ML17333A094

Schematic Diagram:Safety Injection Pump to Hot & Cold Legs

ML17333A094
Person / Time
Site:	Wolf Creek, Callaway, 05000000
Issue date:	05/03/1984
From:	BECHTEL GROUP, INC.
To:	STANDARDIZED NUCLEAR UNIT POWER PLANT SYSTEM
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ML17333A095	List: ML17333A094 ML20259A532 ML20259A537 ML20259A541 ML20259A553 ML20259A557 ML20259A561 ML20259A565 ML20259A569 ML20259A578 ML20259A582 ML20259A586 ML20259A590 ML20259A594 ML20259A605 ML20259A610 ML20259A622 ML20259A638 ML20259A644 ML20259A649 ML20259A655 ML20259A661 ML20259A666 ML20259A683 ML20259A689 ML20259A694 ML20259A700 ML20259A705 ML20259A711 ML20259A716 ML20259A722 ML20259A728 ML20259A733 ML20259A739 ML20259A745 ML20259A750 ML20259A756 ML20259A761 ML20259A767 ML20259A774 ML20259A780 ML20259A783 ML20259A791 ML20259A797 ML20259A803 ML20259A810 ML20259A816 ML20259A824 ML20259A828 ML20259A834 ... further results
References
CON-10466 J-03EM13B(Q), J-3EM13B(Q), NUDOCS 8410050254
Download: ML17333A094 (54)

Text

Southern California Edison Company 19S3 Annual Report 1

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DEADLINE RETURN DATE RECORDS FACILITYBRANCH

'om the ld to e New:

a Innovative Transition

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

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

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

1983 Annual Report Highlights 1983 1982 0/

Change Five-Year Compound Growth Operating Revenues (000)

$4,464,256

$4,302,602 3.8%

13 9%

Fuel and Purchased Power Costs (000)

$2,027,756

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

$617,303

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

$6.22

$5.13 21.2 12.1 Dividends Paid Per Common Share Total Assets (000)

$3.59 S11,035,060

$3.31

$ 10,157,564 8.5 8.6 9.9 12.8 Construction Expenditures (000)

$805,497

$993,903 (19.0) 7.2 Kilowatt-HourSales (000) 59,892,638 59,326,853 1.0 1.0 Number of Customers 3,325,303 3,275,144 1.5 2.2 Number of Employees 16,292 15,797 3.1 4.9 Area Generating Capacity at Peak (Megawatts) 16,365 15,349 6.6 1.8 S7 5

79 80 81 82 83 Earnings Per Share of Common Stock The Company's1983 earnings per share of

$6.22 were the highest in

.,the Company's history, surpassing by 21% the previous high recorded in1982. This increase primarilyreflects higher non.cash allowances for funds used during con-struction, continuing em.

'hasis on productivity and cost controls, and the general rate increase effective January1

~ 1983.

Sources 30%

Commercial 26%

Residential 25%

Industrial 9'/o Public Authorities 6%

Resale 1/o Agricultural 1%

Other Distribution 45%

Fuel and Purchased Power 14%

Dividends and Interest 13%

Operation 9/o Taxes and Other 7%

Depreciation 6%%d Maintenance 6%

Reinvested Earnings 9%

6%/i ".

13%

14/o to/. 1% 6 26%

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94/i Sources and Distribution of Revenues The Company's sources of revenues in 1983 re-flected a well-balanced contribution from each of the major customer classes. Fuel costs were lower than those in1982, but they continued to represent a major por-tion of the distribution of revenues.

To Our More Than 190,000 Shareholders:

Your Company had an exceptionally successful year in 1983. For the third time in our history, we earned the Edison Electric Institute's highest honor, the Edison Award, as the outstanding Company among the nation's nearly 200 investor-owned electric utilities.

The award was based on your Company's commitment and success in developing renew-able and alternative resources, for improving its financial strength through an innovative financing and resource strategy, and for implementing effective cost controls, while, at the same time, providing a fair return to you, our shareholders, and high quality service at reasonable cost to our customers.

The continued hard work, innovation, produc-tivity, cost. consciousness and responsiveness to

~ customer; needs by~our officers, managers and employees resulted, in a number of financial and operating accomplishments for 1983.

~ Earnings increased to a record level for the third consecutive year, reaching $6.22 per share, up 21%.over 1982 earnings of $5.13 per share.

~ For the third consecutive year, we essentially achieved our rate of, return on common equity authorized by the California Public Utilities Com-mission (CPUC).

~ The dividend on our common stock was raised on an annual basis to $3.80 per share from $3.52 per share a year ago. We implemented an ag-gressive dividend policy in 1977 and, since then, have increased the dividend at least once per year. For the past five years, dividends paid per share have increased an average of 9.9%.

> The market price of our common stock ex-ceeded book value throughout most of the year, reaching $42'/4 per share on November 2, or just 12 cents per share below its all-time high in 1965.

During 1983, our common stock provided a total return of 23%, comprised of price appreciation and dividends paid.

> The Board of, Directors, on January19,

1984, approved a two-for-one split of the Company's common stock to price it at a more attractive level. The split is scheduled to become effective July 5, 1984, subject to shareholder approval at the annual meeting on April 19.

2

< San Onofre Nuclear Unit 2 completed full-power testing in August and began commercial oper-ation the same month. An initial portion of the Unit's revenue requirements was included in rates in October, with a subsequent increase authorized in November. The remainder is accruing in a balancing account.

> San Onofre Nuclear Unit 3 received its full-power license from the Nuclear Regulatory Com-mission (NRC) in September and is undergoing full-power testing. We expect to complete the warranty run and, subject to CPUC approval, place the unit into rates in mid-1984.

> Employee awareness of, and responsiveness to, the needs and concerns of our customers were given increased attention and emphasis at all levels of our organization. Additional funds, equipment and personnel were allocated to meet this objective, including additions to data proc-essing and customer information system facili-ties, and greater attention to the selection and training of customer service representatives.

~ Alternative and renewable resources, sched-uled to provide 2,190 megawatts (MW) of electricity to the Edison system by1993, are pro-gressing ahead of schedule. Since the inception of our accelerated program in 1980, 1,400 MW of alternative and renewable resources are either on line, under construction or represented by signed contracts or letters of intent.

< Fuel and purchased power costs, the largest single component of the total cost of providing electricity to customers, decreased for the sec-ond consecutive year to $2 billion in 1983, com-pared to $2.2 billion in 1982 and an all-time high of $2.6 billion in 1981. The decline is primarily attributable to record supplies of hydroelectric power, record economy power purchases from.

other utilities and decreases in the price of natural gas.

> Low-cost purchased power reached a record 37% of the Company's total kilowatt-hour (KWH) requirements. This saved customers ap-proximately $900 million in fuel costs during the year, or the energy equivalent of 41 million bar-rels of fuel oil or natural gas.

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> Purchased power and natural gas availability resulted in no fuel oil being purchased by Edison in 1983 for the first time in more than 40 years.

> Electric rates for the average-usage Edison residential customer were 10% less in January 1984 than in January 1982 as a result of lower fuel costs and effective productivity and cost control programs.

~ Conservation progiams, with effective support by customers, saved more than $280 million in fuel costs in 1983 by reducing electrical usage by 5.6 billion KWH, the energy equivalent of about nine million barrels of costly oil or natural gas.

> Load management programs through 1983 re-sulted in a reduction in our peak demand of 520 MW. This reduces financing requirements and

'- eliminates the need to build approximately $250 million'of new generating capacity.

Our record earnings reflect the favorable im-

- pact of the 1983 general rate increase, continued stringe'nt cost control and productivity improve-ment programs, and an approximately 20%

'ncreas'e over 1982 in non-cash allowances for funds u'sed during construction. With the tran-sition of'-San Onofre Units 2 and 3 from construc-tion into commercial operation, and related rate actions by the CPUC, the cash portion, and therefore the quality, of our earnings will improve.

During 1983, the CPUC granted, in two steps,

$305 million of revenues related to the operation of San Onofre Unit 2. An application is pending before the CPUC covering the $136 million differ-ence between the $305 million currently autho-rized and $441 million, which is the currently projected 1984 annual cost of owning and operating Unit 2. The CPUC authorized the es-tablishment of an interest bearing balancing account to accumulate the remaining investment-related revenue requirements for Unit 2, and a further decision on these deferred amounts is expected by mid-year. The total increase is being partially offset by nuclear fuel savings, in lieu of burning oil and natural gas.

lv October, the Company filed an application with the CPUC for $454 million annually to cover capital and operating costs associated with San Onofre Unit 3. This increase also will be partially offset by nuclear fuel savings, and a decision is expected mid-year.

On a combined basis, Units 2 and 3 represent a total annual rate increase of $895 million, to be partially offset by an estimated $390 million of fuel savings, resulting in a'net revenue increase of about $500 million, or approximately 11% of 1983 revenues.

In a separate proceeding, the CPUC, with an independent consultant, also is reviewing the costs of San Onofre Units 2 and 3 and a decision on this matter is expected by year-end.

At the time of construction in 1974, it was esti-mated that San Onofre Units 2 and 3 would cost

$1.6 billion. These costs have increased to $4.5 billion. Nevertheless, the construction cost in-crease for these units is among the lowest in-crease for any nuclear plant built in the United States during this period.

Contributing to the increased costs of San Onofre Units 2 and 3 were the impact of double-digit inflation and record interest rates experi-enced worldwide during the past 10 years, increased labor and material costs, and cost in-creases associated with changes in design criteria, and significant delays caused by ex-tended regulatory reviews and regulatory policy changes following the Three Mile Island accident.

Your management believes that the costs are prudent and justified, and compare favorably with other nuclear projects or any other complex, long-lead-time project.

San Onofre Unit 1 was taken out of service in April 1980 for maintenance and sleeving repairs to steam generator tubes, and again in February 1982 for NRC-required backfits, fire protection modifications and seismic upgrading. The unit has remained out of service as efforts continue between Edison and the NRC to define the scope of backfitting measures, including seismic, and the scheduling of work. Although this backfitting program involves substantial expenditures, we are encouraged by recent progress. Further review is continuing between Edison, the NRC and the CPUC.

Notwithstanding recent outages, Unit 1, since beginning operation in 1968 to February 1982,=

attained an average lifetime capacity factor of 66%, 9% higher than the national average for nuclear plants, saving customers about $450 million in more expensive replacement fuel.

Edison also has a 15.8% ownership interest in three 1,222-MW units being constructed at the Palo Verde Nuclear Generating Station near Phoenix, Arizona. This project, being managed by Arizona Public Service Company, is experi-encing some startup delays and upward cost revisions.

With the completion and inclusion in rates of the San Onofre and Palo Verde nuclear units, and the continued development of renewable and alternative resources, construction expendi-tures, financing requirements and the need for costly fuel oil and natural gas should decrease in the future.

Construction expenditures for the next five years are projected to decrease approximately

$ 200 million from the previous five-year period, from $4.2 billion in 1979-83 to $4 billion in 1984-88. On a constant dollar basis, using 1984 dollars, the 1984-88 projection totals $3.4 bil-lion. Electric generation from fuel oil and natural gas is projected to decrease to 22% by 1993, compared with 32% in 1983 and 66% in 1973.

In December 1983, we filed with the CPUC for a general rate increase of $453 million annually, or 8.3%, to be effective January 1, 1985, cover-ing projected 1985 cost increases for capital and operating expenditures, other than for fuel, and the continued need for a competitive investment return for shareholders.

We are seeking an in-crease in the, rate of return on common equity from the 16% currently authorized to 17.5%.

On January 1, 1984, as part of the 1983 general rate case decision authorizing an interim rate increase, the CPUC reviewed and authorized a $96.4 million rate increase to help offset increases of certain non-fuel-related costs expe-rienced between general rate cases.

Edison now provides electric service to more than nine million people through over 3.3 million meter connections. At a projected 1.7% com-pound annual growth rate, our customers are expected to number nearly four million by the end of 1993. Our 10-year forecast projects KWH consumption to increase at a1.6% compound annual growth rate, from 59.9 billion KWH in 1983 to nearly 72 billion KWH in 1993.

Success in our load management programs has reduced our projected peak demand growth rate through 1993 from 2.4% to 2% annually, requiring just over 5,000 MW of new generating capacity, and enabling the Company to eliminate the need for a1,500-MW coal-fired generating plant at an estimated cost savings of $ 1 billion.

Allof our additional generating capacity re-quirements through 1993, other than from the Company's 200-MW Balsam Meadow hydro proj-ect at Big Creek, power purchases and nuclear plants currently under construction, is scheduled to be met by Company and third-party-owned renewable and alternative resources, including cogeneration, small hydro, wind, geothermal, solar, synthetic fuel (coal gas), biomass and fuel cells.

Throughout the year, a number of significant executive changes were made to further strengthen the management of your Company, including the election of a new director and officers.

Carl F. Huntsinger, president and chief execu-tive officer of Blue Goose Growers, Inc., an af-filiate of Sunkist Growers, Inc., was elected to the Company's board of directors.

Two directors retired from the Board in1983-John V. Newman, after 26 years of dedicated service, and Richard R. Von Hagen, following over 13 years of valued service.

P. L. Martin, formerly vice president, customer service and conservation, was elected senior vice president with responsibility for customer service, human resources, conservation and corporate communications.

L. T. Papay, formerly vice president, advanced engineering, was elected senior vice president with responsibility for advanced engineering, power supply and system development.

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

Effective January1, 1984, Richard K. Bushey, formerly assistant controller, was elected vice president and controller, succeeding A. L.

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

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

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

Howard P. Allen President February 16, 1984 William R. Gould Chairman of the Board and Chief Executive Officer Fair and responsible regulation at the federal and state levels measureably added to the con-structive and cooperative environment that un-derscored our many successes in 1983. With the continued policy guidance and counsel of our directors, the dedication and overall fine perfor-mance of our officers, managers and employees, and the continued support of you, our share-holders, we view the future with confidence and optimism.

Our Employees and Customers The accomplishments of 1983 reflect the hard work, dedication and innovation of more than 16,000 Edison employees.

Edison employees did an outstanding job main-taining the Company's financial integrity, strength-ening its nuclear operations, engineering new advances in electric generation and distribution, increasing coal and steam plant productivity, and achieving cost savings in resource manage-ment through off-system purchases, conservation and load management.

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

winter energy assistance program was estab-lished for low-income residential customers.

Training of customer service representatives was intensified in all areas of customer contact and communications, and the Company continued to improve its computerized Customer Information System facilities.

Edison's 545 meter readers each read an average of 380 electric meters daily in 1983, a high standard of perfor-mance per reader.

Edison energy audits for residential, com-mercial, industrial, agricultural and public authority customers achieved a total savings of almost 1.6 billion kilowatt-hours in 1983, and a demand reduc-tion of 335 megawatts.

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

In its 50,000 square-mile service territory en-compassing more than 9 million people, Edison served 3.3 millioncustomers in1983, including To this end, the Company in1983 added per-sonnel, intensified training, further decentralized division reporting authority to bring decisions closer to the customer, and upgraded other facets of customer service functions.

During the year, nearly 800 Edison customer service representatives handled about four mil-lion telephone calls and an equal number of cus-tomer visits at 76 local offices. In addition, more than two millionservice requests were handled by field service personnel.

A 24-hour toll-free telephone line aided custom-ers with speech and hearing impairment, and a Edison employees worked approximately 250,000 over time hours to restore service and repair facilities for nearly one millioncus-tomers during the most devastating wind and rain storms in the Company's history in late 1982 and early 1983.

<I 50,159 new customers.

In serving these custom-ers, Edison construction crews replaced more than,6,000 poles, inspected more than 13,000 underground vaults and maintained over 80,000 miles of overhead and underground lines in 1983.

The Company's 545 meter readers each read an average of 380 electric meters daily, a high stan-dard of performance per reader. Working with enforcement agencies, field service personnel identified and halted the theft of more than four million kilowatt-hours (KWH)of electricity through an intensified Energy Theft Prevention Program.

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,I3 Edison's 800 customer service representatives responded to about four millionphone calls and an equal number of customer visits at the Company's 76 local offices in 1983.

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~pe-yI The most devastating wind and rain storms in the Company's history in late1982 and early1983 caused Company employees to work approxi-mately 250,000 overtime hours to restore service and repair facilities for nearly one millioncustom-ers, at a cost of more than $20 million. Customer service representatives handled more than 185,000 calls in connection with the outages from 23 separate storms.

In late January 1984, storm damage from hur-ricane-force winds caused Edison crews to work more than 97,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> restoring service to more than 843,000 customers and repairing damage to facilities, at a cost of more than $6.6 million.

In addition to service on the job, the Company encourages its employees to participate in community affairs. As responsible community members, employees provided leadership and participated in youth league sports, Special Olympics, Junior Achievement, scouting, and YMCAand YWCAactivities. Employees were also involved in senior citizen programs, cultural activities, church organizations, and groups that render voluntary assistance in areas such as low-income housing and unemployment.

Edison employees personally gave more than

$2 million in1983 to United Way programs. This donation assisted more than 200 local agencies and made Edison people among the leading contributors, on a per capita basis, to charitable organizations in California.

Employees who have acted with exceptional courage and initiative in emergencies, or who have performed humanitarian acts of service have been formally recognized by the Company since 1980. To date, 67 employees have received the Jack K. Horton Humanitarian Awards, named in honor of the contributions and dedicated ser-vice of the Company's former Chairman. These employees pulled persons from burning houses and burning or submerged cars, rescued children from attacking dogs, gave first-aid to accident vic-tims, saved choking and drowning victims, and administered cardiopulmonary resuscitation.

The 78-year-old Edison motto, "Good Service, Square Dealing and Courteous Treatment," con-tinues to serve as the guiding operating principle for the Company in its relationship with its employ-ees, customers and the communities it serves.

Edison's Serrano Sub-station, scheduled for completion in tate1984, willprimarilystep-down high voltage electricity from Arizona's Pato Verde Nuclear Generating Station for the benefit of Edison customers.

Year in Review Nuclear Generation Because of the Company's substantial nuclear in-vestment and in light of intense regulatory and public scrutiny of nuclear operations throughout the nation, Edison moved to strengthen and centralize its nu-clear organization in 1983. As outlined in the Letter to Shareholders, two company officers were given di-rect authority for nuclear operations, one at the site of the San Onofre Nuclear Generating Station and the other responsible for nuclear engineering, safety and licensing.

This nuclear organization, including its technical, engineering and support personnel, was responsible for successfully bringing the 1,100-megawatt (MW)

San Onofre Unit 2 through full-power testing and into commercial operation in August 1983. An initial por-tion of the unit's revenue requirements was included in rates in October, with a subsequent increase au-thorized in November. The remainder is accruing in a balancing account.

San Onofre Nuclear Unit 3 received its full-power license from the Nuclear Regulatory Commission (NRC) in September 1983 and is undergoing full-power testing. The Company expects to complete the warranty run and, subject to CPUC approval, place the 1,100-MW unit in rates in mid-year.

During the past decade, changes in regulatory requirements have resulted in substantial modifica-tions to original nuclear plant design.'As a result, San Onofre Unit 1, which was originally placed in service in 1968, was taken out of service in February 1982 for NRC-required backfits, fire protection modifications and seismic upgrading.

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

Edison has an 80/o ownership interest in San Onofre Unit 1 and a 75/0 ownership interest in San Onofre Units 2 and 3. The Company is responsible for the management and operation of the three units, and has a total megawatt ownership in the units of 2,010 MW.

Edison also has a 15.8 lo ownership interest in three 1,222-MW units being constructed at the Palo Verde Nuclear Generating Station near Phoenix, Arizona.

This project, being managed by Arizona Public Ser-vice Company, is experiencing some startup delays and upward cost revisions.

Alternative and Renewable Resources Edison continues to be ahead of schedule in its plan to bring 2,190 MW of renewable and alternative energy sources into production by 1993. The Com-pany now obtains electric power from nine primary energy resources water, oil, gas, nuclear, coal, geothermal, wind, solar and biomass more re-sources than any other electric utility in the world.

Since the Company's accelerated development program began in 1980, more than 1,400 MW of alter-native and renewable resources are either on line, under construction or represented by signed con-tracts or letters of intent. At year-end, alternative and renewable resources developed by third-party entre-preneurs contributed more than 155 MW of capacity to the Edison system at a capital savings over traditional central station generation of more than

$75 million.

Alternative and renewable power generation tech-nologies include:

WindAt the end of 1983, nearly 1,400 wind tur-bines of various designs were installed and produc-ing up to 70 MW of power. A total of 15 wind parks were in initial stages of operation in the Tehachapi Mountain and San Gorgonio Pass Wind Resource Areas. Edison, through purchase contracts, has re-ceived more than 15 million KWH of energy from these third-party projects.

NUCLEAR POWER: Located on the Pacific shore near San Clemente, California, the three unit, 2,650-megawatt San Onofre Nuclear Generating Station at fuiioperation willdisplace the energy equivalent of about 25 millionbarrels of oil and gas annually. In 1983, Unit 2 was placed in full-power operation and a full.power operating license was approved for Unit 3.

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So/arEdison is involved in five solar technologies utilizing the sun's renewable energy, either for direct conversion to electricity, or for concentrating it into usable heat energy:

~ Central Receiver: The 10-MW Solar One gen-erating station, located at Edison's Cool Water Generating facility, near Daggett, California, began power production in April 1982 and set a single-day energy production record in 1983 of 104,000 KWH.

~ Photovoltaic: ARGO Solar Industries'-MW plant near Hesperia, California, has generated more than 2 million KWH of electricity since connection to Edison's grid in November 1982.

~ Parabolic Dish: Advanco's 25-KW system, under construction near Rancho Mirage, Cali-fornia, is the first of a family of parabolic dish reflectors that are scheduled to be built in the current decade.

~ Solar Trough: Operation of the first phase of the Luz parabolic trough 43-MW Solar Energy Generating Station is scheduled to begin in the current year in the Mojave Desert near Daggett, California.

~ Solar Pond: Agreements were signed in late 1983 between Edison and Ormat Turbines, Ltd.,

for a 48-MW solar pond system to be installed at Danby Dry Lake in the Mojave Desert east of Twentynine Palms, California.

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

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

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

Cogeneration Cogeneration facilities produce electricity and thermal energy from a single fuel, an ideal conservation measure.

Heat processes in indus-tries such as paper manufacturing, milk processing, oil recovery and refining, cement and chemical IO production frequently use large volumes of steam, and it is often feasible to cogenerate electric power with the same fuel used in these processes.

Commitments with developers total 527 MW in 35 different projects. Already operational are 27 projects with over 220 MW of capacity.

One of the largest cogeneration projects in the nation, the Kern River Oil Field Cogeneration Project in the San Joaquin Valley, received approval from the California Energy Commission in 1983 and is sched-uled for initial operation in late 1985. The project is a joint venture between subsidiaries of Edison and the Getty Oil Company. The project willgenerate up to 300 MW of electricity for Edison customers and for oil field operations while utilizing waste heat to produce steam for oil recovery.

Geothermal PowerThe generation of electricity utilizing hot water and steam resources located be-neath the earth's surface produced 95 million KWH in 1983 from two pilot plants in California's Imperial Val-ley. The 10-MW plants at Brawley and the Salton Sea continued to advance the technology needed to utilize the salty, corrosive hot water resources preva-lent in the area.

Commitments have also been made to obtain power from three independent geothermal projects totaling 62 MW. In addition, Edison will begin receiv-ing in the current year the first portion of a 70-MW power purchase from Mexico's Cerro Prieto geother-mal generating station.

SOLAR POWER: Solar rays reflect off 300-foot high central receiver tower of Soiar One, the world's largest solar thermal generating station near Dag get t, California. In successful operation for the past year, the station produces 10 megawatts of electrical energy using 1,818 heliostats, or mirrors, that concentrate soiar rays on tower cooiant to create turbine steam.

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12 Research and Development Edison's developmental efforts in alternative and re-newable resources began in 1972, and are a direct extension of a commitment to utilize promising new technology to benefit shareholders and customers that began with the Company's pioneering develop-ment of the first long-distance alternating current transmission line in the 1890s.

The Cool Water Coal Gasification Program is repre-sentative of Edison's efforts to move promising alter-native technologies into commercial electric produc-tion. The project, which has received U.S. Synthetic Fuel Corporation's price support for its operational phase, willconvert 1,000 tons of coal per day into a clean-burning gas to power a 100-MW generating facility.

Edison's Wind Energy Center near Palm Springs also continues to lead as a focal point for utilitywind energy research in the United States.

In 1983, the world's largest Darrieus vertical axis wind turbine generator (WTG) was erected and began start-up testing; testing also began on a 100-KW Wenco horizontal axis unit; and testing continued on the three-bladed, Bendix horizontal WTG.

Research and development in ecological and en-vironmental systems was intensified in 1983. Testing continued on a 90%%d-efficient, 107-MW catalytic NOx removal system, the largest of its type in the nation.

As part of ongoing acid rain and fog studies, the Company joined with the Coordinating Research Council in support of the standardization of collection and evaluation methods for these phenomena in Southern California and the Northeast.

Edison was recognized by the California Depart-ment of Fish and Game in 1983 for innovative and aggressive marine resource management

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

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

With a capacity of 776 MW, the Big Creek hydro-electric complex in the Sierra Nevadas is the main-stay of the Edison hydro system.

It has the hardest working water in the world, irrigating central Califor-nia's San Joaquin Valley from six dams, eight tunnels and eight powerhouses built over a period of 70 years. Further extending Big Creek's capability, con-struction began in 1983 on the 200-MW Balsam

'eadow hydro project, which will become the Com-pany's largest hydro plant. Scheduled for completion in 1987, Balsam Meadow willfeature an underground hydro powerhouse to utilize water flowing from Hun-tington Lake to Shaver Lake.

New Allocation of Hoover Dam Power In 1930, Edison and other utilities contracted to purchase power from Hoover Dam in future years, and such funding permitted the construction of this multi-purpose project. These contracts expire in 1987.

However, in1983 the Department of Energy pro-posed new allocations for Hoover power for Edison, which,'lthough somewhat reduced, would still provide Edison customers 30 more years of low-cost hydro power. The contracts are subject to federal legislative approval, which is expected in the current year.

Hydro Project Relicensing Until recently, it was generally agreed that the Fed-

, eral Power Act of 1920 gave preference to states and municipalities for the original issuance of licenses for new hydroelectric projects on federal lands, but pref-erence to public agencies did not apply to the re-licensing of existing projects. Congress, when reviewing the law in 1968, was so advised of this view by the Chairman and General Counsel of the Federal Power Commission, which has since become the Federal Energy Regulatory Commission (FERC).

Then, in 1980, FERC, which is responsible for issu-ing hydroelectric project licenses, issued a declara-tory order stating that municipalities do have preference over investor-owned utilities in relicens-

. ing. The appellate courts let this decision stand.

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WIND POWER: Ranchers and energy entrepreneurs now share Southern Caliiornia's Tehachapi Mountain Range where small wind turbine arrays, aiong with other renewable and alternative energy resources, willreduce fuel oil and gas dependence and the need to build large, capital ~intensive generating plants.

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This new interpretation would deprive electric cus-tomers of investor-owned electric utilities whose proj-ects are up for relicensing of the benefits of low-cost hydro power and unfairly give these low-cost benefits to the customers of municipal utilities.

In1983, FERC rendered its first decision after hearings in a contested proceeding.

It ruled that mu-nicipalities do not have preference in relicensing. This decision is now being appealed by the municipalities.

Because of the two conflicting FERC rulings and subsequent court appeals, legislation was introduced in the Congress in 1983 to prevent the benefits of low-cost hydroelectric power from being taken from customers of an'existing licensee and given to the customers of a municipality who did not pay for the existing project. Action on this measure is expected this year.

This issue is important to Edison customers be-cause municipalities claiming preferred status have already filed competing applications for 11 hydro projects in the United States, including Edison's Rush Cr'eek and Lee Vining Creek Projects in the Sierras near Bishop. Edison has four other hydro projects subject to relicensing by 1993.

~ Edison's customers'ates willincrease unnecessar-ily,and unjustifiably if these hydro facilities are taken aw'ay since Edison would have to purchase or pro-duce more costly replacement power. In California, fuel costs, including the benefits of low-cost hydro-electric power, are fully and promptly passed on to the electric customer.

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

'nd resolutions to FERC in support of retaining the benefits from these hydroelectric projects.

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

Major Litigation In recent years, Edison has experienced increased antitrust and contract litigation involving claims for 14 significant damages, resulting in related increased legal fees, manpower requirements and expenses.

Antitrust litigation initiated by some of Edison's mu-nicipal resale customers, and litigation involving the Company's fuel oil procurement contract with Chev-ron are requiring substantial legal effort and expense.

These matters are discussed in more detail in Note 2 of Notes to Financial Statements.

Also, Edison is en-gaged in a lawsuit against Westinghouse relative to equipment warranties.

Fuel and Purchased Power Until the 1960s, Edison generated electric power primarily on its own system to provide low-cost elec-tricity to customers in a reliable manner. But as a re-sult of increased emphasis on air pollution control in the late 1960s and skyrocketing fuel oil costs follow-ing the OPEC oil embargo, Edison began increasing its purchases of off-system power from other sup-pliers to keep customer electric costs down and to diversify its fuel mix and minimize emissions.

This quest for low-cost power led to Edison's par-ticipation in the late 1960s in the construction of the, Pacific Intertie transmission system to the Pacific Northwest to import low-cost surplus hydro power for its customers. The Company also participated in the construction of Units 4 and 5 at the Four Corners coal plant in New Mexico in 1969 and the Mohave coal plant in Nevada in 1971. Extra high voltage lines were constructed to import Edison's share of power from Four Corners and Mohave to Southern California.

BIOMASS POWER: Wood, which once supplied 90% of America's energy needs, is experiencing a rebirth as an electric energy producer in a demonstration project at Edison's Highgrove Generating Station near Riverside, California. The project uses the nation's largest down-draft wood gasifier.

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These lines also enable the Company to purchase surplus power, primarily generated from coal, from Southwest utilities. As a result, off-system power purchases, primarily from the Pacific Northwest and Southwest, have dramatically increased over the past 16 years, climbing from one percent of total KWH re-quirements in 1967 to a record 37% in 1983, or ap-proximately 25 billion KWH. The majority of these off-system purchases are interruptible and do not eliminate the necessity to utilize company-owned fa-cilities to meet system peak demand.

Power purchases saved Edison customers approx-imately $900 million in 1983 by displacing the energy equivalent of 41 million barrels of more costly fuel oil or natural gas. In addition, the Company burned the lowest annual amount of fuel oil to generate elec-tricity since 1950 with 3.4 million barrels used from storage. As a result, no fuel oil was purchased in 1983 for the first time in more than 40 years.

Natural gas consumption also decreased from 257 billion cubic feet in 1982 to 215 billion cubic feet in 1983, or the equivalent of 37 million barrels of fuel oil.

In 1983, natural gas represented 29.5% of the Com-pany's fuel mix compared to 37% a year ago.

Even though KWH generation increased in 1983, combined fuel and purchased power costs declined by 9% to $2 billion, compared to $2.2 billion in 1982 and an all-time high of $2.6 billion in 1981. This de-cline is attributable primarily to record supplies of hydroelectric power, record economy power pur-chases from other utilities and decreases in the price of natural gas. Nevertheless, fuel and purchased power costs continue to be the single largest compo-nent of the total cost of providing electric service to customers, representing 45 cents out of each 1983 revenue dollar, down from 52 cents in 1982 and the record high of 63 cents in 1981.

To continue'to expand the Company's off-system power purchase capability in the years ahead, Edison has applied to the CPUC for approval to extend a 500-kilovolt transmission line into the Company's sys-tem from the Palo Verde Nuclear Generating Station in Arizona. Edison and the Los Angeles Department of Water and Power also are studying the feasibility of upgrading the Pacific Intertie 846-mile DC line from 2,100 MW to 3,100 MW by 1988 to allow power pur-chase increases from the Pacific Northwest of up to two billion KWH annually.

16 Annual Peak Demand The Company recorded a 1983 area peak demand of 13,464 MW on September 12, a 2.4% increase over the peak demand of 13,149 MW recorded on Septem-ber 2, 1982, but still below the record peak of 13,738 MW reached during unusually hot weather in 1981.

The annual compound growth in peak demand over the last five years has been 2.1%.

Energy Sales Total energy sales to Edison's 3.3 million customers in 1983 were 59.9 billion KWH, a 1% increase over sales of 59.3 billion KWH in 1982, but below the rec-ord of 62.5 billion KWH set in 1981.

Energy sales were reduced by over one billion KWH in 1983 through the expiration on April 3, 1983, of a 20-year energy sale agreement with the Califor-nia Department of Water Resources (CDWR) for California Aqueduct project pumping. This reduction was more than offset by residential and commercial energy sales growth. Edison is continuing to cooper-ate with CDWR on water project electric use under a new energy exchange arrangement.

Energy sales to six resale cities declined 4.1% in 1983 as some cities began receiving energy through their ownership in San Onofre Unit 2 and because of increased power purchases from outside Edison's system.

PEOPLE POWER: Edison's accomplish-ments in 1963 reflect the working power of more than 16,000 dedicated and innovative Edison people. As responsible members of the com-munities in which they live and work, Edison people make it happen, strengthening the Com-pany's service to both customers and shareholders.

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Total electric consumption by Edison's 2.9 million residential customers in 1983 increased by 4.7% to 17.2 billion KWH from 16.4 billion KWH in 1982, pri-marily as a result of the improved economy, warmer summer temperatures and the addition of 42,556 new residential customers to the Company's service terri-tory during the year. The annual compound growth in residential KWH sales over the last five years has been 2.2%.

Industrial KWH sales, which have declined annu-ally since 1981, recovered by year-end 1983 to within 0.2% of their 1982 sales level, even though the Com-pany lost five major industrial customers.

In contrast, commercial KWH sales increased by 7.8% over 1982, growing for the past five years at an average annual rate of 3.8%.

Sales to agricultural customers in 1983 dropped 17.3% to 709 million KWH from 857 million KWH in 1982. Primarily because of record rainfall and hydro runoff that reduced the need for deep-well pumping, the 1983 agricultural sales level was the lowest re-corded since 1946.

Conservation and Load Management In 1983, the combination of customer response to Edison's conservation programs, plus the Company's direct conservation efforts on its system, achieved a savings of approximately 5.6 billion KWH, resulting in a fuel cost savings of more than $280 million.

Of this total, Edison's efforts in voltage regulation, distribution circuit management, and street light con-version contributed a savings of almost 1.9 billion KWH, while customer response to Company conser-vation programs, including customer cogeneration, contributed a savings of 3.7 billion KWH.

Energy audits helped commercial, industrial, ag-ricultural and public authority customers to achieve a total savings of 1.4 billion KWH and a demand reduc-tion of 335 MW in 1983. SCE's energy audit programs encompass free surveys of customer facilities to pro-vide energy saving recommendations, and financial incentives to encourage the installation of conserva-tion hardware.

More than 100,000 single family residential conser-vation service energy audits have been completed since 1981 and the free audit program was expanded to multi-familymarkets in 1983. Some of the more sig-nificant incentive programs offered to customers in 1983 included:

~ Conservation Financing Program... Edison offers residential customers 8% loans or cash rebates to stimulate installation of energy conservation and hardware improvements. As a result of program ef-forts in 1983, 30,000 energy-efficient refrigerators were purchased by customers, as well as over 20,000 additional improvements including weather-ization, insulation and other measures to reduce air conditioning requirements.

~ Low-Income Program... In 1983, Edison con-tinued to coordinate low-income energy conserva-tion with other state and local agencies.

These activities include the implementation of a low-income solar water heating program, and the use of State of California solar and energy conservation bank funds to install evaporative coolers and weatherization in the residences of qualified low-income customers.

Edison's load management programs are designed to shift the use of electricity from periods of peak us-age to periods of reduced demand in order to defer construction of costly new generating facilities. Pro-grams to shift 520 MW of load are already in place.

Percentage of Male, Female and Minority Employees at Year-End 1978 and 1983 Male Year-End 1978 1983 Female Year-End 1978 1983 Black 0/

Year-End 1978 1983 Asian American Year-End 1978 1983 American Indian Year-End 1978 1983 Hispanic Year-End 1978 1983 Total Minorities Year-End 1978 1983 Management" )

91.4 83.5 8.6 16.5 2.2 3.7 3.7 5.9 0.6 0.5 5.4 7.5 11.9 17.6 Mon-Management(

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77.9 73.7 22.1 26.3 7.5 9.5 2.4 3.3 0.8 1.1 13.9 18.7 24.6 32.6 Total Company' 82.1 77.1 17.9 22.9 5.8 7.5 2.8 4.2 0.7 0.9 11.3 14.8 20.6 27.4 (1) Management employees include the "Officials"and "Professionals" AtfirmativeAction Categories.

(2) Non-Management employees include -Technicians," "Office and Clerical," -Craftsmen," -Operators,"

"Laborers," and -Service Workers."

(3) Includes all classes of employees.

18

The Company projects that innovative load man-agement programs will reduce annual peak load growth from 2.4% to 2% during the next 10 years.

These programs include:

~ AirConditioner Cycling... Rate options are offered to residential and commercial/industrial customers within selected climate zones who agree to allow Edison to cycle air conditioner compressors during periods of high electric demand.

~ Commercial/Industrial Off-Peak Cooling...This program is aimed at reducing peak loads of large commercial/industrial customers through the instal-lation of systems which generate and store chilled water, ice, or other cooling media during off-peak hours when electrical demand is low.

~ Interruptible Tariffs... Edison's interruptible tariffs are designed to encourage large commercial and industrial customers to reduce load during periods of 'low generating margins. Participating customers are given monthly rebates in return for an agree-ment not to exceed a pre-established demand level when notified by Edison.

~ Pool Pump Timing... Since 1978, Edison's residen-tial swimming pool program has encouraged pool owners to install time clock trippers to avoid the operation of pool filter pumps, pool sweeps and spa pumps during hours of peak summer electrical demand.

~ Residential Demand Subscription Service (DSS)

...With CPUC approval, a test DSS program was initiated in 1981 and an expanded test is now being conducted. DSS offers reduced rates to participat-ing residential customers through the meter instal-lation of Edison developed and patented remote controllers which limitelectric usage during critical periods of peak demand.

AffirmativeAction The number of minority and female employees in the Company's work force continued to increase dur-ing the year with minority group employment rising to 27.4% from 26.3% in 1982. Female employees repre-sented 22.9% of the work force at year-end, com-pared to 21.9% at the beginning of 1983.

The upward mobilityof both minority and female employees into management positions also has been increasing. During the five-year period from 1978 through 1983, minority management positions in-creased to 17.6% from 11.9% and female manage-ment positions increased to 16.5% from 8.6%.

Edison's Procurement Division provided increased opportunities to Minority Business Enterprises in 1983, and female-owned enterprises were added to the program. In 1983, $25 million was paid to fernale and minority businesses, compared to $3.7 million paid to minority contractors in 1979 when the pro-gram was formally introduced.

In addition, the number of opportunities to compete for contracts annually has grown from 923 in 1979 to 6,467 in 1983, an increase of more than 600%. Over the same period, the number of contractors qualified to provide goods and services to Edison has more than doubled from 207 to 458.

Nudear Purchases AlternatNer RenewatSes Proven Technctog'es Hydro Srnaa Hydro Cogener aeon Emerging Techrokgies 275 1490 Planned Resource Additions 1984-1993 More than three years ago the Company an-nounced its commitment to accelerate the devel-opment of alternative and renewable energy resources. Atthe end of 1983, the Company was ahead of schedule, with cogeneration, wind, solar, and biomass being the pacesetters.

1993 Projected 28%

Purchased Power-System 22%

OilandGas 17%

Nuclear 12%

Purchased Power.

Renewable 12%

Coal 28%

1983 37%

Recorded 37%

Purchased Power-System 32% OilandGas 15%

Coat 10%

Renewables (including ail Hydro) 5%

Purchased Power-Renewable 5%

1%

Nuclear 15%

10%

1%

22%

By1993, Edison's gener-ation fuel mix is antici-pated to shift away from a dependence on oiland gas to a more balanced fuel mix. The Company expects to receive approximately equal amounts of energy from system purchases, oil and gas, nuclear, and re-newables (both Edison-owned and third-party),

with coal also making a significant contribution.

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Renewables (Including all Hydro) 8%

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19

Financial Review The Company continued to strengthen its financial condition during the year, as measured by several important financial indicators:

~

Earnings per share of common stock rose 21%

over the 1982 level.

~

The Company earned a 17% rate of return on common equity.

~

Interest coverage increased significantly to 3.44

times,

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The level of funds required for Edison's con-struction program declined in 1983, and pro-jected total construction expenditures for the next five years are lower than those of the past five years.

~

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

As a result, Edison's external financial require-ments in 1983 were lower than those of the previous year for the first time in eight years.

Stock Price Improves With the general upturn in the stock market during 1983, Edison's common stock traded, with few ex-ceptions, at slightly above book value. The stock price has increased during seven of the past 10 years, and at year's end, had achieved a compound annual growth rate over the decade of 8%. In 1983, Edison's common stock provided a total return to shar'eholders of 23%, comprised of price apprecia-tion and dividends paid. This included a price in-crease of 13.2% fol'he year, compared with 2.5% for the Moody's average of 24 electric utilities. This per-formance is a result of continued cost control, an ag-gressive dividend policy, the Company's commitment to the development of alternative and renewable re-sources, and a general improvement in the stock market.

Stock Split Recommended In recognition of this price appreciation and to broaden investor interest by providing a more attrac-tive market price, the Board of Directors voted on January 19, 1984, to recommend a 2-for-1 split of the Company's common stock. Shareholders will be asked to approve the stock split at the Annual Meet-ing on April 19, 1984. If approved, it is expected to become effective on July 5, 1984. The Company last split its common stock in 1962.

Earnings Increase For the 1983 calendar year, earnings per share rose 21% to $6.22, the highest in the Company's his-tory, surpassing the $5.13 per share earned in 1982.

In addition, the Company earned a 17% rate of return on common equity, outperforming the 14.9% earned in 1982. Additionally, the Company earned a 12.5%

rate of return on its investment in utility plant.

The increase in earnings primarily reflected higher non-cash allowances for funds used during construc-tion, continuing emphasis on productivity and cost controls, and the general rate increase which be-came effective January 1, 1983.

In the 1983 general rate case, the CPUC estab-lished a rate-making mechanism to stabilize the level of revenue authorized regardless of fluctuations in kilowatt-hour sales. Therefore, even though kilowatt-hour sales increased 1% during 1983, the increase had little impact on earnings.

175 (Index) 150 125

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~ Moody's 24 Etectdos Stock Price Comparison The Company's stock price has increased con-siderably during the past five years, outpacing that of Moody's 24 Elec-tric Utilitiesand the Dow Jones UtilityAverage. In 1983, Edison's common stock provided a total return of 23% based on price appreciation and dividends paid.

20'/o 16 12 Rate of Return on Common Equity In1983 the Company earned a17% rate ol re-turn on common equity, outperforming the14.9%

earned in 1982. Addition-ally, the Company earned a 12.5% rate of return on its investment in utilityplant.

75 79 80 81 82 83 79 80 81 82 83 20

Also, as part of the 1983 general rate case, the CPUC authorized an attrition allowance of $96 million to offset non-fuel inflationary increases projected for 1984. This 2% increase in customer rates, which became effective January 1, 1984, should help to maintain earnings in this year between general rate decisions.

Dividend Raised In September 1983, the Board of Directors ap-proved an 8% increase in the common stock quar-terly dividend, raising the rate to 95tt,'er share from the 88ff,'established in September 1982. On an annual basis, this is equivalent to $3.80 per share, compared with the previous annual rate of $3.52. The Company implemented an aggressive dividend policy in 1977 and has increased the dividend at least once per year since then. For the past five years, the annual dividend increases have averaged 8.9%.

At year-end 1983, the dividend was providing a 9.6% yield on a common stock market value of $398/4 per share.

Financing Needs Decrease A marked increase in internally generated funds combined with the decline in construction expendi-tures reduced the amount of external financing under-taken by the Company in 1983. During the year, the Company raised $400 million from external sources compared to $956 million and $1,080 million required in 1981 and 1982, respectively. This is the lowest level of external financing undertaken by the Company since 1978.

Details of the Company's 1983 financing activities are set out in the following table:

Term Coupon Amount Month Issue (years)

Rate (millions)

Pollution Control Refunding Bonds Four Corners Generating Station Euro-Debentures Pollution Control Refunding Bonds Four Corners Generating Station Dividend Reinvestment and Stock Purchase Plan Employee Stock Purchase Plan Employee Stock Ownership Plan TOTAL January 20 9/s%

$ 88 April May 7

10~/s 75 20 8'/s 20 30 9

71 Ongoing 84 36 26

$400 Of this amount, $229 million represents the refundings of previ-ously issued bonds, plus the retirement of maturing series K bonds, with the remainder of $171 representing new capital.

As noted in the table, the Company's 1983 equity capital needs were satisfied solely through the ongo-ing sales of common stock through the Dividend Reinvestment Plan, Employee Stock Purchase Plan and Employee Stock Ownership Plan. This marked the first year since 1979 that the Company has not under-taken a major public offering of common stock.

Dividends Paid Per Share The 8/o increase in com-mon stock dividends an-nounced in September again underscored the Company's commitment to provide competitive returns to its sharehold-ers. The quarterly divi-dend rate was raised to 95ir. per share which, on an annual basis, is equivalent to $3.80 compared with the previ-ous annual rate of $3.52 per share.

81200 (in Millions)

Funds Required for Construction Edison's construction program over the next fiveyears is estimated to total $4.0 billionas com-pared to $4.2 billionfor the past fiveyears. Con-struction expenditures in 1983, which totaled $805 million,declined for the firsttime since1977, primarilyreflecting the completion of the San Onofre nuclear generat-ing units.

79 80 sl 82 83 83 84 85 88 87 88 21

The Company also completed a tax-exempt financ-ing strategy for pollution control facilities at the Four Corners coal-fired generating station located in New Mexico. In early 1981, the Company identified $260 million of facilities which qualified for low-cost tax-exempt financing. At that time, however, interest rates for long-term pollution control bonds were extremely high, surpassing 14% at one point. Therefore, the Company implemented a strategy of initiallyfinancing the facilities on a short-term, three-year basis with the expectation of refinancing these bonds on a long-term basis if interest rates declined.

At the end of 1982, interest rates did decline signifi-cantly, and the Company began systematically re-financing the short-term bonds on a long-term basis.

On June 8, 1983, the final portion of the short-term pollution control bonds was refinanced at a rate of just under 9%. The total interest savings resulting from this financing strategy was approximately $8'/8 million per year.

The Company also took the opportunity to place

$75 million of debentures in the European market in Aprilwhen, during a brief period, interest rates reached a four-year low. With this financing, the Com-pany now has placed a total of $450 million in the European market on seven separate occasions, all at rates below levels then existing in the domestic market.

Reflecting the $400 million of capital raised in 1983, total capitalization of the Company at year-end was

$8.8 billion. SCE's capital structure at year-end 1983 was comprised of 46.3% Debt, 10.4% Preferred and Preference Stock, and 43.3% Common Equity. In the 1985 general rate case, the Company has requested ratios of 45%, 10% and 45%, respectively.

The Company's reduced need for financing also served to improve financial ratios. Most notable was the change in pretax interest coverage which im-proved from 2.64 times to 3.44 times during 1983.

For 1984, the Company currently plans to issue approximately $300 million of tax-exempt bonds to finance pollution control facilities at the San Onofre and Palo Verde Nuclear Generating Stations. The Company has no plans to issue new shares of com-mon stock in the public market other than through ongoing stock plans. Other financing plans are uncertain at this time.

Regulatory Matters SCE Receives San Onofre Rate Decision:

In 1983, after 13 years of design and construction, San Onofre Nuclear Unit 2 met the CPUC's criteria for commercial operation and began earning a cash re-turn for Edison's shareholders.

In California, a utilityis not allowed to earn a cash return on investment in plant until the plant becomes operational.

In September 1983, the CPUC issued an initial decison to include in rates $207 million for the cost of owning, operating and maintaining San Onofre Unit 2.

In November 1983, the CPUC issued a second deci-sion granting an additional $98 million, bringing the total authorized annual rate relief for Unit 2 to $305 million. This base-rate increase was partially offset for customers by a $207 million decrease in customer rates which represented projected fuel savings asso-ciated with using nuclear fuel rather than burning oil and natural gas.

$3 in Billions Fuel and Purchased Power Costs 1983 marked the second consecutive yearly de-crease in the Company's fuel and purchased power costs. The 1983 year-end total of$2.0 bil-lion was 9% less than in 1982 and 21% less than in 1981. This decline primarilyreflects the increased availabilityof hydroelectric and pur-chased power which dis-placed the use of more costly fossil fuels.

75 (in Billions) 25 Kilowatt-HourSales Kilowatt hour sales changes have littleim-pact on earnings be-cause of the Electric Revenue Adjustment Mechanism which was designed to stabilize revenues regardless of fluctuations in kilowatt-hour sales.

79 80 81 82 83 79 80 81 82 83 22

30o/o 0 '/o of Total Sharohotdars C3 '/o of Total Shares 20 10 Dividend Reinvest-ment and Stock Purchase Plan Participation in the Divi-dend Reinvestment and Stock Purchase Plan continued to increase in 1983. As of year-end 1983, over 44,000 par-ticipating shareholders held approximately 18.8 millionshares of Edison common stock.

A supplemental application has been filed with the CPUC for Unit 2 to reflect the updated 1984 revenue requirement of $441 million. The difference between this request and the $305 million currently authorized is being accumulated in an interest-bearing balanc-ing account. A further decision on this filing is ex-pected mid-year.

San Onofre Unit 3 was synchronized to Edison's system in September 1983 and is expected to meet the CPUC's commercial operating criterion during April 1984. The Company has filed a $454 million rate application for this Unit. The rate increase will be par-tially offset by nuclear fuel savings projected to be approximately $180 million. A decision on the Unit 3 application is expected by mid-year.

Target Capacity Factor Incentive Plan:

The CPUC included in its September 1983 decision a performance incentive plan for San Onofre Unit 2 by setting a target annual capacity factor range of 55'/0 to 80%. Under this plan, shareholders and cus-tomers would share equally the fuel-cost savings if the plant operates above an 80/o annual capacity factor. If the plant operates below a 55'k annual ca-pacity factor, additional fuel costs incurred would be divided equally between shareholders and custom-ers. The plant averaged a 74/0 capacity factor from the time it was placed into service on August 8 to year-end 1983 even though the period included a five-week outage for routine maintenance and testing.

In an application for rehearing, the Company asked the CPUC to change the range from 55/0-80'/o to 55/o 75/o and limit its application to events within Edison's control. In addition, the Company requested that the CPUC modify the target capacity perfor-mance incentive to include a fixed monetary cap of

$25 million on a pre-tax basis for the shareholder risk related to the operation of all Company-owned nu-clear units and increase the amount of operation and maintenance expense authorized in the September decision. A decision on these additional items has been deferred and is pending further Commission consideration.

CPUC Consultant's Review:

An independent consultant was retained by the CPUC to complete a review of costs incurred in con-structing San Onofre Units 2 and 3. A final report from the consultant is expected late in 1984.

1985 General Rate Request Filed:

On December 29, 1983, the Company filed a gen-eral rate application with the CPUC covering capital and operating costs other than fuel. This request to-taled $453 million for the test-year 1985. This reflects a 13.39/o rate of return on rate base and 17.5/0 rate of return on common equity, compared with the cur-rent authorization of 12.65'k and 16'/o, respectively.

The Company requested this increase, averaging 8.3 k in customer rates, become effective January 1,

1985.

Included in the request was an Attrition Rate Ad-justment to help meet inflationary cost increases be-tween rate-case years. Edison estimates this will increase rates in 1986 by $110 million, or 1.8'/0 above the 1985 level. The actual amount of rate change will be determined in late 1985.

New CPUC Commissioner Appointed:

In May 1983, California Governor George Deukme-jian appointed William T. Bagley to the California Pub-lic Utilities Commission.

Mr. Bagley served on the California State Assembly from 1960 to 1974 and in 1978 was appointed the first Chairman of the Com-modity Futures Trading Commission. His term with the CPUC began on June 1, 1983, and will expire Janu-ary 1, 1985.

79 80 81 82 83 23

Southern California Edison Company Responsibility for Financial Statements The management of Southern California Edison Company has prepared and is responsible for the financial statements and the other related financial data contained in this Annual Report. The financial statements, which include amounts based on estimates and judgments of management, have been prepared in conformity with generally accepted accounting principles applied on a consistent basis.

To meet its responsibilities with respect to financial information, the Company maintains a system of internal ac-counting controls which is designed to provide reasonable assurance that assets are safeguarded from loss or unau-thorized use and that the financial records properly reflect the authorized transactions of the Company. This system is supported by written policies and procedures, organiza-tion structures that provide for appropriate division of responsibility, the selection and training of qualified per-sonnel and is augmented by programs of internal audits.

There are limits inherent in all systems of internal account-ing control based on the recognition that the cost of such system should not exceed the benefits to be derived. The Company believes its system of internal accounting control appropriately balances this cost-benefit relationship.

An independent examination of these financial statements has been conducted by Arthur Andersen & Co., inde-pendent public accountants, in accordance with generally accepted auditing standards.

In connection therewith, the independent accountants develop and maintain an understanding of the Company's accounting and financial controls, and conduct such tests and related procedures as they deem necessary to render their opinion as to the fairness of the financial statements.

The Audit Committee of the Board of Directors, composed entirely of directors who are not officers or employees of the Company, meets periodically with the management of the Company, the independent public accountants and the internal auditors to make inquiries as to the manner in which the responsibilities of each are being discharged.

In addition, the Audit Committee recommends to the Board of Directors the annual appointment of the independent public accountants with whom the Audit Committee reviews the scope of the audit and the nature of other services provided as well as the related fees, the accounting prin-ciples being applied by the Company in financial reporting, the scope of internal financial auditing procedures, and the adequacy of internal accounting controls.

To further assure independence in performing and reporting the results of audits, representatives of the inde-pendent public accountants and the Company's staff of internal auditors have full and free access to meet with the Audit Committee, without members of Company manage-ment being present, to discuss any accounting, auditing, or financial reporting matter.

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

We have examined the balance sheets and statements of capital stock and long-term debt of Southern California Edison Company (a California corporation, hereinafter referred to as the "Company" ), as of December 31, 1983 and 1982, and the related statements of income, earnings reinvested in the business, additional paid-in capital and sources of funds used for construction expenditures for each of the three years in the period ended December 31, 1983. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, and also included similar examinations of the financial statements for each quarter within each of the years.

Los Angeles, California, February 3, 1984.

ARTHUR ANDERSEN & CO.

In our opinion, the financial statements referred to above present fairly the financial position of the Company as of December 31, 1983 and 1982, and the results of its opera-tions and the sources of its funds used for construction ex-penditures for each of the three years in the period ended December 31, 1983, and further, in our opinion, the quar-terly financial data set forth in Note 8 of "Notes to Financial Statements" summarize fairly the results of operations for each quarter within such years, all in conformity with gen-erally accepted accounting principles applied on a consis-tent basis.

24

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

Sales (Note 1).

Other

$4,413,619 50,637

$4,266,950 35,652

$4,026,548 27,808 Operating Expenses:

Total operating revenues Fuel Purchased power (Note 10)

Provisions for regulatory adjustment clauses (Note 1)

Other operation expenses Maintenance Depreciation (Note 1)

Income taxes (Note 5)

Property and other taxes Total operating expenses 1,457,102 570)654 1,778,553 449,348 2,078,393 479,813 (21,559) 604,694 279,916 289,361 497)236 82,821 372,537 491,613 210,160 220,927 177,251 65,486 (89,472) 441,138 193,397 202,182 197,865 59,885 3,760)225 3,765,875 3,563,201 4,464,256 4,302,602 4,054,356 Operating Income 704)031 536,727 491,155 Other Income:

Allowance for equity funds used during construction (Note 1)

Interest income Taxes on non-operating income credit (Note 5)

Other income and income deductions...

Total other income 268,831 33)272 117,160 9)838 429,101 209,485 34,571 100,655 965 345,676 162,879 39,025 54,261 13,896 270,061 Total Income Before Interest Charges.

Interest Charges:

Interest on long-term debt Other interest and amortization (Note 1)

Total interest charges Allowance for borrowed funds used during construction (Note 1).........

1,133,132 4251075 114,302 539,377 882,403 360,915 59,367 420,282 761,216 281,626 59,351 340,977 (97,025)

(93,633)

(69,673)

Net interest charges 442,352 326,649 271,304 Net Income Dividends on Cumulative Preferred and Preference Stock..

73,477 72,396 690,780 555,754 489,912 67,888 Earnings Available for Common and Original Preferred Stock.:..

617,303 483,358 422,024 Weighted Average Shares of Common and Original Preferred Stock Outstanding (000) 99,174 94,257 85,610 Earnings Per Share (Note 1).

Dividends Declared Per Common Share

$6.22

$3.66

$5.13

$3.38

$4.93

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

25

Southern California Edison Company Balance Sheets Assets r

UtilityPlant:

Utilityplant, at original cost (Notes 1 and 9)

Less Accumulated depreciation (Notes 1 and 9)............

Thousands of Gollars December 31, 1983 1982 2,426,368 2,185,667

$ 8,883,519

$ 6,609,540 Construction work in progress (Note 9)

Nuclear fuel, at amortized cost.

Less Property-related accumulated deferred income taxes (Notes 1 and 5)...............

6,457,151 2,940,356 62,735 9,460,242 256,629 9,203,613 4,423,873 4,108,878 45,660 8,578,411 79,084 8,499,327 Other Property and Investments:

Nonutility property and other investments, at costless accumulated depreciation.....

Investments in and advances to subsidiaries (Note 1).

19,138 113,595 132 733 11,383 104,378 115,761 Current Assets:.

Cash and equivalents (Note 4)

Cash investments financing subsidiary (Note 1)

Receivables, less reserves of $10,551,000 and

$8,105,000 for uncollectible accounts at respective dates Fuel stock, at cost (first-in, first-out) (Note 4)....

Materials and supplies, at average cost........

Accumulated deferred income taxes net (Note 5).

Prepayrnents and other 254)352 157,321 300,691 450,555 71,625 217,690 53,901 1,506,135 120,661 127,849 306,041 605,162 64,185 198,939 42,563 1,465,400 Deferred Charges:

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

Accumulated deferred income taxes net (Note 5)

Other deferred charges 31,122 101,302 60,155 29,169 21,892 26,015 The accompanying notes are an integral part of these financial statements.

192,579 77,076

$11,035,060

$10,157,564 26

Southern California Edison Company

'apitalization and Liabilities Thousands of Dollars December 31, 1983 1982 Capitalization:

Common stock, at par value, 100,740,155 and 96,691,973 shares outstanding at respective dates(Note 1)

Additional paid-in capital (Note 1)...............

Earnings reinvested in the business.............

Common shareholders'quity Preferred and preference stock without mandatory redemption requirements Preferred and preference stock with mandatory redemption requirements Long-term debt (Note 1) 839,501 1,307,546 1,646,292 3,793)339 469,025 440,500 4,051,836 8,754,700 805,766 1,193,318 1,393,780 3,392,864 471,020 445,000 3,970,400 8,279,284 Current Liabilities:

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

Preferred stock to be redeemed within one year Short-term borrowings (Note 4)................

Short-term borrowingsfinancing subsidiary (Notes1 and 4).

Accounts payable Accrued taxes (Note 5).

Accrued interest Dividends payable Regulatory balancing accounts net (Note 1)...

Other 83,000 4,500 43,670 154,300 364,456 307,403 123,162 101,150 376,248 58,159 1,616,048 53,500 4,500 23,992 123,300 411,240 166,139 112,666 90,636 369,317 47,696 1,402,986 Deferred Credits and Reserves:

Accumulated deferred investment tax credits (Note 5)

Customer advances and other deferred credits'..

Reserves for pensions, insurance, etc. (Note 7)..

343,696 251,084 69,532 664,312 274,280 146,877 54,137 475,294 Commitments and Contingencies (Notes 2, 3, and 10)

$11,035,060

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

27

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

Net income Non-cash items in net income Depreciation Allowance for equity and borrowed funds used during construction.......

Property-related deferred income taxes..

Investment tax credits deferred net....

Othernet (365)856) 177,545 69,416 (33,093)

(303,118) 53,112 64,612 46,497 (232,552)

(993) 47,386 4,694 1

$690,780

$555,754

$489,912 289,361 220,927 202,182 Total funds from operations.

Dividends.

828,153 (438,135) 637,784 (395,103) 510,629 (336,546)

Total funds from operations reinvested..

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

Sales of securities Common stock (a)

Preferred stock Long-term debt (b)

Increase in other long-term debt..............

Reduction for long-term debt due within one yearnet Reduction for preferred stock to be redeemed within one year Conversion of preference stock...............

147,799 130,848 26,099 264,634 49,474 576,864 292,356 634,435 (4,500)

(1,995)

(4,500)

(5,290)

(6,344)

(83,000)

(53,500)

(121,025)

Total funds from long-term financing..

215,251 827,682 799,422 Other Sources (Uses) of Funds Working capital changes Cash and equivalents and cash investments..

Receivables net Fuel stock and materials and supplies........

Accumulated deferred income taxes net....

Long-term debt and preferred stock due within one year Net short-term borrowings Accounts payable Accrued taxes Regulatory balancing accounts net.........

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

Net (increase) decrease in working capital..

Sale of non-current assets Othernet (163,163) 5,350 147,167 (18,751) 29,500 50,678 (46,784) 141,264 6,931 20,135 172,327 27,901 (238,101) 226 (26,517)

(194,067)

(63,025)

(147,895) 51,222 104,365 405,908 1,316 (106,568) 30,108 (2,767)

(17,288)

(880) 24,471 (22,523) 110,214 3,678 (60,142)

(74,109) 31,174 (8,172) 50,623 (59,193)

Total other sources (uses) of funds..

Funds Used for Construction Expenditures (a) Includes conversions of Preference Stock, 5.20% Convertible Series. to Common Stock.

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

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

28 200,228 (76,460)

(16,742)

$805,497

$993,903

$956,763

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

Add:

Net income

$1,393,780

$ 1,238,317

$1,092,137 690,780 555,754 489,912

',084,560 1,794,071 1,582,049 Deduct:

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

$3.38 per share for 1982 and

$3.10 per share for 1981.....

Original Preferred Cumulative Preferred Preference Capital stock expense 362,935 1 723 68,540 4,937

'33 321,118 1,589 67,291 5,105 5,188 267,204

.1,454 62,504 5,384 7,186 438,268 400,291 343,732 Balance at December 31 (a)

$1,646,292

$ 1,393,780

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

Statements of Additional Paid-in Capital Thousands of Dollars Year Ended December 31, 1983 1982 1981 Balance at January1 (Note 1)

$1,193,318 999,764

$805,325 Balance at December 31 Premium received on sale of Common Stock and conversion of Preference Stock......

114,228 193,554

$1,307,546

$1,193,318 194,439

$999,764 The accompanying notes are anintegral part ofthese financial statements.

29

Southern California Edison Company Statements of Capital Stock Common Stock-authorized 140,000,000 shares, par value $8>h per share (a) (b) (d):

December 31, 1983 Redemption Shares Price Outstanding Per Share 100,740,155 Thousands of Dollars Stated Vatue-.

December 31, 1983 1982

$839 501

$805,766 Preferred and Preference Stockwithout Mandatory Redemption Requirements (c):

Original Preferred-5%, prior, cumulative, participating, not redeemable, par value $8>h per share...

480,000 4>000 4,000 Cumulative Preferred par value

$25 per share:

4.08% Series 4.24% Series 4.32% Series 4.78% Series 5.80Io Series 8.85% Series 9.20% Series 1,000,000 1,200>000 1,653,429 1,296.769 2.200.000 2.000.000 2,000,000

$ 25.50 25.80 28.75 25.80 25.25 26.50 26.50 25>000 30,000 41>336 32,419 55>000 50,000 50,000 25,000 30,000 41.336 32,419 55,000 50,000 50,000

$100 Cumulative Preferred-par value

$100 per share:

7.58% Series 8.70% Series 8.96% Series Preference-parvalue$ 25pershare(a)(b)(d):

5.20%convertible Series...

$100 Preference-par value $100 per share.

750,000 500,000 500,000 250,792 102.50 107.00 107.00 25.00 75>000 50,000 50,000 6,270

$469,025 75,000 50,000 50,000 8.265

$471.020 7.325% Series 7.80% Series 8.54% Series 8.70% Series A 12.00% Series 12.31% Series 7.375% Series

>E Preference-par value $25 per share:

Less>Preferred Stock to be redeemed within one year...

Preferred and Preference Stockwith Mandatory Redemption Requirements (c) (e):

$100 Cumulative Preferred-par value

$100 per share:

>i 720,000 584,998 750,000 525,000 750,000 500,000 2.480.000

$ 104.80 110.00 108.54 110.00 112.00 105.83 25.25

$ 72,000 58>500 75>000 52>500 75,000 50,000 62,000 445,000

~4,5>0

$440,500

$ 75,000 60,000 75,000 52,500 75,000 50,000 62.000 449,500 (4,500)

$445,000 (a) Under a prescribed formula, the conversion price of the Preference Stock, 5.20% Convertible Series is adjusted when additional shares of Com-mon Stock are sold by the Company. As of Decem-ber 31 ~ 1983, the conversion price was $31.50 per

, share. The 12>rz% Convertible Subordinated De-

'entures Due 1997, issued by Southern California Edison Finance Company N.V.~ are convertible into Company Common Stock at the conversion price of $32.375 per share.

(b) At December 31, 1983, shares of Common Stock wore reserved for issuance as follows:

Shares (c) As of December 31, 1983, shares authorized for the Original Preferred, Cumulative Preferred,

$100 Cumulative Preferred, Preference and $100 Preference Stock were 480,000, 24,000,000, 12,000,000, 10,000,000, and 2,000,000 shares, re-spectively. Allseries of Cumulative Preferred,

$ 100 Cumulative Preferred and Preference Stock are redeemable at the option of the Company. The 500,000 shares of $ 100 Cumulative Preferred Stock, 12.31% Series, are not subject to such re-demption until May 1 ~ 1992. The various series of the $ 100 Cumulative Preferred Stock, and the Preference Stock, 7.375% Series, are subject to certain restrictions on redemption for refunding

purposes, Shares Issued 1983 1982 1981 Public offerings DRP............

2,328>994 ESPP...........

953,711 ESOP..........

702,200 5,20% Series...

63,277 5,000,000 2.498,253 820,752 601,948 167,748 8,000,000 1,906,474 1.053,413 591,084 198.483 (d) Transactions in the capital stock accounts dur-ing 1983, 1982 and 1981 reflect the following; Shares of Common Stock were issued through public offerings and stock purchase plans, and the conversion of 79,825, 211,522 and 253,761 shares in the respective years of Preference Stock, 5.20% Convertible Series (5.20% Series) as follows:

Conversion of Preference Stock, 5.20% Convertible Series..........

199,040 Conversion of 12'%onvertible Subordinated Debentures, Due 1997, issued by Southern California Edison Finance Company N.V......

1,600,000 Stock purchase plans...............

8.369.844'otal

. 10.168,884

'These plans include the Dividend Reinvestment and Stock Purchase Plan (DRP), Employee Stock Purchase Plan (ESPP) and Employee Stock Own.

ership Plan (ESOP). The Company has issued 644,542 shares of Common Stock under these plans since December 31 ~ 1983.

$100 Cumulative Preferred 7.325%

7.80%..........

8.54%..........

8 70%A.........

12.00%..........

12.31 %..........

Preference 7.375%.........

30,000 15,000'2,500 13,125 22,500 35,000 496,000 7/31/83 11/30/83 6/30/86 6/30/85 12/31/86 4/30/88 2/01/85

$ 3,000 1,500

$ 4.500

$ 3,000 1,500 1,313 12.400

$18.213

$ 3,000 1,500 2,250 1,313 2,250 12.400

$22,713

$ 3,000 1,500 2,250 1,313 2,250 12.400

$22.713

$ 3,000 1,800 2,250 1,313 2,250 3,500 12>400

$26,513 (e) For Preferred and Preference Stock with Mandatory Redemption Requirements, the aggregate manda.

tory redemption requirements for the five years subsequent to December 31, 1983 are as follows:

No. of Thousands of Dollars Shares 1985 1986 1987 1988 Commencing 1984

• Increases to 18,000 shares beginning in 1988.

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

Southern California Edison Company statements of Long-term Debt Issue and Maturity Interest Rates Thousands of Dollars December 31 ~

1983 1982 First and Refunding Mortgage Bonds (a) (c) (d):

Due 1983 through 1987 Due 1988 through 1992 Due 1993 through 1997 Due 1998 through 2002 Due 2003 through 2007.

Due 2008 through 2021 First Mortgage Bonds (Calectric) (a) (c)

Due 1984 through 1991 Promissory Notes Due 1983 Promissory Notes (b) (c) Due 1986 through 1997.

Pollution Control Indebtedness (d).

Principal amounts outstanding Long term debt due within one yearnet (c)

Unamortized debt premium or (discount)-net..

Securities held by trustees (d)

Other long. term debt (e).

Total long. term debt.

4'/i%%uo-10%

4Vrr%-1 59/6%

6%%-89/s%

7%-8'/s%

8r/s%- 1 5'/e%

9%-16%%uo 3'/i%-5%%

5%%

f 1%-1 6'%%%

511>800 615,000 600,000 515,030 813,000 834,300 31889,130 60,000 450,000 92,500 4>491,630 (831000)

(201996)

~136>,99 4,0251737 26,099

$4,051,836 561,800 615,000 600,000 515,030 705,000 763.300 3,760,130 60,000 3,500 375,000 92.500 4,291

~ 130 (53,500)

(22,024)

(245.206) 3,970,400

$3,970,400 (a) The authorized principal amount of each series of First and Refundirlg Mortgage Bonds is equal to the amount outstanding. The Trust Inden-ture under which these bonds are Issued permits the issuance from time to time of additional bonds, including additional bonds equal in principal amount to bonds retired, pursuant to the restric-tions and conditions contained therein. Substan-tially all of the properties of the Company are subject to the lien of the Trust Indenture. The Trust Indenture requires semi-annual deposits with the Trustees of 1%% of the principal amount of the Compat)y's outstanding First and Refunding Mort.

gage Bonds and the Calectric First Mortgage Bonds, The Calectric Indenture requires an annual cash deposit with the Trustee of 1% of the prin.

cipal amount of Caiectric First Mortgage Bonds issued or 166%% of.such amount if property additions are used to satisfy the annual deposit requirements.

In addition, an amount equivatent to the excess of 15% of defined operating revenues over costs of maintenance of the property subject to the lien of such indenture is required to be deposited with the Trustee annually. These deposit requirements of such indentures may be or have been satisfied by property additions and replace-mentsand by delivery and cancellation of bonds outstanding under the applicable indenture.

(b) Promissory Notes payable to Southern Califor.

nia Edison Finance Company N.V. (Finance) have been issued fn exchange for the proceeds from the issuance of Debentures by Finance. Payment of the principal and interest on $400,000,000 and

$50,000,000 principal amount of the Debentures are, respectively, unconditionally guaranteed and guaranteed on a subordinated basis by the Com-pany. The Subordinated Debentures are convert-ible Into the Company's Common Stock.

(c) Maturities and sinking fund requirements of long-term debt for the five years subsequent to December 31, 1983 are as follows'.

Thousands of Dollars Year Ended Sinking Fund December 31.

Maturities Requirements Total 1984.......... $ 83,000

$ 83,000 1985...,......

96,000 5,250 101,250 1986....,.....

113,000 5,250 118,250 1987..........

196,000 5,250 201,250 1988..........

122,000 5,250 127,250 (d) First and Refunding Mortgage Bonds and other indebtedness have beenissued to different municipalities and other governmental agencies in exchange for the proceeds from the issuance of Pollution Control Revenue Bonds and Pollution Control Revenue Refunding Bonds. The Company is obligated to pay the principal and interest on these bonds, The proceeds have been deposited with Trustees and are being utilized to defray the construction and other specified costs of pollution control facilities and retirement of maturing issues.

During February 1984, the Company plans to enter into a loan agreement with the California Pollution Control Financing Authority pursuant to which the Company willbe obligated to pay principal and in-terest on approximately $195,000,000 principal amount of the Authority's Floating Rate Monthly Demand Pollution Control Revenue Bonds. The proceeds of the Authority's bonds willbe used to reimburse the Company for certain costs incurred for air and water pollution control and solid waste disposal facilities at the San Onofre Nuclear Generating Station.

(e) Pursuant to the Nuclear Waste Policy Act of 1982 (Act), the Company has entered into a con-tract with the U.S. Department of Energy for dis-posal of spent nuclear fuel for the San Onofre Nu-clear Generating Station. For nuclear generation prior to April 7, 1983, the Act provides for a one-time fee equivalent to an average charge of 1.0 mil per kilowatt hour. Interest on the one. time fee is accrued and compounded quarterly at the rate of the first 13.week Treasury Billissuance in each calendar quarter as published by the Federal Re-serve, The weighted. average rate used for the year ended December 31 ~ 1983, was 8.39%. The Act does not require selection of payment method until June 30, 1985.

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

31

Southern California Edison Company Notes to Financial Statements Note1 Summary of Significant Accounting Policies General-The Company is a public utilityprimarily engaged in the business of supplying electric energy in portions of central and southern California, excluding the City of Los Angeles and certain other cities. The accounting records of the Company are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC) and adopted by the California Public Utilities Commission (CPUC).

UtilityPlant-The cost of additions and replacements of retirement units of property is capitalized and included in utilityplant. Such cost includes labor, material, indirect charges for engi-neering, supervision, transportation, etc., and an allowance for equity and borrowed funds used during construction (AFUDC). The amount of AFUDC capitalized is also re-ported in the Statements of Income as a reduction of inter-est charges for the borrowed funds component of AFUDC and as other income for the equity funds component. AI-though AFUDC increases net income, it does not represent current cash earnings. The AFUDC rate, which is based upon a formula prescribed by the FERC, was 9.95/0, 9.20k, and 8.77/o for the years1983,1982,

and1981, respectively.

The cost of minor additions and repairs is charged to maintenance expense and the original cost, less net sal-vage, of retired property units is charged to accumulated depreciation.

Property-related accumulated deferred income taxes re-flect the consumption of the value of plant and equipment to which they relate and have been deducted from utility plant. This treatment is consistent with the method utilized in ratemaking proceedings to determine the rate base upon which the Company is entitled to earn a return.

Depreciation-For financial reporting purposes, depreciation of utility plant is computed on a straight-line remaining life basis and approximated 4.1 /o, 3.6/o and 3.6/o of average depre-ciable plant for the years 1983, 1982 and 1981, respec-tively. The Company's rates are designed to recover the original cost of utilityplant, including the estimated decom-missioning costs for the San Onofre Nuclear Generating Station (San Onofre) units in service, through depreciation expense over the estimated remaining useful lives of the facilities. As of December 31, 1983, rates reflected the estimated decommissioning cost of $173,415,000 appli-cable to San Onofre Units 1 and 2.

Income Taxes Accounting policies with respect to income taxes and related investment tax credits are set forth in Note 5.

Debt Premium and Discount Debt premium or discount and related expenses are amortized to income over the lives of the issues to which they pertain.

Revenues and Regulatory Balancing Accounts Customers are billed monthly on a cycle basis and reve-nues are recorded when customers are billed. As autho-rized by the CPUC, the Company has established several regulatory balancing accounts which remove the effect on earnings of fluctuations in kilowatt-hour sales, fuel and purchased power costs and certain conservation program expenses.

Effective January1, 1983, an Electric Revenue Adjustment Mechanism was established to account for dif-ferences between authorized and recorded base rate rev-enues caused by, among other things, fluctuations in kilowatt-hour sales levels. The Energy Cost Adjustment Clause (ECAC) balancing account is used by the Com-pany to record monthly entries to adjust the results of op-erations for variations between 90/o of recorded fuel and purchased power costs and those included in rates billed to customers. Such variations are deferred and accumu-lated in the balancing account until they are refunded to, or recovered from, utilitycustomers through CPUC-au-thorized rate adjustments.

ECAC-related fuel and pur-chased power costs include incurred transportation and interim storage costs related to spent nuclear fuel. The Company has been authorized Annual Energy Rate (AER) revenues to recover 10/o of forecasted fuel and purchased power costs. The ECAC balancing account is used to re-cord monthly AER entries to adjust the results of operations for variations, between such costs and the AER revenues, in excess of $43,400,000 on an annualized basis as of December 31, 1983, A Major Additions Adjustment Clause (MAAC)has been established to include in rates the cost of owning and operating San Onofre Unit 2. The rates became effective October 9, 1983 and were subsequently increased, effec-tive January 1, 1984. Under MAAC, a balancing account is utilized to record differences in investment-related costs and rates authorized by the CPUC to cover such costs.

The CPUC has also established a performance incentive plan for San Onofre Unit 2 which sets a target capacity factor range of 55% to 80/0. The fuel savings or costs for operations above or below the target capacity factor range will be split equally between the Company's shareholders and customers.

32

Southern California Edison Company Interest is accrued on the regulatory balancing accounts at the most recent three-month prime commercial paper rate as published by the Federal Reserve. The weighted-average rate used for the year ended December 31, 1983 was 8.85%%d.The incom e taxeffectso f theregulatory balancing account variations are deferred. Billed revenues and incurred balancing account costs are utilized in the determination of taxable income.

Subsidiaries-The Company's investments in unconsolidated subsidiary companies, all of which are wholly-owned, are accounted for by the equity method except for the Company's sub-sidiaries engaged in Eurodebenture financings. For these subsidiaries, cash investments and short-term borrowings are presented separately on the balance sheet of the Company. None of the Company's other wholly-owned sub-sidiaries are considered significant for financial report-ing purposes.

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

After providing for cumulative preferred and preference stock dividend requirements, effect is given to the par-ticipating provisions of the Original Preferred Stock and Common Stock Equivalents for funds held for the purchase ofCompany Common Stock by the Employee Stock Pur-chase Plan Trustee in each period. The dilutive effect on earnings per share of the conversion of the 5.20/o Con-vertible Series Preference Stock issued by the Company and the 12'/2%%d Convertible Debentures issued by Southern California Edison Finance Company N.V., an affiliate of the Company, is not significant.

Reclassifications-The amounts shown for Common Stock are presented at par value. Amounts in excess of par value are included in Additional Paid-in Capital. Prior period amounts have been reclassified to make them comparable to the classifica-tions at December 31, 1983. Certain other items have been reclassified in prior periods to make them comparable to the classifications at December 31, 1983.

Note 2Commitments and Contingencies Construction Program and Fuel Supply-The Company has significant purchase commitments in connection with its continuing construction program.

As of December 15, 1983 (the date of the Company's latest approved budget), funds required for construction expenditures are estimated at $1,023,000,000 for 1984,

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

Minimum long-term commitments of approximately

$1,600,000,000, exclusive of the Chevron contract dis-cussed below, existed on December 31, 1983 under the Company's fuel supply and transportation arrangements.

Nuclear Waste Policy Act-Pursuant to the Nuclear Waste Policy Act of 1982 (Act), the Company, acting as agent for the San Onofre Participants, has entered into a contract with the U.S. Department of Energy (DOE) for disposal of spent nuclear fuel for San Onofre Units 1, 2 and 3. The Company estimates that, be-fore reduction to present value, the Company's portion of the obligation under this contract would approximate

$340,100,000 over the lives of its nuclear generating units at San Onofre. The amount charged to income for the year ended December 31, 1983 was $2,185,000. There were no charges to income'for this fee in 1982 or 1981. Recovery of the expenses associated with disposal of spent nuclear fuel was authorized through base rates until December 31, 1983. Effective January 1, 1984 such costs will be re-covered through the Company's ECAC procedures.

Fuel Supply Litigation-The Company entered into a contract (for the period Janu-ary1, 1978 through June 30, 1986) with Chevron U.S.A.

Inc. (Chevron) to purchase fuel for generation. Due to en-vironmental, economic, regulatory and other factors, the Company reduced, and then suspended (commencing April 1, 1982), its fuel deliveries under the contract. On May 19, 1982, the Company sent a notice to Chevron which, among other things, terminated the contract effective June 24, 1982. Chevron disputes the effectiveness of this notice.

On July 26, 1982, the Company sent an additional notice to Chevron which, while preserving the Company's rights under the May 19 notice, gave notice of termination under two other sections of the contract, which terminations became effective as of October 25, 1982 and January 31, 1983, respectively.

On April30, 1982, Chevron filed an action against the Company in the Superior Court of the State of California for the City and County of San Francisco for declaratory relief and breach of contract. Chevron alleged that the Company has no contractual basis to reduce below certain levels or suspend deliveries of fuel, or terminate the contract. Chev-ron did not specify the amount of damages alleged to have been incurred. Chevron did seek a ruling that the Com-pany would be obligated to pay a "facilitycharge" (ap-proximately $8,300,000 a month) during the remaining contract term. The Company disagrees with Chevron's in-terpretation of the contract and with many of Chevron's allegations. The Company believes that it has substantial affirmative defenses and intends to vigorously defend the Chevron action.

33

Southern Calilornia Edison Company Notes to Financial Statements (Continued)

On August 2, 1982, the Company filed a cross-complaint against Chevron seeking, among other things, a declara-tory judgment that the Company properly and effectively terminated the subject contract and the return from Chev-ron of approximately $12,000,000 in underlift payments made by the Company to Chevron in the last half of 1981 on a provisional basis.

On October 28, 1983, Chevron filed a motion for a sum-mary judgment that the Company is obligated to pay the facilitycharge throughout the term of the contract. The motion is set to be heard on April 4, 1984.

If Chevron is finallysuccessful in pursuing its present posi-tion and if rate recovery of the Company's costs under or resulting from the contract is not allowed, the Company's financial exposure would be material. Although the Com-pany cannot predict with certainty whether the CPUC and the FERC willallow the Company to recover its costs under or,resulting from the contract, the Company expects to in-clude any such costs in existing or special fuel cost recov-ery proceedings and believes that such costs are a proper item for recovery through rates.

Nuclear Insurance-ghe Price-Anderson Act currently limits the public liability claims that could arise from a nuclear incident to a max-imum amount of $580,000,000 for each licensed nuclear facility. The Company and the co-owners of San Onofre have purchased primary insurance for this exposure in the maximum available amount, presently $160,000,000, with the balance to be provided by secondary financial protec-tion required by the Nuclear Regulatory Commission (NRC). Under the agreement with the NRC, the Company could be assessed retrospective premium adjustments, of up to $30,000,000, in the event of nuclear incidents involv-ing any licensed reactors in the United States.

Property damage coverage is provided for losses up to

$500,000,000 at San Onofre. The Company has also pur-chased decontamination liabilityand property damage insurance in excess of the primary $500,000,000 layer.

Insurance to cover a portion of the additional expense of replacement power resulting from an accident-related outage of a nuclear unit is also provided. A maximum weekly indemnity in the amount of $2,500,000 for a single unit for 52 weeks commences after the first 26 weeks. An additional $1,250,000 per week is provided for the next 52 weeks. These policies are primarily provided through mutual insurance companies owned by utilities with nu-clear facilities. If losses at any nuclear facility covered by the arrangements were to exceed the accumulated funds available for these insurance programs, the Company could be assessed retrospective premium adjustments of up to $114,800,000.

The premiums for the insurance policies discussed above are charged to Operating Expenses currently unless they relate to facilities under construction, in which case the premiums are charged to construction work in progress. At December 31, 1983, the nuclear insurance coverages for San Onofre are summarized as follows:

Millionsof Dollars Maximum Annual Maximum Retrospective Coverage Assessment Type and Source of Coverage Public Liability:

Private Insurance

$ 160.0 Nuclear Regulatory Commission Assessments..

420.0

$ 580.0 30,0 30.0 Property Damage Excess Property Damage and Decontamination Liability.....

Replacement Power.

$ 500.0 96.0

$ 493.0 11.0

$ 195.0 7.8 Government Licenses-The terms and provisions of licenses granted by the United States cover the Company's major and certain minor hydroelectric plants, with a total effective operating capacity of 897.5 megawatts. These licenses also cover certain storage and regulating reservoirs and related transmission facilities. AIIof the above licenses expire at various times between 1984 and 2009. The licenses contain numerous restrictions and obligations on the part of the Company, including the right of the United States to acquire Company properties or, under certain conditions, the FERC to issue a license to a new licensee upon the payment to the Company of specified compensation. Applications of the Company for the relicensing of certain hydro-electric plants referred to above with aggregate effective operating capacity of 31.8 megawatts are pending. Any new licenses to the Company are expected to be issued upon terms and conditions less favorable than those of the expired licenses.

Resa/e Revenues Pursuant to FERC procedures, on February1, 1976, August 16, 1979, July 16, 1981, June 2, 1982 and October 9, 1983, increases in the Company's resale rates became effective, subject to refund with interest to the extent that any of the increases are subsequently determined to be inappropri-ate. Effective May 2, 1974, a Fuel Cost Adjustment Clause (FCA) was added to the Company's resale rates and has been modified concurrent with the subsequent base rate increases beginning with the February 1, 1976 increase. As of December 31, 1983, revenues subject to refund, after giving effect to incremental FCA billing credits, aggregated approximately $383,000,000. The Company believes that, based on present facts, the amount of refunds, if any, likely to result from the outstanding proceedings would not Pave a material effect on net income.

34

Southern California Edison Company Legal Matters-In March 1978, five resale customers filed a suit against the Company in federal court alleging violation of certain antitrust laws. The complaint seeks monetary damages, a

trebling of such damages and certain injunctive relief. The complaint alleges that the Company (i) is engaging in anti-competitive behavior by charging more for wholesale electricity sold to the resale customers than the Company charges certain classes of its retail customers ("price squeeze"), and (ii) has taken action alone and in concert with other utilities to prevent or limitsuch resale customers from obtaining bulk power supplies from other sources to reduce or replace the resale customers'holesale pur-chases from the Company ("foreclosure" ). The plaintiffs have estimated their actual damages for alleged price squeeze before trebling at approximately $22,700,000; alleged foreclosure damages before trebling at approxi-mately $37,900,000 through July 31, 1982; and have pro-jected damages before trebling for the period August 1, 1982 to July 31, 1985 ranging from approximately

$12,100,000 to $33,700,000.

It is estimated that the trial will begin sometime in late 1984. The foregoing proceedings involve complex issues of law and fact and, although the Company is unable to predict their final outcome, it has categorically denied the allegations of these resale customers.

Note 3Leases Rental payments charged to operating expenses amounted to $61,714,000, $39,542,000 and $39,087,000 for 1983, 1982 and 1981, respectively.

The Company leases nuclear fuel to meet its energy re-quirements. Under the terms of the lease agreement, quar-terly payments are based upon consumption of the nuclear fuel and are designed to return to the lessor the accumu-lated investment in nuclear fuel and a financing charge on unrecovered costs. Such quarterly payments are recoverable through the Company's ECAC procedures.

The nuclear fuel lease and certain other leased property would meet the criteria requiring capitalization under gen-erally accepted accounting principles. However, since these leases are treated as operating leases for ratemak-ing purposes, they have been accounted for in the same manner. If such leases had been capitalized, related assets and liabilities of approximately $533,900,000 and

$489,600,000 would have been recorded at December 31, 1983 and December 31, 1982, respectively. The difference between imputed interest expense and depreciation for these capital lease properties and actual recorded lease expbnse is not material.

At December 31, 1983, estimated rental commitments for unrecorded capital leases and noncancelable operating leases consisted of the following:

Year Ended December 31 Thousands of Dollars Capital Operating Leases(a)

Leases 1984.

1985..

1986.

1987 1988.

For periods thereafter.

Total future rental commitments (b)....

Less amount representing interest......

present value of future minimum rental commitments

$ 7,503 4,774 2.764 789 172 4,301 20,303 (2,418)

$17,885

$24,729 13.020 10.708 8.790 7.029 13,274

$77,550 (a) Excludes nuclear iuel, the cost base of whichis payable when the fuel is consumed. The unrecovered cost base of the nuclear fuel lease was approximately $516,000,000 at December 31. 1983.

(b) As a result of amendments to certain leases during 1983. lease commit-ments in the amount of $52.775,000 as of December 31, 1983 have been reclassified from capital leases to operating leases.

The Company has an additional $150,000,000 line of credit which may be utilized only for the purchase of fuel oil through the use of bankers'cceptances.

Notes issued under this agreement are secured by a pledge of the Com-pany's fuel oil inventory.

~ The Company has guaranteed commercial paper (in-cluded on the Company's balance sheet) issued by its wholly-owned subsidiary engaged in financings. Proceeds from the issuance of the commercial paper are used for capitalization of an affiliate engaged in Eurodebenture bor-rowings. The lines of credit available for the issuance of commercial paper amounted to $150,000,000 at December 31, 1983 and $103,600,000 at December 31, 1982. Com-mercial paper issued in excess of the subsidiary's lines is supported by the Company's lines of credit.

Note 4Short-term Borrowings In order to continue lines of credit with various banks, the Company presently maintains deposits aggregating ap-proximately $12,000,000 which are not legally restricted as

'o withdrawal. The lines of credit, which are also available to support commercial paper, amounted to $552,000,000 as of December 31, 1983 and December 31, 1982. In addition, the Company also has lines of credit totaling

$10,000,000 as of December 31, 1983 and $35,000,000 as of December 31, 1982, which may be utilized for general corporate purposes 35

Southern California Edison Company Notes to Financial Statements (Continued)

Short-term borrowings and the weighted average interest rates for the balances outstanding were as follows:

Short ~term Borrowfngs (Thousands of DoIIars)

December 31, 1983 1982 Weighted Average Interest Rate December 31, 1983 1982 Southern California Edison Co.:

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

Pollution control loan payable..

Securities held by a trustee,...

Total.

Financing Subsidiary:

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

Commercial paper payable....

Total.

S 6,006 50,000 (12,336)

S 43.670 154,300

$ 154,300

$ 23,992

$ 23,992

$ 18,600 104. 700

$ 123.300 9.6%

8.9%

6.6%

16 1%

9.5%

8.7%

Note 5Income Taxes As of January 1, 1983, the Company has been providing deferred income taxes for ACRS property under provisions of the Economic Recovery Tax Act of 1981 (ERTA) and pur-suant to CPUC requirements. The amount of deferred taxes is based upon the difference between tax deprecia-tion and depreciation of tax basis using book methods and lives. The deferred tax provisions also applied, in part, in 1982 under transitional rules, but were not applicable to 1981.

Under provisions of ERTA, all Investment Tax Credits (ITC) generated after 1982 are being deferred and amortized as reductions to income tax expense ratably over the lives of the property giving rise to the credits. Prior to 1983, the Company only deferred the additional ITC permitted by the Tax Reduction Act of 1975 and the Tax Reform Act of 1976.

That portion of ITC available under prior law was applied as a current reduction of income tax.

Interpretive regulations are yet to be issued with respect to certain provisions of the Tax Equity and Fiscal Responsi-bilityAct of 1982 (TEFRA) which have an impact on the Company. Major provisions affecting the Company include (i) the current deductibility of interest and property taxes Deferred income taxes are provided for certain net in-

'reas'es or decreases in income tax expense which result from'reporting certain transactions for income tax pur-poses in a period different from that in which they are repoited in the financial statements.

The major items for which'deferred income taxes are provided are the tax effects of regulatory balancing account provisions, depre-ciation related to plant additions after December 31, 1980 (Accelerated Cost Recovery System (ACRS) property),

and r'esale revenues.

In accordance with CPUC require-ments, deferred income taxes are not provided for other differences.

incurred during construction of real property and (ii) a requirement to reduce tax basis for one-half of the ITC utilized after 1982, or to reduce the amount of ITC from 10% of an asset's cost to 8%. Net income reflects the Com-pany's estimate of the impact of the TEFRA piovisions. It is believed interpretive regulations willnot substantially change the impact already reflected.

The current and deferred components of income tax ex-pense are as follows:

Current:

Federal state...

t Thousands of Dollars Year Ended December 31, 1983 1982 1981 178.246 140,350 44,800 58,655 55,621 25,629 236,901 195,971 70,429 Deferred-Federal and State:

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

Accelerated cost recovery system property...............

Regulatory balancing accounts...

Other.

69,416 64,612 131)233 51,673 (3,919)

(192,726)

(53,555)

(42,934) 47,386 26,548 (759)

Total income tax expense..

143,175 (119,375) 73,175

.. $ 380,076 76,596 143,604 Total income tax expense differed from the amount com-puted by applying the Federal statutory tax rate of 46% to income before income taxes for the following reasons:

Thousands of dollars Expected federal income tax expense at statutory rate s

Increase (Decrease) in income tax expense resulting from:

Allowance for equity and borrowed funds used during construction.............

Federal deduction for state taxes on income....................

Depreciation timing differences not deferred........................

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

Administrative and general expenses capitalized................

Nuclear fuel lease interest capitalized,...

Taxes capitalized......................

State tax provision.....................

Allother differences...................

Year Ended December 31, 1983 1982 1981 492,594 S

290,861 S

291,398 (168.294)

(139,434)

(106,974)

(24,712)

(5,518)

(14,253) 45.732 (7,174)

(16,626)

(3.940)

(10,273) 53,723 19,046 (33)

(31,502)

(13,449)

(20,555)

(20,721) 11,997 4,950 10,176 (27,232)

(9,756)

(18,917)

(14,877) 30,985 3,054 Total income tax expense..............

S 380.076 76,596 143.604 Pretax income S1,070,856, $

632.350 633.516 Effective tax rate (Total income tax expense

+ Pretax income).....................

35.5%

12.1%,

22.7%

Income taxes included in operatingexpenses...................

497,236 S

177,251 S

197,865 Income taxes included in other income....

(117,160)

(100,655)

(54,261)

Total income tax expense..'..............

S 380,076 76,596 S

143,604 36

Southern Calilornia Edison Company R&Dcosts charged to expense..

R&Dcosts capitalized-net.....

Total R&D expenditures.........

$32.588 11,687 S44,275

$25.998 24,218

$50.216

$26,542 32.047

$58.589 Note 7Employee Benefit Plans Pension Plan-The Company's current pension program, which covers substantially all employees, is based on a trusteed pen-sion plan, which is non-contributory by employees. The annual normal cost of the plan is funded by the Company with contributions determined on the basis of a level pre-mium funding method. Unfunded prior service costs relating to a 1982 plan amendment are being amortized over a 30-year period. Pension costs are reserved for on the basis of actuarial determinations and amounted to

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

Note 6Research and Development Research and Development (R8 D) costs are expensed currently if they are of a general nature. Plant-related R8 D costs are accumulated in construction work in progress until a determination is made as to whether such projects will result in construction of electric plant. If no construc-tion of electric plant ultimately results, the costs are gen-erally charged to Other Operation Expenses.

Thousands of Dollars Year Ended December 31.

1983 1982 1981 who have attained age 50 may allocate their contributions into various investment programs. The SSPP replaced the Employee Stock Purchase Plan (ESPP), which was in effect through December 31, 1983 and utilized employee contributions consisting of after-income-tax dollars.

The Company's contributions to the ESPP amounted to

$5,639,000, $4,687,000 and $4,452,000 for 1983, 1982 and 1981, respectively.

Note 8Quarterly Financial Data The following table presents quarterly financial data for the four quarters of the years 1983, 1982 and 1981:

First Quarter Second Quarter Third Quarter Fourth Quarter Employee Stock Ownership Plan-The Company has an Employee Stock Ownership Plan (ESOP) through which, prior to 1983, the Company was al-lowed to claim additional 1/o and '/2'/o ITC with employees matching the I/2/o ITC. Under provisions of ERTA, the method of funding employee stock ownership plans was changed effective January 1, 1983 from the method based upon ITC's to a payroll tax credit method based upon a specified percentage of total Company payroll. Funding through these payroll based credits may not exceed

'/2o/o of total payroll for 1983 and 1984, '/4'/o for 1985-1987, and is eliminated after 1987. There will be no employee con-tributions to the Plan.

Thousands of Dollars January 1, 1983 (a) 1982 Actuarial present value of accumulated plan benefits:

Vested

$515,134 Nonvested 25.357

$540,491 Net assets available for plan benefits............

$624,917 (a) Latest available data.

$449.580 22,123

$471,703

$507,966 An actuarial rate of return assumption of 6.5/o was used in determining the actuarial present value of accumulated plan benefits as of January 1, 1983 and January 1, 1982.

Stock Savings Plus Plan-The Stock Savings Plus Plan (SSPP), adopted to supple-ment employees'ncome after retirement, became effective on January1, 1984. The SSPP allows eligible employees to contribute up to11%%d of their regular monthly base pay, using before-income-tax dollars, to a trustee for the pur-chase of Company Common Stock. The Company contrib-utes to the SSPP an amount equal to one-half of the first 6%

of the employees'ontributions, less forfeitures. Participants 1983 Operating Revenues (000).....

Operating Income (000).......

Net Income (000).............

Earnings Available for Common and Original Preferred Stock (000)........

Earnings Per Share...........

1982 Operating Revenues (000).....

Operating Income (000).......

Net Income (000).............

Earnings Available for Common and Original Preferred Stock (000)........

Earnings Per Share......,....

1981 Operating Revenues (000).....

Operating Income (000).......

Netlncorne (000).............

Earnings Available for Common and Original Preferred Stock (000).......,

Earnings Per Share...........

150,538 1.54 154,176 1.56 173,735 1.74 138,854 1.38 1,129,236 111,451 124,691 1.047,426 120,636 126,786 1,110,617 169,066 166,858 1,015,323 135,574 137,419 107,765 1.18 108,338 148,250 1.15 1.55 119,004 1.23 908.514 105,724 100,167 983,848 121,409 113,939 1,122,674 1,039,320 150.996'13,026 147,944 127.862 83,158 1.00 96,965 130,985 1.13 1.51 110,917 1.27

$1,040,773

$1.045,247

$1.248.670

$1.1 29,566 161,636 161,440 171,271 209,683 168,948 172.576 192,077 157,179 37

Southern California Edison Company Notes to Financial Statements (Continued)

Note 9Jointly-Owned UtilityProjects The Company owns undivided interests in several jointly-owned generating stations and transmission systems for which each participant must provide its own financing. The Company's proportionate share of expenses pertaining to such projects is included in the appropriate category of operating expenses in the Statements of Income. In the table below, the amounts represent the Company's invest-ment for each such project as reported on the Balance Sheets:

but permit the accrual of an Allowance for Funds Used During Construction. As indicated in its response to the CPUC investigation, the Company believes that Unit 1 should remain in customer rates. Commencing January 1, 1984, all rates authorized for Unit 1 operation and own-ership costs are being collected subject to refund pending completion of the CPUC's investigation. As of December 31, 1983, the Company's undepreciated book cost, includ-ing nuclear fuel, for this Unit was $327,900,000 excluding the provision for decommissioning costs.

'rojects Bra+lay Geothermal Generating 51 Dorado Transmissen System.......,

Four Corners Coal Generating Station-

, Ursts4 6 5..............,........

Mohave Coal Generating Station.......

Paci'! io Intertie DC Tfansmisskxr System......................-.

~ ~ ~

Palo Verde Nuclear Generating Station..

San Onorre Nucleal Generating Slalion' Unitfr......,...,................

Units263........................

common FaaTtkrs Units 28 3...,.

CommonFaciritles-Units 1.2. 8 3...

Solar One Generating Station..........

Yuma Axis Combined Cycle Generating Stat'on...........................

<a) Represents a composite rate.,

6.307 21.046 204,470 196.386 69.475 906 4,099 6,192 42.633 58.738 22.661 2

184 50.0%

66 60.0(a) 118.281 48.0 3,467 560 14,447 50.0 935.678 15.8 242,383 1,445.070 380.950 76.276 17.660 12.354

$2.673.283 72,815 20.348 5.645 5,111 5.522 8.026

$251,792 121,974 80.0 1.382.466 75.05 2.369 75.05 33.487 75.87

. 513 80.0 17 333

$2,612.949 Thousands of DorrarS December 31, 1983 Utility Cons uuclion plant in Accumulated work in ownership Service Depreciation Progress Interest Note10 Long-term Purchased Power and Transmission Contracts Under firm contracts, the Company has agreed to pur-chase portions of the generating output of certain facilities and to purchase firm transmission service where appro-priate. Although the Company has no investment in such facilties, these contracts provide that the Company pay

, certain minimum amounts (which are based at least in part on the debt service requirements of the supplier) whether or not the facilityor transmission line is operating, None of these power contracts provides, or is expected to provide, in excess of five percent of the Company's current or es-timated future operating capacity. The cost of power and firm transmission service obtained under the contracts, in-cluding payments made when a facilityor transmission line is not operating, is included in Purchased Power and Other Operation Expenses, respectively, in the Statements of In-come. Purchased power costs are recoverable through the Company's ECAC procedure. Certain information as of De-cember 31, 1983, pertaining to purchased power cont(acts is summarized in the following table:

Unit.1 at San Onofre has been out of service since Feb-ruary1982 for NRC required inspections and for various plant modifications. The return to service'date of Unit1 is currently under evaluation and is chiefly contingent on reaching an agreement with the NRC on specific seismic modifications to prove earthquake resistance and other long-range NRC requirements.

Because of this extended outage, the CPUC recently began an investigation to de-termine whether Unit 1 should be removed from customer rates while the plant modification issues are being re-solved with the NRC. A recently filed CPUC staff motion in this proceeding, if adopted by the Commission, would re-move the Unit 1 return component from customer rates, Dollars in Thousands

$ 5,326 Share of Effective Operating CapacityMegawatts (MW)(a) 718.5 Share of EnergyOutput..............

7.9%-1 4.6%

Total Estimated Annual Cost.,

~

$46.956 Company'8 Portion of Estimated Annual Cost Applicable to Supplier'8 Annual MinimumDebt Service Requirement Company'8 Allocable Portion of Interest of Suppliers included in Annual MinimumDebt Service Requirement..

$ 3,465 Related Long.term Debt or Lease Obligations Outstanding of Company None (a) Effective operating capacity may vary according to water availability and other conditions, The Company has agreed to certain reductions in its share of operating capacity prior to the expiration date of a certain contract.

38

Southern Caiiiornia Edison Company Additional information as of December 31, 1983 pertaining to both purchased power and transmission service con-tracts is summarized in the following table:

Dollars in Thousands Purchased Transmission Power Service Dates of Expiration........................

Variable Components of Contracts..........

Required Future Minimum Annual Payments 1984.

1985...

1986.

1987.

1988..

Later years.

Total.....

Less Amount Representing Interest to Reduce Total to Present Value............

Total at Present Vafue..

1984-1987 (a) 9,593 1,560 1,644 723 13,520 (461)

. $ 13,059 1984-2016 (a) 7,000 5.920 5.905 5,890 5,875 155,682 186.272 (115,649)

$ 70,623 Total Purchases for the Years Ended December 31, 1983.

$ 49,263

$.7,595 1982...

39,414 7,409

1981, 36,603 7,658 (a) Tlute variable components of certain contracts are based upon a pro rata share of actual operating, maintenance, and fuel costs or on the U,S, Government cost of service.

Supplementary Information to Disclose the Effects of Changing Prices (Unaudited)

The Company's primary financial statements are stated on the basis of historical costs in accordance with generally accepted accounting principles. During periods of signifi-cant changes in price levels, amounts reported on this basis reflect dollars of varying purchasing power and accordingly do not measure the effects of inflation. The following supplementary information is presented in accordance with the requirements of the Financial Accounting Standards Board (FASB) for the purpose of providing certain information about the effects of both gen-eral inflation (represented by constant dollar amounts) and changes in specific prices (represented by current cost amounts).

This information inherently involves the use of assump-tions, approximations and estimates, and therefore, should be viewed in that context and not as precise measure-ments of'the effects of inflation on the Company.

Thousands of Dollars Statement of Earnings Available for Common and Original Preferred Stock Adjusted for Changing Prices for the Year Ended December 31, 1983 As Reported in the Primary Financial Statements Adjusted For General Inflation (a)

(Constant Dollar)

Adjusted For Changes in Specific Prices (a)

(Current Cost)

Total Operating Revenues Operating Expenses:

'e'preciation Other operating expenses.

Other income.

Net interest charges Dividends on cumulative preferred and preference stock...

289,361 3,470,864 (429,101) 442,352 73,477 667,000 3,470,864 (429,101) 442,352 73,477 774,000 3,470,864 (429,101) 442,352 73,477

$4,x)64,256

$4,464,256

$4,464,256 3,846,953 4,224,592 4,331,592 Earnings available for, Common and Original Preferred Stock (excluding adjustment of utilityplant to net recoverable cost) 617,303 239,664(b) 132,664 Other Adjustments For Changing Prices:

Increase in specific prices (current cost) of utilityplant held during year (c)

Adjustment of utilityplant to net recoverable cost:-

Effect of'increase in general price level on utilityplant................

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

Gain from decline in purchasing power of net amounts owed..........

42,642 612,563 188,764 (651,685) 149,642 201,633 201,633 (a) In average 1983 dollars.

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

(c)gt December 31 ~ 1983, current cost of utitity plant, net of accumulated depreciation (but exclusive of deferred income taxes) was $18.015,435 while related historical cost and net recoverable cost was $9.460,242.

39

Southern California Edison Company Supplementary fnformation(Continued)

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

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

$4,464,256

$4,302,602

$4,054,356

$3,661,117

$2,563,974

$4,464,256

$4,441,012

$4,441,336

$4,426,569

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

As reported In constant 1983 dollars At current cost

$ 617,303

$483,358

$ 239,664

$204,768

$ 132,664

$101,037

$422,024,

$171,116

$ 79,098

$256,586

$292,481

$ 46,604

$166,245

$ (52,540)

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

As reported Iriconstant 1983 dollars At current cost

$6.22

$2.42

$1.34

$5.13

$2.17

$ 1.07

$4.93

$2.00

$.92

$3.50

$.64

$ (.72)

$4.56

$2.59

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

Net Assets at Year End at Net Recoverable Cost As reported In constant 1983 dollars and current cost....

Gain from Decline in Purchasing Power of Net Amounts Owed

$(149,642)

$ (46,736)

$288,586

$506,241

$681,010

$3,793,339

$3,392,864

$2,968,108

$2,529,577

$2,233,133

$3,729,596

$3,438,963

$3,139,607

$2,925,681

$2,898,507

$ 201,633

$212,027

$410,365

$537,908

$620,760 Cash Dividends Declared Per Common Share As reported In constant 1983 dollars

$3.66

$3.64

$3.38

$3.48

$3.10

$3.37

$2.84

$3.40

$2.60

$3.52 Market Price Per Share at Year End In historical dollars In constant 1983 dollars

$39.75

$39.08.

$35.125

$35.85

$28.75

$25.625

$30.41

$29.59

$24.50

$31.80 Average Consumer Price Index (Base Year1967 = 100).

Ia) Excludes adjustment of UtilityPlant to Net Recoverable cost.

298.4 289.1 272.4 246.8 217.4 The amounts adjusted for general inflation represent histor-ical costs of utilityplant restated in terms of dollars of equal purchasing power (constant dollars) as measured by the Consumer Price Index for all Urban Consumers.

This method is intended to measure income after restating all revenues and expenses in dollars of equivalent pur-chasing power.

The current cost amounts reflect the changes in specific prices of utilityplant from the date the plant was acquired to the present, and differ from constant dollar amounts to the extent that prices in general have increased more or less rapidly than specific prices. The current cost of utility plant represents the estimated cost of replacing existing plant assets and was determined by restating its historical cost using indices reported in the Handy-Whitman Index of Public UtilityConstruction Costs. This method is intended to measure income after reflecting the cost of providing the electric service at current price levels.

lr 40

Southern California fdison Company In accordance with procedures specified by the FASH, to-tal operating revenues and all expenses other than depre-ciation were considered to reflect the average price level for the current year and accordingly remain unchanged from those amounts reported in the Company's primary financial statements.

The current year's depreciation ex-pense on the constant dollar and current cost amounts of utilityplant was determined by applying the Company's average annual depreciation rates to the indexed plant amounts.

No adjustments to income tax expense have been made in computing the impact of inflation since only historical costs are deductible for income tax purposes.

Fuel inventories and the cost of fuel consumed in the gen-eration of electricity have not been restated from their his-torical cost. The recovery of fuel and purchased power costs are limited to historical costs through the operation of the Company's energy cost adjustment clauses.

For this reason fuel inventories and deferred recoverable energy costs are effectively monetary assets.

Under ratemaking procedures prescribed by the regula-tory commissions exercising rate jurisdiction over the Company, only the historical cost of utilityplant is recover-Operating Revenues and Kilowatt-Hour Sales able through future depreciation charges. Therefore, the cost of utilityplant, stated in terms of constant dollars or current cost is not presently recoverable through deprecia-tion charges. Accordingly, the difference between such re-stated plant amounts and historical cost is reflected as an adjustment of utilityplant to net recoverable cost. While the ratemaking process gives no recognition to the current cost of replacing utilityplant, based on past ratemaking practices, the Company believes it willbe allowed to re-cover and earn a return on the increased cost of its invest-ment when replacements of utilityplant occur.'uring inflationary periods, holders of monetary assets ex-perience a loss of general purchasing power while holders of monetary liabilities experience a gain. The gain from the decline in purchasing power of net monetary liabilities (net amounts owed) is primarily attributable to the substantial=-

amount of debt which has been used to finance utility plant. To properly reflect the economics of rate regulation, the adjustment of utilityplant to net recoverable cost should be offset or combined, as appropriate, by the gain from the decline in purchasing power of the dollar related to net amounts owed, including Cumulative Preferred and Preference Stock. The Company, therefore, does not have the opportunity to realize such holding gain on net amounts owed.

Class of Service Operating Revenues (Thousands of Dollars)

KilOwatt.HOur SaleS (000)

Residential.............

Agricultural............

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

Industrial..............

Public Authorities.......

Interdepartmental......

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

Sales of Electric Energy............

Other Electric Revenues.

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

%of 1983 total 28.1 1.3 30.0 25.2 8.5 5.8 98.9 1.1 100.0 1983

$1,255,700 56,649 1,337,910 1,126,636, 376,782 109 259,833 4,413,619 50,637

$4,464,256 1982 change

$1,233,338 1.8 68,281 (17.0) 1,226,532 9.1 1,112,784 1.2 370,726 1.6 127 (14.2) 255,162 1.8 4,266,950 3A 35,652 42.0

$4,302,602 3.8

'lo of 1983 total 28.7 1.2 28.0 26.1 8.2 7.8 100.0 100.0 1983 17,173,786 709,094 16,777,503 15,643,149 4,914,422 994 4,673,690 1982 change 16,403,116 4.7 856,929 (17.3) 15,557,692 7.8 15,675,707 (0.2) 5,985,313 (17.9) 1,279 22.3 4,846,817 (3.6) 59,892,638 59,326,853 1.0 59,892,638 59,326,853 1.0 Operating Revenues by Rate Components Rate Components Operating Revenues (Thousands of Dollars)

Percent of Total Base Rates CPUC Jurisdiction..........

Energy Cost Adjustment BillingFactor.....

Annual Energy Rate Major Additions Adjustment Billing Factor..

Other Billing Factors Resale Rates (excluding fringe)..........

Sales of Electric Energy Other Electric Revenues Total 1983

$2,138,011 1,789,474 163,817 29,651 33,189 259,477 4,413,619 50,637 1982

$1,530,389 2,312,442 167,457 1,942 254,720 4,266,950 35,652 1981

$1,487,145 2,161,426 31,704 2,767 343,506 4,026,548 27,808

$4,464,256

$4,302,602

$4,054,356 1983 47 90/

40.1 3.7 0.7 0.7 5.8 98.9 11 100.0 1982 1981 35.6/o 36.6/o 53.7 53.3 3.9 0.8 0.1 0.1 5.9 8.5 99.2 99.3 0.8 0.7 100.0 100.0 41

Southern California Edison Company Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company recorded earnings per share of $6.22 and a rate of return on common equity of 17.0/o in 1983, as com-pared with $5.13 and 14.9o/o, respectively, in 1982.

Several factors were primarily responsible for the improved earnings level achieved by the Company for the year 1983:

~ The general rate increase of $590 million annually which was granted effective January1, 1983, and which autho-rized a rate of return on rate base (CPUC jurisdiction) of 12.55/o and a rate of return on common equity of 16/o.'omparing results for 1983 with 1982, operating revenues increased while total operating expenses decreased with the result that operating income was higher by over 31 /o.

In addition, AFUDC and other income were up by 20/o while interest charges and preferred dividends increased 28/o and 1.5/o, respectively, with the end result that earn-ings available for common and original preferred stock in-creased by 28/o.

The following table presents amounts and percentages of increase (decrease) from the prior years in the rate com-ponents of operating revenues.

~ A continuing emphasis on productivity and cost controls.

Increase (Decrease) from Prior Years Dollars in Millions 1983 1982 1981 4%%d

~ Higher non-cash allowances for funds used during con-struction (AFUDC).

~ The smallest increases in average number of shares out-

'tanding (5.2/o) and average common equity (12%%d) since 1978. There was no major public offering of common stock in 1983.

In addition to the improvement in the level of earnings dur-ing 1983, there was an accompanying improvement in earnings quality. Earnings quality, as measured by the ratio of operating income to total income before interest charges (including allowance for borrowed funds), was 57%%d for 1983 which compares with 55/o for 1982 and was the first time that the ratio has not recorded a year-to-year decrease since 1972. An increase in this ratio is indicative of improvement in earnings quality because the remainder of total income before interest charges comprises AFUDC and other income.

The principal reasons for the improving earnings quality are the aforementioned general rate increase and continu-ing efforts to control costs and the transfer of the invest-ment in San Onofre Unit 2 from construction to rate base.

(For a further discussion of the initial decisions of the CPUC under MAAC,see "Liquidity.")Operation of San Onofre Unit 2 is reflected in the Company's operating revenues and operating expenses commencing October 9, 1983.

Operating Revenues:

Base Rates (CPUC)......

Energy Cost Adjustment BillingFactor...........

Annual Energy Rate......

MaJor Additions Adjustment BillingFactor.........,.

Other BillingFactors......

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

Other Electric Revenues Total Operating Revenues KWHSales (Millions)...'....

Customers.................

$608 39.7

$ 43 2.9

$284 23.6 7.0 (19)

(0.9)

(a) '2 (523)

(22.6) 151 (4)

~

(2.2) 136 30 31 5

15

$162 566 50,159 (a)

(1) 1.9 (89) 420 8

3.8

$248 1.0 (3,124) 1,5 42,457 (29.8)

(2)

(46.1)

(25,8) 100 41.5 28.2 (2)., (6.5),

6.1

$393 10.7 (5.0) 2.536 4.2 1.3 68,719 2.2 (a) Indicates over 200%,

The increase in total operating revenues for 1983 reflected the combined effect of an increase of 2.5%%d in the overall average billing rates and the1%%d increase in kilowatt-hour sales. The decrease in energy cost adjustment billing fac-tor revenue reflected reductions in rates because of actual and anticipated decreases in fuel and purchased power expenses.

A more complete description of the procedures used to establish the Company's rate levels for retail sales is in-cluded in Note 1 of the "Notes to Financial Statements."

In general, base rates are established in biennial general rate case proceedings before the CPUC. In addition, regulatory adjustment clauses which remove the effect on earnings of fluctuations in fuel and purchased power expenses, kilowatt-sales and certain conservation program expenses have been authorized by the CPUC. A Major Additions Ad-justment Clause was established to include in retail rates the cost of owning and operating San Onofre Unit 2.

42

Southern California Edison Company The following table presents amounts and percentages of increase (decrease) from prior years in selected items from the Statements of Income.

Increase (Decrease) from Prior Years Dollars in Millions. Except Earnings Per Share 1983

/o 1982

%%d 1981 23.0 33,2 31.0 180.5 26.5 31,2

$ 50 11.4 17 87 19 9.3 (21)

(10.4) 6 9.4 46 9.3

$49 12.6 (35)

(15.3) 14 76 159 (a)

(10)

(14.0) 119 32.0 Other Operation Expenses

$113 Maintenance Expense.....

70 Depreciation..............

68 Taxes on Operating Income 320 Property 8 Other Taxes.....

17 Operating Income.........

167 Allowance for Equity and Borrowed Funds Used During Construction.....

63 Other Income.............

24 Total Interest Charges.....

119 Net Income...............

135 Earnings Available for Common and Original Preferred Stock.........

134 Earnings Per Share........ $ 1.09 Weighted Average Number of Shares (Millions),......,

(a) Indicates over 200%,

20.7 71 30.3 70 43.3 17.7 29 27.1 41 63.0 28.3 79 23.3 58 20.6 24.3 66 13.4 172 54.3 27.7 61 21,2

$.20 14.5 165 64.5 41

$ 143 409 5

5.2 9

10.1 12 16.9 Taxes on operating income for 1983 increased primarily as a result of increased pre-tax net income and deferred in-come tax provisions. For a further discussion of income taxes see Note 5 of "Notes to Financial Statements."

The higher interest charges were primarily due to addi-tional long-term debt outstanding the entire year.

Increases in other operation expenses in 1983 continued to be influenced by system growth, particularly the addition of San Onofre Unit 2. Also having an impact is the effect of inflation on the cost of labor, material and services. The Company is continuing its efforts to control these expenses.

Variations in levels of maintenance expense have been significantly influenced by inflation, scheduling of major maintenance projects, the addition of new facilities, and weather conditions. The latter is partially reflected in in-creases in property damage expense as a result of storm damage of $6 million. Also affecting maintenance expense in 1983 is the amortization of nuclear sleeving costs of $14 million.

Funds from Operations-Reinvested.............

Funds from Long Term Financing Net.....,.....

Other Sources (Uses) of Funds..................

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

Funds Provided by Operations as a Percent of Funds Used for Construction Expenditures......

$390 215 200

$805 48%

$243 828 (77)

$994 24'Yo

$ 174 800 (17)

$957 18%

The Company is engaged in an extensive construction program designed to accommodate existing and pro-jected demands on its electric system. Because of the high level of construction work in progress, primarily re-lated to the construction of San Onofre Unit 2 (now com-plete) and Unit 3 and the Palo Verde Units, a significant portion of the Company's net income in recent years has been attributabie to AFUDC, which does not represent cur-rent cash income of the Company. On September 7, 1983, the CPUC rendered an initial decision under the Major Ad-ditions Adjustment Clause (MAAC)to include in customer rates the costs of owning and operating Unit 2 at San Onofre. The new rates became effective October 9, 1983 when approximately $1.6 billion of plant investment costs were included in rate base. The accrual of AFUDC on these costs ceased as of that date. The amount of the initial MAAC rate increase was $207 million; however, this was offset by an equal Energy Cost Adjustment Clause rate decrease based on projected fuel savings.

A discussion relating to the effects of changing prices follows the "Notes to Financial Statements" beginning on page 39.

Liquidity Liquidityrefers to the ability of a company to generate funds, whether from operations, long-term financing or other sources, adequate to meet the requirements of its construction program.

The improvement during 1983 in the Company's earnings quality is further demonstrated by the increase in funds provided by operations as a percent of funds used for con-struction expenditures from 24/o for 1982 to 48/o in 1983.

The following table provides a summary of the Company's sources of funds used for construction expenditures for the years 1983, 1982 and 1981.

Dollars in Millions 1983 1982 1981 43

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

In its September 7, 1983 MAACDecision, the CPUC di-rected the Company and the Commission staff to under-take studies to determine if various alternative ratemaking methods should be adopted in establishing retail rates for San Onofre Units 2 and 3. As compared to traditional ratemaking practices, the adoption of an alternative ratemaking method would produce lower cash flow in the early years of operation and higher cash flow in later years.

The Company believes that the placement of San Onofre Units 2 and 3 in service with rates established in accor-dance with traditional procedures will not produce a dramatic increase in rates and that adoption of an alterna-tive ratemaking method is unwarranted. Hearings on this matter are expected to commence during the second quarter of 1984 with a decision to be rendered soon thereafter.

On November 22, 1983, the CPUC issued a second deci-sion granting an additional $98 million of rate relief for Unit 2 to become effective January1, 1984. The Company, there-fore, will receive additional cash income to partially offset the decline in AFUDC. Earnings will be maintained by the return on rate base authorized by the MAACdecision and by the implementation of an interest-bearing balancing account for the facility's investment-related costs. Recov-erability of amounts recorded in the balancing account will be determined in the CPUC's reasonableness review for the Company's investment in Unit 2. AFUDC constituted approximately 53/o, 55/o and 47%%d of net income, respec-tively, for the years 1983, 1982 and 1981. AFUDC is expected to decline significantly with the inclusion of Unit 2 in rates and when Unit 3 is placed in commercial operation, which is currently anticipated to be in Aprilof 1984.

San Onofre Unit 1 has been out of service since February 1982 for NRC required inspections and for various plant modifications. See Note 9 of "Notes to Financial State-ments" for a discussion of the CPUC's investigation to de-termine whether Unit 1 should be removed from customer rates while plant modification issues are being resolved with the NRC. A recently filed CPUC staff motion in this proceeding, if adopted by the Commission, would remove the San Onofre Unit 1 return component from customer rates, but permit the accrual of an Allowance for Funds Used During Construction.

Capital Resources To provide the funds for construction expenditures for the five years through 1988, estimated to total $4.0 billion, and to meet long-term debt maturities and sinking fund re-quirements and preferred stock redemption requirements aggregating $726 million during such years, the Company estimates that approximately $2.4 billion, or 50/o, of such expenditures willbe provided from external sources. The balance of funds required for these purposes is expected to be obtained from operations, primarily during the latter part of such period.

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

The Company's long-term goal is to maintain a capital structure with approximately equal amounts of debt and equity. The Company's capital structure at the end of the years 1983, 1982 and 1981 is shown below:

1983 1982 1981 Common Sharehoiders'quity.....

Preferred and Preference Stock Without Mandatory Redemption Requirements Preferred and Preference Stock With Mandatory Redemption Requirements (a)

Long.Term Debt (a).....

(a) Excludes current portion.

43,3' 1.04%%d 40.7%

5.4 5.7 6.5 5.0 5.4 5.5 46.3 47.9 47.3 1100.0%

100.0'Yo 1100.0'yo Funds provided by long-term financing, after giving effect to the reduction of long-term debt, securities held by trust-ees and the conversion of preference stock amounted to

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

The Company's estimates of funds available from opera-tions for the five years through 1988 assume the receipt of adequate and timely rate relief, the timely inclusion of San Onofre Unit 3 and the Palo Verde Units in rate base and the realization of its assumptions regarding cost increases, including the cost of capital. The Company's estimates and underlying assumptions are subject to continuous review and periodic revision.

44

Southern California Edison Company Capital StockDividend and Price Information Quarterly Dividends Paid Class and Per Series of Stock Share (a) (I)

Calendar Quarter1983 High and LowSales Prices ($)

1 2

3 4

1 High Low High Low High Low High Low High Low Calendar Quarter1982 High Low High Low High Low Common (b)(c)

Original Preferred Cumulative Preferred:

4.08%

4.24'/o 4.32%

4.78'!o 5.80'Io 8.85%

9.20'/o

$ 100 Cumulative Preferred:

7 325% (d) 7 58%

7,80% (d) 8 54'/o 8 70%

8.70% A(d) 8.96%

12.00%

12,31% (d)

Preference:

5.20% (e) 7 375% (d)

$.88

.88

.25'h

.26'h

.27

.29'/s

.36'/i

.553125

.57%

1.83'/s 1 89'h 1.95 2.13%

2.17%

2.17%

2.24 3.00 3.0775

.32'h

.460938 38N 32 37'h 33ih 37'h 33 39'/i 35 29Ye 24%

29yi 25'h 31 25N 34'h 30%

9%

8i/i 9'/s 8'/a 9'/s 9

11N 9%

13N 12 20N 18'/i 21 19Ys 9Ni 8%i 10 8Yi 10 9

11'/e 9%

13'h 11N 20'h 18i/i 21N 19 9'/i 9Ye 9Ya 10N 13Va 19'Ys 20 8

8Ye 8Ys 9

tfN 18 18'Ye 9Ye 8'/s 9 Ye 8'/i 9 Ye 8Ye 10N 9'li 13yi 11'/i tgYs 17%

20yi 18%i 8'/i 6Ys 8'/i 6%

8'/e 7

SYe 7%

10Ys 9'/i 16 14%

16Ys 14'h 7N 6%

8 7ys 8Ye 7

9 7%i 10N 9%

16Ys 14'h 17'/e 15'/i 8%

9'/s gi/i 9N 13 18'/i 19 7

7Yi 7i/i 7N 9%

14N15li 7Y~

9%

8%

9'Ya Bye 10%

9 12'/e 11'h 19%

16'/s 20'/i 17Ya 69'/i 70%

67'h 60%

60 54%

47N 56'Is 49Vs 60Ys 50'h 66Ys 57 85'/i 78 81 70 88%

80r/a 82 73 82 79 80 70 85 75 73 63Yi 68 62 59 70yi 62N 55'h 64 57'li 73 69 68'Ye 58 83%

68 76 65%

82'/i 73 109 103 82%

75 109 101 78'/i 71 106 98ih 77 69Ye 61%

107Ye 100 89 56/i 64%

60 81'h 100 90 71'h 60ys 102 89N 78 68%

106%

99 30N 27Ys 30 28%

30'h 27 32ye 29'h 25%

22Ye 26Vo 24'/i 28 23'h 29 25ih 39'li 34Ya 38'Is 34Ys 39'/s 35%

42N 37Ye 32%

28 33Ys 29rle 35r!e 29'h 37%

31%i (a) Quarterfy dividends were paid at the rates indicated in each quarter of 1983 except the fourth quarter dividend on original Preferred stock and common stock which was at the rate of $0.95 per share.

(b) Dividends per share declared on Common Stock totaled $366 and $338 for 1983 and 1982. respectively.

(c) As of December 31 ~ 1983, there were approximateiy158 000 Common Stock shareholders.

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

(e) The 5,20% Preference Stock is convertible into Common Stock.

(I)

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

45

Southern California Edison Company Selected Financial Data 1973-1983 1983 1982 Summary of Operations (in thousands of dollars except percent and per share data)

Operating Revenues Operating Expenses Fuel and Purchased Power Costs (a)

Income Taxes (a)

Allowance for Equity and Borrowed Funds Used During Construction Interest Charges.......

Net Income Earnings Available for Common and Original Preferred Stock.....................................

Weighted Average Shares of Common and Original Preferred Stock Outstanding (000)

Per Share Data:

Primary Earnings Fully Diluted Earnings Dividends Declared Per Common Share................

Dividend Payout Ratio (paid basis)

Rate of Return on Common Equity Ratio of Earnings to Fixed Charges 365,856 539,377 690,780 303,118 420,282 555,754 617,303 483,358 99,174 94,257

$6.22

$6.15

$3.66 57.7'/o 17.0o/o 2.91

$5.13

$5.09

$3.38 64 5o/o 14.9/o 2.44

$ 4,464,256

$ 4,302,602 3,760,225 3,765,875 2,027,756 2,227,901 497,236 177,251 Balance Sheet Data (in thousands of dollars except percent and per share data)

Operating and Sales Data Total Assets (b)

Gross UtilityPlant Accumulated Depreciation Percent of Gross UtilityPlant Common Stock, at par value.

Additional Paid-in Capital Earnings Reinvested in the Business Common Shareholders'quity Preferred and Preference Stock without mandatory redemption requirements.....................

Preferred and Preference Stock with mandatory redemption requirements (c)

Long-term Debt (c)

Capital Structure (percent):

Common Shareholders'quity Preferred & Preference Stock without mandatory redemption requrements Preferred and Preference Stock with mandatory redemption requirements (c)

Long-term Debt (c).

Book Value Per Common Share Area Peak Demand (MW).

Area Generating Capacity at Peak (MW) (d)...........

Total Energy Requirement (KWH) (000)

Percent Energy Requirement:

Thermal.

Alternative/Renewable (including hydro)............

Purchased Power & Other Sources (e).

Kilowatt-Hour Sales (000)

Average Annual KWH Sales Per Residential Customer..

Number of Customers Number of Employees

$11,035,060 11,886,610

$ 2,426,368 20.4/o 839,501 1)307,546 1)646,292 3,793,339 469,025 440,500

$4)051) 836 43 3o/o 5.4 5.0 46.3olo

$37.52 13,464 16,365 68,020,197 48.7o/o 10.3 41 Oo/o 59,892,638 5,879 3,325,303 16,292

$10,157,564 10,764,078

$ 2,185,667 20 3o/o 805,766 1,193,318 1,393,780 3,392,864 471,020 445,000

$3,970,400 41.0'/o 5.7 5.4 47 9'/o

$34.96 13,149 15,349 66,578,540 55 50/0 9.7 34.8'/o 59,326,853 5,685 3,275,144 15,797 46 (a) Included in Operating Expenses.

(b) The years 1973 through 1981 have been restated to reflect the deduction of property-related accumulated deferred income taxes from UtilityPlant.

(c) Excludes current portion.

1981 1980 1979 1978 1977 1976 1975 1974 1973

$4,054,356

$3,661,117

$2,563,974

$2,328,798

$2,064,914

$ 1,846,540

$1,647,134

$ 1,360,959

$1,075,949 3,563,201 3,288,983 2,178,978 2,004,197 1,734,192 1,539,400 1,380,528 1,108,249 843,530 2,558,206 2,010,227 1,532,903 1,204,749 1,189,597 903,447 824,826 541,890 344,990 197,865 38,683 100,292 72,803 68,792 59,506 46,623 70,618 46,496 232,552 340,977 489,912 162,287 282,656 317,536 118,566 205,082 346,219 78,421 182,658 251,683 60,238 161,078 251,979 47,610 144,368 226,798 26,773 126,185 176,781 16,163 112,959 160,344 10,190 97,728 146,110 422,024 256,586 292,481 202,226 206,330 185,047 137,177 124,656 117,268 85,610

$4.93

$4.91

$3.10 61.5%

14 9%

2.72

$8,702,571 9,517,670

$2,015,212 21.2%

730,027 999,764 1,238,317 2,968,108 73,241

$3.50

$3.48

$2.84 79 4%

10.4%

2.09

$7,706,933 8,406,309

$1,840,233 21.9%

632,115 805,325 1,092,137 2,529,577 64,202

$4.56

$4.39

$2.60 55 7%

13.6%

2.90

$6,949,917 7,577,670

$ 1,676,148 22.1%

540,791 638,046 1,054,296 2,233,133 57,477

$3.52

$3.38

$2.30 63.6%

10 7%

2.53

$6,030,045 6,810,891

$1,519,174 22.3%

521,138 595,701 931,217 2,048,056 54,347

$3.80

$3.63

$2.06 50 5%

12.0%

2.78

$5,698,068 6,191,733

$1,383,009 22.3%

455,387 458,096 862,956 1,776,439 48,678

$3.80

$3.61

$1.68 44.2%

12.4%

2.83

$4,993,330 5,658,433

$1,258,327 22.2%

442,739 427,424 769,425 1,639,588 47,965

$2.86

$2.75

$1.68 58 7'/

9.8%

2.63

$4,701,910 5,147,333

$1,149,311 22.3%

395,707 350,505 671,548 1,417,760 44,580

$2.80

$2.68

$1.68 58.9%

9.4%

2.87

$4,451,810 4,766,175

$1,051,024 22.1%

395,707 350,505 616,562 1,362,774 43,965

$2.67

$2.57

$1.56 58 4'/

9.6%

2.85

$3,861,572 4,458,631 958,210 21.5%

362,374 316,638 569,938 1,248,950 476,308 482,652 489,822 503,650 518,172 537,753 537,753 487,753 437,753 399,500 399,500 324,500 197,000 197,000 75,000 75,000 75,000 75,000

$3,444,080

$2,945,824

$2,746,207

$2,477,474

$2,314,874

$2,151.861

$2,033,038

$1,953,679

$1,722,710 40 7o/

6.5 5.5 47.3%

$33.74 39 8%

7.6 6.3 46.3%

$33.19 38 5%

8.5 5.6 47 4%

$34.22 39.2%

9.6 3.8 47 4%

$32.57 37 0%

10.8 4.1 48.1%

$32.30 37.2%

12.2 1.7 48.9%

$30.67 34 9%

13.2 1.9 50 0%

$29.64 35.1%

12.6 1.9 50 40/

$28.50 35.8%

12.6 2.2 49 4%

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

5.8 26.6%

62,451,319 5,879 3,232,687 14,569 71.2%

9.2 19.6%

59,915,187 5,939 3,163,968 14,157 82.0%

7.7 10.3%

59,517,861 6,010 3,082,382 12,917 73.8%

9.3 16.9%

57,027,035 5,883 2,986,545 12,845 87.4%

2.5 10.1%

57,726,273 5,630 2,900,856 12,671 75 1o/

4.4 20.5%

53,685,378 5,650 2,814,403 12,510 76.2%

8.4 15.4%

51,327,508 5,596 2,749,680 12,377 75 2%

10.1 14.7%

51,089,981 5,541 2,691,691 12,970 84.8%

9.1 6.1%

54,092,934 5,885 2,626,492 13,391 (d) Includes 2,334, 2,080 and 2,323 MWavailable Irorn others in 1983, 1982 and 1981, respectively.

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

47

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

Chairman of the Board and Chief Executive Ollicer, First Interstate Bank ol California, and Vice Chairman ol the Board, First Interstate Bancorp, Los Angeles, California t'lEdward W. Carter, Chairman of the Board Emeritus, Carter Hawfey Hale Stores, Inc., Los Angeles, California Warren Christopher, SeniOr Parlner, Law Firm Of O'Melveny & MyerS, LOS AngeleS, CalifOrnia Walter B. Gerken, Chairman of the Board and Chief Executive Oificer, Pacilic Mutual Life Insurance Company, Newport Beach, California Joan C. Hanley, General Partner and Manager, Miramonte Vineyards, Rancho California, California J. K. Horton, Cliairman ol the Executive Committee and Consultant (Retired Chairman of the Board and Chiel Executive Officer, Southern California Edison Company), Los Angeles, California Carl F. Huntsinger, President and Chief Executive Oflicer, Blue Goose Growers, Inc., Ojai, California F. G. Larkin, Jr.,

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

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

Chairman ol the Board and Chief Executive Oflicer, Santa Fe International Corporation (OilService, Engineering, Petroleum Exploration and Production), Alhambra, California H. Russell Smith, Chairman ol the Executive Commiaee, Avery International (Manufacturer ol Sell-Adhesive Products), Pasadena, California (1) Mr. Carter, having raachad retirement aga. is not a nominee for reelection to the Board of Oirectors in f984.

Southern Cafifornia Edison Company Executive Officers William R. Gould, Chairman ol the Board and Chief Executive Officer Howard P. Allen, President H. Frederick Christie, Executive Vice President and Chiel Financial Oificer David J. Fogarty, Executive Vice President

"'John E. Bryson, Senior Vice President P. L. Martin, Senior Vice President L. T. Papay, Senior Vice President A. Arenal, Vice President Kenneth P. Baskin, Vice President (Nuclear Engineering, Safety and Licensing)

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

Robert H. Bridenbecker, Vice President (Fuel Supply)

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

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

Joe T. Head, Jr.,

Vice President (Power Supply)

(4>A. L. Maxwell, Vice Presidenl and Comptroller Charles B. McCarthy, Jr.,

Vice President (Advanced Engineering)

Edward A. Myers, Jr.,

Vic'e President (System Development)

M. L. Noel, Vice President and Treasurer t )Michael R. Peevey, Vice President (Revenue Requirements and Governmental Affairs)

Harold B. Ray, Vice President and Site Manager, San Onofre Nuclear Generating Station Robert E. Umbaugh, Vice President (Administration)

Honor Muller, Secretary (21 MOSSrS, BrySOn Ond PeeV ey Were eleC led tO their reSPOCti Ve POSiticnS OIIOCllVOFebruery 1, 1984.

(3) Mr. Busboy was oloctod Vico President end Controller elfoctivo Jenuory 1, 1984.

(4) Qr. Maxwell rotirod olloctivo December 31, 1983, 49

Southern California Edison Company Distribution of Record Shareholders and Shares Shareholders Shares as of December 31, 1983 Preferred Common Preferred Common Total Shareholders 33,415 100.0 158,186 100.0 20,144,746 100.0 100,468,012 100.0 Class of Investor Males Females Joint Accounts Fiduciaries Religious, Charitable, Fraternal and Educational Institutions Financial Institutions Other 6(135 13,290 8,861 2,935 203 825 1,166 18.3 36,335 23.0 980,996 39.8 56,514 35.7 1,916,150 26.5 44,572 28.2 1,652,403 8.8 17,030 10.8 558,886 4.9 7,746,299 7.7 9.5 10,687,799 10.6 8.2 9,202,950 9.2 2.8 3,687,622 3.7 0.6 540 0.3 99,871 0.5 595,538 0.6 2.5 1,134 0.7 11,942,505 59.3 66,080,137 65.8 3.5 2,061 1.3 2,993,935 14.8 2,467,667 2.4 Amount of Holdings 1 to 99 shares 100 shares 101 to 499 shares 500 to 999 shares 1,000 or more shares 13,826 41 4 7,465 22.3 8,575 25.7 1,929 5.8 1,620 4.8 53,686 32,737 54,942 11,325 5,496 33.9 397,860 20.7 746,500 34.7 2,091,756 7.2 1,155,234 3.5 15,753,396 2.0 1,892,328 3.7 3,273,700 10.4 13,200,300 5.7 6,822,280 78.2 75,279,404 1.9 3.3 13.1 6.8 74.9 Geographical Location Service Territory Remainder of California United States (except California) and Possessions Foreign Countries 9,075 27.2 38,136 24.1 2,085,099 10.4 13,115,247 13.1 11,036 33.0 46,699 29.5 3,178,264 15.8 25,361,680 25.2 13,242 39.6 72,817 46.0 14,873,686 73.8 61,820,962 61.5 62 0.2 534 0.4 7,697

170,123 0.2 1984 Annual Shareholders'eeting:

The annual meeting of shareholders of Southern California Edison Company willbe held at 10 a.m., Thursday, April 19, 1984, at the Company's Corporate Headquarters, 2244 Walnut Grove Avenue, Rosemead, California 91770.

Telephone (818) 572-1212.

For Investor Relations:

Individual Shareholders contact:

Southern California Edison Company Secretary's Department Room 240 Post Office Box 400

Rosemead, California 91770 Telephone (818) 572-1997 Institutional Investors contact:

Supervisor, Investor Relations Telephone (818) 572-2515 Assistant Treasurer Telephone (818) 572-1090 Stock Transfer Agent:

Southern California Edison Company Secretary's Department Room 240 Post Office Box 400

Rosemead, California 91770 Telephone (818) 572-1393 or (818) 572-1936 Dividend Reinvestment and Stock Purchase Plan Agent:

Southern California Edison Company Secretary's Department Room 240 Post Office Box 400

Rosemead, California 91770 Telephone (818) 572-1852 or (818) 572-1995 Registrar of Stock:

Security Pacific National Bank Los Angeles, California Stock Exchange Listings:

Common Stock:

New York Stock Exchange Pacific Stock Exchange London Stock Exchange Preferred and Preference Stocks:

American Stock Exchange Pacific Stock Exchange Ticker Symbol:

SCE (Common Stock)

Media Listings:

SCalEd Statistical Supplement:

A comprehensive financial and statistical supplement to this report is available in limited quantity. A copy may be requested by writing to the Supervisor of Investor Relations, Southern California Edison Company, P.O. Box 800, Rosemead, California 91770.

This Annual Report and the statements and statistics contained herein have been assembled for generalinformative purposes and are not intended toinduce, or for use in connection with, any sale or purchase of securities.

Under no circumstances is this report or any part ofits contents to be considered a pro-spectus, or as an offer to sell, or the solicitation of an offer to buy, any securities.

50

to Pacific Northwest San CALIFORNIA Francl o

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Geothermal Oy w,.a Oat "-

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ARIZONA Palo Verde Southern California Edison Company System.

~ ~

more primary resources than any other electric utilityin the world.

Southern California Edison Company provides electric ser-vice in a 50,000 square-mile area of Central and Southern California. This area includes some 800 cities and com-munities with a population of more than nine million people Edison's gross investment in utilityplant totals nearly

$11.9 billion. Area generating capacity at peak during 1983 totaled 16,365 megawatts (MW), which included 14,031 MW of Company-owned facilities and 2,334 MW of capacity from other sources. Of the Company-owned facil-ities, 73% was comprised of oil-and gas-fired generating units. SCE's interest in coal-fired generating units ac-counted for another 12%, and 7% was in hydroelectric generation. The Company's interest in a nuclear generat-ing station accounted for the remaining 8%.

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

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

Southern California Edison Company 2244 Walnut Grove Avenue

Rosemead, California 91770 (818) 572-1212