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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Taxes |
Income Taxes | Note 8.Income Taxes Current and Deferred Taxes The components of income tax (benefit) expense by location of taxing jurisdiction are: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
​ | ​ | Years ended December 31,
(in millions) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Current: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 2 | ​ | $ | — | ​ | $ | 13 | ​ | $ | — | ​ | $ | — | ​ | $ | 12
State | ​ |  | 13 | ​ |  | (179) | ​ |  | (22) | ​ |  | 2 | ​ |  | (45) | ​ |  | (26)
​ | ​ |  | 15 | ​ |  | (179) | ​ |  | (9) | ​ |  | 2 | ​ |  | (45) | ​ |  | (14)
Deferred: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Federal | ​ |  | (103) | ​ |  | 83 | ​ |  | (230) | ​ |  | (44) | ​ |  | 83 | ​ |  | (207)
State | ​ |  | (74) | ​ |  | (40) | ​ |  | (66) | ​ |  | (67) | ​ |  | (21) | ​ |  | (56)
​ | ​ |  | (177) | ​ |  | 43 | ​ |  | (296) | ​ |  | (111) | ​ |  | 62 | ​ |  | (263)
Total | ​ | $ | (162) | ​ | $ | (136) | ​ | $ | (305) | ​ | $ | (109) | ​ | $ | 17 | ​ | $ | (277)
​ The components of net accumulated deferred income tax liability are:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
​ | ​ | December 31,
(in millions) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Deferred tax assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Property | ​ | $ | 859 | ​ | $ | 856 | ​ | $ | 840 | ​ | $ | 835
Wildfire-related1 | ​ |  | 458 | ​ |  | 558 | ​ |  | 457 | ​ |  | 558
Nuclear decommissioning trust assets in excess of nuclear ARO liability | ​ |  | 321 | ​ |  | 517 | ​ |  | 321 | ​ |  | 517
Loss and credit carryforwards2 | ​ |  | 3,479 | ​ |  | 3,078 | ​ |  | 2,157 | ​ |  | 1,697
Regulatory balances | ​ |  | 641 | ​ |  | 652 | ​ |  | 641 | ​ |  | 652
Pension and postretirement benefits other than pensions, net | ​ |  | 130 | ​ |  | 153 | ​ |  | 26 | ​ |  | 30
Leases | ​ | ​ | 406 | ​ | ​ | 543 | ​ | ​ | 406 | ​ | ​ | 543
Other | ​ |  | 162 | ​ |  | 165 | ​ |  | 135 | ​ |  | 179
Sub-total | ​ |  | 6,456 | ​ |  | 6,522 | ​ |  | 4,983 | ​ |  | 5,011
Less: valuation allowance3 | ​ |  | 39 | ​ |  | 44 | ​ |  | — | ​ |  | 6
Total | ​ |  | 6,417 | ​ |  | 6,478 | ​ |  | 4,983 | ​ |  | 5,005
Deferred tax liabilities: | ​ |  |  | ​ |  |  | ​ |  | ​ | ​ |  |
Property | ​ |  | 10,091 | ​ |  | 9,645 | ​ |  | 10,078 | ​ |  | 9,633
Regulatory balances | ​ |  | 1,462 | ​ |  | 1,242 | ​ |  | 1,462 | ​ |  | 1,242
Nuclear decommissioning trust assets | ​ |  | 321 | ​ |  | 517 | ​ |  | 321 | ​ |  | 517
Leases | ​ | ​ | 406 | ​ | ​ | 543 | ​ | ​ | 406 | ​ | ​ | 543
Other | ​ |  | 225 | ​ |  | 207 | ​ |  | 200 | ​ |  | 186
Total | ​ |  | 12,505 | ​ |  | 12,154 | ​ |  | 12,467 | ​ |  | 12,121
Accumulated deferred income tax liability, net4 | ​ | $ | 6,088 | ​ | $ | 5,676 | ​ | $ | 7,484 | ​ | $ | 7,116
1 | Relates to accrued estimated losses for wildfire-related claims, net of expected recoveries from insurance and FERC customers, and contributions to the Wildfire Insurance Fund. For further information, see Note 12 and Note 1.
2 | As of December 31, 2022, unrecognized tax benefits of $310 million and $254 million for Edison International and SCE, respectively, are presented net against the deferred tax asset for the loss and tax credit carryforwards. As of December 31, 2021, the unrecognized tax benefits netted against deferred tax assets and tax credit carryforwards were $277 million and $221 million for Edison International and SCE, respectively.
3 | As of December 31, 2022, Edison International has recorded a valuation allowance on deferred tax assets which are estimated to expire before being utilized. The valuation allowance for Edison International includes $35 million for non-California state net operating loss carryforwards and $4 million for California capital losses generated from sale of SoCore Energy in 2018. As of December 31, 2021, the valuation allowance on deferred tax assets which are estimated to expire before being utilized for Edison International includes $33 million for non-California state net operating loss carryforwards, $4 million for California capital losses generated from sale of SoCore Energy in 2018, and $7 million for federal and California charitable contribution carryover from 2017. Valuation allowance for SCE includes $6 million for federal and California charitable contribution carryover from 2017.
4 | Included in "Deferred income taxes and credits" on the consolidated balance sheets.
Net Operating Loss and Tax Credit Carryforwards The amounts of net operating loss and tax credit carryforwards (after-tax) are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
​ | ​ | December 31, 2022
​ | ​ | Loss | ​ | Credit | ​ | Loss | ​ | Credit
(in millions) |  | Carryforwards |  | Carryforwards |  | Carryforwards |  | Carryforwards
Expire in 2023 | ​ | $ | 10 | ​ | $ | — | ​ | $ | 6 | ​ | $ | —
Expire between 2024 to 2027 | ​ |  | 26 | ​ |  | — | ​ |  | 25 | ​ |  | —
Expire between 2029 to 2042 | ​ |  | 1,670 | ​ |  | 544 | ​ |  | 870 | ​ |  | 60
No expiration date1 | ​ |  | 1,529 | ​ |  | 10 | ​ |  | 1,450 | ​ |  | —
Total | ​ | $ | 3,235 | ​ | $ | 554 | ​ | $ | 2,351 | ​ | $ | 60
1 | Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), that it was an event vs. net operating losses generated after December 31, 2017 can carryforward indefinitely.
Edison International consolidates for federal income tax purposes, but not for financial accounting purposes, a group of wind projects referred to as Capistrano Wind. The amount of net operating loss and tax credit carryforwards recognized as part of deferred income taxes includes $121 million and $223 million related to Capistrano Wind for 2022 and 2021, respectively. The change in Capistrano's carryforwards is primarily due to a sale of the Capistrano Wind projects consummated in the third quarter of 2022. The tax impact of the sale and cancellation of debt is approximately $125 million. The tax attributes not utilized as of December 31, 2022 will be available for the Edison International consolidated group to utilize in the future. When the remaining Capistrano tax attributes are used in the future by Edison International, payments will be made to those entities under a tax allocation agreement. Under the tax allocation agreement, Edison International has recorded a corresponding liability as part of other long-term liabilities related to its obligation to make payments to Capistrano Wind when these tax benefits are realized. ​ Effective Tax Rate The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE | ​
​ | ​ | Years ended December 31, | ​
(in millions) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020 |
Income from operations before income taxes | ​ | $ | 662 | ​ | $ | 789 | ​ | $ | 566 | ​ | $ | 845 | ​ | $ | 952 | ​ | $ | 665 | ​
Provision for income tax at federal statutory rate of 21% | ​ |  | 139 | ​ |  | 166 | ​ |  | 119 | ​ |  | 177 | ​ |  | 200 | ​ |  | 140 | ​
Increase (decrease) in income tax from: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
State tax, net of federal benefit | ​ |  | (70) | ​ |  | (47) | ​ |  | (61) | ​ |  | (57) | ​ |  | (33) | ​ |  | (52) | ​
Property-related | ​ |  | (219) | ​ |  | (233) | ​ |  | (320) | ​ |  | (219) | ​ |  | (233) | ​ |  | (320) | ​
Change related to uncertain tax position1 | ​ |  | — | ​ |  | (147) | ​ |  | (15) | ​ |  | — | ​ |  | (37) | ​ |  | (19) | ​
Wildfire related charges2 | ​ | ​ | — | ​ | ​ | 31 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 31 | ​ | ​ | — | ​
Average rate assumption method ("ARAM") adjustment3 | ​ | ​ | — | ​ | ​ | 87 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 87 | ​ | ​ | — | ​
Corporate-owned life insurance cash surrender value | ​ |  | (9) | ​ |  | (8) | ​ |  | (8) | ​ |  | (9) | ​ |  | (8) | ​ |  | (8) | ​
Other | ​ |  | (3) | ​ |  | 15 | ​ |  | (20) | ​ |  | (1) | ​ |  | 10 | ​ |  | (18) | ​
Total income tax (benefit) expense | ​ | $ | (162) | ​ | $ | (136) | ​ | $ | (305) | ​ | $ | (109) | ​ | $ | 17 | ​ | $ | (277) | ​
Effective tax rate | ​ |  | (24.5) | % |  | (17.2) | % |  | (53.9) | % |  | (12.9) | % |  | 1.8 | % |  | (41.7) | %
1 | In 2021, Edison International and SCE recognized tax benefits related to a settlement with the California Franchise Tax Board "FTB" for tax years 2007 – 2012. See further discussion in Tax Disputes below. In 2020, Edison International and SCE recognized tax expense and benefit, respectively, primarily due to the re-measurement of uncertain tax positions related to the 2010 – 2012 California state tax filings currently under audit.
2 | Relates to the non-tax deductible portions of the SED Agreement (as defined in Note 12). See Note 12 for further discussion under 2017/2018 Wildfire/Mudslide Events.
3 | In July 2021, SCE received the IRS' response to its private letter ruling request, regarding the scope of the deferred tax normalization requirements and the computations required to comply with the average rate assumption method. As a result, SCE's estimate changed and a cumulative true-up of $87 million reduction in tax benefits was recorded in the third quarter of 2021, for the period of January 1, 2018 to June 30, 2021.
The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. Flow-through items reduce current authorized revenue requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods. The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to be recovered in future rates. For further information, see Note 11. Accounting for Uncertainty in Income Taxes Authoritative guidance related to accounting for uncertainty in income taxes requires an enterprise to recognize, in its financial statements, the best estimate of the impact of a tax position by determining if the weight of available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained upon examination. The guidance requires the disclosure of all unrecognized tax benefits, which includes both the reserves recorded for tax positions on filed tax returns and the unrecognized portion of affirmative claims. Unrecognized Tax Benefits The following table provides a reconciliation of unrecognized tax benefits:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
(in millions) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Balance at January 1, | ​ | $ | 613 | ​ | $ | 679 | ​ | $ | 370 | ​ | $ | 340 | ​ | $ | 320 | ​ | $ | 282
Tax positions taken during the current year: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Increases | ​ |  | 54 | ​ |  | 53 | ​ |  | 55 | ​ |  | 54 | ​ |  | 53 | ​ |  | 56
Tax positions taken during a prior year: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  |
Increases1 | ​ |  | — | ​ |  | 3 | ​ |  | 274 | ​ |  | — | ​ |  | 1 | ​ |  | 4
Decreases2 | ​ |  | (21) | ​ |  | (118) | ​ |  | (20) | ​ |  | (20) | ​ |  | (29) | ​ |  | (22)
Settlements with taxing authorities3 | ​ |  | — | ​ |  | (4) | ​ |  | — | ​ |  | — | ​ |  | (5) | ​ |  | —
Balance at December 31, | ​ | $ | 646 | ​ | $ | 613 | ​ | $ | 679 | ​ | $ | 374 | ​ | $ | 340 | ​ | $ | 320
1 | Edison International recorded favorable tax positions in 2020 in connection with the Edison Mission Energy bankruptcy that required a revaluation of the reserve for uncertain tax positions.
2 | Decrease in 2021 was related to re-measurement as a result of a settlement with the FTB for tax years 2007 – 2012.
3 | In 2021, Edison International reached a settlement with the FTB for tax years 2007 – 2012.
As of December 31, 2022, if recognized, $341 million of unrecognized tax benefits would impact Edison International's effective tax rate and $69 million of the unrecognized tax benefits would impact SCE's effective tax rate. Tax Disputes Tax years that remain open for examination by the IRS and FTB are 2019 – 2021 and 2013 – 2021, respectively. Accrued Interest and Penalties The total amount of accrued interest and penalties related to income tax liabilities are:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
​ | ​ | December 31,
(in millions) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Accrued interest and penalties | ​ | $ | — | ​ | $ | — | ​ | $ | 23 | ​ | $ | 20
​ The net after-tax interest and penalties recognized in income tax (benefit) expense are:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Edison International | ​ | SCE
​ | ​ | Years ended December 31,
(in millions) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Net after-tax interest and penalties tax (benefit) expense | ​ | $ | — | ​ | $ | (41) | ​ | $ | 4 | ​ | $ | 2 | ​ | $ | (2) | ​ | $ | 6
​

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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