ML20043B146

Forwards Cash Flow Statement & Annual Rept to Securities & Exchange Commission for 1989

ML20043B146
Person / Time
Site:	San Onofre, Palo Verde
Issue date:	05/19/1990
From:	Gonzales J SOUTHERN CALIFORNIA EDISON CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NUDOCS 9005240280
Download: ML20043B146 (48)

Text

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5 Southem Califomia E' dison Company.

P. O.DOX 000 2244 WALNUT GROVE AVENUE ROSEMEAD, CALIFORNIA 91770 May 19, 1990 A

U. S. Nuclear Regulatory Commission

. Attention:

Document Control Desk Washington, D.C.

20555-Re:

Internal Cash Flow for San Onofre Units' 1, :2 & 3-...

.(Dockets 50-206, 50-361, 50-362) and Palo Verde-Units:

1, 2.

& 3: (Dockets 50-528, 50-529 and'50-530)

Gentlemen The materials listed-below are enclosed in accordance with' Section 140.21-of CFP 140 for Southern California Edison = Company, San Diego Gas & Electric Company, the~ City;of Anaheim,'and-'the.

j City of Riverside for their ownership in San Onofre Nuclear-i Generating Units 1,'2, and 3.and for Southern California Edison

.f Company's 15.8%. share of Palo'Vorde Nuclear Generating ~ Units 1, 2.

gl and 3.

1 1.

. Cash. Flow Statement.for the year ending;

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December 31, ~ 19 8 9 '.

2.

Annual' Report ~to the Securities and' Exchange-i Commission-(Form 10-K) for the year ending-l December 31,.1989.

If there are any questions regarding the material, please' contact 1

me at 818-302-9831.

S ncerely, 2

^

oAnne Gonzales-1 Insurance Department JAG /mm yj Enclosure

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9005240280 900519-l-)

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SOUTHERN CALIFORNIA EDISON COMPANY 1990 Internal Cash Flow Projection (Dollars in Thousands)_

1989 1990 L

Actual Projected l

Net Income After Taxes

$723,200

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Dividends Paid 595,300 Retained Earnings

$127,900 Adjustments:

. 686,300

-713,800

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Depreciation l

Deferred' Taxes 71,000-104,800=

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Allowance for Funds i

Used During Construction (22,100)

_(18,600)

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.t Total Adjustments-

$735,200

$800,000 l

1 Internal. Cash Flow

-$863,100

=

Average Quarterly Cash Flow

$215,775 l

1 Percentage Ownership in All Nuclear Units:

San Onofre Nuclear Generating Station Unit 1 L

Southern California Edison Company 80.00%

San Diego Gas & Electric Company _

20.00%'

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

- 75.05%

San Diego Gas & Electric Company 20.00%

City of Anaheim 3.16%

City of' Riverside 1.79%

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Palo Verde Nuclear Generating Station Units 1 & 2 15.80%

Maximum Total Contingent Liability:

San Onofre Nuclear Generating Station Unit 1-

$10,000 i

San Onofre Nuclear Generating Station Unit 2 10,000 San Onofre Nuclear Generating Station Unit 3 10,000 i

Palo Verde. Nuclear Generating Station Unit 1 1,580 Palo Verde Nuclear Generating Station' Unit 2

_1,580 Palo Verde Nuclear Generating Station Unit 3 1,580

$34,740

=

• Company policy prohibits disclosure of financial data which will enable unauthorized persons to forecast earnings or t

dividends, unless assured confidentiality.

The Net Estimated Cash Flow for 1990 is expected to be comparable to the Actual Cash Flow for 1989.

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I cc:

J.-B. Martin, Regional Administrator, NRC Region V F. R. Huey, NRC Senior Resident Inspector, San Onofra 1,2&3 Emmanuel Licitra, NRC Project Manager, Palo Verde 1, 2 &3 C. Tramell,.NRR Project Manager San Onofre 1 D. Hickman, NRR Project Manager, San Onofre 2 &3 A.

C. Llorens, SCE Nuclear Eng./ Safety & Licensing-Dept.

j Charles R.-Kocher, SCE Law Department j

i Joe Rakowski, San.Diego Gas & Electric i

Thomas Vance, City of Anaheim Chuck Harris, City of Riverside i

Norm Cocanour,. Arizona Public Service Fred Lindy, Arizona Public Service j

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Sjag/cashflow 3

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SECURITIES AND EACHANGE COMMISSION Washington, D.C, 20549 FORM 10-K ark One)

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31,1989 or Transition report pursunt to Section 13 or 15(d) of the Securities Exchange Act of 1934 i

s For the transition period from to f&

Commission File Number 1,2313 SOUTHERN CALIFORNIA EDISON COMPANY I

(Exact name of registrant as specified in its charter)

California 95.1240335 (State or other jurisdiction of (i.R.S. Employer incorporation or organization)

Identification No.)

J 2244 Walnut Grove Avenue (818) 302-1212 2

Rosemead, California 91770 (Registrant's telephone number,-

(Address of principal executive office 8)

(Zip Code) including area code) -

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

4 Name of weh exchange Title of each class on which reoistered Capital Stock Cumulative Preferred American and Pacific 4.08% Series 4.24% Series I

4.32% Series 4.78% Series 5.80% Series

$100 Cumulative Preferred American and Pacific 7.58% Series 8.54% Series l-8.70% Series l

8.90% Series Ekst ard Refunding Mortga0e Bonds American Series Y through Series CC, Series FF through Series HH, Series JJ, Series 85A, Series 861 and Series 88E Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preading 12 months (or for such shorier period that the registrant was required to file Le i

auch reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The aggregate market value of registrant's voting stock held by non-affiliates was approximately $490.819,322 on or about February 28,1990 based upon prices reported in the Westem Edition of The Wall Street Joumal. The market values of certain privately placed series of $100 Cumulative Preferred Stock, for which market prices are not available, were derived by dividing the annual dividend rate of each such series of stock bythe average yleid of all of the Company's Cumulative Preferred and $100 Cumulative Preferred

'j Stock outstanding for which market prices were available. The market values of the various classes of voting stock so determined were as follows: CUMULATIVE PREFERRED STOCK $100,061,694; $100 CUMULATIVE PREFERRED STOCK $300,757,628. As of February 28,1990, there were 217,444,052 shares of Common Stock outstanding, all of which are held by the registrant's parent holding company, DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents listed below have been incorporated by reference into the parts of this report so indicated.

(1)

Designated portions of the Annual Report to Shareholders for the year ended December 31,1989 Parts I,11 and IV (2)

Designated portions of the Joint Proxy Statement relating to registrant's 1990 Annual Meeting l

of Shareholders,,..

Part lll I

.l m

I TABLE OF CONTENTS Part 1 -

i L. lit!D fA9ft

1. B usines s............................................. -...........

.1 R eg ulation.....................................................

1 i

Rate Matters...................................................

1

' F uel S upply -....................................................

6' Environmental Matters..............................................

7

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. Proposed Merger with San Diego Gas & Electric Company.................

10=

1

2.. Properties.......................................................

11 Existing Generating Facilities,.......,......,..,.................... -

11-1 Construction Program and Capital Expenditures.........................

,12-Nuclear Power Matters............................................

.13

Nuclear Waste Policy Act..................................... -.....

> 14 '

- Potential Competition.................................... -.........

14

3. Legal P roceed ing s '................................................

15 -

1 1:

Antit rust Matte rs.................................................

~15-1 Other Litigation..................................................

16

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

16:

1 Executive Officers of the Registrant..........................,.........

17 Part 11 '

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.s J

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

19 2

6. - Selected Financial Data....... '.....................

19 1

7. Management's Discussion and Analysis of Results of Operation and i

Financial Condition........

19-Sc Financial Statements and Supplementary Data...........................

19

9. Changes in and Disagreements with Accountants on Accounting and j!

Financial Disclosure.............................................

19 1

4 Part lil

10. Directors and Executive Officers of the Registrant..........................

19

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11. Executive Compensation.

19 s

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

19L

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13. Certain Relationships and Related Transactions..........,,............

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Part IV

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

20 Y

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Report of Independent Pubilo Accountants on Supplemental Schedules.........

21'

-I Signat ur es.................................

33 Exhibit I nd ex......................................

36 1

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PARTI i

1 Item 1. Business Southern Califomia Edison Company (" Edison") was incorporated in 1909 under California law and Is i

a public utility primarily engaged in the business of supplying electric energy to a 50,000' square-mile area of contral and southern California, excluding the City of Los Angeles and certain other cities. This area j

includes some 800 cities and communities and a population of more than ten million people. As of December 31,1989 Edison had 16,627 employees. During 1989,36.1% of Edison's total operating revenues l

were derived from commercial customers, 33.1% from residential customers,17.9% from industrial customers,8.6% from public authorities,1.3% from resale customers and 3.0% from agricultural and other customers.. Edison comprises the major portion of the assets and revenues of SCEcorp, its parent holding company.

Regulation

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The retail operations of Edison are subject to regulation by the Califomia Public Utilities Commission -

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("CPUC"), which has the authority to regulate, among other things, retall rates, issuances of securities and

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accounting and depreciation practices; Edison's resale operations are subject to regulation by the Federal ~

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Energy Regulatory Commission ("FERC") for resale rates as well as other matters, including transmission service pricing, accounting and depreciation practices and licensing of hydroelectric projects.

Edison is subject to the jurisdiction of the Nuclear Regulatory Commission ("NRC") with respect to its nuclear power plants. NRC regulations govem the granting of licenses for the construction and operation 1

of nuclear power plants and subject such power plants to continuing review and regulation; Edison's plant construction, planning and siting within California are subject to the jurisdiction of the California Energy Commission. Edison is subject to rules and regulations promulgated by the Califomia Air i

Resources Board and local air pollution control districts with respect to the emission of pollutants into the atmosphere, and the regulatory requirements of the Califomia State. Water Resources Control Board and -

regional boards with respect to the discharge of pollutants into waters of the state.--Edison is also subject

,f to regulation by the Environmental Protection Agency (" EPA"), which administers certain federal statutes relating to environmental matters, and to certain other federal, state and local laws and regulations relating to environmental protection, land use and water rightsc j

The Department of Energy (" DOE") has regulatory authority over certain aspects of Edison's operations q

or business relating to energy conservation, solar energy development, power plant fuel use and disposal, coal conversion, public utility regulatory policy and natural gas pricing.

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

Annual Encrav Rate ("AER"L A fixed rate designed to recover a portion of the estimated annual direct and indirect fuel cost applicable for inclusion in the Energy Cost Adjustment Clause. This rate is set on a l

forecast basis and is not subject to balancing account treatment. Edison's current AER is 10% for 1990.

Attrition Year Allowance. Base Rate adjustment in the years between General Rate Case test years to recover, without lengthy hearings, specific uncontrollable cost changes in the Base Rate revenue i

requirement. The Attrition Year Allowance is designed to preserve Edison's opportunity to eam its authorized rate of retum in the years between General Rate Case decisions.

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s Balancina Account. Ratemaking mechanism which reflects differences between recorded revenue and recorded costs over time. For a given period, recorded revenue and recorded costs are compared, and any difference is reflected in the balancing account. The amounts in the balancing account, including an interest component, are periodically amortized through rate changes which return overcollections to customers or collect undercollections from customers.. The costs recorded in a balancing account are subject to review by the CPUC and allowed for rate recovery to the extent they are found to be reasonable.

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

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

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

General Rate Case PGRC*). Regulatory proceeding before the CPUC to establish Base Rates in accordance with the Rate Case Plan which critically reviews the operations and general costs (excluding.

energy costs and, in certain instances, major plant additions) of Edison to provide electrical service. The revenue requirement for items such as depreciation, taxes, cost of capital, operation, maintenance, and administrative and general expenses, are determined on a forecasted test year basis, palor Additions Adlustment Clause PMAAC"). Balancing account mechanism which reflects the revenue requirement associated with the costs of owning, operating and rnalntaining major new facilities not included in GRCs.

Nuclear Unit incentive Procedure. commonly referred to as the Taroet Caoacity Factor CTCF"). : An incentive ratemaking procedure for Edison's nuclear units which provides for a sharing of additional energy costs or savings between Edison and ratepayers when operation of San Onofre Nuclear Generating Station 3

(" San Onofre") Units 2 and 3 and Palo Verde Nuclear Generating Station ("Palo Verde") Units 1,2 and 3 are outside a 55% to 80% capacity factor range. The capacity factor range for San Onofre Unit 1 is 55% to 75%.

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

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

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

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GeneralRate Case l

On December 22,1987, the CPUC issued a final decision in the 1988 test year GRC, adopting a j

$48,500,000 rate decrease. Considering the impact of other decisions, the CPUC adopted a $32,700,000 overall rate decrease effective January 1,1988.

.j On August 3,1989, the CPUC issued a decision in the Edison San Diego Gas & Electric Company

("SDG&E") merger proceeding, deferring Edison's test year 1991 GRC and authorizing Edison to file an application by March 30,1990, for a modified attrition adjustment in lieu of a 1991 GRC -

On December 18.-1989, the CPUC lssued a decision in the Edison SDG&E merger proceeding,-

authorizing Edison to file a 1992 GRC. The Notice of intent for Edison's 1992 GRC is expected to be tendered with the CPUC by mid August 1990. The 1992 GRC application is expected to be filed in late d

i-November 1990.

Financial / Operational Attrition On November 22,1989, the CPUC issued its final decision in the annual cost of capital proceeding, which authorized a retum on common equity of 12.85% for the attrition year 1990. The decision also-i maintains Edison's 1989 authorized capital structure and adjusts the cost factors for imbedded cost of debt -

.j and preferred stocl<. The net effect is to adjust Edison's overall rate of return on rate base to 10.70%

On December 18,1989, the CPUC authorized an increase in base rato revenue of $40,500,000, effective January 1,1990, consisting of a $67,000,000 operational attrition increase partially offset by a $26,500,000 j

financial attrition decision. These revenue changes reflect the impact of Edison's 1990 authorized rate of j

return. These rate increases were consolidated with rate changes authorized in an ECAC decision with an effective rate revision date of February 1,1990.

1 Energy Cost Adjustment Clause On February 11,1988, Edison filed its reasonableness of operations report for the 1987 record period.

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

The CPUC's Division of Ratepayer Advocates ("DRA") report recommended a disallowance of

$119,900,000 for payments made pursuant to 18 nor, standard OF contracts. DRA alleges that Edison's l

payments to these OFs exceeded Edison's avoided cost. One of the OF contracts.for which DRA e

recommends a disallowance is the Kem River Cogeneration Company ("KRCC") contract. Fifty percent of j

KRCC is owned by Southern Sierra Energy Company, a subsidiary of Mission Energy Company, a second tier subsidiary of SCEcorp; the other 50% is owned by Getty Energy Company, a subsidiary of Texaco '

j Producing Company.

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DRA proposed a disallowance of $36,600,000 (later revised to $55,600,000, including escalation to 1988 dollars) related to the KRCC contract for the 1985,1986 and 1987 ECAC reasonableness review periods (December 1,1984 through November 30,1987). The remaining 17 contracts are between Edison and OFs which are unaffiliated with Edison. Hearings were conducted and briefs submitted in the KRCC contract review in 1989 and review of the remaining 17 contracts has been deferred until later in 1990.

On March 9,1990, the Administrative Law Judge ("ALJ") Issued a proposed decision regarding the KRCC contract. The ALJ recommended a disallowance of $48,400,000 based upon the conclusion that the KRCC contract is an as available contract, not a firm commitment for 20 years. The ALJ rejected DRA's recommendations that would have required (1) prohibition of any future transactions by Edison with affiliated i

OFs, (ii) divestiture of SCEcorp's ownership Interest in OFs doing business with Edison, or (iii) pass-through to ratepayers of Mission Energy Company's profits. The proposed decision finds that the decision which 3

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4 authorized the formation' of SCEcorp provides adequate safeguards and does not need to be modified as requested by DRA.. However, the proposed decision would require that future OF contracts be limited to standard offers and imposes more stringent reporting requirements regarding Edison's dealings with affiliated OFs.

The CPUC may adopt, modify or entirely reject the ALJ's proposed decision in response to comments

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submitted by Edison and other parties. Comments are limited to legal, factual and technical errors in the proposed decision. Edison believes the proposed decision is erroneous in a number of respects and will urge that the CPUC modify it substantially. A CPUC decision is expected later this year.

The DRA's December 5,1988 report also recommended: adoption of the $1,300,000 reward requested

}

by Edison for San Onofre Unit 2 operation under the TCF procedure; a disallowance of $3,000,000 for payments made pursuant to Edison's long term power sales agreement with Pacific Power and Light Company ("PP&L*); and a disallowance of $1,557,000 for losses from the sale of fuel oil in April and May i

1987. Moreover, the DRA recommended that the CPUC order an mvestigation into Edison's nuclear fuel enrichment costs incurred since 1983.

j On May 30,1989, Edison filed a request to change its rates' effective January 1,1990. Edison requested l

that the CPUC authorize a $50,000,000 rate decrease if the final rate request in Edison's 1989 ECAC Trigger 1

Application were granted; or a $150,000,000 rate increase if the final rate request in the 1989 ECAC Trigger l

Application were not granted. After the CPUC issued a decision in Edison's ECAC Trigger Application, granting a 3.3% average increase which is equivalent to a $201,200,000 annual increase, Edison revised its request to a $29,100,000 decrease. The DRA recommended a $69,900,000 decrease. Edison, the DRA, and two intervenors ultimately agreed upon a recommended decrease of $65,600,000. Pursuant to a request

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by Edison, the ALJ ruled that rate changes assor. lated with this application should be consolidated with other 1

pending applications on February 1,1990.

1 Toward Utility Rate Normalization (" TURN") recommended a change in the ratemaking treatment of

- nonfuel related revenue from off-system power sales which could reduce Edison's net revenue in 1990 by approximately $39,800,000. On January 24,1990, the CPUC lssued a decision in the forecast phase of the proceeding. The decision adopted TURN's position on the ratemaking treatment of nonfuel-related revenues from off system power sales and decreased Edison's rates $30,000,000.

1 The decision among other things reinstates Edison's 10%. AER, adopts Edison's proposed seasonal eamings adjustment which will help mitigate seasonal eamings fluctuations, and adopts Edison's proposed Low Income Residential Assistance Program surcharge. The not effect of these and other minor ratemaking adjustments is an ECAC rate decrease of $93.000,000. When combined with the previously approved revenue changes authorized in other proceedings, the consolidated net revenue increase effective February 1,1990 is $60,000,000.

In conjunction with its rate request, Edison also filed on May 30l1989, its reasonableness of operations I

report for the period December 1987 through March 1989. The report, among other things, sets forth the recorded performance of Edison's coal generating stations at the Mohave Project and the Four Comers' l

Project and requests a $5,900,000 reward pursuant to the Coal Plant incentive Procedure ("CPIP"). (The CPlP was terminated by the CPUC, effective July 13,1988.) A $440,000 reward (Edison share) under the provisions of the TCP procedure for San Onofre Unit 3 is also requested. The unit ended Fuel Cycle 3 in July 1988 with a capacity factor of 80.62%.

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4 The DRA issued its report on the reasonableness of Edison's operations and on the requested incentive procedure awards at the end of September 1989. The DRA agrees with the requested incentive rewards, but also recommends a disallowance of $25,800,000: $20,000,000 for payments made pursuant to a PP&L 4

contract, $1,900,000 for fuel oil carrying costs, and $3,900,000 as an audit adjustment to certain energy payments made to OFs. The DRA has yet to file its report on the reasonableness of the execution and j

administration of QF contracts during the reasonableness period, and may recommend additional disallowances. Hearings in the reasonableness phase are expected to begin in mid or late-1990.

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. Natural Gas and Fuel Oil Supply A number of Edison's major steam electric generating units are designed to burn oil or natural gas as f

primary boiler fuels.. Although natural gas is expected to be Edison's principal fuel during the next several years, the extent of Edison's use of natural gas as boiler fuel is dependent upon the amount of gas available from Edison's gas suppliers, the interstate pipeline capacity available to bring gas to califomia, as well as upon applicable federal and state laws and regulations. To the extent Edison's use of natural gas is restricted, it will be forced to rely more heavily on fuel oil.

Alr pollution controllaws and regulations applicable to most of Edison's oil-and gas-fired steam electric generating plants have required that fuel oil utilized by Edison not exceed a sulfur level of 0.25%. As of

' December 31,1989, Edison had in loventory approximately 4.3 mlillon barrels of fuel oil.. To the extent oil i

utilization exceeds current forecasts, additional supplies are expected to be available from purchases made i

on the spot market and under an option agreement.

I Nuclear Fuel Supply Edison has contractual arrangements covering 100% of the projected nuclear fuel cycle requirements i

for San Onofre through the years indicated below:

i Units.

Unit 1 2&3 ~

i Uranlum concentrates (1)...

1995-1995

'l Conversion.........................................

'1995-1995 Enrichment.....

1998 1998 i

Fabrication.....

200t-1990 Spent fuei storage (2).

2001:

2001

-l (1) Assumes (a) the San Onofre participants meet their supply obligations.in a timely manner and (b)

Edison supplies its generation entitlement share of Palo Verde uranium requirements from Edison's existing contractual commitments.

(2) Assumes full utilization of expanded on-site storage capacity and normal operation of these units, including interpool transfers and no full core reserve. If additional storage or permanent disposal is -

-l unavailable when storage limits are reached, other arrangements will be required, the availability or cost of which Edison cannot predict at this time. The Nuclear Waste Policy Act of 1982 requires that DOE provide for the disposal of utility spent nuclear fuel beginning in 1998. However, DOE has stated that it is unlikely that DOE will be able to start accepting spent nuclear fuel significantly before 2010.

' Participants in Palo Verde have purchased uranium concentrates sufficient to meet projected requirements through 1991, independent of arrangements made by other participants. Edison will furnish -

its share of uranium concentrates requirements through at least 1995 from existing contracts. Contracts to j

provide conversion services cover requirements through 1994. Enrichment and fabrication contracts will meet Palo Verde requirements through 1998 and 1994, respectively.

Palo Verde on-site expanded spent fuel storage capacity will accommodate needs through 2004 for Unit 1,2005 for Unit 2 and 2006 for Unit 3.

Environmental Matters-Legislative and regulatory activities in the areas -of air and water pollution, waste management, hazardous chemical use, nolse abatement land use, aesthetics and nuclear control continue to result in the

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imposition of numerous restrictions on the operation by Edison of its existing facilities and on the timing,.

cost, lot.ation, design, construction and operation by Edison of new facilities required to meet its future load requirements. These activities substantially affect future planning and will continue to require modifications 7

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of Edison's existing facilities and operating procedures. They also increase the risk of forced abandonment I

of construction orojects with a resultant loss of design, engineering and construction costs and the payment r'

of cancellation charges which in the aggregate could be substantial.

4 The Clean Air Act provides the statutory framework to implement a program for achieving national ambient air quality standards and provides for maintenance of air quality in areas exceeding such standards.

The South Coast Air Basin failed to achieve alr quality standards mandated under the Clean Air Act by the end of 1987. As a result, the South Coast Air Quality Management District ('SCAOMD") adopted a stringent new Air Quality Management Plan in March 1989. This new plan would achieve all federal air quality standards by 2007. The plan ldertifles over 120 control measures for reducing emissions in the Los Angeles Basin. In August 1989, the SCAOMD adopted rules to reduce Oxides of Nitrogen ("NO/) emissions from combustion turbines and utility boilers.- Edison will have to reduce NO, emissions at its Long Beach Combined Cycle facility by 60% by 1996. Edison will have to reduce its in basin boiler NO, emissions by approximately 75% by the year 2000. _ Edison estimates that the capital cost of complying with these rules is about $490,000,000 in 1989 dollars. Edison may also incur additional expenses in reducing or eliminating omissions at existing facilities outside the South Coast Air Basin or in constructing any new facilities.

Various competing proposals are pending before Congress which could significantly amend the Clean Air Act. At this time, Edison is unable to predict the extent to which an amendment would affect its operations.

There is growing concem about population exposure to toxic air contaminant emissions in Califomia.

Plans for inventorying toxic emissions from Edison facilities in compliance with the Califomia " Air Toxic ' Hot Spots' Information and Assessment Act of 1987" were submitted to the SCAOMD on August 1,1989. The actual inventories will be submitted in mid 1990. Thereafter, new plans and inventories will be required in altemate years. The information gathered through this process will be used to determine the need for new regulations to control toxic alt contaminants. Edison believes that the low levels of trace emissions of toxic air contaminants from power plants pose an insignificant risk to public health. Edison does not, therefore, anticipato any capital expendtture to control these emissions from Edison facilities.

Regulations under the Clean Water Act require the obtaining of permits for the discharge of certain pollutants into the waters of the United States. Under this act the EPA issues effluent limitation guidelines, pretreatment standards and new source performance standards for the control of certain pollutants.

Individual states may impose still more stringent limitations. In order to comply with guidelines and standards app llcable to steam electric power plants, Edison is incurring additional expenses and capital-1l expenditures. Edison presently has discharge pem;its for all applicable facilities. Additional regulations will be issued but Edison is unable to predict the extent to which such additional regulations will affect its operations and capital expenditure requirements. The Toxic Pits Control Act of 1984 prohibited the use of a

surface impoundments for storage or disposal of hazardous wastes. " Edison applied for exemptions from this use prohibition to enable continued use of impoundments for temporary storage of boiler cleaning wastes. In December 1989, the Regional Water Quality Control Board, Los Angeles Region, directed its j

staff to prepare a resolution which would grant Edison the requested exemptions. The Board adopted the resolution in February 1990.

4 Beginning in the late 1800s and continuing until natural gas became widely available, gas was manufactured from coal and oil. The EPA and the Califomia Department of Health Services may determine '

4g that the chemical constituents of the gas plant by-products constitute hazardous substances or hazardous

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wastes and require removal or other remedial action. Edison has identified nineteen sites of former gas j

. plants for which it may have cleanup responsibility due to either Edison's or a predecessor company's

' d ownership or operation of the sites. Edison continues to study its potentialliability for the cleanup of these -

1 sites, in its 1988 GRC, Edison sought and received approval from the CPUC of a procedure to track costs I

incurred in the investigation and remediation of these sites on a case by case basis for eventual rate recovery. One such appl! cation was filed with the CPUC in February 1988 for the manufactured gas plant i

site formerly operated by an Edison predecessor company in Venice, Califomla. This application was

. approved in August 1988. On December 20,1988, Edison was served with a complaint by the current l

owner of a portion of the Venice site. In May 1989, settlement was reached between Edison and the current i

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Palo Verde Unit 1 ended Fuel Cycle 2 on February 11J 1990 with a gross capacity factor of approximately 37%. Based on a preliminary calculation of the differential fuel cost over Fuel Cycle 2, the penalty under the TCF procedure is expected to be approximately $7,700,000 (Edison share). Edison will report this penalty to the CPUC in the May 1990 ECAC application.

ll San Onofre Unit 1 will begin an outage on June 30,1990 in order to inspect and repair a reactor internal component identified as the " Thermal Shield." The reactor will also be refueled during this outage, thus onding Fuel Cycle 10. It is currently forecast that the Unit 1 capacity factor during this fuel cycle will be 52%.

l The TCF penalty, under the TCF procedure, based on the estimated differential fuel cost over Fuel Cycle 10,~ -

is expected to be approximately $1,100,000 (Edison share). This will be reflected in Edison's 1991 ECAC application.

I San Onofre Unit 3 is forecast to end Fuel Cycle 4 in May 1990 with a gross capacity factor of approximately 83%. Based on the estimated differential fuel cost over Fuel Cycle 4, Edison anticipates an award under the TCF procedure of approximately $4,200,000 (Edison share). Edison will file for this award l;

with the CPUC in the 1991 ECAC application, l

Mohave Order Instituting Investigation i

On July 1,1986, Edison filed its response to the CPUC's Order Instituting investigation (Oll") regarding the outage resulting from the rupture of a high pressure steam line at the Mohave Project on' June 9,1985.

- l The Oli will review Edison's share of repair costs and replacement fuel and energy related costs associated l

with the outage. On July 28,1986, Edison filed an addendum to the July 1,1986 response asserting that ~

the CPUC's adoption of the CPIP precludes any review of reasonableness by the CPUC regarding replacement fuel and purchased power costs incurred during the outage.

Balsam Meadow.

On June 7,1989, the CPUC issued a decision granting base rate treatment for Edison's investment.

l related expenses for the Balsam Meadow Hydroelectric Project. The decision made no findings of imprudent -

a management on Edison's part, and did not disallow any of Edison's investment related expenses.- As a result

-l of Edison withdrawing its request for an incremental rate of retum, and certain accounting adjustments, f

Edison's requested first year revenue requirement decreased from $49,700,000 to $44,001,000,-

High Voltage Direct Current Expansion Project ('HVDCEP')

Since July 1,1989, Edison has been charging its retail customers 0.017 e/kWh, subject to refund, to recover its investment in the HVDCEP, which began operation in April 1989. This charge was authorized in Edison's 1988 GRC'and is designed to recover 75% of the investment related cost, with collection of the remaining costs deferred until the CPUC has determined that the Investment was reasonably incurred.

i Edison filed an application on October 2,1989 to commence this review process.; Hearings are expected to occur later this year, with a decision to be issued by the end of the year.

Outages at Palo Verde Units 1 and 3 l

On December 18,1989, the CPUC announced that it would review outages at Palo Verdo Units 1 and -

l

3. Edison owns 15.8% of this three-unit plant located near Phoenix, Arizona, which is operated by Arizona Public Service Company ("APS"). Since March 1989, Units 1 and 3 have been undergoing refueling and modifications to plant and management systems required by the NRC. Unit 3 retumed to service on January.

21,1990. Unit 1 is expected to go on-line in April 1990.

Califomia state law requires a review whenever a major utility facility is out of service for nine or more consecutive months. However, Edison contends that the Iaw was never intended to trigger an investigation when a facility is shutdown for operating or maintenance activities or required modifications where the utility-

- i is actively pursuing the retum of the facility to operating status. The CPUC will conduct hearings on this matter in conjunction with Edison's next GRC during 1992, 1

5

. i l

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The CPUC order required that the subsequent collection of rates associated with Palo Verde Units 1 and 3 be subject to refund pending its review of the outages. Pursuant to the order, Edison has established a memorandum account to track the relevant costs. The CPUC will also review the reasonableness of

. Edison's purchase of replacement power and fuel during the outages.

I FERC Resale Ratemaking Edison sells electricity to six southern California cities (Anahelm, Azusa, Banning. Colton, Riverside and Vernon), the Southern California Water Company and APS under rates subject to FERC jurisdiction. Rate increases made effective by Edison in 1982 and 1984 for all resale customers are under review by FERC.

A A rate decrease was made effective June 1,1987 for all resale customers except Vernon. Increased rates filed for Vernon became effective on June 5,1988 and are under review by FERC.

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

Fuel Supply '

i Fuel and purchased power costs amounted to approximately $2.6 billion in 1989,19.3% higher than in 1988. Sources of energy and unit costs of fuel for 1985 through 1989 were as follows:

Average Cost Por MWion Sources of Enerov BTU'e m Year ended Dommber 31.

Year ended Decernber 31.

JQQ, 1996 ME, M 1989

.1]Qit M _1987 M 3 09 Oil...

2%

1%

1% -

4%

4%.- $ 6.54 $ 7.o9 - $ 3.25 $2.78 $3.03 i

Nr.; ural gas.......

37 25 36 23 25 4.11 2.58 2.55 3.25 3.24

@al.......................

8 14 14 14 13 1.06 1.02 1.04 1.06

-1.14 Nuclear (2) 3

.29 11 3

1.06 :1.08 1.15 1.02-1.o4 All f u els.....,................

58 56 71 62 58' 3.29 2.01 2.03 1.99 2.15-Hydroelectric '............

6 8

5 4

4 Purctiases: non utility power i

producers (3)...........

4 7

10 ^

18 25 Purchased and inter-changed power,

J2

.22

,,14, 3

3 M% M% M% M% M%

(1) British Thermal Unit (" BTU") is the standard unit of measure for the heat content of fuels. One BTU 13 the amount of heat required to raise the temperature of one pound of water, at 39.1 degrees Fahrenheit, by one degree Fahrenheit.

(2) The average nuclear fuel cost for 1985 is based on the operation of San Onofre Units 1,2 and 3. For i

1986 through 1989 Palo Verde Units 1 and 2 and for 1988 and 1989 Palo Verde Unit 3, have also been included; h

(3) There are no fuel costs associated with Edison's purchases from Independent nonregulated power l

producers.

Average fuel costs, expressed in cents por kilowatt-hour, for the year ended December 31,1989 were:

oil 2.97<, natural gas 3.30e, coal 1.20<, and nuclear 1.134.

6

- owner. Under terms of the settlement, Edison paid the current owner $1,000,000 for consequential damages.

and is obligated to pay an additional $1,000,000 in excavation and clean-up costs after other responsible

' parties have spent $2,000,000. In March,1990, Edison received approval from the CPUC to record up to

$1,000,000 of the incremental excavation and clean-up costs associated with this parcel of land on the Venice site.

j A second application, for an underground storage tank site at Edison's former Comptor Service Center f

was filed in June 1988. In October 1988, Edison and the CPUC Staff agreed to terms and conditions regarding the Compton application and Edison was gNen Interim permission to record the costs in a j

memorandum account. In November 1988, Edison filed an application seeking slmllar provisions to record costs associated with clean up of hazardous water at the Visalla Pole Yard and payment of Edison's share l

of the first phase of cleanup of the Operating Industries, Inc. landfill site located in Monterey Park, California.

On March 31,1989, the Visalia Pole Yard was named to the National Priorities List under terms of the federal Supnfund law. In February,1990, Edison received approval from the CPUC to record an additional

$4,000,000 in the memorandum account. This $4,600,000 reflects Edison's continuing costs at the site as well as additional activities associated with the designation on the National Priorities List. Further '

applications are planned.

The Safe Drinking Water and Toxic Enforcement Act prohibits the exposure to individuals of chemicals known to the State of California to cause cancer or reproductive harm and the discharge of such listed chemicals into potential sources of drinking water. Additional chemicals are continuously being put on the j

state's list, requiring constant monitoring by Edison.

The State of Califomia has adopted a policy discouraging the use of fresh water for' plant cooling-i purposes at inland locations. Such a policy, when taken in conjunction with existing federal and state water

-l quality regulations and coastal zone land use restrictions, could substantially increase the difficulty of siting j

new generating plants anywhere in Califomla.

1 i

The Resource Conservation and Recovery Act (" RCRA") provides the statutory authority for the EPA to l

Implement a regulatory program for the safe treatment, recycling; storage and disposal of' solid and hazardous wastes. Thus far, the EPA's regulations have had only a minimal economic -impact on 1

environmental expenditures. However, a significant report is still before the EPA and Congress regarding the disposition of high volume coal wastes. As a result of the study performed by the EPA over the past few years, the EPA will recommend to Congress that high volume coal combustion wastes (fly ash / bottom ash) not be regulated as hazardous under RCRA. With or without congressional approval, Edison will incur additional expenses to either completely change its disposal practices or to modify existing disposal facilities and monitoring systems.

i Individual states may implement their own EPA approved hazardous waste programs in place of the

-t federal scheme and may impose more stringent controls. The Staa of Califomia has passed legislation which establishes design criteria and monitoring requirements for underground tanks. The regulations implementing the law apply to underground tanks containing hazardous substances, which include motor fuels, solvents and transformer oils. To comply with this law, all of Edison's underground tanks required leak detection monitoring systems or were replaced with tanks that have secondary containment. Edison has 7

E over 300 existing tanks which were affected; Edison's underground storage tank compliance program was completed in 1988. Sixty percent of the tanks were replaced; 30% of the tanks were closed (removed or abandoned in-place); and new extemal leak detection monitoring programs were implemented at the -

1 remaining tanks. In excess of $11,200,000 was spent on this compliance effort. Edison currently has 271 underground tanks which contain hazardous substancesi To date. 283 other tanks have been permanently closed in place or removed.

The Toxic Substance Control Act and accompanying regulations govem the manufacturing, processing, distribution in commerce, use and disposal of polychlorinated biphenyts, a toxic substance used in certain electrical equipment. Regulations to date have had a substantial impact on environmental expenditures.

9 1

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t The effect of Edison's use of low sulfur fuel oil required by air quality regulation is discussed in

• Natural Gas and Fuel Oil Supply" under ' Fuel Supply".

Edison's capitalized expenditures for environmental protection for the years 1969 through 1989 and its currently estimated capital expenditures for such purpose for the years 1990 through 1994 are as follow; On thousands)

Air Water Sand Additional Popution Pouuson Wesen Noise Plant Jeg[3 Total

,Qpntrol

.Qontrol Dienceal Abstement Aesthetics Caoeotty Miecomaneoug 1969-1989.... $ 2,850,592 8 361,517 $ 185,114 $ 203,512

$ 9,707. $1,B49,541 - $ 3,746

$ 237,455 '

1990...,,.,.

223,440

'10,717 210-661 -

3,032 176,566 32,254

~1991..,,,,.,

180,023 10,038 697

~701 1,146 143,447 23,994-1992..,,....

153,560 2,817 734-682 148,796 631 1993........

169,912 2,827

-772 2,719 163,429 ~

165 1994....,,,

190,$95 694 800 22,870-166,217 5

y These estimates include budgeted and forecast plant expenditures responsive to' currently effective legislation. Projected capital expenditures for environmental protection are subject to continuous review and =

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

Proposed Merger with San Diego Gas & Electric Company On -November 30, 1988, SCEcorp, Edison and SDG&E entered Into an Agreement and Plan of Reorganization providing for the merger of SDG&E Into Edison. Under the agreement, SCEcorp will exchange 1.3 shares of its newly issued common stock for each outstanding SDG&E common share.

Outstanding SDG&E preferred and preference stock will be exchanged for preferred and preference stock of SCEcorp with similar provisions, except that the dividends on each series will be Increased by between.

10% and 20%. The merger will be accounted for as a pooling of interests.' Pro forma condensed financial statements reflecting the combination of Edison and SDG&E are presented in Exhibit 28.1 to this Form 10 K, which are incorporated herein by reference.

SDG&E is an operating public utility principally engaged in the generation, purchase, transmission.

~

distribution and sale of electric energy and the purchase, distribution and sale of natural gas, SDG&E.

distributes electric energy to approximately 1,100,000 customers in San Diego County and a portion of Orange County, California and natural gas to approximately 660,000 customers in San Diego County.? As '

of December 31,1989, SOG&E reported consolldated total assets of $3.5 billion,-long term debt of $1.1 billion, preferred stock of $147,000,000 and common equity of $1.3 billion. For the year ended December 31, 1989, SDG&E reported -consolidated total operating revenues'of $2.1 billion and net income of

=

$187,000,000. As of February 28,1990, SDG&E reported 3,450 net megawatts ("MW") of electric power available to it during the summer, of which 1,611 net MW represented oil and gas generating plants,990 not MW represented purchased power,517 net MW represented nuclear generating plants and 332 not MW a

represented combustion turbine generating plants.

The merger agreement was approved last year by the shareholders of SCEcorp, Ed! son and SDG&E.

Completion of the merger remains subject to requisite regulatory approvals, including approval by the FERC, CPUC and NRC. The FERC and CPUC have established regulatory review schedules which are expected to lead to riccisions in 1990.

Hearings before the FERC commenced in February 1990; and hearings before the CPUC are scheduled to begin in April 1990. Numerous parties, including the City of San Diego, have Intervened in the FERC and CPUC proceedings, requesting those agencies to disapprove the merger or to approve it only subject to.

cortain conditions. In response to intervenors' requests, the FERC has ordered the preparation of an'-

l 10 A

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environmental assessment of the effects of the merger on air quality within the service territories of Edison and SDG&E, If, as a result of the environmental assessment, the FERC determines that an environmental impact statement is required, the FERC decision on the merger would likely tw delayed. Prior to the start of the FERC hearings in February, the Califomla Attomey General announced that he would oppose the j-

- merger before the FERC and CPUC on various grounds, including possible violations of antitrust laws. In the CPUC proceedings, the CPUC's DRA filed its initial report in early February 1990 opposing the merger as proposed and citing concems regarding benefits to ratepayers, competition issues involving Edison's transmission system, and regulation of transactions between Edison and its unregulated affiliates.

In addition, fm Ctty of San Diego has filed an action for declaratory relief against SCEcorp, Edison and SDG&E The city nas asked the San Diego Superior Court to rule that the merger constitutes a transfer of

)

SDG&E's franchises to locate its utility facilities in the city's, among other things, streets and public places and that such franchises cannot be transferred to Edison without the city's consent. SCEcorp and Edison believe that the merger will not constitute a transfer of the franchises requiring the city's consent. SDG&E has franchises from other govemmental entitles which contain similar provisions.

I Separately, the city has also stated its concem that the merger may cause interest payments on certain j

industrial development bonds issued by the city on behalf of SDG&E to become taxable to the holders of such bonds. Edison and SDG&E have filed a revenue ruling request with the Intemal Revenue Service

("lRS') seeking assurance as to the tax-exempt status of the bonds after the merger. SCEcorp believes that it is unlikely that the IRS would decide that the merger would render the interest on the bonds includable in the taxable income of the holders. However, in such event, Edison anticipates that it would take steps to cause the redemption, retirement, refunding or defeasance of any bonds affected by such adverse rulingc Besed upon its analysis and the advice of nationally recognized bond counsel, SCEcorp believes that the merger will not adversely affect the tax-exempt status of interest payments on the bonds and expects to obtain an opinion of nationally-recognized bond counsel to that effect.

Item 2.

Properties Existing Generating Facilities 4

Edison owns and operates 12 oil-and gas-fueled electric generating plants, one diesel fueled generating plant,38 hydroelectric plants and.an undivided 80% interest (349 MW net) in Unit 1 and an undivided 75.05%

interest (t,614 MW not) in Units 2 and 3 at San Onofre. These plants are located in central and southem Califomia. Palo Verde (15.8% Edison owned) is located near Phoenix, Arizona. Palo Verde Units 1,2 and 3 started commercial operation on February 1,1986, September 19, 1986, and January 20, 1988, respectively. Edison owns two units at a small oll-and gas-fueled electric generating plant in Arizona and a 48% undivided interest (753 MW) in Units 4 and 5 at the Four Comers Project, a coal fueled steam electric generating plant in New Mexico, all of which are operated by other utilities. Edison operates and owns a 56% undivided interest (885 MW) In the Mohave Project which consists of two coal fueled steam electric generating units in Clark County, Nevada. Edison receives an entitlement of 277 MW from the DOE's Hoover.

Dam Hydroelectric Project. At year end 1989, the existing Edison-owned generating capacity (summer effective rating) was comprised of approximately 62% gas and oil,18%-nuclear fuel,12% coal and 8%

hydroelectric.

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

With certain exceptions, major and certain minor hydroelectric projects, with related reservolts, currently having an effective operating capacity of 1,154 MW and located in whole or in part on lands of the United States, are owned and operated under governmental licenses which expire at various times between 1990 and 2009. Such licenses impose numerous restrictions and obligations on Edison, including the right of the 11 l

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United States to acquire the project upon payment of specified compensation. When existing licenses expire, FERC has the authority to issue new I!conses to third parties, but only if their license application is superior to Edison's and then only upon payment of specified compensation to Edison. Any new licenses issued to Edison are expected to be issued upon terms and conditions less favorable than those of the expired licenses. Applications of Edison for the relicensing of certain of the hydroelectric projects referred' to above with an aggregate effective operating capacity of 61,7 MW are pending. Annual licenses issued for all Edison projects, whose licenses have expired and are undergoing reticensing, will be renewed until the new licenses have been issued.

In 1989, Edison's peak demand was 15,632 MW, set on July 20c At the time of this peak, the total area system operating capacity available to Edison was approximately 20,136 MW. The peak experienced in 1989 was the second highest peak demand ever, falling slightly below the all-time mark of 15,987 MW set on September 6,1988.

Substantially all of the properties of Edison are subject to the lien of a trust indenture securing First and Refunding Mortgage Bonds, of which approximately $3.8 billion principal amount was outstanding at December 31,1989.

Such lien and Edison's title to its properties are subject to the terms of franchises, licenses, easements, leases, permits, contracts and other instruments under which properties are held or operated, certain statutes and governmental regulations, tiens for taxes and assessments, the lien of another trust indenture to the extent referred to below, and liens of the trustees under such indentures. In addition, such liens and Edison's title to its prcperties are subject to certain other liens, prior rights and other encumbrances, none of which, with minor or unsubstantial exceptions, affects Edison's right to use such proporties in its business, unless the matters with respect to Edison's interest in the Four Comers Project and the related easement and lease referred to below may be so considered.

The properties acquired by Edison pursuant to the merger in 1963 with Califomia Electric Power, Company, together with all substitutions, replacements, additions, alterations,n improvements and enlargements to, of, or upon such properties are, with certain exceptions, also subject to the prior tien of another trust indenture securing $20,000,000 principal amount of First Mortgage Bonds originally issued by that company and outstanding on December 31,1989.

Edison's rights in the Four Comers Project, which is located on land of The Navajo Tribe of Indians under an easement from the United States and a lease from The Navajo Tribe, may be subject to possible defects. These defects include possible conflicting grants or encumbrances not ascertalnable because of -

the absence of or inadequacles in the applicable recording law and the record systems of the Bureau of Indian Affairs and The Navajo Tr!be, the possible inability of Edison to resort to legal process to enforce its tights against The Navajo Tribe without Congressional consent, possible impairment or termination under certain circumstances of the easement and lease by The Navajo Tribe, Congress or the Secretary of the '

interior and the possible invalidity of the lien of Edison's trustindenture against Edison's interest in the easement and lease and the improvements thereon. Edison cannot predict what effect, if any, such possible defects may have on its interest in the Four Comers Project.

Construction Program and Capital Expenditures Edison presently anticipates that it will add approximately 3,255 MW of additional capacity resources to serve its projected service area needs through the year 2000. The capacity additions will consist of the following resources: 710 MW of energy management,925 MW of retum to service of existing Edison oil and '

gas units,180 MW of repower of existing Edison oil and gas units,330 MW of spot purchases,200 MW of -

firm purchases,670 MW of purchases from QFs and 110 MW of commercialized research and development projects. In addition, Edison's resale customers are expected to add 130 MW of new resources over the 19904000 timeframe.

Cash required by Edison for its capital expenditures totaled $1.02 billion in 1987, $817,025,000 in 1988 and $811,849,000 in 1989. Construction expenditures for the 1990-1994 period are estimated-(as of December 21,1989, the date of Etlison's' latest approved budget) as followst

(

12 I

y _

k 9

(In mimons)

~

M.,1R1.1992,1993.lgg!. Total Electric generating plant '........................,

$ 208 $221 $ 211 8 230- $ 258 $ 1,128 i

Electric transmission lines I

a nd substations.....................................

150 157 188 107 72 674-I Electric distribution lines

-)

and substations....................................

485 393 406 448

-472 2,204 3

Other expenditures...................................

,,,,,,$,2

,,,,,,9Q 61

,,,,,5)

,,,,,$2

,,,,,,,2Q4, Total 905 831 866 844 864 4,310 j

Less: allowance for funds used during construction............

19 17 J 17 14 87 j

i Cash required for construction expenditures.................. ' M. j,g,M ),,,gg j,,gg ' j,ggQ l 4,,223 l

4 I

Edison's construction program and related expenditures are continuously reviewed and periodically '

t revised because of changes in estimated system load growth, rates of inflation, receipt of adequate and i

timely rate relief, the availability and timing of environmental, siting and other regulatory approvals, the scope l

of modifications required by regulatory agencies, the availability and costs of extemal sources of capital, the 1

development of new technology and other factors beyond Edison's control.

1

- As a result of the completion of San Onofre Units 2 and 3 and Palo Verde' Units 1,2 and 3, construction j

work in progress has been.significantly reduced. The reduction in construction work in progress caused

- {

allowance for funds used durinp construction ("AFUDC"), which does not represent current cash income of

- j Edison, to decline to 3.3% of tM'ilngs for the year 1989.

1 l

.. j in addition to the cash required for construction expenditures for the next five years as discussed above, $4.5 billion is needed to meet requirements for dividend payments, long. term debt maturities, sinking fund and preferred stock redemption requirements, and contributions to nuclear decommissioning trusts.

- The majority of these capital requirements are expected to be met by internally generated sources..

Edison's estimates of funds available from operations for the five years through 1994 assume among

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other things the receipt of adequate and timely rate relief and the realization of its assumptions regarding cost increases, including the cost of capital. Edison's estimates and underlying assumptions are subject.

to continuous review and periodic revision.

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

~

Nuclear. Power Matters

-l Although higher energy costs will be incurred for replacement generation during any periods that the

- San Onofre and Palo Verde Units are not in operation substantially all such costs will be included in future ECAC filings. Edison cannot predict what other effects, if any, legislative or regulatory actions may have upon it or upon the future operation of the San Onofre or.Palo Verde Units or the extent of any additional i

p, costs it may incu'r as a result thereof, except for those that follow.

o San Onofre Unit 1 i

t The CPUC has imposed a cap on capital improvements to San Onofre Unit 1 over the three fuel cycles which began with the November 1985 outage and ends prior to the refueling outage scheduled for late 1992.

This cap limits expenditures to $201,000.000 (1986 Dollars)'

q q

Backfit requirements for Unit 1 are being controlled through a scheduling methodology agreed to

}

between Edison and the NRC known as the integrated implementation Schedule CilS").- On January 2,1990 -

the NRC issued an order which incorporates into the Unit's operating license the schedule of modifications -

to be performed over approximately the next three years.

i 13 l

J San Onofre Units 2 and 3 As a condition of a resolution adopted in 1974 by the Califomia Coastal Commission which authorized construction of San Onotre Units 2 and 3, a three member Marine Review Committee ("MRC") was established to assess the marine environmental effects of the two new generating units. The MRC issued its final report and recommendations in August 1989. The MRC found that San Onofre Units 2 and 3 cause what it considers substantial adverse effects to several species of manne organisms, including a kelp bed located in the vicinity of the San Onofre units. The MRC has recommended prevention or mitigation of these effects using one or more of several attematives ranging from physical modifications to the station to i

construction of artificial reefs and restoration of wetlands. Final action by the Coastal Commission on the MRC recommendations is tentatively scheduled for May 1990. Edison expects costs of mitigating the effects of the San Onofre units not to exceed $40,000,000.

Additionally, the MRC believes that the discharge from Units 2 and 3 violates Edison's National Pollutant Discharges Elimination System Permits. Edison disputes these MRC conclusions..The Califomia Regional Water Ounuty Control Board, San Diego region, will hold a public hearing on April 23 1990 to consider issuance of a cease and desist order for the alleged violations.

Nuclear Facility Decommissioning Edison's share of costs to decommission nuclear facilities upon their retirement from service are estimated to be $188,193,000 for San Onofre Unit 1; $204,889,000 for San Onofre Unit 2; $282,234,000 for San Onofre Unit 3; $38,061,000 for Palo Verde Unit 1; $35,683,000 for Palo Verde Unit 2; and $38,709.000 for Palo Verde Unit 3. These costs are all in 1989 dollars.

Edison is currently collecting in rates $106.484,000 annually for its share of decommissioning costs for San Onofre Units 1,2 and 3 and Palo Verde Units 1,2 and 3.

Nuclear Insurance Edison operates its nuclear units in accordance with prudent utility practices and in conformity with NRC regulations. Edison generally carries the maximum insurance coverage reasonably available to protect against damage to its nuclear units and replacement energy cost in the unlikely event of an accident at any nuclear unit. A description of this insurance is included in Note 10 of the " Notes to Consolidated Financial Statements" incorporated herein. Although Edison believes that an accident at its nuclear units is extremely

(

unlikely, in the event of an accident, regardless of fault, Edison's insurance coverage might be inadequate l

to cover the losses to Edison. In addition, such an accident could result in action by the NRC to suspend operation of the damaged unit. Furthermore, the NRC could suspend operation at Edison's undamaged nuclear units and the CPUC and FERC could deny rate recovery of related costs. Such an accident, therefore, could materially and adversely affect the operations and eamings of Edison.

Nuclear Waste Policy Act Pursuant :o the Nuclear Waste Policy Act of 1982, Edison. acting as agent for the San Onofre participants, has entered into a contract with the DOE for disposal of spent nuclear fuel for San Onofre Units 1,2 and 3. Under the terms of the contract, Edison is required to pay a quarterly fee of one mill per kilowatt hour to the DOE for net nuclear power generated and sold on and after April 7,1983. For generation prior to April 7,1983, the contract requires payment of a one time fee equivalent to one mill per kilowatt hour, plus accrued interest. This one. time fee has been recorded as a deferred asset pending future rate recovery and, including accrued interest, was approximately $19,373,000 on December 31,1989. The obligation for this one time fee is being discharged by equal payments over 40 quarters. Such payments commenced during 1985. Expenses associated with disposal of spent nuclear fuel are recovered through the ECAC procedure.

Potential Competition Under various acts of Congress, federal power projects have been constructed in Califomia and neighboring states. Municipally owned utilities, cooperative utilities and other public bodies have certain preferences over investor owned utilities in the purchase of electric power provided by federally funded 14 V

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Pursuant to Form 10-K's General Instruction (" General Instruction") G(3), the following information Is I

included as an additional item in Part h Executive Officers of the Registrant i

hoe at Deceeatw Effectw

- j Emocutive Officer 31.1989 Company Position Date Howard P, Allen 64 Chairman of the Board, President and -

September 1,1987

[

Chief Executive Officer and Director i

John E. Bryson 46 Executive Mee President and Chief January 1,1985

,j i

Financial Officer

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January 1,1982 j

i' David J. Fogarty 62

' Executive Mce President

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Michael R Peevey

$1 Executive Mce President -

January 1,1986 l

t L T. Papay 53

' Senior Vice President -

May 19,1983 j

i-.

j David N. Barry lli 62 Vice President and General Counsel March 1,1989 t

Kenneth P, Baskin 51 Vice President (Fuel and Material August 1,1989 l

3 l

Management) -

G. J. Bjorklund 57 Mce President (Power Supply)

January 1,1989 j

R H. Bridenbecker 46 Vice President and Site Manager September 1,1989 j

San Onofre Nuclear Generating Station I

Rchard K. Bushey 49 Vice President and Controller -

' January 1,1984 Ronald Daniels '

50 Vice President (Revenue Requirements)

August 1,1989 Robert Dietch 51 Vice President (Engineering, Planning January 1,1989 and Research) l-John R Fielder 44 Vice President (Information Services).

January 1,'1989 1

Charles B. McCarthy, Jr.

.49 Vice Prv6l dant (Customer Service)

Septembee 1,1989 Michael L Noet 48 Vice President and Treasures

. July 1,1980 -

.i t.ewis M. Phelps 46 Vice President (Corporate Communications) '

May 1,1989 Harold B. Ray 49 Vice President (Nuclear Engineering, August 1,1989 Safety and ucensing) -

Jacque J. Sokolov 35 Vice President and Medical Director -

August 1,1989 '

Diana L Peterson-More 39 Corporate Secretary March 6,1989

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None of Edison's executive officers are related to each other by blood or marriage'. As set forth in

-i Article IV of Edison's Bylaws, the officers of Edison are chosen annually by and serve _ at the pleasure of l

Edison's Board of Directors and hold -their respective offices' until their resignation, removal, other i

disqualification from service, or until thelr respective successors are elected. All of the executive officers

'I have been actively engaged in the business of Edison for more than five years except for Messrs. Phelps j

and Sokolov, Those officers who have not held their present posl!!on for the past five years had the following business experience during that period:

Howard P. Allen Chairman of the Board and Chief Executive.

November 1984 Officer and Director

-. to August 1987 Michael R. Peevey Senior Vice President-January 1985 to

'i

' December 1985 i

i David N. Barry lil Associate General dounsel January 1982 to February 1989 l

Vice President - Nuclear Engineering

- September 1983

'j Kenneth P. Baskin Safety and Ucensing.

to July 1989 l

G. J. Bjorklund Vice President - System Planning

.May 1986 to :

l and Research December 1988 l

Vice President - Engineering and February 1984 to Construction April 1986 i

i 17 1

6 I

ia iw.-

'I a

R H. Bridenbecker Mce President - Customer Service January 1988 to August 1989 Mce President - Fuel Supply May 1982 to December 1987 Ronald Caniels Manager - nevenue Requirements September 1975 i

to July 1989 Robert Dietch Mce President - Engineering and May 1986 to Construction December 1988 Mce President - Advanced Engineering May 1985 to April 1986 Mce President - Customer Service July 1983 to April 1985 g

John R. Fielder Manager - Information Services June 1987 to December 1988 Manager - Computing Services March 1981 to May 1987 Charles B. McCarthy, Jr.

Mee President and Site Manager, January 1988 Sari Onofre Nuclear Generating Station to August 1989 Mee President - Customer Serv %

May 1985 to December 1987 Mce President - Advanced Engineering July 1983 to April 1985 Lewis M. Phelps Manager - Corporate Communications July 1985 to April 1989 Mce President - Public Relations -

June 1982 to Southern Pacific Company (1)

June 1985 Harold B Ray Mce President - Fuel Supply, January 1988 Procurement and Materiai Management to July 1989 w

Vice President and Site Manager, November 1983 to San Onofre Nuclear Generating Station December 1987 Jacque J. Sokolov Director - Health Care Department, and October 1987 i

Corporate Medical Director to July 1989 Corporate Medical Director May 1987 to September 1987 Consultant - Preventive Medicine and January 1985 Corporate Health Benefits (2) to April 1987 Physician - Internal Medicine, January 1985 Cardiology, Nuclear Cardiology (2) to April 1987 Diana L Peterson.More Manager, Provider Services October 1987 to March 1989 Manager, Employee Services May 1984 to September 1987 (1) As Vice President of Public Relations for Southern Pacific Company, Mr. Phelps was responsible for all i

public relations functions of Southern Pacific Company and its subsidiaries. Southern Pacific Company is not a parent, subsidiary or other affiliate of Edison.

(2) As a consultant, Dr. Sokolov provided advice to various Fortune 100 companies none of which is a parent, subsidiary or other affiliate of Edison. As a physician, Dr. Sokolov had a private practice in the specialty fields of internal medicine, cardiology and nuclear cardiology.

i I

18

t p

power projects and, in addition, have certain preferences over investor-owned utilities in connection with the L

l acquisition of licenses to build hydroelectric power plants. Any energy which is or may be generated at these projects and transmitted for the account of such other utilities and public bodies over present or future govemment or utility-owned lines into the territory or markets served by Edison would result in a loss of sales by Edison.

Under the laws of California, utility districts can be formed and may include incorporated as well as unincorporated territory. Such districts, as well as municipalities, have the right to construct, purchase or i

g condemn and operate electric facilities. In addition, when a city owning an electric system annexes adjacent =

{

unincorporated territory which Edison has previously served, Edison may experience a loss of customers.

l I

Edison's construction permits for San Onofre Units 2 and 3 contain certain conditions which require Edison (1) to permit privately or publicly-owned utilities, including Edison's resale customers, within or adjacent to Edison's service area, on timely notice, to participate on mutually agreeable terms in future j

nuclear units Initiated by Edison, and (ii) to interconnect and coordinate reserves with, fumish emergency service to, sell bulk power to and purchase bulk power from, and provide certain transmission services for -

such utilities.. Edison has also entered'into agreements with certain of its resale customers which contemplate their possible participation in jointly owned generating projects initiated by Edison, and the integration of power sources acquired by each such customer, including the dispatching, reserve sharing,,

partial power supply requirements and transmission service required in connection with such integrated operations. Pursuant to these agreements, two' resale customers exercised an option to participate In'-

Edison's ownership entitlement in San Onofre Units 2 and 3. Effective November 1,1977, Edison sold an i

undivided 3.45% interest in San Onofre Units 2 and 3 to these two resale customers for approximately

$90,000,000.. Effective September 1,1981, a further 1,5% interest in Units 2 and 3 was sold to one of these j

resale customers for approximately $50,000,000. In addition, since 1986 six of Edison's resale customers have acquired ownership interests in other generating sources and made purchases from other utilities in such amounts as to decrease Edison's revenues from resale cities from 4.4% 101.3% of sales. This revenue loss has not had a substantial effect on Edison's business and opportunities.

The Public Utility Regulatory Policles Act of 1978 ("PURPA") has fostered.the entry of non-utility companies into the electric generation business. Under PURPA, non utility power producers are allowed to construct OFs for the production of electricity from certain alternative or renewable energy resources,'and -

utilities are required to purchase the electrical output of these OFs at prices set by state regulatory bodies.

At the present time, Edison is required by state regulation to continue to buy power generated by OFs, under long term contracts negotiated earlier at prices much higher than the power Edison can produce or s'

purchase from other sources. Further, certain operators of OFs sell power they produce to large industrial and commercial customers of Edison from projects located on-site. Further loss 'of sales from such customers may be aggravated in the future as a result of attempts by these producers to institute mandatory

]

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

Item 3.

Legal Proceedings Antitrust Matters N March 2,1978, five resale customers (the Califomia cities of Anaheim, Azusa, Banning,- Colton and River @s) filed suit against Edison in the United States District Court for the Central District of Califomia alleging violation of certain antitrust laws. The complaint seeks monetary damages, a trebling of such damages and certain injunctive relief. The complaint alleges that Edison (i) is engaging in anti competitive behavior by charging more for electricity sold to the resale customers than Edison charges certain classes of its retall customers ("ptice squeeze *), and (ii) has taken action alone and in concert with other utilities to l

prevent or limit such resale customers from obtaining bulk power supplies from other sources to reduce or.

replace the resale customers' purchases from Edison (" foreclosure"). The plaintiffs estimated their actual damages for alleged price squeeze, before trebling, at approximately $22,780,000 and foreclosure damages.

15 i

L l'

i l:

stemming from alleged loss of energy and capacity at approximately $76,800,000 before trebling, for the per) xi February 1,1978 to December 31, 1985. The trial began on July 8,-1986, and concluded on September 26,1986. Proposed Findings of Fact and Conclusions of Lawwere filed by Edison with the Court

' on November 21,1986. No date has been given for the decision. The foregoing proceedings involve complex issues of law and fact and, although Edison is unable to predict the final outcome of the proceedings, it has categorically denied the allegations of these resale customers.

In 1983, another resale customer, the City of Vernon, filed a' complaint against Edison in the United 3

States District Court for the Central District of California, alleging violation of certain antitrust laws. The complaint alleges that Edison has engaged in anticompetitive behavior by restricting access to Edison transmission facilities and foreclosing Vernon from purchasing bulk power supplies from other sources. The complaint also alleges that Edison unlawfully designed its resale rates in certain respects. Vernon has claimed damages of approximately $60,000,000 before trebling. By means of a Minute Order dated March

-1,1990, the Court in this case has granted three motions for Summary Judgment in favor of Edison.- On March 9,1990, the Court entered a formal decision granting two of the motions. It appears that when the 4

Court's formal order is made on the third motion, the issues in this case will be disposed of.

Other Litigation Palo Verde - Supply of Cooling Water The Salt River Pima Maricopa Indian Community (" Community") filed a first amended complaint on June 23,1982, in Federal District Court against the United States, the Secretary of the Interior and additional defendants, including Edison and the other Palo Verde participants, alleging, among other things, that their contract to obtain effluent water for cooling purposes is invalid. However, the portion of the action challenging the effluent contract has been stayed while the Community litigates its claims against the-f Department of the interior and other defendants for wrongful exclusion from the Salt River Project Agriculturalimprovement and Power District, a federal reclamation project.- A proposed settlement of this j

case has been announced. The settlement will have no adverse impact on the effluent contract; Although -

federallegislation enacted on October 21,'1988 made this settlement law, certain significant contingencies

)

remain to be performed before the settlement is finalized and the suit is dismissed. Among these contingencies are the appropriation of significant sums of money by Congress and the Arlzona legislature, and the approval of the settlement by the Federal District Court. in addition, the participants' rights to use groundwater and effluent at Palo Verde are potentially at issue in a Maricopa County Superior Court action.

4 APS, as project manager, has filed claims in the case challenging the jurisdiction of the court over these uses and attematively requesting the Court to confirm the participants' groundwater rights and their j

contractual right to effluent.

a Edison does not anticipate that any renegotiation of existing contracts would have a material adverse impact on the operation of the Palo Verde units, item 4. Submission of Matters to a Vote of Security Holders Inapplicable.

4

~

PARTll item 5.

Market for Registrant's Common Equity and Related Stockholder Matters Certain Information responding to item 5 with respect to frequency and amount of cash dividends is included in Edison's Annual Report to Shareholders for the year ended December 31,1989 (" Annual Report")

under " Quarterly Financial Data" on page 20 and is incorporated by reference pursuant to General Instruction G(2). As a result of the formation of a holding company described above in item 1, all of the issued and outstanding common stock of Edison is owned by SCEcorp and there is no market for such stock.

item 6.

Selected Financial Data information responding to item 6 is included in the Annual Report under *Solected Financial and Operational Data 1985-1990" on page 21 and is incorporated herein by reference pursuant to General Instruction G(2).

Item 7.

Management's Discussion and Analysis of Results of Operations and Financial Condition Information responding to item 7 is included in the Annual Report under " Management's Discutslon and Analysis of Results of Operations and Financial Condition" on pages 18 and 19 and is incorporated herein by reference pursuant to General Instruction G(2).

Item 8.

Financial Statements and Supplementary Data

/

Certain information responding to item 8 is set forth after item 14 in Part IV. Other information responding to item 8 is included in the Annual Report on pages 1 through 16 and on page 20 under a

" Quarterly Financial Data" and is incorporated herein by reference pursuant to General Instruction G(2).

ltem 9.

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

PART 111 Item 10. Directors and Executive Officers of the Registrant Information concerning executive otticers of Edison is set forth in Part I in accordance with General Instruction G(3), pursuant to instruction 3 to item 401(b) of Regulation S.K. Other information responding to item 10 is included in the Joint Proxy Statement (" Proxy Statement") filed with the Commission in connection with Edison's Annual Meeting of Shareholders to be held on April 19,1990, under the heading

" Election of Directors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3).

. Item 11. Executive Compensation Information responding to item 11 is included in the Proxy Statement under the heading " Election of

'l,'

Dl rectors of SCEcorp and Edison," and is incorporated herein by reference pursuant to General Instruction G(3),

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

19

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l

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mm-

item 13, Certain Relationships and Related Transactions information responding to item 13 is included in the Proxy Statement under the heading " Election of Directors of SCEcorp and Edison,' and is incorporated herein t'y reference pursuant to General Instruction G(3).

PARTIV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

]

(a)(1) Financial Statements The following items contained in the 1989 Annual Report to Shareholders are incorporated by reference i

in trns report.

Consolidated Statements of income - Years Ended December 31,1989,1988 and 1987 Consolidated Balance Sheets - December 31,1989 and 1988 g

Consolidated Statements of Cash Flows - Years Ended December 31,1989,1988 and 198/

Consolidated Statements of Capitalization - December 31,1989 and 1988

]

~

Consolidated Statements of Retained Earnings -- Years Ended December 31,1989,1988 and 1987 Notes to Consolidated Financial Statements Responsibility for Financial Reporting Report of Independent Public Accountants Management's Discussion and Analysis of Results of Operations and Financial Condition j

j (2) Report of Independent Public Accountants and Schedules Supplementing Financial Statements The following documents may be found in this report at the Indicated page numbers.

Report of Independent Public Accountants on Supplemental Schedules Pagg 21 Schedule V

-Property, Plant and Equipment for the Years Ended December 31, 1989,1988 and 1987 22 Schedule VI

-Accumulated Depreciation and Amortization of Property, Plant, and Equipment for the Years Ended December 31,1989,1988 and 1987 25 Schedule Vill -Valuation and Qualifying Accounts for the Years Ended December 31, 1989,1988 and 1987 28 Schedule IX

-Short-Term Borrowings For Each of the Three Years in the Period Ended December 31,1989 31 Schedule X

-Supplementary income Statement Information For Each of the Three Years in the Period Ended December 31,1989 32 Schedules I to XIll, inclusive, except those referred to above, are omitted as not required or not applicable.

(3) Exhibits See Exhibit index on page 36 of this report.

(b) Reports on Form 8-K l

None 20

==

a

n-1 W

f REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS a

ON SUPPLEMENTAL SCHEDULES f.

To Southern Califomla Edison Company:

We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in the 1989 Annual Report to Shareholders of Southern California Edison Company, I

h incorporated by reference in the Form 10-K, and have issued our report thereon dated February 2,1990.

h Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in accounting for unbilled revenuesi Our audits of the consolidated financial statements were made j

for the purpose of forming an opinion on those basic consolidated financial statements taken as a whole.

The Supplemental Schedules listed in Part IV of this Form 10-K are presented for purposes of complying with i

the Securities and Exchange Commission's rules and regulations, and are not part of the basic consolidated financial statements. These supplemental schedules have been subjected to the auditing procedures applied 4,

in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

5 l

i ARTHUR ANDERSEN & CO.

Los Angeles, California February 2,1990 i

1 I-21

y-SOUTHERN CALIFORNIA EDISON COMPANY ~

SCHEDllLE V - PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31,1989 Balance at -

Add (Deduct)-

Balance -.

Beginning of = Additions Other at End of

,Q919tIDilon Period '

- at Cost -

Retirements' Changes-Period -

(In thousands)

Steam production........... ' $ 1,892,736

_ $ l42,438

$ (11,027)

$ 1,924,147_-

- Nuclear production..........

-5,658,708 -

72,779.

(8.059):

- (3,712) -

5,719,716 Hydro production...........

532,005 15,867 1(350)

- (1,448) -

546,074 Other production,.........

-392,616 1,547-

(1,231) -

(1,818) 391,114 j

Transmission........

-2,132,616 186,988 (8,097)

_4,842 2,316,349 Distribution...............

4.263,950 444,250 (53,218)'

- (2,286).

4,652,696 General..................

-771,545

~ 77,858 (23,310)

' $,049 ~

829,142 ~

Plant held for future use......

19,481 1,170

' (2,992) '

. 17,659 Experimental electric plant unclassified 17,126 18,391 35.517 Other utliity plant...........

7.067 3

(8).

7.062 Subtotal-utility plant 15.687.850.-

861,291-(108,292)

' (1,373) 16,439,476.

Construction work in progress...........

676,175 (81,335)(a)

(1,080)'

.593,760 Nuclear fuel..

1.046.090 47.555 (41.350) 1.052.295' Gross utility plant......... $17.410.115

$= 827.511

$ (150.722), $ -(1.373). $18.085.531 Nonutility property......

59.582-S 3542 (8.924) 4 54.200}

(a) Reflects transfers to plant in service, which are not of additions to construction work in progress.

N i

r t'y 22

(

r SOUTHERN CAllFORNIA' EDISON COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31,1944 '

' Balance at Add (Deduct)

Balance -

Beginning of : Additions Other at End of i Description Period at Cost Retirements Chances Period (b)

(In thousands)

Steam production,......... $ 1,852,474

$ 52,609

$ ' (12,347)

= $ 1,892,736

{

' Nuclear production..........

5,109,406 575.681.

(2.274 (24,105)--

5,658,708 Hydro production..........

527,134 6,767 (391 (1,505) 532,005 1

Other production...........

395,023 (2,387) ~

_(20)

Transmission..............

1,973,284 ;

171,571 (13,503) 392,616' 1,264 2,132,616

- j Distribution........,......

3.897,795 406.083

-(39,928 4,263,950 -

i G e neral.................. -

661,315 t19,666 (9,431 (5)

- 771,545 Plant neld for future use.....,

24,734 :

(5,207)

- (46) 19,481 Experimental electric plant unclassified............

17,474

'16,996 (17,344) 17,126 -

Other utility plant...........

7.052 24.

(9) 7.067 Subtotal-utility plant 14,465,691 1,341,803 (95,293)

(24,351)-

15,687,850 Construction work in

_ l I

progress................

1,232,990 (551,315)(a) -.. (5.500)-

676,175 i

Nuclear fuel..............

999.373

~ 57.404 '

__ (10.687) 1.046.090 l

Gross utility plant........., $16.698.054 -

$ 847.892

$ (111.48')):

$(24.351)

$17.410.115 -

1 4

Nonutility property.........,,, & - 169.317 1.649

. $ (111.384)(c) $

59 582

]

i

- 1 i

(a) Reflects transfers to plant in service, which are net of additions to construction work in progressi l

i j;

(b) On July 1,1988,- SCEcorp acquired the outstanding common stock of Edison under a merger agreement approved-by shareholders on April 21,1988. In conjunction withsthe corporate restructuring, Edison's investment in nonutility property was transferred to SCEcorp at book value on July 1,1988. The amounts reported give retroactive effect to the property transfer. In addition, Edison has retroactively restated all prior period financial statements to reflect the consolidation of all majority-J p

owned subsidiaries.

-(c) Reflects the retirement of energy exploration projects which were transferred to the ECAC balancing -

l account pursuant to a CPUC decision.

. )

i p

l 23 g

a f4w

_____m_.

SO'JTHERN CALIFORNIA EDISON COMPANY SCHEDULE V - PROPERTY, Pt. ANT AND EQUIPMENT For the Year Ended December 31,1987 Balance at Add (Deduct)

Balance Beginning of Additions Other at End of Description Period at Cost Retirements _ChaDRig Periodfb)-

(in thousands)

Steam production.......... e $ 1,776.760 78,685

$ (3,849)

$ 878 -

$ 1,852,474 '

Nuclear production..........

5,027,134 85.147 (2.875) 5.109,406 Hydro production...........

270.949 256,622 (437).

$27.134

~

Other production.........,.

393.305 1,757 (39) 395.023 Transmission..............

1,830,316 148,145 (5,177) 1.973.284 Distribution.......,........

3.518.610 420.664 (41,479) 3,897.795 Generat..................

507.866 163,436 (9,987) 661.315 Plant held for future use......

22.764 1.970-24,734 Experimental electric plant unclassified.............

53.884 195 (36,605) 17.474 Other utility plant,..........

7.039 21 (8) 7.052 Subtotal-utility plant.......

13,408.627 1,156.642 (100.456) 878 14.465.691 Construction work in progress................

1.342.169-(107.448)(a)

(1,731)

= 1,232.990 Nuclear f uel...............

932.449 86.924 999.373 Gross utility plant.........

$ 1.116.118

$ (102.187)

$16.698.054 Nonutility property..........

5 7.605 5

(98) 5 169.317' (a) Reflects transfers to plant in service, which are net of additions to construction work in progress, (b) On July 1,1988. SCEcorp acquired the outstanding cornmon stock of Edison under a merger agreement approved by shareholders on April 21, 1988, in conjunction with the corporate restructuring, Edison's investment in nonutility property was transferred to SCEcorp at book value on July 1,1988. The amounts reported give retroactive effect to the property transfer. In addition. Edison has retroactively restated all prior period financial statements to reflect the consolidation of majority-owned subsidlaries.

• b 24

.j -

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Yoer Ended December 31,1989 Additions Charged Balance at to Costs Add (Deduct)

Balance Beginning of and Other at End of Description Period Expenses _ Retirements Chargg313) Salvoge Period (in thousands)

- Steam production,,,.. $ 1,066,854

$ 85,235

$ (13,292)

$ (1,382) 20

$1,137,435 Nuclear production....

1,011,206 302,973 (7,962)

(3,555) 104-1,302,766 Hydro production,,.

120.614 8,293 (337)

. (16) 128,554 Other production,....

199,137

-12,422 (785)

-13 210.787 Transmission,,,,,.,,

603,899 70,085 (5,218)

(3,062) 2,006 667,710 Distribution..........

1,391.040 165,843 (53,271)

(26,372) 13,619 1,490.859 General...,,.,,,...

160,332 40,949 (23,431)

(629) 1,966 179,187 Experimental electric plant unclassified.,,

1,313 4,125 17,325 (17,356) 5,407 Retirement work in progress,,,.......

(26,935)

(6.326) 5,602 (2,635)

(30,294)

Other utility plant reserves.....,,,.

2,478

-199 (2) 2.675 Subtotal.....,,...

4,529,938 690,124 (93,299)

'(46,770) 15,093 5,095,086 Nuclear fuel amortization...,,,

570.3P6 129.195 (41.350)

_ 650.171 Total utility plant reserves......., $ 5.100.264

$ 819 319. $ (134.049)

$(46.770)

M

$5.753.257 Nonutility property reserves.....,,.. $

13.744

$ 1.454

$ (7.166)

$ 17.676

$ 25.708 (a) Includes removal costs related to facilities retired, damage claims and relocation costs collected from others, and various other adjustments of depreciation and amortization.

4 i

t 25 i

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31,1988 Additions z_

Charged Balance at to Costs Add (Deduct)

Balance Beginning of and Other

_ at End of Description Period ExRtatt.l Retirementt Ch:rcega),$njyggg Period (b).

(In thousands)

Steam production

$ 994,377

$ 83,666

$ (11,329)

$ (1,652)

$ 1,792

$ 1,066,854 Nuclear production 729,035 291,559 (2,274)

(7,142) 28 1,011,206 Hydro production 112,881 0,090 (395) 37 1

120,614 Other production 186,557 12,564 (19)

(4) 39 199,137 Transmission 552,679 64.398 (12,794)

(1,257) 873 603,899 Distribution 1,292,644 152,935 (40,13'3)

(20,907) 6,501 1,391,040 General 132,157 36,609 (9,489) 192 863 160,332 Experimental electric plant unclassified 17,449 1,340 (17,339)

(137) 1,313 Retirement work in progress (26,ia96)

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

Other utility plant T

reserves 2.285 202 (9) 2.478 Subtotal 3,993,468 651,363 (100,124)

(20,665) 14,896 4,529,938 Nuclear fuel amortization 451.587 129.426 (10.687) 570.326 Total utility plant reserves

$ 4.44M

$ 780.789

$ (110 811)

$(29 665) gj,4 2 Q

$5100 264 Nonutility property reserves

$ 121.835

$ 1.603

$ (110 291)(c) $

597 13.744 (a) includes removal costs related to facilities retired, damage claims and relocation costs collected from others, and various other adjustments of depreciation and amortization.

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

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

26

k' 1

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION l_,

OF PROPERTY, PLANT AND EQUIPMENT For the Year Ended December 31,1987 Additions Charged I

Balance at to Costs Add (Qeduct)

Balance Beginning of and Other at End of Descrictl93 Period

. Expenses Retirements Charnesfa) Salvage Periodib) h (in thousands)

Steam production..... $ 922,907

$ 75,739 (3,854)

(517)

$ 102

$ 994,377 -

Nuclear production....

541,101 190.800 (2,871)

(74)-

79

.729,035 Hydro production.....

109.555 4,190 (445)

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

169,595 17,000 (40)

(7)

-3 186.557 Transmission......,.

508,t 72 49,939 (5,110)

(1,227) 905 552.679 Distribution..........

1,168.570 181,454 (41,481)

(22,829) 6.930 1,292,644 ~

General............

110,297 26.545 (9,927) 968 4,274 132,157.

Experimental electric plant unclassified...

45,050 9.416 (36,565)

(452)

'17,449 Retirernent work in progress..........

(22,322)

(1,884)

(8.207) 5,817 (26.596)

Other utility plant reserves..........

2.146 194 (8)

(47) 2.285 Subtotal..........

3,555.071-555.283 (102,185)-

(32,811) 18,110 3,993,468-f Nuclear fuel l

amortization.......

313.106 138.481 451.587 Total utility plant reserves........ $ 3.868177

$ 693.764

$ (10?.185)

$(32.811). M

$4.445.055 Nonutility property reserves.......... $

57.106

$ 64.461 F68

$ 1P1835 -

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

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

property transfers for financial reporting purposes.

E 27 d

d

SOUTHERN CAllFORNIA EDISON COMPANY SCHEDULE Vill-VALUATION AND QUALIFYING ACCOUNTS For the Year Ended December 31,1989 AddMons Balance at Charged to Charged to Balance Beginning of Costs and Other at End Descriotion f-orlod Excenses

_ Accounts _. Deductions of Period (In thousands)

Group A:

Uncollectible accounts -

$ 14,961 6.747 Customers..............

$ 7.067

$ 14,641 All other................

6.073 4.409 3.202 7.280 Total...............,.

$ 13.140 t 19.050 s

$ 18.163(a) s 14.027 Group B:

Pension and benefits.........

$ 80.515

$ 21.367

. $18.474(b) $ 25,627(c)

$ 94,729 Insurance, casualty and 42.333(d) 60.090 other..................

66.295 46.128 Tot al.................

$ 136.810

$ 67.495 g,1,g,424, M

s154.819 4

(a) Accounts written off, net.

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

(c) Includes pension payments to retired employees, amounts paid to active employees during periods of illness and the funding of certain pension benefits, (d) Amounts charged to operations that were not covered by insurance.

28

Fl' SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE Vill-VALUATION AND QUALIFYING ACCOUNTS For the Year Ended December 31,1988 Additions Balance at Charged to Charged to Balance Beginning of Costs and Other at End'

_ Description Period Expenses Accounts Deductions of Period (In thousands)

Group A:

Uncollectible accounts -

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

$ 8.305

$ 9.004

$10,242

$ 7,067 All ot her................

6.524 1.346

_ 1.797 R073 Total.................

$ 14.829

$ 10.350 M 4(a)

$ 13.140 Group B:

Pension and benefits........

$ 61.292

$ 25.668

$18.043(b)

$24,488(c). $ 80,515 Insurance, casualty and other...........,,....

52.056 59.532 55.293(d) 56.295 T otcl..............,,.

$ 113 348

$ 85.200 1,10,p,,4,2

}Jg?,g,1

$ 136.810 j

i (a) Accounts written off, not.

(b) Primarily represents transfers from the accrued paid absence allowance account for required additions -

~

to the comprehensive disability plan accounts.

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

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

.l 1

e i

29 L

1 1

1 s

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE Ylli-VALUATION AND OUALIFYING ACCOUNTS For the Year Ended December 31,1987 Additions Balance at Charged to Charged to Balance Beginning of Costs and Other at End

.Qtscription Period Expenses __ Aggggnis_ Deductions

.01 Period (In thousands)

Group A:

[

Uncollectible accounts -

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

$ 6.255

$13,132

$11,082

$ 8,305 All other.,..............

5.619

...1.726

...821 6.524 gj,Lgg2(a)

$ 14.829 Total..........

})uf14 lWLgha Group B:

Pension and benefits.........

$42,111

$23.501

$17,469(b)

$21,789(0)

$ 61,292 Insurance. casualty and ot her..................

,_$23$9

. O t.6"'6

. 63.189(d) 52.056 Total......

gp,},,ggg g2 gjl4.Q2 jgLp2g

$113.348 (a) Accounts written off, not.

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

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

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

f I

30 a

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE IX - SHORT TERM BORROWINGS For Each of the Three Years in the Period Ended December 31,1989 Weighted Maximum Average Average Weighted Amount Amount Interest Balance Average Outstanding Outstanding Rate et End interest During During During 4

,Qtsgjpt198

.91fgigd Rate the Period -- the Period the Period t

i (a)

(b)

(Dollars in thousands)

December 31,1989:

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

$ 10,700 8.72 %

6 71.600

$ 11,000 9.30%

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

501,600 8.72 501,600 393,900 9.30 Payable to holders of commercial paper-fuel...................

281,600(c) 8.72 535,300 335,200 9.30 Payable to others-fuel............

200.000(c) 8.42 200,000 160,274 8.88 December 31,1988:

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

$ 67,120 8.86 %

$244,400

$ 68,559 7.64 %

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

400.000 8.86 400,000 362,384 7.70 Payable to holders of commercial pa per-fuel...................

535,280(c) 8.86 550,300 413,173 7.70 Payable to holders of commercial paper-financing subsidiary.......

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

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

$ 35,800 7.76 %

$ 187.000 -

$ 29.769 7.13 %

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

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

518,300(c) 7.81 766,692 427,252 7.18 i

(a) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by 365 for 1989,366 for 1988 and 365 for 1987.

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

(c) Under eredit agreements with commercial banks which allow Edison to refinance short. term borrowings on a long term basis, borrowings of $272.600,000 as of December 31,1989. $338,800,000 as of December 31,1988 and $288.300,000 as of December 31,1987, have been reclassified as long term debt on the Consolidated Balance Shoot in the 1989 Annual Report to reflect the anticipated timing of repayment of nuclear fuelindebtedness.

31

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION For Each of the Three Years in the Period Ended December 31,1989 Charged to bpense (in thousands)

Year ended December 31,1989:

P roperty taxes................................

$137,800 Year ended December 31.1988:

Property taxes................................

129.587 Year ended December 31,1987:

Propert y taxes................................

122.496 Note: Depreciation and maintenance expenses appear on the Consolidated Statements of Income.

Royalties paid and advertising costs included in Other Operating Expenses are less than 1% of total operating revenue.

32

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

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

Date: March 16,1990 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the reglstrant and in the capacitles and on the dates indicated.

E, Sl9 nature 1]1le

.Qaig Principal Executive Officer;

~j Howard P. Allen

• Chairman of the Board, March 16,1990 President, Chief Executive Officer and Director Principal Financial Officer:

John E. Bryson*

Executive Vice President March 16,1990 I

and Chief Financlal Officer l

Controller or Principal Accounting Officer-i Richard K. Bushey*

Vice President and March 16,1990 i

Controller Majority of Board of Directors:

Norman Barker, Jr.*

Director March 16,1990 Warren Chrlstopher*

Director March 16,1990 Camilla C. Frost

• Director March 16,1990 Walter B. Gerken*

Director March 16,1990 -

I William R. Gould*

Director March 16,1990 l

Joan C. Hanley*

Director March 16,1990 3

Carl F. Huntsinger*

Director March 16,1990 T'

Charles D. Miller

• Director March 16,1990 J. J. Pinola*

Director March 16,1990 James M. Rosser*

Director March 16,1990 Henry T. Segerstrom*

Director March 16,1990 -

E. L Shannon, Jr

• Director March 16,1990 Robert H. Smith

• Director March 16,1990 Edward Zapanta*

. Director March 16,1990

• By M. L. NOEL I

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

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated February 2,1990, (the Report of Independent Public Accountants) appearing on page 17 of the 1990 Annual Report of Southern California Edison Company (Exhibit 13 included herein) in this Annual Report on Form 10-K for the year ended December 31,1989 of Southern California Edison Company (SCE).

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

appearing on page 21 of this Annual Report on Form 10-K, in the Registration Statements whleh follow:

Entity Realstration Form File No.

Effective Date SCE Form S-3 33-33406 February 21,1990 SCE Form S-3 33-26037 December 15,1988 SCE Capital Co.

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

Form S-3 33 14785 June 11,1987 3

ARTHUR ANDERSEN & CO.

Los Angeles, California February 2,1990 O

4 E

34 E

CONSENT OF INDEPENDENT AUDITORS Southern California Edison Company We hereby consent to the incorporation by reference in Registration Statement No. 33-33406 on Form S-3 of Southern California Edison Company (Edison), Registration Statement No. 33 26037 on Form S-3 of Edison, Registration Statement No. 33 18107 on Form S 3 of SCE Capital Company (Capital) and Registration Statement No. 3314785 on Form S-3 of Capital of our report dated February 23,1990, Oppearing on page 20 of the San Diego Gas & Electric Company 1989 Annual Report to Shareholders, on the consolidated l

financial statements of San Diego Gas & Electric Company included as Exhibit 28.2 to this Annual Report on Form 10 K.

DELOITTE & TOUCHE i

San Diego, California March 16,1990 S

e 6

35

--__.______m

f EXHIBIT INDEX Exhibit Number Descriotion

2. -

Agreement and Plan of Reorganization and Related Merger Agreement with SCEcorp and San Diego Gas & Electric Company (File No.12313)*....

3.1 Restated Articles of incorporation as amended through April 25,1988 (File No.

12313)*..................................................

3 3.2 Bylaws as adopted by the Board of Directors on April 20,1989.........

{

4.1 Trust indenture, dated as of October 1,1923 (Registration No. 21369)*...

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

21369)*..................................................

4.3 Second Supplemental Indenture, dated as of April 25,1935 (Registration No.

2 14 72) *................

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

2 160 2) *..............................

4.5 Fourth Supplemental indenture. dated as of September 1,1935 (Registration No. 2-4522)*

4.6 Fifth Supplemental Indenture, dated as of August 15,1939 (9egistration No.

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

4.7 Sixth Supplementalindenture, dated as of September 1,1940 (Registration No.

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

3 4.8 Seventh Supplementallndenture, dated as of January 15,1948 (Registration No.

27369)*..................................................

4.9 Eighth SupplementalIndenture, dated as of August 15,1948 (Registration No.

2 7610) *...............

4.10 Ninth Supplementalindenture, dated as of February 15,1951 (Registration No.

2 8781 ) *................

4.11 Tenth Supplementalindenture, dated as of August 15,1951 (Registration No.

2 7 968) *................................

4.12 Elever'th Supplemental lndenture, dated as of August 15.1953 (Registration No.

2-10396)*..............

4.13 Twelfth Supplemental Indenture, dated as of August 15,1954 (Registration No.

211049)*.................................................

4.14 Thirteenth SupplementalIndenture dated as of April 15,1956 (Registration No.

2 1 23 41 ) *.................................................

1 4.15 Fourteenth Supplementalindenture. dated as of February 15,1957 (Registration N o. 2 13 0 3 0) *........................................'.....

4 4.16 Fifteenth Supplemental Indenture dated as of July 1,1957 (Registration No.

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

4.17 Sixteenth Supplemental Indenture dated as of August 15,1957 (Registration a

No. 213516)*.......

4.18 Seventeenth Supplementallndenture, dated as of August 15,1958 (Registration

(

No. 214285)*..

4.19 Eighteenth SupplementalIndenture, dated as of January 15,1960 (Registration N o. 2 1 5 906) *...................,..............,.........

j 4.20 Nineteenth SupplementalIndenture, dated as of August 15,1960 (Registration 1

No. 216820)*

4.21 Twentieth Supplemental Indenture, dated as of April 1,1961 (Registration No.

2-17668)*.................................................

4.22 Twenty-First Supplementallndenture, dated as of May 1,1962 (Registration No.

2 20 221 ) *......................,.

4.23 Twenty-Second Supplementat Indenture, dated as of October 15,1962 (Registration No. 2 2 0 7 91 ) *...............................,....

]

i 36 I

EXHIBIT INDEX Exhibit Number Description 4.24 Twenty. Third Supplementalindenture, dated as of May 15,1963 (Registration N o. 2 2134 6) *..............................................

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

4.26 Twenty-Fifth Supplementallndenture, dated as of February 1,1965 (Registration

(

N o. 2 23 082) *..............................................

n, 4.27 Twenty Sixth Supplementallndenture, dated as of May 1,1966 (Registration No.

2 24835)*........

4.28 Twenty Seventh Supplemental Indenture, dated as of August 15, 1966 (Registration No. 2 2 531 4) *....................................

4.29 Twenty-Eighth Supplemental Indenture, dated as of May 1,1967 (Registratbn N o. 2 263 2 3) *..............................................

4.30 Twenty-Ninth Supplemental indenture, dated as of February 1, 1968 (Registration No. 2-28000) *....................................

4.31 Thirtieth Supplementalindenture, dated as of January 15,1969 (Registration No.

2-31044)*................................................

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

4...................................

4.33 Thirty-Second Supplemental Indenture, dated as of December 1,1970 i

(Registration No. 2 3 871 3) *....................................

l 4.34 Thirty-Thltd Supplemental Indenture, dated as of September 15,1971 (Re0 stration No. 2 -41 5 2 7) *....................................

1 4.35 Thirty-Fourth Supplementallndenture, dated as of August 15.1972 (Registration N o. 2-4 504 6) *.......................................

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

4.37 Thirty-Sixth Supplementalindenture, dated as of July 1,1974 (Registration No.

2 59199)*.......

4.38 Thirty Seventh Supplemental indenture, dated as of November 1, 1974 (Registration No. 2 5 2160) *....................................

4.39 Thirty Eighth Supplemental Indenture, dated as of March 1,1975 (Registration N o. 2 5 2 7 7 6) *..............................................

4.40 Thirty Ninth SupplementalIndenture, dated as of March 15,1976 (Registration i

N o. 2 5 5 4 63) *..............................................

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

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

4.42 Forty.First Supplementallndenture, dated as of November 1,1978 (Registration

'b N o. 2-62609) *..............................................

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

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

4.44 Forty. Third Supplemental indenture, dated as of September 15,1979 (Fue No.

1 2313)*....

4.45 Forty Fourth Supplementallndenture, dated as of October 1,1979 (Registration No. 2-05493)*

'4.46 Forty Fifth Supplemental indenture, dated as of AprH 1,1930 (Registration No.

2 66896)*.....

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

37 i

.,.,.,,....ii..... -. -, - -,, -....

EXHIBIT INDEX Exhibit

. Number

_ Description 4.48 Forty-Seventh Supplementallndenture, dated as of May 15,1981 (Registration N o. 2 -71 94 8) *.............................................

4.49 Forty Elghth Supplemental Indenture, dated as of August 1,1981 (File No.

12313)*..................................................

4.50 Forty-Ninth Supplementallndenture. dated es of December 1,1981 (Reglstration N o. 2 74 3 3 9) *.....,..................................,.....

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

12313)*.............................................,..

(

4.52 Fifty First SupplomontalIndenture, dated as of April 15,1982 (Registration No.

2 76626) *..........................................,,.....

4.53 Fifty.Socond Supplomontal Indenture, dated as of November 1, 1982 (Registration No. 2 7 96 72) *....................................

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

12313)*..................................................

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

12313)*............................................-......

4.56 Fifty-Fifth Supplomontal indenture, dated as of May 1,1983 (File No.

12313)*........,..........................................

4.57 Fifty Sixth Supplementallndenture, dated as of December 1,1984 (Registration N o. 2 9 4 51 2 ) *.................................,............

4.58 Fifty Seventh Supplementallndenture, dated as of March 15,1985 (Registration No. 2 96181)*

4.59 Fifty Elghth Supplomontal Indenture, dated as of October 1,1985 (Filo No.

12313)*..........................,......................

4.60 Fifty Ninth Supplomontal indenture, dated as of October 15,1985 (File No.

12313)*................................................

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

12313)*....,...........,..,..............................

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

12313)*......................................,..........

4.63 Sixty Second Supplomontal Indenture, dated as of April 15.1986 (File No.

12313)*.................................,................

4.64 Sixty-Third Supplomontal indenture, dated as of April 15,1986- (Filo No.

12313)*...............................................,..

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

1 2313)*..

4.06 Sixty Fifth Supplomontal indenture, dated as of September 1,1986 (File No.

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

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

12313)*...................................................

4.68 Sixty.Soventh Supplementalindenture, dated as of December 1,1986 (File No.

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

4.69 Sixty.Elghth Supplementalindenture, dated as of July 1,1987 (Registration No.

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

4.70 Sixty-Ninth Supplomontallndenture, dated as of October 15,1987 (Registration No. 33 19541)*................

4.71 Seventieth Supplomontal Indenture, dated as of November 1,1987 (Filo No.

12313)*..................................................

4.72 Seventy First Supplemental Indenture. dated as of February 15,1988 (File No.

1-2313)*

38

V I

EXHIBIT INDEX Exhibit Number RhGdPf3ED 4.73 Seventy Secorvi Supplemental Indenture, dated as of April 15,1988 (File No.

12313)*.................................................

4.74 Seventy. Third Supplemental indenture, dated as of July 1,1988 (File No.

12313)*..................................................

4.75 Seventy-Fourth Supplementallndenture, dated as of August 15,1988 (File No.

1 2 313) *...........................................

L 4.76 Seventy-Fifth Supplemental Indenture, dated as of September 15,1988 (File No.

12313)*..................................................

4.77 Seventy-Sixth Supplemental indenture, dated January 15,1989 (File No.

12313)*.........................................

4.78 First Mortgage Indenture, dated October 1,1943, between Califomia Electric Power Company and The intomational Trust Company and Leo A. Steinhardt as Trustees (Registration No. 2 18234) *...........................

4.79 SecondSupplementallndenture datedJune1,1946.botweenCalifomiaElectric Power Company and The International Trust Company and Leo A. Steinhardt as Trustees (Registration No. 218234)*.....

4.00 1 hltd Supplemental indenture, dated June 1,1948,' between California Electric Power Company and The Intemational Trust Company and Leo A. Steinhardt as Trustees (Registration No 2 18234 ) *...........................

4.81 Fourth Supplemental Indenture, dated June 1,1950, between Califomia Electric Power Company and The International Trust Company and Leo A. Steinhardt as Trustees (Registration No. 2-18234 ) *...........................

4.82 Fifth Supplemental Indenture, dated April 1,1953, between Califomia Electric Power Company and The International Trust Company and Leo A. Steinhardt as Trustees (Registration No. 2 18234 ) *,.............,,.........

4.83 Sixth Supplemental Indenture, dated May 1,1954, between Califomla Electric Power Company and The international Trust Company and Elmer W. Johnson as Trustees (Registration No. 2-1823 4) *.........,.'................

4.84 Seventh Supplementallndenture, dated September 1,1955, between Califomia Electric Power Company and The International Trust Company and Elmer W.

Johnson as Trustees (Registration No. 2 18 23 4) *....................

l 4.85 Eighth Supplemental Indenture, dated October 1,1956, between Califomia

}

Electric Power Company and The Intemational Trust Company and Elmer W.

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

4.86 Ninth Supplemental Indenture, dated April 1,1957, between California Electric Power Company and The International Trust Company and Elmer W. Johnson.

as Trustees (Registration No. 2 1 823 4 ) *,.,........................

4.87 Tenth Supplemental Indenture, dated March 1.1958, between Califomla Electric Power Company and The Intemational Trust Company and Elmer W. Johnson l,

as Trustees (Registration No. 2 1823 4) *,..........................

4.88 Eleventh Supplemental Indenture, dated May 1,1960. between Califomia Electric Power Company and The First National Bank of Denver and Elmer W.

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

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

j 4.00 Thirteenth Supplemental Indenture, dated as of December 31,1963, between 1

Southom Califomia Edison Company and The First National Bank of Denver and Elmer W. Johnson as Trustees (Registration No. 2 22056)*.......,.....

1 39 I

i

~l y

EXHIBIT INDEX Exhibit Number-Description 10.1 Executive Supplemental Benefn Program (File No. (12313)*...

10.2 1981 Deferred Compensation Agreement (File No.12313)*...............

10.3 1985 Deferred Compensation Agreement for Executives (File No.12313)*....

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

10.5 1987 Deferred Compensation Plan for Executives (File No.12313)* i........

10.6 1987 Deferred Compensation Plan for Directors (File No.12313)*..........

10.7 1988 Deferred Compensation Plan for Executives (File No.12313)*

10.8 1988 Deferred Compensation Plan for Directors (File No.12313)*..........

[

10.9 1989 Deferred Compensation Plan for Executives (File No.12313)*.........

10.10 1989 Deferred Compensation Plan for Directors (File No.12313)*..........

10.11 1990 Deferred Compensation Plan for Executives.......................

10.12 1990 Deterred Compensation Plan for Directors........................

10.13 Executive Retirement Plan (File No.12313)*..........................

10.14 Employment Agreement with Jack K. Horton (File No.12313)*............

10.15 Employment Agreement with Howard P. Allen (File No.12313)*

10.16 1987 Executive incentive Compensation Plan (File No.12313)*............

10.17 1988 Executive incentive Compensation Plan (File No.12313)*............

10.18 1989 Executive incentive Compensation Plan (File No.12313)*............

10.19 1990 Executive incentive Compensation Plan..........................

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

10.21 Long-Term incentive Plan for Executive Officers (Registration No. 33-19541)*..

10.22 Employment Agreement with Thomas A. Page (File No.12313)*...........

10.23 Employment Agreement with Stephen L Baum (File No.12313)*...........

10.24 Employment Agreement with R. Lee Haney (File No.12313)*.............

10.25 Employment Agreement with Margot Kyd (File No.12313)*.....,........

10.26 Estate and Financial Planning Program for Executive Officers.............

10.27 Consulting Agreement with Jack K. Horton.............,...........

10.28 Consulting Agreement with William R. Gould.........,....,.........

10.29 Consulting Agreement with Howard P. Allen...,.......................

10.30 Consulting Agreement with David J. Fogarty..........................

12.

Computations of Ratios of Eamings to Fixed Charges.....,,..,,........

13.

Annual Report to Shareholders for year ended December St.1989 (except for those portions which are expressly incorporated herein by reference, such Annual Report is fumished safely for the information of the Commission and is not deemed to be N il ed' he re in).................................................

24.1 Consent of Independent Public Accountants. Arthur Andersen & Co. (See page 34 hereof) 24.2 Consent of Independent Auditors. Deloitte & Touche (See page 35 hereof)...

,{

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

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

28.1 Combined Pro Forma Financial Information (Unaudited)..............

28.2 Aullted consolidated financial statements and Independent Auditors Report i

incorporated by reference in the Annual Report on Form 10 K of San Diego Gas &

Electric Company for the year ended December 31,1989........

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

40 t

SOUTHERN CALIFORNIA EDISON COMPANY COMBINED PRO FORMA CONDLMSED CONSOUDATED BALANCE SHEETS (Unaudited) fin millions)

December 31.1989

~'

Histor cal Pro Forma Edison SDG&E Total

~

Utility plant-at original cost (a)......................

$16,376

$ 4,384

$20.760 Accumulated depreciation.........................

(5.095)

(1.434)

(6.529)

Current asset s.................................

1.330 299 1,629 Other asset s...................................

1439 297 1.736 m

Total assets................................

E!4J!i2 idL540 11Z1%i 1

Common equity................................

$ 4,551

$ 1,256 Preferred and preference stock.....................

582 147 M

Long-term debt.........................,......

. 5.047

_.1.113 L r.

Total capitalization...........................

10.180 2,516 12.6s6 i

Current liabilities,..............................

2.629 555 3,184 Deferred credits and other liabilities..................

1.241 4

Total capitallzation and llabilities........,........

ft 4&M 1

(a) deferred taxes aggregating $1.05 billion and nuclear fuel amortization of $658 mil llon. Edison an 1

a i

ii..

-i i=.

.i....i--i-

.n..

--..-n ir..

iin n

i..i n

EXHIBIT 28.1 SOUTHERN CALIFORNIA EDISON COMPANY COMBINED PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The proposed merger of Edison and SDG&E will be treated as s ' pooling-of-interests

• for accounting E

and financial reporting purposes. Under this method of accounting, the assets and liabilities of Edison and SDG&E would be carried forward at their recorded amounts as of the effective time of the merger. Income of the combined corporation would include incomo of the constituent corporations for the entire fiscal year in which the combination occurs and reported incomo of the separate corporations for the prior periods would be combined and restated as income of the combined corporation.

The following combined pro forma condensed consolidated statements of income and balance shoots give effect to the merger using the pooling-of interests method of accounting without giving effect to costs associated with the consummation of the merger, which are currently estimated to total $95 million.

These condensed statements combine Edison's and SDG&E's historical consolidated balanco sheets as of December 31,1989 and their historical consolidated statements of income for each of the three years in the period onded December 31,1989. The pro forma financial statements are not necessarily Iridicative of the financial position or results of operations that would have been reported had the merger been in effect during those periods, and as of December 31,1989, or which may be reported in the future. The merger agreement provides for the conversion of each share of SDG&E preferred stock and SDG&E preference stock into one corresponding share of SCEcorp preferred stock or SCEcorp proference stock with the same liquidation

=

value and a higher dividend rate. The pro forma combined data for Edison and SDG&E do not give retroactive effect to the increase of approximately $1.3 million in preferred and preference dividends because such dividend increases do not result in a significant effect on earnings.

These combined pro forma financial statements should be read in conjunction with the related historical financial statomonts of Edison and SDG&E which are includod in the documents incorporated by reference herein

l SOUTHERN calif 0RNIA EDISON COMPANY COMBINED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudhed)

An maions)

Year Ended Year Ended Ogutg_43Ej.L 1989 December 31.1988 amadosa Hatorloal Pro Forma Pro Forma Ed6 eon

.600aK

,.Tmal.

Ed6 eon SDG&E

.JgigL Revenue...............................

$ 6.524

$ 2.082

$ 8.530(a) $ 5.933

$2.076

$ 8,019(a)

Expanses.............................

._$ 402

,,LBQ2

_Ligb(a)

,4EQ

. 1.004

_ 6.734(a) income irom oporations...................

1.062 200 1.342 1.013 272 1.285 AFUDC-equity..................

12 7

19 18 12 30 Other nonoperating income.........

197 1

J

,,.2Q2 7

,,_2QR Income before interest and other charges.......

1,271 288 1.659 1,233 29t 1,524 670 104 674 627 102 629 Interest...............................

AFUDO-debt end capitallred interest..

(23)

(3)

(26)

(26)

(1)

(27)

Preferred and preference dividend requirements 45 11 J

47 12

,,,,,, },9 Earnings available for common shareholders before effect of Q

Q Q

Q Q

Q accounting change.........

Year Ended -

December 31.1987 Historioni Pro 1orma E$non SDG&E

.Jital Revenue

$5.502

$ 1,904

$ 7.482(a) i

_ 4,576 1 642

_ 6.294(a)

Expenses................

income from operations..................

926 262 1.188

_ 73 15 88 AFUDC-equity..........

_,,jd 5

101 f.Xier nonoperating income,,.....

income before interest and other charges.......

1.095 282 1.377 '

479 103 682 interest,,........................

(63)

AFUDC-debt and capitalized intereet (63)

Preferred and preference dividend requirements.........,,.....,

,_,.}Q 14 64 Earnings available for common shareholders before effect of Q(b)

Q (b) $ 794(b) accounting change.............

e (a) Reflects the reclassification of SDG&E's provision for regulatory adjustment clauses from revenue to expenses to conform to Edison's presentation.

(b) Excludes the cumulative effect of a change in accounting principle which increased net income by $68 million for Edison and by $18 million for SDG&E The pro formacombined effect of this change in accounting principle is $86 million.

,