ML17306A318
| ML17306A318 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 12/31/1990 |
| From: | Bryson J, Peevey M SOUTHERN CALIFORNIA EDISON CO. |
| To: | |
| Shared Package | |
| ML17306A314 | List: |
| References | |
| NUDOCS 9112170341 | |
| Download: ML17306A318 (60) | |
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Corporate Profile Contents SCEcorp is the parent holding company of Southern The Year at a Glance California Edison Company, the nation's second- Letter to Shareholders largest electric utility, and three principal nonutility Special Focus: Smart Electric Solutions subsidiaries of The Mission Group. With headquar- Review of Pending Merger 'Lg ters in Rosemead, California, SCEcorp is primarily A Commitment to Excellence x6 an energy-services company whose subsidiaries Review of Southern California Edison Company 20 have combined assets of more than 8<6 billion. Review of The Mission Group 26 Financial Information 29 SCEcorp's largest subsidiary is Edison, a coy-year- Board of Directors 54 old regulated utility that provides electric service Executive Officers 55 to 4 million customers in Central and Southern Shareholder Reference Guide 56 California. Edison's service territory covers 5o,ooo square miles and has a population of more than 2o million. This area has one of the nation's fastest growing and most prosperous and diversified economies.
The Mission Group's subsidiaries include Mission Energy Company, Mission First Financial and Mission Land Company. They operate throughout the United States and abroad in businesses generally related to the corporation's expertise in the energy industry. These nonutility subsidiaries focus on such areas as electric power generation, financial investments and real estate development.
Cover Electricity powers a light-rail train of the Blue Line leaving Willowstation along a 22-mile route between Long Beach and Los Angeles. The Blue Line is a clean and efficient system that began service in July and will be expanded throughout the Los Angeles Basin. This rapid-transit system is aimed at relieving traffic congestion and air pollution in the urban area. Edison worked with transportation agencies during construction of the line and supplies most of its electricity.
Advanced technologies using electricity play a key role in Edison's efforts to help its customers improve productivity, enhance energy efficiency and protect the environment. (See section called, Special Focus:
Smart Electric Solutions on page 8.)
F'inancial Highlights Five-year compound annual Increase growth Dollars in thousanrls, except per-share rlata 1990 'l989 (decrease) rate SCEcorp Revenue $ 7,198,531 $ 6,9o4,386 4.3% 6.7%
Net income $ 786,360 $ 778,24I l.o Earnings per share $ 3.60 $3.56 2.0 Dividends (current rate) $ 2.64 $ 2.56 3I Rate of return on common equity 14 5/o 'l5. 0%
Dividend payout ratio 72.8 /o 7I.3%
Southern California Revenue $ 6,986,460 $ 6r524r474 7.I% 6.2%
Edison Earnings available for SCEcorp common stock $ 692,627 $ 678,642 2.'l 0.0 Earnings per share" $ 3.17 $ 3.Io (0 3)
Rate of return on common equity 15.0% I4.7%
The Mission Group Net income $ 94,019 $ 99,893 (5.9)% 62.5%
Earnings per share" $ .43 $ .46 (6.5) 6o.8 Equity capital $ 904,282 $ 735r 263 23.0 46.4 Assets $ 1,762,199 $ Ir408rl99 25 I 593 Rate of return on common equity 11.8% I7.2%
"Based on tveighted-average shares of SCEcorp common stock outstanding.
Earnings Per Share Annual Dividend Rate Per Share (SCE<<orp) (SCEcorp) h dotrrs h doilers 239'39 3.49 3.56 3.60 The Mission Group Consumer price rtder 86 87 88 89 90 76 77 77 78 79 80 8I 82 83 84 85 86 87 88 89 90
'ftestrtrd to renrct rroreorronce of nucteerp4nt constructisn cosu
The Year at a Glance Financial D SCEcorp's earnings per share of common stock increased 4 cents to a record $ 3.6o in f990 (Page 3I).
a SCEcorp's earnings were a record $ 786 million and revenue was a record $ 7.z billion (Pages 3 anrl 3z).
a SCEcorp declared its x3th increase in common stock dividends in x4 years; the annual dividend is now $ z.64 per share.
D SCEcorp's common stock provided a total return of 3.x /0 in x99o from price changes and dividends, compared with a decrease of 4.3'/0 for the Dow Jones UtilityAverage (DJUA) and a o.3'/0 drop for the Dow Jones Industrial Average (DIrA). Over the past xo years, SCEcorp's common stock provided shareholders an average compounded return of more than 2T /0 annually, compared with x5.8'/0 for the QUA and x3.3 /o for the DjtA.
a Edison remains the only California electric utility with bonds rated AA by both major bond-rating agencies.
a Edison's earnings increased 2.T /o to $ 693 million (Pages zo anrl 3x).
a The Mission Group's three ongoing nonutility subsidiaries had earnings of $ xxx million, up x9'/0. However, these earnings were partially offset by $ g million in operating losses and reserves established for the discontinued Mission Power Engineering subsid-iary (Pages z6 anrl 3x).
Operational a Edison's total electric sales rose 3.6'/0, compared with z.8'/0 in x989 (Page 20).
tm Edison gained 90 729 new customers (Page 20).
a Edison opened the nation's largest, most comprehensive facility to promote energy-efficient and non-polluting electric technologies for its customers. This innovative facil-ity received widespread national attention from the media as well as environmental, regulatory, consumer and utility groups (Page 9).
o Edison made a major new commitment to energy conservation by introducing, with a coalition of statewide groups, new and intensive programs that double its conservation expenditures to a total of $ x4x million over x99o and x99x. New state regulations now provide Edison the opportunity to earn a return on most of its conservation invest-ments (Page zz).
Regulatory a The Federal Energy Regulatory Commission and the California Public Utilities Commission completed hearings on Edison's proposed merger with San Diego Gas gz Electric. Edison awaits decisions by both commissions (Pages z4 and 34).
Letter to Shareholders
'l990 was a good year for SCEcorp. We had record revenues and earnings, and raised The marketplace in our dividend for the xgth time in the last x4 years. We also enhanced service to our which we do business utility customers and further developed our nonutility businesses, preparing us for a is changing. more competitive future.
Financial Overview SCEcorp's earnings in z99o were a record $ 786 million, up x% from x989. Our util-ity subsidiary, Southern California Edison, earned $ 693 million, up z% from x989.
Our three active nonutility subsidiaries earned $nx million, up z9%. These non-utility earnings were partially offset by $g million in operating losses and reserves established for Mission Power Engineering, our discontinued engineering and con-struction subsidiary. SCEcorp stock continued to outperform the utility industry and the major stock indexes in total return to shareholders on a one-year, five-year and xo-year basis.
New Competition The marketplace in which we do business is changing, and we are transforming ourselves to respond effectively.
Utilitycompanies such as Edison no longer have a near-monopoly on electricity generation. While our customers have been served well by our utility power plants, future construction of generation facilities in most cases will be subject to competi-tion. Over the past five years, an ever-growing proportion of the generation capacity added in the United States g7% last year was built by companies that are not utilities.
At Edison, we will not back away from this competition. As the California Energy Commission has recognized, the most economical source of new generation for Edison's customers in the next decade will be the repowering of certain of our existing power plants for increased efficiency and reduced air emissions. None-theless, it is likely that a significant proportion of the new generating capacity required for our customers in the next decade will be provided by nonutility businesses, from which Edison will purchase power under long-term contracts.
As a result of these changes, a larger percentage of our total utility investment will be in transmission and distribution facilities, and energy-efficiency programs.
Because we serve a rapidly growing service territory, Edison's investments in trans- .
mission and distribution in the last five years have helped to offset the effect of our reduced investments in new power plants, and we project that this will continue to be true in the current decade.
Customer Service: New Electric Technologies Our mostintensive work focuses on two One of the most important priorities for us in x99o was the development of new pressing problems approaches to help our customers meet their energy needs. Our most intensive work in Southern California- focuses on two pressing problems in Southern California poor air quality and poor air quality transportation gridlock.
and transportation gridlock. Southern California businesses increasingly face competitive threats because of costs and production restrictions imposed by air quality regulations established to help our region meet federal clean-air standards. A major new mission for Edison is help-ing these customers identify and use new electric technologies to reduce pollution, increase productivity and preserve manufacturing jobs.
Another high-potential use of electricity is electrified transportation. Edison has been working hard in recent years to encourage development of electric vehicles.
Recently, state and local governments have taken actions that give impetus to elec-tric vehicle development. Most important among them is a new state requirement that 2'/0 of all new vehicles sold in California by'1998 and xo'/0 by zoo3 be virtually free of emissions. Only electric vehicles can meet this requirement.
We have also participated in Southern California's growing use of electrified mass transit, such as the Blue Line light-rail train shown on the cover of this annual report. Electrified trains and buses can make a dual contribution to Southern California by reducing smog and cutting traffic congestion.
Customer Service: Energy Conservation We have substantially intensified efforts to help our customers make the most efficient and economic use of electric energy. The importance of this commitment is underscored by the war in the Persian Gulf, as well as the intensified international competition and recession which our customers face. We need to assist our customers in getting as much productive value from our product as possible. Building on our extensive experience over the past decade, we provide an array of more than go cost-effectiv'e energy-management and conservation programs.
In x99o, with the assistance of environmental and consumer organizations, the California Public Utilities Commission (cpuc) created a regulatory framework that gives Edison the opportunity to earn a profit on funds invested in cost-effective conservation programs. Thus, our customers and shareholders alike can gain from these conservation activities.
Edison's Oil Use: Nearing Zero We need to assist our customersin getting Edison's customer energy efficiency programs, along with our long-time leadership in as much productive developing alternate and renewable energy resources and the strong performance of value from our our nuclear units, allowed us in 'l990 to hold consumption of oil for electric generation product as possible. to g million barrels, compared with a high of g8 million barrels in x977.
The reduction in oil use was achieved as a result of actions taken for environmental protection and energy independence since the x97os oil embargoes. In addition to intensified conservation efforts, we have proposed to the cpvc additional invest-ment in San Onofre Nuclear Generating Station's Unit x, our oldest nuclear plant, to assure that it will continue to provide safe, pollution-free power into the zest century. And further, to minimize or eliminate oil consumption, we have made arrangements to store substantial quantities of gas underground and are investing in new pipeline projects that will bring more natural gas to Southern California.
Utility Cost Control An important element of Edison's financial performance in x99o was holding the increase in operation and maintenance expenses to slightly better than two percent-age points below the rate of inflation. We did that despite the cost of adding more than 9o,ooo new customers, a double-digit increase in health-care costs, and higher than projected expenses at the Palo Verde Nuclear Generating Station in Arizona, which we partially own but do not operate.
The Mission Companies: Nonutility Business Growth SCEcorp has been responding to the changing business environment through both its nonutility and utility businesses. Anticipating the growth in nonutility power generation, we created our Mission Energy subsidiary five years ago. With its strengths in power contracting, construction management and operation of clean and efficient power plants, Mission Energy has made itself one of the largest companies in a fast-growing new industry. It is a partner in 3,ooo megawatts of generation, comprising z8 projects in seven states either in operation or under construction, and js developing an additional z,ooo megawatts.
In x99o Mission Energy expanded its focus to international projects. The United Kingdom and other countries are beginning to expand the role of privately owned generation, creating business opportunities for Mission Energy.
Mission First Financial completed n transactions in z99o, including investments in We remain confident two electric generation projects and eight affordable housing projects. Mission Land that the merger as entered into five new joint-venture projects during the year and completed construc-proposed would tion on x7 new buildings at four existing industrial parks.
benefit our share-holders and customers Our Mission Group subsidiaries, with assets of nearly $x.8 billion, have contributed and serve the public significantly to SCEcorp's profits in recent years. Together they have manag'ed their interest. businesses to position themselves for future growth.
Merger with SDGB E Regulatory review of our proposed merger with San Diego Gas 8z Electric Company continued in x99o. The review process has now taken more than two years. We were pleased that the United States Department of Justice decided the merger would not lessen competition, and that the staff of the Federal Energy Regulatory Commission (FERc) concluded that the merger should be approved. However, administrative law judges at both the FERc and the cpvc have recommended that the merger not be approved. We remain confident that the merger as proposed would benefit our shareholders and customers and serve the public interest. As is discussed more fully on page x4 of this report, the regulatory hearings have concluded and the case has been fully submitted to both the federal and state regulatory bodies. We await their decisions.
Regulatory Proceedings Regarding AffiliateTransactions The cr Uc is conducting regulatory proceedings to examine purchased-power trans-actions between Edison and xg nonutility power-production projects in which our Mission Energy subsidiary has up to go'/0 ownership interests. As discussed on pages z4 and 46 of this report, the cpvc in September x99o ruled that $ 48 million should be disallowed from Edison's rates regarding one such affiliate project. In December x99o, the cr Uc granted Edison a rehearing on its decision in this case.
The rehearing could result in a reduced disallowance. In addition, the Division of Ratepayer Advocates, the consumer-advocacy arm of the cr Uc, has recommended substantial disallowances with respect to two other affiliate projects.
The affiliate projects sell power to Edison under contracts that are at least as favor-able to Edison's customers as the cpvc-approved "standard offer" contracts, which were available to anyone at the time Edison entered into these contracts. It is important to the company that the cpUc adopt fair and reasonable treatment of these projects.
New Management Team Effective October x, we were elected as chairman and chief executive officer and as president of SCEcorp and Edison. This followed the retirement of Howard P. Allen as chairman, president and chief executive officer of both companies. Mr. Allen will continue to assist the company as a consultant and as chairman of the board's executive committee. We are greatly indebted to him for his outstanding leadership during more than 36 years of dedicated service to the company.
kfoward P. Allen As of December x, David J. Fogarty retired as executive vice president after 29 years of distinguished and valuable service. On June x, Edison promoted Charles B.
McCarthy Jr. and Harold B. Ray to senior vice presidents, and Harry E. Morgan Jr.
to vice president and site manager of San Onofre Nuclear Generating Station. Also, Michael L. Noel, vice president and treasurer, was elected chief financial officer on October x.
We want to recognize the dedication and skill of our x7,ooo employees. Our fullest success as a national leader in the energy-services business will depend on encour-aging their best ideas, initiative, judgment and enthusiasm.
Finally, we thank our board of directors and you, our shareholders, for the support and confidence you have shown in us. On behalf of the entire SCEcorp team, we commit our best efforts to serve you well.
John E. Bryson Chairman anrl Chief Execntive Officer
,Pg~MQ Michael R. Peevey
+
President February xg, x99x John E. Bryson Michael R. Peevey
SpeciaI Focus: Smart Electric Solutions Southern California Edison has supplied reliable electric service for xo4 years. In a changing business environment, the concept of good service must be expanded to meet a wider variety of customers'nergy-related needs. In f990, Edison made a major commitment to develop emerging electric technologies and promote energy conservation. These efforts are helping customers cut energy costs, increase efficiency and improve air quality.
OIL-PUMPING OPERATIONS The Benefits of Electric Technologies A large customer uses pollution-free electric motors at its oil.pumping In x989, the South Coast Air Quality Management District adopted an ambitious operations in Ventura County. These clean-air plan for Southern California. This unprecedented plan imposes numerous motors are more reliable, easier to new air-emission requirements on businesses and consumers.
operate and require less maintenance than traditional internal. combustion Electric technologies offer a cost-effective means to meet these requirements for engines. Edison works closely with many of Edison's 4oo,ooo commercial and industrial customers. In addition, these many large customers to cut air emis-clean and energy-efficient technologies can both reduce costs and improve product sions and comply with strict environ-mental requirements in oil, gas and quality.
water. pumping operations. Edison has been demonstrating a host of new energy-efficient electric technolo-gies for customers at its z3,ooo-square-foot Customer Technology Application Cen-ter (crAC) in Irwindale, California. Since it opened in January s99o, the center has attracted widespread national attention, and top industry, governmental and envi-ronmental groups from all over the country have visited it.
At cTAc, visitors can participate in a variety of "hands-on" demonstrations.
Industrial customers, for example, can test clean-air technologies, including ultra-violet curing and microwave and radio-frequency heating and drying. Commercial customers can learn about energy-efficient electric motors, heat pumps, lighting and new commercial cooking technologies. Residential customers and builders can see the electric "House of the Future," with its highly efficient electric appliances and home automation systems. Already, many customers have implemented in their own businesses new production methods they found at crAc.
The Future of Electric Transportation Electric vehicles produce 97% less air pollution than gasoline-powered ones even counting emissions from power plants generating electricity to charge the vehicles'atteries.
In the greater Los Angeles area, about two-thirds of all pollution comes from vehicles.
CLEAN-AIR COATING TECHNOLOGY A technician from Safetran Systems Corp., an electronic equipment man-ufacturer, uses ultraviolet light to process the protective coating on cir-cuit boards at its Rancho Cucamonga plant. Faced with strict new environ-mental regulations, the industrial customer installed this pollution. free equipment after seeing a demonstra-tion at Edison's new Customer Tech-nology Application Center. Businesses throughout Southern California that use coatings in manufacturing processes-such as printers, furniture manufacturers and the metal-coating industry- benefit from cost-effective electric technologies that can cut emissions and boost productivity.
Faced with that reality, air quality agencies have mandated new rules to stimulate ELECTRIC VEHICLE the manufacture of low-emission vehicles. In z99o, the California Air Resources Edison employees test the company's Board mandated that z% of all new cars sold annually in the state by z998, or new prototype TEVan, a non-polluting 4o,ooo vehicles, must produce no emissions. That figure will rise to so% of all new electric minivan for fleet and personal transportation. A joint project of cars by the year zoo3, or zoo,ooo vehicles. These goals will help establish a large Edison and various government and market for clean electric vehicles in the coming decade. In response, all three Amer- industry groups, the Chrysler-built ican auto makers are developing electric vehicles. TEVan uses advanced nickel iron bat-
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teries that provide a driving range up In z99o, Edison worked closely with public and private organizations on programs to 120 miles and a top speed of 65 to help commercialize electric vehicles. For example, Edison loans its fleet of g miles per hour. In addition to this large electric vans to cities, counties and private companies to demonstrate their TEVan, Edison has 17 full-size electric cargo and passenger vans that it loans practical value. The company is testing two advanced vans produced by Chrysler for demonstration to its larger fleet Corp., which go 6g miles per hour and zzo miles between recharges. In addition, customers. Vehicles cause most of the Edison joined the Los Angeles Department of Water and Power in a $ 7 million pro- smog in the Los Angeles area, and air quality officials have mandated more ject to help bring xo,ooo electric vehicles to Southern California by z99g. clean-fuel vehicles on California roads.
Edison will have enough generating capacity over the next decade to recharge x million vehicles each night. This would make more efficient use of power plants, thereby reducing the average cost of electricity for all customers.
Electric transportation goes beyond electric vehicles it also means electrically powered light-rail, heavy-rail and magnetic-levitation trains. A major success story in z99o was the 22-mile-long Blue Line, the first link of a 3oo-mile mass-transit network to be built in Southern California. Edison worked closely with transit offi-cials in planning the system and now supplies about two-thirds of its power. The Blue Line already carries more than three times the passengers originally projected.
Other links in the rail network the planned Green Line to the Los Angeles Inter-national Airport and the downtown Los Angeles Red Line-should be operating within three years.
PRODUCE FIRM Ilrsslllrg sllltij The Kirk Produce Company in Placen-r PX'3< jja,W)jr $ IJ~H) mwrrm mv uses a specialized energy-efficient
'ia PxwMS Lsfrrwyr sr'. Surd)wa MUM H cooling system to prolong the shelf life of its fruits and vegetables. With BM"""lE. 4""')H assistance from Edison, the customer cssfociN ssssssNss cKlcNQ nsssANts cut its electricity bills by installing a thermal. energy storage system that makes ice at night when electricity S'gQ<g jjlgf+vg jr'.akg costs are low. It uses fans in the day ltAflRll l%M " ~ww/g to cool and humidify the produce.
)~NBHi This technology also enables Edison
[QNsll~lg to use its generating plants more effi-uuXm SmrSNSS SSSNSSSSSSSSSSSS ciently by shifting customers'emand for electricity from peak periods to off.peak times.
A Blueprint for Energy Efficiency DESIGN WINNER The new Social Services Center in Another key element in supplying better service to customers is energy conserva- Santa Barbara uses much less energy tion. A kilowatt-hour of electricity saved through improved efficiency is as valuable than conventional buildings. The to the economy as a kilowatt-hour consumed. Using energy wisely cuts air pollution energy-efficient features include highly efficient lighting, heating and as well as electricity bills. air conditioning -and other special-In response to recommendations from a broad coalition of public and private ized features like motion sensors that shut off lights when employees leave groups, the California Public Utilities Commission in x99o approved a far-reaching a room. The center won a top award array of programs giving consumers and utilities incentives to conserve energy. For in the Design for Excellence program, its part, Edison will nearly double spending on these energy-efficiency programs to jointly sponsored by Edison and the California Energy Commission. The a total of $ zyz million for z99o and x99z. With other programs, the company plans program encourages energy-efficient to spend more than Sago million for all its energy-management activities cluring design and construction of new build-this two-year period. ings above minimum state standards.
Under new and expanded programs, Edison offers incentives to commercial and residential builders to construct offices, factories and homes that go beyond Califor-nia's already stringent efficiency standards. These energy-saving measures include home insulation and greater use of advanced technologies, such as energy-efficient lighting, electric motors, and heating and cooling systems.
The company also offers rebates to customers who install efficient appliances. In addition, Edison has increased funding for its light-bulb replacement program. Since z98y, Edison has distributed x million compact-fluorescent light bulbs to low-income customers. They last nine times as long as conventional light bulbs, while using only one-quarter the energy. In all, they save customers nearly $ 9 million annually through lower electricity bills.
These new programs recognize the value of energy efficiency. Under them, regu-lators allow Edison the opportunity to earn a profit on most of its energy-efficiency investments-similar to the traditional return on building a power plant or any other capital investment. As a result, shareholders as well as customers can benefit from energy conservation.
RESIDENTIAL CONSTRUCTION An Edison service crew pulls cable to provide electric service at a construc-tion site for energy-efficient homes in Thousand Oaks. The company's Welcome Home program encourages energy-efficient buildings. In 1990, agreements were signed with builders to construct more than 33,000 residential units that surpass state energy-efficiency standards by 10% to 30%. Edison helps builders promote these dwellings and also pro-vides Welcome Home buyers with assistance in cutting electric bills.
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Review of Pending Merger The proposed merger of Edison and San Diego Gas h Electric Company (sDca E) is a top priority for the company. The combined utility would have nearly $ 8.7 billion of annual revenue, g.x million customers, assets of Sxg.z billion and a service terri-tory of g4poo square miles from Central California to the Mexican border.
The merged company would be stronger financially and operationally than either utility standing alone and better able to compete in a changing business environ-ment. It would produce more stable revenue and earnings, a more diverse customer base, better growth opportunities and overall customer savings of $ x.7 billion in the 199 os.
The boards of directors of SCEcorp, Edison and sDGt E agreed in November x988 to merge the two utilities. The companies'hareholders later approved the merger at their annual meetings in April x989. The merger must be approved by the Califor-nia Public Utilities Commission (cPUC) and the Federal Energy Regulatory Com-mission (PERc).
Regulatory Actions In x99o, the FERc and CPuc completed xa3 days of hearings with testimony from 6o witnesses. The regulatory review of the merger proceeded through several impor-tant steps:
MERGER PLANNING Rich Garza (left) of San Diego Gas &
Electric and Richard Fox from Edison plan the integration of the two com-panies'omputer systems at Edison's Irvine Operations Center. TWenty-two transition teams from the two utili-ties have been working together for .,
months to ensure a smooth and effi-cient integration of facilities and oper-ations after the merger is approved.
>>E F
a An environmental impact report prepared by the ct'vc determined that the merger will result in substantial reduction of air pollution in Southern California because Edison's power plants are newer and more efficient than sDGhE's. In spe-cific areas where additional emissions are forecasted, Edison has reached agree-ments with local air quality agencies to provide further emission controls.
a In June, Edison reached agreement with the United States Department of Justice on merger conditions that would resolve its antitrust concerns. Edison agreed to accept conditions that will provide additional transmission service to intercon-nected utilities when it does not harm Edison's customers or interfere with pre-existing contractual commitments.
t3 In November, a FERc administrative law judge recommended against the merger.
In x988, the same administrative law judge also recommended against the PacifiCorp-Utah Power h Light merger, which the vaRc ultimately approved by a g-o vote. In Edison's merger proceeding, the United States Department of Justice and the FERc staff each urged the commission to reject key portions of the admin-istrative law judge's recommendation. Both said that the merger complies with federal merger guidelines. The veRc staff supported the position of Edison and svc8zr; that the merger would produce economic benefits shared by utility cus-tomers. These benefits would include lower electric rates for customers of both Edison and sDGhE, and improved service for San Diego residents.
a On February x, x99x, the administrative law judges assigned to review the merger at the ct uc recommended against the proposed merger. Although they recognized more than Sx billion of consumer benefits from the merger during the decade, they also found that the merger would harm competition. This decision is not binding on the cave's commissioners, who are expected to make their decision m '1991.
Throughout the year, Edison's representatives met with San Diego community leaders to improve mutual understanding and provide them with information about the merger. Despite these efforts, the City of San Diego and some local groups have opposed the merger, largely because they do not want to lose a hometown headquarters. Other parties opposing the merger include the California Attorney General's Office.
Assuming the merger is approved, each socage common share would be exchanged for x.3 newly issued SCEcorp common shares. Existing socaa preferred and prefer-ence shares would be exchanged for newly issued SCEcorp preferred and preference shares on a share-for-share basis.
A Commitment to Excellence In x99o, Edison employees demonstrated their professionalism throughout the ser-vice territory. Service crews and others responded rapidly and worked ago,ooo hours to restore service when fires or winds caused electric outages. The length of non-storm outages dropped g% due to continuing emphasis on system maintenance.
Telephone representatives handled 7.x million calls from customers in x99o, a 7%
increase over t989.
Focus on Customers In response to rapidly changing demographics in Southern California, Edison has expanded services to non-English-speaking customers. The company has translated basic information for customers on billing procedures, conservation and safety and made it available at company offices. Edison also has a toll-free telephone service with representatives fluent in Spanish, Chinese (Mandarin and Cantonese), Viet-namese, Cambodian and Korean. Bilingual volunteers from the company's new multi-ethnic Speakers'ureau make presentations on a variety of energy-related topics. The Edison Electric Institute the electric utility industry's national trade association, recognized these communication programs by presenting the company with the x99o Common Goals award for quality service.
MULTI-ETHNICPROGRAMS Energy Services Representative Hanh Nguyen advises residential and com-mercial customers in the Little Saigon area of Westminster on ways to con-serve energy and reduce costs. The company translates information on billing, energy conservation and safety for its growing population of non-English-speaking customers.
Edison has established toll-free tele-phone service using representatives fluent in various languages.
Ratio of Customers to During the year, Edison representatives made presentations to numerous senior-Employees (Edison) citizen groups on energy use, emergency preparedness and safety. Under the com-pany's Good Neighbor program, initiated in x988, employees refer elderly people 204 218 230 237 243 needing assistance to various community organizations for medical care, meals and transportation. Other noteworthy customer service achievements included:
t3 Providing energy conservation services to 8o,ooo low-income and other customers with special needs, including bilingual assistance and free installation of energy-efficient appliances; Average for ts Encouraging more efficient energy use by conducting nearly nz,ooo free energy 15.large11 efeerrie uQt'e. audits for residential customers, and responding to zoo,ooo telephone calls about (frr'Nvared for 1990.) conservation on Edison's toll-free line; ts Paying part of the winter electric bills of sz,ooo low-income, elderly and disabled customers. In its eighth year, Edison's Winter Energy Assistance Fund contributed more than Shoo,ooo, matching contributions from customers; and n Offering a z4-hour, toll-free telephone number for speech- and hearing-impaired customers.
86 87 88 89 90 Needs of Large Customers By intensifying and specializing its service, Edison has stemmed the potential loss of large commercial and industrial customers that considered leaving Edison s ser-vice territory or installing their own electric generating systems. Such companies include aerospace, plastics manufacturing and food concerns. Edison's experts rec-ommended strategies, rate options, process modifications and electric technologies to increase productivity, improve product quality, decrease costs and improve air quality.
Edison also helped many of these customers take advantage of financial, educational and employment assistance programs available through state and local government agencies.
Promoting Equal Opportunity Equal opportunity is a top priority at Edison. In x99o, the company began imple-menting a comprehensive equal opportunity pledge made in x989. By the end of x99o, Edison had exceeded many of its goals. Women and minorities hold x8'/0 of the top 5oo positions, just two percentage points short of the company's 1995 go'll.
Women and minorities hold ~'/o of the top xoo positions, surpassing the corporate goal of xo /o by '1995 and well on the way to achieving the zo /0 goal by oooo. The advancement of minorities and women will not come through quotas. Instead, employees will be promoted on merit. Edison is committed to ensuring there will be no barriers to advancement by employees who perform well.
Edison's x99o purchases from minority- and women-owned businesses grew to more than x7'/0 of its approximately $ x billion in procurement contracts. The com-pany expects these purchases to rise to zo'/0 by x993 thereby meeting a goal first established with the cPUc in x988. Edison expects to reach the 3o'/0 target estab-lished in last year's pledge by '1998.
Investment firms owned by minorities and women manage $ x75 million, or xx'/0 of Edison's pension fund. This is the highest percentage of any large pension fund.
Furthermore, the company has $ 33 million in credit lines and deposits with 35 minority- and women-owned firms, making it the largest such utility program in the nation.
Percentages of male, female ASIAN AhIERICAN TOTAL and minority employees at hI ALE FERIALE BLACK ANIERICAN INDIAN IIISPANIC htINORmES year-end 1985 and 1990 '/o '/o 0/ 0/ O/ 0/ /0 YEAR.END YEAR.END YEAR END YEAR.END YEAR.END YEAR-END YEAR-END 1985 199o '1985 '1990 1985 <<990 1985 '1990 1985 <<990 <<985 199o 'x 985 'x 990 Management" 81.7 76.7 'I8.3 23.3 3.8 5.'l 6.g 7.8 o.5 o.5 8.3 11,5 <<9,0 2g.9 Administrative ge operativetn 7g.3 74.9 25.7 25.'1 9,Q 9.1 3.7 4.5 1.1 <<.Q 19.8 23.3 34.0 38.3 Total Edisonm 77.0 75.6 23.0 2g.g 7.4 7.5 g.6 5.8 0.9 'l.o 15.6 18.6 28.5 33.0 (1) Inchrdes the officials nnd "professionals'ffinnative action cntegon'es.
(2) Includes the 'technicians,'office nnd clerical," "craftsmen,'operntors and sertrice workers categories.
(3) Regulnr employees only.
x8
Good Corporate Citizenship Each year, Edison and its employees support a broad range of civic, charitable and cultural organizations. Overall, the corporation supported more than z,goo non-profit organizations during the year. Edison's good will and strong ties to more than Soo communities in its service territory are integral to its business.
Support for education is a high priority and takes many forms. During the year, zoo employees and retirees participated in the new Edison Student Mentoring Pro-gram. These volunteers help disadvantaged youngsters who have received educa-tional grants from Edison adapt to the demands of community college.
In 199o, the company expanded the number and amount of scholarships, awards and grants to students in its service territory. This included two four-year $ zo,ooo scholarships to minority students. In all, annual awards to high school seniors and community college graduates seeking to advance themselves totaled $gzo,ooo.
In Edison's zgth United Way Campaign, employees showed their generosity by pledging a record $ z.6 millionand the company another $ t.z millionto help people in need. United Way supports more than 9oo charitable organizations in Edison's service territory. Employees also donated thousands of hours of their time as volunteers to various community organizations including ones for battered women and children, the elderly and the homeless.
EMPLOYEE HEALTH CARE Dr. Carol Peebles, staff physician, administers a treadmill test at Edison's health-care center in Rosemead. The company's flexible benefits program allows employees to choose the coverage best suited to their needs.
Edison also encourages employees to maintain healthy lifestyles to help minimize overall health. care costs.
Edison was the first non-medical cor-poration to receive accreditation by the Joint Commission on Accredi-tation of Healthcare Organizations. Its innovative health. care programs have reduced cost increases from 23%
annually during the 1980s to 10% in 1990.
19
Review of Southern California Edison Company The utility's earnings increased 2.T% to $ 693 million from $ 679 million in s989, because of reduced taxes and improvements in several areas of operations. Revenue grew 7.t% to a record $ 7.o billion from $ 6.g billion in t989.
Growth in Peak Demand, Customers and Sales On June 27, x99o, during an extended heat wave, the Edison system met a record peak demand for electricity of 27,647 megawatts (Mw), which was To% higher than the previous record. Edison started up 2t generating units in the two days preceding the peak, and an additional s3 peaking and combined-cycle units on the peak day, achieving coo% startup reliability.
In s99o, Edison added 90,729 customers to exceed the 4 million mark. By this measurement, it is the second-largest electric utility in the United States. Edison has added nearly 4go,ooo new customers in the last five years.
Retail electric sales climbed 3.6% to 7o. T billion kilowatt-hours (kwh) from 67.6 billion kwh in s989. Total electric sales in s99o, including sales to other utilities and municipalities, rose 3.6% to 7T.6 billion kwh from 69.s billion in s989.
SERVICE TERRITORY To Pacific Northwest Edison supplies more than 4 million customers with electricity from nine CALIFORNIA energy resources, more than any other electric utility in the world. Its San NEVADA UTA II Francisco 50,000-square-mile service territory in Central and Southein California has one of the nation's most diversified Big creek and prosperous regional economies.
To the south is the area served by San Diego Gas & Electric Company.
To Four Corners Hoover (coal)
EI Southern California Edison Company oam service area 0 San Diego Gas & Electric Company Mohave (coai) service area Extra-high-voltage transmission lines
~ Hydroelectric I
=
a Fossil Nuclear Geothermal Los Anacics A
ARIZONA 5 Wind O'San Onofre 4S PaIo Ilt Solar Verde d'or Biomass San Diego MEXICO 20
Research Focus on New Technologies Edison's research programs seek to provide customers with better value and more choices for their energy dollars. In the last two years, the company's research has shifted from emphasizing generation of electricity to a sharp focus on energy efficiency and environmental protection. Many of these programs are directed at conservation and helping consumers and businesses use electric technologies more effectively.
In 199o, the company continued to test an advanced two-way communications and electronic metering network that links the utility with customers. These "smart" meters can offer customers a variety of energy-management choices and informational services. Eventually, this network could allow Edison to remotely read meters, connect and disconnect service, enhance operation of its distribution system, and offer time-of-use pricing and other services to customers.
Other research projects focus on electric transportation, as well as generation and transmission improvements.
Diverse Generating Resources Today, Edison supplies customers with electricity from nine types of generating resources: oil, natural gas, hydroelectric, coal, nuclear, biomass, solar, wind and geothermal. About one-third of this power comes from renewable and alternative SANTA BARBARA FIRE Steve O'Donnell (left), Rick Torres and Diane Miller, members of a service crew from Edison's Santa Barbara dis-trict, dig holes to replace electricity poles lost in fires that destroyed nearly 700 homes and buildings and charred 4,900 acres in June and July.
Working around-the-clock, 41 Edison crews installed 170 new poles and 110 transformers and restored service I within 96 hours0.00111 days <br />0.0267 hours <br />1.587302e-4 weeks <br />3.6528e-5 months <br /> to nearly all 5,000 customers affected.
'f tt
(
t
resources developed in the x98os. This diversity provides considerable protection against supply disruptions and volatility in world energy markets.
In the x99os, Edison plans to add new transmission capacity for more access to power from neighboring regions and to avoid construction of costly new power plants. In this decade, purchases from outside sources will remain a major source of power. The company also seeks to reduce costs by: greater short-term ("spot-market") purchases of electricity; expansion of conservation and load management programs; improvements in existing power-plant efficiency; and repowering of older oil- and gas-fired units with new combustion turbines that reduce air emissions and increase efficiency.
Performance of Nuclear Plants During the year, zo% of customers'lectricity needs was generated by nuclear power plants in California and Arizona. This nuclear energy saved z6 million bar-rels of oil or its equivalent in natural gas, resulting in fuel savings of about Spy million.
The three units at the San Onofre Nuclear Generating Station generated nearly xg% of the electricity used by Edison's customers. Edison owns 8o% of the ygo-Mw Unit x and 7g% of Unit z and Unit 3, which have a combined capacity of zygo Mw. The company manages and operates the three units.
PACIFIC INTERTIE Lineman/splicer Bob Fox helps to maintain a tower of the Pacific Intertie transmission system near Palmdale.
The line is a major transmission link between California and the Pacific Northwest for sales and purchases of power. Edison is expanding its trans-mission facilities to enhance reliability and provide greater access to low-cost energy in neighboring states and the Pacific Northwest. Edison plans to have 5,300 MW of transmission access to the Pacific Northwest and Southwest by 1997.
22
Generation Mix (EdisOn) Together, the San Onofre units operated on average at 7y% of their capacity for tn percent the year, exceeding the s990 national average for nuclear plants. San Onofre ranked 1980 among the top four sites nationwide in electricity production. Unit s was shut down for the last six months of s99o for its moth refueling outage, which extended into x99t to replace reactor components. Unit 3 completed a three-month outage for refueling in mid-july.
Edison owns a sg.8% interest in the Palo Verde Nuclear Generating Station near Phoenix, Arizona. The three 'I 22I-Mw units are managed by Arizona Public Serv-ice Company. In x99o, these units together produced on average at 64% of their capacl ty.
58 Oil and gas Higher Fuel and Purchased-Power Costs I Huctear 12 Coat 9 Hydro Fuel and purchased-power costs are Edison's largest expenses in supplying electricity 20 Purchases: other utilt'es to customers. These costs rose from $ 2.6g billion in x989 to $ 2.9o billion in 1990.
Most of this increase was due to large increases in purchases from nonutility power 1990 producers. These purchases were made under contracts required by federal law and state regulation.
Natural gas was the primary fuel used in Edison's g gas- and oil-powered gener-ating units. During the past three years, Edison's gas supplies have been curtailed about 3o% of the time. In response to these curtailments, the cpuc permitted Edison to lease gas storage space from Southern California Gas Company for the second consecutive year. By using stored gas, Edison can avoid burning oil, which produces higher air emissions.
2003andgas To avoid these gas curtailments, more gas pipeline capacity into California is 20Hudear needed. In x990, Edison continued to negotiate details of a s989 agreement with a 13 Coal subsidiary of Pacific Gas 8c Electric Company to construct a major gas-pipeline 3 Hydro 15 Purchases: other utisties expansion project. Edison has an option to become a 2o% equity owner in this 29 Purchases: other power producers project, which eventually will supply 3o% to go% of its gas needs from Canada.
This expansion project is scheduled for completion in late x993.
In late s990, Edison also signed xg-year contracts for firm supplies with four 2000 Canadian companies that will supply a total of 2oo million cubic feet of natural gas daily beginning in x99y. Edison also is seeking new firm gas supplies from sources in Wyoming and the Southwest.
24 Oil and gas 10 Coal 5 Hydro 20 Purchases: other unities 26 Purchases; other power producers
Regulatory Review Rate Approvals Edison received approval for a number of revenue changes in
'r990, resulting in a net annual rate increase of 2.o%, or Sz33 million. Additional changes effective January x, 1991 further increase revenue by $ 464 million, or 6.8%. The major elements contributing to these rate changes included a $ 93 million decrease on February x, 2990, related primarily to changes in fuel and purchased-power costs, offset by a $ 459 million increase on January 1, 299t; and rate increases of Sr86 million in 299o for a phase-in plan approved by the California Public Util-ities Commission (cPUc) to recover the company's investment-related costs in the Palo Verde Nuclear Generating Station in Arizona.
1992 General Rate Case In December 2990, the company filed its'1992 General Rate Case application with the cPUc. The filing requests a $ 154 million increase, or 2.2%, beginning January 1, 2992 to cover increases in the company's costs of doing business. The ci Uc will issue a decision by year-end l99i.
Purchased-Power Reasonableness Review On September 25 l990 the cPUc dis-allowed $ 48 million ($ 37 million plus interest) of Edison's purchased-power expenses from mid-2985 through late 2987. The disallowance is for power purchased from Kern River Cogeneration Company (RRcc), a nonutility power producer that is REGULATORY ACTIVITIES John Hughes, manager of Edison's Regulatory Affairs, frequently meets with the regulatory staff of the Cali-fornia Public Utilities Commission in San Francisco. During 1990, Edison representatives attended hundreds of meetings, workshops and formal hear-ings to address regulatory matters concerning the company. They dealt
" &Y with a variety of issues, including nat-ural gas pricing, environmental pro-grams, fuel costs, new transmission projects and the 1992 general rate case.
'4
5o'/o owned by Mission Energy Company, an SCEcorp subsidiary. The KRcc coIl-tract was found to be for the purchase of "as-available" rather than "firm" capacity.
The cPUC disallowed the amount of capacity payments to KRcc exceeding those that would have been based on the as-available capacity price. In response, Edison urged a rehearing, pointing out that the decision ignores substantial ratepayer bene-fits, which include $52 million of savings compared with a cPUC-approved standard offer contract. In December 2990 the cPvc agreed to reconsider the amount of the disallowance; a final decision is expected in 299'.
Edison also purchases power from the Sycamore and Watson projects, both of which are nonutility power producers partially owned by Mission Energy Company.
For the period of late 2987 through early 2989, the cPUc's Division of Ratepayer Advocates (DRA) has recommended disallowances of $ g7 million (excluding interest) for power purchased from the Sycamore project and $24 million (excluding interest) for power purchased from the Watson project. Edison strongly disagrees with these proposed disallowances. In fact, Edison's customers receive substantial benefits from these projects. Hearings on these issues are expected to be held in late 299'.
The DRA is currently reviewing Edison's power purchases from the remaining xo nonutility power producers partly owned by Mission Energy Company, and its reports on these projects are expected in late 2992. Hearings on these projects are not expected until early 2992.
For more information, see Note 3 of "Notes to Consolidated Financial State-ments," Page 46.
Average Nitrogen-Oxide Emissions (Edison) trr toot per dey The 1990 Electricity Report The California Energy Commission (CEC) released its 94.9 62.I 59.2 31.0 14.2 9.9 4.5 299o Electricity Report that forecasts Edison will need about x,2oo megawatts (Mw) of additional generating capacity between 2996 and 2999. According to the CEC, Edison should have 8oo Mw of this additional power available by x997. The need for the remaining 4oo Mw will be addressed in the 2992 Electricity Report.
Edison believes that repowering older oil- and gas-fired power plants is the most cost-effective, environmentally sound way to increase generating capacity. The cEc concurs with this judgment, but it proposes that half of the additional power needed by x997 should come from renewable and alternative resources.
70 75 80 85 90 95 00 et Recorded ts ltojKted 25
Review of The Mission Group The Mission Group: The Mission Group was established in x987 as the parent company for SCEcorp's Earnings Per Share nonutility businesses. Its objective is to broaden SCEcorp's earnings base by devel-Cents per strere oping and investing in secure businesses with growth potential.
t9 35 46 43 The Mission Group's earnings were $ 94.o million, compared with $ 99.9 million in x989. It contributed 4g cents per share to SCEcorp earnings in x99o, compared with 46 cents per share in x989.
Mission Fest The Mission Group's two largest contributors to income Mission Energy and Mission First Financial rnsnnrirl in x99o had substantially higher earnings, and Mission Land earned slightly less than in 1989. The net earnings increase at these three sub-sidiaries was partially offset by costs incurred and reserves established for litigation and the discontinued operations at Mission Power Engineering. At year end, The Mission Group had assets totaling nearly &t.8 billion, with SCEcorp's equity amount-ing to $ 9o4.g million. The Mission Group earnings were xz% of SCEcorp's total x99o earnings, compared with x3% in z989.
Mission Paver tn9ineering Mission Energy Company 87 88 89 90 Mission Energy Company, the largest subsidiary, is a national leader in the owner-ship, development and operation of independent power generation projects, espe-cially cogeneration and geothermal plants. The company provides a full range of services that include: management of engineering and construction work; operation POWER PROJECT Mario Brunasso, project manager at Mission Energy Company, oversees construction at the Salinas River cogeneration plant being built in Monterey County by Mission Energy and Texaco. Construction started in JTT 1990 on this 33-megawatt (MW) i project, the first of three that will provide electricity in the oil fields of Central California. Mission Energy, the largest subsidiary of The Mission Group, owns interest in 21 operating projects totaling 2,349 MW, enough capacity to serve 1.2 million people.
NONUTILITYPROJECTS
~ Mission Energy Company A Mission First Financial
~ Mission Land Company
~ sk and maintenance; financing of power facilities; and ownership and management of fuel supplies for its cogeneration projects.
u Mission Energy owns interests in operating joint-venture projects totaling 2,349 megawatts (Mw), including three projects totaling 4'w added in J99o.
Seven other projects totaling 559 Mw are under construction, while the company is seeking permits for six more totaling 950 Mw. A number of these operating projects are in Edison's service territory. However, to avoid future regulatory issues, Edison will no longer purchase power from new Mission Energy projects without prior approval of the California Public Utilities Commission.
To provide a hedge against rising gas prices and guarantee fuel supplies for its projects, Mission Energy has begun to purchase interests in proven producing natu-ral gas and oil reserves.
In x99o, the company purchased a zo% interest in Four Star Oil and Gas Com-pany, based in Houston, Texas, from Texaco, Inc. Four Star has ownership interests in oil- and gas-producing operations in eight U.S. locations.
In December, Mission Energy and Texaco Canada Petroleum (TExCAN) agreed to jointly purchase and operate oil- and natural gas-producing properties in British Columbia from Esso Resources Canada. The properties include: approximately 230 billion cubic feet of proven natural gas reserves and coo billion cubic feet of probable reserves; and 4 million barrels of proven reserves of crude oil and natural gas liquids and z million barrels of probable reserves.
In s99o, Mission Energy's earnings increased to $ 69.5 million, or 3z cents a share up more than z3%. Revenue rose to Sr53.8 million from &z7.8 million in x989. At year end, equity investment in the company totaled $ 494.7 million.
27
The Mission Group: Mission First Financial Assets hmilions of doftsrs Mission First Financial invests primarily in energy-related projects, which represent 642 971 lrt08 1,762 about 7o% of its portfolio. This approach allows the company to bring its spe-Mission Paver tn9ireriin9 cialized skills to complicated financial transactions.
Mission tend Since its inception in x987, Mission First Financial has invested in zg projects. In x99o, it completed sale/leaseback transactions for: the i,37O-Mw Midland Cogen-eration Plant in Michigan; the 29z-Mw Vidalia Hydroelectric Plant in Louisiana; Mission Fist Frnsn&l and for a Boeing 747 aircraft. In addition, the company invested in eight real estate limited partnerships to provide affordable housing for low- and medium-income people. Five of the projects are in California.
In x99o, Mission First Financial's earnings increased to Sn.3 million, or xo cents per share up 43%. Revenue rose to Sz9.9 million from Szg.7 million in x989. At year end, equity investment in this subsidiary totaled $23z.x million.
Mission Land Company 87 88 89 90 Mission Land invests in real estate. It owns, develops and operates industrial parks, as well as office, retail and residential properties. The company concentrates on investments in Southern California, which is expected to remain one of the fastest growing regions in the nation into the next century.
The Mission Group: Mission Land continues to grow through joint developments and expansion of its Equity solely owned industrial parks. During x99o, Mission Land continued construction hmifrons of dottsrs projects in four of its industrial parks and reached agreements for five new joint 292 505 735 904 ventures in California. Mission Land sold $33.x million in industrial property dur-ing '1990.
In x99o, Mission Land Company's earnings decreased to $719.9 million, or 9 cents per share-down to%. Revenue rose to $ 48.9 million, compared with $ 4'.7 million in x989. Earnings were slightly lower because of a slowdown in the real estate Mission Fist market, but the company believes it is well positioned for future growth. At year Nrrnorrf end, equity investment in this company totaled Sz38.x million.
Mission Power Engineering Company In x99o, Mission Power Engineering lost $ 26.7 million, or 8 cents per share. By comparison, it earned $ 6.6 million, or 3 cents per sharc, in x989. Revenue was $ 7.5 million, compared with $ 209.4 million in x989. At year end, equity investment in this subsidiary totaled $3.8 million.
87 88 89 90 The loss for x99o resulted primarily from a continuing dispute with California Energy Company over a completed geothermal construction project, and from reserves established in connection with this litigation. Mission Power Engineering has sued California Energy Company to collect disputed project costs, and Califor-nia Energy Company has countersued. In the third quarter of x99o, Mission Power Engineering discontinued operations.
z8
Financial Information Selected Financial Data: x986-f990 30 Management's Discussion and Analysis of Results of Operations and Financial Condition 3'L Responsibility for Financial Reporting 35 Report of Independent Public Accountants 36 Consolidated Statements of Income 37 Consolidated Balance Sheets 38 Consolidated Statements of Cash Flows 40 Consolidated Statements of Capitalization 41 Notes to Consolidated Statements of Capitalization 42 Consolidated Statements of Retained Earnings 43 Notes to Consolidated Financial Statements 44 Quarterly Financial Data 53 Electric Revenue and Kilowatt-Hour Sales 53 Electric Revenue by Rate Components 53 29
Selected Financial Data: x986 1990 SCEcorp and Subsidiaries Dollars in thousands, except per-share data 1990 T989 x988 x987 T986t >
SCEcorp and Subsidiaries Operating revenue $ 7,198,531 S 6,904 386 S 61252,719 $ 5r 601 r 9 2 6 $ 5,368,o87 Operating expenses 5,947,427 5'r736,612 5r 156I351 4,637,x35 4I420,93'I Net income 786,360 778,24x 761,831 738,53x 520,727 Weighted-average shares of common stock outstanding (ooo) 218,474 218,463 2x8,332 2x8,ox4 2x7,78o Per-share data:
Earnings $ 3.60 $3.56 $ 3 49 $ 2 39 Dividends declared 2.62 2. 54 2.45 /s 2.35/. 2. 25 Book value" 25.19 24. 21 23.x8 22.x6 21.'I3 Market value at year end 37'/s 39/s 32>/s 3o/. 33r/s Dividend payout ratio 72.8 /o 7x.3'/o 7o.3'/o 69.5 /o 94.1 /o Rate of return on common equity'> 14.51 /0 '14.99 /o T5.51 /o 'I'I.09 /o Price/earnings ratio 10.5 'I'I.'I 93 9.0 '14. 2 Ratio of earnings to fixed charges 2.72 2 79 2.86 2.9l 271 Assets" $ 16,312,246 $ 15r443,05T Sx4,866,276 $ 14,35o,664 $ x3,683,o53 Retained earnings 3,038,378 2,824,42l 2,6ox,o86 2r375 915 2px50r75T Common shareholders'quity '> 5,502,650 5,288,687 5,o64,848 4I833I734 4p605p069 Preferred and preference stock of subsidiary:
Not subject to mandatory redemption 358,755 358r 755 358,755 36x,238 36'l,654 Subject to mandatory redemption 210,492 223,800 239i037 277,538 299i049 Long-term debt of subsidiaries 5,291,366 5,282,764 51421 r 747 5,x5o,883 5r'I 22r 243 Southern California Edison Company Financial data:
Earnings available for SCEcorp common stock $ 6921627 $ 678I642 $ 684I689 $ 697r 188 $ 503~198 Earnings per share+'nternal 3.17 3. Io 3.'14 3. 20 2 3'I generation of funds 76o/o 88 /o 100 /o 77 /o 74'/o Operating and sales data:
Area peak demand (Mw) 17,647 x5,632 15,987 14I775 T4r599 Area generation capacity at peak (Mw) 20,323 2o,x36 18,893 x8,2o6 18,32o Kilowatt-hour sales (ooo) 71,613,760 69r T35r748 67,885,761 65,539,481. 64,x97,4o5 Customers 4,031,678 3i9401949 3,831,656 3,7x7,262 3,589,414 Employees 16,604 16,627 x6,66o x7,o86 17ISS3 The Mission Group Common shareholder's equity $ 904,282 $ 735,263 $505.371 $ 292r'108 $ 166,381 Net income 94,019 99,893 77,763 4xr343 T7r 529 Earnings per .43 .46 ~
35 .19 .o8 share+'ercent of SCEcorp's earnings per share 11 9o/o 12.9'/o Io.o /o 5.6'/o 3.3'/o t't Restated for nuclear-plant construction-cost disallowances.
at Based on weighted-average shares of SCEcorp common stock outstanding.
30
SCEcorp and Subsidiaries Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Sources of Revenue Earnings SCEcorp's earnings per share for x99o were $ 3.6o, compared with $3.g6
'SCEcorp) in x989 and $ g.49 in x988. Net income rose to $ 786.4 million in x99o, compared In percent with $ 778.z million in x989 and $ 76x.8 million in x988. Revenue grew to $ p.z billion from $ 6.9 billion in x989 and $ 6.3 billion in x988.
In x99o, Southern California Edison Company (Edison) contributed 88% of SCEcorp's earnings, or $3.x7 per share, a 7-cent increase over x989. This increase primarily resulted from reduced income taxes and minor improvements in several areas of operations. Utilityearnings in x989 declined 4 cents per share from x988, resulting largely from costs associated with the Palo Verde Nuclear Generating Sta-tion (Palo Verde) outage (see Note g of "Notes to Consolidated Financial Statements" )
and the pending merger with San Diego Gas 8c Electric Company (sDGIhE).
35 Cmernerical I6industna!
In x99o, The Mission Group of nonutility businesses provided earnings of 43 cents 8 Public authorities per share, or xz% of SCEcorp's earnings, compared with 46 cents per share in x989 5 Other etectiic and 3g cents per share in x988. Net income for x99o was $ 94.o million, compared 3 Oiversifred operations with $99.9 million in x989 and $ 77.8 million in x988. The Mission Group's two ident'ui 33 largest contributors to income in x99o had substantially higher earnings, with Mission Energy Company's (Mission Energy) earnings up z3% to gz cents per share, as a result of placing three new projects into service, and Mission First Finan-cial's earnings rising 43% to xo cents per share, resulting from several new financing investmehts during the year. Mission Land Company's (Mission Land) earnings of 9 cents per share were off xo% as a result of slower real estate activity. The net Distribution of Revenue increase in earnings at these three subsidiaries was more than offset by costs (SC Ecorp) incurred and a reserve established in connection with litigation and discontinued operations at Mission Power Engineering Company (Mission Power). The reserve was established as a result of a dispute with a client over recovery of costs for a completed construction project.
The Mission Group's earnings increase of xx cents to 46 cents per share in x989 over x988 was largely from additional Mission Energy projects placed into opera-tion, project-financing investments at Mission First Financial, and the management and sale of Mission Land properties.
2l Operat'xN 8 maittenance Operating Revenue Operating revenue totaled $ 7.z billion in x99o, a $ z94.x lt OiVidends & nterest million increase over x989. Electric revenue increased $ 46x.9 million over x989, par-100epredadon tially offset by a $ x67.8 million decrease in revenue from diversified operations.
8 Taxes & other Over 98% of electric revenue is derived from Edison's retail sales, which are subject 3 Reirrested earnin9s 41 fuei 8 purchased porrer to rate regulation by the California Public Utilities Commission (cpvc). The remaining electric revenue is from Edison's sales to wholesale customers, which are regulated by the Federal Energy Regulatory Commission (FERc).
Electric revenue increased in x99o, primarily due to rate increases and a 3.6% rise in retail sales, reflecting the addition of nearly 9x,ooo customers. Rates increased in x99o as a result of a cvvc-authorized increase of $ zox million, or 3.3%, effective July x, x989, mainly to offset Edison's higher energy costs. Additionally, the cPUc authorized an attrition rate increase of $ 4x million for x99o to offset higher nonfuel operating expenses.
Electric revenue for x99x will reflect a cpvc-authorized rate increase of $ 464 mil-lion, or 6.8%, primarily to offset Edison's higher energy costs. The ci'vc also
Electric Revenue authorized a xz.8g% return on common equity for x99x, unchanged from x99o and Increases (SCEcorp) down from x3.oo% in x989.
InmiRns of do845 The decrease in revenue from diversified (nonutility) operations primarily resulted 431 593 462 from discontinued operations at Mission Power and the reserve it established as a result of a dispute with a client, as previously discussed. However, the other three Mission companies posted a combined revenue increase of Sz6.8 million in x99o.
Operating Expenses Operating expenses in x99o increased Szxo.8 million over x989, compared with increases of Sago.3 million in x989 and Spy.z million in x988.
Purchased-power expense increased $ 43'.4 million in '1990 over x989, compared Ibfe dsnges with increases of $ 4'.4 million in ~989 and $4g4.g million in x988, reflecting increased power purchases from nonutility generators as required by federal regula-tions. These power purchases were made at cPvc-approved rates, which are gener-ally higher than those for other sources. Purchased-power expense will continue to increase from additional purchases from nonutility power producers, escalating prices under certain cpvc-approved contracts and higher forecasted gas prices.
The cpvc periodically reviews the reasonableness of Edison's purchased-power expenses. As reported in Note 3 of "Notes to Consolidated Financial Statements,"
several purchased-power contracts with nonutility power producers have been reviewed by the cpvc's Division of Ratepayer Advocates and disallowances have been imposed or recommended. The cpvc will conduct future reviews of these and other purchased-power contracts.
Edison's fuel expense declined $268.6 million in x99o, after increasing by Sz3.x million in x989 and decreasing by Stx9.o million in x988. The increase in purchased Kwh Sales (Edison) power has led to lower fuel expense as Edison reduced generation at its own facilities.
Although electric generation was down in x989 from z988, higher fuel costs caused In bIIIons the Sz3.x million increase in fuel expense for 'l989.
64.2 65.5 679 69.I 7I.6 The cpvc has established various rate-making mechanisms to accumulate revenue or energy costs until they are recovered from, or refunded to, utility customers through authorized rate adjustments. These provisions for regulatory adjustment clauses reflect net overcollections of Szog.6 million in x99o, compared with $ 284.z million in x989 and $ z4o.7 million in x988. These overcollections are principally due to rate increases in the energy cost adjustment clause to recover prior undercollections.
Other operating expenses decreased $ 88.5 million in x99o, which reflects the dis-continuance of operations at Mission Power. Operating expenses incurred in provid-ing service to new utility customers partially offset the reduction at Mission Power.
Operating income before income taxes increased 4.g% in x99o. However, income taxes decreased x.6%, primarily due to a favorable settlement of tax issues related to prior years.
Other Income and Deductions To minimize the rate impact of Palo Verde con-struction costs, the crvc authorized a xo-year rate phase-in plan for Palo Verde 86 87 88 89 90 Units x, z and g, which defers $ zoo million of revenue during the first four years of operation for each unit. Deferrals for each unit, for years one through four, are
$8o million, $ 6o million, $ 4o million and $ zo million, respectively. Edison will collect the deferred revenue, with interest, evenly over the final six years of each unit's rate phase-in plan. The four-year deferral periods for Units x and z ended in February 1990 and September x99o, respectively. The Stx7.z million decline in the provision for rate phase-in plan in x99o reflects the conclusion of the deferrals for Units x and z and the collection of the deferred revenue in rates.
Regulatory Balancing Accounts New Accounting Standards As discussed further in Note S of "Notes to and Rate Phase-in Plan (Edison) Consolidated Financial Statements," the income tax accounting standard issued in In rnilrions of doltars '2987 requires major balance sheet adjustments. The Financial Accounting Standards 830 862 831 923 881 Board is considering requests to amend certain provisions of the standard and has tentatively postponed its required implementation date one additional year to 1993.
These adjustments are not expected to significantly affect future earnings.
As reported in Note 6 of "Notes to Consolidated Financial Statements," a new accounting standard will require the expected cost of postretirement benefits other than pensions to be charged to expense during the years employees render service.
Rate phase-I SCEcorp's current policy is to recognize the cost of these benefits as they are paid.
plan deferrafs Annual employee benefits expense is expected to increase significantly upon adop-tion of the new standard in x993. cpvc hearings on the rate-making impact of this new standard are expected to begin in x992. Edison anticipates recovering the addi-tional postretirement benefit expense in rates. With rate recovery and the applica-tion of regulatory accounting principles, no significant financial effect should result 8arandng.aecorwt from this accounting standard.
NrdefcoltKtons Financial Condition 86 87 88 89 90 Liquidityand Capital Resources SCEcorp's liquidity is primarily affected by dividend payments and its subsidiaries'onstruction expenditures and debt maturi-ties. Capital resources include cash provided by subsidiary company operations and external financings.
Total Generation The cpvc regulates Edison's capital structure, thereby limiting the dividends that Capacity (Edison)
Edison may pay to SCEcorpv At December 3x, x99o, Edison could pay approximately in hhorrsands of rnegavvatts
$ T.x billion in additional dividends to SCEcorp and still maintain its capital structure 18.3 18.2 18.9 20.1 20.3 within the cpvc-authorized range. The California Public Utilities Code also prohibits Edison from making loans or advances to SCEcorp or The Mission Group These Reserve rnarg'n restrictions are not expected to affect SCEcorp's ability to meet its cash obligations.
External financings are influenced by market conditions and other factors, includ-ing limitations imposed by Edison's Articles of Incorporation and Trust Indenture.
As of December 3x, x99o, Edison could issue approximately $ 4. x billion of additional first and refunding mortgage bonds and $ z.x billion of preferred stock at current interest and dividend rates.
Peak demand SCEcorp continues to meet most of its capital requirements by cash generated through operations. For x99o, net cash from operations increased $ zo.7 million over x989, primarily due to the collection of revenue previously deferred under the Palo Verde rate phase-in plan.
SCEcorp's subsidiaries raise additional cash through short- and long-term debt issuances. Short-term debt is used by Edison to finance fuel inventories and balanc-86 87 88 89 90 ing account undercollections, as authorized by the cPUc. In x99o, Edison issued $ 6oo million of first mortgage bonds, primarily to refinance existing debt at lower inter-est rates. The Mission subsidiaries issued $ S7 million in long-term debt, primarily to finance their continued growth. Other uses of cash for financing activities, as detailed in the consolidated statements of cash flows, are for dividends, which totaled $ 368.o million in x99o, and Edison's repayment of long-term debt. Cash out-flows exceeded cash inflows from financing activities by $ 7z.o million in %990.
33
Construction Expenditures SCEcorp's subsidiaries have lines of credit totaling $ z.x billion. About $ x.g billion (Edison) of this amount supports Edison's commercial paper and other borrowings to finance h Mlions of doltrrt general cash requirements, fuel inventories and undercollections in regulatory bal-4.5 4.9 ancing accounts. Another $ gtg million is available to Edison for the long-term refinancing of certain variable-rate indebtedness for pollution control facilities. The remaining $3oo million supports commercial paper and other borrowings to finance 3236 Generation general cash requirements at Mission Energy and Mission First Financial, and 2796 leveraged leases at Mission First Financial.
The primary uses of cash for investing activities are for capital expenditures, investments in nonutility activities and contributions to nuclear decommissioning 13%
[ 1296 trnnnrusdcn trusts. Currently, Edison contributes $ 97 million per year to nuclear decommis-sioning trusts. These contributions will continue until the trust funds are used to decommission Edison's nuclear plants. Net cash used for investing activities 49% 469i Distribution increased by $ 77.o million over x989.
Capital Structure SCEcorp's capital structure as of December g2, 'l990 was: com-mon equity, 48.4%; preferred stock, g.o%; and long-term debt, 46.6%.
1986-1990 1991-1995 Pending Merger (Rmxde4 fPrciected)
Under the terms of a November x988 agreement to merge sDGfeE into Edison, SCEcorp will exchange x.3 shares of newly issued common stock for each sDGfeE common share. svcfeE preferred and preference stock will be exchanged for SCEcorp preferred and preference stock with similar provisions, except that dividends on each Projected Capital series will be increased between co% and zo%. During April x989, the shareholders Requirements (SCEcorp) of SCEcorp, Edison and sDGhE approved the merger agreement. The merger is sub-h bgrrorrr of dcftrrr ject to approval by regulatory agencies, including the cvvc and the FERc. The FERc 1.45 1.23 1.20 1.15 1.32 and CFvc administrative law judges have recommended that the merger not be approved because of its impact on competition. Edison expects decisions from both Preferred rtodc rederrlp6Ã$
commissions in x99t.
long.term debt Pro forma financial statements of the combined companies are presented in fIQtVntier SCEcorp's'1990 Securities and Exchange Commission Annual Report on Form xo-K.
Independent Power Producers Federal law requires utilities to purchase power from nonutility electric-generation companies at state-mandated prices. Edison is required to buy this power even if the prices exceed other power sources, including Edison's own facilities. Additionally, cer-tain nonutility producers sell power they generate to large industrial and commercial customers of Edison from projects located on-site. Further loss of sales to such cus-tomers may occur in the future ifthe electric utilityindustry undergoes deregulation.
91 92 93 94 95 Environmental Matters As reported in Note xo of "Notes to Consolidated Financial Statements," Edison is subject to numerous legislative and regulatory environmental requirements in the areas of air and water pollution, waste management, hazardous chemical use, noise abatement, land use, aesthetics and nuclear control. Edison's potential cost for these environmental requirements cannot be determined at this time.
Responsibility for Financial Reporting The management of SCEcorp is responsible for preparing the accompanying finan-cial statements. The statements were prepared in accordance with generally accepted accounting principles and necessarily include amounts based on management's esti-mates and judgment. Management believes other information in the annual report is consistent with the financial statements.
Management maintains systems of internal control that provide reasonable assur-ance assets are safeguarded, transactions are properly executed in accordance with management's authorization, and accounting records may be relied upon for the preparation of financial statements and other financial information. The design of internal control systems involves management's judgment concerning the relative cost and expected benefits of specific control measures. These systems are aug-mented by internal audit programs through which the adequacy and effectiveness of internal controls, policies and procedures are evaluated and reported to management.
In addition, Arthur Andersen 8z Co., as part of its independent audit of SCEcorp's financial statements, is responsible under generally accepted auditing standards to evaluate the internal control structures in order to determine the scope of its audit-ing procedures for the purpose of expressing its opinion on the financial statements.
Management believes SCEcorp's systems of internal control are adequate to accomplish the objectives discussed herein. Management has implemented all of the internal and external auditors'ignificant recommendations regarding the systems of internal control.
The audit committee of the board of directors, which is composed entirely of non-employee directors, meets periodically with both the external and internal auditors, who have unrestricted access to the committee. This committee recommends to the board of directors the annual appointment of a firm of independent public accoun-tants, considers the audit scope and independence of the external auditor, discusses the adequacy of internal controls, reviews financial reporting issues and is advised of management's actions regarding these matters.
Management is responsible for fostering a climate in which SCEcorp's affairs are conducted in accordance with the highest standards of personal and corporate conduct, which are reflected in SCEcorp's Standards of Conduct. Management maintains programs to encourage and assess compliance with these standards.
Richard K. Bushey John E. Bryson Vice President Chairman of the Board anrl Controller and Chief Executive Officer February x, x99i
Report of Independent Public Accountants To the Shareholders and the Board of Directors, SCEcorp:
We have audited the accompanying consolidated balance sheets and statements of capitalization of SCEcorp (a California corporation) and its subsidiaries as of December 3l, x99o, and x989, and the related consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 3l, l99o. These financial statements are the responsibility of SCEcorp's management. Our responsibility is to express an opinion on these financial state-ments based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-dards. Those standards require that we plan and perform the audit to obtain reason-able assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assess-ing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SCEcorp and its subsidiaries as of Decem-ber pl,'1990 and l989, and the results of their operations and their cash flows for each of the three years in the period ended December gl, l99o, in conformity with generally accepted accounting principles.
Los Angeles, California ARTHUR ANDERSEN h CO.
February x, 'l991
Consolidated Statements of Income SCEcorp and Subsidiaries ln thousands, except per-share amounts Year ended December 31, 1990 1989 1988 Electric revenue $ 6,986,284 $ 6,524,386 $ 5 I93 1,682 Diversified operations 212,247 38o,ooo 321~037 Total operating revenue 7,198,531 6~904~386 612521719 Fuel 827,393 996I026 972 973 Purchased power 2,071,910 II638~495 11235~110 Provisions for regulatory adjustment clauses-net 205,638 18+206 24o,681 Other operating expenses 1,084,149 1,172,651 i,o68,886 Maintenance 375,338 377 888 375i444 Depreciation and decommissioning 715,680 689,614 646i569 Income taxes 489,798 497 793 446,395 Property and other taxes 177,521 179i939 170,293 Total operating expenses 5,947,427 5 736,612 5 156 351 Operating income 1,251,104 'i~'1671774 1~0961368 Provision for rate phase-in plan 2,283 119,478 170 856 Allowance for equity funds used during construction 13,226 12q598 18,125 Interest income 147,896 168,331 121,7o8 Taxes on nonoperating income (16,453) (78.sss) (79i547)
Other net 2,644 7,148 (162)
Total other income- net 149 f596 229I000 230p980 Income before interest and other expenses 1,400,700 1I3961 774 I13 271348 Interest on long-term debt 454,500 467,096 439,842 Other interest expense 136,661 130i210 io8,498 Allowance for borrowed funds used during construction (9,636) (9,482) (11,883)
Capitalized interest (11,311) (13 797) (17,636)
Preferred and preference stock dividend requirements of subsidiary 44,126 44,506 46,696 Total interest and other expenses-net 614,340 618,533 565 517 Net income $ 786,360 $ 778,241 $ 761,831 Weighted-average shares of common stock outstanding 218,474 218,463 218,332 Earnings per share $ 3.60 $3S6 $ 3 49 The accompanying Notes to Consolirlated Financial State)nents are an integral part of these statements.
37
Consolidated Balance Sheets In thousanrls December 3x, 1990 x989 ASSETS Utilityplant, at original cost $ 17,044,604 $ x6 439 476 Less accumulated provision for depreciation and decommissioning 5,696,083 5,095 086 11,348,521 xx.344I390 Construction work in progress 741,040 593,76o Nuclear fuel, at amortized cost 294,908 394I 124 12,384,469 x2~332,274 Less property-related accumulated deferred income taxes 1,164,602 x,05x~527 Total utility plant 11,219,867 xxi2801747 Nonutility property less accumulated provision for depreciation of
$36,ozx,ooo and $ 36,ox7,ooo at respective dates 108,627 97i060 Nuclear decommissioning trusts 384,667 270,069 Investments in partnerships and unconsolidated subsidiaries 1,021,502 773,682 Investments in leveraged leases 316,120 169,997 Other investments 62,240 52ix40 Total other property and investments 1,893,156 xp362p948 Cash and equivalents 479,106 x5o,676 Receivables, including unbilled revenue, less allowances of $ x8,238,ooo and $ x4,o85,ooo for uncollectible accounts at respective dates 860,613 866,o48 Fuel stock 181,048 89,895 Materials and supplies, at average cost 104,166 96~888 Regulatory balancing accounts- net 225,485 320i765 Prepayments and other current assets 145,666 x50,486 Total current assets 1,996,084 x,674,758 Unamortized debt issuance and reacquisition expense 290,172 288,664 Rate phase-in plan 655,950 602p073 Other deferred charges 257,017 233,86x Total deferred charges 1,203,139 'Iix24i598 Total assets $ 16,312,246 $ 15,443,o5x The accotnpanying Notes to Consolidated Financial Statements are an integral part of these statements.
SCEcorp and Subsidiaries In thorrsands December 3I, 1990 989 CAPITALIZATIONAND LIABILITIES Common shareholders'quity 5 5,502,650 $ 5;288,687 Preferred stock of subsidiary:
Not subject to mandatory redemption 358,755 358i755 Subject to mandatory redemption 210,492 223,800 Long-term debt of subsidiaries 5,291,366 5,282,764 Total capitalization (see accompanying statements) 11,363,263 II,I54,oo6 Other long-term liabilities 160,506 I54,8I9 Current portion of subsidiaries'ong-term debt and redeemable preferred stock 233,356 2I5,075 Short-term debt 1,313,189 793,967 Accounts payable 537,282 5I8,363 Accrued taxes 425,030 458I90I Accrued interest 122,079 I32,284 Dividends payable 147,511 I43~300 Accumulated deferred income taxes net 37,750 Ioo,669 Deferred unbilled revenue and other 503,035 398,765 Total current liabilities 3,319,232 2 I76If324 Accumulated deferred investment tax credits 515,692 537,699 Accumulated deferred income taxes-net 652,637 542,736 Customer advances and other deferred credits 300,916 292I 467 Total deferred credits 1,469,245 Ii372i902 Commitments and contingencies (Notes I, 3, S, 9 anrl Io)
Total capitalization and liabilities $ 16,312,246 $ I5,443,05I The accompanyirrg Notes to Consolirlaterl Financial Statenrents are an integral part of these statements.
39
Consolidated Statements of Cash Flows SCEcorp and Subsidiaries In thonsanrls Year ended December 31, 1990 1989 1988 Cash flows from operating activities:
Net income $ 786,360 778,z41 $ 761,831 Adjustments for noncash items:
Depreciation and decommissioning 715,680 689,614 646,569 Amortization 168,608 157i454 156,73 Allowance for funds used during construction (22,862) (zz,o8o) (3o,oo8)
Rate phase-in plan (53,877) (166,132) (196,181)
Deferred income taxes and investment tax credits 142,091 203I337 176,614 Equity in income from partnerships and unconsolidated subsidiaries (127,065) (1z7,o36) (87.070)
Income from leveraged leases (21,238) (12,231) (17 056)
Other net 9,481 (z3,zo6) (20,420)
Changes in working capital components:
Receivables 5,435 (165,7o5) (74.554)
Regulatory balancing accounts 95,280 74,z61 z26,6o9 Fuel stock, materials and supplies (98,431) 35 287 2,047 Prepayments and other current assets (11,153) 6,904 (1z,689)
Accrued interest and taxes (74,005) 38,638 (63,314)
Accounts payable and other current liabilities 107,873 'I34, I70 (43 292)
Net cash provided by operating activities 1,622,177 1,6o1,516 1,4z5,818 Cash flows from financing activities:
Issuances of long-term debt 650,649 'l93,306 631.343 Repayment of long-term debt (554,291) (168,368) (35o.383)
Redemption of subsidiary preferred and preference stock (13,303) (15.363) (48.775)
Nuclear-fuel financing (106,252) (129.<<7) (18,569)
Short-term debt financings-net 519,222 135I549 51i917 Dividends paid (568,033) (550.524) (530i409)
Net cash used by financing activities (72,008) (534.507) (264,876)
Cash flows from investing activities:
Capital expenditures (905,289) (837,99o) (834,63o)
Nuclear decommissioning trusts (114,598) (112,983) (157,o86)
Investments in leveraged leases net (129,024) (6,1o1) (zoo)
Investments in partnerships and unconsolidated subsidiaries (246,184) (272.557) (168,332)
Distributions from partnerships and unconsolidated subsidiaries 123,973 xooi432 55,998 Proceeds from sale of assets 28,742 35 370 27 637 Other net 20,641 (50 871) ('19 388)
Net cash used by investing activities (1,221,739) ('I1144~700) (I,096,001)
Net increase (decrease) in cash and equivalents 328,430 (77.691) 6+941 Cash and equivalents, beginning of year 150,676 zz8,367 163,426 Cash and equivalents, end of year 5 479,106 15o,676 $ 228,367 Cash payments for interest and taxes:
Interest 5 535,531 512i555 $ 485,5oo Taxes 392,881 356I147 421i90I Noncash investing and financing activities:
Obligation to fund investment in partnerships and unconsolidated subsidiaries $ 20,844 I3,401 The accotnpanying Notes to Consolidated Financial Statements are an integral part of these statements.
40
Consolidated Statements of Capitalization SCEcorp and Subsidiaries Notes to Consolidated Statentents of Capitalization are on page 42.
In thousands December 3x, 1990 T989 Common shareholders'quity (a):
Common stock no par value; 4oo,ooo,ooo shares authorized; 2x8,474,432 outstanding at each respective date (b) $ 2,464,272 $ 2,464,266 Retained earnings (see accont panying statements) 3,038,378 2,824,421 Total 5,502,650 5,288,687 Cumulative preferred stock of subsidiary (c): December 31, '1990 Shares Redemption Not subject to mandatory redemption: Series Outstanding Price
$ 25 par value: 4.o8% lI000,000 $ 25. 50 25,000 25,000
- 4. 24 lI200,000 25. 80 30,000 30,000 4.32 1~653,429 28.75 41,336 4x,336 TI296i769 25. 80 32,419 32~419 5.8o 2I200~000 25. 25 55,000 55,000
$ 1oo par value: 758 750,000 TOT. 00 75,000 75,000 8.7o 500~000 '101.00 50,000 50,000 8.96 500,000 101.00 50,000 50~000 Total 358,755 358,755 Subject to mandatory redemption (d):
$ 1oo par value: 7.325% 487,381 l03.03 48,738 51,738 7.8o 447i495 '104. 04 44,750 46g550 8.54 570,000 '102. 75 57,000 59i250 8.70A 406,874 '104.'14 40,687 42,000
'12 31 310p550 xo5.83 31,055 36,000 Preferred stock to be redeemed within one year (11,738) (11,738)
Total 210,492 223,8oo Long-term debt of subsidiaries (d):
Maturity Interest Rates First and refunding mortgage bonds (e): '1991 through '1994 to 9/s% 718,000 690IOOO
'1995 through 1999 71/s% to 9% 1,100,000 IITOOIOOO zooo through 2oo9 8'/g% to 9.95% 668,250 673,500 zoxo through zo22 81/s% to Io% 1,625,000 113501777 Pollution control bonds (f): 1999 through zox5 6>/i% to TV/<% and variable 962,255 947i730 Funds held by trustees (f) (9,924) (11 945)
Debentures and notes (g): '1991 through 1999 9.6% to x1.5% and variable 301,638 464~734 Nuclear fuel indebtedness (h) 183,433 292I517 Long-term debt due within one year (221,618) (203 337)
Unamortized debt discount net (35,668) (2x,zx2)
Total 5,291,366 5,282,764 Total capitalization $ 11,363,263 $11, T54,006 The accontpanying Notes to Consolirlated Financial Statements are an integral part of these statements.
Notes to Consolidated Statements of Capitalization SCEcorp and Subsidiaries (a) The California Public Utilities Commission (cvvc) regulates (e) Substantially all Edison properties are subject to the liens of Southern California Edison Company's (Edison) capital structure, trust indentures, except for fuel inventories, which are financed thereby limiting the dividends that Edison may pay its parent with short-term debt in conformity with cpuc rate-making company, SCEcorp At December 3x, x99o, Edison could pay procedures.
approximately $ x.x billion in additional dividends to SCEcorp and still maintain its capital structure within the crvc-authorized (f) Edison has issued first and refunding mortgage bonds and range. The California Public Utilities Code also prohibits Edison other indebtedness to governmental agencies in exchange for from making loans or advances to any of its nonutility affiliates. proceeds from pollution control bonds. These proceeds have been deposited with trustees and are used to finance construction of (b) SCEcorp issued X2,5oo and 327,45x shares of common stock in pollution control facilities. Certain pollution control bonds may be x989 and x988, respectively. No stock was issued during 2990. redeemed at the discretion of bondholders under certain circum-stances. Edison has made arrangements with security dealers for (c) Edison's authorized shares of original preferred, $ 25 cumulative the remarketing or purchase of the pollution control bonds in such preferred, Sioo cumulative preferred, $ 25 preference and Sxoo cases. Edison has arranged lines of credit of $ 5x5 million as of preference stock are 48o,ooo, 24,ooo,'ooo, xz,ooo,ooo, xo,ooo,ooo December 3x, x99o, to refinance these bonds, should remarketing and 2,ooo,ooo shares, respectively. All series of cumulative pre- be unsuccessful.
ferred stock are redeemable. The 3xo,55o shares of Sxoo cumulative preferred stock, X2.3x% series, are not subject to redemption until (g) SCEcorp's nonutility subsidiaries had debt outstanding in the May x, x992, other than pursuant to mandatory redemption amount of $ 29x.x million and S256.4 million at December 3x, X99o, provisions. and x989, respectively, supported by letters and lines of credit Changes in Edison's preferred and preference stock during the aggregating $ 355.7 million and $ 378.8 million at December 3x, last three years were: X99o, and X989, respectively.
Year ended December 3x, (h) Nuclear-fuel financing was composed of:
Shares 1990 X989 'x988 December 3X, Not subject to mandatory redemption: Iu thousands 1990 x 989
- 5. 20% preference 99I337 Rreign-currency-denominated notest*i 5 38,625 S Commercial paper and notes
- 127,743 272,620 Subject to mandatory redemption:
Spent nuclear fuel 17,065 x9,897 7.325% preferred 30,000 30,000 52,629 obligation"'urrent 7.8o% preferred 18,000 ig,ooo 26,500 183,433 292,5I7 8.54% preferred 22,500 22r500 22,500 maturities (3,134) (2,823)
- 8. 7o%A preferred 13,125 X3r'I 25 26I250 Total 5180,299 $ 289,694 x2.3x% preferred 49,450 70,000 70,000 7.375% preference 'x,x54,546 Total shares redeemed 133,075 'Ir45'Xr752 (I) A subsidiary of Edison lssrrcd foreign-cnrrcncy-dcuominatcd notes X53~625 totaling $396 million in Febnrary 299o. Thc rwtcs mat rrr c 24 months from thc date of issuance and thc prvcccds were used to finnncc mrclcar fuel.
Premiums paid upon redemption of preferred and preference Thrvugh a rclntcd interest rntc and crrrrcncy exchange ngrccmcnt, the cffcctivc interest cost of the notes is rcduccd trr below prevailing comrrrcr-shares are charged to common equity through a reduction to addi- cinl paper rates. The wcightcd-avcrngc interest rate on the notes was g.o%
tional paid-in capital. for 299o (cvmpnrcd with tlrc nominal rale of x4>/~%) Edison is grrnrnutor of both the notes arul thc rclntcrl agrccrncrrt. Frrrcign-crrrrcncy translation (d) Preferred stock redemption requirements, long-term debt gains arrd losses hnvc been dcfcrrcd mul nrc included ln thc lrnnslatcd maturities and sinking fund requirements for the five years vnluc of the linbility. Any such trnnslation gain or loss is assumed by thc countcrparty to thc ngrccmcnt. Edison is exposed to credit loss lu the event subsequent to December 3x, x99o, are:
of nonpc%nnnucc by thc corrntcrpnrty to thc ngrccmcnt. Edison, lrnwcvcr, Year ended December 3x, docs not anlicipntc such nonperformance.
In thousands x99x x992 X993 x994 2995 (2) A portion of ccrmmcrcial paper and notes issued to finance nuclear fuel Preferred stock has been classified as long-tenn debt in connection with rcfinanclng terms redemption under lines of credit with commercial banks. Tlrc long-term portion requirements 5 xxp738 S xxp738 S xxp338 5 x2p338 S x3~9x3 finnnccs rmclcnr fuel schcdulcd for consumptiou after x2 months froru the Long-term debt balance shcct date.
maturities and sinking fund (3) Prrrsrrnnt to thc Nrrclcar Waste Policy Act of 2982, Edison lras signed requiremcrus 22ig618 277p27X 259p283 232p680 280I786 a contract with tlrc U.S. Dcpartmcnt of Energy for disposal of spent nuclear Total 5233g356 S289,oo9 5272,62X S245,oig 5294,699 fuel from the Snn Ouofrc Nuclear Generating Station. Thc interest rate is fixed at xo.57%.
Consolidated Statements of Retained Earnings SCEcorp and Subsidiaries In thousanrls, except per-share amounts Year ended December 3x, 1990 i989 x988 Balance at beginning of year $ 2,824,421 $ z,6ox,o86 >>i375i9L5 Net income 786,360 778,z4x 76m,8gx Dividends declared on common stock (572,403) (554,9o6) (536,66o)
Balance at end of year $ 3,038,378 $ 2,824,42% $ 2,6ox,o86 Dividends declared per common share $ 2.62 $ 2. 54 $ z.45/i The accompattying Notes to Consolidated Financial Statements are an integral part of these statements.
Notes to Consolidated Financial Statements SCEcorp and Subsidiaries Note 1. Pending Merger less salvage, is charged to the accumulated provision for depreciation. Accumulated deferred income taxes related to On November go, i988, SCEcorp, Southern California utility plant are presented as a deduction from utility plant Edison Company (Edison) and San Diego Gas 8z Electric to conform with rate-making procedures used to determine Company (stx;8zE) executed an agreement to merge sDG8zE rate base.
into Edison. Under the terms of the merger agreement, SCEcorp will exchange x.3 shares of newly issued common Construction Financing Costs Arvoc represents the cost stock for each sDG8zE common share. sDG8zE preferred and of debt and equity funds used to finance construction of preference stock will be exchanged for SCEcorp preferred utility plant. It is reported in the consolidated statements of and preference stock with similar provisions, except that income as a reduction of interest charges for the debt com-dividends on each series will be increased between so% and ponent and as other income for the equity component.
zo%. During April z989, the shareholders of SCEcorp, Plant construction costs, including Amoc, are recovered in Edison and sDG8zE approved the merger agreement. The authorized rates through related depreciation when com-merger is subject to approval by regulatory agencies, includ- pleted projects are placed into commercial operation.
ing the California Public Utilities Commission (cpvc) and The Arvoc rate, which reflects semiannual compound-the Federal Energy Regulatory Commission (FERc). The ing, was xx.o3%, n.o6% and xo.76% for 'i990 1989 and FERc and cPvc administrative law judges have recom- '1988, respectively.
mended that the merger not be approved because of its Interest on loans used to finance construction projects of impact on competition. Edison expects decisions from both partnerships and unconsolidated subsidiaries is capitalized commissions in x99x. until the projects are operational. Such capitalized interest is included in the consolidated statements of income as a Note 2. Summary of Significant Accounting Poiicies reduction of interest charges and in the consolidated balance sheets as investments in partnerships and unconsolidated Consolidation Policy The consolidated financial state- subsidiaries.
ments include the accounts of SCEcorp and its subsidiaries.
The principal subsidiaries are Edison, a rate-regulated elec- Depreciation and Decommissioning Depreciation of tric utility, and The Mission Group, the parent company utility plant, except nuclear fuel, is computed on a straight-of SCEcorp's nonutility subsidiaries. SCEcorp uses the line, remaining-life basis. Depreciation of nonutility equity method of accounting to report investments in part- properties is computed on a straight-line basis over their nerships and go% or less owned subsidiaries. All signifi- estimated useful lives.
cant intercompany transactions have been eliminated, The estimated cost of decommissioning Edison's nuclear except intercompany profits from energy sales to Edison by generating facilities is $ 8g6.x million, in current-year dol-nonutility energy-producing affiliates, which are allowed in lars, and is recovered in rates through annual allowances utility customer rates. charged to depreciation expense. Retail rates include annual decommissioning revenue requirements that are deposited Accounting Principles Edison is regulated by the a'vc in trusts until decommissioning begins. Trust fund contri-and the rERc. The accompanying consolidated financial butions are invested in high-grade securities and are statements reflect the rate-making policies of these reported at the lower of cost or market value. At December commissions, as applied to Edison, in conformity with 3x, x99o, the market value of the trusts was $ 398.y million.
generally accepted accounting principles applicable to Approximately 8y% of the trust fund contributions quali-rate-regulated enterprises. fied as tax deductions.
UtilityPlant The costs of plant additions, including Nuclear Fuel The cost of nuclear fuel, including its replacements and betterments, are capitalized and included disposal, is amortized on the basis of generation and is in utility plant. Capitalized costs include direct material charged to fuel expense. In accordance with rate-making and labor, construction overhead and an allowance for procedures adopted by the cvvc, nuclear-fuel financing funds used during construction (ArvDc). The cost of prop- costs are capitalized until the fuel is placed into production.
erty that is replaced or retired, and related removal costs,
Research, Development and Demonstration (RD&D) Currently, all fuel and purchased-power costs, including RDEZD costs not related to a specific project are expensed in energy purchased by Edison from unregulated energy-the year incurred. RD8zD costs related to specific construc- producing affiliates, are recovered through the ECAC balanc-tion projects are capitalized until it is determined whether ing account. When the annual energy rate (AER) component they will result in construction of plant. If construction of ECAC is in effect, xo'/0 of fuel and purchased-power costs does not result, the costs are charged to expense. are recovered through the AER and 9o'/0 of such costs Edison's RDEzD costs were: through the ECAC balancing account. The 10'/o AER compo-nent was in effect during the first five months of1988 and Year ended December 31, from February z '1990 through August 8, 1990.
ln thousands 1990 x989 1988 The cpvc has established performance incentives based RD8m costs charged to expense, $ 40~985 $ 42~555 $ 43~4'14 on target generation levels for Edison's nuclear generating RD&D costs deferred/capitalized 11,991 xzp6oz z7,455 units. Fuel savings or costs attributable to levels above or Total RD&D costs $ 52,976 $ 55'6 $ 6o,869 below the targeted ranges are divided equally between Edison and customers through adjustments to the EcAc In z988, a balancing account was established for RD8tD balancing account.
costs charged to expense, which requires Edison to refund to ratepayers any cpuc-authorized but unspent RD8zD funds Major Plant Atirlitions Prior to 1988, Edison used major at the end of the rate-case cycle. additions adjustment clause (MAAc) balancing accounts to accumulate the differences between revenue required and Unamortized Debt Issuance and Reacquisition Expense revenue authorized to provide recovery of ownership costs Debt premium, discount and issuance expenses are amor- of San Onofre Nuclear Generating Station (San Onofre) tized over the lives of the related issuances. The expense of Units z and 3 and Palo Verde Nuclear Generating Station reacquiring bonds that are redeemed without refunding is (Palo Verde) Units z and z.
amortized over the period the debt would have remained Commencing in x988, ownership costs of San Onofre outstanding. The reacquisition expenses are amortized over Units z and 3 are being recovered in base rates. The owner-the lives of the new debt issues when debt is reacquired ship costs of Palo Verde Units 1, z and 3 are also recovered with refunding. in base rates to the extent they are not deferred in accor-dance with the Palo Verde rate phase-in plan discussed Revenue Revenue is recorded for electricity that has been below. Recovery of the remaining undercollections in the delivered to utility customers through the end of each MAAC balancing accounts has been authorized over a three-period but has not yet been billed. year period beginning in x989. Edison records interest income on these undercollections, excluding accumulated Regulatory Balancing Accounts deferred income taxes, using the annual AEUDC rate. At December 31, '1990 $35.3 million remains to be collected Operating Reventte An electric revenue adjustment mech- in rates charged to utility customers.
anism (ERAM) balancing account minimizes the effect on earnings of retail sales fluctuations. Differences between Interest antI Tares Interest on regulatory balancing authorized and recorded base-rate revenue are accumulated accounts, except MAAC, is accrued at the three-month prime in the account until they are refunded to, or recovered commercial paper rate. The weighted-average interest rates from, utility customers through cpvc-authorized rate were 8.13'/o, 8.85'/o and 7.6o'/0 for l990 1989 and x988, adjustments. respectively. Income tax effects on the changes in the regu-latory balancing accounts are deferred.
Energy Costs The energy cost adjustment clause (EcAc) adjusts results of operations for variations between the recorded energy costs, and revenue designated for recovery of such costs. Undercollected or overcollected energy costs are accumulated in the ECAC balancing account until they are recovered from, or refunded to, utility customers through cvuc-authorized rate adjustments.
45
Palo Verde Rate Phase-In Plan Palo Verde Units 1, 2 In an application for rehearing, Edison contested the and 3 have been in commercial operation, for rate-making amount of the disallowance, arguing that if the cvuc treats purposes, since February 1, 1986, September 19, 1986, and the capacity delivered under the contract on an as-available January 2o, 1988, respectively. The cove has authorized a basis, it should treat the energy that KRcc delivered the 10-year rate phase-in plan, which defers $ 2oo million of same way. Pricing the energy on an as-available basis would revenue during the first four years of operation for each reduce the disallowance to approximately $ 17 million for unit. Deferrals for each unit, for years one through four, the period between mid-198'nd late 1987. In December are $ 8o million, $ 6o million, $ 4o million and $ 2o million, 1990 the cPvc granted Edison's request for a rehearing respectively. The deferrals and related interest income on for the purpose of determining the appropriate level of dis-the deferred balance will be recovered evenly over the final allowance for the mid-198'hrough late 1987 period.
six years of each unit's rate phase-in plan. The deferred The expenses incurred by Edison for the KRcc project for balance at December 31, 1990, was $ 6g6.0 million. the period between late 1987 and early 1990 are currently under review by the DRA. Hearings on these expenses have Statements of Cash Flows For purposes of the consoli- not been scheduled.
dated statements of cash flows, short-term temporary cash In November 1990, the DRA recommended that the cpuc investments are considered to be cash equivalents. disallow recovery of part of the expenses incurred by Edison for power purchased from the Sycamore Cogeneration Reclassifications Certain items in prior periods have been Company (Sycamore) and the Watson Cogeneration reclassified to conform them to the financial statement Company (Watson) during late 1987 through early 1989.
presentations for December 31 '1990. Mission Energy owns go'/0 of the Sycamore and yg'!0 of the Watson projects. The recommended disallowances for Note 3. Regulatory Matters Sycamore and Watson, which total $ 37 million and $ 14 million (both excluding interest), respectively, are based on Energy Cost Proceedings different reasons than the KRcc decision.
The recommended disallowance for Sycamore includes Contracts toith Erlison Affiliates The cpvc s Division of $33 million, primarily based on the DRA's allegations that Ratepayer Advocates (DRA), which periodically reviews Edison should have terminated or renegotiated the contract the reasonableness of utility expenses, recommended in in 198', and $ y million based on the assertion that the December 1988 that the cr vc disallow recovery of part energy price could exceed avoided cost.
of the expenses incurred by Edison for power purchased The DRA's recommended $ 1'illion disallowance for from the Kern River Cogeneration Company (KRcc), a non- Watson is primarily based on allegations that Edison over-utility power producer. Mission Energy Company, which paid Watson for both capacity and energy during late 1987 is one of SCEcorp's nonutility subsidiaries, owns a go /0 through early 1989.
interest in KRcc. After conducting hearings on the DRA Edison believes its purchases from Sycamore and Watson recommendation, the cpvc issued a decision in September saved its customers more than $1o million during the 1990 disallowing recovery of $ y8 million of Edison power review period and will vigorously contest the proposed dis-expenses (including interest) paid to KRcc between mid-1985 allowances. Hearings on the Sycamore and Watson matters and late 1987. The disallowance was based on the have been scheduled for late 1991.
conclusion that the contract is essentially for the purchase The DRA is currently reviewing payments made to the of "as-available" rather than "firm" capacity. If the same remaining 10 nonutility power producers owned in part by principles were applied to expenses incurred by Edison from Mission Energy. The DRn reports on these projects have not late 1987 through year-end 1990, the disallowance would been issued.
increase to $ 86 million (including interest). Future KRcc disallowances, if any, would be less significant than those Contracts with Non-affiliates In December 1988, the DRA through 1990 due to forecasted increases in the price of also recommended that the cvvc disallow the recovery of as-available capacity in subsequent years. $ 83 million in payments made between late 1984 and late 1987 under 17 contracts negotiated with non-affiliates. This recommended disallowance was withdrawn by the DRA on February 20 '1991.
Other Matters In addition, the DRAs December 1988 Edison, which owns a 15.8'/0 interest in Palo Verde, report recommended a disallowance of $g million in power believes the plant modifications and operating costs are payments made in x987 to Pacific Power gz Light Company reasonable and proper items for rate recovery. Although (vvgzL). Hearings have been held on this matter, and a CFUC Edison cannot predict whether the cPvc will ultimately decision is expected soon. In 1989, the DRA recommended a allow recovery of costs subject to the on, Edison believes further disallowance of $ 2o million paid to PPEtL and $ 6 that the amount of refund likely to result from the investi-million related to fuel oil carrying charges and contract gation or the amount denied recovery, if any, will not have administration matters, for the period from late 1987 a material effect on results of operations. Hearings on this through early x989. Hearings have not been held on this matter will occur in x991 as part of the 1992 general rate additional recommended disallowance. case proceedmg.
The probable effect on net income of the outcome of the Resale Rates In accordance with FERC procedures, resale above matters cannot be determined at this time. However, revenue is subject to refund with interest if subsequently SCEcorp believes that the outcome of the above proceedings disallowed. Edison believes that any refunds resulting from will not have a material effect on its financial position. pending rate proceedings will not have a material effect on net income.
Palo Verde Outage Review During March x989, Arizona Public Service Company, operating agent for Palo Verde, Note 4. Short-Term Debt removed Units 1 and 3 from service for refueling and mod-ifications of plant and management systems as required by SCEcorp's subsidiaries maintain lines of credit that may be regulatory agencies. The California Public Utilities Code utilized at negotiated or bank index rates. At December 31, requires Edison to notify the CFUC when a plant is out of 'l990 such lines totaled $ 2.z billion.
service for nine or more consecutive months. Although Approximately $ 1.6 billion of these lines of credit sup-Edison believes that the code requirement is not intended port commercial paper and other borrowings to finance to apply when a facility is shut down for a planned outage general cash requirements, fuel inventories and undercollec-of predetermined duration, Edison advised the cvvc of the tions in regulatory balancing accounts. The remaining $ 5z5 Palo Verde outage on December 6, 1989. On December 18, million of these lines of credit are available for the long-1989, the cove initiated an order instituting investigation term refinancing of certain variable-rate pollution control (on) to determine, for rate recovery purposes, the reason- indebtedness.
ableness of certain costs incurred during the period the The subsidiaries'hort-term debt components were:
Palo Verde units were not in service. In the oii, the cPvc December 3i, ordered the subsequent collection of customer revenue in 1990 1989 In inillions connection with the ownership and operation of the Palo General purpose 5 506.6 S 89.2 Verde units to be subject to refund pending the outcome of 140.9 99.0 Leveraged leases its outage review. Unit g and Unit x resumed operation in Balancing accounts 506.7 5ox.6 January and July x99o, respectively. In July 199o, the code Fuel 436.1 48'.6 section requiring an investigation was clarified with an Total borrowings supported by amendment that excludes planned outages of predetermined lines of credit 1,590.3 x,x7z.4 duration in determining whether an investigation is Amount reclassified as long-term (268.6) (37m.6) required. Unamortized discount (8.5) (5.8)
Net short-term debt 51,313.2 S 794.0 Commercial paper outstanding was Q.5 billion at December 31, 1990, and $ 892.9 million at December g1, l989.
47
Note 5. Income Taxes The differences between recorded state and federal income taxes and amounts determined on income before SCEcorp's subsidiaries are included in its consolidated fed- taxes by applying the federal statutory tax rate are recon-eral income tax and combined state franchise tax returns. ciled and presented below:
Under income tax allocation agreements, each affiliate Year ended December 3x, calculates its tax liability separately.
In thousanrls 1990 1989 x988 Current and Deferred Taxes Income tax expense includes Expected federal income tax expcnsc at the current tax liability from operations, and deferred statutory rate $ 439,488 S 46o,560 S 437843 income taxes provided on certain items of income and Increase (decrease) in expense which are reported in different periods for tax and income tax expense financial reporting purposes. resulting from:
The current and deferred components of income tax Federal deduction for expense were: state taxes on income (40,975) (4'1,976) (4o,oo5)
Year ended December 3x, Depreciation and In thousands related timing 1990 x989 I988 difference not Current: deferred Federal 55,821 52,296 39'<<5 State
$ 244~245 $ 253~469 $ 24xg917 State tax provision 120,514 I23,458 xx7,662 119,915 xx9p542 xojp4xl Investment and energy 364,160 tax credits (33,003) (I8,799) (34,869) 373goil 349/328 Ail other differences (35,594) xoi809 6,I96 Deferred-Federal and State:
Investment and energy tax Total income tax expense $ 506,251 S 576,348 S 525,942 credits-net (20,234) (I.33I) (xx,no) Pretax income $ 1,292,611 SI/354g589 $ Ig287g773 Depreciation 188,476 >07i703 x73,380 Regulatory balancing accounts (29,157) (24i995) (79i774) Effective tax rate Leveraged leases 63,114 35,o63 38,950 (total income tax Fuel inventory (10,783) (x,890) I6,573 expense : pretax Unbilled revenue (20,968) (3x,8o3) (24,420) income) 39.2%%d 4I.5% 4o.g'/0 Rate phase-in plan 21,625 66,68'>I 78,743 Accrued liabilities (24,075) 9>9) 7 994 Contributions in aid of Deferred income taxes for tax depreciation prior to x98x construction (15,170) (x5,516) (I8,836) and certain construction overheads have not been provided Other (10,737) (7,637) (4,786) because the tax effects of such timing differences are not 1 42~091 203/337 'I 76/61 4 allowed for retail rate-making purposes until the taxes Total income tax expense $ 506,251 become payable. The cumulative net amount of these
$ 576,348 $ 525,942 timing differences was Sz.o billion at December 3x, 1990, Classification of income taxes:
x989 and x988.
Included in operating expenses $ 489,798 S497,793 $ 446 395 Included in other income 16,453 78 555 79 547 New Accounting Standard Under current accounting Total income tax expense $ 506,251 S576,348 $5z5,94m rules, deferred income tax balances are not adjusted to reflect changes in tax rates or laws. However, in 1987, the Accumulated deferred investment tax credits are amortized Financial Accounting Standards Board (FAsn) released an over the lives of the related properties. income tax accounting standard requiring such adjust-The federal and composite federal and state statutory ments. The FA50 is considering requests to amend certain income tax rates are 34'/0 and 4o.x38 /0, respectively, for provisions of the standard and has tentatively postponed its
'1990, 1989 and 1988. required implementation date one additional year to '1993.
When the new income tax accounting standard is imple-mented, other significant balance sheet adjustments will be required. SCEcorp will record additional deferred income taxes related to the equity component of AFUDc, which is 48
currently recorded on an after-tax basis; the debt component In conformity with the accounting principles for rate-of APUDc, which was recorded on a net-of-tax basis prior regulated enterprises, regulatory adjustments have been to i987; and other temporary differences for which deferred recorded to reflect, in net income, the pension costs calcu-income taxes have not been provided. lated under the actuarial method used for rate-making Additional balance sheet adjustments will be recorded for purposes. The difference between pension costs calculated the net reduction in deferred income tax liabilities resulting for accounting and rate-making purposes has been from income tax rate changes; the recognition of deferred recorded as a deferred charge in the consolidated balance income tax assets attributable to the reduction of the book sheets.
basis of property by unamortized investment tax credits; The plan's funded status was:
and to classify property-related accumulated deferred taxes December 3i, as a liability instead of a reduction of utility plant. The 1>> thousands 1990 i989 majority of additional deferred tax assets and liabilities will be offset by recording regulatory assets and liabilities rep- Actuarial present value of benefit obligations:
resenting the anticipated effects of these adjustments on Vested benefits $ 1,124,985 Si,o6ig799 customer rates. Such regulatory assets and liabilities will Nonvcstcd benefits 28,590 32,78i be adjusted as they are recovered or refunded through the Accumulated benefit obligation 1,1 53,575 i,o94,58o rate-making process and for changes in tax rates or jaws. Value of projected future Accordingly, these adjustments are not expected to signifi- compensation levels 448,750 486,779 cantly affect future earnings.
Projected benefit obligation $ 1,602,325 Si,58i,359 Note 6. Employee Benefit Plans Plan assets at fair value $ 1,542,568 Si,630,225 Projected benefit obligation in excess Pension Plan SCEcorp has a noncontributory defined- of (less than) plan assets $ 59,757 S (48,766) benefit pension plan, administered by a trustee, covering Unrecognized nct gain 65,394 i72,849 substantially all full-time employees who fulfillminimum Unrecognized prior service cost (6,567) (7,ooo)
Unrecognized nct obligation being service requirements. Benefits are based on years of accred-amortized over i7 years (78,594) (84,ii7) ited service and average compensation. SCEcorp's policy is to fund the plan on a level-premium actuarial method, Accrued pension liability $ 39,990 S 32,966 provided that annual contributions meet the minimum Assumptions for defined benefit pension plan:
funding requirements of the Employee Retirement Income Discount rate 8.0% 7'5%
Security Act and do not exceed the maximum deductible Rate of increase in future compensation 6.0% 6.o%
amount under income tax regulations. Prior service costs Expected long-term rate of return on assets 8.5% 8.5%
from pension plan amendments are funded over 30-year periods. Assets of the plan consist primarily of common stocks, The components of pension expense were: corporate and government bonds, short-term investments and guaranteed investment contracts.
Year ended December 3i, In thousands 1990 i989 'i988 Employee Stock Plans SCEcorp maintains an Employee Net pension expense: Stock Ownership Plan (EsoP) and a Stock Savings Plus Service cost for benefits earned $ 57/430 S 49g307 S 43p340 Plan (sspp), designed to supplement employees'etirement Interest cost on projected income. Contributions to the Esop were funded primarily benefit obligation 116,141 'i08I34'I i02p249 Actual return on plan assets 35,278 (306I493) ('133 p 687) by federal income tax benefits and contributions by Nct amortization and deferral (167,214) i99,260 40,6io employees. SCEcorp contributions to the ssPr were $27.2 million in 2990, and &6.9 million each in i989 and i988.
Pension cost pursuant to accounting standards 41,635 5o,4'i5 52,5'l2 Under Edison's Long-Term Incentive Compensation Plan, Regulatory adjustment 5,173 (4,21o) (6,4i6) i,477,5oo shares of SCEcorp common stock were reserved at December 3i, i99o, for issue to key employees in various Netpenslon cost recognized $ 46,808 S 46205 S 46,o96 forms, including the exercise of stock options.
SCEcorp common shares subject to option at December in the range of $ 7o million to $ 8o million. Management 31, 199o, were: believes that there will be a similar relationship between the accumulated obligation and additional expense in 1993, Options: Shares Share Price" although it could differ significantly due to changes in Outstanding, January 1, 1989 health-care cost trends or interest rates.
Granted 1'151200 $ 32 00 $32 37 Canceled (8,522) 32.37 The cave has initiated an investigation to determine the rate-making impact of the new standard. Hearings on this Outstanding, December 31, 1989 106,678 32.00- 32.37 Granted 'x56i650 matter are expected to begin in 1991. Edison anticipates 39.69 recovering the additional postretirement benefit expense in Outstanding, December 31, 1990 263,328 32.00- 39.69 rates. With rate recovery and the application of regulatory accounting principles, no significant financial effect should Exercisable, December 3'1, '1990 '106,470 32.00- 32.37 result from this accounting standard.
'Share options nccrue dividend equivalents at a rate equal to dividettds declared on outstanding common shares. Such dividend equivalents may be utilized against the grant price at the time the share options Note 7. Jointly Owned UtilityProjects are exercised.
Edison owns undivided interests in several generating sta-At December 31, 199o, and 1989, 1,214,17z and tions and transmission systems for which each participant
'1 370 822 shares, respectively, were reserved for future provides its own financing. Edison's proportionate share grants. of expenses pertaining to such projects is included in the respective operating expense category in the consolidated Other Postretirement Benefits Employees retiring statements of income.
from SCEcorp's subsidiaries on or after attaining age 55 The investment in each project, Deprec-as included in the consol-and with at least io years of service are entitled to post- idated balance sheet as of December 31 1990 was:
retirement health care, dental, life insurance and other benefits for themselves and their dependents. Health- Accumu-care benefits are provided by a combination of programs, lated Under Owner-Plant in Con- ship and are subject to deductibles, copayment provisions and In thousnnds Service iationn struction Interest other limitations. The plans may be amended or changed El Dorado periodically. The costs of these benefits are recognized as Transmission expense as claims and premiums are paid, and totaled System 23,586 9,860 60%(a)
S S S 1,440
$ 24.3 million in 199o, $ zi.z million in 1989 and $ 22.8 Four Corners million in 1988. Coal Generating Station-New Accounting Standard In December 199o, the FAso Units 4 and 5 422,739 157,553 17,56o 48 Mohave Coal issued a new standard on accounting for postretirement Generating benefits other than pensions. The new standard requires Station 247 '184 '107 621 7 436 56 the expected cost of these benefits to be charged to expense Pacific Intertie Dc during the years employees render service. This is a signifi- Turns mission cant change from SCEcorp's current policy of recognizing System 201~663 45~298 2r577 50 Palo Verde Nuclear the cost of these benefits as they are paid. SCEcorp is Generating required to implement the new accounting and disclosure Station 1~485~729 159,617 6r168 15.8 rules no later than 1993, and may do so through a cumula- San Onofrc Nuclear tive adjustment or ratably over future periods. Generating SCEcorp expects to implement the new standard effective Station 4 428 495 1,071,381 73,438 (b)
January 1, 1993, and amortize the transition obligation at Yuma Axis Generating that date over a zo-year period. Based on a preliminary Station (c) 12r 579 1 1/71 2 1 333 review by actuaries, the accumulated obligation at Decem-ber 31, 199o, measured in accordance with the new stan- Total $ 6/821 g975 $ 1 g563p042 $ 108g620 dard, is approximately $ 7oo million. Had the new standard t'i Represents a composite rnte.
been implemented in 199o, the actuaries estimate additional 'Ownership interest is go'/o in Unit 1 and 73/o in Units 2 and 3.
postretirement benefits expensed in 199o would have been t" ln january zyyo, Edison entered into an agreement to sell its interest in this facility, subject to a'uc and rsRc approvnl.
50
Note 8. Leases Note 9. Commitments Investments in Leveraged Leases A nonutility subsidiary Construction Program and Fuel Supply As of December is the lessor in several leveraged-lease agreements, under 3'i, 'i990, construction expenditures of SCEcorp's subsidiaries which property is leased for terms extending from z4 to 3o are estimated to be $ x.z billion for xggi, $ g38.g million for years. All operating, maintenance, insurance and decom- xggz and $ gz5.z million for xgg3. In addition, minimum missioning costs are the responsibility of the lessees. Thc long-term commitments of approximately Sx.3 billion total cost of these facilities was $ x.x billion at December 3x, existed as of December 3'i x990, under fuel supply contracts.
x990, and $ 635.9 million at December 3x, x989.
The equity investment in these facilities represents z3'/0 Long-Term Purchased-Power and Transmission Contracts of the purchase price. The remaining 77'/0 is nonrecourse Edison has contracted to purchase a portion of the gen-debt, which is secured by first liens on the leased property. erating output of a hydroelectric facility and firm trans-The lenders accept their security interests as their only mission service from another utility, as needed. Although remedy in the event of default by the lessee. there is no investment in the facility or transmission line, The components of the nct investment in leveraged leases these contracts provide for minimum payments based, in were: part, on the debt service requirements of the provider, whether or not the facility or transmission line is operable.
December 3x, The power contract is not expected to provide more than hr tlro0sanrls 1990 x989 5'/0 of current or estimated future operating capacity.
Rentals receivable (net of principal and The cost of power and firm transmission service interest on nonrecourse debt) S 561,742 S 257,782 obtained under these contracts, including payments made Unearned income (260,842) (87,785) when the facility or transmission line is not operating, is Investmcnt in leveraged leases 300,900 x69,997 included in purchased power and other operating expenses Estimated residual value 15,220 Deferred income taxes (171,737) in the consolidated statements of income. Purchased-power (xo7,6xx) costs are generally recoverable through the ECAC balancing Net investment in leveraged leases 5 144,383 S 6a,386 account.
Selected information pertaining to these contracts at Operating Lease Commitments SCEcorp's subsidiaries December 3x, xggo, is summarized below:
lease automotive, computer, office and miscellaneous equip- Purchased Transmission ment through operating rental agreements with varying Power Service terms, provisions and expiration dates. Year contract expires xox7 aox6 At December 3x, xggo, estimated remaining rental com- Sharc of effective operating mitments for noncancelable opemting leases were: capacity megawatts a77.5 Share of energy output 5.54 /o Year ended December 3x, Itt t110050tttls l99i S 30,9i8 Required minimum annual payments In thottsnt0Is x992 26,228 'i99'i S 3,000 S 4,7oi i993 ax,696 x99> 3,400 4,53x x994 x7i5o3 3,400 x993 4 377 x995 xa,8xx x994 3,400 4i>37 For periods thereafter x3i544 4,'i io x995 3,400 Total future rental commitments Si 22,700 For periods thereafter 73,95o 6i,7o9 Total Sgo,55o S83,665 Costs under the purchased-power contract were $ 3.4 million in xggo, $4.5 million in xggg and $3.8 million in
'l988. Costs under the transmission contract were $ 4.9 mil-lion in xggo, $ 4.4 million in xg89 and $5.3 million in xg88.
Note 10. Contingencies actual damages, before trebling, were approximately $ 99.5 million from February x, x978, through December 3'i, Nuclear Insurance The federal statutory limit on public x985. The trial began on July 8, x986, and concluded on liability claims that could arise from a nuclear incident is September z6, x986. On October z4, x99o, the court issued
$ 7.8 billion. Participants in San Onofre and Palo Verde a final judgment favorable to Edison. On November x5, have purchased the maximum private primary insurance x99o, the plaintiffs filed an appeal of the decision to the available ($ zoo million). The balance is to be covered by Ninth Circuit Court of Appeals.
the industry's retrospective rating plan, using deferred pre- In x983, another resale customer, the City of Vernon, mium charges. This secondary level of financial protection also filed a complaint against Edison in federal district court, is required by the Nuclear Regulatory Commission (NRc). alleging violation of certain antitrust laws. The complaint The maximum amount of the deferred premium that may alleged that Edison engaged in anticompetitive behavior be charged for each nuclear incident is $ 63 million per by restricting access to Edison transmission facilities and reactor, but not more than $ xo million per reactor may be foreclosing Vernon from purchasing bulk power supplies charged in any one year for each incident. Edison could be from other sources. The complaint also alleged that Edison required to pay a maximum of $ x83.6 million per nuclear unlawfully designed its resale rates in certain respects.
incident, based on its ownership interests in San Onofre Vernon claimed damages of approximately $ 6o million and Palo Verde, but it would have to pay no more than before trebling. Final judgment for Edison on all claims
$ z9.x million per incident in any one year. Such amounts was entered on August 3x, x99o. Vernon filed a notice of include a 5'/o surcharge that would be applicable in the appeal of the court's decisions on October 23 l990.
event that additional funds are needed to satisfy public lia- On January 31 199T California Energy Company filed bility claims, and are subject to adjustment for inflation. an action in federal district court against SCEcorp and Property damage insurance, including decontamination three of its subsidiaries (Mission Energy, Mission Power costs, covers losses up to $ 5oo million at San Onofre and Engineering Company and Edison), alleging violation of Palo Verde. Decontamination liability and property damage antitrust laws and unlawful interference with its lender coverage in excess of the primary $ 5oo million layer also contracts and negotiations for future financing. The suit has been purchased in amounts exceeding NRc require- seeks $ z6o million in damages, before trebling, and requests ments. Insurance covering part of the additional expense of a permanent injunction prohibiting the merger of Edison replacement power, which could result from an accident- and socage. SCEcorp and its subsidiaries are reviewing related nuclear unit outage, is also provided. These policies the allegations and will vigorously contest the lawsuit.
are issued primarily by mutual insurance companies owned by utilities with nuclear facilities. If losses at any nuclear Environmental Matters Edison is subject to numerous facility covered by the arrangement were to exceed the legislative and regulatory environmental requirements per-accumulated funds available for these insurance programs, taining to air and water pollution, waste management, haz-Edison could be assessed retrospective premium adjust- ardous chemical use, noise abatement, land use, aesthetics ments of up to $ 3'.5 million per year. Insurance premiums and nuclear control. These requirements have caused, and are charged to operating expenses. will continue to cause, Edison to incur substantial addi-tional costs to operate its existing facilities, to construct Antitrust Litigation In x978, five resale customers filed a and operate new facilities, and to clean up waste disposal suit in federal district court, alleging violation of antitrust sites for which it may be responsible. The potential cost of laws. The complaint sought monetary damages, a trebling these environmental requirements for Edison cannot be of such damages, and certain injunctive relief. The com- determined at this time. Edison believes that the costs plaint alleged that Edison engaged in anticompetitive incurred in complying with these environmental require-behavior by charging more for electricity it sold to resale ments either will be covered by insurance or recognized by customers than it charged certain classes of retail cus- the cove or the FERc as reasonable and necessary costs of tomers. The complaint also alleged that Edison acted alone service for rate purposes. There can be no assurance that and in concert with other utilities to prevent or limit such these costs will be recoverable, but Edison believes that any resale customers from obtaining bulk power supplies from costs that are unrecovered will not have a significant other sources to reduce or replace the resale impact on its financial position or results of operations.
customers'urchases from Edison. The plaintiffs estimated that their 52
Quarterly Financial Data SCEcorp and Subsidiaries Unaudited 1990 '1989 In millions, except per-share data Total Fourth Third Second First Total Fourth Third Second First Operating revenue $ 7ii99 Sii755 $ 2,258 $ 1,595 $ 1,591 $ 6i904 Sx,62o $ 2,182 Si,572 $ 1,530 Operating income X,25X 297 406 266 282 1,168 213 497 243 215 Net income 786 182 286 146 x72 '119 401 141 117 Per share:
Earnings 3.6o .83 x 3x .67 .79 3.56 ~
54 1.83 .65 ~
54 Dividends declared 2.62 .66 .66 .66 .64 2. 54 .64 .64 .64 .62 Common stock prices High $ 40'/s $39r/s $ 38~/s $ 40 $ 40'/j $ 4x $ 41 $37r/s $ 36'/< $ 33 s/s Low 33'/i 35'/s 33'/i 35/s 35/s 31 34/s 34/i 31 /s 31 Close 37r/s 37r/s 36 37'/i 37'/s 39~/s 39/s 35s/s 34s/s 31'/i Electric Revenue and Kilowatt-Hour Sales Electric Revenue Kilowatt-Hour Sales In thousands In thousands
% of % of Class of Service 1990 Total 1990 1989 1988 1990 Total 1990 x989 1988 Residential 34.3 $ 2,392,985 $ 2,155,328 $ 1,881,290 31.2 22,335,309 355,283 20i900,569 Agricultural 1.7 115,962 'I 05,982 96,o73 1.7 1,214,310 'l,082i9x9 i,o49,376 Commercial 36.3 2,536,672 2i356,274 2,095,514 35.5 25,466,649 24,214,070 23i039i977 Industrial 16.3 1,137,099 Ii170i246 Iix55,651 21.0 15,038,496 '15,22l,756 '15,415i694 Public authorities 8.3 583,216 558,8xx 513,089 8.4 5,995,649 5,761,603 5i544i3<<
Railroads and railways 1.331 11,533 Interdepartmental 108 118 109 1,098 Xi232 x,258 Resale 1.5 106,599 84,979 '114,510 2.2 1,550,716 x,498,885 'l,934,586 Sales of electric energy 98.4 6,873,972 6,43x,738 5,856,236 100.0 71,613,760 69,x35,748 67,885,76x Other electric revenue 1.6 112,312 92,648 75,446 Total 100.0 $ 6,986,284 $ 6,524,386 $5,93x,682 100.0 71,613,760 69 'x35 748 67,885,761 Electric Revenue by Rate Components Electric Revenue % of Total In thousands Rate Components 1990 x989 1988 1990 x989 x988 Base rates- cr vc jurisdiction $ 3,724,356 $3,625i331 $3,397,923 53.3 55.6 57.3 Energy cost adjustment billing factor 2,926,613 2i743i451 2i126,224 41.9 42.o 35.8 Major additions adjustment billing factor 78,292 94i737 l53,840 1.1 1.4 2.6 Other billing factors 16,358 (x33,64x) 45,o84 0.2 (2.o) o.8 Resale rates (excluding fringe) 102,370 88,565 I'I2,920 1.5 x.4 x.9 Unbilled revenue 25,983 13i295 20'45 0.4 o.2 o.3 Sales of electric energy 6,873,972 6i43'Ii738 5i856i236 98.4 98.6 98.7 Other electric revenue 112,312 92,648 75,446 1.6 1.4 x.3 Total $ 6,986,284 $ 6,524,386 $ 5i931,682 100.0 ioo.o xoo.o 53
Board of Directors c <<<<<<
le Jf rt/
v cENrzra John E. Bryson. FRowr ctnct.e (moat t.erT): Joan C. Hanley, Walter B. Gerken, Warren Christopher, William R. Gould, Howard P. Allen, Michael R. Peevey. tacK ctaa.e (raoht tLrr): Edward Zapanta, Henry T. Segerstrom, Norman Barker Jr., Carl E Huntsinger, E. L Shannon Jr.,
Camilla C. Frost, James M. Rosser, Roy A. Anderson, Charles D. Miller, J.J. Pinoia, Robert H. Smith.
'John E. Bryson William R. Gould James M. Rosser Chairman of the Board Chairman Emeritus Prcsidcnt and Chief Executive Officer Southern California Edison Company California State University, Los Angeles Los Angeles, California a Howard P. Allen Joan C. Hanley Chairman of the Executive Committee General Partner, Miramontc Vineyards Henry T. Segerstrom and Consultant and Public Affairs Consultant Managing Partner Monaghan Company- Long Pbint C.J. Scgerstrom 8e Sons Roy A. Anderson Temccula, California Costa Mesa, California Chairman Emeritus, Lockheed Corporation Burbank, California Carl F. Huntsinger E.L. Shannon Jr.
General Partner President and Chief Executive Officer Norman Barker Jr. DAE Limited Partnership, Ltd. Santa Fe International Corporation Chairman of the Board Ojai, California Alhambra, California Pacific American Income Shares, Inc.
Los Angeles, California Charles D. Miller Robert H. Smith Chairman of the Board and President and Chief Executive Officer Warren Christopher Chief Executive Officer Security Pacific Corporation and Chairman, O'Melvcny gz Myers Avery Dennison Corporation Chairman of the Board Los Angclcs, California Pasadena, California Security Pacific National Bank Los Angeles, California Camiiia C. Frost >Michael R. Peevey Trustee, Chandler Trusts and President Edward Zapanta Director, Secretary-Treasurer Physician and Neurosurgeon Chandlis Securities Company J.J. Pinola Monterey Park and Los Angclcs, California Chairman of the Exccutivc Committee East Los Angeles, California First Interstate Bancorp Walter B. Gerken Los Angeles, California California Chairman of thc Executive Committcc Fhcific Mutual Life Insurance Company Newport Beach, California
- s. hln Bryson was clcacd Chairman ol the Board and a. hln Allen retired as Chairman of the Brxsrd, Prcsidcnt 3. Mr. Prcciuy was clcctcd Prrcsidcnt ol SCEccrrp Chief Executive Officer ol SCEcorrp and Southern and Chief Executive Officer ol SCEcorrp and and Southern California Edison Co. and a board California Edison Co. effective October s, s9po. Southern Edison Co., and ccetinucd as a board member of both compsnics effective mcmbcc and was elected Chairman of the Exccudvu Oaobcr s, sSSo.
Commit tcc of both compsnics effective October s, trito.
Executive Officers SCEcorp John E. Bryson David N. Barry III Michael L. Noel Chairman of the Board Vice President and Vice President, Treasurer and and Chief Executive Officer General Counsel Chief Financial Officer Michael R. Peevey Richard K. Bushey Diana L Peterson-More President Vice President and Controller Secretary of the Corporation Southern California Edison Company John E. Bryson Glenn J. Bjorklund Harry E. Morgan Jr.
Chairman of the Board Vice President Vice President and Site Manager and Chief Executive Officer (Power Supply) San Onofre Nuclear Generating Station Michael R. Peevey Robert H. Bridenbecker Michael L. Noel President Vice President Vice President, Treasurer and (Customer Service) Chief Financial Officer Charles B. McCarthy Jr.
Senior Vice President Richard K. Bushey Lewis M. Phelps Vice President and Controller Vice President LT. Papay (Corporate Communications)
Senior Vice President Ronald Daniels Vice President Jacque J. Sokolov Harold B. Ray (Revenue Requirements Vice President and Medical Director Senior Vice President and Governmental Affairs)
Diana L. Peterson-More David N. Barry III Robert Dietch Secretary of the Corporation Vice President and General Counsel Vice President (Engineering, Planning and Research)
Kenneth P. Baskin Vice President John R. Fielder (Fuel and Material Management) Vice President (Information Services)
The Mission Group John E. Bryson Thomas R. McDaniel Robert E. Umbaugh Chairman of the Board and President President Chief Executive Officer Mission First Financial Mission Land Company The Mission Group James S. Pignatelli Michael R. Peevey President President Mission Energy Company The Mission Group 55
Shareholder Reference Guide SCEcorp and Subsidiaries Stock listing and trading information How to transfer stock Whenever there is a name change on a stock certificate, regulations require a transfer of SCEcorp common stock Listed on the New York, Pacific, stock. This can happen when you sell the stock, make a London and Tokyo stock exchanges under the ticker symbol gift of stock, or add or delete owners of the stock certifi-SCE. Shareholders can find the previous day's closing price cate. The transfer can be made by completing the stock in daily newspapers under the symbols SCEcp, or SCEcorp. assignment on the back of the stock certificate and signing it exactly as the name appears on the front. The signature Edison preferred stocks Listed on the American and of the individual transferring the stock must be guaranteed Pacific stock exchanges under the ticker symbol SCE. Pre- by a commercial bank (not a savings and loan association) vious day's closing prices, when traded, are listed in the or a brokerage firm that is a member of a national securi-American Stock Exchange listing table under the symbol ties exchange. A notary's acknowledgment is not accept-SoCalEd. The 7.gag'/o, 7.8o'/o, 8.7o /oA and 12.31'/o series able. The certificate should then be sent to Shareholder are not listed. Services by registered or certified mail.
Where to buy and sell stock The common and listed Annual meetings of shareholders preferred stocks may be purchased through any brokerage firm. Firms handling unlisted series can be located through The annual meetings of shareholders of SCEcorp and Edison your broker. willbe held on Thursday, April18,1991, at 1o:oo a.m. at the Industry Hills and Sheraton Resort, One Industry Hills Transfer agent and registrar Parkway, City of Industry, California.
Southern California Edison Company maintains share- Shareholder profile holder records and acts as transfer agent and registrar for all SCEcorp and Edison stocks. Shareholders may call Share- As of December g1, 199o, there were ~y,929 SCEcorp holder Services at (8oo) gy7-86zg between 8:oo a.m. common stock shareholders of record and ~,696 Edison and y:go p.m. (Pacific time) every business day, regarding: preferred stock shareholders. Millions of other shares are a stock transfer and name-change requirements; held in "street name" by securities brokers and nominees.
rr address changes, including dividend addresses; rr taxpayer identification number (Social Security number) submission or changes; a replacement of dividend checks; a duplicate 1099 forms and w-9 tax certification forms; Stock Price Range (SCEcorp) a notices of lost or destroyed stock certificates; a SCEcorp's Dividend Reinvestment Plan, including enroll- hdblair ment, withdrawal, terminations, transfers and statements. 38'/i 37 34r/i 4r 40'/i tfigh 33N 30'/i 32i/i 39i/i 37i/ Cue 25~/i 27'/i 29i/i 31 33'/i Inw The address of Shareholder Services is:
P.o. Box iioo, Rosemead, California 91770 FAx: (818) 302-4815 Dividend reinvestment and deposit services Please call or write Shareholder Services for a prospectus on how SCEcorp's common stock shareholders can purchase addi-tional shares by reinvesting their quarterly dividends.
Among other features, the plan also allows optional cash payments of up to $1o,ooo per calendar month.
If you wish to have your dividend check mailed directly to your bank for deposit, send instructions, including your shareholder account number, your bank account number or a blank deposit slip, and the complete address of the bank to Shareholders Services. 86 87 88 89 90
Corporate Offices SCEcorp 2244 Walnut Grove Avenue Rosemead, California 9t77o (818) 302-2222 Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, California 91770 (8%8) 302-12T2 The Mission Group 38 Executive Park Irvine, California 927I4 (7r4) 756-39oo
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