ML13331B143

Forwards Cash Flow Statement & Annual Rept to Securities & Exchange Commission for Yr Ending 881231

ML13331B143
Person / Time
Site:	Palo Verde, San Onofre, 05000000
Issue date:	03/08/1989
From:	Gonzales J SOUTHERN CALIFORNIA EDISON CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NUDOCS 8903140589
Download: ML13331B143 (44)

Text

Southern California Edison Company P. 0. BOX 800 2244 WALNUT GROVE AVENUE ROSEMEAD, CALIFORNIA 91770 March 8, 1989 U. S. Nuclear Regulatory Commission Attention:

Document Control Desk Washington, D.C.

20555 Re:

Internal Cash Flow for San Onofre Units 1, 2 & 3 (Dockets 50-206, 50-361, 50-362) and Palo Verde Units 1,

2. & 3 (Dockets 50-528, 50-529 and 50-530)

Gentlemen:

The materials listed below are enclosed in accordance with Section 140.21 of CFP 140 for Southern California Edison Company, San Diego Gas & Electric Company, the City of Anaheim, and the City of Riverside for their ownership in San Onofre Nuclear Generating Units 1, 2, and 3 and for Southern California Edison Company's 15.8% share of Palo Verde Nuclear Generating Units 1, 2 and 3.

1.

Cash Flow Statement for the year ending December 31, 1988.

2. Annual Report to the Securities and Exchange Commission (Form 10-K) for the year ending December 31, 1988.

If there are any questions regarding the material, please contact me at 818-302-9831.

S kneely, JoAnne Gonzales Insurance Department JAG/mm Enclosure 890):3 1 40589~

89~0:308E PDR ADeOCK 05(00:206

cc:

J. B. Martin, Regional Administrator, NRC Region V F. R. Huey, NRC Senior Resident Inspector, San Onofre 1,2&3 Emmanuel Licitra, NRC Project Manager, Palo Verde 1, 2 & 3 C. Tramell, NRR Project Manager San Onofre 1 D. Hickman, NRR Project Manager, San Onofre 2 & 3 A. C. Llorens, SCE Nuclear Eng./Safety & Licensing Dept.

Charles R. Kocher, SCE Law Department Craig Hubble, San Diego Gas & Electric Thomas Vance, City of Anaheim Chuck Harris, City of Riverside Norm Cocanour, Arizona Public Service 5jag/cashflow

SOUTHERN CALIFORNIA EDISON COMPANY 1989 Internal Cash Flow Projection (Dollars in Thousands) 1988 1989 Actual Projected Net Income After Taxes

$731,000 Dividends Paid 578,000 Retained Earnings

$153,000 Adjustments:

Depreciation & Amortization 644,000 682,000 Deferred Taxes 109,000 119,000 Allowance for Funds Used During Construction (30,000)

(15,000)

Total Adjustments

$723,000

$786,000 Internal Cash Flow

$876,000 Average Quarterly Cash Flow

$219,000 Percentage Ownership in All Nuclear Units:

San Onofre Nuclear Generating Station Unit 1 Southern California Edison Company 80.00%

San Diego Gas & Electric Company 20.00%

San Onofre Nuclear Generating Station Units 2 & 3 Southern California Edison Company 75.05%

San Diego Gas & Electric Company 20.00%

City of Anaheim 3.16%

City of Riverside 1.79%

Palo Verde Nuclear Generating Station Units 1 & 2 15.80%

Maximum Total Contingent Liability:

San Onofre Nuclear Generating Station Unit 1

$10,000 San Onofre Nuclear Generating Station Unit 2 10,000 San Onofre Nuclear Generating Station Unit 3 10,000 Palo Verde Nuclear Generating Station Unit 1 1,580 Palo Verde Nuclear Generating Station Unit 2 1,580 Palo Verde Nuclear Generating Station Unit 3 1,580

$34,740

• Company policy prohibits disclosure of financial data which will enable unauthorized persons to forecast earnings or dividends, unless assured confidentiality. The Net Estimated Cash Flow for 1989 is expected to be comparable to the Actual Cash Flow for 1988.

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 198 Commission file number 1-2313 SOUTHERN CALIFORNIA EDISON COMPANY (Exact name of registrant as specified In Its charter)

California 95-1240335 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization)

Identification No.)

2244 Walnut Grove Avenue (818) 302-1212 Rosemead, California 91770 (Registrant's telephone number, (Address of principal executive offices)

(Zip Code)

Including area code)

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange Title of each class on which registered Capital Stock Cumulative Preferred American and Pacific 4.08% Series 4.24% Series 4.32% Series 4.78% Series 5.80% Series

$100 Cumulative Preferred American and Pacific 7.58% Series 8.54% Series 8.70% Series 8.96% SerIes First and Refunding Mortgage Bonds American Series R and Series S, Series Y through Series CC, Series FF through Series HH, Series JJ, Series ZZ, Series 85A, Series 861 and Series 88E Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes r No The aggregate market value of registrant's voting stock held by non-affiliates was approximately $489,449,167 on or about February 23, 1989 based upon prices reported in the Western Edition of The Wall Street Journal.

The market values of certain privately placed series of $100 Cumulative Preferred Stock, for which market prices are not available, were derived by dividing the annual dividend rate of each such series of stock by the average yield of all of the Company's Cumulative Preferred and $100 Cumulative Preferred Stock outstanding for which market prices were available. The market values of the various classes of voting stock so determined were as follows: CUMULATIVE PREFERRED STOCK $94,937,856; $100 CUMULATIVE PREFERRED STOCK

$394,511,311. As of February 24, 1989, there were 217,444,052 shares of Common Stock outstanding, all of which are held by SCEcorp, the registrant's parent holding company.

DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents listed below have been Incorporated by reference into the parts of this report so Indicated.

(1) Designated portions of the Annual Report to shareholders for the year ended Decem ber 31, 1988..........................................................................................................

Parts I, II and IV (2) Designated portions of the Joint Proxy Statement and Prospectus relating to regis trant's 1989 Annual Meeting of Shareholders...............................................................

Part III

TABLE OF CONTENTS Part I Item Page

1. Business 1

Regulation....................................................

1 Rate Matters...........................................

1 Fuel Supply.....................

6 Environmental Matters.................8.......

8 Formation of a Holding Company...................

10 Proposed Merger with San Diego Gas & Electric Company

..... 10

2.

Properties 10 Existing Generating Facilities 10 Construction Program and Capital Expenditures 12 Nuclear Power Matters 13 Nuclear Waste Policy Act 14 Potential Competition 14

3.

Legal Proceedings............................

15 Antitrust Matters...........................

15 Other Litigation................................................

16

4.

Submission of Matters to a Vote of Security Holders 16 Executive Officers of the Registrant 17 Part II

5.

Market for Registrant's Common Equity and Related Stockholder Matters................

19

6. Selected Financial Data.........................

19

7.

Management's Discussion and Analysis of Results of Operations and Financial Condition..............................

............... 19

8.

Financial Statements and Supplementary Data 19

9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............................................

19 Part III

10.

Directors and Executive Officers of the Registrant 19

11.

Executive Compensation

..... 19

12.

Security Ownership of Certain Beneficial Owners and Management...........................

19

13.

Certain Relationships and Related Transactions............................................................

19 Part IV

14.

Exhibits, Financial Statement Schedules, and Reports on Form 8-K......

20 Report of Independent Public Accountants on Supplemental Schedules

........... 21 Signatures.....................................................

33 Exhibit Index 35

PART I Item 1. Business Southern California Edison Company ("Edison") was incorporated in 1909 under California law and is a public utility primarily engaged in the business of supplying electric energy to a 50,000 square-mile area of central and southern California, excluding the City of Los Angeles and certain other cities. This area includes some 800 cities and communities and a population of more than ten million people. As of December 31, 1988, Edison had 16,660 employees. During 1988, 35.3% of Edison's total operating revenues were derived from commercial customers, 31.7% from residential customers, 19.5% from industrial customers, 8.7% from public authorities, 1.9% from resale cus tomers and 2.9% from agricultural and other customers. Edison comprises the major portion of the assets and revenues of SCEcorp, its parent holding company.

Regulation The retail operations of Edison are subject to regulation by the California Public Utilities Commission ("CPUC"), which has the authority to regulate, among other things, retail rates, issuances of securities and accounting and depreciation practices. Edison's resale operations are subject to regulation by the Federal Energy Regulatory Commission ("FERC") for resale rates as well as other matters, including transmission service pricing, accounting and depreciation practices and licensing of hydroelectric projects.

Edison is subject to the jurisdiction of the Nuclear Regulatory Commission ("NRC") with respect to its nuclear power plants. NRC regulations govern the granting of licenses for the construction and operation of nuclear power plants and subject such power plants to continuing review and regulation.

Edison's plant construction, planning and siting within California are subject to the jurisdiction of the California Energy Commission. Edison is subject to rules and regulations promulgated by the California Air Resources Board and local air pollution control districts with respect to the emission of pollutants into the atmosphere, and the regulatory requirements of the California State Water Resources Control Board and regional boards with respect to the discharge of pollutants into waters of the state. Edison is also subject to regulation by the Environmental Protection Agency

("EPA"), which administers certain federal statutes relating to environmental matters, and to certain other federal, state and local laws and regulations relating to environmental protection, land use and water rights.

The Department of Energy ("DOE") has regulatory authority over certain aspects of Edison's operations or business relating to energy conservation, solar energy development, power plant fuel use and disposal, coal conversion, public utility regulatory policy and natural gas pricing.

Rate Matters CPUC Retail Ratemaking The CPUC has established various ratemaking mechanisms to facilitate equitable changes in retail utility rates. The principal mechanisms are described as follows:

Annual Energy Rate ("AER"). A fixed rate designed to recover a portion of the estimated annual direct and indirect fuel cost applicable for inclusion in ECAC. This rate is set on a forecast basis and is not subject to balancing account treatment. The AER has been temporarily suspended.

Attrition Year Allowance. Base Rate adjustment in the years between General Rate Case test years to recover, without lengthy hearings, specific uncontrollable cost changes in the Base Rate revenue requirement. The Attrition Year Allowance is designed to preserve Edison's opportunity to earn its authorized rate of return in the years between General Rate Case decisions.

Balancing Account. Ratemaking mechanism which reflects differences between recorded reve nue and recorded costs over time. For a given period, recorded revenue and recorded costs are compared, and any difference is reflected in the balancing account. The amounts in the balancing 1

account, including an interest component, is periodically amortized through rate changes which return overcollections to customers or collect undercollections from customers. The costs recorded in a balancing account are subject to review by the CPUC and allowed for rate recovery to the extent they are found to be reasonable.

Base Rates. Rates determined in a General Rate Case which are designed to recover the revenue requirement, excluding costs recovered through balancing account procedures.

Coal Plant Incentive Procedure ("CPIP"). An Incentive Procedure to encourage efficient opera tion of Edison's coal plants, Mohave Generating Station ("Mohave Project") Units 1 and 2 and Four Corners Generating Station ("Four Corners Project") Units 4 and 5, by providing a set of perform ance standards for each coal plant, which are applied annually by use of a formula that converts recorded unit gross heat rate and a four-year recorded gross capacity factor to dollars of reward or penalty. The amount of reward or penalty is based upon: (1) the difference in cost between producing energy from coal-fueled generation and incremental-fueled generation, and (2) the devia tion in recorded unit performance from the performance standard. The CPIP has been terminated as of July 13, 1988.

Electric Revenue Adjustment Mechanism ("ERAM"). Balancing account mechanism which periodically adjusts revenue, which is not subject to other balancing account treatment, for changes primarily due to fluctuations in kilowatt-hour sales.

Energy Cost Adjustment Clause ("ECAC"). Balancing account mechanism which is designed to recover the reasonably incurred fuel and energy-related costs of providing electrical service. Certain incentive provisions are included in the ECAC which can affect the amount of fuel and energy-related costs actually recovered. Edison is required to make one ECAC filing per year for a January 1 revision date. A second filing for a July 1 revision date may be filed, depending on whether the level of ECAC rate change would exceed 5% of total annual revenue.

General Rate Case. Regulatory proceeding before the CPUC to establish Base Rates in accordance with the Rate Case Plan which critically reviews the operations and general costs (excluding energy costs and, in certain instances, major plant additions) of Edison to provide electrical service. The revenue requirement for items such as depreciation, taxes, cost of capital, operation, maintenance, and administrative and general expenses, are determined on a forecasted test year basis.

Interim Major Additions Adjustment Clause ("IMAAC"). Balancing account mechanism which reflects the revenue requirements associated with the costs of owning Palo Verde Nuclear Generat ing Station ('.'Palo Verde") Units 1 and 2 except for the revenue deferred pursuant to the Palo Verde Phase-in Plan. On January 1, 1988, this clause was terminated and recovery of the non-deferred revenue requirement pursuant to the Palo Verde Phase-in Plan for Palo Verde Units 1 and 2 was transferred to base rates.

Major Additions Adjustment Clause ("MAAC"). Balancing account mechanism which reflects the revenue requirement associated with the costs of owning, operating and maintaining major new facilities not included in General Rate Cases.

Nuclear Unit Incentive Procedure, commonly referred to as the Target Capacity Factor ("TCF").

An incentive ratemaking procedure for Edison's nuclear units which provides for a sharing of additional energy costs or savings between Edison and ratepayers when operation of San Onofre Nuclear Generating Station ("San Onofre") Units 2 and 3 and Palo Verde Units 1, 2 and 3 are outside a 55% to 80% capacity factor range. The capacity factor range for San Onofre Unit 1 is 55% to 75%.

Palo Verde Phase-In Plan. A 10-year rate phase-in plan, which provides for the deferral during the first four years of operations of $200,000,000 of investment-related revenue for each of the three Palo Verde units commencing on their commercial operation date. Revenue deferred for each unit under the plan for years 1 through 4 is $80,000,000, $60,000,000, $40,000,000 and $20,000,000, respectively. Such deferrals and related interest are to be recovered on a levelized basis during the final six years of the phase-in plan as applied to each unit.

2

Rate Case Plan. Regulatory plan designed by the CPUC to ensure that General Rate Cases are processed and a decision is issued twelve months after a formal application is filed. Under this plan, Edison can file a General Rate Case application once every three years.

Revenue Requirement. The forecast level of the cost of providing service to customers, including the cost of capital. The total revenue requirement is often separated into components which are covered by specific rate proceedings. The CPUC establishes a Base Rate revenue requirement in the General Rate Case and the ECAC and MAAC revenue requirements in the respective ECAC and MAAC proceedings.

General Rate Case On December 22, 1987, the CPUC authorized Edison a $48,500,000, or 0.9%, annual revenue reduction, effective January 1, 1988, in Edison's general rate case.

The reduction lowered Edison's authorized return on common equity from 13.9% to 12.75%

because of lower inflation and interest expenses. The decision authorized higher operating and maintenance expenses and capital additions. The CPUC indicated that the cost of capital authorized in the decision is for 1988 only and that Edison should address the issue of return on common equity again in its 1989 and 1990 annual attrition year proceedings.

The CPUC also approved a new rate structure to more closely reflect the cost of providing service to different classes of customers. Under the previous CPUC-approved rate structure, commercial and industrial customers paid more than the cost of providing service to them, while residential customers paid less. The CPUC also changed the demand component of the rate structure for many large commercial and industrial customers. This change caused dramatic variations in comparisons of 1987 and 1988 quarterly earnings but had little or no effect in comparisons of full-year 1987 and 1988 earnings. The distortion of quarterly earnings comparisons caused by the change in rate structure occurred only for comparisons of 1987 and 1988 quarterly earnings. It is expected that in future years third quarter earnings will continue to be higher than the other three quarters because the demand for energy in southern California is largest in the summer.

Several other 1987 CPUC decisions affecting Edison's rates also became effective January 1, 1988. These included, among others, recovery of settlement costs paid for termination of fuel contracts; increased funding for the eventual decommissioning of nuclear power plants; and energy cost adjustments. Taking these decisions together with the general rate case decision, Edison's overall rates decreased $32,700,000, or 0.6%, on an annual basis, as of January 1, 1988.

The December 22, 1987 CPUC decision adopted $97,000,000 and $121,500,000 increases in 1989 and 1990 revenues, respectively. These revenue requirement increases were subject to adjustments as part of the attrition year allowance to reflect changes in inflation and capital costs in the years between general rate cases.

On July 15, 1988, Edison filed its financial attrition application pursuant to order of the Executive Director of the CPUC. Edison proposed to update its capital structure and financings and to increase its rate of return on common equity from 12.75% authorized for the 1988 test year to 13.75%, to be effective for a twelve month period commencing January 1, 1989.

On October 31, 1988, proposed revenue requirement increases and associated rate changes for operational and financial attrition totaling $186,000,000 were submitted to the CPUC, to be effective commencing January 1, 1989.

On December 19, 1988, a final decision was rendered in Edison's cost of capital proceeding which authorized a 13.00% return on common equity for 1989. A resolution adopted by the CPUC on December 19, 1988, authorized an increase in Edison's Authorized Level of Base Rate Revenue for operational and financial attrition of $116,300,000 to be effective January 1, 1989.

Energy Cost Adjustment Clause On July 8, 1988, the CPUC issued a decision in Edison's 1987 ECAC application on the reasonableness of operations for the 1986 record period. The decision adopted among other things:

3

(1) Edison's operations as reasonable; (2) a stipulation between Edison and the Division of Ratepayers Advocates ("DRA") of the CPUC disallowing $799,000 due to a San Onofre Unit 1 outage; (3) a CPIP reward of $7,900,000; (4) an Economic Modifier to the Nuclear Unit Incentive Procedure to prevent penalty to Edison if a refueling outage is rescheduled to meet the system reliability needs of other San Onofre participants; and, (5) application of the efficiency deviation method to all oil and gas fired units, using 1984 and 1985 recorded oil and gas system heat rate as reference pursuant to an agreement reached by Edison and the DRA. The decision also terminated the CPIP, effective July 13, 1988, and ordered Edison: (1) to continue to try to attain concessions from Arizona Public Service Company ("APS") on a firm purchase contract relating to APS's Cholla-4 Coal Plant; and (2) to provide a complete report of its efforts in its next ECAC proceeding, including the cost/benefit of terminating or continuing the contract.

On February 11, 1988, Edison filed its annual ECAC Application for a June 1, 1988, revision date. Pursuant to an Administrative Law Judge's ("ALJ") ruling, the proceeding was bifurcated into a forecast phase and a reasonableness phase. In its Application, Edison requested a $628,000,000 increase in ECAC revenue above the then-present retail revenue. On March 28, 1988, Edison decreased its original request to reflect a forecast annual revenue increase of $484,000,000 primarily due to a decrease in forecast gas expense. The DRA issued its report on Edison's request which recommended an increase of $383,000,000.

On May 25, 1988, the CPUC issued a decision which authorized an interim ECAC revenue increase of $200,000,000 effective June 1, 1988. In addition, the CPUC suspended the AER pending a final decision in the forecast phase of this proceeding. The CPUC ruled that Edison's recommend ed rate design, based on reflecting the revenue increase in energy charges only, should not be considered in this proceeding.

Hearings on the forecast phase concluded on June 6, 1988. As a result of changes and agreements made during hearings, Edison's requested increase was revised to $456,000,000 and the DRA's forecasted increase was revised to $384,000,000. Due to material unforeseen events which occurred in the natural gas industry subsequent to the close of hearings that would signifi cantly increase Edison's energy expenses, Edison petitioned the CPUC to set aside submission and reopen hearings.

On September 14, 1988, the CPUC issued is final decision on the forecast phase of the 1988 ECAC Application. The decision denied Edison's petition to set aside submission and reopen hearings, and instead authorized a $465,000,000 revenue increase, and continued suspension of the AER until the end of the forecast period (May 31, 1989). The $465,000,000 revenue increase included an additional $88,000,000 to reflect the August 31, 1988 balance in the ECAC Balancing Account. This amount was offset, in part, by approximately $7,000,000 in other ratemaking adjustments.

On February 11, 1988, Edison filed its reasonableness of operations report for the 1987 record period. On December 5, 1988, the DRA issued its report on the reasonableness of operations. This report covered the period December 1, 1986 through November 30, 1987 for the reasonableness of payments to qualifying facilities ("QFs") under nonstandard contracts and the period December 1, 1984 through November 30, 1987 for all other ECAC expenses.

The DRA's report recommended a disallowance of $119,944,000 for payments made to certain QFs primarily based upon its allegations that Edison unreasonably signed 18 nonstandard contracts with QFs with purchased power prices that exceed avoided cost. Based upon its review of a nonstandard OF contract with the Kern River Cogeneration Company ("KRCC"), which is 50%

owned by Southern Sierra Energy Company, a third tier subsidiary of SCEcorp, the DRA filed a motion to reopen the SCEcorp holding company application and modify the holding company decision to alter Edison's ability to enter into nonstandard QF power purchase agreements with affiliates of SCEcorp and to force divestiture of SCEcorp affiliate ownership in QFs selling power to Edison. In addition, the DRA filed a motion to dismiss the application with respect to more than

$700,000,000 in payments made to QFs alleging that Edison did not provide a sufficient showing of the reasonableness of its OF contract administration.

4

0 0

On January 3, 1989 Edison responded to the DRA's motion to reopen the holding company decision stating, in part, that the DRA's requested relief would be unfair, beyond the CPUC's jurisdiction, and contrary to federal and state law and policy under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). In response to the DRA's motion to dismiss the application, Edison stated that it would supplement its testimony on contract administration of 201 contracts by May 1, 1989.

The DRA's December 5, 1988 report also recommended a disallowance of $3,000,000 for payments made pursuant to Edison's long-term power sales agreement with Pacific Power and Light Company ("PP&L"). In addition, the DRA recommended a disallowance of $1,557,000 for losses from the sale of fuel oil in April and May 1987. Moreover, the DRA recommended that the CPUC order an investigation into Edison's nuclear fuel enrichment costs incurred since 1983.

On January 19,1989 the ALJ issued a ruling on various motions filed by Edison and the DRA in the reasonableness phase of this proceeding. The rulings denied the DRA's motion to dismiss Edison's application for payments made to QFs due to the alleged inadequacy of Edison's initial showing. The ruling also adopted a procedural schedule consisting of two phases. The first phase will include the reasonableness review of the KRCC contract, PP&L contract, fuel oil sale losses, and other ratemaking issues. The second phase will include a review of other nonstandard QF contracts for the 1985, 1986, and 1987 record periods.

On January 27, 1989 the CPUC issued rulings on various motions and responses filed by Edison, the DRA, and the Cogenerators of Southern California ("CSC") regarding the reasonable ness phase of the proceeding. The decision found that the DRA's motion to modify the holding company decision was premature and therefore was denied without prejudice. However, the DRA will be permitted to submit testimony regarding alleged self-dealing between Edison and QF affiliates during the first phase of the reasonableness proceeding. In addition, the CPUC denied CSC's motion to limit discovery and to establish the scope of the proceeding. The CPUC's review will include consideration of all facets of Edison's negotiation, execution, and administration of its nonstandard contracts. The CPUC rejected CSC's and Edison's position that the reasonableness of nonstandard QF contracts should be determined by a price comparison to an approved standard offer.

Edison believes that adoption of the DRA's recommendation to modify the holding company decision is not necessary to protect the public interest and will work diligently to demonstrate that it has reasonably administered the contracts under review. CPUC proceedings are scheduled to take place later this year.

San Onofre Units 2 and 3 On May 18, 1987, Edison filed an application requesting base rate recovery of $447,500,000

($339,399,000 Edison share) of investment incurred at San Onofre Units 2 and 3 since commercial operation. On January 25, 1988, Edison and the DRA filed a joint stipulation regarding the reason ableness and ratemaking treatment of this investment. On December 9, 1988, the CPUC issued a decision adopting the stipulation and resolving all remaining ratemaking issues regarding San Onofre Units 2 and 3. The decision resulted in a revenue increase for Edison of $39,000,000, or less than 1%, effective January 1, 1989.

Mohave Order Instituting Investigation On July 1, 1986, Edison filed its respdnse to the CPUC's Order Instituting Investigation ("Oil")

regarding the outage resulting from the rupture of a high pressure steam line at the Mohave Project on June 9,1985. The Oil will review Edison's share of repair costs and replacement fuel and energy related costs associated with the outage. On July 28, 1986, Edison filed an addendum to the July 1, 1986 response asserting that the CPUC's adoption of the CPIP precludes any review of reasonable ness by the CPUC regarding replacement fuel and purchased power costs incurred during the outage.

5

Balsam Meadow and Devers-Valley-Serrano Projects Since January 1, 1988, Edison has been charging its retail customers 0.085 cents/kWh, subject to refund, to recover its investment in the Balsam Meadow Hydroelectric Project ("Balsam Meadow") and the Devers-Valley-Serrano Transmission Project, both of which began operation in 1987. This charge was authorized in Edison's 1988 General Rate Case and is designed to recover 75% of the investment-related cost, with collection of the remaining costs deferred until the CPUC has determined the investment was reasonably incurred. Edison filed applications on May 6, 1988 to commence this review process. Hearings on Balsam Meadow have been concluded, and the case is under submission. The ALJ's draft decision is expected to be issued in March 1989. There were no recommended findings of imprudent management or disallowances by the CPUC. As a result of Edison withdrawing.its request for an incremental rate of return on the investment in Balsam Meadow, and certain accounting adjustments, Edison's requested first year revenue requirement decreased from $49,700,000 to $44,001,000.

Hearings for the Devers-Valley-Serrano Transmission Project have also been concluded and the case is under submission. The ALJ's draft decision is expected to be issued in early 1989. There were no recommended findings of imprudent management, or disallowances by the CPUC. As a result of certain minor accounting adjustments, Edison's requested first year revenue requirement decreased slightly to $23,700,000.

FERC Resale Ratemaking Edison sells electricity to six southern California cities (Anaheim, Azusa, Banning, Colton, Riverside and Vernon), the Southern California Water Company and APS under rates subject to FERC jurisdiction. Rate increases made effective by Edison in 1982 and 1984 for all resale customers are under review by FERC. A rate decrease was made effective June 1, 1987 for all resale customers except Vernon. Increased rates filed for Vernon became effective on June 5, 1988 and are under review by FERC. Total wholesale sales accounted for approximately 1.9% of total operating revenues in 1988.

In accordance with FERC procedures, resale rates are subject to refund with interest if subsequently disallowed. Edison believes that refunds from pending rate proceedings, if any, would not have a material effect on the results of operations.

Fuel Supply Fuel and purchased power costs amounted to approximately $2.2 billion in 1988, 18% higher than in 1987. Sources of energy and unit costs of fuel for 1984 through 1988 were as follows:

Average Cost Per Million Sources of Energy BTU's(1)

Year ended December 31, Year ended December 31, 1984 1985 1986 1987 1988 1984 1985 1986 1987 1988 Oil.................................................

1%

2%

1%

1%

4%

$6.52

$6.54

$7.09

$3.25

$2.78 Natural Gas.................

29 37 25 36 23 4.78 4.11 2.58 2.55 3.25 Coal...........................................

14 8

14 14 14 0.92 1.06 1.02 1.04 1.06 Nuclear(2) 10 11 16 20 21 1.30 1.06 1.08 1.15 1.02 All Fuels.....................

54 58 56 71 62 3.48 3.29 2.01 2.03 1.99 Renewable/alternative Purchases (including hydro)(3) 9 10 15 15 22 Purchased and interchanged a

power(3)....................................

37 32 29 14 16 100%

100%

100%

10018 100%

(1) British Thermal Unit ("BTU") is the standard unit of measure for the heat content of fuels. One BTU is the amount of heat required to raise the temperature of one. pound of water, at 39.1 degrees Fahrenheit, by one degree Fahrenheit.

6

(2) The average nuclear fuel costs for 1984 and 1985 are based on the operation of San Onofre Units 1, 2 and 3. For 1986,1987, and 1988 Palo Verde Units 1 and 2, and for 1988 Palo Verde Unit 3, have also been included.

(3) There are no fuel costs associated with Edison's renewable/alternative generation including purchases from independent non-regulated power producers.

Average fuel costs, expressed in cents per kilowatt-hour, for the year ended December 31, 1988 were: oil 2.824, natural gas 3.340, coal 1.134, and nuclear 1.070.

Natural Gas and Fuel Oil Supply A number of Edison's major steam electric generating units are designed to burn oil or natural gas as primary boiler fuels. Although natural gas is expected to be Edison's principal fuel during the next several years, the extent of Edison's use of natural gas as boiler fuel is dependent upon the amount of gas available from Edison's gas suppliers as well as upon applicable federal and state laws and regulations. To the extent Edison's use of natural gas is restricted, it will be forced to rely more heavily on fuel oil.

Air pollution control laws and regulations applicable to most of Edison's oil-and gas-fired steam electric generating plants have required that fuel oil utilized by Edison not exceed a sulfur level of 0.25%. As of December 31, 1988, Edison had in inventory approximately 6.5 million barrels of fuel oil. To the extent oil utilization exceeds current forecasts, additional supplies are expected to be available from purchases made on the spot market and under an option agreement.

Nuclear Fuel Supply Edison has contractual arrangements covering 100% of the projected nuclear fuel cycle require ments for San Onofre through the years indicated below:

Units Unit 1 2 & 3 Uranium concentrates()

1995 1995 Conversion 1995 1995 Enrichment 2013 2013 Fabrication 2001 1990 Spent fuel storage(2) 1995 1995 (1) Assumes (a) the San Onofre Participants meet their supply obligations in a timely manner and (b) Edison supplies its generation entitlement share of Palo Verde uranium requirements from Edison's existing contractual commitments. If, as a result of litigation pending before the U.S.

Tenth Circuit Court, the DOE is restricted from enriching foreign uranium, Edison would be unable to utilize uranium under contract with foreign suppliers and would be required to purchase additional uranium from domestic sources which would be in short supply and at higher prices.

(2) Assumes full utilization of existing on-site storage capacity and normal operation of these units, including interpool transfers and no full core reserve. If additional storage or permanent disposal is unavailable when storage limits are reached, other arrangements will be required, the availa bility or cost of which Edison cannot predict at this time. The Nuclear Waste Policy Act of 1982 requires that DOE provide for the disposal of utility spent nuclear fuel beginning in 1998.

However, DOE has stated that it is unlikely that DOE will be able to start accepting spent nuclear fuel significantly before 2003.

Participants in Palo Verde have purchased uranium concentrates sufficient to meet projected requirements through 1989. Independent of arrangements made by other participants, Edison will furnish its share of uranium concentrates requirements through at least 1995 from existing con tracts. A contract to provide conversion services covers requirements through 1989. Enrichment and fabrication contracts will meet Palo Verde requirements through 2014 and 1994 respectively.

7

Palo Verde on-site spent fuel storage capacity will accommodate needs through 1996 for Unit 1, 1997 for Unit 2 and 1998 for Unit 3 assuming normal operation and no full core reserve.

Environmental Matters Legislative and regulatory activities in the areas of air pollution, water pollution, waste manage ment, hazardous chemical use, noise abatement, land use, aesthetics and nuclear control continue to result in the imposition of numerous restrictions on the operation by Edison of its existing facilities and on the timing, cost, location, design, construction and operation by Edison of new facilities required to meet its future load requirements. These activities substantially affect future planning and will continue to require modifications of Edison's existing facilities and operating procedures.

They also increase the risk of forced abandonment of construction projects with a resultant loss of design, engineering and construction costs and the payment of cancellation charges which in the aggregate could be substantial.

The Clean Air Act provides the statutory framework to implement a program for achieving national ambient air quality standards and provides for maintenance of air quality in areas exceeding such standards. The South Coast Air Basin failed to achieve air quality standards mandated under the Clean Air Act by the end of 1987. As a result, the South Coast Air Quality Management District is considering new Oxides of Nitrogen controls on Edison boilers and gas turbines. The proposed rules could cost Edison several hundred million dollars. Edison may also incur additional expenses in reducing or eliminating emissions at existing facilities outside the South Coast Air Basin or in constructing any new facilities.

Regulations under the Clean Water Act require the obtaining of permits for the discharge of certain pollutants into the waters of the United States. Under this act the EPA issues effluent limitation guidelines, pretreatment standards and new source performance standards for the control of certain pollutants. Individual states may impose still more stringent limitations. In order to comply with guidelines and standards applicable to steam electric power plants, Edison is incurring addition al expenses and capital expenditures. Edison presently has discharge permits for all applicable facilities. Additional regulations will be issued but Edison is unable to predict the extent to which such additional regulations will affect its operations and capital expenditure requirements. Recent changes in legislation (Toxic Pits Cleanup Act of 1984) and rulemaking (Discharge of Wastes to Land) have changed how utilities must operate their surface impoundments. Surface impoundments which contain hazardous waste have been closed or upgraded using double lined systems. Exemp tions from closure requirements have been requested for four surface impoundments. Action is pending, but if the requests are denied, closure could cost nearly $5,000,000.

Beginning in the late 1800s and continuing until natural gas became widely available, gas was manufactured from coal and oil. The EPA and the California Department of Health Services may determine that the chemical constituents of the gas plant by-products constitute hazardous sub stances or hazardous wastes and require removal or other remedial action. Edison has identified nineteen sites of former gas plants for which it may have cleanup responsibility due to either Edison's or a predecessor company's ownership or operation of the sites. Edison is on an ongoing basis studying its potential liability for the cleanup of these sites. In its 1988 General Rate Case, Edison sought and received approval from the CPUC of a procedure to track costs incurred in the investigation and remediation of these sites on a case by case basis for eventual rate recovery. One such application was filed with the CPUC in February 1988 for the manufactured gas plant site formerly operated by an Edison predecessor company in Venice, California. This application was approved in August 1988. A second application for an underground storage tank site at Edison's former Compton Service Center was filed in June 1988. In October 1988 Edison and the CPUC Staff agreed to terms and conditions regarding the Compton application and Edison was given interim permission to record the costs in a memorandum account. In November of 1988 Edison filed an application seeking similar provisions to record costs associated with clean up of hazardous water at the Visalia Pole Yard and payment of Edison's share of the first phase of cleanup of the Operating Industries, Inc. landfill site located in Monterey Park, California. Further applications are planned.

8

The Safe Drinking Water and Toxic Enforcement Act prohibits the exposure to individuals of chemicals known to the State of California to cause cancer or reproductive harm and the discharge of such listed chemicals into potential sources of drinking water. Additional chemicals are continu ously being put on the state's list, requiring constant monitoring by Edison.

The State of California has adopted a policy discouraging the use of fresh water for plant cooling purposes at inland locations. Such a policy, when taken in conjunction with existing federal and state water quality regulations and coastal zone land use restrictions, could substantially increase the difficulty of siting new generating plants anywhere in California.

The Resource Conservation and Recovery Act ("RCRA") provides the statutory authority for the EPA to implement a regulatory program for the safe treatment, recycling, storage and disposal of solid and hazardous wastes. Thus far, the EPA's regulations have had only a minimal economic impact on environmental expenditures. However, a significant report is still before EPA and Con gress regarding the disposition of high volume coal wastes. As a result of the study performed by EPA over the past few years, EPA will recommend to Congress that high volume coal combustion wastes (fly ash/bottom ash) not be regulated as hazardous under RCRA. With or without congres sional approval, Edison will incur additional expenses to either completely change its disposal practices or to modify existing disposal facilities and monitoring systems.

Individual states may implement their own EPA-approved hazardous waste programs in place of the federal scheme and may impose more stringent controls. The State of California has obtained interim EPA authorization to administer its own program, and has passed legislation which estab lishes design criteria and monitoring requirements for underground tanks. The regulations imple menting the law apply to underground tanks containing hazardous substances, which include motor fuels, solvents and transformer oils. To comply with this law, all of Edison's underground tanks required leak detection monitoring systems or were replaced with tanks that have secondary containment. Edison has over 300 existing tanks which were affected. Edison's underground storage tank compliance program was completed by the end of 1988. Sixty percent of the tanks were replaced; 30% of the tanks were closed (removed or abandoned in-place); and new external leak detection monitoring programs were implemented at the remaining tanks. In excess of

$11,200,000 was spent on this compliance effort. Edison currently has 219 underground tanks which contain hazardous substances. To date, 103 tanks have been permanently closed in place or removed.

The Toxic Substance Control Act and accompanying regulations govern the manufacturing, processing, distribution in commerce, use and disposal of polychlorinated biphenyls ("PCBs"), a toxic substance used in certain electrical equipment. Regulations and policies governing the use and disposal of PCBs are currently the subject of administrative proceedings. Regulations to date have had a substantial impact on environmental expenditures.

The effect of Edison's use of low-sulfur fuel oil required by air quality regulation is discussed in "Natural Gas and Fuel Oil Supply" under "Fuel Supply".

Edison's capitalized expenditures for environmental protection for the years 1970 through 1988 and its currently estimated capital expenditures for such purpose for the years 1989 through 1993 are as follows:

(in Thousands)

Air Water Solid Additional Pollution Pollution Waste Noise Plant Years Total Control Control Disposal Abatement Aesthetics Capacity Miscellaneous 1969-1988........

$2,689,123

$356,363

$183,418

$203,287

$8,106

$1,676,933

$3,746

$257,270 1989..................

179,498 12,895 1,528 162 4,192 148,488 12,233 1990..................

174,389 18,416 172 2,968 137,314 15,519 1991..................

156,531 3,042 178 804 138,966 13,541 1992..................

149,426 186 367 141,400 7,473 1993..................

157,454 198 251 149,501 7,504 These estimates include budgeted and forecast plant expenditures responsive to currently effective legislation. Projected capital expenditures for environmental protection are subject to 9

continuous review and periodic revisions because of escalation in engineering and construction costs, additions and deletions of planned facilities, changes in technology, evolving environmental regulatory requirements and other factors beyond Edison's control. Edison believes that costs incurred for these environmental purposes will be recognized by the CPUC and the FERC as reasonable and necessary costs of service for rate purposes.

Formation of a Holding Company Effective July 1, 1988, pursuant to an Agreement of Merger, Edison became a subsidiary of a new holding company named SCEcorp. Each share of Edison Common Stock was converted into one share of SCEcorp Common Stock and each share of Edison Original Preferred Stock was converted into 2.1 shares of SCEcorp Common Stock. The other Edison Preferred Stocks and debt securities were not converted or altered and remained as securities of Edison. SCEcorp now owns all of the issued and outstanding shares of Common Stock of Edison.

SCEcorp also owns all of the outstanding stock of The Mission Group, which in turn owns all of the outstanding stock of Mission Energy Company, Mission First Financial, Mission Land Company and Mission Power Engineering Company (collectively, the "Mission Companies"). The Mission Companies are engaged in various non-utility businesses. Prior to the adoption of the holding company structure, the Mission Companies were indirect subsidiaries of Edison. On July 1, 1988, Edison's investment in the Mission Companies and the related earnings were transferred to SCEcorp. The impact on Edison's financial position at that date was a reduction of assets and equity in the amount of $371,700,000. The consolidated financial statements have been restated to reflect the financial position and results of operations of Edison and its utility subsidiaries as presently structured.

Proposed Merger with San Diego Gas & Electric Company On November 30, 1988, SCEcorp, Edison and San Diego Gas & Electric Company ("SDG&E")

entered into an Agreement and Plan of Reorganization providing for the merger of SDG&E into Edison. Under the agreement, SCEcorp will exchange 1.3 shares of its newly issued Common Stock for each outstanding SDG&E common share. Outstanding SDG&E Preferred and Preference Stock will be exchanged for Preferred Stock and Preference Stock of SCEcorp with similar provisions, except that the dividends on each series are proposed to be increased by between 2.53% and 20.0%. The merger will be accounted for as a pooling-of-interests. Consummation of the transaction is subject to requisite shareholder and regulatory approvals.

SDG&E is an operating public utility principally engaged in the generation, purchase, transmis sion, distribution and sale of electric energy and the purchase, distribution and sale of natural gas.

SDG&E distributes electric energy to approximately 990,000 customers in San Diego County and a portion of Orange County, California and natural gas to approximately 620,000 customers in San Diego County, California. As of December 31, 1988, SDG&E reported consolidated total assets of

$3.53 billion, long-term debt of $1.18 billion, preferred stock of $150,000,000 and common equity of

$1.23 billion. For the year ended December 31, 1988, SDG&E reported consolidated total operating revenue of $2.08 billion and net income of $189,000,000. As of December 31, 1988, SDG&E reported 3,110 net megawatts of electric power available to it during the summer, of which 1,611 net megawatts represented oil and gas generating plants, 650 net megawatts represented purchased power, 517 net megawatts represented nuclear generating plants and 332 net megawatts represented combustion turbine generating plants.

Item 2. Properties Existing Generating Facilities Edison owns and operates 12 oil-and gas-fueled electric generating plants, one diesel-fueled generating plant, 38 hydroelectric plants and an undivided 80% interest (349 megawatts ("MW") net) in Unit 1 and an undivided 75.05% interest (1,614 MW net) in Units 2 and 3 at San Onofre. These plants are located in central and southern California. Palo Verde (15.8% Edison-owned) is located 10

near Phoenix, Arizona. Palo Verde Units 1, 2 and 3 started commercial operation on February 1, 1986, September 19, 1986, and January 20, 1988, respectively. Edison owns two units at a small oil and gas-fueled electric generating plant in Arizona and a 48% undivided interest (753 MW) in Units 4 and 5 at the Four Corners Project, a coal-fueled steam electric generating plant in New Mexico, all of which are operated by other utilities. Edison operates and owns a 56% undivided interest (885 MW) in the Mohave Project, two coal-fueled steam electric generating units in Clark County, Nevada.

Edison receives an entitlement of 277 MW from the U.S. Department of Energy's Hoover Dam Hydroelectric Project. At year-end 1988, the existing Edison-owned generating capacity (summer effective rating) was comprised of approximately 62% gas and oil, 18% nuclear fuel, 12% coal and 8% renewable/alternative resources (including hydroelectric).

San Onofre, the Four Corners Project, certain of Edison's substations and certain portions of its transmission, distribution and communication systems are located on lands of the United States or others under (with minor exceptions) licenses, permits, easements or leases or on public streets or highways pursuant to franchises. Certain of such documents obligate Edison, under specified circumstances and at its expense, to relocate transmission, distribution and communication facilities located on lands owned or controlled by federal, state or local governments.

With certain exceptions, major and certain minor hydroelectric projects, with related reservoirs, currently having an effective operating capacity of 1,154 MW and located in whole or in part on lands of the United States, are owned and operated under governmental licenses which expire at various times between 1989 and 2009. Such licenses impose numerous restrictions and obligations on Edison, including the right of the United States to acquire the project upon payment of specified compensation. When existing licenses expire, FERC has the authority to issue new licenses to third parties, but only if their license application is superior to Edison's and then only upon payment of specified compensation to Edison. Any new licenses issued to Edison are expected to be issued upon terms and conditions less favorable than those of the expired licenses. Applications of Edison for the relicensing of certain of the hydroelectric projects referred to above with an aggregate effective operating capacity of 61 MW are pending. Annual licenses issued for all Edison projects, whose licenses have expired and are undergoing relicensing, will be renewed until the new licenses have been issued.

The record peak area demand experienced on Edison's system through December 31, 1988 is 15,987 MW recorded on September 6, 1988. At the time of this record peak, the total area system operating capacity available to Edison was approximately 18,893 MW.

Substantially all of the properties of Edison are subject to the lien of a trust indenture securing First and Refunding Mortgage Bonds, of which approximately $3.8 billion principal amount was outstanding at December 31, 1988. Such lien and Edison's title to its properties are subject to the terms of franchises, licenses, easements, leases, permits, contracts and other instruments under which properties are held or operated, certain statutes and governmental regulations, liens for taxes and assessments, the lien of another trust indenture to the extent referred to below, and liens of the trustees under such indentures. In addition, such liens and Edison's title to its properties are subject to certain other liens, prior rights and other encumbrances, none of which, with minor or unsubstan tial exceptions, affects Edison's right to use such properties in its business, unless the matters with respect to Edison's interest in the Four Corners Project and the related easement and lease referred to below may be so considered.

The properties acquired by Edison pursuant to the merger in 1963 with California Electric Power Company, together with all substitutions, replacements, additions, alterations, improvements and enlargements to, of, or upon such properties are, with certain exceptions, also subject to the prior lien of another trust indenture securing $20,000,000 principal amount of First Mortgage Bonds originally issued by that company and outstanding on December 31, 1988.

Edison's rights in the Four Corners Project, which is located on land of The Navajo Tribe of Indians under an easement from the United States and a lease from The Navajo Tribe, may be subject to possible defects. These defects include possible conflicting grants or encumbrances not ascertainable because of the absence of or inadequacies in the applicable recording law and the 11

record systems of the Bureau of Indian Affairs and The Navajo Tribe, the possible inability of Edison to resort to legal process to enforce its rights against The Navajo Tribe without Congressional consent, possible impairment or termination under certain circumstances of the easement and lease by The Navajo Tribe, Congress or the Secretary of the Interior and the possible invalidity of the lien of Edison's trust indenture against Edison's interest in the easement and lease and the improve ments thereon. Edison cannot predict what effect, if any, such possible defects may have on its interest in the Four Corners Project.

Construction Program and Capital Expenditures Edison presently anticipates that it will add approximately 4,700 MW of additional capacity resources to serve its projected service area needs through 1998. The capacity additions will consist of the following resources: 1,400 MW of energy management, 450 MW of return to service of existing Edison oil and gas units, 550 MW of spot purchases, 750 MW of firm purchases, 1,250 MW of purchases from QFs, and 300 MW of additional resources. The 300 MW of additional resources will be chosen on a least cost basis from the following options: utility/nonutility purchases, return to service or repower of existing Edison oil and gas units, new resources, and energy management. In addition, the resale customers are expected to add 470 MW of new resources over the 1989-1998 timeframe.

Cash required by Edison for its construction expenditures totaled $1,156,387,000 in 1986,

$1,021,177,000 in 1987 and $817,025,000 in 1988. Construction expenditures for the 1989-1993 period are estimated (as of December 15, 1988, the date of Edison's latest approved budget) as follows:

(In Millions) 1989 1990 1991 1992 1993 Total Electric generating plant...............................................................................

$191

$147

$131

$137

$137

$ 743 Electric transmission lines and substations........

125 92 133 178 90 618 Electric distribution lines and substations 437 420 404 406 417 2,084 Other expenditures 64 63 65 64 67 323 Total...........................................................................................................

$817

$722

$733

$785

$711

$3,768 Less: allowance for funds used during construction 15 18 20 25 17 95 Cash required for construction expenditures

$802

$704

$713

$760

$694

$3,673 Edison's construction program and related expenditures are continuously reviewed and periodi cally revised because of changes in estimated system load growth, rates of inflation, receipt of adequate and timely rate relief, the availability and timing of environmental, siting and other regulatory approvals, the scope of modifications required by regulatory agencies, the availability and costs of external sources of capital, the development of new technology and other factors beyond Edison's control.

As a result of the completion of San Onofre Units 2 and 3 and Palo Verde Units 1, 2 and 3, construction work in progress has been significantly reduced. The reduction in construction work in progress caused allowance for funds used during construction ("AFUDC"), which does not repre sent current cash income of Edison, to decline to 4.4% of earnings for the year 1988.

In addition to the funds required for construction expenditures for the next five years as discussed above, $955,000,000 is required to meet long-term debt maturities, sinking fund require ments and preferred stock redemption requirements. A majority of these capital needs is expected to be provided from internally generated sources.

Edison's estimates of funds available from operations for the five years through 1993 assume among other things the receipt of adequate and timely rate relief and the realization of its assump tions regarding cost increases, including the cost of capital. Edison's estimates and underlying assumptions are subject to continuous review and periodic revision.

12

The timing, type and amount of all additional long-term financing are also influenced by market conditions, rate relief and other factors, including limitations imposed by Edison's Articles of Incorporation and Trust Indenture.

Nuclear Power Matters Although higher energy costs will be incurred for replacement generation during any periods that the San Onofre and Palo Verde Units are not in operation, substantially all such costs will be included in future ECAC filings. Edison cannot predict what other effects, if any, legislative or regulatory actions may have upon it or upon the future operation of the San Onofre or Palo Verde Units or the extent of any additional costs it may incur as a result thereof, except for those that follow.

San Onofre Units 1, 2 and 3 Station Blackout ("SBO") is a total loss of offsite and onsite alternating current power and is not currently required to be considered in the design of nuclear power plants. The NRC Commissioners have approved a final rule on SBO which became effective on July 21, 1988. The final rule modifies NRC required nuclear plant design criteria to include SBO and requires Edison to assess the reliability of the offsite and onsite electrical power sources and conduct an analysis of the ability of San Onofre to cope with an SBO event. The Nuclear Management and Resources Council

("NUMARC") has committed to five initiatives as part of a reasonable resolution to SBO rulemaking to address SBO. Edison cannot predict at this time the extent or cost of any modifications which may be required as a result of the final SBO rule and NUMARC's initiatives.

San Onofre Units 2 and 3 In order to be in full compliance with the NRC Anticipated Transients Without Scram ("ATWS")

rule, Edison committed by letter dated October 15, 1985, to install a Diverse Scram System ("DSS")

with an inherently Diverse Turbine Trip ("DTT") in both San Onofre Units 2 and 3. The cost to install the DSS was estimated to be $1,000,000 for both Units 2 and 3, based upon the DSS conceptual design submitted to the NRC on June 6, 1986. By letter dated August 4, 1986, the NRC (1) provided their preliminary conclusion that even with installation of a DSS, San Onofre Units 2 and 3 do not appear to have sufficient diversity to satisfy the ATWS rule requirements, (2) provided, for the first time, the specific criteria used to evaluate compliance with the rule, and (3) requested more detailed information addressing the specific criteria which they need to reach a final conclusion. Accordingly, Edison submitted the requested detailed information to the NRC by letter dated December 24, 1986.

The NRC has completed their review of this information, and by letter dated January 11, 1988 informed Edison that either hardware changes to the auxiliary feedwater ("AFW") actuation system must be made or an exemption from the ATWS rule must be requested. Edison submitted a request for an exemption from the AFW actuation system part of the rule by letter dated December 29, 1988.

Completion of the NRC's evaluation of Edison's commitment to install a DSS system for compliance with the remainder of the ATWS rule requirements is not expected until the end of the first quarter of 1989.

Nuclear Facility Decommissioning Edison's share of costs to decommission nuclear facilities upon their retirement from service are estimated to be $179,556,000 for San Onofre Unit 1; $194,466,000 for San Onofre Unit 2;

$268,183,000 for San Onofre Unit 3; $36,122,000 for Palo Verde Unit 1; $33,849,000 for Palo Verde Unit 2; and $36,761,000 for Palo Verde Unit 3. These costs are all in 1988 dollars.

On June 26, 1987, Edison filed testimony with the CPUC for authorization to collect

$106,484,000 annually starting in 1988, for its share of decommissioning costs for the three San Onofre and three Palo Verde Units. On November 13, 1987, the CPUC authorized Edison to collect

$100,430,000 annually effective on January 1, 1988 and an additional $6,054,000 annually effective on the commercial operation date of Palo Verde Unit 3, which was January 20, 1988.

13

Nuclear Insurance Edison operates its nuclear units in accordance with prudent utility practices and in conformity with NRC regulations. Edison generally carries the maximum insurance coverage reasonably availa ble to protect against damage to its nuclear units and replacement energy cost in the unlikely event of an accident at any nuclear unit. A description of this insurance is included in Note 10 to the Consolidated Financial Statements of Edison incorporated herein. Although Edison believes that an accident at its nuclear units is extremely unlikely, in the event of an accident, regardless of fault, Edison's insurance coverage might be inadequate to cover the losses to Edison. In addition, such an accident could result in action by the NRC to suspend operation of the damaged unit. Furthermore, the NRC could suspend operation at Edison's undamaged nuclear units and the CPUC and FERC could deny rate recovery of related costs. Such an accident, therefore, could materially and adversely affect the operations and earnings of Edison.

Nuclear Waste Policy Act Pursuant to the Nuclear Waste Policy Act of 1982, Edison, acting as agent for the San Onofre participants, has entered into a contract with the DOE for disposal of spent nuclear fuel for San Onofre Units 1, 2 and 3. Under the terms of the contract, Edison is required to pay a quarterly fee of one mill per kilowatt hour to the DOE for net nuclear power generated and sold on and after April 7, 1983. For generation prior to April 7, 1983, the contract requires payment of a one-time fee equivalent to one mill per kilowatt hour, plus accrued interest. This one-time fee has been recorded as a deferred asset pending future rate recovery and, including accrued interest, approximated

$21,850,000 on December 31, 1988. The obligation for this one-time fee is being discharged by equal payments over 40 quarters. Such payments commenced during 1985. Expenses associated with disposal of spent nuclear fuel are recovered through the ECAC procedure.

Potential Competition Under various acts of Congress, federal power projects have been constructed in California and neighboring states. Municipally-owned utilities, cooperative utilities and other public bodies have certain preferences over investor-owned utilities in the purchase of electric power provided by federally funded power projects and, in addition, have certain preferences over investor-owned utilities in connection with the acquisition of licenses to build hydroelectric power plants. Any energy which is or may be generated at these projects and transmitted for the account of such other utilities and public bodies over present or future government or utility-owned lines into the territory or markets served by Edison would result in a loss of sales by Edison.

Under the laws of California, utility districts can be formed and may include incorporated as well as unincorporated territory. Such districts, as well as municipalities, have the right to construct, purchase or condemn and operate electric facilities. In addition, when a city owning an electric system annexes adjacent unincorporated territory which Edison has previously served, Edison may experience a loss of customers.

Edison's construction permits for San Onofre Units 2 and 3 contain certain conditions which require Edison (i) to permit privately-or publicly-owned utilities, including Edison's resale customers, within or adjacent to Edison's service area, on timely notice, to participate on mutually agreeable terms in future nuclear units initiated by Edison, and (ii) to interconnect and coordinate reserves with, furnish emergency service to, sell bulk power to and purchase bulk power from, and provide certain transmission services for such utilities. Edison has also entered into agreements with certain of its resale customers which contemplate their possible participation in jointly-owned generating projects initiated by Edison, and the integration of power sources acquired by each such customer, including the dispatching, reserve sharing, partial power supply requirements and transmission service required in connection with such integrated operations. Pursuant to these agreements, two resale customers exercised an option to participate in Edison's ownership entitlement in San Onofre Units 2 and 3. Effective November 1, 1977, Edison sold an undivided 3.45% interest in San Onofre Units 2 and 3 to these two resale customers for approximately $90,000,000. Effective September 1, 14

1981, a further 1.5% interest in Units 2 and 3 was sold to one of these resale customers for approximately $50,000,000. The foregoing conditions and agreements involve the potential addition al loss of sales of power. Edison is unable to determine what effect such potential additional losses will have on its business and operations.

PURPA has fostered the entry of non-utility companies into the electric generation business.

Under PURPA, non-utility power producers are allowed to construct QFs for the production of electricity from certain alternative or renewable energy resources, and utilities are required to purchase the electrical output of these QFs at prices set by state regulatory bodies.

At the present time, Edison is required by state regulation to continue to buy power generated by QFs, under long term contracts at prices much higher than the power Edison can produce or purchase from other sources. Further, certain operators of QFs have sought to sell power they produce to large industrial and commercial customers of Edison. This situation may be further aggravated in the future as a result of attempts by these producers to institute mandatory "wheel ing" -

unlimited access to public utility transmission lines. Edison opposes any attempt to impose mandatory wheeling. Edison is presently managing contracts with QF developers to reduce ratepayer impacts and to more closely match Edison's needs with proposed development.

Item 3. Legal Proceedings Antitrust Matters On March 2, 1978, five resale customers (the California cities of Anaheim, Azusa, Banning, Colton and Riverside) filed suit against Edison in the United States District Court for the Central District of California alleging violation of certain antitrust laws. The complaint seeks monetary damages, a trebling of such damages and certain injunctive relief. The complaint alleges that Edison (i) is engaging in anti-competitive behavior by charging more for electricity sold to the resale customers than Edison charges certain classes of its retail customers ("price squeeze"), and (ii) has taken action alone and in concert with other utilities to prevent or limit such resale customers from obtaining bulk power supplies from other sources to reduce or replace the resale customers' purchases from Edison ("foreclosure"). The plaintiffs estimated their actual damages for alleged price squeeze, before trebling, at approximately $22,780,000 and foreclosure damages stemming from alleged loss of energy and capacity at approximately $76,800,000 before trebling, for the period February 1, 1978 to December 31, 1985. The trial began on July 8, 1986, and concluded on September 26,1986. Findings of Fact and Conclusions of Law were filed by Edison with the Court on November 21, 1986. No date has been given for the decision.

In an administrative law proceeding before the FERC in which many of the issues raised are similar to the foreclosure issues raised by the resale customers in the Federal court action discussed herein, Edison received the FERC's final decision on September 30, 1987. The decision orders refunds of approximately $2,600,000 plus interest. Edison has filed a motion for rehearing.

In 1983 another resale customer, the City of Vernon, filed a complaint against Edison in the United States District Court for the Central District of California and alleged violation of certain antitrust laws. The complaint alleges that Edison has engaged in anti-competitive behavior in the form of price squeeze and foreclosure as previously described above. In addition, the complaint includes breach of contract and fraud issues and alleges that Edison has refused to provide Vernon with a fair and reasonable integrated operations agreement to permit Vernon to obtain other bulk power supplies. The complaint seeks monetary damages in excess of $150,000,000 before trebling and certain injunctive relief. On July 17, 1988, Edison received Vernon's antitrust damage study showing total damages of approximately $135,000,000 before trebling. A new trial date of November 14, 1989 has been set by the Court.

The foregoing proceedings involve complex issues of law and fact and, although Edison is unable to predict the final outcome of the proceedings, it has categorically denied the allegations of these resale customers.

15

Other Litigation Palo Verde-Supply of Cooling Water In connection with the construction of Palo Verde, Edison, APS and the other participants entered into effluent contracts with the City of Phoenix and certain other municipalities ("Municipali ties") granting APS the right to purchase effluent for cooling purposes. The validity of these contracts and the right to the use of the effluent water for cooling purposes are the subject of several lawsuits.

The first of these lawsuits ("A Tumbling T") was initiated in November 1982, in Maricopa County Superior Court ("State Court") by certain downstream users of the effluent. It challenged the legality of the effluent contracts under Arizona water law. Summary judgment was granted in the State Court in favor of APS and the other participants on October 2, 1985, primarily on the basis that effluent is not subject to regulation under state water rights law. These proceedings were appealed by both APS and the defendants, the appeal was granted and the case subsequently transferred to the Arizona Supreme Court. Oral arguments were held on February 16, 1988.

On November 22, 1985, the Municipalities instituted a new action for declaratory relief in State Court against John F. Long ("Long"), a real estate developer in the Phoenix area. In this case, the Municipalities sought a declaration that the effluent supply contracts were valid. On June 2, 1986, the Court granted APS's motion for summary judgment and declared that the primary effluent contract is valid and enforceable. The decision was affirmed by the Arizona Court of Appeals on February 9, 1988. On September 26, 1988, the Arizona Supreme Court declined to accept Long's petition for review. Therefore, the Court of Appeals decision affirming the ruling that the effluent agreement is a valid and enforceable contract stands.

In yet another case involving the effluent supply, the Salt River Pima-Maricopa Indian Commu nity ("Community") filed a first amended complaint on June 23, 1982, in Federal District Court against the United States, the Secretary of the Interior and additional defendants, including Edison and the other Palo Verde participants, alleging, among other things, that the primary effluent contract is invalid. However, the portion of the action challenging the effluent contract has been stayed while the Community litigates its claims against the Department of the Interior and other defendants for wrongful expulsion from the SRP, a federal reclamation project. A proposed settlement of this case has been announced. The settlement will have no adverse impact on the effluent contract. Although federal legislation on October 7, 1988 made this settlement law, significant appropriations are required by Congress and the Arizona legislature before the suit is dismissed. Edison anticipates that neither the various lawsuits nor any renegotiations of existing contracts would have a material adverse impact on the operation of the Palo Verde Units.

Item 4. Submission of Matters to a Vote of Security Holders Inapplicable.

16

Pursuant to Form 10-K's General Instruction ("General Instruction") G(3), the following informa tion is included as an additional item in Part 1:

Executive Officers of the Registrant Age at December Effective Executive Officer 31, 1988 Company Position Date Howard P. Allen 63 Chairman of the Board, September 1, 1987 President and Chief Executive Officer and Director John E. Bryson 45 Executive Vice President and January 1,1985 Chief Financial Officer David J. Fogarty 61 Executive Vice President January 1,1982 Michael R. Peevey 50 Executive Vice President January 1, 1986 P. L. Martin 59 Senior Vice President May 19, 1983 L. T. Papay 52 Senior Vice President May 19, 1983 Kenneth P. Baskin 50 Vice President (Nuclear September 1, 1983 Engineering, Safety and Licensing)

Glenn J. Bjorklund 56 Vice President (Power Supply)

January 1,1989 R. H. Bridenbecker 45 Vice President (Customer January 1,1988 Service)

John R. Bury*

61 Vice President and General January 1, 1982 Counsel Richard K. Bushey 48 Vice President and Controller January 1, 1984 Robert Dietch 50 Vice President (Engineering, January 1, 1989 Planning and Research)

John R. Fielder 43 Vice President (Information January 1, 1989 Services)

Charles B. McCarthy, Jr.

48 Vice President and Site January 1, 1988 Manager, San Onofre Nuclear Generating Station Michael L. Noel 47 Vice President and Treasurer July 1,1980 Harold B. Ray 48 Vice President (Fuel and Material January 1, 1988 Management)

Jennifer Moran 39 Secretary of the Corporation January 1, 1987 Effective March 1,O1989, Mr. Bury has elected to retire and David N. Barry Ill will become Vice President and General Counsel.

17

None of Edison's executive officers are related to each other by blood or marriage. As set forth in Article IV of Edison's Bylaws, the officers of Edison are chosen annually by and serve at the pleasure of Edison's Board of Directors and hold their respective offices until their resignation, removal, other disqualification from service, or until their respective successors are elected. All of the executive officers have been actively engaged in the business of Edison for more than five years except for Messrs. John E. Bryson and Michael R. Peevey. Those officers who have not held their present position for the past five years had the following business experience during that period:

Howard P. Allen Chairman of the Board and Chief Executive November 1984 to Officer and Director August 1987 President and Director July 1980 to October 1984 John E. Bryson Senior Vice President February 1984 to December 1984 Partner -

Law Firm of Morrison &

December 1982 to Foerster(1)(3)

January 1984 Michael R. Peevey Senior Vice President January 1985 to December 1985 Vice President -

Revenue Requirements February 1984 to and Governmental Affairs December 1984 President -

California Council for June 1973 to Environmental and Economic Balance(2)(3)

January 1984 Glenn J. Bjorklund Vice President -

System Planning and May 1986 to Research December 1988 Vice President -

Engineering and February 1984 to Construction April 1986 Vice President -

System Development August 1979 to January 1984 R. H. Bridenbecker Vice President -

Fuel Supply May 1982 to December 1987 Robert Dietch Vice President -

Engineering and May 1986 to Construction December 1988 Vice President -

Advanced Engineering May 1985 to April 1986 Vice President -

Customer Service July 1983 to April 1985 John R. Fielder Manager -

Information Services June 1987 to December 1988 Manager -

Computing Services March 1981 to May 1987 Charles B. McCarthy, Jr.

Vice President -

Customer Service May 1985 to December 1987 Vice President -

Advanced Engineering July 1983 to April 1985 Harold B. Ray Vice President and Site Manager, November 1983 to San Onofre Nuclear Generating Station December 1987 Jennifer Moran Senior Counsel -

Law Department December 1984 to December 1986 Attorney June 1979 to December 1984 (1) During the period in which Mr. Bryson was at the law firm of Morrison & Foerster, he was in the firm's business department.

(2) As president of the California Council for Environmental and Economic Balance, a non-profit corporation, Mr. Peevey administered and directed programs in the energy, environment and resource management fields.

(3) This entity is not a parent, subsidiary or other affiliate of Edison.

18

PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Certain information responding to Item 5 with respect to frequency and amount of cash dividends is included in Edison's Annual Report to Shareholders for the year ended December 31, 1988 ("Annual Report") under "Quarterly Financial Data" on page 23, and is incorporated by reference pursuant to General Instruction G(2). As a result of the formation of a holding company described above in Item 1, all of the issued and outstanding Common Stock of Edison is owned by SCEcorp and there is no market for such stock.

Item 6. Selected Financial Data Information responding to Item 6 is included in the Annual Report under "Selected Financial and Operational Data 1984-1988" on page 26, and is incorporated herein by reference pursuant to General Instruction G(2).

Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition Information responding to Item 7 is included in the Annual Report under "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 20 through 22, and is incorporated herein by reference pursuant to General Instruction G(2).

Item 8. Financial Statements and Supplementary Data Certain information responding to Item 8 is set forth after Item 14 in Part IV. Other information responding to Item 8 is included in the Annual Report on pages 1 through 19 and on page 23 under "Quarterly Financial Data," and is incorporated herein by reference pursuant to General Instruction G(2).

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

PART Ill Item 10. Directors and Executive Officers of the Registrant Information concerning executive officers of Edison is set forth in Part I in accordance with General Instruction G(3), pursuant to Instruction 3 to Item 401(b) of Regulation S-K. Other informa tion responding to Item 10 is included in the Joint Proxy Statement and Prospectus ("Proxy Statement") filed with the Commission in connection with Edison's Annual Meeting of Shareholders to be held on April 20, 1989, under the heading "Election of Directors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3).

Item 11. Executive Compensation Information responding to Item 11 is included in the Proxy Statement under the heading "Election of Directors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3).

Item 12. Security Ownership of Certain Beneficial Owners and Management Information responding to Item 12 is included in the Proxy Statement under the heading "Election of Directors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3).

Item 13. Certain Relationships and Related Transactions Information responding to Item 13 is included in the Proxy Statement under the heading "Election of Directors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3).

19

PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) Financial Statements The following items contained in the 1988 Annual Report to shareholders are incorporated by reference in this report.

Responsibility for Financial Reporting Report of Independent Public Accountants Consolidated Statements of Income -

Years Ended December 31, 1988, 1987 and 1986 Consolidated Balance Sheets -

December 31, 1988 and 1987 Consolidated Statements of Cash Flows -

Years Ended December 31, 1988, 1987 and 1986 Consolidated Statements of Capitalization -

December 31, 1988 and 1987 Consolidated Statements of Common Shareholder's Equity -

Years Ended December 31, 1988, 1987 and 1986 Notes to Consolidated Financial Statements Management's Discussion and Analysis of Results of Operations and Financial Condition (2) Report of Independent Public Accountants and Schedules Supplementing Financial Statements The following documents may be found in this report at the indicated page numbers.

Page Report of Independent Public Accountants on Supplemental Schedules..............

21 Schedule V -Property, Plant and Equipment for the Years Ended December 31, 1988, 1987 and 1986...................................

22 Schedule VI -Accumulated Depreciation and Amortization of Property, Plant, and Equipment for the Years Ended December 31, 1988, 1987 and 1986......

25 Schedule VIII-Valuation and Qualifying Accounts for the Years Ended December 31, 1988, 1987 and 1986.....................................................................................

28 Schedule IX -Short-Term Borrowings For Each of the Three Years in the Period Ended Decem ber 31, 1988............................................................................

31 Schedule X -Supplementary Income Statement Information For Each of the Three Years in the Period Ended December 31, 1988....................

32 Schedules I to XIII, inclusive, except those referred to above, are omitted as not required or not applicable.

(3) Exhibits See Exhibit Index on page 35 of this report.

(b) Reports on Form 8-K November 30, 1988 Item 5: Other Events-Execution of agreement to merge SDG&E into Edison.

December 8,1988 Item 5: Other Events-Proposed merger of SDG&E and Edison.

Proposed disallowance from ECAC rates.

Financial Statements-Pro Forma Combined Financial Statements of Edison and SDG&E.

-Audited Financial Statements of SDG&E for Year Ended December 31, 1987.

-Unaudited Financial Statements of SDG&E for Quarter Ended September 30, 1988.

20

REPORT OF INDEPENDENT PUBLIC ACCOONTANTS ON SUPPLEMENTAL SCHEDULES To Southern California Edison Company:

We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in the 1988 Annual Report to Shareholders of Southern California Edison Company, incorporated by reference in the Form 10-K, and have issued our report thereon dated February 6, 1989. Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in accounting for unbilled revenues, the change in accounting for majority-owned subsidiaries, the change in reporting entity pursuant to the July 1, 1988 SCEcorp restructuring, and the change in accounting for disallowances of plant costs, as described in Notes 1, 2 and 3 to those consolidated financial statements. Our audits of the consolidated financial statements were made for the purpose of forming an opinion on those basic consolidated financial statements taken as a whole. The Supplemental Schedules listed in Part IV of this Form 10-K are presented for purposes of complying with the Securities and Exchange Commission's rules and regulations, and are not part of the basic consolidated financial statements. These supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

ARTHUR ANDERSEN & CO.

Los Angeles, California February 6, 1989 21

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1988 Balance at Add (Deduct)

Balance Beginning of Additions Other at End of Description Period at Cost Retirements Changes Period(c)

(In Thousands)

Steam Production...........

$ 1,852,474 52,609

$ (12,347)

$ 1,892,736 Nuclear Production.........

5,109,406 575,681 (2,274)

(24,105) 5,658,708 Hydro Production...........

527,134 6,767 (391)

(1,505) 532,005 Other Production............

395,023 (2,387)

(20) 392,616 Transmission...................

1,973,284 171,571 (13,503) 1,264 2,132,616 Distribution......................

3,897,795 406,083 (39,928) 4,263,950 General............................

661,315 119,666 (9,431)

(5) 771,545 Plant Held for Future Use..............................

24,734 (5,207)

(46) 19,481 Experimental Electric Plant Unclassified.......

17,474 16,996 (17,344) 17,126 Other Utility Plant..........

7,052 24 (9) 7,067 Subtotal-Utility Plant 14,465,691 1,341,803 (95,293)

(24,351) 15,687,850 Construction Work in Progress......................

1,232,990 (551,315)(a)

(5,500) 676,175 Nuclear Fuel...................

999,373 57,404 (10,687) 1,046,090 Gross Utility Plant.......

$16,698,054

$ 847,892 (b) $(111,480)

$(24,351)

$17,410,115 Nonutility Property..........

169,317 1,649

$(111,384)(d) $ -

59,582 (a) Transfers to plant in service which are net of additions to Construction Work in Progress.

(b) Gross utility plant additions of $847,892,000, less allowance for funds used during construction of $29,686,000, plus nonutility property additions of $1,649,000 less miscellaneous reclassifica tions of $2,830,000, equals cash used for construction expenditures of $817,025,000, as re ported in the 1988 Annual Report.

(c) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. In conjunction with the corporate restructuring, the Company's investment in nonutility property was transferred to SCEcorp at book value on July 1, 1988. The amounts reported give retroactive effect to the property transfer.

In addition, the Company has retroactively restated all prior period financial statements in order to reflect the consolidation of all majority-owned subsidiaries.

(d) Reflects the retirement of energy exploration projects which were transferred to the ECAC balancing account pursuant to a CPUC decision.

22

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1987 Balance at Add (Deduct)

Balance Beginning of Additions Other at End of Description Period at Cost Retirements Changes Period(c)

(In Thousands)

Steam Production............

$ 1,776,760 78,685

$ (3,849)

$878

$ 1,852,474 Nuclear Production..........

5,027,134 85,147 (2,875) 5,109,406 Hydro Production.............

270,949 256,622 (437) 527,134 Other Production.............

393,305 1,757 (39) 395,023 Transmission....................

1,830,316 148,145 (5,177) 1,973,284 Distribution.......................

3,518,610 420,664 (41,479) 3,897,795 General.............................

507,866 163,436 (9,987) 661,315 Plant Held for Future Use................................

22,764 1,970 24,734 Experimental Electric Plant Unclassified.........

53,884 195 (36,605) 17,474 Other Utility Plant............

7,039 21 (8) 7,052 Subtotal-Utility Plant..

13,408,627 1,156,642 (100,456) 878 14,465,691 Construction Work in Progress.......................

1,342,169 (107,448)(a)

(1,731) 1,232,990 Nuclear Fuel.....................

932,449 66,924 999,373 Gross Utility Plant........

$15,683,245

$1,116,118 (b) $(102,187)

$878

$16,698,054 Nonutility Property...........

161,770 7,645 (98) 169,317 (a) Transfers to plant in service which are net of additions to Construction Work in Progress.

(b) Gross utility plant additions of $1,116,118,000, less allowance for funds used during construction of $106,705,000, plus write-off of estimated plutonium value of spent nuclear fuel of $1,030,000, nonutility property additions of $7,645,000 and miscellaneous reclassifications of $3,089,000, equals cash used for construction expenditures of $1,021,177,000, as reported in the 1988 Annual Report.

(c) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. In conjunction with the corporate restructuring, the Company's investment in nonutility property was transferred to SCEcorp at

• book value on July 1, 1988. The amounts reported give retroactive effect to the property transfer.

23

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1986 Balance at Add (Deduct)

Balance Beginning of Additions Other at End of Description Period at Cost Retirements Changes Period(d)

(In Thousands)

Steam Production.........

$ 1,735,565 44,668

$ (3,473)

$ 1,776,760 Nuclear Production(c)...

4,092,099 1,218,570 (274)

(283,261) 5,027,134 Hydro Production.........

264,037 7,294 (382) 270,949 Other Production..........

384,642 8,973 (310) 393,305 Transmission.................

1,673,513 164,349 (7,167)

(379) 1,830,316 Distribution....................

3,191,511 367,615 (40,014)

(502) 3,518,610 General..........................

426,647 84,693 (4,355) 881 507,866 Plant Held for Future Use............................

23,778 (879)

(135) 22,764 Experimental Electric Plant Unclassified.....

54,667 121 (904) 53,884 Other Utility Plant.........

6,983 89 (33) 7,039 Subtotal-Utility Plant.......................

11,853,442 1,895,493 (57,047)

(283,261) 13,408,627 Construction Work in Progress....................

2,041,738 (692,208)(a)

(7,361) 1,342,169 Nuclear Fuel.................

878,186 86,603 (32,340) 932,449 Gross Utility Plant.....

$14,773,366

$1,289,888 (b) $(64,408)

$(315,601)

$15,683,245 Nonutility Property.......

$

• 180,090 622

$(18,942) 161,770 (a) Transfers to plant in service, which are net of additions to construction work in progress.

(b) Gross utility plant additions of $1,289,888,000, less allowance for funds used during construction of $124,103,000, and San Onofre Unit 1 sleeving amortization of $15,142,000, plus write-off of estimated plutonium value of spent nuclear fuel of $7,051,000, nonutility property additions of

$622,000 and less miscellaneous reclassifications of $1,929,000, equals cash used for construc tion expenditures of $1,156,387,000, as reported in the 1988 Annual Report.

(c) In conformity with a new accounting standard, Southern California Edison Company (Edison) recorded a one-time write-off of nuclear plant of approximately $268,119,000 to reflect plant costs disallowed for ratemaking purposes. (See Note 3 of "Notes to Consolidated Financial Statements" in the 1988 Annual Report.)

(d) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. In conjunction with the corpo rate restructuring, the Company's investment in nonutility property was transferred to SCEcorp at book value on July 1, 1988. The amounts reported give retroactive effect to the property transfer.

24

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1988 Additions Charged Balance at to Costs Add (Deduct)

Balance Beginnin of and Other at End of Description Period Expenses Retirements Changes(a)

Salvage Period(b)

(In Thousands)

Steam Production........

$ 994,377

$ 83,666

$ (11,329)

$ (1,652)

$ 1,792

$1,066,854 Nuclear Production......

729,035 291,559 (2,274)

(7,142) 28 1,011,206 Hydro Production........

112,881 8,090 (395) 37 1

120,614 Other Production.........

186,557 12,564 (19)

(4) 39 199,137 Transmission................

552,679 64,398 (12,794)

(1,257) 873 603,899 Distribution...................

1,292,644 152,935 (40,133)

(20,907) 6,501 1,391,040 General.........................

132,157 36,609 (9,489) 192 863 160,332 Experimental Electric Plant Unclassified....

17,449 1,340 (17,339)

(137) 1,313 Retirement Work in Progress...................

(26,596)

(6,343) 1,205 4,799 (26,935)

Other Utility Plant Reserves...................

2,285 202 (9) 2,478 Subtotal....................

3,993,468 651,363 (100,124)

(29,665) 14,896 4,529,938 Nuclear Fuel Amortization.............

451,587 129,426 (10,687) 570,326 Total Utility Plant Reserves...............

$4,445,055

$780,789

$(110,811)

$(29,665)

$14,896

$5,100,264 Nonutility Property Reserves.........

$ 121,835

$ 1,603

$(110,291)(c) $

597 13,744 (a) Includes removal costs related to facilities retired, damage claims and relocation costs collected from others, and various other adjustments of depreciation and amortization.

(b) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. The Company's investment in nonutility property was transferred to SCEcorp at book value on July 1, 1988. Retroactive effect has been given to the property transfers for financial reporting purposes.

(c) Reflects the retirement of energy exploration projects which were transferred to the ECAC balancing account pursuant to a CPUC decision.

25

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1987 Additions Balance at to Add (Deduct)

Balance Beginning of and Other at End Description Period Expenses Retirements Changes(a)

Salvage of Period(b)

(In Thousands)

Steam Production...........

$ 922,907 $ 75,739

$ (3,854) $

(517) $

102 $ 994,377 Nuclear Production.........

541,101 190,800 (2,871)

(74) 79 729,035 Hydro Production............

109,555 4,190 (445)

(419) 112,881 Other Production.............

169,595 17,006 (40)

(7) 3 186,557 Transmission...................

508,172 49,939 (5,110)

(1,227) 905 552,679 Distribution......................

1,168,570 181,454 (41,481)

(22,829) 6,930 1,292,644 General............................

110,297 26,545 (9,927) 968 4,274 132,157 Experimental Electric Plant Unclassified........

45,050 9,416 (36,565)

(452) 17,449 Retirement Work in Progress.......................

(22,322)

(1,884)

(8,207) 5,817 (26,596)

Other Utility Plant Reserves......................

2,146 194 (8)

(47) 2,285 Subtotal........................

3,555,071 555,283 (102,185)

(32,811) 18,110 3,993,468 Nuclear Fuel Amortiza tion...............................

313,106 138,481 451,587 Total Utility Plant Reserves..................

$3,868,177 $693,764

$(102,185)

$(32,811)

$18,110 $4,445,055 Nonutility Property Reserves......................

57,106 $ 64,461 268

$ 121,835 (a) Includes removal costs related to facilities retired, damage claims and relocation costs collected from others, and various other adjustments of depreciation and amortization.

(b) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. The Company's investment in nonutility property was transferred to SCEcorp at book value on July 1, 1988. Retroactive effect has been given to the property transfers for financial reporting purposes.

26

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31, 1986 Additions Charged Balance at to Costs Add (Deduct)

Balance Be ginning of and Other at End Description Period Expenses Retirements Changes(a)

Salvage of Period(c)

(In Thousands)

Steam Production...........

$ 852,362 $ 73,091

$ (2,179) $

(396) $

29 $ 922,907 Nuclear Production (b)....

398,397 173,870 (275)

(31,007) 116 541,101 Hydro Production............

106,410 3,668 (374)

(204) 55 109,555 Other Production.............

153,005 16,752 (126)

(36) 169,595 Transmission...................

468,147 46,519 (5,411)

(3,406) 2,323 508,172 Distribution......................

1,055,316 163,961 (39,066)

(19,574) 7,933 1,168,570 General............................

91,010 21,290 (4,307) 1,210 1,094 110,297 Experimental Electric Plant Unclassified........

34,582 11,374 (905)

(1) 45,050 Retirement Work in Progress.......................

(9,040)

(10,862)

(2,334)

(86)

(22,322)

Other Utility Plant Reserves......................

1,952 189 (32) 37 2,146 Subtotal........................

3,152,141 510,714 (63,537)

(55,711) 11,464 3,555,071 Nuclear Fuel Amortization.................

232,059 106,336 (25,289) 313,106 Total Utility Plant Reserves..................

$3,384,200 $617,050

$ (63,537) $(81,000) $11,464 $3,868,177 Nonutility Property Reserves...........

55,032 $ 2,665

$ (1,074) $

483 57,106 (a) Includes removal costs related to facilities retired, damage claims and relocation costs collected from others, and various other adjustments of depreciation and amortization.

(b) In conformity with a new accounting standard, Southern California Edison Company (Edison) in January 1988 recorded a one-time adjustment to accumulated depreciation of approximately

$31,009,000 in connection with the write-off of nuclear plant investment costs disallowed for ratemaking purposes. (See Note 3 of "Notes to Consolidated Financial Statements" in the 1988 Annual Report.)

(c) On July 1, 1988, SCEcorp acquired the outstanding common stock of the Company under a merger agreement approved by shareholders on April 21, 1988. The Company's investment in nonutility property was transferred to SCEcorp at book value on July 1, 1988. Retroactive effect has been given to the property transfers for financial reporting purposes.

27

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE Vill-VALUATION AND QUALIFYING ACCOUNTS For the Year Ended December 31, 1988 Additions Balance at Charged to Charged to Balance Beginning of Costs and Other at End Description Period Expenses Accounts Deductions of Period (In Thousands)

Group A:

Uncollectible Accounts Customers.............................

$ 8,305

$ 9,004

$10,242

$ 7,067 All Other 6,524 1,346 1,797 6,073 Total...................................

$ 14,829

$10,350

$12,039(a) $ 13,140 Group B:

Pension and Benefits...............

$ 61,292

$25,668

$18,043(b)

$24,488(c) $ 80,515 Insurance, Casualty and Other 52,056 59,532 55,293(d) 56,295 Total...................................

$113,348

$85,200

$18,043

$79,781

$136,810 (a) Accounts written off, net.

(b) Primarily represent transfers from the accrued paid absence allowance account for required additions to the comprehensive disability plan accounts.

(c) Includes pension payments to retired employees, amounts paid to active employees during periods of illness and the funding of certain pension benefits.

(d) Amounts charged to operations that were not covered by insurance.

28

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS For the Year Ended December 31, 1987 Additions Balance at Charged to Charged to Balance BeinnOther a

n Beginning of Costs and at End Description Period Expenses Accounts Deductions of Period (In Thousands)

Group A:

Uncollectible Accounts Customers.............................

$ 6,255

$13,132

$11,082

$ 8,305 All Other................................

5,619 1,726 821 6,524 Total...................................

$11,874

$14,858

$11,903(a)

$ 14,829 Group B:

Pension and Benefits...............

$42,111

$23,501

$17,469(b)

$21,789(c) $ 61,292 Insurance, Casualty and Other......................................

53,569 51,676 53,189(d) 52,056 Total...................................

$95,680

$75,177

$17,469

$74,978

$113,348 (a) Accounts written off, net.

(b) Primarily represent transfers from the accrued paid absence allowance account for required additions to the comprehensive disability plan accounts.

(c) Includes pension payments to retired employees, amounts paid to active employees during periods of illness and the funding of certain pension benefits.

(d) Amounts charged to operations that were not covered by insurance.

29

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE Vill-VALUATION AND QUALIFYING ACCOUNTS For the Year Ended December 31, 1986 Additions Balance at Charged to Charged to Balance Beginning of Costs and Other at End Description Period Expenses Accounts Deductions of Period (In Thousands)

Group A:

Uncollectible Accounts Customers..............................

$ 5,962

$10,558

$10,265

$ 6,255 All Other..................................

3,871 3,125 128 1,505 5,619 Total.....................................

$ 9,833

$13,683 128

$11,770(a)

$11,874 Group B:

Pension and Benefits................

$35,642

$11,125

$16,310(b)

$20,966(c)

$42,111 Insurance, Casualty and Other.......................................

55,484 43,681 1,171 46,767(d) 53,569 Total.....................................

$91,126

$54,806

$17,481

$67,733

$95,680 (a) Accounts written off, net.

(b) Primarily represent transfers from the accrued paid absence allowance account for required additions to the comprehensive disability plan accounts.

(c) Includes pension payments to retired employees, amounts paid to active employees during periods of illness and the funding of certain pension benefits.

(d) Amounts charged to operations that were not covered by insurance.

30

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE IX-SHORT-TERM BORROWINGS For Each of the Three Years in the Period Ended December 31, 1988 Weighted Maximum Average Average Weighted Amount Amount Interest Balance Average Outstanding Outstanding Rate at End Interest During During During Description of Period Rate the Period the Period the Period (000)

(000)

(000)(a)

(b)

December 31, 1988:

Payable to holders of commercial paper-general purpose....................

$ 67,120 8.86% $244,400

$ 68,559 7.64%

Payable to holders of commercial paper-balancing accounts................

400,000 8.86 400,000 362,384 7.70 Payable to holders of commercial paper-fuel..........................................

535,280(c) 8.86 556,300 413,173 7.70 Payable to holders of commercial paper-financing subsidiary...............

420,100 190,101 7.08 December 31, 1987:

Payable to holders of commercial paper-general purpose....................

$ 35,800 7.76%

$187,000

$ 29,769 7.13%

Payable to holders of commercial paper -

balancing accounts.............

400,000 7.76 400,000 400,000 6.88 Payable to holders of commercial paper-financing subsidiary...............

518,300(c) 7.81 766,692 427,252 7.18 December 31, 1986:

Payable to holders of commercial paper-general purpose....................

$115,000 6.98%

$200,000

$ 40,385 6.94%

Payable to holders of commercial paper-fuel oil....................................

213,000 6.32 275,000 220,113 6.80 Payable to holders of commercial paper-financing subsidiary...............

48,800 6.37 148,850 76,495 7.12 (a) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by 366 for 1988 and 365 for 1987 and 1986.

(b) Weighted average interest rate during the period is computed by dividing the total interest expense by the average amount outstanding.

(c) Under credit agreements with commercial banks which allow the Company to refinance short term borrowings on a long-term basis, commercial paper borrowings of $338,800,000 as of December 31, 1988 and $288,300,000 as of December 31, 1987, including intermediate-term indebtedness, have been reclassified as long-term debt in the Consolidated Balance Sheets in the 1988 Annual Report to reflect the anticipated timing of repayment of nuclear fuel indebtedness.

31

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION For Each of the Three Years in the Period Ended December 31, 1988 Charged to Expense (000)

Year Ended December 31, 1988:

Property Taxes.................................................

$129,587 Year Ended December 31, 1987:

Property Taxes..................................................

122,496 Year Ended December 31, 1986:

Property Taxes.............................

108,952 Note: Depreciation and maintenance expenses appear on the Consolidated Statements of Income.

Royalties paid and advertising costs included in Other Operating Expenses are less than 1%

of total operating revenue.

32

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SOUTHERN CALIFORNIA EDISON COMPANY By M. L. NOEL (M. L. Noel, Vice President and Treasurer)

Date: February 24, 1989 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date Principal Executive Officer:

Howard P. Allen*

Chairman of the Board, February 24, 1989 President, Chief Executive Officer and Director Principal Financial Officer:

John E. Bryson*

Executive Vice President February 24, 1989 and Chief Financial Officer Controller or Principal Accounting Officer:

Richard K. Bushey*

Vice President and February 24, 1989 Controller Majority of Board of Directors:

Roy A. Anderson*

Director February 24, 1989 Norman Barker, Jr.*

Director February 24, 1989 Warren Christopher*

Director February 24, 1989 Camilla C. Frost*

Director February 24, 1989 Walter B. Gerken*

Director February 24, 1989 William R. Gould*

Director February 24, 1989 Joan C. Hanley*

Director February 24, 1989 J. K. Horton*

Director February 24, 1989 Carl F. Huntsinger*

Director February 24, 1989 Charles D. Miller*

Director February 24, 1989 J. J. Pinola*

Director February 24, 1989 James M. Rosser*

Director February 24, 1989 Henry T. Segerstrom*

Director February 24, 1989 E. L. Shannon, Jr.*

Director February 24, 1989 Edward Zapanta*

Director February 24, 1989

• By M. L. NOEL (M. L. Noel, Attorney-in-Fact) 33

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated February 6, 1989, (the Report of Independent Public Accountants) appearing on page 25 of the 1988 Annual Report of Southern California Edison Company (Exhibit 13 included herein) in this Annual Report on Form 10-K for the year ended December 31, 1988 of Southern California Edison Company (SCE).

We further consent to the incorporation by reference of the above-mentioned Report of Independent Public Accountants, incorporated by reference in this Annual Report on Form 10-K, and to the incorporation by reference of our report (the Report of Independent Public Accountants on Supplemental Schedules), appearing on page 21 of this Annual Report on Form 10-K, in the Registration Statements which follow:

Entity Registration Form File No.

Effective Date SCE Form S-3 33-26037 December 15, 1988 SCE Form S-3 33-20832 April 5, 1988 SCE Capital Co.

Form S-3 33-18107 November 3, 1987 SCE Capital Co.

Form S-3 33-14785 June 11, 1987 ARTHUR ANDERSEN & CO.

Los Angeles, California February 6, 1989 34

0 EXHIBIT INDEX Exhibit Number Description

2.

Agreement and Plan of Reorganization and Related Merger Agreement with SCEcorp and San Diego Gas & Electric Company (File No. 1-2313)*.........

3.1 Restated Articles of Incorporation as amended through April 25, 1988......

3.2 Bylaws as adopted by the Board of Directors on June 16, 1988................

4.1 Trust Indenture, dated as of October 1, 1923 (Registration No. 2-1369)*...

4.2 Supplemental Indenture, dated as of March 1,1927 (Registration No.

2-1369) *......................

4.3 Second Supplemental Indenture, dated as of April 25, 1935 (Registration No. 2-1472)*..........................................

4.4 Third Supplemental Indenture, dated as of June 24, 1935 (Registration No.

2-1602) *......................

4.5 Fourth Supplemental Indenture, dated as of September 1, 1935 (Registra tion No. 2-4522)*.......................................

4.6 Fifth Supplemental Indenture, dated as of August 15, 1939 (Registration No.

2-4522)*......................

4.7 Sixth Supplemental Indenture, dated as of September 1, 1940 (Registration No. 2-4522)*..........................................

4.8 Seventh Supplemental Indenture, dated as of January 15, 1948 (Registra tion No. 2-7369)*.......................................

4.9 Eighth Supplemental Indenture, dated as of August 15, 1948 (Registration No. 2-7610)*..........................................

4.10 Ninth Supplemental Indenture, dated as of February 15, 1951 (Registration No. 2-8781)*..........................................

4.11 Tenth Supplemental Indenture, dated as of August 15, 1951 (Registration No. 2-7968)*..........................................

4.12 Eleventh Supplemental Indenture, dated as of August 15, 1953 (Registration No. 2-10396)*.........................................

4.13 Twelfth Supplemental Indenture, dated as of August 15, 1954 (Registration No. 2-11049)*.........................................

4.14 Thirteenth Supplemental Indenture, dated as of April 15, 1956 (Registration No. 2-12341)*.........................................

4.15 Fourteenth Supplemental Indenture, dated as of February 15, 1957 (Regis tration No. 2-13030)*....................................

4.16 Fifteenth Supplemental Indenture, dated as of July 1, 1957 (Registration No.

2-13418)*............................................

4.17 Sixteenth Supplemental Indenture, dated as of August 15, 1957 (Registra tion No. 2-13516)*............................

4.18 Seventeenth Supplemental Indenture, dated as of August 15, 1958 (Regis tration No. 2-14285)*.............................................................

4.19 Eighteenth Supplemental Indenture, dated as of January 15, 1960 (Registra tion No. 2-15906)*....................

4.20 Nineteenth Supplemental Indenture, dated as of August 15, 1960 (Registra tion No. 2-16820)*.........................

4.21 Twentieth Supplemental Indenture, dated as of April 1, 1961 (Registration No. 2-17668)*............................................

4.22 Twenty-First Supplemental Indenture, dated as of May 1, 1962 (Registration No. 2-20221)*.........................................

4.23 Twenty-Second Supplemental Indenture, dated as of October 15, 1962 (Registration No. 2-20791)*................................

35

Exhibit Number Description 4.24 Twenty-Third Supplemental Indenture, dated as of May 15, 1963 (Registra tion No. 2-21346)*......................................

4.25 Twenty-Fourth Supplemental Indenture, dated as of February 15, 1964 (Registration No. 2-22056)*................................

4.26 Twenty-Fifth Supplemental Indenture, dated as of February 1, 1965 (Regis tration No. 2-23082)*...........................................

4.27 Twenty-Sixth Supplemental Indenture, dated as of May 1, 1966 (Registra tion No. 2-24835)*......................................

4.28 Twenty-Seventh Supplemental Indenture, dated as of August 15, 1966 (Reg istration No. 2-25314)*...................................

4.29 Twenty-Eighth Supplemental Indenture, dated as of May 1, 1967 (Registra tion N o. 2-26323)*..................................................................................

4.30 Twenty-Ninth Supplemental Indenture, dated as of February 1, 1968 (Regis tration No. 2-28000)*....................

4.31 Thirtieth Supplemental Indenture, dated as of January 15, 1969 (Registra tion No. 2-31044)*...................

4.32 Thirty-First Supplemental Indenture, dated as of October 1, 1969 (Registra tion No. 2-34839)*......................................

4.33 Thirty-Second Supplemental Indenture, dated as of December 1, 1970 (Reg istration No. 2-38713)*...........................................

4.34 Thirty-Third Supplemental Indenture, dated as of September 15, 1971 (Reg istration No. 2-41527)*....................

4.35 Thirty-Fourth Supplemental Indenture, dated as of August 15, 1972 (Regis tration No. 2-45046)*.....................

4.36 Thirty-Fifth Supplemental Indenture, dated as of February 1, 1974 (Registra tion No. 2-50039)*......................................

4.37 Thirty-Sixth Supplemental Indenture, dated as of July 1, 1974 (Registration No. 2-59199)*.........................................

4.38 Thirty-Seventh Supplemental Indenture, dated as of November 1, 1974 (Registration No. 2-52160)*................................

4.39 Thirty-Eighth Supplemental Indenture, dated as of March 1, 1975 (Registra tion No. 2-52776)*......................................

4.40 Thirty-Ninth Supplemental Indenture, dated as of March 15, 1976 (Registra tion No. 2-55463)*........................................

4.41 Fortieth Supplemental Indenture, dated as of July 1, 1977 (Registration No.

2-59199)*.............................................

4.42 Forty-First Supplemental Indenture, dated as of November 1, 1978 (Regis tration No. 2-62609)*....................................

4.43 Forty-Second Supplemental Indenture, dated as of June 15, 1979 (File No.

1-2313) *.............................................

4.44 Forty-Third Supplemental Indenture, dated as of September 15, 1979 (File No. 1-2313)*..........................................

4.45 Forty-Fourth Supplemental Indenture, dated as of October 1, 1979 (Regis tration No. 2-65493)*....................................

4.46 Forty-Fifth Supplemental Indenture, dated as of April 1, 1980 (Registration No. 2-66896)*.........................................

4.47 Forty-Sixth Supplemental Indenture, dated as of November 15, 1980 (Regis tration No. 2-69609)*....................................

4.48, Forty-Seventh Supplemental Indenture, dated as of May 15, 1981 (Registra tion No. 2-71948)*........................................

36

Exhibit Number Description 4.49 Forty-Eighth Supplemental Indenture, dated as of August 1, 1981 (File No.

1-2313) *..........................................

4.50 Forty-Ninth Supplemental Indenture, dated as of December 1, 1981 (Regis tration No. 2-74339)*................................................................................

4.51 Fiftieth Supplemental Indenture, dated as of January 16, 1982 (File No.

1-2313) *.......................

4.52 Fifty-First Supplemental Indenture, dated as of April 15, 1982 (Registration No. 2-76626)*.........................................

4.53 Fifty-Second Supplemental Indenture, dated as of November 1, 1982 (Reg istration No. 2-79672)*.................

4.54 Fifty-Third Supplemental Indenture, dated as of November 1, 1982 (File No.

1-2313) *.............................................

4.55 Fifty-Fourth Supplemental Indenture, dated as of January 1, 1983 (File No.

1-2313)*.......................................................................................

4.56 Fifty-Fifth Supplemental Indenture, dated as of May 1, 1983 (File No.

1-2313)*.......................................................................................

4.57 Fifty-Sixth Supplemental Indenture, dated as of December 1, 1984 (Regis tration No. 2-94512)*.................

4.58 Fifty-Seventh Supplemental Indenture, dated as of March 15, 1985 (Regis tration No. 2-96181)*.........................................................................................

4.59 Fifty-Eighth Supplemental Indenture, dated as of October 1, 1985 (File No.

1-2313) *..........................................

4.60 Fifty-Ninth Supplemental Indenture, dated as of October 15, 1985 (File No.

1-2313)*....................................................................................

4.61 Sixtieth Supplemental Indenture, dated as of March 1, 1986 (File No.

1-2313).......................

4.62 Sixty-First Supplemental Indenture, dated as of March 15, 1986 (File No.

1-23 13)*.....................................................................................

4.63 Sixty-Second Supplemental Indenture, dated as of April 15, 1986 (File No.

1-2313).......................

4.64 Sixty-Third Supplemental Indenture, dated as of April 15, 1986 (File No.

1-2313)......................

4.65 Sixty-Fourth Supplemental Indenture, dated as of July 1, 1986 (File No.

1-2313)*......................

4.66 Sixty-Fifth Supplemental Indenture, dated as of September 1, 1986 (File No.

1-2313)*........................................................................................

4.67 Sixty-Sixth Supplemental Indenture, dated as of September 1, 1986 (File No.

1-2313)*...................................................................

4.68 Sixty-Seventh Supplemental Indenture, dated as of December 1, 1986 (File No. 1-2313)*....................

4.69 Sixty-Eighth Supplemental Indenture, dated as of July 1, 1987 (Registration N o. 33-1954 1)*...............................................................................................

4.70 Sixty-Ninth Supplemental Indenture, dated as of October 15, 1987 (Regis tration No. 33-19541)................

4.71 Seventieth Supplemental Indenture, dated as of November 1, 1987 (File No.

1-2313).......................

4.72 Seventy-First Supplemental Indenture, dated as of February 15, 1988 (File N o. 1-2313)*......................................................................................

4.73 Seventy-Second Supplemental Indenture, dated as of April 15, 1988 (File N o. 1-23 13)*......................................................................................................

37

Exhibit Number Description 4.74 Seventy-Third Supplemental Indenture, dated as of July 1, 1988 (File No.

1-2313).............................................................................

4.75 Seventy-Fourth Supplemental Indenture, dated as of August 15, 1988.

(a) Resolution creating First and Refunding Mortgage Bonds, Series 880 4.76 Seventy-Fifth Supplemental Indenture, dated as of September 15,1988 (File No. 1-2313)*.......................................................................

4.77 First Mortgage Indenture, dated October 1, 1943, between California Elec tric Power Company and The International Trust Company and Leo A.

Steinhardt as Trustees (Registration No. 2-18234)*.........................

4.78 Second Supplemental Indenture, dated June 1, 1946, between California Electric Power Company and The International Trust Company and Leo A.

Steinhardt as Trustees (Registration No. 2-1 8234)*.........................

4.79 Third Supplemental Indenture, dated June 1, 1948, between California Elec tric Power Company and The International Trust Company and Leo A.

Steinhardt as Trustees (Registration No 2-1 8234)*..........................

4.80 Fourth Supplemental Indenture, dated June 1, 1950, between California*

Electric Power Company and The International Trust Company and Leo A.

Steinhardt as Trustees (Registration No. 2-18234)*.........................

4.81 Fifth Supplemental Indenture, dated April 1, 1953, between California Elec tric Power Company and The International Trust Company and Leo A.

Steinhardt as Trustees (Registration No. 2-18234)*.........................

4.82 Sixth Supplemental Indenture, dated May 1, 1954, between California Elec tric Power Company and The International Trust Company and Elmer W.

Johnson as Trustees (Registration No. 2-18234)*............................

4.83 Seventh Supplemental Indenture, dated September 1, 1955, between California Electric Power Company and The International Trust Company and Elmer W. Johnson as Trustees (Registration No. 2-18234)*..........

4.84 Eighth Supplemental Indenture, dated October 1, 1956, between California Electric Power Company and The International Trust Company and Elmer W. Johnson as Trustees (Registration No. 2-18234)*.......................

4.85 Ninth Supplemental Indenture, dated April 1, 1957, between California Elec tric Power Company and The International Trust Company and Elmer W.

Johnson as Trustees (Registration No. 2-18234)*............................

4.86 Tenth Supplemental Indenture, dated March 1, 1958, between California Electric Power Company and The International Trust Company and Elmer W. Johnson as Trustees (Registration No. 2-1 8234)*.......................

4.87 Eleventh Supplemental Indenture, dated May 1, 1960, between California Electric Power Company and The First National Bank of Denver and Elmer W. Johnson as Trustees (Registration No. 2-18234)*.......................

4.88 Twelfth Supplemental Indenture, dated July 1, 1961, between California Electric Power Company and The First National Bank of Denver and Elmer W. Johnson as Trustees (Registration No. 2-22056)*.......................

4.89 Thirteenth Supplemental Indenture, dated as of December 31, 1963, between Southern California Edison Company and The First National Bank of Denver and Elmer W. Johnson as Trustees (Registration No. 2-22056)*

10.1 Executive Supplemental Benefit Program (File No. 1-2313)*...............

10.2 1981 Deferred Compensation Agreement (File No. 1-2313)*...............

10.3 1985 Deferred Compensation Agreement for Executives (File No. 1-2313)*

10.4 1985 Deferred Compensation Agreement for Directors (File No. 1-2313)*..

10.5 1987 Deferred Compensation Plan for Executives (File No. 1-2313)*....

10.6 1987 Deferred Compensation Plan for Directors (File No. 1-72313)*.......

38

Exhibit Number Description 10.7 1988 Deferred Compensation Plan for Executives (File No. 1-2313)*..........

10.8 1988 Deferred Compensation Plan for Directors (File No. 1-2313)*.............

10.9 1989 Deferred Compensation Plan for Executives........................................

10.10 1989 Deferred Compensation Plan for Directors...........................................

10.11 Executive Retirement Plan as amended December 31, 1985 (File No.

1-2313)*..............................................

10.12 Employment Agreement with Jack K. Horton (File No. 1-2313)*..................

10.13 Employment Agreement with Howard P. Allen (File No. 1-2313)*................

10.14 1987 Executive Incentive Compensation Plan (File No. 1-2313)*.................

10.15 1988 Executive Incentive Compensation Plan (File No. 1-2313)*.................

10.16 1989 Executive Incentive Compensation Plan................................................

10.17 Retirement Plan for Directors (File No. 1-2313)*............................................

10.18 Long-Term Incentive Plan for Executive Officers (Registration No.

33-19541)*..............................................................................................

10.19 Employment Agreement with Thomas A. Page..............................................

10.20 Employment Agreement with Stephen L. Baum.............................................

10.21 Employment Agreement with R. Lee Haney...................................................

10.22 Employment Agreement with Margot Kyd......................................................

12.

Computations of Ratios of Earnings to Fixed Charges.................................

13.

Annual Report to Shareholders for year ended December 31, 1988 (except for those portions which are expressly incorporated herein by reference, such Annual Report is furnished solely for the information of the Commis sion and is not deemed to be "filed" herein).

24.

Consent of Independent Public Accountants (See page 34 hereof).............

25.1 Power of Attorney......................................

25.2 Certified copy of Resolution of Board of Directors Authorizing Signature..

• Incorporated by reference pursuant to Rule 12b-32.

39