30, 2000, SCE paid about $1.0 billion (including energy
and capacity payments) more for these power purchases than the cost of power
available from other sources. SCE is continuing to purchase power under existing
contracts from certain QFs and from other utilities. Power purchases from QFs
and other utilities are sold through the PX.

Since April 1, 1998, SCE has been required to sell all of its generated
power through the PX, schedule delivery of the power through the California
Independent System Operator (ISO) and acquire all of its power from the PX to
distribute to its retail customers. These transactions with the PX and ISO are
reported net. PX/ISO purchased-power expense increased for the three, six and
twelve months ended June 30, 2000, compared to the same periods in 1999. During
second quarter 2000, an increased volume of higher priced PX purchases was
partially offset by increases in PX sales revenue and ISO net revenue, as well
as an increase in the market value of gas call options. Increases in the
options' market value


                                       28
<PAGE>


decrease purchased-power expense. These gas call options mitigate SCE's exposure
to increases in energy prices. In addition, the year-to-date and twelve-months
ended increases in 2000 were partially offset by the realization of
hydroelectric-related ISO revenue (in first quarter 2000) that had been
previously deferred awaiting regulatory approval. For a further discussion of
the recent significant increases in PX prices, see Market Risk Exposures.

Provisions for regulatory adjustment clauses decreased for the three months
ended June 30, 2000, compared to the year-earlier period, primarily due to
undercollections related to the generation-related balancing accounts.
Provisions for regulatory adjustment clauses increased for both the six months
and twelve months ended June 30, 2000, compared to the same periods in 1999,
mainly due to overcollections related to the generation-related balancing
accounts and to the administration of public purpose funds. The
twelve-months-ended increase in the provision was partially offset by
undercollections related to the rate-making treatment of the rate reduction
notes. This rate-making treatment has allowed for the deferral of the recovery
of a portion of the transition-related costs, from a four-year period to a
10-year period.

Other operating expenses decreased for the three, six and twelve months ended
June 30, 2000, compared to the prior-year periods, primarily due to a decrease
in mandated transmission service (known as must-run reliability services)
expense, which was caused by SCE being contractually obligated for fewer
must-run units in 2000, compared to 1999. The six- and twelve-months ended
decreases also reflect lower operating expenses at San Onofre in 2000 due to
scheduled refueling outages in the first half of 1999. The twelve-months-ended
decrease also results from lower expenses related to SCE's direct access
activities.

Maintenance expense decreased for the three, six and twelve months ended
June 30, 2000, compared to the year-earlier periods, mainly due to the absence
of any refueling outages at San Onofre in 2000. During the first half of 1999,
both of the San Onofre units were subject to a planned refueling outage. The
twelve-months ended decrease also reflects lower maintenance expenses incurred
at distribution facilities.

Income tax expense increased for the three, six and twelve months ended June 30,
2000. The quarterly and year-to-date increases were primarily due to higher
pre-tax income. The twelve-months-ended increase was primarily due to higher
pre-tax income during the current period and a one-time cumulative benefit for
accelerated amortization of deferred investment tax credits in October 1998.

Net (gain) loss on sale of utility plant resulted from the sale of SCE's
generating plants in 1998. Gains were used to reduce stranded costs. Losses will
be recovered from customers over the transition period through the competition
transition charge (CTC) mechanism.

Other Income

Interest and dividend income increased for the three, six and twelve months
ended June 30, 2000, primarily due to increases in interest earned on higher
balancing account undercollections, partially offset by lower interest income
resulting from lower investment balances during the period.

Other nonoperating income decreased for the six months ended June 30, 2000,
compared to the same period in 1999, primarily due to gains on sales of equity
investments in the first quarter of 1999. Other nonoperating income increased
for the twelve months ended June 30, 2000, compared to the same period in 1999,
mainly due to the one-time adjustment in fourth quarter 1999, resulting from an
Internal Revenue Service ruling that allowed SCE to record a tax benefit,
partially offset by additional regulatory accruals in third quarter 1999 and the
1999 gains on sales of equity investments discussed above.

Interest Expense

Other interest expense increased for the three, six and twelve months ended
June 30,  2000,  compared  to the same  periods  in 1999,  mostly  due to higher
overall  short-term  debt balances  necessary to meet


                                       30
<PAGE>


general cash requirements during the periods and higher interest expense
related to balancing account overcollections.

Financial Condition

SCE's liquidity is primarily affected by debt maturities, dividend payments and
capital expenditures. Capital resources include cash from operations and
external financings.

Edison International's Board of Directors authorized the repurchase of up to
$2.8 billion of its outstanding shares of common stock. Edison International
repurchased more than 21 million shares (approximately $400 million) of its
common stock through the first six months of 2000. These were the first
repurchases since first quarter 1999. Edison International has now repurchased
approximately 122 million shares ($2.8 billion) between January 1, 1995, and
June 30, 2000, funded by dividends from its subsidiaries.

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $419 million, $1.0 billion and
$1.7 billion, respectively, for the three, six and twelve months ended June 30,
2000, compared with $460 million, $844 million and $1.2 billion for the same
periods in 1999. SCE's cash flow coverage of dividends for the three, six and
twelve months ended June 30, 2000, was 4.2 times, 5.0 times and 2.8 times,
respectively, compared to 3.9 times, 2.9 times and 1.3 times for the
year-earlier periods. The increases in 2000 reflect special dividends SCE paid
to Edison International ($75 million in first quarter 1999 and $330 million in
third quarter 1998).

Cash Flows from Financing Activities

At June 30, 2000, SCE had total credit lines of $1.25 billion, with $1 million
available for general purpose, short-term debt and $515 million available for
the refinancing of its variable-rate pollution-control bonds. These unsecured
lines of credit are at negotiated or bank index rates and expire in 2002.

Short-term debt is used to finance fuel inventories, balancing account
undercollections and general cash requirements. Long-term debt is used mainly to
finance capital expenditures. External financings are influenced by market
conditions and other factors, including limitations imposed by SCE's articles of
incorporation and first mortgage trust indenture. As of June 30, 2000, SCE could
issue approximately $11.8 billion of additional first and refunding mortgage
bonds and $2.9 billion of preferred stock at current interest and dividend
rates.

California law prohibits SCE from incurring or guaranteeing debt for its
nonutility affiliates. Additionally, the CPUC regulates SCE's capital structure,
limiting the dividends it may pay Edison International. At June 30, 2000, SCE
had the capacity to pay $89 million in additional dividends and continue to
maintain its authorized capital structure.

In December 1997, $2.5 billion of rate reduction notes were issued on behalf of
SCE by SCE Funding LLC, a special purpose entity. These notes were issued to
finance the 10% rate reduction mandated by state law. The proceeds of the rate
reduction notes were used by SCE Funding LLC to purchase from SCE an enforceable
right known as transition property. Transition property is a current property
right created by the restructuring legislation and a financing order of the CPUC
and consists generally of the right to be paid a specified amount from
non-bypassable rates charged to residential and small commercial customers. The
rate reduction notes are being repaid over 10 years through these non-
bypassable residential and small commercial customer rates which constitute the
transition property purchased by SCE Funding LLC. The remaining series of
outstanding rate reduction notes have scheduled maturities beginning in 2001 and
ending in 2007, with interest rates ranging from 6.17% to 6.42%. The notes are
secured by the transition property and are not secured by, or payable from,
assets of SCE or Edison International. SCE used the proceeds from the sale of
the transition property to retire debt and equity securities. Although, as
required by generally accepted accounting principles, SCE Funding LLC is
consolidated with SCE and the rate reduction notes are shown as long-term debt
in the


                                       30
<PAGE>


consolidated financial statements, SCE Funding LLC is legally separate
from SCE. The assets of SCE Funding LLC are not available to creditors of SCE or
Edison International and the transition property is legally not an asset of SCE
or Edison International.

On July 19, 2000, SCE issued $144 million of pollution-control bonds at an
interest rate that is reset daily, due in June 2035. The proceeds of the bonds
are held in trust until October 2000, at which time the funds will be used for
the early retirement of $144 million of pollution-control bonds.

Cash Flows from Investing Activities

Cash flows from investing activities are affected by additions to property and
plant and funding of nuclear decommissioning trusts. Decommissioning costs are
recovered in rates. SCE estimates that it will spend approximately $8.6 billion
through 2060 to decommission its nuclear facilities. This estimate is based on
SCE's current-dollar decommissioning costs ($2.1 billion), escalated at rates
ranging from 0.3% to 10.0% (depending on the cost element) annually. These costs
are expected to be funded from independent decommissioning trusts which receive
SCE contributions of approximately $25 million per year.

Projected Capital Requirements

SCE's projected construction expenditures for the next five years are: 2000 -
$1.1 billion; 2001 - $1.1 billion; 2002 - $923 million; 2003 - $905 million; and
2004 - $921 million.

Long-term debt maturities and sinking fund requirements for the five
twelve-month periods following June 30, 2000, are: 2001 - $648 million; 2002 -
$246 million; 2003 - $572 million; 2004 - $247 million; and 2005 - $372 million.

Preferred stock redemption requirements for the five twelve-month periods
following June 30, 2000, are: 2001- zero; 2002 - $105 million; 2003 - $9
million; 2004 - $9 million; and 2005 - $9 million.

Market Risk Exposures

SCE's primary market risk exposures arise from fluctuations in energy prices and
interest rates. SCE's risk management policy allows the use of derivative
financial instruments to manage its financial exposures, but prohibits the use
of these instruments for speculative or trading purposes.

As a result of the rate freeze established in the 1996 restructuring
legislation, SCE's transition costs are recovered as the residual component of
rates once the costs for distribution, transmission, public benefit programs,
nuclear decommissioning and the cost of supplying power to its customers through
the PX and ISO have already been recovered. Accordingly, more revenue generally
will be available to cover transition costs when market prices in the PX and ISO
are low than when PX and ISO prices are high. The effects of higher prices on
transition cost revenue are mitigated to some extent by increased revenue on
energy sold to the PX from SCE-controlled generation sources. The PX and ISO
market prices to date have generally been consistent, although some irregular
price spikes have occurred, and during second quarter 2000, there were sustained
periods during which market prices diverged from the level of prices that should
have come from properly functioning competitive markets. The ISO has responded
to price spikes in the market for reliability services (referred to as ancillary
services) by imposing a price cap on the market for such services until certain
actions have been completed to improve the functioning of those markets.
Similarly, the ISO currently maintains a cap on its market for imbalance energy
until adequate measures to improve the efficient operation of the market have
been implemented. The caps in these markets mitigate the risk of costly price
spikes that would reduce the revenue available to SCE to pay transition costs.
The price cap instituted by the ISO in the summer of 1998 was $250/MWh. In
October 1999, that cap was raised to $750/MWh. The ISO decided to reduce the cap
on imbalance energy and ancillary services to $500/MWh effective July 1, 2000,
and to $250/MWh effective August 7, 2000. The ISO further reduced the cap on
replacement reserves to $100/MWh, also effective July 1, 2000. These price cap
reductions were a response to sustained significantly higher prices in the
energy


                                       31
<PAGE>


and ancillary services markets, beginning in May 2000. Reacting to the
recent price increases, which have continued throughout the summer of 2000,
government and regulatory bodies including the FERC, the CPUC, the California
Electricity Oversight Board, the California Legislature and the California
Attorney General, have launched or announced investigations or other actions
relating to aspects of the electricity markets. SCE cannot predict what actions
any of these bodies may take or the potential effects of their actions.

In 1997, SCE bought gas call options to mitigate its exposure to increases in
energy costs. In July 1999, SCE began participating in forward purchases through
a PX block forward market. In the PX block forward market, SCE can purchase
monthly blocks of energy or ancillary services for six days a week (excluding
Sundays and holidays) for 8 to 16 hours a day. These purchases can be made up to
12 months in advance of the delivery date. The CPUC originally limited SCE's use
of the PX block forward market to a maximum of approximately 2,000 MW in any
month. The PX requested and was granted authority from the FERC to sell other
forward products including a peak product, six days a week, for eight hours a
day. In March 2000, the CPUC approved SCE's request for rate-making treatment
for its use of these additional products and for an expansion of the limits from
all forward PX products up to 5,200 MW in summer months. In April 2000, the CPUC
approved SCE's request to begin a demand responsiveness program that would allow
customers to be paid to curtail their load during times of very high PX energy
prices. On August 3, 2000, the CPUC approved SCE's request to enter into
bilateral contracts for delivery of electricity.

A 10% increase in market interest rates would result in a $3 million increase in
the fair value of SCE's interest rate hedge agreement. A 10% decrease in market
interest rates would result in a $5 million decline in the fair market value of
SCE's interest rate hedge agreement. A 10% increase in natural gas prices would
result in a $54 million increase in the fair market value of gas call options. A
10% decrease in natural gas prices would result in a $35 million decline in the
fair market value of gas call options. A 10% increase in electricity prices
would result in a $66 million increase in the fair market value of block forward
contracts. A 10% decrease in electricity prices would result in a $66 million
decrease in the fair market value of block forward contracts. A 10% change in
market rates is expected to have an immaterial effect on SCE's other financial
instruments.

Regulatory Environment

SCE currently operates in a highly regulated environment in which it has an
obligation to deliver electric service to customers in return for an exclusive
franchise within its service territory. This regulatory environment continues to
change as California moves toward a more competitive climate. SCE continues to
recover its stranded costs associated with generation-related assets through an
authorized CTC. California's electric industry restructuring statute included
provisions to finance a portion of the stranded costs that residential and small
commercial customers would have paid between 1998 and 2001, which allowed SCE to
reduce rates by at least 10% to these customers, effective January 1, 1998. The
statute mandated other rates to remain frozen at June 1996 levels (system
average of 10.1(cent) per kilowatt-hour), including those for large commercial
and industrial customers, and included provisions for continued funding for
energy conservation, low-income programs and renewable resources.

Revenue is determined by various mechanisms depending on the utility operation.

Generation

Revenue from generation-related operations is being determined through the
market and the CTC mechanism, which now includes the nuclear rate-making
agreements. The portion of revenue related to fossil generation operations that
is made uneconomic by electric industry restructuring is recovered through the
CTC mechanism. The portion that is economic is recovered through the market.
SCE's costs associated with its hydroelectric plants are being recovered through
a performance-based mechanism. The mechanism sets the hydroelectric revenue
requirement and establishes a formula for extending it through the duration of
the electric industry restructuring transition period, or until market valuation
of the

                                       32
<PAGE>

hydroelectric facilities, whichever occurs first. The mechanism provides
that power sales revenue from hydroelectric facilities in excess of the
hydroelectric revenue requirement be credited against the costs to transition to
a competitive market. In 2000, fossil and hydroelectric generation assets have
the opportunity to earn a 7.22% return. SCE has filed an application with the
CPUC regarding the market valuation of all of its non-nuclear generating
facilities. See additional discussions below regarding hydroelectric valuation,
Mohave Generating Station auction and pending sale, and pending Four Corners
Generating Station sale.

SCE is recovering its investment in its nuclear facilities on an accelerated
basis in exchange for a lower authorized rate of return. SCE's nuclear assets
are earning an annual rate of return of 7.35%. In addition, the San Onofre plan
authorizes a fixed rate of approximately 4(cent) per kilowatt-hour generated for
operating costs including incremental capital costs, nuclear fuel and nuclear
fuel financing costs. The San Onofre plan commenced in April 1996, and ends in
December 2001 for the accelerated recovery portion, and in December 2003 for the
incentive-pricing portion. Palo Verde's operating costs, including incremental
capital costs, and nuclear fuel and nuclear fuel financing costs, are subject to
balancing account treatment. The Palo Verde plan commenced in January 1997 and
ends in December 2001. Beginning January 1, 1998, both the San Onofre and Palo
Verde rate-making plans became part of the CTC mechanism. SCE has entered into
an agreement to sell its investment in Palo Verde (see further discussion
below).

In October 1999, SCE filed an application with the CPUC to approve an auction
process to sell its 56% interest in Mohave Generating Station. On April 6, 2000,
the CPUC approved the auction process. On May 10, 2000, SCE agreed to sell its
interest in Mohave to AES Corporation for approximately $533 million. The
transaction is subject to approval by the CPUC and various federal regulatory
agencies. On June 28, 2000, SCE submitted a compliance filing with the CPUC
seeking approval of the auction results and the sale to AES. The sale is
expected to close within the next 12 months.

In December 1999, SCE filed an application with the CPUC establishing a market
value for its hydroelectric generation-related assets at approximately $1.0
billion (almost twice the assets' book value) and proposing to retain and
operate the hydroelectric assets under a performance-based, revenue-sharing
mechanism. The application has broad-based support from labor, ratepayer and
environmental groups. If approved by the CPUC, SCE would be allowed to recover
an authorized, inflation-indexed operations and maintenance allowance, as well
as a reasonable return on capital investment. A revenue-sharing arrangement
would be activated if revenue from the sale of hydroelectricity exceeds or falls
short of the authorized revenue requirement. SCE would then refund 90% of the
excess revenue to ratepayers or recover 90% of any shortfalls from ratepayers. A
final CPUC decision is expected in 2001.

On April 27, 2000, SCE agreed to sell its 16% interest in Palo Verde and
its 48% interest in Four Corners Generating Station to Pinnacle West Energy for
a total price of $550 million, subject to certain adjustments. The sale of
assets at Palo Verde will be accompanied by an assignment of SCE's interest in
the related decommissioning fund. Palo Verde is located in Arizona and Four
Corners is located in New Mexico. The transaction is subject to the approval of
the CPUC, the Nuclear Regulatory Commission, the FERC and other state and
federal entities, and to the receipt of a favorable ruling from the Internal
Revenue Service. The Utility Reform Network has filed a protest with the CPUC
recommending that the CPUC reject the sale and require SCE to retain these
generating assets. There can be no assurance that other protests will not be
filed with the CPUC. The transaction is expected to close by mid-2001. Until the
end of November, competing offers may be solicited by SCE, subject to certain
conditions, and any superior offers received are subject to matching rights by
Pinnacle West Energy.

Accounting for Generation-Related Assets

As the CPUC's electric industry restructuring plan continues as described above,
SCE is allowed to recover its transition costs through non-bypassable charges to
its distribution customers (although its investment in certain generation assets
is subject to a lower authorized rate of return). In 1997, SCE discontinued
application of accounting principles for rate-regulated enterprises for its
generation assets based on new accounting guidance. The new guidance did not
require SCE to write off any of its


                                       33
<PAGE>

generation-related assets, including related regulatory assets because the
restructuring plan referred to above made probable their recovery through a
non-bypassable charge to distribution customers. The regulatory assets are
comprised of accelerated income tax benefits previously flowed through to
customers, purchased power contract termination payments and unamortized losses
on reacquired debt. The new accounting guidance also permits the recording of
new generation-related regulatory assets during the transition period that are
probable of recovery through the CTC mechanism.

During the second quarter of 1998, additional guidance was developed related to
the application of asset impairment standards to these assets. Using this
guidance, SCE reduced its remaining nuclear plant investment by $2.6 billion (as
of June 30, 1998) and recorded a regulatory asset on its balance sheet for the
same amount. For this impairment assessment, the fair value of the investment
was calculated by discounting expected future net cash flows. This
reclassification had no effect on SCE's results of operations.

Status of Stranded-Asset Recovery

SCE's transition costs arise from QF contracts (which are the direct result of
prior legislative and regulatory mandates), costs pertaining to certain
generating assets and regulatory commitments consisting of recovery of costs
incurred to provide service to customers. Such commitments include the recovery
of income tax benefits previously flowed through to customers, postretirement
benefit transition costs, accelerated recovery of investment in San Onofre Units
2 and 3 and the Palo Verde units, and certain other costs. Transition costs
related to power-purchase contracts are being recovered through the terms of
each contract. Most of the remaining transition costs may be recovered through
the end of the transition period, March 31, 2002.

SCE's transition costs are being recovered principally through a non-bypassable
CTC. This charge applies to all customers who were using or began using utility
services on or after the CPUC's 1995 restructuring decision date. Revenue from
the sale or valuation of generation assets in excess of book value is also
applied to recovery of transition costs. During 1998, SCE sold all of its gas-
and oil-fueled generation plants for $1.2 billion, over $500 million more than
the combined book value. Net proceeds of the sales were used to reduced stranded
costs, which otherwise were expected to be collected through the CTC mechanism.
Sales or valuations of other generating assets are discussed above. In addition,
net market revenue from sales of power and capacity from SCE-controlled
generation sources is applied to transition cost recovery.

As further discussed in Note 1 to the Consolidated Financial Statements,
CTC revenue is determined residually. Increases in market prices for electricity
affect SCE in two fundamental ways. First, CTC revenue decreases because there
is less or no residual revenue from frozen rates due to higher cost PX power
purchases. Second, transition costs decrease because there is increased net
market revenue due to sales from SCE-controlled generation sources to the PX at
higher prices. Although the second effect mitigates the first to some extent,
the overall impact on transition cost recovery is negative because SCE purchases
more power than it sells to the PX. In addition, higher market prices for
electricity may adversely affect SCE's ability to recover non-transition costs
during the rate freeze period. For example, if market prices for electricity are
extremely high in a given month, residual CTC revenue may be negative, which
means there was insufficient revenue from customers under the frozen rates to
cover all costs of providing service during that month. Under existing CPUC
decisions, this undercollection in the transition revenue account is carried
forward and recovered from future positive CTC revenue.

Since the beginning of the rate freeze (January 1, 1998), SCE has had positive
CTC revenue of $4.1 billion to recover its transition costs. As the result of
sustained higher market prices which began in May 2000 (further discussed in
Market Risk Exposures), SCE experienced the first month in which there was
negative CTC revenue. SCE continued to have negative CTC revenue in June and
July 2000. To date, the CPUC has denied SCE requests to allow recovery of the
transition revenue account undercollections after the end of the rate freeze.
SCE is currently reassessing the significance of the current undercollections
and may renew requests to the CPUC to modify certain rate-making practices.


                                       34
<PAGE>


As of June 30, 2000, the book value of stranded assets to be recovered by the
end of the rate freeze, less estimated credits from the market valuation or
pending sale of remaining generation assets, is as follows:

   In millions
- -------------------------------------------------------------------------

   Unamortized nuclear investment - net                       $   978
   Unamortized loss on sale of plant                               91
   Transition-related balancing accounts                          424
   Transition revenue account                                     644
   Flow-through taxes                                             170
   Other regulatory assets                                         40
- -------------------------------------------------------------------------

   Total regulatory assets                                      2,347
   Book value of remaining generation plant                       392
- -------------------------------------------------------------------------

   Total stranded assets                                        2,739
   Less estimated credits:
       Excess of market value over book for hydro assets         (500)
       Proceeds from pending sale of generating plants         (1,083)
- ------------------------------------------------------------------------

   Net amount of stranded assets                              $ 1,156
- ------------------------------------------------------------------------


As of July 31, 2000, SCE's transition revenue account undercollection was $1.1
billion and its transition-related balancing accounts undercollections were
$261 million.

Despite the rate freeze, SCE expects to recover its revenue requirement during
the transition period. The following factors may affect the amount of revenue
available to recover both transition and non-transition costs: the market prices
of gas and electricity; the ultimate selling price for the Palo Verde and Four
Corners generating assets; the outcome of SCE's hydroelectric filing; ISO rate
caps; economic conditions; weather conditions; and actions of governmental and
regulatory bodies. If during the transition period events were to occur that
make the recovery of any of SCE's costs no longer probable, SCE would be
required to write off the unrecoverable portion as a one-time charge against
earnings.

Distribution

Revenue related to distribution operations is determined through a
performance-based rate-making (PBR) mechanism and the distribution assets have
the opportunity to earn a CPUC-authorized 9.49% return. The distribution PBR
will extend through December 2001. Key elements of the distribution PBR include:
distribution rates indexed for inflation based on the Consumer Price Index less
a productivity factor; adjustments for cost changes that are not within SCE's
control; a cost-of-capital trigger mechanism based on changes in a bond index;
standards for customer satisfaction; service reliability and safety; and a net
revenue-sharing mechanism that determines how customers and shareholders will
share gains and losses from distribution operations.

In January 2000, SCE filed an application with the CPUC proposing rates that
would go into effect when the current rate freeze ends on March 31, 2002, or
earlier, depending on the pace of CTC recovery. On July 7, 2000, SCE updated
this filing with more recent information. The proposal seeks CPUC approval of a
rate redesign that will result in reduced rates for most customers when SCE
completes the first phase of recovery of its transition costs. The proposed new
rates are expected to reduce SCE's system average rates by about 12% from
current frozen rate levels, based on certain assumptions about competitive
energy prices and unbundled revenue requirements for 2002. In addition, SCE's
filing proposes to redesign and establish separate transmission and distribution
rates to better reflect the actual costs to deliver electricity and serve
customers by recovering the fixed costs of delivering electricity in fixed
charges. This pricing approach is consistent with CPUC policies requiring
California's major utilities to move toward cost-based transmission and
distribution rates.


                                       35
<PAGE>

Transmission

Transmission revenue is determined through FERC-authorized rates and is subject
to refund. In March 1997, SCE filed its first FERC transmission rate case. In
response to a FERC ruling, in November 1999, SCE filed additional evidence
regarding return on equity. On July 26, 2000, the FERC issued its final decision
adopting SCE's requested return on equity of 11.6% and a 9.29% return on
transmission assets. The FERC decision rejected SCE's proposed approach for the
recovery of a portion of administrative and general costs and plant costs
related to transmission, and instead suggested that SCE seek recovery of such
costs through distribution rates.

Environmental Protection

SCE is subject to numerous environmental laws and regulations, which require it
to incur substantial costs to operate existing facilities, construct and operate
new facilities, and mitigate or remove the effect of past operations on the
environment.

As further discussed in Note 11 to the Consolidated Financial Statements, SCE
records its environmental liabilities when site assessments and/or remedial
actions are probable and a range of reasonably likely cleanup costs can be
estimated. SCE's recorded estimated minimum liability to remediate its 45
identified sites is $104 million. SCE believes that, due to the uncertainties
inherent in the estimation process, it is reasonably possible that cleanup costs
could exceed its recorded liability by up to $281 million. In 1998, SCE sold all
of its gas- and oil-fueled power plants but has retained some liability
associated with the divested properties.

The CPUC allows SCE to recover environmental-cleanup costs at 44 of its sites,
representing $34 million of its recorded liability, through an incentive
mechanism, which is discussed in Note 11. SCE has recorded a regulatory asset of
$71 million for its estimated minimum environmental-cleanup costs expected to be
recovered through customer rates.

SCE's identified sites include several sites for which there is a lack of
currently available information. As a result, no reasonable estimate of cleanup
costs can be made for these sites. SCE expects to clean up its identified sites
over a period of up to 30 years. Remediation costs in each of the next several
years are expected to range from $5 million to $15 million. Recorded costs for
the twelve months ended June 30, 2000, were $13 million.

Based on currently available information, SCE believes it is unlikely that it
will incur amounts in excess of the upper limit of the estimated range and,
based upon the CPUC's regulatory treatment of environmental-cleanup costs, SCE
believes that costs ultimately recorded will not materially affect its results
of operations or financial position. 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 such
estimates.

The 1990 Federal Clean Air Act requires power producers to have emissions
allowances to emit sulfur dioxide. Power companies receive emissions allowances
from the federal government and may bank or sell excess allowances. SCE expects
to have excess allowances under Phase II of the Clean Air Act (2000 and later).
A study was undertaken to determine the specific impact of air contaminant
emissions from the Mohave Generating Station on visibility in Grand Canyon
National Park. The final report on this study, which was issued in March 1999,
found negligible correlation between measured Mohave station tracer
concentrations and visibility impairment. The absence of any obvious
relationship cannot rule out Mohave station contributions to haze in Grand
Canyon National Park, but strongly suggests that other sources were primarily
responsible for the haze. In June 1999, the Environmental Protection Agency
(EPA) issued an advanced notice of proposed rulemaking regarding assessment of
visibility impairment at the Grand Canyon. SCE filed comments on the proposed
rulemaking in November 1999. In 1998, several environmental groups filed suit
against the co-owners of the Mohave station regarding alleged violations of
emissions limits. In order to accelerate resolution of key environmental issues
regarding the


                                       36
<PAGE>


plant, the parties filed, in concurrence with SCE and the other station
owners, a consent decree, which was approved by the court in December 1999. In a
letter to SCE, the EPA has expressed its belief that the controls provided in
the consent decree will likely resolve the potential Clean Air Act visibility
concerns. The EPA is considering incorporating the decree into the visibility
provisions of its Federal Implementation Plan for Nevada.

SCE's projected environmental capital expenditures are $850 million for the
2000-2004 period, mainly for undergrounding certain transmission and
distribution lines.

San Onofre Steam Generator Tubes

The San Onofre Units 2 and 3 steam generators have performed relatively well
through the first 16 years of operation. The steam generator design allows for
the removal of up to 10% of the tubes before the rated capacity of the unit must
be reduced. Increased tube degradation was found during routine inspections in
1997. To date, 7.5% of Unit 2's tubes and 5.4% of Unit 3's tubes have been
removed from service. A decreasing (favorable) trend in degradation has been
observed in more recent inspections.

New Accounting Rule

In June 1998, a new accounting standard for derivative instruments and
hedging activities was issued. The new standard, which as amended SCE will be
required to implement on January 1, 2001, requires all derivatives to be
recognized on the balance sheet at fair value. Gains or losses from changes in
fair value would be recognized in earnings in the period of change unless the
derivative is designated as a hedging instrument. Gains or losses from hedges of
a forecasted transaction or foreign currency exposure would be reflected in
other comprehensive income. Gains or losses from hedges of a recognized asset or
liability or a firm commitment would be reflected in earnings for the
ineffective portion of the hedge. SCE anticipates that most of its derivatives
under the new standard would qualify for hedge accounting. SCE expects to
recover in rates any market price changes from its derivatives that could
potentially affect earnings. Accordingly, implementation of this new standard is
not expected to affect earnings.

Forward-looking Information

In the preceding Management's Discussion and Analysis of Results of Operations
and Financial Condition and elsewhere in this quarterly report, the words
estimates, expects, anticipates, believes, and other similar expressions are
intended to identify forward-looking information that involves risks and
uncertainties. Actual results or outcomes could differ materially as a result of
such important factors as further actions by state and federal regulatory bodies
setting rates and implementing the restructuring of the electric utility
industry including the sale or retention and ongoing operation of remaining
generation assets; the effects, unfavorable interpretations and implementations
of new or existing laws and regulations relating to restructuring, taxes and
other matters; the effects of increased competition in the electric utility
business and other energy-related businesses, including direct customer access
to retail energy suppliers and the unbundling of revenue cycle services such as
metering and billing; changes in prices of electricity and fuel costs; changes
in financial market conditions; the amount of revenue available to recover both
transition and non-transition costs; the ability to sell or retain electric
generation assets; the ultimate selling price of those plants that are sold; new
or increased environmental liabilities; the ability to create and expand new
businesses such as telecommunications; weather conditions; and other unforeseen
events.


                                       37
<PAGE>


PART II    OTHER INFORMATION

Item 1.    Legal Proceedings

                        Geothermal Generators' Litigation

On June 9, 1997, SCE filed a complaint in Los Angeles County Superior Court
against an independent power producer of geothermal generation and six of its
affiliated entities (Coso parties). SCE alleges that in order to avoid power
production plant shutdowns caused by excessive noncondensable gas in the
geothermal field brine, the Coso parties routinely vented highly toxic hydrogen
sulfide gas from unmonitored release points beginning in 1990 and continuing
through at least 1994, in violation of applicable federal, state, and local
environmental law. According to SCE, these violations constituted material
breaches by the Coso parties of their obligations under their contracts with SCE
and applicable law. SCE seeks damages for excess power purchase payments made to
the Coso parties and other relief. The Coso parties' motion to transfer venue to
Inyo County Superior Court was granted on August 31, 1997.

The Coso parties filed a cross-complaint against SCE, The Mission Group, and
Mission Power Engineering Company (Mission parties), which contains claims for
breach of contract, unfair competition, interference with contract, defamation,
breach of an earlier settlement agreement between the Mission parties and the
Coso parties, and other claims. As against SCE, the cross-complaint seeks
restitution, compensatory damages in excess of $115 million, punitive damages in
an amount not less than $400 million, interest, attorney's fees, declaratory
relief, and injunctive relief. As against the Mission parties, the
cross-complaint seeks damages for breach of warranty of authority with respect
to the settlement agreement, and for equitable indemnity. Edison International
was named as a cross-defendant, allegedly as an alter ego of SCE and the Mission
parties. The Coso parties voluntarily dismissed the claims against Edison
International.

Three of the Coso Parties also filed a separate action in the Inyo County
Superior Court against SCE and Edison International, alleging claims for unfair
competition, false advertising and for violations of Public Utilities Code ss.
2106, and seeking injunctive relief, restitution, and punitive damages. The
Court ordered this action consolidated with the SCE action.

Effective February 8, 2000, the parties entered into confidential agreements
resolving all claims in the consolidated action and calling for dismissals with
prejudice and releases. The settlement is subject to the approval of the CPUC.
On February 10, 2000, the Court approved a stipulation staying all proceedings
during the period required to obtain CPUC approval. On April 26, 2000, SCE filed
an application to obtain such approval. The period for protesting the
application has passed and no person has filed a protest. SCE expects a decision
on the application later this year. The settlement is not expected to have a
material financial effect on SCE.

                      San Onofre Personal Injury Litigation

As previously reported in Part I, Item 3, of the Registrant's Annual Report on
Form 10-K for the year ending December 31, 1999, SCE is actively involved in
three lawsuits claiming personal injuries allegedly resulting from exposure to
radiation at San Onofre.

On August 31, 1995, the wife and daughter of a former San Onofre security
supervisor sued SCE and SDG&E in the U.S. District Court for the Southern
District of California. Plaintiffs also named Combustion Engineering and the
Institute of Nuclear Power Operations as defendants. All trial court proceedings
were stayed pending ruling of the Ninth Circuit Court of Appeal, on an appeal of
a lower court's judgment in favor of SCE in two earlier cases raising
similar  allegations.  On May 28,  1998,  the  Court of  Appeal  affirmed  these
judgments.  Pursuant to an  agreement  of the parties as  described  below,  all
proceedings in this matter have been stayed.


                                       38
<PAGE>


On November 17, 1995, an SCE employee and his wife sued SCE in the U.S. District
Court for the Southern District of California. Plaintiffs also named Combustion
Engineering. The trial in this case resulted in a jury verdict for both
defendants. The plaintiffs' motion for a new trial was denied. Plaintiffs filed
an appeal of the trial court's judgment to the Ninth Circuit Court of Appeals.
On July 20, 2000, the Ninth Circuit issued an opinion reversing the trial
court's judgment and ordering a retrial as to both defendants. The Court of
Appeals concluded that the jury instructions were flawed and unfairly prejudiced
plaintiffs and that the trial court erroneously dismissed the products liability
claims against Combustion Engineering. The Ninth Circuit did not decide the
merits of plaintiffs' claims. This decision, if not vacated or altered on
rehearing or other further proceedings, would constitute a "favorable
determination" for plaintiffs in both of the other cases at the U.S. District
Court level (respectively mentioned in the immediately preceding and immediately
following paragraphs), for purposes of the stay agreement described below. SCE
and Combustion Engineering intend to seek rehearing before the Ninth Circuit.

On November 28, 1995, a former contract worker at San Onofre, her husband, and
her son, sued SCE in the U.S. District Court for the Southern District of
California. Plaintiffs also named Combustion Engineering. On August 12, 1996,
the Court dismissed the claims of the former worker and her husband with
prejudice, leaving only the son as plaintiff. Pursuant to an agreement of the
parties as described below, all proceedings in the matter have been stayed.

In March of 1999, SCE reached an agreement with the plaintiffs in both of the
cases at the U.S. District Court level to stay all proceedings including trial,
pending the results of the case currently before the Ninth Circuit Court of
Appeal. The parties agreed that if the plaintiffs in that case do not receive a
favorable determination on appeal, then the two cases at the District Court
level will be dismissed. If, however, those plaintiffs receive a favorable
determination on their appeal, then the two District Court cases will be set for
trial. On March 23, 1999, the District Court approved the parties' stay
agreement in both cases. The stay will remain in effect until the conclusion of
the appellate process, including filing and disposition of any petitions for
rehearing in the Ninth Circuit or petitions for certiorari in the United States
Supreme Court.

SCE was previously involved, along with other defendants, in two earlier cases
raising allegations similar to those described above. Although SCE is no longer
actively involved in these actions, the impact on SCE, if any, from further
proceedings in those cases against the remaining defendants cannot be determined
at this time.


                                       39
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

3.1  Certificate of Amendment and Restated Articles of Incorporation of SCE
     effective  June 1, 1993  (File  No.  1-2313,  Form 10-K for the year  ended
     December 31, 1993)*

3.2  Certificate of Correction of Restated Articles of Incorporation of SCE
     dated June 23, 1997 (File No. 1-2313, Form 10-Q for the quarter ended
     September 30, 1997)*

3.3  Amended Bylaws of Southern California Edison Company as adopted by the
     Board of Directors on February 17, 2000 (File No. 1-2313, filed as Exhibit
     3.3 to Form 10-K for the period ended December 31, 1999)*

10.1 Edison International 2000 Equity Plan

10.2 Form of Agreement for 2000 Employee Awards under the 2000 Equity Plan

10.3 Form of Agreement for 2000 Director Awards under the Equity Compensation
     Plan

10.4 Amendment No. 1 to the Edison International Equity Compensation Plan (as
     restated January 1, 1998)

23.  Consent of Independent Public Accountants

27.  Financial Data Schedule

(b)  Reports on Form 8-K:

     No reports on Form 8-K were filed during the quarter ended June 30, 2000.


- ------------------
* Incorporated by reference pursuant to Rule 12b-32.


                                       40
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                               SOUTHERN CALIFORNIA EDISON COMPANY
                                                 (Registrant)


                               By       THOMAS M. NOONAN
                                        ---------------------------------
                                        THOMAS M. NOONAN
                                        Vice President and Controller

                               By       KENNETH S. STEWART
                                        ---------------------------------
                                        KENNETH S. STEWART
                                        Assistant General Counsel and
                                        Assistant Secretary

August 11, 2000

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EDISON INTERNATIONAL 2000 EQUITY PLAN
<TEXT>


                              EDISON INTERNATIONAL

                                2000 EQUITY PLAN


                             Effective May 18, 2000

<PAGE>

                                TABLE OF CONTENTS

                                                                      Page
                                                                      ----

1.   GENERAL............................................................1

     1.1      Purpose...................................................1

     1.2      Participation.............................................1

     1.3      Operation, Administration and Definitions.................1

2.   STOCK OPTIONS......................................................1

     2.1      General...................................................1

     2.2      Stock Options.............................................1

3.   OPERATION AND ADMINISTRATION.......................................2

     3.1      Effective Date of Plan and Duration.......................2

     3.2      Administration............................................2

     3.3      Aggregate and Maximum Grants Under Plan...................3

     3.4      Adjustment Provisions.....................................4

     3.5      General Provisions........................................5

     3.6      Amendment and Termination of the Plan.....................8

     3.7      Termination of Employment.................................8

4.   DEFINITIONS........................................................9


<PAGE>

                              EDISON INTERNATIONAL

                                2000 EQUITY PLAN

                             Effective May 18, 2000

                                   1. GENERAL

     1.1 Purpose.

   The purpose of the Plan is to improve the long-term financial and operational
performance of Edison International and its affiliates by providing Participants
a financial incentive that reinforces and recognizes long-term corporate,
organizational and individual performance and accomplishments. The Plan is
further intended to promote the interests of Edison International and its
shareholders by attracting and retaining qualified officers and employees and
aligning their interests with those of the other shareholders by encouraging
Participants to acquire Common Stock or otherwise increase their proprietary
interest in Edison International.

     1.2 Participation.

   Subject to Section 3.3(b), the Administrator has authority, in its sole
discretion, to determine and designate from time-to-time, from among the
Eligible Persons, those who are to be granted Stock Options and thereby become
Participants in the Plan.

     1.3 Operation, Administration and Definitions.

   The operation and administration of the Plan and the Stock Options are
subject to the provisions of Article 3. Capitalized terms in the Plan are
defined in Article 4.

                                2. STOCK OPTIONS

     2.1 General.

   The Administrator may grant Stock Options to Eligible Persons. The
Administrator may grant Stock Options as alternatives or replacements of awards
outstanding under any other plan or arrangement of another business or entity,
all or a portion of which is acquired by an EIX Company. Each Stock Option will
be evidenced by a written instrument specifying the date of grant and may
include or incorporate by reference any additional terms and conditions
consistent with the Plan as determined in the discretion of the Administrator.

     2.2 Stock Options.

   The grant of a Stock Option entitles the Participant to purchase shares of
Common Stock at an exercise price established by the Administrator. Stock
Options awarded


                                       1
<PAGE>

pursuant to the Plan shall not be "incentive stock options" as defined in
Section 422 of the Code. Stock Options granted under this Plan are subject to
the following terms and conditions:

(a)  The exercise price of each Stock Option will be determined by a method
     established by the Administrator at the time of the grant, except that the
     exercise price may not be less than one hundred percent of the Fair Market
     Value of the Common Stock as of the Pricing Date.

(b)  Upon the exercise of a Stock Option, the purchase price will be payable in
     full in cash (or its equivalent acceptable to Edison International) and/or
     shares of Common Stock at the Participant's election; provided, however,
     that (i) a Holder may not pay the exercise price with any shares of Common
     Stock acquired from any EIX Company unless the Holder has held such shares
     of Common Stock for at least six months prior to the date of exercise, (ii
     ) in the case of any broker-assisted "cashless exercise," the exercise
     price must be paid in cash. Any shares so assigned and delivered to Edison
     International in payment or partial payment of the purchase price will be
     valued at their Fair Market Value on the exercise date.

(c)  No fractional shares will be issued pursuant to the exercise of a Stock
     Option. Cash payments will be made in lieu of fractional shares.

(d)  No Stock Option may be exercised more than ten years from the date of the
     grant. Each Stock Option granted under this Plan will also be subject to
     earlier termination as provided in this Plan.

                        3. OPERATION AND ADMINISTRATION

     3.1 Effective Date of Plan and Duration.

   This Plan will become effective on May 18, 2000. Unless the Plan is
terminated earlier pursuant to Section 3.6, no Stock Options will be granted
after December 31, 2007.

     3.2 Administration.

(a)  The Administrator of the Plan is the Committee. The Administrator has, and
     may exercise, such powers and authority of the Board as may be necessary or
     appropriate for the Administrator to carry out its functions as described
     in the Plan. Subject to Section 3.3, the Administrator has sole authority
     in its discretion to determine the Eligible Persons to whom, and the time
     or times at which, Stock Options may be granted, the number of shares of
     Common Stock subject to each Stock Option, the exercise price, vesting
     schedule and term of any Stock Option, and such other terms and conditions
     applicable to each individual Stock Option as the Administrator will
     determine. The Administrator may grant at any time additional Stock


                                       2
<PAGE>

     Options to Participants who have previously received Stock Options during
     the year. The purchase price of the Stock Options may be established by the
     Administrator without regard to the existing Stock Options or such other
     grants. Further, the Administrator may, with the consent of a Participant,
     amend the terms of any existing Stock Option previously granted to include
     or amend any provisions which could be incorporated in such a Stock Option
     at the time of such amendment, except that repricing of Stock Options is
     not permitted.

     The Administrator has the sole authority to interpret the Plan, to
     determine the terms and provisions of the Stock Option agreements, and to
     make all determinations necessary or advisable for the administration of
     the Plan. The Administrator has authority to prescribe, amend, and rescind
     rules and regulations relating to the Plan. All interpretations,
     determinations, and actions by the Administrator will be final, conclusive,
     and binding upon all parties. Any action of the Administrator with respect
     to the administration of the Plan will be taken pursuant to a majority vote
     or by the unanimous written consent of its members except in the case of a
     delegation of authority described in the following sentence. The
     Administrator may elect to delegate its authority, including without
     limitation, to approve awards and transactions under the Plan, subject to
     any conditions it deems appropriate at the time of such delegation, (i) to
     a subcommittee of at least two members of the Administrator who may act by
     unanimous written consent or by majority vote, or (ii) in the case of
     awards and transactions to, by or with Eligible Persons who are not Edison
     International officers under and subject to the provisions of Section 16 of
     the Securities Exchange Act of 1934, as amended ("Section 16"), to EIX
     Company management.

(b)  No member of the Board or the Administrator or agent or designee thereof
     will be liable for any action or determination made in good faith with
     respect to the Plan or any transaction arising under the Plan.

(c)  Notwithstanding the provisions of Section 3.6 regarding the term of the
     Plan, all authority of the Board and the Administrator with respect to
     Stock Options hereunder, including (subject to share limits) the authority
     to amend outstanding Stock Options, shall continue after the term of the
     Plan, so long as any Stock Option remains outstanding. The Administrator
     shall have the authority to permit a deferred payment in respect of Stock
     Options under any deferred compensation plan of Edison International,
     consistent with Subsection 3.5(b). Any such deferral shall not be deemed a
     new grant hereunder so long as all shares issuable in respect thereof do
     not exceed the aggregate number of shares subject to the Stock Option so
     paid thereby.

                                       3
<PAGE>

(d)  Notwithstanding anything to the contrary contained in this Plan, no Stock
     Option may be exercised more than ten years from the date of the grant.
     Each Stock Option granted under this Plan will also be subject to earlier
     termination as provided in this Plan.

(e)  The approval by the Administrator of awards and transactions under this
     Plan to, by or with Eligible Persons who are or become Edison International
     officers under Section 16 is intended to comply with and exempt such awards
     and transactions under Rule 16b-3.

     3.3 Aggregate and Maximum Grants Under Plan.

(a)  Subject to the provisions of Sections 3.3 and 3.4 of the Plan, the
     aggregate number of shares of Common Stock that may be issued or
     transferred pursuant to Stock Options will not exceed 10 million shares of
     Common Stock.

(b)  During both the term of the Plan as defined in Section 3.1 and the first
     three years of such term, the aggregate number of shares subject to Stock
     Options granted to Edison International Section 16 officers and/or Edison
     International directors under this Plan shall be less than 50% of the
     shares subject to Stock Options granted to Eligible Persons who are not
     Edison International Section 16 officers and/or Edison International
     directors. The shares to be delivered under the Plan will be made
     available, at the discretion of Edison International, either from
     authorized but unissued shares of Common Stock or from shares purchased on
     the open market.

(c)  If any Stock Option expires, is forfeited, is canceled, or otherwise
     terminates for any reason other than upon exercise, the shares of Common
     Stock (provided the Participant receives no benefit of ownership) that
     could have been delivered will not be charged against the limitations
     provided above and may again be made subject to Stock Options.

     3.4 Adjustment Provisions.

(a)  Subject to the provisions of this Section 3.4, if the outstanding shares of
     Common Stock are increased, decreased, or exchanged for a different number
     or kind of shares or other securities, or if additional shares or new or
     different shares or other securities are distributed with respect to such
     shares of Common Stock or other securities, through merger, consolidation,
     sale of all or substantially all of the property of Edison International,
     reorganization, recapitalization, reclassification, stock dividend, stock
     split, reverse stock split or other distribution with respect to such
     shares of Common Stock or other securities, an appropriate and
     proportionate adjustment may be made in (i) the maximum number and kind of
     shares provided in Article 3 of the Plan, (ii) the maximum


                                       4
<PAGE>

     individual award, (iii) the number and kind of shares or other securities
     subject to the then outstanding Stock Options, and (iv) the price for each
     share or other unit of any other securities subject to the then outstanding
     Stock Options without change in the aggregate purchase price or value as to
     which Stock Options remain exercisable or subject to restrictions.

(b)  Despite the foregoing, upon a Change in Control of Edison International,
     all Stock Options then outstanding under the Plan will be fully vested and
     exercisable unless provisions are made in connection with such transaction
     for the continuance of the Plan and the assumption of or the substitution
     for such Stock Options of new stock options, covering the stock of a
     successor employer corporation, or a parent or subsidiary thereof, with
     appropriate adjustments as to the number and kind of shares and prices. The
     Administrator may include in the terms and conditions of any Stock Option
     provisions for the acceleration of vesting and exercisability of a Stock
     Option in the event a Holder's employment is terminated without Cause or a
     Holder terminates employment with Good Reason in connection with a Change
     in Control of Edison International.

(c)  Any adjustments pursuant to this Section 3.4 will be made by the
     Administrator, whose determination as to what adjustments will be made and
     the extent thereof will be final, binding, and conclusive, except to the
     extent the successor employer corporation or any other acquiring or
     surviving entity is required to approve the adjustment to exempt any
     resulting transaction under Rule 16b-3. No fractional interest will be
     issued under the Plan on account of any such adjustments. Only cash
     payments will be made in lieu of fractional shares.

     3.5  General Provisions.

(a)  With respect to any share of Common Stock issued or transferred under any
     provision of the Plan, such shares may be issued or transferred subject to
     such conditions, in addition to those specifically provided in the Plan, as
     the Administrator may direct.

(b)  Notwithstanding the term of a Stock Option, the Administrator may approve
     the delayed payment or delivery of any cash or shares of Common Stock that
     may become due under the Plan. Any such delayed payment or delivery must
     specifically be authorized by the Administrator in writing and shall be
     subject to any conditions, restrictions or requirements as the
     Administrator may determine.

     The Administrator may permit the deferral of any Common Stock payable in
     respect of a Stock Option in the form of Stock Units which may earn
     dividend equivalents and other compensation in respect thereof, and the
     Committee may provide that such Stock Units and dividend equivalents

                                       5
<PAGE>

     shall eventually be paid in the form of shares of Common Stock (subject to
     share limits).

     In the event that the purchase price of a Stock Option is paid in full in
     shares of Common Stock and the delivery of shares of Common Stock in excess
     of the option price is deferred, Stock Units may be credited in respect of
     such excess shares and may earn dividend equivalents or other compensation
     in respect thereof, and the number of shares of Common Stock issued in
     respect of the deferred shares may include the number of such deferred
     shares and the number of Stock Units credited as dividend equivalents
     (subject to share limits).

     In addition, during the term of the Plan, the Administrator may grant Stock
     Units to selected employees as dividend equivalents under and as set forth
     in any Edison International option gain deferral program (the "Deferral
     Program") and may deliver shares of Common Stock in respect to such Stock
     Units pursuant to the selected employee's election under the Deferral
     Program.

(c)  Nothing in the Plan or in any instrument executed pursuant to the Plan will
     confer upon any Holder any right to continue in the employ of an EIX
     Company or affect the right of the EIX Company to terminate the employment
     of any Holder at any time with or without cause.

(d)  No shares of Common Stock will be issued or transferred pursuant to a Stock
     Option unless and until all then applicable requirements imposed by federal
     and state securities and other laws, rules, and regulations and by any
     regulatory agencies having jurisdiction, and by any stock exchanges upon
     which the Common Stock may be listed, have been fully met. As a condition
     precedent to the issue of shares pursuant to the exercise of a Stock
     Option, Edison International may require the Holder to take any reasonable
     action to meet such requirements.

(e)  No Holder (individually or as a member of a group) and no beneficiary or
     other person claiming under or through such Holder will have any right,
     title, or interest in or to any shares of Common Stock allocated or
     reserved under the Plan or subject to any Stock Option except as to such
     shares of Common Stock, if any, that have been issued or transferred to
     such Holder.

(f)  Except to the extent prohibited by applicable law or the applicable rules
     of a stock exchange, or to the extent the exempt status of any transaction
     under Section 16 would be decreased or eliminated, and in addition to the
     delegation pursuant to Section 3.2(a), the Administrator may delegate all
     or any portion of its responsibilities and powers to any one or more of its
     members or any other person or persons selected by it. The Administrator
     may revoke such delegation at any time.

                                       6
<PAGE>


(g)  Edison International may make such provisions as it deems appropriate to
     withhold any taxes that it determines it is required to withhold in
     connection with any Stock Option. Subject to this Subsection, however, the
     Administrator, in its sole discretion and subject to such rules as the
     Administrator may adopt, may permit Participants to elect to apply a
     portion of the shares of Common Stock they are otherwise entitled to
     receive pursuant to a Stock Option, or shares of Common Stock already
     owned, to satisfy the tax withholding obligation arising from the exercise
     of any Stock Option. Any shares so delivered to Edison International will
     be valued at their Fair Market Value on the withholding date.

     Notwithstanding any other provision of this Plan, the number of shares of
     Common Stock which may be withheld upon the exercise of any Stock Option in
     order to satisfy the Holder's federal and state income and payroll tax
     liabilities with respect to the exercise, receipt or vesting of the right
     shall be limited to the number of shares which have a Fair Market Value on
     the date of withholding equal to the aggregate amount of such liabilities
     based on the minimum statutory withholding rates for federal and state tax
     income and payroll tax purposes that are applicable to such supplemental
     taxable income.

(h)  No Stock Option and no right under the Plan, contingent or otherwise, will
     be assignable or subject to any encumbrance, pledge, or charge of any
     nature, or otherwise transferable (meaning, without limitation, that such
     Stock Option or right is exercisable during the Holder's lifetime only by
     him/her or by his/her guardian or legal representative) except that, under
     such rules and regulations as Edison International may establish pursuant
     to the terms of the Plan, a beneficiary may be designated with respect to a
     Stock Option in the event of death of a Holder of such Stock Option, and
     Stock Options may be transferred pursuant to a qualified domestic relations
     order as defined by the Code or Title I of the Employee Retirement Income
     Security Act, or the regulations promulgated thereunder. If such
     beneficiary is the executor or administrator of the estate of the Holder of
     such Stock Option, any rights with respect to such Stock Option may be
     transferred to the person or persons or entity (including a trust) entitled
     thereto under the will of the Holder of such Stock Option, or, in the case
     of intestacy, under the laws relating to intestacy. Stock Options
     transferred remain subject to all applicable terms, conditions and
     restrictions.

(i)  Notwithstanding Subsection (h), the Administrator will have the authority,
     in its discretion, to grant (or to sanction by way of amendment of an
     existing grant) Stock Options that may be transferred by the Participant
     during his/her lifetime to any member of his/her immediate family or to a
     trust, limited liability corporation, family limited partnership or other
     equivalent vehicle, established for the exclusive benefit of one or more

                                       7
<PAGE>

     members of his/her immediate family, in which case the written
     documentation containing the terms and conditions of such Stock Options
     will so state. A transfer of a Stock Option pursuant to this Subsection may
     only be effected by the Administrator at the written request of a
     Participant and will become effective only when recorded in Edison
     International's record of outstanding Stock Options. In the event a Stock
     Option is transferred as contemplated in this Subsection, such Stock Option
     may not be subsequently transferred by the transferee except by will or the
     laws of descent and distribution. In the event a Stock Option is
     transferred as contemplated in this Subsection, such Stock Option will
     continue to be governed by and subject to the terms, conditions and
     restrictions of the Plan and the relevant grant. As used in this
     Subsection, "immediate family" will mean, with respect to any person, a
     spouse, child, stepchild or grandchild, and will include relationships
     arising from legal adoption.

(j)  No fractional shares will be issued under the Plan. Only cash payments will
     be made in lieu of fractional shares.

(k)  Each EIX Company will be liable for payment of any cash payable under the
     Plan with respect to any Participant to the extent that such benefits are
     attributable to services rendered for that EIX Company by the Participant.
     Any disputes related to liability of an EIX Company for cash payments will
     be resolved by the Administrator.

(l)  Future services shall not constitute payment or part payment for previously
     unissued shares of Common Stock to be issued upon the exercise of a Stock
     Option.

(m)  This Plan will be governed by the laws of the State of California.

(n)  If a Stock Option is granted to an Eligible Person who thereafter becomes
     an Edison International Section 16 officer or director, such Stock Option
     (including without limitation any exercise or conversion or other
     transaction pursuant to the terms of such Stock Option that may be deemed
     to be a "purchase" or "sale" for purposes of Section 16) shall thereupon
     immediately and automatically become subject to the requirements of Rule
     16b-3(d)(3) (or any successor provision thereof) promulgated under Section
     16 and shall be held by such Eligible Person (or any other person then duly
     holding such Stock Option) until such Rule has been satisfied, any other
     terms or provisions of this Plan or any instrument evidencing such Stock
     Option to the contrary notwithstanding. In its sole discretion, the
     Administrator may take any action it may deem necessary or advisable to
     assure compliance with the requirements of such Rule, including withholding
     delivery to such Eligible Person (or any such other person) of any security
     (or certificate evidencing a security) or of

                                       8
<PAGE>

     any other payment in any form until such time as the requirements of such
     Rule have been satisfied. In his or her sole discretion, the Secretary of
     Edison International may waive compliance with the requirements of such
     Rule if the Secretary has determined that, for purposes of Section 16, the
     acquisition and/or disposition of any securities or derivative securities
     pursuant to such Stock Option by such Eligible Person is and will be
     otherwise exempt from the provisions of paragraph (b) of Section 16.

     3.6  Amendment and Termination of the Plan.

(a)  The Board will have the power, in its discretion, to amend, suspend, or
     terminate the Plan at any time if, in the sole judgment of the Board, such
     action is in the best interests of Edison International.

(b)  The Administrator may, with the consent of a Holder, make such
     modifications in the terms and conditions of any Stock Option as it deems
     advisable or cancel the Stock Option (with or without consideration). No
     amendment, suspension, or termination of the Plan will, without the consent
     of the Holder, alter, terminate, impair, or adversely affect any right or
     obligation under any Stock Option previously granted under the Plan.

     3.7  Termination of Employment.

(a)  The Administrator shall provide in the terms and conditions of any Stock
     Option at the time of grant the extent to which termination of employment
     will shorten the period for exercising a Stock Option.

(b)  In the event a Holder of a Stock Option ceases to be an employee, the
     Holder must have been a Participant for the entire incentive or vesting
     period applicable to the Stock Option in order to be eligible for the full
     amount of any such Stock Option. Pro-rata awards may be distributed to
     Participants who are discharged or who terminate their employment for
     reasons other than incompetence, misconduct or fraud, or who retired or
     became disabled during the incentive period, or who were Participants for
     less than the full incentive period. A pro-rata award may be made to a
     Participant's designated beneficiary in the event of death of a Participant
     during an incentive period prior to an award being made.

(c)  The Administrator may in its sole discretion determine, with respect to a
     Stock Option, that any Holder who is on a leave of absence for any reason
     will be considered as still in the employ of an EIX Company, provided that
     rights to such Stock Option during an unpaid leave of absence will be
     limited to the extent to which such right was earned or vested at the
     commencement of such leave of absence.

                                       9
<PAGE>

(d)  The Administrator may vary the requirements of this Section 3.7 in the
     terms and conditions of a Stock Option at the time of grant, or on a
     case-by-case basis thereafter, as it deems appropriate and in the best
     interests of Edison International. The Administrator may accelerate the
     vesting of all, or a portion of any Stock Option, and may extend the
     above-described exercise periods to as long as the term provided in the
     terms and conditions of the original Stock Option.

                                4. DEFINITIONS.

   Whenever the following terms are used in this Plan, they will have the
meanings specified below unless the context clearly indicates otherwise:

   "Administrator" is the Committee.

   "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended.

   "Board of Directors" or "Board" means the Board of Directors of Edison
International.

   "Cause" means the occurrence of either or both of the following:

(a)  The Participant's conviction of, or pleading guilty or nolo contendere to,
     an act of fraud, embezzlement, theft, or other act constituting a felony;
     or

(b)  The willful engaging by the Participant in misconduct that would have
     resulted in the termination of his or her employment by his or her Employer
     under its or Edison International's policies and practices applicable to
     the Participant in effect immediately prior to the start of the Protected
     Period; however, no act or failure to act, on the Participant's part, shall
     be considered "willful" unless done, or omitted to be done, by the
     Participant not in good faith and without reasonable belief that his or her
     action or omission was in the best interest of Edison International and his
     or her Employer.

   "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:

(a)  Any Person (other than a trustee or other fiduciary holding securities
     under an employee benefit plan of Edison International or other EIX
     Company) becomes the Beneficial Owner, directly or indirectly, of
     securities of Edison International representing thirty percent (30%) or
     more of the combined voting power of Edison International's then
     outstanding securities. For purposes of this clause, "Person" shall not
     include one or more underwriters acquiring newly-issued voting securities

                                       10
<PAGE>

     (or securities convertible into voting securities) directly from Edison
     International with a view towards distribution.

(b)  On any day after the Effective Date (the "Measurement 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 Edison
          International'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
          Edison International'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 applicable of this provision) then in office.

          "Initial Date" means the later of (i) the Effective Date or (ii) the
          date that is two (2) years before the Measurement Date.

(c)  Edison International is liquidated; all or substantially all of Edison
     International's assets are sold in one or a series of related transactions;
     or Edison International 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 Edison
     International 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 Edison International (or
     such surviving entity) outstanding immediately after such merger,
     consolidation, or reorganization.

     Notwithstanding the foregoing, a bankruptcy of Edison International or a
     sale or spin-off of an Edison International subsidiary (short of a
     dissolution of Edison International or a liquidation of substantially all
     of Edison International's assets, determined on an aggregate basis) will
     not constitute a Change in Control.

(d)  The consummation of such other transaction that the Board may, in its
     discretion in the circumstances, declare to be a Change in Control for
     purposes of this Plan.

                                       11
<PAGE>

   "Code" means the Internal Revenue Code of 1986, as amended.

   "Committee" means those Directors on the Compensation and Executive Personnel
Committee of the Board who qualify as both "non-employee Directors" under Rule
16b-3 and "outside Directors" under Section 162(m) of the Code. The Board will
ensure at least two members are qualified to administer the Plan at all times.

   "Common Stock" means the common shares of Edison International.

   "Director" means a member of the Board of Directors of EIX.

   "Edison International Affiliate" means any company during any period in which
it is a "subsidiary company" as that term is defined in Section 424(f) of the
Code.

   "Effective Date" means May 18, 2000.

   "EIX Company" means Edison International or an Edison International
Affiliate.

   "Eligible Person" means each full-time employee of an EIX Company who is an
"exempt employee" as defined under the Fair Labor Standards Act of 1938.

   "Employer" means the EIX Company that employs or last employed the
Participant.

   "Fair Market Value" means the average of the highest and lowest sale prices
for the Common Stock as reported in the western edition of The Wall Street
Journal for the New York Stock Exchange Composite Transactions for the date as
of which such determination is made or, if such report is not available, as
reported in any other generally recognized source as determined by the
Administrator.

   "Good Reason" means, without the Participant's express written consent, the
occurrence of any one or more of the following:

(a)  A material reduction in the nature or status of the Participant's
     authorities, duties, and/or responsibilities (when such authorities,
     duties, and/or responsibilities are viewed in the aggregate) from their
     level in effect on the day immediately prior to the start of the Protected
     Period.

(b)  A reduction by the Participant's Employer in the Participant's base salary
     as in effect on the day immediately prior to the start of the Protected
     Period.

(c)  A material reduction by Edison International or by the Participant's
     Employer of the Participant's aggregate welfare benefits and/or incentive
     opportunities under Edison International's and/or the Employer's short
     and/or long-term incentive programs, as such benefits and opportunities

                                       12
<PAGE>

     exist on the day immediately prior to the start of the Protected Period and
     when viewed on an aggregate basis.

(d)  Any other event defined as "Good Reason" in any severance plan that covers
     the Participant or any severance agreement to which the Participant is a
     party.

   "Holder" means a person holding a Stock Option.

   "Participant" is an Eligible Person who has been granted a Stock Option.

   "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended, 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 2000 Equity Plan as set forth herein, which may be amended
from time-to-time.

   "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:

(a)  Any Person (other than a trustee or other fiduciary holding securities
     under an employee benefit plan of Edison International or other EIX
     Company): (i) announces an intention to take action which, if consummated,
     would result in a Change of Control; or (ii) becomes the Beneficial Owner,
     directly or indirectly, of securities of Edison International representing
     fifteen percent (15%) or more of the combined voting power of Edison
     International's then outstanding securities. For purposes of this clause,
     "Person" shall not include one or more underwriters acquiring newly-issued
     voting securities (or securities convertible into voting securities)
     directly from Edison International with a view towards distribution.

(b)  Edison International enters into an agreement that, if consummated, would
     result in a Change in Control.

(c)  The Board declares that a Potential Change in Control has occurred for
     purposes of this Plan.

(d)  The shareholders of Edison International approve a transaction that, if
     consummated, would constitute a Change in Control of Edison International.

   "Pricing Date" means the date the Stock Option is granted except that the
Administrator may provide that the Pricing Date is the date the recipient is
hired or promoted if the grant of the Stock Option occurs within 90 days of such
event.

                                       13
<PAGE>

   "Protected Period" means the period related to a Change in Control that
begins on the date of the related Potential Change in Control (or, if no
Potential Change in Control occurs with respect to the event, the date that is
six months before the actual Change in Control) and ends on the date of the
Change in Control.

   "Rule 16b-3" means Rule 16b-3 (or any successor provision thereof)
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended.

   "Stock Option" means an option granted pursuant to Section 2.2 of the Plan.

   "Stock Unit" means a non-voting unit of measurement that is deemed for
bookkeeping purposes to be equivalent to one outstanding share of Common Stock
(subject to adjustment).





                                        EDISON INTERNATIONAL



                                           John H. Kelly
                              ------------------------------------------
                                           John H. Kelly
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>FORM OF AGRMT FOR 2000 EMPLOYEE AWARDS
<TEXT>


EDISON INTERNATIONAL LOGO



                                2000 EQUITY PLAN

                            SPECIAL GRANT CERTIFICATE




This award is made by Edison International to _________________ ("Employee"), as
of May 18, 2000, pursuant to the 2000 Equity Plan. Edison International hereby
grants to Employee, as a matter of separate arrangement and not in lieu of any
other compensation for services, the following:


               -------------------------------------------------
                The right and option to purchase _____ shares of
                    Edison International Common Stock at an
                     exercise price of $20.0625 per share.
               -------------------------------------------------



The award is made subject to the conditions contained in the document "Equity
Compensation Plan and 2000 Equity Plan Terms and Conditions for Special Grant of
Stock Options May 18, 2000" which is incorporated herein by reference.


Edison International


By:  John Kelly
    ------------------------------
     John Kelly



<PAGE>


                              EDISON INTERNATIONAL

                            Equity Compensation Plan
                                       and
                                2000 Equity Plan
                              Terms and Conditions
                                       For
                         Special Grant of Stock Options
                                  May 18, 2000

The Compensation and Executive Personnel Committee of the Board of Directors of
Edison International (Committee) approved a special one-time grant (the May 2000
Grant) of nonqualified stock options to purchase EIX common stock (EIX Options)
under the Equity Compensation Plan and the 2000 Equity Plan (Plans) to eligible
persons (Holders) at Edison International (EIX) or its participating affiliates
(the Companies, or individually, the Company) to be effective upon adoption of
the 2000 Equity Plan by EIX's Board of Directors. The Board of Directors adopted
the 2000 Equity Plan on May 18, 2000. The EIX Options included in the May 2000
Grant are subject to the terms and conditions set forth below. These terms and
conditions (Terms and Conditions) shall not apply to any other EIX Options
granted under the Plans.

1. PRICE
The exercise price of an EIX Option stated in the award certificate is
the average of the high and low sales prices of EIX Common Stock as reported in
the Western Edition of The Wall Street Journal for the New York Stock Exchange
Composite Transactions for May 18, 2000, the date of grant.

2.  VESTING AND EXERCISABILITY
(a) Subject to the provisions of Section 3, (i) EIX Options may only be
exercised or paid to the extent vested, and (ii), until the fifth anniversary of
the date of grant, vested EIX Options may not be exercised unless and until the
average closing price for EIX Common Stock as reported in the Western Edition of
The Wall Street Journal for the New York Stock Exchange Composite Transactions
for at least 20 consecutive trading days has equaled or exceeded $25. The EIX
Options will vest in annual installments according the following schedule as
long as the Holder remains employed by one of the Companies:

                 Anniversary of Grant Date         Vested Percentage
                 -------------------------         -----------------
                            2nd                           25%
                            3rd                           50%
                            4th                           75%
                            5th                          100%

                                       1
<PAGE>

(b) The vested portions of the EIX Options will accumulate to the extent not
exercised or exercisable, and be exercisable by the Holder subject to the stock
price appreciation requirement of Section 2(a)(ii) and the provisions of Section
3, in whole or in part, in any subsequent period but shall not be exercisable
after the 10th anniversary of the date of grant.

(c) If, during the vesting period, the Holder (i) retires on or after (A)
attaining age 65 or (B) attaining age 55 with five "years of service," as
defined in the Southern California Edison Company Retirement Plan, or (C) such
earlier date that EIX determines qualifies as retirement for purposes of its
qualified retirement plans, (ii) terminates employment while on leave with a
permanent and total disability, or (iii) dies while employed, then the vesting
and exercise provisions of this Section 2(c) will apply. The EIX Options will
vest to the extent necessary to cause the aggregate number of shares subject to
vested EIX Options (including any shares acquired pursuant to previously
exercised EIX Options) to equal the product of 1/60th of the number of shares
granted times the number of full months of service the Holder has completed
during the vesting period. Such EIX Options may not, however, be exercised prior
to the 5th anniversary of the date of grant unless the stock price appreciation
requirement of Section 2(a)(ii) has been satisfied prior to the exercise date.
In addition, the provisions of Appendix B hereto shall apply with respect to any
Holder who served as a member of the Southern California Edison Company
Management Committee (which was dissolved in 1993).

(d) Notwithstanding the foregoing, in the event of a "Change in Control of EIX"
as defined in Appendix A hereto, the provisions of Appendix A hereto shall
apply.

3.  EIX OPTION EXERCISE
(a) Subject to the stock price appreciation requirement of Section 2(a)(ii), the
Holder may exercise a vested EIX Option by providing written notice to EIX on
the form prescribed by EIX for this purpose accompanied by full payment of the
applicable exercise price. Payment must be in cash, or its equivalent, including
EIX Common Stock valued on the exercise date at a per share price equal to the
average of the high and low sales prices of EIX Common Stock as reported in the
Western Edition of The Wall Street Journal for the New York Stock Exchange
Composite Transactions, acceptable to EIX. A broker-assisted "cashless" exercise
may be accommodated for EIX Options at the discretion of EIX. Until payment is
accepted, the Holder will have no rights in the optioned stock. EIX Options may
be exercised at any time after they have vested through the 10th anniversary of
the date of grant except as otherwise provided in Sections 2(a)(ii), 2(c), and
6.

(b) Notwithstanding the foregoing, the Holder of any EIX Option granted under
the 2000 Equity Plan who was a "covered employee," as defined in Section
162(m)(3) of the Internal Revenue Code of 1986, as amended, as of December 31,
1999, may not exercise his or her EIX Option prior to his or her termination of
employment with the Company unless (i) he or she exercises the EIX Option
pursuant to the terms of the Option Gain Deferral Plan (OGDP) and Section 4
below, and (ii) he or she elects a payment date under the OGDP that is certain
to occur following his or her termination of employment.

(c) The Holder agrees that any securities acquired by him or her hereunder are
being acquired for his or her own account for investment and not with a view to
or for the sale in connection with

                                       2
<PAGE>

any distribution thereof and that he or she understands that such securities may
not be sold, transferred, pledged, hypothecated, alienated, or otherwise
assigned or disposed of without either registration under the Securities Act of
1933 or compliance with the exemption provided by Rule 144 or another applicable
exemption under such act.

(d) The Holder will have no right or claim to any specific funds, property or
assets of EIX as a result of the award.

4.  DELAYED PAYMENT OR DELIVERY OF EIX OPTION GAINS
Holders who are eligible to defer salary under the EIX Executive Deferred
Compensation Plan (EDCP) may irrevocably elect to alternatively exercise all or
part of any vested and exercisable EIX Option pursuant to the terms of the OGDP.
To make such an election, the Holder must submit a signed agreement in the form
approved by the Administrator at least six months prior to the expiration date
of the EIX Option. An EIX Option may not be exercised for six months thereafter
except under the limited circumstances specified in the OGDP. Any subsequent
exercises or payments will be subject to the terms, conditions and restrictions
of the OGDP.

5.  TRANSFER AND BENEFICIARY
(a) The EIX Option will not be transferable by the Holder. During the lifetime
of the Holder, the EIX Option will be exercisable only by him or her. The Holder
may designate a beneficiary who, upon the death of the Holder, will be entitled
to exercise the then vested portion of the EIX Option during the remaining term
subject to the provisions of the Plan and these terms and conditions.

(b) Notwithstanding the foregoing, EIX Options of the members of the EIX
Management Committee are transferable to a spouse, children, or grandchildren,
or trusts or other vehicles established exclusively for their benefit. Any
transfer request must specifically be authorized by EIX in writing and shall be
subject to any conditions, restrictions or requirements as the administrator may
determine.

6.  TERMINATION OF EIX OPTIONS
(a) If a Holder's employment terminates for any reason other than a reason
identified in Section 2(c), (i) the Holder's unvested EIX Options and vested EIX
Options which have not become exercisable will terminate on the date of such
termination, and (ii) the Holder's EIX Options that have become both vested and
exercisable will terminate 180 days after the date of such termination.

(b) If a Holder's employment terminates for a reason identified in Section 2(c),
(i) the Holder's unvested EIX Options (after application of the vesting
provisions of Section 2(c)) will terminate on the date of such termination, and
(ii) the Holder's vested EIX Options will terminate on the 10th anniversary of
the date of grant.

(c) Notwithstanding the foregoing provisions of this Section 6, no EIX Option
may remain outstanding after the 10th anniversary of the date of grant, each EIX
Option is subject to the

                                       3
<PAGE>

terms and conditions of Appendix A hereto, and each EIX Option may be terminated
if EIX elects to substitute a cash award as provided under Section 11.

7.  ENGAGING IN COMPETITION WITH EIX OR ITS AFFILIATES
In the event that a Holder who is at the level of Senior Vice President or above
"competes" (as defined below) with any of the Companies prior to, or during the
six-month period following, any exercise of an EIX Option, the Committee, in its
sole discretion, may rescind such exercise within two years thereafter. In the
event of any such rescission, the Holder shall pay to EIX or the Company by
which he is or was last employed the amount of any gain realized as a result of
the rescinded exercise in such manner and on such terms and conditions as the
Committee may require, and EIX or such Company shall be entitled to set-off the
amount of any such gain against any amount owed to the Holder by EIX or such
Company. For purposes of this Section 7, "compete" shall mean the Holder's
rendering of services for any organization or engaging directly or indirectly in
any business that competes with the business of the Company by which he is or
was last employed without the prior written consent of the General Counsel of
EIX.

8.  TAXES
EIX will have the right to retain and withhold the amount of taxes required by
any government to be withheld or otherwise deducted and remitted with respect to
the exercise of any EIX Option. In its discretion, EIX may require the Holder to
reimburse EIX for any such taxes required to be withheld by EIX and may withhold
any distribution in whole or in part until EIX is so reimbursed. In lieu
thereof, EIX will have the right to withhold from any other cash amounts due
from EIX to the Holder an amount equal to such taxes required to be withheld by
EIX, or to retain and withhold a number of shares of EIX Common Stock having a
market value equal to such taxes and cancel (in whole or in part) the shares, or
to repurchase such shares from the Holder within six months after the shares of
Common Stock were acquired by the Holder. Shares withheld or repurchased to
reimburse EIX for federal and state income and payroll taxes shall be limited to
the number of shares which have a Fair Market Value on the date of withholding
or repurchase equal to the aggregate amount of such tax liabilities based on the
minimum statutory withholding rates that are applicable to such supplemental
taxable income.

9.  CONTINUED EMPLOYMENT
Nothing in the award certificate or this Statement of Terms and Conditions will
be deemed to confer on the Holder any right to continue in the employ of EIX or
an EIX affiliate or interfere in any way with the right of the employer to
terminate his or her employment at any time.

10. NOTICE OF DISPOSITION OF SHARES AND SECTION 16
(a) Holder agrees that if he or she should dispose of any shares of stock
acquired on the exercise of EIX Options, including a disposition by sale,
exchange, gift or transfer of legal title within six months from the date such
shares are transferred to the Holder, the Holder will notify EIX promptly of
such disposition.

(b) If an EIX Option is granted to a person who later becomes subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended
("Section 16"), the EIX Option

                                       4
<PAGE>

will immediately and automatically become subject to the requirements of Rule
16b-3(d)(3) ("Rule") and may not be exercised, paid or transferred until the
Rule has been satisfied. In its sole discretion, the Administrator may take any
action to assure compliance with the requirements of the Rule, including
withholding delivery to Holder (or any other person) of any security or of any
other payment in any form until the requirements of the Rule have been
satisfied. The Secretary of Edison International may waive compliance with the
requirements of the Rule if he or she determines the transaction to be exempt
from the provisions of paragraph (b) of Section 16.

11.  AMENDMENT
The EIX Options are subject to the terms of the Plans as amended from time to
time. EIX reserves the right to substitute cash awards substantially equivalent
in value to the EIX Options. The EIX Options may not otherwise be restricted or
limited by any Plan amendment or termination approved after the date of the
award without the Holder's consent; provided, however, that EIX reserves the
right to amend the provisions of Appendix A hereto without the consent of any
Holder at any time before a "Potential Change in Control" as defined in Appendix
A.

12.  FORCE AND EFFECT
The various provisions herein 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.

13.  GOVERNING LAW
The terms and conditions of the EIX Options will be construed under the laws of
the State of California.

14. NOTICE
Unless waived by EIX, any notice required under or relating to the EIX Options
must be in writing, with postage prepaid, addressed to: Edison International,
Attn: Corporate Secretary, P.O. Box 800, Rosemead, CA 91770.



EDISON INTERNATIONAL




JOHN KELLY
- -------------------------------
JOHN KELLY

<PAGE>

                                   APPENDIX A
                                CHANGE IN CONTROL

This Change in Control Appendix sets forth the terms and conditions applicable
to EIX Options granted on May 18, 2000 under the Edison International Equity
Compensation Plan and the Edison International 2000 Equity Plan in the event of
a Change in Control of EIX. Capitalized terms used herein have the meaning set
forth in the Terms and Conditions or, if not defined in the Terms and
Conditions, the meanings set forth in Section 3 below.

1.       EFFECT OF CHANGE IN CONTROL
Notwithstanding anything to the contrary in the Terms and Conditions, in the
event of a Change in Control of EIX, the EIX Options will vest and become
exercisable unless provisions are made in connection with the transaction for
the assumption of or substitution for the EIX Options of new options for stock
of the successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices. If the
EIX Options are assumed or converted as described in the preceding sentence, any
Holder's assumed or converted options will vest and become exercisable if he or
she is terminated without Cause or voluntarily terminates with Good Reason upon
or within 24 months after the Change in Control of EIX.

2.       EFFECT OF TERMINATION DURING A PROTECTED PERIOD
(a) Notwithstanding anything to the contrary in the Terms and Conditions, if,
during a Protected Period but prior to a Change in Control of EIX, a Holder
terminates employment with Good Reason or is terminated without Cause, then (i)
any of his or her EIX Options that have not vested and become exercisable at the
time of his or her termination of employment shall not be forfeited upon his or
her termination of employment, but instead shall be suspended and remain
unvested and not exercisable; (ii) any of his or her EIX Options that have
vested and become exercisable as of the date of his or her termination of
employment shall not be forfeited if unexercised at the end of 180 days
following termination of employment, but instead shall be suspended and become
not exercisable; (iii) if a Change in Control of EIX occurs within 24 months
following the Holder's termination of employment, all of his or her suspended
EIX Options shall vest and become exercisable on the day immediately preceding
the closing of such Change in Control of EIX; and (iv) if no Change in Control
of EIX occurs within 24 months following the Holder's termination of employment,
all of the Holder's suspended EIX Options shall be forfeited at the end of such
24 month period.

(b) If a Holder's suspended options vest and become exercisable in accordance
with this Section 2, and the EIX Options are assumed or converted as
contemplated by Section 1 above, the Holder will have until the later of (i) the
date that is 180 days after the date his or her employment terminated, or (ii)
the date that is 60 days after the date of the Change in Control of EIX to
exercise his or her vested options. The Holder's vested options that are not
exercised during such period shall terminate at the end of such period. If the
EIX Options are not assumed or converted as contemplated by Section 1 above, any
suspended options that vest and become exercisable in accordance with this
Section 2 will terminate (to the extent not previously exercised) upon the
closing of the Change in Control of EIX.


                                       A-1
<PAGE>

(c) Notwithstanding anything else contained herein to the contrary, in no event
may a Holder exercise his or her options after the expiration of the stated term
of the EIX Options.

3.       DEFINITIONS
Whenever the following terms are used in this Appendix, they will have the
meanings specified below unless the context clearly indicates otherwise:

     (a)  "Beneficial Owner" shall have the meaning ascribed to such term in
          Rule 13d-3 of the General Rules and Regulations under the Securities
          Exchange Act of 1934, as amended.

     (b)  "Board of Directors" or "Board" means the Board of Directors of EIX.

     (c)  "Cause" means the occurrence of either or both of the following:

          (i)  Holder's conviction of, or pleading guilty or nolo contendere to,
               an act of fraud, embezzlement, theft, or other act constituting a
               felony; or

          (ii) The willful engaging by the Holder in misconduct that would have
               resulted in the termination of his or her employment by his or
               her Employer under its or EIX's policies and practices applicable
               to the Holder in effect immediately prior to the start of the
               Protected Period; however, no act or failure to act, on the
               Holder's part, shall be considered "willful" unless done, or
               omitted to be done, by the Holder 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.

     (d)  "Change in Control of EIX" shall be deemed to have occurred as of the
          first day that any one or more of the following conditions shall have
          been satisfied:

          (i)  Any Person (other than a trustee or other fiduciary holding
               securities under an employee benefit plan of EIX) becomes the
               Beneficial Owner, directly or indirectly, of securities of EIX
               representing thirty percent (30%) or more of the combined voting
               power of the EIX's then outstanding securities. For purposes of
               this clause, "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.

          (ii) On any day after May 18, 2000 (the "Measurement 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:

               (A)  was a member of the Board on the applicable Initial Date (an
                    "Initial Director"); or

                                       A-2
<PAGE>

               (B)  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 (B) 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.

                    "Initial Date" means the later of (A) May 18, 2000 or (B)
                    the date that is two (2) years before the Measurement Date.

                    (iii) 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 Edison International Affiliate
                         (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.

                    (iv) 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.

     (e)  "Code" means the Internal Revenue Code of 1986, as amended.

     (f)  "Common Stock" means the common shares of EIX.

     (g)  "Director" means a member of the Board of Directors of EIX.

     (h)  "Edison International Affiliate" means any company during any period
          in which it is a "subsidiary company" as that term is defined in
          Section 424(f) of the Code.

     (i)  "EIX Company" means EIX or an Edison International Affiliate.

     (j)  "Employer" means the EIX Company that employs or last employed the
          Participant.

                                       A-3
<PAGE>

     (k)  "Good Reason" means, without the Participant's express written
          consent, the occurrence of any one or more of the following:

          (i)  A material reduction in the nature or status of the Participant's
               authorities, duties, and/or responsibilities (when such
               authorities, duties, and/or responsibilities are viewed in the
               aggregate) from their level in effect on the day immediately
               prior to the start of the Protected Period.

          (ii) A reduction by the Participant's Employer in the Participant's
               base salary as in effect on the day immediately prior to the
               start of the Protected Period.

          (iii) A material reduction by EIX or by the Participant's Employer of
               the Participant's aggregate welfare benefits and/or incentive
               opportunities under EIX's and/or the Employer's short and/or
               long-term incentive programs, as such benefits and opportunities
               exist on the day immediately prior to the start of the Protected
               Period and when viewed on an aggregate basis.

          (iv) Any other event defined as "Good Reason" in any severance plan
               that covers the Participant or any severance agreement to which
               the Participant is a party.

     (l)  "Person" shall have the meaning ascribed to such term in Section
          3(a)(9) of the Securities Exchange Act of 1934, as amended, 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.

     (m)  "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:

          (i)  Any Person (other than a trustee or other fiduciary holding
               securities under an employee benefit plan of EIX): (A) announces
               an intention to take action which, if consummated, would result
               in a Change in Control of EIX; or (B) 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" 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.

          (ii) EIX enters into an agreement that, if consummated, would result
               in a Change in Control of EIX.

          (iii) The Board declares that a Potential Change in Control has
               occurred for purposes of this Plan.

                                       A-4
<PAGE>

          (iv) The shareholders of EIX approve a transaction that, if
               consummated, would constitute a Change in Control of EIX.

     (n)  "Protected Period" means the period related to a Change in Control of
          EIX that begins on the date of the related Potential Change in Control
          (or, if no Potential Change in Control occurs with respect to the
          event, the date that is six months before the actual Change in Control
          of EIX) and ends on the date of the Change in Control of EIX.

<PAGE>

                                   APPENDIX B
                         MANAGEMENT COMMITTEE PROVISIONS

This Management Committee Appendix sets forth certain special vesting provisions
applicable to Holders who served as members of the Southern California Edison
Company Management Committee (which was dissolved in 1993). Capitalized terms
used herein have the meaning set forth in the Terms and Conditions.

1.       SPECIAL VESTING RULES
(a) Except to the extent otherwise provided in the Holder's Stock Option
certificate, the Holder's May 2000 Grant of an EIX Option is deemed to be
granted in two separate tranches: "Tranche 2001"and "Tranche 2002," each
covering 50% of the shares subject to the Holder's May 200 Grant. Tranche 2001
and Tranche 2002 will each be subject to the vesting and other provisions of the
Terms and Conditions as if they were separate grants.

(b) If, during the vesting period and before January 1, 2001, the Holder's
employment terminates due to a reason described in Section 2(c) of the Terms and
Conditions, both Tranche 2001 and Tranche 2 of the Holder's EIX Option will vest
to the extent determined under Section 2(c) of the Terms and Conditions without
regard to the other provisions of this Appendix B.

(c) If, during the vesting period and on or after January 1, 2001 but before
January 1, 2002, the Holder's employment terminates due to a reason described in
Section 2(c) of the Terms and Conditions:

     (i)  Tranche 2001 of the Holder's EIX Option will become fully vested upon
          the termination of the Holder's employment; and

     (ii) Tranche 2002 of the Holder's EIX Option will vest to the extent
          determined under Section 2(c) of the Terms and Conditions without
          regard to the other provisions of this Appendix B.

(d) If, during the vesting period and on or after January 1, 2002, the Holder's
employment terminates due to a reason described in Section 2(c) of the Terms and
Conditions, both Tranche 2001 and Tranche 2002 of the Holder's EIX Options will
become fully vested upon the termination of the Holder's employment.

(e) Notwithstanding anything to the contrary herein, any portion of the Holder's
EIX Option that becomes vested in accordance with the provisions of this
Appendix B will not be exercisable prior to the 5th anniversary of the date of
grant unless the stock price appreciation requirement of Section 2(a)(ii) has
been satisfied prior to the exercise date.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>2000 DIRECTOR AWARD CERTIFICATE
<TEXT>


EDISON INTERNATIONAL
LOGO

                            EQUITY COMPENSATION PLAN

                        2000 DIRECTOR AWARD CERTIFICATE

This award is made by Edison International to NAME ("Director"), as of April 20,
2000 pursuant to the Equity Compensation Plan ("Plan"). Edison International
hereby grants to Direcotr, as a matter of separate arrangement and not in liey
of any other compensation for services, the following:

                ------------------------------------------------
                   500 shares of Edison International Common
                  Stock to be issued as soon as practicable in
                accordance with the Director's instructions, and

                300 Edison International deferred stock units to
                    be credited under the Director Deferred
                               Compensation Plan.
                ------------------------------------------------

The deferred stock unit award is made subjec to the terms and conditions
contained in the Director Deferred Compensation Plan which are incorporated
herein by reference.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>AMENDMENT NO. 1 TO EIX ECP
<TEXT>



                              Amendment No.1 to the
                  Edison International Equity Compensation Plan
                          (AS RESTATED JANUARY 1, 1998)





     Section 3.4 of the Edison International Equity Compensation Plan as
Restated January 1, 1998 is amended by adding the following section thereto as a
new Section 3.4(e) effective May 18, 2000:

     "(e) Notwithstanding the foregoing provisions of this Section 3.4, a Plan
          Award may contain specific provisions, determined by the Administrator
          at the time of the award and set forth in the written award instrument
          (or the statement of terms applicable thereto), regarding the
          consequences of a change in control of Edison International and, if so
          contained in an award, those provisions shall be controlling in the
          event of any inconsistency with this Section 3.4. (For example, and
          without limitation, a Plan Award may provide that accelerated vesting
          will occur in connection with a change in control event only if the
          Participant's employment is terminated by an EIX Company without cause
          or the Participant terminates employment with an EIX Company for good
          reason, and, in either event, the Participant does not otherwise
          continue as an employee of another EIX Company.)"

                                                  Edison International


                                                       John H. Kelly
                                        ---------------------------------------
                                         John H. Kelly, Senior Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<TEXT>



                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference of our report included in this quarterly report on Form 10-Q for the
quarter ended June 30, 2000, of Southern California Edison Company into the
previously filed Registration Statements which follow:

      Registration Form      File No.        Effective Date

       Form S-3              33-53288       November 6, 1992
       Form S-3              33-50251       September 21, 1993
       Form S-3              333-00497      February 2, 1996




ARTHUR ANDERSEN LLP

Los Angeles
August 10, 2000

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>SCE FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>



<ARTICLE>  UT

<LEGEND>
SCE Financial Data Schedule - Exhibit 27
</LEGEND>
<MULTIPLIER>  1,000



<S>                                       <C>
<PERIOD-TYPE>                             6-MOS
<FISCAL-YEAR-END>                                           DEC-31-2000
<PERIOD-START>                                              JAN-01-2000
<PERIOD-END>                                                JUN-30-2000
<BOOK-VALUE>                                                PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                                           7,532,922
<OTHER-PROPERTY-AND-INVEST>                                         2,839,086
<TOTAL-CURRENT-ASSETS>                                              1,977,725
<TOTAL-DEFERRED-CHARGES>                                            5,894,801
<OTHER-ASSETS>                                                              0
<TOTAL-ASSETS>                                                     18,244,534
<COMMON>                                                            2,168,054
<CAPITAL-SURPLUS-PAID-IN>                                             335,883
<RETAINED-EARNINGS>                                                   690,347
<TOTAL-COMMON-STOCKHOLDERS-EQ>                                      3,194,284
<PREFERRED-MANDATORY>                                                 255,700
<PREFERRED>                                                           128,755
<LONG-TERM-DEBT-NET>                                                2,342,803
<SHORT-TERM-NOTES>                                                    175,000
<LONG-TERM-NOTES-PAYABLE>                                           2,507,657
<COMMERCIAL-PAPER-OBLIGATIONS>                                        680,357
<LONG-TERM-DEBT-CURRENT-PORT>                                         647,781
<PREFERRED-STOCK-CURRENT>                                                   0
<CAPITAL-LEASE-OBLIGATIONS>                                                 0
<LEASES-CURRENT>                                                            0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                                      8,312,197
<TOT-CAPITALIZATION-AND-LIAB>                                      18,244,534
<GROSS-OPERATING-REVENUE>                                           3,682,723
<INCOME-TAX-EXPENSE>                                                  257,949
<OTHER-OPERATING-EXPENSES>                                          2,948,527
<TOTAL-OPERATING-EXPENSES>                                          3,206,476
<OPERATING-INCOME-LOSS>                                               476,247
<OTHER-INCOME-NET>                                                     53,617
<INCOME-BEFORE-INTEREST-EXPEN>                                        529,864
<TOTAL-INTEREST-EXPENSE>                                              249,972
<NET-INCOME>                                                          279,892
<PREFERRED-STOCK-DIVIDENDS>                                            10,219
<EARNINGS-AVAILABLE-FOR-COMM>                                         269,673
<COMMON-STOCK-DIVIDENDS>                                              186,741
<TOTAL-INTEREST-ON-BONDS>                                             174,864
<CASH-FLOW-OPERATIONS>                                                999,885
<EPS-BASIC>                                                                 0
<EPS-DILUTED>                                                               0



</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
