ML13329A110

Southern California Edison 1983 Annual Rept

ML13329A110
Person / Time
Site:	San Onofre
Issue date:	12/31/1983
From:	Allen H, Gould W Southern California Edison Co
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ML13310B354	List: ML13310B353 ML13329A109 ML13329A110
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NUDOCS 8404200252
Download: ML13329A110 (54)

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So2her 5=CE Ud~ to An Innovative Transton 8404200252 640413 PDR ADOCK 05000206

1 PDR

Southern California Edison Company Hydroelectric Fossil (oil, gas, coal)

C In 1983, Edison received the Edison Electric Institute's highest award, the Edison Award, for Nuclear the Company's commitment and success in developing renewable and alternative resources, for improving its financial strength through an innovative financing and resource strategy, and for implementing effective cost controls, while, at the same time, providing a Geothermal fair return to shareholders, and high quality service at reasonable cost to customers. That commitment is designed to stand the test of a changing decade and allow an innovative transition from old to new ways of electric generation. Today, Edison uses nine primary Wind resources to generate electricity-water, oil, gas, nuclear, coal, geothermal, wind, solar and biomass-more resources than any other electric utility in the world.

Solar Biomass Contents 2: Letter to Shareholders 6: Our Employees and Customers 8: Year in Review 20: Financial Review 24: Responsibility for Financial Statements and Report of Independent Public Accountants 25: Financial Statements 42: Managements Discussion and Analysis of Financial Condition and Results of Operations 45: Capital Stock-Dividend and Price Information 46: Selected Financial Data 1973-1983

1983 Annual Report Five-Year Compound Highlights 1983 1982 Change Growth Operating Revenues (000)

$4,464,256

$4,302,602 3.8%

13.9%

Fuel and Purchased Power Costs (000)

$2,027,756

$2,227,901 (9.0) 11.0 Earnings Available for Common and Original Preferred Stock (000)

$617,303

$483,358 27.7 25.0 Weighted Average Shares of Common and Original Preferred Stock (000) 99,174 94,257 5.2 11.5 Earnings Per Share

$6.22

$5.13 21.2 12.1 Dividends Paid Per Common Share

$3.59

$3.31 8.5 9.9 Total Assets (000)

$11,035,060

$10,157,564 8.6 12.8 Construction Expenditures (000)

$805,497

$993,903 (19.0) 7.2 Kilowatt-Hour Sales (000) 59,892,638 59,326,853 1.0 1.0 Number of Customers 3,325,303 3,275,144 1.5 2.2 Number of Employees 16,292 15,797 3.1 4.9 Area Generating Capacity at Peak (Megawatts) 16,365 15,349 6.6 1.8

$7 Earnings Per Share Sources 2

6%

Sources and of Common Stock 30%

Commercial 9%

Distribution 28%

Residential

/

of Revenues The Company's 1983 25%

Industrial earnings per share of 9% Public The Company's sources

$6.22 were the highest in Authorities ot revenues in 1983 re 5

the Company's history, 6% Resale flected a well-balanced surpassing by 21% the 1% Agricultura contrbutiontromeachof previous high recorded 1% Other 302 the major customer in 1982, This increase classes, Fuel costs were 4

F primarily reflects higher Distribution non-cash allowances for 45%

Fuel and lowe thantin1982, funds used during con-Purchased Power

%eycntinuedjo struction, continuing em-1 represent a r

strutInntem-est 6%

tion of the distribution of phasis on productivity Interet revenues.

and cost controls, and 9% Oaeand the general rate increase 9

ther 7%

effective January 1, 1983.

7% Oepreciation 6%

Mainterance 6% Reinvested 14%

1 Earnings

%13%

7 0

81 82 83

To Our More Than 190,000 Shareholders:

Your Company had an exceptionally successful w San Onofre Nuclear Unit 2 completed full-power year in 1983. For the third time in our history, we testing in August and began commercial oper earned the Edison Electric Institute's highest ation the same month. An initial portion of the honor, the Edison Award, as the outstanding Unit's revenue requirements was included in Company among the nation's nearly 200 rates in October, with a subsequent increase investor-owned electric utilities.

authorized in November. The remainder is accruing The award was based on your Company's in a balancing account.

commitment and success in developing renew-u San Onofre Nuclear Unit 3 received its full able and alternative resources, for improving its power license from the Nuclear Regulatory Coi financial strength through an innovative financing mission (NRC) in September and is undergoing and resource strategy, and for implementing full-power testing. We expect to complete the effective cost controls, while, at the same time, warranty run and, subject to CPUC approval, providing a fair return to you, our shareholders, place the unit into rates in mid-1984.

and high quality service at reasonable cost to m Employee awareness of, and responsiveness our customers.

to, the needs ahd concerns of our customers The continued hard work, innovation, produc-were given increased attention and emphasis at tivity, cost consciousness and responsiveness to all levels of our organization. Additional funds, customer needs by our officers, managers and equipment and personnel were allocated to meet employees resulted in a number of financial and this objective, including additions to data proc operating accomplishments for 1983.

essing and customer information system facili m Earnings increased to a record level for the ties, and greater attention to the selection and third consecutive year, reaching $6.22 per share, training of customer service representatives.

up 21% over 1982 earnings of $5.13 per share.

m Alternative and renewable resources, sched n For the third consecutive year, we essentially uled to provide 2,190 megawatts (MW) of achieved our rate of return on common equity electricity to the Edison system by 1993, are pro authorized by the California Public Utilities Com-gressing ahead of schedule. Since the inception mission (CPUC).

of our accelerated program in 1980,1,400 MW m The dividend on our common stock was raised of alternative and renewable resources are either on an annual basis to $3.80 per share from $3.52 on line, under construction or represented by per share a year ago. We implemented an ag-signed contracts or letters of intent.

gressive dividend policy in 1977 and, since then,

• Fuel and purchased power costs, the largest have increased the dividend at least once per single component of the total cost of providing year. For the past five years, dividends paid per electricity to customers, decreased for the sec share have increased an average of 9.9%.

ond consecutive year to $2 billion in 1983, com m The market price of our common stock ex-pared to $2.2 billion in 1982 and an all-time high ceeded book value throughout most of the year, of $2.6 billion in 1981. The decline is primarily reaching $42/4 per share on November 2, or just attributable to record supplies of hydroelectric 12 cents per share below its all-time high in 1965.

power record economy power purchases from During 1983, our common stock provided a total other utilities and decreases in the price of return of 23%, comprised of price appreciation natural gas.

and dividends paid.

m Low-cost purchased power reached a record

• The Board of Directors, on January 19, 1984, 37% of the Company's total kilowatt-hour approved a two-for-one split of the Company's (KWH) requirements. This saved customers ap common stock to price it at a more attractive proximately $900 million in fuel costs during the level. The split is scheduled to become effective year, or the energy equivalent of 41 million bar July 5, 1984, subject to shareholder approval at rels of fuel oil or natural gas.

the annual meeting on April 19.

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• Purchased power and natural gas availability capital and operating costs associated with San resulted in no fuel oil being purchased by Edison Onofre Unit 3. This increase also will be partially in 1983 for the first time in more than 40 years.

offset by nuclear fuel savings, and a decision is m Electric rates for the average-usage Edison expected mid-year.

residential customer were 10% less in January On a combined basis, Units 2 and 3 represent 1984 than in January 1982 as a result of lower a total annual rate increase of $895 million, to be fuel costs and effective productivity and cost partially offset by an estimated $390 million of control programs.

fuel savings, resulting in a net revenue increase m Conservation programs, with effective support of about $500 million, or approximately 11% of by customers, saved more than $280 million 1983 revenues.

in fuel costs in 1983 by reducing electrical In a separate proceeding, the CPUC, with an usage by 5.6 billion KWH, the energy equivalent independent consultant, also is reviewing the of about nine million barrels of costly oil or costs of San Onofre Units 2 and 3 and a decision natural gas.

on this matter is expected by year-end.

m Load management programs through 1983 re-At the time of construction in 1974, it was esti suIted in a reduction in our peak demand of 520 mated that San Onofre Units 2 and 3 would cost MW. This reduces financing requirements and

$1.6 billion. These costs have increased to $4.5 eliminates the need to build approximately $250 billion. Nevertheless, the construction cost in million of new generating capacity.

crease for these units is among the lowest in Our record earnings reflect the favorable im-crease for any nuclear plant built in the United pact of the 1983 general rate increase, continued States during this period.

stringent cost control and productivity improve-Contributing to the increased costs of San ment programs, and an approximately 20%

Onofre Units 2 and 3 were the impact of double increase over 1982 in non-cash allowances for digit inflation and record interest rates experi funds used during construction. With the tran-enced worldwide during the past 10 years, sition of San Onofre Units 2 and 3 from construc-increased labor and material costs, and cost in tion into commercial operation, and related rate creases associated with changes in design actions by the CPUC, the cash portion, and criteria, and significant delays caused by ex therefore the quality, of our earnings will improve.

tended regulatory reviews and regulatory policy During 1983, the CPUC granted, in two steps, changes following the Three Mile Island accident.

$305 million of revenues related to the operation Your management believes that the costs are of San Onofre Unit 2. An application is pending prudent and justified, and compare favorably before the CPUC covering the $136 million differ-with other nuclear projects or any other complex, ence between the $305 million currently autho-long-lead-time project.

rized and $441 million, which is the currently San Onofre Unit 1 was taken out of service in projected 1984 annual cost of owning and April 1980 for maintenance and sleeving repairs operating Unit 2. The CPUC authorized the es-to steam generator tubes, and again in February tablishment of an interest bearing balancing 1982 for NRC-required backfits, fire protection account to accumulate the remaining investment-modifications and seismic upgrading. The unit related revenue requirements for Unit 2, and has remained out of service as efforts continue a further decision on these deferred amounts between Edison and the NRC to define the scope is expected by mid-year. The total increase is of backfitting measures, including seismic, and being partially offset by nuclear fuel savings, in the scheduling of work. Although this backfitting lieu of burning oil and natural gas.

program involves substantial expenditures, In October, the Company filed an application we are encouraged by recent progress. Further with the CPUC for $454 million annually to cover review is continuing between Edison, the NRC and the CPUC.

3

Notwithstanding recent outages, Unit 1, since ncreases of certain non-fuel-related costs expe beginning operation in 1968 to February 1982, rienced between general rate cases.

attained an average lifetime capacity factor of Edison now provides electric service to more 66%, 9% higher than the national average for than nine million people through over 3.3 million nuclear plants, saving customers about $450 meter connections. At a projected 1.7% cor million in more expensive replacement fuel.

pound annual growth rate, our customers are Edison also has a 15.8% ownership interest in expected to number nearly four million by the three 1,222-MW units being constructed at the end of 1993. Our 10-year forecast projects KWH Palo Verde Nuclear Generating Station near consumption to increase at a 1.6% compound Phoenix, Arizona. This project, being managed annual growth rate, from 59.9 billion KWH in 1983 by Arizona Public Service Company, is experi-to nearly 72 billion KWH in 1993.

encing some startup delays and upward cost Success in our load management programs revisions.

has reduced our projected peak demand growth With the completion and inclusion in rates of rate through 1993 from 2.4% to 2% annually, the San Onofre and Palo Verde nuclear units, requiring just over 5,000 MW of new generating and the continued development of renewable capacity and enabling the Company to eliminate and alternative resources, construction expendi-the need for a 1,500-MW coal-fired generating tures, financing requirements and the need for plant at an estimated cost savings of $1 billion.

costly fuel oil and natural gas should decrease in All of our additional generating capacity re the future.

quirements through 1993, other than from the Construction expenditures for the next five Company's 200-MW Balsam Meadow hydro proj years are projected to decrease approximately ect at Big Creek, power purchases and nuclear

$200 million from the previous fivet-year period, plants currently under construction, is scheduled from $4.2 billion in 1979-83 to $4 billion in to be met by Company and third-party-owned 1984-88. On a constant dollar basis, using 1984 renewable and alternative resources, including dollars, the 1984-88 projection totals $3.4 bil-cogeneration, small hydro, wind, geothermal, lion. Electric generation from fuel oil and natural solar, synthetic fuel (coal gas), biomass and gas is projected to decrease to 22% by 1993, fuel cells.

compared with 32% in 1983 and 66% in 1973.

Throughout the year, a number of significant In December 1983, we filed with the CPUC for executive changes were made to further a general rate increase of $453 million annually, strengthen the management of your Company, or 8.3%, to be effective January 1, 1985, cover-including the election of a new director and ing projected 1985 cost increases for capital and officers.

operating expenditures, other than for fuel, and Carl F. Huntsinger, president and chief execu the continued need for a competitive investment tive officer of Blue Goose Growers, Inc., an af return for shareholders. We are seeking an in-filiate of Sunkist Growers, Inc., was elected to the crease in the rate of return on common equity Company's board of directors.

from the 16% currently authorized to 17.5%.

Two directors retired from the Board in 1983 On January 1, 1984, as part of the 1983 general John V. Newman, after 26 years of dedicated rate case decision authorizing an interim rate service, and Richard R. Von Hagen, following increase, the CPUC reviewed and authorized over 13 years of valued service.

a $96.4 million rate increase to help offset 4ee oncin.A rjce

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P. L. Martin, formerly vice president, customer Fair and responsible regulation at the federal service and conservation, was elected senior and state levels measureably added to the con vice president with responsibility for customer structive and cooperative environment that un service, human resources, conservation and derscored our many successes in 1983. With the corporate communications. L. T. Papay, formerly continued policy guidance and counsel of our vice president, advanced engineering, was directors, the dedication and overall fine perfor elected senior vice president with responsibility mance of our officers, managers and employees, for advanced engineering, power supply and and the continued support of you, our share system development.

holders, we view the future with confidence and Charles B. McCarthy, Jr., formerly manager of optimism.

fuel supply, was elected vice president, ad vanced engineering. Kenneth P. Baskin, formerly manager of nuclear engineering, was elected vice president, nuclear engineering, safety and licensing, and Harold B. Ray, formerly site man ager of the San Onofre Nuclear Generating Station, was elected vice president and site man ager, San Onofre Nuclear Generating Station.

Effective January 1, 1984, Richard K. Bushey, formerly assistant controller, was elected vice president and controller, succeeding A. L.

Maxwell, who retired after nearly 35 years of dedicated service.

Effective February 1, 1984, John E. Bryson, partner in the law firm of Morrison and Foerster, and former president of the California Public Utilities Commission, was elected senior vice president, with responsibility for the law, control ler's, treasurer's and secretary's departments, and Michael R. Peevey, formerly president of the Howard P. Allen William R Gould California Council for Environmental and Eco-President Chairman of the Board and nomic Balance, was elected vice president, gov-Chief Executive Officer ernmental affairs and revenue requirements.

In the face of the most difficult nuclear licens-February 16,1984 ing and construction period in the history of our nation, which is threatening the financial integrity of many utilities completing nuclear facilities, your Company experienced a successful year and strengthened its ability to meet its public service responsibility to customers and its finan cial stewardship to shareholders.

strutiveandcoopratve eviromen tha un

Our Employees and Customers The accomplishments of 1983 reflect the hard winter energy assistance program was estab work, dedication and innovation of more than lished for low-income residential customers.

16,000 Edison employees.

Training of customer service representatives was Edison employees did an outstanding job main-intensified in all areas of customer contact and taining the Company's financial integrity, strength-communications, and the Company continued to ening its nuclear operations, engineering new improve its computerized Customer Information advances in electric generation and distribution, System facilities.

increasing coal and steam plant productivity, and achieving cost savings in resource manage ment through off-system purchases, conservation and load management.

Special efforts were made to further improve the Company's ability to respond promptly and ef fectively to customer needs. Throughout the year, senior management met personally with public contact employees to reaffirm the importance of high quality customer service as a top corporate priority.

iory Edison's 545 meter readers each read an aaverage of 380 eiectric meters daiiy in 1983, a high standard ot perfor mance per reader.

The number of informal complaints to the fCalifornia Public Utilities Commission (CPUC) de creased in 1983 by 38% to 1,006. In addition, the number of billing inquiries reflecting customer Edison energy audits concern over the cost of electricity decreased by for residential, com-22% to 70,000.

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agricuitural and public In its 50,000 servieren authority customers compassing more than 9 million Edison achieved a total savingspel, lsserved 3.3 million customers in 1983, including of ustmer seiceluntins kilowatt-hours in 1983 t and a demand reduca tion of 335 megawatts.

To this end, the Company in 1983 added per sonnel, intensified training, further decentralized division reporting authority to bring decisions closer to the customer, and upgraded other facets of customer service functions.

During the year, nearly 800 Edison customer Edison employees service representatives handled about four mil-worked approximately 250,000 overtime iion telephone calls and an equal number of cus-hours to restore service tomer visits at 76 local offices. In addition, more and repair facilities for t

than two million service requests were handled by nearly one million cus tomers during the most field service personnel.

devastating wind and averain storms in the Company's history in late ers with speech and hearing impairment, and a 1982 and early 1983.

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50,159 new customers. In serving these custom-YMCA and YWCA activities. Employees were also ers, Edison construction crews replaced more involved in senior citizen programs, cultural than 6,000 poles, inspected more than 13,000 activities, church organizations, and groups that underground vaults and maintained over 80,000 render voluntary assistance in areas such as miles of overhead and underground lines in 1983.

low-income housing and unemployment.

The Company's 545 meter readers each read an Edison employees personally gave more than average of 380 electric meters daily, a high stan-

$2 million in 1983 to United Way programs. This dard of performance per reader. Working with donation assisted more than 200 local agencies enforcement agencies, field service personnel and made Edison people among the leading identified and halted the theft of more than four contributors, on a per capita basis, to charitable million kilowatt-hours (KWH) of electricity through organizations in California.

an intensified Energy Theft Prevention Program..

Employees who have acted with exceptional courage and initiative in emergencies, or who have performed humanitarian acts of service have been formally recognized by the Company U

since 1980. To date, 67 employees have received uthe Jack K. Horton Humanitarian Awards, named in honor of the contributions and dedicated ser 7vice of the Company's former Chairman. These employees pulled persons from burning houses and burning or submerged cars, rescued children from attacking dogs, gave first-aid to accident vic Edison's 800 customer tims, saved choking and drowning victims, and service representatives administered resuscitation.

responded to about cardioputaonaro tour million phone calls The 78-year-old Edison motto, "Good Service, and an equal number Square Dealing and Courteous Treatment," con of customer visits at tha Company's 76 local tinues to serve as the guiding operating principle offices in 1983 for the Company in its relationship with its employ The most devastating wind and rain storms in ees, customers and the communities it serves.

the Company's history in late 1982 and early 1983 caused Company employees to work approxi-E o

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mately 250,000 overtime hours to restore service and repair facilities for nearly one million custom ers, at a cost of more than $20 million. Customer service representatives handled more than 185,000 calls in connection with the outages from 23 separate storms.

In late January 1984, storm damage from hur ricane-force winds caused Edison crews to work more than 97,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> restoring service to more than 843,000 customers and repairing damage to Edison's Serrano Sub facilities, at a cost of more than $6.6 million station, scheduled for completion in late 1984n In addition to service on the job, the Company will primarily step-down encourages its employeessto participate in high voltage electricity community affairs. As responsible community Verde Nuclear members, employees provided leadership and Generating Station for the benefit of Edison participated'in youth league sports, Special customers.

Olympics, Junior Achievement, scouting, and admiistredcardopumonry rsusitaion

Year in Review Nuclear Generation vice Company, is experiencing some startup delays Because of the Company's substantial nuclear in-and upward cost revisions.

vestment and in light of intense regulatory and public Alternative and Renewable Resources scrutiny of nuclear operations throughout the nation, Edison continues to be ahead of schedule in its Edison moved to strengthen and centralize its nu-pla clear organization in 1983. As outlined in the Letter to n torg 2,190pMWdoftrenbl and Ternaiv Shareholders, two company officers were given di-eny ourcesaint prction by 19Te Cin rect authority for nuclear operations, one at the site of pny nowobtais-eeter fro nieapriary the San Onofre Nuclear Generating Station and the eery resurcswar, o as-nuclero other responsible for nuclear engineering, safety and gohrawnslradboasmr e

licensing.

sources than any other electric utility in the world.

This nuclear organization, including its technicalaccelerated development Thincland supporztipon nldn was tehncl program began in 1980, more than 1,400 MW of alter engineering and support personnel, was responsible native and renewable resources are either on line, for successfully bringing the 1,100-megawatt (MW) under construction or represented by signed con San Onofre Unit 2 through full-power testing and into tracts or letters of intent. At year-end, alternative and commercial operation in August 1983. An initial por tion of the unit's revenue requirements was included renew rsou ed by third-paty in rates in October, with a subsequent increase au-preneursontribtem ta 155 MW oac thorized in November. The remainder is accruing in a traditional central station generation of more than balancing account.

San Onofre Nuclear Unit 3 received its full-power lion license from the Nuclear Regulatory Commission ltie nden (NRC) in September 1983 and is undergoing full power testing. The Company expects to complete the Wind-At the end of 1983, nearly 1,400 wind tur warranty run and, subject to CPUC approval, place bines of various designs were installed and produc the 1,100-MW unit in rates in mid-year ing up to 70 MW of power. A total of 15 wind parks During the past decade, changes in regulatory were in initial stages of operation in the Tehachapi requirements have resulted in substantial modifica-Mountain and San Gorgonio Pass Wind Resource tions to original nuclear plant design. As a result, San Onofre Unit 1, which was originally placed in service ceived more than 15 million KWH of energy from in 1968, was taken out of service in February 1982 for these third-party projects.

NRC-required backfits, fire protection modifications and seismic upgrading.

Unit 1 has remained out of service as efforts con tinue between Edison and the NRC to define the scope of all necessary backfitting measures, and the scheduling of work. Although this program involves substantial expenditures, the Company is encouraged by recent progress. Further review is continuing between Edison, the NRC and the CPUC.

Edison has an 80% ownership interest in San Onofre Unit 1 and a 75% ownership interest in San Onofre Units 2 and 3. The Company is responsible for the management and operation of the three units, and has a total megawatt ownership in the units of NUCLEAR POWER: Located on the 2,010 MW.

Pacific shore near San Clemente, California, the three unit, 2,650-megawatt San Onofre Nuciear Edison also has a 15.8% ownership interest in three Generating Station at fuii operation wiii displace 1,222-MW units being constructed at the Palo Verde the energy equivaient of about 25 miiiion barreis Nuclear Generating Station near Phoenix, Arizona.

of oii and gas annualy. In 1983, Unit 2 was planipiaced in fuii-power operation and a fuli-power This project, being managed by Arizona Public Ser-

. operating license was approved for Unit 3.

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So/ar-Edison is involved in five solar technologies production frequently use large volumes of steam, utilizing the sun's renewable energy, either for direct and it is often feasible to cogenerate electric power conversion to electricity, or for concentrating it into with the same fuel used in these processes.

usable heat energy:

Commitments with developers total 527 MW in 35

• Central Receiver: The 10-MW Solar One gen-different projects. Already operational are 27 projects erating station, located at Edison's Cool Water with over 220 MW of capacity.

Generating facility, near Daggett, California, One of the largest cogeneration projects in the began power production in April 1982 and set a nation, the Kern River Oil Field Cogeneration Project single-day energy production record in 1983 of in the San Joaquin Valley, received approval from the 104,000 KWH.

California Energy Commission in 1983 and is sched

• Photovoltaic: ARCO Solar Industries' 1-MW uled for initial operation in late 1985. The project is a plant near Hesperia, California, has generated joint venture between subsidiaries of Edison and the more than 2 million KWH of electricity since Getty Oil Company. The project will generate up to connection to Edison's grid in November 1982.

300 MW of electricity for Edison customers and for oil

• Parabolic Dish: Advanco's 25-KW system, field operations while utilizing waste heat to produce under construction near Rancho Mirage, Cali-steam for oil recovery.

fornia, is the first of a family of parabolic dish Geothermal Power-The generation of electricity reflectors that are scheduled to be built in the utilizing hot water and steam resources located be current decade.

neath the earth's surface produced 95 million KWH in

• Solar Trough: Operation of the first phase of the 1983 from two pilot plants in California's Imperial Val Luz parabolic trough 43-MW Solar Energy ley. The 10-MW plants at Brawley and the Salton Sea Generating Station is scheduled to begin in the continued to advance the technology needed to current year in the Mojave Desert near Daggett, utilize the salty, corrosive hot water resources preva California.

lent in the area.

• Solar Pond: Agreements were signed in late Commitments have also been made to obtain 1983 between Edison and Ormat Turbines, Ltd.,

power from three independent geothermal projects for a 48-MW solar pond system to be installed totaling 62 MW. In addition, Edison will begin receiv at Danby Dry Lake in the Mojave Desert east of ing in the current year the first portion of a 70-MW Twentynine Palms, California.

power purchase from Mexico's Cerro Prieto geother Biomass-Waste-to-energy power production mal generating station.

currently is a small but promising contributor to the Edison power grid. Applications to generate electricity range from landfill gas recovery and digester gas from sewage treatment facilities to wood-waste com bustion, used tire combustion, agricultural waste and municipal refuse.

Commitments have been made by independent developers for 28 biomass projects involving 262 MW. Eleven projects totaling 27 MW currently are in operation.

Edison also is operating a prototype project at its Highgrove Generating Station to convert wood waste into a clean, combustible gas fuel. This project uses the nation's largest down-draft wood gasifier.

Cogeneration-Cogeneration facilities produce SOLAR POWER: Solar rays reflect off 300 foot high central receiver tower of Solar One, electricity and thermal energy from a single fuel, an the world's largest solarthermal generating ideal conservation measure. Heat processes in indus-station near Daggett, California. In successful operation for the past year, the station produces tries such as paper manufacturing, milk processing, 10 megawatts ot electrical energy using 1,818 oil recovery and refining, cement and chemical heliostats, or mirrors, that concentrate solar rays on tower coolant to create turbine steam.

10

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Research and Development years. Further extending Big Creek's capability, con Edison's developmental efforts in alternative and re-struction began in 1983 on the 200-MW Balsam newable resources began in 1972, and are a direct Meadow hydro project, which will become the Coi extension of a commitment to utilize promising new pany's largest hydro plant. Scheduled for completion technology to benefit shareholders and customers in 1987, Balsam Meadow will feature an underground that began with the Company's pioneering develop-hydro powerhouse to utilize water flowing from Hun ment of the first long-distance alternating current tington Lake to Shaver Lake.

transmission line in the 1890s.

New Allocation of Hoover Dam Power The Cool Water Coal Gasification Program is repre-In 1930, Edison and other utilities contracted to sentative of Edison's efforts to move promising alter-purchase power from Hoover Dam in future years, native technologies into commercial electric produc-and such funding permitted the construction of this tion. The project, which has received U.S. Synthetic multi-purpose project. These contracts expire in 1987.

Fuel Corporation's price support for its operational However, in 1983 the Department of Energy pro phase, will convert 1,000 tons of coal per day into a posed new allocations for Hoover power for Edison, clean-burning gas to power a 100-MW generating which, although somewhat reduced, would still facility provide Edison customers 30 more years of low-cost Edison's Wind Energy Center near Palm Springs hydro power. The contracts are subject to federal also continues to lead as a focal point for utility wind legislative approval, which is expected in the energy research in the United States. In 1983, the current year.

world's largest Darrieus vertical axis wind turbine Hydro Project Relicensing generator (WTG) was erected and began start-up Until recently, it was generally agreed that the Fed testing; testing also began on a 100-KW Wenco eral Power Act of 1920 gave preference to states and horizontal axis unit; and testing continued on the municipalities for the original issuance of licenses for three-bladed, Bendix horizontal WTG.

new hydroelectric projects on federal lands, but pref Research and development in ecological and en-erence to public agencies did not apply to the re vironmental systems was intensified in 1983. Testing licensing of existing projects. Congress, when continued on a 90%-efficient, 107-MW catalytic NOx reviewing the law in 1968, was so advised of this view removal system, the largest of its type in the nation.

by the Chairman and General Counsel of the Federal As part of ongoing acid rain and fog studies, the Power Commission, which has since become the Company joined with the Coordinating Research Federal Energy Regulatory Commission (FERC).

Council in support of the standardization of collection Then, in 1980, FERC, which is responsible for issu and evaluation methods for these phenomena in ing hydroelectric project licenses, issued a declara Southern California and the Northeast.

tory order stating that municipalities do have Edison was recognized by the California Depart-preference over investor-owned utilities in relicens ment of Fish and Game in 1983 for innovative and ing. The appellate courts let this decision stand.

aggressive marine resource management programs, including SCE's support of the Pendleton Artificial Reef Project, the largest ecosystem of its type in the U.S.

Edison Hydro More than 1,300 MW of hydroelectric capacity is currently on line from Edison's 21 federally licensed hydro projects and from Edison's Hoover Dam entitlement.

With a capacity of 776 MW, the Big Creek hydro electric complex in the Sierraentrepreneurs now share Southern California's stay of the Edison hydro system. It has the hardest Tehachapi Mountain Range where small wind working water in the world, irrigating central Califor-turbine arrays, along with other renewable and workingalternative energy resources, will reduce fuel oil nia's San Joaquin Valley from six dams, eight tunnels and gas dependence and the need to build and eight powerhouses built over a period of 70 large, capital-intensive generating plants.

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This new interpretation would deprive electric cus-significant damages, resulting in related increased tomers of investor-owned electric utilities whose proj-legal fees, manpower requirements and expenses.

ects are up for relicensing of the benefits of low-cost Antitrust litigation initiated by some of Edison's mu hydro power and unfairly give these low-cost benefits nicipal resale customers, and litigation involving the to the customers of municipal utilities.

Company'sfuel oil procurement contract with Chev In 1983, FERC rendered its first decision after ron are requiring substantial legal effort and expense.

hearings in a contested proceeding. It ruled that mu-These matters are discussed in more detail in Note 2 nicipalities do not have preference in relicensing. This of Notes to Financial Statements. Also, Edison is en decision is now being appealed by the municipalities.

gaged in a lawsuit against Westinghouse relative to Because of the two conflicting FERC rulings and equipment warranties.

subsequent court appeals, legislation was introduced Fuel and Purchased Power in the Congress in 1983 to prevent the benefits of Until the 1960s, Edison generated electric power low-cost hydroelectric power from being taken from primarily on its own system to provide low-cost elec customers of an existing licensee and given to the tricity to customers in a reliable manner But as a re customers of a municipality who did not pay for the sult of increased emphasis on air pollution control in existing project. Action on this measure is expected the late 1960s and skyrocketing fuel oil costs follow this year.

ing the OPEC oil embargo, Edison began increasing This issue is important to Edison customers be-its purchases of off-system power from other sup cause municipalities claiming preferred status have pliers to keep customer electric costs down and to already filed competing applications for 11 hydro diversify its fuel mix and minimize emissions.

projects in the United States, including Edison's Rush This quest for low-cost power led to Edison's par Creek and Lee Vining Creek Projects in the Sierras ticipation in the late 1960s in the construction of the near Bishop. Edison has four other hydro projects Pacific Intertie transmission system to the Pacific subject to relicensing by 1993.

Northwest to import low-cost surplus hydro power for Edison's customers' rates will increase unnecessar-its customers. The Company also participated in the ily and unjustifiably if these hydro facilities are taken construction of Units 4 and 5 at the Four Corners coal away since Edison would have to purchase or pro-plant in New Mexico in 1969 and the Mohave coal duce more costly replacement power. In California, plant in Nevada in 1971. Extra high voltage lines were fuel costs, including the benefits of low-cost hydro-constructed to import Edison's share of power from electric power, are fully and promptly passed on to Four Corners and Mohave to Southern California.

the electric customer.

Edison's efforts to retain the benefits of low-cost hydroelectric power for its customers have received strong support from customers, shareholders, legis lators, regulators, local government and public opin ion leaders. Over 100 cities, 12 counties and more than 15,000 customers have sent letters, petitions, and resolutions to FERC in support of retaining the benefits from these hydroelectric projects.

The investor-owned electric utility industry has un dertaken major efforts to provide full information to its customers about the potential cost increase to them and is supporting legislation to protect their interests.

Major Litigation In recent years, Edison has experienced increased leglfes mapoer eIemS Oents wod, whihene antitrust and contract litigation involving claims for supplied 90% of America's energy needs, is experiencing a rebirth as an electric energy producer in a demonstration project at Edison's Highgrove Generating Station near Riverside, california. The project uses the nation's largest down-draft wood gasiier.

14

IIRV 71~

IAA

These lines also enable the Company to purchase Annual Peak Demand surplus power, primarily generated from coal, from The Company recorded a 1983 area peak demand Southwest utilities. As a result, off-system power of 13,464 MW on September 12, a 2.4% increase over purchases, primarily from the Pacific Northwest and the peak demand of 13,149 MW recorded on Septem Southwest, have dramatically increased over the past ber 2,1982, but still below the record peak of 13,738 16 years, climbing from one percent of total KWH re-MW reached during unusually hot weather in 1981.

quirements in 1967 to a record 37% in 1983, or ap-The annual compound growth in peak demand over proximately 25 billion KWH. The majority of these the last five years has been 2.1%.

off-system purchases are interruptible and do not eliminate the necessity to utilize company-owned fa-E nergy s

cilities to meet system peak demand.

in 1983 were 59.9 billion KWH, a 1% increase over Power purchases saved Edison customers approx-sales of 59.3 billion KWH in 1982, but below the rec imately $900 million in 1983 by displacing the energy ord of 62.5 billion KWH set in 1981.

equivalent of 41 million barrels of more costly fuel oil or natural gas. In addition, the Company burned En sale er e euceabyov on illion the lowest annual amount of fuel oil to generate elec tricity since 1950 with 3.4 million barrels used from of a 20-year energy sale agreement with the Califor storage. As a result, no fuel oil was purchased in nia aqedt prepumpng This r

1983 for the first time in more than 40 years.

Natural gas consumption also decreased from 257 was more than offset by residential and commercial billion cubic feet in 1982 to 215 billion cubic feet in energy sales growth. Edison is continuing to cooper 1983, or the equivalent of 37 million barrels of fuel oil.

ate with CDWR on water project electric use under a In 1983, natural gas represented 29.5% of the Com-new energy exchange arrangement.

pany's fuel mix compared to 37% a year ago.

Energy sales to six resale cities declined 4.1% in Even though KWH generation increased in 1983, 1983 as some cities began receiving energy through combnedfuelandpurcase powr csts eclned their ownership in San Onofre Unit 2 and because of combined fuel and purchased power costs declined inraeporpucssfomutdeEsn' by 9% to $2 billion, compared to $2.2 billion in 1982 syse.

and an all-time high of $2.6 billion in 1981. This de cline is attributable primarily to record supplies of hydroelectric power, record economy power pur chases from other utilities and decreases in the price of natural gas. Nevertheless, fuel and purchased power costs continue to be the single largest compo nent of the total cost of providing electric service to customers, representing 45 cents out of each 1983 revenue dollar, down from 52 cents in 1982 and the record high of 63 cents in 1981.

To continue to expand the Company's off-system power purchase capability in the years ahead, Edison has applied to the CPUC for approval to extend a 500-kilovolt transmission line into the Company's sys tem from the Palo Verde Nuclear Generating Station in Arizona. Edison and the Los Angeles Department of Water and Power also are studying the feasibility of upgrading the Pacific Intertie 846-mile DCline from 2,100 MW to 3,100 MW by 1988 to allow power pur-PEOPLE POWER: Edison's accomplish chase increases from the Pacific Northwest of up to ments in 1983 reflect the working power of more lthan 16,000 dedicated and innovative Edison thepeakidemandofn9people. As responsible members of the com munities in which they live and work, Edison people make it happen, strengthening the Com pany s service to both customers and shareholders.

16

WAx

£0r A

UU r

i

Total electric consumption by Edison's 2.9 million total savings of 1.4 billion KWH and a demand reduc residential customers in 1983 increased by 4.7% to tion of 335 MW in 1983. SCE's energy audit programs 17.2 billion KWH from 16.4 billion KWH in 1982, pri-encompass free surveys of customer facilities to pro marily as a result of the improved economy, warmer vide energy saving recommendations, and financial summer temperatures and the addition of 42,556 new incentives to encourage the installation of conserva residential customers to the Company's service terri-tion hardware.

tory during the year. The annual compound growth More than 100,000 single family residential conser in residential KWH sales over the last five years has vation service energy audits have been completed been 2.2%. been.2%.since 1981 and the free audit program was expanded Industrial KWH sales, which have declined annu-to multi-family markets in 1983. Some of the more sig ally since 1981, recovered by year-end 1983 to within nificant incentive programs offered to customers in 0.2% of their 1982 sales level, even though the Com-1983 included pany lost five major industrial customers. In contrast, commercial KWH sales increased by 7.8% over 1982, Conservation Financing Program... Edison offers growing for the past five years at an average annual residential customers 8% loans or cash rebates to rate of 3.8%.

stimulate installation of energy conservation and Sales to agricultural customers in 1983 droppedprogram ef 17.3% to 709 million KWH from 857 million KWH in 1982. Primarily because of record rainfall and hydro 2000 ad improments nluinswater runoff that reduced the need for deep-well pumping, the 1983 agricultural sales level was the lowest re-zation, insulation and other measures to reduce cordd sice 146.air conditioning requirements.

corded since 1946.

Conservation and Load Management

• Low-Income Program... In 1983, Edison con In 1983, the combination of customer response to tinued to coordinate low-income energy conserva Edison's conservation programs, plus the Company's tion with other state and local agencies. These direct conservation efforts lus the activities include the implementation of a low savings of approximately 5.6 billion KWH, resulting income solar water heating program, and the use afeotsavings of prxme 5.6n b20illion. euligi of State of California solar and energy conservation a fuel cost savings of more than $280 million,.akfnst ntl vprtv olr n

Of this total, Edison's efforts in voltage regulation, watherizato insthevresiecoequad distribution circuit management, and street light con-income customers.

version contributed a savings of almost 1.9 billion KWH, while customer response to Company conser-Edison's load management programs are designed vation programs, including customer cogeneration, to shift the use of electricity from periods of peak us contributed a savings of 3.7 billion KWH.

age to periods of reduced demand in order to defer Energy audits helped commercial, industrial, ag-construction of costly new generating facilities. Pro ricultural and public authority customers to achieve a grams to shift 520 MW of load are already in place.

Percentage of Male, Female and Minority Asian American Total Employees at Male Female Black Amerncan noean Hispanic Minorities Year-Erdnre YerEdYear-End Year-End Year-End Year-End Year-End Year-End Year-End 1978 and 1983 1978 1983 1978 1983 1978 1983 1978 1983 1978 1983 1978 1983 1978 1983 Management('t 91.4 83.5 8.6 16.5 2.2 3.7 3.7 5.9 0.6 0.5 5.4 7.5 11.9 17.6 Non-Management(')

77.9 73.7 22.1 26.3 7.5 9.5 2.4 3.3 0.8 1.1 13.9 18.7 24.6 32.6 Total Company (3 )

82.1 77.1 17.9 22.9 5.8 7.5 2.8 4.2 0.7 0.9 11.3 14.8 20.6 27.4 (1) Management empioyees include tne 'Officials" and Professionals" Affirmative Action Categories.

(2) Non-Management employees include nTeccnclans "Office and Clericaud Craftsmen" Operators"

'Laborers," and 'Service Workers."

(3) Includes all classes of employees.

18

The Company projects that innovative load man-conducted. DSS offers reduced rates to participat agement programs will reduce annual peak load ing residential customers through the meter instal growth from 2.4% to 2% during the next 10 years.

lation of Edison developed and patented remote These programs include:

controllers which limit electric usage during critical

• Air Conditioner Cycling... Rate options are offered periods of peak demand.

to residential and commercial/industrial customers Affirmative Action within selected climate zones who agree to allow The number of minority and female employees in Edison to cycle air conditioner compressors during the Company's work force continued to increase dur periods of high electric demand.

ing the year with minority group employment rising to

• Commercial/Industrial Off-Peak Cooling...This 27.4% from 26.3% in 1982. Female employees repre program is aimed at reducing peak loads of large sented 22.9% of the work force at year-end, com commercial/industrial customers through the instal-pared to 21.9% at the beginning of 1983.

lation of systems which generate and store chilled The upward mobility of both minority and female water, ice, or other cooling media during off-peak employees into management positions also has been hours when electrical demand is low.

increasing. During the five-year period from 1978

• Interruptible Tariffs... Edison's interruptible tariffs through 1983, minority management positions in are designed to encourage large commercial and creased to 17.6% from 11.9% and female manage industrial customers to reduce load during periods ment positions increased to 16.5% from 8.6%.

of low generating margins. Participating customers Edison's Procurement Division provided increased are given monthly rebates in return for an agree-opportunities to Minority Business Enterprises in ment not to exceed a pre-established demand 1983, and female-owned enterprises were added to level when notified by Edison.

the program. In 1983, $25 million was paid to female

• Pool Pump Timing... Since 1978, Edison's residen-and minority businesses, compared to $3.7 million tial swimming pool program has encouraged pool paid to minority contractors in 1979 when the pro owners to install time clock trippers to avoid the gram was formally introduced.

operation of pool filter pumps, pool sweeps and In addition, the number of opportunities to compete spa pumps during hours of peak summer electrical for contracts annually has grown from 923 in 1979 to demand.

6,467 in 1983, an increase of more than 600%. Over

• Residential Demand Subscription Service (DSS) the same period, the number of contractors qualified

... With CPUC approval, a test DSS program was to provide goods and services to Edison has more initiated in 1981 and an expanded test is now being than doubled from 207 to 458.

Planned Resource 1983 37%

tr Generation Fuel Mix lation of Recorded d

a p

Addtinsntro1e 37%

Purchased Power-By 1993, Edison's gener rMore than three years System ation fuel mix is antici urche 1480 ago the Company an-32% Om and Gas w

k o contpiated to shift away from Pucae 30 nucdiscmimn 5%

Coal a dependence on oil and ingce the yearten wihmnrt ru epomn iigt Pltroave Tenolges

~

~

oto accelerate the devel-10%

Reewbes gas to a more balanced 27.4%n fromloie 2623%

(n192.Fealleplyesnepe ens eopment of alternative all Hydro f

fuel mix. The ompany Hydro 300 and renewable energy 5%

Purchased Power-expects to receive Small Hydro 140 resources. At the end of Renewable 15%

approximately equal Cogeneration 820 1983, the Company was 1% Nuclear 10%

1%

amounts of energy from ahead of schedule, with m n e

system purchases, oil Emerging Technologies 930 1993 1

22%

and gas, nuclear, and re md200cogenerasoion,

wind, Protectedo 16w5%efr GeW l

271 solar, and biomass being 28%

Purchased Power-o ownede adthEdato)

Gthe pormthe pacesetters.

System 1

wih pald to fma Solar 300 22%

Oil and Gas

/m a

e t

o 3.7 m

i n padhetn rs17%

Nuclear n 1 7

w ificant contribution.

Syntgramcwaseformally2%ntroduced.

Fuel Cells 55 Power-12%

6,467 500 1Renewable 1ne o

nO/

Lnotiatd nagent 1 1 a12%

Coal f

Pla d%

Renewables (including all Hydro) 9%

17%

19

Financial Review The Company continued to strengthen its financial to the development of alternative and renewable re condition during the year, as measured by several sources, and a general improvement in the stock important financial indicators:

market.

Earnings per share of common stock rose 21%

Stock Split Recommended over the 1982 level.

In recognition of this price appreciation and to

• The Company earned a 17% rate of return on broaden investor interest by providing a more attrac common equity.

tive market price, the Board of Directors voted on

• Interest coverage increased significantly to 3.44 January 19,1984, to recommend a 2-for-i split of the times.

timesCompany's common stock. Shareholders will be

• The level of funds required for Edison's con-asked to approve the stock split at the Annual Meet struction program declined in 1983, and pro-ing on April 19,1984. If approved, it is expected to jected total construction expenditures for the become effective on July 5,1984. The Company last next five years are lower than those of the split its common stock in 1962.

past five years.

• San Onofre Unit 2 was placed into service and began producing cash earnings.

For the 1983 calendar year, earnings per share As a result, Edison's external financial require-rose 21% to $6.22, the highest in the Company's his ments in 1983 were lower than those of the previous tory, surpassing the $5.13 per share earned in 1982.

year for the first time in eight years.

In addition, the Company earned a 17% rate of return Stock Price Improves on common equity, outperforming the 14.9% earned With the general upturn in the stock market during rt of reton t iemn y ant.

1983, Edison's common stock traded, with few ex-The increase in earnings primarily reflected higher ceptions, at slightly above book value. The stock price has increased during seven of the past 10 tion, continuing emphasis on productivity and cost years, and at year's end, had achieved a compound controls, and the general rate increase which be annual growth rate over the decade of 8%. In 1983, Edison's common stock provided a total return to came effctienuary 1,1983.

shareholders of 23%, comprised of price apprecia-lished a rate-making mechanism to stabilize the level tion and dividends paid. This included a price in-of revenue authorized regardless of fluctuations in crease of 13.2% for the year, compared with 2.5% for kilowatt-hour sales. Therefore, even though kilowatt the Moody's average of 24 electric utilities. This per-hour sales increased 1% during 1983, the increase formance is a result of continued cost control, an ag-had little impact on earnings.

gressive dividend policy, the Company's commitment 175 (Index)

Stock Price Rate of Return on Comparison 2%Common Equity SCE The Company's stock In 1983 the Company brdDow Jones Utility Average provi d

a more attra tMoody's 24 ElectricspriprtheBoas fncre tosdvteno sideablydurig thJpasua6ry_

19,__1984,__to

__recomm-~end a2frne

-a17 ralte of te 150C common stock1 turn on common equity, askedtokfive years, outpacing outperforming the 14.9%

that of Moody's 24 Eiec-earned in 1982. Addit ion otric Utifities and the Jow a59 y, the Company Jones Utiiity Average, In 12 ________________

earned a 12.5% rate of sp8it itson' comoosomon162 125 9return on its investment rosestock provided a totai in ut iity plant y

trreturn of 23% based on price appreciation and 8 aditonte_

omanereda7%raefetr nas dudividends paid.

100 79 80 81 82 83 79 80 81 82 83 20

Also, as part of the 1983 general rate case, the Details of the Company's 1983 financing activities CPUC authorized an attrition allowance of $96 million are set out in the following table:

to offset non-fuel inflationary increases projected for 1984. This 2% increase in customer rates, which Term Coupon Amount became effective January 1, 1984, should help to Month Issue (years)

Rate (millions) maintain earnings in this year between general rate January Pollution Control 20 97/8%

$ 88 decisions.

Refunding Bonds Dividend Raised Generating Station In September 1983, the Board of Directors ap-April Euro-Debentures 7

1012 75 proved an 8% increase in the common stock quar-May Pollution Control 20 87/8 20 terly dividend, raising the rate to 950 per share from Refunding Bonds-30 9

71 the 880 established in September 1982. On an annual Four Corners basis, this is equivalent to $3.80 per share, compared Generating Station with the previous annual rate of $3.52. The Company Ongoing Dividend Reinvestment implemented an aggressive dividend policy in 1977 and Stock Purchase and has increased the dividend at least once per Plan 84 year since then. For the past five years, the annual purhae Plac3 dividend increases have averaged 8.9%.

Employee Stock At year-end 1983, the dividend was providing a Ownership Plan 26 9.6% yield on a common stock market value of $39 TOTAL

$400*

per share.

per sare.

Of this amount, $229 million represents the refundings of previ Financing Needs Decrease ously issued bonds, plus the retirement of maturing series K A marked increase in internally generated funds bonds, with the remainder of $171 representing new capital.

combined with the decline in construction expendi tures reduced the amount of external financing under-As noted in the table, the Company's 1983 equity taken by the Company in 1983. During the year, the capital needs were satisfied solely through the ongo Company raised $400 million from external sources ing sales of common stock through the Dividend compared to $956 million and $1,080 million required Reinvestment Plan, Employee Stock Purchase Plan in 1981 and 1982, respectively This is the lowest level and Employee Stock Ownership Plan. This marked the of external financing undertaken by the Company first year since 1979 that the Company has not under since 1978.

taken a major public offering of common stock.

Dividends Paid Per

$1200 fin Millions)

Funds Required for

$4 Share Construction The 8% increase in com-Edisons construction mon stock dividends an-program over the next nounced in September five years is estimated to again underscored the 900 etotal

$4.0 billion as com Companyts commitment pared to $4.2 billion for to provide competitive the past tive years. Con returns to its sharehold-struction expenditures in ers.The uartrly lvi-1983, which totaled $805 Reudn Bondse 30arterlydi million, declined for the gdend rate was raised to 600 Ong95o per share which,Reinves Ion an annual basis, is primarily reflecting the Eequivalent to $3.80 completion of the San compared with the previ-Onotre nuclear generat ous annual rate of $3.52 ing units.

per share.

79 80 81 82 83 83 84 85 86 87 88 21

The Company also completed a tax-exempt financ-1985 general rate case, the Company has requested ing strategy for pollution control facilities at the Four ratios of 45%, 10% and 45%, respectively.

Corners coal-fired generating station located in New The Company's reduced need for financing also Mexico. In early 1981, the Company identified $260 served to improve financial ratios. Most notable was million of facilities which qualified for low-cost tax-the change in pretax interest coverage which in exempt financing. At that time, however, interest rates proved from 2.64 times to 3.44 times during 1983.

for long-term pollution control bonds were extremely For 1984, the Company currently plans to issue high, surpassing 14% at one point. Therefore, the approximately $300 million of tax-exempt bonds to Company implemented a strategy of initially financing finance pollution control facilities at the San Onofre the facilities on a short-term, three-year basis with the and Palo Verde Nuclear Generating Stations. The expectation of refinancing these bonds on a long-Company has no plans to issue new shares of com term basis if interest rates declined.

mon stock in the public market other than through At the end of 1982, interest rates did decline signifi-ongoing stock plans. Other financing plans are cantly, and the Company began systematically re-uncertain at this time.

financing the short-term bonds on a long-term basis.

Regulatory Matters On June 8, 1983, the final portion of the short-term SCE Receives San Onofre Rate Decision:

pollution control bonds was refinanced at a rate of In 1983, after 13 years of design and construction, just under 9%. The total interest savings resulting San Onofre Nuclear Unit 2 met the CPUC's criteria for from this financing strategy was approximately $8172 commercial operation and began earning a cash re million per year.

turn for Edison's shareholders. In California, a utility is The Company also took the opportunity to place not allowed to earn a cash return on investment in

$75 million of debentures in the European market in plant until the plant becomes operational.

April when, during a brief period, interest rates In September 1983, the CPUC issued an initial reached a four-year low. With this financing, the Com-decison to include in rates $207 million for the cost of pany now has placed a total of $450 million in the owning, operating and maintaining San Onofre Unit 2.

European market on seven separate occasions, all at In November 1983, the CPUC issued a second deci rates below levels then existing in the domestic sion granting an additional $98 million, bringing the market.

total authorized annual rate relief for Unit 2 to $305 Reflecting the $400 million of capital raised in 1983, million. This base-rate increase was partially offset for total capitalization of the Company at year-end was customers by a $207 million decrease in customer

$8.8 billion. SCE's capital structure at year-end 1983 rates which represented projected fuel savings asso was comprised of 46.3% Debt, 10.4% Preferred and ciated with using nuclear fuel rather than burning oil Preference Stock, and 43.3% Common Equity. In the and natural gas.

$3 (in Billions)

Fuei and Purchased 75 (in Billions)

Kilowatt-Hour Sales served toss iKilowatt-hour sales 1983 marked the second changes have little im consecutive yearly de-pact on earnings be crease in the Company's r

cause of the Electric fuel and purchased LRevenue Adjustmnent finance pollutio conro fac Mechanism which was a

year-end total ot $2.0 bil-adesigned to stabilize lion was 9% less thantin revenues regardless of 1982 and 21s%

less than fluctuations in kilowatt uin 1981. This decline hour sales.

primarily reflects the increased availability of Inhydroelectric and pur notse aplowe tic eanacahrtunos-vsmeti placed the use of more costly fossil fuels.

79 80 01 82 83 79 80 81 82 83 22

A supplemental application has been filed with the In an application for rehearing, the Company asked CPUC for Unit 2 to reflect the updated 1984 revenue the CPUC to change the range from 55%-80% to requirement of $441 million. The difference between 55%-75% and limit its application to events within this request and the $305 million currently authorized Edison's control. In addition, the Company requested is being accumulated in an interest-bearing balanc-that the CPUC modify the target capacity perfor ing account. A further decision on this filing is ex-mance incentive to include a fixed monetary cap of pected mid-year.

$25 million on a pre-tax basis for the shareholder risk San Onofre Unit 3 was synchronized to Edison's related to the operation of all Company-owned nu system in September 1983 and is expected to meet clear units and increase the amount of operation and the CPUC's commercial operating criterion during maintenance expense authorized in the September April 1984. The Company has filed a $454 million rate decision. A decision on these additional items has application for this Unit. The rate increase will be par-been deferred and is pending further Commission tially offset by nuclear fuel savings projected to be consideration.

approximately $180 million. A decision on the Unit 3 application is expected by mid-year.

An independent consultant was retained by the Target Capacity Factor Incentive Plan:

CPUC to complete a review of costs incurred in con The CPUC included in its September 1983 decision structing San Onofre Units 2 and 3. A final report a performance incentive plan for San Onofre Unit 2 from the consultant is expected late in 1984.

by setting a target annual capacity factor range of 55% to 80%. Under this plan, shareholders and cus-1985 General Rate Request Filed:

tomers would share equally the fuel-cost savings if On December 29,1983, the Company filed a gen the plant operates above an 80% annual capacity eral rate application with the CPUC covering capital factor. If the plant operates below a 55% annual ca-and operating costs other than fuel. This request to pacity factor, additional fuel costs incurred would be taled $453 million for the test-year 1985. This reflects divided equally between shareholders and custom-a 13.39% rate of return on rate base and 17.5% rate ers. The plant averaged a 74% capacity factor from of return on common equity, compared with the cur the time it was placed into service on August 8 to rent authorization of 12.65% and 16%, respectively.

year-end 1983 even though the period included a The Company requested this increase, averaging five-week outage for routine maintenance and 8.3% in customer rates, become effective January 1, testing.

1985.

Included in the request was an Attrition Rate Ad justment to help meet inflationary cost increases be tween rate-case years. Edison estimates this will increase rates in 1986 by $110 million, or 1.8% above Diviend einvst-the 1985 level. The actual amount of rate change will Divdentad RiSt-be determined in late 1985.

30%-

ment and Stock E% of Total Shareholders Purchase Plan New CRUC Commissioner Appointed:

0 % of Total Shares Participation in the Divi dend Reinvestment and In May 1983, California Governor George Deukme Stock Purchase Plan jian appointed William T. Bagley to the California Pub 20 II H

continued to increase in lic Utilities Commission. Mr. Bagley served on the 20

_1983.

As of year-end 1983, over 44,000 par-California State Assembly from 1960 to 1974 and in ticipating shareholders held approximately 18.8 million shares of Edison modity Futures Trading Commission. His term with the common stock.

CPUC began on June 1,1983, and will expire Janu 10 anapliatonforherigthCmpnyary 1, 1985.

79 80 81 82 83 23

Southern California Edison Company Responsibility for Financial Statements The management of Southern California Edison Company the independent accountants develop and maintain an has prepared and is responsible for the financial statements understanding of the Company's accounting and financial and the other related financial data contained in this Annual controls, and conduct such tests and related procedures Report. The financial statements, which include amounts as they deem necessary to render their opinion as to the based on estimates and judgments of management, fairness of the financial statements.

have been prepared in conformity with generally accepted The Audit Committee of the Board of Directors, composed accounting principles applied on a consistent basis.

entirely of directors who are not officers or employees of To meet its responsibilities with respect to financial the Company, meets periodically with the management of information, the Company maintains a system of internal ac-the Company, the independent public accountants and counting controls which is designed to provide reasonable the internal auditors to make inquiries as to the manner in assurance that assets are safeguarded from loss or unau-which the responsibilities of each are being discharged. In thorized use and that the financial records properly reflect addition, the Audit Committee recommends to the Board the authorized transactions of the Company. This system of Directors the annual appointment of the independent is supported by written policies and procedures, organiza-public accountants with whom the Audit Committee reviews tion structures that provide for appropriate division of the scope of the audit and the nature of other services responsibility, the selection and training of qualified per-provided as well as the related fees, the accounting prin sonnel and is augmented by programs of internal audits.

ciples being applied by the Company in financial reporting, There are limits inherent in all systems of internal account-the scope of internal financial auditing procedures, and ing control based on the recognition that the cost of such the adequacy of internal accounting controls.

system should not exceed the benefits to be derived. The To further assure independence in performing and Company believes its system of internal accounting control reporting the results of audits, representatives of the inde appropriately balances this cost-benefit relationship.

pendent public accountants and the Company's staff of An independent examination of these financial statements internal auditors have full and free access to meet with the has been conducted by Arthur Andersen & Co., inde-Audit Committee, without members of Company manage pendent public accountants, in accordance with generally ment being present, to discuss any accounting, auditing, accepted auditing standards. In connection therewith, or financial reporting matter.

Report of Independent Public Accountants To the Shareholders and the Board of Directors, Southern California Edison Company:

We have examined the balance sheets and statements In our opinion, the financial statements referred to above of capital stock and long-term debt of Southern California present fairly the financial position of the Company as of Edison Company (a California corporation, hereinafter December 31, 1983 and 1982, and the results of its opera referred to as the "Company"), as of December 31, 1983 tions and the sources of its funds used for construction ex and 1982, and the related statements of income, earnings penditures for each of the three years in the period ended reinvested in the business, additional paid-in capital and December 31, 1983, and further, in our opinion, the quar sources of funds used for construction expenditures for terly financial data set forth in Note 8 of "Notes to Financial each of the three years in the period ended December 31, Statements" summarize fairly the results of operations for 1983. Our examinations were made in accordance with each quarter within such years, all in conformity with gen generally accepted auditing standards and, accordingly, erally accepted accounting principles applied on a consis included such tests of the accounting records and such tent basis.

other auditing procedures as we considered necessary in the circumstances, and also included similar examinations of the financial statements for each quarter within each of the years.

Los Angeles, California, ARTHUR ANDERSEN & CO February 3, 1984.

24

Southern California Edison Company Statements of Income Thousands of Dollars Year Ended December 31, 1983 1982 1981 Operating Revenues:

Sales (Note 1)............................

$4,413,619

$4,266,950

$4,026,548 Other....................................

50,637 35,652 27,808 Total operating revenues..................

4,464,256 4,302,602 4,054,356 Operating Expenses:

Fuel.....................................

1,457,102 1,778,553 2,078,393 Purchased power (Note 10)................

570,654 449,348 479,813 Provisions for regulatory adjustment clauses (Note 1).........................

(21,559) 372,537 (89,472)

Other operation expenses..................

604,694 491,613 441,138 Maintenance..............................

279,916 210,160 193,397 Depreciation (Note 1)......................

289,361 220,927 202,182 Income taxes (Note 5)....................

497,236 177,251 197,865 Property and other taxes..................

82,821 65,486 59,885 Total operating expenses..................

3,760,225 3,765,875 3,563,201 Operating Income 704,031 536,727 491,155 Other Income:

Allowance for equity funds used during construction (Note 1)....................

268,831 209,485 162,879 Interest income............................

33,272 34,571 39,025 Taxes on non-operating income credit (Note 5)..........................

117,160 100,655 54,261 Other income and income deductions........

9,838 965 13,896 Total other income.........................

429,101 345,676 270,061 Total Income Before Interest Charges...............................

1,133,132 882,403 761,216 Interest Charges:

Interest on long-term debt..................

425,075 360,915 281,626 Other interest and amortization (Note 1)......

114,302 59,367 59,351 Total interest charges......................

539,377 420,282 340,977 Allowance for borrowed funds used during construction (Note 1)..............

(97,025)

(93,633)

(69,673)

Net interest charges.......................

442,352 326,649 271,304 Net Income 690,780 555,754 489,912 Dividends on Cumulative Preferred and Preference Stock.................

73,477 72,396 67,888 Earnings Available for Common and Original Preferred Stock.............$

617,303

$ 483,358

$ 422,024 Weighted Average Shares of Common and Original Preferred Stock O utstanding (000).................................................

99,174 94,257 85,610 Earnings Per Share (Note 1).........................................

$6.22

$5.13

$4.93 Dividends Declared Per Common Share................................

$3.66

$3.38

$3.10 The accompanying notes are an integral part of these financial statements.

25

Southern California Edison Company Balance Sheets Thousands of Dollars December 31, Assets 1983 1982 Utility Plant:

Utility plant, at original cost (Notes 1 and 9)...... $ 8,883,519

$ 6,609,540 Less-Accumulated depreciation (Notes 1 and 9)................

2,426,368 2,185,667 6,457,151 4,423,873 Construction work in progress (Note 9)..........

2,940,356 4,108,878 Nuclear fuel, at amortized cost..................

62,735 45,660 9,460,242 8,578,411 Less-Property-related accumulated deferred income taxes (Notes 1 and 5)................

256,629 79,084 9,203,613 8,499,327 Other Property and Investments:

Nonutility property and other investments, at cost-less accumulated depreciation..........

19,138 11,383 Investments in and advances to subsidiaries (Note 1).................................

113,595 104,378 132,733 115,761 Current Assets:

Cash and equivalents (Note 4)...................

254,352 120,661 Cash investments-financing subsidiary (N ote 1)....................................

157,321 127,849 Receivables, less reserves of $10,551,000 and

$8,105,000 for uncollectible accounts at respective dates............................

300,691 306,041 Fuel stock, at cost (first-in, first-out) (Note 4)......

450,555 605,162 Materials and supplies, at average cost..........

71,625 64,185 Accumulated deferred income taxes-net (Note5).................................

217,690 198,939 Prepayments and other........................

53,901 42,563 1,506,135 1,465,400 Deferred Charges:

Unamortized debt expense (Note 1).............

31,122 29,169 Accumulated deferred income taxes-net (Note5)..................................

101,302 21,892 Other deferred charges........................

60,155 26,015 192,579 77,076

$11,035,060

$10,157,564 The accompanying notes are an integral part of these financial statements.

26

Southerrf California Edison Company Thousands of Dollars December 31, Capitalization and Liabilities 1983 1982 Capitalization:

Common stock, at par value, 100,740,155 and 96,691,973 shares outstanding at respective dates (Note 1) 839,501 805,766 Additional paid-in capital (Note 1)...............

1,307,546 1,193,318 Earnings reinvested in the business.............

1,646,292 1,393,780 Common shareholders' equity..................

3,793,339 3,392,864 Preferred and preference stock without mandatory redemption requirements....................

469,025 471,020 Preferred and preference stock with mandatory redemption requirements....................

440,500 445,000 Long-term debt (Note 1)......................

4,051,836 3,970,400 8,754,700 8,279,284 Current Liabilities:

Long-term debt due within one year.............

83,000 53,500 Preferred stock to be redeemed within one year..

4,500 4,500 Short-term borrowings (Note 4).................

43,670 23,992 Short-term borrowings-financing subsidiary (Notes 1 and 4)............................

154,300 123,300 Accounts payable...........................

364,456 411,240 Accrued taxes (Note 5).......................

307,403 166,139 Accrued interest............................

123,162 112,666 Dividends payable...........................

101,150 90,636 Regulatory balancing accounts-net (Note 1)....

376,248 369,317 Other.....................................

58,159 47,696 1,616,048 1,402,986 Deferred Credits and Reserves:

Accumulated deferred investment tax credits (Note 5).................................

343,696 274,280 Customer advances and other deferred credits...

251,084 146,877 Reserves for pensions, insurance, etc. (Note 7)...

69,532 54,137 664,312 475,294 Commitments and Contingencies (Notes 2, 3, and 10)

$11,035,060

$10,157,564 The accompanying notes are an integral part of these financial statements.

27

Southern California Edison Company Statements of Sources of Funds Used for Thousands of Dollars Construction Expenditures Year Ended December 31, 1983 1982 1981 Funds Provided By Operations:

Net income.................................

$690,780

$555,754

$489,912 Non-cash items in net income Depreciation............................

289,361 220,927 202,182 Allowance for equity and borrowed funds used during construction...........

(365,856)

(303,118)

(232,552)

Property-related deferred income taxes.....

177,545 53,112 (993)

Investment tax credits deferred-net.......

69,416 64,612 47,386 Other-net.............................

(33,093) 46,497 4,694 Total funds from operations....................

828,153 637,784 510,629 Dividends..................................

(438,135)

(395,103)

(336,546)

Total funds from operations-reinvested........

390,018 242,681 174,083 Long-term Financing:

Sales of securities Common stock (a).........................

147,799 264,634 292,356 Preferred stock............................

49,474 Long-term debt (b).........................

130,848 576,864 634,435 Increase in other long-term debt................

26,099 Reduction for long-term debt due within one year-net.......................

(83,000)

(53,500)

(121,025)

Reduction for preferred stock to be redeemed within one year............................

(4,500)

(4,500)

Conversion of preference stock................

(1,995)

(5,290)

(6,344)

Total funds from long-term financing 215,251 827,682 799,422 Other Sources (Uses) of Funds-Working capital changes Cash and equivalents and cash investments (163,163)

(238,101)

(2,767)

Receivables-net.........................

5,350 226 (17,288)

Fuel stock and materials and supplies........

147,167 (26,517)

(880)

Accumulated deferred income taxes-net....

(18,751)

(194,067) 24,471 Long-term debt and preferred stock due within one year..........................

29,500 (63,025)

(22,523)

Net short-term borrowings.................

50,678 (147,895) 110,214 Accounts payable..........................

(46,784) 51,222 3,678 Accrued taxes.............................

141,264 104,365 (60,142)

Regulatory balancing accounts-net.........

6,931 405,908 (74,109)

Other changes in working capital..............

20,135 1,316 31,174 Net (increase) decrease in working capital..

172,327 (106,568)

(8,172)

Sale of non-current assets....................

50,623 Other-net.................................

27,901 30,108 (59,193)

Total other sources (uses) of funds.............

200,228 (76,460)

(16,742)

Funds Used for Construction Expenditures...............................

$805,497

$993,903

$956,763 (a) Includes conversions of Preference Stock, 5.20% Convertible Series, to Common Stock.

(b) Includes reduction for funds held by trustees for construction of pollution control facilities.

The accompanying notes are an integral part of these financial statements.

28

Southern' California Edison Company Statements of Earnings Reinvested Thousands of Dollars in the Business Year Ended December 31, 1983 1982 1981 Balance at January 1..................................................

$1,393,780

$1,238,317

$1,092,137 Add:

Net income...............................

690,780 555,754 489,912 2,084,560 1,794,071 1,582,049 Deduct:

Dividends declared on capital stock Common-$3.66 per share for 1983,

$3.38 per share for 1982 and

$3.10 per share for 1981.......

362,935 321,118 267,204 Original Preferred.......................

1,723 1,589 1,454 Cumulative Preferred....................

68,540 67,291 62,504 Preference..............................

4,937 5,105 5,384 Capital stock expense....................

133 5,188 7,186 438,268 400,291 343,732 Balance at December 31 (a).......................................

$1,646,292

$1,393,780

$1,238,317 (a) Includes undistributed earnings of unconsolidated subsidiaries of $11,185,000 and appropriated earnings related to certain federally-licensed hydroelectric projects of $3,932,000 at December 31, 1983.

Statements of Additional Paid-in Capital Thousands of Dollars Year Ended December 31, 1983 1982 1981 Balance at January 1 (Note 1)......................................

$1,193,318

$ 999,764

$805,325 Premium received on sale of Common Stock and conversion of Preference Stock........

114,228 193,554 194,439 Balance at December 31

$1,307,546

$1,193,318

$999,764 The accompanying notes are an integral part of these financial statements.

29

Southern California Edison Company December 31, 1983 Thousands of Dollars Statements of Capital Stock Redemption Stated Value Shares Price December 31, Outstanding Per Share 1983 1982 Common Stock-authorized 140,000,000 shares, par value $81/a per share (a) (b) (d):

100,740,155

$839,501

$805,766 Preferred and Preference Stock-without Mandatory Redemption Requirements (c):

Original Preferred-5%, prior, cumulative, participating, not redeemable, par value $81/3 per share 480,000 4,000

$ 4,000 Cumulative Preferred-par value

$25 per share:

4.08% Series...........................

1,000,000

$ 25.50 25,000 25,000 4.24% Series...........................

1,200,000 25.80 30,000 30,000 4.32% Series...........................

1,653,429 28.75 41,336 41,336 4.78% Series...........................

1,296,769 25.80 32,419 32,419 5.80% Series...........................

2,200,000 25.25 55,000 55,000 8.85% Series...........................

2,000,000 26.50 50,000 50,000 9.20% Series...........................

2,000,000 26.50 50,000 50,000

$100 Cumulative Preferred-par value

$100 per share:

7.58% Series..........................

750,000 102.50 75,000 75,000 8.70% Series...........................

500,000 107.00 50,000 50,000 8.96% Series...........................

500,000 107.00 50,000 50,000 Preference-par value $25 per share (a) (b) (d):

5.20% Convertible Series................

250,792 25.00 6,270 8,265

$100 Preference-par value $100 per share..........................................

$469,025

$471,020 Preferred and Preference Stock-with Mandatory Redemption Requirements (c) (e):

$100 Cumulative Preferred-par value

$100 per share:

7.325% Series..........................

720,000

$104.80

$ 72,000

$ 75,000 7.80% Series...........................

584,998 110.00 58,500 60,000 8.54% Series...........................

750,000 108.54 75,000 75,000 8.70% Series A.........................

525,000 110.00 52,500 52,500 12.00% Series...........................

750,000 112.00 75,000 75,000 12.31% Series...........................

500,000 105.83 50,000 50,000 Preference-par value $25 per share:

7.375% Series..........................

2,480,000 25.25 62,000 62,000 445,000 449,500 Less: Preferred Stock to be redeemed within one year...................................

(4,500)

(4,500)

$440,500

$445,000 (a) Under a prescribed formula, the conversion (c) As o1December31, 1983, shares authorized (d) Transactions in the capital stock accounts dur price of the Preference Stock, 5.20% Convertible for the Original Preferred, Cumulative Preferred, ing 1983,1982 and 1981 reflect the following:

Series is adjusted when additional shares of Com-

$100 Cumulative Preferred, Preference and $100 Shares of Common Stock were issued through mon Stock are sold by the Company. As of Decem-Preference Stock were 480,000, 24,000,000, public offerings and stock purchase plans, and ber 31, 1983, the conversion price was $31.50 per 12,000,000, 10,000,000, and 2,000,000 shares, re-the conversion of 79,825, 211,522 and 253,761 share. The 121/2% Convertible Subordinated De-spectively. All series of Cumulative Preferred, shares in the respective years of Preference bentures Due 1997, issued by Southern California

$100 Cumulative Preferred and Preference Stock Stock, 5.20% Convertible Series (5.20% Series) as Edison Finance Company N.V., are convertible are redeemable at the option of the Company. The follows:

into Company Common Stock at the conversion 500,000 shares of $100 Cumulative Preferred price of $32.375 per share.

Stock, 12.31% Series, are not subject to such re-Shares Issued 1983 1982 1981 demption until May 1, 1992. The various series of Public offerings 5,000,000 8,000,000 (b) At December 31, 1983, shares of Common the $100 Cumulative Preferred Stock, and the DRP..........2,328,994 2,498,253 1,906,474 Stock were reserved for issuance as follows:

Preference Stock, 7.375% Series, are subject to ESPP...........953,711 820,752 1.053,413 certain restrictions on redemption for refunding ESOP..........

702,200 601,948 591,084 Shares purposes.

5.20% Series...

63,277 167,748 198,483 Conversion of Preference Stock, 5.20% Convertible Series..........

199,040 (e) For Preferred and Preference Stock with Mandatory Redemption Requirements, the aggregate manda Conversion of 121/2% Convertible Subordinated Debentures, Due 1997, issued by Southern California No. of Thousands of Dollars Edison Finance Company N.V.....

1,600,000 Shares Commencing 1984 1985 1986 1987 1988 Stock purchase plans.............

8,369,844*

Total

...................... 10,168,884 Preferred 7.325%...........

30,000 7/31/83

$ 3,000

$ 3,000

$ 3,000

$ 3,000

$ 3,000

• These plans include the Dividend Reinvestment 7.80%............. 1 5,00Cm 11/30/83 1,500 1,500 1,500 1,500 1,800 and Stock Purchase Plan (DRP), Employee Stock 8.54%............. 22,500 6/30/86 2,250 2,250 2,250 Purchase Plan (ESPP) and Employee Stock Own-8.70%A...........13,125 6/30/85 1,313 1,313 1,313 1,313 ership Plan (ESOP). The Company has issued 12.00%............

22,500 12/31/86 2,250 2,250 2,250 644,542 shares of Common Stock under these 12.31%............

35,000 4/30/88 3,500 plans since December 31, 1983.

Preference 7.375%...........496,000 2/01/85 12,400 12,400 12,400 12,400

$ 4,500

$18,213

$22,713

$22,713

$26,513 Increases to 18,000 shares beginning in 1988.

The accompanyiing notes are an integral part of these financial statements.

Southern California Edison Company Statements of Long-term Debt Thousands of Dollars December 31, Issue and Maturity Interest Rates 1983 1982 First and Refunding Mortgage Bonds (a) (c) (d):

Due 1983 through 1987....

4%-10%

$ 511,800

$ 561,800 Due 1988 through 1992............

43/%-151/4%

615,000 615,000 Due 1993 through 1997........

6%%-81/%

600,000 600,000 Due 1998 through 2002 7%-8/a%

515,030 515,030 Due 2003 through 2007........

8 8%-151/%

813,000 705,000 Due 2008 through 2021........

9%-16%

834,300 763,300 3,889,130 3,760,130 First Mortgage Bonds (Calectric) (a) (c)

Due 1984 through 1991...................

3/4%-51/%

60,000 60,000 Promissory Notes Due 1983................

51/2%

3,500 Promissory Notes (b) (c) Due 1986 through 1997...........

11%-16/4%

450,000 375,000 Pollution Control Indebtedness (d)....................

8V%

92,500 92,500 Principal amounts outstanding 4,491,33..................

(83 0 (53 0 Long-term debt due within one year-net (c)

(83,000)

(53,500)

Unamortized debt premium or (discount)-net (20,996)

(22,024)

Securities held by trustees (d)......

(361,897)

(245,206) 4,025,737 3,970,400 Other long-term debt (e) 26,099.

Total long-term debt.........

$4,051,836

$3,970,400 (a) The authorized principal amount of each (b) Promissory Notes payable to Southern Califor-with Trustees and are being utilized to defray the series of First and Refunding Mortgage Bonds is nia Edison Finance Company N.V. (Finance) have construction and other specified costs of pollution equal to the amount outstanding. The Trust Inden-been issued in exchange for the proceeds from control facilities and retirement of maturing issues.

ture under which these bonds are issued permits the issuance of Debentures by Finance. Payment During February 1984, the Company plans to enter the issuance from time to time of additional bonds, of the principal and interest on $400,000,000 and into a loan agreement with the California Pollution including additional bonds equal in principal

$50,000,000 principal amount of the Debentures Control Financing Authority pursuant to which the amount to bonds retired, pursuant to the restric-are, respectively, unconditionally guaranteed and Company will be obligated to pay principal and in tions and conditions contained therein. Substan-guaranteed on a subordinated basis by the Coi-terest on approximately $195,000,000 principal tially all of the properties of the Company are pany. The Subordinated Debentures are convert-amount of the Authority's Fioating Rate Monthly subject to the lien of the Trust Indenture. The Trust ible into the Company's Common Stock.

Demand Pollution Control Revenue Bonds. The Indenture requires semi-annual deposits with the proceeds of the Authority's bonds will be used to Trustees of 1/2% of the principal amount of the (c) Maturities and sinking fund requirements of reimburse the Company for certain costs incurred Company's outstanding First and Refunding Mort-long-term debt for the five years subsequent to for air and water pollution control and solid waste gage Bonds and the Calectric First Mortgage December 31,1983 areas follows:

disposal facilities at the San Onofre Nuclear Bonds. The Calectric Indenture requires an annual Generating Station.

cash deposit with the Trustee of 1% of the prin-Thousands of Dollars cipal amount of Calectric First Mortgage Bonds Year Ended Sinking Fund (e) Pursuant to the Nuclear Waste Policy Act of issued or 166%% of such amount if property December 31, Maturities Requirements Total 1982 (Act), the Company has entered into a con additions are used to satisfy the annual deposit tract with-the U.S. Department of Energy for dis requirements. In addition, an amount equivalent to 1984.........$ 83,000

$ 83,000 posal of spent nuclear fuel for the San Onofre Nu the excess of 15% of defined operating revenues 1985 96,000 5,250 101,250 clear Generating Station. For nuclear generation over costs of maintenance of the property subject 1986 113,000 5,250 118,250 prior to April 7,1983, the Act provides foraone to the lien of such indenture is required to be 1987..........196,000 5,250 201,250 time fee equivalent to an average charge 011.0 mil deposited with the Trustee annually. These deposit 1988..........122,000 5,250 127,250 per kilowatt hour Interest on the one-time fee is requirements of such indentures may be or have accrued and compounded quarterly at the rate of been satisfied by property additions and replace-(d) First and Refunding Mortgage Bonds and the first 13-week Treasury Bill issuance in each ments, and by delivery and cancellation of bonds other indebtedness have been issued to different calendar quarter as published by the Federal Re outstanding under the applicable indenture, municipalities and other governmental agencies in serve. The weighted-average rate used for the exchange for the proceeds from the issuance of year ended December 31,1983, was 8.39%. The Pollution Control Revenue Bonds and Pollution Act does not require selection of payment method Control Revenue Refunding Bonds. The Company until June 30, 1985.

is obligated to pay the principal and interest on these bonds. The proceeds have been deposited The accompanying notes are an integral part of these financial statements.

31

Southern California Edison Company Notes to Financial Statements Note 1-Summary of Significant Accounting Policies Income Taxes Accounting policies with respect to income taxes and General-related investment tax credits are set forth in Note 5.

The Company is a public utility primarily engaged in the business of supplying electric energy in portions of central Debt Premium and Discount and southern California, excluding the City of Los Angeles Debt premium or discount and related expenses are and certain other cities. The accounting records of the amortized to income over the lives of the issues to which Company are maintained in accordance with the Uniform they pertain.

System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC) and adopted by the Revenues and Regulatory Balancing Accounts California Public Utilities Commission (CPUC).

Customers are billed monthly on a cycle basis and reve nues are recorded when customers are billed. As autho Utility Plant-rized by the CPUC, the Company has established several The cost of additions and replacements of retirement units regulatory balancing accounts which remove the effect on of property is capitalized and included in utility plant. Such earnings of fluctuations in kilowatt-hour sales, fuel and cost includes labor, material, indirect charges for engi-purchased power costs and certain conservation program neering, supervision, transportation, etc., and an allowance expenses. Effective January 1,1983, an Electric Revenue for equity and borrowed funds used during construction Adjustment Mechanism was established to account for dif (AFUDC)'. The amount of AFUDC capitalized is also re-ferences between authorized and recorded base rate rev ported in the Statements of Income as a reduction of inter-enues caused by, among other things, fluctuations in est charges for the borrowed funds component of AFUDC kilowatt-hour sales levels. The Energy Cost Adjustment and as other income for the equity funds component. Al-Clause (ECAC) balancing account is used by the Coi though AFUDC increases net income, it does not represent pany to record monthly entries to adjust the results of op current cash earnings. The AFUDC rate, which is based erations for variations between 90% of recorded fuel and upon a formula prescribed by the FERC, was 9.95%,

purchased power costs and those included in rates billed 9.20%, and 8.77% for the years 1983, 1982, and 1981, to customers. Such variations are deferred and accumu respectively.

lated in the balancing account until they are refunded to, or recovered from, utility customers through CPUC-au The cost of minor additions and repairs is charged to thorized rate adjustments. ECAC-related fuel and pur maintenance expense and the original cost, less net sal-chased power costs include incurred transportation and vage, of retired property units is charged to accumulated interim storage costs related to spent nuclear fuel. The depreciation.

Company has been authorized Annual Energy Rate (AER) revenues to recover 10% of forecasted fuel and purchased Property-related accumulated deferred income taxes re-power costs. The ECAC balancing account is used to re flect the consumption of the value of plant and equipment cord monthly AER entries to adjust the results of operations to which they relate and have been deducted from utility for variations, between such costs and the AER revenues, plant. This treatment is consistent with the method utilized in excess of $43,400,000 on an annualized basis as of in ratemaking proceedings to determine the rate base December 31,1983.

upon which the Company is entitled to earn a return.

A Major Additions Adjustment Clause (MAAC) has been Depreciation-established to include in rates the cost of owning and For financial reporting purposes, depreciation of utility operating San Onofre Unit 2. The rates became effective plant is computed on a straight-line remaining life basis October 9,1983 and were subsequently increased, effec and approximated 4.1%, 3.6% and 3.6% of average depre-tive January 1,1984. Under MAAC, a balancing account is ciable plant for the years 1983, 1982 and 1981, respec-utilized to record differences in investment-related costs tively. The Company's rates are designed to recover the and rates authorized by the CPUC to cover such costs.

original cost of utility plant, including the estimated decom-The CPUC has also established a performance incentive missioning costs for the San Onofre Nuclear Generating plan for San Onofre Unit 2 which sets a target capacity Station (San Onofre) units in service, through depreciation factor range of 55% to 80%. The fuel savings or costs for expense over the estimated remaining useful lives of the operations above or below the target capacity factor range facilities. As of December 31, 1983, rates reflected the will be split equally between the Company's shareholders estimated decommissioning cost of $173,415,000 appli-and customers.

cable to San Onofre Units 1 and 2.

32

Southerr California Edison Company Interest is accrued on the regulatory balancing accounts Minimum long-term commitments of approximately at the most recent three-month prime commercial paper

$1,600,000,000, exclusive of the Chevron contract dis rate as published by the Federal Reserve. The weighted-cussed below, existed on December 31,1983 under the average rate used for the year ended December 31, 1983 Company's fuel supply and transportation arrangements.

was 8.85%. The income tax effects of the regulatory balancing account variations are deferred. Billed revenues Nuclear Waste Policy Act and incurred balancing account costs are utilized in the Pursuant to the Nuclear Waste Policy Act of 1982 (Act), the determination of taxable income.

Company, acting as agent for the San Onofre Participants, has entered into a contract with the U.S. Department of Subsidiaries-Energy (DOE) for disposal of spent nuclear fuel for San The Company's investments in unconsolidated subsidiary Onofre Units 1, 2 and 3. The Company estimates that, be companies, all of which are wholly-owned, are accounted fore reduction to present value, the Company's portion of for by the equity method except for the Company's sub-the obligation under this contract would approximate sidiaries engaged in Eurodebenture financings. For these

$340,100,000 over the lives of its nuclear generating units subsidiaries, cash investments and short-term borrowings at San Onofre. The amount charged to income for the year are presented separately on the balance sheet of the ended December 31,1983 was $2,185,000. There were no Company. None of the Company's other wholly-owned sub-charges to income for this fee in 1982 or 1981. Recovery of sidiaries are considered significant for financial report-the expenses associated with disposal of spent nuclear ing purposes.

fuel was authorized through base rates until December 31, 1983. Effective January 1, 1984 such costs will be re Earnings Per Share-covered through the Company's ECAC procedures.

Earnings per share are determined by dividing the earn ings available for Common and Original Preferred Stock by Fuel Supply Litigation a weighted average number of such shares outstanding.

The Company entered into a contract (for the period Janu After providing for cumulative preferred and preference ary 1,1978 through June 30,1986) with Chevron U.S.A.

stock dividend requirements, effect is given to the par-Inc. (Chevron) to purchase fuel for generation. Due to en ticipating provisions of the Original Preferred Stock and vironmental, economic, regulatory and other factors, the Common Stock Equivalents for funds held for the purchase Company reduced, and then suspended (commencing of Company Common Stock by the Employee Stock Pur-April 1,1982), its fuel deliveries under the contract. On May chase Plan Trustee in each period. The dilutive effect on 19,1982, the Company sent a notice to Chevron which, earnings per share of the conversion of the 5.20% Con-among other things, terminated the contract effective June vertible Series Preference Stock issued by the Company 24,1982. Chevron disputes the effectiveness of this notice.

and the 12/2% Convertible Debentures issued by Southern On July 26,1982, the Company sent an additional notice California Edison Finance Company N.V., an affiliate of the to Chevron which, while preserving the Company's rights Company, is not significant.

under the May 19 notice, gave notice of termination under two other sections of the contract, which terminations Reclassifications-became effective as of October 25,1982 and January 31, The amounts shown for Common Stock are presented at 1983, respectively.

par value. Amounts in excess of par value are included in Additional Paid-in Capital. Prior period amounts have been On April 30,1982, Chevron filed an action against the reclassified to make them comparable to the classifica-Company in the Superior Court of the State of California for tions at December 31, 1983. Certain other items have been the City and County of San Francisco for declaratory relief reclassified in prior periods to make them comparable to and breach of contract. Chevron alleged that the Company the classifications at December 31, 1983.

has no contractual basis to reduce below certain levels or suspend deliveries of fuel, or terminate the contract. Chev Note 2-Commitments and Contingencies ron did not specify the amount of damages alleged to have been incurred. Chevron did seek a ruling that the Coin Construction Program and Fuel Supply-pany would be obligated to pay a "facility charge" (ap The Company has significant purchase commitments in proximately $8,300,000 a month) during the remaining connection with its continuing construction program.

contract term. The Company disagrees with Chevron's in As of December 15, 1983 (the date of the Company's terpretation of the contract and with many of Chevron's latest approved budget), funds required for construction allegations. The Company believes that it has substantial expenditures are estimated at $1,023,000,000 for 1984, affirmative defenses and intends to vigorously defend the

$850,000,000 for 1985 and $701,000,000 for 1986.

Chevron action.

33

Southern California Edison Company Notes to Financial Statements (Continued)

On August 2, 1982, the Company filed a cross-complaint The premiums for the insurance policies discussed above against Chevron seeking, among other things, a declara-are charged to Operating Expenses currently unless they tory judgment that the Company properly and effectively relate to facilities under construction, in which case the terminated the subject contract and the return from Chev-premiums are charged to construction work in progress. At ron of approximately $12,000,000 in underlift payments December 31,1983, the nuclear insurance coverages for made by the Company to Chevron in the last half of 1981 San Onofre are summarized as follows:

on a provisional basis.

Mijons of Dollars Maximum Annual On October 28, 1983, Chevron filed a motion for a sum-Maximum Retroapectve mary judgment that the Company is obligated to pay the Type and Source of Coverage Coverage Assessment facility charge throughout the term of the contract. The Public Liability:

motion is set to be heard on April 4, 1984.

Private Insurance........................$

160.0 Nuclear Regulatory Commission Assessments..

420.0 30.0 If Chevron is finally successful in pursuing its present posi-

$ 580.0

$ 30.0 tion and if rate recovery of the Company's costs under or resulting from the contract is not allowed, the Company's Exces Property Damage ano financial exposure would be material. Although the Com-Decontamination Liability..................

$ 493.0 11.0 pany cannot predict with certainty whether the CPUC and Replacement Power........................$

195.0 7.8 the FERC will allow the Company to recover its costs under or resulting from the contract, the Company expects to in-Govermend L

censes clude any such costs in existing or special fuel cost recov-Thete d

povisions oflcnss grand byte ery proceedings and believes that such costs are a properUntdSaecorthCmpy'mjradcrai item forcrecovery throughiraes.ta uhcssaeapoe minor hydroelectric plants, with a total effective operating itemcapacity of 897.5 megawatts. These licenses also cover Nuclear Insurance-certain storage and regulating reservoirs and related The Price-Anderson Act currently limits the public liability transmission facilities. All of the above licenses expire at claims that could arise from a nuclear incident to a max-various times between 1984 and 2009. The licenses contain imum amount of $580,000,000 for each licensed nuclear numerous restrictions and obligations on the part of the facility. The Company and the co-owners of San Onofre Company, including the right of the United States to acquire have purchased primary insurance for this exposure in the Company properties or, under certain conditions, the FERC maximum available amount, presently $160,000,000, with to issue a license to a new licensee upon the payment the balance to be provided by secondary financial protec-to the Company of specified compensation. Applications tion required by the Nuclear Regulatory Commission of the Company for the relicensing of certain hydro (NRC). Under the agreement with the NRC, the Company electric plants referred to above with aggregate effective could be assessed retrospective premium adjustments, of operating capacity of 31.8 megawatts are pending. Any up to $30,000,000, in the event of nuclear incidents involv-new licenses to the Company are expected to be issued ing any licensed reactors in the United States.

upon terms and conditions less favorable than those of the expired licenses.

Property damage coverage is provided for losses up to

$500,000,000 at San Onofre. The Company has also pur-Resale Revenues chased decontamination liability and property damage Pursuant to FERC procedures, on February 1,1976, August insurance in excess of the primary $500,000,000 layer 16,1979, July 16,1981, June 2,1982 and October 9,1983, Insurance to cover a portion of the additional expense of increases in the Company's resale rates became effective, replacement power resulting from an accident-related subject to refund with interest to the extent that any of the outage of a nuclear unit is also provided. A maximum increases are subsequently determined to be inappropri weekly indemnity in the amount of $2,500,000 for a single ate. Effective May 2,1974, a Fuel Cost Adjustment Clause unit for 52 weeks commences after the first 26 weeks. An (FCA) was added to the Company's resale rates and has additional $1,250,000 per week is provided for the next 52 been modified concurrent with the subsequent base rate weeks. These policies are primarily provided through increases beginning with the February 1,1976 increase. As mutual insurance companies owned by utilities with nu-of December 31,1983, revenues subject to refund, after clear facilities. If losses at any nuclear facility covered by giving effect to incremental FCA billing credits, aggregated the arrangements were to exceed the accumulated funds approximately $383,000,000. The Company believes that, available for these insurance programs, the Company based on present facts, the amount of refunds, if any, likely could be assessed retrospective premium adjustments of to result from the outstanding proceedings would not have up to $114,800,000.

a material effect on net income.

34

Southern-California Edison Company Legal Matters-At December 31,1983, estimated rental commitments for In March 1978, five resale customers filed a suit against unrecorded capital leases and noncancelable operating the Company in federal court alleging violation of certain leases'consisted of the following:

antitrust laws. The complaint seeks monetary damages, a trebling of such damages and certain injunctive relief. The Thousands of Dollars complaint alleges that the Company (i) is engaging in anti-YearEnded Capital Operating competitive behavior by charging more for wholesale December31 Leases(a)

Leases electricity sold to the resale customers than the Company 1984

$ 7,503

$24,729 1985........................

4,774 13,020 charges certain classes of its retail customers ("price 1986 2,764 10,708 squeeze"), and (ii) has taken action alone and in concert 1987 789 8,790 with other utilities to prevent or limit such resale customers 1988 172 7,029 For periods thereafter............................

4,301 13,274 from obtaining bulk power supplies from other sources to reduce or replace the resale customers' wholesale pur-Total future rental commitments (b)..............20,303

$77,550 chases from the Company ("foreclosure"). The plaintiffs Less amount representing interest..................

(2,418) have estimated their actual damages for alleged price Present value of future minimum rental squeeze before trebling at approximately $22,700,000; commitments..............................

$17,885 alleged foreclosure damages before trebling at approxi alleged~ ~

~

~31 1982;our aaae eoetelnd ave pro-(a) Excludes nuclear fuei, the cost base of which is payable when the fuel is mately $37,900,000 through July 31,consme.

The unrecovered cost base of the nuclear fuel lease was jected damages before trebling for the period August 1, approximately $516,000,000 at December 31, 1983.

1982 to July 31, 1985 ranging from approximately 120,0 to

$3ly370, 0.

It8 rn is estpoimdtatetiawl (b) Assa result.of amendments to certain leases during 1983, lease commit

$12,100,000 to $33,700,000. It is estimated that the trial will31,1983 have been begin sometime in late 1984. The foregoing proceedings reclassified from capital leases to operating leases.

involve complex issues of law and fact and, although the Company is unable to predict their final outcome, it has Note 4-Short-term Borrowings categorically denied the allegations of these resale cuteomrs.lydnehealgtosofteersl In order to continue lines of credit with various banks, the customers.Company presently maintains deposits aggregating ap Note 3-Leases proximately $12,000,000 which are not legally restricted as to withdrawal. The lines of credit, which are also available Rental payments charged to operating expenses to support cotnmercial paper, amounted to $552,000,000 amounted to $61,714,000, $39,542,000 and $39,087,000 for asiof DeCmr19 and Decembe 3118.in 1983, 1982 and 1981, respectively.31,1983 and $35,000,000 as The Company leases nuclear fuel to meet its energy re-of December 31,1982, which may be utilized for general quirements. Under the terms of the lease agreement, quar-corporate purposes.

terly payments are based upon consumption of the nuclear fuel and are designed to return to the lessor the accumu-The may ha aniaddtional $

0 l oit lated investment in nuclear fuel and a financing charge hich mye ute nlr thepurchse of fue on unrecovered costs. Such quarterly payments arethogteusofbnr'acpacs.Nesiud onrecovere hogh. the Comanty'EA pr edres under this agreement are secured by a pledge of the Com recoverable through the Company's ECAC procedures.fuel oil inventory.

The nuclear fuel lease and certain other leased property The Company has guaranteed commercial paper (in would meet the criteria requiring capitalization under gen erally accepted accounting principles. However, since cluded on the Company's balance sheet) issued by its these leases are treated as operating leases for ratemak-wholly-owned subsidiary engaged in financings. Proceeds ing purposes, they have been accounted for in the same from the issuance of the commercial paper are used for manner If such leases had been capitalized, related capitalization of an affiliate engaged in Eurodebenture bor assets and liabilities of approximately $533,900,000 and rowings. The lines of credit available for the issuance of

$489,600,000 would have been recorded at December 31, commercial paper amounted to $150,000,000 at December 1983 and December 31, 1982, respectively. The difference 31,1983 and $103,600,000 at December 31,1982. Coi between imputed interest expense and depreciation for mercial paper issued in excess of the subsidiary's lines is these capital lease properties and actual recorded lease supported by the Company's lines of credit.

expense is not material.

35

Southern California Edison Company Notes to Financial Statements (Continued)

Short-term borrowings and the weighted average interest incurred during construction of real property and (ii) a rates for the balances outstanding were as follows:

requirement to reduce tax basis for one-half of the ITC Short-termutilized after 1982, or to reduce the amount of ITC from (Thorsaeds Bororons)

Ierest ARae 1%of an asset's cost to 8%. Net income reflects the Coin (Thousands of Dollars)

Interest Hae 10 December 31, December 31, pany's estimate of the impact of the TEFRA provisions. It is 1983 1982 1983 1982 believed interpretive regulations will not substantially Southern California Edison Co.:

change the impact already reflected.

Notes payable to banks........

$ 6,006

$ 23,992 9.6%

8.9%

Pollution control loan payable..

50,000 6.6%

Securities held by a trustee....

(12,336)

The current and deferred components of income tax ex Total..........................

$ 43,670

$ 23,992 Financing Subsidiary:

Notes payable to banks........

$ 18,600 16.1%

Commercial paper payable....

154,300 104,700 9.5%

8.7%

Year Ended December31, Total..................... $154,300

$123,300 1983 1982 1981 Current:

Federal.........................

178,246

$ 140,350 $

44,800 Note 5-Income Taxes S

236,901 195,971 70,429 Deferred income taxes are provided for certain net in-Deferred-Federal and State.

Investment tax credits-net.............

69,416 64,612 47,386 creases or decreases in income tax expense which result Accelerated cosf recovery from reporting certain transactions for income tax pur-system property..................131,233 51,673 poses in a period different from that in which they are Regulatory balancing accounts (3,919)

(192,726) 26,548 reported in the financial statements. The major items for Other............................(53,555)

(42,934)

(759) which deferred income taxes are provided are the tax 1

efecs freultrybaacig cout rviios dpr-Total income tax expense.............. $ 380,076

$ 76,596

$ 143,604 effects of regulatory balancing account provisions, depre ciation related to plant additions after December 31, 1980 Income taxes included in (Accelerated Cost Recovery System (ACRS) property),

operating expenses...............$

497,236

$ 177,251

$ 197,865 and resale revenues. In accordance with CPUC require-Income taxes included in other income (117,160)

(100,655)

(54,261) mets dferd ncmetae ae otprvde fr thr Total income tax expense.............. $ 380,076 76,596

$ 143,604 ments, deferred income taxes are not provided for other differences.

Total income tax expense differed from the amount com As of January 1, 1983, the Company has been providing puted by applying the Federal statutory tax rate of 46% to deferred income taxes for ACRS property under provisions income before income taxes for the following reasons:

of the Economic Recovery Tax Act of 1981 (ERTA) and pur-T ousands of dollars suant to CPUC requirements. The amount of deferred taxes is based upon the difference between tax deprecia-1983 1982 1981 tion and depreciation of tax basis using book methods and Expected federal income tax expense at lives. The deferred tax provisions also applied, in part, in statutory rate....................$

492,594

$ 290,861

$ 291,398 1982 under transitional rules, but were not applicable to 1981.

Increase (Decrease) in income tax expense resulting from:

Allowance for equity and borrowed funds Under provisions of ERTA, all Investment Tax Credits (ITC) used during construction............(168,294)

(139,434)

(106,974) generated after 1982 are being deferred and amortized as Federal deduction for state taxes on income...................

(24,712)

(5,518)

(14,253) reductions to income tax expense ratably over the lives of Depreciation timing differences the property giving rise to the credits. Prior to 1983, the not deferred......................45,732 (33) 10,176 Company only deferred the additional ITC permitted by the Investment tax credits-net.............(7,174)

(31,502)

(27,232)

Tax Reduction Act of 1975 and the Tax Reform Act of 1976.and general TaxReuctonActof195 ad he axReormAc of196.

expenses capitalized............... (16,626)

(13,449)

(9,756)

That portion of ITC available under prior law was applied Nuclear fuel lease interest capitalized (3,940)

(20,555)

(18,917) as a current reduction of income tax.

Taxes capitalized....................(10,273)

(20,721)

(14,877)

State tax provision.................... 53,723 11,997 30,985 All other differences..................

19,046 4,950 3,054 Interpretive regulations are yet to be issued with respect to T

certain provisions of the Tax Equity and Fiscal Responsi bility Act of 1982 (TEFRA) which have an impact on the Pretax i

,33 Company. Major provisions affecting the Company include Effective tax rate (Total income fax expense (i) the current deductibility of interest and property taxes in 36

Southern California Edison Company Note 6-Research and Development who have attained age 50 may allocate their contributions Research and Development (R&D) costs are expensed into various investment programs. The SSPP replaced currently if they are of a general nature. Plant-related R&D the Employee Stock Purchase Plan (ESPP), which was in costs are accumulated in construction work in progress effect through December 31 1983 and utilized employee until a determination is made as to whether such projects contributions consisting of after-income-tax dollars.

will result in construction of electric plant. If no construc-The Company's contributions to the ESPP amounted to tion of electric plant ultimately results, the costs are gen-

$5,639,000, $4,687,000 and $4,452,000 for 1983,1982 erally charged to Other Operation Expenses.

and 1981, respectively.

Thousands of Dollars Employee Stock Ownership Plan Year Ended December 31, The Company has an Employee Stock Ownership Plan 1983 1982 1981 (ESOP) through which, prior to 1983, the Company was al R&D costs charged to expense........... $32,588

$25,998

$26,542 R&D costs capitalized-net..............

11.687 24,218 32,047 Total R&D expenditures..................

$44,275

$50,216

$58,589 matching the 1/2% IC. Under provisions of ERTA, the

_____method of funding employee stock ownership plans was changed effective January 1, 1983 from the method based Note 7-Employee Benefit Plans upon ITC's to a payroll tax credit method based upon a Penson Pan-specified percentage of total Company payroll. Funding Pension Plan Thethrough these payroll based credits may not exceed 1/2%

substantially all employees, is based on a trusteed pen-is el nated ftr 1987 Thr will be no employee c n sion plan, which is non-contributory by employees. The tri insto te Plan.

annual normal cost of the plan is funded by the Company with contributions determined on the basis of a level pre-Note 8-Quarterly Financial Data mium funding method. Unfunded prior service costs relating to a 1982 plan amendment are being amortized The following table presents quarterly financial data for the over a 30-year period. Pension costs are reserved for on four quarters of the years 1983,1982 and 1981:

the basis of actuarial determinations and amounted to

$48,701,000, $42,079,000 and $36,137,000 for 1983, 1982 and 1981, respectively.

Frst Second Third Fourth Quarter Quarter Quarter Quarter Thousands of Dollars 1983 January 1, Operating Revenues (000).

$1,040,773

$1,045,247

$1,248,670

$1,129,566 1983 (a) 1982 Operating Income (000)........

161,636 161,440 171,271 209,683 Actuarial present value of accumulated plan benefits:

Net Income (000)..............168,948 172,576 192,077 157,179 Vested.....................................

$515,134

$449,580 Earnings Available for Nonvested.................................

25,357 22,123 Common and Original Preferred Stock (000).....

150,538 154,176 173,735 138,854

$540,491

$471,703 Earnings Per Share...........

1.54 1.56 1.74 1.38 Net assets available for plan benefits............

t$624,917

$507,966 1982 Operating Revenues (000)..1,129,236 1.047,426 1,110,617 1,015,323 (a) Latest available data.

Operatng income (000).......

111,451 120,636 169,066 135,574 Net Income (000)...............

124,691 126,786 166,858 137,419 An actuarial rate of return assumption of 6.5% was used in Earnings Available for Common and Original determining the actuarial present value of accumulated Preferred Stock (000)........

107,765 108,338 148,250 119,004 plan benefits as of January 1, 1983 and January 1, 1982.

Earnngs Per Share..............

1.18 1.15 1.55 1.23 1981 Stock Savings Plus Plan-Operating Revenues (000) 908,514 983,848 1,122,674 1,039,320 The Stock Savings Plus Plan (SSPP), adopted to supple-Operating Income (000).......

105,724 121,409 150,996 113,026 Net income (000)..............

100,167 113,939 147,944 127,862 ment employees' income after retirement, became effective Earnings Availabne for on January 1,c1984. The SSPP allows eligible employees Common and Original to contribute up to 11% of their regular monthly base pay, Preferred Stock (000)........

83,158 96,965 130,985 110,917 serified percaentage...of.total0 Compan 1arl.5 und 2n using before-income-tax dollars, to a trustee for the pur-a Pr r

1 51 chase of Company Common Stock. The Company contrib utes to the SSPP an amount equal to one-half of the first 6%

of the employees' contributions, less forfeitures. Participants 37

Southern California Edison Company Notes to Financial Statements (Continued)

Note 9-Jointly-Owned Utility Projects but permit the accrual of an Allowance for Funds Used The ompny ons ndiidedintrest insevral oinly-During Construction. As indicated in its response to the The Company owns undivided interests in several jointly-ou netgtoteCmayblee htUi owned generating stations and transmission systems for which each participant must provide its own financing. The should remain in customer rates. Commencing January 1, Company's proportionate share of expenses pertaining to 1984, all rates authorized for Unit 1 operation and own such projects is included in the appropriate category of ership costs are being collected subject to refund pending operating expenses in the Statements of Income. In the completion of the CPUC's investigation. As of December table below, the amounts represent the Company's invest-31,1983, the Company's undepreciated book cost, includ ment for each such project as reported on the Balance ing nuclear fuel, for this Unit was $327,900,000 excluding Sheets:

the provision for decommissioning costs.

Thousands of Dollars Note 10- Long-term Purchased Power and (December 31, 1983 Transmission Contracts UtiDsty Construction Plant in Accumulated Work in Ownership Under firm contracts, the Company has agreed to pur 1984,ice DepreauciaitdionrProgreoperaiontadrown chase portions of the generating output of certain facilities Bramley Geothermal Generating and to purchase firm transmission service where appro Project 6,307

$ 4,099 184 50.0%

priate. Althoughthhe Company has no investment in such El Dorado Transmission System..........

21,046 6,192 66 6D,0(a) facilties, these contracts provide that the Company pay Foir Corners Coaf Generatng Station-amounts ni are based at least ing Units 4 &5...................... 204,47D 42.633 118,281 48.0 cetimnmu(wchpr Mohave Coal Generating Station........

196,386 58,738 3,467 56,0 on the debt service requirements of the supplier) whether Pacific Inrertia DC Transmisson or not the facility or transmission line is operating. None of System......................... 69,475 22,661 t4,447 50.0 these power contracts provides, or is expected to provide, Palo Verde Nuclear Generating Station..

906 2

935678 5.8 San Onofre Nuclear Generating in excess of five percent ofteCompany's current or es Station-timated future operating capacity. The cost of power and Uni t s242,383 728t5 121974 80.0 firm transmission service obtained under the contracts, in Prts 2 & 3..

.................... 1,445 070 20,348 1382,466 75.05 Common Facilities-Units 2 &3...

380,950 5,645 2,369 75.05 cluding payments made when a facility or transmission line Common Faclites -Unist1.2, &3...

76276 5,111 33,487 75.87 is not operating, is included in Purchased Power and Other SolarOne GeneratingStation..........

17,660 5,522 5t3 80 Operation Expenses, respectively, in the Statements of In Yuma Axis Combine Cycle Generating Station.......................

12,354 8,026 17 33 3 come Purchased power costs are recoverable through the Total.........................$2,673,23

$251,792 2,612,949 Company's ECAC procedure. Certain information as of De (a) epreentsa cmposte rte.cember 31, 1983, pertaining to purchased power contracts is summarized in the following table:

Unit 1 at San Onofre has been out of service since Feb-ollars in Thousands ruar y 1982 for NRC required inspections and for various Share of Effective Operating Capacity-Megamatts Thet 242u 383 72 5 d e 8718.5 plant modifications.

Share of Energy Output..........

currently under evaluation and is chiefly contingent on TotalEstimatedAnnual Cost.........................

$46,56 reaching an agreement with the NRC on specific seismic Company'sPortion of Estimated Annual Cost Applicable to Supplier's Annual Minimum Debt Service modifications to prove earthquake resistance and other Requirement...................

2 5$326 long-range NRC requirements. Because of this extended Company's Allocable Portion of Interest of Suppliers outage, the CPUC recently began an investigation to de-inclder in Annual Minimum Cebt Service Requirement......................

$ 3,465 termine whether Unit 1 should be removed from customer Related Long-term Debt or Lease Obligations rates while the plant modification issues are being re-Outstanding of Company.........................

None solved with the NRC. A recently filed CPUC staff motion in (a) Effectiveoperating capacitymayvaryaccording toateravailabicitye n r

this proceeding, if adopted by the Commission, would re-conditions. The Company nas agreed to certan reductons in its share of move the Unit 1 return component from customer rates, or e 38

Southern California Edison Company Additional information as of December 31, 1983 pertaining Supplementary Information to Disclose the Effects of to both purchased power and transmission service con-Changing Prices (Unaudited) tracts is summarized in the following table:

Dollars in Thousands The Company's primary financial statements are stated on Purchased Transmission the basis of historical costs in accordance with generally Power Service accepted accounting principles. During periods of signifi Dates of Expiration.......................

1984-1987 1984-2016 Variable Components of Contracts..........

(a)

(a)

Required Future Minimum Annual Payments basis reflect dollars of varying purchasing power and 1984..................................

$ 9,593

$ 7,000 accordingly do not measure the effects of inflation. The 1985...................................

1,560 5,920 1986...................................

1,644 5,905 following supplementary information is presented in 1987...................................

723 5,890 accordance with the requirements of the Financial 1988.................................-

5,875 Accounting Standards Board (FASB) for the of Later-1 providing certain information about the effects of both gen Total.....................................

13,520 186,272 Less Amount Representing Interest to Reduce Total to Present Value............

(461)

(115,649) and changes in specific prices (represented by current Total at Present Value....................

$ 13,059

$ 70,623 cost amounts).

Total Purchases for the Years Ended December31 This information inherently involves the use of assump 1983..

$ 49,263

$ 7,595 tions, approximations and estimates, and therefore, should 1982 39,414 7,409 be viewed in that context and not as precise measure accord3ments of the effects of inflation on the Company.

(a) The variable components of certaf contracts are based upon a pro-rats share of actuaa operating, maintenance, and fuel costs or on the U.S. Government cost Thousands of Dollars of service.

As Reported Adusted For provideng certai Ein the Adlusted For changesin eraletnflationAaiepresentedadPrimary General Specific Original Preferred Stock Adausted for Changing Prices Financial Inflation (a)

Prices (a) for the Year Ended December 31,1983 Statements (Constant Dollar)

(Current Cost)

Total Operating Revenues...

$4,464,256

$4,464,256

$4,464,256 Operating Expenses:

Depreciation 289,361 667,000 774,000 Other operating expenses9......................................

3,470,864 3,470,864 3,470,864 Other income....................................................

(429,101)

(429,101)

(429,101)

Net interest charges...........................................

442,352 442,352 442,352 Dividends on cumulative preferred and preference stock..............73,477 73,477 73,477 3,846,953 4,224,592 4,331,592 Earnings available for Common and Original Preferred Stock (excluding adjustment of utility plant to net recoverable cost)..........

$ 617,303

$ 239,664(b) $ 132,664 Other Adjustments For Changing Prices:

Increase in specific prices (current cost) of utility plant held during year (c)..................

$ 612,563 Adjustment of utility plant to net recoverable cost 42,642 188,764 Effect ofbincrease in general price level on utility plant p-(651,685)

Excess of increase in specific prices over increase in general price level, after adjustment to net recoverable cost..............

$ 149,642 Gain from decline in purchasing power of net amounts owed......

$ 201,633

$ 201,633 (a) In average 1983 dollars.

(b) Including the adjustment to net recoverable cost, the earnings available for common and original preferred s tock on a constant dollar basis would have been $282,306 for 1983.

(c) At December 31,1983, current cost of utility plant, net of accumulated depreciation (but exclusive of deferred income taxes) was $18,015,435 while related historical cost and net recoverable cost was $9,460,242.

39

Southern California Edison Company Supplementary Information (Continued)

Five Year Comparison of Selected Supplementary Financial Data Adjusted for the Effects of Changing Prices (Data adjusted for the effects of changing prices are reported in average 1983 dollars.)

Year Ended December 31, In Thousands of Dollars, Except Per Share Amounts 1983 1982 1981 1980 1979 Total Operating Revenues As reported...............................

$4,464,256

$4,302,602

$4,054,356

$3,661,117

$2,563,974 In constant 1983 dollars......................

$4,464,256

$4,441,012

$4,441,336

$4,426,569

$3,519,273 Earnings Available for (Loss on) Common and Original Preferred Stock (a)

As reported...............................

$617,303

$483,358

$422,024

$256,586

$292,481 In constant 1983 dollars.....................

$ 239,664

$204,768

$171,116

$ 46,604

$166,245 At current cost.............................

$ 132,664

$101,037

$ 79,098

$ (52,540)

$ 77,027 Earnings (Loss) Per Share on Common and Original Preferred Stock (a)

As reported................................

$6.22

$5.13

$4.93

$3.50

$4.56 In constant 1983 dollars......................

$2.42

$2.17

$2.00

$.64

$2.59 At current cost..............................

$1.34

$1.07

$.92

$ (.72)

$1.20 Excess of Increase in General Price Level Over Increase in Specific Prices of Utility Plant after Adjustment to Net Recoverable Cost......

$(149,642)

$ (46,736)

$288,586

$506,241

$681,010 Net Assets at Year End at Net Recoverable Cost As reported...............................

$3,793,339

$3,392,864

$2,968,108

$2,529,577

$2,233,133 In constant 1983 dollars and current cost.......

$3,729,596

$3,438,963

$3,139,607

$2,925,681

$2,898,507 Gain from Decline in Purchasing Power of Net Amounts Owed..........................

$201,633

$212,027

$410,365

$537,908

$620,760 Cash Dividends Declared Per Common Share As reported................................

$3.66

$3.38

$3.10

$2.84

$2.60 In constant 1983 dollars......................

$3.64

$3.48

$3.37

$3.40

$3.52 Market Price Per Share at Year End In historical dollars..........................

$39.75

$35.125

$28.75

$25.625

$24.50 In constant 1983 dollars......................

$39.08

$35.85

$30.41

$29.59

$31.80 Average Consumer Price Index (Base Year 1967 = 100)......................

298.4 289.1 272.4 246.8 217.4 (a) Excludes adjustment of Utility Plant to Net Recoverable Cost.

The amounts adjusted for general inflation represent histor-to the present, and differ from constant dollar amounts to ical costs of utility plant restated in terms of dollars of the extent that prices in general have increased more or equal purchasing power (constant dollars) as measured less rapidly than specific prices. The current cost of utility by the Consumer Price Index for all Urban Consumers.

plant represents the estimated cost of replacing existing This method is intended to measure income after restating plant assets and was determined by restating its historical all revenues and expenses in dollars of equivalent pur-cost using indices reported in the Handy-Whitman Index of chasing power.

Public Utility Construction Costs. This method is intended The current cost amounts reflect the changes in specific to measure income after reflecting the cost of providing the prices of utility plant from the date the plant was acquired electric service at current price levels.

40

Southern.California Edison Company in accordance with procedures specified by the FASB, to-able through future depreciation charges. Therefore, the tal operating revenues and all expenses other than depre-cost of utility plant, stated in terms of constant dollars or ciation were considered to reflect the average price level current cost is not presently recoverable through deprecia for the current year and accordingly remain unchanged tion charges. Accordingly, the difference between such re from those amounts reported in the Company's primary stated plant amounts and historical cost is reflected as an financial statements. The current year's depreciation ex-adjustment of utility plant to net recoverable cost. While the pense on the constant dollar and current cost amounts of ratemaking process gives no recognition to the current utility plant was determined by applying the Company's cost of replacing utility plant, based on past ratemaking average annual depreciation rates to the indexed plant practices, the Company believes it will be allowed to re amounts.

cover and earn a return on the increased cost of its invest No adjustments to income tax expense have been made in computing the impact of inflation since only historical costs During inflationary periods, holders of monetary assets ex are deductible for income tax purposes.

perience a loss of general purchasing power while holders of monetary liabilities experience a gain. The gain from the Fuel inventories and the cost of fuel consumed in the gen-decline in purchasing power of net monetary liabilities (net eration of electricity have not been restated from their his-amounts owed) is primarily attributable to the substantial torical cost. The recovery of fuel and purchased power amount of debt which has been used to finance utility costs are limited to historical costs through the operation plant. To properly reflect the economics of rate regulation, of the Company's energy cost adjustment clauses. For this the adjustment of utility plant to net recoverable cost reason fuel inventories and deferred recoverable energy should be offset or combined, as appropriate, by the gain costs are effectively monetary assets.

from the decline in purchasing power of the dollar related Under ratemaking procedures prescribed by the regula-Preerecento e company thereforeees n

tory commissions exercising rate jurisdiction over the thernit to rle Ch hding g o nt Company, only the historical cost of utility plant is recover-a o tn an o l o

satedpunt ounsadwetrcadotisrfete.sa Operating Revenues and Kilowatt-Hour Sales Ccass of Service Operating Revenues (Thousands of Doiars)

Kilowatt-Hour Saies (000)

% of o

of p

1983 totan 1983 1982 change 1983 totai 1983 1982 change Residential..............

28.1

$1,255,700

$1,233,338 1.8 28.7 17,173,786 16,403,116 4.7 Agriculturalp............ee1.3 56,649 68,281 (17.0) 1.2 709,094 856,929 (17.3)

Commercial..............

30.0 1,337,910 1,226,532 9.1 28.0 16,777,503 15,557,692 7.8 Industrial................

25.2 1,126,636 1,112,784 1.2 26.1 15,643,149 15,675,707 (0.2)

Public Authorities..

8.5 376,782 370,726 1.6 8.2 4,914,422 5,985,313 (17.9)

Interdepartmental owed) 109 127 (14.2) 994 1,279 22.3 Resale..................

5.8 259,833 255,162 1.8 7.8 4,673,690 4,846,817 (3.6)

Sales of Electric Energyp............l98.9 4,413,619 4,266,950 3.4 100.0 59,892,638 59,326,853 1.0 Other Electric Revenues th1.1 50,637 35,652 42.0 of uite r

Total.................

100.0

$4,464,256

$4,302,602 3.8 100.0 59,892,638 59,326,853 1.0 Operating Revenues by Rate Components Rate Components Operating Revenues (Thousands of Doiars)

Percent of Total 1983 1982 1981 1983 1982 1981 Base Rates-CPUC Jurisdiction.................

$2,138,011

$1,530,389

$1,487,145 47.9% 35.6% 36.6%

Energy Cost AdjustmentBilling Factor............

1,789,474 2,312,442 2,161,426 40.1 53.7 53.3 Annual Energy Rate............................

163,817 167,457 31,704 3.7 3.9 0.8 Major Additions Adjustment Billing Factor.........

29,651 0.7 Other Billing Factors............................

33,189 1,942 2,767 0.7 0.1 0.1 Resale Rates (excluding fringe).................

o259,477 254,720 343,506 5.8 5.9 8.5 Sales of Electric Energy.....................

4,413,619 4,266,950 4,026,548 98.9 99.2 99.3 Other Electric Revenues.........................

50,637 35,652 27,808 1.1 0.8 0.7 Total..................................

$4,464,256

$4,302,602

$4,054,356 100.0 100.0 100.0 41

Southern California Edison Company Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Comparing results for 1983 with 1982, operating revenues The Company recorded earnings per share of $6.22 and awith rate of return on common equity of 17.0% in 1983, as com-In addit aF and income w ereiu by 20%

pared with $5.13 and 14.9%, respectively, in 1982.

whiin c

and prerredcdividendsuincrease 28% itrethre and 1.%,repetielyewithitheendsltcthaen Several factors were primarily responsible for the improved earnings level achieved by the Company for the year 1983:

ings available for common and original preferred stock in creased by 28%.

• The general rate increase of $590 million annually which was granted effective January 1, 1983, and which autho-The following table presehts amounts and percentages of rized a rate of return on rate base (CPUC jurisdiction) of increase (decrease) from the prior years in the rate com 12.55% and a rate of return on common equity of 16%.

ponents of operating revenues.

• continuing emphasis on productivity and cost controls.

increase (Decrease)

Dollars in Millions from PriorYears 1983 1982 1981 Operating Revenues:

t Higher non-cash allowances for funds used during con-Base Rates (P o.pert.$608 39.7

$ 43 2.9

$284 23.6 struction (AFUDC).

Energy Cost AdCustment ili ing Factor........... (523)

(22.6 151 7.0 (19)

(0 )

Annual Energy Rates...... cv(4)

(2.2) 136 (a) 32

" The smallest increases in average number of shares out-Major Additions Adjustment standing (5.2%) and average common equity (12%) since Biling Factor...........

30 1978. There was no major public offering of common Other Billing Factors........

31 (a)

(1) (29.8)

(2) (46.1)

Resale...................

5 1.9 (89)

(25.8) 100 41.5 inOther Electric Revenues 15 42.0 8

28.2 (2).

(6.5)

In addition to the improvement in the level of earnings dur-Total Operating Revenues

$162 3.8

$248 6.1

$393 10.7 ing 1983, there was an accompanying improvement in KWH Sales (Millions)....

566 1.0 (3,124)

(5.0) 2,536 4 2 earnings quality. Earnings quality, as measured bythe Customers 50,159 1.5 42,457 1.3 68,719 2.2 ratio of operating income to total income before interest (a)lndicates over 200%.

charges (including allowance for borrowed funds), was 57% for 1983 which compares with 55% for 1982 and was The increase in total operating revenues for 1983 reflected the first time that the ratio has not recorded a year-to-year the combined effect of an increase of 2.5% in the overall 1decrease since 1972 An increase in this ratio is indicative average billing rates and the 1% increase in kilowatt-hour of improvement in earnings quality because the remainder sales. The decrease in energy cost adjustment billing fac of total income before interest charges comprises AFUDC tor revenue reflected reductions in rates because of actual and other income.

and anticipated decreases in fuel and purchased power expenses.

The principal reasons for the improving earnings quality are the aforementioned general rate increase and continu-A more complete description of the procedures used to ing efforts to control costs and the transfer of the invest-establish the Company's rate levels for retail sales is in ment in San Onofre Unit 2 from construction to rate base.

cluded in Note 1 of the "Notes to Financial Statements." In (For a further discussion of the initial decisions of the CPUC general, base rates are established in biennial general rate under MAAC, see 'Liquidity.") Operation of San Onofre Unit case proceedings before the CPUC. In addition, regulatory 2 is reflected in the Company's operating revenues and adjustment clauses which remove the effect on earnings operating expenses commencing October 9,1983.

of fluctuations in fuel and purchased power expenses, kilowatt-sales and certain conservation program expenses have been authorized by the CPUC. A Major Additions Ad justment Clause was established to include in retail rates the cost of owning and operating San Onofre Unit 2.

42

Southerr California Edison Company The following table presents amounts and percentages of A discussion relating to the effects of changing prices increase (decrease) from prior years in selected items follows the Notes to Financial Statements" beginning from the Statements of Income.

on page 39.

Increase (Decrease)

Dollars in Millions, Except Earnings Per Share from Prior Years 1983 1982 1981 Other Operation Expenses

$113 23.0

$50 11.4

$49 12.6 Liquidity refers to the ability of a company to generate Maintenance Expense.....

70 33.2 17 8.7 (35)

(15.3) funds, whether from operations, long-term financing or Depreciation..............

68 31.0 19 9.3 14 7.6 Taxes on Operating income 320 180.5 (21)

(10.4) 159 (a) other sources, adequate to meet the requirements of its Property & Other Taxes.....

17 26.5 6

9.4 (10)

(14.0) construction program.

Operating income.........

167 31.2 46 9.3 119 32.0 Allowance for Equity and The improvement during 1983 in the Company's earnings Borrowed Funds Used During Construction.....

63 20.7 71 30.3 70 43.3 quality is further demonstrated by the increase in funds Other income.............

24 17.7 29 27.1 41 63.0 provided by operations as a percent of funds used for con Total Interest Charges.....

119 28.3 79 23.3 58 20.6 struction expenditures from 24% for 1982 to 48% in 1983.

Net Income...............

135 24.3 66 13.4 172 54.3 Earnings Available for Common and Original The following table provides a summary of the Company's Preferred Stock.........

134 27.7 61 14.5 165 64.5 sources of funds used for construction expenditures for Earnings Per Share........

$1.09 21.2

$.20 4.1

$1.43 40.9 Weighted Average Number of Dollars in Millions Shares (Millions)........

5 5.2 9

10.1 12 16.9 (a)lndicates over 200%.

Funds from Operations-Reinvested...

$390

$243

$174 Funds from Long-Term Financing-Net............

215 828 800 Increases in other operation expenses in 1983 continued to Other Sources (Uses) of Funds..................200 (77)

(17)

Funds Used for Construction Expenditures........ $805

$994

$957 be influenced by system growth, particularly the addition of San Onofre Unit 2. Also having an impact is the effect of Funds Provided by Operations as a Percent of inflation on the cost of labor, material and services. The Company is continuing its efforts to control these The Company is engaged in an extensive construction expenses.

program designed to accommodate existing and pro jected demands on its electric system. Because of the Variations in levels of maintenance expense have been high level of construction work in progress, primarily re significantly influenced by inflation, scheduling of major lated to the construction of San Onofre Unit 2 (now com maintenance projects, the addition of new facilities, and plete) and Unit 3 and the Palo Verde Units, a significant weather conditions. The latter is partially reflected in in-portion of the Company's net income in recent years has creases in property damage expense as a result of storm been attributable to AFUDC, which does not represent cur damage of $6 million. Also affecting maintenance expense rent cash income of the Company. On September 7,1983, in 1983 is the amortization of nuclear sleeving costs of $14 the CPUC rendered an initial decision under the Major Ad million.

ditions Adjustment Clause (MAAC) to include in customer rates the costs of owning and operating Unit 2 at San Taxes on operating income for 1983 increased primarily as Onofre. The new rates became effective October 9,1983 a result of increased pre-tax net income and deferred in-when approximately $1.6 billion of plant investment costs come tax provisions. For a further discussion of income were included in rate base. The accrual of AFUDC on taxes see Note 5 of "Notes to Financial Statements."

these costs ceased as of that date. The amount of the initial MAAC rate increase was $207 million; however, this The higher interest charges were primarily due to addi-was offset by an equal Energy Cost Adjustment Clause tional long-term debt outstanding the entire year.

rate decrease based on projected fuel savings.

43 on page 39

Southern California Edison Company Management's Discussion and Analysis (Continued)

In its September 7,1983 MAAC Decision, the CPUC di-Capital Resources rected the Company and the Commission staff to under-To provide the funds for construction expenditures for the take studies to determine if various alternative ratemaking methods should be adopted in establishing retail rates for lyeea tr 1etmated o t n, and San Onofre Units 2 and 3. As compared to traditional tomet n-trebmusd s inin funre ratemaking practices, the adoption of an alternative quiremetsnd pere toc redeptio rumen ratemaking method would produce lower cash flow in the aggreatin $726 millio duin such yr, th Copn early years of operation and higher cash flow in later years.

estites hat approie $2.4 billin or h

The Company believes that the placement of San Onofre expende wl be rvied fr eernal surce Units 2 and 3 in service with rates established in accor-be oftfn ed f rths p uris epected dance with traditional procedures will not produce a to e o eromi dramatic increase in rates and that adoption of an alterna tive ratemaking method is unwarranted. Hearings on this The Company's estimates of funds available from opera matter are expected to commence during the second tions for the five years through 1988 assume the receipt of quarter of 1984 with a decision to be rendered soon therater. 94wt eiio ob edrdso adequate and timely rate relief, the timely inclusion of San thereafterOnofre Unit 3 and the Palo Verde Units in rate base and On Nvemer 2, 983 th CPU isueda scon dei -

the realization of its assumptions regarding cost increases, On November 22, 1983, the CPUC issued a second deci-m sion granting an additional $98 million of rate relief for Unit 2 uding the cost of capital. The Company's estimates and to become effective January 1, 1984. The Company, there-underlying assumptions are subject to continuous review fore, will receive additional cash income to partially offset and periodic revision.

the decline in AFUDC. Earnings will be maintained by the The timing, type and amount of all additional long-term return on rate base authorized by the MAAC decision and financings are also influenced by market conditions, rate by the implementation of an interest-bearing balancing account for the facility's investment-related costs. Recov-rle an o rcos Incdniation s Ioedtby erability of amounts recorded in the balancing account will be determined in the CPUC's reasonableness review for The Company's long-term goal is to maintain a capital the Company's investment in Unit 2. AFUDC constituted structure with approximately equal amounts of debt and approximately 53%, 55% and 47% of net income, respec tively, for the years 1983, 1982 and 1981. AFUDC is expected eiy The Company capit structueat n

h to decline significantly with the inclusion of Unit 2 in rates and when Unit 3 is placed in commercial operation, which 1983 1982 1981 is currently anticipated to be in April of 1984.

Common Sharenolders' Equity..................43.3%

41.0%

40.7%

Preferred and Preference Stock San Onofre Unit 1 has been out of service since February Re demption 1982 for NRC required inspections and for various plant Rreent 5.4 5.7

6.

modifications. See Note 9 of "Notes to Financial State-With Mandatory Redemption Requirements (a).......

5.0 5.4 5.5 ments" for a discussion of the CPUC's investigation to de-Long-Term Debt (a)..........................46.3 47.9 47.3 termine whether Unit 1 should be removed from customer 0

0 0

rates while plant modification issues are being resolved with the NRC. A recently filed CPUC staff motion in this proceeding, if adopted by the Commission, would remove Funds provided by long-term financing, after giving effect the San Onofre Unit 1 return component from customer to the reduction of long-term debt, securities held by trust rates, but permit the accrual of an Allowance for Funds ees and the conversion of preference stock amounted to Used During Construction.

$215 million in 1983. The Company uses short-term bor rowings and temporary investments as a part of normal daily operations. The Company has a total of $862 million of available short-term borrowing facilities with foreign and domestic banks. Temporary investments and cash invest ments-financing subsidiary, outstanding at December 31, 1983 were $244 million and $157 million, respectively.

44

Southern-California Edison Company Capital Stock-Dividend and Price Information Quarterly High and Low Sales Prices ($)

Dividends Calendar Ouarter-1983 Calendar Quarter-1982 Paid Class and Per 1

2 3

4 1

2 3

Series of Stock Share (a) (f)

High Low High Low High Low High Low High Low High Low High Low High Low Common (b)(c)

$.88 39/

345/

381/s 343/s 391/a 351/s 42/4 375/

3272 28 335/

291/

357/8 29/2 371/s 311/4 Original Preferred

.88 38%

32 371/2 332 371/2 33 391/4 35 29%

2472 29 251/2 31 25/4 341/2 30/

Cumulative Preferred:

4.08%

.251/2 93/

8 9

81/4 91/4 8

9/8 81/8 81/4 6/8 7%

6/8 81/2 7

91/4 73/4 4.24%

.262 97/8 87/8 10 8

9%5/ 8%

95/

8V 8A 672 8

77/

9/s 7

93/s 8%

4.32%

.27 97/

9 10 9

95/

85/s 95/

8/8 81/s 7 83/

7 9/4 7A 95/

8/s 4.78%

.29%/

113/

9/2 11/8 91/

10 9

10/4 9/4 8/a 7

9 7/

9 7

10 7/

9 5.80%

.36 13 12 1372 11/4 133/

11/8 13 11 10/8 91/4 10/4 972 13 97/

127/8 11 8.85%

.553125 20/4 1874 201/2 18 19/

18 19/8 173/

16 141/

16%

14 181/4 14 19 16/8 9.20%

.5772 21 193/8 213/

19 20 185/8 201/4 18 16%

14 17-/

15 19 153/

201 17%

$100 Cumulative Preferred:

7.325% (d) 1.83s 7.58%

1.8972 6974 60 7072 64 67 60 68 60 5472 47 567s 49%

605/

50 665/s 57 7.80% (d) 1.95 8.54%

2.137/

85/

81 8872 82 82 79 85 73 63 59 70/

62 73 69 8372 68 8.70%

2.17 78 70 807/a 73 80 70 75 68 62 5572 64 57 685/

58 76 651/2 8.70%-A (d) 2.17 8.96%

2.24 821/4 73 8212 75 787/

71 77 69%

611s 56 6472 60 71 603/

78 68 12.00%

3.00 109 103 109 101 106 98 1075/ 100 89 8172 100 90 102 89%

1067s 99 12.31% (d) 3.0775 Preference:

5.20% (e)

.32 30 27/8 30 2872 3072 27 32s 291/2 251/2 22/8 26/8 24 28 23 29 251/2 7.375% (d)

.460938 (a) Ouarterly dividends were paid at the rates indicated in each quarter of 1983 except the fourth quarter dividend on Original Preferred Stock and Common Stock which was at the rate of $0.95 per share.

(b) Dividends per share declared on Common Stock totaled $3.66 and $3.38 for 1983 and 1982, respectively.

(c) As of December 31, 1983, there were approximately 158,000 Common Stock shareholders.

(d) There are no prices as these issues are private placements and shares are not traded.

(e) The 5.20% Preference Stock is convertible into Common Stock.

(f) The Indenture securing the Company's First and Refunding Mortgage Bonds provides, in substance, that the Company shall not pay any cash dividends except out of its earnings reinvested in the business and net income.

45

Southern California Edison Company Selected Financial Data 1973-1983 1983 1982 Summary of Operations Operating Revenues...............................$

4,464,256 $ 4,302,602 (in thousands of dollars Operating Expenses............................

3,760,225 3,765,875 except percent and Fuel and Purchased Power Costs (a)......................2,027,756 2,227,901 per share data)

Income Taxes (a)..............................497,236 177,251 Allowance for Equity and Borrowed Funds Used During Construction.......................................

365,856 303,118 Interest Charges......................................

539,377 420,282 Net Income..........................................

690,780 555,754 Earnings Available for Common and Original Preferred Stock...................................

617,303 $

483,358 Weighted Average Shares of Common and Original Preferred Stock Outstanding (000)...............................

99,174 94,257 Per Share Data:

Primary Earnings.....................................

$6.22

$5.13 Fully Diluted Earnings.................................

$6.15

$5.09 Dividends Declared Per Common Share..................

$3.66

$3.38 Dividend Payout Ratio (paid basis).......................

57.7%

64.5%

Rate of Return on Common Equity.........................

17.0%

14.9%

Ratio of Earnings to Fixed Charges.........................

2.91 2.44 Balance Sheet Data Total Assets (b)...................................$11,035,060

$10,157,564 (in thousands of dollars Gross Utility Plant...................................

11,886,610 10,764,078 except percent and per Accumulated Depreciation............................

$ 2,426,368 $ 2,185,667 share data)

Percent of Gross Utility Plant.............................

20.4%

20.3%

Common Stock, at par value...........................

839,501 $

805,766 Additional Paid-in Capital..............................

1,307,546 1,193,318 Earnings Reinvested in the Business......................1,646,292 1,393,780 Common Shareholders' Equity...........................

3,793,339 3,392,864 Preferred and Preference Stock without mandatory redemption requirements.............................

469,025 471,020 Preferred and Preference Stock with mandatory redemption requirements (c)...........................

440,500 445,000 Long-term Debt (c).................................$4,051,836

$3,970,400 Capital Structure (percent):

Common Shareholders' Equity.........................

43.3%

41.0%

Preferred & Preference Stock without mandatory redemption requrements............................

5.4 5.7 Preferred and Preference Stock with mandatory redemption requirements (c)..........................

5.0 5.4 Long-term Debt (c)...................................

46.3%

47.9%

Book Value Per Common Share

$37.52

$34.96 Operating and Area Peak Demand (MW)...............................

13,464 13,149 Sales Data Area Generating Capacity at Peak (MW) (d)...............16,365 15,349 Total Energy Requirement (KWH) (000)...................68,020,197 66,578,540 Percent Energy Requirement:

Thermal.............

Sp 48.7%

55.5%

Alternative/Renewable (including hydro)................10.3 9.7 Purchased Power & Other Sources (e)...................

41.0%

34.8%

Kilowatt-Hour Sales (000)..............................

59,892,638 59,326,853 Average Annual KWH Sales Per Residential Customer....

5,879 5,685 Number of Customers................................

3,325,303 3,275,144 Number of Employees..................................

16,292 15,797 (a) Included in Operating Expenses.

(b) The years 1973 through 1981 have been restated to reflect the deduction of propertyrelated accumulated deferred income taxes from utility Plant.

46 (c) Excludes current portion.

1981 1980 1979 1978 1977 1976 1975 1974 1973

$4,054,356 $3,661,117 $2,563,974 $2,328,798 $2,064,914 $1,846,540 $1,647,134 $1,360,959

$1,075,949 3,563,201 3,288,983 2,178,978 2,004,197 1,734,192 1,539,400 1,380,528 1,108,249 843,530 2,558,206 2,010,227 1,532,903 1,204,749 1,189,597 903,447 824,826 541,890 344,990 197,865 38,683 100,292 72,803 68,792 59,506 46,623 70,618 46,496 232,552 162,287 118,566 78,421 60,238 47,610 26,773 16,163 10,190 340,977 282,656 205,082 182,658 161,078 144,368 126,185 112,959 97,728 489,912 317,536 346,219 251,683 251,979 226,798 176,781 160,344 146,110

$ 422,024

$ 256,586

$ 292,481

$ 202,226 $ 206,330 $ 185,047

$ 137,177

$ 124,656 $ 117,268 85,610 73,241 64,202 57,477 54,347 48,678 47,965 44,580 43,965

$4.93

$3.50

$4.56

$3.52

$3.80

$3.80

$2.86

$2.80

$2.67

$4.91

$3.48

$4.39

$3.38

$3.63

$3.61

$2.75

$2.68

$2.57

$3.10

$2.84

$2.60

$2.30

$2.06

$1.68

$1.68

$1.68

$1.56 61.5%

79.4%

55.7%

63.6%

50.5%

44.2%

58.7%

58.9%

58.4%

14.9%

10.4%

13.6%

10.7%

12.0%

12.4%

9.8%

9.4%

9.6%

2.72 2.09 2.90 2.53 2.78 2.83 2.63 2.87 2.85

$8,702,571

$7,706,933

$6,949,917 $6,030,045 $5,698,068

$4,993,330 $4,701,910 $4,451,810 $3,861,572 9,517,670 8,406,309 7,577,670 6,810,891 6,191,733 5,658,433 5,147,333 4,766,175 4,458,631

$2,015,212 $1,840,233

$1,676,148

$1,519,174

$1,383,009 $1,258,327

$1,149,311

$1,051,024

$ 958,210 21.2%

21.9%

22.1%

22.3%

22.3%

22.2%

22.3%

22.1%

21.5%

$ 730,027 $ 632,115 $ 540,791

$ 521,138 $ 455,387

$ 442,739 $ 395,707 $ 395,707 $ 362,374 999,764 805,325 638,046 595,701 458,096 427,424 350,505 350,505 316,638 1,238,317 1,092,137 1,054,296 931,217 862,956 769,425 671,548 616,562 569,938 2,968,108 2,529,577 2,233,133 2,048,056 1,776,439 1,639,588 1,417,760 1,362,774 1,248,950 476,308 482,652 489,822 503,650 518,172 537,753 537,753 487,753 437,753 399,500 399,500 324,500 197,000 197,000 75,000 75,000 75,000 75,000

$3,444,080 $2,945,824 $2,746,207 $2,477,474 $2,314,874 $2,151,861

$2,033,038 $1,953,679

$1,722,710 40.7%

39.8%

38.5%

39.2%

37.0%

37.2%

34.9%

35.1%

35.8%

6.5 7.6 8.5 9.6 10.8 12.2 13.2 12.6 12.6 5.5 6.3 5.6 3.8 4.1 1.7 1.9 1.9 2.2 47.3%

46.3%

47.4%

47.4%

48.1%

48.9%

50.0%

50.4%

49.4%

$33.74

$33.19

$34.22

$32.57

$32.30

$30.67

$29.64

$28.50

$28.46 13,738 12,841 12,662 12,159 11,564 11,292 10,369 10,279 10,535 15,592 15,504 15,071 14,966 14,278 14,071 13,941 13,750 13,500 69,179,641 65,459,278 66,216,910 63,877,116 63,344,706 59,427,973 56,279,231 55,105,988 57,730,121 67.6%

71.2%

82.0%

73.8%

87.4%

75.1%

76.2%

75.2%

84.8%

5.8 9.2 7.7 9.3 2.5 4.4 8.4 10.1 9.1 26.6%

19.6%

10.3%

16.9%

10.1%

20.5%

15.4%

14.7%

6.1%

62,451,319 59,915,187 59,517,861 57,027,035 57,726,273 53,685,378 51,327,508 51,089,981 54,092,934 5,879 5,939 6,010 5,883 5,630 5,650 5,596 5,541 5,885 3,232,687 3,163,968 3,082,382 2,986,545 2,900,856 2,814,403 2,749,680 2,691,691 2,626,492 14,569 14,157 12,917 12,845 12,671 12,510 12,377 12,970 13,391 (d) Includes 2,334, 2,080 and 2,323 MW available from others in 1983, 1982 and 1981, respectively.

(e) Includes non-Edison owned renewable/alternative sources.

47

Southern California Edison Company Directors and Officers Board of Directors William R. Gould, Chairman of the Board and Chief Executive Officer Howard P. Allen, President Roy A. Anderson, Chairman of the Board and Chief Executive Officer, Lockheed Corporation, Burbank, California N. Barker, Jr.,

Chairman of the Board and Chief Executive Officer, First Interstate Bank of California, and Vice Chairman of the Board, First Interstate Bancorp, Los Angeles, California

("Edward W. Carter, Chairman of the Board Emeritus, Carter Hawley Hale Stores, Inc., Los Angeles, California Warren Christopher, Senior Partner, Law Firm of O'Melveny & Myers, Los Angeles, California Walter B. Gerken, Chairman of the Board and Chief Executive Officer, Pacific Mutual Life Insurance Company, Newport Beach, California Joan C. Hanley, General Partner and Manager, Miramonte Vineyards, Rancho California, California J. K. Horton, Chairman of the Executive Committee and Consultant (Retired Chairman of the Board and Chief Executive Officer, Southern California Edison Company), Los Angeles, California Carl F. Huntsinger, President and Chief Executive Officer, Blue Goose Growers, Inc., Oai, California F. G. Larkin, Jr.,

Chairman of the Executive Committee, Security Pacific National Bank, Los Angeles, California T. M. McDaniel, Jr.,

Former President, Southern California Edison Company, San Marino, California Gerald H. Phipps, President, Gerald H. Phipps, Inc., General Contractors (Building Construction), Denver, Colorado Henry T. Segerstrom, Managing Partner, C. J. Segerstrom & Sons (Real Estate Development), Costa Mesa, California E. L. Shannon, Jr.,

Chairman of the Board and Chief Executive Officer, Santa Fe International Corporation (Oil Service, Engineering, Petroleum Exploration and Production), Alhambra, California H. Russell Smith, Chairman of the Executive Committee, Avery International (Manufacturer of Self-Adhesive Products), Pasadena, California (1) Mr. Carter, having reached retirement age, is not a nominee for reelection to the Board of Directors in 1984.

48

SoutloreCalifornia Edison Company Executive Officers William R. Gould, Chairman of the Board and Chief Executive Officer Howard P. Allen, President H. Frederick Christie, Executive Vice President and Chief Financial Officer David J. Fogarty, Executive Vice President (2)John E. Bryson, Senior Vice President P. L. Martin, Senior Vice President L. T. Papay, Senior Vice President A. Arenal, Vice President Kenneth P. Baskin, Vice President (Nuclear Engineering, Safety and Licensing)

G. J. Bjorklund, Vice President (Engineering and Construction)

Robert H. Bridenbecker, Vice President (Fuel Supply)

John R. Bury, Vice President and General Counsel (3)Richard K. Bushey, Vice President and Controller Robert Dietch, Vice President (Customer Service)

C. E. Hathaway, Vice President (Human Resources)

Joe T. Head, Jr.,

Vice President (Power Supply)

(4)A. L. Maxwell, Vice President and Comptroller Charles B. McCarthy, Jr.,

Vice President (Advanced Engineering)

Edward A. Myers, Jr.,

Vice President (System Development)

M. L. Noel, Vice President and Treasurer (2)Michael R. Peevey, Vice President (Revenue Requirements and Governmental Affairs)

Harold B. Ray, Vice President and Site Manager, San Onofre Nuclear Generating Station Robert E. Umbaugh, Vice President (Administration)

Honor Muller, Secretary (2) Messrs. Bryson and Peevey were elected to their respective positions effective February t, 1984.

(3) Mr. Bushey was elected Vice President and Controller effective January t, 1984.

(4) Mr Maxwell retired effective December 31, 1983.

49

Southern California Edison Company Distribution of Record Shareholders and Shares Shareholders Shares as of December 31, 1983 Preferred Common Preferred Common Total Shareholders 33,415 100.0 158,186 100.0 20,144,746 100.0 100,468,012 100.0 Class of Investor Males 6,135 18.3 36,335 23.0 980,996 4.9 7,746,299 7.7 Females 13,290 39.8 56,514 35.7 1,916,150 9.5 10,687,799 10.6 Joint Accounts 8,861 26.5 44,572 28.2 1,652,403 8.2 9,202,950 9.2 Fiduciaries 2,935 8.8 17,030 10.8 558,886 2.8 3,687,622 3.7 Religious, Charitable, Fraternal and Educational Institutions 203 0.6 540 0.3 99,871 0.5 595,538 0.6 Financial Institutions 825 2.5 1,134 0.7 11,942,505 59.3 66,080,137 65.8 Other 1,166 3.5 2,061 1.3 2,993,935 14.8 2,467,667 2.4 Amount of Holdings 1 to 99 shares 13,826 41.4 53,686 33.9 397,860 2.0 1,892,328 1.9 100 shares 7,465 22.3 32,737 20.7 746,500 3.7 3,273,700 3.3 101 to 499 shares 8,575 25.7 54,942 34.7 2,091,756 10.4 13,200,300 13.1 500 to 999 shares 1,929 5.8 11,325 7.2 1,155,234 5.7 6,822,280 6.8 1,000 or more shares 1,620 4.8 5,496 3.5 15,753,396 78.2 75,279,404 74.9 Geographical Location Service Territory 9,075 27.2 38,136 24.1 2,085,099 10.4 13,115,247 13.1 Remainder of California 11,036 33.0 46,699 29.5 3,178,264 15.8 25,361,680 25.2 United States (except California) and Possessions 13,242 39.6 72,817 46.0 14,873,686 73.8 61,820,962 61.5 Foreign Countries 62 0.2 534 0.4 7,697 170,123 0.2 1984 Annual Shareholders' Meeting:

Dividend Reinvestment and Statistical Supplement:

The annual meeting of shareholders of Stock Purchase Plan Agent:

A comprehensive financial and statistical Southern California Edison Company Southern California Edison Company supplement to this report is available in will be held at 10 a.m., Thursday, April Secretary's Department-Room 240 limited quantity. A copy may be requested 19, 1984, at the Company's Corporate Post Office Box 400 by writing to the Supervisor of Investor Headquarters, 2244 Walnut Grove Rosemead, California 91770 Relations, Southern California Edison Avenue, Rosemead, California 91770.

Telephone (818) 572-1852 or Company, P.O. Box 800, Rosemead, Telephone (818) 572-1212.

(818) 572-1995 California 91770.

For Investor Relations:

Registrar of Stock:

This Annual Report and the statements and Individual Shareholders contact:

Security Pacific National Bank statistics contained herein have been assembled Southern California Edison Company Los Angeles, California for general informative purposes and are Secretary's Department-Room 240 not intended to induce, or for use in connection Post Office Box 400 Stock Exchange Listings:

with, any sale or purchase of securities.

Rosemead, California 91770 Common Stock:

Under no circumstances is this report or any Telephone (818) 572-1997 New York Stock Exchange part of its contents to be considered a pro Pacific Stock Exchange spectus, or as an offer to sell, or the solicitation Institutional Investors contact:

London Stock Exchange of an offer to buy, any securities.

Supervisor, Investor Relations Telephone (818) 572-2515 Preferred and Preference Stocks:

Assistant Treasurer American Stock Exchange Telephone (818) 572-1090 Pacific Stock Exchange Stock Transfer Agent:

Ticker Symbol:

Southern California Edison Company SCE (Common Stock)

Secretary's Department-Room 240 Post Office Box 400 Media Listings:

Rosemead, California 91770 SCalEd Telephone (818) 572-1393 or (818) 572-1936 50

,.A to Pacific Northwest UTAH San CALIFORNIA NEVADA Franci o Big Creek J

Four Las Vegas Corners r(coal)

Hoover Solar One A Mohave (coal)

A ARIZONA Rosemea Wind Center Hydroelectric Los Angeles AA Fossil Palm Springs leSan Onofre N l Service territory Geothermal Geothermal Extra high voltage (EHV) transmission lines Wind Solar Biomass Southern California Edison Company System...

more primary resources than any other electric utility in the world.

Southern California Edison Company provides electric ser-subject to regulation by the California Public Utilities Cor vice in a 50,000 square-mile area of Central and Southern mission which has the authority, among other things, to California. This area includes some 800 cities and com-establish retail rates and to regulate security issuances, munities with a population of more than nine million people. accounting and depreciation. The Company's resale oper Edison's gross investment in utility plant totals nearly ations are subject to regulation by the Federal Energy Reg

$11.9 billion. Area generating capacity at peak during ulatory Commission as to rates on sales for resale, as well 1983 totaled 16,365 megawatts (MW), which included as to other matters, including accounting and depreciation.

14,031 MW of Company-owned facilities and 2,334 MW of The Company's planning and siting of new plant con capacity from other sources. Of the Company-owned facil-struction are subject to the jurisdiction of the California ities, 73% was comprised of oil-and gas-fired generating Energy Commission. Edison also is subject to various units. SCE's interest in coal-fired generating units ac-governmental licensing requirements, to Securities and counted for another 12%, and 7% was in hydroelectric Exchange Commission filing and disclosure requirements generation. The Company's interest in a nuclear generat-and to certain other federal, state and local laws and regu ing station accounted for the remaining 8%.

lations, including those related to nuclear energy and The Company, incorporated in 1909 under the laws of nuclear plant construction, environmental protection, fuel California, is a public utility and its retail operations are supplies and land use.

Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, California 91770 (818) 572-1212