ML17297A652

Annual Financial Rept 1980

ML17297A652
Person / Time
Site:	Palo Verde
Issue date:	02/19/1981
From:	SOUTHERN CALIFORNIA EDISON CO.
To:
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ML17297A650	List: ML17297A649 ML17297A651 ML17297A652 ML17297A653 ML17297A654
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NUDOCS 8108110411
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Southern California Edison Company Southern California Edison Company provides electric ser-vice in a 50,000 square-mile area of Central and Southern California. This area includes some 800 cities and commu-nities'with a population of more than eight million people.

Edison's gross investment in utility plant totals nearly

$ 8.4 billion. Operating capacity at peak during 1980 to-taled 15,504 megawatts (MW), which included 13,221 MW of Company-owned facilities and 2,283 MW of capacity from other sources. Of the Company-owned facilities, 78 /0 was comprised of oil- and gas-fired generating units.

SCE's interest in coal-fired generating units accounted for another 12 /o, and 7 /0 is in hydroelectric plants. The Com-pany's 80 /0 interest in a nuclear plant accounted for the remaining 3 /o.

The Company, incorporated in 1909 under the laws of California, is a public utility and its retail operations are subject to regulation by the California Public Utilities Com-mission which has the authority, among other things, to establish retail rates and to regulate security issuances, accounting and depreciation. The Company's resale operations are subject to regulation by the Federal Energy Regulatory Commission as to rates on sales for resale, as well as to other matters including accounting and depreciation.

Under the National Energy Act, the federal Department of Energy has been granted regulatory authority over certain aspects of energy conservation, solar energy devel-opment, power plant fuel use, coal conversion, public utility regulatory policy and natural gas pricing.

The Company's planning and siting of new plant con-struction are subject to the jurisdiction of the California Energy Commission. Edison also is subject to various governmental licensing requirements, to Securities and Exchange Commission filing and disclosure requirements, and to certain other federal, state and local laws and regulations, including those related to nuclear energy and nuclear plant construction, environmental protection, fuel supplies and land use.

Contents 2: Letter to Shareholders 5: Review of 1980 16: Financial Review 18: Reports of Management and Independent Public Accountants 19: Financial Statements 34:

Capital Stock Dividend and Price Information 34: Management's Discussion and Analysis of Financial Condition and Results of Operations 36: Selected Financial Data 1970-1980

Southern California Edison Contpatty 1980 Annual Report Five-Year Compound Highlights 1980 1979 Change Growth Earnings Per Share $ 3.50 $ 4.56 (23.2)% 4.1%

Common Dividends Paid Per Share'2.78 $ 2.54 9.4 10.6 Operating Revenues (000) $ 3,661,117 $ 2,563,974 42.8 17.3 Energy Costs (000) $ 2,371,827 $ 1,344,023 76.5 Operating Expenses Net of Energy Costs (000) $ 917,156 $ 834,955 9.8 10.5 Kilowatt-hour Consumption (000) 59,915,187 ~ 59,517,861 '0.7 3.1 Customers Served 3,163,968 3,082,382 2.6 2.8 Area Peak Demand (Megawatts) 12,841 12,662 1.4 k

Area Generating Capacity at Peak (Megawatts) 15,504 15,071 2.9

'On September 18,1980, the Company's Board of Directors authorized an increase in the common stock quarterly dividend to $ 0.74 from $ 0.68 per sharc, effective with the October 31, 1980 payment, which is equivalent to $ 2.96 pcr share on an annual basis.

Earnings Per Share and Dividends Paid Per Share 1980 Sources and Distribution of Income

$ 3.80, $ 3.80 $ 3. 52 $ 4. 56 $ 3. 50

$ 1.68 $ 1.92 $ 2.24 , $ 2.54 $ 2.78

~ Earnings Per Share Agricultural Other 2%

6%

Earnings rcinvested in the business 1%

2%

E2 Dividends Paid Per Share Taxes Itesale Public 6%

god Depreciation Maintenance ~~ 6oro 70/o authorities Interest Dividends 7%

Commercial 2$ %

Other operation 10 expenses (principally labor)

Industrial 26%

Energy costs 62%

Residential 27%

1976 1977 1978 1979 1980 Sources Distribution Consistent increases in the common stock dividend underscore the The Company's sources of income in 1980 reflected a well balanced Company's commitment to provide competitive returns to its contribution from each of the major customer classes. Energy common stock shareholders. The Company's $ 294 million general costs represented a major portion of the distribution of income, rate increase, cffcctive January 1, 1981, is expected to reverse the accounting for approximately 62 cents out of every dollar the earnings decline experienced in 1980. Company collected in 1980.

Southern California Edison Company To Our Shareholders The year 1981 began on an encouraging note with January 1, 1981, the California Public Utilities Com-increased recognition from both the public and . mission (CPUC) authorized the Company an annual private sectors that we must find solutions to the increase in general rates of $ 294 million. The new problems of inflation and lagging productivity, in- rates provide for an increase in the Company's 1981 crease our domestic energy resources, reduce our re- authorized rate of return on rate base from 9.6% to liance on foreign oil and give greater attention to 11.2% and an increase in return on common equity cost-effective decisions and actions. from 13.49% to 14.95%, the highest return ever Your Company for some time has been working authorized by the CPUC for a major California utility.

toward these goals, and we pledge to continue and The increased rates and higher authorized return intensify our efforts to improve productivity through are of particular importance because earnings per increased management effectiveness, stringent share for 1980 were $ 3.50, down from $ 4.56 recorded cost controls and practical conservation programs. in 1979. The lower earnings resulted primarily from Further, we intend to remain in the forefront of increases in operating and money costs not covered innovation in our planning and operations to eco- by 1980 rates and by the dilutive effect of an in-nomically and efficiently meet the needs of our creased number of common shares outstanding.

customers. Earnings also decreased as a result of oil inventory In the area of cost control, excluding cost increases financing costs which were above the level included since the 1973 oil embargo of low-sulfur, foreign oil in 1980 rates. However, a recent energy cost adjust-and other fuels over which we have no control, Edi- ment decision by the CPUC should help provide for son's price of electricity has gone up less than the the recovery of future inventory carrying costs asso-rate of inflation and less than most other commodities ciated with fuel oil price increases.

and pioducts in Southern California. The adverse impact of inflation on earnings in 1982 In the. area of conservation, the Company has also should be partially alleviated by a $ 92 million implemented nearly 100 conservation programs since attrition allowance granted by the CPUC to be effec-the early 1970s.which, with positive customer re- tive January 1 of the 1982 non-rate-case year.

spons'e and 'co'operation, have saved more than 17 By turning more to alternative resources and en-million bari'els of costly fuel oil: This effort earned ergy management programs, we believe we can Edison the"President's Award for energy efficiency further neutralize some of the inflationary factors in January 1981 from, then-President Carter, and the which adversely affected 1980 financial results.

State of California's first business award for energy Largely because of conservation programs, Edison conserv'ation in'1980 from Governor Brow'n. currently projects average annual peak demand to in-In the area of innovation, your Company made a crease by only 2.8% per year in the present decade major policy commitment in 1980 to the accelerated while kilowatt-hour (KWH) consumption is estimated development of alternative and renewable energy to increase by only 2.4% annually. This compares resources including wind, geothermal, solar, fuel with a 1970 projected growth rate of 7.5% annually for cells, small hydro and cogeneration. Our strong both peak demand and KWH consumption for the existing resource base of hydroelectric, coal, oil and decade of the 70s.

nuclear resources gave us the foundation from The Company projects a need for about 6,000 which to pursue these promising new energy forms additional megawatts (MW) of generating capacity to that are important to our future generation mix. meet the requirements of an estimated four million Success in their development will contribute to re- customers by the end of the decade. Renewable and ducing our dependence on expensive fuel oil.and alternative energy resources are now forecast to eliminating the adverse financial impact of large gen- meet approximately one-third or 2,000 MW of this erating facility development that requires costly con- additional need. Another 2,340 MW are scheduled to struction and long lead times for regulatory approval. be provided by San Onofre Nuclear Generating Sta-Edison's ability to financially support development tion Units 2 and 3, and Palo Verde Nuclear Units 1, of renewable and alternate resources as well as con- 2, and 3 in Arizona.

ventional resources is dependent upon timely and While extensive studies by the Nuclear Regulatory adequate rate relief. In this connection, effective Commission (NRC) reaffirmed in January 1981 the

Southern California Edison Contpany seismic design basis of San Onofre Units 2 and 3, Perhaps never before in the history of our industry continued slow NRC administrative processing has has the need for innovation been as apparent as in caused scheduled operation of Unit 2 to be moved this first year of the new decade. In this spirit, we back from the fourth quarter of 1981 to the second reaffirm our commitment to improved productivity, quarter of 1982, and operation of Unit 3 to be moved effective conservation programs and the develop-back from the first quarter of 1983 to the third quar- ment of alternative and renewable energy resources.

ter of 1983. Public hearings for the licensing of Units Our new energy policy was cited as "a nationally 2 and 3 are expected to begin in mid-1981. significant breakthrough in utilityresource planning" We also will continue to pursue the licensing of by John Bryson, President of the California Public California and out-of-state coal projects in order to Utilities Commission. With the continued counsel of maintain our coal option for future energy resources. our Directors and the support of you, our sharehold-These power generation projects are important to ers, our employees and our customers, and with our resource requirements in the event that renew- a dedication to continued hard work and thoughtful able and alternative sources are delayed in fulfilling innovation in the way we do business, we plan to the promise we believe they hold. live up to that appraisal.

On September 18, the Board of Directors declared an 8.8% increase in the common stock quarterly dividend by raising the rate, on an annual basis, to Howard P. Allen William R. Gould

$ 2.96 per share. At year-end, the dividend was pro- Presirlent Chairman of the Board viding a yield on common stock market value of 11.6%

The Board's action represented the fifth dividend February 19, 1981 increase in the past four years. Over that period, the annual dividend increase has averaged 15.2%.

Edison's Board of Directors elected your Chairman and Chief Executive Officer, and your President to their current positions effective July 1 following the re-tirement of Jack K. Horton who served with distinc-tion as the Company's Chairman since 1968 and its Chief Executive Officer since 1965. Additionally, your President was elected a Director effective July 1.

The elections of H. Fred Christie as Executive Vice President and Chief Financial Officer, and Michael L.

Noel as Vice President and Treasurer also became.

effective on July 1. Mr. Christie was formerly Senior Vice President and Chief Financial Officer while Mr. Noel was Treasurer.

We will continue to benefit from Mr. Horton's ex-perience in his current capacity as a Director and Chairman of the Board's Executive Committee. His contributions to the Company have been well ex-pressed in a resolution of the Los Angeles City Howard P. Allen William R. Gould Council which termed his career "a unique blending of respected leadership and innovative thinking."

We will miss the able counsel of Company Directors William B. Coberly, Jr., and Terrell C. Drinkwater, who, because of having reached retirement age, are not standing for reelection to the Board on April 16.

Mr. Coberly served as a Director since 1953, and Mr. I ~

Drinkwater served as a Director since 1964. Jack K. Horton

Southern Ca!ifornia Edison Contpany Nuclear Approximately 1,760 MW willbe added to the Edison system by San Onofre Nuclear Generating Station Units 2 and 3 which are now 86%

complete. The licensing of the two units (shown below and at right),

coupled with the realization of Edi-son's alternative energy goals, will contribute to the displacement of expensive fuel oil in the last half of the 1980s. Edison also has a 15.8%

interest or 579 MW in Palo Verde Nuclear Generating Station Units1, 2, and 3 which are 56% complete.

Sonlhern California Edison Company Year in Review Monthly Billing Affects Reported Electric Consumption Generation Resources Under Construction Electric consumption by Edison's 3.2 million customers in Edison projects a need for 6,000 MW of new generating 1980 totaled 59.9 billion KWH. However, Edison's conver- capacity for this decade to meet the electric needs of its sion of customer accounts from bi-monthly to monthly customers. This generation requirement is equal to about billing has caused a distortion in statistical comparison of 40 percent of Edison's current resources, 1980 KWH consumption with 1979 consumption. In 1980, Edison spent approximately $ 782 million on its The monthly billing changeover was initiated in April construction programs and currently projects an expendi-and essentially completed in December. Electric bills, sent ture of about $ 953 million in 1981.

to about1.3 million customers in December, would not have Edison's ownership share of San Onofre Nuclear Gen-been mailed nor recorded until January of the 1981 report- erating Station Units 2 and 3, which will each provide ing year under the previous bi-monthly system. As a re- 1,100 MW, was reduced from 80% to 76.55% during the sult, reported electricity consumption in 1980 was 0.7% year. This resulted from the purchase by the cities of Ana-over 1979 levels. Excluding the effect of the conversion, heim and Riverside of 1.66% and 1.79%, respectively, of total KWH consumption for 1980 would have de- Edison's interest in the two units, which are now about clined 0.4%. 86% completed. The Company's ownership interest in A total of 81,586 customers were added to the Edison San Onofre Unit 1 remains at 80%.

system in 1980 compared to 95,837 in 1979 when the Edison also has a 15.8% interest totaling 579 MW in largest yearly customer increase since 1963 was recorded. three 1,222-MW units being constructed at the Palo Verde The increase in customers during the year subsequently Nuclear Generating Station near Phoenix, Arizona.

increased total 1980 residential consumption by 1.7% Construction is about 56% complete and operation is compared with 1979. Customer conservation efforts in scheduled for the 1983-86 period.

~

1980 and the higher cost of electricity, however, served to San Onofre Changes: As a result of evaluations of the reduce average annual residential consumption to 5,939 Three Mile Island (TMI) accident, the NRC required a re-KWH as compared with 6,010 KWH in 1979. view of the design and operating procedures of all operat-Commercial usage gained 2.2% in 1980 as compared ing nuclear power plants. Although San Onofre Unit 1 is with the previous year, while industrial consumption de- different in design from TMI, the Company removed Unit clined 3.3% and consumption by other customer class- 1 from service from late January to early February to per-

,ifications increased by 3.2%. form certain NRC-required changes. Additional NRC-The average annual growth in total KWH consumption required changes were implemented during the plant's re-over the last five years has been 3.1%. fueling which commenced in April, and the Company ex-pects to proceed with additional design changes in 1981 Record Peak Set During Heat Wave and 1982.

A record area peak demand of 12,841 MW was set July 30, During'the'April refueling of Unit 1 at San Onofre, as a result of heavy air-conditioning loads during a heat normal maintenance procedures revealed deterioration of wave. The new record represents a 1.4% increase over the a number of the steam generator tubes. Corrective action 12,662 MW area peak recorded in September 1979. The irivolving a new process developed by the steam gener-annual growth in peak demand over the last five years, ator manufacturer, termed "sleeving," has been initiated to including the 1980 peak, was 4.4%. correct the tube leaks. The Company presently expects that Unit1 will return to service in the second quarter of 1981, subject to NRC authorization. Advantage is being

Southern California Edison Contpany Hydro Penstocks drop sharply through mountains to Edison's Big Creek Power Station P3 in photo at right below. Photo directly below shows new turbine which was added to the four-turbine power station in early 1980 to contribute another 35 MW to the Edison system. Of Edison's alternative and renewable energy options, hydroelectric power is estimated to be a prime source with a total of 720 MW of additional hydro generation targeted by the Company in the current decade.

7( ~)

Southern California Edison Contpany Capacity Additions: 1981-1990 The Company has set a goal for renewable and alternative resources during the next ten Rene wablel years to provide about one<< Alternative 30%

(incl. hydro) third of the approximately 6,000 megawatts of capacity additions required for load growth and retirement of Purchased power 21%

older oil and gas-fired units.

Nuclear 35%

Coal 14%

taken of the outage to perform additional NRC-required Non-capital generation resources are being examined design changes which would have necessitated unit in the Western U.S., Mexico and in Canada where a shutdown. feasibility study is in progress for purchase participation in a 2,000-MW coal-fired generating station near Generation Resources Planned Calgary, Alberta.

Edison's reduced annual load growth projection of 2.8%

(down from an earlier forecast of 3.3%) has combined Edison Pursues Renewable Energy Resources with increased purchased power and the Company's com- Renewable and alternative energy resources are now fore-mitment to alternative and renewable energy resources cast to meet one-third, or 2,000 MW, of the approximately to necessitate the rescheduling of two generating projects 6,000 MW of additional electric generating capacity in 1980. needed by Edison customers during the 1980s, compared In November, Edison applied to the California Energy to 14% or 900 MW prior to the Company's acceleration of Commission for a deferral in hearings for its proposed

• its renewable energy plans.

Lucerne Valley 1,290-MW "peaker park" combustion- Significant steps were taken in 1980 toward meeting this turbine generating facility. The facility is scheduled as a goal in four key areas.

~ Utilization of hydroelectric contingency project should other alternatives not develop energy through hydro as expected. purchases from others and through expansion of Edison has rescheduled the California Coal Project from Edison-owned hydro resources.

1988-1990 to 1991-1993. In response to the Company's ~ Utilization of solar energy through central station Notice of Intent to build this three-unit, 1,500-MW coal- thermal generation and a program to encourage low-fired generating station, the California Energy Commission cost solar photovoltaic development.

has recently determined that three sites located in the east- ~ Utilization of wind energy through wind turbine ern California desert are acceptable. developments and a program to encourage wind Edison has been pursuing the licensing of the Allen- turbine installations by others.

~ Utilization of geothermal energy from beneath Warner Valley Energy System, a multi-component coal project in Nevada and Utah. The Company withdrew its California's Imperial Valley and through a geothermal licensing application on this total project and plans to re- purchase agreement with Mexico.

submit the application for a project limited to just the coal- Hydro: On February 24, a hydroelectric unit was placed fired Harry Allen Generating Plant in Nevada, which is in operation at Big Creek in the High Sierra which added now more consistent with the Company's current projec- 35 MW to the Edison system, and an application was filed tions for needed capacity. in February with the Federal Energy Regulatory Commis-Edison also continues to actively pursue the acquisition sion for the construction of a 200-MW hydroelectric, unit of non-capital generation resources in an effort to near Big Creek in the mid-1980s.

reduce the large amount of capital required for annual Hydroelectric power remains the Company's prime construction programs, and to further reduce dependence source of alternative energy with a total of 720 MW of on expensive foreign oil. As opportunities arise, the additional hydro generation planned by the end of the Company plans to continue to purchase generating current decade.

resources constructed and owned by other utilities in an Edison has entered into contractual agreements to pur-effort to reduce the need for capital expenditures. chase hydro power from the development of a facility of between 200 MW and 300 MW by the Upper San Joaquin

Soufhern California Edison Contpany Geothermal Three Edison generating stations in Water Flow California's Imperial Valley will 5 7 Steam Flow provide the base for Edison's accel- Production well erated commitment to geothermal A Hot water Sc steam energy by 1990. Edison also has 4 Separator completed a benchmark geothermal Steam Y

purchase agreement with Mexico Turbine for 70 MW of geothermal power. 120'F 6. Generator Shown below is the Company's J 7. Electricity 10-MW Brawley geothermal plant s. Condenser which is the nation's first utility- h hah

9. Cooling tower owned central station generating 12 b+I Cooled water 1O system to operate on steam con- 11. Water vapor verted from a hot water geothermal 12. Injection pump source. Schematic at right shows 13. Waste water 14 how steam propellant is extracted 13 14. Injection well from Imperial Valley's highly saline h V geothermal fluids. 2 1

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Southern California Edison Ctnnpany Generation Capacity Mix

'1980 Recorded 1990 Projected Megawatts 15,504 Megawatts 20,230 In addition to completing nu-clear capacity under construc- Rene wablel tion, Edison is pursuing the Alternative 13%

development of renewable (incl. hydro) and alternative resources and Purchased 16 non-oil-generated purchases Hydro power to reduce its dependence 6'urchased 15%

on foreign oil and to help power Nuclear 13%

stabilize the cost of service to 2%

its customers. Nuclear 10% I +IIII Coal 13 Oil 6 Gas 67% Oil 6c Gas 45%

River Water and Power Authority and from a 120-MW and is expected to produce about i/z MW of electricity.

Dinkey Creek project by the Kings River Conservation In a further effort toward achieving the development District, both scheduled for operation in the mid-1980s. goal of 120 MW of wind-generated electricity by 1990, Edi-An additional 100 MW of small hydro capacity from son became the first investor-owned electric utility to customer-owned facilities and Edison-owned hydro im- solicit proposals from private developers for the commer-provements are also planned in the same time frame. cialization of wind parks. Under the plan, Edison will Solar: On July 23, Edison completed an agreement for purchase wind power from energy suppliers who install the pilot production of silicon solar cells using a new generators of their own selection at sites or parks 'ind dendritic web process for increased cell efficiencies and withiri Edison's 50,000 square-mile service territory.

lower manufacturing costs, and on October 30 dedicated Geo/hernial: On October 15, Edison dedicated the first the nation's largest solar electric central receiver power system to use the Imperial Valley's highly saline geother-plant near Daggett, California. The project, termed "Solar mal fluids for central station electrical generation, and on One," is scheduled for operation in late 1981 and will be- November 12 signed the first agreement between the U.S.

come the first electric generating station powered directly and Mexico'o purchase energy from Mexican geothermal by solar energy and connected to a utility grid. Solar One deposits.

is a cooperative effort by Edison, which serves as project In a cooperative venture with Uriion Oil Company of manager of the non-solar portion of the plant, the Depart- California, Edison began utilizing geothermal energy from ment of Energy (DOE), the Los Angeles Department of the Imperial Valley at Brawley in October to produce 10 Water and Power, and the California Energy Commission. MW of electricity, enough power for a community Located at Edison's Cool Water Generating Station, the of 5,000 people. The Brawley unit is the first utility-owned solar system will produce 10 MW of electric power during generating plant in the United States to operate on steam peak daylight hours, enough electricity to serve about converted from a geothermal hot water resource, as dis-5,000 people. The facility also will include a thermal stor- tinguished from a pure steam resource..

age subsystem capable of providing steam to generate Union and Edison also are developing a 10-MW geo-,

electricity at approximately 7 MW during periods of cloud thermal plant near Niland, south of the Salton Sea. The cover'and in the early'evening hours following sunset. plant's initial operation is scheduled for 1982. Also, com-Edison's production goal for solar generation is 310 MW pletion of a commercial size, 41-MW geothermal generat-in the current decade through the development. of both ing unit at Heber is projected for 1983. The three Imperial solar, heat conversion systems and solar photovoltaics. Valley developments will provide the base from which

'"%nid 'On October 30, Edison became the'first electric"'tility Edison plans to meet its goal of 420 MW of geothermal to issue a proposal for the shared development of energy by 1990.

wind parks, and on December 16, began operation of Cali- Edison signed an agreement in November to purchase fornia's first wind turbine generator near Palm Springs. electricity'-from Mexico's geothermal fields nea'r~3llexicali.

The horizontal axis wind turbine generator is located The transaction with Comision Federal de Electricidad near Edison's Devers Substation where the Company plans (CFE) marks the first international sale of geothermal'ower to complete construction of a vertical axis wind turbine in North America. It gives the Company purchase generator in early 1981. The horizontal Bendix/Schachle rights to up to 70 MW of electricity beginning in 1984 unit is designed to produce approximately 3 MW of elec- when Mexico's new geothermal generating units are tricity while the vertical axis Alcoa Darrieus generator scheduled to be on line. Another 260 MW in purchase represents a second concept in wind energy conversion contracts with CFE are also anticipated. 4 1 l

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Southern California Edison Contpany 10 Cogeneration and Fuel Cells Heat from on-site electricity genera- ro 1. Fuel tion helps paper manufacturing 2. Fuel processing system process at Pomona's Garden State 3. Hydrogen Paper Company in photo below. 4. Air (oxygen)

Termed cogeneration, electricity as 5. Anode an industrial by-product, and small power production arrangements within Edison's service territory in

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7.

8.

Cathode Electrolyte Steam 1980 totaled 206 MW. Additional 9. Power conditioning system generation capability by 1990 is 10. AC electricity planned from fuel cell de- r 6 velopments. A phosphoric acid fuel cell built by United Technologies Corporation is pictured at right along with schematic showing cell's electrochemical operation.

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Southertt California Edisott Company Research and Development Expenditures (in millions)

$ 15 $ 18 $ 28 The Company, an industry leader in research and devel-opment, has made a major commitment to the accelerated development of renewable and alternative energy resources.

C3 Recorded,

~ Projected 1977 1978 1979 1980 1981 Cogenerntiott: Edison actively pursued cogeneration voltage regulation, distribution circuit management and contracts with large commercial and industrial customers streetlight conversion.

during the year in a major effort to convert waste heat Edison has placed increased emphasis on its streetlight and gas from industrial processes into usable electricity at conversion program and at the end of 1980, energy-the industrial site. At year's end, electrical cogeneration efficient high-pressure sodium vapor lamps had been in-and small power production arrangements within the stalled in 102,390 Edison-owned streetlights. The remain-Company's service territory totaled 206 MW. ing 238,610 Edison-owned streetlights are scheduled for Under the Company's accelerated resource plan, conversion to sodium vapor by 1984.

cogeneration is projected to contribute an additional The Company augmented its commercial and industrial 300 MW to the Edison system by 1990. energy audit activities in 1980 to include the testing of fi-Research attd Development: Edison's research and develop- nancial incentives to further encourage customers to make ment expenditures in 1980 totaled more than $ 40 million. investments in conservation and load management hard-Expenditures of nearly $ 56 million currently are planned ware such as more efficient lighting fixtures and demand for research and development in 1981 including substantial limiting equipment and controls. These financial incen-alternative energy R&D. tives and the'ongoing energy audit activities with the The Company's research efforts include support of a Company's commercial, industrial, agricultural and public solar photovoltaic pilot production facility designed to test authority customers achieved a total savings of 1.1 billion production feasibility of a low-cost, continuous silicon KWH and a demand reduction of 276 MW.

ribbon manufacturing process. Development efforts also While Edison has offered home energy audits to high-include a 92-MW coal-gasifier/combined cycle demonstra- use (1,000 KWH per month) residential customers on a tion facility at Edison's Cool Water Generating Station continuing basis with more than 15,000 audits conducted site, a feasibility study near the Salton Sea aimed at ,in 1980, the service will be expanded in 1981. The ex-generating electricity from solar heated salt ponds, and panded program conforms to the federally-mandated Res-investigation of a 200-ton-per-day demonstration facility idential Conservation Services program as filed during the which would utilize thermochemical and bioconversion year by the California Energy Commission.

systems to produce gaseous fuel from wastes. The computerized home energy audit program termed In addition, Edison plans to produce 130 MW from fuel "SAVES" (Sure Actions for Valuable Energy Savings) was cells in the current decade through research support at expanded in 1980 to respond to inquiries from 115,000 res-Westinghouse and General Electric and through con- idential customers with personalized detailed conserva-tinued participation in a multi-utilityprogram with tion and load management suggestions.

United Technologies Corporation. The Company plans to test the use of heat pump water heaters in approximately 300 residences in 1981. The heat Conservation Efforts Increase pump water'heater test program is the result of:two years Customer response to the Company's conservation pro- of testing concluded in 1980 with DOE and other Califor-grams in 1980 resulted in a savings of more than three nia electric utilities.

billion KWH of electricity, equivalent to about five million The Company installed more than 37,000 electric water barrels of expensive fuel oil. This response was due to the heater insulation jackets in 1980 and distributed approxi-combined efforts of nonresidential and residential cus- mately 37,700 low-flow shower devices. Since the pro-tomers as well as the Company's activities in the areas of gram's inception in 1978, almost 83,000 jackets and 81,000 shower devices have been installed with energy savings

Southern California Edison Company Wind Resembling a propeller from a gi-gantic aircraft, 191-foot tall Bendix/

Schachle 3-MW wind turbine generator (WTG) towers above California's first wind energy center near Palm Springs. The wind center was dedicated by Edison in De-cember and will house a second,

'/x-MW Alcoa Darrieus WTG (at right) in early 1981. Edison plans to h

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help augment its electrical genera-tion base by 1990 through such in-stallations and through a program to encourage wind turbine in-stallations by others.

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Southern California Erlison Company 13 Total Revenues and Energy Costs (in billions)

$ 1.8 $ 2.1 $ 2.3 $ 2.6 $ 3.7

$ 0.9 $ 1.0 $ 1.2 $ 1.3 $ 2.i Energy costs, the Company's largest expense, continue to rise. However, recent modiTi-cations to the Energy Cost Adjustment Clause (ECAC) procedure have enabled the Company to recover its energy costs on a timely basis.

CD Total Revenues

~ Energy Costs 19'76 1977 1978 1979 1980 from the combined installations totaling approximately Energy Costs Continue To Rise 206 million KWH. Energy costs continue to represent the Company's largest expense, amounting to $ 2.4 billion in 1980, compared with Load Management Activities Increase $1.3 billion in 1979. These costs consumed approximately Complementing Edison's conservation efforts are a 62 cents out of each income dollar.

number of nonresidential and residential load manage- Fuel oil consumption in'1980 totaled 30 million barrels, ment programs designed to reduce peak demand and down from 48 million barrels in 1979, primarily because defer the need for constructing additional generation the Company was able to utilize significant amounts of facilities. These programs are expected to reduce the natural gas in addition to purchased energy from the Company's projected peak demand by 700 MW by 1985, a Pacific Northwest and Southwest.

capacity equivalent to an amount which could serve more More than 196 billion cubic feet of natural gas, equal to than 350,000 people. about 33 million barrels of oil, was burned during 1980, To meet Edison's goal to reduce peak demand, the compared to approximately 150 billion cubic feet, equal to Company has developed a number of load management about 25 million barrels of oil, in 1979. Natural gas supplies programs for commercial, industrial and agricultural met more than 50% of the fuel requirements of the customers. Edison's load deferral experiments are designed Company's oil- and gas-fired generating plants for the first to test load shifting equipment performance, while load time since 1972.

management programs have been implemented to include several rate categories such as time-of-use (TOU) rates and Synthetic Fuels interruptible rates, both designed to limit peak demand. The Company, through Mono Power Company, its Historically, residential customers are the single largest wholly-owned fuel resources exploration and develop-"

contributors to Edison's demand peak. In 1980, Edison ment subsidiary, is participating in a feasibility study of initiated an innovative approach to residential load man- the proposed Emery, Utah, Coal Conversion Project, agement called Demand Subscription Service (DSS). which is intended to produce substitute natural gas and The DSS concept allows a customer to select a level of methanol. Mono also is one of 12 participants in the kilowatt demand and is designed to automatically limit Paraho Project, an $ 8 million engineering effort for an oil the customer's demand for electricity to that level when shale commercial demonstration module.

7 the device is activated during periods of critical capacity availability. DSS utilizes a load management device in- Resale Rates stalled in conjunction with the customer's meter which In December 1980, the Company filed an application with will trip (shut off) the customer's total electrical load if the the Federal Energy Regulatory Commission for higher re-predetermined demand level is exceeded. The customer sale rates and an optional TOU rate for resale customers.

may manually reset the device and restore service after These rates',"if approved, would produce annual increases the electrical load has been reduced to the predetermined in resale revenues of approximately $ 18.6 million.

level or below.

The Company's Swimming Pool Pump program is de- Costly Air Quality Rule signed to shift swimming pool pumping to off-peak hours In 1980, Edison initiated a court challenge to a rule and to reduce the customer's pool pumping time by in- adopted by the California Air Resources Board which re-stalling time-clock trippers. Approximately 54,000 new quired a 90% reduction of oxides of nitrogen (NOx) from participants were added to the program in 1980, bringing power plants by 1990. This rule could have cost the Com'-

total participation to more than 95,600 customers and pany's ratepayers as much as $ 1.5 billion by requiring resulting in an on-peak demand reduction of 108 MW. massive NOx control equipment retrofitting at 16 Edison

Southern California Edison Contpany 14 Solar Technicians install first of 1,818 ~ Waterflow heliostats (mirrors) at nation's 5 o- Steam flo largest central station solar generat- 1. Sun ing facility near Daggett, Californi, 2. Heliostat in photo at right below. When 3. Boiler completed in late 1981, computer- Y 4. Steam directed heliostats will reflect sun' 4 5. Turbine heat to 300-foot central tower 6. Generator (shown in background and in t~a 7. Electricity schematic at right) to produce 10 @~<3 8. Condenser MW of electricity during daylight t~>a 10

9. Cooling tower hours. Edison plans to increase its 10. Cooled water generating capacity in the 1980s l~><3 u te 11. Water vapor from both solar thermal systems like V~<3 12. Pump Solar One and high efficiency, low- 13. Make-up water cost solar photovoltaic systems similar in configuration to sys-tem shown directly below.

>> ~

• I I I I

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Southern California Edison Company 15 Area Capacity and Peak Demand (in megawatts) 14.071 '4,278 14.966 15.071 15,501 11,292 11,564 12,159 12,662 12,841 In1980, a July heat wave pushed the demand for elec-tricity to a record peak of 12,841 megawatts. However, Edison's load management programs and conservation ef-forts by its customers helped hold the 1980 peak to only 1.4% above the 1979 peak.

~ Area Capacity

~ Area Peak Demand 1976 1977 1978 1979 1980 Reserve margin: 2598 2396 2396 19'fo 219'r power plants. However, revisions to the rule adopted by were appointed Central and Southeastern Division the Hoard at year's end are expected to reduce the cost Vice Presidents, respectively, effective June 1, 1980.

burden to ratepayers to between $ 300 million and $ 500 million by limiting the retrofit to seven power plants. Sub- Jack K. Horton Humanitarian Award stantial cost exposures remain, however, and the Company Edison has established an award to provide recognition plans to continue its challenges through the courts to the for those deserving employees who have distinguished most recent version of the rule. themselves by displaying acts of exceptional courage and initiative in an emergency situation, or who perform any .

Edison Van Pool Program other noteworthy act or service of a humanitarian nature.

In May, Edison initiated a van pool program for Company award is named in honor of Jack K. Horton who,

'he employees which, when fully operational, is expected to while serving as Edison Chairman for 22 years," contrib-save more than 400,000 gallons of gasoline annually by uted much toward the achievement of excellence for removing approximately 500 vehicles per workday from which this Company stands.

roads and freeways. Fares charged to employees currently in the program are used to pay for Edison's lease on the Affirmative Action Program Continues vans and for fuel, insurance and upkeep. The Company Efforts to increase the representation of minorities and pays for the administrative costs of the program, which is females in the work force continued during 1980 through the first ever underwritten in California by a publicly- the Company's Affirmative Action Program.

held utility. During 1980, minority representation increased from 22.2% at the beginning of the year to 24.8% at year-end.

Management Appointments During the same period, female representation increased Effective January 1, 19M, Alan M. Nedry was appointed from 18.9% to 20.2%.

Vice President-Washington D.C. Region, and Geoffrey During the five-year period from year-end1975 through Cook was appointed Vice President-Sacramento Region. year-end 1980, minority representation in the Company's R. D. Blake, formerly Central Division manager, and work force increased from 16.5% to 24.8% and female R. L. Whelchel, formerly Southeastern Division manager, employees increased from 1S.4% to 20.2%.

Percentage of Male, Female and Minority Asian American Total Male Female Black American Indian Hispanic Minorities Employees at Year-End Year-End Year-End Year-End Year-End Year-End Year-End Year-End 1975 and 1980 1975 1980 1975 1980 1975 1980 '1975 . '1980 1975 1980 1975 1980 1975 1980 Management'" 93.5 88.0 6.5 12.0 1.7 3.0 3.S 5.1'.6 0.5 4.1 6.2 9.9 14.9 Non-Management'2'0.7 76.1 19.3 23.9 6.4 9.0 1.4 2.8 0.7 0.9 10.8 16.6 19.4 29.3 Total Company"'4.6 79.8 15.4 20.2 5.0 7.1 2.1 3.6 0.7 0.8 8.8 13.4 16.5 24.8 il) htanagcmrnt employers include thc "0/fictats and Managers" and "professionals" Af/innatiec Action Categories.

Q) lvon.htanagrmrnl employers include the "Technicians," "O/Pcc and Clerical," "Craftsmen," "Operators,"

"taborer>>" and "Sc ruler 1Vor hers" Affirmative Action Categories.

i3l Includes all classes of cmptoyccs.

Southern California Edison Company 16 Financial Review The following discussion highlights the events and occur- Energy Cost Adjustments rences which the Company believes had a significant im- Under the ECAC procedure, electric rates are adjusted up pact on its financial position during 1980. A more detailed or down three times annually to reflect the cost of fuel review of the factors affecting Edison's operations is con- and purchased power used to generate electricity in a tained in Management's Discussion and Analysis of Finan- given period. Energy costs above or below those used in cial Condition and Results of Operations in this report. the established rates are accumulated in a balancing ac-Revenues surpassed the three and one-half billion dol- count, and the accumulated amount is reflected in suc-lar level during 1980, totaling $ 3.66 billion for the year. ceeding rate adjustments. Although cash flow is affected, This represented an increase of $1.097 billion or 43% over the ECAC procedure is designed to prevent fluctuations 1979 revenues. However, most of the increase reflected re- in earnings as a result of changes in energy costs.

imbursement for expensive foreign oil and other energy The ECAC procedure was modified by the CPUC early costs and did not affect earnings. Therefore, despite this in 1980 and, as a result, the 1979 year-end undercollection record level of revenues, earnings per share. for 1980 were of over $ 300 million, together with interest, was fully re-down considerably from the $ 4.56 recorded in 1979, result- covered during 1980. This was accomplished through two ing primarily from increases. in operating expenses and ECAC increases granted by the Commission which, in financing costs irt the year between general rate case deci- part, were designed to eliminate the undercollection in sions and the dilutive effect of an increased number of the balancing account. The first increase, of $ 338 million common shares outstanding. Earnings also decreased as a annually, became effective in February concurrent with result of oil inventory financing costs which were above the changes in the ECAC procedure. The second increase, the level included in 1980 rates. However, a recent Energy of $ 560 million annually, was effective in May.

Cost Adjustment Clause (ECAC) decision by the Califor- In recent months, substantial quantities of natural gas nia Public Utilities Commission (CPUC) should help have been available to the Company, reducing the need to provide for the recovery of certain inventory carrying burn higher-priced foreign oil. Consequently, at the re-costs associated with fuel oil price increases. quest of the Company, the CPUC granted two ECAC rate reductions. The first, a decrease of $ 236 million annually, General Rate Increase Granted was effective in October. The second, of $ 194 million an-As discussed in the Letter to Shareholders, the Company nually, became effective concurrent with the general rate was granted a $ 294 million general rate increase effective increase on January 1, 1981.

January 1, 1981. In granting this increase, the CPUC recog-nized substantial inflationary increases in operating and Financing Program Continues capital costs along with added expenses for customer con- Continued double-digit inflation, the Federal Reserve servation programs and the further development of re- Board's restrictive monetary policy, and uncertain domes-newable and alternate energy resources. tic and world affairs all contributed to extreme vola-The biennial rate review process, in effect since 1979, tilityin interest rates and financial markets during 1980.

and inflation caused the Company to experience lower The prime rate, the interest rate charged by large U.S.

earnings in the non-rate-case year. This condition, commercial banks to their most credit-worthy business which affected the Company in 1980, should be partially borrowers, reached a record high of 20% in April, then alleviated as a result of the CPUC's authorization of an plunged to below 11% in July. Late in the year, interest additional $92 million attrition allowance for 1982. This al- rates soared again and ended the year at an all-time lowance is designed to offset some of the increases in high of 21'/r.%.

operating and maintenance costs generally experienced in the year following a rate-case year.

Southern California Edison Contpany 17 Funds Required for Construction (in millions)

$782 $ 953 $ 768 $ 806 $ 769 $ 839 Construction expenditures are projected to be within the Company's objective to main-tain a financially manageable growth in plant additions.

Construction expenditures for 1981 reflect the near-term completion of San Onofre Nu-clear Units 2 and 3.

~

~

Recorded 7<<'j Projected <<Cl.'

I 1980 1981 1982 1983 1986 198$

Despite these difficulties in the capital market, the Dividend Reinvestment Plan Continues to Grow Company raised $ 726 million in new capital through four At the end of 1980, more than 20,000 shareholders, or public securities issues, one private placement, and the about 13% of the holders of Edison's common stock, were sale of common stock under Edison's Dividend Reinvest- participating in the Dividend Reinvestment and Stock ment and Stock Purchase Plan, Employee Stock Purchase Purchase Plan.

Plan, and Employee Stock Ownership Plan. This capital During the year, participants purchased 1.7 million was used to finance the Company's continuing construc- shares with over $ 40 million of dividends and optional tion program and to refund maturing debt obligations of cash payments. Since the plan was started in 1976,

$ 85 million. Details of these issues are provided in the ac- over $ 93 million has been invested in new shares. This companying table. represented approximately 4 million shares, or 5%, of the Of particular note, in September the Company privately Company's total common stock outstanding on December placed $ 50 million in 9s/8% mortgage bonds through an 31, 1980.

agreement, negotiated in September 1979, with a syndi-cate of foreign banks. 1980 Financings Reflecting the $ 726 million in total new capital raised in Amount 1980, Edison's capital structure at year-end 1980 was Month Issue (Millions) 47.5% debt, 13.6% preferred and preference stock, and February Common Stock 38.9% common equity. 7,000,000 shares $ 23'/s $ 162 Looking to 1981, the Company's capital expenditures March 25-Year First & Refunding are expected to amount to approximately $ 953 million for Mortgage Bonds the construction of new facilities and the development of renewable and alternative resources. Additionally, $144 Cou on Rate 15'/8% 200 million will be required to refund maturing debt obliga- September 7-year First & Refunding tions. To help finance these capital needs, Edison plans to Mortgage Bonds issue common and preferred stock, and mortgage bonds.

Coupon Rate 9s/s% 50'5 Some of the non-conventional sources of capital which October Cumulative Preferred Stock Edison plans to pursue include Eurodollar funds, U.S.

Dividend Rate 12%

government loan guarantees and grants for its research November 30-year First & Refunding and development programs in renewable and alternative Mortgage Bonds resources, and tax-exempt financing for pollution control Coupon Rate 133/2% 150 equipment. Ongoing Dividend Reinvestment and The first financing of the new year, eight million shares ,

Stock Purchase Plan, of common stock, was issued on January 29 at an initial Employee Stock Purchase public offering price of $ 243/s per share, raising approxi- Plan, and Employee Stock mately $ 188 million in net proceeds. Ownership Plan 89 Over the five-year period 1981 to 1985, construction ex- $ 726 penditures are projected to amount to approximately $ 4.1 billion. Construction expenditures as a percent of total "Reported as long-term debt in 1979 Balance Sheet and Statement of capitalization are expected to average less than 10% annu- Changes in Financial Position.

ally during this period, which is within the Company's objective to maintain financially manageable growth in plant additions.

Southern California Edison Conipany 18 Report of Management The accompanying financial statements have been pre- ment as Audit Committee members. The Audit Commit-pared by Company personnel in conformity with gen- tee meets periodically with the management of the Com-erally accepted accounting principles appropriate in the pany, the independent public accountants and the internal circumstances applied on a consistent basis. The integrity auditors to make inquiries as to the manner in which the and objectivity of the data in these financial statements responsibilities of each are being discharged and reports are the responsibility of management. In order to assure thereon to the Board of Directors. In addition, the Audit this integrity and objectivity, the Company maintains a Committee recommends to the Board of Directors the an-highly developed system of internal controls. This system 'nual appointment of the independent public accountants includes communication by written policies and proce- with whom the Audit Committee reviews the scope of the dures, organization structures that provide for appropri- audit and non-audit assignments and the related fees, the ate division of responsibility, and the selection and accounting principles being applied by the Company in training of qualified personnel and is augmented by pro- financial reporting, the scope of internal financial auditing grams of internal audits. procedures, and the adequacy of internal accounting con-An independent examination of these financial state- trols.

ments has been conducted by Arthur Andersen & Co., To further assure independence in performing and independent public accountants, in accordance with reporting the results of audits, representatives of the inde-generally accepted auditing standards. The accompanying pendent public accountants and the Company's staff of

,Report of the Independent Public Accountants expresses internal auditors have full and free access to meet with ari informed opinion as to whether the financial state- the Audit Committee, without members of Company ments, considered in their entirety, present fairly the Com- management being present, to discuss any accounting, pany's financial position, results of operations and changes auditing, or financial reporting matter.

in financial position, in conformity with generally accepted accounting principles applied on a consistent basis.

The Audit Committee of the Board of Directors is entirely composed of Directors who are free from any rela- H. Fred Christie William R. Gould tionships that, in the opinion of the Board of Directors, Executive Vice President Chairnian of the Board would interfere with the exercise of independent judg- and Chief Financial Officer and Chief Executive Officer Report. of Independent Public Accountants

'To the Shareholders and the Board of Directors, Southern California Edison Company:

We have examined the balance sheets and statements of In our opinion, the financial statements referred to capital stock and long-term debt of Southern California above present fairly the financial position of the Company Edison Company (a California corporation, hereinafter re- as of December 31, 1980 and 1979, and the results of its ferred to as the "Company" ), as of December 31, 1980 operations and the changes in its financial position for and 1979, and the related statements of income, earnings each of the three years in the period ended December 31, reinvested in the business, additional paid-in capital and 1980, and further, in our opinion, the quarterly financial changes in financial position for each of the three years in data set forth in Note 7 of "Notes to Financial Statements" the period ended December 31, 1980. Our examinations summarize fairly the results of operations for each quarter were made in accordance with generally accepted audit- within such years, all in conformity with generally ac-ing standards and, accordingly, included such tests of the cepted accounting principles applied on a consistent basis.

accounting records and such other auditing procedures as we considered necessary in the circumstances, and also included similar examinations of the financial statements for each quarter within each of the years. Los Angeles, California ARTHUR ANDERSEN & CO.

February 6, 1981

Southerrr California Edison Conrpany 19 Statements of Income Year Ended Deeenrber 31, 1980 1979 1978 Thousands of Dollars Operating Revenues: Sales (Note1) . $ 3,631,373 $ 2,553,126 $ 2,294,543 Other . 29,744 10,848 34,255 Total operating revenues (Note 7) 3,661,117 2,563,974 2,328,798 Operating Expenses: Fuel (Note 2) 1,729,552 1,433,658 1,086,051 Purchased power (Note 9) . 280,675 99,245 118,698 Provision for energy cost adjustments (Notes 1 and 4).............. 361,600 (188,880) 35,280 Subtotal energy costs............... 2,371,827 1,344,023 1,240,029 Other operation expenses (Notes 2, 5 and 6) . 392,593 322,191 283,622 Maintenance (Note 1) . 228,269 177,407 164,111 Provision for depreciation (Note 1) ......... 187,959 178,637 157,203 Taxes on income current and deferred (Notes 1 and 4) . 38,683. 100,292 72,803 Property and other taxes (Note 4) .......... 69,652 56,428 86,429 Total operating expenses . 3,288,983 2,178,978 2,004,197 Operating Income (Note 7) 372,134 384,996 324,601 Other Income and Allowance for equity funds used during Income Deductions: construction (Note 1) 121,488 92,019 58,471 Other net (Notes 1 and 4) .............. 65,771 47,739 31,319 Total other income and income deductions 187,259 139,758 89,790 Total Income before Interest Charges . 559,393 524,754 414,391 Interest Charges: Interest on long-term debt............. 227,163 179,626 154,301 Other interest and amortization (Note 1) . 55,493 25,456 28,357 Total interest charges . 282,656 205,082 182,658 Allowance for debt funds used during construction (Note 1)... (40,799) (26,547) (19,950)

Net interest charges 241,857 178,535 162,708 Net Income (Note 7) 317,536 346,219 251,683 Dividends on Cumulative Preferred and Preference Stock 60,950 53,738 49,457 Earnings Available for Common and Original Preferred Stock .. $ 256,586 $ 292,481 $ 202,226 Weighted Average Shares of Common and Original Preferred Stock Outstanding and Common Stock Equivalents (000) 73,241 64,202 -:- 4 57,477 Earnings Per Share: Primary (Notes 1 and 7) . $ 3.50 $ 4.56 $ 3.52 Fully diluted (Notes 1 and 7) $ 3.48 $ 4.39 $ 3.38 Dividends Declared Per Common Share . $ 2.84 $ 2.60 $ 2.30 The accompanying notes are an integral part of these statenrents.

.Southern California Edison Company 20 Balance Sheets Dcmnbcr 31, 1980 1979 ASSETS Thousands of Dollars UtilityPlant: Utilityplant, at original cost (Notes 1, 2 and 8) .. $ 5,785,200 $ 5,502,984 Less Accumulated provision for depreciation (Notes 1 and 8) . 1,840,233 1,676,148 Net utility plant. 3,944,967 3,826,836 Construction work in progress (Notes 5 and S) . 2,600,460 2,058,958 Nuclear fuel, at amortized cost 20,649 15,728 Total utility plant 6,566,076 5,901,522 Other Property and Investments: Real estate and other, at cost less accumulated provision for depreciation .. 9,754 11,110 Subsidiary companies (Note 1) 96,757 93,725 Total other property and investments....., 106,511 104,835 Current Assets: Cash and temporary cash investments (Note 3) ... 7,642 4,705 Receivables, less reserves of $ 8,005,000 and

$ 8,496,000 for uncollectible accounts at respective dates (Note 1) . 288,979 212,728 Fuel stock, at cost (first-in, first-out) (Notes 2 and 3) 593,008 317,908 Materials and supplies, at average cost .......... 48,942 39,388 Regulatory balancing accounts (Notes 1 and 4)..... 307,090 Accumulated deferred income taxes (Notes 1 and 4) 29,343 Prepayments and other (taxes, insurance, etc.) ... 54,040 43,717 Total current assets . 1,021,954 925,536 Deferred Charges: Unamortized debt expense (Note 1) .. 18,880 16,589 Other deferred charges 20,477 28,755 Total deferred charges 39,357 45,344

$ 7,733,898 $ 6,977,237 The. accompanying notes are an integral part of these balance sheets.

Southern California Edison ConIpany 21 Demnber 31, 19BO 1979 CAPITALIZATIONAND LIABILITIES 71tousands of Dollars Capitalization:

Preferred Stock subject to mandatory redemption/repurchase requirements:

Cumulative Preferred Stock $ 337,500 $ 262,500 Preference Stock 62,000 62,000 Preferred Stock other:

Original Preferred Stock 4,000 4,000 Cumulative Preferred Stock 458,755 458,755 Preference Stock 19,897 27,067 Common Stock, including additional stated capital . 673,921 577,259 Other Shareholders'quity:

Additional paid-in capital 763,519 601,578 Earnings reinvested in the business .... 1I092I137 1,054,296 Long-term debt (Note 1) 2,945,824 2,746,207 Total capitalization . 6,357,553 5,793,662 Current Liabilities: Accounts payable 356,340 288,897 Commercial paper payable (Note 3).... 164,975 134,340 Notes payable to banks (Note 3)....... 19,998 19,840 Current maturities of long-term debt .. 143,548 84,544 Customer refunds 66,160 58,139 Taxes accrued (Note 4) . 121,916 73.312 Interest accrued . 66,124 55,619 Customer deposits . 11,242 14,583 Dividends declared. 60,292 48,381 Regulatory balancing accounts net (Notes1 and 4) . 37,518 Accumulated deferred income taxes (Notes 1 and 4) 89,893 Other 26,167 18,130 Total current liabilities 1,074,280 885,678 Commitments and Contingencies (Note 2)

Reserves and Deferred Credits: Customer advances and other deferred credits . 63,652 51,598 Customer refunds 58,454 Accumulated deferred income taxes and investment tax credits (Notes 1 and 4) ........ 198,476 155,297 Reserves for pensions, insurance, etc. (Note 6) .. 39,937 32,548 Total reserves and deferred credits ............ 302,065 297,897

$ 7 733 898 $ 6,977,237 The accotnpanying 'iIotes are aiI integral part of these balance sheets.

Soufhcru California Edison Coutpany 22 Statements of Changes in Financial Position Year Ended December 31, 1980 1979 1978 Thousands of Dollars Funds Provided By:

Operations Net income (Note 7) 317,536 346,219 $ 251,683 Non-fund items Depreciation (Nofc 1) . 187,959 178,637 157,203 Equity in earnings of unconsolidated subsidiaries (Note 1) (2,164) (3,133) (608)

Allowance for debt and equity funds used during construction (Note 1) ... (162,287) (118,566) (78,421)

Investment tax credit deferred net (Nofes1 attd 4) ....... 25,235 45,533 32,568 Deferred income tax conversion to monthly billing . 18,299 Other net 13,136 9,269 4,788 Earnings distributed from unconsolidated subsidiaries. 1,000 1,000 Total from operations 397,714 458,959 368,213 Long-term financing Preferred stock. 75,000 127,500 Preference stock'ommon (7,169) (13,828) (14,522) 258,607 62,002 203,364 debt 350,000 355,000 200,000 stock'ong-term Total from long-term financing 676,438 530,674 388,842 Other sources Construction advances and other . 14,131 11,628 9,258 Sale of non-current assets . 89,557 Decrease in working capital"..... 33,180 3,918 13,067 Total from other sources 136,868 15,546 22,325 Total funds provided $ 1,211,020 $ 1,005,179 $ 779,380 Funds Applied To: Construction expenditures 943,797 792,713 $ 646,252 Less allowance for debt and equity funds used during construction (Nofe 1) ......... 162,287 118,566 78,421 Funds used for construction expenditures . 781,510 674,147 567,831 Advances to unconsolidated subsidiaries .... 720 5,769 3,630 Dividends 273I312 221,400 182,738 Repayment of long-term debt .............. 84,544 33,736 35,500 Customer refunds net. 58,454 49,321 (36,918)

Other net. 12,480 20,806 26,599 Total funds applied . $ 1,211,020 $ 1,005,179 $ 779,380 Working Capital Changes Receivables net 76,251 1,103 $ (1,377)

Fuel stock and materials and supplies (Notes 2 and 3) 284,654 165,812 (114,118)

Prepayments and other 18,583 6,474 (31,990)

Regulatory balancing accounts net (Notes 1 and 4) (235,512) 162,586 (9,301)

Notes and accounts payable (106,257) (274,011) 77,288 Taxes and interest accrued (59,109) 14,688 (64)

Other net (11,790) (80,570) 66,495 (Decrease) in working capital" (33,180) (3,918) $ (13,067I

'These amounts include conversions of Preference Stock, 5.20% Convertible Series, to Common Stock.

"Other than current maturities of long-term debt.

The accorapanying nofes are an integral part of these sfatetttenfs.

Southern California Edison Conrpany 23 Statements of Earnings Reinvested in the Business Year Ended December 31, 1980 1979 1978 Thousands of Dollars Balance at January1 $ 1,054,296 $ 931,217 $ 862,956 Add: Net income 317,536 346,219 251,683 Transfer of amortization reserve Federal (a) .. 3,801 1,371,832 1,277,436 1,118,440 Deduct:,. Dividends declared on capital stock Original preferred . 1,334 1,219 1,075 Cumulative preferred. 55,230 47,574 42,532 Preference 5,721 6,164 6,926 Common $ 2.84 per share for 1980,

$ 2.60 per share for 1979 and

$ 2.30 per share for 1978 ..... 211,027 166,443 132,205 Capital stock expense 6,383 1,740 4,485 279,695 223,140 187,223 Balance at December 31 (b). $ 1,092,137 $ 1,054,296 $ 931,217 (a) Pursuant to a regulatory order, an operating reserve relating to certain federally-licensed hydroelectric projects was transferred to Earnings Reinvested in the Business and became an appropriation thereof.

(b) Includes undistributed earnings of unconsolidated subsidiaries of Q2,918,000 at December 31,1980.

Statements of Additional Paid-in Capital 1980 Year Ended Decenrber 31, 1979 1978 Thousands of Dollars Balance at January 1 $ 601,578 $ 569,673 $ 443,109 Premium received on sale of common stock .. 161,949 31,908 126,572 Payments made in lieu of issuing fractional shares of common stock ........ (8) (3) (8)

Balance at December 31 $ 763,519 $ 601,578 $ 569,673 The accompanying notes are an integral part of these statements.

Southern California Edison Cont pany December 31, 1980 Slated Value-Statements of Capital Stock Rcdcmytion Deceinber 31, Shares Price 1980 1979 Ou/s/anding Per Share Thousands of Dollars Preferred Stock Subject to Mandatory Redemption/

Repurchase Requirements (a) (b):

$ 100 Cumulative Preferred par value $ 100 per share (I):

71.325% Series 750,000 $ 110.00 $ 75,000 $ 75,000 7l80% Series 600,000 110.00 60,000 60,000 8,54% Series 750,000 108.54 75,000 75,000 8.70% Series A S25,000 110.00 52,500 52,500 12.00% Series 750,000 112.00 75,000

$ 337,500 $ 262,500 Preference par value $25 per share: 7375% Scrics 2,480,000 25.75 $ 62,000 $ 62,000 Preferred Stock Other:

Original Preferred 5%, prior, cumulative, participating, not redeemable, authorized 480,000 shares, par value $ 8'h pcr share 480,000 $ 4,000 $ 4,000 Cumulative Preferred authorized 24,000,000 shares, par value

$25 per share (a): 4.08% Series 1,000,000 $ 25.50 $ 25,000 $ 25,000 4.24% Series 1,200,000 25.80 30,000 30,000 4.32% Series 1,653,429 28.75 41,336 41,336 4.78% Series 1,296,769 25.80 32,419 32,419 5.80% Series 2,200,000 25.65 55,000 55,000 8.85% Series . 2,000,000 26.50 50,000 50,000 9.20% Series 2,000,000 26.50 50,000 50,000

$ 100 Cumulative Preferred authorized,6,000,000 shares, par value

$ 100 per share (a): 7,.58% Series 750,000 105.00 75,000 7S,000 8.70% Series 500,000 107.00 50,000 50,000 8.96% Series 500,000 107.00 50,000 50,000

$ 458,755 $ 458,755 Preference authorized 10,000,000 shares, par value

$ 25 per share (a) (c) (f): 5.20% Convertible Series .. 795,900 $ 19,897 $ 27,067

$ 100 Preference authorized 2,000,000 shares, par value

$ 100 pcr share Common Stock authorized 140,000,000 shares, par value $ 8Vs per share, including additional stated capital (c) (d) (c) (I) 75,853,818 $ 673,921 $ 577,259 (a) All series of $ 100 Cumulative Preferred (2) Based upon 2.5% of shares originally out- (e) On January 29, 1981, 8,000,000 shares of Stock, Cumulative Preferred Stock and Prefer- standing and increasing to 5.5% by 2003. Common Stock were issued at an initial public ence Stock are redeemable at the option of (3) Based upon 2.5% of shares originally out- offering price of $ 24~h per share.

Company. Thc various series of the $ 100~

'he standing and increasing to 9.5% by 2000.

Cumulative Preferred Stock, and the Preference (f) Transactions in the capital stock accounts Stock, 7.375% Series, arc subject to certain re- For each of the five 12-month periods sub- during 1980, 1979 and 1978 reflect the following:

strictions on redemption for refunding pur- sequent to December 31, 1980, the aggregate In 1980, 7,000,000 shares of Common Stock at poses. Authorized shares of Preferred Stock mandatory redemption or repurchase re- an initial public offering price of $23;125 per Subject to Mandatory Redemption or Repur- quirements will be: none for 1981 and 1982, share and 750,000 shares of $ 100 Cumulative chase Requirements are included under Pre- $ 4,500,000 for 1983, $ 4,500,000 for 1984 and Preferred Stock, '12% Series, were issued; in ferred Stock Other. $ 18,212,500 for 1985. 1979, 525,000 shares of $ 100 Cumulative Pre-ferred Stock, 8.70% Series A and 750,000 shares (b) Preferred Stock Subject to Mandatory (c) Under a prescribed formula, the conversion of $ 100 Cumulative Preferred Stock, 8.54%

Redemption or Repurchase Requirements: prices of convertible securities are adjusted Series, were issued; and in 1978, 6,000,000 when additional shares of Common Stock are shares of Common Stock were issued at an ini-Rcdemytion or Reyurchasc sold by the Company. The shares of Common tial public offering price of $ 25.375 per share.

Nome Stock reserved for conversion and the adjusted Additional shares of Common Stock were is-Comeennoo o/Shorn Prio Per conversion prices per share were as follows:

S efles monl Don Annnouy Slea'ro/0 sued for the Dividend Reinvestment and Stock Series Dceenlbcr 31, Purchase Plan (DRIP), Employee Stock Pur-

$ 100 Cumulative chase Plan (ESPP), Employee Stock Ownership Preferred 1980 1979 Plan (ESOP) and the conversion of 286,780, 7.325% 7/31/83 30,000 $ 100 Preference Stock, 612,230(1) 796,088(1) 553,'140, and 580,854 shares in respective years 7.80% 11/30/83 15,000(2) $ 100 S.20% Convertible Series $ 32.50(2) $ 34.00(2) of Preference Stock, 5.20% Convertible Series 6/30/86 22,500 $ 100 3'/s% Convertible 2,024,380(1) (5.20% Series) as follows:

8.54 ohio 8.70% A 6/30/85 13,125(3) $ 100 Debentures, Due 1980 $ 37.00(2) Shares /ssued 12.00oio 12/31/86 22,500 $ 100 (1) Shares of Common Stock reserved 1980 1979 1978 eeeeee (2) Adjusted conversion price per share P~ee 7.375% 2/1/85 496,000 $ 25 DRIP .......... 1,751,330 1,165,073 637,014 (d) At December 31, 1980, there were 9,'126,673 ESPP.......... 953,885 756,427 631,521 ESOP ......... 1,033,794 30,282 203,879 (1) Plus accumulated unpaid dividends. authorized and unissued shares of Common Redemption or repurchase to continue Stock reserved for sale and issuance under 5.20% Series... 219,873 406,573 417,710 annually until all shares'are redeemed provisions of the Company's stock purchase or repurchased. plans. On February 2, 1981, the Company issued 540,053 shares of Common Stock under these plans.

The aceolnpanying notes are an infegral part of these sfatentenls.

Southern California Edison Conlpalty Statements of Long-term Debt Year Ended Deceinber 31, 1980 1979 Thousands of Dollars First and Refunding Mortgage Bonds (a): Series G, Due 1981 (3s/so/o) $ 40,000 $ 40,000 Series H, Due 1982 (4'/s o/o) 37~0 37,500 Series I, Due 1982 (4s/s /o) 40,000 40,000 Series J, Due 1982 (4r/so/o) . 40,000 40,000 Series K, Due 1983 (4s/so/o) 50,000 50,000 Series L, Due 1985 (5%) 30,000 30,000 Series M, Due 1985 (4s/so/o) . 60,000 60,000 Series N, Due 1986 (4'/so/o) . 30,000 30,000 Series 0, Due 1987 (4'/s o/o) . 40,000 40,000 Series P, Due 1987 (4'/s o/o) 50,000 50,000 Series Q, Due 1988 (4s/so/o) . 60,000 60,000 Series R, Due 1989 (4s/s%) . 60,000 60,000 Series S, Due 1990 (4'/s%) . 60,000 60,000 Scrics T, Due 1991 (5'/4 o/o) . /S,000 75,000 Series U, Due 1991 (6'/s%) . 80',000 80,000 Series V, Due 1992 (Sr/s%) . 80,000 80,000 Series W, Due 1993 (6s/so/o) . 100,000 100,000 Series X, Due 1994 (7i/s%) . 75,000 75,000 Series Y, Due 'l994 (8'/s%) . 100,000 100,000 Series Z, Due 1995 (7r/so/o) . 100,000 '100,000 Series AA, Due 1996 (8%) . 100,000 100,000 Series BB, Due 1997 (7s/so/o) . 125,000 125,000 Series CC, Due 1999 (8'/4%) . 100,000 100,000 Series DDP, Due 1999 (7%) (a) . 15,030 15,030 Series EE, Due 1981 (9%) . 100,000 100,000 Series FF, Due 2000 (8~/s%) . 150,000 150,000 Series GG, Due 2001 (8~/s%) . 125,000 125,000 Series HH, Due 2002 (8'/s o/o) . 125,000 125,000 Series II, Due 1984 (7 /s%) . 7S,000 75,000 Series JJ, Due 2003 (9 /s%) . 200,000 200,000 Series KK, Due 2004 (9.95%) (a) . 105,000 105,000 Series LL, Due1987(9/s%) (c) . 50,000 Series MM, Due 2001 (11 /4 o/o) 200,000 200,000 Series NN, Due 2005 (15'/s%) . 200,000 Series OO, Due 2010 (13 h'Yo) . 150,000 3,027,530 2,627,530 First Mortgage Bonds (Calectric) (a) Due 1980-1991 (2/s%-5'/s%) 60,000 66,000 Convertible Debentures Due 1980 (3'/s'Yo) . 74,902 Promissory Notes (b) Due 1980-1983 (5'h%) 10+76 14,217 Short-term debt expected to be refinanced Commercial paper (c).....

~

50,000 Principal amounts outstanding. 3,098,106 2,832,649 Current maturities of long-term debt (d) (143+48) (84,544)

Unamortized premium (discount) nct (8,734) (1,898)

Total long-term debt . $2,945,824 $ 2,746,207 (a) The authorized principal amount of each nance of the property subject to the lien of such (c) The Company refinanced $ 50,000,000 of series of First and Refunding Mortgage Bonds is indenture is required to be deposited with the short-term obligations. Such amount was equal to the amount outstanding. The Trust In- trustee annually. These deposit requirements of classified as long-term debt in the balance sheet denture under which these bonds are issued such indentures may be or have been satisfied at December 31, 1979.

permits the issuance from time to time of addi- by property additions and replacements, and by tional bonds, including additional bonds equal delivery and cancellation of bonds outstanding (d) Current maturities of long-term debt on in principal amount to bonds retired, pursuant under the applicable indenture. Thc Series DDP December 31, 1980, include 5'/s% Promissory to the restrictions and conditions contained and KK, First and Refunding Mortgage Bonds, Notes Due February 27, 1981, in the amount of therein. Each of the bond indentures requires are subject to mandatory sinking fund require- $1,786,000 and Due August 31, 1981 in the semiannual deposits with the Trustees of1'/so/o ments commencing on July 1, 1990 and June 1S, amount of $ 1,762,000, First and Refunding of the principal amount of its outstanding First 1985, respectively.

Mortgage Bonds, Series G, Due April15, 1981 (3s/so/o) in the amount of $ 40,000,000, and First and Refunding Mortgage Bonds and the First Mortgage Bonds of Calectric. The Calectric In- (b) The Company has entered into a financing and Refunding Mortgage Bonds, Series EE, denture requires an annual cash deposit with agreement, as amended, with certain English Due November 1,1981 (9%) in the amount of banks pursuant to which it issued promissory $100,000,000. The amounts of long-term debt the Trustee of 1% of thc principal amount of notes payable in pounds sterling. These'notes maturing in thc four twelve-month periods Calectric First Mortgage Bonds issued less cer-tain bonds retired, or 166%% of such amount arc secured by a pledge of thc Company's cus- subsequent to December 31,1981 willbe:

if property additions are used to satisfy the tomer accounts receivable. On June 28, 1976, the $ 121,025,000 in 1982; $ 53,501,000 in 1983; annual deposit requirements. In addition, an Company entered into forward exchange con- $ 83,000,000 in 1984; and $ 101,250,000 in 1985.

tracts with a United States bank to purchase at amount equiva!ent to the excess of 15% of de- various times from February 1979 to August fined operating revenues over costs of mainte-1983, pounds sterling to repay substantially all of the promissory notes.

The accompanying notes are an integral part of these statenlents.

Southern California Edisoii Conipany 26 Notes to Financial Statements Note 1 Summary of Significant Accounting Policies Debt Preiniuni aiul Discount Debt premium or discount and related expenses are General- amortized to income over the lives of the issues to which The Company is a public utility primarily engaged in they pertain.

the business of supplying electric energy in portions of central and southern California, excluding the City of Los Revenues aiid Regulatory Balancing Accounts Angeles and certain other cities. The accounting records Customers are billed monthly on a cycle basis and revenues of the Company are maintained in accordance with the are recorded when customers are billed. As authorized by Uniform System of Accounts as prescribed by the Federal the CPUC, the Company has established several regulatory Energy Regulatory Commission (FERC) and adopted by balancing accounts for its adjustment clauses, which the California Public Utilities Commission (CPUC). affect the accounting for most of its energy costs. The Energy Cost Adjustment Clause (ECAC) balancing account UtilityPlant- is used by the Company to record monthly entries to The cost of additions and replacements of retirement units adjust the results of operations for the variation between of property is capitalized and included in utility plant. ECAC-related energy costs incurred and those included Such cost includes labor, material, indirect charges for en- in rates billed to customers. Such variations, including gineering, supervision, transportation, etc., and an allow- interest thereon, are accumulated in the balancing account ance for debt and equity funds used during construction until they are refunded to, or recovered from, utility (AFUDC). The amount of AFUDC capitalized is also re- customers through CPUC-authorized rate adjustments.

ported in the Statements of Income as a reduction of ECAC-related energy costs include incurred transportation interest charges for the debt component of AFUDC and as and storage costs related to spent nuclear fuel. The other income for the equity component. Although income tax effects of ECAC variations are deferred. Billed AFUDC increases net income, it does not represent cur- revenues and incurred energy costs are utilized in the rent cash earnings. The AFUDC rate was 7.82% for 1980, determination of taxable income.

7.76% for 1979 and 6.96% for 1978, and is based upon a formula prescribed by the FERC. Subsidiaries-The. cost of minor additions and repairs is charged to The Company's investments in unconsolidated subsidiary maintenance expense and the original cost, less net sal- companies, all of which are wholly-owned, are accounted vage, of retired property units is charged to the accumu- for by the equity method. None of the Company's wholly-lated provision for depreciation. owned subsidiaries is considered significant for financial reporting purposes.

Depreciation-For financial reporting purposes, depreciation of utility Earnings Per Share plant is computed on a straight-line remaining life basis Primary earnings per share are determined by dividing and it approximated 3.5%, 3.5%, and 3.2% of average the earnings available for Common and Original Preferred depreciable plant for the years 1980, 1979 and 1978, re- Stock by a weighted average number of such shares out-spectively. The Company's rates are designed to recover standing. After providing for cumulative preferred and the original cost of utility plant, including the estimated preference dividend requirements, effect is given to the decommissioning costs of $ 36,000,000 for nuclear genera- participating provisions of the Original Preferred Stock tion facilities in service, through depreciation expense and Common Stock Equivalents for funds held for the over the estimated remaining useful lives of the facilities. purchase of the Company Stock by the Employee Stock Purchase Plan Trustee in each period. Fully-diluted earn-Taxes ings per share give effect to the dilution which would re-Accounting policies with respect to taxes on income and related investment tax credits are set forth in Note 4, together with supplementary income tax information.

Southern California Edison Conipany 27 suit from the conversion of convertible securities out- Energy cost arjlustntent clause-standing at the end of each period and treat all actual On October 8, 1980, the CPUC issued an interim decision conversions during each period as if they took place at the approving a Company filing providing for a reduction in beginning of the period. In the computation of fully- revenues under the ECAC of approximately $ 236,300,000 diluted earnings per share for 1979, consideration has on an annual basis. Such reduction provides for recovery been given to the dilutive effect of potential conversion of of $35,000,000 in the ECAC balancing account, recovery of the Preference Stock, 5.20% Convertible Series, and the which had been deferred by an October 23, 1979 CPUC 3i/8% Convertible Debentures, Due 1980. In the computa- decision pending an evaluation of the reasonableness of tion of fully-diluted earnings per share for 1980, however, operating capacity factors at the Company's coal-fired dilution attributable only to the former has been consid- power plants. A final decision on this matter has not yet ered, since the 3'/e% Convertible Debentures were been rendered.

retired on August '15, 1980. On December 5, 1980, the CPUC modified energy cost adjustment procedures for California utilities. In addition to Note 2 Commitments and Contingencies various procedural changes, the revised ECAC procedures Construction prograni afoul fuel supply-will provide for the application of ECAC to 98% of the Company's energy costs with the remaining 2% being The Company has significant purchase commitments in subject to annual base rate treatment. The revised ECAC connection with its continuing construction program. As also will enable the Company to recover certain inventory of Decemberl8, 1980 (the date of the Company's latest carrying costs associated with fuel oil price increases.

approved budget), funds required for construction expen-ditures are estimated at $ 953,031,000 for 1981; $ 767,978,000 matters-Legal for 1982 and $ 806,494,000 for 1983. Minimum long-term In March 1978, five resale customers filed a suit against commitments of approximately $ 9.4 billion existed on the Company in federal court alleging violation of certain December 31, 1980 under the Company's fuel supply and antitrust laws. The complaint seeks damages in excess of transportation arrangements.

$ 23,000,000, consequential damages and a trebling of such damages, and certain injunctive relief, and alleges that the Government licenses-Company (i) is engaging in anti-competitive behavior by The terms and provisions of licenses granted by the charging more for wholesale electricity sold to the resale United States cover the Company's major and certain customers than the Company charges certain classes of its minor hydroelectric plants. These licenses also cover retail customers, and (ii) has taken actions alone and in certain storage and regulating reservoirs and related trans- concert with other utilities to prevent or limit such resale mission facilities. All of the above licenses expire at customers from obtaining bulk power supplies from other various times between 1981 and 2009. The licenses contain sources to reduce or replace the resale customers'hole-numerous restrictions and obligations on the part of the sale purchases from the Company. In May 1979, the Company, including the right of the United States to Federal Court continued a stay of the proceedings pending acquire Company properties or the FERC to issue a license resolution of the Company's FERC resale rate filing which to a new licensee under certain conditions and upon the became effective on February 1, 1976, and of the FERC payment to the Company of specified compensation. proceedings involving bulk power contracts and sub-stantially the same antitrust issues. The resale customers Resale revenues have asked the FERC to modify these contracts and to Pursuant to FERC procedures, on August 4, 1974, order the Company to provide additional transmission February 1, 1976, and August 16, 1979, increases in the services to them. On February15, 1980, the Court lifted the Company's resale rates became effective, subject to refund stay on discovery. On February 2, 1981, the Plaintiffs filed with interest to the extent that any of the increases are a motion to adjudicate certain facts, and to limit the scope subsequently determined to be inappropriate. Effective of discovery and issues to be tried. The next status confer-May 2, 1974, a Fuel Clause Adjustment (FCA) was added ence and oral argument on the motions is set for April 6, to the Company's resale rates and was modified effective 1981. The foregoing proceedings involve complex issues of February 1, 1976 and August 16, 1979. As of December 31, law and fact, and, although the Company is unable to 1980, approximately $ 473,100,000 had been billed predict their final outcome, it has categorically denied the subject to refund. allegations of these resale customers.

Sonthern California Edison Company 28

'Notes to Financial Statentents (continued)

Leases anrl Rentals- Although a portion of the Company's ITC has been The Company has entered into various arrangements to applied as a current reduction of income tax expense, ad-lease automotive equipment, computer equipment, nu- ditional ITC, permitted by the Tax Reduction Act of 1975 clear fuel, office space and other incidental equipment and and the Tax Reform Act of 1976, have been deferred and property. These agreements are accounted for as operat- are being amortized as reductions to income tax expense ing leases based upon ratemaking practices. Neither the ratably over the lives of the properties which gave rise annual gross lease expense nor the present value of the to the credits.

minimum commitments under capital leases are considered Supplementary information regarding taxes on income material for financial reporting purposes. and other taxes is set forth in the following table:

Note 3 Compensating Balances and Short-Term Debt Thousands of Dollars Year Ended December 31, In order to continue lines of credit with various banks, the 1980 1979 '1978 Company presently maintains deposits aggregating ap- Current:

proximately $12,000,000 which are not legally restricted as Federal $ 38,582 $ 6,717 $ (49,219) to withdrawal. The lines of credit, which are. also available State. 36,909 4,019 3,567 to support commercial paper, amounted to $ 555,000,000 /5,491 10,736 (45,652) and $ 198,000,000 as of December 31, 1980 and December Deferred Federal and State:

31, 1979, respectively. None of such lines of credit was Investment tax credits net.... 25,235 45,533 32,568 Regulatory balancing accounts .. (107@22) 34,148 (15,904) used during 1980 and 1979. Customer refunds............. 78,801 The Company has an additional $ 150,000,000 line of Other. 14,921 (13,644) 2,208 creditwhich may be utilized only for the purchase of fuel (67,166) 66,037 97,673 oil through the use of bankers'cceptances. Notes is- Total taxes on income... $ 8+25 5 76,773 $ 52,021 sued under this agreement are secured by a pledge of the Taxes on income included in Company's fuel oil inventory. There were no operating expenses........ $ 38,683 $ 100,292 $ 72,803 Taxes on income included in outstanding during 1980 or 1979.

bankers'cceptances other income ............. (30,358) (23,519) (20,782)

Note 4 Taxes Total taxes on income........ $ 8@25 $ 76,773 $ 52,021 Differences between the federal In accordance with CPUC requirements, no deferred in- statutory tax rate and the come taxes are provided for net increases or decreases in Company's effective tax rate income tax expense which result from reporting certain are reconciled as follows:

Federal statutory tax rate..... 46 0% 46.0% 48.0%

transactions for income tax purposes in a period different Excess of tax over book from that in which they are reported in the financial depreciation.............. (1.2) (3.4) statements except for the resale revenues, and additional Allowance for debt and equity investment tax credits (ITC) discussed below, and the tax funds used during construction .............. (22.9) (12.9) (12.4) effects of the regulatory balancing account provisions. Percentage repair allowance .. (3.5) (3.3) (4.7)

Effective January 1, 1976, pursuant to FERC procedure, Administrative and general the Company began providing deferred income taxes expenses capitalized....... (3 4) (2.2) (2.7)

Investment tax credits net .. (6.8) (8.1) (8.4) for certain timing differences related to resale revenues. Federal deduction for state The revenues associated with such deferred income taxes taxes on income........... (1.0) (2.2) (2.7) are being collected subject to refund, as discussed in Ad valorem lien date deduction ................ (0.3) (0.2) 4.2 Note 2, pending action by the FERC. Nuclear fuel lease interest capitalized ........ (3.3) (0.9) (0.6)

State tax provision .......... 2.1 4.7 4.7 Other differences ........... (3.1) (2.8) (4.9)

Effective tax rate ................ 2 6% 18 1% 17 1 Other taxes included in operating expenses:

Property $ 54,114 $ 48,300 $ 74,665 Payroll and other ... 15,538 8,128 11,764

$ 69,652 $ 56,428 $ 86,429

Southern California Edison Coinpany 29 Note S Research and Development Employee Stock Purchase Plan Research and Development (R&D) costs are expensed cur- Under the Employee Stock Purchase Plan (ESPP) adopted rently if they are of a general nature. Plant-related R&D to supplement employees'ncome after retirement, employ-costs are accumulated in construction work in progress ees may elect to contribute specified percentages of their (CWIP) until a determination is made as to whether such compensation to a trustee for the purchase of Company projects will result in construction of electric plant. If no Common Stock and the Company contributes to the Plan construction of electric plant ultimately results, the costs an amount equal to one-half of the employees'ontribu-are charged to operating expense. The balance of R&D tions, less forfeitures. The Company's contributions to this expenditures included in CWIP at December 31, 1980, 1979 Plan amounted to $ 3,679,000, $ 3,263,000 and $ 2,785,000 and 1978 was $ 35,076,000, $ 29,438,000, and $ 17,178,000, for 1980, 1979 and 1978, respectively. In addition, employ-respectively. ees may contribute up to 5% of their regular monthly base Thousands of Dollars pay through supplemental contributions without regard Year Ended December 31, to their years of service. These supplemental contributions 1980 1979 1978 are not matched by the Company.

R&D charged to expense ..... $ 21,964 $ 15,778 $ 14,442

'R&D charged to CWIP net .. 19,812 12,260 3,847 Entployee Stock Otonership Plan Total R&D expenditures...... $ 41,776 $ 28,038 $ 18,289 Under the Employee Stock Ownership Plan (ESOP), shares of Company Common Stock are purchased for the benefit Note 6 Employee Benefit Plans of eligible employees and held in trust using funds gener-.

ated by an additional 1% and '/2% investment tax credits Pension Plan- and matching employee contributions for the '/a% ITC.

The Company's current pension program is based on a The Company has elected the additional 1% ITC for the trusteed pension plan, which is non-contributory by em- years 1976 through 1979, and the '/a% ITC for the years 1978 ployees. Company contributions are determined on the through 1979. The Company expects to elect the addi-basis of a level premium funding method and prior ser- tional 1% and '/2% ITC for 1980. As of December 31, 1980, vice costs are funded. Pension costs are funded or re- 1,370,217 shares of Common Stock were held by the served for on an actuarial basis and amounted to Trustee under the Plan. In addition, as of December 31,

$ 40,321,000, $ 37,456,000, and $ 32,236,000 for 1980, 1979 1980, the Company had a liability to the Plan in the amount and 1978, respectively. of $ 7,006,000.

Thousands of Dollars For 1979 and 1978, the amounts of ESOP ITC were .

December 31, higher than those utilized in the Federal income tax re- .

1979(1) 1978 turns for such years. It is expected such ITC will be Actuarial present value of accumulated utilized in the 1980 Federal income tax return. For 1980, plan benefits: the amount of ESOP ITC is higher than that expected to ~

Vested. $ 301,429 $ 270,142 Nonvested . 19,965 25,387 be utilized in that year's Federal income tax return. If not-

$ 321,394 $ 295,529 completely utilized in 1980 or future income tax returns, the excess ITC would expire in 1987, in which event Net assets available for benefits $ 375,846 $ 316,349 the Company would be allowed a tax deduction for the (1) Latest available information. amounts contributed to the ESOP.

An assumed rate of return of 5.5% was used in deter-mining the actuarial present value 'of accumulated plan benefits for both 1979 and 1978.

Southern California Edison Conipany 30 Notes to Financial Statenfefits (continued)

Note 7 Quarterly Financial Data Note 9 Long-Term Purchased Power Contracts Earnings Under fixed contracts, the Company has agreed to pur-Thousands of Dollars Per Share Operating Operating Net Fully chase portions of the generating output of certain Three Months Ended Revenues Income Income Primary Diluted facilities. Although the Company has no investment in December 31, 1980.... $ 969,227 $ 91,649 $ 70,495 $ 0.71 $ 0.71 such facilities, these contracts provide that the Company September 30, 1980... 1,058,916 103,011 88,427 0.99 0.98 June 30,1980 ........ 828,028 88,996 76,929 0.84 0.82 pay certain minimum amounts (which are based at least March 31, 1980....... 804,946 88,478 81,685 0.96 0.93 in part on the debt service requirements of the supplier)

December 31,1979.... 709,252 100,352 92,538 1.19 1.15 whether or not the facility is operating. None of such con-September 30, 1979... 684,334 106,738 98,822 1.32 '1.27 tracts provides, or is expected to provide, in excess of five June 30,1979 ........ 566,656 81,748 71,183 0.91 0.88 percent of the Company's current or estimated future March 3l, 1979....... 603,733 96,159 83,677 1.13 1.09 December 31, 1978.... 600,902 99,162 85,455 1.19 1.15 operating capacity. The cost of power obtained under the September 30, 1978... 634,934 90,778 68,846 1.00 0.96 contracts, including payments made when a facility June 30,1978 ........ 545,444 70,612 50,912 0.69 0.67 is not operating, is included in Purchased Power in the March 31, 1978....... 547,518 64,050 46,470 0.62 0.59 Statements of Income. Information as of December 31, Note 8 7ointly-Owned UtilityProjects 1980 pertaining to such contracts is summarized in the The Company owns undivided interests in several following table:

jointly-owned generating stations and transmission sys- Orovitto.Thermattto Navajo Hoover Sales Power Sale tems for which each participant must provide its own Layoff Agroomeat Agreameat Agreement financing. The Company's proportionate share of expenses Date of Expiration......, January 1, 1985 May 31, 1987(2) April1, 1983(3)

Share of Effective pertaining to such projects is included in the appropriate Operating Capacity category of operating expenses in the Statements of In- Megawatts (MW)...... 327.5 MW(1) 331 MW 340 MW come. In the table below, the amounts represent the Share of Energy Output . 14.6'%.9yo 37.6 /o Estimated Annual Cost .. $ 38,556,000 $ 1,872,000 $ 5,985,000 Company's share for each such project as reported on the Portion of Estimated Annual Cost Applicable Balance Sheet: to Supplier's Annual (Thousands of Dollars) Minimum Debt Service Retiuirement.......... $ 1,978,000 S 456,000 $ 5,234,000 December 31, 1980 Allocable Portion of Estimated Interest of Supplier Utility Accumulated Construction Included in Annual Plant in Provision for 'ivork in Ownership Projects Service Depredation Progress interest Minimum Debt Service Requirement.......... $ 523,000 $ 85,000 $ 4,601,000 Axis Generating Station ...$ 12,167 $ 6 811 $ 114 33 3 Related Long-Term Debt Pacific Intertie DC System . 67,837 16,475 49 50.0 or Lease Obligations El Dorado System......... 19,243 4,812 735 60.0(1) Outstanding of Four Corners Generating Company............. None None None Station................. 99,802 29,570 26,056 48.0 (I) The Company has agreed to certain reductions in its share of effective Mohave Generating Station. 178,465 41,544 8,728 56.0 operating capacity prior to the January1, 1985 termination date.

Palo Verde Generating (2) The Company has certain renewal rights under the existing agreement.

Station................. 366,621 15.8 (3) The Company has obtained entitlement of 350 MW from April1, 1983 San Onofre Generating through December 31, 2004, subject to termination upon five years'otice Station Unit 1 ......... 183,845 48,788 35,081 80.0 from the California Department of Water Resources.

San Onofre Generating Station Units 2 & 3 .... 1,835,444 76.55 Solar Power Generating Project ................. 6,649 80.0 Total..............". $ 561,359 $ 148,000 $ 2,279,477 (1) Represents a composite rate.

Southern California Edison Cotnpany 31 Supplementary Information to Disclose the Effects of plementary information presented below is intended to Changing Prices (Unaudited) provide certain information about the effects of both general inflation and changes in specific prices. It.

In accordance with the requirements and guidelines of should be viewed as an estimate of the approximate the Financial Accounting Standards Board, the sup- effect of inflation, rather than as a precise measure.

(Thousands of Dollars)

Statement of Earnings Available for Common and As Reported Original Preferred Stock Adjusted for Changing Prices in the primary Average 1980 Dollars for the Year Ended December 31,1980 Financial Statements Constant Dollar Current Cost Total Operating Revenues $ 3,661,117 $ 3,661,117 $ 3,661,117 Operating Expenses:

Provision for depreciation . 187,959 406,000 488,000 Other operating expenses . 3,101,024 3,101,024 3,101,024 Other income and deductions (187,259) (187,259) (187,259)

Net interest charges . 241,857 241,857 241,857 Dividends on cumulative preferred and preference stock 60,950 60,950 60,950 3,404,531 3,622,572 3,704,572 Earnings available for (loss on) common and original preferred stock (excluding reduction of utility plant to net recoverable cost)........ $ 256,586 $ 38,545 $ (43,455) .

Excess of increase in general price level of $ 1,336,000,000 over increase in specific prices of $ 1,039,000,000 of utility plant held during the year (a) . $ (297,000)

Reduction of utility plant to net recoverable cost $ (501,000) $ (122,000)

Gain from decline in purchasing power of net monetary liabilities.... $ 445,000 $ 445,000 (a) At December 31, 1980, current cost of utility plant, net of accumulated depreciation, was $ 12,312,000,000 while related historical cost and net recoverable cost was $ 6,566,000,000. The difference of $ 5,746,000,000, which includes $ 1,039,000,000 for the current year, represents the changes in specific prices (current cost) of utility plant from the date the plant was originally acquired.

Southern California Erlison Company 32 Supplententary htjormation (continued)

Five Year Comparison of Selected Supplementary Financial Data Adjusted for the Effects of Changing Prices (Data ad'usted I for the effects of changing prices are reported in average 1980 dollars)

Year Ended December 31, (In Thousands of Dollars, Except Per Share Amounts) 1980 1979 1978 1977 1976 Total Operating Revenues As reported........ $ 3,661,117 $ 2,563,974 $ 2,328,798 $ 2,064,914 $ 1,846,540 In constant dollars .. $ 3,661,117 $ 2,911,000 $ 2,941,000 $ 2,808,000 $ 2,673,000 Earnings Available for (Loss on) Common and Original Preferred Stock' As reported......... $ 256,586 $ 292,481 In constant dollars... $ 38,545 $ 137,497 At current cost...... $ (43,455) $ 63,707 Earnings (Loss) Per Share on Common and Original Preferred Stock' As reported........ $ 3.50 $ 4.56 In constant dollars .. $ .53 $ 2.15 At current cost ..... $ (.59) $ .99 Excess of Increase in General Price Level Over Increase in Specific Prices of UtilityPlant after Reduction to Net Recoverable Cost $ 419,000 $ 563,000 Net Assets at Year End at Net Recoverable Cost As reported.............. $ 2,529,577 $ 2,233,133 In constant dollars and current cost.......... $ 2,420,000 $ 2,397,000 Gain from Decline in Purchasing Power of Net Monetary. Liabilities $ 445,000 $ 513,000 Cash Dividends Declared Per Common Share As reported............ $ 2.84 $ 2.60 $ 2.30 $ 2.06 $ 1.68 In constant dollars...... $ 2.82 $ 2.92 $ 2.87 $ 2.78 $ 2.42 Market Price Per Share at Year End In historical dollars . $ 25.625 $ 24.50 $ 25.75 $ 26.375 $ 22.875 In constant dollars .. $ 24.51 $ 26.30 $ 31.32 $ 34.98 $ 32.39 Average Consumer Price Index Urban 246.8" 217.4 '195.4 181.5 170.5

'Excludes reduction of utility plant to net recoverable cost.

"'Estimated.

Constant dollar amounts represent historical costs of The provision for depreciation on constant dollar and utility plant restated in terms of dollars of equal purchas- current cost bases was determined by applying primary ing power, as measured by the Consumer Price Index for financial statement depreciation rates to restated utility all Urban Consumers. Current cost amounts reflect the plant accounts.

changes in specific prices of utility plant from the date Because only historical costs are deductible for income the plant was acquired to the present, and differ from tax purposes, the income tax expense in the primary constant dollar amounts to the extent that prices in gen- financial statements was not adjusted.

eral have increased more or less rapidly than specific Fuel inventories and the cost of fuel used in the gener-prices. The current cost of utility plant was determined ation of electricity have not been restated from their his-by restating its historical cost using Company projections torical cost because rate regulation limits the recovery of of year-end indices to be reported in the Handy- fuel and purchased power costs to recorded costs. As such, Whitman Index of Public UtilityConstruction Costs. fuel inventories are effectively monetary assets and have been included in the computation of purchasing power gain or loss.

Sontltern California Edison Company 33 Under ratemaking procedures prescribed by the regula- During a period of inflation, holders of monetary assets tory commissions exercising rate jurisdiction over the suffer a loss of general purchasing power while holders Company, only the historical cost of utility plant is re- of monetary liabilities experience a gain. The gain from coverable through future depreciation charges. There- the decline in purchasing power of net.monetary fore, the cost of utility plant, stated in terms of constant liabilities is primarily attributable to the substantial dollars or current cost, exceeding the historical cost of amount of debt which has been used to finance utility utility plant is not presently recoverable through depre- plant. However, to properly reflect the economics of.rate ciation charges, and, accordingly, the excess is reflected regulation, the gain from the decline in purchasing as a reduction of utility plant to net recoverable cost. power of net monetary liabilities, including Cumulative While the ratemaking process gives no recognition to the Preferred and Preference Stock, offsets the reduction to current cost of replacing utility plant, based on past net recoverable cost of utility plant. The Company, ratemaking practices the Company believes it will be therefore, does not have the opportunity to realize such allowed to recover and earn a return on the increased holding gain on net monetary liabilities.

cost of its investment when replacements of utility plant occur.

Operating Revenues and Kilowatt-Hour Consumption Class of Seroice Operating Revenues (ooo) Kilowatt-Hour Consumption (ooo)

%of %of 1980 total 1980 1979 ~chan e 1980 total 1980 1979 ~chan e Residential .............. 28.1 $ 1,026,778 $ 764,595 34.3 27.5 16,471,840 16,191,091 1.7 Agricultural ............. 1.9 68,503 47,146 45.3 1.6 964,452 975,311 (1'.1)

Commercial ............. 26.7 979,051 663,678 47.5 24.7 14,778,843 14,454,319 2.2 Industrial ............... 27.3 997,831 683,013 46.1 28.0 16,777,563 17,351,728 (3.3)

Public Authorities........ 8.5 312,578 222,223 40.7 7.7 4,623,886 4,701,251 (1.6)

Interdepartmental........ 51 39 31.7 1,138 1,134 0.4 Resale 5.4 198,543 149,266 33.0 7.4 4,415,038 4,426,206 (0.3)

Subtotal................. 97.9 3,583,335 2,529,960 41.6 96.9 58,032,760 58,101,040 (0.1)

Resale-Special Contracts .. 1.2 44,631 20,038 122.7 1.8 1,071,184 558,385 91.8 Public Authorities-Special................ 0.1 3,407 3,128 8.9 1.3 811,243 858,436 (5.5)

Total Sales of Electric Energy................ 99.2 3,631,373 2,553,126 42.2 100.0 59,915,187 59,517,861 0.7 Other Electric Revenues .. 0.8 29,744 10,848 174.2 Total 100.0 $ 3,661,117 $ 2,563,974 42.8 100.0 59,915,187 59,517,861 0.7

Southern California Erlison Contpany 34 Capital Stock Dividend and Price Information Quarterly Hi h and Low Sales Prices ($)

Dividends Calendar Quarter 1980 Calendar Quarter 1979 Paid 'I Class and Per 2 3 4 2 3 4 Series of Stock Share (a) (0 High Low High Low High Low High Low High Low High Low High Low High Low Original Preferred Cumulative 26 22~/4 28'/a 19'7 23r/4 25 /4 22 27rh 25 Vz 27% 24% 28 25'/s 27r/s 25 /4 Preferred:

4.08% 251/2 10>/s 6~/4 10 7'h 93/4 7~/6 9 7 11s/s 10'/4 11a/s 10'/a 11 a/s '10 Iorh ss/s 4.24 .26Vz 10~/s 7'h 103/4 8 10s/s 8 Ss/s 7'/6 '12'/4 10s/8 12 10s/s 12'/s 10 11'/s 8'/4 4.32 .27 93/4 7'/s 103/4 7s/s 11% 8 8~/4 7~/s 12 10th 13 103/s 12 10 10~/4 8'h 4.78% .29r/s 11>/s 8 11r/s Bi/s 11'/s 83/4 10'/a 7r/6 13~/s 11% 133/s 11r/s 13'/4 11th 12'/4 '10 5 80% .36% 13% 10s/s 14% 10s/s 14a/s 11~/4 12~/a 10 16/4 19

$ 100 Cumulative Preferredt 7.325% (b) 1.83'/s 7 58% 67% 54 74% 51 70'/4 62% 50'h 82>/i 77'h 84'/4 78'h 77% 63 1.899'.95 7.80% (b) 8.54o/o 2.13t/a 92s/s 79 93 74 90 88'h 87 70'/6 93 85'/4 8.70% 2.17'h 79 56~/s 84 60 82 67% 71 59r/s 95s/s 89 96s/s 90 987e 87~h 87 72 8.70%-A (b) 2.17th 8.96o/0 2.24 77~/4 66 85 58'h 823/4 723/4 74~/4 62 98'h 94 '100 91 99'h 90 92 74 12.00% 2.30 (c) 101 97 Preference:

520 321h 17'/s 15s/s 20r/s 16s/s 193/4 18'0~/a 17>/4 19r/s 18r/a '19s/8 17s/s 19r/4 18>h 19 17'/s Convertible 7.375o/o (b) .460938 Common (d) (e) .68 24'/e 20~/4 27>/i 21s/s 26% 24'/6 26'/s 23'/s 27~/s 25 /s 27~/4 24>/4 26r/s 25'/i 269m 23'h (a) Quarterly dividends were paid at the rates indicated in each quarter of 1980 except the fourth quarter dividend on Original Prelerred Stock and Common Stock, which was at the rate of $ 0.74 per share.

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

(c) Initial pro rata dividend paid December 31, 1980. Subsequent quarterly dividends to be paid at $ 3.00 per share or $ 12.00 annually.

(d) Dividends declared on Common Stock totalled $ 2.84 and $ 2.60 for 1980 and 1979, respectively.

(e) As of December 31, 1980, there were approximately 150,000 Common Stock shareholders.

(I) The Indenture securing the Company's First and Refunding Mortgage Bonds provides in substance that the Company shall not pay any cash dividends except out of its surplus and out of earnings.

Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company's primary earnings per share for the years granted with the decision authorizing an increase in gen-1980, 1979 and 1978 of $ 3.50, $ 4.56 and $ 3.52, respectively, eral rates of $ 294 million annually effective January 1, 1981.

reflected the biennial general rate review process which Total operating revenues increased during 1980 by nearly has caused earnings to decline in the non-rate-case year. $ 1.1 billion, or 43%; however, almost 89% of the increase Operating expenses and capital costs have increased was, along with a balancing account procedure, for the pur-substantially from year to year. Also, an increased number pose of offsetting higher energy costs and did not impact of common shares outstanding has had a dilutive effect earnings. Recorded kilowatt-hour consumption was up by on earnings per share. However, the higher general rates only 4.4% in 1979 and 0.7% in 1980 despite increases in which became effective on January 1, 1979 (the majority of the number of customers served of 95,837 in 1979 and 81,586 the increase had become effective in July 1978) to offset in 1980. This reflected continuing conservation efforts these effects were based on a 1979 test year and did not include an allowance for attrition in 1980. Such an allow-ance, $ 92 million to become effective January 1, 1982, was

Southern California Edison Conipany 35 by our customers and the impact of price elasticity. A re- changes may either provide or use funds, this dissimilarity cently completed conversion to monthly billing of cus- may be more pronounced. For example, fuel stock and tomers previously billed bimonthly caused a distortion in materials and supplies were reduced substantially in 1978 comparisons of kilowatt-hour consumption between 1980 which provided funds, however, increases during 1979 and 1979. Excluding the effect of the conversion, kilowatt- and 1980 used funds. In addition, funds are generated by hour consumption would have been down by 0.4%. reductions in the regulatory balancing accounts such as Increases in operation expenses other than energy occurred in 1978 and to a greater extent in 1980, in which costs continue to be due in large part to the impact of years the Company's revenues were recovering pre-inflation on the costs of labor, material and services. In viously deferred energy costs. Conversely, in 1979, funds addition, the costs related to the Company's energy con- were used by an increase in the balancing accounts as servation programs have risen. Also, beginning in 1980, revenues were deficient in relation to energy costs.

increased costs were incurred related to the conversion to See pages 31 through 33 for discussion relating to sup-monthly billing. plementary information to disclose the effects of changing Maintenance expenses also reflected the impact of infla- prices.

tion. However, the $ 50.9 million, or 29%, increase recorded in 1980 was caused in part by higher than usual costs for Liquidity the repair of damaged property wind and rain in the first The Company's ability to generate cash adequate to meet quarter and fires and wind in the fourth quarter and its needs ("liquidity") results from rates collected from

=

large expenditures at the Mohave and San Onofre (Unit 1) customers for energy service, periodic bank and commer-generating stations. cial paper borrowings and the sale of debt and equity The increases in interest charges and dividends on securities. These sources of liquidity are utilized for con-cumulative preferred and preference stock in 1980 reflected struction expenditures, dividend payments, maturing se-the combined effects of additional short- and long-term curities and operating and capital costs not yet recovered debt and preferred stock outstanding and higher interest through the ratemaking process.

and dividend rates. The overall rate of return authorized Revenues collected from customers have increased each by the general rate case decision in December 1978, year reflecting growth in the number of customers and although allowing for rates on new issues of 9.15% for recovery of rising energy costs. During the year ended bonds and 8.42% for preferred stock, did not anticipate December 31, 1980, the Company's liquidity was improved'y the extent to which money costs would accelerate nation- the collection of deferred energy costs (ECAC) and ally in 1979 and 1980. The costs on securities issued conversion of customer billing from a bi-monthly to a reached 15.36% for the Series NN Bonds issued April 9, monthly basis. Liquidity was adversely affected by in-1980, and 12% for the Preferred Stock issued October 22, creased costs of carrying fuel oil inventory, principally as-1980. At the end of 1980, the Company's annualized, effec- sociated with fuel oil price increases. (See Note 2 of tive interest rate for all long-term debt securities then "Notes to Financial Statements" for a discussion of re-outstanding was 8.40%, as compared with a rate of 7.14% vised ECAC procedures which will enable the Company included in the decision of December 1978. Similarly, the to recover certain inventory carrying costs.)

Company's annualized effective rate on preferred and The Company has a total of $ 725 million of short-term preference stock at the end of 1980 was 7.94%, as compared borrowing facilities, including a $ 150 million bankers'c-with 7.29% reflected in the authorized rate of return. ceptances line, with foreign and domestic banks. At De-In its decision effective January 1, 1981, the CPUC has cember 31, 1980 approximately $ 20 million of borrowings recognized the adverse effect on the Company of financial was outstanding under these arrangements.

attrition as well as operational attrition and authorized an overall rate of return which included projected year- Capital Resources end 1981 costs of capital. The assumptions used by the The Company's capital resource commitments at Decem-CPUC for the 1981 incremental costs of long-term debt ber 31, 1980 principally consisted of purchase commit-and preferred stock were 13% and 12%, respectively. ments related to its continuing construction program Financing costs also increased in 1980 as a result of car- and fuel supply and transportation arrangements. (See rying an oil inventory above the level included in rates. Note 2 of "Notes to Financial Statements.") In addition, However, a recent ECAC decision by the CPUC will now the Company is obligated to meet long-term debt 'matu-help provide for the recovery of future carrying costs rities and preferred stock sinking fund requirements.

associated with fuel oil price increases. (See Statements of Long-Term Debt and Statements of The Company's earnings pattern for the past three years Capital Stock, respectively.) The Company intends to has not produced a similar pattern for funds provided from finance these commitments with funds generated from operations. Of the total of funds used for construction its internal sources of liquidity and sale of debt and equity expenditures, funds provided from operations furnished securities. No material changes are contemplated in the approximately 65% in 1978, 68% in 1979 and 51% in 1980. mix of debt and equity portions of capitalization.

However, when funds provided by operations are com-bined with changes in certain working capital items, which

Southern California Edison Company 36 Selected Financial Data 1970 1980 1980 1979 Summary of Operations Operating Revenues. $ 3,661,117 $ 2,563,974 (in thousands of dollars except Operating Expenses....................... 3,288,983 2,178,978 percent and per share data) Energy Costs (a) 2+71,827 1,344,023 Taxes on Income Current and Deferred (a) . 38,683 100,292 Allowance for Debt and Equity Funds Used During Construction 162,287 118,566 Interest Charges 282,656 205,082 Net Income . 317,536 346,219 Earnings Available for Common and Original Preferred Stock ............. $ 256,586 $ 292,481 Weighted Average Shares of Common and Original Preferred Stock Outstanding and Common Stock Equivalents .......... 73,241 64,202 Per Share Data:

Primary Earnings . $ 3.50 $ 4.56 Fully Diluted Earnings $ 3.48 $ 4.39 Dividends Declared per Common Share ... $ 2.84 $ 2.60 Dividend Payout Ratio (paid)............. 79.4% 55.7%

Balance Sheet Data Total Assets $ 7,733,898 $ 6,977,237 (in thousands of dollars except Gross UtilityPlant . 8,406,309 7,577,670 percent and per share data) Accumulated Provision for Depreciation .. 1,840,233 1,676,148 Percent of Gross UtilityPlant................. 21.9 22.1 Long-Term Debt (includes current maturities) (b):

Bonds. 3,078,796 2,691,577 Debentures 74,957 Other . 10,576 64,217 Preferred Stock Subject to Mandatory Redemption/Repurchase Requirements........ 399,500 324,500 Preferred Stock Other. 482,652 489,822 Common Stock, including Additional Stated Capital 673,921 577,259 Additional Paid-in Capital . 763,519 601,578 Earnings Reinvested in the Business $ 1,092,137 $ 1,054,296 Capital Structure (percent):

Long-Term Debt:

Bonds. 47.3% 45.8%

Debentures . 1.3 Other 0.2 1.1 Preferred 8z Preference Stock 13.6 13.8 Common Equity . 38.9 38.0 Return on Common Equity. 10.76% 13.64%

Book Value Per Common Share $ 33.19 $ 34.22 Operating and Area Generating Capacity at Peak (MW) (c) .. 15,504 15,071 Consumption Data Total Energy Requirement (KWH) (000) ..... 65,459,278 66,216,910 Percent Output:

Thermal 71.4 82.1 Hydro-Company Plants. 9.0 7.6 Purchased Power 8z Other Sources........ 19.6 10.3 Kilowatt-Hour Consumption (000) .......... 59,915,187 59,517,861 Number of Customers . 3,163,968 3,082,382 Average Annual KWH Consumption Per Residential Customer . 5,939 6,010 Number of Employees . 14,157 12,917 Area Peak Demand (MW) 12,841 12,662 (a) Included in Operating Expenses.

Sonlhern California Edison Company 37 197B 1977 1976 1975 1974 1973 1972 1971 1970

$ 2,328,798 $ 2,064,914 $ 1,846,540 $ 1,647,134 $ 1,360,959 $ 1,075,949 $ 927,674 $ 802,434 $ 720,661 2,004,197 1,734,192 1,539,400 1,380,528 1,108,249 843,530 709,724 612,732 535,846 1,240,029 1,040,091 916,131 824,826 541,890 344,990 240,135 192,982 143,475 72,803 68,792 59,506 46,623 70,618 46,496 44,542 38,542 38,635 78,421 60,238 47,610 26,773 16,163 10,190 7,152 15,859 17,007 182,658 161,078 144,368 126,185 112,959 97,728 91,752 82,308 77,633 251,683 251,979 226,798 176,781 160,344 146,110 135,648 127,297 127,495

$ 202,226 $ 206,330 $ 185,047 $ 137,177 $ 124,656 $ 117,268 $ 110,469 $ 105,752 $ 110,497 57,477 54,347 48,678 47,965 44,580 43,965 43,965 43,041 40,963

$ 3.S2 $ 3.80 $ 3.80 $ 2.86 $ 2.80 $ 2.67 $ 2.51 $ 2.46 $ 2.70

$ 3.38 $ 3.63 $ 3.61 $ 2.75 $ 2.68 $ 2.57 $ 2.43 $ 2.37 $ 2.59

$ 2.30 $ 2.06 $ 1.68 $ 1.68 $ 1.68 $ 1.56 $ 1.56 $ 1.51'1.50 63.6% 50.5% 44.2% 5S.7% 58.9% 5S.4% 62.2% 61.0% 54.6%

$ 6,057,697 $ 5,725,266 $ 5,020,843 $ 4,729,444 $ 4,481,488 $ 3,893,379 $ 3,774,664 $ 3,498,985 $ 3,226,881 6,810,891 6,191,733 5,658,433 5,147,333 4,766,175 4,458,631 4,233,067 3,998,045 3,737,837 1,519,174 1,383,009 1,258,327 1,149,311 1,051,024 958,210 851,910 779,409 707,928 22.3 22.3 22.2 22.3 22.1 21.5 20.1 19.5 18.9 2,418,212 2,255,216 2,055,966 2,012,597 1,863,951 1,640,349 1,705,139 1,584,840 1,484,840 75,046 75,135 75,224 75,313 75,401 75,490 75,579 74,902 74,987 17,953 20,023 20,671 25,968 14,327 6,871 7,991 7,991 438 197,000 197,000 75,000 75,000 75,000 75,000 503,650 518,172 537,753 537,753 487,753 437,753 437,753 362,753 362,753 547,166 470,374 442,741 395,709 395,709 362,376 362,376 362,376 337,360 569,673 443,109 427,422 350,503 350,503 316,636 316,636 316,636 243,437

$ 931,217 $ 862,956 $ 769,425'671,548 $ 616,562 $ 569,938 $ 512,164 $ 470,754 $ 430,477 46.0% 46.6% 46.7ogo 48.6% 48.1% 47.1% 49.9% 49.9% 50.6%

1.4 1.6 1.7 1.8 1.9 2.2 2.2 2.3 2.6 0.4 0.4 0.5 0.6 0.4 0.2 0.3 0.3 13.3 14.7 13.9 14.8 14.5 14.7 12.8 11.4 12.4 38.9 36.7 37.2 34.2 35.1 35.8 34.8 36.1 34.4 10.54% 12.05% 12.07% 9.84% 9.52% 9.59% 9.42% 9.80% 11.20%

$ 32.57 $ 32.30 $ 30.67, $ 29.64 $ 28.50 $ 28.46 $ 27.14 $ 26.20 $ 24.72 14,966 14,278 14,071 13,941 13,750 13,500 12,819 11,575 H,128 63,877,116 63,344,706 59,427,973 56,279,231 55,105,988 57,730,121 55,686,776 52,672,084 49,674,757 73.9 9.2 16.9 87.5 2.4 10.1

'.3 75.2 20.5 76.2 8.4 15.4 75.2 10.0 14.8

.' 84 9 9.0 6.1 86.6 6.4 7.0 80.0 8.4 11.6 82.5 9.2 8.3 57,027,035 57,726,273 53,685,378 51,327,508 51,089,981 54,092,934 52,309,906 48,856,493 45,881,076 2,986,545 2,900,856 2,814,403 2,749,680 2,691,691 2,626,492 2,566,341 2,497,342 2,438,584 5,883 5,630 5,650 5,596 5,541 5,885 5,777 5,642 5,240 12,845 12,671 12,510 12.377 12,970 13,391 12,907 12,534 12,048 12,159 11,564 11,292 10,369 10,279 10,535 10,317 9,817 8,556 (b) The years subsequent to 1971 include unamortized premium or discount related to each category of long-term debt.

(c) Includes 2,283, 1,944 and 1,886 MW available from others in 1980, 1979 and 1978, respectively.

Southern California Edison Company 38 Board of Directors

~ William R. Gould Chairman of the Board and Chief Executive Officer

~Howard P. Allen- President

>Roy A. Anderson Chairman of the Board and Chief Exectt tive Officer, Lockheed Corporation, Burbank, California

~Norman Barker, Jr. Chairntan of the Board and Chief Executive Officer, United California Bank, and Vice Chairntan of the Board, Western Bankcorporation, Los Angeles, California-Edward W. Carter Chairman of the Board, Carter Harvley Hale Stores, Inc., Los Angeles, California "William B. Coberly, Jr. President, California Cotton Oil Corporation (Investntents and Real Estate Holdings),

Los Angeles, Califontia

"'Terrell C. Drinkwater Retired Airline Executive, Los Angeles, California

~Walter B. Gerken Chainuan of the Board and Chief Executive Officer, Pacific Mutual Life Insurance Company, Netvport Beach, California Joan C. Hanley General Partner and Manager, Miramonte Vineyards, Rancho California, California "Jack K. Horton Chairntan of the Executive Conntut tee and Consultant (Retired Chairntan of the Board anrl Chief Executive Officer, Southern California Edisott Contpany), Los Angeles, California

~ Frederick G. Larkin, Jr. Chairntan of the Executive Conunit tee, Security Pacific National Bauk, Los Angeles, California

'T. M. McDaniel, Jr. Corporate Director and Consultant (Retired President, Southern California Edison Contpany),

San Marino, Califonu'a

~John V. Newman President, CBS-Sony California, Inc. (Citrus Production), Oxnard, California

~Gerald H. Phipps President, Gerald H. Phipps, Inc., General Contractors (Building Construction), Denver, Colorado Henry T. Segerstrom Managing Partner, C.J. Segerstront & Sons (Real Estate Develop>nent), Costa Mesa, California E. L. Shannon, Jr. Chairntan of the Board and Chief Executive Officer, Santa Fe International Corporation (Oil Service, Petro!cunt Exploration and Production), Orange, California

- H. Russell Smith Chairman of the Board, Avery International (Manufacturer of Self-Adhesive Prorlucts), San Marino, California Richard R. Von Hagen President, Lloyd Corporation, Ltd.

(Real Estate Developntent and Production of Oil and Gas), Beverly Hills, California

'Messrs. Coberly and Drinkwater, having reached retirement age, will not stand for reelection to the Board of Directors in 1981.

Southern California Edison Co~npany 39 Executive OEGcers William R. Gould Chairman of the Boarcl and Chief Executive Officer Howard P. Allen President H. Fred Christie Executive Vice President and Chief Financial Ofhcer David J. Fogarty Senior Vice President A. Arenal Vice President (Engineering and Construction)

G.J. Bjorklund Vice President (Syste>n DevelopnIent)

Robert Dietch Vice President (Nuclear Engineering and Operations)

C. E. Hathaway Vice President (Human Resources)

Joe T. Head, Jr. Vice President (Power Supply)

P. L. Martin Vice President (Customer Service)

A. L. Maxwell Vice President and Comptroller Edward A. Myers, Jr. Vice President (Conservation, Communications and Revenue Services)

Michael L. Noel Vice President and Treasurer L.T. Papay Vice President (Advanced Engineering)

William H. Seaman Vice President (Fuel Supply)

Robert E. Umbaugh Vice President (Adunnistration)

John R. Bury General Counsel Honor Muller Secretary

Southerzz California Edison Company 40 1981 Annual Shareholders'eeting Stock Transfer Agent The annual meeting of shareholders of Southern Califor- Southern California Edison Company nia Edison Company will be held at 10 a.m., Thursday, Post Office Box 400 April 16, 1981, at the Company's Corporate Headquarters, Rosemead, California 91770 2244 Walnut Grove Avenue, Rosemead, California 91770.

Telephone (213) 572-1212. Registrar of Stock Security Pacific National Bank Statistical Supplement Los Angeles, California A comprehensive financial and statistical supplement to this report is available in limited quantity. A copy may be Dividend Reinvestment and requested by writing to the Manager of Investor Relations, Stock Purchase Plan Agent Southern California Edison Company, P.O. Box 800, Bank of America N.T. & S.A.

Rosemead, California 91770. San Francisco, California For Investor Relations: Stock Exchange Listings Institutional Investors contact: Common Stock:

Treasurer's Department New York Stock Exchange Manager of Investor Relations Pacific Stock Exchange Telephone (213) 572-1090 Preferred and Preference Stocks:

Izzdividual Shareholders contact: American Stock Exchange Secretary's Department Pacific Stock Exchange Telephone (213) 572-1937 Ticker Symbol For Dividend Reinvestment and SCE (Common Stock)

Stock Purchase Plan Information:

Southern California Edison Company Media Listing:

Secretary's Department Room 240 SCalEd Post Office Box 400 Rosemead, California 91770 Telephone (213) 572-1852 This Annual Rcport and the statements and statistics contained herein Iiave been assembled for general informative purposes and are not intended to induce, or for use in connection with, any sale or purchase of securities. Under no circumstances is this report or any part of its contents to be considered a prospectrzs, or as an offer to sell, or the solicitatiozz of azz offer to buy, any securities.

Southern California Edison Company System to Pacilic Northwest San Francisco NEVADA UTAH CA I.I PORN IA Big Creek Four Comers >

Las Vcgas (coal) po Hoover Mohave Solar Oneo L

ARIZONA

~

goscrrrcarfyr s wind Center LOS AugCICS L)L t0L L'+ ~ under C3 Service territory L construction pg Extra-high-voltage (EHv) transmission lines

~ Hydroelectric generating station San Onofre I Pat)I spri Irs 69 Palo Verde A Fossil fuel generating station Geothermal O Nuclear generating station

Southern California Edison Company 2244 Walnut Grove Avenue, Rosemead, California 91770