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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Sources of income (loss) before income taxes | Edison International's sources of income (loss) before income taxes are:
|  | Years ended December 31,
(in millions) |  | 2012 |  | 2011 |  | 2010
Income from continuing operations before income taxes |  | $ | 1,861 |  |  | $ | 1,668 |  |  | $ | 1,479 |
Discontinued operations before income taxes |  | (2,235 | ) |  | (1,931 | ) |  | 191 |
Income (loss) before income tax |  | $ | (374 | ) |  | $ | (263 | ) |  | $ | 1,670 |
Components of income tax expense (benefit) by location of taxing jurisdiction | The components of income tax expense (benefit) by location of taxing jurisdiction are:
| Edison International |  | SCE
| Years ended December 31,
(in millions) | 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010
Current: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | — |  |  | $ | (279 | ) |  | $ | (143 | ) |  | $ | — |  |  | $ | (275 | ) |  | $ | (145 | )
State | — |  |  | 80 |  |  | (104 | ) |  | 50 |  |  | 91 |  |  | (71 | )
| — |  |  | (199 | ) |  | (247 | ) |  | 50 |  |  | (184 | ) |  | (216 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |
Federal | 132 |  |  | 727 |  |  | 614 |  |  | 136 |  |  | 757 |  |  | 663 |
State | 135 |  |  | 40 |  |  | (32 | ) |  | 28 |  |  | 28 |  |  | (7 | )
| 267 |  |  | 767 |  |  | 582 |  |  | 164 |  |  | 785 |  |  | 656 |
Total continuing operations | 267 |  |  | 568 |  |  | 335 |  |  | 214 |  |  | 601 |  |  | 440 |
Discontinued operations | (549 | ) |  | (853 | ) |  | 27 |  |  | — |  |  | — |  |  | — |
Total | $ | (282 | ) |  | $ | (285 | ) |  | $ | 362 |  |  | $ | 214 |  |  | $ | 601 |  |  | $ | 440 |
Components of net accumulated deferred income tax liability | The components of net accumulated deferred income tax liability for continuing operations are:
| Edison International |  | SCE
| December 31,
(in millions) | 2012 |  | 2011 |  | 2012 |  | 2011
Deferred tax assets: |  |  |  |  |  |  |
Property and software related | $ | 600 |  |  | $ | 728 |  |  | $ | 600 |  |  | $ | 728 |
Unrealized gains and losses | 491 |  |  | 385 |  |  | 477 |  |  | 374 |
Loss and credit carryforwards | 1,515 |  |  | 689 |  |  | 125 |  |  | 15 |
Regulatory balancing accounts | 80 |  |  | 89 |  |  | 80 |  |  | 89 |
Pension and PBOPs | 275 |  |  | 179 |  |  | 99 |  |  | 173 |
Other | 723 |  |  | 696 |  |  | 625 |  |  | 480 |
Sub-total | $ | 3,684 |  |  | $ | 2,766 |  |  | $ | 2,006 |  |  | $ | 1,859 |
Less valuation allowance | 1,017 |  |  | — |  |  | — |  |  | — |
Total | $ | 2,667 |  |  | $ | 2,766 |  |  | $ | 2,006 |  |  | $ | 1,859 |
Deferred tax liabilities: |  |  |  |  |  |  |
Property-related | $ | 7,289 |  |  | $ | 6,502 |  |  | $ | 7,279 |  |  | $ | 6,492 |
Capitalized software costs | 325 |  |  | 324 |  |  | 325 |  |  | 324 |
Regulatory balancing accounts | 296 |  |  | 301 |  |  | 296 |  |  | 301 |
Unrealized gains and losses | 477 |  |  | 374 |  |  | 477 |  |  | 374 |
Other | 471 |  |  | 419 |  |  | 379 |  |  | 238 |
Total | $ | 8,858 |  |  | $ | 7,920 |  |  | $ | 8,756 |  |  | $ | 7,729 |
Accumulated deferred income tax liability, net | $ | 6,191 |  |  | $ | 5,154 |  |  | $ | 6,750 |  |  | $ | 5,870 |
Classification of accumulated deferred income taxes, net: |  |  |  |  |  |  |
Included in deferred credits and other liabilities | $ | 6,127 |  |  | $ | 5,065 |  |  | $ | 6,669 |  |  | $ | 5,781 |
Included in current liabilities | 64 |  |  | 89 |  |  | 81 |  |  | 89 |
Reconciliation of income tax expense | The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:
| Edison International |  | SCE
| Years ended December 31,
(in millions) | 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010
Income from continuing operations before income taxes | $ | 1,861 |  |  | $ | 1,668 |  |  | $ | 1,479 |  |  | $ | 1,874 |  |  | $ | 1,745 |  |  | $ | 1,532 |
Provision for income tax at federal statutory rate of 35% | 652 |  |  | 584 |  |  | 518 |  |  | 656 |  |  | 611 |  |  | 536 |
Increase (decrease) in income tax from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items presented with related state income tax, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Repair deductions 1 | (231 | ) |  | — |  |  | — |  |  | (231 | ) |  | — |  |  | — |
Global Settlement related 2 | — |  |  | — |  |  | (159 | ) |  | — |  |  | — |  |  | (95 | )
Change in tax accounting method for asset removal costs 3 | — |  |  | — |  |  | (40 | ) |  | — |  |  | — |  |  | (40 | )
State tax, net of federal benefit | 108 |  |  | 85 |  |  | 44 |  |  | 54 |  |  | 80 |  |  | 59 |
Health care legislation 4 | — |  |  | — |  |  | 39 |  |  | — |  |  | — |  |  | 39 |
Property-related 5 | (223 | ) |  | (46 | ) |  | (92 | ) |  | (223 | ) |  | (46 | ) |  | (92 | )
Accumulated deferred income tax adjustments | (41 | ) |  | (30 | ) |  | — |  |  | (41 | ) |  | (30 | ) |  | — |
Tax reserve | 40 |  |  | — |  |  | 44 |  |  | 36 |  |  | (3 | ) |  | 45 |
Other | (38 | ) |  | (25 | ) |  | (19 | ) |  | (37 | ) |  | (11 | ) |  | (12 | )
Total income tax expense from continuing operations | $ | 267 |  |  | $ | 568 |  |  | $ | 335 |  |  | $ | 214 |  |  | $ | 601 |  |  | $ | 440 |
Effective tax rate | 14.3 | % |  | 34.1 | % |  | 22.7 | % |  | 11.4 | % |  | 34.4 | % |  | 28.7 | %
1 | As discussed below, SCE recorded a $231 million earnings benefit in the fourth quarter of 2012, resulting from the flow-through regulatory treatment for certain repair costs for 2009 – 2011 as adopted in the 2012 GRC.
2 | During 2010, Edison International and SCE recognized an earnings benefit of $159 million and $95 million, respectively, from the acceptance by the California Franchise Tax Board of the IRS tax positions finalized in 2009 and receipt of the final interest determination from the Franchise Tax Board.
3 | During the second quarter of 2010, the IRS approved Edison International's request to change its tax accounting method for asset removal costs primarily related to SCE's infrastructure replacement program. As a result, Edison International and SCE recognized a $40 million earnings benefit (of which $28 million relates to asset removal costs incurred prior to 2010) from deducting asset removal costs earlier in the construction cycle. These deductions were recorded on a flow-through basis as required by the CPUC.
4 | During the first quarter of 2010, Edison International and SCE recorded a $39 million non-cash charge to reverse previously recognized federal tax benefits eliminated by the federal health care legislation enacted in March 2010. The health care law eliminated the federal tax deduction for retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies.
5 | Incremental repair benefit recorded in 2012. See discussion of repair deductions below.
Reconciliation of unrecognized tax benefits | The following table provides a reconciliation of unrecognized tax benefits for continuing and discontinued operations:
| Edison International |  | SCE
| December 31,
(in millions) | 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010
Balance at January 1, | $ | 631 |  |  | $ | 565 |  |  | $ | 664 |  |  | $ | 373 |  |  | $ | 329 |  |  | $ | 482 |
Tax positions taken during the current year: |  |  |  |  |  |  |  |  |  |  |
Increases | 33 |  |  | 39 |  |  | 42 |  |  | 35 |  |  | 34 |  |  | 47 |
Tax positions taken during a prior year: |  |  |  |  |  |  |  |  |  |  |
Increases | 177 |  |  | 102 |  |  | 273 |  |  | 169 |  |  | 82 |  |  | 140 |
Decreases | (11 | ) |  | (75 | ) |  | (332 | ) |  | (6 | ) |  | (72 | ) |  | (272 | )
Decreases – Deconsolidation of EME 1 | (18 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Decreases for settlements during the period | — |  |  | — |  |  | (82 | ) |  | — |  |  | — |  |  | (68 | )
Balance at December 31, | $ | 812 |  |  | $ | 631 |  |  | $ | 565 |  |  | $ | 571 |  |  | $ | 373 |  |  | $ | 329 |
1 | Unrecognized tax benefits of EME have been deconsolidated as a result of the bankruptcy filing by EME, except for tax liabilities that Edison International is jointly liable with EME under the Internal Revenue Code and applicable state statues. See Note 17 for further information.
Schedule of interest and penalties related to income tax liabilities | The total amount of accrued interest and penalties related to income tax liabilities for continuing and discontinued operations are:
| Edison International |  | SCE
| December 31,
(in millions) | 2012 |  | 2011 |  | 2012 |  | 2011
Accrued interest and penalties | $ | 278 |  |  | $ | 242 |  |  | $ | 87 |  |  | $ | 75 |
The net after-tax interest and penalties recognized in income tax expense are:
| Edison International |  | SCE
| December 31,
(in millions) | 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010
Net after-tax interest and penalties tax benefit (expense) | $ | (10 | ) |  | $ | (8 | ) |  | $ | 166 |  |  | $ | (11 | ) |  | $ | (8 | ) |  | $ | 80 |

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