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Summary of Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2024
Summary of Significant Accounting Policies |
Summary of Significant Accounting Policies | Note 1.Summary of Significant Accounting Policies Organization and Basis of Presentation Edison International is the ultimate parent holding company of Southern California Edison Company ("SCE") and Edison Energy, LLC, doing business as Trio ("Trio"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area across Southern, Central and Coastal California. Trio is a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial and institutional customers. Trio's business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE, and other controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE, its controlled subsidiaries and a variable interest entity, SCE Recovery Funding LLC., of which SCE is the primary beneficiary. All intercompany transactions have been eliminated from the consolidated financial statements. Edison International's and SCE's significant accounting policies were described in the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2023 Form 10-K. In the opinion of management, all adjustments, consisting only of adjustments of a normal recurring nature, have been made that are necessary to fairly state the consolidated financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the interim periods presented are not necessarily indicative of the operating results for the full year. The December 31, 2023 financial statement data was derived from the audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements. Certain prior period amounts have been conformed to the current period's presentation, including the separate presentation of accrued interest on Edison International's and SCE's consolidated balance sheets. Cash, Cash Equivalents and Restricted Cash Cash equivalents consist of investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Edison International | ​ | SCE
​ | ​ | June 30, | ​ | December 31, | ​ | June 30, | ​ | December 31,
(in millions) |  | 2024 |  | 2023 | ​ | 2024 |  | 2023
Money market funds | ​ | $ | 397 | ​ | $ | 199 | ​ | $ | 10 | ​ | $ | 78
​ Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period. The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, |  | December 31,
(in millions) |  | 2024 |  | 2023
Edison International: | ​ |  | ​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 465 | ​ | $ | 345
Short-term restricted cash1 | ​ |  | 39 | ​ |  | 35
Long-term restricted cash2 | ​ | ​ | 295 | ​ | ​ | 152
Total cash, cash equivalents and restricted cash | ​ | $ | 799 | ​ | $ | 532
SCE: | ​ |  | ​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 68 | ​ | $ | 214
Short-term restricted cash1 | ​ |  | 34 | ​ |  | 33
Long-term restricted cash2 | ​ | ​ | 294 | ​ | ​ | 151
Total cash, cash equivalents and restricted cash | ​ | $ | 396 | ​ | $ | 398
1 | Includes SCE Recovery Funding LLC's restricted cash for payments of senior secured recovery bonds and is reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.
2 | The SCE amount represents cash collected for customer-funded wildfire self-insurance and is reflected in "Other long-term assets" on Edison International's and SCE's consolidated balance sheets. See Note 12 for further information.
Allowance for Uncollectible Accounts The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California which exposes SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical amounts written-off, assessment of customer collectibility and current economic trends, including unemployment rates and any likelihood of recession for the region. The increase in the provision of uncollectible accounts and write-offs for the three and six months ended June 30, 2024 is driven primarily by consumer protection programs. The following table sets forth the changes in allowance for uncollectible accounts for SCE: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | ​ | Three months ended
​ | ​ | June 30, 2024 | ​ | ​ | June 30, 2023
(in millions) | ​ | Customers | ​ | All others | ​ | Total | ​ | ​ | Customers | ​ | All others | ​ | Total
Beginning balance | ​ | $ | 347 |  | $ | 16 | ​ | $ | 363 | ​ | ​ | $ | 326 |  | $ | 18 | ​ | $ | 344
Current period provision for uncollectible accounts1 | ​ | ​ | 54 | ​ | ​ | 3 | ​ | ​ | 57 | ​ | ​ | ​ | 20 | ​ | ​ | 1 | ​ | ​ | 21
Write-offs, net of recoveries | ​ |  | (52) | ​ | ​ | (4) | ​ |  | (56) | ​ | ​ |  | (20) | ​ |  | (2) | ​ |  | (22)
Ending balance | ​ | $ | 349 |  | $ | 15 | ​ | $ | 364 | 3 | ​ | $ | 326 |  | $ | 17 | ​ | $ | 343
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Six months ended | ​ | ​ | Six months ended
​ | ​ | June 30, 2024 | ​ | ​ | June 30, 2023
(in millions) | ​ | Customers | ​ | All others | ​ | Total | ​ | ​ | Customers | ​ | All others | ​ | Total
Beginning balance | ​ | $ | 347 |  | $ | 17 | ​ | $ | 364 | 3 | ​ | $ | 334 |  | $ | 20 | ​ | $ | 354
Current period provision for uncollectible accounts2 | ​ | ​ | 114 | ​ | ​ | 4 | ​ | ​ | 118 | ​ | ​ | ​ | 40 | ​ | ​ | 1 | ​ | ​ | 41
Write-offs, net of recoveries | ​ |  | (112) | ​ | ​ | (6) | ​ |  | (118) | ​ | ​ | ​ | (48) | ​ | ​ | (4) | ​ | ​ | (52)
Ending balance | ​ | $ | 349 |  | $ | 15 | ​ | $ | 364 | 3 | ​ | $ | 326 |  | $ | 17 | ​ | $ | 343
1 | This includes $46 million and $13 million of incremental costs, for the three months ended June 30, 2024 and 2023, respectively, which were probable of recovery from customers and recorded as regulatory assets.
2 | This includes $96 million and $27 million of incremental costs, for the six months ended June 30, 2024 and 2023, respectively, which were probable of recovery from customers and recorded as regulatory assets.
3 | Approximately $30 million and $4 million of allowance for uncollectible accounts are included in "Other long-term assets" on SCE's consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively.
Wildfire Insurance Fund Based on information available in January of 2024 regarding catastrophic wildfires during 2023, SCE reassessed its estimate of the life of the Wildfire Insurance Fund. After incorporating 2023 expected losses into the historical data for the Monte Carlo simulations, SCE determined that effective in the first quarter of 2024, the life of the Wildfire Insurance Fund increased from 15 to 20 years from the date SCE committed to participate in the Wildfire Insurance Fund. Accordingly, the change resulted in a reduction in wildfire insurance fund expense from $53 million in the three months ended June 30, 2023 to $37 million in the three months ended June 30, 2024 and from $105 million in the six months ended June 30, 2023 to $73 million in the six months ended June 30, 2024. Earnings Per Share Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards, payable in common shares, which earn dividend equivalents on an equal basis with common shares once the awards are vested. See Note 13 for further information. EPS attributable to Edison International common shareholders was computed as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three months ended June 30, |  | Six months ended June 30,
(in millions, except per-share amounts) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Basic earnings per share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income attributable to common shareholders | ​ | $ | 439 | ​ | $ | 354 | ​ | $ | 428 | ​ | $ | 664
Net income available to common shareholders | ​ | $ | 439 | ​ | $ | 354 | ​ | $ | 428 | ​ | $ | 664
Weighted average common shares outstanding | ​ |  | 385 | ​ |  | 383 | ​ |  | 385 | ​ | ​ | 383
Basic earnings per share | ​ | $ | 1.14 | ​ | $ | 0.92 | ​ | $ | 1.11 | ​ | $ | 1.73
Diluted earnings per share: | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​ | ​ | ​
Net income attributable to common shareholders | ​ | $ | 439 | ​ | $ | 354 | ​ | $ | 428 | ​ | $ | 664
Net income available to common shareholders | ​ | $ | 439 | ​ | $ | 354 | ​ | $ | 428 | ​ | $ | 664
Income impact of assumed conversions | ​ |  | 1 | ​ |  | — | ​ |  | 1 | ​ | ​ | 1
Net income available to common shareholders and assumed conversions | ​ | $ | 440 | ​ | $ | 354 | ​ | $ | 429 | ​ | $ | 665
Weighted average common shares outstanding | ​ |  | 385 | ​ |  | 383 | ​ |  | 385 | ​ | ​ | 383
Incremental shares from assumed conversions | ​ |  | 3 | ​ |  | 2 | ​ |  | 2 | ​ | ​ | 2
Adjusted weighted average shares – diluted | ​ |  | 388 | ​ |  | 385 | ​ |  | 387 | ​ | ​ | 385
Diluted earnings per share | ​ | $ | 1.13 | ​ | $ | 0.92 | ​ | $ | 1.11 | ​ | $ | 1.73
​ In addition to the participating securities discussed above, Edison International also may award stock options, which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 1,899,476 and 2,046,312 shares of common stock for the three months ended June 30, 2024 and 2023, respectively, 3,051,134 and 3,230,213 shares of common stock for the six months ended June 30, 2024 and 2023, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive. Revenue Recognition Revenue is recognized by Edison International and SCE when a performance obligation to transfer control of the promised goods is satisfied or when services are rendered to customers. This typically occurs when electricity is delivered to customers, which includes amounts for services rendered but unbilled at the end of a reporting period. Regulatory Proceedings FERC 2024 Formula Rate Update In November 2023, SCE filed its 2024 annual transmission revenue requirement update with the FERC, with the rate effective January 1, 2024. The update reflects a $1.1 billion transmission revenue requirement for 2024, $290 million or 20% lower than amounts included in the 2023 annual rates. The decrease is primarily due to returning of prior year overcollection. Pending resolution of the FERC formula rate proceedings, SCE recognized revenue in the first six months of 2024 based on the FERC 2024 annual update rate, subject to refund. New Accounting Guidance Accounting Guidance Adopted No material accounting standards were adopted in 2024. Accounting Guidance Not Yet Adopted In November 2023, the FASB issued an accounting standards update to enhance the disclosures related to public entities' reportable segments. The new guidance requires an entity with only one reportable segment to include all the required segment disclosures. The guidance will be effective for annual disclosures for the year ended December 31, 2024 and subsequent interim periods with early adoption permitted. The guidance is applied retrospectively to all periods presented in the financial statements. Edison International and SCE have one reportable segment and are currently evaluating the impact of any increased segment disclosures. In December 2023, the FASB issued an accounting standards update requiring public entities to provide more disclosures primarily related to the income tax rate reconciliation and income taxes paid. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective January 1, 2025 with early adoption permitted. The guidance is applied prospectively. Edison International and SCE are currently evaluating the impact of the new guidance.

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