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<SEC-DOCUMENT>0000827052-02-000012.txt : 20020415
<SEC-HEADER>0000827052-02-000012.hdr.sgml : 20020415
ACCESSION NUMBER:		0000827052-02-000012
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		12
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020329

FILER:

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

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-02313
		FILM NUMBER:		02592964

	BUSINESS ADDRESS:	
		STREET 1:		2244 WALNUT GROVE AVE
		STREET 2:		P O BOX 800
		CITY:			ROSEMEAD
		STATE:			CA
		ZIP:			91770
		BUSINESS PHONE:		6263021212

	MAIL ADDRESS:	
		STREET 1:		2244 WALNUT GROVE AVE
		CITY:			ROSEMEAD
		STATE:			CA
		ZIP:			91770
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>sce10k2001.htm
<DESCRIPTION>2001 SCE ANNUAL REPORT ON FORM 10-K
<TEXT>
<HTML>
<HEAD>
<TITLE> SCE 10-K December 31, 2001
</TITLE>
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<BODY>
<PRE>
===================================================================================================================

                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                     FORM 10-K

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

For the fiscal year ended                         December 31, 2001
                          -----------------------------------------------------------------------------------------

                                           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                                                      (626) 302-1212
            Rosemead, California                       91770                    (Registrant's telephone number,
  (Address of principal executive offices)          (Zip Code)                       including area code)
                            Securities registered pursuant to Section 12(b) of the Act:

                                                                                     Name of each exchange
             Title of each class                                                      on which registered
             -------------------                                                 ---------------------------

                Capital Stock
            Cumulative Preferred                                                     American and Pacific
         4.08% Series      4.32% Series
         4.24% Series      4.78% Series

                         Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark  whether  the  registrant  (1) has filed all  reports  required to be filed by Section 13 or
15(d) of the  Securities  Exchange Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such filing  requirements  for the past
90 days.    Yes [X]     No [  ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation S-K is not contained
herein,  and will not be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or  information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    [X]

As of March 25,  2002,  there were  434,888,104  shares of Common Stock  outstanding,  all of which are held by the
registrant's   parent  holding  company.   The  aggregate  market  value  of  registrant's  voting  stock  held  by
non-affiliates  was  approximately  $323,592.460.35  on or about March 25, 2002,  based upon prices reported by the
American Stock  Exchange.  The market values of the various classes of voting stock held by  non-affiliates,  as of
March 25, 2001,  were as follows:  CUMULATIVE  PREFERRED  STOCK  $75,829,990.35;  $100 CUMULATIVE  PREFERRED  STOCK
$247,762,470.00.

                                        DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  following  documents  listed  below have been  incorporated  by  reference  into the parts of this
report so indicated.

(1)  Designated portions of the Annual Report to
         Shareholders for the year ended December 31, 2001............................  Parts I, II and IV
(2)  Designated portions of the Joint Proxy Statement
         relating to registrant's 2002 Annual Meeting of Shareholders.................  Part III

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






                                                 TABLE OF CONTENTS


Item                                                                                                        Page
- -------------------------------------------------------------------------------------------------------------------

                                                      Part I

1.   Business ...............................................................................................  1
         Forward-Looking Statements and Risk Factors.........................................................  1
         Competitive Environment.............................................................................  3
         Regulation..........................................................................................  3
         Changing Regulatory Environment.....................................................................  4
         Other Rate Matters.................................................................................. 13
         Fuel Supply and Purchased Power Costs............................................................... 17
         Environmental Matters............................................................................... 19
2.   Properties.............................................................................................. 22
         Existing Generating Facilities...................................................................... 22
         Construction Program and Capital Expenditures....................................................... 24
         Nuclear Power Matters............................................................................... 24
3.   Legal Proceedings....................................................................................... 27
         San Onofre Personal Injury Litigation............................................................... 27
        Navajo Nation Litigation............................................................................. 28
        Shareholder Litigation............................................................................... 28
         Qualifying Facilities Litigation.................................................................... 29
         Power Exchange (PX) Performance Bond Litigation..................................................... 30
         CPUC Litigation and Settlement...................................................................... 31
4.   Submission of Matters to a Vote of Security Holders..................................................... 31
         Executive Officers of the Registrant................................................................ 31

                                                      Part II

5.   Market for Registrant's Common Equity and Related Stockholder Matters................................... 33
6.   Selected Financial Data................................................................................. 33
7.   Management's Discussion and Analysis of Results of Operations and Financial Condition................... 33
7A.  Quantitative and Qualitative Disclosures About Market Risk.............................................. 33
8.   Financial Statements and Supplementary Data............................................................. 33
9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... 33

                                                     Part III

10.  Directors and Executive Officers of the Registrant...................................................... 34
11.  Executive Compensation.................................................................................. 34
12.  Security Ownership of Certain Beneficial Owners and Management.......................................... 34
13.  Certain Relationships and Related Transactions.......................................................... 34

                                                      Part IV

14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................................ 35
         Financial Statements................................................................................ 35
         Report of Independent Public Accountants and Schedules Supplementing Financial Statements........... 35
         Exhibits............................................................................................ 35
         Reports on Form 8-K................................................................................. 35
         Signatures.......................................................................................... 40











                                                      PART I

Item 1.  Business

Southern California Edison Company (SCE) was incorporated in 1909 under the laws of the State of California.  SCE
is a public utility primarily engaged in the business of supplying electric energy to a 50,000 square-mile area
of central, coastal and southern California, excluding the City of Los Angeles and certain other cities.  The SCE
service territory includes approximately 800 cities and communities and a population of more than 11 million
people.  In 2001, SCE's total operating revenue was derived from:  34% residential customers, 42% commercial
customers, 10% industrial customers, 7% public authorities, 2% agricultural and other customers, and 5% other
electric revenue.  SCE had 11,663 full-time employees at year-end 2001.

Beginning in April 1998, pursuant to the restructuring of the California electric utility industry mandated by a
1996 state law, other entities have had the ability to sell electricity in SCE's service territory, utilizing
SCE's transmission and distribution lines at tariffed rates.  As a part of this utility industry restructuring,
SCE sold some of its electric generating plants in 1998.  SCE retained other electric generating plants, however,
and it retained its transmission and distribution lines over which it transmits and distributes the electricity
generated by SCE and other generators to the customers in SCE's service territory.  As a further part of the
industry restructuring, SCE was required for an interim transitional period to sell all SCE-generated electricity
to the California Power Exchange (PX) at prices determined by periodic public auctions, and to buy any
electricity needed to serve SCE's retail customers from the PX at similarly determined prices.  Due to the
California energy crisis and SCE's resulting financial difficulties, as described below under "Changing
Regulatory Environment," in January 2001 SCE ceased buying and selling power through the PX.  In 2001,
legislation was enacted in California prohibiting SCE and other California utilities from selling their remaining
generating facilities.  SCE has continued to provide power for its customers from its own generation sources and
from existing contracts with other utilities and power producers.  The California Department of Water Resources
(CDWR) is providing power for sale to SCE's customers to the extent SCE cannot provide sufficient power from
SCE's own generation and power contracts.  SCE delivers such power and collects and remits revenues on behalf of
the CDWR.

                                    Forward-Looking Statements and Risk Factors

This annual report on Form 10-K contains forward-looking statements that reflect SCE's current expectations and
projections about future events based on SCE's knowledge of present facts and circumstances and assumptions about
future events.  Other information distributed by SCE that is incorporated herein or refers to or incorporates
this annual report may also contain forward-looking statements.  In this annual report and elsewhere, the words
"expects," "believes," "anticipates," "estimates," "intends," "plans," "probable" and variations of such words and
similar expressions are intended to identify forward-looking statements.  Such statements necessarily involve
risks and uncertainties that could cause actual results to differ materially from those anticipated.  Some of the
risks, uncertainties and other important factors that could cause results to differ, or that otherwise could
impact SCE, are:

o    SCE's financial condition, liquidity and credit ratings were adversely affected by California's electricity
     crisis.  SCE is seeking to regain an investment grade credit rating so it can re-enter the credit markets on
     more efficient and reasonable terms.  Whether and when investment grade credit ratings can be regained will
     have a significant impact on SCE's financial condition.  Based on the rights to cost recovery and revenue
     established by the settlement agreement with the California Public Utilities Commission (CPUC) (discussed
     below) and CPUC implementing orders, including the procurement-related obligations account (PROACT)
     resolution (discussed below), SCE's credit ratings were raised and the company repaid all of its undisputed
     past-due obligations in March 2002 to creditors from a combination of cash on hand and the proceeds of
     senior secured credit facilities and a remarketing of pollution control bonds.  Although Fitch IBCA,
     Standard &amp; Poor's and Moody's Investors Service





     raised their credit ratings significantly for both Edison International and SCE in March 2002, the new
     ratings are still below investment grade.

o    The court order approving SCE's settlement agreement with the CPUC is being appealed by a consumer advocacy
     group to the federal court of appeals.  If the order is successfully challenged on appeal, implementation of
     the settlement agreement by SCE and the CPUC could be affected adversely, which in turn may have an adverse
     affect on SCE's ability to restore its financial condition.

o    SCE is affected by actions of regulatory bodies setting rates, adopting or modifying cost recovery,
     accounting or rate-setting mechanisms and implementing the restructuring of the electric utility industry.

o    SCE may be affected by legislative measures adopted and being contemplated by federal and state authorities
     to address the California electricity crisis or deregulation in other states, and pending legislation that
     would repeal or amend key statutes governing the electric industry.

o    SCE may be affected by increased competition in the electric utility business and other energy-related
     businesses, including among other things the ability of customers to purchase energy and metering and
     billing services from nonutility energy service providers.

o    SCE owns and operates power generation facilities and, therefore, may be affected by changes in the supply,
     demand and price for electric capacity and energy in relevant markets and the cost and availability of fuel
     and fuel transportation.

o    As an owner-operator of power generation facilities, SCE also may be affected by unpredictable weather
     conditions that may affect seasonal patterns of revenue collection, cause changes in demand (and prices) for
     electricity for heating and cooling purposes, and result in higher costs for repair or maintenance of assets.

o    SCE may be affected by financial market conditions such as inflation and changes in interest rates, which
     could affect the availability and cost of external financing, as well as the actions of securities rating
     agencies.

o    SCE is subject to power plant operation risks, including strikes, equipment failures and other issues.

o    SCE may be affected by changes in tax laws or unfavorable interpretation and application of the laws by tax
     authorities.

o    The operation of power generation, transmission or distribution facilities by SCE involves the potential for
     new or increased environmental liabilities associated with power plants and other facilities or operations,
     resulting from changes in laws, accidents or other events.  Environmental advocacy groups and regulatory
     agencies have been focusing considerable attention on carbon dioxide emissions from coal-fired plants and
     their potential role in the "global-warming" issue.  The adoption of new laws and regulations to implement
     carbon dioxide or other emission controls could adversely affect SCE's coal plants.  For further discussion,
     see "Business - Environmental Matters."

o    SCE may be subject to legal proceedings arising out of financial reporting, commercial disputes, property
     rights, personal injuries, and other circumstances.

Additional information about the risk factors listed above and other risks and uncertainties is contained
throughout this report and in the Notes to Consolidated Financial Statements and Management's Discussion and
Analysis of Results of Operations and Financial Condition (MD&amp;A) that are incorporated by reference into Part II
of this annual report.  Readers are urged to read this entire report, including the information incorporated by
reference, and carefully consider the risks, uncertainties and other factors that affect SCE's business.  The
information contained in this report is subject to change without notice, and

                                     Page 2



SCE is not obligated to publicly update or revise forward-looking statements.  Readers should review future
reports filed by SCE with the Securities and Exchange Commission (SEC).

                                              Competitive Environment

Throughout most of its history, SCE provided integrated electric generation, transmission, and distribution
services on a bundled basis to its customers and had an exclusive franchise within its service territory.
Customers had the right to generate their own electricity through cogeneration or other means, but third parties
were not permitted to sell energy directly to customers within SCE's service territory.  In 1994, the CPUC
commenced the electric industry restructuring process.  In 1996, the California Legislature enacted comprehensive
restructuring legislation.  SCE's business was unbundled into separate generation, transmission, and distribution
components, and the development of a competitive generation market was authorized.  SCE was directed by the CPUC
to divest the bulk of its gas-fired generation portfolio.  Those plants are now owned and operated by independent
power producers.  Under the legislation and CPUC decisions, independent power producers and other energy service
providers were authorized to enter into contracts to provide electricity to retail customers over SCE's
distribution system.  Power producers and suppliers were authorized to sell energy to the PX at wholesale prices
set by the market.  In 2001, as a result of the California energy crisis, the PX ceased operation and the CDWR
took over the purchase of power for utility customers.  The ability of customers to depart utility service and
buy power from power producers and suppliers other than SCE was suspended.  The future of the competitive market
in California is uncertain.  The effects on SCE of this changing competitive environment are discussed below
under "Business - Changing Regulatory Environment."

                                                    Regulation

SCE's retail operations are, for the most part, subject to regulation by the CPUC.  The CPUC has the authority to
regulate, among other things, retail rates, issuance of securities, and accounting practices.  SCE's wholesale
operations are subject to regulation by the Federal Energy Regulatory Commission (FERC).  The FERC has the
authority to regulate wholesale rates as well as other matters, including retail transmission service pricing,
accounting practices, and licensing of hydroelectric projects.

SCE is subject to the jurisdiction of the United States Nuclear Regulatory Commission (NRC) with respect to its
nuclear power plants.  NRC regulations govern the granting of licenses for the construction and operation of
nuclear power plants and subject those power plants to continuing review and regulation.

The construction, planning, and siting of SCE's power plants within California are subject to the jurisdiction of
the California Energy Commission and the CPUC.  SCE is subject to the rules and regulations of the California Air
Resources Board and local air pollution control districts with respect to the emission of pollutants into the
atmosphere; the regulatory requirements of the California State Water Resources Control Board and regional boards
with respect to the discharge of pollutants into waters of the state; and the requirements of the California
Department of Toxic Substances Control with respect to handling and disposal of hazardous materials and wastes.
SCE is also subject to regulation by the Environmental Protection Agency (EPA), which administers certain federal
statutes relating to environmental matters.  Other federal, state, and local laws and regulations relating to
environmental protection, land use, and water rights also affect SCE.

The California Coastal Commission has continuing jurisdiction over the coastal permit for San Onofre Nuclear
Generating Station (San Onofre) Units 2 and 3.  Although the units are operating, the permit's mitigation
requirements have not yet been completed.  California Coastal Commission jurisdiction may continue for several
years due to implementation and oversight of permit mitigation conditions, including restoration of wetlands and
construction of an artificial reef for kelp.  Additionally, SCE has a coastal permit to construct a dry cask
spent fuel storage installation for Units 2 and 3.

                                     Page 3



The United States Department of Energy has regulatory authority over certain aspects of SCE's operations and
business relating to energy conservation, power plant fuel use and disposal, electric sales for export, public
utility regulatory policy, and natural gas pricing.

                                          Changing Regulatory Environment

SCE operates in a highly regulated environment in which it has an obligation to deliver electric service to
customers within its service territory in return for certain obligations of the regulatory authorities to provide
just and reasonable rates.  In 1994, state lawmakers and the CPUC initiated the electric industry restructuring
process, as discussed above under "Competitive Environment".  As part of California's electric industry
restructuring, a multi-year freeze on the rates that SCE could charge its customers was mandated and transition
cost recovery mechanisms were implemented allowing SCE to recover certain specified costs associated with
generation-related assets (referred to as "stranded costs").

California's electric utility 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.  These frozen rates
were to remain in effect until the earlier of March 31, 2002, or the date when the CPUC-authorized costs for
utility-owned generation assets and obligations were recovered.

In May 2000, SCE began experiencing adverse impacts from unusually high prices for energy and ancillary services
procured through the PX and the California Independent System Operator (ISO).  These high wholesale prices,
coupled with the freeze on SCE's retail rates resulted in substantial revenue undercollections.  Pursuant to CPUC
and accounting rules, SCE recorded the undercollections in the transition revenue account (TRA).  As of
December 31, 2000, the amount of undercollections recorded was $4.5 billion.  Based on a CPUC decision on
March 27, 2001 (see further discussion in "Recovery of Transition and Power Procurement Costs" below), the TRA
undercollection, along with SCE's coal and hydroelectric balancing account overcollections (which amounted to
$1.5 billion as of December 31, 2000), were reclassified to a transition cost balancing account (TCBA).  In
addition, the CPUC recalculated the TCBA to be a $2.9 billion undercollection.

Liquidity Issues

Sustained higher wholesale energy prices that exceeded SCE's retail rate levels resulted in large
undercollections in the TRA and TCBA regulatory balancing accounts.  The undercollections in these accounts,
coupled with near-term capital requirements and the adverse reaction of the credit markets to regulatory
uncertainty regarding SCE's ability to recover its power procurement costs, materially and adversely affected
SCE's liquidity throughout late 2000 and 2001.  As a result of its liquidity crisis, SCE took steps to conserve
cash while continuing to provide service to its customers.  Beginning in January 2001, SCE suspended payments
owed to the ISO, the PX, and qualifying facilities (QFs), deferred payments of certain obligations for principal
and interest on outstanding debt, and did not declare dividends on any of its cumulative preferred stock.  The
suspension or deferral of payments caused defaults on two series of SCE's senior unsecured notes and all of SCE's
commercial paper.  In March 2001, the CPUC ordered SCE to commence payments to QFs for future energy deliveries
and by April 1, 2001, SCE resumed payment of interest on its debt obligations.

In October 2001, SCE entered into an agreement settling a lawsuit against the CPUC concerning SCE's right to
recover its power procurement costs in retail rates.  On January 23, 2002, the CPUC adopted a resolution
implementing a mechanism for recovery of these costs.  (See "CPUC Settlement Agreement" below for a discussion of
this matter.)

On March 1, 2002, SCE closed on a $1.6 billion credit facility, secured by three newly issued series of SCE's
first mortgage bonds, and remarketed approximately $196 million of pollution control bonds that SCE repurchased
in late 2000.

                                     Page 4



The proceeds from the credit facilities and pollution-control bond remarketing were used along with SCE's
available cash to repay $3.2 billion in past-due obligations and $1.65 billion in near-term debt maturities.  The
past-due obligations consisted of:  (1) $875 million to the PX; (2) $99 million to the ISO; (3) $1.1 billion to
QFs; (4) $193 million in PX energy credits for energy service providers; (5) $531 million of matured commercial
paper; (6) $400 million of principal on its 5-7/8% and 6-1/2% senior unsecured notes which were issued prior to
the energy crisis; and (7) $23 million in preferred dividends in arrears.  The near-term debt maturities
consisted of credit facilities whose maturity dates were extended several times and were scheduled to mature in
March and May 2002.  After making the above-described payments, SCE has no material undisputed obligations that
are past-due or in default.  In addition, SCE entered into an agreement with the CDWR to pay for prior deliveries
of energy of $100 million on April 1, 2002, $150 million on June 3, 2002, and the balance on July 1, 2002.

CDWR Power Purchases

On January 17, 2001, following rolling blackouts in the northern California service territory of Pacific Gas and
Electric Company (PG&amp;E), California Governor Gray Davis signed an order declaring an emergency and authorizing
the CDWR to purchase power in order to prevent further blackouts.

In accordance with the emergency order, the CDWR began making emergency power purchases for SCE's customers on
January 17, 2001.  Amounts SCE bills to and collects from its customers for electric power purchased and sold by
the CDWR and through the ISO are remitted directly to the CDWR and are not recognized as revenue by SCE.  In
February 2001, Assembly Bill 1 (First Extraordinary Session, AB 1X) was enacted into law.  AB 1X authorized the
CDWR to enter into contracts to purchase electric power and sell power at cost directly to retail customers being
served by SCE, and authorized the CDWR to issue bonds to finance electricity purchases.

On March 27, 2001, the CPUC issued an interim order requiring SCE to pay the CDWR a per-kWh price equal to the
applicable generation-related retail rate per kWh for electricity for each kWh the CDWR sells to SCE's
customers.  The CPUC determined that the generation-related retail rate should be equal to the total bundled
electric rate (including the 1(cent)per kWh and 3(cent)per kWh surcharges adopted by the CPUC on January 4, 2001, and
March 27, 2001, respectively) less certain nongeneration-related rates or charges.  For the period January 19
through January 31, 2001, the CPUC ordered SCE to pay the CDWR at a rate of 6.277(cent)per kWh for power delivered to
SCE's customers.  This amount increased per the 1(cent)and 3(cent)surcharges referenced above.  The CPUC ordered SCE to
pay the CDWR its applicable generation rate within 45 days after the CDWR supplies power to retail customers,
subject to penalties for each day the payment is late.

On February 21, 2002, the CPUC issued a decision implementing a CDWR revenue requirement of $9.0 billion to pay
its costs associated with bonds issued to finance the CDWR's energy procurement costs for the period January 17,
2001, through December 31, 2002.  The decision states that SCE's allocated share of this revenue requirement
would be approximately $3.6 billion, and changes SCE's payment from an average recorded rate of 11.46(cent)per kWh to
9.744(cent)per kWh.  Amounts remitted to the CDWR on or after March 15, 2002, will be based on the new rate.  The
decision also requires SCE to pay the CDWR the difference in the amount SCE previously paid the CDWR for
electricity delivered from January 17, 2001, through March 15, 2002, and the amount that would have been paid had
the new rate been in effect for the entire period (approximately $41 million).  This amount may be paid in equal
monthly installments over a six-month period.

On February 14, 2001, FERC issued an order that denied the ISO's request to relax creditworthiness standards in
the ISO tariff to the extent this would affect third-party suppliers.  FERC, however, allowed the ISO to revise
its tariff so that a "creditworthy counterparty" could assume responsibility for procuring power with respect to
utilities that do not have the credit rating required by the ISO tariff, such as SCE or PG&amp;E.  On April 6, 2001,
FERC issued an order essentially reaffirming the February 14 order and holding that the ISO must assure that
there is a creditworthy buyer for power delivered to loads through the ISO.  SCE has not met the ISO's
creditworthiness requirements since its credit ratings were downgraded in mid-January 2001.  As a result, SCE
protested and returned the bills it had received from the ISO.  On

                                     Page 5



August 9, 2001, the ISO filed a petition for review of the FERC's April 6, 2002, order with the court of appeals
for the D.C. Circuit Court.

On November 7, 2001, the FERC issued an order directing the ISO, within 15 days of the order, to invoice the CDWR
for all ISO transactions it entered into on behalf of SCE and PG&amp;E.  The FERC also directed the ISO, within 15
days from the date of the order, to file a compliance report with the FERC indicating overdue amounts from the
CDWR and a schedule for payment of those overdue amounts within three months of the date of the order.  On
November 21, 2001, the ISO filed the compliance report.  On December 7, 2001, SCE sought a limited rehearing of
the November 7, 2001, order.  On the same day, the CDWR also filed its rehearing request.  On December 21, 2001,
SCE filed comments on the ISO's compliance filing and many parties, including the CDWR, protested the compliance
filing.

On February 28, 2002, SCE and the CDWR executed an agreement that resolves outstanding issues relating to payment
for imbalance energy delivered to SCE's customers (imbalance energy is energy obtained from the ISO's real-time
market) and responsibility for certain ISO charges.  Under this agreement, SCE will pay the CDWR for imbalance
energy previously delivered in three installments ($100 million on April 1, 2002; $150 million on June 3, 2002;
and the balance on July 1, 2002).  The agreement also establishes a mechanism for SCE to pay the CDWR for
imbalance energy that the CDWR sells to SCE's customers in the future.  Additionally, the agreement allocates
responsibility for ISO charges between the CDWR and SCE.  The agreement provides that SCE will reimburse the CDWR
by September 1, 2002, for ISO charges which the CDWR previously paid and which SCE agrees to pay in the
agreement.  The agreement also provides a mechanism for payment of ISO charges that are incurred in the future.

Direct Access

A related power-procurement issue is the extent to which customers should be allowed to purchase power directly
from energy service providers (Direct Access) instead of through SCE.  As part of emergency legislation
authorizing the CDWR to purchase power on behalf of utility customers, the CPUC was ordered to suspend Direct
Access until such time as the CDWR was no longer supplying power.  The CPUC was given flexibility as to the
timing of its order.  In early 2001, when extremely high power prices prevailed in the wholesale markets, many
customers who had previously chosen Direct Access returned to SCE bundled utility service, and the CDWR purchased
power on their behalf.  As the crisis in the wholesale energy markets eased in summer of 2001, customers again
sought to move to Direct Access suppliers.  On September 20, 2001, the CPUC suspended Direct Access on an interim
basis, reserving its right to review the suspension date.  On March 21, 2002, the Commission voted to maintain
the September 20, 2001, suspension date.  The Commission also ordered that Direct Access surcharges or exit fees
shall be developed in a separate proceeding so that there is an equitable allocation of the CDWR costs and that
Direct Access customers pay their fair share of CDWR costs.  Based on the September 20, 2001, suspension,
approximately 14% or more of SCE's retail energy load will likely be served through Direct Access.  Because the
CDWR is presently supplying all power in excess of SCE's own generation and long-term contracts, a change in the
amount of Direct Access load could affect the CDWR's total costs going forward.

The CPUC has also initiated hearings on an additional Direct Access issue.  Until June 3, 2001, Direct Access
customers were receiving a credit based on SCE's weighted-average energy cost.  When wholesale energy costs
skyrocketed in early 2001, this energy cost often exceeded the generation rate component of frozen rates.  Thus,
during these times, SCE incurred a liability to fund both energy purchases for bundled service customers and
energy credits for Direct Access customers.  These costs were reflected in SCE's regulatory asset accounts.  As a
result, Direct Access customers contributed to SCE's procurement related liabilities in the same manner as SCE's
bundled customers.  The CPUC is investigating whether and how to allocate to Direct Access customers an
appropriate share of the balance in the PROACT, which is described under "CPUC Settlement Agreement" and "PROACT"
below.  Briefs were filed on this issue on February 13 and February 20, 2002, with a draft decision expected by
mid 2002.  As part of the Direct Access proceeding, the CPUC will consider whether the method used to calculate
the credits paid to Direct Access customers after January 17, 2001, was appropriate.

                                     Page 6



Affiliate and Holding Company Proceedings

In 1997, the CPUC adopted a decision which established new rules governing the relationship between California's
natural gas local distribution companies, electric utilities, and certain of their affiliates.  While SCE and its
affiliates have been subject to affiliate transaction rules since the establishment of its holding company
structure in 1988, these new rules are more detailed and restrictive.  As required by the new rules and an
interim CPUC resolution, SCE has filed preliminary and revised compliance plans which set forth SCE's
implementation of the new affiliate transaction rules.  The CPUC has not yet ruled on the sufficiency of SCE's
October 1998 revised compliance plan.  In January 2001, the CPUC issued an order instituting rulemaking to
commence the review of the 1997 affiliate transaction rules that the original decision itself requires.  The CPUC
proposes that some rules be considered for streamlining or other revision, while inviting interested parties to
submit proposals of their own.  No decision has yet been issued.

In April 2001, the CPUC adopted an order instituting investigation that reopened the past CPUC decisions
authorizing the utilities to form holding companies and initiated an investigation into: whether the holding
companies violated CPUC requirements to give first priority to the capital needs of their respective utility
subsidiaries; whether actions by Edison International and PG&amp;E Corporation and their respective nonutility
affiliates to shield, or "ring-fence," nonutility assets also violated the requirements that the holding
companies give first priority to the capital needs of their utility subsidiaries; whether the payment of
dividends by the utilities violated requirements that the utilities maintain dividend policies as though they
were comparable stand-alone utility companies; any additional suspected violations of laws or CPUC rules and
decisions; and whether additional rules, conditions, or other changes to the holding company decisions are
necessary.  On January 9, 2002, the CPUC issued a decision regarding the "first priority" condition that defined
the term "capital" as encompassing all of the following:  "the money and property with which a company carries on
its corporate business; a company's assets, regardless of source, utilized for the conduct of the corporate
business and for the purpose of deriving gains and profits; and a company's working capital," and which found
that the first priority condition does not preclude the requirement that the holding companies infuse all types
of "capital" into their respective utility subsidiaries where necessary to fulfill the utility's obligation to
serve.  The CPUC stated that it had not conclusively found that any holding company has violated such condition.
Also on January 9. 2002, the CPUC denied motions by Edison International and the other holding companies to
dismiss the proceeding as it pertains to them for lack of jurisdiction.  Both Edison International and SCE filed
requests for rehearing of the decision on the first priority condition, and Edison International filed a request
for rehearing of the denial of its motion to dismiss for lack of jurisdiction.

Although the CPUC denied the holding companies' motions to dismiss for lack of jurisdiction, the CPUC then
dismissed PG&amp;E Corporation from the proceeding so that the issue of whether PG&amp;E Corporation's bankruptcy plan
would result in a violation of the first priority condition could be resolved "in the appropriate judicial
forums."  On January 10, 2002, the California Attorney General filed a civil lawsuit in state court alleging that
PG&amp;E Corporation had violated California's Unfair Competition Act by, among other things, failing to infuse
capital into Pacific Gas and Electric Company as required by the first priority condition and seeking to insulate
assets from the CPUC's jurisdiction through the improper use of the power of the bankruptcy court.  The lawsuit
seeks injunctions, restitution, and a civil penalty of at least $500 million.  The CPUC announced that it intends
to join in the lawsuit against PG&amp;E Corporation, based on the CPUC's January 9, 2002 decisions.

SCE cannot predict what effects the CPUC's investigation or any other actions by the CPUC or the Attorney General
may have.

Qualifying Facilities

On March 27, 2001, the CPUC ordered SCE to begin making payments to QFs for power deliveries on a going forward
basis.  Under the order, SCE was directed to pay QFs within 15 days of the end of the QFs' billing period, and
QFs are allowed to establish 15-day billing periods.  A supplemental order issued on December 11, 2001, deleted
the automatic penalty provisions and instead advised SCE that it could be

                                     Page 7



subject to an order to show cause in the event of a violation.  Furthermore, settlement agreement amendments
entered into with the vast majority of the QFs under contract with SCE resulted in the QFs' waiver of the 15-day
payment opportunity coincident with the making of a "final" settlement payment by SCE on March 1, 2002.  SCE is
pursuing agreements with the remaining QFs that likewise would result in a waiver of the 15-day payment
directive.  In the March 27 order, the CPUC also modified the formula used in calculating payments to most QFs by
substituting natural gas index prices based on deliveries at the Oregon border in the place of index prices at
the Arizona border.  The order further revises other aspects of the payment formula to take into account changes
in intrastate gas transportation costs.  SCE anticipates that the changes will probably result in lower QF energy
prices.  The changes apply where appropriate regardless of whether the QF uses natural gas or other resources
such as solar or wind.  In March 2002, SCE paid $1.1 billion to QFs to resolve issues related to SCE's suspension
of payments for deliveries by QFs during the period November 1, 2000, through March 26, 2001.  For additional
information about lawsuits filed against SCE by QFs, see "Qualifying Facilities Litigation" in Part 1, Item 3 of
this report.

CPUC Settlement Agreement

In November 2000, SCE filed a complaint in federal District Court against the Commissioners of the CPUC, alleging
that their refusal to allow SCE to recover its wholesale costs of purchasing power in its retail rates violated
federal law.  The case was stayed in April 2001 by agreement of SCE and the CPUC, with the support of Governor
Davis, to create an opportunity to implement a consensual resolution.  The state legislature, however, did not
pass legislation to implement such a resolution by late September 2001.  At that point, the CPUC and SCE
negotiated a settlement agreement (CPUC Settlement Agreement) to resolve the litigation, and the district court
entered a stipulated judgment on October 5, 2001, incorporating the settlement.  Several entities appealed the
stipulated judgment entered by the district court, including a California consumer group that had been allowed to
intervene in the litigation as a permissive intervenor, and three other entities whose motions to intervene had
been denied.

On November 28, 2001, a federal court of appeals denied the consumer group's request for a stay of the
settlement.  The group had alleged that it was denied due process, that the settlement violated state law, and
that the CPUC had no authority to agree to the settlement.  In its ruling, the court of appeals also granted
SCE's request for an expedited hearing of the appeal.  On March 4, 2002, the court of appeals heard argument on
the appeal, and the matter is now under submission.  A decision could be issued anytime within the next several
months.  It is impossible to predict the outcome of the appeal, or the impact that any outcome would have upon
the stipulated judgment or the settlement.

Key elements of the CPUC Settlement Agreement include the following items:

o    Establishment of an account called the procurement-related obligations account, or PROACT, as of
     September 1, 2001, which will have an opening balance equal to the amount of SCE's procurement-related
     liabilities as of August 31, 2001 (approximately $6.4 billion), less SCE's cash and cash equivalents as of
     that date (approximately $2.5 billion), and less $300 million.

o    Beginning September 1, 2001, and ending on the earlier of the date that SCE has recovered all of its
     procurement-related obligations recorded in the PROACT or December 31, 2005, SCE will apply to the PROACT,
     on a monthly basis, the difference between SCE's revenue from retail electric rates (including surcharges)
     and the costs that SCE is authorized by the CPUC to recover in retail electric rates.  Unrecovered
     obligations in the PROACT will accrue interest from September 1, 2001.

o    SCE will recover in retail electric rates its procurement-related obligations in the PROACT, with
     interest, by December 31, 2005.  Subject to certain adjustments, the CPUC will maintain current rates
     (including surcharges) in effect until December 31, 2003, or, if earlier, until the date that SCE recovers
     the entire PROACT balance.  If SCE has not recovered the entire balance by December 31, 2003, the
     unrecovered balance will be amortized over a period not to extend beyond December 31, 2005.  The parties
     project that existing retail electric rates, including surcharges and as adjusted to reflect certain


                                     Page 8



     costs, will likely result in SCE recovering substantially all of its unrecovered procurement-related
     obligations prior to the end of 2003.

o    If the CPUC concludes that it is desirable to authorize a securitized financing of SCE's
     procurement-related obligations, the parties will work together to achieve the securitization.  Proceeds of
     any securitization will be credited to the PROACT when they are actually received.

o    During the period that SCE is recovering its procurement-related obligations, no penalty will be imposed
     by the CPUC on SCE for any noncompliance with CPUC-mandated capital structure requirements.

o    SCE will incur up to $250 million of recoverable costs to acquire financial instruments and engage in
     other transactions intended to hedge fuel cost risks associated with SCE's retained generation assets and
     power purchase contracts with qualifying facilities and other utilities.  As of December 31, 2001, SCE had
     purchased $209 million in hedging instruments.  See discussion under "Market Risk Exposures" in the MD&amp;A
     that is incorporated by reference into Part II, Item 7 of this report.

o    SCE will not declare or pay dividends or other distributions on its common stock (all of which is held
     by its parent) prior to the earlier of the date SCE has recovered all of its procurement-related obligations
     in the PROACT or January 1, 2005.  However, if SCE has not recovered all of its procurement-related
     obligations by December 31, 2003, SCE may apply to the CPUC for consent to resume common stock dividends,
     and the CPUC will not unreasonably withhold its consent.

o    To ensure the ability of SCE to continue to provide adequate service until the effectiveness of SCE's
     next general rate case, SCE may make capital expenditures above the level contained in current rates, up to
     $900 million per year, which will be treated as recoverable costs.

o    Subject to certain qualifications, SCE will cooperate with the CPUC and the California Attorney General
     to pursue and resolve SCE's claims and rights against sellers of energy and related services, SCE's defenses
     to claims arising from any failure to make payments to the PX or ISO, and similar claims by the State of
     California or its agencies against the same adverse parties.  During the recovery period discussed above,
     refunds obtained by SCE related to its procurement-related liabilities will be applied to the balance in the
     PROACT.

The CPUC Settlement Agreement states that one of its purposes is to restore the investment grade creditworthiness
of SCE as rapidly as reasonably practicable so that it will be able to provide reliable electrical service as a
state-regulated entity as it has in the past.  SCE cannot provide assurance that it will regain investment grade
credit ratings by any particular date.

PROACT

On January 23, 2002, the CPUC issued a resolution that approved the new ratemaking and accounting structure that
SCE proposed to implement the CPUC Settlement Agreement.  Among other things, the new structure eliminates the
TCBA as of August 31, 2001, and creates the new PROACT.  This change implements the provision of the CPUC
Settlement Agreement declaring that "balances in SCE's TCBA as of August 31, 2001, shall have no further impact
on SCE's retail electric rates."  According to the terms of the CPUC Settlement Agreement and the CPUC's
implementing resolution, in the fourth quarter of 2001, SCE established (retroactive to August 31, 2001) a
$3.6 billion PROACT regulatory asset for its previously incurred procurement costs.  On February 25, 2002, TURN
submitted an application for rehearing, of the CPUC's January 23, 2002, resolution.  In its application for
rehearing, TURN challenges the CPUC Settlement Agreement and its implementation.  On March 12, 2002, SCE
submitted to the CPUC its opposition to the TURN application for rehearing.

                                     Page 9



Recovery of Transition and Power Procurement Costs

SCE's transition costs include power purchases from QF contracts (which are the direct result of prior
legislative and regulatory mandates), recovery of certain generating assets and other costs incurred to provide
service to customers.  Other costs include the recovery of income tax benefits previously flowed through to
customers, postretirement benefit transition costs and accelerated recovery of investment in SCE's nuclear
plants.  Recovery of costs related to power-purchase QF contracts is permitted through the terms of each
contract.  Legislation and regulatory decisions issued prior to the beginning of the rate freeze called for most
of the remaining transition costs to be recovered through the end of the four-year transition period (not later
than March 31, 2002).

There were three sources of revenue available to SCE for transition cost recovery through the TCBA mechanism:
revenue from the sale or valuation of generation assets in excess of book values, net market revenue from the
sale of SCE-controlled generation into the ISO and PX markets, and competition transition charge (CTC) revenue.
Revenue from the first two sources has not been available since January 2001.  Net proceeds of the 1998 plant
sales were used to reduce transition costs, which otherwise had been expected to be collected through the TCBA
mechanism.  State legislation enacted in January 2001 prohibits the sale of SCE's remaining generation assets
until 2006.  SCE stopped selling power from its generation into the ISO and PX markets in January 2001, after
SCE's credit ratings were downgraded and the PX suspended SCE's trading privileges.

The CTC applied to all customers who were using or began using utility services on or after the CPUC's 1995
restructuring decision date.  CTC revenue was determined residually (i.e., CTC revenue was 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 and ISO).  Residual CTC revenue was calculated through the TRA mechanism.  In accordance
with the March 27, 2001, rate stabilization decision, both positive and negative residual CTC revenue was
transferred from the TRA to the TCBA on a monthly basis, retroactive to January 1, 1998.  A previous decision had
called only for a transfer of positive residual CTC revenue (TRA overcollections) to the TCBA and there had not
been any positive residual CTC revenue between May 2000 and June 2001.

Because the regulatory and legislative actions did not occur that would have made recovery of transition costs
probable, SCE was unable to conclude as of December 31, 2000, that the recalculated TCBA net undercollection was
probable of recovery through the ratemaking process.  As a result, the $2.9 billion TCBA net undercollection was
written off as a charge to earnings as of that date, and an additional $552 million (pre-tax) in net
undercollected transition costs were charged to earnings in 2001.  Although the TCBA was written off, SCE
continued to calculate the account for ratemaking purposes, and the account reflected a $4.2 billion
undercollection as of September 1, 2001, which, as discussed below, is the effective date of the beginning of the
PROACT mechanism and the end of the TCBA mechanism.  Additional information about the financial impact of this
undercollection and various ongoing and proposed regulatory efforts and judicial proceedings designed to address
or otherwise relating to it, is provided under "Regulatory Environment - Status of Transition and Power
Procurement Cost Recovery" in the MD&amp;A that is incorporated by reference into Part II, Item 7 of this report.

Rate Reduction Notes

In December 1997, after receiving approval from the CPUC and the California Infrastructure and Economic
Development Bank, a limited liability company created by SCE issued approximately $2.5 billion of rate reduction
notes.  Residential and small commercial customers, whose 10% rate reduction began January 1, 1998, are repaying
the notes over the expected ten-year term through non-bypassable charges based on electricity consumption.  There
were originally seven classes of notes.  The first four classes of notes matured in December 1998 and March 2000,
2001, and 2002, respectively.  The remaining three classes of notes valued at approximately $1.5 billion have
maturities beginning in 2003 and ending in 2007, with interest rates ranging from 6.28% to 6.42%.

                                    Page 10



Other Revenue and Cost-Recovery Mechanisms

Revenue is determined by various mechanisms depending on the utility operation:  distribution, transmission and
generation.

Distribution

Revenue related to distribution operations is being determined through a performance-based ratemaking mechanism
(PBR) and the distribution assets have the opportunity to earn a CPUC-authorized 9.49% return.  The PBR mechanism
was to have ended in 2001, and SCE's distribution costs were to be established for 2002 in a general rate case
(GRC).  Due to the industry upheaval of the last year, SCE was allowed to defer the GRC for one year, and a
proceeding was established to extend the existing PBR mechanism through 2002.  In addition, legislative changes
required that the mechanism be altered to eliminate revenue volatility due to sales fluctuations.  As a result,
the proceeding also addresses how to establish balancing accounts such that the revenues set in this proceeding
for 2001 and 2002 will be fully recovered.  A CPUC proposed decision on the PBR mechanism for 2002 was issued in
January 2002.  The proposed decision authorized SCE to use a formula to determine its distribution revenue
requirement for the last half of 2001 and 2002, and a revenue balancing account to ensure that variations in
sales do not result in under or overcollections.  A final decision is expected by mid-2002.  At this time, SCE
cannot predict the effect of the final decision on its results of operation.

At the expiration of the PBR, SCE is to begin recovering costs based on cost of service ratemaking.  In December
2001, SCE filed its 2003 general rate case with the CPUC, requesting an increase of approximately $500 million in
revenue (compared to 2000 recorded revenue) for its distribution and generation operations.  Hearings are
expected to begin in July 2002, with a final decision expected in second quarter 2003.

Transmission

Transmission revenue is being determined through the FERC-authorized rates that are subject to refund.  Since the
initiation of the ISO in April 1998, transmission cost recovery has been under FERC authority.  In July 2000, the
FERC issued a final decision in SCE's 1998 transmission rate case in which it ordered a reduction of
approximately $38 million to SCE's proposed annual base transmission revenue requirement of $213 million.  Of the
total reduction of $38 million, about $24 million is associated with the rejection by the FERC of SCE's proposed
method for allocating overhead costs to transmission operations.  SCE filed a conditional petition for rehearing
of the decision in August 2000, asking that the FERC reconsider the decision assuming that the CPUC does not
allow SCE to recover the $24 million in CPUC jurisdictional rates.  In February 2001, SCE filed with the CPUC a
request to recover in CPUC-jurisdictional rates the overhead costs not permitted by the FERC to be included in
transmission rates.  A CPUC decision is pending.  In the meantime, SCE continues to collect transmission revenues
based on the originally proposed $213 million level, subject to refund pending final resolution of the 1998 rate
case.  SCE expects that any refund amounts ultimately ordered by the FERC associated with transmission will not
be refunded to retail customers but will be credited to the PROACT balance reflecting SCE's procurement-related
obligations.  Additionally, on January 31, 2002, SCE filed to increase the base transmission revenue requirement
to $280 million.  This proposed increase is to reflect higher costs of capital, increased depreciation expense,
and increased operation and maintenance costs attributable to FERC-jurisdictional services.  FERC action on
whether and when the proposed transmission rates will be placed into effect, subject to refund, is expected in
April 2002.  As discussed above, under "CPUC Settlement Agreement," total rates to retail customers were
unchanged.  Thus, SCE intends to file an equal and opposite reduction in generation rates upon acceptance by the
FERC of the increased transmission rates.

Generation

Effective with the commencement of the ISO and PX operations on March 31, 1998, generation costs were subject to
recovery through the market and transition cost recovery mechanisms, which included the nuclear ratemaking
agreements.  During the rate freeze, revenue from generation-related operations has also been determined through
the market and transition cost recovery mechanisms, which also included the nuclear

                                    Page 11



ratemaking agreements.  The portion of revenue related to coal generation plant costs (Mohave Generating Station
(Mohave Station) and Four Corners Generating Station (Four Corners)) that were made uneconomic by electric
industry restructuring has been recovered through the transition cost recovery mechanisms.  After April 1, 1998,
coal generation operating costs have been recovered through the market.  The excess of power sales revenue from
the coal generating plants over the plants' operating costs has been accumulated in a coal generation balancing
account.  SCE's costs associated with its hydroelectric plants have been recovered through a performance-based
mechanism.  The mechanism set the hydroelectric revenue requirement and established a formula for extending it
through the duration of the electric industry restructuring transition period, or until market valuation of the
hydroelectric facilities, whichever occurred first.  The mechanism provided that power sales revenue from
hydroelectric facilities in excess of the hydroelectric revenue requirement is accumulated in a hydroelectric
balancing account.  In accordance with a CPUC decision issued in 1997, the credit balances in the coal and
hydroelectric balancing accounts were transferred to the TCBA at the end of 1998 and 1999.  However, due to the
CPUC's March 27, 2001, rate stabilization decision, the credit balances in these balancing accounts were
transferred to the TRA on a monthly basis, retroactive to January 1, 1998, which later were transferred to the
TCBA on a monthly basis, retroactive to January 1, 1998, and subsequently replaced by the PROACT mechanism
effective September 1, 2001.

In June 2001, SCE filed a comprehensive proposal for new cost-of-service ratemaking for utility retained
generation (URG) through the end of 2002.  After that time, SCE's URG-related revenue requirement will be
determined by the general rate case.  The URG proposal calls for balancing accounts for SCE-owned generation, QFs
and interutility contracts, procurement costs and ISO charges based on either actual or CPUC-authorized revenue
requirements.  Under the proposal, the four new balancing accounts would be effective January 1, 2001, for
capital-related costs, and February 1, 2001, for non-capital-related costs.  In addition, SCE's unamortized
nuclear investment would be amortized and recovered in rates over a 10-year period, effective January 1, 2001.
Should this application be approved as filed, SCE expects to reestablish for financial reporting purposes its
unamortized nuclear investment and regulatory assets related to purchased-power settlement and flow-through
taxes, with a corresponding credit to earnings, and adjust the PROACT regulatory asset in accordance with the
final URG decision.

On January 18, 2002, a CPUC administrative law judge issued a proposed decision and a CPUC commissioner issued an
alternate proposed decision in the URG proceeding.  Both the proposed and alternate proposed decisions adopt most
of the elements of SCE's application, but propose eliminating incremental cost incentive pricing for San Onofre,
effective January 1, 2002, and replacing it with balancing account treatment for San Onofre's operating costs,
subject to a later reasonableness review.  On February 7, 2002, another CPUC commissioner issued an alternate
proposed decision recommending continuing the incentive pricing plan for San Onofre Units 2 and 3 through
December 31, 2003, as originally provided in CPUC decisions adopted in early 1996.  If the CPUC approves SCE's URG
application, as filed, SCE expects to reapply accounting principles for rate-regulated enterprises for its
generation assets.  These assets will then be subject to traditional cost-of-service regulation.

Generation Procurement Proceeding

In October 2001, the CPUC issued an order instituting rulemaking (OIR) to establish policies and cost recovery
mechanisms for generation procurement.  The OIR directed SCE and the other major California electric utilities to
provide recommendations for establishing these policies and mechanisms to enable the utilities to resume their
power procurement responsibilities in 2003.  In comments filed with the CPUC on November 26, 2001, SCE
recommended that the CPUC issue a procurement framework decision in February 2002, and direct the utilities to
submit their specific procurement plan proposals and related framework compliance proposals in March 2002.  SCE
also proposed that a final decision be issued in October 2002 adopting utility-specific procurement plans.  The
CPUC has not yet acted on SCE's recommendations, but is expected in second quarter 2002 to issue a scoping memo
setting forth issues to be addressed in this proceeding.

                                    Page 12



FERC Related Matters

Due to a December 15, 2000, FERC order, SCE is no longer required to buy and sell power exclusively through the
ISO and PX.  In mid-January 2001, the PX suspended SCE's trading privileges for failure to post collateral due to
SCE's rating agency downgrades.  As a result, power from SCE's coal and hydroelectric plants is no longer being
sold through the market.

In October 2000, SCE filed a joint petition urging the FERC to immediately find the California wholesale
electricity market to be not workably competitive; immediately impose a cap on the price for energy and ancillary
services; and institute further expedited proceedings regarding the market failure, mitigation of market power,
structural solutions and responsibility for refunds.  On December 15, 2000, the FERC released a final order
containing remedies and other actions in response to the problems in the California electricity market.  On
December 26, 2000, SCE filed an emergency petition in the federal court of appeals challenging the FERC order and
seeking a writ of mandamus requiring the FERC to immediately establish cost-based wholesale rates.  On January 5,
2001, the court denied SCE's petition.  The effect of the denial is to leave in place the FERC's market
mechanisms.  SCE's petition for rehearing remains pending.

In its December 2000 order, the FERC established an "underscheduling" penalty applicable to scheduling
coordinators that do not schedule sufficient resources to supply 95% of their respective loads.  In December
2001, the FERC eliminated the underscheduling penalty, retroactive to January 1, 2001.

On March 9, 2001, the FERC directed 13 wholesale sellers of energy to refund $69 million or submit
cost-of-service information to the FERC to justify their prices above $273 per MWh during ISO Stage 3 emergencies
in January 2001.  On April 9, 2001, SCE filed opposing the order as inadequate, particularly because the FERC is
unwilling to exercise any control over the sellers' exercise of market power during periods other than Stage 3
emergencies.  On March 16, 2001, the FERC ordered six wholesale sellers of energy to refund an additional $55
million or submit cost-of-service information to the FERC to justify their prices above $430 per MWh during ISO
Stage 3 emergencies in February 2001.  A Stage 3 emergency refers to 1.5% or less in reserve power, which could
trigger rotating blackouts in some neighborhoods.

On April 25, 2001, after months of extremely high power prices, the FERC issued an order providing for energy
price controls during ISO Stage 1 or greater power emergencies (7% or less in reserve power).  The order
established an hourly clearing price based on the costs of the least efficient generating unit during the
period.  Effective June 20, 2001, the FERC expanded the April 25, 2001, order to include non-emergency periods
and price mitigation in the 11-state western region.  The latest order is in effect until September 30, 2002.

After unsuccessful settlement negotiations among utilities, power sellers and state representatives, on July 25,
2001, the FERC issued an order that limited potential refunds from alleged overcharges to the ISO and PX spot
markets during the period from October 2, 2000, through June 20, 2001, and adopted a refund methodology based on
daily spot market gas prices.  An administrative law judge will conduct evidentiary hearings on this matter.  SCE
cannot predict the amount of any potential refunds.  Under the CPUC Settlement Agreement, refunds will be applied
to the balance in the PROACT.

See the "Regulatory Environment - Generation and Power Procurement" and "Regulatory Environment - Rate
Stabilization Proceedings" sections of the MD&amp;A that is incorporated by reference into Part II, Item 7 for more
information about SCE's revenue from its generation-related operations, recovery of its investment in its nuclear
facilities, and on accounting for generation-related assets and power procurement costs.

                                                Other Rate Matters

CPUC Retail Ratemaking

The CPUC regulates the charges for services provided by SCE to its retail customers.  As discussed above in the
section on "Changing Regulatory Environment," the way in which the CPUC regulates SCE

                                    Page 13



has been changing.  The CPUC has issued both final and interim decisions regarding Direct Access, transition cost
recovery, and rate unbundling in the restructuring of the electric industry.  While some of the decisions (such
as those regarding transition cost recovery) are being challenged by SCE both before the CPUC as well as in
judicial proceedings, the above decisions have affected cost recovery and rate regulation, and authorized new
ratemaking mechanisms.

Under the restructuring legislation, total rates for all customers were frozen at June 10, 1996, levels, although
residential and small commercial customers received a 10% reduction from the June 10, 1996, rate levels beginning
on January 1, 1998.  These rate levels were to remain in effect for the remainder of the transition period;
however, on January 4, 2001, the CPUC issued an interim decision authorizing SCE to establish an interim
surcharge of 1(cent)per kilowatt-hour for 90 days, subject to refund.  This was followed by a 3(cent)per kilowatt-hour
surcharge pursuant to the CPUC's interim rate stabilization order adopted on March 27, 2001.  Under these frozen
rates, individual rate components (distribution, transmission, nuclear decommissioning, and public purpose
programs) are determined according to CPUC- or FERC-authorized mechanisms, with the generation rate determined
residually by subtracting these other components from the total rate.  Beginning for rates effective in 1999, the
consolidation of the individual rate component changes and the calculation of the residual generation rate are
set forth for CPUC approval as part of the Revenue Adjustment Proceeding (RAP).  On June 1, 1998, SCE filed its
first annual RAP Report in compliance with CPUC directives to:  (1) consolidate authorized rates and revenue
requirements associated with various proceedings and mechanisms; (2) verify the residual CTC revenue calculation
in the TRA; (3) verify the regulatory account balances which were transferred to the TCBA on January 1, 1998 (see
"Annual Transition Cost Proceeding" below for further discussion of the TCBA); (4) streamline certain balancing
and memorandum accounts; and (5) review the PX charge/credit calculation.  On June 6, 1999, the CPUC issued its
final 1998 RAP decision.  In compliance with that decision, SCE updated its nongeneration rate components in
October 1999.  To maintain overall frozen rate levels, to the extent nongeneration rate components are authorized
to change, the generation rate component changes equal and opposite from the nongeneration rate component
changes.  The decision also instructed SCE to include in the 1999 RAP Report a PX credit calculation that
reflects the long-run marginal costs of customer account managers, customer service representatives,
self-provision of ancillary services, and financing costs for purchasing power from the PX.

On August 9, 1999, SCE filed its 1999 RAP Report requesting CPUC approval of the following:  (1) consolidation of
the 2000 nongeneration revenue requirements; (2) rate levels for 2000; (3) 2000 kWh sales forecast; (4) entries
to the TRA for the period June 1, 1998, through May 31, 1999; (5) proposed retention, elimination, and
modification of balancing and memorandum accounts; (6) implementation and costs of electric vehicle programs;
(7) administration of SCE's self-generation deferral rate contracts; and (8) the proposed additional 7(cent)per MWh
credit to Direct Access customers associated with SCE's procurement of PX energy for bundled service customers.
On January 4, 2001, the CPUC issued its decision, which put SCE on notice that it will no longer be able to
prospectively recover 100% of its reliability must-run costs in the TRA, and adopted all other RAP issues SCE
requested.

On September 4, 2001, SCE filed its 2000/2001 RAP Report.  On November 30, 2001, SCE amended its 2000/2001 RAP
report to reflect the CPUC Settlement Agreement.  The CPUC Settlement Agreement indicates that the TCBA (which,
by definition, includes the TRA) shall have no further impact on SCE's retail electric rates.  Thus, the only
issues remaining in SCE's 2000/2001 RAP Report are a review of SCE's Low Emission Vehicle program and SCE's
special contracts.

In June 1999, the CPUC issued a decision regarding unbundling SCE's cost of capital based on major utility
functions.  The decision was in response to SCE's May 1998 application on this issue.  The CPUC found no
unbundling adjustment was required in setting 1999 cost of capital for the California electric utilities.
Furthermore, the CPUC ruled that SCE's rate of return should continue to be governed by the cost of capital
trigger mechanism authorized as part of SCE's performance-based ratemaking mechanism.  As a result, SCE's return
on equity from 1999 through 2001 was unchanged at 11.6%.

                                    Page 14



Nuclear Decommissioning and Public Purpose Program Rates

Recovery of SCE's nuclear decommissioning costs and legislatively mandated public purpose program funding is made
through rates set to recover 100% of these costs.  Public purpose programs include cost effective energy
efficiency, research, renewable technology development, and low income programs.

Annual Transition Cost Proceeding

In 1997, the CPUC established the ATCP to determine whether SCE's TCBA entries are recorded pursuant to
applicable CPUC decisions and the restructuring legislation, and whether certain expenses are justified.  The
purpose of the ATCP was to ensure the recovery of generation-related transition costs through the TCBA.  The TCBA
tracked the recovery of transition costs, including the accelerated recovery of plant balances, QF and purchased
power costs, and regulatory assets and obligations.  As discussed above, the CPUC recently approved the new
ratemaking and accounting structure, referred to as the PROACT, to implement the CPUC Settlement Agreement.  See
the discussion above under "Changing Regulatory Environment - PROACT."  The PROACT mechanism replaces the ATCP
mechanism effective as of September 1, 2001.  SCE will prepare and file revised testimony in its ATCP proceedings
described below to withdraw all matters related to entries made on or before August 31, 2001.  It is not known at
this time whether or to what extent the CPUC's Office of Ratepayer Advocates (ORA), may recommend any
disallowances related to the revised testimony.

1998 ATCP

On September 1, 1998, SCE filed its first ATCP Report with the CPUC and requested, among other things, that
entries made to the TCBA and applicable generation-related memorandum accounts during the record period of
January 1, 1998, through June 30, 1998, be found to be justified and in compliance with applicable CPUC decisions
and the restructuring legislation.  On February 17, 2000, the CPUC issued a decision finding that SCE's
calculation of the TCBA for the record period was correct.  The decision changed the accounting methodology used
to estimate the market value of retained generating assets and required that SCE credit the TCBA for the
aggregate net book value of certain of SCE's non-nuclear assets.

SCE reviewed the decision and discovered that the CPUC had inadvertently omitted establishing a new account to
record the corresponding debit to the TCBA credit for the aggregate net book value of any remaining non-nuclear
generation assets.  SCE proposed that the Generation Asset Balancing Account (GABA) be established in order to
avoid problems associated with limits for short-term borrowing purposes.  The CPUC agreed, and on June 8, 2000,
established the GABA.  SCE filed its compliance advice letter in June 2000.  On April 13, 2000, SCE filed a
petition for modification seeking modification of the decision to restore recovery of authorized return, taxes,
and depreciation for its hydro assets through the TCBA.  It is not known when the CPUC will act on SCE's petition
for modification.

2000 ATCP

On September 1, 2000, SCE filed its 2000 ATCP setting forth entries made to the TCBA and other generation-related
accounts for the months of July 1999 through June 2000.  ORA issued its report on February 27, 2001.  In its
report, ORA recommended, among other things, that the CPUC:  (1) defer review of SCE's natural gas procurement
and management activities, including a $10 million post record period adjustment, until the 2001 ATCP;
(2) disallow $882,000 of employee-related transition costs; and (3) adjust the TCBA undercollection downward $4.35
million to reflect the reasonableness of post record period adjustments.  ORA subsequently withdrew its
recommendation to defer its review of SCE's natural gas procurement and management activities and found the
$10,000,000 post-period adjustment to be reasonable as well as SCE's natural gas procurement and management
activities.  The only contested issue that remains is the $882,000 in employee-related transition costs.
Hearings were held in May 2001, and briefs were filed in June 2001.  The CPUC has not yet issued a decision
concerning the 2000 ATCP.

                                    Page 15



2001 ATCP

On September 4, 2001, SCE filed its 2001 ATCP report setting forth entries made to the TCBA and other generation
memorandum accounts for the months of July 2000 through June 2001.  On October 11, 2001, the ORA filed a protest
to SCE's application which included a motion to consolidate SCE's application with those of PG&amp;E and SDG&amp;E.  SCE
opposed consolidation of its ATCP with the other application.  A prehearing conference to establish a procedural
schedule was held on November 14, 2001, at which time the administrative law judge ruled that SCE's ATCP would
not be consolidated with those of PG&amp;E and SDG&amp;E.

San Onofre Nuclear Generating Station Units 2 and 3

In April 1996, the CPUC authorized a further acceleration of the recovery of SCE's remaining investment of $2.6
billion in San Onofre Units 2 and 3.  The accelerated recovery would have continued through December 2001,
earning a 7.35% fixed rate of return.  However, due to the various unresolved regulatory and legislative issues
(see discussion in "Changing Regulatory Environment" above), SCE is not able to conclude that the unamortized
nuclear investment regulatory assets are probable of recovery through the ratemaking process.  As a result, these
balances were written off as a charge to earnings as of December 31, 2000.

In 1996, the CPUC adopted an incentive plan for SCE's San Onofre Units 2 and 3 under which SCE would have
recovered its remaining investment in the San Onofre Units at a reduced rate of return of 7.35%, but on an
accelerated basis during the eight-year period from the effective date in 1996 through December 31, 2003.
California's restructuring legislation, however, required the recovery of the San Onofre investment to be
completed by December 31, 2001.  Due to the various unresolved regulatory and legislative issues (see discussion
in "Regulation" above), SCE was not able to conclude that the unamortized nuclear investment regulatory assets
were probable of recovery through the ratemaking process.  As a result, these balances were written off as a
charge to earnings as of December 31, 2000.

In addition, the incentive plan adopted by the CPUC in 1996 adopted a preset price for each kWh of energy
generated at San Onofre during the eight-year period.  Under the CPUC Settlement Agreement, SCE also retained the
ability to request recovery of the cost of replacement energy for periods in which San Onofre will not generate
power through energy cost adjustment clause filings and, beginning September 1, 2001, as part of the PROACT
mechanism.  San Onofre Units 2 and 3 incentive pricing was authorized to continue through December 31, 2003.  On
January 18, 2002, the assigned administrative law judge issued a proposed decision and CPUC President Loretta
Lynch issued an alternate proposed decision in the URG proceeding both proposing to eliminate the existing cost
recovery procedure for San Onofre Units 2 and 3, effective January 1, 2002, and to replace it with a balancing
account treatment of San Onofre Units 2 and 3 operating costs, subject to a later reasonableness review.  On
February 7, 2002, CPUC Commissioner Bilas issued an alternate proposed decision that continued the existing
procedure for San Onofre Units 2 and 3 through December 31, 2003.  The restructuring legislation allows SCE to
continue to collect funds for decommissioning expenses through traditional ratemaking treatment.

SCE requested in its URG application to recover the unamortized cost of the nuclear investment regulatory asset
over a ten-year period, retroactive to January 1, 2001.  All present proposed decisions and alternates in the URG
proceeding would authorize this recovery.  If any of the present URG proposed decisions are adopted, SCE would
reestablish for financial reporting purposes its unamortized nuclear investment in San Onofre and Palo Verde and
related flow-through taxes as regulatory assets with a corresponding credit to earnings.

In 1997, the CPUC approved San Diego Gas &amp; Electric's (SDG&amp;E) and SCE's joint petition to modify, requesting
continued recovery of certain corporate administrative and general costs allocable to San Onofre Units 2 and 3,
at rates of 0.28(cent)and 0.21(cent)per kWh, respectively, for the period January 1, 1998, through December 31, 2003.

                                    Page 16



Palo Verde Nuclear Generating Station

In 1996, SCE filed an application requesting adoption of a new rate mechanism for Palo Verde consistent with that
of San Onofre Units 2 and 3.  See the discussion under "Other Rate Matters - San Onofre Nuclear Generating
Station Units 2 and 3."  On November 15, 1996, SCE, the ORA, and a consumer group entered into a settlement
agreement, which was approved by the CPUC on December 20, 1996.  The settling parties agreed that SCE would
recover its share of Palo Verde incremental operating costs, except if those costs exceed 95% of the levels
forecast by SCE in its application by more than 30% in any given year.  In such cases, SCE must demonstrate that
the aggregate amount of the costs exceeding the forecast in that year is reasonable.  If the annual Palo Verde
site gross capacity factor is less than 55% in a calendar year, SCE will bear the burden of proof to demonstrate
that the site's operations causing the gross capacity factor to fall below 55% were reasonable in that year.  If
operations are determined to be unreasonable by the CPUC, SCE's replacement power purchases associated with that
period of Palo Verde operations below 55% gross capacity factor may be disallowed.

In January 1997, the CPUC authorized a further acceleration of the recovery of SCE's remaining investment of $1.2
billion in Palo Verde Units 1, 2, and 3.  The accelerated recovery would have continued through December 2001,
earning a 7.35% fixed rate of return.  However, due to certain unresolved regulatory and legislative issues
discussed above with respect to San Onofre, the unamortized nuclear investment regulatory assets were written off
as a charge to earnings as of December 31, 2000.  See the discussion under "Changing Regulatory Environment,"
above.

In January 1997, the CPUC authorized the future Palo Verde operating costs, including nuclear fuel costs and
incremental capital expenditures, to be subject to balancing account treatment through 2001.  Beginning
August 31, 2001, the balancing account became part of the PROACT mechanism.  In January 1997, the CPUC also
authorized continuation of the existing nuclear unit incentive procedure for Palo Verde.  The existing procedure
will continue only for purposes of calculating a reward for performance of any unit above an 80% capacity factor
for a fuel cycle.

Beginning in 2002, SCE was required to share the net benefits received from the operation of Palo Verde equally
with ratepayers.  In a September 2001 decision, the CPUC granted SCE's request to eliminate the Palo Verde
post-2001 benefit sharing mechanism and to continue the current rate treatment for Palo Verde, including the
continuation of the existing nuclear unit incentive procedure with a 5(cent)per kWh cap on replacement power costs,
until resolution of SCE's next general rate case or further CPUC action.  Palo Verde's existing nuclear unit
incentive procedure calculates a reward for performance of any unit above an 80% capacity factor for a fuel
cycle.

                                       Fuel Supply and Purchased Power Costs

In 2001, PX/ISO purchased power expense decreased in accordance with an emergency order signed by Governor Davis
authorizing the CDWR to begin making emergency power purchases for SCE's customers beginning on January 17,
2001.  In February 2001, Assembly Bill 1 (First Extraordinary Session, AB 1X) was enacted into law.  AB 1
authorized the CDWR to enter into contracts to purchase electric power and sell power at cost directly to retail
customers being served by SCE and authorized the CDWR to issue bonds to finance electricity purchases.  (See
discussion above under "Changing Regulatory Environment - CDWR Power Purchases").

In 2000, PX/ISO purchased power expense increased significantly due to electricity shortages and dramatic price
increases for natural gas, a key input of electricity production.  The increased volume of higher priced PX
purchases was minimally 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 decreased purchased power expense.
These gas call options (which were sold in October 2000) mitigated SCE's transition cost recovery exposure to
increases in energy prices.

                                    Page 17



SCE's sources of energy during 2001 were as follows:  34% purchased power; 29.9% CDWR, ISO and PX; 19.1% nuclear;
13.4% coal; and 3.6% hydro.

Natural Gas Supply

As a result of the sale of all of its gas-fired generating stations, SCE has terminated four long-term natural
gas supply and three long-term gas transportation contracts which had been used to import gas from Canada.  In
addition, SCE has exercised an option under its 15-year gas transportation commitment with El Paso Natural Gas
Company to reduce its capacity obligation from 200 million to 130 million cubic feet per day.  SCE permanently
assigned its contract with El Paso in November 2000 paying $12.3 million in consideration to a third party.

Nuclear Fuel Supply

SCE has contractual arrangements covering 100% of the projected nuclear fuel requirements for San Onofre through
the years indicated below:

      Uranium concentrates(*)...........................................................     2003
           Conversion...................................................................     2003
           Enrichment...................................................................     2003
           Fabrication..................................................................     2005
      ---------------
      (*)  Assumes the San Onofre participants meet their supply obligations in a timely manner.

Assuming normal operation and full utilization of existing on-site fuel-storage capacity, San Onofre Units 2
and 3 will maintain full-core offload reserve through 2005.  The Nuclear Waste Policy Act of 1982 requires that
the United States Department of Energy provide for the disposal of utility spent nuclear fuel beginning
January 31, 1998.  The Department of Energy has defaulted on its obligation to begin acceptance of spent nuclear
fuel from the commercial nuclear industry by that date.  Additional spent fuel storage either on-site or at
another location will be required to permit continued operations beyond 2005.  Additional on-site spent fuel
storage capacity is being developed for availability in 2003 for San Onofre Unit 1, and by 2006 for San Onofre
Units 2 and 3.

Participants at Palo Verde have contractual agreements for uranium concentrates to meet projected requirements
through 2002.  Independent of arrangements made by other participants, SCE will furnish its share of uranium
concentrates requirements through at least 2001 from existing contracts.  Contracts covering 100% of requirements
are in place for uranium enrichment and conversion through 2008 and fabrication through 2015.

Palo Verde has existing fuel storage pools and is in the process of completing construction of a new facility for
on-site dry storage of spent fuel.  With the existing storage pools and the addition of the new facility, spent
fuel storage or disposal methods will be available for use by Palo Verde to allow its continued operation through
the term of the plant license.

Coal Supply

SCE purchases coal pursuant to long term contracts to provide stable and reliable fuel supplies to its two
coal-fired generating stations (Mohave Station and Four Corners).  SCE entered into a coal contract, dated
September 1, 1966, with BHP Navajo Coal Company, the predecessor to the current owner of the Navajo mine, to
supply coal to Units 4 and 5 of Four Corners.  The coal supply contract's initial term is through 2004 and
includes extension options for up to 15 additional years.  For additional discussion of the litigation affecting
the coal supply contract for the Mohave Station, see "Navajo Nation Litigation" in Part I, Item 3 of this
report.  SCE does not have reasonable assurance of an adequate coal supply for operating the Mohave Station after
2005.  If reasonable assurance of an adequate coal supply is not obtained, it will become necessary to shut down
the Mohave Station after December 31, 2005.  If the station is shut down

                                    Page 18



at that time, the shutdown is not expected to have a material adverse impact on SCE's financial position or
results of operations, assuming the remaining book value of the station (approximately $88 million as of
December 31, 2001), and plant closure and decommissioning-related costs are recoverable in future rates.  SCE
cannot predict what effect any future actions by the CPUC may have on this matter.

                                               Environmental Matters

Legislative and regulatory activities in the areas of air and water pollution, waste management, hazardous
chemical use, noise abatement, land use, aesthetics, and nuclear control continue to result in the imposition of
numerous restrictions on SCE's operation of existing facilities, on the timing, cost, location, design,
construction, and operation by SCE of new facilities, and on the cost of mitigating the effect of past operations
on the environment.  These activities substantially affect future planning and will continue to require
modifications of SCE's existing facilities and operating procedures.  SCE is unable to predict the extent to
which additional regulations may affect its operations and capital expenditure requirements.

In California, pursuant to federal, state and regional Clean Air Act programs, SCE generating stations were
required to reduce emissions of oxides of nitrogen and certain other pollutants.  During 1998, SCE sold all of
its oil- and gas-fueled generating stations within the Mohave Desert Air Quality Management District, Ventura
County Air Pollution Control District, and in the Santa Barbara County Air Pollution Control District.  SCE has
sold all but one of its oil- and gas-fired generating stations within the South Coast Air Quality Management
District.  The remaining plant, the small diesel-fired Pebbly Beach Generating Station, supplies power to Santa
Catalina Island.

SCE also owns a 56% undivided interest in the Mohave Station located in Laughlin, Nevada, which is subject to
certain air quality programs.  SCE is the operator of the Mohave Station on behalf of its co-owners.  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 plant, the
parties filed, in concurrence with SCE and the other co-owners, a consent decree, which was approved by the Court
in December 1999.  The decree was designed also to address concerns raised by two EPA programs regarding regional
haze and visibility.  The EPA issued its final rulemaking regarding regional haze regulations on July 1, 1999.
That final rule does not impose any additional emissions control requirements on the Mohave Station beyond
meeting the provisions of the consent decree.

Regarding visibility, a study was undertaken to determine the specific impact of air contaminant emissions from
the Mohave 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 EPA issued an advanced notice of proposed rulemaking regarding assessment of visibility impairment
at the Grand Canyon.  The EPA issued its final rule on February 8, 2002, which incorporates the terms of the
consent decree into the Visibility Federal Implementation Plan for the state of Nevada, making the terms of the
consent decree federally enforceable.

SCE's share of the costs of complying with the consent decree and taking other actions to continue operation of
the Mohave Station is estimated to be approximately $560 million over the next four years.  However, SCE has
suspended its efforts to seek approval from the CPUC to install the Mohave Station controls because it has not
obtained reasonable assurance of an adequate coal supply for operating Mohave Station beyond 2005.  For
additional discussion, see "Business - Fuel Supply and Purchased Power Costs - Coal Supply."

The Clean Air Act also requires the EPA to carry out a three-year study of risk to public health from the
emissions of toxic air contaminants from electric utility steam generating plants, and to regulate such

                                    Page 19



emissions if the EPA's Administrator makes certain findings.  The study's final report to Congress concluded that
mercury from coal-fired plants is the hazardous air pollutant of greatest potential concern and merits additional
research and monitoring to better understand the risks of mercury exposure.  Other pollutants that may
potentially need further study are dioxins and arsenic from coal-fired plants, and nickel from oil-fired plants.
The EPA concluded that the impacts from emissions from gas-fired plants are negligible and that there is no need
for further evaluation of the risks of hazardous air pollutants emitted from such plants.

In December 2000, the EPA announced its intentions to regulate mercury emissions from coal-fired and oil-fired
electric power plants under Section 112 of the Clean Air Act and indicated that it would propose a rule to
regulate these emissions by no later than December 15, 2003.  The EPA expects to finalize this rule by
December 15, 2004.  Because SCE does not know what the EPA may require with respect to this issue, SCE is
presently unable to evaluate the impact of potential mercury regulations on the operations of its coal- and
oil-fired generating facilities.

On November 3, 1999, the United States Department of Justice filed suit against a number of electric utilities,
not including SCE, for alleged violations of the Clean Air Act's "new source review" requirements related to
modifications of air emissions sources at electric generating stations located in the southern and midwestern
regions of the United States.  Several states have joined these lawsuits.  In addition, the EPA has issued
administrative notices of violation alleging similar violations at additional power plants owned by some of the
same utilities named as defendants in the Department of Justice lawsuit, as well as other utilities, and also
issued an administrative order to the Tennessee Valley Authority for similar violations at certain of its power
plants.  The EPA has also issued requests for information pursuant to the Clean Air Act to numerous other
electric utilities seeking to determine whether these utilities also engaged in activities that may have been in
violation of the Clean Air Act's new source review requirements.

To date, one utility--the Tampa Electric Company--has reached a formal agreement with the United States (February
2000) to resolve alleged new source review violations.  Two other utilities, the Virginia Electric Power Co. and
Cinergy Corp., have reached agreements in principle with the EPA (November and December 2000, respectively).  In
each case, the settling party has agreed to incur over $1 billion in expenditures over several years for the
installation of additional pollution controls, the retirement or repowering of coal-fired generating units,
supplemental environmental projects and civil penalties.  These agreements provide for a phased approach to
achieving required emission reductions over the next 10 to 15 years.  The settling utilities have also agreed to
pay civil penalties ranging from $3.5 million to $8.5 million.

SCE owns a 48% undivided interest in Units 4 and 5 at the Four Corners coal plant in New Mexico, which is
operated by Arizona Public Service Company (APS).  On June 27, 2000, the EPA issued a request for information to
the Four Corners plant.  On September 1, 2000, APS replied to the request.  To date, no further action has been
taken with respect to the Four Corners plant.

Regulations under the Clean Water Act require permits for the discharge of certain pollutants into United States
waters.  Under this act, the EPA issues effluent limitation guidelines, pretreatment standards, and new source
performance standards for the control of certain pollutants.  Individual states may impose more stringent
limitations.  SCE incurs additional expenses and capital expenditures in order to comply with guidelines and
standards applicable to steam electric power plants.  SCE presently has discharge permits for all applicable
facilities.

The Safe Drinking Water and Toxic Enforcement Act prohibits the exposure to individuals of chemicals known to the
State of California to cause cancer or reproductive harm and the discharge of such listed chemicals into
potential sources of drinking water.  Additional chemicals are continuously being put on the State's list,
requiring constant monitoring.

The Toxic Substances Control Act and accompanying regulations govern the manufacturing, processing, distribution
in commerce, use, and disposal of listed compounds, such as polychlorinated biphenyls, a

                                    Page 20



toxic substance used in certain electrical equipment.  Current costs for disposal of this substance are
immaterial.

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 environmental liabilities include
expenses to remediate sites currently owned by SCE or by third parties, and for which SCE has been named as one
of the potential responsible parties.  They also include mitigation expenses associated with the construction of
its San Onofre nuclear power plant.

As of December 31, 2001, SCE's recorded estimated minimum liability to remediate its 42 identified sites is
$111 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 $279 million.  The upper limit of this
range of costs ($390.2 million) was estimated using assumptions least favorable to SCE among a range of
reasonably possible outcomes.  SCE has sold all of its gas-fueled generation plants and has retained some
liability associated with the divested properties.

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.  No reasonable estimate of cleanup costs can now
be made for these sites.  Thus, the estimated minimum liability and possible range does not include any monetary
information associated with these sites.

The CPUC allows SCE to recover environmental-cleanup costs at certain sites, representing $50 million of its
recorded liability, through an incentive mechanism.  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 subject to certain time limitations.  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 $76 million for its estimated minimum
environmental-cleanup costs expected to be recovered through customer rates.

SCE expects to clean up its identified sites over a period of up to 30 years.  Remediation expenditures in each
of the next several years are expected to range from $10 million to $25 million.  Recorded expenditures for 2001
were $16.8 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.

Currently, environmental advocacy groups and regulatory agencies in the United States are focusing considerable
attention on carbon dioxide emissions from coal-fired power plants and their potential role in the
"global-warming" issue.  SCE believes that evolving environmental laws and regulations will need to recognize that
coal-fired power plants must continue to play an essential role in providing electricity

                                    Page 21



supply.  Nevertheless, the fact that SCE is a co-owner of two coal-fired power plants exposes the company to the
uncertainties and risks inherent in the environmental laws and regulations applicable to such plants.  The
adoption of laws and regulations to implement carbon dioxide controls could adversely impact SCE's coal plants.
Coal plant emissions of nitrogen and sulphur oxides, mercury and particulates also are potentially subject to
increased controls.  The Bush administration, Congress and the EPA are now considering various proposals that
would impose, or modify, controls on these power plant emissions.  As a regulated utility, SCE has access to
cost-of-service ratemaking that may allow it to recover costs reasonably incurred in complying with environmental
regulations.  For additional discussion, see "Business - Environmental Matters."

SCE's projected environmental capital expenditures are $1.3 billion for the 2002 - 2006 period, mainly for
undergrounding certain transmission and distribution lines.

Item 2.  Properties

                                             Existing Generating Facilities

SCE owns and operates one diesel-fueled generating plant located on Santa Catalina Island, 37 hydroelectric
plants, and an undivided 75.05% interest (1,614 MW net) in San Onofre nuclear generating station Units 2 and 3.
These plants are located in Central and Southern California.

SCE also operates and owns a 56% undivided interest (885 MW) in the Mohave Station, which consists of two
coal-fueled generating units in Clark County, Nevada.  See "Business - Environmental Matters and - Fuel Supply
and Purchased Power Costs - Coal Supply," above, for a discussion of the coal supply and environmental issues
affecting the Mohave Station.

SCE also owns a 15.8% (590 MW net) share of Palo Verde nuclear generating station, which is located near Phoenix,
Arizona, and a 48% undivided interest (754 MW net) in Units 4 and 5 at the Four Corners, which is a coal-fueled
generating plant located in New Mexico.  Palo Verde and Four Corners are operated by other utilities.

In April 2000, SCE agreed to sell its 15.8% interest in Palo Verde and its 48% interest in Four Corners to
Pinnacle West Energy.  In May 2000, after conducting an auction that had been approved by the CPUC, SCE agreed to
sell its 56% interest in Mohave to The AES Corporation.  All three of these transactions remained subject to
certain conditions, including the final approval of the CPUC.  However, the CPUC suspended action on these sales
as problems began to develop in the California electricity market.  As indicated above, subsequently enacted
California state legislation barred the sale of utility generating facilities until 2006.  Consequently, SCE then
withdrew its applications to sell its shares of Palo Verde, Four Corners and Mohave plants.

During the fall of 2003, the steam generators are scheduled to be replaced at Palo Verde Unit 2.  SCE and the
other participants are also considering issues related to the potential replacement of the steam generators in
Units 1 and 3.  Although a final determination of whether Units 1 and 3 steam generators will be replaced has not
yet been made, SCE and the other participants have approved the expenditure of $25.6 million ($4.0 million SCE
share) in 2002 to procure long lead-time materials for fabrication of a spare set of steam generators for either
Unit 1 or 3.  This action will provide Palo Verde participants an option to replace the steam generators in
Unit 1 as early as fall 2005 or in Unit 3 as early as fall 2007 should they ultimately decide to do so.  If the
participants decide to proceed with the earliest possible steam generator replacement at both Units 1 and 3, SCE
estimates that its portion of the fabrication and installation costs and associated power upgrade modifications
would be approximately $70 million over the next seven years.

At year-end 2001, the existing SCE-owned generating capacity (summer effective rating) was divided approximately
as follows: 44% nuclear, 32% coal, 24% hydroelectric, and less than 1% diesel.  San Onofre, Four Corners, certain
of SCE's substations and portions of its transmission, distribution and communication systems are located on
lands of the United States or others under (with minor exceptions)

                                    Page 22



licenses, permits, easements or leases, or on public streets or highways pursuant to franchises.  Certain of such
documents obligate SCE, under specified circumstances and at its expense, to relocate transmission, distribution,
and communication facilities located on lands owned or controlled by federal, state, or local governments.

The 37 hydroelectric plants (some with related reservoirs) have an effective operating capacity of 1,156 MW, and
are, with five exceptions, located in whole or in part on United States lands pursuant to, 30- to 50-year
governmental licenses that expire at various times between 2001 and 2029.  Such licenses impose numerous
restrictions and obligations on SCE, including the right of the United States to acquire projects upon payment of
specified compensation.  When existing licenses expire, the FERC has the authority to issue new licenses to third
parties, but only if their license application is superior to SCE's and then only upon payment of specified
compensation to SCE.  Any new licenses issued to SCE are expected to be issued under terms and conditions less
favorable than those of the expired licenses.  SCE's applications for the relicensing of certain hydroelectric
projects with an aggregate dependable operating capacity of about 112.67 MW are pending.  Annual licenses have
been issued to SCE hydroelectric projects that are undergoing relicensing and whose long-term licenses have
expired.  The annual licenses will be renewed until the long-term licenses are issued.

SCE filed an application with the CPUC on December 15, 1999, seeking authorization to market value and retain the
ownership and operation of the hydroelectric plants pursuant to the State's electric utility industry
restructuring legislation.  In June 2000, SCE credited the TCBA with the proposed excess of market value over
book value of its hydroelectric generation assets and simultaneously recorded the same amount in the GABA (see
"1998 ATCP" above), pursuant to a CPUC decision.  This balance was to remain in GABA until final market valuation
of the hydroelectric assets.  Due to the various unresolved regulatory and legislative issues (as discussed in
Regulation), the GABA transaction was reclassified back to the TCBA, and the TCBA balance (as recalculated based
on a March 27, 2001, CPUC interim decision) was written off as of December 31, 2000.  Pursuant to the terms of
the CPUC Settlement Agreement, SCE is no longer proposing to market value its hydro facilities.  Accordingly, SCE
filed a motion on November 15, 2001, to withdraw its December 1999 petition.

In 2001, the capacity factors in 2001 for SCE's principal generation resources were:  30% for SCE's hydroelectric
plants (lower than average due to below-normal water conditions); 80% for San Onofre; 74% for the Mohave Station;
87% for Four Corners Units 4 and 5; and 88% for Palo Verde.

Substantially all of SCE's properties are subject to the lien of a trust indenture securing First and Refunding
Mortgage Bonds (Trust Indenture), of which approximately $3.6 billion in principal amount was outstanding on
March 1, 2002.  Such lien and SCE's title to its properties are subject to the terms of franchises, licenses,
easements, leases, permits, contracts, and other instruments under which properties are held or operated, certain
statutes and governmental regulations, liens for taxes and assessments, and liens of the trustees under the Trust
Indenture.  In addition, such lien and SCE's title to its properties are subject to certain other liens, prior
rights and other encumbrances, none of which, with minor or insubstantial exceptions, affect SCE's right to use
such properties in its business, unless the matters with respect to SCE's interest in Four Corners and the
related easement and lease referred to below may be so considered.

SCE's rights in Four Corners, which is located on land of The Navajo Nation of Indians under an easement from the
United States and a lease from The Navajo Nation, may be subject to possible defects.  These defects include
possible conflicting grants or encumbrances not ascertainable because of the absence of, or inadequacies in, the
applicable recording law and the record systems of the Bureau of Indian Affairs and The Navajo Nation, the
possible inability of SCE to resort to legal process to enforce its rights against The Navajo Nation without
Congressional consent, possible impairment or termination under certain circumstances of the easement and lease
by The Navajo Nation, Congress, or the Secretary of the Interior, and the possible invalidity of the Trust
Indenture lien against SCE's interest in the easement, lease, and improvements on Four Corners.

                                    Page 23



                                   Construction Program and Capital Expenditures

Cash required by SCE for its capital expenditures totaled $569 million in 2001, $1.0 billion in 2000, and
$959 million in 1999.  Construction expenditures for the 2002 - 2006 period are forecasted at $6.2 billion, but
may have to be changed depending on SCE's financial situation.

In addition to cash required for construction expenditures for the next five years as discussed above,
$3.6 billion is needed to meet requirements for long-term debt maturities and sinking fund redemption requirements.

SCE's estimates of cash available for operations for the five years through 2006 assume, among other things,
satisfactory reimbursement of cost incurred during the California energy crisis, the receipt of adequate and
timely rate relief and the realization of its assumptions regarding cost increases, including the cost of
capital.  SCE's estimates and underlying assumptions are subject to continuous review and periodic revision.

The timing, type, and amount of all additional long-term financing are also influenced by market conditions, rate
relief, and other factors, including limitations imposed by SCE's Articles of Incorporation and Trust Indenture.
SCE's ability to obtain financing has been affected adversely by the effects of California's energy crisis during
2000 and 2001, as described above in Part I under "Changing Regulatory Environment - Liquidity Issues."

                                               Nuclear Power Matters

SCE's nuclear facilities have been reliable sources of inexpensive, non-polluting power for SCE's customers for
more than a decade.  Throughout the operating life of these facilities, SCE's customers have supported the
revenue requirements of SCE's capital investment in these facilities and for their incremental costs through
traditional cost-of-service ratemaking.

SCE requested in its URG application to recover the unamortized cost of the nuclear investment regulatory asset
over a ten-year period, retroactive to January 1, 2001.  All present proposed decisions and alternates in the URG
proceeding would authorize this recovery.  If any of the present URG proposed decisions are adopted, SCE would
reestablish for financial reporting purposes its unamortized nuclear investment in San Onofre and Palo Verde and
related flow-through taxes as regulatory assets with a corresponding credit to earnings.

San Onofre Nuclear Generating Station

San Onofre Unit 3 suffered a forced outage because of the failure of an electrical component in the non-nuclear
portion of the plant resulting in a fire on February 3, 2001.  The electrical circuit breaker failure and
resultant fire had significant consequences beyond just the damage to the electrical components and cabling.
Loss of electrical power supply also resulted in loss of lubricating oil to the turbine generator system while it
was still rotating.  This caused severe and extensive damage to the turbine generator rotors, bearings and other
components.  San Onofre Unit 3 returned to service on June 1, 2001, and has operated reliably since that date.
The lost revenue due to this repair outage was covered by SCE's insurance.

The San Onofre Units 2 and 3 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, 8% of Unit 2's tubes and 6% of Unit 3's tubes have been removed from service.  A decreasing
(favorable) trend in degradation has been observed in more recent inspections.

                                    Page 24



Additionally, in the summer of 2000, SCE applied for a coastal permit to construct a dry cask spent fuel storage
facilities for Units 2 and 3.  This permit was approved, with certain conditions, by the California Coastal
Commission at its meeting on March 13, 2001.

Nuclear Facility Decommissioning

In 1992, the CPUC approved a settlement agreement between SCE and the ORA to discontinue operation of San Onofre
Unit 1 at the end of its then-current fuel cycle.  In November 1992, SCE discontinued operation of Unit 1.  As
part of the agreement, SCE recovered its remaining investment over a four-year period ending August 1996.  On
December 21, 1998, SCE filed an application with the CPUC requesting authorization to access its nuclear
decommissioning trust funds for Unit 1 for the purpose of commencing decommissioning of Unit 1 in 2000.  On
March 8, 1999, SCE, SDG&amp;E, the ORA and TURN entered into a settlement agreement that provided for SCE to access
its nuclear decommissioning trust funds for Unit 1 decommissioning.  On June 3, 1999, the CPUC adopted the
settlement agreement.  On December 6, 1999, SCE applied for a coastal permit to demolish and remove San Onofre
Unit 1 buildings and other structures and to construct a temporary dry cask spent fuel storage facility as part
of the San Onofre Unit 1 decommissioning project.  On February 15, 2000, the California Coastal Commission
approved SCE's application.  Decommissioning of Unit 1 is now underway and will be completed in three phases,
(1) decontamination and dismantling of all structures and most foundations, (2) spent fuel storage monitoring, and
(3) fuel storage facility dismantling and site restoration.  Phase one is anticipated to continue through 2008.
Phase two is expected to continue until 2026.  Phase three will be conducted concurrently with San Onofre Units 2
and 3 decommissioning projects.  All of SCE's reasonable San Onofre Unit 1 decommissioning costs will be paid
from its nuclear decommissioning trust funds.

SCE plans to decommission its nuclear generating facilities as expeditiously as possible once authorized by the
NRC.  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 in 2026 and 2028 for the Palo Verde units.  Decommissioning
costs, which are recovered through non-bypassable customer rates and are recorded as a component of depreciation
expense.

Decommissioning is estimated to cost $2.1 billion in year 2001 dollars based on site-specific studies performed
in 1998 for San Onofre and Palo Verde.  This estimate considers the total cost of decommissioning and dismantling
the plant, including labor, material, burial, and other costs.  The site-specific studies are updated
approximately every three years.  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 in nominal dollars through completion of
decommissioning of its nuclear facilities.

Decommissioning expenses were $96 million in 2001, $106 million in 2000, and $124 million in 1999.
The accumulated provision for decommissioning excluding San Onofre Unit 1 and unrealized holding gains was
$1.5 billion at December 31, 2001, $1.4 billion at December 31, 2000, and $1.3 billion at December 31, 1999.  The
estimated cost to decommission San Onofre Unit 1 is approximately $300 million in year 2001 dollars and is
recorded as a liability.

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

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 United States results in claims and/or costs which
exceed the primary insurance at that plant site.  Federal

                                    Page 25



regulations require this secondary level of financial protection.  The NRC 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.  It would
have to pay, however, 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 has also
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 insurance programs, SCE could be assessed retrospective premium
adjustments of up to $35 million per year.  Insurance premiums are charged to operating expense.

The Federal law requiring the nuclear insurance described above for all new NRC licensed reactors was due to
expire in August 2002.  The United States Senate passed an amendment to the Energy bill which renews the law for
another 10 years.  The United States House of Representatives has also passed a bill renewing the law for another
10 years.  Congressional action to reconcile differences between the House and Senate versions appears to be
necessary.  Even if this Federal law did expire, all of the nuclear insurance provisions required by the law, as
described above, will still apply to SCE, as an owner of the existing San Onofre and Palo Verde units, until the
termination of each unit's NRC license and the removal of all radioactive materials from its site.
                                                                                                  -

                                    Page 26



Item 3.  Legal Proceedings

                                       San Onofre Personal Injury Litigation

SCE is actively involved in four 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&amp;E in the
United States 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 Appeals, 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 Appeals affirmed these judgments.
Pursuant to an agreement of the parties as described below, all proceedings in this matter have been stayed.

On November 17, 1995, an SCE employee and his wife sued SCE in the United States 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.  Briefing on the appeal was completed in
January 1999, oral argument took place on February 10, 2000, and the matter was taken under submission.  On
July 20, 2000, the Ninth Circuit Court of Appeals issued an opinion reversing the District Court judgment and
ordering a retrial as to both defendants.  On August 10, 2000, SCE filed a petition for rehearing with the Ninth
Circuit Court of Appeals.  On September 27, 2001, the Ninth Circuit issued a new opinion affirming the District
Court judgment in favor of all defendants.  On October 9, 2001, plaintiffs filed a petition for rehearing or, in
the alternative, for a rehearing en banc, with the Ninth Circuit.  On December 28, 2001, the Ninth Circuit denied
plaintiffs' petition for rehearing and its alternative petition for a rehearing en banc.  Plaintiffs could seek
further review in the United States Supreme Court.

On November 28, 1995, a former contract worker at San Onofre, her husband, and her son, sued SCE in the United
States 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.

On May 9, 2001, SCE was served with a complaint filed on March 1, 2001, by a former contract worker at San Onofre
and his wife in the United States District Court for the Southern District of California.  In addition to SCE,
plaintiffs also named as defendants Combustion Engineering and Bechtel Construction Company, the employer of the
former San Onofre worker.  Pursuant to an agreement of the parties as described below, all proceedings in this
matter have been stayed.

In March 1999, SCE reached an agreement with the plaintiffs in the above four cases at the United States District
Court level to stay all proceedings including trial, pending the results of the case currently before the Ninth
Circuit Court of Appeals.  The parties agreed that if the plaintiffs 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.  Plaintiffs in those cases have agreed to a stay of proceedings similar to the stay
agreements entered into by plaintiffs with SCE in the above four lawsuits.  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.

                                    Page 27



                                             Navajo Nation Litigation

On June 18, 1999, SCE, was served with a complaint filed by the Navajo Nation in the United States District Court
for the District of Columbia against Peabody Holding Company and certain of its affiliates (Peabody), Salt River
Project Agricultural Improvement and Power District, and SCE.  The complaint asserts claims against the
defendants for, among other things, violations of the federal RICO statute, interference with fiduciary duties
and contractual relations, fraudulent misrepresentation by nondisclosure, and various contract-related claims.
Peabody supplies coal from mines on Navajo Nation lands to the Mohave Station.  The complaint claims that the
defendants' actions prevented the Navajo Nation from obtaining the full value in royalty rates for the coal.  The
complaint seeks damages of not less than $600 million, trebling of that amount, and punitive damages of not less
than $1 billion, as well as a declaration that Peabody's lease and contract rights to mine coal on Navajo Nation
lands should be terminated.  SCE joined Peabody's motion to strike the Navajo Nation's complaint.  In addition,
SCE and the other defendants have filed motions to dismiss.

The Navajo Nation had previously filed suit in the Court of Claims against the United States Department of
Interior, alleging that the Government had breached its fiduciary duty concerning the above-referenced contract
negotiations.  On February 4, 2000 the Court of Claims issued a decision in the Government's favor, finding that
while there had been a breach, there was no available redress from the Government.  In its decision, the Court
indicated that it was making no statements regarding, or findings in, the above federal civil court action.  That
decision is on appeal.  On February 28, 2000, the Hopi Tribe filed a motion to intervene in the pending
litigation, alleging that the royalty payments set for their interest in the coal leases with Peabody had been
impacted by the events at issue in the Navajo case.  The defendants filed an opposition to the motion, and the
Court calendared all pending motions for hearing on March 15, 2001.  On March 15, 2001, the District Court heard
arguments, granted the Hopi Tribe's motion to intervene and denied Peabody and SCE's motions to dismiss.  The
Court, however, did grant Salt River's motion on jurisdictional grounds.  The Court denied SCE's and Peabody's
motions to allow an interlocutory appeal.

Peabody and SCE filed cross claims against the Navajo Nation on February 21, 2002, alleging that the Navajo
breached a settlement agreement between Peabody and the Navajo Nation by filing their lawsuit.  Additionally,
Peabody has filed a motion to transfer the matter to Arizona in conjunction with their demand that the matter be
submitted to arbitration pursuant to the settlement agreement.  A response to the cross claim or the motion to
transfer has not yet been received.

                                              Shareholder Litigation

Two purported class actions were filed in October 2000 and March 2001, and involved securities fraud claims
arising from alleged improper accounting by Edison International and SCE of undercollections in SCE's TRA.  These
actions, as described below, were dismissed with prejudice on March 8, 2002.

On October 30, 2000, a purported class action lawsuit  was filed in federal district court in Los Angeles against
SCE and Edison International.  By agreement of the parties and the Court, plaintiffs amended their complaint on
two occasions.  Pursuant to this stipulation, on March 5, 2001, plaintiffs filed a second amended complaint.  The
second amended complaint alleged that the companies were engaging in securities fraud by over-reporting income
and improperly accounting for the TRA undercollections.  The second amended complaint purported to be filed on
behalf of a class of persons who purchased Edison International common stock beginning June 1, 2000, and
continuing until such time as TRA-related undercollections were recorded as a loss on SCE's income statements.
The second amended complaint sought compensatory damages caused by the alleged fraud as well as punitive
damages.  As discussed below, this lawsuit was consolidated with another action, a new consolidated complaint was
filed and defendants responded to the consolidated complaint.

On March 15, 2001, a purported class action lawsuit was filed in federal district court in Los Angeles,
California, against Edison International and SCE and certain of their officers.  The complaint alleged that the
defendants engaged in securities fraud by misrepresenting and/or failing to disclose material facts

                                    Page 28



concerning the financial condition of Edison International and SCE, including that the defendants allegedly
overreported income and improperly accounted for the TRA undercollections.  The complaint purported to be filed
on behalf of a class of persons who purchased publicly-traded securities of Edison International between May 12,
2000, and December 22, 2000.  Plaintiffs sought damages, in an unstated amount, in connection with their purchase
of securities during the class period.

On August 3, 2001, the plaintiffs in both cases filed a consolidated complaint on behalf of alleged shareholders
of Edison International, naming as defendants SCE, Edison International, and certain officers of Edison
International.  The consolidated complaint alleged that the defendants engaged in securities fraud by
misrepresenting and/or failing to disclose material facts concerning the financial condition of Edison
International and SCE, including that defendants allegedly over-reported income and improperly accounted for the
TRA undercollections.  The complaint purported to be filed on behalf of a class of persons who purchased Edison
International stock between July 21, 2000, and April 17, 2001.  Plaintiffs sought damages in an unstated amount
in connection with their purchase of securities during the class period.  On September 17, 2001, the defendants
filed a motion to dismiss for failure to state a claim.  On March 8, 2002, the Court issued an order granting the
motion and dismissing the complaint with prejudice as to all defendants.  Plaintiffs could appeal this ruling to
the Ninth Circuit Court of Appeals.

                                         Qualifying Facilities Litigation

SCE is involved in a number of legal actions brought by various QFs, alleging SCE failed to timely pay for power
deliveries made from November 1, 2000, through March 26, 2001.  The QF plaintiffs include gas-fired cogenerators
and owners of solar, wind, geothermal and biomass projects.  The lawsuits, in aggregate, seek payments of more
than $833,000,000 for energy and capacity supplied to SCE under QF contracts, and in some cases additional
damages.  Many of these QF lawsuits also seek an order allowing the suppliers to stop providing power to SCE so
that they may sell to other purchasers.

The table below sets forth the principal parties, filing date and court jurisdiction of the QF litigation:

Principal Party                             Date Filed               Court Jurisdiction
- ---------------                             ----------               ------------------

City of Long Beach                          February 9, 2001         Los Angeles County Superior Court,
                                                                     South District
Salton Sea Power Generation, L.P.           February 20, 2001        Imperial County Superior Court
Beowawe Power, L.L.C.                       March 2, 2001            United States District Court,
                                                                     District of Nevada
Mohave 16/17/18 LLC; Ridgetop               March 5, 2001            Los Angeles County Superior Court,
     Energy, L.L.C.                                                  Central District
IMC Chemicals, Inc.                         March 26, 2001           San Bernardino County Superior Court,
                                                                     Barstow District
NP Cogen, Inc.                              March 28, 2001           Los Angeles County Superior Court,
                                                                     Central District
Watson Cogeneration Co.                     March 29, 2001           Los Angeles County Superior Court
O.L.S. Energy-Chino                         March 30, 2001           Los Angeles County Superior Court,
                                                                     Central District
E.F. Oxnard, Inc.                           April 2, 2001            United States District Court,
                                                                     Central District
Herber Geothermal Company                   April 6, 2001            Imperial County Superior Court
Inland Paperboard and                       April 9, 2001            United States District Court,
     Packaging, Inc.                                                 Central District
Mammoth Pacific, L.P.                       April 9, 2001            Mono County Superior Court
Brea Power Partners, L.P.                   April 5, 2001            Los Angeles County Superior Court,
                                                                     Central District
Kern River Cogeneration Company             April 10, 2001           Kern County Superior Court

                                    Page 29



Southern California Sunbelt                 March 27, 2001           Riverside County Superior Court,
     Developers                                                      Indio Branch
Corona Energy Partners, LTD                 April 5, 2001            Riverside County Superior Court
Procter &amp; Gamble Paper                      April 11, 2001           Ventura County Superior Court
     Products Company
Oak Creek Wind Power, Inc.                  April 16, 2001           Kern County Superior Court, Central
                                                                     District
Willamette Industries, Inc.                 April 12, 2001           Ventura County Superior Court
Mammoth Pacific, L.P.                       May 25, 2001             Los Angeles County Superior Court
Berry Petroleum Company                     May 2, 2001              Los Angeles County Superior Court,
                                                                     Central District
Ace Cogeneration Company                    May 1, 2001              Los Angeles County Superior Court,
                                                                     Central District
Cabazon Power Partners LLC                  May 2, 2001              Los Angeles County Superior Court,
                                                                     Central District
U.S. Borax Inc.                             May 6, 2001              Kern County Superior Court
Black Hills Ontario, LLC                    May 7, 2001              San Bernardino County Superior Court,
                                                                     Rancho Cucamonga District
Luz Solar Partners LTD., III                May 8, 2001              Sacramento County Superior Court
Rio Bravo Jasmin                            May 16, 2001             Los Angeles County Superior Court
CalWind Resources                           May 18, 2001             Los Angeles County Superior Court
Wheelabrator Norwalk Energy Co. Inc.        May 18, 2001             Los Angeles County Superior Court,
                                                                     Southeast District
Smurfit Stone Container                     May 24, 2001             United States District Court,
                                                                     Central District
Ripon Cogeneration, Inc.                    June 6, 2001             Los Angeles County Superior Court
San Gorgonio Westwinds II, LLC              June 8, 2001             Riverside County Superior Court
Colmac Energy, Inc.                         June 12, 2001            Los Angeles County Superior Court
Midway-Sunset Cogeneration                  June 7, 2001             Kern County Superior Court
     Company


Plaintiffs in most of these cases have entered into settlement agreements providing for stays of litigation,
payments to the QFs upon the occurrence of specified conditions, modifications in some cases to the contract
prices going forward, releases and dismissals of the litigation upon payment by SCE.  On March 1, 2002, and with
several exceptions related to unique disputes or other unique circumstances, including the status of regulatory
approval, SCE paid the amounts due under the settlement agreements with these QFs, which triggered the releases
and other provisions effectuating the settlements.  As a result, the litigation with those QFs to whom payment in
full has been made under the parties' settlement agreements should be dismissed during 2002.

                                  Power Exchange (PX) Performance Bond Litigation

On January 19, 2001, American Home Assurance Company (American Home) notified SCE that due to SCE's failure to
comply with its payment obligations to the PX, the PX issued a demand to American Home on a $20,000,000 pool
performance bond.  American Home demanded payment from SCE by January 29, 2001, of $20,000,000 under an indemnity
agreement between SCE and American Home.

SCE has exercised its right under the indemnity agreement to assume the defense of American Home against claims
arising from the pool performance bond.  As required by the indemnity agreement, in February 2001, SCE deposited
$20,200,000 in an account in trust to be available to satisfy any judgment, should there be one, against American
Home as a result of SCE's alleged default.  SCE has further instituted the alternative dispute resolution
provisions provided for in the applicable PX tariff, which provide for negotiation followed by mediation and, if
unsuccessful, arbitration.  On or about September 13, 2001,

                                    Page 30



the PX submitted a demand for arbitration against American Home, asserting causes of action for breach of
contract and bad faith refusal to pay.  On September 25, 2001, American Home demanded that SCE indemnify and
defend American Home in connection with the demand for arbitration, pursuant to the operative documents between
the parties.  SCE assumed the defense of the arbitration.  On March 1, 2002, SCE made payment directly to CalPX
on the full amount of its outstanding obligations.  See "Business - Changing Regulatory Environment - Liquidity
Issues."  CalPX was unwilling to provide American Home with an exoneration of the pool performance bond, and has
continued to pursue the arbitration, asserting, among other things, that it is entitled to the face amount of the
bond on account of PG&amp;E's default.  On March 19, 2002, American Home initiated suit against SCE, alleging that
SCE's failure to obtain an exoneration of the bond in connection with SCE's payment of its indebtedness was a
material breach of the indemnity agreement.

                                          CPUC Litigation and Settlement

See the discussion under "Changing Regulatory Environment" for a description of SCE's lawsuit against the CPUC,
its settlement (referred to as the CPUC Settlement Agreement), and the legal proceedings associated with the CPUC
Settlement Agreement, including the appeal thereof.


Item 4.  Submission of Matters to a Vote of Security Holders

Inapplicable

Pursuant to Form 10-K's General Instruction (General Instruction) G(3), the following information is included as
an additional item in Part I:

Executive Officers(1) of the Registrant

                                        Age at
         Executive Officer          December 31, 2001                       Company Position
  ------------------------------ ------------------------ ------------------------------------------------------
  Alan J. Fohrer                           51             Chairman of the Board, Chief Executive Officer and
                                                          Director
  ------------------------------ ------------------------ ------------------------------------------------------
  Robert G. Foster                         54             President
  ------------------------------ ------------------------ ------------------------------------------------------
  Harold B. Ray                            61             Executive Vice President, Generation Business Unit
  ------------------------------ ------------------------ ------------------------------------------------------
  Pamela A. Bass                           54             Senior Vice President, Customer Service Business Unit
  ------------------------------ ------------------------ ------------------------------------------------------
  John R. Fielder                          56             Senior Vice President, Regulatory Policy and Affairs
  ------------------------------ ------------------------ ------------------------------------------------------
  Stephen E. Pickett                       51             Senior Vice President and General Counsel
  ------------------------------ ------------------------ ------------------------------------------------------
  Richard M. Rosenblum                     51             Senior Vice President, Transmission and Distribution
                                                          Business Unit
  ------------------------------ ------------------------ ------------------------------------------------------
  Mahvash Yazdi                            50             Senior Vice President and Chief Information Officer
  ------------------------------ ------------------------ ------------------------------------------------------
  Bruce C. Foster                          49             Vice President, Regulatory Operations
  ------------------------------ ------------------------ ------------------------------------------------------
  Frederick J. Grigsby, Jr.                54             Vice President, Human Resources &amp; Labor Relations
  ------------------------------ ------------------------ ------------------------------------------------------
  Thomas M. Noonan                         50             Vice President and Controller
  ------------------------------ ------------------------ ------------------------------------------------------
  W. James Scilacci                        46             Vice President and Chief Financial Officer
  ------------------------------ ------------------------ ------------------------------------------------------

- ------------------------
(1) Executive Officers are defined by Rule 3b-7 of the General Rules and Regulations under the Securities
    Exchange Act of 1934, as amended.


                                    Page 31



None of SCE's executive officers is related to each other by blood or marriage.  As set forth in Article IV of
SCE's Bylaws, the elected officers of SCE are chosen annually by and serve at the pleasure of SCE's Board of
Directors and hold their respective offices until their resignation, removal, other disqualification from
service, or until their respective successors are elected.  All of the above officers have been actively engaged
in the business of SCE for more than five years except Mahvash Yazdi and Frederick J. Grigsby, Jr.  Those
officers who have not held their present position with SCE for the past five years had the following business
experience during that period:

- -------------------------------- ---------------------------------------------- ----------------------------------------
Executive Officer                              Company Position                             Effective Dates
- -------------------------------- ---------------------------------------------- ----------------------------------------
Alan J. Fohrer                   Chairman of the Board, Chief Executive         January 2002 to present
                                 Officer and Director, SCE
                                 ---------------------------------------------- ----------------------------------------
                                 President and Chief Executive Officer,         January 2000 to December 2001
                                 Edison Mission Energy
                                 ---------------------------------------------- ----------------------------------------
                                 Executive Vice President and Chief Financial   September 1996 to January 2000
                                 Officer, Edison International
                                 ---------------------------------------------- ----------------------------------------
                                 Chairman of the Board, Edison Enterprises      January 1998 to September 1999
                                 ---------------------------------------------- ----------------------------------------
                                 Executive Vice President and Chief Financial   September 1996 to December 1999
                                 Officer, SCE
                                 ---------------------------------------------- ----------------------------------------
                                 Vice Chairman of the Board, Edison Mission     May 1993 to January 1999
                                 Energy
- -------------------------------- ---------------------------------------------- ----------------------------------------
Robert G. Foster                 President, SCE                                 January 2002 to present
                                 Senior Vice President, External Affairs, SCE   April 2001 to December 2001
                                 and Edison International
                                 Senior Vice President, Public Affairs, SCE     November 1996 to April 2001
                                 and Edison International
- -------------------------------- ---------------------------------------------- ----------------------------------------
Pamela A. Bass                   Senior Vice President, Customer Service        March 1999 to present
                                 Business Unit, SCE
                                 Vice President, Customer Solutions Business    June 1996 to February 1999
                                 Unit, SCE
- -------------------------------- ---------------------------------------------- ----------------------------------------
John R. Fielder                  Senior Vice President, Regulatory Policy and   February 1998 to present
                                 Affairs, SCE
                                 Vice President, Regulatory Policy and          February 1992 to February 1998
                                 Affairs, SCE
- -------------------------------- ---------------------------------------------- ----------------------------------------
Stephen E. Pickett               Senior Vice President and General Counsel,     January 2002 to present
                                 SCE
                                 Vice President and General Counsel, SCE        January 2000 to December 2001
                                 Associate General Counsel, SCE                 November 1993 to December 1999
- -------------------------------- ---------------------------------------------- ----------------------------------------
Richard M. Rosenblum             Senior Vice President, Transmission and        February 1998 to present
                                 Distribution Business Unit, SCE
                                 Vice President, Distribution Business Unit,    January 1996 to February 1998
                                 SCE
- -------------------------------- ---------------------------------------------- ----------------------------------------
Mahvash Yazdi                    Senior Vice President and Chief Information    January 2000 to present
                                 Officer, SCE and Edison International
                                 Vice President and Chief Information           May 1997 to December 1999
                                 Officer, SCE and Edison International
                                 Vice President of Information Technology and   September 1995 to May 1997
                                 Chief Information Officer, Hughes Aircraft
                                 Company(1)
- -------------------------------- ---------------------------------------------- ----------------------------------------
Frederick J. Grigsby, Jr.        Vice President, Human Resources &amp; Labor        July 2001 to present
                                 Relations
                                 Senior Vice President, Human Resources,        December 1998 to October 2000
                                 Fluor Corporation(1) (2)
                                 Vice President, Human Resources, Thermo King   December 1995 to November 1998
                                 Corporation(1) (3)
- -------------------------------- ---------------------------------------------- ----------------------------------------

                                    Page 32



- -------------------------------- ---------------------------------------------- ----------------------------------------
Thomas M. Noonan                 Vice President and Controller, SCE and         March 1999 to present
                                 Edison International
                                 Assistant Controller, SCE and Edison           September 1993 to February 1999
                                 International
- -------------------------------- ---------------------------------------------- ----------------------------------------
W. James Scilacci                Vice President and Chief Financial Officer,    January 2000 to present
                                 SCE
                                 Director, 2002 General Rate Case, SCE          August 1999 to December 1999
                                 Director, Qualifying Facility Resources, SCE   January 1995 to August 1999
- -------------------------------- ---------------------------------------------- ----------------------------------------

- ---------------------------
(1) This entity is not a parent, subsidiary or other affiliate of SCE.

(2) The Fluor Corporation is one of the world's largest, publicly owned engineering, procurement, construction,
    and maintenance services organizations.

(3) Thermo King Corporation provides climate control solutions for global transportation industries.

                                                      PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Certain information responding to Item 5 with respect to frequency and amount of cash dividends is included in
SCE's Annual Report to Shareholders for the year ended December 31, 2001 (Annual Report), under Quarterly
Financial Data on page 49 and is incorporated by reference pursuant to General Instruction G(2).  As a result of
the formation of a holding company described above in Item 1, all of the issued and outstanding common stock of
SCE is owned by Edison International and there is no market for such stock.

Item 6.  Selected Financial Data

Information responding to Item 6 is included in the Annual Report under Selected Financial and Operating Data:
1996 - 2001 on page 1 and is incorporated herein by reference pursuant to General Instruction G(2).

Item 7.  Management's Discussion and Analysis of Results of Operations and Financial Condition

Information responding to Item 7 is included in the Annual Report under Management's Discussion and Analysis of
Results of Operations and Financial Condition on pages 2 through 20 and is incorporated herein by reference
pursuant to General Instruction G(2).

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Information responding to Item 7A is included in the Annual Report under Management's Discussion and Analysis of
Results of Operations and Financial Condition on pages 8 through 9 incorporated herein by reference pursuant to
General Instruction G(2).

Item 8.  Financial Statements and Supplementary Data

Certain information responding to Item 8 is set forth after Item 14 in Part IV.  Other information responding to
Item 8 is included in the Annual Report on pages 21 through 49, and is incorporated herein by reference pursuant
to General Instruction G(2).

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

                                    Page 33



                                                     PART III

Item 10.  Directors and Executive Officers of the Registrant

Information concerning executive officers of SCE is set forth in Part I in accordance with General Instruction
G(3), pursuant to Instruction 3 to Item 401(b) of Regulation S-K.  Other information responding to Item 10 will
be incorporated by reference from SCE's definitive Joint Proxy Statement (Proxy Statement) filed with the SEC in
connection with SCE's Annual Shareholders' Meeting to be held on May 14, 2002, under the headings, "Election of
Directors" and is incorporated herein by reference pursuant to General Instruction G(3).

In addition, the following information is furnished with respect to certain Directors of SCE, who are expected to
retire from the Board on May 14, 2002:

Warren Christopher, age 76, has been a Director of SCE from August 1971 through January 1977, from June 1981
through January 1993, and from May 1997 to date.  He is also a Director of Edison International.  He is a Senior
Partner of the law firm of O'Melveny &amp; Myers (1958-1967, 1969-1977, 1981-1993, and since 1997) and is the former
United States Secretary of State (1993-1997).

Carl F. Huntsinger, age 72, has been a Director of SCE since 1983 and is also a Director of Edison
International.  He has been a General Partner of DAE Limited Partnership, Ltd. (agricultural management) since
1986.

Charles D. Miller, age 73, has been a Director of SCE since 1987 and is also a Director of Edison International.
He is a Director of Avery Dennison Corporation, Nationwide Health Properties (Chairman), The Air Group, Mellon
Financial Group-West Coast, and Korn/Ferry International.  He is also the Retired Chairman of the Board of Avery
Dennison Corporation (manufacturer of self-adhesive products) (1998-2000); and the prior Chairman of the Board
and Chief Executive Officer of Avery Dennison Corporation (1983-1998).

Item 11.  Executive Compensation

Information responding to Item 11 will be incorporated by reference from SCE's definitive Proxy Statement under
the headings "Board Compensation," "Executive Compensation - Summary Compensation Table," "Aggregated Option/SAR
Exercises in 2001 and FY-End Option/SAR Values," "Long-Term Incentive Plan Awards in Last Fiscal Year," "Pension
Plan Table," "Other Retirement Benefits," "Employment Contracts and Termination of Employment Arrangements,"
"Compensation and Executive Personnel Committees' Report on Executive Compensation," and "Compensation and
Executive Personnel Committees' Interlocks and Insider Participation," and is incorporated herein by reference
pursuant to General Instruction G(3).

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Information responding to Item 12 will be incorporated by reference from SCE's definitive Proxy Statement under
the headings "Stock Ownership of Directors and Executive Officers" and "Stock Ownership of Certain Shareholders,"
and is incorporated herein by reference pursuant to General Instruction G(3).

Item 13.  Certain Relationships and Related Transactions

Information responding to Item 13 will be incorporated by reference from SCE's definitive Proxy Statement under
the heading "Certain Relationships and Transactions of Nominees and Executive Officers" and "Other Management
Transactions," and is incorporated herein by reference pursuant to General Instruction G(3).


                                    Page 34



In addition, Mr. Christopher is a Senior Partner of the law firm of O'Melveny and Myers.  The firm provided legal
services to SCE and/or its subsidiaries in 2001, and such services are expected to continue to be provided in the
future.  The amount paid to O'Melveny and Myers for legal services was below the threshold requiring disclosure
by the SEC.  SCE believes that these transactions are comparable to those which would have been undertaken under
similar circumstances with nonaffiliated entities or persons.

                                                      PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)   Financial Statements

The following items contained in the Annual Report are found on pages 2 through 51, and incorporated by reference
in this report.

         Management's Discussion and Analysis of Results of Operations and Financial Condition
         Consolidated Statements of Income - Years Ended December 31, 2001, 2000, and 1999
         Consolidated Balance Sheets - December 31, 2001, and 2000
         Consolidated Statements of Cash Flows - Years Ended December 31, 2001, 2000, and 1999
         Consolidated Statements of Changes in Common Shareholder's Equity - Years Ended
              December 31, 2001, 2000, 1999 and 1998
         Notes to Consolidated Financial Statements
         Responsibility for Financial Reporting
         Report of Independent Public Accountants

(a)(2)   Report of Independent Public Accountants and Schedules Supplementing Financial Statements

The following documents may be found in this report at the indicated page numbers.
                                                                                                     Page
                                                                                                     ----
         Report of Independent Public Accountants on Supplemental Schedules                          36
         Schedule II - Valuation and Qualifying Accounts for the Years
              Ended December 31, 2001, 2000, and 1999                                                37

Schedules I through V, inclusive, except those referred to above, are omitted as not required or not applicable.

(a)(3)   Exhibits

         See Exhibit Index beginning on page 41 of this report.

         The Company will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written
request and upon payment to the Company of its reasonable expenses of furnishing such exhibit, which shall be
limited to photocopying charges and, if mailed to the requesting party, the cost of first-class postage.

(b)      Reports on Form 8-K

         October 2, 2001
                  Item 5:  Other Events              Settlement Agreement
         October 30, 2001
                  Item 5:  Other Events              Settlement Agreement


                                    Page 35



                                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                             ON SUPPLEMENTAL SCHEDULES




To Southern California Edison Company:

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated
financial statements included in the 2001 Annual Report to Shareholders of Southern California Edison Company
(SCE) incorporated by reference in this Form 10-K, and have issued our report thereon dated March 25, 2002.  Our
audits were made for the purpose of forming an opinion on those consolidated financial statements taken as a
whole.  The supplemental schedules listed in Part IV of this Form 10-K are the responsibility of SCE's management
and are presented for purposes of complying with the Securities and Exchange Commission's rules and regulations,
and are not part of the consolidated financial statements.  These supplemental schedules have been subjected to
the auditing procedures applied in the audits of the consolidated financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set forth therein in relation to the
consolidated financial statements taken as a whole.




                                                              ARTHUR ANDERSEN LLP
                                                              ARTHUR ANDERSEN LLP

Los Angeles, California
March 25, 2002


                                    Page 36



                                        Southern California Edison Company


                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 2001


                                                                   Additions
                                                        -----------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------
                                                                (In thousands)
Group A:
Geothermal projects reserves
Projects in development stage
Uncollectible Accounts:
     Customers                      $    19,793      $    28,926      $       --       $    20,419      $    28,300
     All other                            3,427            1,836              --             1,607            3,656
- -------------------------------------------------------------------------------------------------------------------
Total                               $    23,220      $    30,762      $       --       $    22,026(a)   $    31,956
- -------------------------------------------------------------------------------------------------------------------

Group B:
DOE Decontamination
     and Decommissioning            $    29,920      $        --      $                $     5,520(b)   $    24,400
Purchased-power settlements             466,232                               --           110,353(c)       355,879
Pension and benefits                    296,278          195,558                            72,037(d)       419,799
Maintenance Accrual
Insurance, casualty and other            64,058           54,827              --            43,815(e)        75,070
- -------------------------------------------------------------------------------------------------------------------
Total                               $   856,488      $   250,385      $       --       $   231,725      $   875,148
- -------------------------------------------------------------------------------------------------------------------

- -------------------------
(a)  Accounts written off, net.
(b)  Represents amounts paid.
(c)  Represents the amortization of the liability established for purchased-power contract settlement agreements.
(d)  Includes pension payments to retired employees, amounts paid to active employees during periods of illness
     and the funding of certain pension benefits.
(e)  Amounts charged to operations that were not covered by insurance.



                                    Page 37



                                        Southern California Edison Company


                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 2000


                                                                   Additions
                                                        -----------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------
                                                                (In thousands)
Group A:
Uncollectible accounts
     Customers                      $    21,656      $    24,017      $       --       $    25,880      $    19,793
     All other                            3,009            1,201              --               783            3,427
- -------------------------------------------------------------------------------------------------------------------
Total                               $    24,665      $    25,218      $       --       $    26,663(a)   $    23,220
- -------------------------------------------------------------------------------------------------------------------

Group B:
DOE Decontamination
     and Decommissioning            $    34,590      $        --      $     (219)(b)   $     4,451(c)   $    29,920
Purchased-power settlements             563,459           17,188              --           114,415(d)       466,232
Pension and benefits                    232,901           44,244          24,101(e)          4,968(f)       296,278
Insurance, casualty and other            68,880           42,749              --            47,571(g)        64,058
- -------------------------------------------------------------------------------------------------------------------
Total                               $   899,830      $   104,181      $   23,882       $   171,405      $   856,488
- -------------------------------------------------------------------------------------------------------------------

- -------------------------
(a)  Accounts written off, net.
(b)  Represents revision to estimate based on actual billings.
(c)  Represents amounts paid.
(d)  Represents the amortization of the liability established for purchased-power contract settlement agreements.
(e)  Primarily represents transfers from the accrued paid absence allowance account for required additions to the
     comprehensive disability plan accounts.
(f)  Includes pension payments to retired employees, amounts paid to active employees during periods of illness
     and the funding of certain pension benefits.
(g)  Amounts charged to operations that were not covered by insurance.



                                    Page 38




                                        Southern California Edison Company


                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                       For the Year Ended December 31, 1999


                                                                   Additions
                                                       ------------------------------
                                     Balance at          Charged to        Charged to                      Balance
                                    Beginning of          Costs and           Other                        at End
             Description               Period             Expenses          Accounts      Deductions      of Period
- -------------------------------------------------------------------------------------------------------------------
                                                                (In thousands)
Group A:
Uncollectible accounts
     Customers                       $    19,596       $    21,968      $       --     $    19,908      $    21,656
     All other                             2,634             1,288              --             913            3,009
- -------------------------------------------------------------------------------------------------------------------
Total                                $    22,230       $    23,256      $       --     $    20,821(a)   $    24,665
- -------------------------------------------------------------------------------------------------------------------

Group B:
DOE Decontamination
     and Decommissioning             $    39,419       $        --      $     (134)(b) $     4,695(c)   $    34,590
Purchased-power settlements              129,697           466,043              --          32,281(d)       563,459
Pension and benefits                     239,668            48,894          21,674(e)       77,335(f)       232,901
Insurance, casualty and other             73,249            37,674              --          42,043(g)        68,880
- -------------------------------------------------------------------------------------------------------------------
Total                                $   482,033       $   552,611      $   21,540     $   156,354      $   899,830
- -------------------------------------------------------------------------------------------------------------------

- -------------------------
(a)  Accounts written off, net.
(b)  Represents revision to estimate based on actual billings.
(c)  Represents amounts paid.
(d)  Represents the amortization of the liability established for purchased-power contract settlement agreements.
(e)  Primarily represents transfers from the accrued paid absence allowance account for required additions to the
     comprehensive disability plan accounts.
(f)  Includes pension payments to retired employees, amounts paid to active employees during periods of illness
     and the funding of certain pension benefits.
(g)  Amounts charged to operations that were not covered by insurance.



                                    Page 39



                                                    SIGNATURES

Pursuant to the  requirements  of Section 13 or 15(d) 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

                                                              By:

                                                              Kenneth S. Stewart
                                                              --------------------------------------
                                                              Kenneth S. Stewart
                                                              Assistant General Counsel

                                                              Date:  March 29, 2002


Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.


       Signature                                             Title                                    Date
       ---------                                             -----                                    ----

Principal Executive Officer:
     Alan J. Fohrer*                             Chairman of the Board, Chief                   March 29, 2002
                                                     Executive Officer and Director

Principal Financial Officer:
     W. James Scilacci*                          Vice President and
                                                     Chief Financial Officer                    March 29, 2002

Controller or Principal Accounting Officer:
     Thomas M. Noonan*                           Vice President and Controller                  March 29, 2002


Board of Directors:

     Warren Christopher*                         Director                                       March 29, 2002
     Joan C. Hanley*                             Director                                       March 29, 2002
     Carl F. Huntsinger*                         Director                                       March 29, 2002
     Charles D. Miller*                          Director                                       March 29, 2002
     Luis G. Nogales*                            Director                                       March 29, 2002
     Ronald L. Olson*                            Director                                       March 29, 2002
     James M. Rosser*                            Director                                       March 29, 2002
     Robert H. Smith*                            Director                                       March 29, 2002
     Thomas C. Sutton*                           Director                                       March 29, 2002
     Daniel M. Tellep*                           Director                                       March 29, 2002

*By:

Kenneth S. Stewart
- -----------------------------
Kenneth S. Stewart
Assistant General Counsel


                                    Page 40



                                                   EXHIBIT INDEX

Exhibit
Number                                             Description
- ------                                             -----------

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 effective August 21,
              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
              January 1, 2002
4.1           SCE First Mortgage Bond Trust Indenture, dated as of October 1, 1923 (Registration No. 2-1369)*
4.2           Supplemental Indenture, dated as of March 1, 1927 (Registration No. 2-1369)*
4.3           Third Supplemental Indenture, dated as of June 24, 1935 (Registration No. 2-1602)*
4.4           Fourth Supplemental Indenture, dated as of September 1, 1935 (Registration No. 2-4522)*
4.5           Fifth Supplemental Indenture, dated as of August 15, 1939 (Registration No. 2-4522)*
4.6           Sixth Supplemental Indenture, dated as of September 1, 1940 (Registration No. 2-4522)*
4.7           Eighth Supplemental Indenture, dated as of August 15, 1948 (Registration No. 2-7610)*
4.8           Twenty-Fourth Supplemental Indenture, dated as of February 15, 1964 (Registration No. 2-22056)*
4.9           Eighty-Eighth Supplemental Indenture, dated as of July 15 1992 (File No. 1-2313, Form 8-K dated
              July 22, 1992)*
4.10          Indenture dated as of January 15, 1993 (File No. 1-2313, Form 8-K dated January 28, 1993)*
4.11          Indenture dated as of May 1, 1995 (File No. 1-2313, Form 8-K dated May 24, 1995)*
4.12          Ninety-Seventh Supplemental Indenture, dated as of February 21, 2002
10.1          1981 Deferred Compensation Agreement (File No. 1-2313, filed as Exhibit 10.2 to Form 10-K for the
              year ended December 31, 1981)*
10.2          1985 Deferred Compensation Agreement for Executives (File No. 1-2313, filed as Exhibit 10.3 to Form
              10-K for the year ended December 31, 1986)*
10.3          1985 Deferred Compensation Agreement for Directors (File No. 1-2313, filed as Exhibit 10.4 to Form
              10-K for the year ended December 31, 1986)*
10.4          Director Deferred Compensation Plan (File No. 1-9936, filed as Exhibit 10.3 to the Edison
              International Form 10-Q for the quarter ended June 30, 1998)*
10.5          Director Grantor Trust Agreement (File No. 1-9936,  filed as Exhibit 10.10 to the Edison
              International Form 10-K for the year ended December 31, 1995)*
10.6          Executive Deferred Compensation Plan (File No. 1-9936, filed as Exhibit 10.2 to the Edison
              International Form 10-Q for the quarter ended March 31, 1998)*
10.7          Executive Grantor Trust Agreement (File No. 1-9936, filed as Exhibit 10.12 to the Edison
              International Form 10-K for the year ended December 31, 1995)*
10.8          Executive Supplemental Benefit Program (File No. 1-9936, filed as Exhibit 10.2 to the Edison
              International Form 10-Q for the quarter ended September 20, 1999)*
10.9          Dispute resolution amendment of 1981 Executive Deferred Compensation Plan, 1985 Executive and
              Director Deferred Compensation Plans and Executive Supplemental Benefit Program (File No. 1-9936,
              filed as Exhibit 10.21 to the Edison International Form 10-K for the year ended December 31, 1998)*
10.10         Executive Retirement Plan (File No. 1-9936, filed as Exhibit 10.1 to the Edison International Form
              10-Q for the quarter ended September 30, 1999)*
10.10.1       Executive Retirement Plan Amendment 2001-1 (File No. 1-9936, filed as Exhibit 10.1 to the Edison
              International Form 10-Q for the quarter ended March 31, 2001)*
10.11         Executive Incentive Compensation Plan (File No. 1-9936, filed as Exhibit 10.12 to the Edison
              International Form 10-K for the year ended December 31, 1997)*
10.12         Executive Disability and Survivor Benefit Program (File No. 1-9936, filed as Exhibit 10.22 to the
              Edison International Form 10-K for the year ended December 31, 1994)*

                                    Page 41



10.13         Retirement Plan for Directors (File No. 1-9936, filed as Exhibit 10.2 to the Edison International
              Form 10-Q for the quarter ended June 30, 1998)*
10.14         Officer Long-Term Incentive Compensation Plan (File No. 1-9936, filed as Exhibit 10.3 to the Edison
              International Form 10-Q for the quarter ended March 31, 1998)*
10.15         Equity Compensation Plan (File No. 1-9936, filed as Exhibit 10.1 to the Edison International Form
              10-Q for the quarter ended June 30, 1998)*
10.15.1       Amendment No. 1 to the Equity Compensation Plan (File No. 1-9936, filed as Exhibit 10.3 to the
              Edison International Form 10-Q for the quarter ended June 30, 2000)*
10.16         2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to the Edison International Form 10-Q for
              the quarter ended June 30, 2000)*
10.17         Forms of Agreement for long-term compensation awards under the Officer Long-Term Incentive
              Compensation Plan, the Equity Compensation Plan or the 2000 Equity Plan (File No. 1-9936, for
              1991-1995 stock option awards filed as Exhibit 10.21.1 to the Edison International Form 10-K for
              the year ended December 31, 1995, for 1996 stock option awards filed as Exhibit 10.16.2 to the
              Edison International Form 10-K for the year ended December 31, 1996, for 1997 stock option awards
              filed as Exhibit 10.16.3 to the Edison International Form 10-K for the year ended December 31,
              1997, for 1998 stock option awards filed as Exhibit 10.4 to the Edison International Form 10-Q for
              the quarter ended June 30, 1998, for 1999 stock option awards filed as Exhibit 10.1 to the Edison
              International Form 10-Q for the quarter ended March 31, 1999, for January 2000 stock option and
              performance share awards as restated filed as Exhibit 10.2 to the Edison International Form 10-Q
              for the quarter ended March 31, 2001, for May 2000 special stock option awards filed as Exhibit
              10.2 to the Edison International Form 10-Q for the quarter ended June 30, 2000, for 2001 basic
              stock option and performance share awards filed as Exhibit 10.3 to the Edison International Form
              10-Q for the quarter ended March 31, 2001, for 2001 special stock option awards filed as Exhibit
              10.4 to the Edison International Form 10-Q for the quarter ended March 31, 2001, for 2001 retention
              incentives filed as Exhibit 10.5 to the Edison International Form 10-Q for the quarter ended
              March 31, 2001, and for 2001 exchange offer deferred stock units filed as Attachment C of Exhibit
              (a)(1) to Schedule TO-I dated October 26, 2001)*
10.18         Form of Agreement for 2001 Director Awards under the Equity Compensation Plan (File No. 1-9936,
              filed as Exhibit 10.21 to the Edison International Form 10-K for the year ended December 31, 2001)*
10.19         Estate and Financial Planning Program as amended April 1, 1999 (File No. 1-2313, filed as Exhibit
              10.2 to Form 10-Q for the quarter ended June 30, 1999)*
10.20         Option Gain Deferral Plan as restated September 15, 2000 (File No. 1-9936, filed as Exhibit 10.25
              to the Edison International Form 10-K for the year ended December 31, 2000)*
10.21         Employment Letter Agreement with Stephen E. Frank (File No. 1-2313, filed as Exhibit 10.25 to Form
              10-K for the year ended December 31, 1995)*
10.22         Retirement Agreement with Stephen E. Frank
10.23         Consulting Agreement with Stephen E. Frank
10.24         Election Terms for Warren Christopher (File No. 1-9936, filed as Exhibit 10.22 to the Edison
              International Form 10-K for the year ended December 31, 1997)*
10.25         Executive Severance Plan as adopted effective January 1, 2001 (File No. 1-9936, filed as Exhibit
              10.34 to the Edison International Form 10-K for the year ended December 31, 2001)*
12.           Computation of Ratios of Earnings to Fixed Charges
13.           Annual Report to Shareholders for year ended December 31, 2001
23.           Consent of Independent Public Accountants - Arthur Andersen LLP
24.1          Power of Attorney
24.2          Certified copy of Resolution of Board of Directors Authorizing Signature
99            Letter to United States Securities and Exchange Commission Regarding the Issuer's Independent
              Public Accountants, Arthur Andersen LLP
- -------------------------
*  Incorporated by reference pursuant to Rule 12b-32.


                                    Page 42
</PRE>
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<DESCRIPTION>SCE BYLAWS
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SCE Bylaws
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<PRE>
                                         To Holders of the Company's Bylaws:




                                        Effective January 1, 2002, Article IV,
                                    Section 3 was amended to provide that only the
                                    Chairman of the Board must be a member of the
                                  Board of Directors, and Article IV, Section 9 was
                                     amended to provide that the President shall
                                      succeed to the Chairman's duties at Board
                                           meetings only if a Board member.




                                                   BEVERLY P. RYDER
                                                 Corporate Secretary









                                                        BYLAWS

                                                          OF

                                          SOUTHERN CALIFORNIA EDISON COMPANY

                                             AS AMENDED TO AND INCLUDING

                                                   JANUARY 1, 2002




<PAGE>




                                                        INDEX
                                                                                                  Page
                                             ARTICLE I - PRINCIPAL OFFICE
Section   1.  Principal Office......................................................................1

                                              ARTICLE II - SHAREHOLDERS
Section   1.  Meeting Locations.....................................................................1
Section   2.  Annual Meetings.......................................................................1
Section   3.  Special Meetings......................................................................2
Section   4.  Notice of Annual or Special Meeting...................................................2
Section   5.  Quorum................................................................................4
Section   6.  Adjourned Meeting and Notice Thereof..................................................4
Section   7.  Voting................................................................................4
Section   8.  Record Date...........................................................................6
Section   9.  Consent of Absentees..................................................................7
Section  10.  Action Without Meeting................................................................7
Section  11.  Proxies...............................................................................8
Section  12.  Inspectors of Election................................................................8

                                               ARTICLE III - DIRECTORS
Section   1.  Powers................................................................................9
Section   2.  Number of Directors..................................................................10
Section   3.  Election and Term of Office..........................................................10
Section   4.  Vacancies............................................................................10
Section   5.  Place of Meeting.....................................................................11
Section   6.  Organization Meeting.................................................................11
Section   7.  Special Meetings and Other Regular Meetings..........................................11
Section   8.  Quorum...............................................................................12
Section   9.  Participation in Meetings by Conference Telephone....................................12
Section  10.  Waiver of Notice.....................................................................12
Section  11.  Adjournment..........................................................................12

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Section  12.  Fees and Compensation................................................................13
Section  13.  Action Without Meeting...............................................................13
Section  14.  Rights of Inspection.................................................................13
Section  15.  Committees...........................................................................13

                                                ARTICLE IV - OFFICERS
Section   1.  Officers.............................................................................14
Section   2.  Election.............................................................................15
Section   3.  Eligibility of Chairman..............................................................15
Section   4.  Removal and Resignation..............................................................15
Section   5.  Appointment of Other Officers........................................................15
Section   6.  Vacancies............................................................................15
Section   7.  Salaries.............................................................................16
Section   8.  Furnish Security for Faithfulness....................................................16
Section   9.  Chairman's Duties; Succession to
                Such Duties in Chairman's Absence or Disability....................................16
Section  10.  President's Duties...................................................................16
Section  11.  Chief Financial Officer..............................................................17
Section  12.  Vice Presidents' Duties..............................................................17
Section  13.  General Counsel's Duties.............................................................17
Section  14.  Associate General Counsel's and Assistant General
              Counsel's Duties................................... .................................17
Section  15.  Controller's Duties..................................................................17
Section  16.  Assistant Controllers' Duties........................................................17
Section  17.  Treasurer's Duties...................................................................18
Section  18.  Assistant Treasurers' Duties.........................................................18
Section  19.  Secretary's Duties...................................................................18
Section  20.  Assistant Secretaries' Duties........................................................19
Section  21.  Secretary Pro Tempore................................................................19
Section  22.  Election of Acting Treasurer or Acting Secretary.....................................19
Section  23.  Performance of Duties................................................................20


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                                             ARTICLE V - OTHER PROVISIONS
Section   1.  Inspection of Corporate Records......................................................20
Section   2.  Inspection of Bylaws.................................................................21
Section   3.  Contracts and Other Instruments, Loans, Notes
                      and Deposits of Funds........................................................21
Section   4.  Certificates of Stock................................................................22
Section   5.  Transfer Agent, Transfer Clerk and Registrar.........................................22
Section   6.  Representation of Shares of Other Corporations.......................................22
Section   7.  Stock Purchase Plans.................................................................23
Section   8.  Fiscal Year and Subdivisions.........................................................23
Section   9.  Construction and Definitions.........................................................23

                                             ARTICLE VI - INDEMNIFICATION
Section   1.  Indemnification of Directors and Officers............................................24
Section   2.  Indemnification of Employees and Agents..............................................25
Section   3.  Right of Directors and Officers to Bring Suit........................................26
Section   4.  Successful Defense...................................................................26
Section   5.  Non-Exclusivity of Rights............................................................26
Section   6.  Insurance............................................................................26
Section   7.  Expenses as a Witness................................................................27
Section   8.  Indemnity Agreements.................................................................27
Section   9.  Separability.........................................................................27
Section  10.  Effect of Repeal or Modification.....................................................27

                                          ARTICLE VII - EMERGENCY PROVISIONS
Section   1.  General..............................................................................27
Section   2.  Unavailable Directors................................................................28
Section   3.  Authorized Number of Directors.......................................................28
Section   4.  Quorum...............................................................................28
Section   5.  Creation of Emergency Committee......................................................28
Section   6.  Constitution of Emergency Committee..................................................29

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Section   7.  Powers of Emergency Committee........................................................29
Section   8.  Directors Becoming Available.........................................................29
Section   9.  Election of Board of Directors.......................................................29
Section  10.  Termination of Emergency Committee...................................................30

                                              ARTICLE VIII - AMENDMENTS
Section   1.  Amendments...........................................................................30


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                                                         BYLAWS

                               Bylaws for the regulation, except as otherwise provided
                                     by statute or its Articles of Incorporation

                                                          of

                                          SOUTHERN CALIFORNIA EDISON COMPANY

                                             AS AMENDED TO AND INCLUDING
                                                   JANUARY 1, 2002


                                             ARTICLE I - PRINCIPAL OFFICE

Section 1.        Principal Office.

     The Edison  General  Office,  situated at 2244 Walnut Grove  Avenue,  in the City of Rosemead,  County of Los
Angeles,  State of  California,  is hereby fixed as the principal  office for the  transaction  of the business of the
corporation.


                                              ARTICLE II - SHAREHOLDERS

Section 1.        Meeting Locations.

     All  meetings of  shareholders  shall be held at the  principal  office of the  corporation  or at such other
place or places  within or  without  the State of  California  as may be  designated  by the Board of  Directors  (the
"Board").  In the event  such  places  shall  prove  inadequate  in  capacity  for any  meeting  of  shareholders,  an
adjournment  may be taken to and the meeting  held at such other place of adequate  capacity as may be  designated  by
the officer of the corporation presiding at such meeting.

Section 2.        Annual Meetings.

     The  2002  annual  meeting  of  shareholders  shall be held on  May 14,  2002,  and all  annual  meetings  of
shareholders  thereafter  shall be held on the  third  Thursday  of the  month of May of each year at such time as the
Chairman of the Board shall  designate  on said day to elect  directors  to hold office for the year next  ensuing and
until  their  successors  shall be  elected,  and to  consider  and act upon such  other  matters as may  lawfully  be
presented to such meeting;  provided,  however,  that should said day fall upon a legal holiday,  then any such annual
meeting of shareholders  shall be held at such  designated time and place on the next day thereafter  ensuing which is
not a legal holiday.


<PAGE>


Section 3.        Special Meetings.

     Special  meetings of the  shareholders may be called at any time by the Board, the Chairman of the Board, the
President,  or upon written  request of any three members of the Board,  or by the holders of shares  entitled to cast
not less than ten percent of the votes at such  meeting.  Upon  request in writing to the  Chairman of the Board,  the
President,  any Vice  President  or the  Secretary  by any person  (other  than the Board)  entitled to call a special
meeting of shareholders,  the officer  forthwith shall cause notice to be given to the  shareholders  entitled to vote
that a  meeting  will be held at a time  requested  by the  person  or  persons  calling  the  meeting,  not less than
thirty-five  nor more than sixty  days after the  receipt of the  request.  If the notice is not given  within  twenty
days after receipt of the request, the persons entitled to call the meeting may give the notice.

Section 4.        Notice of Annual or Special Meeting.

     Written  notice of each  annual or special  meeting of  shareholders  shall be given not less than ten (or if
sent by  third-class  mail,  thirty)  nor more than sixty  days  before  the date of the  meeting to each  shareholder
entitled to vote thereat.  Such notice shall state the place,  date,  and hour of the meeting and (i) in the case of a
special  meeting,  the general  nature of the business to be transacted,  and no other business may be transacted,  or
(ii) in the case of an annual  meeting,  those  matters  which the Board,  at the time of the  mailing of the  notice,
intends to  present  for action by the  shareholders,  but,  subject to the  provisions  of  applicable  law and these
Bylaws,  any proper  matter may be  presented  at an annual  meeting  for such  action.  The notice of any  special or
annual  meeting at which  directors are to be elected shall include the names of nominees  intended at the time of the
notice to be  presented  by the Board for  election.  For any matter to be  presented  by a  shareholder  at an annual
meeting held after  December 31, 1993,  but on or before  December 31, 1999,  including  the  nomination of any person
(other than a person  nominated by or at the  direction of the Board) for election to the Board,  written  notice must
be received by the Secretary of the  corporation  from the  shareholder  not less than sixty nor more than one hundred
twenty days prior to the date of the annual meeting  specified in these Bylaws and to which the  shareholder's  notice
relates;  provided however,  that in the event the annual meeting to which the shareholder's written notice relates is
to be held on a date which is more than thirty days  earlier  than the date of the annual  meeting  specified in these
Bylaws,  the notice from a  shareholder  must be received by the Secretary not later than the close of business on the
tenth day  following the date on which public  disclosure  of the date of the annual  meeting was made or given to the
shareholders.  For any matter to be  presented by a  shareholder  at an annual  meeting held after  December 31, 1999,
including  the  nomination  of any person  (other than a person  nominated  by or at the  direction  of the Board) for
election to the Board, written notice must be received

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<PAGE>


by the  Secretary of the  corporation  from the  shareholder  not more than one hundred  eighty days nor less than one
hundred  twenty days prior to the date on which the proxy  materials  for the prior year's  annual  meeting were first
released to  shareholders  by the  corporation;  provided  however,  that in the event the annual meeting to which the
shareholder's  written  notice  relates is to be held on a date which is more than thirty  days  earlier or later than
the date of the annual  meeting  specified  in these  Bylaws,  the notice from a  shareholder  must be received by the
Secretary  not  earlier  than  two  hundred  twenty  days  prior  to the  date of the  annual  meeting  to  which  the
shareholder's  notice relates nor later than one hundred sixty days prior to the date of such annual  meeting,  unless
less than one  hundred  seventy  days' prior  public  disclosure  of the date of the  meeting is made by the  earliest
possible quarterly report on Form 10-Q, or, if impracticable,  any means reasonably  calculated to inform shareholders
including  without  limitation  a report on Form 8-K, a press  release or  publication  once in a newspaper of general
circulation  in the county in which the principal  office is located,  in which event notice by the  shareholder to be
timely  must be  received  not later than the close of  business  on the tenth day  following  the date of such public
disclosure.  The  shareholder's  notice to the Secretary shall set forth (a) a brief  description of each matter to be
presented at the annual  meeting by the  shareholder;  (b) the name and address,  as they appear on the  corporation's
books, of the shareholder;  (c) the class and number of shares of the corporation which are beneficially  owned by the
shareholder;  and (d) any material  interest of the  shareholder in the matters to be presented.  Any  shareholder who
intends to nominate a candidate  for election as a director  shall also set forth in such a notice (i) the name,  age,
business  address and  residence  address of each nominee that he or she intends to nominate at the meeting,  (ii) the
principal  occupation  or  employment  of each  nominee,  (iii) the class and number of shares of capital stock of the
corporation  beneficially owned by each nominee,  and (iv) any other information  concerning the nominee that would be
required under the rules of the Securities and Exchange  Commission in a proxy  statement  soliciting  proxies for the
election of the nominee. The notice shall also include a consent,  signed by the shareholder's  nominees,  to serve as
a director of the  corporation if elected.  Notwithstanding  anything in these Bylaws to the contrary,  and subject to
the  provisions  of any  applicable  law, no business  shall be  conducted  at a special or annual  meeting  except in
accordance with the procedures set forth in this Section 4.

     Notice of a  shareholders'  meeting  shall be given  either  personally  or by  first-class  mail (or, if the
outstanding  shares of the  corporation  are held of record by 500 or more persons on the record date for the meeting,
by third-class mail) or by other means of written  communication,  addressed to the shareholder at the address of such
shareholder  appearing on the books of the  corporation or given by the shareholder to the corporation for the purpose
of notice;  or, if no such address appears or is given, at the place where the principal  office of the corporation is
located or by publication at least once in a newspaper of general

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<PAGE>


circulation  in the  county in which the  principal  office is  located.  Notice by mail  shall be deemed to have been
given at the time a written  notice is  deposited in the United  States  mails,  postage  prepaid.  Any other  written
notice shall be deemed to have been given at the time it is  personally  delivered to the recipient or is delivered to
a common carrier for  transmission,  or actually  transmitted by the person giving the notice by electronic  means, to
the recipient.

Section 5.        Quorum.

     A majority of the shares entitled to vote,  represented in person or by proxy,  shall  constitute a quorum at
any meeting of shareholders.  The affirmative  vote of a majority of the shares  represented and voting at a duly held
meeting at which a quorum is present  (which shares voting  affirmatively  also  constitute at least a majority of the
required  quorum) shall be the act of the  shareholders,  unless the vote of a greater  number or voting by classes is
required by law or the Articles;  provided,  however,  that the shareholders  present at a duly called or held meeting
at which a quorum is present may continue to do business until adjournment,  notwithstanding  the withdrawal of enough
shareholders  to have less than a quorum,  if any action  taken  (other  than  adjournment)  is approved by at least a
majority of the shares required to constitute a quorum.

Section 6.        Adjourned Meeting and Notice Thereof.

     Any  shareholders'  meeting,  whether or not a quorum is present,  may be adjourned  from time to time by the
vote of a majority of the shares,  the holders of which are either  present in person or represented by proxy thereat,
but in the absence of a quorum  (except as provided in Section 5 of this Article) no other  business may be transacted
at such meeting.

     It shall  not be  necessary  to give any  notice  of the time and place of the  adjourned  meeting  or of the
business to be transacted  thereat,  other than by announcement at the meeting at which such  adjournment is taken. At
the adjourned  meeting,  the  corporation  may transact any business which might have been  transacted at the original
meeting.  However,  when  any  shareholders'  meeting  is  adjourned  for  more  than  forty-five  days  or,  if after
adjournment a new record date is fixed for the adjourned  meeting,  notice of the adjourned  meeting shall be given as
in the case of an original meeting.

Section 7.        Voting.

     The  shareholders  entitled to notice of any meeting or to vote at any such meeting  shall be only persons in
whose name shares stand on the stock records of the  corporation  on the record date  determined  in  accordance  with
Section 8 of this Article.

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<PAGE>


     Voting shall in all cases be subject to the  provisions of Chapter 7 of the  California  General  Corporation
Law, and to the following provisions:

     (a)      Subject  to  clause  (g),  shares  held by an  administrator,  executor,  guardian,  conservator  or
custodian  may be voted by such  holder  either in person or by proxy,  without a  transfer  of such  shares  into the
holder's  name;  and shares  standing  in the name of a trustee  may be voted by the  trustee,  either in person or by
proxy,  but no trustee  shall be entitled to vote shares held by such  trustee  without a transfer of such shares into
the trustee's name.

     (b)      Shares  standing  in the name of a receiver  may be voted by such  receiver;  and shares  held by or
under the control of a receiver may be voted by such receiver  without the transfer  thereof into the receiver's  name
if authority to do so is contained in the order of the court by which such receiver was appointed.

     (c)      Subject to the provisions of Section 705 of the California General  Corporation Law and except where
otherwise  agreed in writing  between the parties,  a  shareholder  whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred  into the name of the pledgee,  and thereafter the pledgee shall be
entitled to vote the shares so transferred.

     (d)      Shares  standing  in the name of a minor may be voted  and the  corporation  may  treat  all  rights
incident  thereto as  exercisable  by the minor,  in person or by proxy,  whether or not the  corporation  has notice,
actual or  constructive,  of the non-age  unless a guardian of the minor's  property  has been  appointed  and written
notice of such appointment given to the corporation.

     (e)      Shares  standing  in the name of another  corporation,  domestic  or  foreign,  may be voted by such
officer,  agent or  proxyholder  as the bylaws of such other  corporation  may  prescribe  or, in the  absence of such
provision,  as the  Board  of  Directors  of  such  other  corporation  may  determine  or,  in the  absence  of  such
determination,  by the chairman of the board,  president or any vice  president of such other  corporation,  or by any
other  person  authorized  to do so by the  chairman  of the  board,  president  or any vice  president  of such other
corporation.  Shares  which  are  purported  to be  voted  or any  proxy  purported  to be  executed  in the name of a
corporation  (whether or not any title of the person signing is indicated)  shall be presumed to be voted or the proxy
executed in accordance with the provisions of this subdivision, unless the contrary is shown.

     (f)      Shares of the  corporation  owned by any of its  subsidiaries  shall not be  entitled to vote on any
matter.

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<PAGE>


     (g)      Shares of the  corporation  held by the  corporation  in a  fiduciary  capacity,  and  shares of the
corporation  held in a  fiduciary  capacity by any of its  subsidiaries,  shall not be entitled to vote on any matter,
except to the extent that the  settlor or  beneficial  owner  possesses  and  exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.

     (h)      If shares stand of record in the names of two or more  persons,  whether  fiduciaries,  members of a
partnership,  joint  tenants,  tenants in common,  husband and wife as community  property,  tenants by the  entirety,
voting  trustees,  persons  entitled to vote under a  shareholder  voting  agreement or  otherwise,  or if two or more
persons  (including  proxyholders)  have the same  fiduciary  relationship  respecting  the same  shares,  unless  the
secretary of the  corporation  is given written  notice to the contrary and is furnished with a copy of the instrument
or order  appointing them or creating the  relationship  wherein it is so provided,  their acts with respect to voting
shall have the following effect:

         (i)      If only one votes, such act binds all;

         (ii)     If more than one vote, the act of the majority so voting binds all;

         (iii)    If more than one vote, but the vote is evenly split on any particular matter,  each faction may vote
                  the securities in question proportionately.

         If the instrument so filed or the  registration  of the shares shows that any such tenancy is held in unequal
interests, a majority or even split for the purpose of this section shall be a majority or even split in interest.

         No  shareholder  of any  class of stock  of this  corporation  shall be  entitled  to  cumulate  votes at any
election of directors of this corporation.

         Elections for directors need not be by ballot;  provided,  however,  that all elections for directors must be
by ballot upon demand made by a shareholder at the meeting and before the voting begins.

         In any election of directors,  the candidates  receiving the highest  number of votes of the shares  entitled
to be voted for them up to the number of directors to be elected by such shares are elected.

Section 8.        Record Date.

         The Board may fix, in advance,  a record date for the  determination of the  shareholders  entitled to notice
of any meeting or to vote or entitled to receive  payment of any dividend or other  distribution,  or any allotment of
rights, or to

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<PAGE>


exercise  rights in respect of any other  lawful  action.  The record  date so fixed shall be not more than sixty days
nor less than ten days prior to the date of the  meeting  nor more than sixty days prior to any other  action.  When a
record date is so fixed,  only  shareholders of record at the close of business on that date are entitled to notice of
and to vote at the meeting or to receive the  dividend,  distribution,  or  allotment  of rights,  or to exercise  the
rights,  as the case may be,  notwithstanding  any transfer of shares on the books of the corporation after the record
date,  except as otherwise  provided by law or these Bylaws.  A  determination  of  shareholders of record entitled to
notice of or to vote at a meeting of  shareholders  shall apply to any  adjournment  of the  meeting  unless the Board
fixes a new  record  date for the  adjourned  meeting.  The  Board  shall  fix a new  record  date if the  meeting  is
adjourned for more than forty-five days.

         If no record date is fixed by the Board, the record date for determining  shareholders  entitled to notice of
or to vote at a meeting of  shareholders  shall be at the close of business on the business day next preceding the day
on which  notice is given or, if notice is waived,  at the close of business on the business  day next  preceding  the
day on which the  meeting is held.  The record date for  determining  shareholders  for any purpose  other than as set
forth in this  Section 8 or  Section  10 of this  Article  shall be at the close of  business  on the day on which the
Board adopts the resolution  relating thereto,  or the sixtieth day prior to the date of such other action,  whichever
is later.

Section 9.        Consent of Absentees.

         The  transactions  of any meeting of  shareholders,  however  called and noticed,  and wherever  held, are as
valid as though had at a meeting duly held after regular call and notice,  if a quorum is present  either in person or
by proxy,  and if, either before or after the meeting,  each of the persons entitled to vote, not present in person or
by proxy,  signs a written  waiver of notice or a consent to the  holding of the meeting or an approval of the minutes
thereof.  All such  waivers,  consents or approvals  shall be filed with the  corporate  records or made a part of the
minutes of the meeting.  Neither the business to be  transacted  at nor the purpose of any regular or special  meeting
of shareholders  need be specified in any written waiver of notice,  consent to the holding of the meeting or approval
of the minutes thereof, except as provided in Section 601 (f) of the California General Corporation Law.

Section 10.       Action Without Meeting.

         Subject to Section 603 of the California  General  Corporation Law, any action which,  under any provision of
the California  General  Corporation  Law, may be taken at any annual or special meeting of shareholders  may be taken
without a meeting and without prior notice if a consent in writing, setting forth the

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<PAGE>


action so taken,  shall be signed by the holders of  outstanding  shares  having not less than the  minimum  number of
votes that would be  necessary  to  authorize  or take such  action at a meeting at which all shares  entitled to vote
thereon  were  present and voted.  Unless a record date for voting  purposes be fixed as provided in Section 8 of this
Article,  the record date for determining  shareholders  entitled to give consent pursuant to this Section 10, when no
prior action by the Board has been taken, shall be the day on which the first written consent is given.

Section 11.       Proxies.

         Every person  entitled to vote shares has the right to do so either in person or by one or more persons,  not
to exceed  three,  designated by a proxy  authorized by such  shareholder  or the  shareholder's  attorney in fact and
filed with the  corporation,  in accordance with Cal. Corp. Codess.178.  Subject to the following  sentence,  any proxy
duly  authorized  continues  in full force and effect  until  revoked by the person  authorizing  it prior to the vote
pursuant  thereto by a writing  delivered  to the  corporation  stating  that the proxy is revoked or by a  subsequent
proxy  authorized  by the person  authorizing  the prior proxy and  presented to the meeting,  or by attendance at the
meeting and voting in person by the person authorizing the proxy;  provided,  however,  that a proxy is not revoked by
the death or incapacity of the maker unless,  before the vote is counted,  written  notice of such death or incapacity
is received by this  corporation.  No proxy shall be valid after the  expiration of eleven months from the date of its
authorization unless otherwise provided in the proxy.

Section 12.       Inspectors of Election.

         In advance of any  meeting  of  shareholders,  the Board may  appoint  any  persons  other than  nominees  as
inspectors  of election to act at such  meeting and any  adjournment  thereof.  If  inspectors  of election are not so
appointed,  or if any persons so appointed  fail to appear or refuse to act, the chairman of any such meeting may, and
on the request of any shareholder or  shareholder's  proxy shall,  make such  appointments at the meeting.  The number
of inspectors  shall be either one or three.  If appointed at a meeting on the request of one or more  shareholders or
proxies, the majority of shares present shall determine whether one or three inspectors are to be appointed.

         The  duties  of  such  inspectors  shall  be as  prescribed  by  Section  707 (b) of the  California  General
Corporation  Law and shall include:  determining  the number of shares  outstanding  and the voting power of each, the
shares represented at the meeting,  the existence of a quorum,  and the authenticity,  validity and effect of proxies;
receiving  votes,  ballots or consents;  hearing and  determining  all  challenges and questions in any way arising in
connection with the right to vote; counting and tabulating all votes or consents; determining when

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<PAGE>



the polls shall close;  determining  the result;  and doing such acts as may be proper to conduct the election or vote
with fairness to all shareholders.  If there are three inspectors of election,  the decision,  act or certificate of a
majority is effective in all respects as the decision,  act or certificate  of all. Any report or certificate  made by
the inspectors of election is prima facie evidence of the facts stated therein.

                                               ARTICLE III - DIRECTORS

Section 1.        Powers.

         Subject to  limitations  of the  Articles,  of these Bylaws and of the  California  General  Corporation  Law
relating to action  required to be approved  by the  shareholders  or by the  outstanding  shares,  the  business  and
affairs of the corporation  shall be managed and all corporate  powers shall be exercised by or under the direction of
the Board.  The Board may delegate  the  management  of the  day-to-day  operation of the business of the  corporation
provided  that the  business  and  affairs of the  corporation  shall be managed  and all  corporate  powers  shall be
exercised under the ultimate  direction of the Board.  Without  prejudice to such general  powers,  but subject to the
same  limitations,  it is hereby expressly  declared that the Board shall have the following powers in addition to the
other powers enumerated in these Bylaws:

         (a)      To select and remove all the other officers, agents and employees of the corporation,  prescribe the
powers  and  duties  for them as may not be  inconsistent  with law,  with the  Articles  or these  Bylaws,  fix their
compensation and require from them security for faithful service.

         (b)      To conduct,  manage and control the affairs and business of the  corporation  and to make such rules
and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best.

         (c)      To adopt,  make and use a corporate seal, and to prescribe the forms of  certificates of stock,  and
to alter the form of such seal and of such certificates from time to time as in their judgment they may deem best.

         (d)      To authorize the issuance of shares of stock of the  corporation  from time to time, upon such terms
and for such consideration as may be lawful.

         (e)      To borrow  money and incur  indebtedness  for the  purposes of the  corporation,  and to cause to be
executed and  delivered  therefor,  in the  corporate  name,  promissory  notes,  bonds,  debentures,  deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and securities therefor.

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<PAGE>


Section 2.        Number of Directors.

         The  authorized  number of directors  shall be not less than nine nor more than  seventeen  until  changed by
amendment  of the  Articles or by a Bylaw duly adopted by the  shareholders.  The exact  number of directors  shall be
fixed,  within the limits  specified,  by the Board by adoption of a  resolution  or by the  shareholders  in the same
manner provided in these Bylaws for the amendment thereof.

Section 3.        Election and Term of Office.

         The directors  shall be elected at each annual  meeting of the  shareholders,  but if any such annual meeting
is not held or the  directors  are not  elected  thereat,  the  directors  may be  elected at any  special  meeting of
shareholders  held for that  purpose.  Each  director  shall hold  office  until the next  annual  meeting and until a
successor has been elected and qualified.

Section 4.        Vacancies.

         Any director may resign  effective upon giving  written  notice to the Chairman of the Board,  the President,
the Secretary or the Board,  unless the notice specifies a later time for the  effectiveness of such  resignation.  If
the  resignation  is  effective  at a future  time,  a successor  may be elected to take  office when the  resignation
becomes effective.

         Vacancies  in the Board,  except  those  existing as a result of a removal of a director,  may be filled by a
majority of the remaining  directors,  though less than a quorum, or by a sole remaining  director,  and each director
so elected shall hold office until the next annual  meeting and until such  director's  successor has been elected and
qualified.  Vacancies  existing as a result of a removal of a director may be filled by the  shareholders  as provided
by law.

         A vacancy or  vacancies  in the Board shall be deemed to exist in case of the death,  resignation  or removal
of any director,  or if the authorized  number of directors be increased,  or if the shareholders  fail, at any annual
or special  meeting of  shareholders  at which any director or directors  are  elected,  to elect the full  authorized
number of directors to be voted for at that meeting.

         The Board may declare  vacant the office of a director  who has been  declared of unsound mind by an order of
court or convicted of a felony.

         The  shareholders  may elect a director or directors at any time to fill any vacancy or vacancies  not filled
by the directors.  Any such election by written consent other than to fill a vacancy  created by removal  requires the
consent of a

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<PAGE>


majority of the outstanding  shares  entitled to vote. If the Board accepts the resignation of a director  tendered to
take effect at a future  time,  the Board or the  shareholders  shall have power to elect a  successor  to take office
when the resignation is to become effective.

         No reduction of the  authorized  number of directors  shall have the effect of removing any director prior to
the expiration of the director's term of office.

Section 5.        Place of Meeting.

         Regular  or  special  meetings  of the  Board  shall be held at any  place  within  or  without  the State of
California  which has been  designated  from time to time by the Board or as provided in these Bylaws.  In the absence
of such designation, regular meetings shall be held at the principal office of the corporation.

Section 6.        Organization Meeting.

         Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the
purpose of organization, election of officers and the transaction of other business.

Section 7.        Special Meetings and Other Regular Meetings.

         Special  meetings  and  regular  meetings  other than  organization  meetings of the Board for any purpose or
purposes may be called at any time by the Chairman of the Board, the President,  any Vice President,  the Secretary or
by any two directors.

         Such  meetings  of the Board  shall be held upon four  days'  notice  by mail or  forty-eight  hours'  notice
delivered  personally or by telephone,  including a voice messaging  system or other system or technology  designed to
record  and  communicate  messages,   telegraph,  telex,  facsimile,   electronic  mail  or  other  similar  means  of
communication.  Any such  notice  shall be  addressed  or  delivered  to each  director  at such  director's  address,
telephone number, telex number,  facsimile number, E-mail address, or other designated location(s),  as shown upon the
records of the  corporation  or as may have been given to the  corporation  by the director for purposes of notice or,
if such information is not shown on such records or is not readily  ascertainable,  at the place in which the meetings
of the directors are regularly held.  The notice need not specify the purpose of such meeting.

         Notice by mail shall be deemed to have been  given at the time a written  notice is  deposited  in the United
States  mail,  postage  prepaid.  Any other  written  notice  shall be  deemed  to have  been  given at the time it is
personally  delivered to the recipient or is delivered to a common carrier for transmission,  or actually  transmitted
by the person giving the notice by electronic means to the recipient.

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<PAGE>


Oral notice shall be deemed to have been given at the time it is  communicated,  in person or by telephone,  wireless,
or other  similar  means,  to the  recipient or to a person at the office of the  recipient  who the person giving the
notice has reason to believe will promptly  communicate it to the recipient,  or actually transmitted to the recipient
by the person giving the notice by a system or technology designed to record and communicate messages.

Section 8.        Quorum.

         One-third of the number of  authorized  directors  constitutes a quorum of the Board for the  transaction  of
business,  except to  adjourn as  provided  in Section ll of this  Article.  Every act or  decision  done or made by a
majority of the  directors  present at a meeting  duly held at which a quorum is present  shall be regarded as the act
of the Board,  unless a greater  number is required by law or by the Articles;  provided,  however,  that a meeting at
which a quorum is initially  present may continue to transact  business  notwithstanding  the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum for such meeting.

Section 9.        Participation in Meetings by Conference Telephone.

         Members  of  the  Board  may  participate  in a  meeting  through  use of  conference  telephone  or  similar
communications  equipment,  so  long  as all  members  participating  in such  meeting  can  hear  one  another.  Such
participation constitutes presence in person at such meeting.

Section 10.       Waiver of Notice.

         The  transactions  of any meeting of the Board,  however called and noticed or wherever held, are as valid as
though had at a meeting  duly held after  regular  call and notice if a quorum is  present  and if,  either  before or
after the meeting,  each of the  directors  not present  signs a written  waiver of notice,  a consent to holding such
meeting or an  approval of the minutes  thereof.  All such  waivers,  consents  or  approvals  shall be filed with the
corporate records or made a part of the minutes of the meeting.

Section 11.       Adjournment.

         A majority of the directors present,  whether or not a quorum is present,  may adjourn any directors' meeting
to another time and place.  Notice of the time and place of holding an  adjourned  meeting need not be given to absent
directors

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<PAGE>


if the time and place is fixed at the  meeting  adjourned.  If the  meeting  is  adjourned  for more than  twenty-four
hours,  notice of any  adjournment to another time or place shall be given prior to the time of the adjourned  meeting
to the directors who were not present at the time of the adjournment.

Section 12.       Fees and Compensation.

         Directors and members of  committees  may receive such  compensation,  if any, for their  services,  and such
reimbursement for expenses, as may be fixed or determined by the Board.

Section 13.       Action Without Meeting.

         Any action  required or permitted  to be taken by the Board may be taken  without a meeting if all members of
the Board shall  individually  or  collectively  consent in writing to such action.  Such written  consent or consents
shall  have the same  force and effect as a  unanimous  vote of the Board and shall be filed  with the  minutes of the
proceedings of the Board.

Section 14.       Rights of Inspection.

         Every director shall have the absolute  right at any reasonable  time to inspect and copy all books,  records
and  documents of every kind and to inspect the physical  properties  of the  corporation  and also of its  subsidiary
corporations,  domestic or foreign.  Such  inspection  by a director may be made in person or by agent or attorney and
includes the right to copy and make extracts.

Section 15.       Committees.

         The Board may appoint one or more  committees,  each  consisting  of two or more  directors,  to serve at the
pleasure of the Board.  The Board may  delegate to such  committees  any or all of the  authority  of the Board except
with respect to:

         (a)      The  approval  of any  action  for  which  the  California  General  Corporation  Law also  requires
shareholders' approval or approval of the outstanding shares;

         (b)      The filling of vacancies on the Board or in any committee;

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<PAGE>




         (c)      The fixing of compensation of the directors for serving on the Board or on any committee;

         (d)      The amendment or repeal of Bylaws or the adoption of new Bylaws;

         (e)      The  amendment  or  repeal  of any  resolution  of the Board  which by its  express  terms is not so
amendable or repealable;

         (f)      A distribution to the  shareholders  of the corporation  except at a rate or in a periodic amount or
within a price range determined by the Board; or

         (g)      The appointment of other committees of the Board or the members thereof.

         Any such committee,  or any member or alternate member thereof,  must be appointed by resolution adopted by a
majority of the exact  number of  authorized  directors as  specified  in Section 2 of this  Article.  The Board shall
have the power to  prescribe  the  manner  and  timing of giving of notice  of  regular  or  special  meetings  of any
committee  and the  manner in which  proceedings  of any  committee  shall be  conducted.  In the  absence of any such
prescription,  such  committee  shall  have the  power to  prescribe  the  manner in which  its  proceedings  shall be
conducted.  Unless the Board or such committee shall  otherwise  provide,  the regular and special  meetings and other
actions of any such committee  shall be governed by the provisions of this Article  applicable to meetings and actions
of the Board.  Minutes shall be kept of each meeting of each committee.

                                                ARTICLE IV - OFFICERS

Section 1.        Officers.

         The officers of the corporation  shall be a Chairman of the Board, a President,  a Chief  Financial  Officer,
one or more Vice Presidents,  a General Counsel,  one or more Associate General Counsel, one or more Assistant General
Counsel, a Controller,  one or more Assistant Controllers,  a Treasurer, one or more Assistant Treasurers, a Secretary
and one or more  Assistant  Secretaries,  and such other  officers as may be elected or appointed in  accordance  with
Section 5 of this  Article.  The Board,  the Chairman of the Board or the  President  may confer a special  title upon
any Vice President not specified herein.  Any number of offices of the corporation may be held by the same person.

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<PAGE>


Section 2.        Election.

         The officers of the  corporation,  except such officers as may be elected or appointed in accordance with the
provisions  of Section 5 or Section 6 of this  Article,  shall be chosen  annually by, and shall serve at the pleasure
of the Board, and shall hold their respective  offices until their  resignation,  removal,  or other  disqualification
from service, or until their respective successors shall be elected.

Section 3.        Eligibility of Chairman.

         No person  shall be eligible  for the office of  Chairman of the Board  unless such person is a member of the
Board of the corporation; any other officer may or may not be a director.

Section 4.        Removal and Resignation.

         Any officer may be removed,  either with or without  cause,  by the Board at any time or by any officer  upon
whom such power or removal  may be  conferred  by the  Board.  Any such  removal  shall be  without  prejudice  to the
rights, if any, of the officer under any contract of employment of the officer.

         Any officer may resign at any time by giving  written  notice to the  corporation,  but without  prejudice to
the rights,  if any, of the  corporation  under any  contract  to which the officer is a party.  Any such  resignation
shall  take  effect at the date of the  receipt of such  notice or at any later time  specified  therein  and,  unless
otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 5.        Appointment of Other Officers.

         The Board may appoint  such other  officers as the  business of the  corporation  may  require,  each of whom
shall hold office for such period,  have such  authority,  and perform such duties as are provided in the Bylaws or as
the Board may from time to time determine.

Section 6.        Vacancies.

         A vacancy in any office because of death,  resignation,  removal,  disqualification  or any other cause shall
be filled at any time deemed  appropriate by the Board in the manner  prescribed in these Bylaws for regular  election
or appointment to such office.

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<PAGE>


Section 7.        Salaries.

         The salaries of the Chairman of the Board,  President,  Chief Financial  Officer,  Vice  Presidents,  General
Counsel,  Controller,  Treasurer and Secretary of the corporation  shall be fixed by the Board.  Salaries of all other
officers shall be as approved from time to time by the chief executive officer.

Section 8.        Furnish Security for Faithfulness.

         Any  officer  or  employee  shall,  if  required  by the  Board,  furnish  to the  corporation  security  for
faithfulness to the extent and of the character that may be required.

Section 9.        Chairman's Duties; Succession to Such Duties in Chairman's Absence or Disability.

         The Chairman of the Board shall be the chief  executive  officer of the  corporation and shall preside at all
meetings of the  shareholders  and of the Board.  Subject to the Board, the Chairman of the Board shall have charge of
the business of the corporation,  including the  construction of its plants and properties and the operation  thereof.
The Chairman of the Board shall keep the Board fully  informed,  and shall freely consult them concerning the business
of the corporation.

         In the absence or disability of the Chairman of the Board,  the  President  shall act as the chief  executive
officer of the corporation;  in the absence or disability of the Chairman of the Board and the President,  the next in
order of election by the Board of the Vice Presidents shall act as chief executive officer of the corporation.

         In the absence or  disability  of the  Chairman of the Board,  one of the  following  shall act, in the order
indicated,  as  Chairman  of the Board at  meetings  of the Board:  first,  the  President,  if a member of the Board;
second,  a Vice President,  if any, who is a member of the Board, in order of election;  and, third, any member of the
Board who is designated by the Board as a temporary Chairman to preside at any such meeting of the Board.

Section 10.       President's Duties.

         The President  shall perform such other duties as the Chairman of the Board shall  delegate or assign to such
officer.

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<PAGE>


Section 11.       Chief Financial Officer.

         The Chief  Financial  Officer of the  corporation  shall be the chief  consulting  officer in all  matters of
financial import and shall have control over all financial matters concerning the corporation.

Section 12.       Vice Presidents' Duties.

         The Vice Presidents shall perform such other duties as the chief executive officer shall designate.

Section 13.       General Counsel's Duties.

         The General  Counsel  shall be the chief  consulting  officer of the  corporation  in all legal  matters and,
subject  to the chief  executive  officer,  shall  have  control  over all  matters  of legal  import  concerning  the
corporation.

Section 14.       Associate General Counsel's and Assistant General Counsel's Duties.

         The  Associate  General  Counsel  shall  perform  such of the duties of the  General  Counsel as the  General
Counsel shall designate,  and in the absence or disability of the General Counsel,  the Associate General Counsel,  in
order of election to that office by the Board at its latest  organizational  meeting,  shall perform the duties of the
General Counsel.  The Assistant General Counsel shall perform such duties as the General Counsel shall designate.

Section 15.       Controller's Duties.

         The Controller shall be the chief  accounting  officer of the Corporation and, subject to the Chief Financial
Officer,  shall have control over all  accounting  matters  concerning  the  Corporation  and shall perform such other
duties as the Chief Executive Officer shall designate.

Section 16.       Assistant Controllers' Duties.

         The  Assistant  Controllers  shall  perform  such of the duties of the  Controller  as the  Controller  shall
designate,  and in the absence or disability of the  Controller,  the Assistant  Controllers,  in order of election to
that office by the Board at its latest organizational meeting, shall perform the duties of the Controller.

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<PAGE>


Section 17.       Treasurer's Duties.

         It shall be the duty of the Treasurer to keep in custody or control all money,  stocks,  bonds,  evidences of
debt,  securities  and  other  items of value  that  may  belong  to,  or be in the  possession  or  control  of,  the
corporation,  and to dispose of the same in such manner as the Board or the chief  executive  officer may direct,  and
to perform all acts incident to the position of Treasurer.

Section 18.       Assistant Treasurers' Duties.

         The  Assistant  Treasurers  shall  perform  such  of the  duties  of the  Treasurer  as the  Treasurer  shall
designate, and in the absence or disability of the Treasurer,  the Assistant Treasurers,  in order of election to that
office by the Board at its latest  organizational  meeting,  shall perform the duties of the Treasurer,  unless action
is taken by the Board as contemplated in Article IV, Section 22.

Section 19.       Secretary's Duties.

         The Secretary shall keep or cause to be kept full and complete  records of the  proceedings of  shareholders,
the Board and its  committees at all meetings,  and shall affix the corporate seal and attest by signing copies of any
part thereof when required.

         The  Secretary  shall keep,  or cause to be kept, a copy of the Bylaws of the  corporation  at the  principal
office in accordance with Section 213 of the California General Corporation Law.

         The Secretary  shall be the custodian of the corporate seal and shall affix it to such  instruments as may be
required.

         The Secretary shall keep on hand a supply of blank stock certificates of such forms as the Board may adopt.

         The  Secretary  shall  serve or cause to be served by  publication  or  otherwise,  as may be  required,  all
notices of meetings  and of other  corporate  acts that may by law or  otherwise  be required to be served,  and shall
make or cause to be made and filed in the principal  office of the  corporation,  the necessary  certificate or proofs
thereof.

         An affidavit of mailing of any notice of a  shareholders'  meeting or of any report,  in accordance  with the
provisions of Section 601 (b) of the California  General  Corporation  Law,  executed by the Secretary  shall be prima
facie evidence of the fact that such notice or report had been duly given.

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<PAGE>


         The Secretary may, with the Chairman of the Board, the President,  or a Vice President,  sign certificates of
ownership of stock in the  corporation,  and shall cause all  certificates so signed to be delivered to those entitled
thereto.

         The Secretary shall keep all records required by the California General Corporation Law.

         The Secretary shall generally  perform the duties usual to the office of secretary of corporations,  and such
other duties as the chief executive officer shall designate.

Section 20.       Assistant Secretaries' Duties.

         Assistant  Secretaries  shall perform such of the duties of the Secretary as the Secretary  shall  designate,
and in the  absence or  disability  of the  Secretary,  the  Assistant  Secretaries,  in the order of election to that
office by the Board at its latest  organizational  meeting,  shall perform the duties of the Secretary,  unless action
is taken by the Board as contemplated in Article IV, Sections 21 and 22 of these Bylaws.

Section 21.       Secretary Pro Tempore.

         At any meeting of the Board or of the  shareholders  from which the  Secretary  is absent,  a  Secretary  pro
tempore may be appointed and act.

Section 22.       Election of Acting Treasurer or Acting Secretary.

         The Board may elect an Acting  Treasurer,  who shall  perform  all the  duties of the  Treasurer  during  the
absence or disability of the  Treasurer,  and who shall hold office only for such a term as shall be determined by the
Board.

         The Board may elect an Acting  Secretary,  who shall  perform  all the  duties of the  Secretary  during  the
absence or disability of the  Secretary,  and who shall hold office only for such a term as shall be determined by the
Board.

         Whenever the Board shall elect either an Acting Treasurer or Acting  Secretary,  or both, the officers of the
corporation as set forth in Article IV, Section 1 of these Bylaws,  shall include as if therein  specifically set out,
an Acting Treasurer or an Acting Secretary, or both.

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<PAGE>




Section 23.       Performance of Duties.

         Officers  shall  perform  the  duties  of their  respective  offices  as  stated  in these  Bylaws,  and such
additional duties as the Board shall designate.


                                             ARTICLE V - OTHER PROVISIONS

Section 1.        Inspection of Corporate Records.

         (a)      A shareholder  or  shareholders  holding at least five percent in the  aggregate of the  outstanding
voting  shares of the  corporation  or who hold at least one percent of such  voting  shares and have filed a Schedule
14B with the  United  States  Securities  and  Exchange  Commission  relating  to the  election  of  directors  of the
corporation shall have an absolute right to do either or both of the following:

                  (i)      Inspect and copy the record of shareholders'  names and addresses and shareholdings  during
usual business hours upon five business days' prior written demand upon the corporation; or

                  (ii)     Obtain from the transfer  agent,  if any, for the  corporation,  upon five  business  days'
prior  written  demand and upon the tender of its usual  charges for such a list (the amount of which charges shall be
stated to the  shareholder by the transfer agent upon request),  a list of the  shareholders'  names and addresses who
are entitled to vote for the  election of directors  and their  shareholdings,  as of the most recent  record date for
which it has been compiled or as of a date specified by the shareholder subsequent to the date of demand.

         (b)      The record of  shareholders  shall also be open to  inspection  and  copying by any  shareholder  or
holder of a voting trust  certificate at any time during usual business hours upon written demand on the  corporation,
for a purpose reasonably related to such holder's interest as a shareholder or holder of a voting trust certificate.

         (c)      The accounting  books and records and minutes of proceedings of the  shareholders  and the Board and
committees of the Board shall be open to inspection  upon written  demand on the  corporation  of any  shareholder  or
holder of a voting trust  certificate at any reasonable  time during usual business  hours,  for a purpose  reasonably
related to such holder's interests as a shareholder or as a holder of such voting trust certificate.

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<PAGE>


         (d)      Any such inspection and copying under this Article may be made in person or by agent or attorney.

Section 2.        Inspection of Bylaws.

         The  corporation  shall keep in its  principle  office the  original or a copy of these  Bylaws as amended to
date, which shall be open to inspection by shareholders at all reasonable times during office hours.

Section 3.        Contracts and Other Instruments, Loans, Notes and Deposits of Funds.

         The Chairman of the Board,  the  President,  or a Vice  President,  either alone or with the  Secretary or an
Assistant  Secretary,  or the Secretary alone,  shall execute in the name of the corporation such written  instruments
as may be authorized by the Board and,  without special  direction of the Board,  such  instruments as transactions of
the ordinary  business of the  corporation may require and, such officers  without the special  direction of the Board
may  authenticate,  attest or countersign any such  instruments when deemed  appropriate.  The Board may authorize any
person, persons, entity,  entities,  attorney,  attorneys,  attorney-in-fact,  attorneys-in-fact,  agent or agents, to
enter into any contract or execute and deliver any  instrument  in the name of and on behalf of the  corporation,  and
such authority may be general or confined to specific instances.

         No loans shall be  contracted on behalf of the  corporation  and no evidences of such  indebtedness  shall be
issued in its name unless  authorized  by the Board as it may  direct.  Such  authority  may be general or confined to
specific instances.

         All checks,  drafts,  or other similar  orders for the payment of money,  notes,  or other such  evidences of
indebtedness  issued in the name of the  corporation  shall be signed by such officer or officers,  agent or agents of
the corporation and in such manner as the Board or chief executive officer may direct.

         Unless  authorized by the Board or these Bylaws, no officer,  agent,  employee or any other person or persons
shall have any power or authority to bind the  corporation  by any contract or  engagement  or to pledge its credit or
to render it liable for any purpose or amount.

         All funds of the  corporation  not otherwise  employed  shall be deposited from time to time to the credit of
the corporation in such banks, trust companies, or other depositories as the Board may direct.

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<PAGE>


Section 4.        Certificates of Stock.

         Every holder of shares of the corporation  shall be entitled to have a certificate  signed in the name of the
corporation  by the Chairman of the Board,  the  President,  or a Vice  President and by the Treasurer or an Assistant
Treasurer  or the  Secretary  or an Assistant  Secretary,  certifying  the number of shares and the class or series of
shares owned by the  shareholder.  Any or all of the  signatures  on the  certificate  may be  facsimile.  In case any
officer,  transfer agent or registrar who has signed or whose  facsimile  signature has been placed upon a certificate
shall have ceased to be such  officer,  transfer  agent or  registrar  before such  certificate  is issued,  it may be
issued by the corporation  with the same effect as if such person were an officer,  transfer agent or registrar at the
date of issue.

         Certificates  for shares may be used prior to full payment under such  restrictions  and for such purposes as
the Board may provide;  provided,  however,  that on any certificate  issued to represent any partly paid shares,  the
total amount of the consideration to be paid therefor and the amount paid thereon shall be stated.

         Except as provided  in this  Section,  no new  certificate  for shares  shall be issued in lieu of an old one
unless the latter is  surrendered  and  canceled at the same time.  The Board may,  however,  if any  certificate  for
shares is alleged to have been  lost,  stolen or  destroyed,  authorize  the  issuance  of a new  certificate  in lieu
thereof,  and the corporation may require that the corporation be given a bond or other adequate  security  sufficient
to indemnify  it against any claim that may be made  against it  (including  expense or  liability)  on account of the
alleged loss, theft or destruction of such certificate or the issuance of such new certificate.

Section 5.        Transfer Agent, Transfer Clerk and Registrar.

         The Board  may,  from time to time,  appoint  transfer  agents,  transfer  clerks,  and stock  registrars  to
transfer and register the  certificates of the capital stock of the  corporation,  and may provide that no certificate
of capital  stock shall be valid  without the  signature  of the stock  transfer  agent or transfer  clerk,  and stock
registrar.

Section 6.        Representation of Shares of Other Corporations.

         The chief executive  officer or any other officer or officers  authorized by the Board or the chief executive
officer are each  authorized to vote,  represent and exercise on behalf of the  corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of the corporation.

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The authority herein granted may be exercised  either by any such officer in person or by any other person  authorized
so to do by proxy or power of attorney duly executed by said officer.

Section 7.        Stock Purchase Plans.

         The  corporation  may  adopt and  carry  out a stock  purchase  plan or  agreement  or stock  option  plan or
agreement  providing  for the issue and sale for such  consideration  as may be fixed of its  unissued  shares,  or of
issued shares  acquired,  to one or more of the employees or directors of the  corporation  or of a subsidiary or to a
trustee on their behalf and for the payment for such shares in  installments  or at one time, and may provide for such
shares in  installments  or at one time,  and may  provide  for aiding any such  persons in paying for such  shares by
compensation for services rendered, promissory notes or otherwise.

         Any such stock  purchase  plan or  agreement  or stock  option plan or  agreement  may  include,  among other
features,  the fixing of eligibility  for  participation  therein,  the class and price of shares to be issued or sold
under the plan or agreement,  the number of shares which may be subscribed  for, the method of payment  therefor,  the
reservation  of title  until  full  payment  therefor,  the  effect of the  termination  of  employment  and option or
obligation on the part of the corporation to repurchase the shares upon termination of employment,  restrictions  upon
transfer of the shares,  the time limits of and  termination of the plan,  and any other matters,  not in violation of
applicable law, as may be included in the plan as approved or authorized by the Board or any committee of the Board.

Section 8.        Fiscal Year and Subdivisions.

         The  calendar  year  shall be the  corporate  fiscal  year of the  corporation.  For the  purpose  of  paying
dividends,  for making reports and for the convenient  transaction of the business of the  corporation,  the Board may
divide the fiscal year into appropriate subdivisions.

Section 9.        Construction and Definitions.

         Unless the context  otherwise  requires,  the  general  provisions,  rules of  construction  and  definitions
contained in the General  Provisions of the California  Corporations  Code and in the California  General  Corporation
Law shall govern the construction of these Bylaws.


23
<PAGE>



                                             ARTICLE VI - INDEMNIFICATION

Section 1.        Indemnification of Directors and Officers.

         Each person who was or is a party or is  threatened  to be made a party to or is involved in any  threatened,
pending or completed action,  suit or proceeding,  formal or informal,  whether brought in the name of the corporation
or otherwise and whether of a civil,  criminal,  administrative or investigative  nature (hereinafter a "proceeding"),
by  reason  of the  fact  that he or she,  or a  person  of whom he or she is the  legal  representative,  is or was a
director  or  officer of the  corporation  or is or was  serving at the  request  of the  corporation  as a  director,
officer,  employee or agent of another  corporation or of a partnership,  joint  venture,  trust or other  enterprise,
including  service with respect to employee  benefit plans,  whether the basis of such proceeding is an alleged action
or inaction in an official  capacity or in any other capacity while serving as a director or officer,  shall,  subject
to the terms of any  agreement  between the  corporation  and such person,  be  indemnified  and held  harmless by the
corporation to the fullest extent  permissible under California law and the  corporation's  Articles of Incorporation,
against all costs,  charges,  expenses,  liabilities and losses (including  attorneys' fees,  judgments,  fines, ERISA
excise  taxes or  penalties  and amounts  paid or to be paid in  settlement)  reasonably  incurred or suffered by such
person in  connection  therewith,  and such  indemnification  shall  continue  as to a person  who has  ceased to be a
director  or officer  and shall  inure to the benefit of his or her heirs,  executors  and  administrators;  provided,
however,  that (A) the  corporation  shall  indemnify any such person  seeking  indemnification  in connection  with a
proceeding  (or part thereof)  initiated by such person only if such  proceeding  (or part thereof) was  authorized by
the Board of the  corporation;  (B) the  corporation  shall  indemnify  any such  person  seeking  indemnification  in
connection  with a proceeding  (or part  thereof)  other than a  proceeding  by or in the name of the  corporation  to
procure  a  judgment  in its  favor  only if any  settlement  of such a  proceeding  is  approved  in  writing  by the
corporation;  (C) that no such person shall be  indemnified  (i) except to the extent that the  aggregate of losses to
be  indemnified  exceeds  the  amount of such  losses  for which the  director  or  officer  is paid  pursuant  to any
directors' and officers'  liability  insurance policy  maintained by the  corporation;  (ii) on account of any suit in
which  judgment is rendered  against such person for an  accounting  of profits made from the purchase or sale by such
person of securities of the  corporation  pursuant to the provisions of Section 16(b) of the  Securities  Exchange Act
of 1934 and amendments  thereto or similar  provisions of any federal,  state or local statutory law; (iii) if a court
of  competent  jurisdiction  finally  determines  that  any  indemnification  hereunder  is  unlawful;  and (iv) as to
circumstances in which indemnity is expressly  prohibited by Section 317 of the General  Corporation Law of California
(the "Law");  and (D) that no such person shall be  indemnified  with regard to any action  brought by or in the right
of the corporation for breach of duty to the corporation and its

24
<PAGE>


shareholders  (a) for acts or omissions  involving  intentional  misconduct or knowing and culpable  violation of law;
(b) for acts or  omissions  that the  director  or  officer  believes  to be  contrary  to the best  interests  of the
corporation  or its  shareholders  or that  involve the absence of good faith on the part of the  director or officer;
(c) for any  transaction  from which the director or officer  derived an improper  personal  benefit;  (d) for acts or
omissions that show a reckless  disregard for the director's or officer's duty to the corporation or its  shareholders
in  circumstances  in which the director or officer was aware,  or should have been aware,  in the ordinary  course of
performing his or her duties,  of a risk of serious injury to the  corporation  or its  shareholders;  (e) for acts or
omissions  that  constitute an unexcused  pattern of  inattention  that amounts to an abdication of the  director's or
officer's  duties to the  corporation or its  shareholders;  and (f) for costs,  charges,  expenses,  liabilities  and
losses  arising  under  Section 310 or 316 of the Law. The right to  indemnification  conferred in this Article  shall
include the right to be paid by the  corporation  expenses  incurred in  defending  any  proceeding  in advance of its
final disposition;  provided,  however, that if the Law permits the payment of such expenses incurred by a director or
officer in his or her  capacity as a director  or officer  (and not in any other  capacity in which  service was or is
rendered by such person while a director or officer,  including,  without  limitation,  service to an employee benefit
plan) in advance of the final  disposition  of a  proceeding,  such  advances  shall be made only upon delivery to the
corporation of an  undertaking,  by or on behalf of such director or officer,  to repay all amounts to the corporation
if it shall be ultimately determined that such person is not entitled to be indemnified.

Section 2.        Indemnification of Employees and Agents.

         A person who was or is a party or is  threatened  to be made a party to or is involved in any  proceeding  by
reason  of the fact that he or she is or was an  employee  or agent of the  corporation  or is or was  serving  at the
request of the corporation as an employee or agent of another  enterprise,  including service with respect to employee
benefit  plans,  whether the basis of such action is an alleged  action or inaction in an official  capacity or in any
other  capacity  while  serving as an  employee  or agent,  may,  subject to the terms of any  agreement  between  the
corporation and such person,  be indemnified  and held harmless by the corporation to the fullest extent  permitted by
California law and the corporation's  Articles of Incorporation,  against all costs,  charges,  expenses,  liabilities
and losses,  (including attorneys' fees,  judgments,  fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in connection therewith.

25
<PAGE>


Section 3.        Right of Directors and Officers to Bring Suit.

         If a claim  under  Section 1 of this  Article is not paid in full by the  corporation  within 30 days after a
written claim has been received by the  corporation,  the claimant may at any time  thereafter  bring suit against the
corporation  to recover the unpaid  amount of the claim and, if  successful  in whole or in part,  the claimant  shall
also be  entitled  to be paid  the  expense  of  prosecuting  such  claim.  Neither  the  failure  of the  corporation
(including its Board,  independent  legal counsel,  or its  shareholders)  to have made a  determination  prior to the
commencement of such action that  indemnification  of the claimant is permissible in the  circumstances  because he or
she has met the applicable  standard of conduct,  if any, nor an actual  determination  by the corporation  (including
its Board,  independent legal counsel,  or its shareholders) that the claimant has not met the applicable  standard of
conduct,  shall be a defense to the action or create a presumption  for the purpose of an action that the claimant has
not met the applicable standard of conduct.

Section 4.        Successful Defense.

         Notwithstanding  any other  provision  of this  Article,  to the extent  that a director  or officer has been
successful on the merits or otherwise  (including the dismissal of an action without  prejudice or the settlement of a
proceeding  or action  without  admission of liability)  in defense of any  proceeding  referred to in Section 1 or in
defense of any claim, issue or matter therein, he or she shall be indemnified  against expenses (including  attorneys'
fees) actually and reasonably incurred in  connection therewith.

Section 5.        Non-Exclusivity of Rights.

         The right to  indemnification  provided by this  Article  shall not be exclusive of any other right which any
person may have or hereafter  acquire under any statute,  bylaw,  agreement,  vote of  shareholders  or  disinterested
directors or otherwise.

Section 6.        Insurance.

         The  corporation  may  maintain  insurance,  at its expense,  to protect  itself and any  director,  officer,
employee or agent of the corporation or another  corporation,  partnership,  joint venture,  trust or other enterprise
against any expense,  liability or loss,  whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Law.

26
<PAGE>



Section 7.        Expenses as a Witness.

         To the  extent  that any  director,  officer,  employee  or agent of the  corporation  is by  reason  of such
position,  or a position  with  another  entity at the request of the  corporation,  a witness in any action,  suit or
proceeding,  he or she shall be indemnified  against all costs and expenses actually and reasonably incurred by him or
her on his or her behalf in connection therewith.

Section 8.        Indemnity Agreements.

         The corporation may enter into  agreements with any director,  officer,  employee or agent of the corporation
providing for  indemnification  to the fullest  extent  permissible  under the Law and the  corporation's  Articles of
Incorporation.

Section 9.        Separability.

         Each and every  paragraph,  sentence,  term and provision of this Article is separate and distinct so that if
any paragraph,  sentence,  term or provision hereof shall be held to be invalid or unenforceable for any reason,  such
invalidity or  unenforceability  shall not affect the validity or  enforceability  of any other  paragraph,  sentence,
term or provision hereof. To the extent required,  any paragraph,  sentence,  term or provision of this Article may be
modified by a court of competent  jurisdiction  to preserve its validity and to provide the claimant with,  subject to
the  limitations  set forth in this Article and any  agreement  between the  corporation  and  claimant,  the broadest
possible indemnification permitted under applicable law.

Section 10.       Effect of Repeal or Modification.

         Any repeal or  modification  of this Article shall not  adversely  affect any right of  indemnification  of a
director  or officer  existing  at the time of such  repeal or  modification  with  respect to any action or  omission
occurring prior to such repeal or modification.


                                          ARTICLE VII - EMERGENCY PROVISIONS

Section 1.        General.

         The  provisions  of this  Article  shall be  operative  only  during a  national  emergency  declared  by the
President of the United  States or the person  performing  the  President's  functions,  or in the event of a nuclear,
atomic or other attack on the United States or a disaster  making it impossible or  impracticable  for the corporation
to conduct its business without recourse to the provisions of this

27
<PAGE>


Article.  Said  provisions  in such event shall  override all other  Bylaws of the  corporation  in conflict  with any
provisions of this Article,  and shall remain operative so long as it remains  impossible or impracticable to continue
the business of the corporation  otherwise,  but thereafter  shall be inoperative;  provided that all actions taken in
good faith pursuant to such provisions  shall  thereafter  remain in full force and effect unless and until revoked by
action taken pursuant to the provisions of the Bylaws other than those contained in this Article.

Section 2.        Unavailable Directors.

         All  directors of the  corporation  who are not  available to perform  their duties as directors by reason of
physical  or mental  incapacity  or for any  other  reason  or who are  unwilling  to  perform  their  duties or whose
whereabouts are unknown shall  automatically  cease to be directors,  with like effect as if such persons had resigned
as directors, so long as such unavailability continues.

Section 3.        Authorized Number of Directors.

         The authorized  number of directors shall be the number of directors  remaining after  eliminating  those who
have ceased to be  directors  pursuant  to Section 2, or the  minimum  number  required  by law,  whichever  number is
greater.

Section 4.        Quorum.

         The number of directors  necessary to  constitute  a quorum  shall be one-third of the  authorized  number of
directors  as specified in the  foregoing  Section,  or such other  minimum  number as,  pursuant to the law or lawful
decree then in force, it is possible for the Bylaws of a corporation to specify.

Section 5.        Creation of Emergency Committee.

         In the event the number of  directors  remaining  after  eliminating  those who have  ceased to be  directors
pursuant  to  Section 2 is less than the  minimum  number of  authorized  directors  required  by law,  then until the
appointment of additional  directors to make up such required minimum,  all the powers and authorities which the Board
could by law delegate,  including all powers and authorities  which the Board could delegate to a committee,  shall be
automatically  vested in an emergency  committee,  and the emergency  committee shall thereafter manage the affairs of
the  corporation  pursuant to such powers and  authorities  and shall have all other powers and  authorities as may by
law or lawful decree be conferred on any person or body of persons during a period of emergency.

28
<PAGE>


Section 6.        Constitution of Emergency Committee.

         The emergency  committee  shall  consist of all the  directors  remaining  after  eliminating  those who have
ceased to be  directors  pursuant to Section 2,  provided  that such  remaining  directors  are not less than three in
number.  In the event such  remaining  directors are less than three in number the emergency  committee  shall consist
of three  persons,  who shall be the  remaining  director or directors  and either one or two officers or employees of
the  corporation,  as the  remaining  director  or  directors  may in  writing  designate.  If there  is no  remaining
director,  the  emergency  committee  shall  consist of the three most  senior  officers  of the  corporation  who are
available  to serve,  and if and to the extent that  officers  are not  available,  the most senior  employees  of the
corporation.  Seniority  shall be  determined in accordance  with any  designation  of seniority in the minutes of the
proceedings of the Board,  and in the absence of such  designation,  shall be determined by rate of  remuneration.  In
the event that there are no  remaining  directors  and no officers or  employees  of the  corporation  available,  the
emergency  committee  shall  consist of three  persons  designated  in writing by the  shareholder  owning the largest
number of shares of record as of the date of the last record date.

Section 7.        Powers of Emergency Committee.

         The emergency  committee,  once  appointed,  shall govern its own procedures and shall have power to increase
the number of members  thereof  beyond  the  original  number,  and in the event of a vacancy  or  vacancies  therein,
arising at any time,  the  remaining  member or members of the emergency  committee  shall have the power to fill such
vacancy or vacancies.  In the event at any time after its  appointment  all members of the emergency  committee  shall
die or resign or become  unavailable to act for any reason  whatsoever,  a new emergency  committee shall be appointed
in accordance with the foregoing provisions of this Article.

Section 8.        Directors Becoming Available.

         Any person  who has  ceased to be a  director  pursuant  to the  provisions  of Section 2 and who  thereafter
becomes available to serve as a director shall automatically become a member of the emergency committee.

Section 9.        Election of Board of Directors.

         The emergency  committee  shall, as soon after its appointment as is practicable,  take all requisite  action
to secure the election of a board of directors,

29
<PAGE>


and upon such election all the powers and authorities of the emergency committee shall cease.

Section 10.       Termination of Emergency Committee.

         In the event, after the appointment of an emergency  committee,  a sufficient number of persons who ceased to
be  directors  pursuant  to Section 2 become  available  to serve as  directors,  so that if they had not ceased to be
directors as aforesaid,  there would be enough  directors to constitute  the minimum  number of directors  required by
law,  then all such  persons  shall  automatically  be  deemed to be  reappointed  as  directors  and the  powers  and
authorities of the emergency committee shall be at an end.


                                              ARTICLE VIII - AMENDMENTS

Section 1.        Amendments.

         These Bylaws may be amended or repealed  either by approval of the  outstanding  shares or by the approval of
the Board;  provided,  however,  that a Bylaw  specifying  or changing a fixed  number of  directors or the maximum or
minimum  number or  changing  from a fixed to a variable  Board or vice versa may only be adopted by  approval  of the
outstanding  shares.  The exact number of directors  within the maximum and minimum  number  specified in these Bylaws
may be amended by the Board alone.






30

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<TYPE>EX-4.12
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<DESCRIPTION>NINETY SEVENTH SUPPLEMENTAL INDENTURE
<TEXT>
<HTML>
<HEAD>
<TITLE>
Exhibit 4.12 97th Supplement to Trust Indenture
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<PRE>
                                       NINETY-SEVENTH SUPPLEMENTAL INDENTURE








                                        Southern California Edison Company

                                                        to

                                               The Bank of New York

                                                        and

                                                  D. G. Donovan,

                                                     Trustees








                                           DATED AS OF FEBRUARY 21, 2002





<PAGE>



                  This Ninety-Seventh Supplemental Indenture, dated as of the 21st day of February, 2002, is
entered into by and between Southern California Edison Company (between 1930 and 1947 named "Southern California
Edison Company Ltd."), a corporation duly organized and existing under and by virtue of the laws of the State of
California and having its principal office and mailing address at 2244 Walnut Grove Avenue, in the City of
Rosemead, County of Los Angeles, State of California 91770, and qualified to do business in the States of
Arizona, New Mexico, and Nevada (hereinafter sometimes termed the "Company"), and The Bank of New York, a
corporation duly organized and existing under and by virtue of the laws of the State of New York, acting through
its agent, BNY Midwest Trust Company with its principal office and mailing address at 2 North LaSalle Street, in
the City of Chicago, State of Illinois 60602 (successor Trustee to Harris Trust and Savings Bank), and D. G.
Donovan of 2 North LaSalle Street, in the City of Chicago, State of Illinois 60602 (successor Trustee to R. G.
Mason, who was successor Trustee to Wells Fargo Bank, National Association, which was successor Trustee to
Security Pacific National Bank, formerly named Security First National Bank and Security-First National Bank of
Los Angeles, successor, by consolidation and merger, to Pacific-Southwest Trust &amp; Savings Bank), as Trustees
(hereinafter sometimes termed the "Trustees");

                  WITNESSETH:

                  WHEREAS, the Company heretofore executed and delivered to said Harris Trust and Savings Bank
and said Pacific-Southwest Trust &amp; Savings Bank, Trustees, a certain Indenture of Mortgage or Deed of Trust dated
as of October 1, 1923, which said Indenture was duly filed for record and recorded in the offices of the
respective recorders of the following counties:  in the State of California-Fresno County, Volume 397 of Official
Records, page 1; Imperial County, Book 1174 of Official Records, page 966; Inyo County, Volume 154 of Official
Records, page 417; Kern County, Book 379 of Trust Deeds, page 196; Kings County, Volume 84 of Deeds, page 1; Los
Angeles County, Book 2963 of Official Records, page 1; Madera County, Volume 9 of Official Records, page 63;
Merced County, Volume 363 of Official Records, page 1; Modoc County, Volume 230 of Official Records, page 119 et
seq.; Mono County, Volume 64 of Official Records, page 29; Orange County, Book 496 of Deeds, page 1; Riverside
County, Book 594 of Deeds, page 252; San Bernardino County, Book 825 of Deeds, page 1; San Diego County, Series 5
Book 1964, page 84061; Santa Barbara County, Book 229 of Deeds, page 30; Stanislaus County, Volume 465 of
Official Records, page 370; Tulare County, Volume 50 of Official Records, page 1; Tuolumne County, Volume 274 of
Official Records, page 568; and Ventura County, Volume 33 of Official Records, page 1; in the State of
Nevada-Clark County, Book 8 of Mortgages; Churchill County, Book 40 of Official Records, page 235; Lyon County,
Book 39 of Mortgages, page 1; Mineral County, Book 13 of Official Records, page 794; Pershing County, Book 15 of
Official Records, page 612; and Washoe County, Book 83 of Mortgages, page 301; in the State of Arizona-La Paz
County, Instrument No. 83-000212 of Official Records; Mohave County, Book 11 of Realty Mortgages; Maricopa
County, Docket 4349 of Official Records, page 197; and Yuma County, Docket 369, page 310; and in the offices of
the county clerks of the following counties in the State of New Mexico-McKinley County, Book Mtg. 50, page 187
and filed as Document No. 10536 in the Chattel Records; and San Juan County, Book Mtg. 630, page 13 and filed as
Document No. 17838 in the Chattel Records (hereinafter referred to as the "Original Indenture"), to secure the
payment of the principal of and interest on all bonds of the Company at any time outstanding thereunder, and (as
to certain such filings or recordings) the principal of and interest on all Debentures of 1919 (referred to in
the Original Indenture and now retired) outstanding; and

                  WHEREAS, the Company has heretofore executed and delivered to the Trustees ninety-six certain
supplemental Indentures, dated, respectively, as of March 1, 1927, April 25, 1935, June 24, 1935, September 1,
1935, August 15, 1939, September 1, 1940, January 15, 1948, August 15, 1948, February 15, 1951, August 15, 1951,
August 15, 1953, August 15, 1954, April 15, 1956, February 15, 1957, July 1, 1957, August 15, 1957, August 15,
1958, January 15, 1960, August 15, 1960, April 1, 1961, May 1, 1962, October 15, 1962, May 15, 1963, February 15,
1964, February 1, 1965, May 1, 1966, August 15, 1966, May 1, 1967, February 1, 1968, January 15, 1969, October 1,
1969, December 1, 1970, September 15, 1971, August 15, 1972, February 1, 1974, July 1, 1974, November 1, 1974,
March 1, 1975, March 15, 1976, July 1, 1977, November 1, 1978, June 15, 1979, September 15, 1979, October 1,
1979, April 1, 1980, November 15, 1980, May 15, 1981, August 1, 1981, December 1, 1981, January 16, 1982, April
15, 1982, November 1, 1982, November 1, 1982, January 1, 1983, May 1, 1983, December 1, 1984, March 15, 1985,



Page 2
<PAGE>



October 1, 1985, October 15, 1985, March 1, 1986, March 15, 1986, April 15, 1986, April 15, 1986, July 1, 1986,
September 1, 1986, September 1, 1986, December 1, 1986, July 1, 1987, October 15, 1987, November 1, 1987,
February 15, 1988, April 15, 1988, July 1, 1988, August 15, 1988, September 15, 1988, January 15, 1989, May 1,
1990, June 15, 1990, August 15, 1990, December 1, 1990, April 1, 1991, May 1, 1991, June 1, 1991, December 1,
1991, February 1, 1992, April 1, 1992, July 1, 1992, July 15, 1992, December 1, 1992, January 15, 1993, March 1,
1993, June 1, 1993, June 15, 1993, July 15, 1993, September 1, 1993, and October 1, 1993, which modify, amend and
supplement the Original Indenture, such Original Indenture, as so modified, amended and supplemented, being
hereinafter referred to as the "Amended Indenture"; and

                  WHEREAS, there have been issued and are now outstanding and entitled to the benefits of the
Amended Indenture, First and Refunding Mortgage Bonds as follows:

              Series                        Due Date                       Principal Amount
              ------                        --------                       ----------------
             86D,E,F&amp;G                        2008                              196,000,000
             87A,B,C&amp;D                        2008                              135,000,000
                91A                           2021                               48,920,000
                91D                           2017                               28,585,000
                92C                           2027                               30,000,000
                92E                           2024                              190,000,000
                93C                           2026                              300,000,000
                93D                           2023                              154,540,000
                93F                           2003                              125,000,000
                93G                           2025                              225,000,000
                93H                           2004                              125,000,000
                93I                           2018                              200,000,000
                93J                           2002                              200,000,000

                  WHEREAS, the Company proposes presently to issue in fully registered form only, without
coupons, up to $2,000,000,000 aggregate principal amount of four new series of the Company's First and Refunding
Mortgage Bonds, with the exact principal amount and maturity date of each series to be fixed in a resolution of
the Board of Directors or the Executive Committee of the Board of Directors of the Company, said new series to be
designated, respectively, "Series 2002A, Due 2003," "Series 2002B, Due 2005," "Series 2002C, Due 2004," and
"Series 2002D, Due 2002" (the bonds of such four series being hereinafter sometimes referred to collectively as
the "Bonds"); and the Company's authorized bonded indebtedness has been increased to provide for the issuance of
said Bonds; and

                  WHEREAS, the Company has acquired real and personal property since the execution and delivery
of the Ninety-Sixth Supplemental Indenture which, with certain exceptions, is subject to the lien of the Amended
Indenture by virtue of the after-acquired property clauses and other clauses thereof, and the Company now desires
in this Ninety-Seventh Supplemental Indenture (hereinafter sometimes referred to as the "Supplemental Indenture")
expressly to convey and confirm unto the Trustees all properties, whether real, personal or mixed, now owned by
the Company (with the exceptions hereinafter noted); and

                  WHEREAS, for the purpose of further safeguarding the rights and interests of the holders of
bonds under the Amended Indenture, the Company desires, in addition to such conveyance, to enter into certain
covenants with the Trustees; and

                  WHEREAS, the making, executing, acknowledging, delivering and recording of this Supplemental
Indenture have been duly authorized by proper corporate action of the Company, and the Trustees have each duly
determined to execute and accept this Supplemental Indenture;

                  NOW, THEREFORE, in order further to secure the payment of the principal of and interest on all
of the bonds of the Company at any time outstanding under the Amended Indenture, as from time to time amended and
supplemented, including specifically, but without limitation, the First and Refunding Mortgage Bonds, Series 86D,


Page 3
<PAGE>


Series 86E, Series 86F, Series 86G, Series 87A, Series 87B, Series 87C, Series 87D, Series 91A, Series 91D,
Series 92C, Series 92E, Series 93C, Series 93D, Series 93F, Series 93G, Series 93H, Series 93I, and Series 93J,
referred to above, all of said bonds having been heretofore issued and being now outstanding, and the Bonds, of
the aggregate principal amount of up to $2,000,000,000, to be presently issued and outstanding; and to secure the
performance and observance of each and every of the covenants and agreements in the Amended Indenture contained,
and without in any way limiting (except as hereinafter specifically provided) the generality or effect of the
Original Indenture or any of said Supplemental Indentures executed and delivered prior to the execution and
delivery of this Supplemental Indenture insofar as by any provision of any said Indenture any of the properties
hereinafter referred to are subject to the lien and operation thereof, but to such extent (except as hereinafter
specifically provided) confirming such lien and operation, and for and in consideration of the premises, and of
the sum of One Dollar ($1.00) to the Company duly paid by the Trustees, at or upon the ensealing and delivery of
these presents (the receipt whereof is hereby acknowledged), the Company has executed and delivered this
Supplemental Indenture and has granted, bargained, sold, aliened, released, conveyed, assigned, transferred,
warranted, mortgaged, and pledged, and by these presents does grant, bargain, sell, alien, release, convey,
assign, transfer, warrant, mortgage, and pledge unto the Trustees, their successors in trust and their assigns
forever, in trust, with power of sale, all of the following:

                  All and singular the plants, properties (including goods which are or are to become fixtures),
equipment, and generating, transmission, feeding, storing, and distributing systems, and facilities and utilities
of the Company in the Counties of Fresno, Imperial, Inyo, Kern, Kings, Los Angeles, Madera, Merced, Modoc, Mono,
Orange, Riverside, San Bernardino, San Diego, Santa Barbara, Stanislaus, Tulare, Tuolumne, and Ventura, in the
State of California, Churchill, Clark, Lyon, Mineral, Pershing, and Washoe, in the State of Nevada, La Paz,
Maricopa, and Mohave, in the State of Arizona, and McKinley and San Juan, in the State of New Mexico, and
elsewhere either within or without said States, with all and singular the franchises, ordinances, grants,
easements, rights-of-way, permits, privileges, contracts, appurtenances, tenements, and other rights and property
thereunto appertaining or belonging, as the same now exist and as the same or any and all parts thereof may
hereafter exist or be improved, added to, enlarged, extended or acquired in said Counties, or elsewhere either
within or without said States;

                  Together with, to the extent permitted by law, all other properties, real, personal, and mixed
(including goods which are or are to become fixtures), except as herein expressly excepted, of every kind,
nature, and description, including those kinds and classes of property described or referred to (whether
specifically or generally or otherwise) in the Original Indenture and/or in any one or more of the indentures
supplemental thereto, now or hereafter owned, possessed, acquired or enjoyed by or in any manner appertaining to
the Company, and the reversion and reversions, remainder and remainders, tolls, incomes, revenues, rents, issues,
and profits thereof; it being hereby intended and expressly agreed that all the business, franchises, and
properties, real, personal, and mixed (except as herein expressly excepted), of every kind and nature whatsoever
and wherever situated, now owned, possessed, or enjoyed, and which may hereafter be in anywise owned, possessed,
acquired, or enjoyed by the Company, shall be as fully embraced within the provisions hereof and be subject to
the lien created hereby and by the Original Indenture and said supplemental indentures executed and delivered
prior to the execution and delivery of this Supplemental Indenture, as if said properties were particularly
described herein;

                  Saving and excepting, however, anything contained herein or in the granting clauses of the
Original Indenture, or of the above mentioned Indentures supplemental thereto, or elsewhere contained in the
Original Indenture or said supplemental Indentures, to the contrary notwithstanding, from the property hereby or
thereby mortgaged and pledged, all of the following property (whether now owned by the Company or hereafter
acquired by it):  all bills, notes, warrants, customers' service and extension deposits, accounts receivable,
cash on hand or deposited in banks or with any governmental agency, contracts, choses in action, operating
agreements and leases to others (as distinct from the property leased and without limiting any rights of the
Trustees with respect thereto under any of the provisions of the Amended Indenture), all bonds, obligations,
evidences of indebtedness, shares of stock and other securities, and certificates or evidences of interest


Page 4
<PAGE>


therein, all office furniture and office equipment, motor vehicles and tools therefor, all materials, goods,
merchandise, and supplies acquired for the purpose of sale in the ordinary course of business or for consumption
in the operation of any property of the Company, and all electrical energy and other materials or products
produced by the Company for sale, distribution, or use in the ordinary conduct of its business--other than any of
the foregoing which has been or may be specifically transferred or assigned to or pledged or deposited with the
Trustees, or any of them, under the Amended Indenture, or required by the provisions of the Amended Indenture, so
to be; provided, however, that if, upon the occurrence of a default under the Amended Indenture, the Trustees, or
any of them, or any receiver appointed under the Amended Indenture, shall enter upon and take possession of the
mortgaged and pledged property, the Trustees, or such Trustee or such receiver may, to the extent permitted by
law, at the same time likewise take possession of any and all of the property excepted by this paragraph then on
hand which is used or useful in connection with the business of the Company, and collect, impound, use, and
administer the same to the same extent as if such property were part of the mortgaged and pledged property and
had been specifically mortgaged and pledged hereunder, unless and until such default shall be remedied or waived
and possession of the mortgaged and pledged property restored to the Company, its successors or assigns, and
provided further, that upon the taking of such possession and until possession shall be restored as aforesaid,
all such excepted property of which the Trustees, or such Trustee or such receiver shall have so taken
possession, shall be and become subject to the lien hereof, subject, however, to any liens then existing on such
excepted property.

                  And the Company does hereby covenant and agree with the Trustees, and the Trustees with the
Company, as follows:

                                                      PART I

                  The Trustees shall have and hold all and singular the properties conveyed, assigned, mortgaged
and pledged hereby or by the Amended Indenture, including property hereafter as well as heretofore acquired, in
trust for the equal and proportionate benefit and security of all present and future holders of the bonds and
interest obligations issued and to be issued under the Amended Indenture, as from time to time amended and
supplemented, without preference of any bond over any other bond by reason of priority in date of issuance,
negotiation, time of maturity, or for any other cause whatsoever, except as otherwise in the Amended Indenture,
as from time to time amended and supplemented, permitted, and to secure the payment of all bonds now or at any
time hereafter outstanding under the Amended Indenture, as from time to time amended and supplemented, and the
performance of and compliance with the covenants and conditions of the Amended Indenture, as from time to time
amended and supplemented, and under and subject to the provisions and conditions and for the uses set forth in
the Amended Indenture, as from time to time amended and supplemented.

                                                      PART II

                  Article I to Article Twenty-One, inclusive, of the Amended Indenture are hereby incorporated by
reference herein and made a part hereof as fully as though set forth at length herein.

                                                     PART III

                  All of the terms appearing herein shall be defined as the same are now defined under the
provisions of the Amended Indenture, except when expressly herein otherwise defined.

                                                      PART IV

                  Pursuant to Section 1 of Article Five of the Original Indenture, as amended by Part IV, Subpart
C, of the Sixth Supplemental Indenture, dated as of September 1, 1940, the notice to be given with respect to the
redemption of the Bonds in whole or in part, shall be limited to and shall consist of the giving by the Company
or The Bank of New York, Trustee, of a notice in writing (including by facsimile transmission) of such
redemption, at least four business days prior to the date fixed for redemption to the holder of each Bond called
for redemption at the holder's last address shown on the registry books of the Company.  Failure to so provide
such notice to the holder of any Bond shall not affect the validity of the redemption proceedings with respect to
any other Bond.



Page 5
<PAGE>

                                                      PART V

                  All, but only, the duties, responsibilities, liabilities, immunities, rights, powers, and
indemnities against liability, of the Trustees and each of them, with respect to the trust created by the Amended
Indenture, are hereby assumed by and given to the Trustees, and each of them, with respect to the trust hereby
created, and are so assumed and given subject to all the terms and provisions with respect thereto as set forth
in the Amended Indenture, as fully and to all intents and purposes as if the same were herein set forth at
length; and this Supplemental Indenture is executed by the Trustees for the purpose of evidencing their consent
to the foregoing.

                  The recitals contained herein, except the recital that the Trustees have each duly determined
to execute and deliver this Supplemental Indenture, shall be taken as the statements of the Company, and the
Trustees assume no responsibility for the correctness thereof.  The Trustees make no representations as to the
validity of this Supplemental Indenture.

                                                      PART VI

                  As amended and supplemented by this Supplemental Indenture, the Amended Indenture is in all
respects ratified and confirmed, and the Original Indenture and all said indentures supplemental thereto
including this Supplemental Indenture, shall be read, taken, and considered as one instrument, and the Company
agrees to conform to and comply with all and singular the terms, provisions, covenants, and conditions set forth
therein and herein.

                                                     PART VII

                  In case any one or more of the provisions contained in this Supplemental Indenture should be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions contained in this Supplemental Indenture, and, to the extent and only to the extent
that any such provision is invalid, illegal, or unenforceable, this Supplemental Indenture shall be construed as
if such provision had never been contained herein.

                                                     PART VIII

                  This Supplemental Indenture may be simultaneously executed and delivered in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to be an original.

                  IN WITNESS WHEREOF, the Company has caused its corporate name and seal to be hereunto affixed
and this Supplemental Indenture to be signed by its Chairman of the Board, its President or one of its Vice
Presidents and attested by the signature of its Secretary or one of its Assistant Secretaries, for and in its
behalf; said The Bank of New York has caused its corporate name and seal to be hereunto affixed, and this
Supplemental Indenture to be signed, by one of its Vice Presidents or Assistant Vice Presidents or Agents and
attested by the signature of one of its Assistant Secretaries or Agents, and said D. G. Donovan has hereunto
executed this Supplemental Indenture; all as of the day and year first above written.  Executed in counterparts
and in multiple.


Page 6
<PAGE>




                                                              SOUTHERN CALIFORNIA EDISON COMPANY



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


Attest:


BONITA J. SMITH
- ---------------
BONITA J. SMITH
Assistant Secretary

(Seal)



                                                              THE BANK OF NEW YORK, Trustee



                                                              ROBERT D. FOLTZ
                                                              ---------------
                                                              ROBERT D. FOLTZ
                                                              Agent




                                                              D. G. DONOVAN
                                                              -------------
                                                              D. G. DONOVAN
                                                              Trustee

Page 7
<PAGE>





STATE OF CALIFORNIA        }
                                    }  ss.
COUNTY OF LOS ANGELES      }


         On this 21st day of February, 2002, before me, MARCELDA G. PUENTES, a Notary Public, personally appeared
THOMAS M. NOONAN and BONITA J. SMITH, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or
the entity on behalf of which the persons acted, executed the instrument.

         WITNESS my hand and official seal.




                                                              Marcela G. Puentes
                                                              --------------------------------
                                                              Marcela G. Puentes
                                                              Notary Public, State of California




(Seal)

My Commission expires on April 13, 2005.




<PAGE>



STATE OF ILLINOIS }
                           }  ss.
COUNTY OF COOK    }


         On this 21st day of February, 2002, before me, LINDA ELLEN GARCIA, a Notary Public, personally appeared
ROBERT D. FOLTZ, Agent of THE BANK OF NEW YORK, Trustee, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or
entity on behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.




                                                     Linda Ellen Garcia
                                                     -------------------------------
                                                     Linda Ellen Garcia
                                                     Notary Public, State of Illinois




(Seal)

My Commission expires on September 23, 2002.




STATE OF ILLINOIS }
                  }ss.
COUNTY OF COOK    }


         On this 21st day of February, 2002, before me, LINDA ELLEN GARCIA, a Notary Public, personally appeared
D. G. DONOVAN, Trustee, personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or entity on behalf of which the
person acted, executed the instrument.

         WITNESS my hand and official seal.




                                                     Linda Ellen Garcia
                                                     ------------------
                                                     Linda Ellen Garcia
                                                     Notary Public, State of Illinois




(Seal)

My Commission expires on September 23, 2002.

</PRE>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>5
<FILENAME>sefretagmt.htm
<DESCRIPTION>RETIREMENT AGREEMENT SEFRANK
<TEXT>
<HTML>
<HEAD>
<TITLE>Stephen E. Frank Retirement Agreement
</TITLE>
</HEAD>
<BODY>
<PRE>
                                               RETIREMENT AGREEMENT




         This Retirement Agreement ("Agreement"), is entered into by and between Stephen E. Frank ("SEF") an
individual, and Southern California Edison Company ("SCE"), a corporation.

         In consideration of the covenants undertaken and the releases contained in this Agreement and of SEF's
valued service to SCE, SEF on the one hand, and SCE on the other hand, agree as follows:

         1.       SEF will irrevocably resign as an officer of SCE effective January 1, 2002, by executing a
letter substantially in the form attached hereto as Exhibit A and incorporated herein by reference.  SEF will
retire as an employee of SCE on March 14, 2002 ("Retirement Date").  SEF will continue as an employee of SCE
until the Retirement Date at no less than his current salary and shall remain eligible for all executive benefit
plans at the officer level he was entitled to prior to his resignation.  Upon retirement, he will receive such
benefits he would have received had his resignation as an officer of SCE occurred on that date.

         2.       SEF's bonus percentage for 2001 (to be applied to his final salary used for this purpose) will
be equal to the higher of (a) 70 percent, or (b) 70 percent multiplied by the average bonus percentage (relative
to the target percentage) paid to other SCE officers for 2001 at a level of Senior Vice President or above (i.e.,
if the average bonus percentage paid to other SCE Senior Vice Presidents and above is 120 percent of their
respective target percentages, SEF's bonus percentage would be 120 percent multiplied by 70 percent = 84
percent). The bonus will be paid to SEF on the same date as other executives of SCE are paid.  SEF will not be
eligible for a bonus for 2002.

         3.       SCE will pay SEF's COBRA premiums after the Retirement Date until he attains age 65.  Payments
under this Paragraph 3 are conditioned upon SEF providing annual certifications that he is not eligible to
participate in another employee medical plan.  SCE will pay to SEF or his beneficiary $100,000 on the Retirement
Date, net of


                                     Page 1
<PAGE>



income and payroll tax withholding, in a single lump sum which he or his beneficiary may use as deemed
appropriate to defer the costs of supplemental medical coverage.

         4.       SEF has been awarded long-term incentive awards under the Edison International ("EIX") Equity
Compensation Plan or predecessor plans.  Subject to the approval of the EIX Compensation and Executive Personnel
Committee to the extent necessary, any outstanding long-term awards specified in (a)-(c) of this paragraph will
vest according to their respective award terms, except that in no case will the vesting be less than as follows:
(a) EIX stock options granted in 1999 or earlier will be 100% vested, (b) EIX performance shares granted in
January 2000 will be 100% vested, and (c) EIX performance shares granted in January 2001 will be 100% vested.
Except as provided above, all outstanding stock options, performance shares and retention units are subject to
and exercisable in accordance with the terms and conditions of the respective grants.  SEF elected to exchange
all of the EIX stock options awarded to him in 2000 pursuant to the terms of the Stock Option Retention Exchange
Offer approved by the EIX Compensation and Executive Personnel Committee on October 11, 2001.  The deferred stock
units ("DSU") awarded in exchange for the EIX stock options SEF chose to exchange will be subject to the DSU
award terms and conditions and be paid on the regularly scheduled dates, except that in no case will the vesting
of his DSU's be less than 75%.

         5.       SEF is eligible to receive retirement benefits under the Qualified Retirement Plan and the SCE
Executive Retirement Plan ("ERP") in accordance with their respective terms as modified by the additional service
credit as specified in SEF's employment letter dated May 16, 1995.

         6.       SEF and SCE expressly agree that, except to the extent this Agreement imposes obligations upon
the parties, this Agreement will never, at any time, for any purpose whatsoever, be considered as an admission of
liability or responsibility of the parties or any of them.  Moreover, neither this Agreement nor anything in this
Agreement will be construed to be nor will be admissible in any proceeding as evidence of or an admission by SCE
or any of its affiliates of any violation of its or their policies or


                                     Page 2
<PAGE>



procedures, or of state or federal laws or regulations.  This Agreement may be introduced, however, in any
proceeding to enforce the terms of this Agreement.

         7.       SCE may withhold from any compensation or benefits payable under this Agreement all federal,
state and other taxes as may be required pursuant to any law or governmental regulation or ruling.  SEF agrees
that he will be exclusively liable for the payment of all federal and state taxes that may be due from him as the
result of the consideration received from SCE herein.

         8.       If SEF has a right as a former employee and retiree to receive other plan benefits not
specifically addressed herein (by way of example and not by way of limitation, benefits under the Stock Savings
Plus Plan), SEF and his beneficiaries will continue to have the right to such other benefits in accordance with
the terms of the respective plans.

         9.       SEF will remain eligible to participate in the Estate and Financial Planning Program for five
years following the Retirement Date.  Ownership of SEF's corporate automobile will be transferred to him on the
Retirement Date.

         10.      This Agreement will be administered by SCE, which will have the general responsibility of
reasonably interpreting its terms.  Any controversy or claim arising out of or relating to this Agreement or
breach or alleged breach of this Agreement, or to enforce or interpret this Agreement, which cannot be resolved
by the parties will be settled by arbitration to be held in the County of Los Angeles in accordance with the
Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.  The parties will equally divide the arbitrators' fees.  The
prevailing party will be entitled to recover against the other party reasonable attorney's fees, expenses and
costs incurred in connection with such proceedings including his or its one-half share of the arbitrators' fees.

         11.      This Agreement will be binding upon any successor in interest of SCE.  Neither this Agreement
nor any right or interest hereunder will be assignable by SEF without SCE's prior written consent. Nothing herein
will restrict SEF's right to designate beneficiaries under any of the plans in which he is a participant,
provided such


                                     Page 3
<PAGE>



designations are not prohibited by the applicable plan documents and are otherwise lawful, or to transfer rights
to income to any trust or other entity which he may establish for estate planning purposes.  Except as required
by law, no right to receive payments under this Agreement will be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy, or
similar process or assignment by operation of law, and any attempt to effect such action will be null, void and
of no effect.

         12.      No provision of this Agreement may be amended, modified, or waived except by written agreement
signed by the parties hereto.

         13.      SEF acknowledges and understands that the confidentiality of this Agreement is of the utmost
concern to SCE and that this Agreement would not have been entered into by SCE without his promise to keep such
matter confidential.  Accordingly, SEF agrees that, until the Agreement is publicly disclosed by SCE in the
appropriate Form 10-Q or 10-K, he will keep the terms and conditions of this Agreement and the Agreement document
itself confidential and he will not disclose them to any other person, other than his wife, immediate family
members, legal advisors and/or other professional advisors, who will also be advised of its confidentiality and
who will agree to be bound by this confidentiality agreement.

         14.      SEF acknowledges and understands that SCE would not enter into this Agreement without it
serving as the means to compromise, resolve, settle, and terminate any dispute or claim that may exist between
them with respect to SEF's employment with SCE and his retirement therefrom.  As part of SEF's consideration
under this Agreement, and as a condition precedent to the additional payments and benefits he will be entitled to
receive pursuant to the Agreement, SEF agrees as follows:

         (a)      Except for obligations granted by or arising out of this Agreement, and any applicable
         retirement, deferred compensation, stock option, or welfare benefit plan, SEF, on his own behalf, and on
         the behalf of his descendants, dependents, heirs, executors, administrators, assigns and successors, as
         such, does hereby covenant not to sue and acknowledges complete satisfaction of and hereby


                                     Page 4
<PAGE>



         releases, absolves and discharges SCE, and its successors, assigns, subsidiaries, divisions and
         affiliated corporations, past and present (including without limitation Edison International and its
         affiliates), and their trustees, directors, officers, shareholders, agents, attorneys, insurers, and
         employees, past and present, and each of them, as such (hereinafter collectively referred to as "SCE
         Releasees") with respect to and from any and all claims, demands, liens, agreements, contracts,
         covenants, actions, suits, causes of action, wages, obligations, debts, expenses, attorney's fees,
         damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise,
         without any exception whatsoever, and any and all claims, demands, agreements, obligations, and causes
         of action, known or unknown, suspected or unsuspected, by SEF arising out of or in any way concerning
         the events and/or circumstances surrounding his employment with SCE or separation and retirement
         therefrom.

         (b)      SEF understands and expressly agrees that the release given by him in Clause (a), above,
         without any exception whatsoever, extends to all claims, injuries, damages or losses to his person and
         property, whether known, unknown, foreseen, patent or latent, which he may have against the SCE
         Releasees or any of them.  SEF specifically and expressly waives all his rights under SECTION 1542 of
         the CALIFORNIA CIVIL CODE which provides as follows:

              "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
              EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
              MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         (c)      SEF expressly acknowledges and agrees that by entering into this Agreement, he is waiving any
         and all rights or claims that he may have arising from the Age Discrimination in Employment Act of 1967,
         as amended, which


                                     Page 5
<PAGE>



         have arisen on or before the date of execution of this Agreement.  SEF further acknowledges and agrees
         that:

     o     In return for executing this Agreement, he will receive compensation beyond that which he was already
           entitled to receive before entering into this Agreement;

     o     He is hereby advised in writing to consult with an attorney before signing this Agreement;

     o     He was given a copy of this Agreement on December 13, 2001, and informed that he had 21 days within
           which to consider the Agreement and voluntarily executed this Agreement before expiration of that
           21-day period; and

     o     He was informed that he had seven days following the date of execution of this Agreement in which to
           revoke it.

         15.      This Agreement will be deemed to have been entered into in the State of California and all
questions concerning its validity, interpretation or performance of any of its terms or provisions, or of any
rights or obligations of the parties hereto, will be governed and resolved in accordance with the laws of the
State of California.  Furthermore, no provision of this Agreement is to be interpreted for or against either
party because that party, or his legal representative, drafted such provision.

         16.      SEF represents and agrees that he has carefully read and understands this Agreement, and agrees
that neither SCE nor any officer, agent, or employee of SCE or any of its affiliates has made any representations
other than those contained herein.  SCE agrees that neither SEF nor any of his representatives has made any
representations other than those contained herein.  Further, SEF and SCE expressly agree that they have entered
into this Agreement freely and voluntarily and without pressure or coercion from the other or from their
respective officers, agents, employees, or anyone else acting on their behalf.  SEF further expressly agrees that
prior to the execution of this Agreement, he was advised to seek independent legal advice concerning the terms,
conditions and effect of this Agreement.


                                     Page 6
<PAGE>



         17.      SEF and SCE represent and agree that this Agreement contains the entire agreement and
understanding between the parties hereto concerning SEF's employment with and retirement from SCE, and other
subject matters addressed herein.  SEF and SCE further represent and agree that the Agreement supersede and
replace all prior negotiations and agreements, proposed or otherwise, whether written or oral, concerning the
subject matter hereof and that the Agreement constitutes an integrated agreement, the terms of which are
contractual in nature and not a mere recital.

         18.      If any provision of this Agreement or the application thereof is held invalid, the invalidity
will not affect the other provisions or applications, and to this extent, the provisions of this Agreement are
declared to be severable.

         19.      This Agreement may be executed in counterparts, and each counterpart, when executed, will have
the efficacy of a signed original.  Photographic copies of such signed counterparts may be used in lieu of the
original for any purpose.

///

///

///

///

///

///

///

///

///

///

         IN WITNESS WHEREOF, SEF and SCE have executed this Agreement on the dates opposite their signatures.


                                     Page 7
<PAGE>



         I declare under penalty of perjury under the laws of the State of California that I have carefully read
the foregoing Agreement and know and fully understand the terms and content thereof and I accept and agree to the
provisions it contains and hereby execute it voluntarily and as my own free act with full understanding of its
consequences.


Dated:       [12-14]           , 2001, at                        [Stephen E. Frank]
       -----------------------                       ----------------------------------------
                                                                     Stephen E. Frank
          [Rosemead]       , California
- ---------------------------


I warrant and represent that I have the authority to execute this Agreement on behalf of SCE.


                                                   SOUTHERN CALIFORNIA EDISON COMPANY


Dated:      [12-18]        , 2001                  By        [Frederick J. Grigsby, Jr.]
                                                      -------------------------------------------------

at Rosemead, California                            Its                    [V.P.]
                                                       ---------------------------------------------------




                                     Page 8
<PAGE>


                                                SPOUSE'S STATEMENT

I have carefully read the foregoing Agreement and I know and fully understand the terms and content thereof.  I
understand that California is a community property state, and to the extent I now or in the future may have any
right, title or interest in anything released, bargained for, received, or agreed to in the Agreement, I hereby
expressly agree to be completely bound by all provisions of the Agreement.  I have signed this statement as my
own free act.


Dated:        [12-14]             , 2001                            [Lillian Frank]
       --------------------------                    ------------------------------------------
                                                                       Lillian Frank
at      [Los Angeles]     , California.
   -----------------------


WITNESSED BY:


Dated:        [12-14]             , 2001                         [Lyneece James]
       --------------------------                    -----------------------------------------




                                     Page 9
<PAGE>



                                                      12-14, 2001


Edison International
Southern California Edison Company
2244 Walnut Grove Avenue
Rosemead, California 91770

ATTENTION:  Corporate Secretary
            -------------------

Ladies and Gentlemen:

This is to advise you that effective January 1, 2001, I hereby irrevocably and voluntarily elect to resign as
Chairman of the Board, President and Chief Executive Officer of Southern California Edison Company ("SCE"), and
as a director of Edison International and SCE, and from all other officer and/or director positions held with
other affiliates of SCE.  I am also electing to retire as an employee of SCE on March 14, 2002.

Subsequent to my retirement as an employee of SCE, I will not seek reemployment with SCE or any of its other
affiliates.

                                                          Sincerely,


                                                          [Stephen E. Frank]
                                                          Stephen E. Frank


AGREED TO AND ACCEPTED BY:


         [Beverly P. Ryder]                               Date:     [Dec. 17]    , 2001
- --------------------------------------                          -----------------



</PRE>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>6
<FILENAME>sefcnsltgagmt.htm
<DESCRIPTION>CONSULTING AGREEMENT - SEFRANK
<TEXT>
<HTML>
<HEAD>
<TITLE>Stephen E. Frank Consulting Agreement
</TITLE>
</HEAD>
<BODY>
<PRE>
                                               CONSULTING AGREEMENT

         This Consulting Agreement (Agreement) is entered into by Southern California Edison Company, a
California corporation (Company) and Stephen E. Frank (Consultant) effective the first day following Consultant's
retirement when he is no longer employed by any affiliate of the Company (Effective Date).

         WHEREAS, Company desires to engage the services of Consultant and Consultant agrees to act as an
independent contractor on behalf of Company;

         NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter contained, the parties
agree as follows:

         1.       Consultant agrees that for a period of three years commencing on the Effective Date, he will be
available to serve as an independent contractor by rendering advice and assistance to the Company in connection
with its business affairs with which he became familiar while he was employed by the Company under the direction
of the Chief Executive Officer the Company, or such other Company officers the CEO may designate.  The scope of
such work may be spelled out in one or more purchase orders or engagement letters.  Company will give Consultant
reasonable prior notice of its need for his services and will make reasonable scheduling accommodations to
recognize Consultant's other business and personal activities and plans.

         2.       In consideration of the services to be performed during the term of this Agreement, Company
will pay Consultant a retainer of $200,000 within two weeks following the Effective Date.  On the first
anniversary of the Effective Date, the Company will pay an additional retainer of $200,000.  On the second
anniversary of the


                                     Page 1
<PAGE>


Effective Date, the Company will pay an additional retainer of $100,000.  Consultant will make himself reasonably
available for consulting services for up to 20 hours per month for the first two years of this Agreement, and for
up to 10 hours per month for the third year of this Agreement.  To the extent SCE requests consulting services in
excess of these hourly limits and Consultant agrees to perform such services, Consultant will be paid a fee at a
rate of $150 per hour.  The Company is not obligated to use a minimum number of hours of Consultant's services.

         3.       Company agrees to reimburse Consultant for any expenses reasonably incurred by him in
connection with the performance of his consulting services pursuant to this Agreement.  Such expenses will
include lodging, meals, travel, telephone, mileage and parking expense.  Consultant will submit written invoices
accounting for his time and expenses on a monthly basis in accordance with the terms of any purchase order to the
Company's Controller.

         4.       Consultant is not and will not be deemed an employee of the Company, or any affiliate of the
Company, while performing consulting services pursuant to this Agreement.  This Agreement will not, in any way,
affect Consultant's rights to receive any and all Company benefits to which he may be entitled in accordance with
the provisions of any other agreement or plan in which he was or is a participant.  The Company will comply with
all applicable governmental reporting requirements with respect to compensation paid pursuant to this Agreement.
Consultant agrees that any federal, state, local and other applicable taxes which may become due and payable as a
result of the compensation paid pursuant to this Agreement are the sole responsibility of Consultant.


                                     Page 2
<PAGE>


         5.       Consultant agrees that the services to be rendered by Consultant pursuant to this Agreement are
personal in nature and may not be assigned without prior written approval of the Chief Executive Officer or
General Counsel of the Company.  By giving Company written notice at least 30 days prior to an anniversary of the
Effective Date, Consultant has the right to terminate this Agreement as of the anniversary date subject to
Consultant's obligation to complete the services previously requested under this Agreement.  The Company may
terminate this Consulting Agreement only in the event of (i) Consultant's conviction of, or pleading guilty or
nolo contendere to, an act of fraud, embezzlement, theft, or other act constituting a felony; or (ii)
Consultant's breach of his obligations under this Agreement.  Company will have no further obligation for payment
under this Agreement in the event this Agreement is terminated, except for expenses incurred by Consultant prior
to such termination.

         6.       Consultant acknowledges that he is in possession of confidential trade secret and/or business
information not publicly available concerning Company and Company affiliates.  Consultant specifically agrees
that he will not at any time, in any fashion, form, or manner use or divulge, disclose or communicate to any
person, firm, or corporation, in any manner whatsoever, any such confidential information concerning any matters
affecting or relating to the business of Company or any Company affiliate.

         7.       Consultant agrees that during the term of this Agreement he will not, directly or indirectly,
for his own benefit, for the benefit of any person or entity other than the Company, or any Company affiliate, or
otherwise:


                                     Page 3
<PAGE>


         (a)      solicit,  encourage or induce,  or assist  others to solicit,  encourage or induce,  any officer,
         director,  executive or employee of the Company, or any Company affiliate,  to leave his or her employment
         with the Company, or any Company affiliate for any reason;

         (b)      induce or attempt to induce any customer,  supplier,  financier,  government agency,  independent
         contractor,  developer,  promoter  or others  having any  business  or  regulatory  relationship  with the
         Company,  or any Company  affiliate,  to cease,  reduce or alter the  nature,  amount or terms of business
         conducted  or  regulatory  oversight  or practices  followed  with respect to the Company,  or any Company
         affiliate,  or to engage in any business,  regulatory or other  activity which might  materially  harm the
         Company, or any Company affiliate, or which is opposed by the Company, or any Company affiliate; or

         (c)      make or cause  to be made  any  public  statement  that is  disparaging  of the  Company,  or any
         Company  affiliate,  or their respective  businesses or that materially injures the business or reputation
         of the Company, or any Company affiliate, or their respective businesses.

         8.       Consultant further agrees that while this Agreement is in effect he will not, except with the
written consent of the General Counsel of the Company, (a) engage in any activity which is directly competitive
with the Company, or any Company affiliate, or (b) render services to any organization or individual in
connection with any matter in which the position of such organization or individual is known by Consultant to be
adverse to the position of the Company, or any Company affiliate.


                                     Page 4
<PAGE>


         9.       If, during the term of this Agreement, Consultant engages in discussions with any entity or
person regarding Consultant providing services to such entity or person, or regarding engaging in any business
enterprise with such entity or person, he may disclose the fact that he has agreed to the provisions of Section 8
for a period of three years beginning on the Effective Date, and he may also disclose the provisions of Section 8
to such entity or person.

         10.      This Agreement is made and will be construed under the laws of the State of California.

         IN WITNESS THEREOF, the Company has caused this Agreement to be executed by its duly authorized officer
and Consultant has hereunto set his hand.



Stephen E. Frank                                             Southern California Edison Company



            [Stephen E. Frank]                               By        [Frederick J. Grigsby, Jr.]

                                                             Title  Vice President, Human Resources &amp;
                                                                      Labor Relations

Dated         [12-14-01]         at                          Dated    [12-18-01]          at

       [Rosemead]          , California.                            [Rosemead]        , California.


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<TYPE>EX-10.25
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<DESCRIPTION>EXECUTIVE SEVERANCE PLAN
<TEXT>
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EIX Executive Severance Plan
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<PRE>



                                                  EDISON INTERNATIONAL
                                                EXECUTIVE SEVERANCE PLAN








<PAGE>

                                                 TABLE OF CONTENTS

                                                                                                               Page


Article 1           Establishment, Term, and Purpose......................................................1

       1.1          Establishment of the Plan.............................................................1
       1.2          Purpose of the Plan...................................................................1

Article 2           DEFINITIONS...........................................................................1


Article 3           PARTICIPATION.........................................................................6

       3.1          Participation.........................................................................6
       3.2          Termination of Participation..........................................................7
       3.3          Termination of Employment.............................................................7
       3.4          Benefit Offset........................................................................7
       3.5          Re-Employment.........................................................................7

Article 4           services during certain events........................................................8


Article 5           SEVERANCE BENEFITS....................................................................8

       5.1          Right to Severance Benefits...........................................................8
       5.2          Right to Change in Control Severance Benefits.........................................8
       5.3          Severance Benefit - Termination by Employer Without Cause (Other than a
                    Qualifying Termination Event or termination due to the Participant's
                    Disability)...........................................................................9
       5.4          Change in Control....................................................................15
       5.5          Change in Control Severance Benefits.................................................16
       5.6          Termination for Other Reasons........................................................18
       5.7          Notice of Termination................................................................18
       5.8          Relationship to Other Plans..........................................................19

Article 6           TAXES................................................................................19


Article 7           EXCISE TAX GROSS-UP..................................................................19

       7.1          Gross-Up Payment.....................................................................19
       7.2          Determination of Gross-Up............................................................20
       7.3          Notification.........................................................................20
       7.4          Underpayment and Overpayment.........................................................22

Article 8           PAYMENT OBLIGATIONS..................................................................23

       8.1          Liability for Payment................................................................23
       8.2          Payment of Obligations Absolute......................................................23
       8.3          Unsecured General Creditor...........................................................23
       8.4          Other Benefit Plans..................................................................24

Article 9           RESOLUTION OF DISPUTES PRIOR TO A CHANGE IN CONTROL..................................24

       9.1          Claim................................................................................24
       9.2          Claim Decision.......................................................................24
       9.3          Request for Review...................................................................24
       9.4          Review of Decision...................................................................25

Article 10          RESOLUTION OF DISPUTES - ARBITRATION.................................................25

       10.1         General..............................................................................25
       10.2         Arbitration of Claims................................................................25
       10.3         Discovery............................................................................26
       10.4         Subpoenas............................................................................26
       10.5         Designation of Witnesses.............................................................27

Article 11          SUCCESSORS AND ASSIGNMENT............................................................27

       11.1         Successors to an Employer............................................................27
       11.2         Sale, Spin-Off, or Liquidation of an Employer........................................27
       11.3         Assignment by the Participant........................................................27

Article 12          ADMINISTRATION OF THE PLAN...........................................................28

       12.1         Committee Action.....................................................................28
       12.2         Powers and Duties of the Committee...................................................28
       12.3         Construction and Interpretation......................................................28
       12.4         Information..........................................................................29
       12.5         Compensation, Expenses and Indemnity.................................................29

Article 13          MISCELLANEOUS........................................................................29

       13.1         Release and Agreement................................................................29
       13.2         Term of the Plan.....................................................................29
       13.3         Employment Status....................................................................30
       13.4         Beneficiaries........................................................................30
       13.5         Payments on Behalf of Persons Under Incapacity.......................................31
       13.6         Gender and Number....................................................................31
       13.7         Severability.........................................................................31
       13.8         Modification.........................................................................32
       13.9         Notice...............................................................................32
       13.10        Applicable Law.......................................................................32
       13.11        WARN Act.............................................................................32


<PAGE>



                                               EDISON INTERNATIONAL
                                             EXECUTIVE SEVERANCE PLAN


                                                     ARTICLE 1
                                         ESTABLISHMENT, TERM, AND PURPOSE

1.1      Establishment of the Plan  Edison International hereby establishes a severance plan to be known as the
"Edison International Executive Severance Plan" (the "Plan").  This Plan shall become effective January 1, 2001
(the "Effective Date").  This Plan is intended to be an "employee benefit plan" within the meaning of Section (3)
of the Employee Retirement Income Security Act of 1974, as amended.

1.2      Purpose of the Plan  The purpose of this Plan is to provide for continuity in the management and
operations of the Employers (as such term is defined below) by offering certain key employees of the Employers
employment protection and financial security in the event that their employment is terminated by their respective
Employers without Cause (as such term is defined below) or in the event of a Change in Control (as such term is
defined below).

                                                     ARTICLE 2
                                                    DEFINITIONS

         Whenever used in this Plan, the following terms shall have the meanings set forth below (such defined
terms are in addition to the defined terms set forth above) unless the context clearly indicates to the contrary:

(a)      "Base Salary" means the Participant's base salary of record for benefit purposes paid to a Participant
                  by the Company and/or one or more Employers (whether or not deferred), but excludes (1)
                  incentive, retention, signing or other bonus compensation and (2) any other form of
                  compensation or benefit.

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

(c)      "Beneficiary" means the persons or entities designated or deemed designated by a Participant pursuant to
                  Section 13.4.

(d)      "Board" means the Board of Directors of the Company.

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

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

                  (2)      The willful engaging by the Participant in misconduct that is: (i) if the event giving
                           rise to the termination of the Participant's employment does not occur during a
                           Protected Period, in violation of the Company's and/or


Page 1
<PAGE>


                           the Participant's Employer's policies and practices applicable to the Participant from time to
                           time; or (ii) if the event giving rise to the termination of the Participant's
                           employment occurs during a Protected Period, that would have resulted in the
                           termination of the Participant's employment by the Company or the Participant's
                           Employer under the Company's and/or the Participant's Employer'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 the Company and his or her Employer.

(f)      "CEO" means the Chief Executive Officer of the Company.

(g)      "COBRA" means the health care continuation coverage requirements set forth in Section 4980B of the Code.

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

                  (1)      Any Person (other than a trustee or other fiduciary holding securities under an
                           employee benefit plan of the Company or a Company affiliate) becomes the Beneficial
                           Owner, directly or indirectly, of securities of the Company representing thirty
                           percent (30%) or more of the combined voting power of the Company's then outstanding
                           securities. For purposes of this clause, "Person" (or "group" as used in the
                           definition of Person) shall not include one or more underwriters acquiring
                           newly-issued voting securities (or securities convertible into voting securities)
                           directly from the Company with a view towards distribution.

                  (2)      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 the Company'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 the Company's shareholders, was approved by a
                           vote of at least two-thirds (2/3) of the Initial Directors (including
Page 2
<PAGE>


                           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 (i) the Effective Date or (ii) the date that is two
                           years before the Measurement Date.

                  (3)      The Company is liquidated; all or substantially all of the Company's assets are sold
                           in one or a series of related transactions; or the Company 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 the Company
                           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 the
                           Company (or a surviving entity) outstanding immediately after such merger,
                           consolidation, or reorganization.  Notwithstanding the foregoing, a bankruptcy of the
                           Company or a sale or spin-off of a Company subsidiary (short of a dissolution of the
                           Company or a liquidation of substantially all of the Company's assets, determined on
                           an aggregate basis) will not constitute a Change in Control.

                  (4)      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.

(i)      "Code" means the United States Internal Revenue Code of 1986, as amended.

(j)      "Committee" means the Company's Compensation and Executive Personnel Committee or its successor.

(k)      "Company" means Edison International, a California corporation, or any successor thereto as provided in
                  Section 11.1.

(l)      "Deferred Stock Unit" means an award granted by the Company or an Employer in the form of a bookkeeping
                  entry which serves as a measurement relative to shares of Edison International common stock for
                  purposes of determining the payment, in cash or stock at some time after vesting, of the award.

(m)      "Disability" shall mean, for all purposes of this Plan, the Participant's eligibility for benefits under
                  his or her Employer's long-term disability plan applicable to the Participant, as determined by
                  the Employer.

(n)       "Dividend Equivalent" means a dividend equivalent granted by the Company or an Employer in connection
                  with a Stock Option grant.

(o)      "EDCP" means the Edison International Executive Deferred Compensation Plan, as amended from time to
                  time.  EDCP shall not include the Edison International Affiliate Option Deferred Compensation
                  Plan, the OGDP, or any other nonqualified deferred compensation plan.


Page 3
<PAGE>




(p)      "Eligible Person" means any employee of an Employer whose designation as an executive has been approved
                  in writing by the executive officer of the Company responsible for human resources.

(q)      "Employer" means the Company or any affiliated business of the Company that has adopted this Plan with
                  the written consent of the Company, including but not limited to Southern California Edison,
                  Edison Capital, Edison Mission Energy or Edison O &amp; M (or any such entity's successor).  As the
                  context may require, a Participant's Employer means the Employer that employs or last employed
                  the Participant.

(r)      "Exchange Act" means the United States Securities Exchange Act of 1934, as amended.

(s)      "Executive Incentive Award" means the annual incentive bonus, if any, paid to the Participant by his or
                  her Employer(s) (or deferred by the Participant) under the Edison International Executive
                  Incentive Compensation Plan or any similar successor plan.  Executive Incentive Award does not
                  include special retention bonus, signing bonus, one-time or special project bonus, or any other
                  form of bonus, or any other form of compensation or benefit.

(t)      "Executive Retirement Plan" means the Southern California Edison Company Executive Retirement Plan, as
                  amended from time to time, or any similar or successor plan sponsored by an Employer.

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

                  (1)      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.

                  (2)      A reduction by the Participant's Employer of the Participant's Base Salary as in
                           effect on the Effective Date, or as the same shall be increased from time to time.

                  (3)      A material reduction by the Company or by the Participant's Employer of the
                           Participant's aggregate welfare benefits and/or incentive targets under the Company's
                           and/or the Participant's Employer's short and/or long-term incentive programs, as such
                           benefits and opportunities exist on the Effective Date, or as such benefits and
                           opportunities may be increased after the Effective Date.


Page 4
<PAGE>




                  (4)      The relocation of the Participant's principal office more than 50 miles from the
                           Participant's principal office immediately prior to the start of the Protected Period.

                  (5)      Any purported termination by the Participant's Employer of the Participant's
                           employment that is not effected pursuant to a Notice of Termination satisfying the
                           requirements of Section 5.7.

                  (6)      The failure of the Company or the Participant's Employer to obtain a satisfactory
                           agreement from any successor to the Company to assume and agree to perform this Plan,
                           as contemplated by Section 11.1 but subject to Section 11.2.

(v)      "OGDP" means the Edison International Option Gain Deferral Plan, as it may be amended from time to time.

(w)      "Participant" means any person who is a participant in this Plan as determined in accordance with
                  Article 3.

(x)      "Performance Shares" means an award of units denominated as "performance shares," the value of which is
                  based on the value of a related number of shares of Company stock and the earn-out of which is
                  based on the passage of time or the attainment of one or more performance criteria.  However,
                  Stock Options, Dividend Equivalents, and Deferred Stock Units granted or credited under or in
                  accordance with the Company's Affiliate Option Exchange Offer, any other offer by the Company
                  or an affiliate to exchange outstanding awards, or any plan of deferred compensation maintained
                  by the Company or an Employer shall not be deemed to be Performance Shares.

(y)      "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in
                  Sections 13(d) and 14(d) thereof, including a group as contemplated by Sections 13(d)(3) and
                  14(d)(2) thereof.

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

                  (1)      Any Person (other than a trustee or other fiduciary holding securities under an
                           employee benefit plan of the Company or of a Company affiliate): (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 the
                           Company representing fifteen percent (15%) or more of the combined voting power of the
                           Company's then outstanding securities.  For purposes of this clause, "Person" (and
                           "group" as used in the definition of Person) shall not include one or more underwriters
                           acquiring newly-issued voting securities (or securities convertible into voting
                           securities) directly from the Company with a view towards distribution.


Page 5
<PAGE>




                  (2)      The Company enters into an agreement that, if consummated, would result in a Change in
                           Control.

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

(aa)     "Protected Period" means the period related to a Change in Control that is deemed to commence on the
                  date that is six months before the date of the actual Change in Control and end on the date
                  that is two years after the Change in Control.

(bb)     "Qualifying Termination Event" means, as to a Participant, the occurrence of any one or more of the
                  following events within the Protected Period corresponding to a Change in Control:

                  (1)      A termination of the Participant's employment by his or her Employer, without the
                           Participant's consent, for reasons other than Cause or Disability;

                  (2)      A termination of employment by the Participant for Good Reason;

                  (3)      A successor company to the Company fails or refuses to assume the Company's and the
                           Participant's Employer's obligations under this Plan, as contemplated by Section 11.1
                           but subject to Section 11.2; or

                  (4)      The Company, the Participant's Employer or any successor company to the Company
                           repudiates or breaches any of the provisions of this Plan.

(cc)      "Senior Officers" means: (i) all Senior Vice Presidents or higher ranking executive officers of Edison
                  International, Southern California Edison, Edison Mission Energy, and Edison Capital, and (ii)
                  all other executives designated in writing by the Committee, the CEO or the executive officer
                  of the Company responsible for human resources to be in Executive Compensation Band A, B, C, or
                  D, or the equivalent.

(dd)     "Stock Option" means an option granted by the Company or an Employer to purchase shares of Company stock.

(ee)     "Stock Option Retention Exchange" means the exchange on November 29, 2001, pursuant to a Participant's
                  election, of Stock Options for Deferred Stock Units.

(ff)     "Termination Date" means, in the case of a Participant who becomes entitled to benefits under this Plan,
                  the last day that the Participant is actually employed by an Employer in connection with the
                  event that entitles the Participant to such benefits.

(gg)     "2001 Retention Program Awards" means the retention program awards, including cash awards and Deferred
                  Stock Units, granted by the Company on March 12, 2001.


Page 6
<PAGE>




                                                     ARTICLE 3
                                                   PARTICIPATION

3.1      Participation.  All Eligible Persons on the Effective Date shall be eligible to participate in this
Plan.  Any newly-hired or promoted employee shall also be eligible to participate in this Plan if he or she is an
Eligible Person.  The Committee may, from time to time, designate additional employees as eligible to participate
in this Plan; provided that the Committee shall limit the group of all persons eligible to participate in this
Plan to "a select group of management or highly compensated employees" within the meaning of 29 C.F.R.
2520.104-23 or any similar successor provision.  A person who is eligible to participate in this Plan shall become
a Participant on the date that the Committee (or its delegate) receives a valid Participation Agreement in the
form attached hereto as Exhibit A (or such other form, substantially the same as the form attached hereto as
Exhibit A, as the Committee may require) executed by the eligible person, except that those persons who were
Eligible Persons as of any date in 2001, were terminated in 2001, and otherwise would have had a right to
severance benefits pursuant to Section 5.1 shall be considered Participants without having completed the
Participation Agreement.  Notwithstanding the foregoing and unless the Board or the Committee otherwise provides,
no employee shall first become a Participant on or after the date of a Change in Control or a Potential Change in
Control.

3.2      Termination of Participation.  A Participant shall cease to participate in this Plan (a) if the CEO, the
Committee, or the Board notifies the Participant in writing that he or she is no longer a Participant, or (b) if
he or she is no longer in the class of Eligible Persons (or such other group of employees that the Committee may
include as eligible for participation in this Plan); provided that no action by the CEO, the Committee, or the
Board to terminate a Participant's participation shall be effective if it occurs after a Potential Change in
Control (unless and until the Board declares in good faith that the circumstances giving rise to the Potential
Change in Control will not result in an actual Change in Control or an actual Change in Control occurs) or during
a Protected Period.  This Section 3.2 shall not affect a former Participant's right to benefits under this Plan
if the event giving rise to such benefits occurred while he or she was a Participant or in connection with the
termination of his or her participation in this Plan.  A former Participant shall not again be an Eligible Person
under this Plan unless and until (a) the CEO, the Committee, or the Board notifies him or her in writing that he
or she is again eligible for participation in this Plan, subject to such conditions that the CEO, the Committee
or the Board may establish, and (b) the Committee (or its delegate) receives a new valid Participation Agreement
in the form attached hereto as Exhibit A (or such other form, substantially the same as the form attached hereto
as Exhibit A, as the Committee may require) executed by the former Participant.

3.3      Termination of Employment.  Notwithstanding anything else contained herein to the contrary, a
Participant shall not be deemed to have terminated employment if his or her employment by an Employer terminates
but he or she continues as an employee of another Employer.

3.4      Benefit Offset.  Notwithstanding anything else contained herein to the contrary, any severance benefits
otherwise payable or deliverable under this Plan to a Participant shall be offset or reduced by the amount of
severance benefits payable or deliverable to the Participant under any other plan, program, or agreement of or
with the Company, the Participant's Employer, or their respective affiliates.



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<PAGE>




3.5      Re-Employment.  Notwithstanding anything else contained herein to the contrary, a Participant shall have
no right to severance benefits hereunder with respect to a termination of his or her employment if, in connection
with such termination, he or she is otherwise entitled to severance benefits under this Plan but, prior to the
payment or delivery (or commencement of payment or delivery, as the case may be) of such benefits, the
Participant becomes re-employed by his or her Employer or by another Employer or by any other affiliate of the
Company.  Notwithstanding anything else contained herein to the contrary, a Participant's right to continuing or
additional benefits under this Plan shall automatically terminate (but the Participant shall have no obligation
to re-pay benefits previously paid) if the Participant becomes re-employed by his or her Employer or by another
Employer or by any other affiliate of the Company.  If a Participant is re-employed and his or her employment is
subsequently terminated and the Participant again becomes entitled to severance benefits under the terms of this
Plan in connection with such later termination of employment, the amount of severance payments otherwise payable
to the Participant hereunder in connection with such later termination of employment shall be reduced by the
amount of any severance payments paid under this Plan to the Participant within the 24 months prior to such later
termination of employment in connection with any prior termination of his or her employment.

                                                  ARTICLE 4
                                          SERVICES DURING CERTAIN EVENTS

         If a Potential Change in Control occurs, each Participant agrees that he or she will not voluntarily
leave the employ of his or her Employer and will render service until (a) the Board declares that the
circumstances giving rise to the Potential Change in Control will not result in an actual Change in Control, or
(b) if a Change in Control occurs, until six months after the Change in Control; provided, however, that, subject
to any right that the Participant may have to benefits hereunder, his or her Employer may terminate the
Participant's employment at any time, and the Participant may terminate his or her employment at any time for
Good Reason.

                                                     ARTICLE 5
                                                SEVERANCE BENEFITS

5.1      Right to Severance Benefits.  Subject to Sections 11.2 and 13.1, a Participant shall be entitled to
receive from his or her Employer the benefits described in Section 5.3 if the Participant's employment by his or
her Employer is terminated by the Employer without Cause (and other than due to the Participant's Disability).
Notwithstanding anything else contained herein to the contrary, a Participant shall not be entitled to receive
the benefits described in Section 5.3 if the Participant is entitled to or has previously received benefits under
or as described in Section 5.2.

5.2      Right to Change in Control Severance Benefits.  Certain Changes in Control will trigger the accelerated
vesting and payment of a Participant's Performance Shares, Stock Options, Dividend Equivalents, Deferred Stock
Units  and 2001 Retention Program Awards as described in Section 5.4, regardless of whether the Participant
incurs a Qualifying Termination Event.  Subject to Sections 11.2 and 13.1, a Participant shall be entitled to
receive the benefits described in Section 5.5 if the Participant incurs a Qualifying Termination Event.  If more
than one Qualifying Termination Event occurs with respect to a Participant, such events shall constitute a single
Qualifying Termination Event and the provisions of Section 5.5 shall apply with respect to the Participant only
once.  A Participant's continued employment shall not constitute a consent to, or a waiver of rights with respect
to, any circumstances constituting Good Reason for purposes of determining if a Qualifying Termination Event has
occurred with respect to the Participant.


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5.3      Severance Benefit - Termination by Employer Without Cause (Other than a Qualifying Termination Event or
termination due to the Participant's Disability).  In the event that a Participant becomes entitled to receive
benefits in accordance with Section 5.1, then the Participant shall be entitled to the benefits described in
Sections 5.3.1 through 5.3.16 below.

5.3.1    Cash Benefit.  The Participant's Employer shall pay to the Participant a non-discounted cash amount
         equal to the sum of the following:

(a)      the Participant's accrued and unpaid Base Salary and vacation pay through his or her Termination Date
                  (to the extent that such amounts have not previously been paid);

(b)      an amount equal to the greater of: (1) one times the highest rate of the Participant's annualized Base
                  Salary in effect at any time during the 24-month period ending on the Participant's Termination
                  Date, or (2) one times the highest rate of the Participant's Base Salary on a weekly basis in
                  effect at any time during the 24-month period ending on the Participant's Termination Date
                  multiplied by the number of weeks that would have been used (if the Participant had not been an
                  executive) to determine the Participant's cash severance benefit under the non-executive
                  severance plan (if any) maintained by the Participant's Employer and as in effect on the
                  Participant's Termination Date;

(c)      a pro rata portion (based on the number of weekdays that elapsed in the calendar year in which the
                  Participant's Termination Date occurs between the start of that calendar year and the
                  Participant's Termination Date) of the Participant's highest annual Executive Incentive Award
                  target percentage in effect at any time during the 24-month period ending on the Participant's
                  Termination Date multiplied by the Participant's highest annualized Base Salary in effect at
                  any time during such 24-month period; and

(d)      an amount equal to the amount calculated under Section 5.3.1(b) with respect to the Participant
                  multiplied by the Participant's highest annual Executive Incentive Award target percentage in
                  effect at any time during the 24-month period ending on Participant's Termination Date.

         The amount determined under this Section 5.3.1 shall be paid, at the Company's discretion, either as a
         lump sum within 30 days after the date the Company receives from the Participant the agreement
         referenced in Section 13.1, or as substantially equal biweekly or monthly payments without interest
         extending over a period not longer than the greater of 12 months or the number of


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         weeks determined under Section 5.3.1(b)(2) for purposes of calculating the Participant's benefit
         commencing within 30 days after the date the Company receives from the Participant the agreement
         referenced in Section 13.1, or as a combination of a lump sum and biweekly or monthly payments.

5.3.2    Health Care Coverage Benefit.

(a)      The Participant will be eligible to participate in the Company's retiree health care program if, under
                  the terms of the non-executive severance plan (if any) maintained by the Participant's Employer
                  and as in effect on the Participant's Termination Date, the Participant would otherwise have
                  been eligible (if he or she had not been an executive) for participation in the Company's
                  retiree health care program by virtue of his or her age and service.

(b)      If the Participant is not eligible for the Company's retiree health care program in accordance with
                  Section 5.3.2(a), the Participant will receive an extension of health care coverage for a
                  period following the Participant's Termination Date that is the greater of 12 months or the
                  extension period for which the Participant would have been eligible (if he or she had not been
                  an executive) under the non-executive severance program (if any) maintained by the
                  Participant's Employer and as in effect on the Participant's Termination Date.  Any continued
                  coverage in accordance with the preceding sentence shall be on terms similar to those as in
                  effect under the Participant's Employer's health care program in effect with respect to the
                  Participant immediately before the termination of his or her employment and based on the
                  Participant's coverage elections in effect at such time.  Notwithstanding Section 8.2 to the
                  contrary, the Company and/or the Participant's Employer, as applicable, shall not be obligated
                  to continue such coverage if the Participant obtains similar coverage from any successor
                  employer.  The Company and/or the Participant's Employer, as applicable, shall give the
                  Participant the required COBRA benefit continuation notice prior to and the Participant's
                  eligibility for continuation benefits under COBRA shall commence as of the end of the
                  applicable period determined as set forth above.

5.3.3    Executive Retirement Plan Enhanced Benefit.  The Participant will receive an additional year of service
         credit and an additional year of age for purposes of calculating the Participant's pension benefit under
         the Executive Retirement Plan and will be deemed to be fully vested in such benefit.  If the Participant
         has attained age 55 after giving effect to the additional year of age credit, then the Participant's
         Executive Retirement Plan benefit will be paid or payments will commence within 30 days after the
         Participant's Termination Date, or as soon thereafter as practicable, in the retirement payment form
         elected by the Participant in accordance with the provisions of the Executive Retirement Plan (such
         benefits will be paid in the retirement payment form elected by the Participant even if the Participant
         does not have at least five years of service credit under the Executive Retirement Plan) or in the form
         elected by the Participant on the Special Election form (in such form as may be approved by the
         Committee) provided for such elections under this Executive Severance Plan.  If a Participant makes an
         election on the Special Election form and such form is received by the Company more than 90 days before
         the Participant's Termination Date, such election shall control over any election made by the
         Participant under the Executive Retirement Plan; otherwise, the Participant's Executive


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         Retirement Plan election will control.  If the Participant has not attained age 55 after giving
         effect to the additional year of age credit, then the Participant's Executive Retirement Plan benefit
         will be paid or payments will commence within 30 days after the date the Participant actually attains
         age 55, or as soon thereafter as practicable.  In such circumstances, the Participant's form of payment
         will be determined in accordance with the Executive Retirement Plan, except that the Executive may by
         written notice to the Company at least 90 days before he or she attains age 55 elect an optional form of
         payment from any of the retirement payment options available under the Executive Retirement Plan, in
         which case the Participant's Executive Retirement Plan benefit will be paid in the form so elected by
         the Participant.  If the Participant has not attained age 55 after giving effect to the additional year
         of age credit, but the Participant has a total of 68 years of age plus service (after giving effect to
         the additional year of age and additional year of service credit) and the Participant participates in
         the Southern California Edison Company Retirement Plan, as amended from time to time, or a successor
         plan maintained by an Employer (the "SCERP"), the Participant's Executive Retirement Plan benefit will
         be calculated assuming that the benefit formula under the SCERP for grandfathered employees not yet age
         55 but with 68 points applied to the Participant in calculating the total retirement benefit amount.

5.3.4    Executive Deferred Compensation Plan Enhanced Benefit.  The Participant shall be deemed to be fully
         vested in any of his or her unvested EDCP benefits.  The Participant may, on such form and in such
         manner as the Company may prescribe, make a special Severance Plan EDCP benefit election (a) to commence
         payment of his or her EDCP benefits as soon as administratively practicable following his or her
         Termination Date or as soon as administratively practicable following the later of his or her
         Termination Date or his or her attainment of age 55, and (b) to specify the form of payment from among
         those otherwise available under the EDCP for a termination of employment due to retirement or
         resignation.  The Participant's special Severance Plan EDCP benefit election shall be effective only if
         the Participant's EDCP account balance is at least $50,000 on the Participant's Termination Date and
         only if such election is received by the Company at least 90 days before the Participant's Termination
         Date.  If the Participant does not timely make a valid Severance Plan EDCP benefit election, of if the
         Participant's EDCP account balance is less than $50,000 on the Participant's Termination Date, then the
         Participant's EDCP benefit (if any) will be paid as soon as practicable following the Participant's
         Termination Date in the form of a lump sum or three annual installments in accordance with the
         provisions of the EDCP and the Participant's prior election (if any).  In any case, the Participant's
         unpaid EDCP account balance will be credited with interest following his or her Termination Date at the
         same rate that is applicable to active employees' EDCP accounts.   Notwithstanding the above, if the
         Participant is at least age 55 with at least five years of service (as years of service are determined
         for vesting purposes under the Executive Retirement Plan) as of the Participant's Termination Date or
         if, after crediting the Participant with an additional year of service credit and an additional year of
         age for such purposes, the Participant is deemed to be at least age 55 with at least five years of
         service, then all EDCP provisions for retirement shall


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         apply with respect to the Participant, including the EDCP survivor benefit consisting of a
         doubling of the balance to be paid to the Participant's designated survivor(s) if the Participant's
         death occurs before the later of January 1, 2005 or 10 years from the date the Participant's
         participation in the EDCP commenced.  If the Participant is not or is not deemed to be at least age 55
         with at least five years of service in accordance with the preceding sentence, then the Participant's
         EDCP survivor benefit will remain in effect for 12 months following the Participant's Termination Date.

5.3.5    Option Gain Deferral Plan Enhanced Benefit.  The Participant may, on such form and in such manner as the
         Company may prescribe, make a special Severance Plan OGDP benefit election (a) to commence payment of
         his or her OGDP benefits as soon as administratively practicable following his or her Termination Date
         or as soon as administratively practicable following the later of his or her Termination Date or his or
         her attainment of age 55, and (b) to specify the form of payment from among those available under the
         OGDP for a termination of employment due to retirement or resignation.  The Participant's special
         Severance Plan OGDP benefit election shall be effective only if the value of the Participant's OGDP
         account balance is at least $50,000 on the Participant's Termination Date and only if such election is
         received by the Company at least 90 days before the Termination Date.  If the Participant does not
         timely make a valid Severance Plan OGDP benefit election, of if the value of the Participant's OGDP
         account balance is less than $50,000 on the Participant's Termination Date, the Participant's OGDP
         benefit (if any) will be paid as soon as practicable following the Participant's Termination Date in the
         form of a lump sum or three annual installments in accordance with the provisions of the OGDP and the
         Participant's prior election (if any).  Notwithstanding the above, if the Participant is at least age 55
         with at least five years of service (as years of service are determined for vesting purposes under the
         Executive Retirement Plan) as of the Participant's Termination Date or if, after crediting the
         Participant with an additional year of service credit and an additional year of age for such purposes,
         the Participant is deemed to be at least age 55 with at least five years of service, then all OGDP
         provisions for retirement shall apply with respect to Participant.

5.3.6    Stock Options and Dividend Equivalents.  The Participant shall be entitled to additional Stock Option
         and Dividend Equivalent vesting such that, as to any particular Stock Option or Dividend Equivalent
         grant outstanding immediately prior to the termination of the Participant's employment, the aggregate
         portion of such grant that shall have vested as of the Termination Date (which in no event shall be
         greater than 100%) shall not be less than the portion of the award that would have vested if the award
         vested as described in the next sentence.  The total vested percentage for each such grant (which in no
         event shall be greater than 100%) shall be determined based on the number of weekdays that elapsed from
         the start of the grant's vesting period through the Participant's Termination Date plus one additional
         year, divided by the number of weekdays in the full vesting period of the original grant.  Subject to
         the following two sentences, the Participant shall have one year after his or her Termination Date to
         exercise his or her Stock Options and Dividend Equivalents that were vested and outstanding as of the
         Termination Date or vested in connection with the termination of his or her employment.  Stock Options
         and Dividend Equivalents are subject to earlier termination upon the stated expiration date of the
         award, in accordance with Section 5.4, or in accordance with the adjustment or change


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         in control provisions of the plan under which they were granted.  Vested Dividend Equivalents
         may only be exercised to the extent earned and remain subject to the applicable performance provisions.
         The Special 2000 Grant Stock Options and Special 2001 Grant Stock Options may not be exercised until the
         earlier of May 18, 2005 or the date on which the closing price of Edison International common stock as
         reported by Bloomberg has averaged $25 or more for at least 20 consecutive trading days.  Subject to
         earlier termination as described above, if the Participant's Termination Date occurs prior to the
         earliest date any such Special Grant Stock Option is exercisable, the Participant shall have until the
         later of the 90th day following that date such option becomes exercisable or the date that is the first
         anniversary of his or her Termination Date to exercise such option.  Notwithstanding the above, if (i)
         after crediting the Participant with an additional year of service credit and an additional year of age,
         the Participant is deemed to be at least age 55 with at least five years of service (as years of service
         are determined for vesting purposes under the Executive Retirement Plan), or (ii) the Participant is
         otherwise qualified for retirement as of the Termination Date under the terms of any non-executive
         retirement plan of the Employer that is applicable to the Participant on the Termination Date, then all
         the regular terms and conditions for retirement under the applicable incentive award shall apply with
         respect to the vesting and exercise periods with respect to the Participant's Stock Options and Dividend
         Equivalents, except that one additional year of service shall be added for purposes of determining the
         Participant's prorated vesting in such awards and only if such provisions would result in greater
         vesting than the preceding provisions of this Section 5.3.6.

5.3.7    Performance Shares.  The Participant shall be entitled to additional Performance Share vesting such
         that, as to any particular Performance Share grant outstanding immediately prior to the termination of
         the Participant's employment, the aggregate portion of such grant that shall have vested as of the
         Termination Date (which in no event shall be grated than 100%) shall not be less than the portion of the
         award that would have vested if the award vested as described in the next sentence.  The vested
         percentage of each such Performance Share grant (which in no event shall be greater than 100% of the
         outstanding Performance Shares from that grant) shall be determined based on the number of weekdays that
         elapsed in the award term through the Participant's Termination Date plus one additional year, divided
         by the number of weekdays in the full vesting period of the original grant.  Payout of the Participant's
         vested Performance Shares shall otherwise remain subject to the provisions applicable to the respective
         grant.  A Participant's payout with respect to the vested portion of a Performance Share grant shall
         occur when active employees receive payment for their similar Performance Share grants.

5.3.8    2001 Retention Program Awards.  The unpaid portion of the Participant's 2001 Retention Program Award
         will fully vest and be paid on or as soon as practicable after the Participant's Termination Date.

5.3.9    Stock Option Retention Exchange Deferred Stock Units.  A pro rata portion of the Participant's
         outstanding Deferred Stock Units granted in the Stock Option Retention Exchange shall vest.  The vested
         percentage (which in no event shall be greater than 100% of the Participant's outstanding Deferred Stock
         Units from the Exchange) shall be determined based on the number of weekdays that elapsed in the award
         term through the Participant's Termination


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         Date plus one additional year, divided by the number of weekdays in the full vesting period for
         the original grant.  A Participant's payout with respect to the vested portion of the Deferred Stock
         Units shall occur when active employees receive payment for their similar Deferred Stock Unit grants.

5.3.10   Estate and Financial Planning Extension.  If the Participant was eligible to participate in the Estate
         and Financial Planning Program of an Employer at any point during the 12 months preceding the
         Participant's Termination Date, the Participant will be entitled to reimbursement of up to $10,000 for
         estate and financial planning costs incurred in the one-year period commencing on the Participant's
         Termination Date.  Notwithstanding the above, if the Participant is at least age 55 with at least five
         years of service (as years of service are determined for vesting purposes under the Executive Retirement
         Plan) as of the Participant's Termination Date or if, after crediting the Participant with an additional
         year of service credit and an additional year of age for such purposes, the Participant is deemed to be
         at least 55 with at least five years of service, then the normal terms of the Estate and Financial
         Planning Program for retirement will apply with respect to the Participant.

5.3.11   Executive Health Enhancement Extension.  If the Participant was eligible to participate in the
         Company-sponsored Executive Health Enhancement Program at any point during the 12 months preceding the
         Participant's Termination Date, the Participant will be entitled to reimbursement of up to $1,000 for
         physical examination and preventive health care costs incurred in the one-year period commencing on the
         Participant's Termination Date.

5.3.12   Survivor Benefit Plan Extension.  If the Participant was eligible to participate in the Survivor Benefit
         Plan component of the Southern California Edison Company Executive Disability and Survivor Benefit
         Program at any point during the 12 months preceding the Participant's Termination Date, the Participant
         will be entitled to continued coverage under such Survivor Benefit Plan for the one-year period
         commencing on the Participant's Termination Date.

5.3.13   1985 Deferred Compensation Plan.  A Participant who has a balance in his account under the 1985 Deferred
         Compensation Plan will be entitled to elect to delay the commencement of payout for one year from his
         Termination Date, provided he or she has so elected on a Special Election form (in such form as may be
         approved by the Committee) and the Company has received such completed form from the Participant at
         least 90 days before his or her Termination Date.

5.3.14   Supplemental Benefit Program Extension and Enhancement.  A Participant who is eligible and has elected
         to continue participation in the Southern California Edison Company Executive Supplemental Benefit
         Program will be entitled to continued coverage with the same terms applicable for an active employee
         under that program for the one-year period commencing on the Participant's Termination Date.  After the
         end of such one-year period, the Participant will be entitled to an additional one year of age credit
         beyond the Participant's age on


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         his or her Termination Date for purposes of the Supplemental Retirement Income benefit
         calculation under such program and otherwise will be entitled to post-retirement benefits under the
         terms of such program.

5.3.15   Outplacement Benefit.  The Participant shall be entitled to reimbursement of up to $20,000 for
         outplacement costs incurred in the two-year period commencing on his or her Termination Date.

5.3.16   Educational Assistance Benefit.  The Participant shall be entitled to the educational assistance benefit
         to which he or she would have been entitled (if he or she had not been an executive) under the
         non-executive severance plan, if any, maintained by his or her Employer and as in effect on the
         Participant's Termination Date.

5.4      Change in Control.  Performance Shares, Stock Options, Dividend Equivalents, Deferred Stock Units, and
2001 Retention Program Awards shall be subject to adjustment upon the occurrence of events such as stock splits,
stock dividends and other changes in capitalization in accordance with the incentive plan and terms and
conditions under which the particular award was granted.  Notwithstanding the change in control provisions
otherwise applicable to the award (including, without limitation, any "Distribution Date" accelerated vesting
and/or payment provisions and any other accelerated vesting and/or payment provisions set forth under the
"Adjustments Provisions" section of the applicable plan), a Participant's rights with respect to his or her
outstanding Performance Shares, Stock Options, Dividend Equivalents and/or 2001 Retention Program Awards upon the
occurrence of a Change in Control shall be as follows:

(a)      If a Change in Control is triggered by clause (3) of the definition of Change in Control and the Company
                  is not the successor and the successor to the Company (if any, or a parent thereof) does not
                  agree in writing prior to the occurrence of the Change in Control to continue and assume the
                  applicable award(s) following the Change in Control, or if for any other reason the award(s)
                  would not continue after the Change in Control, then (1) the Participant's then outstanding
                  Performance Shares shall vest and be paid, (2) the Participant's then outstanding Deferred
                  Stock Units shall vest and be paid, (3) the Participant's then outstanding Stock Options shall
                  vest and become exercisable, (4) the Participant's then outstanding 2001 Retention Program
                  Award shall vest and be paid, and (5) the Participant's then outstanding Dividend Equivalents
                  shall vest, be deemed to have been earned in full to the extent of 100% of the dividends paid
                  on Company common stock for record dates from the grant date of the award through the
                  Participant's Termination Date, and be paid.  The amount of the payment (if any) with respect
                  to a particular Performance Share award will equal the target number of Performance Shares
                  under the award.  Subject to clause (e) below, payment with respect to Performance Shares,
                  Deferred Stock Units, 2001 Retention Program Awards  and/or Dividend Equivalents in such
                  circumstances shall be made upon or as soon as practicable after the Change in Control event.

(b)      Notwithstanding clause (a), no acceleration of vesting and/or payout of an award shall occur in
                  connection with a Change in Control event that would, in the absence of such acceleration, be
                  accounted for as a pooling of interests transaction to the extent that such acceleration
                  (together with any similar acceleration of awards) would render pooling accounting unavailable
                  with respect to the transaction.


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(c)      No acceleration of vesting and/or payout of an award shall occur in connection with a Change in Control
                  absent a Qualifying Termination Event if either (1) the Company is the surviving entity, (2)
                  the successor to the Company (if any, or a parent thereof) agrees in writing prior to the
                  occurrence of the Change in Control to assume the award, or (3) the Change in Control is not
                  triggered by clause (3) of the definition of Change in Control.

(d)      If the circumstances described in clause (a) above apply, then to the extent a Participant is given
                  notice and at least fifteen days to exercise his or her Stock Options (to the extent then
                  vested after giving effect to clauses (a) and (b) above) prior to or upon the Change in Control
                  event, the Participant's unexercised Stock Options (whether vested or not) shall terminate upon
                  the Change in Control event subject to any provision that has been made by the Company through
                  a plan of reorganization or otherwise for the survival, substitution, exchange or other
                  settlement of such Stock Options.  Performance Shares, Deferred Stock Units, 2001 Retention
                  Program Awards and Dividend Equivalents that are paid in accordance with clause (a) above shall
                  terminate.

(e)      The Committee may accelerate vesting and/or payment of an award sufficiently prior to the Change in
                  Control event if necessary or deemed appropriate to permit the Participant to realize the
                  benefits intended to be conveyed with respect to the particular award and may reinstate the
                  original terms of the award if the related Change in Control event does not actually occur.

5.5      Change in Control Severance Benefits.  If a Participant incurs a Qualifying Termination Event, the
Participant shall be entitled to the benefits described in Sections 5.3.1 through 5.3.16 above subject to the
provisions of Section 5.4 with respect to the Participant's Performance Shares, Deferred Stock Units, Stock
Options, 2001 Retention Program Awards and Dividend Equivalents and subject to the following subsections of this
Section 5.5.

5.5.1    Senior Officer Enhanced Benefit.  If the Participant is a Senior Officer or was a Senior Officer within
         the 12-month period preceding his or her Termination Date but is not covered by Section 5.5.2, then the
         Participant will be entitled to the benefit modifications described in this Section 5.5.1.  The
         participant's cash benefit determined under Section 5.3.1 may be paid over a period not to exceed the
         greater of 24 months or twice the number of weeks determined under Section 5.3.1(b)(2) for purposes of
         calculating the Participant's benefit.  "Two times" will be substituted for "one times" in Section
         5.3.1(b) (including for purposes of determining the Participant's benefit under Section 5.3.1(d)).  "24
         months" shall be substituted for "12 months" in Section 5.3.2(b) and in Section 5.3.4.  The Participant
         will be credited with an additional two years of service credit and an additional two years of age under
         Sections 5.3.3, 5.3.4, 5.3.5 and 5.3.10 (as opposed to an additional year of service credit and an
         additional year of age as set forth therein).  "$20,000" and "two-year period" will be substituted for
         "$10,000" and "one-year period," respectively, in Section 5.3.10.  "$2,000" and "two-year period" will be
         substituted for "$1,000" and "one-year period" in Section 5.3.11.  "Two-year period" will be substituted
         for "one-year period" in Sections 5.3.12 and 5.3.13.  "Two-year period" and "an


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         additional two years of age" will be substituted for "one-year period" and "an additional one
         year of age," respectively, in Section 5.3.14.  "$30,000" and "three-year period" will be substituted
         for "$20,000" and "two-year period," respectively, in Section 5.3.15.

5.5.2    Certain Additional Enhanced Benefits.  If the Participant was the Chief Executive Officer of Edison
         International, Southern California Edison, Edison Mission Energy, or Edison Capital, or the General
         Counsel or Chief Financial Officer of Edison International within the 12-month period preceding his or
         her Termination Date, then the Participant will be entitled to the benefit modifications described in
         this Section 5.5.2.  The participant's cash benefit determined under Section 5.3.1 may be paid over a
         period not to exceed the greater of 36 months or three times the number of weeks determined under
         Section 5.3.1(b)(2) for purposes of calculating the Participant's benefit.  "Three times" will be
         substituted for "one times" in Section 5.3.1(b) (including for purposes of determining the Participant's
         benefit under Section 5.3.1(d)).  "36 months" shall be substituted for "12 months" in Section 5.3.2(b)
         and in Section 5.3.4.  The Participant will be credited with an additional three years of service credit
         and an additional three years of age under Sections 5.3.3, 5.3.4, 5.3.5 and 5.3.10 (as opposed to an
         additional year of service credit and an additional year of age as set forth therein).  "$30,000" and
         "three-year period" will be substituted for "$10,000" and "one-year period," respectively, in Section
         5.3.10.  "$3,000" and "three-year period" will be substituted for "$1,000" and "one-year period" in
         Section 5.3.11.  "Three-year period" will be substituted for "one-year period" in Sections 5.3.12 and
         5.3.13.  "Three-year period" and "an additional three years of age" will be substituted for "one-year
         period" and "an additional one year of age," respectively, in Section 5.3.14.  "$50,000" and "three-year
         period" will be substituted for "$20,000" and "two-year period," respectively, in Section 5.3.15.

5.5.3    Stock Options and Dividend Equivalents.  The Participant shall be fully vested in his or her Stock
         Options and Dividend Equivalents outstanding immediately before the termination of his or her
         employment.  Subject to the following two sentences, the Participant shall have two years (three years
         in the case of a Participant covered by Section 5.5.2) after his or her Termination Date to exercise his
         or her Stock Options and Dividend Equivalents that were outstanding as of the Termination Date.  Stock
         Options and Dividend Equivalents are subject to earlier termination upon the stated expiration date of
         the award, in accordance with Section 5.4, or in accordance with the adjustment or change in control
         provisions of the plan under which they were granted.  Vested Dividend Equivalents may only be exercised
         to the extent earned and remain subject to the applicable performance provisions unless the provisions
         of Section 5.4(a) apply.

5.5.4    Performance Shares, Deferred Stock Units and 2001 Retention Program Awards.  The Participant's
         outstanding Performance Shares and Deferred Stock Units shall vest.  Unless the provisions of Section
         5.4(a) apply, payout of the Participant's vested Performance Shares and Deferred Stock Units shall
         otherwise remain subject to the provisions applicable to the respective grant, and a Participant's
         payout with respect to Performance Share and Deferred

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<PAGE>


         Stock Unit grants shall occur when active employees receive payment for their similar
         Performance Share and Deferred Stock Unit grants.  The unpaid portion of the Participant's 2001
         Retention Program Award will fully vest and be paid on or as soon as practicable after the Participant's
         Termination Date.

5.6      Termination for Other Reasons.  Except as expressly provided below, the Company and a Participant's
Employer shall have no obligations (or no further obligations, as the case may be) to the Participant under this
Plan if:

(a)      the Participant's employment is terminated by his or her Employer for Cause;

(b)      the Participant terminates his or her employment with his or her Employer during a Protected Period
                  other than for Good Reason;

(c)      the Participant's employment by his or her Employer terminates due to the Participant's Disability or
                  death; or

(d)      the Participant terminates his or her employment with his or her Employer for any reason if the
                  termination occurs outside of a Protected Period; or

(e)      the Participant is employed by an Employer that is sold, spun off, or liquidated and the Participant is
                  no longer covered by this Plan as provided in Section 11.2 or the Participant does not timely
                  comply with Section 13.1.

         If, during a Protected Period and immediately prior to a Participant's Disability, death or retirement
(at least age 55 with five years of service under the Executive Retirement Plan including any additional years of
age and service to which he or she would be entitled under the terms of this Executive Severance Plan), the
Participant would have been entitled to terminate employment with his or her Employer for Good Reason, then upon
termination of the Participant's employment for Disability, death or retirement he or she shall be deemed to have
terminated for Good Reason for purposes of this Plan.

         Notwithstanding anything else contained herein to the contrary, a termination of a Participant's
employment on account of the Participant reaching mandatory retirement age, as such age may be defined from time
to time in policies adopted by the Company or his or her Employer prior to the commencement of the Protected
Period, to the extent such policies are applicable to the Participant immediately prior to the commencement of
the Protected Period and to the extent such policies are consistent with applicable law, shall not entitle the
Participant to the benefits described in Section 5.3 and shall not be a Qualifying Termination Event unless the
Participant was otherwise able to terminate employment for Good Reason immediately prior to his or her retirement
and his or her retirement occurred during a Protected Period.

5.7      Notice of Termination.  Any termination of a Participant's employment by his or her Employer for Cause
or by a Participant for Good Reason shall be communicated by Notice of Termination.  For purposes of this Plan, a
"Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in
this Plan relied upon, and shall set forth in reasonable


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detail the facts and circumstances claimed to provide a basis for termination of the Participant's
employment under the provision so indicated.  The Notice of Termination shall be effective on the date specified
in Section 13.9 of this Plan.

5.8      Relationship to Other Plans.  By accepting participation in this Plan, each Participant (a) consents to
the payment terms set forth in this Plan, (b) agrees that this Plan amends the otherwise inconsistent terms of
any Company or Employer compensation, incentive, benefit or perquisite plan or program, and (c) agrees that such
sections of this Plan will control to the extent that any inconsistency may exist between those sections and the
terms of any Company or Employer compensation, incentive, benefit or perquisite plan or program.

                                                     ARTICLE 6
                                                       TAXES

         The Company and/or the Participant's Employer, as applicable, has the right to withhold from any amount
otherwise payable to a Participant under or pursuant to this Plan the amount of any taxes that the Company or
such Employer may legally be required to withhold with respect to such payment (including, without limitation,
any United States Federal taxes, and any other state, city, or local taxes).  In the event that tax withholding
is required with respect to amounts or benefits payable or deliverable by the Company or the Participant's
Employer to a Participant and the Company or the Employer cannot satisfy its tax withholding obligations in the
manner described in the preceding sentence, the Company or the Employer may require the Participant to pay or
provide for the payment of such required tax withholding as a condition to the payment or delivery of such
amounts or benefits.

         Each Participant, former Participant and Beneficiary shall be solely responsible for all income and
employment taxes arising in connection with participation in this Plan or benefits hereunder.

                                                     ARTICLE 7
                                                EXCISE TAX GROSS-UP

7.1      Gross-Up Payment.  In the event it is determined (pursuant to Section 7.2) or finally determined (as
defined in Section 7.3(c)) that any payment, distribution, transfer, or benefit by a Participant's Employer, or a
direct or indirect subsidiary or affiliate of that Employer, to or for the benefit of the Participant or the
Participant's dependents, heirs or beneficiaries (whether such payment, distribution, transfer, benefit or other
event occurs pursuant to the terms of this Plan or otherwise, but determined without regard to any additional
payments required under this Article 7) (each a "Payment" and collectively the "Payments") is subject to the
excise tax imposed by Section 4999 of the Code, and any successor provision or any comparable provision of state
or local income tax law (collectively, "Section 4999"), or any interest, penalty or addition to tax is incurred
by the Participant with respect to such excise tax (such excise tax, together with any such interest, penalty,
and addition to tax, hereinafter collectively referred to as the "Excise Tax"), then, within 10 days after such
determination or final determination, as the case may be, the Participant's Employer shall pay to the Participant
(or to the applicable taxing authority on the Participant's behalf) an additional cash payment (hereinafter
referred to as the "Gross-Up Payment") equal to an amount such that after payment by the Participant of all
taxes, interest, penalties, additions to tax and costs imposed or incurred with respect to the Gross-Up Payment
(including, without limitation, any income and excise taxes imposed upon the Gross-Up Payment), the


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<PAGE>


Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Payment
or Payments.  This provision is intended to put the Participant in the same position as the Participant would
have been had no Excise Tax been imposed upon or incurred as a result of any Payment.

7.2      Determination of Gross-Up.

(a)      Except as provided in Section 7.3, the determination that a Payment is subject to an Excise Tax shall be
                  made in writing by the principal certified public accounting firm then retained by the Company
                  to audit its annual financial statements (the "Accounting Firm").  Such determination shall
                  include the amount of the Gross-Up Payment and detailed computations thereof, including any
                  assumptions used in such computations.  Any determination by the Accounting Firm will be
                  binding on the Company, the Participant's Employer and the Participant.

(b)      For purposes of determining the amount of the Gross-Up Payment, the Participant shall be deemed to pay
                  Federal income taxes at the highest marginal rate of Federal income taxation in the calendar
                  year in which the Gross-Up Payment is to be made.  Such highest marginal rate shall take into
                  account the loss of itemized deductions by the Participant and shall also include the
                  Participant's share of the hospital insurance portion of FICA and state and local income taxes
                  at the highest marginal rate of taxation in the state and locality of the Participant's
                  residence on the date of his or her Qualifying Termination Event, net of the maximum reduction
                  in Federal income taxes that could be obtained from the deduction of such state and local taxes.

7.3      Notification.

(a)      The Participant shall notify the Company and his or her Employer (if other than the Company) in writing
                  of any claim by the Internal Revenue Service (or any successor thereof) or any state or local
                  taxing authority (individually or collectively, the "Taxing Authority") that, if successful,
                  would require the payment by the Participant's Employer of a Gross-Up Payment.  Such
                  notification shall be given as soon as practicable but no later than 30 days after the
                  Participant receives written notice of such claim and shall apprise the Company and his or her
                  Employer of the nature of such claim and the date on which such claim is requested to be paid;
                  provided, however, that failure by the Participant to give such notice within such 30-day
                  period shall not result in a waiver or forfeiture of any of the Participant's rights under this
                  Article 7 except to the extent of actual damages suffered by the Participant's Employer as a
                  result of such failure.  The Participant shall not pay such claim prior to the expiration of
                  the 15-day period following the date on which the Participant gives such notice to the Company
                  and his or her Employer (or such shorter period ending on the date that any payment of taxes,
                  interest,

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<PAGE>


                  penalties or additions to tax with respect to such claim is due). If the Company or the Participant's
                  Employer notifies the Participant in writing prior to the expiration of such 15-day period
                  (regardless of whether such claim was earlier paid as contemplated by the preceding
                  parenthetical) that it desires to contest such claim, the Participant shall:

                  (1)      give the Company and the Participant's Employer any information reasonably requested
                           by the Company or the Participant's Employer relating to such claim;

                  (2)      take such action in connection with contesting such claim as the Company or the
                           Participant's Employer shall reasonably request in writing from time to time,
                           including, without limitation, accepting legal representation with respect to such
                           claim by an attorney selected by the Company or the Participant's Employer;

                  (3)      cooperate with the Company and the Participant's Employer in good faith in order
                           effectively to contest such claim; and

                  (4)      permit the Company and the Participant's Employer to participate in any proceedings
                           relating to such claim;

                  provided, however, that the Participant's Employer shall bear and pay directly all attorneys
                  fees, costs and expenses (including additional interest, penalties and additions to tax)
                  incurred in connection with such contest and shall indemnify and hold the Participant harmless,
                  on an after-tax basis, for all taxes (including, without limitation, income and excise taxes),
                  interest, penalties and additions to tax imposed in relation to such claim and in relation to
                  the payment of such costs and expenses or indemnification.

(b)      Without limitation on the foregoing provisions of this Section 7.3, and to the extent its actions do not
                  unreasonably interfere with or prejudice the Participant's disputes with the Taxing Authority
                  as to other issues, the Company and the Participant's Employer shall control all proceedings
                  taken in connection with such contest and, in its or their reasonable discretion, may pursue or
                  forego any and all administrative appeals, proceedings, hearings and conferences with the
                  Taxing Authority in respect of such claim and may, at its or in their sole option, either
                  direct the Participant to pay the tax, interest or penalties claimed and sue for a refund or
                  contest the claim in any permissible manner, and the Participant agrees to prosecute such
                  contest to a determination before any administrative tribunal, in a court of initial
                  jurisdiction and in one or more appellate courts, as the Company or the Participant's Employer
                  shall determine; provided, however, that if the Company or the Participant's Employer directs
                  the Participant to pay such claim and sue for a refund, the Participant's Employer shall
                  advance an amount equal to such payment to the Participant, on an interest-free basis, and
                  shall indemnify and hold the Participant harmless, on an after-tax basis, from all taxes
                  (including, without limitation, income and excise taxes), interest, penalties and additions to
                  tax imposed with respect to such advance or with respect to any imputed income with respect to
                  such advance, as any such amounts are incurred; and, further, provided, that any extension of
                  the statute of limitations relating to payment of taxes, interest, penalties or additions to


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<PAGE>


                  tax for the taxable year of the Participant with respect to which such contested amount is claimed
                  to be due is limited solely to such contested amount; and, provided, further, that any settlement of
                  any claim shall be reasonably acceptable to the Participant, and the Company's and the
                  Participant's Employer's control of the contest shall be limited to issues with respect to
                  which a Gross-Up Payment would be payable hereunder, and the Participant shall be entitled to
                  settle or contest, as the case may be, any other issue.

(c)      If, after receipt by the Participant of an amount advanced by the Participant's Employer pursuant to
                  Section 7.3(a), the Participant receives any refund with respect to such claim, the Participant
                  shall (subject to the Participant's Employer's complying with the requirements of this Article
                  7) promptly pay to the Participant's Employer an amount equal to such refund (together with any
                  interest paid or credited thereof after taxes applicable thereto), net of any taxes (including,
                  without limitation, any income or excise taxes), interest, penalties or additions to tax and
                  any other costs incurred by the Participant in connection  with such advance, after giving
                  effect to such repayment.  If, after the receipt by the Participant of an amount advanced by
                  the Participant's Employer pursuant to Section 7.3(a), it is finally determined that the
                  Participant is not entitled to any refund with respect to such claim, then such advance shall
                  be forgiven and shall not be required to be repaid and the amount of such advance shall be
                  treated as a Gross-Up Payment and shall offset, to the extent thereof, the amount of any
                  Gross-Up Payment otherwise required to be paid.

(d)      For purposes of this Article 7, whether the Excise Tax is applicable to a Payment shall be deemed to be
                  "finally determined" upon the earliest of: (1) the expiration of the 15-day period referred to
                  in Section 7.3(a) if the Company or the Participant's Employer has not notified the Participant
                  that it intends to contest the underlying claim, (2) the expiration of any period following
                  which no right of appeal exists, (3) the date upon which a closing agreement or similar
                  agreement with respect to the claim is executed by the Participant and the Taxing Authority
                  (which agreement may be executed only in compliance with this section), or (4) the receipt by
                  the Participant of notice from the Company or the Participant's Employer that it no longer
                  seeks to pursue a contest (which shall be deemed received if the Company or the Participant's
                  Employer does not, within 15 days following receipt of a written inquiry from the Participant,
                  affirmatively indicate in writing to the Participant that the Company or the Participant's
                  Employer intends to continue to pursue such contest).

7.4      Underpayment and Overpayment.  It is possible that no Gross-Up Payment will initially be made but that a
Gross-Up Payment should have been made, or that a Gross-Up Payment will initially be made in an amount that is
less than what should have been made (either of such events is referred to as an "Underpayment").  It is also
possible that a Gross-Up Payment will initially be made in an amount that is greater than what should have been
made (an "Overpayment").  The determination of any Underpayment or Overpayment shall be made by the Accounting
Firm in accordance with Section 7.2.  In the event of an Underpayment, the amount of any such Underpayment shall
be paid to the


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<PAGE>


Participant as an additional Gross-Up Payment.  In the event of an Overpayment, any such Overpayment
shall be treated for all purposes as a loan to the Participant with interest at the applicable Federal rate
provided for in Section 1274(d) of the Code.  In such case, the amount of the loan shall be subject to reduction
to the extent necessary to put the Participant in the same after-tax position as if such Overpayment were never
made.  The amount of any such reduction to the loan shall be determined by the Accounting Firm in accordance with
the principles set forth in Section 7.2.  The Participant shall repay the amount of the loan (after reduction, if
any) to the Participant's Employer as soon as administratively practicable after the Company or the Participant's
Employer notifies the Participant of (a) the Accounting Firm's determination that an Overpayment was made and (b)
the amount to be repaid.

                                                      ARTICLE 8
                                                PAYMENT OBLIGATIONS

8.1      Liability for Payment.  Except for the benefits related to Performance Shares, Deferred Stock Units,
2001 Retention Program Awards, Stock Options and/or Dividend Equivalents which shall be paid by the appropriate
entity as determined under the provisions of the incentive plan under which the award was granted, each Employer
shall be liable for the payment of benefits under this Plan with respect to each Participant who is employed or
was last employed by that Employer immediately prior to the time that the Participant becomes entitled to
benefits hereunder.

8.2      Payment of Obligations Absolute.  Subject to the Participant's compliance with Section 13.1 and the
agreement contemplated thereby and subject to Section 3.5 and Article 6, each Employer's obligation to make the
payments and the arrangements provided for herein shall be absolute and unconditional, and shall not be affected
by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Employer may have against the Participant or anyone else except as provided in Section 3.4 and/or
Section 3.5.  All amounts payable by an Employer hereunder shall be paid without notice or demand.  Each and
every payment made hereunder by an Employer shall be final, and the Employer shall not seek to recover all or any
part of such payment from the Participant or from whomsoever may be entitled thereto, for any reasons whatsoever,
except as otherwise provided in Section 3.5, Article 7, or Article 10 and subject to the Participant's compliance
with Section 13.1 and the agreement contemplated thereby.

         Participants shall not be obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Plan, and the obtaining of any such other employment shall in no
event effect any reduction of an Employer's obligations to make the payments and arrangements required to be made
under this Plan except as provided in Section 5.3.2(b).

8.3      Unsecured General Creditor.  Participants and their Beneficiaries, heirs, successors, and assigns shall
have no legal or equitable rights, claims, or interest in any specific property or assets of the Company or any
Employer.  No assets of the Company or any other Employer shall be held under any trust, or held in any way as
collateral security for the fulfilling of the obligations of the Company or other Employer under this Plan.  Any
and all of each Employer's assets shall be, and remain, the general unpledged, unrestricted assets of the
Employer.  Each Employer's obligation under this Plan


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<PAGE>


shall be merely that of an unfunded and unsecured promise of the Employer to pay money in the future,
and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general
creditors.  It is the intention of the Company and each other Employer that this Plan be unfunded for purposes of
the Code and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

8.4      Other Benefit Plans.  All payments, benefits and amounts provided under this Plan shall be in addition
to and not in substitution for any pension rights under the Company's or other Employer's tax-qualified pension
plan in which the Participant participates, and any disability, workers' compensation or other Company or other
Employer benefit plan distribution that a Participant is entitled to, under the terms of any such plan, at the
time his or her employment by his or her Employer terminates.  Notwithstanding the foregoing, this Plan shall not
create an inference that any duplicate payments shall be required.  Payments received by a person under this Plan
shall not be deemed a part of the person's compensation for purposes of determining the person's benefits under
any employee welfare, pension or other benefit plan or arrangement, if any, provided by an Employer, except where
explicitly provided under the terms of such plan or arrangement.

                                                      ARTICLE 9
                                RESOLUTION OF DISPUTES PRIOR TO A CHANGE IN CONTROL

9.1      Claim.  A person who believes that he or she is being denied a benefit to which he or she is entitled
under this Plan (hereinafter referred to as "Claimant") may file a written request for such benefit with the
Committee, setting forth his or her claim.  The request must be addressed to the Committee at the Company's
principal place of business.

9.2      Claim Decision.  Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be
forthcoming within 90 days and shall, in fact, deliver such reply within such period.  The Committee may,
however, extend the reply period for an additional 90 days for special circumstances.

         If the claim is denied in whole or in part, the Committee shall inform the Claimant in writing, using
language calculated to be understood by the Claimant, setting forth:  (a) the specific reason or reasons for such
denial; (b) the specific reference to pertinent provisions of this Plan on which such denial is based; (c) a
description of any additional material or information necessary for the Claimant to perfect his or her claim and
an explanation why such material or such information is necessary; (d) appropriate information as to the steps to
be taken if the Claimant wishes to submit the claim for review; and (e) the time limits for requesting a review
under Section 9.3.

9.3      Request for Review.  Within 60 days after the receipt by the Claimant of the written opinion described
above, the Claimant may request in writing that the Committee review the determination.  Such request must be
addressed to the Committee, at the Company's principal place of business.  The Claimant or his or her duly
authorized representative may, but need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee.


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<PAGE>




9.4      Review of Decision.  Within 60 days after the Committee's receipt of a request for review, after
considering all materials presented by the Claimant, the Committee will inform the Claimant in writing, in a
manner calculated to be understood by the Claimant, of its decision setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions of this Plan on which the decision is
based.  If special circumstances require that the 60 day time period be extended, the Committee will so notify
the Claimant and will render the decision as soon as possible, but no later than one hundred twenty days after
receipt of the request for review.

                                                   ARTICLE 10
                                       RESOLUTION OF DISPUTES - ARBITRATION

10.1     General.  Prior to a Change in Control, a Participant or Beneficiary must complete the claims procedure
described in Article 9 before submitting any claim or controversy arising out of or in connection with this Plan
to arbitration as described below in this Article 10.  Upon and following a Change in Control, because time will
be of the essence in determining whether any benefits are due to a Participant or Beneficiary, the Company,
Participant, or Beneficiary may submit any claim or controversy arising out of or in connection with this Plan to
arbitration as described below in this Article 10 without first satisfying the claims procedure described in
Article 9.

10.2     Arbitration of Claims.  The Company, the Participant, and the Participant's Employer hereby consent to
the resolution by mandatory and binding arbitration of all claims or controversies arising out of or in
connection with this Plan and/or the Exhibits hereto that the Company or the Participant's Employer may have
against the Participant, or that the Participant may have against the Company, his or her Employer, or against
either of their officers, directors, employees or agents acting in their capacity as such.  Each party's promise
to resolve all such claims or controversies by arbitration in accordance with this Plan rather than through the
courts is consideration for the other party's like promise.  It is further agreed that the decision of an
arbitrator on any issue, dispute, claim or controversy submitted for arbitration, shall be final and binding upon
the Company, the Participant, and the Participant's Employer and that judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction.

         All expenses of such arbitration, including the reasonable fees and expenses of the counsel for the
Participant, shall be advanced and borne by the Company or the Participant's Employer; provided, however, that if
it is finally determined that the Participant did not commence the arbitration in good faith and had no
reasonable basis therefore or that the Participant failed to comply with Section 13.1 or breached the agreement
contemplated thereby, the Participant shall repay all advanced fees and expenses and shall reimburse the Company
and the Participant's Employer for their reasonable legal fees and expenses in connection therewith.

         Except as otherwise provided in this procedure or by mutual agreement of the parties, any arbitration
shall be administered by a sole arbitrator: (a) in accordance with the then-current Model Employment Arbitration
Procedures of the American Arbitration Association ("AAA") before an arbitrator who is licensed to practice law
in the state in which the arbitration is convened; or (b) if locally


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<PAGE>


available, the Judicial Arbitration &amp; Mediation Services, Inc. ("JAMS"), in accordance with the JAMS
procedures then in effect. The party who did not initiate the claim can designate between JAMS or AAA (the
"Tribunal").  The arbitration shall be held in Los Angeles, California, or at a mutually agreeable location.
Pre-hearing and post-hearing procedures may be held by telephone or in person, as the arbitrator deems necessary.

         The arbitrator shall be selected as follows: if the parties cannot agree on an arbitrator, the Tribunal
(JAMS or AAA) shall then provide the names of nine available arbitrators experienced in business employment
matters along with their resumes and fee schedules.  Each party may strike all names on the list it deems
unacceptable.  If more than one common name remains on the list of all parties, the parties shall strike names
alternately until only one remains.  The party who did not initiate the claim shall strike first.  If no common
name remains on the lists of the parties, the Tribunal shall furnish an additional list or lists until an
arbitrator is selected.

         The arbitrator shall interpret this Plan, any applicable Company or Employer policy or rules and
regulations, any applicable substantive law (and the law of remedies, if applicable), or applicable federal law;
provided, however, if arbitration is brought after the claim or controversy has been submitted for review by the
Committee in accordance with Article 9, the arbitrator shall defer to the Committee's interpretations of the Plan
and such policies, rules, and regulations so long as the Committee has not abused its discretion hereunder.  In
reaching his or her decision, the arbitrator shall have no authority to change or modify any lawful Company or
Employer policy, rule or regulation, or this Plan.  The arbitrator, and not any federal, state or local court or
agency, shall have exclusive and broad authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Plan, including but not limited to, any claim that all or any
part of this Plan is voidable.

         The arbitrator shall have authority to entertain a motion to dismiss and/or motion for summary judgment
by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.
Following the completion of the arbitration, the arbitrator shall issue a written decision disclosing his or her
essential findings and conclusions upon which the award is based.

10.3     Discovery.  Each party shall have the right to take the deposition of one individual and any expert
witness(es) designated by another party.  Each party shall also have the opportunity to obtain documents from
another party through one request for production of documents.  Additional discovery may be had only when the
arbitrator so orders upon a showing of substantial need.  Any disputes regarding depositions, requests for
production of documents or other discovery shall be submitted to the arbitrator for determination.

10.4     Subpoenas.  Each party shall have the right to subpoena witnesses and documents for the arbitration
hearing by requesting a subpoena from the arbitrator.  Any such request shall be served on all other parties, who
shall advise the arbitrator in writing of any objections that the party may have to issuance of the subpoena
within ten calendar days of receipt of the request.


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<PAGE>




10.5     Designation of Witnesses.  At least thirty calendar days before the arbitration, the parties must
exchange lists of witnesses, including any expert(s), and copies of all exhibits intended to be used at the
arbitration.

                                                    ARTICLE 11
                                             SUCCESSORS AND ASSIGNMENT

11.1     Successors to an Employer.  Subject to Section 11.2, each Employer will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the business
and/or assets of the Employer or of any division or subsidiary thereof (the business and/or assets of which
constitute at least fifty percent (50%) of the total business and/or assets of the Employer) to expressly assume
and agree to perform the Employer's obligations under this Plan in the same manner and to the same extent that
the Employer would be required to perform them if such succession had not taken place.  Subject to Section 11.2,
in any case where the successor is not an affiliate of the Company (determined immediately after the
transaction), failure of the Employer to obtain such assumption and agreement in a written instrument prior to
the effective date of any such succession shall be a breach of this Plan and shall entitle Participants employed
by that Employer to benefits under this Plan.

11.2     Sale, Spin-Off, or Liquidation of an Employer.  Except as provided in the following two sentences, if
the Company sells (regardless of whether pursuant to a stock sale or sale of all or substantially all of the
business and/or assets of the Employer), spins-off or liquidates an Employer (other than the Company), this Plan
shall be deemed to have been terminated as to all Participants employed by that Employer and such Participants
shall have no further rights under this Plan and shall have no right to any payment or benefits under this Plan
in respect of such termination.  If such a sale, spin-off or liquidation occurs after a Potential Change in
Control has occurred (and the Board has not declared in good faith that the circumstances giving rise to the
Potential Change in Control will not result in an actual Change in Control) or during a Protected Period, the
preceding sentence shall not apply with respect to any Participant who was employed immediately prior to the
Potential Change in Control or start of the Protected Period, as applicable, by the Company or an Employer other
than the Employer that is sold, spun off, or liquidated.  The first sentence of this Section 11.2 will not apply
to a Participant if (i) the Employer has entered a written agreement with the Participant, (ii) the agreement has
been approved by an officer of Edison International, (iii) the agreement provides specific conditions under which
the Participant will eligible for the benefits described in Section 5.3 in connection with the sale or spin-off
of the Employer, and (iv) those conditions are met.

11.3     Assignment by the Participant.  None of the benefits, payments, proceeds or claims of any Eligible
Person or Participant shall be subject to any claim of any creditor and, in particular, the same shall not be
subject to attachment or garnishment or other legal process by any creditor, nor shall any such Eligible Person
or Participant have any right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or
payments or proceeds that he or she may expect to receive, contingently or otherwise, under this Plan.
Notwithstanding the foregoing, benefits that are in pay status may be subject to a court order of garnishment or
wage assignment, or similar order, or a tax levy.  This Plan shall inure to the benefit of and be enforceable by
each Participant's personal or legal representatives, executors,


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<PAGE>


administrators, successors, heirs, distributees, devisees, and legatees.  If a Participant dies while
any amount would still be payable to him or her hereunder had he or she continued to live, all such amounts,
unless otherwise provided herein, shall be paid to the Participant's Beneficiary in accordance with the terms of
this Plan.

                                                  ARTICLE 12
                                            ADMINISTRATION OF THE PLAN

12.1     Committee Action.  The Committee shall act at meetings by affirmative vote of a majority of the members
of the Committee.  Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such
action, a written consent to the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee.  A member of the Committee shall not vote or act upon
any matter which relates solely to himself or herself as a Participant.  The Chairman or any other member or
members of the Committee designated by the Chairman may execute any certificate or other written direction on
behalf of the Committee.

12.2     Powers and Duties of the Committee.  The Committee shall enforce this Plan in accordance with its terms,
shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish
its purposes, including, but not by way of limitation, the power and authority to do the following:

(a)      To determine eligibility for and participation in this Plan;

(b)      To construe and interpret the terms and provisions of this Plan;

(c)      To compute and certify to the amount and kind of benefits payable to Participants and their
                  Beneficiaries, and to determine the amount of withholding taxes to be deducted pursuant to
                  Article 6;

(d)      To maintain all records that may be necessary for the administration of this Plan;

(e)      To provide for the disclosure of all information and the filing or provision of all reports and
                  statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

(f)      To make and publish such rules for the regulation of this Plan and procedures for the administration of
                  this Plan as are not inconsistent with the terms hereof; and

(g)      To appoint a plan administrator or any other agent (which may include, without limitation, one or more
                  employees of the Company), and to delegate to them such powers and duties in connection with
                  the administration of this Plan as the Committee may from time to time prescribe.

12.3     Construction and Interpretation.  The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretation or construction shall be final and binding on all
parties, including but not limited to each Employer and any Participant or Beneficiary.  The Committee shall
administer such terms and provisions in full accordance with any and all laws applicable to this Plan.


Page 28
<PAGE>




12.4     Information.  To enable the Committee to perform its functions, each Employer shall supply full and
timely information to the Committee on all matters relating to the compensation of all Participants, their death
or other cause of termination, and such other pertinent facts as the Committee may require.

12.5     Compensation, Expenses and Indemnity.  The members of the Committee shall serve without additional
compensation for their services hereunder beyond that which they are entitled as authorized by the Board.  The
Committee is authorized at the expense of the Company to employ such legal counsel as it may deem advisable to
assist in the performance of its duties hereunder.  The Company shall pay expenses and fees in connection with
the administration of this Plan.  To the extent permitted by applicable law, the Company shall indemnify and save
harmless the Committee and each member thereof, the Board and each member thereof, and delegates of the Committee
who are employees of the Company against any and all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under
or incident to this Plan, other than expenses and liabilities arising out of willful misconduct.  This indemnity
shall not preclude such further indemnities as may be available under insurance purchased by the Company or
provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted under state
law.

                                                     ARTICLE 13
                                                   MISCELLANEOUS

13.1     Release and Agreement.  Notwithstanding anything else contained herein to the contrary, each Employer's
obligation to pay benefits to a Participant is subject to the condition precedent that the Participant execute a
valid and effective Severance Agreement in the form attached hereto as Exhibit B (or such other form, which is
substantially the same as the form attached hereto as Exhibit B, as the Committee may require) <U>and</U> such executed
agreement is received by the Company and the Participant's Employer no later than 60 days after the Participant's
Termination Date and is not revoked by the Participant or otherwise rendered unenforceable by the Participant.

13.2     Term of the Plan.

(a)      This Plan will commence on the Effective Date and shall continue in effect through December 31, 2003.
                  However, at the end of such initial period and, if extended, at the end of each additional year
                  thereafter, the term of this Plan shall be extended automatically for one additional year,
                  unless the Committee (or the Board) delivers written notice at least six months prior to the
                  end of such term, or extended term, to each Participant that this Plan will not be extended,
                  and if such notice is timely given this Plan will terminate at the end of the term then in
                  progress; provided, however, that this provision for automatic extension shall have no
                  application following a Potential Change


Page 29
<PAGE>


                  in Control (unless and until the Board declares in good faith that the circumstances giving rise to the
                  Potential Change in Control will not result in an actual Change in Control) or a Change in
                  Control, in which case the provisions of Section 13.2(b) or Section 13.2(c), respectively,
                  shall apply.

(b)      If a Potential Change in Control occurs, the Committee (or the Board) may not give notice that the term
                  of this Plan will not be extended, or will not be further extended, as the case may be, unless
                  and until the Board declares in good faith that the circumstances giving rise to the Potential
                  Change in Control will not result in an actual Change in Control or an actual Change in Control
                  occurs.

(c)      In the event a Change in Control occurs during the initial or any extended term, this Plan will remain
                  in effect for the longer of: (1) twenty-four months beyond the month in which such Change in
                  Control occurred; or (2) as to any Participant who incurs a Qualifying Termination Event, until
                  all obligations of each Employer hereunder to that Participant have been fulfilled.  Any
                  subsequent Change in Control ("Subsequent Change in Control") that occurs during the initial or
                  any extended term shall also continue the term of this Plan until the later of: (1) twenty-four
                  months beyond the month in which such Subsequent Change in Control occurred; or (2) as to any
                  Participant who incurs a Qualifying Termination Event, until all obligations of each Employer
                  hereunder have been fulfilled to that Participant; provided, however, that if a Subsequent
                  Change in Control occurs, it shall only be considered a Change in Control under this Plan if it
                  occurs no later than twenty-four months after the immediately preceding Change in Control or
                  Subsequent Change in Control.

(d)      The foregoing provisions of this Section 13.2 are subject to the provisions of Section 11.2 as to any
                  Participant that is employed by an Employer that is sold or spun-off by the Company.

13.3     Employment Status.  Except as may be provided under any other written agreement between a Participant
and his or her Employer, the employment of the Participant by his or her Employer is "at will," and may be
terminated by either the Participant or the Employer at any time, subject to applicable law and subject to the
express provisions of Article 4.  Payments made under this Plan shall not give any person the right to any
benefits provided to persons retained in an Employer's employ (such as, without limitation, health and dental
benefits).  Except as may otherwise be required by law or set forth specifically in such plans or as otherwise
expressly provided in this Plan, such benefits shall terminate as of the date the Participant's employment by an
Employer terminates.

13.4     Beneficiaries.  Subject to the other provisions of this Section 13.4, the person or persons (including a
trustee, personal representative or other fiduciary) last designated in writing by a Participant in accordance
with procedures established by the Committee to receive the benefits specified hereunder in the event of the
Participant's death shall be the Participant's Beneficiary or Beneficiaries.

         No beneficiary designation shall become effective until it is filed with the Committee, and no
beneficiary designation of someone other than a Participant's spouse shall be effective unless such designation
is consented to by the Participant's spouse on a form provided by and in accordance with procedures established
by the Committee or its delegate.


Page 30
<PAGE>




         If there is no Beneficiary designation in effect with respect to a Participant, or if there is no
surviving designated Beneficiary, then the Participant's surviving spouse shall be the Beneficiary.  If there is
no surviving spouse to receive any benefits payable in accordance with the preceding sentence, the duly appointed
and currently acting personal representative of the Participant's estate (which shall include either the
Participant's probate estate or living trust) shall be the Beneficiary.  In any case where there is no such
personal representative of the Participant's estate duly appointed and acting in that capacity within 90 days
after the Participant's death (or such extended period as the Committee determines is reasonably necessary to
allow such personal representative to be appointed, but not to exceed 180 days after the Participant's death),
then Beneficiary shall mean the person or persons who can verify by affidavit or court order to the satisfaction
of the Committee that they are legally entitled to receive the benefits specified hereunder.

         Notwithstanding anything else herein to the contrary, in the event any amount is payable under this Plan
to a minor, payment shall not be made to the minor, but instead be paid: (a) to that person's living parent(s) to
act as custodian; (b) if that person's parents are then divorced, and one parent is the sole custodial parent, to
such custodial parent; or (c) if no parent of that person is then living, to a custodian selected by the
Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the
jurisdiction in which the minor resides.  If no parent is living and the Committee decides not to select another
custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount becomes payable, payment shall be deposited with the
court having jurisdiction over the estate of the minor.

13.5     Payments on Behalf of Persons Under Incapacity.  In the event that any amount becomes payable under this
Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental
condition to be unable to give a valid receipt therefor the Committee may direct that such payment be made to any
person found by the Committee, in its sole judgment, to have assumed the care of such person.  Any payment made
pursuant to such determination shall constitute a full release and discharge of the Committee and all Employers.

13.6     Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also
shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

13.7     Severability.  In the event any provision of this Plan shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.  Further, the captions of this Plan
are not part of the provisions hereof and shall have no force and effect.


Page 31
<PAGE>




13.8     Modification.  The Committee or the Board may from time to time amend this Plan in any way it determines
to be advisable; provided, however, that no such amendment shall be effective without the consent of each
affected Participant (or the Participant's legal representative) if it is adopted (a) after a Potential Change in
Control (unless and until the Board determines in good faith that the circumstances giving rise to the Potential
Change in Control will not result in an actual Change in Control or an actual Change in Control occurs), or (b)
during a Protected Period.  No provision of this Plan may be waived unless as to a Participant such waiver is
agreed to in writing and signed by the Participant (or the Participant's legal representative) and by an
authorized member of the Committee (or the Board) or its designee or legal representative.

13.9     Notice.  For purposes of this Plan, notices, including Notice of Termination, and all other
communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when
delivered or on the date stamped as received by the U.S. Postal Service for delivery by certified or registered
mail, postage prepaid and addressed: (a) if to the Participant, to his or her latest address as reflected on the
records of the Company or his or her Employer, and (b) if to an Employer, to the attention of the Company's
Corporate Secretary at the address of the Company's principal executive offices; or to such other address as
either party may furnish to the other in writing for the delivery of notices to that party, with specific
reference to this Plan and the importance of the notice, except that a notice of change of address shall be
effective only upon receipt by the other party.

13.10    Applicable Law.  To the extent not preempted by the laws of the United States, the laws of the State of
California shall be the controlling law in all matters relating to this Plan.  Any statutory reference in this
Plan shall also be deemed to refer to all applicable final rules and final regulations promulgated under or with
respect to the referenced statutory provision.

13.11    WARN Act.  Benefits payable under this Plan are intended to satisfy, where applicable, any Company or
other Employer's obligations under the Federal Worker Adjustment and Retraining Notification Act and any similar
obligations that the Company or any other Employer may have under any successor or other severance pay statute.

         IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan as of the
date first set forth above.



                                                     EDISON INTERNATIONAL



                                                     Beverly P. Ryder
                                                     ---------------------------
                                                     Beverly P. Ryder








Page 32
<PAGE>





                                                        EXHIBIT A



                                                  PARTICIPATION AGREEMENT

         I am eligible to participate in the Edison International Executive Severance Plan (the "Plan").

         I have received a copy of the Plan.  I have read and understand the Plan and I agree to be bound by its
terms.

         Without limiting the generality of the foregoing, I (1) consent to the payment terms set forth in the
Plan, (2) agree that the Plan amends (as to my compensation, awards and/or plan or program participation) the
otherwise inconsistent terms of any Company or Employer (as such terms are defined in the Plan) compensation,
incentive, benefit or perquisite plan or program, and (3) agree that the Plan will control to the extent that any
inconsistency may exist between the Plan and the terms of any Company or Employer compensation, incentive,
benefit or perquisite plan or program.



Signature:
                  ----------------------------------------------

Print Name:
                  ----------------------------------------------


<PAGE>








                                                     EXHIBIT B

                                                SEVERANCE AGREEMENT
                                                -------------------

         This Severance Agreement (this "Agreement"), made this __ day of ________, _____ (the "Termination
Date"), by and between __________________________, an individual (the "Individual"), and Edison International, a
California corporation (the "Company"), is a severance agreement that includes a release, a confidentiality
agreement, and an agreement not to solicit employees or customers, and certain other terms and conditions.

                                                     RECITALS

A.       The Individual and the Company desire to terminate the Individual's employment by the Company and/or one
or more of its current or former subsidiaries or affiliates (collectively, the Company and its current or former
subsidiaries and affiliates are referred to herein as the "Company Group").

B.       The Individual and the Company further desire to resolve all pending and potential actions and issues
between the Individual and each member of the Company Group without the further expenditure of time and expense
of litigation and, for that reason, have entered into this Agreement.

C.       The Company maintains the Edison International Executive Severance Plan (the "Plan").  The Company's
(and/or another member of the Company Group's) obligation to pay severance benefits to the Individual under and
in accordance with the terms of the Plan, which benefits are summarized and attached to this Agreement as Exhibit
A (the "Severance Benefits"), is subject to the condition precedent that the Company receive this Agreement from
the Individual and that the Individual does not revoke or otherwise render this Agreement unenforceable.

                                                     AGREEMENT

         In consideration of the covenants undertaken and the releases contained in this Agreement, and the
Individual's right to receive the Severance Benefits, the Individual and the Company agree as follows:

1.       Termination of Employment.  The Individual and the Company agree that the Individual's employment by the
Company and/or one or more of the other members of the Company Group shall be, and it hereby is, terminated.
Accordingly, the Individual hereby resigns any and all of his or her positions, offices, and/or directorships
with each entity in the Company Group and any employment agreement(s) between the Individual and one or more
members of the Company Group be, and they hereby are, terminated.

2.       Severance Benefits.  The Company and/or the appropriate member of the Company Group will pay to the
Individual the Severance Benefits in accordance with the terms of the Plan.

3.       Release by the Individual.  Except for those obligations created by or arising out of this Agreement,
the Individual on behalf of himself or herself, his or her descendants, dependents, heirs, executors,
administrators, assigns, and successors, and each of them, hereby covenants not to sue and fully releases and
discharges the Company, its parent (if any), the Company's subsidiaries and affiliates,

Exhibit B-1
<PAGE>


past and present, and each of them, as well as its and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives, assigns, and successors, past and present, and
each of them, hereinafter together and collectively referred to as "Releasees," with respect to and from any and
all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action,
obligations, debts, costs, expenses, attorneys' fees, damages, judgments, orders and liabilities of whatever kind
or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not
concealed or hidden, which he or she now owns or holds or he or she has at any time heretofore owned or held or
may in the future hold as against said Releasees, arising out of or in any way connected with the Individual's
employment relationship with any member of the Company Group, or the termination of his or her employment or any
other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown,
suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them,
committed or omitted prior to the date of this Agreement including, without limiting the generality of the
foregoing, any claim under Section 1981 of the Civil Rights Act of 1866, Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave
Act of 1993, the California Fair Employment and Housing Act, the California Family Rights Act, any other claim
under any other federal, state or local law or regulation, and any other claim for severance pay, bonus or
incentive pay, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other
fringe benefit, medical expenses, or disability (except vested benefits that the Individual may be entitled to
receive under and in accordance with the terms of the Plan, as such benefits are outlined in Exhibit A hereto, or
vested benefits that the Individual may be entitled to receive under and in accordance with the terms of the
[Company to list any other plans in which the Individual has a vested right to receive benefits following the
Termination Date]).  Exhibit A is incorporated herein by this reference.

4.       Known and Unknown Claims.  It is the intention of the Individual and the Company in executing this
instrument that the same shall be effective as a bar to each and every claim, demand and cause of action
hereinabove specified.  In furtherance of this intention, the Individual hereby expressly waives any and all
rights and benefits conferred upon him or her by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and
expressly consents that this Agreement shall be given full force and effect according to each and all of its
express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims, demands and causes of action hereinabove
specified.  SECTION 1542 provides:

         "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."

The Individual acknowledges that he or she may hereafter discover claims or facts in addition to or different
from those which he or she now knows or believes to exist with respect to the subject matter of this Agreement
and which, if known or suspected at the time of executing this Agreement, may have materially affected this
settlement.  Nevertheless, the Individual hereby waives any right, claim or cause



Exhibit B-2
<PAGE>


of action that might arise as a result of such different or additional claims or facts.  The Individual
acknowledges that he or she understands the significance and consequence of such release and such specific waiver
of SECTION 1542.

5.       Other Waiver by the Individual.  The Individual expressly acknowledges and agrees that, by entering into
this Agreement, he or she is waiving any and all rights or claims that he or she may have arising under the Age
Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of execution of
this Agreement.

6.       Confidentiality.  The Individual represents and covenants that he or she has not previously and that he
or she will not at any time, unless compelled by lawful process, disclose or use for his or her own benefit or
purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than the Company, any trade secrets, or
other confidential data or information relating to customers, development programs, costs, marketing, trading,
investment, sales activities, promotion, credit and financial data, financing methods, or plans of any member of
the Company Group; provided that the foregoing shall not apply to information which is generally known to the
industry or the public other than as a result of the Individual's breach of this covenant.  The Individual agrees
that he or she will return to the Company immediately all memoranda, books, papers, plans, information, letters
and other data, and all copies thereof or therefrom, in any way relating to the business of any entity within the
Company Group, except that he or she may retain personal notes, notebooks and diaries that do not contain
confidential information of the type described in the preceding sentence.  The Individual further agrees that he
or she will not retain or use for his or her account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of any entity within the Company Group.

7.       No Solicitation.  The Individual represents and covenants that he or she has not previously and that
during the period commencing on the date hereof and ending on the second anniversary of the date hereof (the
"Limitation Period") he or she will not influence or attempt to influence customers of any entity within the
Company Group (as it may now or in the future be composed), either directly or indirectly, to divert their
business away from the Company Group to any individual, partnership, firm, corporation or other entity then in
competition with the business of any entity within the Company Group.

         The Individual represents and covenants that he or she has not previously and that he or she will not at
any time during the Limitation Period directly or indirectly solicit any person who is then, or at any time
within six months prior thereto was, an employee of an entity within the Company Group who earned annually
$25,000 or more as an employee of such entity during the last six months of his or her own employment to work for
any business, individual, partnership, firm, corporation, or other entity then in competition with the business
of any entity within the Company Group.

8.       Representations by the Individual.    The Individual further expressly acknowledges, represents, and
agrees that:



Exhibit B-3
<PAGE>




              a.      He or she was not otherwise entitled to the Severance Benefits (in the event that the
                      Individual is entitled to severance benefits under any federal or state law, the Individual
                      acknowledges, represents and agrees that he or she was not otherwise entitled the level of
                      Severance Benefits being offered and that such benefits exceed the minimum required
                      statutory level of benefits that he or she may have otherwise been entitled to);

              b.      His or her right to receive the Severance Benefits is consideration for his or her
                      agreements herein and the Severance Benefits (to the extent that they exceed any minimum
                      required statutory level of benefits) would not be paid if he or she did not execute and
                      deliver this Agreement;

              c.      The restrictions on him or her which are set forth in Sections 6 and 7 are reasonable;

              d.      He or she was orally advised by the Company and is hereby advised in writing by this
                      Agreement to consult with an attorney before signing this Agreement;

              e.      He or she was given a copy of this Agreement on the Termination Date, and informed that he
                      or she had up to forty-five (45) days within which to consider the Agreement;

              f.      He or she was informed that he or she has seven (7) days following the date of execution of
                      the Agreement in which to revoke the Agreement; and

              g.      He or she has had the opportunity to consult with his or her advisors and attorneys
                      regarding this Agreement (including, without limitation, its terms, conditions, and
                      effects) and represents that he or she has so consulted with such advisors and attorneys.

9.       Confidentiality of the Agreement.  The parties agree that the terms and conditions of this Agreement
shall remain confidential as between the parties and they shall not, except as required by law, disclose them to
any other person other than family members, and legal and financial advisors.  Without limiting the generality of
the foregoing, the parties will not respond to or in any way participate in or contribute to any public
discussion, notice or other publicity concerning, or in any way relating to, execution of this Agreement or the
events (including any negotiations) which led to the termination of the Individual's employment.  Without
limiting the generality of the foregoing, the Individual specifically agrees that he or she shall not disclose
information regarding this Agreement or the termination of his or her employment to any current or former
employee of any entity in the Company Group (other than the Company's executive officers), except to the extent
required by law or authorized in writing by the Company's General Counsel.  The Individual hereby agrees that
disclosure by him or her of any of the terms and conditions of this Agreement in violation of the foregoing shall
constitute and be treated as a material breach of this Agreement.

10.      No Prior Assignment or Transfer.  The Individual warrants and represents to the Company that he or she
has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any
part or portion thereof and he or she shall defend, indemnify and hold harmless the


Exhibit B-4
<PAGE>


Releasees from and against any claim (including the payment of attorneys' fees and costs actually
incurred whether or not litigation is commenced) based on or in connection with or arising out of any such
assignment or transfer made, purported or claimed.

11.      No Further Employment Rights.  The Individual and the Company acknowledge that any employment
relationship between the Individual and the Company Group terminated on the Termination Date, and that they have
no further employment or contractual relationship except as may arise out of this Agreement and that the
Individual waives any right or claim to reinstatement as an employee of any member of the Company Group.  In the
event any member of the Company Group receives inquiries about the Individual from prospective employers, such
member shall provide to such persons or entities only the following information: confirmation of the Individual's
employment dates, position history, salary history, and that the Individual's employment with the Company Group
was mutually terminated.

12.      Taxes.  The Individual agrees that he or she shall be exclusively liable for the payment of all federal
and state taxes which may be due as the result of the consideration that he or she receives pursuant to this
Agreement and the Individual hereby represents that he or she shall make payments on such taxes at the time and
in the amount required of him or her.  In addition, the Individual hereby agrees fully to defend, indemnify and
hold harmless Releasees and each of them from payment of taxes or penalties that are required of them by any
government agency at any time as the result of payment of the consideration set forth herein.  The individual
further agrees to comply with the provisions of Article 7 of the Plan including, without limitation, the notice
and repayment provisions thereof.  The Individual further agrees to provide the Releasees and each of them with
any tax information that they or it may reasonably request.

13.      Beneficiaries and Successors.  Each Releasee shall be deemed to be a beneficiary of the Individual's
promises and representations made herein.  In the event of a merger, consolidation, or transfer or sale of all or
substantially all of the assets of the Company with or to any other individual(s) or entity, this Agreement shall
inure to the benefit of such successor.  In the event of a merger, transfer or sale of the stock or assets of an
entity in the Company Group that results in such entity not continuing as a member of the Company Group, the
Individual's promises and representations made herein shall continue to inure to the benefit of such entity as
well as the Company.

14.      Entire Agreement.  This instrument constitutes and contains the entire agreement and understanding
concerning the Individual's relationship with the Company Group, the termination of the Individual's employment,
and the other subject matters addressed herein between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters
hereof.  This is an integrated document.

15.      Revocability.  The Individual may revoke this Agreement in its entirety during the seven (7) days
following execution of this Agreement by the Individual.  Any revocation of this Agreement must be in writing,
clearly state that it is a revocation of this Agreement, and be hand delivered to, or delivered in such a manner
to ensure receipt by, the General Counsel of the Company during the revocation period.  This Agreement will
become effective, enforceable, and irrevocable upon seven (7) days following its execution by the Individual,
unless it is revoked during the seven-day period.


Exhibit B-5
<PAGE>




16.      Severability.  If any provision of this Agreement or the application thereof is held invalid, the
invalidity shall not affect other provisions or applications of this Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this Agreement are declared to be
severable.

17.      Governing Law.  This Agreement shall be deemed to have been executed and delivered within the State of
California, and the rights and obligations of the parties hereunder shall be construed and enforced in accordance
with, and governed by, the laws of the State of California without regard to principles of conflict of laws.

18.      Mandatory Arbitration.  Except for the injunctive relief provided for and contemplated by the following
paragraph, which is expressly hereby excluded from this paragraph, any dispute or controversy between the
Individual, on the one hand, and the Company (or any other Releasee), on the other hand, in any way arising out
of, related to, or connected with this Agreement or the subject matter thereof, or arising out of or related to
any other dispute between the Individual and the Company or any other member of the Company Group, now or in the
future, shall be resolved through final and binding arbitration in Los Angeles, California, in accordance with
the arbitration provisions contained in the Plan.

         It is further expressly agreed that Company will or would suffer irreparable injury if the Individual
were to breach Section 6 or 7 of this Agreement and that, regardless of the dispute resolution provisions set
forth in the foregoing paragraph, the Company would by reason of such breach or potential breach be entitled to
injunctive relief in a court of appropriate jurisdiction, and the Individual further consents and stipulates to
the entry of such injunctive relief in such a court prohibiting the Individual from engaging in any act, conduct,
or relationship in violation of, or that would reasonably result in a violation of, this Agreement.

19.      Counterparts, Headings.  This Agreement may be executed in counterparts, and each counterpart, when
executed, shall have the efficacy of a signed original.  Photographic copies of such signed counterparts may be
used in lieu of the originals for any purpose.  The headings in this Agreement are only for convenience and ease
of reference and are not to be considered in construction or interpretation.

20.      Waiver, Amendment.  Failure to insist upon strict compliance with any of the terms, covenants, or
conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or
more times be deemed a waiver or relinquishment of such right or power at any other time or times.  No waiver
shall be binding unless in writing and signed by the party waiving the breach. No amendment of any term or
provision of this Agreement shall be binding unless in writing and signed by all parties to this Agreement.


Exhibit B-6
<PAGE>




21.      No Presumption. In entering this Agreement, the parties represent that they have had full opportunity to
consult with attorneys of their own choice, that the parties have completely read and understood the terms of
this Agreement and voluntarily accepted such terms.  If an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of
proof will arise favoring or disfavoring any party because it or its representatives drafted any of the
provisions of this Agreement.

22.      Additional Acts.  All parties agree to cooperate fully and to execute any and all supplementary
documents and to take all additional actions that may be necessary or appropriate to give full force to the basic
terms and intent of this Agreement and which are not inconsistent with its terms.

         I have read the foregoing Agreement and I accept and agree to the provisions it contains and hereby
execute it voluntarily with full understanding of its consequences.  I declare under penalty of perjury under the
laws of the United States and the State of California that the foregoing is true and correct.

         EXECUTED on the Termination Date at Los Angeles County, California.
                                                     The Individual


                                                     Signature:
                                                                ---------------------------------------------------

                                                     Print Name:
                                                                 --------------------------------------------------


         EXECUTED on the Termination Date at Los Angeles County, California.

                                                     The Company


                                                     By:
                                                         ----------------------------------------------------------

                                                     Print Name:
                                                                 --------------------------------------------------

                                                     Its:
                                                          ---------------------------------------------------------

Exhibit B-7
<PAGE>


                                                    ENDORSEMENT
                                                    -----------

         I, ____________________________________ (the Individual named in the foregoing Agreement), hereby
acknowledge that I was given 45 days to consider the foregoing Agreement and voluntarily chose to sign the
Agreement prior to the expiration of the 45-day period.

         I declare under penalty of perjury under the laws of the United States and the State of California that
the foregoing is true and correct.

         EXECUTED this ____ day of ___________, _____, at Los Angeles County, California.

                                                     Signature:
                                                                ---------------------------------------------------

                                                     Print Name:
                                                                 --------------------------------------------------


Exhibit B-8
<PAGE>

</PRE>
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<TYPE>EX-12
<SEQUENCE>8
<FILENAME>sceexh12.htm
<DESCRIPTION>COMPUTATION OF RATIOS OF EARNINGS
<TEXT>
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<HEAD>
<TITLE>
SCE Exhibit 12
</TITLE>
</HEAD>
<BODY>
<PRE>
                                     SOUTHERN CALIFORNIA EDISON COMPANY AND CONSOLIDATED UTILITY-RELATED SUBSIDIARIES

                                         RATIOS OF EARNINGS TO FIXED CHARGES

                                                                  (Thousands of Dollars)



                                                      Year Ended December 31,
                                                  ------------------------------------------------------------------------------------------------------
                                                      1996              1997             1998             1999             2000              2001
                                                  --------------    --------------   --------------   -------------    --------------   ----------------


EARNINGS BEFORE INCOME TAXES
  AND FIXED CHARGES:

Income before interest expense (1)              $1,108,410   $ 1,049,866  $    999,910  $  992,354   $(1,456,584)   $ 3,192,815
Add:
  Taxes on income (2)                              511,819       520,468       442,356     438,006    (1,021,452)     1,658,033
  Rentals (3)                                        3,269         2,639         2,208       1,901         2,905          2,128
  Allocable portion of interest
      on long-term Contracts for
      the purchase of power (4)                      1,824         1,797         1,767       1,735         1,699          1,659
  Amortization of previously capitalized
      fixed charges                                    814         1,127         1,571       1,508         1,390          1,083
                                                 ----------    ----------   -----------  ----------   -----------   ------------
Total earnings before income
  taxes and fixed charges (A)                   $1,626,136   $ 1,575,897  $  1,447,812  $1,435,504   $(2,472,042)   $ 4,855,718
                                                ===========  ===========  ============  ==========   ===========    ===========




FIXED CHARGES:
  Interest and amortization                     $  453,015   $   444,272  $    484,788  $  482,933   $   571,760    $   784,858
  Rentals (3)                                        3,269         2,639         2,208       1,901         2,905          2,128
  Capitalized fixed charges -
      nuclear fuel (5)                               1,711         2,398         1,294       1,211         1,538            756
  Allocable portion of interest on
      long-term contracts for
      the purchase of power (4)                      1,824         1,797         1,767       1,735         1,699          1,659
                                                 ----------    ----------   -----------  ----------   -----------   ------------
Total fixed charges (B)                         $  459,819   $   451,106  $    490,057  $  487,780   $   577,902    $   789,401
                                                ==========   ===========  ============  ==========   ===========    ===========


RATIO OF EARNINGS TO
  FIXED CHARGES (A) / (B):                            3.54          3.49          2.95        2.94        (4.28)          6.15
                                                ==========    ==========   ===========  ==========    ==========   ============



(1)   Includes allowance for funds used during construction and accrual of unbilled revenue.
(2)   Includes allocation of federal income and state franchise taxes to other income.
(3)   Rentals include the interest factor relating to certain significant rentals plus one-third of all remaining annual rentals.
(4)   Allocable portion of interest included in annual minimum debt service requirement of supplier.
(5)   Includes fixed charges associated with Nuclear Fuel.

</PRE>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>9
<FILENAME>scear02.htm
<DESCRIPTION>SCE 2001 ANNUAL REPORT
<TEXT>
<HTML>
<HEAD>
<TITLE>
SCE 2001 Annual Report
</TITLE>
</HEAD>
<BODY>
<PRE>

SOUTHERN CALIFORNIA EDISON COMPANY
[LOGO]










2001 ANNUAL REPORT
















- -------------------------------------------------------------------------------------------------------------------
Southern California Edison Company








Southern California Edison Company (SCE) is one of the nation's largest investor-owned electric utilities.
Headquartered in Rosemead, California, SCE is a subsidiary of Edison International.

SCE, a 116-year-old electric utility, serves a 50,000-square-mile area of central, coastal and southern
California.



       Contents
       --------

 1     Selected Financial and Operating Data:  1997 - 2001
 2     Management's Discussion and Analysis of
       Results of Operations and Financial Condition
21     Consolidated Financial Statements
26     Notes to Consolidated Financial Statements
49     Quarterly Financial Data
50     Responsibility for Financial Reporting
51     Report of Independent Public Accountants
52     Board of Directors
52     Management Team






- ------------------------------------------------------------------ ----------------------------------------------------
Selected Financial and Operating Data:  1997 - 2001                                 Southern California Edison Company

- -----------------------------------------------------------------------------------------------------------------------
Dollars in millions                                       2001        2000         1999         1998         1997
- ---------------------------------------------------------------------------------------------------------------------

Income statement data:

Operating revenue                                       $ 8,126     $ 7,870      $ 7,548      $ 7,500       $ 7,953
Operating expenses                                        3,509      10,529        6,242        6,136         6,311
Fuel and purchased power expenses                         3,982       4,882        3,405        3,586         3,735
Income tax (benefit)                                      1,658      (1,022)         438          442           520
Provisions for regulatory adjustment clauses - net       (3,028)      2,301         (763)        (473)         (411)
Interest expense - net of amounts capitalized               785         572          483          485           444
Net income (loss)                                         2,408      (2,028)         509          515           606
Net income (loss) available for common stock              2,386      (2,050)         484          490           576
Ratio of earnings to fixed charges                         6.15       (4.28)        2.94         2.95         3.49

- ---------------------------------------------------------------------------------------------------------------------

Balance sheet data:

Assets                                                 $ 22,453    $ 15,966     $ 17,657     $ 16,947      $ 18,059
Gross utility plant                                      15,982      15,653       14,852       14,150        21,483
Accumulated provision for depreciation
 and decommissioning                                      7,969       7,834        7,520        6,896        10,544
Short-term debt                                           2,127       1,451          796          470           322
Common shareholder's equity                               3,146         780        3,133        3,335         3,958
Preferred stock:
  Not subject to mandatory redemption                       129         129          129          129           184
  Subject to mandatory redemption                           151         256          256          256           275
Long-term debt                                            4,739       5,631        5,137        5,447         6,145
Capital structure:
  Common shareholder's equity                            38.5%       11.5%        36.2%        36.4%        37.5%
  Preferred stock:
   Not subject to mandatory redemption                    1.6%        1.9%         1.5%         1.4%         1.7%
   Subject to mandatory redemption                        1.9%        3.8%         2.9%         2.8%         2.6%
  Long-term debt                                         58.0%       82.8%        59.4%        59.4%        58.2%

- ---------------------------------------------------------------------------------------------------------------------

Operating data:

Peak demand in megawatts (MW)                            17,890      19,757       19,122       19,935        19,118
Generation capacity at peak (MW)                          9,802       9,886       10,431       10,546        21,511
Kilowatt-hour deliveries (in millions)                   78,524      84,430       78,602       76,595        77,234
Total energy requirement (kWh) (in millions)             83,496      82,503       78,752       80,289        86,849
Energy mix:
  Thermal                                                32.5%       36.0%        35.5%        38.8%        44.6%
  Hydro                                                   3.6%        5.4%         5.6%         7.4%         6.5%
  Purchased power and other sources                      63.9%       58.6%        58.9%        53.8%        48.9%
Customers (in millions)                                    4.47        4.42         4.36         4.27         4.25
Full-time employees                                      11,663      12,593       13,040       13,177        12,642




Page 1



- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition

The following discussion contains forward-looking statements.  These statements are based on Southern California
Edison's (SCE) current expectations about future events, based on knowledge of present facts and assumptions
about future developments.  These forward-looking statements are subject to risks and uncertainties that could
cause actual future activities and results of operations to be materially different from those set forth in this
discussion.  Important factors that could cause actual results to differ include risks discussed in the Market
Risk Exposures and Forward-Looking Statements sections.

Until early 2002, SCE faced a crisis resulting from deregulation of the generation side of the electric utility
industry through legislation enacted by the California Legislature and decisions issued by the California Public
Utilities Commission (CPUC).  Under the legislation and CPUC decisions, prices for wholesale purchases of
electricity from power suppliers are set by markets while the retail prices paid by utility customers for
electricity delivered to them remained frozen at June 1996 levels except for the 10% residential rate reduction
starting in 1998 and the 4 cents-per-kWh surcharge effective in 2001.  See further discussion of the CPUC rate
increases in Rate Stabilization Proceedings.  Beginning in May 2000, SCE's costs to obtain power (at wholesale
electricity prices) for resale to its customers substantially exceeded revenue from frozen rates.  The shortfall
was accumulated in the transition revenue account (TRA), a CPUC-authorized regulatory asset.  As a result of a
March 27, 2001, CPUC decision, the TRA balance was transferred retroactively to the transition cost balancing
account (TCBA).  The TCBA was a regulatory balancing account that tracked the recovery of generation-related
transition costs, including stranded investments.  SCE has borrowed significant amounts of money to finance its
electricity purchases.  Uncertainty regarding SCE's ability to recover funds spent to purchase power created a
severe liquidity crisis at SCE.  However, based on the settlement agreement with the CPUC (discussed below)
permitting full recovery of past power procurement costs, SCE was able to arrange new financing and together with
cash on hand, was able to repay its undisputed past-due obligations in March 2002.

In October 2001, a federal district court in California entered a stipulated judgment approving an agreement
between the CPUC and SCE to settle a lawsuit.  On January 23, 2002, the CPUC adopted a resolution approving the
establishment of the procurement-related obligations account (PROACT).  See discussion below.  SCE believes that
the settlement agreement will enable SCE to recover its previously undercollected power procurement costs.  In
compliance with the terms of the settlement agreement and the CPUC resolution, in the fourth quarter of 2001, SCE
established a $3.6 billion regulatory asset for these previously incurred procurement costs, called the PROACT.
A corresponding credit to earnings was recorded, in connection with this regulatory asset, in the amount of $3.6
billion ($2.1 billion after tax).

On September 1, 2001, SCE began applying to the PROACT the difference between SCE's revenue from retail electric
rates and the costs that SCE is authorized by the CPUC to recover in retail electric rates.  The settlement also
calls for the end of the TCBA mechanism as of August 31, 2001, and continuation of the rate freeze until the
earlier of December 31, 2003, or the date that SCE recovers the PROACT balance.  If SCE has not recovered the
entire PROACT balance by the end of 2003, the remaining balance will be amortized in retail rates for up to an
additional two years.  For further details on the settlement with the CPUC and the CPUC resolution, see CPUC
Litigation Settlement Agreement and PROACT Regulatory Asset discussions.

Accounting principles generally accepted in the United States permit SCE to defer costs and record regulatory
assets if those costs are determined to be probable of recovery in future rates.  SCE assessed the probability of
recovery of the undercollected costs that were previously recorded in the TCBA in light of the CPUC's March 27,
2001, and April 3, 2001, decisions, including the retroactive transfer of balances from SCE's TRA to its TCBA and
related changes that are discussed in more detail in Rate Stabilization Proceedings.  These decisions and other
regulatory and legislative actions did not meet SCE's prior expectation that the CPUC would provide adequate cost
recovery mechanisms.  As a result, SCE's financial results for the year ended December 31, 2000, included an
after-tax charge of approximately $2.5 billion ($4.2 billion pre-tax), reflecting a write-off of the TCBA and net
regulatory assets to be recovered through the TCBA mechanism, as of December 31, 2000.  Transition costs in
excess of transition revenue were also incurred during 2001, resulting in additional net charges against earnings
of $328 million ($552 million pre-tax) through August 31, 2001 (the effective date of the PROACT mechanism).


Page 2


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company




The following pages include a discussion of the history of the TRA and TCBA and related circumstances, the
significantly negative effect on the financial condition of SCE of undercollections recorded in the TRA and TCBA,
the current status of the undercollections, the impact of the CPUC's March 27, 2001, decisions and related
matters, and the implementation of the CPUC settlement agreement and the PROACT mechanism, and SCE's March 2002
financing.

Results of Operations

Earnings

In 2001, SCE earned $2.4 billion, compared with a loss of $2.1 billion in 2000 and earnings of $484 million in
1999.  SCE's 2001 earnings included a $2.1 billion (after tax) benefit resulting from the reestablishment of
procurement-related regulatory assets and liabilities as a result of the PROACT resolution and recovery of
$178 million (after tax) of previously written off generation-related regulatory assets, partially offset by $328
million (after tax) of net undercollected transition costs incurred between January and August 2001.  SCE's loss
in 2000 included a $2.5 billion (after tax) write-off of regulatory assets and liabilities as of December 31,
2000.  SCE's 1999 earnings included a $15 million one-time tax benefit due to an Internal Revenue Service
ruling.  Excluding the $2.0 billion net benefit in 2001, the $2.5 billion (after tax) write-off in 2000 and the
$15 million benefit in 1999, SCE's earnings were $408 million in 2001, $471 million in 2000 and $469 million in
1999.  The $63 million decrease in 2001 was primarily due to the February 2001 fire and resulting outage at San
Onofre Nuclear Generation Station Unit 3 and lower kilowatt-hour sales.  In 2000, superior operating performance
at San Onofre and higher kilowatt-hour sales were almost completely offset by adjustments to reflect potential
regulatory refunds and lower gains from sales of equity investments.

Accounting principles generally accepted in the United States require SCE at each financial statement date to
assess the probability of recovering its regulatory assets through a regulatory process.  Based on the rules
arising from the CPUC's March 27, 2001, rate stabilization decision, the $4.5 billion TRA undercollection as of
December 31, 2000, and the coal and hydroelectric balancing account overcollections were reclassified, and the
TCBA balance was recalculated to be a $2.9 billion undercollection (see further discussion of the CPUC rate
increase in the Rate Stabilization Proceeding section and the components of the TCBA undercollection in the
Status of Transition and Power-Procurement Cost Recovery section of Regulatory Environment).  As a result, SCE
was unable to conclude that, under applicable accounting principles, the $2.9 billion TCBA undercollection (as
recalculated above) and $1.3 billion (book value) of other net regulatory assets that were to be recovered
through the TCBA mechanism by the end of the rate freeze, were probable of recovery through the rate-making
process as of December 31, 2000.  As a result, SCE's December 31, 2000, income statement included a $4.0 billion
charge to provisions for regulatory adjustment clauses and a $1.5 billion net reduction in income tax expense, to
reflect the $2.5 billion (after tax) write-off.

Based on the rules arising from the CPUC's January 23, 2002, PROACT resolution, SCE was able to conclude that
$3.6 billion in regulatory assets previously written off were probable of recovery through the rate-making
process as of December 31, 2001.  As a result, SCE's December 31, 2001, consolidated income statement included a
$3.6 billion credit to provisions for regulatory adjustment clauses and a $1.5 billion charge to income tax
expense, to reflect the $2.1 billion (after tax) credit to earnings.

Operating Revenue

From 1998 through mid-September 2001, SCE's customers were able to choose to purchase power directly from an
energy service provider (thus becoming direct access customers) or continue to have SCE purchase power on their
behalf.  Most direct access customers continued to be billed by SCE, but were given a credit for the generation
purchased from the energy service provider.  Operating revenue is reported net of this credit.  On September 20,
2001, the CPUC suspended the ability of retail customers to select alternative providers of electricity until the
California Department of Water Resources (CDWR) stops buying power for retail customers, pending further review
by the CPUC.  On March 21, 2002, the

Page 3

- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition


CPUC issued a final decision affirming September 20, 2001, as the date when direct access was suspended in the
state.

During 2000, as a result of the power shortage in California, SCE's customers on interruptible rate programs
(which provide for lower generation rates with a provision that service can be interrupted if needed, with
penalties for noncompliance) were asked to curtail their electricity usage at various times.  As a result of
noncompliance with SCE's requests, those customers were assessed significant penalties.  On January 26, 2001, the
CPUC waived the penalties assessed to noncompliant customers after October 1, 2000, until the interruptible
programs can be reevaluated.

Operating revenue increased in 2001 (as shown in the table below), primarily due to the effects of the reduced
credits given to direct access customers in 2001 and the 4 cents-per-kWh (1 cent in January and 3 cents in June)
surcharge effective in 2001. The increases were partially offset by: a decrease in retail sales volume primarily
attributable to conservation efforts; a decrease in revenue related to penalties customers incurred for not
complying with their interruptible contracts; a decrease in revenue related to operation and maintenance
services; and a decrease in revenue related to electric power provided to SCE customers by the CDWR or
Independent System Operator (ISO).  Amounts SCE bills to and collects from its customers for electric power
purchased and sold by the CDWR or through the ISO on behalf of SCE's customers (beginning January 17, 2001) are
being remitted to the CDWR and are not recognized as revenue by SCE.  In 2001, this amount was $2.0 billion.  See
CDWR Power Purchases discussion.

Operating revenue increased in 2000 (as shown in the table below), primarily due to:  warmer weather in the
second and third quarters of 2000 as compared to the same periods in 1999; increased resale sales; and an
increase in revenue related to penalties customers incurred for not complying with their interruptible contracts.

The changes in operating revenue resulted from:

         In millions                Year ended December 31,                     2001         2000       1999
- ------------------------------------------------------------------------------------------------------------

         Operating revenue -
         Rate changes (including refunds)                                     $  422       $  120     $  (75)
         Direct access credit                                                    566         (434)      (213)
         Interruptible noncompliance penalty                                    (117)         102          6
         Sales volume changes                                                   (544)         520        195
         Other                                                                   (71)          14        136
- ------------------------------------------------------------------------------------------------------------

              Total                                                           $  256       $  322      $  49
- ------------------------------------------------------------------------------------------------------------


More than 94% of operating revenue was from retail sales.  Retail rates are regulated by the 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 increased in 2001 and decreased in 2000.  The increase in 2001 and the decrease in 2000 were both
due to fuel-related refunds resulting from a settlement with another utility that SCE recorded in the second and
third quarters of 2000.

Purchased-power expense decreased in 2001 and increased in 2000.  The 2001 decrease resulted from the absence of
California Power Exchange (PX)/ISO purchased-power expense after mid-January 2001, partially offset by increased
expenses related to qualifying facilities (QFs), bilateral contracts and interutility contracts.  See Purchased
Power table in Note 1 to the Consolidated Financial Statements and discussion in CDWR Power Purchases.  PX/ISO
purchased-power expense increased significantly between May 2000 and mid-

Page 4


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


January 2001, due to a number of factors, including increased demand for electricity in California, dramatic
price increases for natural gas (a key input of electricity production), and problems in the structure and
conduct of the PX and ISO markets.  In December 2000, the FERC eliminated the requirement that SCE buy and sell
all power through the PX and ISO.  Due to SCE's noncompliance with the PX's tariff requirement for posting
collateral for all transactions in the day-ahead and day-of markets as a result of the downgrade in its credit
rating, the PX suspended SCE's market trading privileges effective mid-January 2001.

Prior to April 1998, federal law and CPUC orders required SCE 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.  These contracts expire on various dates through 2025.  See further discussion regarding new
QF agreements in Litigation.  Purchased-power expense related to QFs increased due to the short-run avoided cost
factor (which is based on the price of natural gas) of the QF contracts causing a significant increase in the
payments to QFs.  In early 2001, structural problems in the market caused abnormally high gas prices.  The
increase related to bilateral contracts was the result of SCE not having these contracts in 2000.  The increase
related to interutility contracts was volume-driven.

SCE has contracts with certain QFs in which Edison Mission Energy (a wholly owned subsidiary of Edison
International) has 49% - 50% interests.  The terms and pricing of these contracts are approved by the CPUC.
SCE's power purchases from these facilities were $983 million in 2001, $716 million in 2000 and $513 million in
1999.

Provisions for regulatory adjustment clauses decreased for 2001 and increased for 2000.  The 2001 decrease
resulted from SCE recording the $3.6 billion PROACT regulatory asset in fourth quarter 2001.  The increase in
2000 was mainly due to SCE's write-off as of December 31, 2000, of $4.2 billion in regulatory assets and
liabilities as a result of the California energy crisis.  Adjustments to reflect potential regulatory refunds
related to the outcome of the CPUC's reevaluation of the operation of the interruptible rate programs also
contributed to the increase in 2000.

Other operation and maintenance expense decreased in 2000.  The decrease was primarily due to a $120 million
decrease in mandated transmission service (known as reliability must-run services) expense and a $19 million
decrease in operating expenses at San Onofre.  The decrease at San Onofre in 2000 was primarily due to scheduled
refueling outages for both units in the first half of 1999.  San Onofre had only one refueling outage in 2000.

Depreciation, decommissioning and amortization expense decreased in 2001, mainly due to SCE's nuclear investment
amortization expense ceasing since the unamortized nuclear investment regulatory asset was included in the
December 31, 2000, write-off.

Net gain on sale of utility plant in 2000 resulted from the sale of additional property related to four of the
generating stations SCE sold in 1998.  The gains were returned to the ratepayers through the TCBA mechanism.

Other Income and Deductions

Interest and dividend income increased in both 2001 and 2000.  The increase in 2001 was mainly due to an overall
higher cash balance, as SCE conserved cash due to its liquidity crisis.  The increase in 2000 was mostly due to
increases in interest earned on higher balancing account undercollections.

Other nonoperating income decreased in both 2001 and 2000.  The decrease in 2001 primarily reflects the gains on
sales of marketable securities in 2000.  The decrease in 2000 was primarily due to larger gains on sales of
marketable securities in 1999.

Interest expense - net of amounts capitalized increased in both 2001 and 2000.  The increase in 2001 reflects
additional long-term debt and higher short-term debt balances.  The increase in 2000 was mostly

Page 5


- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition


due to higher overall short-term debt balances necessary to meet general cash requirements (especially PX and ISO
payments) and higher interest expense related to balancing account overcollections.

Other nonoperating deductions decreased in 2001 primarily due to lower accruals for regulatory matters in 2001.

Income Taxes

Income taxes increased in 2001 and decreased in 2000.  The increase in 2001 reflects $1.5 billion in income tax
expense related to the PROACT regulatory asset establishment in fourth quarter 2001.  The decrease in 2000 was
primarily due to the $1.5 billion income tax benefit related to the write-off as of December 31, 2000, of
regulatory assets and liabilities in the amount of $2.5 billion (after tax).  Absent the impact of the PROACT
regulatory asset in 2001 and the write-off in 2000, SCE's income tax expense increased in both 2001 and 2000 due
to higher pre-tax income in both years.

Financial Condition

SCE's liquidity is affected primarily by regulation affecting its ability to recover the cost of power purchases,
debt maturities, access to capital markets, credit ratings, dividend payments and capital expenditures.  Capital
resources include cash from operations and external financings.

Liquidity Issues

Sustained higher wholesale energy prices that began in May 2000 persisted through June 2001.  This resulted in
undercollections in the TRA and TCBA.  Undercollections, coupled with SCE's anticipated near-term capital
requirements (detailed in Projected Commitments) and the adverse reaction of the credit markets to continued
regulatory uncertainty regarding SCE's ability to recover its current and future power procurement costs,
materially and adversely affected SCE's liquidity throughout 2001.  As a result of its liquidity concerns, SCE
took steps to conserve cash to continue to provide service to its customers.  As a part of this process,
beginning in January 2001, SCE suspended payments owed to the ISO, the PX and QFs, deferred payments of certain
obligations for principal and interest on outstanding debt and did not declare dividends on any of its cumulative
preferred stock.  As applicable, unpaid obligations continued to accrue interest.  As of March 31, 2001, SCE
resumed payment of interest on its debt obligations.  However, since June 30, 2001, SCE deferred the interest
payments on its quarterly income debt securities (subordinated debentures), as allowed by the terms of the
securities.  All interest in arrears must be paid at the end of the deferral period.  As long as accumulated
dividends on SCE's preferred stock remain unpaid, SCE could not pay dividends on its common stock.  Common stock
dividends are additionally restricted as detailed in the CPUC Litigation Settlement discussion.

Based on the rights to cost recovery and revenue established by the settlement agreement with the CPUC and CPUC
implementing orders, including the PROACT resolution, SCE repaid its undisputed past-due obligations on March 1,
2002, with lump-sum payments to creditors from the proceeds of $1.6 billion in senior secured credit facilities,
the remarketing of $196 million in pollution-control bonds which were repurchased in late 2000, and existing cash
on hand.  The $1.6 billion senior secured credit facilities consist of a $300 million, two-year revolving credit
loan, a $600 million, one-year loan and a $700 million, three-year loan.

The proceeds from the senior secured credit facilities and pollution-control bond remarketing were used, along
with SCE's available cash, to repay $3.2 billion in past-due obligations and $1.65 billion in near-term debt
maturities.  The past-due obligations consisted of:  (1) $875 million to the PX; (2) $99 million to the ISO;
(3) $1.1 billion to QFs; (4) $193 million in PX energy credits for energy service providers; (5) $531 million of
matured commercial paper; (6) $400 million of principal on its 5-7/8% and 6-1/2% senior unsecured notes which
were issued prior to the energy crisis; and (7) $23 million in preferred dividends in arrears.  The near-term
debt maturities consisted of credit facilities whose maturity dates were extended several times and were
scheduled to mature in March and May 2002.  In addition, SCE entered into an agreement with the CDWR to pay for
prior deliveries of energy in installments of $100 million on April 1,

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                                                                                Southern California Edison Company


2002, $150 million on June 3, 2002, and the balance on July 1, 2002.  After making the above-described payments,
SCE has no material undisputed obligations that are past due or in default.

SCE expects to meet its continuing obligations from remaining cash on hand and future operating cash flows.

For additional discussion on the impact of California's energy crisis on SCE's liquidity, see Cash Flows from
Financing Activities.  For a discussion on the settlement agreement with the CPUC and the PROACT resolution to
resolve SCE's crisis, see CPUC Litigation Settlement Agreement and PROACT Regulatory Asset sections.

Cash Flows from Operating Activities

Net cash provided by operating activities was $3.3 billion in 2001, $829 million in 2000 and $1.5 billion in
1999.  The increase in 2001 was primarily due to SCE suspending payments for purchased power and other
obligations beginning in January 2001.  Cash provided by operating activities also reflects the CPUC-approved
surcharges (1 cent per kWh in January and 3 cent per kWh in June) that were billed in 2001.  The decrease in 2000
was the result of extremely high prices SCE paid for energy and ancillary services procured through the PX and
ISO.

Cash Flows from Financing Activities

At December 31, 2001, SCE had drawn on its entire credit lines of $1.65 billion.  These unsecured lines of credit
have various expiration dates and, when available, could be drawn down at negotiated or bank index rates.  On
March 1, 2002, SCE's credit lines ($1.65 billion) were repaid using proceeds from the March 1, 2002, financing.
See additional discussion in Liquidity Issues.

Short-term debt is used to finance balancing account undercollections, fuel inventories and general cash
requirements, including purchased-power payments.  Long-term debt is used mainly to finance capital
expenditures.  External financings are influenced by market conditions and other factors.  Because of the $2.5
billion charge to earnings as of December 31, 2000, SCE does not currently meet the interest coverage ratio that
is required for SCE to issue additional preferred stock.

As a result of investors' concerns regarding the California energy crisis and its impact on SCE's liquidity and
overall financial condition, during December 2000 and early 2001, SCE had to repurchase $550 million of
pollution-control bonds that could not be remarketed in accordance with their terms.  SCE remarketed $196 million
of these bonds in March 2002 (see additional discussion in Liquidity Issues).  The remaining amount of these
bonds may be remarketed in the future.  In addition, SCE remains unable to sell its commercial paper and other
short-term financial instruments.

Although Fitch IBCA, Standard &amp; Poor's and Moody's Investors Service raised their credit ratings significantly
for SCE in March 2002, the new ratings are still below investment grade.  The new ratings reflect the ongoing
financial recovery of SCE that began in October 2001 with SCE's settlement agreement with the CPUC and has
continued with the CPUC's January 2002 PROACT resolution and the repayment of SCE's past-due obligations.  SCE
lost its investment-grade ratings in January 2001.

California law prohibits SCE from incurring or guaranteeing debt for its nonutility affiliates.  Additionally,
the CPUC regulates SCE's capital structure, thereby limiting the dividends it may pay Edison International.

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

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Management's Discussion and Analysis of Results of Operations and Financial Condition


purchased by SCE Funding LLC.  The remaining series of outstanding rate reduction notes have scheduled maturities
beginning in 2002 and ending in 2007, with interest rates ranging from 6.22% 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 accounting principles generally accepted in the United States, 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.  Due to
its credit rating downgrade in late 2000, in January 2001, SCE began remitting its customer collections related
to the rate-reduction notes on a daily basis.

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 utility rates.  These costs are expected to be
funded from independent decommissioning trusts that receive SCE contributions of approximately $25 million per
year.  In 1995, the CPUC determined the restrictions related to the investments of these trusts.  They are: not
more than 50% of the fair market value of the qualified trusts may be invested in equity securities; not more
than 20% of the fair market value of the trusts may be invested in international equity securities; up to 100% of
the fair market values of the trusts may be invested in investment grade fixed-income securities including, but
not limited to, government, agency, municipal, corporate, mortgage-backed, asset-backed, non-dollar, and cash
equivalent securities; and derivatives of all descriptions are prohibited.  Contributions to the decommissioning
trusts are reviewed every three years by the CPUC.  The contributions are determined from an analysis of
estimated decommissioning costs, the current value of trust assets and long-term forecasts of cost escalation and
after-tax return on trust investments.  Favorable or unfavorable investment performance in a period will not
change the amount of contributions for that period.  However, trust performance for the three years leading up to
a CPUC review proceeding will provide input into future contributions.  SCE's costs to decommission San Onofre
Unit 1 are paid from the nuclear decommissioning trust funds.  These withdrawals from the decommissioning trusts
are netted with the contributions to the trust funds in the Consolidated Statements of Cash Flows.

Projected Commitments

SCE's projected construction expenditures for 2002 are $921 million.

Long-term debt maturities and sinking fund requirements for the next five years are:  2002 - $1.1 billion; 2003 -
$1.4 billion; 2004 - $371 million; 2005 - $246 million; and 2006 - $446 million.

Fuel supply contract payments for the next five years are:  2002 - $168 million; 2003 - $108 million; 2004 - $103
million; 2005 - $106 million; and 2006 - $109 million.

Purchased-power capacity payments for the next five years are:  2002 - $629 million; 2003 - $629 million; 2004 -
$626 million; 2005 - $624 million; and 2006 - $572 million.

Preferred stock redemption requirements for the next five years are:  2002 - $105 million; 2003 - $9 million;
2004 - $9 million; 2005 - $9 million; and 2006 - $9 million.

Market Risk Exposures

SCE's primary market risk exposures include commodity price risk and interest rate risk that could adversely
affect results of operations or financial position.  Commodity price risk arises from fluctuations in the market
price of an energy commodity, such as electricity, natural gas, or coal.  Interest rate risk arises from
fluctuations in interest rates.  Additionally, natural gas is a key input for the prices specified in
approximately half of SCE's QF (including non-gas QF) contracts.  Virtually all of SCE's exposure to changes in
the spot market price for natural gas through 2003 is hedged through financial derivatives or fixed-price
contracts.  SCE's risk management policy allows the use of derivative financial instruments to

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                                                                                Southern California Edison Company


manage its financial exposures, but prohibits the use of these instruments for speculative or trading purposes.

SCE is exposed to changes in interest rates primarily as a result of its borrowing and investing activities used
for liquidity purposes and to fund business operations, as well as to finance capital expenditures.  The nature
and amount of SCE's long-term and short-term debt can be expected to vary as a result of future business
requirements, market conditions and other factors.  As a result of California's energy crisis, SCE has been
exposed to significantly higher interest rates, which intensified its liquidity crisis during 2001 (further
discussed in the Liquidity Issues section of Financial Condition).

At December 31, 2001, SCE did not believe that its short-term debt was subject to interest rate risk, due to the
fair market value being approximately equal to its carrying value.  SCE did believe that the fair market value of
its fixed-rate long-term debt was subject to interest rate risk.  At December 31, 2001, a 10% increase in market
interest rates would have resulted in a $128 million decrease in the fair market value of SCE's long-term debt.
A 10% decrease in market interest rates would have resulted in a $141 million increase in the fair market value
of SCE's long-term debt.

Since April 1998, the price SCE paid to acquire power on behalf of customers was allowed to float, in accordance
with the 1996 electric utility restructuring law.  Until May 2000, retail rates were sufficient to cover the cost
of power and other SCE costs.  However, between May 2000 and June 2001, market power prices escalated, creating a
substantial gap between costs and retail rates.  In response to the dramatically higher prices, the ISO and the
FERC have placed certain caps on the price of power (see further discussion in Wholesale Electricity Markets).

Under the terms of the CPUC settlement agreement, SCE purchased $209 million in hedging instruments (gas call
options) in October and November 2001 to hedge a majority of its natural gas price exposure associated with QF
contracts for 2002 and 2003.  Although these gas call options are reflected in the income statement, any fair
value changes of the gas call options are offset through a regulatory balancing account; therefore, fair value
changes do not affect earnings.  At December 31, 2001, a 10% increase in market gas prices would have resulted in
a $32 million increase in the fair market value of SCE's gas call options.  A 10% decrease in market gas prices
would have resulted in a $27 million decrease in the fair market value of the gas call options.

In accordance with an accounting standard for derivatives, on January 1, 2001, SCE recorded its block-forward
contracts at fair value on the balance sheet.  Because SCE suspended payments for purchased power on January 16,
2001, the PX sought to liquidate SCE's remaining block-forward contracts.  Before the PX could do so, on
February 2, 2001, the state seized the contracts.  On September 20, 2001, a federal appeals court ruled that the
governor of California acted illegally when he seized the power contracts held by SCE.  In conjunction with its
settlement agreement with the CPUC (discussed in CPUC Litigation Settlement Agreement), SCE has agreed to release
any claim for compensation against the state for these contracts.  However, if the PX prevails in its claims
against the state, SCE may receive some refunds.  Due to its speculative grade credit ratings, SCE has been
unable to purchase additional bilateral forward contracts, and some of the existing contracts were terminated by
the counterparties.

Regulatory Environment

SCE operates in a highly regulated environment and has an exclusive franchise within its service territory.  SCE
has an obligation to deliver electric service to its customers and regulatory authorities have an obligation to
provide just and reasonable rates.  In the mid-1990s, state lawmakers and the CPUC initiated the electric
industry restructuring process.  SCE was directed by the CPUC to divest the bulk of its gas-fired generation
portfolio.  Today, independent power companies own the divested generating plants.  The electric industry
restructuring plan also instituted a multi-year freeze on the rates that SCE could charge its customers and
transition cost recovery mechanisms (as described in Status of Transition and Power-Procurement Cost Recovery)
designed to allow SCE to recover its stranded costs associated with generation-related assets.  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

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Management's Discussion and Analysis of Results of Operations and Financial Condition


1998 and 2001, which allowed SCE to reduce rates by at least 10% to these customers, effective January 1, 1998.
These frozen rates (except for the surcharge effective in 2001) were to remain in effect until the earlier of
March 31, 2002, or the date when the CPUC-authorized costs for utility-owned generation assets and obligations
are recovered.  However, between May 2000 and June 2001, the prices charged by sellers of power escalated far
beyond what SCE could charge its customers.  As a result, SCE incurred $2.7 billion (after tax), or $4.7 billion
(pre-tax), in write-offs as of December 31, 2000, and net undercollected transition costs through August 31,
2001.  As indicated below, implementation of the CPUC settlement agreement and CPUC approval of SCE's
Utility-Retained Generation (URG) application is expected to allow SCE to recover substantially all of the $4.7
billion.

Generation and Power Procurement

During the rate freeze, recovery of generation-related transition costs was tracked through the TCBA mechanism.
Revenue from generation-related operations was determined through the market and transition cost recovery
mechanisms, which included the nuclear rate-making agreements.  During fourth quarter 2001, the TCBA mechanism
was terminated retroactive to September 1, 2001, and a $3.6 billion PROACT regulatory asset was created in
accordance with the October 2001 settlement agreement with the CPUC and the PROACT resolution adopted in January
2002.  In accordance with a state law passed in January 2001, SCE will continue to own its remaining generation
assets, which will be subject to cost-based ratemaking, through 2006 (see further discussion in URG Proceeding).

Through December 31, 2000, SCE had been recovering its investment in its nuclear facilities on an accelerated
basis (over four years) in exchange for a lower authorized rate of return on investment.  SCE's nuclear assets
were earning an annual rate of return on investment of 7.35%.  However, due to the various unresolved regulatory
and legislative issues (as discussed in Status of Transition and Power-Procurement Cost Recovery), as of
December 31, 2000, SCE was no longer able to conclude that the $610 million balance of unamortized nuclear
investment regulatory assets was probable of recovery through the rate-making process.  As a result, this balance
was written off as a charge to earnings at that time (see further discussion in Earnings).  Should the URG
application be approved, SCE expects to reestablish for financial reporting purposes its unamortized nuclear
investment and related flow-through taxes retroactive to August 31, 2001, with recovery based on a 10-year
period, effective January 1, 2001, with a corresponding credit to earnings, and adjust the PROACT regulatory
asset balance as necessary to reflect recovery of the nuclear investment in accordance with the final URG
decision.

The San Onofre incentive-pricing plan authorizes a fixed rate of approximately 4 cent per kWh generated for
operating costs including incremental capital costs, nuclear fuel and nuclear fuel financing costs.  The
San Onofre incentive-pricing plan started in April 1996 and ends in December 2003.  The Palo Verde Nuclear
Generating Station's operating costs, including incremental capital costs, and nuclear fuel and nuclear fuel
financing costs, were subject to balancing account treatment.  The Palo Verde plan started in January 1997 and
was to end in December 2001.  The benefits of operation of the San Onofre units and the Palo Verde units were
required to be shared equally with ratepayers beginning in 2004 and 2002, respectively. In a June 2001 decision,
the CPUC granted SCE's request to eliminate the San Onofre post-2003 sharing mechanism based on compliance with a
state law enacted in early 2001.  In a September 2001 decision, the CPUC granted SCE's request to eliminate the
Palo Verde post-2001 sharing mechanism and to continue the current rate-making treatment for Palo Verde,
including the continuation of the existing nuclear incentive procedure with a 5 cents per kWh cap on replacement
power costs, until resolution of SCE's next general rate case or further CPUC action.  Beginning January 1, 1998,
both the San Onofre and Palo Verde rate-making plans became part of the TCBA mechanism.  These rate-making plans
and the TCBA mechanism were to continue for rate-making purposes at least through the end of the rate freeze
period.  However, in its URG application, SCE proposed to move the recovery of nuclear costs to another balancing
account mechanism.  See discussion in URG Proceeding for the proposed and alternate decisions' impact on the
incentive-pricing plans.

CPUC Litigation Settlement Agreement
- ------------------------------------

In November 2000, SCE filed a lawsuit against the CPUC in federal district court seeking a ruling that SCE is
entitled to full recovery of its past electricity procurement costs in accordance with the tariffs filed with

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                                                                                Southern California Edison Company


the FERC.  By agreement of the parties, a stay of the lawsuit was issued in April 2001 while SCE sought
implementation of legislative, regulatory and executive actions to resolve the California energy crisis and SCE's
related financial and liquidity problems.  In October 2001, the federal district court entered a stipulated
judgment approving an agreement between the CPUC and SCE to settle the pending lawsuit.  On January 23, 2002, the
CPUC adopted a resolution implementing the settlement agreement.  See discussion below in PROACT Regulatory
Asset.

Key elements of the settlement agreement include the following items:

o        Establishment of the PROACT, as of September 1, 2001, with an opening balance equal to the amount of
     SCE's procurement-related liabilities as of August 31, 2001 (approximately $6.4 billion), less SCE's cash and
     cash equivalents as of that date (approximately $2.5 billion), and less $300 million.

o        Beginning on September 1, 2001, SCE will apply to the PROACT, on a monthly basis, the difference between
     SCE's revenue from retail electric rates (including surcharges) and the costs that SCE is authorized by the
     CPUC to recover in retail electric rates.  Unrecovered obligations in the PROACT will accrue interest from
     September 1, 2001.

o        Maintain current rates (including surcharges) in effect until December 31, 2003, subject to certain
     adjustments, or, if earlier, until the date that SCE recovers the entire PROACT balance.  If SCE has not
     recovered the entire balance by December 31, 2003, the unrecovered balance will be amortized for up to an
     additional two years.  The parties project that existing retail electric rates, including surcharges and as
     adjusted to reflect certain costs, will likely result in SCE recovering substantially all of its unrecovered
     procurement-related obligations prior to the end of 2003.

o        If the CPUC concludes that it is desirable to authorize a securitized financing of SCE's
     procurement-related obligations, the parties will work together to achieve the securitization.  Proceeds of
     any securitization will be credited to the PROACT when they are actually received.

o        During the period that SCE is recovering its previously incurred procurement-related obligations, no
     penalty will be imposed by the CPUC on SCE for any noncompliance with CPUC-mandated capital structure
     requirements.

o        SCE can incur up to $250 million of recoverable costs to acquire financial instruments and engage in
     other transactions intended to hedge fuel cost risks associated with SCE's retained generation assets and
     power purchase contracts with QFs and other utilities.  As of December 31, 2001, SCE had purchased $209
     million in hedging instruments.  See discussion in Market Risk Exposures.

o        SCE will not declare or pay dividends or other distributions on its common stock (all of which is held
     by its parent) prior to the earlier of the date SCE has recovered all of its procurement-related obligations
     in the PROACT or January 1, 2005.  However, if SCE has not recovered all of its procurement-related
     obligations by December 31, 2003, SCE may apply to the CPUC for consent to resume common stock dividends,
     and the CPUC will not unreasonably withhold its consent.

o        To ensure the ability of SCE to continue to provide adequate service, SCE may make capital expenditures
     above the level contained in current rates, up to $900 million per year, which will be treated as
     recoverable costs.

o        Subject to certain qualifications, SCE will cooperate with the CPUC and the California Attorney General
to pursue and resolve SCE's claims and rights against sellers of energy and related services, SCE's defenses to
claims arising from any failure to make payments to the PX or ISO, and similar claims by the State of California
or its agencies against the same adverse parties.  During the recovery period discussed above, refunds obtained
by SCE related to its procurement-related liabilities will be applied to the balance in the PROACT.

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Management's Discussion and Analysis of Results of Operations and Financial Condition


The settlement agreement states that one of its purposes is to restore the investment grade creditworthiness of
SCE as rapidly as reasonably practicable so that it will be able to provide reliable electrical service as a
state-regulated entity as it has in the past.  SCE cannot provide assurance that it will regain investment grade
credit ratings by any particular date.

On November 28, 2001, a federal court of appeals denied a California consumer group's request for a long-term
stay of the settlement.  The group had alleged that it was denied due process and that the CPUC had no authority
to agree with SCE to violate the statutory rate freeze.  In its ruling, the federal court of appeals also granted
SCE's request for an expedited hearing of an appeal of the settlement filed by the consumer group.  On March 4,
2002, the court of appeals heard argument on the appeal and the matter is now under submission.  A decision could
be issued anytime during the next several months.  SCE cannot predict the outcome of the appeal or the impact
that any outcome would have upon the stipulated judgment or the settlement, at this time.  Possible outcomes
include affirmance, a return to the district court or reversal of the stipulated judgment.  SCE cannot predict
whether or how a ruling on the stipulated judgment could also affect the settlement agreement.

PROACT Regulatory Asset
- -----------------------

According to the terms of the settlement agreement and the CPUC resolution, in the fourth quarter of 2001, SCE
established (retroactive to August 31, 2001) a $3.6 billion PROACT regulatory asset for its previously incurred
procurement costs.

The beginning balance of the PROACT, as verified by the CPUC, was calculated as follows:

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

              Past-due bills:
                 PX or ISO                                                               $    924
                 QFs                                                                        1,219
                 PX energy credits                                                            236
                 Imbalance energy (CDWR)                                                      383
                 Ancillary services for resale cities                                          30
- --------------------------------------------------------------------------------------------------

                  Total past-due bills                                                      2,792
- --------------------------------------------------------------------------------------------------

              Procurement-related debt (including accrued interest):
                 Credit facilities                                                          1,298
                 Bilateral credit facilities                                                  415
                 Defaulted commercial paper                                                   563
                 Floating rate notes due May 2002                                             313
                 Variable rate notes due November 2003                                      1,043
- --------------------------------------------------------------------------------------------------

                  Total procurement-related debt                                            3,632
- --------------------------------------------------------------------------------------------------

              Total procurement-related liabilities                                         6,424
              Less:  Cash and cash equivalents on hand                                     (2,547)
              Less:  Amount stipulated in agreement                                          (300)
- --------------------------------------------------------------------------------------------------

              Net PROACT balance as of August 31, 2001                                    $ 3,577
- --------------------------------------------------------------------------------------------------


For a comparison between the PROACT balance as of August 31, 2001, and the TCBA balance as of that date, see
discussion in Status of Transition and Power-Procurement Cost Recovery.

CDWR Power Purchases
- --------------------

In accordance with an emergency order signed by the governor, the CDWR began making emergency power purchases for
SCE's customers on January 17, 2001.  Amounts SCE bills to and collects from its customers for electric power
purchased and sold by the CDWR and through the ISO are remitted directly to the CDWR and are not recognized as
revenue by SCE.  In February 2001, Assembly Bill 1 (First Extraordinary Session, AB 1X) was enacted into law.
AB 1X authorized the CDWR to enter into contracts

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                                                                                Southern California Edison Company


to purchase electric power and sell power at cost directly to retail customers being served by SCE, and
authorized the CDWR to issue bonds to finance electricity purchases.

On March 27, 2001, the CPUC issued an interim order requiring SCE to pay the CDWR a per-kWh price equal to the
applicable generation-related retail rate per kWh for electricity (based on rates in effect on January 5, 2001),
for each kWh the CDWR sells to SCE's customers.  The CPUC determined that the generation-related retail rate
should be equal to the total bundled electric rate (including the 1 cent-per-kWh surcharge adopted by the CPUC on
January 4, 2001) less certain nongeneration-related rates or charges.  For the period January 19 through January
31, 2001, the CPUC ordered SCE to pay the CDWR at a rate of 6.277 cents per kWh for power delivered to SCE's
customers.  The CPUC determined that the applicable rate component is 7.277 cents per kWh (which increased to
10.277 cents per kWh for electricity delivered after March 27, 2001, due to the 3 cents-surcharge discussed in
Rate Stabilization Proceedings), for electricity delivered by the CDWR to SCE's retail customers after
February 1, 2001, until more specific rates are calculated.  The CPUC ordered SCE to pay the CDWR within 45 days
after the CDWR supplies power to retail customers, subject to penalties for each day the payment is late.

On February 21, 2002, the CPUC issued a decision implementing a CDWR revenue requirement of $9.0 billion to pay
its bonds' costs and energy procurement costs for the period January 17, 2001, through December 31, 2002.  The
decision states that SCE's allocated share of this revenue requirement would be approximately $3.6 billion, and
changes SCE's payment to 9.744 cents per kWh for all bills rendered on or after March 15, 2002.  The decision
requires SCE to pay the CDWR in equal monthly installments over a six-month period the difference in rates
between January 17, 2001, and March 15, 2002.  SCE estimates that this amount could be approximately $41
million.

On February 28, 2002, SCE and the CDWR executed an agreement that resolves outstanding issues relating to the
payment for electric power purchased for SCE's customers through the ISO real-time market (known as imbalance
energy).  Under this agreement, SCE will pay the CDWR for imbalance energy previously delivered in three
installments ($100 million on April 1, 2002; $150 million on June 3, 2002; and the balance on July 1, 2002).

Status of Transition and Power-Procurement Cost Recovery
- --------------------------------------------------------

SCE's transition costs to be recovered through the TCBA mechanism included power purchases from QF contracts
(which are the direct result of prior legislative and regulatory mandates), recovery of certain generating assets
and other costs incurred to provide service to customers.  Other costs included the recovery of income tax
benefits previously flowed through to customers, postretirement benefit transition costs and accelerated recovery
of investment in nuclear generating units.  Recovery of costs related to power-purchase QF contracts was
permitted through the terms of each contract.  Legislation and regulatory decisions issued prior to the beginning
of the rate freeze called for most of the remaining transition costs to be recovered through the end of the
four-year transition period (not later than March 31, 2002).  Because regulatory and legislative actions that
make such recovery probable were not taken in a timely manner during the energy crisis, as of December 31, 2000,
SCE was unable to conclude that the net regulatory assets related to purchased-power settlements, the unamortized
loss on SCE's generating plant sales in 1998, and various other generation regulatory assets were probable of
recovery through the rate-making process.  As a result, these balances were written off as a charge to earnings
at that time (see further discussion in Earnings).

There were three sources of revenue available to SCE for transition cost recovery through the TCBA mechanism:
revenue from the sale or valuation of generation assets in excess of book values, net market revenue from the
sale of SCE-controlled generation into the ISO and PX markets and competition transition charge (CTC) revenue.
Revenue from the first two sources has not been available since January 2001.  Net proceeds of the 1998 plant
sales were used to reduce transition costs, which otherwise had been expected to be collected through the TCBA
mechanism.  However, state legislation enacted in January 2001 prohibits the sale of SCE's remaining generation
assets until 2006.  SCE stopped selling power from its generation into the ISO and PX markets in January 2001,
after SCE's credit ratings were downgraded and the PX suspended SCE's trading privileges (see discussion in
Generation and Power Procurement).


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Management's Discussion and Analysis of Results of Operations and Financial Condition


CTC revenue was determined residually (i.e., CTC revenue was 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 and ISO).
The CTC applied to all customers who were using or began using utility services on or after the CPUC's 1995
restructuring decision date.  Residual CTC revenue was calculated through the TRA mechanism.  In accordance with
the March 27, 2001, rate stabilization decision, both positive and negative residual CTC revenue was transferred
from the TRA to the TCBA on a monthly basis, retroactive to January 1, 1998 (see further discussion in Rate
Stabilization Proceedings).  A previous decision had called only for a transfer of positive residual CTC revenue
(TRA overcollections) to the TCBA and there had not been any positive residual CTC revenue between May 2000 and
June 2001.

Because the regulatory and legislative actions that made such recovery probable were not taken, SCE was unable to
conclude as of December 31, 2000, that the recalculated TCBA net undercollection was probable of recovery through
the rate-making process.  As a result, the $2.9 billion TCBA net undercollection was written off as a charge to
earnings as of that date (see further discussion in Earnings), and an additional $552 million (pre-tax) of net
undercollected transition costs was charged to earnings between January 1, 2001, and August 31, 2001.  Although
the TCBA was written off, SCE continued to calculate the account for rate-making purposes, and the account
reflected a $4.2 billion undercollection as of August 31, 2001, the effective date of the beginning of the PROACT
mechanism and the end of the TCBA mechanism.  If the TCBA would have been adjusted for the impact of SCE's
treatment of the nuclear facilities as proposed in the URG proceeding, the TCBA balance as of August 31, 2001,
would have reflected an undercollection of $3.626 billion, substantially equal to the $3.577 billion
undercollection in the PROACT regulatory asset.

For more details on the matters discussed above, see discussions in Rate Stabilization Proceedings,
URG Proceeding and PROACT Regulatory Asset.

Litigation
- ----------

In October 2000, a federal class action securities lawsuit was filed against SCE and Edison International.  As
amended in December 2000 and March 2001, the lawsuit involves securities fraud claims arising from alleged
improper accounting for the TRA undercollections.  The second amended complaint is supposedly filed on behalf of
a class of persons who purchased Edison International common stock between July 21, 2000, and April 17, 2001.
This lawsuit has been consolidated with another similar lawsuit filed on March 15, 2001.  A consolidated class
action complaint was filed on August 3, 2001.  On September 17, 2001, SCE and Edison International filed a motion
to dismiss for failure to state a claim.  On March 8, 2002, the district court issued an order dismissing the
complaint with prejudice.  The plaintiffs could appeal this ruling to the court of appeals.

In addition to the lawsuits filed against Edison International and SCE discussed above, SCE has been a defendant
in a number of legal actions brought by various QFs arising out of SCE's suspension of payments for electricity
delivered by the QFs during the period November 1, 2000, through March 26, 2001.  The QF claims were eventually
largely subsumed within agreements with the litigating QFs providing for a provisional settlement of the parties'
disputes.  On March 1, 2002, SCE paid the amounts due under settlement agreements with these QFs, which triggered
the releases and other provisions of the settlements.  As a result, the litigation with those QFs to whom payment
in full has been made under the parties' settlement agreements should be dismissed during 2002.  However, SCE's
March 1, 2002, payments excluded several QFs or did not result in immediate releases under the settlement
agreements based on unique disputes or other unique circumstances, including the status of regulatory approval.

Rate Stabilization Proceedings
- ------------------------------

In January 2000, SCE filed an application with the CPUC proposing rates that would go into effect when the
four-year rate freeze was to end on March 31, 2002, or earlier, depending on the pace of transition cost
recovery.  In December 2000, SCE filed an amended rate stabilization plan application, stating that the statutory
rate freeze had ended in accordance with California law, and requesting the CPUC to approve an immediate 30%
increase to be effective, subject to refund, January 4, 2001.


Page 14

- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


In January 2001, independent auditors hired by the CPUC issued a report on the financial condition and solvency
of SCE and its affiliates.  The report confirmed what SCE had previously disclosed to the CPUC in public filings
about SCE's financial condition.  The audit report covered, among other things, cash needs, credit relationships,
accounting mechanisms to track stranded cost recovery, the flow of funds between SCE and Edison International,
and earnings of SCE's California affiliates.  In April 2001, the CPUC adopted an order instituting investigation
that reopens the past CPUC decision authorizing the utilities to form holding companies and initiates an
investigation into:  whether the holding companies violated CPUC requirements to give first priority to the
capital needs of their respective utility subsidiaries; whether ring-fencing actions by Edison International and
PG&amp;E Corporation and their respective nonutility affiliates also violated the requirements to give priority to
the capital needs of their utility subsidiaries; whether the payment of dividends by the utilities violated
requirements that the utilities maintain dividend policies as though they were comparable stand-alone utility
companies; any additional suspected violations of laws or CPUC rules and decisions; and whether additional rules,
conditions, or other changes to the holding company decisions are necessary.  The CPUC ordered testimony and
briefing on these matters, which SCE filed in May and June 2001.  On January 9, 2002, the CPUC issued an interim
decision on the first priority condition.  The decision stated that, at least under certain circumstances, the
condition includes the requirement that holding companies infuse all types of capital into their respective
utility subsidiaries when necessary to fulfill the utility's obligation to serve.  On February 11, 2002, SCE
filed an application for rehearing of the decision stating that the decision is an unlawful and erroneous attempt
to rewrite the first priority condition rather than interpret it and that the decision would result in higher
rates for SCE's customers.  SCE cannot predict what effects this investigation or any subsequent actions by the
CPUC may have on SCE.

In March 2001, the CPUC ordered a rate increase in the form of a 3 cents-per-kWh surcharge applied only to
going-forward electric power procurement costs and affirmed that a 1 cent interim surcharge granted in January
2001 is permanent.  The 3 cents surcharge is to be added to the rate paid to the CDWR (see CDWR Power
Purchases).  Although the 3 cents-increase was authorized as of March 27, 2001, the surcharge was not collected
in rates until the CPUC established a rate design in early June 2001.  To compensate for the two-month delay in
collecting the 3 cents surcharge, the CPUC authorized an additional1/2cent surcharge for a 12-month period
beginning in June 2001.

URG Proceeding
- --------------

In June 2001, SCE filed a comprehensive proposal for new cost-of-service ratemaking for utility retained
generation through the end of 2002.  After that time, SCE's URG-related revenue requirement will be determined by
the general rate case.  The URG proposal calls for balancing accounts for SCE-owned generation, QF and
interutility contracts, procurement costs and ISO charges based on either actual or CPUC-authorized revenue
requirements.  Under the proposal, the four new balancing accounts would be effective January 1, 2001, for
capital-related costs, and February 1, 2001, for non-capital-related costs.  In addition, SCE's unamortized
nuclear investment would be amortized and recovered in rates over a 10-year period, effective January 1, 2001.
Should this application be approved as filed, SCE expects to reestablish for financial reporting purposes its
unamortized nuclear investment and regulatory assets related to purchased-power settlements and flow-through
taxes, with a corresponding credit to earnings, and adjust the PROACT regulatory asset balance in accordance with
the final URG decision.

On January 18, 2002, a CPUC administrative law judge issued a proposed decision and a CPUC commissioner issued an
alternate proposed decision.  Both the proposed and alternate proposed decisions adopt most of the elements of
SCE's application, but propose eliminating an incentive-pricing plan for San Onofre, effective January 1, 2002,
and replacing it with balancing account treatment for San Onofre's operating costs, subject to a later
reasonableness review.  On February 7, 2002, another CPUC commissioner issued an alternate proposed decision
recommending continuing the incentive-pricing plan for San Onofre Units 2 and 3 through December 31, 2003, as
originally provided in CPUC decisions adopted in early 1996.  A final decision is expected in second quarter 2002.


Page 15


- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition


Generation Procurement Proceeding
- ---------------------------------

In October 2001, the CPUC issued an order instituting rulemaking (OIR) to establish policies and cost recovery
mechanisms for generation procurement.  The OIR directed SCE and the other major California electric utilities to
provide recommendations for establishing these policies and mechanisms to enable the utilities to resume their
power procurement responsibilities in 2003.  In comments filed with the CPUC on November 26, 2001, SCE
recommended that the CPUC issue a procurement framework decision in February 2002, and direct the utilities to
submit their specific procurement plan proposals and related framework compliance proposals in March 2002.  SCE
also proposed that a final decision be issued in October 2002 adopting utility-specific procurement plans.  The
CPUC has not yet acted on SCE's recommendations, but is expected in second quarter 2002 to issue a scoping memo
setting forth issues to be addressed in this proceeding.

Accounting for Generation-Related Assets and Power Procurement Costs
- --------------------------------------------------------------------

In 1997, SCE discontinued application of accounting principles for rate-regulated enterprises for its generation
assets.  At that time, SCE did not write off any of its generation-related assets, including related regulatory
assets, because the electric utility industry restructuring plan made probable their recovery through a
non-bypassable charge to distribution customers.

During the second quarter of 1998, in accordance with asset impairment accounting standards, 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.

As of December 31, 2000, SCE assessed the probability of recovery of its generation-related assets and power
procurement costs in light of the CPUC's March 27, 2001, and April 3, 2001, decisions, and could not conclude
that its $2.9 billion TCBA undercollection (as redefined in the March 27 decisions) and $1.3 billion (book value)
of its net generation-related regulatory assets to be amortized into the TCBA, were probable of recovery through
the rate-making process.  As a result, accounting principles generally accepted in the United States required
that the balances in the accounts be written off as a charge to earnings.  In addition to the $4.2 billion
pre-tax write-off, SCE incurred approximately $552 million (pre-tax) in net undercollected transition costs
through August 31, 2001 (see Earnings).

In accordance with the CPUC settlement agreement and the PROACT resolution, in fourth quarter 2001, SCE
established a $3.6 billion regulatory asset for previously incurred power procurement costs, called the PROACT,
retroactive to August 31, 2001.  See further discussion in PROACT Regulatory Asset.  CPUC approval of the URG
application, as filed (see URG Proceeding), together with implementation of the PROACT mechanism is expected to
allow SCE to recover substantially all of the $4.7 billion in write-offs as of December 31, 2000, and net
undercollected transition costs incurred through August 31, 2001.

If the CPUC approves SCE's URG application, as filed, SCE expects to reapply accounting principles for
rate-regulated enterprises for its generation assets.  These assets will then be subject to traditional
cost-of-service regulation.

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 on investment.  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 utility 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.  The distribution PBR was to have ended in
December 2001, but in June 2001 the CPUC extended the mechanism until SCE's next general rate case, which will be
effective in 2003.  A CPUC proposed decision on the PBR

Page 16

- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


mechanism for 2002 was issued in January 2002.  The proposed decision authorized SCE to use a formula to
determine its distribution revenue requirement for the last half of 2001 and 2002, and a revenue balancing
account to ensure that variations in sales do not result in under or overcollections.  A final decision is
expected in second quarter 2002.  At this time, SCE cannot predict the effect of the final decision on its
results of operations.

In December 2001, SCE filed its 2003 general rate case with the CPUC, requesting an increase of approximately
$500 million in revenue (compared to 2000 recorded revenue) for its distribution and generation operations.
Hearings are expected to begin in July 2002, with a final decision expected in second quarter 2003.

Transmission

Transmission revenue is determined through FERC-authorized rates and is subject to refund.

Wholesale Electricity Markets

In October 2000, SCE filed a joint petition urging the FERC to immediately find the California wholesale
electricity market to be not workably competitive, immediately impose a cap on the price for energy and ancillary
services, and institute further expedited proceedings regarding the market failure, mitigation of market power,
structural solutions and responsibility for refunds.  In December 2000, the FERC took limited action and failed
to impose a price cap.  SCE filed an emergency petition in the federal court of appeals challenging the FERC
order and requesting the FERC to immediately establish cost-based wholesale rates.  The court denied SCE's
petition in January 2001.

In its December 2000 order, the FERC established an underscheduling penalty effective January 1, 2001, applicable
to scheduling coordinators that do not schedule sufficient resources to supply 95% of their respective loads.  In
December 2001, the FERC eliminated the underscheduling penalty retroactive to January 1, 2001.

On April 25, 2001, after months of extremely high power prices, the FERC issued an order providing for energy
price controls during ISO Stage 1 or greater power emergencies (7% or less in reserve power).  The order
establishes an hourly clearing price based on the costs of the least efficient generating unit during the
period.  Effective June 20, 2001, the FERC expanded the April 25, 2001, order to include non-emergency periods
and price mitigation in the 11-state western region.  The latest order is in effect until September 30, 2002.

After unsuccessful settlement negotiations among utilities, power sellers and state representatives, on July 25,
2001, the FERC issued an order that limits potential refunds from alleged overcharges to the ISO and PX spot
markets during the period from October 2, 2000, through June 20, 2001, and adopted a refund methodology based on
daily spot market gas prices.  An administrative law judge will conduct evidentiary hearings on this matter.  SCE
cannot predict the amount of any potential refunds.  Under the settlement of litigation with the CPUC, refunds
will be applied to the balance in the PROACT.

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 12 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 42 identified sites is $111
million.  SCE believes that, due to uncertainties inherent in the estimation process, it is reasonably possible
that cleanup costs could exceed its recorded liability by up to $279 million.  In 1998, SCE sold all of its
gas-fueled power plants but has retained some liability associated with the divested properties.


Page 17


- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition


The CPUC allows SCE to recover environmental-cleanup costs at certain sites, representing $50 million of its
recorded liability, through an incentive mechanism, which is discussed in Note 12.  SCE has recorded a regulatory
asset of $76 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 $10 million to $25 million.  Recorded costs for the year ended December 31, 2001, were $18
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 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.  The EPA issued its final rule on February 8, 2002, which incorporates the terms of the consent
decree into the visibility provisions of its Federal Implementation Plan for Nevada, making the terms of the
consent decree federally enforceable.

SCE's share of the costs of complying with the consent decree and taking other actions to continue operation of
the Mohave station is estimated to be approximately $560 million over the next four years.  However, SCE has
suspended its efforts to seek approval to install the Mohave controls because it has not obtained reasonable
assurance of an adequate coal supply for operating Mohave beyond 2005.  If an adequate coal supply is not
obtained, it will become necessary to shut down the Mohave station after December 31, 2005.  If the station is
shut down at that time, the shutdown is not expected to have a material adverse impact on SCE's financial
position or results of operations, assuming the remaining book value of the station (approximately $88 million as
of December 31, 2001), and plant closure and decommissioning-related costs are recoverable in future rates.  SCE
cannot predict what effect any future actions by the CPUC may have on this matter.

SCE's projected environmental capital expenditures are $1.3 billion for the 2002-2006 period, mainly for
undergrounding certain transmission and distribution lines.

San Onofre Nuclear Generating Station

In February 2001, SCE's San Onofre Unit 3 experienced a fire due to an electrical fault in the non-nuclear
portion of the plant.  The turbine rotors, bearings and other components of the turbine generator system were
damaged extensively.  In June 2001, Unit 3 returned to service.  Under the currently effective San Onofre
rate-recovery plan (discussed in the Generation and Power Procurement section of Regulatory Environment), SCE's
lost revenue was approximately $98 million as a result of the fire and related outage.



Page 18

- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


The San Onofre Units 2 and 3 steam generators' 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, 8% of Unit 2's tubes and 6% of Unit 3's tubes have been removed from service.  A decreasing
(favorable) trend in degradation has been observed in more recent inspections.

Critical Accounting Policies

The accounting policies described below are viewed by management as critical because their application is the
most relevant and material to SCE's results of operations and financial position and these policies require the
use of material judgments and estimates.

SCE applies accounting principles for rate-regulated enterprises to the portion of its operations, where
regulators set rates at levels intended to recover the estimated costs of providing service, plus a return on
capital.  Due to timing and other differences in the collection of revenue, these principles allow a cost that
would otherwise be charged to expense by a non-regulated entity to be capitalized as a regulatory asset, if it is
probable that the cost is recoverable through future rates, and conversely allow creation of a regulatory
liability for probable future costs collected through rates in advance.  See further discussion of regulatory
assets and liabilities in Note 1 to the Consolidated Financial Statements.

SCE applied judgment in the use of the above principles when it concluded, as of December 31, 2000, that $4.2
billion of generation-related regulatory assets and liabilities were no longer probable of recovery, and wrote
off these assets as a charge to earnings, and again in fourth quarter 2001 when it created the $3.6 billion
PROACT regulatory asset with a corresponding credit to earnings upon receiving regulatory assurance of collection
of these costs.  See further discussion in Earnings section.

New Accounting Standards

On January 1, 2001, SCE adopted a new accounting standard for derivative instruments and hedging activities.  The
standard requires derivatives to be recognized on the balance sheet at fair value, unless they meet the
definition of a normal purchase or sale.  Gains or losses from changes in the fair value of a recognized asset or
liability or a firm commitment are reflected in earnings for the ineffective portion of the hedge.  For a hedge
of the cash flows of a forecasted transaction, the effective portion of the gain or loss is initially recorded as
a separate component of shareholder's equity under the caption accumulated other comprehensive income, and
subsequently reclassified into earnings when the forecasted transaction affects earnings.  The ineffective
portion of the hedge is reflected in earnings immediately.  SCE does not anticipate any earnings impact from any
derivatives, since it expects that any market price changes will be recovered in rates.  In October 2001,
additional implementation guidance, which will be effective April 1, 2002, was issued.  SCE is still evaluating
the impact of this new implementation guidance.

In July and August 2001, three new accounting standards were issued:  Business Combinations; Goodwill and Other
Intangibles; and Accounting for Asset Retirement Obligations.

The new Business Combinations standard eliminates the pooling-of-interests method, effective June 30, 2001.
After that, all business combinations will be recorded under the purchase method (i.e., record purchase based
upon value exchanged and record goodwill for excess of costs over the net assets acquired).

The new Goodwill and Other Intangibles standard requires that companies cease amortizing goodwill, effective
January 1, 2002.  Goodwill initially recognized after June 30, 2001, will not be amortized.  Goodwill on the
balance sheet at June 30, 2001, was amortized until December 31, 2001.  Under the new standard, goodwill will be
tested for impairment using a fair-value approach when events or circumstances occur indicating that impairment
might exist.  Also, a benchmark assessment for goodwill is required within six months of the date of adoption of
the standard.

The Accounting for Asset Retirement Obligations standard requires entities to record the fair value of a
liability for a legal asset retirement obligation in the period in which it is incurred.  When the liability is

Page 19


- -------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations and Financial Condition


initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived
asset.  Over time, the liability is increased to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset.  Upon settlement of the liability, an entity either
settles the obligation for its recorded amount or incurs a gain or loss upon settlement.  The standard is
effective for SCE beginning on January 1, 2003.

SCE is studying the impact of the new Asset Retirement Obligations standard and is unable to predict at this time
the effect on its financial statements.  SCE does not anticipate any material impact on its results of operations
or financial position from the other two new accounting standards.

In October 2001, a new accounting standard was issued related to accounting for the impairment or disposal of
long-lived assets.  Although the standard supersedes a prior accounting standard related to the impairment of
long-lived assets, it retains the fundamental provisions of the impairment standard regarding
recognition/measurement of impairment of long-lived assets to be held and used and measurement of long-lived
assets to be disposed of by sale.  Under the new accounting standard, asset write-downs from discontinuing a
business segment will be treated the same as other assets held for sale.  The new standard also broadens the
financial statement presentation of discontinued operations to include the disposal of an asset group (rather
than a segment of a business).  The standard (effective on January 1, 2002) was adopted early, in fourth quarter
2001.  The adoption of this standard had no effect on SCE's financial statements.

Forward-looking Information

In the preceding Management's Discussion and Analysis of Results of Operations and Financial Condition and
elsewhere in this annual 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 important factors that may be outside SCE's control,
including among other things:  the outcome of the pending appeals of the stipulated judgment approving the
settlement agreement with the CPUC, and the effects of other legal actions or ballot initiatives, if any,
attempting to undermine the provisions of the settlement agreement or otherwise adversely affecting SCE; changes
in prices of wholesale electricity and natural gas or in SCE's operating costs, which could cause SCE's cost
recovery to be less than anticipated; the actions of securities rating agencies, including the determination of
whether or when to make changes in SCE's credit ratings, the ability of SCE to regain investment grade ratings,
and the impact of current or lowered ratings and other financial market conditions on the ability of SCE to
obtain needed financing on reasonable terms; further actions by state and federal regulatory bodies setting
rates, adopting or modifying cost recovery, accounting or rate-setting mechanisms and implementing the
restructuring of the electric utility industry, as well as legislative or judicial actions affecting the same
matters; the effects of increased competition in energy-related businesses, including the market entrants and the
effects of new technologies that may be developed in the future; new or increased environmental liabilities; and
weather conditions, natural disasters, and other unforeseen events.





Page 20



- -------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Income (Loss)                                        Southern California Edison Company


In millions                    Year ended December 31,                2001              2000               1999
- -------------------------------------------------------------------------------------------------------------------
Operating revenue                                                   $ 8,126            $ 7,870           $ 7,548
- -------------------------------------------------------------------------------------------------------------------

Fuel                                                                    212                195               215
Purchased power                                                       3,770              4,687             3,190
Provisions for regulatory adjustment clauses - net                   (3,028)             2,301              (763)
Other operation and maintenance                                       1,771              1,772             1,933
Depreciation, decommissioning and amortization                          681              1,473             1,548
Property and other taxes                                                112                126               122
Net gain on sale of utility plant                                        (9)               (25)               (3)
- -------------------------------------------------------------------------------------------------------------------

Total operating expenses                                              3,509             10,529             6,242
- -------------------------------------------------------------------------------------------------------------------

Operating income (loss)                                               4,617             (2,659)            1,306
Interest and dividend income                                            215                173                69
Other nonoperating income                                                57                118               162
Interest expense - net of amounts capitalized                          (785)              (572)             (483)
Other nonoperating deductions                                           (38)              (110)             (107)
- -------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes                                            4,066             (3,050)              947
Income tax (benefit)                                                  1,658             (1,022)              438
- -------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                     2,408             (2,028)              509
Dividends on preferred stock                                             22                 22                25
- -------------------------------------------------------------------------------------------------------------------

Net income (loss) available for common stock                        $ 2,386           $ (2,050)            $ 484
- -------------------------------------------------------------------------------------------------------------------



Consolidated Statements of Comprehensive Income (Loss)


In millions                    Year ended December 31,                2001              2000               1999
- -------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                   $ 2,408           $ (2,028)            $ 509
Other comprehensive income, net of tax:
   Unrealized gain on securities - net                                   --                  3                28
   Cumulative effect of change in accounting for derivatives            398                 --                --
   Unrealized loss on cash flow hedges                                 (420)                --                --
   Reclassification adjustment for loss included in net income (loss)    --                (25)              (45)
- -------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss)                                         $ 2,386           $ (2,050)            $ 492
- -------------------------------------------------------------------------------------------------------------------








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


Page 21


Consolidated Balance Sheets


In millions                                          December 31,                      2001                 2000
- -------------------------------------------------------------------------------------------------------------------

ASSETS
- -------------------------------------------------------------------------------------------------------------------

Cash and equivalents                                                                 $  3,414           $    583
Receivables, less allowances of $32 and $23
   for uncollectible accounts at respective dates                                       1,093                919
Accrued unbilled revenue                                                                  451                377
Fuel inventory                                                                             14                 12
Materials and supplies, at average cost                                                   146                132
Accumulated deferred income taxes - net                                                   433                545
Regulatory assets - net                                                                    83                 --
Prepayments and other current assets                                                      145                124
- -------------------------------------------------------------------------------------------------------------------

Total current assets                                                                    5,779              2,692
- -------------------------------------------------------------------------------------------------------------------

Nonutility property - less accumulated provision
   for depreciation of $17 and $11 at respective dates                                    159                102
Nuclear decommissioning trusts                                                          2,275              2,505
Other investments                                                                         224                 90
- -------------------------------------------------------------------------------------------------------------------

Total investments and other assets                                                      2,658              2,697
- -------------------------------------------------------------------------------------------------------------------

Utility plant, at original cost:
   Transmission and distribution                                                       13,568             13,129
   Generation                                                                           1,729              1,745
Accumulated provision for depreciation
   and decommissioning                                                                 (7,969)            (7,834)
Construction work in progress                                                             556                636
Nuclear fuel, at amortized cost                                                           129                143
- -------------------------------------------------------------------------------------------------------------------

Total utility plant                                                                     8,013              7,819
- -------------------------------------------------------------------------------------------------------------------

Regulatory assets - net                                                                 5,528              2,390
Other deferred charges                                                                    475                368
- -------------------------------------------------------------------------------------------------------------------

Total deferred charges                                                                  6,003              2,758
- -------------------------------------------------------------------------------------------------------------------






Total assets                                                                         $ 22,453           $ 15,966
- -------------------------------------------------------------------------------------------------------------------




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


Page 22



- -------------------------------------------------------------------------------------------------------------------
                                                                                 Southern California Edison Company

In millions, except share amounts                    December 31,                      2001                2000
- -------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDER'S EQUITY
- -------------------------------------------------------------------------------------------------------------------

Short-term debt                                                                      $  2,127           $  1,451
Long-term debt due within one year                                                      1,146                646
Preferred stock to be redeemed within one year                                            105                 --
Accounts payable                                                                        3,261              1,055
Accrued taxes                                                                             823                536
Regulatory liabilities - net                                                               --                195
Other current liabilities                                                               1,645              1,502
- -------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                               9,107              5,385
- -------------------------------------------------------------------------------------------------------------------

Long-term debt                                                                          4,739              5,631
- -------------------------------------------------------------------------------------------------------------------

Accumulated deferred income taxes - net                                                 3,365              2,009
Accumulated deferred investment tax credits                                               153                164
Customer advances and other deferred credits                                              739                722
Power-purchase contracts                                                                  356                467
Accumulated provision for pensions and benefits                                           420                296
Other long-term liabilities                                                               148                127
- -------------------------------------------------------------------------------------------------------------------

Total deferred credits and other liabilities                                            5,181              3,785
- -------------------------------------------------------------------------------------------------------------------

Commitments and contingencies
   (Notes 3, 11 and 12)

Preferred stock:
   Not subject to mandatory redemption                                                    129                129
   Subject to mandatory redemption                                                        151                256
- -------------------------------------------------------------------------------------------------------------------

Total preferred stock                                                                     280                385
- -------------------------------------------------------------------------------------------------------------------

   Common stock (434,888,104 shares outstanding
     at each date)                                                                      2,168              2,168
   Additional paid-in capital                                                             336                334
   Accumulated other comprehensive income (loss)                                          (22)                --
   Retained earnings (deficit)                                                            664             (1,722)
- -------------------------------------------------------------------------------------------------------------------

Total common shareholder's equity                                                       3,146                780
- -------------------------------------------------------------------------------------------------------------------



Total liabilities and shareholder's equity                                           $ 22,453           $ 15,966
- -------------------------------------------------------------------------------------------------------------------





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


Page 23



- ------------------------------------------------------------ ---------------------------------------------------------
Consolidated Statements of Cash Flows

In millions                    Year ended December 31,                2001                2000              1999
- -------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income (loss)                                                   $ 2,408            $ (2,028)         $   509
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
   Depreciation, decommissioning and amortization                       681               1,473            1,548
   Other amortization                                                    82                  97               95
   Deferred income taxes and investment tax credits                   1,313                (928)             178
   Regulatory assets - long-term - net                               (3,135)              1,759           (1,354)
   Gas call options                                                     (91)                 20               11
   Net gain on sale of marketable securities                             --                 (41)             (77)
   Other assets                                                         (68)                 24              (73)
   Other liabilities                                                     17                 (13)              17
   Changes in working capital:
     Receivables and accrued unbilled revenue                          (243)               (282)              99
     Regulatory liabilities - short-term - net                         (278)                 97              363
     Fuel inventory, materials and supplies                             (16)                 29               (5)
     Prepayments and other current assets                               (21)                (14)             (19)
     Accrued interest and taxes                                         365                  48             (186)
     Accounts payable and other current liabilities                   2,251                 588              352
- -------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                             3,265                 829            1,458
- -------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
Long-term debt issued                                                    --               1,760              491
Long-term debt repaid                                                    --                (525)            (363)
Bonds repurchased and funds held in trust                              (130)               (440)              --
Rate reduction notes repaid                                            (246)               (246)            (246)
Nuclear fuel financing - net                                            (21)                  9              (37)
Short-term debt financing - net                                         676                 655              326
Dividends paid                                                           (1)               (395)            (686)
- -------------------------------------------------------------------------------------------------------------------

Net cash provided (used) by financing activities                        278                 818             (515)
- -------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
Additions to property and plant                                        (688)             (1,096)            (986)
Funding of nuclear decommissioning trusts                               (36)                (69)            (116)
Proceeds from sales of marketable securities                             --                  41               84
Sales of investments in other assets                                     12                  34               19
- -------------------------------------------------------------------------------------------------------------------

Net cash used by investing activities                                  (712)             (1,090)            (999)
- -------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and equivalents                       2,831                 557              (56)
Cash and equivalents, beginning of year                                 583                  26               82
- -------------------------------------------------------------------------------------------------------------------

Cash and equivalents, end of year                                   $ 3,414               $ 583           $   26
- -------------------------------------------------------------------------------------------------------------------

Cash payments for interest and taxes:
Interest - net of amounts capitalized                              $    455               $ 303            $ 287
Tax payments (receipts)                                                (105)                306              433



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


Page 24



- ----------------------------------------------------------------------------- ----------------------------------------
                                                                                      Southern California Edison Company
Consolidated Statements of Changes in Common
Shareholder's Equity

                                                                           Accumulated                    Total
                                                          Additional          Other       Retained       Common
                                              Common        Paid-in       Comprehensive   Earnings    Shareholder's
In millions                                    Stock        Capital       Income (Loss)   (Deficit)      Equity
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1998                 $ 2,168        $ 334             $ 39      $    794         $ 3,335
- --------------------------------------------------------------------------------------------------------------------

Net income                                                                                   509             509
Unrealized gain on securities                                                   46                            46
   Tax effect                                                                  (18)                          (18)
Reclassified adjustment for gain
  included in net income                                                       (77)                          (77)
   Tax effect                                                                   32                            32
Dividends declared on common stock                                                          (666)           (666)
Dividends declared on preferred stock                                                        (25)            (25)
Stock option appreciation                                                                     (3)             (3)
Capital stock expense and other                                 1                             (1)             --
- --------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1999                 $ 2,168        $ 335             $ 22      $    608         $ 3,133
- --------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                                         (2,028)         (2,028)
Unrealized gain on securities                                                    8                             8
   Tax effect                                                                   (5)                           (5)
Reclassified adjustment for gain
  included in net income                                                       (41)                          (41)
   Tax effect                                                                   16                            16
Dividends declared on common stock                                                          (279)           (279)
Dividends declared on preferred stock                                                        (22)            (22)
Stock option appreciation                                                                     (1)             (1)
Capital stock expense and other                                (1)                                            (1)
- --------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2000                 $ 2,168        $ 334              $--      $ (1,722)        $   780
- --------------------------------------------------------------------------------------------------------------------

Net income                                                                                 2,408           2,408
Cumulative effect of change in
  accounting for derivatives                                                   398                           398
Unrealized loss on cash flow hedges                                           (420)                         (420)
Dividends accrued on preferred stock                                                         (22)            (22)
Capital stock expense and other                                 2                                              2
- -------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2001                 $ 2,168        $ 336            $ (22)     $    664         $ 3,146
- --------------------------------------------------------------------------------------------------------------------


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





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



Page 25



- -------------------------------------------------------------------------------------------------------------------
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 that supplies electric energy to a
50,000 square-mile area of central, coastal and southern California.

SCE operates in a highly regulated environment and has an exclusive franchise within its service territory.  SCE
has an obligation to deliver electric service to its customers and regulatory authorities have an obligation to
provide just and reasonable rates.  In the mid-1990s, state lawmakers and the California Public Utilities
Commission (CPUC) initiated an electric industry restructuring process.  SCE, as directed by the CPUC, sold its
gas-fired generating stations.  See Note 3 for a further discussion of regulatory changes in the electric utility
industry.

Basis of Presentation

The consolidated financial statements include SCE and its subsidiaries.  Intercompany transactions have been
eliminated.  Certain prior-year amounts were reclassified to conform to the December 31, 2001, financial
statement presentation.

SCE's accounting policies conform to accounting principles generally accepted in the United States, including the
accounting principles for rate-regulated enterprises, which reflect the rate-making policies of the CPUC and the
Federal Energy Regulatory Commission (FERC).  Since 1997, as a result of industry restructuring legislation
enacted by the State of California and related changes in the rate recovery of generation-related assets, SCE has
used accounting principles applicable to enterprises in general for its investment in generation facilities.

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, financial instruments, decommissioning and contingencies are further
discussed in Notes 3, 4, 11 and 12 to the Consolidated Financial Statements, respectively.

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

Revenue

Operating revenue includes amounts for services rendered but unbilled at the end of each year.  Since January 17,
2001, power purchased by the California Department of Water Resources (CDWR) or through the Independent System
Operator (ISO) for SCE's customers is not considered a cost to SCE, since SCE is acting as an agent for these
transactions.  Further, amounts billed to ($2.0 billion in 2001) and collected from its customers for these power
purchases are being remitted to the CDWR and are not recognized as revenue to SCE.  See further discussion in
Note 3.

Related Party Transactions

Certain Edison Mission Energy (a wholly owned subsidiary of Edison International) subsidiaries have 49% - 50%
ownership in partnerships (qualifying facilities (QFs)) that sell electricity generated by their project
facilities to SCE under long-term power purchase agreements with terms and pricing approved by the CPUC.  SCE's
purchases from these partnerships were $983 million in 2001, $716 million in 2000 and $513 million in 1999.


Page 26


- ----------------------------------------------------------------------------------------------------------------
                                                                              Southern California Edison Company

Purchased Power

SCE purchased power through the California Power Exchange (PX) from April 1998 through mid-January 2001.  SCE has
bilateral forward contracts with other entities (as discussed in Note 4) and power-purchase contracts with other
utilities and independent power producers classified as QFs.  Purchased power detail is provided below:

         In millions         Year ended December 31,                 2001             2000           1999
- ----------------------------------------------------------------------------------------------------------

         PX/ISO:
         Purchases                                               $    775          $ 8,449        $ 2,490
         Generation sales                                             324            6,120          1,719
- ----------------------------------------------------------------------------------------------------------

         Purchased power - PX/ISO - net                               451            2,329            771
         Purchased power - bilateral contracts                        188               --             --
         Purchased power - interutility/QF contracts                3,131            2,358          2,419
- ----------------------------------------------------------------------------------------------------------

         Total                                                    $ 3,770          $ 4,687        $ 3,190
- ----------------------------------------------------------------------------------------------------------


Since January 17, 2001, all other power is purchased by the CDWR for delivery to SCE's customers and is not
considered a cost to SCE.

Planned Major Maintenance

Certain plant facilities require major maintenance on a periodic basis.  All such costs are expensed as incurred.

Other Nonoperating Income and Deductions

Other nonoperating income and deductions was comprised of:

         In millions         Year ended December 31,                 2001             2000           1999
- ----------------------------------------------------------------------------------------------------------

         Gain on sale of marketable securities                     $   --           $   41         $   77
         AFUDC                                                         16               21             24
         Other                                                         41               56             61
- ----------------------------------------------------------------------------------------------------------

         Total other nonoperating income                           $   57            $ 118          $ 162
- ----------------------------------------------------------------------------------------------------------

         Provisions for regulatory issues and refunds              $    7           $   78         $   79
         Other                                                         31               32             28
- ----------------------------------------------------------------------------------------------------------

         Total other nonoperating deductions                       $   38            $ 110          $ 107
- ----------------------------------------------------------------------------------------------------------


Cash Equivalents

Cash equivalents include time deposits and other investments with original maturities of three months or less.
All investments are classified as available for sale.

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.

Investments

Net unrealized gains (losses) on equity investments 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.


Page 27

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Utility Plant

Utility 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 in other nonoperating  income.  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.

AFUDC - equity was $7 million in 2001, $11 million in 2000 and $13 million in 1999.  AFUDC - debt was $9 million
in 2001, $10 million in 2000 and $11 million in 1999.

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
3.6% for 2001, 2000 and 1999.

SCE's net investment in generation-related utility plant was $1.0 billion at both December 31, 2001, and December
31, 2000.

Nuclear

During the second quarter of 1998, SCE reduced its remaining nuclear plant investment by $2.6 billion (book value
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.  The reclassification had no effect on SCE's 1998
results of operations.

SCE had been 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 was to
continue through December 2001, earning a 7.35% fixed rate of return on investment.  San Onofre's operating
costs, including nuclear fuel and nuclear fuel financing costs, and incremental capital expenditures, were
recovered through an incentive pricing plan that allows SCE to receive about 4 cents per kilowatt-hour through
2003.  Any differences between these costs and the incentive price would 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, were subject to balancing account treatment through December 31,
2001.  The San Onofre and Palo Verde rate recovery plans and the Palo Verde balancing account were part of the
transition cost balancing account (TCBA).

The nuclear rate-making plans and the TCBA mechanism were to continue for rate-making purposes at least through
2001 for Palo Verde operating costs and through 2003 for the San Onofre incentive pricing plan.  However, due to
the various unresolved regulatory and legislative issues (as discussed in Note 3), as of December 31, 2000, SCE
was no longer able to conclude that the unamortized nuclear investment was probable of recovery through the
rate-making process.  As a result, this balance was written off as a charge to earnings at that time.  Should
SCE's utility-retained generation (URG) application be approved, SCE would reestablish for financial reporting
purposes its unamortized nuclear investment and related flow-through taxes, retroactive to August 31, 2001, based
on a 10-year recovery period, effective January 1, 2001, with a corresponding credit to earnings, and adjust the
PROACT regulatory asset balance to reflect recovery of the nuclear investment in accordance with the final URG
decision.

The benefits of operation of the Palo Verde and San Onofre units were required to be shared equally with
ratepayers beginning in 2002 and 2004, respectively.  In a June 2001 decision, the CPUC granted SCE's request to
eliminate the San Onofre post-2003 benefit sharing mechanism.  The CPUC based its action on compliance with a new
state law.  In a September 2001 decision, the CPUC granted SCE's request to eliminate the Palo Verde post-2001
benefit sharing mechanism and to continue the current rate-making treatment for Palo Verde, including the
continuation of the existing nuclear unit incentive procedure with a

Page 28

- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


5 cents per kWh cap on replacement power costs, until resolution of SCE's next general rate case or further CPUC
action.  Palo Verde's existing nuclear unit incentive procedure calculates a reward for performance of any unit
above an 80% capacity factor for a fuel cycle.  See discussion in Note 3 for the proposed and alternate
decisions' impact on the incentive pricing plans.

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.

The TCBA was established for the recovery of generation-related transition costs during the four-year rate freeze
period.  The transition revenue account (TRA) was a CPUC-authorized regulatory asset account in which SCE
recorded the difference between revenue received from customers through frozen rates and the costs of providing
service to customers, including power procurement costs.  SCE's discontinuance of accounting principles for
rate-regulated enterprises applicable to its generation assets did not result in a write-off of its
generation-related regulatory assets at that time since the CPUC had approved recovery of these assets through
the TCBA mechanism.

The gains resulting from the sale of 12 of SCE's generating plants during 1998 have been credited to the TCBA.
The coal and hydroelectric generation balancing accounts tracked the differences between market revenue from coal
and hydroelectric generation and the plants' operating costs after April 1, 1998.

On March 27, 2001, the CPUC issued a decision stating, among other things, that the rate freeze had not ended,
and the TCBA mechanism was to remain in place.  However, the decision required SCE to recalculate the TCBA
retroactive to January 1, 1998, the beginning of the rate freeze period.  The new calculation required the coal
and hydroelectric balancing account overcollections (which amounted to $1.5 billion as of December 31, 2000) to
be transferred monthly to the TRA, rather than annually to the TCBA (as previously required).  In addition, it
required the TRA to be transferred to the TCBA on a monthly basis.  Previous rules had called only for
overcollections to be transferred to the TCBA monthly, while undercollections were to remain in the TRA until
they were recovered from future overcollections or the end of the rate freeze, whichever came first.

There are many factors that affect SCE's ability to recover its regulatory assets.  SCE assessed the probability
of recovery of its generation-related regulatory assets in light of the CPUC's March 27, 2001, decisions,
including the retroactive transfer of balances from SCE's TRA to the TCBA and related changes.  These decisions
and other regulatory and legislative actions did not meet SCE's prior expectation that the CPUC would provide
adequate cost recovery mechanisms.  SCE was unable to conclude that its generation-related regulatory assets were
probable of recovery through the rate-making process as of December 31, 2000.  Therefore, in accordance with
accounting rules, SCE recorded a $2.5 billion after-tax charge to earnings at that time, to write off the TCBA
and other regulatory assets.

In addition to the TCBA, generation-related regulatory assets totaling $1.3 billion (including the unamortized
nuclear investment, flow-through taxes, unamortized loss on sale of plant, purchased-power settlements and other
regulatory assets) were written off as of December 31, 2000.

In accordance with an October 2001 settlement agreement between the CPUC and SCE, the CPUC passed a resolution on
January 23, 2002, allowing SCE to establish the procurement-related obligations account (PROACT) regulatory asset
for previously incurred energy procurement costs, retroactive to August 31, 2001. The settlement agreement calls
for the end of the TCBA mechanism as of August 31, 2001, and continuation of the rate freeze (including
surcharges) until the earlier of December 31, 2003, or the date SCE recovers its previously incurred
(undercollected) power procurement costs.  During a period beginning on September 1, 2001, and ending on the
earlier of the date that SCE has recovered all of its procurement-related obligations recorded in the PROACT or
December 31, 2005, SCE will apply to the

Page 29

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


PROACT the difference between SCE's revenue from retail electric rates (including surcharges) and the costs that
SCE is authorized by the CPUC to recover in retail electric rates.  The balance in the PROACT will accrue
interest.  If SCE has not recovered the entire balance by December 31, 2003, the unrecovered balance will be
amortized for up to an additional two years.

Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are:

       In millions                           December 31,                         2001             2000
- -----------------------------------------------------------------------------------------------------------

       PROACT                                                                   $ 2,641          $     --
       Rate reduction notes - transition cost deferral                            1,453             1,090
       Other:
         Flow-through taxes                                                       1,017               874
         Unamortized loss on reacquired debt                                        254               273
         Environmental remediation                                                   57                52
         Regulatory balancing accounts and other                                    189               (94)
- -----------------------------------------------------------------------------------------------------------

       Total                                                                    $ 5,611           $ 2,195
- -----------------------------------------------------------------------------------------------------------


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

Balancing account undercollections and overcollections accrue interest based on a three-month commercial paper
rate published by the Federal Reserve.  Income tax effects on all balancing account changes are deferred.

New Accounting Standards

On January 1, 2001, SCE adopted a new accounting standard for derivative instruments and hedging activities.
Adoption of this standard had no material impact on SCE's financial statements.  An authoritative accounting
interpretation issued in October 2001 precludes fuel contracts that have variable amounts from qualifying under
the normal purchases and sales exception effective April 1, 2002.  SCE is still evaluating the impact of this new
interpretation.

In July and August 2001, three new accounting standards were issued:  Business Combinations; Goodwill and Other
Intangibles; and Accounting for Asset Retirement Obligations.

The new Business Combinations standard eliminates the pooling-of-interests method, effective June 30, 2001.
After that, all business combinations will be recorded under the purchase method (record goodwill for excess of
costs over the net assets acquired).

The new Goodwill and Other Intangibles standard requires that companies cease amortizing goodwill, effective
January 1, 2002.  Goodwill initially recognized after June 30, 2001, was not amortized.  Goodwill on the balance
sheet at June 30, 2001, was amortized until December 31, 2001.  Under the new standard, goodwill will be tested
for impairment using a fair-value approach when events or circumstances occur indicating that impairment might
exist.  Also, a benchmark assessment for goodwill is required within six months of the date of adoption of the
standard.

The Accounting for Asset Retirement Obligations standard requires entities to record the fair value of a
liability for a legal asset retirement obligation in the period in which it is incurred.  When the liability is
initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived
asset.  Over time, the liability is increased to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset.  Upon settlement of the liability, an entity either
settles the obligation for its recorded amount or incurs a gain or loss upon settlement.  The standard is
effective for SCE on January 1, 2003.


Page 30

- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


SCE is studying the impact of the new Asset Retirement Obligations standard, and is unable to predict at this
time the effect on its financial statements.  SCE does not anticipate any material impact on its results of
operations or financial position from the Business Combinations and Goodwill and Other Intangibles accounting
standards.

In October 2001, a new accounting standard was issued related to accounting for the impairment or disposal of
long-lived assets.  Although the standard supersedes a prior accounting standard related to the impairment of
long-lived assets, it retains the fundamental provisions of the impairment standard regarding
recognition/measurement of impairment of long-lived assets to be held and used and measurement of long-lived
assets to be disposed of by sale.  Under the new accounting standard, asset write-downs from discontinuing a
business segment will be treated the same as other assets held for sale.  The new standard also broadens the
financial statement presentation of discontinued operations to include the disposal of an asset group (rather
than a segment of a business).  The standard (effective on January 1, 2002) was adopted early, in fourth quarter
2001.  The adoption of this new standard had no effect on SCE's financial statements.

Note 2.  Liquidity Issues

SCE's liquidity is affected primarily by regulation affecting its ability to recover the cost of power purchases,
debt maturities, access to capital markets, credit ratings, dividend payments and capital expenditures.  Capital
resources include cash from operations and external financings.

Undercollections in the TRA and TCBA mechanisms, coupled with SCE's anticipated near-term capital requirements
and the adverse reaction of the credit markets to continued regulatory uncertainty regarding SCE's ability to
recover its current and future power procurement costs, materially and adversely affected SCE's liquidity
throughout 2001.  As a result of its liquidity concerns, SCE took steps to conserve cash to continue to provide
service to its customers.  As a part of this process, beginning in January 2001, SCE suspended payments owed to
the ISO, the PX and QFs, deferred payments of certain obligations for principal and interest on outstanding debt
and did not declare dividends on any of its cumulative preferred stock.  As applicable, unpaid obligations
continued to accrue interest.  As of March 31, 2001, SCE resumed payment of interest on its debt obligations.
However, since June 30, 2001, SCE deferred the interest payments on its quarterly income debt securities
(subordinated debentures), as allowed by the terms of the securities.  See Note 5.  As long as accumulated
dividends on SCE's preferred stock remained unpaid, SCE could not pay any dividends on its common stock.  Common
stock dividends are additionally restricted as detailed in Note 3.

Based on the rights to cost recovery and revenue established by the settlement agreement with the CPUC and CPUC
implementing orders, including the PROACT resolution, SCE repaid its undisputed past-due obligations on March 1,
2002, with lump-sum payments to creditors from the proceeds of $1.6 billion in senior secured credit facilities,
the remarketing of $196 million in pollution control bonds which were repurchased in late 2000, and existing cash
on hand.  The $1.6 billion senior secured credit facilities consist of a $300 million, two-year revolving credit
loan, a $600 million, one-year loan and a $700 million, three-year loan.  See Note 5.

The proceeds from the senior secured credit facilities and pollution control bond remarketing were used along
with SCE's available cash to repay $3.2 billion in past-due obligations and $1.65 billion in near-term debt
maturities.  The past-due obligations consisted of:  (1) $875 million to the PX; (2) $99 million to the ISO;
(3) $1.1 billion to QFs; (4) $193 million in PX energy credits for energy service providers; (5) $531 million of
matured commercial paper; (6) $400 million of principal on its 5-7/8% and 6-1/2% senior unsecured notes which
were issued prior to the energy crisis; and (7) $23 million in preferred dividends in arrears.  After making
these payments, SCE has no material undisputed obligations that are past due or in default.  The near-term debt
maturities consisted of credit facilities whose maturity dates were extended several times and were scheduled to
mature in March and May 2002.  In addition, SCE has entered into an agreement with the CDWR to pay for prior
deliveries of energy in installments of $100 million on April 1, 2002, $150 million on June 3, 2002, and the
balance on July 1, 2002.


Page 31

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


SCE's Board of Directors has not declared quarterly common stock dividends to SCE's parent, Edison International,
since September 2000.  Payment of dividends on SCE's common stock is restricted by the settlement agreement
between the CPUC and SCE as detailed in Note 3.

Note 3.  Regulatory Matters

CPUC Litigation Settlement Agreement

In November 2000, SCE filed a lawsuit against the CPUC in federal district court, seeking a ruling that SCE is
entitled to full recovery of its past electricity procurement costs in accordance with the tariffs filed with the
FERC.  By agreement of the parties, a stay of the lawsuit was issued in April 2001 while SCE sought
implementation of legislative, regulatory and executive actions to resolve the California energy crisis and SCE's
related financial and liquidity problems.  In October 2001, the court entered a stipulated judgment approving an
agreement between the CPUC and SCE to settle the pending lawsuit.  On January 23, 2002, the CPUC adopted a
resolution implementing the settlement agreement.

Key elements of the settlement agreement include the following items:

o        Establishment of the PROACT as of September 1, 2001, with an opening balance equal to the amount of
     SCE's procurement-related liabilities as of August 31, 2001 (approximately $6.4 billion), less SCE's cash and
     cash equivalents as of that date (approximately $2.5 billion), and less $300 million.

o        Beginning September 1, 2001, SCE will apply to the PROACT, on a monthly basis, the difference between
     SCE's revenue from retail electric rates (including surcharges) and the costs that SCE is authorized by the
     CPUC to recover in retail electric rates.  Unrecovered obligations in the PROACT will accrue interest from
     September 1, 2001.

o        Maintain current rates (including surcharges) in effect until December 31, 2003, subject to certain
     adjustments or, if earlier, until the date that SCE recovers the entire PROACT balance.  If SCE has not
     recovered the entire balance by December 31, 2003, the unrecovered balance will be amortized for up to an
     additional two years.  The parties project that existing retail electric rates, including surcharges and as
     adjusted to reflect certain costs, will likely result in SCE recovering substantially all of its unrecovered
     procurement-related obligations prior to the end of 2003.

o        If the CPUC concludes that it is desirable to authorize a securitized financing of SCE's
     procurement-related obligations, the parties will work together to achieve the securitization.  Proceeds of
     any securitization will be credited to the PROACT when they are actually received.

o        During the period that SCE is recovering its previously incurred procurement-related obligations, no
     penalty will be imposed by the CPUC on SCE for any noncompliance with CPUC-mandated capital structure
     requirements.

o        SCE can incur up to $250 million of recoverable costs to acquire financial instruments and engage in
     other transactions intended to hedge fuel cost risks associated with SCE's retained generation assets and
     power purchase contracts with QFs and other utilities.  As of December 31, 2001, SCE had purchased $209
     million in hedging instruments.

o        SCE will not declare or pay dividends or other distributions on its common stock (all of which is held
     by its parent) prior to the earlier of the date SCE has recovered all of its procurement-related obligations
     in the PROACT or January 1, 2005.  However, if SCE has not recovered all of its procurement-related
     obligations by December 31, 2003, SCE may apply to the CPUC for consent to resume common stock dividends,
     and the CPUC will not unreasonably withhold its consent.



Page 32

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                                                                                Southern California Edison Company


o    To ensure the ability of SCE to continue to provide adequate service, SCE may make capital expenditures above the
     level contained in current rates, up to $900 million per year, which will be treated as recoverable costs.

o    Subject to certain qualifications, SCE will cooperate with the CPUC and the California Attorney General
     to pursue and resolve SCE's claims and rights against sellers of energy and related services, SCE's defenses
     to claims arising from any failure to make payments to the PX or ISO, and similar claims by the State of
     California or its agencies against the same adverse parties.  During the recovery period discussed above,
     refunds obtained by SCE related to its procurement-related liabilities will be applied to the balance in the
     PROACT.

The settlement agreement states that one of its purposes is to restore the investment grade creditworthiness of
SCE as rapidly as reasonably practicable so that it will be able to provide reliable electrical service as a
state-regulated entity as it has in the past.  SCE cannot provide assurance that it will regain investment grade
credit ratings by any particular date.

On November 28, 2001, a federal court of appeals denied a California consumer group's request for a long-term
stay of the settlement.  The group had alleged that it was denied due process and that the CPUC had no authority
to agree with SCE to violate the statutory rate freeze.  In its ruling, the federal court of appeals also granted
SCE's request for an expedited hearing of the appeal of the settlement filed by the consumer group.  On March 4,
2002, the court of appeals heard argument on the appeal and the matter is now under submission.  A decision could
be issued anytime during the next several months.  SCE cannot predict the outcome of the appeal or the impact
that any outcome would have upon the stipulated judgment or settlement.  Possible outcomes include affirmance, a
return to the district court or reversal of the stipulated judgment.  SCE cannot predict whether or how a ruling
on the stipulated judgment could also affect the settlement agreement.

CDWR Power Purchases

In accordance with an emergency order signed by the governor, the CDWR began making emergency power purchases for
SCE's customers on January 17, 2001.  Amounts SCE bills to and collects from its customers for electric power
purchased and sold by the CDWR and through the ISO are remitted directly to the CDWR and are not recognized as
revenue by SCE.  In February 2001, Assembly Bill 1 (First Extraordinary Session, AB 1X) was enacted into law.
AB 1X authorized the CDWR to enter into contracts to purchase electric power and sell power at cost directly to
retail customers being served by SCE, and authorized the CDWR to issue bonds to finance electricity purchases.

On March 27, 2001, the CPUC issued an interim order requiring SCE to pay the CDWR a per-kWh price equal to the
applicable generation-related retail rate per kWh for electricity (based on rates in effect on January 5, 2001),
for each kWh the CDWR sells to SCE's customers.  The CPUC determined that the generation-related retail rate
should be equal to the total bundled electric rate (including the 1 cent per kWh surcharge adopted by the CPUC on
January 4, 2001) less certain nongeneration-related rates or charges.  For the period January 19 through
January 31, 2001, the CPUC ordered SCE to pay the CDWR at a rate of 6.277 cents per kWh for power delivered to
SCE's customers.  The CPUC determined that the applicable rate component is 7.277 cents per kWh (which increased
to 10.277 cents per kWh for electricity delivered after March 27, 2001, due to the 3 cents surcharge discussed in
Rate Stabilization Proceedings), for electricity delivered by the CDWR to SCE's retail customers after
February 1, 2001, until more specific rates are calculated.  The CPUC ordered SCE to pay the CDWR within 45 days
after the CDWR supplies power to retail customers, subject to penalties for each day the payment is late.

On February 21, 2002, the CPUC issued a decision implementing a CDWR revenue requirement of $9.0 billion to pay
its bonds' costs and energy procurement costs for the period January 17, 2001, through December 31, 2002.  The
decision states that SCE's allocated share of this revenue requirement would be approximately $3.6 billion, and
changes SCE's payment to 9.744 cents per kWh for all bills rendered on or after March 15, 2002.  The decision
requires SCE to pay the CDWR in equal monthly installments over a


Page 33

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


six-month period the difference in rates between January 17, 2001, and March 15, 2002.  SCE estimates that this
amount is approximately $41 million.

On February 28, 2002, SCE and the CDWR executed an agreement that resolves outstanding issues relating to the
payment for electric power purchased for SCE's customers through the ISO real-time market (known as imbalance
energy).  Under this agreement, SCE will pay the CDWR for imbalance energy previously delivered in three
installments ($100 million on April 1, 2002; $150 million on June 3, 2002; and the balance on July 1, 2002).

Rate Stabilization Proceedings

In January 2000, SCE filed an application with the CPUC proposing rates that would go into effect when the
four-year rate freeze was to end on March 31, 2002, or earlier, depending on the pace of transition cost
recovery.  In December 2000, SCE filed an amended rate stabilization plan application, stating that the statutory
rate freeze had ended in accordance with California law, and requesting the CPUC to approve an immediate 30%
increase to be effective, subject to refund, January 4, 2001.

In January 2001, independent auditors hired by the CPUC issued a report on the financial condition and solvency
of SCE and its affiliates.  The report confirmed what SCE had previously disclosed to the CPUC in public filings
about SCE's financial condition.  The audit report covered, among other things, cash needs, credit relationships,
accounting mechanisms to track stranded cost recovery, the flow of funds between SCE and Edison International,
and earnings of SCE's California affiliates.  In April 2001, the CPUC adopted an order instituting investigation
that reopens the past CPUC decision authorizing the utilities to form holding companies and initiates an
investigation into: whether the holding companies violated CPUC requirements to give first priority to the
capital needs of their respective utility subsidiaries; whether ring-fencing actions by Edison International and
PG&amp;E Corporation and their respective nonutility affiliates also violated the requirements to give first priority
to the capital needs of their utility subsidiaries; whether the payment of dividends by the utilities violated
requirements that the utilities maintain dividend policies as though they were comparable stand-alone utility
companies; any additional suspected violations of laws or CPUC rules and decisions; and whether additional rules,
conditions, or other changes to the holding company decisions are necessary.  The CPUC ordered testimony and
briefing on these matters, which SCE filed in May and June 2001.  On January 9, 2002, the CPUC issued an interim
decision on the first priority condition.  The decision stated that, at least under certain circumstances, the
condition includes the requirement that holding companies infuse all types of capital into their respective
utility subsidiaries when necessary to fulfill the utility's obligation to serve.  On February 11, 2002, SCE
filed an application for rehearing of the decision stating that the decision is an unlawful and erroneous attempt
to rewrite the first priority condition rather than interpret it and that the decision could result in higher
rates for SCE's customers.  Neither Edison International nor SCE can predict what effects this investigation or
any subsequent actions by the CPUC may have on either one of them.

In March 2001, the CPUC ordered a rate increase in the form of a 3 cents per kWh surcharge applied only to
going-forward electric power procurement costs, effective immediately, and affirmed that a 1 cent interim
surcharge granted in January 2001 is permanent.  The 3 cents surcharge is to be added to the rate paid to the
CDWR.  Although the 3 cents increase was authorized as of March 27, 2001, the surcharge was not collected in
rates until the CPUC established a rate design in early June 2001.  To compensate for the two-month delay in
collecting the 3 cents surcharge, the CPUC authorized an additional1/2cent surcharge for a 12-month period
beginning in June 2001.

Utility-Retained Generation Proceeding

In June 2001, SCE filed a comprehensive proposal for new cost-of-service ratemaking for utility retained
generation through the end of 2002.  After that time, SCE's URG-related revenue requirement will be determined in
the general rate case.  The URG proposal calls for balancing accounts for SCE-owned generation, QF and
interutility contracts, procurement costs and ISO charges based on either actual or CPUC-authorized revenue
requirements.  Under the proposal, the four new balancing accounts would be effective January 1, 2001, for
capital-related costs, and February 1, 2001, for non-capital-related costs.  In

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                                                                                Southern California Edison Company


addition, SCE's unamortized nuclear investment would be amortized and recovered in rates over a 10-year period,
effective January 1, 2001.  Should this application be approved as filed, SCE expects to reestablish for
financial reporting purposes its unamortized nuclear investment and regulatory assets related to purchased-power
settlements and flow-through taxes, with a corresponding credit to earnings, and adjust the PROACT regulatory
asset balance in accordance with the final URG decision.

On January 18, 2002, a CPUC administrative law judge issued a proposed decision and a CPUC commissioner issued an
alternate proposed decision.  Both the proposed and alternate proposed decisions adopt most of the elements of
SCE's application, but propose eliminating an incentive pricing plan for San Onofre, effective January 1, 2002,
and replacing it with balancing account treatment for San Onofre's operating costs, subject to a later
reasonableness review.  On February 7, 2002, another CPUC commissioner issued an alternate proposed decision
recommending continuing the incentive pricing plan for San Onofre Units 2 and 3 through December 31, 2003, as
originally provided in CPUC decisions adopted in early 1996.  A final decision is expected in second quarter 2002.

Wholesale Electricity Markets

In October 2000, SCE filed a joint petition urging the FERC to immediately find the California wholesale
electricity market to be not workably competitive, immediately impose a cap on the price for energy and ancillary
services, and institute further expedited proceedings regarding the market failure, mitigation of market power,
structural solutions and responsibility for refunds.  In December 2000, the FERC took limited action and failed
to impose a price cap.  SCE filed an emergency petition in the federal court of appeals challenging the FERC
order and requesting the FERC to immediately establish cost-based wholesale rates.  The court denied SCE's
petition in January 2001.

In its December 2000 order, the FERC established an "underscheduling" penalty effective January 1, 2001,
applicable to scheduling coordinators that do not schedule sufficient resources to supply 95% of their respective
loads.  In December 2001, the FERC eliminated the underscheduling penalty retroactive to January 1, 2001.

On April 25, 2001, after months of extremely high power prices, the FERC issued an order providing for energy
price controls during ISO Stage 1 or greater power emergencies (7% or less in reserve power).  The order
establishes an hourly clearing price based on the costs of the least efficient generating unit during the
period.  Effective June 20, 2001, the FERC expanded the April 25, 2001, order to include non-emergency periods
and price mitigation in the 11-state western region.  The latest order is in effect until September 30, 2002.

After unsuccessful settlement negotiations among utilities, power sellers and state representatives, on July 25,
2001, the FERC issued an order that limits potential refunds from alleged overcharges to the ISO and PX spot
markets during the period from October 2, 2000, through June 20, 2001, and adopted a refund methodology based on
daily spot market gas prices.  An administrative law judge will conduct evidentiary hearings on this matter.  SCE
cannot predict the amount of any potential refunds.  Under the settlement of litigation with the CPUC, refunds
will be applied to the balance in the PROACT.

Note 4.  Derivative Instruments and Hedging Activities

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

On January 1, 2001, SCE adopted a new accounting standard for derivative instruments and hedging activities.  The
standard requires derivative instruments to be recognized on the balance sheet at fair value unless they meet the
definition of a normal purchase or sale.  The normal purchases and sales exception requires, among other things,
physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of
business.  Gains or losses from changes in the fair value of a recognized asset or liability or a firm commitment
are reflected in earnings for the ineffective portion of the

Page 35


- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


hedge.  For a hedge of the cash flows of a forecasted transaction, the effective portion of the gain or loss is
initially recorded as a separate component of shareholder's equity under the caption "accumulated other
comprehensive income," and subsequently reclassified into earnings when the forecasted transaction affects
earnings.  The ineffective portion of the hedge is reflected in earnings immediately.

SCE recorded its interest rate swap agreement (terminated January 5, 2001) and its block forward power-purchase
contracts at fair value effective January 1, 2001.  The realized loss of $26 million on the interest rate swap
will be amortized over a period ending in 2008.  Due to downgrades in SCE's credit ratings and SCE's failure to
pay its obligations to the PX, the PX suspended SCE's market trading privileges and sought to liquidate SCE's
remaining block forward contracts.  Before the PX could do so, on February 2, 2001, the state seized the
contracts.  On September 30, 2001, a federal appeals court ruled that the governor of California acted illegally
when he seized the contracts held by SCE.  In conjunction with its settlement agreement with the CPUC, SCE has
agreed to release any claim for compensation against the state for these contracts.  However, if the PX prevails
in its claims against the state, SCE may receive some refunds.

SCE has bilateral forward power contracts, which are considered normal purchases under accounting rules.  SCE is
exposed to credit loss in the event of nonperformance by the counterparties to its bilateral forward contracts,
but does not expect the counterparties to fail to meet their obligations.  The counterparties are required to
post collateral depending on the creditworthiness of each counterparty.

In October and November 2001, SCE purchased $209 million of call options that mitigate its exposure to increases
in natural gas prices.  Amounts paid to QFs for energy are based on natural gas prices.  The options cover
various periods from 2002 through 2003, averaging 11 million MMBtus per month.  Any fair value changes for gas
call options are offset through a regulatory balancing account; therefore, fair value changes do not affect
earnings.

Fair values of financial instruments were:

       In millions                          December 31,               2001                  2000
- -----------------------------------------------------------------------------------------------------

       Financial assets:
       Decommissioning trusts                                        $ 2,275               $ 2,505
       Gas options                                                        91                    --

       Financial liabilities:
       DOE decommissioning and
          decontamination fees                                            25                    31
       Interest rate swap                                                 --                    21
       Short-term debt                                                 2,103                 1,339
       Long-term debt                                                  4,659                 5,178
       Preferred stock subject to
          mandatory redemption                                           118                   157
       Preferred stock to be redeemed
          within one year                                                102                    --
- -----------------------------------------------------------------------------------------------------


The fair value of financial assets is based on quoted market prices.

Financial liabilities' fair values are based on:  discounted future cash flows for U.S. Department of Energy
(DOE) decommissioning and decontamination fees; quoted market prices for the interest rate swap; and brokers'
quotes for short-term debt, long-term debt and preferred stock.  Due to their short maturities, amounts reported
for cash equivalents approximate fair value.

Note 5.  Long-Term Debt

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


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                                                                                Southern California Edison Company


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 arrangements with securities dealers to remarket or
purchase them if necessary.  As a result of investors' concerns regarding SCE's liquidity difficulties and
overall financial condition, SCE had to repurchase $550 million of pollution control bonds in December 2000 and
early 2001 that could not be remarketed in accordance with their terms.  On March 1, 2002, SCE sold approximately
$196 million of the pollution control bonds that SCE had repurchased in late 2000.

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, for which SCE has the ability to
refinance, 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.

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 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
accounting principles generally accepted in the United States, 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.  Due to SCE's
credit downgrade, in January 2001, SCE began remitting its customer collections related to the rate-reduction
notes on a daily basis.

Long-term debt consisted of:

     In millions              December 31,                             2001                    2000
- ----------------------------------------------------------------------------------------------------------

     First and refunding mortgage bonds:
       2002 - 2026 (5.625% to 7.25%)                                 $ 1,175                 $ 1,175
     Rate reduction notes:
       2002 - 2007 (6.22% to 6.42%)                                    1,478                   1,724
     Pollution-control bonds:
       2008 - 2040 (5.125% to 7.2% and variable)                       1,216                   1,216
     Bonds repurchased                                                  (550)                   (420)
     Funds held by trustees                                              (20)                    (20)
     Debentures and notes:
       2001 - 2029 (5.875% to 7.625% and variable)                     2,450                   2,450
     Subordinated debentures:
       2044 (8.375%)                                                     100                     100
     Commercial paper for nuclear fuel                                    60                      79
     Long-term debt due within one year                               (1,146)                   (646)
     Unamortized debt discount - net                                     (24)                    (27)
- ----------------------------------------------------------------------------------------------------------

     Total                                                           $ 4,739                 $ 5,631
- ----------------------------------------------------------------------------------------------------------



Page 37


- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Long-term debt maturities and sinking-fund requirements for the next five years are:  2002 - $1.1 billion; 2003 -
$1.4 billion; 2004 - $371 million; 2005 - $246 million; and 2006 - $446 million.

As a result of its liquidity concerns, SCE took steps to conserve cash to continue to provide service to its
customers.  As a part of this process, SCE suspended payments of certain obligations, including $400 million of
maturing principal on its 5-7/8% and 6-1/2% senior unsecured notes.  From June 30, 2001, SCE deferred the
interest payments on its quarterly income debt securities (subordinated debentures), as allowed by the terms of
the securities.  All interest in arrears will be paid on April 1, 2002.

On March 1, 2002, SCE closed on $1.6 billion in syndicated senior secured credit facilities providing for $600
million of one-year term loans, $700 million of three-year term loans, and $300 million of two-year revolving
credit loans.  The interest rate for the revolving credit loans and the one-year loan is a eurodollar rate plus
2.5% or a bank prime or equivalent rate plus 1.5%, at SCE's election.  The interest rate for the three-year loans
is a eurodollar rate plus 3% or a bank prime or equivalent rate plus a margin of 2%, at SCE's election.  The
credit facilities are secured by three newly issued series of SCE first mortgage bonds. The proceeds of the
loans, along with available cash, were used to repay all of SCE's past due obligations and near-term maturities,
which include the senior notes.

Note 6.  Short-Term Debt

Short-term debt is used to finance fuel inventories, balancing account undercollections and general cash
requirements, including power purchase payments.  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.

Short-term debt consisted of:

       In millions            December 31,                                  2001                 2000
- -----------------------------------------------------------------------------------------------------------

       Commercial paper                                                   $    531           $    700
       Bank loans                                                            1,650                835
       Other                                                                     6                 --
       Amount reclassified as long-term debt                                   (60)               (79)
       Unamortized discount                                                     --                 (5)
- -----------------------------------------------------------------------------------------------------------

       Total                                                               $ 2,127            $ 1,451
- -----------------------------------------------------------------------------------------------------------

       Weighted average interest rates                                       5.3%                6.9%


As of January 2001, SCE had borrowed the entire $1.65 billion in funds available under its credit lines.  The
proceeds were used in part to repurchase pollution control bonds; the balance was retained as a liquidity
reserve.  SCE conserved cash by deferring payment of $531 million of matured commercial paper.

SCE repaid its credit line borrowings and commercial paper using proceeds from its March 1, 2002, financings.
See further discussion in Note 2.

Note 7.  Preferred Stock

Authorized shares of preferred and preference stocks 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 next five years are:  2002 - $105 million; 2003 - $9 million;
2004 - $9 million; 2005 - $9 million; and 2006 - $9 million.



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                                                                                Southern California Edison Company

Cumulative preferred stocks consisted of:

Dollars in millions, except per share amounts        December 31,                             2001           2000
- -------------------------------------------------------------------------------------------------------------------

                                              December 31, 2001
                                       --------------------------------
                                         Shares            Redemption
                                       Outstanding            Price
                                       -----------        -------------

Not subject to mandatory redemption:
$25 par value:
4.08% Series                             1,000,000         $ 25.50                          $  25          $  25
4.24                                     1,200,000           25.80                             30             30
4.32                                     1,653,429           28.75                             41             41
4.78                                     1,296,769           25.80                             33             33
- -------------------------------------------------------------------------------------------------------------------
Total                                                                                       $ 129          $ 129
- -------------------------------------------------------------------------------------------------------------------

Subject to mandatory redemption:
$100 par value:
6.05% Series                               750,000        $ 100.00                          $  75          $  75
6.45                                     1,000,000          100.00                            100            100
7.23                                       807,000          100.00                             81             81

Preferred stock to be redeemed within one year                                               (105)            --
- -------------------------------------------------------------------------------------------------------------------
Total                                                                                       $ 151          $ 256
- -------------------------------------------------------------------------------------------------------------------


SCE did not issue or redeem any preferred stock in the last three years.

In 2001, SCE's Board did not declare the regular quarterly dividends for any of SCE's cumulative preferred
stock.  As of February 28, 2002, SCE's preferred stock dividends in arrears were $23 million.  On March 11, 2002,
SCE repaid its past due preferred stock dividends.

Note 8.  Income Taxes

SCE and its subsidiaries are included in Edison International's consolidated federal income tax and combined
state franchise tax returns.  Under an income tax allocation agreement approved by the CPUC, SCE calculates its
tax liability on a stand-alone basis.

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.



Page 39


- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


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

     In millions                               December 31,                           2001               2000
- ----------------------------------------------------------------------------------------------------------------

     Deferred tax assets:
     Decommissioning                                                              $     99          $      98
     Accrued charges                                                                   472                379
     Investment tax credits                                                             72                 81
     Property-related                                                                  192                277
     Regulatory balancing accounts                                                   1,709              1,763
     Unbilled revenue                                                                  (10)               101
     Unrealized gains or losses                                                        310                420
     Other                                                                             145                 56
- ----------------------------------------------------------------------------------------------------------------
     Total                                                                        $  2,989          $   3,175
- ----------------------------------------------------------------------------------------------------------------
     Deferred tax liabilities:
     Property-related                                                             $  2,248          $   2,184
     Capitalized software costs                                                        224                264
     Regulatory balancing accounts                                                   2,929              1,632
     Unrealized gains and losses                                                       208                317
     Other                                                                             312                242
- ----------------------------------------------------------------------------------------------------------------
     Total                                                                        $  5,921          $   4,639
- ----------------------------------------------------------------------------------------------------------------
     Accumulated deferred income taxes - net                                      $  2,932          $   1,464
- ----------------------------------------------------------------------------------------------------------------

     Classification of accumulated deferred income taxes:
     Included in deferred credits                                                 $  3,365          $   2,009
     Included in current assets                                                        433                545


The current and deferred components of income tax expense (benefit) were:

     In millions                 Year ended December 31,             2001             2000               1999
- ----------------------------------------------------------------------------------------------------------------

     Current:
     Federal                                                     $    240         $   (104)            $  299
     State                                                             29               --                 79
- ----------------------------------------------------------------------------------------------------------------

                                                                      269             (104)               378
- ----------------------------------------------------------------------------------------------------------------
     Deferred - federal and state:
     Accrued charges                                                  (79)            (133)               (76)
     Investment and energy tax credits - net                           (6)             (41)               (45)
     Property-related                                                 174             (302)              (194)
     Regulatory asset amortization                                   (138)             251                  7
     Regulatory balancing accounts                                  1,345             (740)               371
     State tax - privilege year                                       (36)              31                  7
     Unbilled revenue                                                 101               20                 (5)
     Other                                                             28               (4)                (5)
- ----------------------------------------------------------------------------------------------------------------

                                                                    1,389             (918)                60
- ----------------------------------------------------------------------------------------------------------------
     Total                                                       $  1,658         $ (1,022)            $  438
- ----------------------------------------------------------------------------------------------------------------


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



Page 40


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                                                                                Southern California Edison Company


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

                                 Year ended December 31,             2001             2000              1999
- --------------------------------------------------------------------------------------------------------------
     Federal statutory rate                                          35.0%            35.0%             35.0%
     Capitalized software                                             --               --               (2.4)
     Investment and energy tax credits                               (0.1)             1.4              (4.4)
     Property-related and other                                       0.1             (6.6)              9.3
     State tax - net of federal deduction                             5.8              3.7               8.5
- --------------------------------------------------------------------------------------------------------------
     Effective tax rate                                              40.8%            33.5%             46.0%
- --------------------------------------------------------------------------------------------------------------


Note 9.  Employee Compensation and Benefit Plans

Employee Savings Plan

SCE has a 401(k) defined-contribution savings plan designed to supplement employees' retirement income.  The plan
received employer contributions of $29 million in 2001, $29 million in 2000 and $25 million in 1999.

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:

In millions                             Year ended December 31,                        2001              2000
- -------------------------------------------------------------------------------------------------------------------

Change in benefit obligation
Benefit obligation at beginning of year                                               $ 2,200          $ 2,075
Service cost                                                                               67               63
Interest cost                                                                             154              155
Actuarial loss (gain)                                                                      88               90
Benefits paid                                                                            (182)            (183)
- -------------------------------------------------------------------------------------------------------------------

Benefit obligation at end of year                                                     $ 2,327          $ 2,200
- -------------------------------------------------------------------------------------------------------------------

Change in plan assets
Fair value of plan assets at beginning of year                                        $ 3,067          $ 3,078
Actual return on plan assets                                                             (162)             143
Employer contributions                                                                     --               29
Benefits paid                                                                            (182)            (183)
- -------------------------------------------------------------------------------------------------------------------

Fair value of plan assets at end of year                                              $ 2,723          $ 3,067
- -------------------------------------------------------------------------------------------------------------------

Funded status                                                                        $    396         $    867
Unrecognized net loss (gain)                                                             (234)            (745)
Unrecognized transition obligation                                                         17               22
Unrecognized prior service cost                                                           109              118
- -------------------------------------------------------------------------------------------------------------------

Recorded asset                                                                       $    288         $    262
- -------------------------------------------------------------------------------------------------------------------

Discount rate                                                                           7.0%             7.25%
Rate of compensation increase                                                           5.0%             5.0%
Expected return on plan assets                                                          8.5%             8.5%



Page 41


- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


Expense components were:

In millions                     Year ended December 31,                2001            2000              1999
- -------------------------------------------------------------------------------------------------------------------

Service cost                                                          $   67          $    63           $   66
Interest cost                                                            154              155              146
Expected return on plan assets                                          (251)            (266)            (188)
Special termination benefits                                              13               --               --
Net amortization and deferral                                             (9)             (40)              12
- -------------------------------------------------------------------------------------------------------------------
Expense under accounting standards                                       (26)             (88)              36
Regulatory adjustment - deferred                                          39               88               14
- -------------------------------------------------------------------------------------------------------------------
Total expense recognized                                              $   13          $    --           $   50
- -------------------------------------------------------------------------------------------------------------------


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:

In millions                     Year ended December 31,                                2001              2000
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

Change in benefit obligation
Benefit obligation at beginning of year                                               $ 1,762          $ 1,462
Service cost                                                                               44               39
Interest cost                                                                             129              121
Actuarial loss (gain)                                                                      61              202
Benefits paid                                                                             (71)             (62)
- -------------------------------------------------------------------------------------------------------------------

Benefit obligation at end of year                                                     $ 1,925          $ 1,762
- -------------------------------------------------------------------------------------------------------------------

Change in plan assets
Fair value of plan assets at beginning of year                                        $ 1,200          $ 1,283
Actual return on plan assets                                                              (92)             (40)
Employer contributions                                                                    102               19
Benefits paid                                                                             (71)             (62)
- -------------------------------------------------------------------------------------------------------------------

Fair value of plan assets at end of year                                              $ 1,139          $ 1,200
- -------------------------------------------------------------------------------------------------------------------

Funded status                                                                        $   (786)        $   (562)
Unrecognized net loss (gain)                                                              390              141
Unrecognized transition obligation                                                        295              323
- -------------------------------------------------------------------------------------------------------------------

Recorded asset (liability)                                                           $   (101)       $     (98)
- -------------------------------------------------------------------------------------------------------------------

Discount rate                                                                           7.25%             7.5%
Expected return on plan assets                                                          8.2%              8.2%

Expense components were:

In millions                     Year ended December 31,                2001            2000              1999
- -------------------------------------------------------------------------------------------------------------------

Service cost                                                         $    44         $     39          $    46
Interest cost                                                            129              121              109
Expected return on plan assets                                           (98)            (106)             (79)
Special termination benefits                                               2               --               --
Net amortization and deferral                                             27               27               27
- -------------------------------------------------------------------------------------------------------------------

Total expense                                                        $   104         $     81          $   103
- -------------------------------------------------------------------------------------------------------------------


The assumed rate of future increases in the per-capita cost of health care benefits is 10.5% for 2002, gradually
decreasing to 5.0% for 2008 and beyond.  Increasing the health care cost trend rate by one

Page 42


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


percentage point would increase the accumulated obligation as of December 31, 2001, by $300 million and annual
aggregate service and interest costs by $33 million.  Decreasing the health care cost trend rate by one
percentage point would decrease the accumulated obligation as of December 31, 2001, by $243 million and annual
aggregate service and interest costs by $26 million.

Stock Options and Other Equity-Based Awards

In 1998, Edison International shareholders approved the Edison International equity compensation plan, replacing
the long-term incentive compensation program that had been adopted by Edison International shareholders in 1992.
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,
the Edison International Board of Directors adopted an additional plan, the 2000 equity plan, under which the
special options discussed below were awarded.

Under the 1992, 1998 and 2000 plans, options on 4.9 million shares of Edison International common stock are
currently outstanding to officers and senior managers.

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 and prior to 2000 are accrued to the extent dividends are declared
on Edison International common stock, and are subject to reduction unless certain performance criteria are met.
Only a portion of 1999 Edison International stock option awards include a dividend equivalent feature.

Options issued after 1997 generally have a four-year vesting period.  The special options granted in 2000 vest
over five years, but vesting does not begin until May 2002.  Earlier options had a three-year vesting period with
one-third of the total award vesting annually.  If an option holder retires, dies, is terminated by the company,
or is terminated while permanently and totally disabled (qualifying event) during the vesting period, the
unvested options will vest on a pro rata basis.

Unvested options of any person who has served in the past on the SCE management committee (which was dissolved in
1993) will vest and be exercisable upon a qualifying event.  If a qualifying event occurs, the vested options may
continue to be exercised within their original terms by the recipient or beneficiary except that in the case of
termination by the company where the option holder is not eligible for retirement, vested options are forfeited
unless exercised within one year of termination date.  If an option holder is terminated other than by a
qualifying event, options which had vested as of the prior anniversary date of the grant are forfeited unless
exercised within 180 days of the date of termination.  All unvested options are forfeited on the date of
termination.

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:

         December 31,                                          2001                        2000
- ----------------------------------------------------------------------------------------------------------

         Expected life                                   7 years - 10 years           7 years - 10 years
         Risk-free interest rate                            4.7% - 6.1%                  4.7% - 6.0%
         Expected volatility                                 17% - 52%                    17% - 46%
- ----------------------------------------------------------------------------------------------------------


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.


Page 43

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


The weighted-average fair value of options granted during 2001 and 2000 was $4.53 per share option and $5.50 per
share option, respectively.  The weighted-average remaining life of options outstanding as of December 31, 2001,
and December 31, 2000, was 6 years and 7 years, respectively.

For the years after 1999, a portion of the executive long-term incentives was awarded in the form of performance
shares.  The 2000 performance shares were restructured as retention incentives in December 2000, which pay as a
combination of Edison International common stock and cash if the executive remains employed at the end of the
performance period.  The performance period ended December 31, 2001, for half of the award, and ends on
December 31, 2002, for the remainder.  Additional performance shares were awarded in January 2001 and January
2002.  The 2001 performance shares vest December 31, 2003, half in shares of Edison International common stock
and half in cash.  The 2002 performance shares vest December 31, 2004, also half in shares of common stock and
half in cash.  The number of shares that will be paid out from the 2002 performance share awards will depend on
the performance of Edison International common stock relative to the stock performance of a specified group of
peer companies.

The 2000 and 2001 performance shares and deferred stock unit values are accrued ratably over a three-year
performance period.  The 2002 performance shares will be valued based on Edison International's stock performance
relative to the stock performance of other such entities.

In March 2001, deferred stock units were awarded as part of a retention program.  These vest and will be paid
between March 12, 2002, and March 12, 2003, depending on performance.  The deferred stock units are payable on
the vesting date in shares of Edison International common stock.

In October 2001, a stock option retention exchange offer was extended, offering holders of Edison International
stock options granted in 2000 the opportunity to exchange those options for a lesser number of deferred stock
units.  The exchange ratio was based on the Black-Scholes value of the options and the stock price at the time
the offer was extended.  The exchange took place in November 2001; the options that participants elected to
exchange were cancelled, and deferred stock units were issued.  Approximately three options were cancelled for
each deferred stock unit issued.  The deferred stock units will vest 25% per year over four years, with the first
vesting date in November 2002.  The following assumptions were used in determining fair value through the
Black-Scholes option-pricing model:  expected life:  8 - 9 years; risk-free interest rate:  5.10%; expected
volatility:  52%.

SCE measures compensation expense related to stock-based compensation by the intrinsic value method.
Compensation expense recorded under the stock-compensation program was $1 million in 2001, $4 million in 2000 and
$5 million in 1999.

Stock-based compensation expense under the fair-value method of accounting would have resulted in pro forma net
income (loss) available for common stock of $2.383 billion for 2001, $(2.054) billion for 2000 and $484 million
for 1999.

Note 10.  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.



Page 44


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


The investment in each project as of December 31, 2001, was:

                                                  Investment          Accumulated
                                                      in           Depreciation and        Ownership
         In millions                               Facility          Amortization          Interest
- -------------------------------------------------------------------------------------------------------

         Transmission systems:
           Eldorado                              $      41            $     11                60%
           Pacific Intertie                            240                  84                50
         Generating stations:
           Four Corners Units 4 and 5 (coal)           469                 365                48
           Mohave (coal)                               334                 246                56
           Palo Verde (nuclear)(1)                   1,653               1,648                16
           San Onofre (nuclear)(1)                   4,305               4,283                75
- -------------------------------------------------------------------------------------------------------

         Total                                   $   7,042            $  6,637
- -------------------------------------------------------------------------------------------------------


         (1) Regulatory assets, which were written off as a charge to earnings as of December 31, 2000, as
             discussed in Note 1.

Note 11.  Commitments

Leases

SCE has operating leases, primarily for vehicles, with varying terms, provisions and expiration dates.  Operating
lease expense was $19 million in 2001, $20 million in 2000 and $17 million in 1999.

Estimated remaining commitments for noncancelable leases at December 31, 2001, were:

         Year ended December 31,                                                     In millions
- -----------------------------------------------------------------------------------------------------

         2002                                                                            $ 14
         2003                                                                              13
         2004                                                                              11
         2005                                                                               8
         2006                                                                               6
         Thereafter                                                                        13
- -----------------------------------------------------------------------------------------------------
         Total                                                                           $ 65
- -----------------------------------------------------------------------------------------------------


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 element) annually.  These costs are expected
to be funded from independent decommissioning trusts, which effective June 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 in 2026 and 2028 for the Palo Verde units.
Decommissioning costs, which are recovered through non-bypassable customer rates over the term of each nuclear
facility's operating license, are recorded as a component of depreciation expense.


Page 45

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


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

Decommissioning expense was $96 million in 2001, $106 million in 2000 and $124 million in 1999.  The accumulated
provision for decommissioning, excluding San Onofre Unit 1 and unrealized holding gains, was $1.5 billion at
December 31, 2001, and $1.4 billion at December 31, 2000.  The estimated cost to decommission San Onofre Unit 1
is 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:

                                                   Maturity
- ------------------------------------------------------------------------------------------------------------------
     In millions                                     Dates           December 31,       2001               2000
- ------------------------------------------------------------------------------------------------------------------

     Municipal bonds                              2001 - 2034                        $    463           $   548
     Stocks                                            -                                  637               531
     U.S. government issues                       2001 - 2029                             332               421
     Short-term and other                            2001                                 334               220
- ------------------------------------------------------------------------------------------------------------------
     Total                                                                           $  1,766           $ 1,720
- ------------------------------------------------------------------------------------------------------------------


Trust fund earnings (based on specific identification) increase the trust fund balance and the accumulated
provision for decommissioning.  Net earnings were $13 million in 2001, $38 million in 2000 and $58 million in
1999.  Proceeds from sales of securities (which are reinvested) were $3.9 billion in 2001, $4.7 billion in 2000
and $2.6 billion in 1999.  Approximately 91% 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.  Certain SCE
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 QFs (cogenerators and small power producers) and other utilities.
These contracts provide for capacity payments if a facility meets certain performance obligations and energy
payments based on actual power supplied to SCE.  There are no requirements to make debt-service payments.  In an
effort to replace higher-cost contract payments with lower-cost replacement power, SCE has entered into
purchased-power settlements to end its contract obligations with certain QFs.  The settlements are reported as
power purchase contracts on the balance sheets.

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 $158 million through 2017.  The purchased-power contract is expected to provide
approximately 5% of current or estimated future operating capacity, and is reported as power purchase contracts
(approximately $31 million).  The transmission service contract requires a minimum payment of approximately
$6 million a year.

Certain commitments for the years 2002 through 2006 are estimated below:

         In millions                                         2002       2003       2004       2005       2006
- --------------------------------------------------------------------------------------------------------------

         Fuel supply contract payments                      $ 168      $ 108      $ 103      $ 106      $ 109
         Purchased-power capacity payments                    629        629        626        624        572
- --------------------------------------------------------------------------------------------------------------



Page 46


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


Note 12.  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 other proceedings will not materially affect its results of
operations or liquidity.

Energy Crisis Issues

In October 2000, a federal class action securities lawsuit was filed against SCE and Edison International.  As
amended in December 2000 and March 2001, the lawsuit involves securities fraud claims arising from alleged
improper accounting for the TRA undercollections.  The second amended complaint is supposedly filed on behalf of
a class of persons who purchased Edison International common stock between July 21, 2000, and April 17, 2001.
This lawsuit has been consolidated with another similar lawsuit filed on March 15, 2001.  A consolidated class
action complaint was filed on August 3, 2001.  On September 17, 2001, SCE and Edison International filed a motion
to dismiss for failure to state a claim.  On March 8, 2002, the district court issued an order dismissing the
complaint with prejudice.  The plaintiffs could appeal this ruling to the court of appeals.

SCE has been a defendant in a number of legal actions brought by various QFs arising out of SCE's suspension of
payments for electricity delivered by the QFs during the period November 1, 2000, through March 26, 2001.  The QF
claims were eventually largely subsumed within agreements with the litigating QFs providing for a provisional
settlement of the parties' disputes.  On March 1, 2002, SCE paid the amounts due under settlement agreements with
these QFs, which triggered the releases and other provisions of the settlements.  As a result, the litigation
with those QFs to whom payment in full has been made under the parties' settlement agreements should be dismissed
during 2002.  However, SCE's March 1, 2002, payments excluded several QFs or did not result in immediate releases
under the settlement agreements based on unique disputes or other unique circumstances, including the status of
regulatory approval.

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 42 identified sites is $111 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 $279 million.  The upper limit of this range of costs
was estimated using assumptions least favorable to SCE among a range of reasonably possible outcomes.  SCE has
sold all of its gas-fueled generation plants and has retained some liability associated with the divested
properties.


Page 47

- -------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements


The CPUC allows SCE to recover environmental-cleanup costs at certain sites, representing $50 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 $76 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 $10 million to $25 million.  Recorded costs for 2001 were
$18 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 insurance programs, SCE could be assessed retrospective premium
adjustments of up to $35 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

Page 48


- ------------------------------------------------------------------------------------------------------------------
                                                                                Southern California Edison Company


accepting spent nuclear fuel from San Onofre or from other nuclear power plants.  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.

SCE, as operating agent, 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.  SCE plans to spend
approximately $34 million for the initial interim spent fuel storage at San Onofre Units 2 and 3 through 2008.

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.


- -------------------------------------------------------------------------------------------------------------------
Quarterly Financial Data
                                                 2001                                        2000
                            -------------------------------------------    ---------------------------------------
In millions                 Total    Fourth    Third    Second     First  Total   Fourth    Third   Second   First
- -------------------------------------------------------------------------------------------------------------------

Operating revenue          $8,126    $2,296   $2,726    $1,592   $1,512   $7,870  $1,755   $2,432   $1,853  $1,830
Operating income (loss)     4,617     3,956    1,294       204     (837)  (2,659) (3,840)     447      385     349
Net income (loss)           2,408     2,310      657        34     (593)  (2,028) (2,485)     177      161     119
Net income (loss) available for
  common stock              2,386     2,304      652        28     (598)  (2,050) (2,491)     172      156     113
Common dividends declared      --        --       --        --       --      279      --       92       91      96
- -------------------------------------------------------------------------------------------------------------------





Page 49



- -------------------------------------------------------------------------------------------------------------------
Responsibility for Financial Reporting                                          Southern California Edison Company



The management of Southern California Edison Company (SCE) is responsible for the integrity and objectivity of
the accompanying financial statements.  The statements have been prepared in accordance with accounting
principles generally accepted in the United States and are based, in part, on management estimates and judgment.

SCE maintains systems of internal control to provide reasonable, but not absolute, assurance that assets are
safeguarded, transactions are executed in accordance with management's authorization and the accounting records
may be relied upon for the preparation of the financial statements.  There are limits inherent in all systems of
internal control, the design of which involves management's judgment and the recognition that the costs of such
systems should not exceed the benefits to be derived.  SCE believes its systems of internal control achieve this
appropriate balance.  These systems are augmented by internal audit programs through which the adequacy and
effectiveness of internal controls and policies and procedures are monitored, evaluated and reported to
management.  Actions are taken to correct deficiencies as they are identified.

SCE's independent public accountants, Arthur Andersen LLP, are engaged to audit the financial statements in
accordance with auditing standards generally accepted in the United States and to express an informed opinion on
the fairness, in all material respects, of SCE's reported results of operations, cash flows and financial
position.

As a further measure to assure the ongoing objectivity of financial information, the audit committee of the board
of directors, which is composed of outside directors, meets periodically, both jointly and separately, with
management, the independent public accountants and internal auditors, who have unrestricted access to the
committee.  The committee recommends annually to the board of directors the appointment of a firm of independent
public accountants to conduct audits of SCE's financial statements; considers the independence of such firm and
the overall adequacy of the audit scope and SCE's systems of internal control; reviews financial reporting
issues; and is advised of management's actions regarding financial reporting and internal control matters.

SCE maintains high standards in selecting, training and developing personnel to assure that its operations are
conducted in conformity with applicable laws and is committed to maintaining the highest standards of personal
and corporate conduct.  Management maintains programs to encourage and assess compliance with these standards.






Thomas M. Noonan                                                       Alan J. Fohrer
Thomas M. Noonan                                                       Alan J. Fohrer
Vice President                                                         Chairman of the Board
and Controller                                                         and Chief Executive Officer


March 25, 2002




Page 50



- -------------------------------------------------------------------------------------------------------------------
Report of Independent Public Accountants                                        Southern California Edison Company



To Southern California Edison Company:

We have audited the accompanying consolidated balance sheets of Southern California Edison Company (SCE, a
California corporation) and its subsidiaries as of December 31, 2001, and 2000, and the related consolidated
statements of income (loss), comprehensive income (loss), cash flows and changes in common shareholder's equity
for each of the three years in the period ended December 31, 2001.  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 December 31, 2001, and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.





                                                                       ARTHUR ANDERSEN LLP
                                                                       ARTHUR ANDERSEN LLP


Los Angeles, California
March 25, 2002



Page 51





- -------------------------------------------------------------------------------------------------------------------
Board of Directors                                                              Southern California Edison Company
- -------------------------------------------------------------------------------------------------------------------



Page


Warren Christopher*
Senior Partner,
O'Melveny &amp; Myers (law firm),
Los Angeles, California

Alan J. Fohrer
Chairman of the Board and
Chief Executive Officer,
Southern California Edison Company

Joan C. Hanley
The Former General Partner and Manager,
Miramonte Vineyards,
Rancho Palos Verdes, California



*  Retiring on May 14, 2002.

Carl F. Huntsinger*
General Partner,
DAE Limited Partnership Ltd.
(agricultural management),
Ojai, California

Charles D. Miller*
Retired Chairman of the Board,
Avery Dennison Corporation (manu-facturer of self-adhesive products),
Pasadena, California

Luis G. Nogales
Managing Partner,
Nogales Investors (a private equity
investment company),
Los Angeles, California

Ronald L. Olson
Senior Partner,
Munger, Tolles and Olson (law firm),
Los Angeles, California

James M. Rosser
President,
California State University, Los Angeles,
Los Angeles, California

Robert H. Smith
Managing Director,
Smith and Crowley Inc.
(merchant banking),
Pasadena, California

Thomas C. Sutton
Chairman of the Board and
Chief Executive Officer
Pacific Life Insurance Company,
Newport Beach, California

Daniel M. Tellep
Retired Chairman of the Board,
Lockheed Martin Corporation
(aerospace industry),
Bethesda, Maryland


- -------------------------------------------------------------------------------------------------------------------
Management Team
- -------------------------------------------------------------------------------------------------------------------


Alan J. Fohrer
Chairman of the Board and
Chief Executive Officer

Robert G. Foster
President

Harold B. Ray
Executive Vice President,
Generation Business Unit

Pamela A. Bass
Senior Vice President,
Customer Service Business Unit

John R. Fielder
Senior Vice President,
Regulatory Policy and Affairs

Stephen E. Pickett
Senior Vice President and
General Counsel

Richard M. Rosenblum
Senior Vice President,
Transmission and Distribution
Business Unit

Mahvash Yazdi
Senior Vice President and
Chief Information Officer

Emiko Banfield
Vice President, Shared Services

Robert C. Boada
Vice President and Treasurer

Clarence Brown
Vice President,
Corporate Communications

Bruce C. Foster
Vice President, San Francisco Regulatory Operations

A. L. Grant
Vice President, Engineering and
Technical Services

Frederick J. Grigsby, Jr.
Vice President, Human Resources and Labor Relations

Lawrence D. Hamlin
Vice President, Power Production

Harry B. Hutchison
Vice President, Mass Customers

James A. Kelly
Vice President,
Regulatory Compliance

Russell W. Krieger
Vice President,
Nuclear Generation

Thomas M. Noonan
Vice President and Controller

Dwight E. Nunn
Vice President, Nuclear Engineering
and Technical Services

Pedro J. Pizarro
Vice President,
Business Development

Frank J. Quevedo
Vice President, Equal Opportunity

W. James Scilacci
Vice President and
Chief Financial Officer

Dale E. Shull, Jr.
Vice President, Power Delivery

Anthony L. Smith
Vice President, Tax

Joseph J. Wambold
Vice President, Nuclear Business and Support Services

Beverly P. Ryder
Secretary


Page 52





Shareholder Information
- -------------------------------------------------------------------------------------------------------------------

Annual Meeting of Shareholders

Tuesday, May 14, 2002
10:00 a.m.
DoubleTree Hotel Ontario
222 N. Vineyard Avenue
Ontario, California 91764

- -------------------------------------------------------------------------------------------------------------------

Stock Listing and Trading Information

SCE Preferred Stock

SCE's preferred stocks are listed on the American and Pacific stock exchanges under the ticker symbol SCE.
Previous day's closing prices, when traded, are listed in the daily newspapers in the American Stock Exchange
composite table.  The 6.05%, 6.45% and 7.23% series are not listed.

Where to Buy and Sell Stock

The listed preferred stocks may be purchased through any brokerage firm.  Firms handling unlisted series can be
located through your broker.

- -------------------------------------------------------------------------------------------------------------------

Transfer Agent and Registrar

Wells Fargo Bank Minnesota, N.A. maintains shareholder records and is the transfer agent and registrar for SCE
preferred stock.  Shareholders may call Wells Fargo Shareowner Services, (800) 347-8625, between 7:00 a.m. and
7:00 p.m. (Central Time), Monday through Friday, regarding:

o        stock transfer and name-change requirements;
o        address changes, including dividend addresses;
o        electronic deposit of dividends;
o        taxpayer identification number submission or changes;
o        duplicate 1099 forms and W-9 forms;
o        notices of, and replacement of, lost or destroyed stock certificates and dividend checks; and
o        requests for access to online account information.

The address of Wells Fargo Shareowner Services is:

161 North Concord Exchange Street
South St. Paul, MN 55075-1139
FAX: (651) 450-4033
E-mail:  stocktransfer@wellsfargo.com
         ----------------------------




SCE Web Address:
www.edisoninvestor.com















Southern California Edison Company
2244 Walnut Grove Avenue
Rosemead, California 91770
(626) 302-1212


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Exhibit 23 - Consent of Independent Public Accountants
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                                                                                                         EXHIBIT 23





CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



As independent public accountants, we hereby consent to the incorporation by reference of our reports included
and incorporated by reference in this annual report on Form 10-K for the year ended December 31, 2001, of
Southern California Edison Company into the previously filed Registration Statements which follow:

                 Registration Form               File No.                  Effective Date
                 -----------------               --------                  --------------

                  Form S-3                      33-50251                 September 21, 1993
                  Form S-3                      333-44778                September 7, 2000




ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Los Angeles
March 25, 2002



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<TYPE>EX-24.1
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<DESCRIPTION>SCE POWER OF ATTORNEY
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SCE Power of Attorney
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                                    SOUTHERN CALIFORNIA EDISON COMPANY

                                             POWER OF ATTORNEY

                  The undersigned, SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation, and certain of
its officers and/or directors do each hereby constitute and appoint, STEPHEN E. PICKETT, THOMAS M. NOONAN,
W. JAMES SCILACCI, BEVERLY P. RYDER, KENNETH S. STEWART, MARY C. SIMPSON, PAIGE W. R. WHITE, TIMOTHY W. ROGERS,
ALLEN E. KELINSKY, RAYNA M. MORRISON, BONITA J. SMITH, PEGGY A. STERN, POLLY L. GAULT, and DOUGLAS G. GREEN, or
any of them, to act as attorney-in-fact, for and in their respective names, places, and steads, to execute, sign,
and file or cause to be filed an Annual Report on Form 10-K for the fiscal year ended December 31, 2001,
Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal year 2002, any Current Reports on
Form 8-K from time to time during 2002 and through February 20, 2003, or in the event this Board of Directors
does not meet on February 20, 2003, through the next succeeding date on which this Board holds a regular meeting,
and any and all supplements and amendments thereto, to be filed by Southern California Edison Company with the
Securities and Exchange Commission, under the Securities Exchange Act of 1934 as amended, (the "Act"), for the
purpose of complying with Sections 13 or 15(d) of the Act, granting unto said attorneys-in-fact, and each of
them, full power and authority to do and perform all and every act and thing whatsoever requisite, necessary and
appropriate to be done in and about the premises as fully and to all intents and purposes as the undersigned or
any of them might or could do if personally present, hereby ratifying and approving the acts of each of said
attorneys-in-fact.
                  Executed at Rosemead, California, as of this 21st day of February, 2002.

                                                 SOUTHERN CALIFORNIA EDISON COMPANY


                                                 By:      Alan J. Fohrer
                                                          ---------------------------
                                                          Alan J. Fohrer
                                                          Chairman of the Board
                                                          and Chief Executive Officer


Attest:


BEVERLY P. RYDER
- ---------------------------
BEVERLY P. RYDER
Secretary


<PAGE>


                                      2002 Southern California Edison Company
                                       10-K, 10-Q, and 8-K Power of Attorney


Principal Executive Officer:

Alan J. Fohrer
- ----------------------------
Alan J. Fohrer                                                    Chairman of the Board,
                                                                  Chief Executive Officer, and Director


Principal Financial Officer:

W. James Scilacci
- ----------------------------
W. James Scilacci                                         Vice President and Chief
                                                                  Financial Officer


Controller and Principal Accounting Officer:

Thomas M. Noonan
- ----------------------------
Thomas M. Noonan                                          Vice President and Controller


Additional Directors:

Warren Christopher                     Director               Ronald L. Olson                     Director
- --------------------------------------                        -----------------------------------
Warren Christopher                                            Ronald L. Olson

Joan C. Hanley                         Director               James M. Rosser                     Director
- --------------------------------------                        -----------------------------------
Joan C. Hanley                                                James M. Rosser

Carl F. Huntsinger                     Director               Robert H. Smith                     Director
- --------------------------------------                        -----------------------------------
Carl F. Huntsinger                                            Robert H. Smith

Charles D. Miller                      Director               Thomas C. Sutton                    Director
- --------------------------------------                        -----------------------------------
Charles D. Miller                                             Thomas C. Sutton

Luis G. Nogales                        Director               Daniel M. Tellep                    Director
- --------------------------------------                        -----------------------------------
Luis G. Nogales                                               Daniel M. Tellep








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<TYPE>EX-24.2
<SEQUENCE>12
<FILENAME>sceres.htm
<DESCRIPTION>SCE BOARD RESOLUTION
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SCE 10-K Board Resolution
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                  I, Bonita J. Smith, Assistant Secretary of Southern California Edison Company, certify that the
attached is an accurate and complete copy of a resolution of the Board of Directors of the corporation, duly
adopted at a meeting of its Board of Directors held on February 21, 2002.

                  Dated:  March 28, 2002




                                                     Bonita J. Smith
                                                     ----------------------------------
                                                     Bonita J. Smith
                                                     Assistant Secretary
                                                     Southern California Edison Company

[SEAL]







                                      RESOLUTION OF THE BOARD OF DIRECTORS OF
                                        SOUTHERN CALIFORNIA EDISON COMPANY
                                            Adopted: February 21, 2002
                                           RE: FORMS 10-K, 10-Q, AND 8-K

                  WHEREAS, the Securities Exchange Act of 1934, as amended, and regulations thereunder, require
that Annual, Quarterly, and Current Reports be filed with the Securities and Exchange Commission ("Commission"),
and it is desirable to effect such filings over the signatures of attorneys-in-fact;

                  NOW, THEREFORE, BE IT RESOLVED, that each of the officers of this corporation is hereby
authorized to file or cause to be filed with the Commission the Annual Report on Form 10-K of this corporation
for the fiscal year ended December 31, 2001, Quarterly Reports on Form 10-Q for each of the first three quarters
of fiscal year 2002, Current Reports on Form 8-K from time to time during 2002 and through February 20, 2003, or
in the event this Board of Directors does not meet on February 20, 2003, through the next succeeding date on
which this Board holds a regular meeting, and any required or appropriate supplements or amendments to such
reports, all in such forms as the officer acting or counsel for this corporation considers appropriate.

                  BE IT FURTHER RESOLVED, that each of the officers of this corporation is hereby authorized to
execute and deliver on behalf of this corporation and in its name a power of attorney appointing Stephen E.
Pickett, Thomas M. Noonan, W. James Scilacci, Beverly P. Ryder, Kenneth S. Stewart, Mary C. Simpson, Paige W. R.
White, Timothy W. Rogers, Allen E. Kelinsky, Rayna M. Morrison,  Bonita J. Smith, Peggy A. Stern, Polly L. Gault,
and Douglas G. Green, and each of them, to act severally as attorney-in-fact for this corporation for the purpose
of executing and filing with the Commission the above-described reports and any amendments and supplements
thereto.

APPROVED:



Alan J. Fohrer
- -------------------------------------
Alan J. Fohrer
Chairman of the Board


Stephen E. Pickett
- -------------------------------------
Stephen E. Pickett
Senior Vice President and General Counsel





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<TYPE>EX-99
<SEQUENCE>13
<FILENAME>exh99sce.htm
<DESCRIPTION>SCE LETTER TO SEC RE INDE PUBLIC ACCOUNTANTS
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SCE Letter to SEC re Ind Public Accountants
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Letter to the SEC Regarding the Issuer's Independent Public Accountants, Arthur Andersen LLP






To the Securities and Exchange Commission:



Arthur Andersen LLP has audited the consolidated financial statements of Southern California Edison Company and its
subsidiaries as of December 31, 2001, and for the year then ended, and has issued a report thereon dated March
25, 2002.

Southern California Edison Company has received representations from Arthur Andersen LLP, in a letter dated March 25,
2002, that their audit was subject to their quality control system for the United States accounting and auditing
practice to provide reasonable assurance that the engagement was conducted in compliance with professional
standards, and that there was appropriate continuity of Arthur Andersen LLP personnel working on the audit and
availability of national office consultation.  Availability of personnel at foreign affiliates of Arthur Andersen
LLP is not relevant to this audit.



SOUTHERN CALIFORNIA EDISON COMPANY


By:



Kenneth S. Stewart
- ----------------------------
Kenneth S. Stewart
Assistant General Counsel

Date: March 28, 2002



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