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Compensation and Benefit Plans | 12 Months Ended
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Dec. 31, 2011
Compensation And Benefit Plans Disclosure [Abstract] |
Compensation and Benefit Plans | 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 $83 million in 2011, $76 million in 2010 and $70 million in 2009. Pension Plans and Postretirement Benefits Other Than Pensions Pension Plans Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting minimum service requirements. SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking. The expected contributions (all by the employer) are approximately $263 million for the year ending December 31, 2012. Annual contributions made to most of SCE's pension plans are currently recovered through CPUC-approved regulatory mechanisms. Annual contributions to these plans are expected to be, at a minimum, equal to the related annual expense. The funded position of SCE's pension is very sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund SCE's long-term pension are affected by movements in the equity and bond markets. The market value of the investments (reflecting investment returns, contributions and benefit payments) within the plan trusts declined 35% during 2008. This reduction in value of plan assets combined with increased liabilities has resulted in a change in the pension plan funding status from a surplus to a material deficit, which will result in increased future expense and cash contributions. The SCE pension remains underfunded as liabilities have increased significantly as a result of steady declines in interest rates. Due to SCE's regulatory recovery treatment, the unfunded status is offset by a regulatory asset. In the 2009 GRC, SCE requested recovery of and continued balancing account treatment for amounts contributed to these trusts. SCE requested the continuation of this approach in the 2012 GRC. Information on plan assets and benefit obligations is shown below:
|  | Years ended December 31,
(in millions) |  | 2011 | 2010
Change in projected benefit obligation |  |  |
Projected benefit obligation at beginning of year |  | $ | 3,732 |  | $ | 3,389 |
Service cost |  | 145 |  | 132 |
Interest cost |  | 192 |  | 193 |
Amendments |  | — |  | 5 |
Actuarial loss |  | 311 |  | 185 |
Benefits paid |  | (268 | ) | (172 | )
Projected benefit obligation at end of year |  | $ | 4,112 |  | $ | 3,732 |
Change in plan assets |  |  |
Fair value of plan assets at beginning of year |  | $ | 3,066 |  | $ | 2,726 |
Actual return on plan assets |  | 58 |  | 414 |
Employer contributions |  | 115 |  | 98 |
Benefits paid |  | (268 | ) | (172 | )
Fair value of plan assets at end of year |  | $ | 2,971 |  | $ | 3,066 |
Funded status at end of year |  | $ | (1,141 | ) | $ | (666 | )
Amounts recognized in the consolidated balance sheets consist of: |  |  |
Current liabilities |  | $ | (6 | ) | $ | (6 | )
Long-term liabilities |  | (1,135 | ) | (660 | )
|  | $ | (1,141 | ) | $ | (666 | )
Amounts recognized in accumulated other comprehensive loss consist of: |  |  |
Net loss |  | $ | 41 |  | $ | 42 |
Amounts recognized as a regulatory asset: |  |  |
Prior service cost |  | $ | 34 |  | $ | 40 |
Net loss |  | 955 |  | 500 |
|  | $ | 989 |  | $ | 540 |
Total not yet recognized as expense |  | $ | 1,030 |  | $ | 582 |
Accumulated benefit obligation at end of year |  | $ | 3,817 |  | $ | 3,436 |
Pension plans with an accumulated benefit obligation in excess of plan assets: |  |  |
Projected benefit obligation |  | $ | 4,112 |  | $ | 3,732 |
Accumulated benefit obligation |  | 3,817 |  | 3,436 |
Fair value of plan assets |  | 2,971 |  | 3,066 |
Weighted-average assumptions used to determine obligations at end of year: |  |  |
Discount rate |  | 4.5 | % | 5.25 | %
Rate of compensation increase |  | 4.5 | % | 5.0 | %
Expense components and other amounts recognized in other comprehensive income: Expense components are:
|  | Years ended December 31,
(in millions) |  | 2011 | 2010 | 2009
Service cost |  | $ | 145 |  | $ | 132 |  | $ | 107 |
Interest cost |  | 192 |  | 193 |  | 191 |
Expected return on plan assets |  | (225 | ) | (201 | ) | (162 | )
Amortization of prior service cost |  | 7 |  | 8 |  | 11 |
Amortization of net loss |  | 22 |  | 17 |  | 54 |
Expense under accounting standards |  | $ | 141 |  | $ | 149 |  | $ | 201 |
Regulatory adjustment – deferred |  | (28 | ) | (52 | ) | (94 | )
Total expense recognized |  | $ | 113 |  | $ | 97 |  | $ | 107 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
|  | Years ended December 31,
(in millions) |  | 2011 | 2010 | 2009
Net loss |  | $ | 8 |  | $ | 15 |  | $ | 11 |
Amortization of net loss |  | (7 | ) | (4 | ) | (4 | )
Total recognized in other comprehensive loss |  | $ | 1 |  | $ | 11 |  | $ | 7 |
Total recognized in expense and other comprehensive income |  | $ | 114 |  | $ | 108 |  | $ | 114 |
In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of its postretirement benefit plans that are recoverable in utility rates. The estimated net loss and prior service cost that will be amortized to expense in 2012 are $57 million and $3 million, respectively; $7 million of the net loss is expected to be reclassified from accumulated other comprehensive loss. The following are weighted-average assumptions used to determine expense:
|  | Years ended December 31,
|  | 2011 | 2010 | 2009
Discount rate |  | 5.25 | % | 6.0 | % | 6.25 | %
Rate of compensation increase |  | 5.0 | % | 5.0 | % | 5.0 | %
Expected return on plan assets |  | 7.5 | % | 7.5 | % | 7.5 | %
The following benefit payments, which reflect expected future service, are expected to be paid:
(in millions) | Years ended December 31,
2012 | $ | 285 |
2013 | 291 |
2014 | 296 |
2015 | 307 |
2016 | 313 |
2017 – 2021 | 1,590 |
Postretirement Benefits Other Than Pensions Most non-union employees retiring at or after age 55 with at least 10 years of service may be eligible for postretirement medical, dental, vision and life insurance and other benefits. Eligibility for a company contribution toward the cost of these benefits in retirement depends on a number of factors, including the employee's hire date. The expected contributions (all by the employer) to the PBOP trust are $62 million for the year ending December 31, 2012. Annual contributions made to SCE plans are currently recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans. The funded position of SCE's PBOP is very sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund SCE's other postretirement benefits are affected by movements in the equity and bond markets. The market value of the investments (reflecting investment returns, contributions and benefit payments) within the plan trust declined 33% during 2008. This reduction in the value of plan assets resulted in an increase in the plan's underfunded status and will also result in increased future expense and increased future contributions. SCE's PBOP is underfunded as liabilities have increased significantly as a result of steady declines in interest rates. Due to SCE's regulatory recovery treatment, the unfunded status is offset by a regulatory asset. In the 2009 GRC, SCE requested recovery of and continued balancing account treatment for amounts contributed to this trust. SCE requested the continuation of this approach in the 2012 GRC. Information on plan assets and benefit obligations is shown below:
|  | Years ended December 31,
(in millions) |  | 2011 | 2010
Change in benefit obligation |  |  |
Benefit obligation at beginning of year |  | $ | 2,295 |  | $ | 2,011 |
Service cost |  | 40 |  | 34 |
Interest cost |  | 114 |  | 121 |
Amendments |  | — |  | 12 |
Actuarial loss |  | 46 |  | 203 |
Plan participants' contributions |  | 18 |  | 17 |
Medicare Part D subsidy received |  | 5 |  | 5 |
Benefits paid |  | (103 | ) | (108 | )
Benefit obligation at end of year |  | $ | 2,415 |  | $ | 2,295 |
Change in plan assets |  |  |
Fair value of plan assets at beginning of year |  | $ | 1,606 |  | $ | 1,459 |
Actual return on assets |  | 10 |  | 175 |
Employer contributions |  | 34 |  | 58 |
Plan participants' contributions |  | 18 |  | 17 |
Medicare Part D subsidy received |  | 5 |  | 5 |
Benefits paid |  | (103 | ) | (108 | )
Fair value of plan assets at end of year |  | $ | 1,570 |  | $ | 1,606 |
Funded status at end of year |  | $ | (845 | ) | $ | (689 | )
Amounts recognized in the consolidated balance sheets consist of: |  |  |
Current liabilities |  | $ | (16 | ) | $ | (17 | )
Long-term liabilities |  | (829 | ) | (672 | )
|  | $ | (845 | ) | $ | (689 | )
Amounts recognized as a regulatory asset (liability): |  |  |
Prior service credit |  | $ | (125 | ) | $ | (161 | )
Net loss |  | 839 |  | 718 |
Total not yet recognized as expense |  | $ | 714 |  | $ | 557 |
Weighted-average assumptions used to determine obligations at end of year: |  |  |
Discount rate |  | 4.75 | % | 5.5 | %
Assumed health care cost trend rates: |  |  |
Rate assumed for following year |  | 9.5 | % | 9.75 | %
Ultimate rate |  | 5.25 | % | 5.5 | %
Year ultimate rate reached |  | 2019 |  | 2019 |
Expense components and other amounts recognized in other comprehensive income: Expense components are:
|  | Years ended December 31,
(in millions) |  | 2011 | 2010 | 2009
Service cost |  | $ | 40 |  | $ | 34 |  | $ | 28 |
Interest cost |  | 114 |  | 121 |  | 116 |
Expected return on plan assets |  | (111 | ) | (100 | ) | (81 | )
Amortization of prior service credit |  | (35 | ) | (37 | ) | (32 | )
Amortization of net loss |  | 26 |  | 35 |  | 44 |
Total expense |  | $ | 34 |  | $ | 53 |  | $ | 75 |
In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of its postretirement benefit plans that are recoverable in utility rates. The estimated net loss and prior service cost (credit) that will be amortized to expense in 2012 are $45 million and $(35) million, respectively. The following are weighted-average assumptions used to determine expense:
|  | Years ended December 31,
|  | 2011 | 2010 | 2009
Discount rate |  | 5.5 | % | 6.0 | % | 6.25 | %
Expected return on plan assets |  | 7.0 | % | 7.0 | % | 7.0 | %
Assumed health care cost trend rates: |  |  |  |
Current year |  | 9.75 | % | 8.25 | % | 8.75 | %
Ultimate rate |  | 5.5 | % | 5.5 | % | 5.5 | %
Year ultimate rate reached |  | 2019 |  | 2016 |  | 2016 |
Increasing the health care cost trend rate by one percentage point would increase the accumulated benefit obligation as of December 31, 2011 by $273 million and annual aggregate service and interest costs by $14 million. Decreasing the health care cost trend rate by one percentage point would decrease the accumulated benefit obligation as of December 31, 2011 by $227 million and annual aggregate service and interest costs by $12 million. The following benefit payments are expected to be paid:
|  | Years ended December 31,
(in millions) |  | Before Subsidy 1 | Net
2012 |  | $ | 97 |  | $ | 91 |
2013 |  | 105 |  | 98 |
2014 |  | 113 |  | 106 |
2015 |  | 121 |  | 114 |
2016 |  | 130 |  | 122 |
2017 – 2021 |  | 769 |  | 716 |
1 | Medicare Part D prescription drug benefits
Plan Assets Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes, and may have active and passive investment strategies within asset classes. Target allocations for pension plan assets are 30% for U.S. equities, 16% for non-U.S. equities, 35% for fixed income, 15% for opportunistic and/or alternative investments and 4% for other investments. Target allocations for PBOP plan assets are 41% for U.S. equities, 17% for non-U.S. equities, 34% for fixed income, 7% for opportunistic and/or alternative investments, and 1% for other investments. Edison International employs multiple investment management firms. Investment managers within each asset class cover a range of investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers, styles and securities. Plan, asset class and individual manager performance is measured against targets. Edison International also monitors the stability of its investment managers' organizations. Allowable investment types include:
• | United States Equities: Common and preferred stocks of large, medium, and small companies which are predominantly United States-based.
• | Non-United States Equities: Equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies.
• | Fixed Income: Fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade.
Opportunistic, Alternative and Other Investments:
• | Opportunistic: Investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid.
• | Alternative: Limited partnerships that invest in non-publicly traded entities.
• | Other: Investments diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns.
Asset class portfolio weights are permitted to range within plus or minus 3%. Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions. Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios. Determination of the Expected Long-Term Rate of Return on Assets The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns are subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis. Capital Markets Return Forecasts Our capital markets return forecast methodologies primarily use a combination of historical market data, current market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts and a building block approach. The forecasts are developed using variables such as real risk-free interest, inflation, and asset class specific risk premiums. For equities, the risk premium is based on an assumed average equity risk premium of 6% over cash. The forecasted return on private equity and opportunistic investments are estimated at a 3% premium above public equity, reflecting a premium for higher volatility and liquidity. For fixed income, the risk premium is based off of a comprehensive modeling of credit spreads. Fair Value of Plan Assets The PBOP Plan and the Southern California Edison Company Retirement Plan Trust (Master Trust) assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S. treasury securities, mutual and money market funds are classified as Level 1 as fair value is determined by observable, unadjusted quoted market prices in active or highly liquid and transparent markets. Common/collective funds are valued at the net asset value ("NAV") of shares held. Although common/collective funds are determined by observable prices, they are classified as Level 2 because they trade in markets that are less active and transparent. The fair value of the underlying investments in equity mutual funds and equity common/collective funds are based upon stock-exchange prices. The fair value of the underlying investments in fixed-income common/collective funds, fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Foreign exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. One of the partnerships is classified as Level 2 since this investment can be readily redeemed at NAV and the underlying investments are liquid, publicly traded fixed-income securities which have observable prices. The remaining partnerships/joint ventures are classified as Level 3 because fair value is determined primarily based upon management estimates of future cash flows. Other investment entities are valued similarly to common collective funds and are therefore classified as Level 2. The Level 1 registered investment companies are either mutual or money market funds. The remaining funds in this category are readily redeemable at NAV and classified as Level 2 and are discussed further at footnote 7 to the pension plan master trust investments table below. SCE reviews the process/procedures of both the pricing services and the trustee to gain an understanding of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and SCE's validation procedures for pension and PBOP equity and fixed income securities are the same as the nuclear decommissioning trusts. For further discussion see Note 4. The values of Level 1 mutual and money market funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's investment managers corroborate the trustee fair values. Pension Plan The following table sets forth the Master Trust investments that were accounted for at fair value as of December 31, 2011 by asset class and level within the fair value hierarchy:
(in millions) |  | Level 1 | Level 2 | Level 3 |  | Total
Corporate stocks 1 |  | $ | 642 |  | $ | — |  | $ | — |  |  | $ | 642 |
Partnerships/joint ventures 2 |  | — |  | 140 |  | 448 |  |  | 588 |
Common/collective funds 3 |  | — |  | 582 |  | — |  |  | 582 |
Corporate bonds 4 |  | — |  | 497 |  | — |  |  | 497 |
U.S. government and agency securities 5 |  | 104 |  | 351 |  | — |  |  | 455 |
Other investment entities 6 |  | — |  | 247 |  | — |  |  | 247 |
Registered investment companies 7 |  | 79 |  | 29 |  | — |  |  | 108 |
Interest-bearing cash |  | 5 |  | — |  | — |  |  | 5 |
Other |  | (1 | ) | 69 |  | — |  |  | 68 |
Total |  | $ | 829 |  | $ | 1,915 |  | $ | 448 |  |  | $ | 3,192 |
Receivables and payables, net |  |  |  |  |  |  |  |  | (39 | )
Net plan assets available for benefits |  |  |  |  |  |  |  |  | $ | 3,153 |
SCE's share of net plan assets |  |  |  |  |  |  |  |  | $ | 2,971 |
The following table sets forth the Master Trust investments that were accounted for at fair value as of December 31, 2010 by asset class and level within the fair value hierarchy:
(in millions) |  | Level 1 | Level 2 | Level 3 |  | Total
Corporate stocks 1 |  | $ | 786 |  | $ | — |  | $ | — |  |  | $ | 786 |
Partnerships/joint ventures 2 |  | — |  | 155 |  | 345 |  |  | 500 |
Common/collective funds 3 |  | — |  | 600 |  | — |  |  | 600 |
Corporate bonds 4 |  | — |  | 555 |  | — |  |  | 555 |
U.S. government and agency securities 5 |  | 84 |  | 316 |  | — |  |  | 400 |
Other investment entities 6 |  | — |  | 236 |  | — |  |  | 236 |
Registered investment companies 7 |  | 84 |  | 92 |  | — |  |  | 176 |
Interest-bearing cash |  | 5 |  | — |  | — |  |  | 5 |
Other |  | 2 |  | 30 |  | — |  |  | 32 |
Total |  | $ | 961 |  | $ | 1,984 |  | $ | 345 |  |  | $ | 3,290 |
Receivables and payables, net |  |  |  |  |  |  |  |  | (55 | )
Net plan assets available for benefits |  |  |  |  |  |  |  |  | $ | 3,235 |
SCE's share of net plan assets |  |  |  |  |  |  |  |  | $ | 3,066 |
1 | Corporate stocks are diversified. For 2011 and 2010, respectively, performance is primarily benchmarked against the Russell Indexes (60% and 63%) and Morgan Stanley Capital International (MSCI) index (40% and 37%).
2 | Partnerships/joint venture Level 2 investments consist primarily of a partnership which invests in publicly traded fixed income securities, primarily from the banking and finance industry and U.S. government agencies. At December 31, 2011 and 2010, respectively, approximately 55% and 60% of the Level 3 partnerships are invested in (1) asset backed securities, including distressed mortgages and (2) commercial and residential loans and debt and equity of banks. The remaining Level 3 partnerships are invested in small private equity and venture capital funds. Investment strategies for these funds include branded consumer products, early stage technology, California geographic focus, and diversified US and non-US fund-of-funds.
3 | At December 31, 2011 and 2010, respectively, the common/collective assets were invested in equity index funds that seek to track performance of the Standard and Poor's (S&P 500) Index (29% and 29%), Russell 200 and Russell 1000 indexes (27% and 28%) and the MSCI Europe, Australasia and Far East (EAFE) Index (10% and 11%). A non-index U.S. equity fund representing 23% of this category for both 2011 and 2010 is actively managed. Another fund representing 8% of this category for both 2011 and 2010 is a global asset allocation fund.
4 | Corporate bonds are diversified. At December 31, 2011 and 2010, respectively, this category includes $53 million and $65 million for collateralized mortgage obligations and other asset backed securities of which $10 million and $17 million are below investment grade.
5 | Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
6 | Other investment entities were primarily invested in (1) emerging market equity securities, (2) a hedge fund that invests through liquid instruments in a global diversified portfolio of equity, fixed income, interest rate, foreign currency and commodities markets, and (3) domestic mortgage backed securities.
7 | Level 1 of registered investment companies consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index. Level 2 primarily consisted of short-term, emerging market, high yield bond funds and government inflation-indexed bonds.
At both December 31, 2011 and 2010, approximately 69% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States. The following table sets forth a summary of changes in the fair value of Level 3 investments for 2011 and 2010:
(in millions) |  | 2011 | 2010
Fair value, net at beginning of period |  | $ | 345 |  | $ | 240 |
Actual return on plan assets: |  |  |
Relating to assets still held at end of period |  | 6 |  | 42 |
Relating to assets sold during the period |  | 22 |  | 24 |
Purchases |  | 130 |  | 108 |
Dispositions |  | (55 | ) | (69 | )
Transfers in and /or out of Level 3 |  | — |  | — |
Fair value, net at end of period |  | $ | 448 |  | $ | 345 |
Postretirement Benefits Other than Pensions The following table sets forth the PBOP Plan's financial assets that were accounted for at fair value as of December 31, 2011 by asset class and level within the fair value hierarchy:
(in millions) |  | Level 1 | Level 2 | Level 3 |  | Total
Common/collective funds 1 |  | $ | — |  | $ | 642 |  | $ | — |  |  | $ | 642 |
Corporate stocks 2 |  | 319 |  | — |  | — |  |  | 319 |
Corporate notes and bonds 3 |  | — |  | 177 |  | — |  |  | 177 |
Partnerships 4 |  | — |  | 16 |  | 130 |  |  | 146 |
U.S. government and agency securities 5 |  | 100 |  | 42 |  | — |  |  | 142 |
Registered investment companies 6 |  | 80 |  | — |  | — |  |  | 80 |
Interest bearing cash |  | 12 |  | — |  | — |  |  | 12 |
Other 7 |  | 4 |  | 71 |  | — |  |  | 75 |
Total |  | $ | 515 |  | $ | 948 |  | $ | 130 |  |  | $ | 1,593 |
Receivables and payables, net |  |  |  |  |  |  |  |  | (23 | )
Combined net plan assets available for benefits |  |  |  |  |  |  |  |  | $ | 1,570 |
The following table sets forth the PBOP Plan's financial assets that were accounted for at fair value as of December 31, 2010 by asset class and level within the fair value hierarchy:
(in millions) |  | Level 1 | Level 2 | Level 3 |  | Total
Common/collective funds 1 |  | $ | — |  | $ | 657 |  | $ | — |  |  | $ | 657 |
Corporate stocks 2 |  | 344 |  | — |  | — |  |  | 344 |
Corporate notes and bonds 3 |  | — |  | 184 |  | — |  |  | 184 |
Partnerships 4 |  | — |  | 16 |  | 92 |  |  | 108 |
U.S. government and agency securities 5 |  | 50 |  | 38 |  | — |  |  | 88 |
Registered investment companies 6 |  | 144 |  | 1 |  | — |  |  | 145 |
Interest bearing cash |  | 12 |  | — |  | — |  |  | 12 |
Other 7 |  | 4 |  | 76 |  | — |  |  | 80 |
Total |  | $ | 554 |  | $ | 972 |  | $ | 92 |  |  | $ | 1,618 |
Receivables and payables, net |  |  |  |  |  |  |  |  | (12 | )
Combined net plan assets available for benefits |  |  |  |  |  |  |  |  | $ | 1,606 |
1 | At December 31, 2011 and 2010, respectively, 63% and 61% of the common/collective assets are invested in a large cap index fund which seeks to track performance of the Russell 1000 index. 21% and 23% of the assets in this category are in index funds which seek to track performance in the MSCI Europe, Australasia and Far East (EAFE) Index. 6% and 7% of this category are invested in a privately managed bond fund and 6% and 6% in a fund which invests in equity securities the fund manager believes are undervalued.
2 | Corporate stock performance is primarily benchmarked against the Russell Indexes (53% and 54%) and the MSCI All Country World (ACWI) index (47% and 46%) for 2011 and 2010, respectively.
3 | Corporate notes and bonds are diversified and include approximately $14 million and $15 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2011 and 2010, respectively.
4 | At December 31, 2011 and 2010, respectively, 81% and 84% of the Level 3 partnerships category is invested in (1) asset backed securities including distressed mortgages, (2) distressed companies and (3) commercial and residential loans and debt and equity of banks.
5 | Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.
6 | Level 1 registered investment companies consist of an investment grade corporate bond mutual fund and a money market fund.
7 | Other includes $60 million and $64 million of municipal securities at December 31, 2011 and 2010, respectively.
At December 31, 2011 and 2010, approximately 69% and 67%, respectively, of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States. The following table sets forth a summary of changes in the fair value of PBOP Level 3 investments for 2011 and 2010:
(in millions) |  | 2011 | 2010
Fair value, net at beginning of period |  | $ | 92 |  | $ | 49 |
Actual return on plan assets |  |  |
Relating to assets still held at end of period |  | (3 | ) | 14 |
Relating to assets sold during the period |  | 6 |  | — |
Purchases |  | 48 |  | 46 |
Dispositions |  | (13 | ) | (17 | )
Transfers in and /or out of Level 3 |  | — |  | — |
Fair value, net at end of period |  | $ | 130 |  | $ | 92 |
Stock-Based Compensation Edison International maintains a shareholder approved incentive plan (the 2007 Performance Incentive Plan) that includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended in 2009 and 2011, is 49.5 million shares, plus the number of any shares subject to awards issued under Edison International's prior plans and outstanding as of April 26, 2007, which expire, cancel or terminate without being exercised or shares being issued ("carry-over shares"). As of December 31, 2011, Edison International had approximately 30 million shares remaining for future issuance under its stock-based compensation plans. Stock Options Under various plans, Edison International has granted stock options at exercise prices equal to the average of the high and low price and, beginning in 2007, at the closing price at the grant date. Edison International may grant stock options and other awards related to or with a value derived from its common stock to directors and certain employees. Options generally expire 10 years after the grant date and vest over a period of four years of continuous service, with expense recognized evenly over the requisite service period, except for awards granted to retirement-eligible participants, as discussed in "Stock-Based Compensation" in Note 1. Stock options granted in 2003 through 2006 accrue dividend equivalents for the first five years of the option term. Stock options granted in 2007 and later have no dividend equivalent rights except for options granted to Edison International's Board of Directors in 2007. Unless transferred to nonqualified deferral plan accounts, dividend equivalents accumulate without interest. Dividend equivalents are paid in cash after the vesting date. Edison International has discretion to pay certain dividend equivalents in shares of Edison International common stock. Additionally, Edison International will substitute cash awards to the extent necessary to pay tax withholding or any government levies. The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires various assumptions noted in the following table:
|  | Years ended December 31,
|  | 2011 | 2010 | 2009
Expected terms (in years) |  | 7.0 | 7.3 | 7.4
Risk-free interest rate |  | 1.4% – 3.1% | 2.0% – 3.2% | 2.8% – 3.5%
Expected dividend yield |  | 3.1% – 3.5% | 3.3% – 4.0% | 3.6% – 5.0%
Weighted-average expected dividend yield |  | 3.4% | 3.8% | 4.9%
Expected volatility |  | 18.2% – 19.0% | 18.8% – 19.8% | 20% – 21%
Weighted-average volatility |  | 18.9% | 19.8% | 20.6%
The expected term represents the period of time for which the options are expected to be outstanding and is primarily based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate for periods within the contractual life of the option is based on a zero coupon U.S. Treasury issued STRIPS (separate trading of registered interest and principal of securities) whose maturity equals the option's expected term on the measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the length of the option's expected term for 2011. The volatility period used was 84 months, 87 months and 84 months at December 31, 2011, 2010 and 2009, respectively. The following is a summary of the status of Edison International stock options granted to SCE employees:
|  |  |  | Weighted-Average |  |
|  | Stock Options |  | Exercise Price |  | Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2010 |  | 10,064,736 |  |  | $ | 32.86 |  |  |  |  |  |  |
Granted |  | 1,909,443 |  |  | 38.09 |  |  |  |  |  |  |
Expired |  | (95,170 | ) |  | 49.65 |  |  |  |  |  |  |
Forfeited |  | (296,680 | ) |  | 33.59 |  |  |  |  |  |  |
Exercised |  | (1,166,076 | ) |  | 24.03 |  |  |  |  |  |  |
Affiliate transfers – net |  | 110,287 |  |  | 31.98 |  |  |  |  |  |  |
Outstanding at December 31, 2011 |  | 10,526,540 |  |  | 34.60 |  |  | 6.01 |  |  |  |
Vested and expected to vest at December 31, 2011 |  | 10,272,969 |  |  | 34.62 |  |  | 5.96 |  |  | $ | 86 |
Exercisable at December 31, 2011 |  | 5,781,567 |  |  | 35.20 |  |  | 4.36 |  |  | $ | 50 |
At December 31, 2011, there was $10 million of total unrecognized compensation cost related to stock options, net of expected forfeitures. That cost is expected to be recognized over a weighted-average period of approximately two years. Performance Shares A target number of contingent performance shares were awarded to executives in March 2009, March 2010 and March 2011, and vest at the end of December 2011, 2012 and 2013, respectively. Performance shares awarded contain dividend equivalent reinvestment rights. An additional number of target contingent performance shares will be credited based on dividends on Edison International common stock for which the ex-dividend date falls within the performance period. The vesting of Edison International's performance shares is dependent upon a market condition and three years of continuous service subject to a prorated adjustment for employees who are terminated under certain circumstances or retire, but payment cannot be accelerated. The market condition is based on Edison International's total shareholder return relative to the total shareholder return of a specified group of peer companies at the end of a three-calendar-year period. The number of performance shares earned is determined based on Edison International's ranking among these companies. Performance shares earned are settled half in cash and half in common stock; however, Edison International has discretion under certain of the awards to pay the half subject to cash settlement in common stock. Edison International also has discretion to pay certain dividend equivalents in Edison International common stock. Additionally, cash awards are substituted to the extent necessary to pay tax withholding or any government levies. The portion of performance shares that can be settled in cash is classified as a share-based liability award. The fair value of these shares is remeasured at each reporting period and the related compensation expense is adjusted. The portion of performance shares payable in common stock is classified as a share-based equity award. Compensation expense related to these shares is based on the grant-date fair value. Performance shares expense is recognized ratably over the requisite service period based on the fair values determined, except for awards granted to retirement-eligible participants. The fair value of performance shares is determined using a Monte Carlo simulation valuation model. The Monte Carlo simulation valuation model requires various assumptions noted in the following table.
|  | Years ended December 31,
|  | 2011 | 2010 | 2009
Equity awards |  |  |  |
Grant date risk-free interest rate |  | 1.2% | 1.3% | 1.3%
Grant date expected volatility |  | 20.4% | 21.6% | 21.4%
Liability awards 1 |  |  |  |
Expected volatility |  | 15.9% | 20.6% | 21.9%
Risk-free interest rate: |  |  |  |
2011 awards |  | 0.3% | —% | —%
2010 awards |  | 0.2% | 0.6% | —%
2009 awards |  | —% | 0.3% | 1.1%
1 | The portion of performance shares classified as share-based liability awards are revalued at each reporting period.
The risk-free interest rate is based on the daily spot rate on the grant or valuation date on U.S. Treasury zero coupon issue or STRIPS with terms nearest to the remaining term of the performance shares and is used as a proxy for the expected return for the specified group of peer companies. Expected volatility is based on the historical volatility of Edison International's (and the specified group of peer companies') common stock for the most recent 36 months. Historical volatility for each company in the specified group is obtained from a financial data services provider. The following is a summary of the status of Edison International nonvested performance shares granted to SCE employees:
|  | Equity Awards |  | Liability Awards
|  | Shares |  | Weighted-Average Grant Date Fair Value |  | Shares |  | Weighted-Average Fair Value
Nonvested at December 31, 2010 |  | 219,904 |  |  | $ | 32.15 |  |  | 219,904 |  |  | $ | 37.68 |
Granted |  | 86,207 |  |  | 29.40 |  |  | 86,207 |  |  |  |
Forfeited 1 |  | (54,848 | ) |  | 49.87 |  |  | (54,848 | ) |  |  |
Affiliate transfers – net |  | 3,496 |  |  | 26.90 |  |  | 3,496 |  |  |  |
Nonvested at December 31, 2011 |  | 254,759 |  |  | 27.91 |  |  | 254,759 |  |  | 29.74 |
1 | Includes performance shares that expired with zero value as performance targets were not met.
The current portion of nonvested performance shares classified as liability awards is reflected in "Other current liabilities" and the long-term portion is reflected in "Pensions and benefits" on the consolidated balance sheets. At December 31, 2011, there was $2 million (based on the December 31, 2011 fair value of performance shares classified as equity awards) of total unrecognized compensation cost related to performance shares. That cost is expected to be recognized over a weighted-average period of approximately two years. Restricted Stock Units Restricted stock units were awarded to executives in March 2009, March 2010 and March 2011 and vest and become payable in January 2012, 2013 and 2014, respectively. Each restricted stock unit awarded is a contractual right to receive one share of Edison International common stock, if vesting requirements are satisfied. Restricted stock units awarded contain dividend equivalent reinvestment rights. An additional number of restricted stock units will be credited based on dividends on Edison International common stock for which the ex-dividend date falls within the performance period. The vesting of Edison International's restricted stock units is dependent upon continuous service through the end of the three-calendar-year-plus-two-days vesting period. Vesting is subject to a pro-rated adjustment for employees who are terminated under certain circumstances or retire. Cash awards are substituted to the extent necessary to pay tax withholding or any government levies. The following is a summary of the status of Edison International nonvested restricted stock units granted to SCE employees:
|  | Restricted Stock Units |  | Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2010 |  | 385,877 |  |  | $ | 32.90 |
Granted |  | 140,916 |  |  | 38.07 |
Forfeited |  | (23,574 | ) |  | 31.91 |
Paid Out |  | (98,400 | ) |  | 47.95 |
Affiliate transfers – net |  | 6,747 |  |  | 30.56 |
Nonvested at December 31, 2011 |  | 411,566 |  |  | $ | 32.14 |
The fair value for each restricted stock unit awarded is determined as the closing price of Edison International common stock on the grant date. Compensation expense related to these shares, which is based on the grant-date fair value, is recognized ratably over the requisite service period, except for awards whose holders become eligible for retirement vesting during the service period, in which case recognition is accelerated into the year the holders become eligible for retirement vesting. At December 31, 2011, there was $4 million of total unrecognized compensation cost related to restricted stock units, net of expected forfeitures, which is expected to be recognized as follows: $3 million in 2012 and $1 million in 2013. Supplemental Data on Stock Based Compensation
|  | Years ended December 31,
(in millions, except per award amounts) |  | 2011 | 2010 | 2009
Stock Based Compensation Expense 1 |  |  |  |
Stock options |  | $ | 9 |  | $ | 10 |  | $ | 8 |
Performance shares |  | 3 |  | 6 |  | 3 |
Restricted stock units |  | 4 |  | 5 |  | 3 |
Other |  | 4 |  | 6 |  | 6 |
Total stock based compensation expense |  | $ | 20 |  | $ | 27 |  | $ | 20 |
Income tax benefits related to stock compensation expense |  | $ | 8 |  | $ | 11 |  | $ | 8 |
Excess tax benefits 2 |  | 11 |  | 4 |  | 7 |
Stock options |  |  |  |
Weighted average grant date fair value per option granted |  | $ | 5.61 |  | $ | 4.87 |  | $ | 3.06 |
Fair value of options vested |  | 10 |  | 11 |  | 8 |
Cash used to purchase shares to settle options |  | 46 |  | 27 |  | 9 |
Cash from participants to exercise stock options |  | 28 |  | 18 |  | 6 |
Value of options exercised |  | 18 |  | 9 |  | 3 |
Tax benefits from options exercised |  | 7 |  | 4 |  | 1 |
Performance Shares 3 Classified as Equity Awards |  |  |  |
Weighted average grant date fair value per share granted |  | $ | 29.40 |  | $ | 32.19 |  | $ | 21.56 |
Fair value of shares vested |  | 2 |  | 3 |  | 1 |
Restricted Stock units |  |  |  |
Values of shares settled |  | $ | 5 |  | $ | — |  | $ | — |
Tax benefits realized from settlement of awards |  | 2 |  | — |  | — |
Weighted average grant date fair value per unit granted |  | 38.07 |  | 33.38 |  | 25.32 |
1 | Reflected in "Operations and maintenance" on the consolidated statements of income.
2 | Reflected in "Settlements of stock based compensation – net" in the financing section of the consolidated statements of cash flows.
3 | There were no settlements of awards for performance shares in 2011, 2010 and 2009 as performance targets were not met.

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