ML20062K519
| ML20062K519 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 12/31/1992 |
| From: | SOUTHERN CALIFORNIA EDISON CO. |
| To: | |
| Shared Package | |
| ML17310A857 | List: |
| References | |
| NUDOCS 9312220182 | |
| Download: ML20062K519 (50) | |
Text
{{#Wiki_filter:_ _ fE5 carp 1992 Annua Reaort f i d l
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W(SCEsorpet19924 > iTlie: corporation pr6vides cnstomers with electricithand energy-relittedlervichs.t ' a 2SCEcorp'skstrardgyis to improve Value' foi shareholders 1byl increasing ihe va f
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(scrvices to customers 5 major focus for Southern'Califdrnia Edison in-1992 Y f ' > Lwas helping its large and small~bhsiness customers: control energy-rdated costs? 9W g Mv sand become more productive 1The Mission compnnies madejtrategic~nesvi ,...
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Einvestments in energy;and other projects, continuing the; ir expansion:in dom ... estic - y Land foreign markets. - ,'. [h s . . Corporate Profile . Contents '
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.SCEcorp.
2: 2 News' Digest:
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.' SCEcorp is 'the parent corporation of Southern California . 4: Letter to Sharch61ders c Edison Company and'the Alission companies. Mith head . . 9: 7 Partners in Doing Business g quarteis in Rosemead, California,'sCEcorp has assets isf ' 113: IFocusiiig on Cods and Pro'ductivity1 ' .
' more than'$19 billion. 17i . SupportingLRegional Destlopment " ,
i 18L Leading a New Indlustry! 9 Southern California Edison -24L Boaki'of Directors and Executive Officers; ! EEdison is the nation's second-largest electric utility, based . '25i FinancialInformation1 - J on the number of customers. The 106-year-old itinstor- 48i Selected $ _ . . . , 1linancial' Data: 1988-1992 i owned utility scrws 4J million customers in Central and ' ' 49: 1 Shareholder Information - *
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. Southern California.'Its 50,000-square-mile service terri-
; tory has a population of nearly 11 million. ,
t The Mission Companies [ Thi Mission cornpanies include Mission Energy Com- ,
-Lpany, the nation's largest nonutilityl power produk '
- w 3 Mission First Financial and Mission Lan'd Company.-
- They operate throughout the United States; Mission :
Energy also is active in foreign niarkets/ .g ' On $x ansr:
. Entering the Austrlian ptmer market-In bte 1992, Misskm Energy Gunpany completed the purchase of a 51% intere.st in Loy Y.uig B, a Large coal fired plant near Memourne, The first ofits two 5004tw units is wheduled for operatkm in late 1993, Missism Energy will operate the
_ plant and sett power under a 30-year ccmtract to the State of Victoria. l See dhcuuku of nonutility business activities on Page 18.:
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Pay 2 Eews Digest
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Ifigher earnings: SCEcorp's 1992 net income rose 5% to $739 million; Mh [])
- I carnings per share were $3.32, up 11 cents from 1991. Reported earnings fbr 1992 and 1991 mcluded several s one-time charges. Ilefbre these charges,1992 camings were $776
- million, or $3.49 per share, down 15 cents from the prior Scar (Page 25).
liigher dividend: SCEcorp declared ) its 17th increase in the common stock A new housing dewlopment in San Itcrnardino County .j dividend in 16 vears; the annual divi- .I dend rate is $2.'80, up from $2.72 Record production: The San Edison's new energy needs through in 1991. Onofre Nuclear Generating Station the year 2000 will be met by cost- 1 (SONGS) generated 19.6 billion effective conservation programs. The I ym kilawart-hours (kwh) in 1992, a site company does not need new p(mcr MMNMNwN/3Dh record and more than 12% above the plants because ofits excess capacity. previous record in 1991. The utility's Howe tr, the state's resource planning Iligher carnings: The utility's 1992 Mohave and Four Corners generating process ordered Edison to solicit 624 net income rose 7% to $631 million; stations also set production records MW of new generating resources earnings per share were $2.83,15 and operated on average at 77% and through a competiti e bidding proc. cents above 1991. Befbre one-time 85% of their capacities, respectively. ess. Edison's planned 274-MW charges, howerr, utility earnings fell upgrade ofits San Bernardino plant 17 cents in 1992 because of a lower Nuclear plant awards: SONGS will compete against outside bidders' authorized return on equity, lower received the nuclear industry's highest proposals to supply part of this addi-interest income and dilution from perfbrmance rating from the Institute tional power (Page 33). issuing SCEcorp common stock. of Nuclear Power Operations for its overall operation. Also, the Nuclear Renewable energy and technology: Expenses and return: Departmental Regulatory Commission gase SONGS Edison has more solar, wind and bio-operation and maintenance expenses its highest rating ever Ibr operations mass generating resources than any were held below 1991 Intls. With ai d safety in its latest Systematic other utility in the world. Among the these reductions, Edison carned Assessment of Licensee Perfbrmance company's technology initiatives in 10.53% on its rate base, only 6 basis report. renewable energy for the 1990s are: points below its authorized lesti and construction of a 10-MW solar proj-the second-best perfbrmance by this Nuclear plant retirement: Unit I at ect, using advanced molten salt tech-measure in the last 25 years (Page 13). SONGS was permanently retired nology; new photovoltaic technologies November 30 after 25 years of service, in Southern Califbrnia, inch"!ing a Continued operation of the 436- solar carport; and advanced equip-
!y Ed e n megawatt (MW) facility would have ment to convert municipal waste into k serac required a capital investment of up to clean gas to fuel power plants.
"""rF $125 million. Under an agreement
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t with state regulators, Edison will 'Ihcson settlement: In September, fmu= $f[""["'" recover its remaining $350 million the company settled a lawsuit fbr $40 f imestment over four years, with an million with 'Ibcson Electric Power ( f 8.98% return on capital (Pages 32,36). Company over alleged interference in . y5- ; 'Ibcson's proposed 1988 merger with New generating resources: The Cali- San Diego Gas & Electric Company w,dl . fornia Public Utilities Commission (Pages 25,26). bg]A s
- (CPUC) ruled that the majority of
LFinancia.Hichi g hts increase sa annual growth annual growth 1Mlarsin millimu, exceptpr-shart amcmnts 1992 1991 Necrcue) rasc rate SCEcorp Revenue $7,984 $7,556 5.7% ' 6.6% 6.2% Net income $739 $703' 5.1 .(0.7)- 3.4 Net income before one time charges $776 $797 .(2.6) 1.1 3.7 Earnings per share $3.32 - $3.21 3.4 (l.0) 2.1 . Dividends (current rate) $2.80 . $2.72 ' 2.9 3.2 4.4 - Disidend payout ratio 83.1% 83.5 % - - - Assets $19,140 - $18,343 4.3 4.6 ' 5.5 Rate of return on common equity 12.5 % 12.5 % - - - Ikiok value $26.59 $25.83 2.9 3.6 4.0 - Southern California Edison Revenue $7,722 $7,298 5.8% 6.6% 5.8% Earnings $631 $587 _7.4- '(2.7) 1.4 Earnings per SCEcorp common share $2.83 ' $2.68 5.6 (3.1) 0.1 Rate of return on common equity 13.2 % 12.6 % - - .- Peak demand in megawatts 18,413 16,709 10.2 3.8 2.9 Kilowatt-hour sales (in millions) 74,186 71,146 4.3 2.2- 2.1 Customers (in millions) 4.11 4.08 0.7 2.0 2.5 Full time employees 16,736 17,110 (2.2) (0.1) 0.3 Th3 Mission Companies Net income $109 $116 (6.4)% - 15.7% - o Earnings per SCEcorp common share $ 49 S.53 (7.5) 15.5- - Equity capital $1,169 $1,020 14.6 23.2 - Assets $3,344 $2,344 42.7 26.9 : Rate of return on common equity 9.8% 12.2% - - - SCEcorp: SCEcorp: Earnings Per Share AnnualDividend Rate Per Share In ddlan in dd!an 3 rio 2.80-3.32 aw i irm 2 40 E
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- 88. 89' 90 VL 92 76 77 ' 78 79 80 81 82 83 84 R$ 86 87- 88 89 90 95 92
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A i Chairman's Message : Pap 4 Dear Felow Sharehokers ; For SCEcorp,1992 was a year of modest earnings growth Net income rose 5.1% to
$739 million, while per-share earnings were up 3.4% to $3.32. Before one-time charges, .
however, net income was $776 million, down 2.6E Southern California Edison, our utility subsidiary, had strong operating results and improved its foundation for future competitive performance. Mission Energy and Mission First Financial had record results. . - , Southern California Edison *
,i At Edison, we carned within 6 basis points ofour state-authorized rate of return-the ' '
second-best achievement by that standard in the last 25 years. This resulted from excel-lent operating and cost-control performance, for which our employe'es desent special ; recognition. Ptnver production employees achieved record production and efficiency while reducing costs $40 million. Employees at San Onofre Nuclear Generating Station exceeded their previous production record by 12%, reduced San Onofrc's astrage - kilowatt-hour cost by 14%, and received their highest operational and safety ratings ewr from the Nuclear Regulatory Commission.
"We heightened efforts . Overall, Edison's depanmental operating and maintenance expenses were $58 million . -!
to sharpen our customers' below the initial 1992 budget and $4 million below 1991 levels. We heightened efforts ;
. competitive position, funda- to sharpen our customers' competithe position, fundamentally reorganizing key- <
mentally reorganizing key departments to enhance efficiency and reducing our totallabor force by the equivalent r departments...and reducing of1,300 full-time employees-or 6.7%-thus permanently reducing costs for cust' omers. a our fora! labor force by In 1992, Edison was authorized a lower return on capital imrsted in the business the equivalent of 6.71" than it had been in 1991, or in any year since 1977. These strong operating achieve-ments were necessary to earn that lower authorized return. To understand current and future Edison earnings, it is useful to focus on the princi-pal elements that govern utility earnings. While-as in any business-many variables affect results in any single year, over time, our utility earnings are dominated by 'three . ' factors: a our California Public Utilities Commission-authorized return on equity;: a how we manage the business in order to earn that return; and a our " rate base," or undepreciated shareholder capital imested in facilities that sent our customers. - Each year, the CPUC sets an authorized return on the capital invested to sent our customers. The commission generally sets the return in line with long-term interest rates, which are now at a 20-year low. For 1993, the CPUC has reduced our return to : 11.80%, which in itself will reduce Edison's 1993 earnings by 19 cents per share. While we do not control long-term interest rates or the level of our authorized return, we can manage the company w ell so that we keep operational and capital expenses within limits established by the CPUC. Our authorized return is not a guaranteed return, and on average, owr time, few electric utilities do earn their authorized retums. , By managing our business well, we can maximize the opporttmity to earn our full-return, as we did in 1992. The utility's future opportunities for imtsting capital to sent customers will be influenced by customers' need for our services, Edison's ability to compete in the new- - generation market and the economic health of our service territory. Long-term growth of our utility depends in part on growth in the service territory. In 1992, we had a net - increase of under 27,000 customers-about 75% fewer than we had three years ago.- , We forecast growth in"irwested capital of1% to 2% per year for the rest of the decade from imrstments in electric facilities for our customers.
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Pape 3 Return lowered: The CPUC reduced - Edison's authorized rate of return on common equity in 1993 to 11.80%, . down from 12.65% in 1992, because . p " s. oflower interest rates. The CPUC also _ denied the utility's request to increase H Jy ' s its equity ratio from 46% to 48% to . g {.5 ~ w' ~ . C - - i oll' set increased financial risk related to ' ' long-term purchased-power contracts. 4" . In response, three credit-rating ' j - agencies lowered Edison's senior debt . rating from double- A to single A.plus (Pages 30,32). Public power settlement: Edison Miwica Energy's new American Bituminous plant in ht Virginia. resohrd, in late 1992, long-standing rate and operational disputes with the Briefs: Edison began a major adwr- 1993, it owned 1,507 MW of generat-public pmer utilities in its service ter- tising campaign promoting energy ing capacity in 30 operating projects in j ritory, which toga her scrw a popula- etliciency as a means ofenhancing domestic and toregn markets, Mission- l l tion of 700,000. They are the cities of economic development and keeping operated power plants achieved a record i Anaheim. Azusa, Banning, Colton and businesses in Southern California. 1992 on-peak capacity factor of 98.9% Riverside. The settlement pawd the Edison sent much-needed personnel way for building positiw relationships and equipment to the Ilawaiian island Foreign projects: Mission Energy i with these utilitics, and possibly of Kauai to help the local utility restore successfully completed negotiations to j increased electricity sales to them in electric service after the devastation of buy a 51% interest in a 1,000-MW future years. 1lurricane Iniki. . Viewed by a world- power plant in Australia. The plant is wide audience of more than 400 mil- valued at approximately $1.9 billion. l 1ligher demand and sales: Edison lion, Edison's award-winning float was The company also signed power sales customers set a record demand for propelled in the 1993 Pasadena Tour- and asset transfer agreements to l clectricity of18,413 MW in August, nament of Roses Parade by electric dewlop and purchase 49% of a 1,400-l 4% higher than the previous record in batteries and had solar-powered MW generating station in Mexico. l June 1990. 'Iotal electric sales grew animation. Mission Energy has invested approx-4%, but a weak cconomy contributed imately $300 million in the SL8 billion m plant. It also has purchased interests to a net increase ofonly 26,940 customers-about one-fourth the gNqpapMMpgg C sbtsb p ;p in operating projects in Spain and i average annual gain in recent years. England and is negotiating development Earnings: Mission Energy Company of projects in Indonesia and other Financial aid pledge: Edison made a carned a record $89 million, up 85 foreign markets (Pages 20,21). fve-year, $35 million commitment to Mission First Financial earned a record support community renewal and job 529 million, up 20%, and its return New investments: Mission First training programs in the greater Los on equity improved slightly to 17.3% Financial funded $70 million in new Angeles area (Page 17). As a result of reserves taken to cover projects and afTordable housing reduced value in real estate projects, investments and committed an addi-Equal opportunity: Edison exceeded Mission Land Company lost $9.8 tional $100 million in afTordable its 1995 comprehensiw equalmppor- million, down from carnings of $9.2 housing projects sdieduled for com-tunity goals to increase the number of million in '1991 (Pages 18,22,25). pletion in 1993 and 1994 (Page 22). l i qualified minorities and women in management positions. 'Ibtal projects: Mission Energy, the nation's largest nonutility power pro-L ducer, placed three projects totaling 605 MW ofcapacity into commercial operation in 1992. As of February u_.__________________
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John E. Bryson
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'WMER Another factor is construction of new generating plants. In the last decade, Edison has been required to purchase most new generation from independent power producers.
However, in 1992, the CPUC gave Edison a limited opportunity to compete. When
- new generation capacity is needed, we believe the best value and lowest cost for our .
utility customers lies in repowering-modernizing existing Edison power plants and making them more eflicient. Lastly, by identifying new ways to serve our customers and provide value to them, . we can create new business opportunities. Edison is working to promote a new electric j '
- transportation industry, as well as energy-efliciency technologies and services to help' O businesses be more competitive, stay in Southern California and provide jobs.
1-Competitive Performance
...in the changing ihr continued success in the changing environment, Edison will have to be leaner, faster, environment, Edison v ill more market responsive and more customer focused. We understand what is necessary have to be leaner, faste, end are implementing a comprehensive strategic plan that has put us on that path.
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' more market-respondve and more customer-focused.
Our first priority is serving customers well. Helping our customers be competitiw keeps them on the Edison system and enhances the vitality of our region and thus our we. .are implementing a company. We can help them increase productivity, improve the quality of their products, , comprehensive strategic meet Califomia's high environmental standards and cut costs. Edison is doing these . plan that has put us on things with clean, energy-eflicient technologies, including electric technologies, and an e that path." array of energy-efficiency services. We are partnering wit h customers in new ways, work-l ing harder to understand their business concerns and t ringing all the forces we have to
- _ bear on solving their problems. We also haw expanded raw options to give them more ;
- choices and saw them money.
- In addition, we are improving utilization of our existing assets. Edison is strategically i
! located in the western grid. We have excess generating capacity, and many ofour neigh- j boring utilities need new sources of electric supply. Therefore, we are exploring ways of j J
- increasing use of our transmission and generation assets to scrw these utilities' needs in the emerging wholesale power market.
L j' California Regulation Serving our customers and shareholders well depends on consistent, sound decisions ,
- i. by the CPUC and other regulatory bodies. These public officials have important and .l difficult responsibilities. We are committed to working cooperatiwly with them to -
; shape a positive economic and environmental climate for our customers and region.
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- Chairman's Message' Page 6 P
Over many years, the CPUC has given Edison an opportunity to reward shareholders and sent customers well. We were disappointed in the 1993 cost-of-capital decision, . which failed to recognize the risk to us of mandated long-term power-purchase contracts l and led to the knvering of Edison's credit rating. Howntr, the CPUC last year reached - some important constructive decisions. It approved a shutdown plan for San Onofre Unit I that allows Edison to recover fully its inestment in that pioneering nuclear plant.. ;; Funding of retiree health care costs nas tven 'a national problem, and the CPUC has; moved to deal with it. The commissien ecognized these future expenses as part of the cunrut cost ofdoing business and took a major step in enabling Edison to recover them in current customer rates. In addition, we worked successfully with the CPUC to - obtain modification of California's resource planning process-which determines how much new generation we need and how it should be provided-so future decisions will cost customers less and allow Edison competitive opportunities. looking forward, we beliest we should have an opportunity not only to participate in - - the generation market, but also to provide our customers with an expanded range of energy services. In working to achieve the increased regulatory flexibility to do that, we - can aho increase earnings opportunities for shareholders. Later in this annual report are three sections focusing on important ways we are - adding value fbr customers and shareholders. The first section, beginning on Page 9, details our efibrts to assist business customers. Th3 Mission Companies "In 1992, SCEcorp had more Through the Mission companies, SCEcorp seeks to enhance shareholder value by; ' earnings from nonutility developing outstanding businesses in fields close to our core energy business. Mission ; businesses than any other ' Energy and Mission First Financial have achiewd substantial success since they were electric utility holding created in the mid 1980s. Mission Land has beeri less successful and, as announced last company." year, we will be winding it down over the next five years. Iri 1992, SCEcorp had more carnings from nonutility businesses than any other electric utility holding company.: Mission Energy Increasing domestic opportunities for independent power producers and growing: international utility privatization continue to expand the market for Mission Energy In 1992, in awarding the first imestment-grade credit rating to an independent power - producer, Standard & Ibor's concluded that Mission Energy is "a leading developer? owner and operator of independent power projects...with strong project cash flows, sound project-finance structures and seasoned company management." As of February 1993, Mission Energy was the latest U.S. independent power producer, with 1,360 MW ofcapacity at 28 operating projects in the United States?
' Its broad experience at home, its operatmg record and its ability to meet demanding U.S.
environmental regulations enhance Mission Energy's competithe position overseas. In 1992, it acquired operating projects iri Spain and the United Kingdom. Projects put : e into construction iri 1992, including internation~al projects, will double Mission Energy's ~ megawatts ofcapacity by 1996. Imtsting abroad invohrs accepting some risks that are new to SCEcorp. Mission - Energy seeks to mitigate these risks by taking sound precautions, described ori Page 21. . In short, Mission Energy is developing a diversified international portfolio by under , taking projects in countries that offer the most attracthic risk-return trade-offs and thei best long-term market potential.
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. Mission First Financial '
Mission First Financial likewise is building on its expertise in energy and finance and
. carning an excellent return. More than two-thirds ofits imtstments are energy related ,
and complement the activities of Mission Energy. M6st of the remainder ofits imest- y
. ments are in aErdable housing, which offers atriactive returns at reasoiiably controlled -
risk. Mission First Financial is becoming a leader in this field. .Its im:estmcnts in energy - , projects and affordable housing provide a stable,long-tenn base of earnin;;s to support ;
& . future growth.
t 4 The 1992 Energy lblicy Act provides new opportunities for the Mission companies,; while protecting important rights and priorities for utilities and their customers. y' 9 Because our Mission companies play an important role in SCEcorp's future growth ; prospects, we have provided an expanded discussion this year of their operatiom and .'
, strategies, which' begins on Page 18 under the heading," Leading a New Industry" ' ,
a
- Management Changes i
In 1992, the boani elected three new officers: Bryant Cc Danner, senior vice' president and general counsel of Edison and SCFcorp; Margaret H. Jordan, Edison vice president
- of health care; and Kenneth S. Stewart, corporate secretary of Edison and SCEcorp. ,
Ken is also an assistant general counsel in our laiv department.' Margaret and Bry came i from outside the company In January 1993, Alan J Fohrer was promoted to senior vice ; president, treasurer and chief financial oflicer of SCEcorp and Edison.1 David Barry, vice president and general counsel for Edison and SCEcorp, retired July 1,~ .. j after 40 years of dedicated service. Diana Petersori-More, secretary of Edison and ' SCEcorp, resigned to accept an6ther position.Vice president and site manager of San : g Onofre Nuclear Generating Station Harry E. Morgan Jr..will reti're March 1,1993, after?
.1 23 years of service.
In April, Daniel M. Tellepichairman and CEO sf Lockheed Corporation, was' elected ? j
- a. director of SCEcorpa' nd Edison, replacing Wdliam R.' Gould, who retired fr6m the,
. SCEcorp and Edison boards after 45 years of service. Bill was chairman of Edison from :
- k. .1980-1984. .
On January 19,1993, Warren Christopher resigned from the SCEcorp and Edison -
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. boards to become U.S. Secretary of State. SCEcorp's loss is the nationi gitium j H
' We also say farewell to our president arxl director Midiael R; Peevey, who announced his retirement effective March 1,1993. Throughout his nine years with 'the company, ; 4
_ he made many important contributions. He took a leading role in efforts toward effeci
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the regulatory and government relations. His strong support ;for impbrtant company} h initiatives included the development'ofMission Energy and Edison's 43 onal i leadershipD i
' efforts. We wish him well? -
h The enthusiasm, creativity and eff6rt of our employees are ' helping us' achieve difficuhl
$MichaelICitewy ,
l goals. .We' thank them wholeheartedly. We also tlyank our board of directors for theiri S guidance, and you,' our shareholders, for your confidende in us and the company.
;y 1 John E. Bryson..
Chairman oftheBoardand February 22,1993 Chi,fEvcutive Officer , r, IJ
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. y_' . . . % , 'f _'f . .yL '.. ;[ f ?]1 iN , . h . '?:s EFFICIENT OIL-RECOVERY OPERATIONS Edison service representatives helped Union Pacific Resources improve the efficiency of its electric water pumps for oil recovery in Long Beach. This saved the major customer about $1.5 million annually from reduced energy consumption. In addition, Edison gave it a $734,000 rebate for energy-efficient modifications.
- Pap 9 l Southem California Edison lPartnersin Doing Business J ':
In 1992, average rates for all customers increased only 1.9%, or two-thirds the rate of inflation; and in 1993, Added v'alueiEdison is reducing the cost of E overall customer rates will fall 2.9%. These rate reductions
, service and increasing value to its 400,000 . . _
resulted from Edison's cost-control efforts and agreement
' husiness custothersby offering innovative: :
with the CPUC that costs should be balanced equitably
. solutions. Rates for large industry are among all customers. Adjusting for inflation, average races
~ down 40% in. realterms since 1982 for the 3,000 largest business customers today are down ,
n '?JL - 11%iO M. H Es,t 40% since 1987-and are roughly bd tc th' elevels they were 10 years ago.
. The success of businesses in Edison's senice territory is Edison has helped busine, customers in another essential to the success of Edison itself. As many businesses important way: designing flexible rate options that save struggle in a lagging economy, Edison is using its resources money and increase their productivity. These include to help them be more competitive and meet stringent interruptible rates, special-contract rates, incremental sales environmental requirements. These efforts, in turn, help rates and time-of-use options. Interruptible rates alone strengthen the regional economy. saved businesses $140 million in 1992. Edison also For the first time in recent decades, California is experi- offered, for the first time, an economic-development dis-encing a severe recession. The population of the country's count rate to businesses mming to various areas of South-most popuk us state cor.tinues to grow, but California has ern California. This incentive can help create jobs and lost some 800,000 jobs s:nce 1990. Never before has the resitalize the local economy.
state focused more on impcminrj its economic health. Edi-
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son is working diligently to rap businesses in its service Understanding Business Needs territory grow and provide employment. Consequently, in past years, electric utilities, including Edison, saw the company has redoubled its etTorts in 1992 to give themsches principally as suppliers of reliable; reasonably business customers increased value for their energy dollar. priced electric energy. While this responsibility will always - Edison is be Aqwrtant, electric utilitics must also find new w2ys for o Helping business customers sharply reduce costs e ectricity to add value to their customers' operations. through rate options and other senices; in 1M, the company began intenshely analyzing cus-o Understanding what businesses need from their electric tome.r needs on an industry-by-industry basis, developing utility and meeting those needs cost-effectively; profiles of cu;tomer groups, researching their needs and 6 Strongly promoting energy efliciency to save businesses taking new initiatives to meet them. Edison identified 30 money and i.mprove the environment; commercial and industrial market segments and researched e Leading partnerships in retaining and attracting and destkiped appropriate strategies to increase senice to 1 businesses; and eight of them. Initiatives targeted at 12 more key segments - o Using leading-edge technology to help businesses be will be implemented in 1993 and the rest in 1994. Similar more competithe and meet stringent air-quality work is being conducted for the residential market. requirements. This analysis has been invaluable. For example, Edison's ' research of hospitals revealed unique problems associated d
. Aggressive Moves To Lower Rates with their uses of electricity. Sanitation requirements, in Although the energy needs of businesses vary widely, all particular, prevent air from being recycled through ven-customers want knver rates. Since 1987, with support tilation systems, complicating air-conditioning design.
from the California Public Utilities Commission (CPUC), Hospitals also need a highly reliable power supply to. Edison has lowered rates ofits largest business customers. operate emergency, surgical and life-sustaining facilities During these six years, astrage rates for the 3,000 largest - and equipment, customers actually fell by 9%, while overall customer rates rose by 24%.
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Southern C-liforn11 Edison ' Pa,gc10 L P rtn:rs in Doing Business
. To help cut health-care costs, hospital, must control Edison employs similar public-private partnerships in energy costs. Accordingly, Edison has destloped a model attracting new customers. For example, Pennsyh ania-energy-elliciency program for hospitals. Among other bred Air Products and Chemicals Inc. selected the~ -
things, it accommodates their long construction-planning Southern Califomia city of Santa Fe Springs over com-
. lead time by extending energy efficiency rebates beyond peting beations to expand in 1992 after Edison offered the typical 12-month cycle. The company aho has assigned assistance through its new-construction energy-efliciency account representatives with specialized knowledge of program, and the municipality helped sohr design both energy efliciency and hospital operations to consult problems.
with these customers. As hospitals take advantage of this model program, they will cut their energy costs and use Technology Forjobs and Cleaner Air their capital more effectively One special challenge of doing business in Southern California is meeting stringent air-quality standards. Energy-Efficiency Savings Edison can help its business customers meet these stan-Since 1973, Edison has been helping all business cus- dards and increase productivity through advanced energy-tomers cut energy use through a mix of programs. They etlicient electric technologies. Edison has led other major include energy audits to identify opportunities for conser- utilities in introducing these technologies in the market-varion; incentives and rebates to spur business imestment place. At its nationally recognized, state-of-the-art in energy-eflicient technology; and other efforts to help Customer Technology Application Center in Irwindale, buik!crs incorporate energy-efficiency design features into California, Edison demonstrates numerous electric tech-new structures. In 1992, new Edison energy-efliciency nologies that save money and improve industrial produc-programs helped customers cut energy consumption by tivity and air quality They include thermal-energy storage,
- 800 million kilowatt-hours (kwh). The benefits of many of infrared heating, ultraviolet curing, clean-air coatings and these programs will last up to 20 years. This 800 million energy-eflicient lighting.
kwh, plus the cumulathr annual energy savings from As an example of how such_ technologies can help Edison's energy-efliciency programs since 1973, total 5.5 customers, Globe Iron Foundry installed two electric-' billion kwh, saving customes ruore than 5500 million in induction furnaces to reduce nitrogen-orides emissions
-1992. and meet clean-air standards The improvement helped -
the facility and its 130 employees remain in the Los - Partnerships to Retain Businesses Angeles area. Keeping businesses in Southern California is essential to In addition, Edison is demonstrating other promising generating jobs and stimulating regional economic recov- electric technologies. One desice reduces air-polluting, . ery Edison has an aggressive program to retain business volatile organic compounds without producing oxides of customers and help them grow. In 1992, it helped more nitrogen, as current methods do. Edison has helped than 80 businesses remain or expand in the area. These businesses-such as furniture finishers, aerospace com-businesses represent annual sales of 940 million kwh, panies and bakers-remain in Southern California by Edison revenues of 567 million and 20,000 jobs. reducing their costs of complying with air-quality For example, higher business costs fbrced Industrial regulations. Dynamics to consider ! caving lbrrance, Califbrnia, placing Edison has a major mission to help businesses in its 350 jobs at risk. In response, Edison, the city and state senice territory be competiti e. The company is meeting
- worked with the firm, which makes quality control equip- this objecti e by holding its own costs down, reducing. - ment for soft-drink bottlers. The city and state helped . average rates to business customers, enhancing senices to obtain industrial development bonds needed by the cus- businesses and promoting electric technologies that allow tomer to expand in Torrance. Edison redesigned metering businesses to reduce their costs.
systems to acconunodate the expansion and made energy-etlicient lighting and air-conditioning recommendations for cutting electricity costs. This cooperative cfrort in 1992 kept Industrial Dynamics in Southern California, and the company may soon add 80 new jobs. 1
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- aircraft center in San Bernardino that cut annual lighting costs by $50,000.
in consultation with Edison, the large aerospace customer also installed pollution-control equipment that cut emissions 99% in painting planes and treating contaminated water. w-~,-me-,
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GAUGING PLANT PERFORMANCE
- Etiwanda Generating Station in Rancho Cucamonga was among several Edison facilities that significantly improved maintenance and training procedures in 1992 by incorporating the "best practices" of other utilities' oil and gas plants.
l This process resulted in the purchase of more ef ficient equipment for employees to
- complete maintenance work themselves rather than using outside contractors.
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- Southern California Edison Pay 13 '
Focusing on Costs anc Procuctivity i 1
) m A part of the new system planning and operations :
department, Edison's " gas company within the utility" .!
~ Cost containtnehtFOperating arid .
treame fully functional in 1992 and bought all natural gas mainten ce expenses werel$4 million less . - for power plants. Edison ranks among the nation,s 10 1 than.in . In addition, by managing its . - . largest gas purchasers, acquiring 185 bilh.on cubic feet of - E own purcha'ses and delivery of natural gas it in 1992 at a cost of $550 million. to epower plants, the c6mpany saved more-a Because workers compensation costs have been growmg , than.$28 million in fusi costs. Employee - .; more than 20%. a year, Edison formed a new department
. teams led the way-in eliminating .
m September to deal w.it h the issue. Comb. mmg. four pre- !
- Nunproductive practices. .
'l viously separate ftmetions, this department will help con-trol future increases in a vexing area of rapidly rising costs for all California companies.
For the last five years, Edison has fixused intensively on a Reflecting the lack of new power-plant construction, the i cost-containment effbrts, and has kept increases in its company has climinated its engineering and construction operating and maintenance expenses below the rate of department.
. inflation. In 1992, Edison's cost-control efforts reaped m A new power production department was created from greater benefits than at any time in the company's recent the former power supply department, transferring respon-history. Departmental operating and maintenance expenses sibilities for telecommunications, fuel supply and system were 558 million below originally proposed 1992 budget operations to other organizations. This allows power !cvels, and S4 million beknv actual 1991 expenses. Costs production management to focus intensistly on its core -
were cut despite the addition of 26,940 new customers, mission. unusually high legal expenses, record storm and earth-quake damage and intlation. Lower Costs and Higher Productivity An important contribution to Edison's cost-cutting suc- , Streamlining Organizational Structure cess has been the strength of management and employee l Edison has made significant changes in its management teams rethinking how uurk is performed. As Edison and structure, cutting unneessary layers of supervision and many other businesses recognize, employee productivitv-aligning the organizationa' structure with the company's can be enhanced through management strategies that give . strategic goals. Specifically; employees both the means and the freedom to put all e The custom (r service department reorganized into their knowledge of the job to good use. Such strategies customer-fbcused business units, climinating an entire enabled Edison to reduce its total work force by 6.7% - layer of field organization management and more than during the year, eliminating the equivalent of1,300 full. 200 management positions. time jobs. o The company established a new regulatory affairs depart. Employees of the power production department exem-ment, consolidating four separate ftmetions, providing plify w hat can be achiestd. They slashed their operating . closer coordination of such efforts and emuring increased and maintenance expenses by $40 million in 1992 while -- quality'and speed of communication with the regulatory boosting production efliciency and total energy produc-staffs that atreet the company's operations. tion. Their success came through rigorous re-examination
- c A new system planning and operations department was of every work practice in the department, using both
-established by merging system planning, fuel supply, sys- internal analysis and teams that visited and studied "the tem operation and power contracts, so that all aspects of best of the best" power plants; resource acquisition and planning were unified. Within They learned, for example, how employees at an exem-that department, a special team now handles integration plary Texas power plant perfbnn turbine ostrhauls more -
of third party power producers into the electric system. cost-effectively. And maintenance practices came under , close scrutiny. Power production people created a more sophisticated means of scheduling maintenance that is now based on close inspection of the actual condition of ~-
Southern California Edison Pane N Focusing on Costs and Productivity l l equipment rather than on the calendar. Although some must not be extended when the 10 year period expires. i machinery is maintained more frequently under such prac- Edison expects intense political pressure from some third- ! , rices, overall maintenance can be reduced without affect- party energy suppliers, which it will vigorously oppose, ing equipment perfbrmance. That frees Edison emplovees because their aims are contrary to customers' interests. to do nmre work that had been perfonned by outside Lomcrfhcl costs: Th reduce emissions and improve the contractors-further reducing costs. environment, Edison has virtually ceased using fuel oil in Emphasizinn cmplere traminn*: Around the company, its power plants and relies instead on clean-burning natu-management is increasingly using employee teams to ral gas. Edison has developed a long-term gas strategy fbr improw productivity and eliminate wasteful practices. obtaining reliable supplies at the lowest overall cost by l The company has embraced three values of special impor- accessing multiple supply regions and pipelines and buy-l tance in times of change: challenge, candor and ing gas at market-sensitive prices. In 1992, natural gas l conunitment. burned at Edison plants was the equivalent of more than
-l These values become especially important during "3 C 30 million barrels of oil, and gas costs were reduced S28 Sessions," begun in 1992- multi-day meetings of spe- million through discount contracts. A new gas pipeline cially selected employee teams to search out and destroy inter-connection at the Cool Water Generating Station j wasteful bureaucracy, unproductive work requirements ultimately will save more than 525 million a year.
l and inctlicient practices. Each area ofimprovement Aforc cfficicut and rcliab/c opcrations: While reducing l idemitied in 3-C Sessions has an employee " champion" costs through more productive operations, the company responsible tbr carrying it back to the workplace and also is seeking to increase off-peak use of the electric sys-ensuring that it is fully implemented. tem to spread fixed costs over greater usage and reduce Among these improvements were: slicing one to the average cost per kilowatt-hour (kwh). Electric trans- i wo weeks from the time for processing customer service portation and new electric technologies, both discussed orders by climinating unnecessary approvals; and modifv- elsewhere, are prime examples. l ing prmurement processes to lower costs by concentrat- Reducing costs has not been achiesed by sacrificing ing on "otf-the-shelf" items, rather than those custom- reliable service. Edison's system reliability continued in made for the company. 1992 at the same record-low level of customer outages Refinancing debt: Interest on debt is 8% of the utilirv's the company has maintained for a decade. costs, so debt retinancing in times of declining interest increasing the productivity of generating units with rates is etrective in redudng costs. Edison retinanced St.1 low operating costs helps save money for customers. In billion of bonds and $200 million of preferred stock in 1992, the company's tbssil-fuel plants achieved their most 1992, cutting interest expenses 520 mil! ion annually. fuel-etlicient performance in a decade, saving $16 million Thday, Edison's average cost of debt is 8A8%, its lowest in fuel costs compared with 1991. And San Onofre since 1980. Nuclear Generating Station produced 19.6 billion kwh in Controlling purchascd pourr costs: One area of special 1992, a site record that is 12% above the previous record concern is the cost of purchasing power from third-party in 1991. The average production cost at San Onofre suppliers at prices established through the regulatory improved to 2.2 cents per kwh from 2.6 cents in 1991, process nearly a decade ago. In past years, Edison was Improved productivity and cost reduction, made required to sign contracts for more third party power possible in 1992 by close management attention and wide-supply than it now needs, at prices set by regulation spread employee participation, accelerated the pace of higher than cunent market conditions justify. These high previous years' efibrts. In today's more demanding prices were prescribed tbr 10 years. Consequently, Edison environment, Edison people fully recognize the need to customets paid $650 million more for power from these become leaner and more agile and to lower costs even third-party energy suppliers in 1992 than the cost of more. Only through such a disciplined approach can the pou er available from other sources. ~Ib control s ich costs company succeed in meeting its obligations to customers in the future fbr Edison customers, the high payments and shareholders.
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l..*^~_ ,/ '. s ql SUPPORTING ELECTRIC TRANSPORTATION A showcase electric vehicle was unveiled in 1992 by Calstart, a consortium to develop electric transportation and boost the California economy. State air quality regulations could put 500,000 clean electric vehicles on the road by 2003. Edison could recharge over 1 million vehicles in off-peak hours without building new power plants. This would spread fixed costs and cut average cost q per kilowatt-hour for all Edison customers. i
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1 FOCUSING ON EDUCATIONAL NEEDS ] in 1992 Edison implemented its "Early Start" Program, a partnership with the l California Community College Foundation and El Camino College, for academic and f personal enrichment of some 450 "at-risk" teenagers. Early Start enabled 75 8th-graders from the Inglewood and Centinela Valley School Districts to attend summer classes at El Camino College in math, English, computer training and other skills. l i
. - . - - , . . ~ . - , , , , -
KSouthern C Momb Edison : Pay 17 1 Supporting Regiona Development a Edison is a founding member of the United States . e . . m: : RegionalleadershiptEdison' advances oL Advanced Battery Consortium, which began development of a m.c kel-metal hydride batterv.for electnc vchicles .m environmentat strategies; forges partner-
'i 1992. These batterics could double the range of the ships to spur a clean electric transportation ddda industry ant;l create jobs;; invests in educa . .
. m Edison is work.mg in partnersh.ip with the Metropolitan
..tion arid regional renewal. ~
. Transportation Authority to deselop a system of dean-
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electric trolley buses to replace diesel buses in the Los = Angeles area. . With' deep roots in Central and Southern Calitbrnia, . Edison has joined forces with public and private EducationalPriorities .. organizations to tackle major issues vital to the region's Edison is spearheading one of the most comprehensive environment, economy and social fabric. business-educationd partnerships in the country. Through the STEP UP program started in 1991, it Environmentallnitiatives contributed $100,000 to 18 school projects and facilitated Edison has taken environmental initiatives that advance business fimding of 23 more. STEP UP enhances educa-its business interests: tional opportimities fbr minority youth, sponsors after-o Edison has pledged to reduce carbon-dioxide (CO2 ) schoo! dubs, provides parenting dasses and is part of a emissions by 20% in the next two decades to address pilot project to restructure education. global-warming concerns. It is doing this through cost. Edison focused specially on a comprehenske program - effective energy efliciency programs, virtually replacing oil to help inner city students achieve educational success. with clean-burning natural gas in power plants, using Energy and environmental.' awareness programs at schools, more alternative and renewable resources and repowering museums and theme parks readied hundreds of thousands existing generating facilities, ofchildren, aThe South Coast Air Quality Management District Edison's new Matching Gifts program empowers : and the Ventura County Air Ibilution Control District employees to support schools. In addition, in 1992, Edison approved Edison's plan to install selective catalytic reduc. awarded 148 scholarships, community college achievement = tion equipment in Los Angeles and Ventura area gas awards and educational grants-totaling S360,000-to power plants to redse nitrogen-oxides emissions rates students in its senice territory and employees' children. 86% and 88%, respectively e Between 1987 and 1992, the company reduced its vol- RegionalRenewal ume of hazardous waste by 80%, saving $2.5 million in response to Southern California's civil tinrest in April,' annually in disposal costs. Edison pledged a five-year, $35 million commitment to regional renewal. Edison service crews were among the . Electric Transportation first to provide post-riot dean'up efibrts. The company Electric transportation will improve air quality, provide donated use of one ofits Compton facilities as a job-skills jobs fbr Southern Califbrnians and improve U.S. energy training center and is working to establish training pro ~ efliciency and energy independence. grams for hundreds of unemployed local residents'cach . o Edison led in the formation of Cahtart-a public-private - year. It is a partner with the cities of Long Beach and consortium that seeks to increase regional employment by . Inglewood in similar efforts. making Southern California a world center ihr electric By reaching out to the community, Edison invigorates transportation design and manufacturing. Cahtart could the economic dimate.in which it operates and creates create tens of thousands of jobs. better economic opportunities for the customers it serves. '
)
L The Mission Compinie . Jyn/Js 4 LeacingANewIncustr
. . .. - . Mission' Energy has been very successful. Were it a stand-alone comparw,its profits uvuld rank 157th in the
. Expanthog' businesses; Nonutility earningsE '
Fortune 500, and it uuuld place 49th on Fortune maga-
; of $109 million were the n'ation's highest' . ,
zmes latest list of the 100 fastest-growing U.S. com-for ailiversified electric-utility holding .' .
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pames, based on earnings growth .m the last five years, company. Mission Energy earned $89 millioit, ~ In June, when Mission Energy issued S200 million >f-up SE IVlission First Financial earned intermediate-term notes, two major rating agencies-
$29 million. up 20% Mission t.and lost Standard & Poo'r 's and Moody's Imtstors Service-
.$9.8 million. ~ ~
assigned the securities the first imestmenti grade credit .
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ratings in the history of the independent-power industry. SCEcorp's nonutility companies have concentrated - Growing Domestic Market primarily on the rapidly growing independent power In this decade, industry experts estimate a need for about industry and on closely related project and lease financing. 50,000 MW of new U.S. nonutility power generation, These are areas with substantial growth potential in requiring some $75 billion in new capitalinvestment. which the corporation has special expdrtise. With reduced That market represents significant opportunity for - authorized utility rnurn in the last sestral years, Mission Mission Energy Energy and Mission First Financial have become the In 1992 and early 1993, two projects in which the; l corpor: aon's engine for carnings growth. company owns a 50% interest, went into commercial ' operation: Mission Energy Company Conunomrcalth Atlantic: In June, Mission Energy began i operating the 34041W natural gas-fired facility in , Highlights 1992 1991 % Change Virginia. Th'e5150 million plant sells power to Virginia Rctenue $183.1 million 5154.2 million 19 Electric and Ibwer Company. Net income s 89.3 million s 82.5 miuion 8 Murh PointR: This 6041W gas-fired cogeneration , , t ei s7 bilion s5 11 n 2 pr ject in Anacortes, Washington, began commercial Assets s 2.0-1 billion s 1.17 biuion 75 operation in January 1993. Mission Energy and Texaco . are equal owners of the $59 million plant.- In addition, Mission Energy made significant progress Mission Energy is the nation's largest independent power in 1992 to develop several other projects, including: producer-and one of the largest in the world. As of Feb- 3,ncrican Rituminsus: a $184 million,8041W plant ruary 1993, it owned 1,507 MW of generating capacity that will burn waste coal in West Virginia. in 30 operating domestic and foreign projects, enough Dclaimrc Clean Enngy: a 23241W cogeneration plant . power to serve three-quarters of a million customers. It n Delaware. The company will imest up to $65 million . (- also owned 1,970 MW in another 11 projects under and own 49.5% of the plant. construction or in advanced stages of permitting (See mycrhacuscr: a 5400 million,43541W cogeneration
- table and map, Page 20). plant in Washington.
Mission Energy develops, owns and operates cogenera' Brooklyn Nary Tard a 30041W natural gas-fired plant ; tion and independent power plants and supplies low-cost in New York Mission Energy will own 50% of the S400 w holesale electricity to customers. The company seeks million facility equity partners with complementary skills and resources, Auburnda5: a 15041W cogeneration plant in Florida. ' either to purchase and manage existing power projects, The company will own 50% of the' S150 million plantc 4 l. improve the management and operations, or to develop gg,7fyyn.jdt: a 240-MW cogeneration plant in Virginia. new power-generating facilities. Mission Energy will own 50% of the 5220 million plant. Cnnrn/ Vista: a 36041W coal fired plant in New Jersey l- is being developed in partnership with Fluor Daniel Ince i ..
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1 l l ENERGY-EFFICIENT PLANT IN WASHINGTON Mission Energy owns 50% of the 60-megawatt March Point ll cogeneration plant at Texaco's Puget Sound oil refinery in Anaco tes, Washington. The natural gas-fired plant, co-owned with Texaco, began producing steam in early 1993 for the l refinery and power to sell to Puget 5')und Power & Light Co. 1
Th'e Mission Companies Pa,qr 20; AWork.wice Profie Missknftle$$diinNigt ylissiaMhstFhncid
~ Domestic . International Opaatinppnjuts:(February 1993) L% der constructi<m/pcrmining: Operatingyniers: (hbruary 1993) Leadng andprojenfinance:
' Coal - ~ Coal / Coal Gas Hydroelectric ' . .
Beanr %!!cv Unit 2, James River, Virginia '
- American Bituminous, W. Virginia Iberian Hy Ibwer Spain Pennsykania Geo6ermi
- Crown, New Jersey Natural Gas Lake Superior Paper Mill. <
M ista, New Jersey
- AiLi I, C difornia Lakeland Power, England Minnesota Anlin II, Cahfornia Delaware Clean Energy, Delaware .
Beowawe, Nevada Midland Cogeneration Plant' Natural Gas Del Ranch, Cahform,a
- Auburndale, Florida Unda mimionpridningt ; Michigan Elmore, Cahtornia
- Brmk!vn Navy Yard, New Erk Coal Huntington Waste-to Energy,
*Geo East Mesa II, Cahfornia
- Gordonsville I, Virgir.ia
- Carbon !!, Unit 1, Mexico ' New Erk -
- Geo East Mesa llI, Calitbrnia
- Gordonsville II, Virginia
- Cartun II, Un t 2, Mexico Vidalia Hydrodectric, Louisiana Leathers, Calitbrnia
- Carbon II, Umt 3, Mexico . "
- McCabe, California "?'" "
- Carbon II, Unit 4, Mexico Greenwood Combustion Turbine, Y"haeusa, e er Washington Missouri Vukan, Califbrnia
- Ioy Yang B, Unir 1, Australia "E ' n US 3 Natural Gas Boeing 737/M Aimaft, Bavonne, New Jersev @*# Natural Gas United Airlines
- Coalinga, Catitbrnia' Corporate Office Derwent, England Boeing 767 Aircraft (3)'
Commonwealth Atlantic, Virginia 18101 Von Karman Avenue g ,da s w isiria.. American Airhnes
- Harbon California Suite 1700 Pai Ihdonesia ilazleton, Pennsylvania Irvine, Cahfornia 927151007 Hopewell, Virginia Virginia Corp rate Office:
- Kern River, California 12500 Fair Lakes Circle, Suite 420 @ur' 18101 Von Karman Annue March Ibint I, Washington Australia Sune 1700 Fairfax, Virginia 22033 March Ibint II, Washington clo Blake Dawson Waldnm . Imne, Califin nia 92715-1007
- Mid-Set, Cahforni.i Florida Lent 40,101 Collins Street
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- Midway-Sunset, Cahfornia 10013rd Annue West Mdbourne, Victoria 3000 Nevada Sun Peak, Nevada Brandenton, Florida 3420 Australia
. Missi on Energy Company
- Saguaro, Nevada New York
*Sahnas Riwr,Calitbrnia United Kingdom -
200 Broadhollow Road, Suite 207
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66 Buckingham Gate
*Sargent Canyon, Californ,a i Mehille, New York 11747
- Sycamore, Calitbrni London, SWlE 6AU England
- U"#" ""##"d""#f"'""I"8 Texas e hojects under narotiarum Watson, Cahfonna Mexico 16945 Northchase Dn.ve 190-A Bosques de Cirudos, #303 *@*
5""'I?b0 Cok>nia Bosques de las Loma, e Opwaud & Minion Enery Cennpany : Houston, Texas 77060 2133 11700 Mexico, D.F. Indonesia . Mission First Financial 25th Fhwr, Wisma Nusantara e leasirte andprojectfinana lin. M. H. Thamrin, # 59
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Misticm Enagy is aairrly crylariy opportunities in Asia, Latin Arnmca and Euny. ~$ f( g= A.
2 The Mission Cornpinles - Papc 21 - lL= ding A NewIndustry Int:rnational Market: The New frontier million plant Separately, Alission Energy acquired a 60% Even larger than the domestic market is the international interest in Lakeland Power, a 220-A1W gas fired indepen-one, where Alission Energy is among the early leaders, dent power project in operation since November 1991. With some 60 countries now considering privatization of British Gas will supply fuel for both projects under long- i aheir electric power industries, experts forecast the need term fixed-price contracts. for more than 460,000 A1W of new generating capacity Spain: In December, Alission Energy purchased a 34% outside the United States and Canada by the turn of the interest in Iberian Hy-lbwer Amsteb.m, B.V., a Dutch century. An estimated one-fourth of this capacity will company that develops small hyd roclectric projects in . come from independent power producers at a capital Spain. It has 45 MW in opermon and 35 AlW under investment of more than $200 billion. development.- Although foreign markets may have greater risks, Ind<mcsin The company is part of a consortium with Alission Energy's experience, reputation and resources put Alitsui, General Electric, and P.T. Batu Hitam Per Kasa it in a strong position to be very selective in docloping that was selected in a competitive tender to exclusively projects that are sound and profitable. The company care- negotiate the rights to build, own and operate a $1.9 fully evaluates each project for key factors-such as political billion,1,220.A1W coal-fired plant scheduled for oper-stability, currency comertibility, labor requirements, ation in 1997. The consortium, led by Alission Energy, availability of skilled labor, legal requirements, cultural is in the final stages of negotiation with the Indonesian customs and availability and price of fuel. National Utility and the Government ofIndonesia for the By early 1993, the company had sneral international plant. Alission Energy's anticipated equity imrstment projects either completed or in advanced stages of would be approximately $150 million for a 32.5% development. They include: interest. Australia: In December, Alission Energy completed purchase of a 51% interest in ley Yang B, a 1,000-A!W Blueprint for Success power plant near Alelbourne. The State Electricity Alission Energy has had good success in getting projects Commission of Victoria is a 49% partner. The company off the ground, completed on time and within budget. will imrst nearly 5300 million for its share of the $1.9 Alission Energy has several competitive strategies: billion plant. The facility has two 500-AIW coal-fired Equity andfinancing: Alission Energy typically imests units, one scheduled for operation in late 1993 and the substantial equity-20% to 25%-so its plants have the other in 1996. Alission Energy will operate the plant resources and flexibility to succeed in varying economic and sell power to the State of Victoria utility under conditions. Also, the company uses nonrecourse project a 30-year contract. financing to limit its liability for each project and to Afrxico: Alission Energy and its Alexican partners better le crage resources. (Organizacion Autrey and Grupo Ancira) are completing Fuct supplies: Mission Energy purchases and owns arrangements with Comision Federal de Electricidad competitively priced, reliable fuel supplies that directly (CFE), the Alexican national electric utility, to develop, support many ofits projects. own and operate a fbur-unit 1,400-AlW coal-fired power Pniject mana,qcmcnt: Its expertise in project manage-plant under construction about 100 miles south of San ment helps ensure high standards .in engineering and con-Antonio, Texas. In late 1992, Alission Energy and CFE struction fbr reliable, long-term plant operations. signed power-sales and asset-transfer agreements. The Operation and maintenancc: Mission Energy's operations - company has invested approximately $300 million for a unit has an excellent record for running and maintaining 49% interest in the $1.8 billion plant and associated projects in which the company owns an interest. In 1992, coal resources. The first two units are scheduled to begin it operated 12 projects with an on-peak capacity factor commercial operation in 1993 and the other two in of 98.9%. Such operation and maintenance services are 1994 and 1995. integral to Alission Energy's strategy of being a United Kingdom: In April, the company invested full-service company.
$13 million for a 33% interest in a 210-A1W gas-fired cogeneration plant near Derby, England, scheduled for operation in 1995. Mission Energy will operate the S250
The Mission Comp;ni s Ihgc22 Luding A New industry Mission First Financial At the end of 1992, one-half of these projects were completed and fully occupied, and the rest are scheduled - Highlights 1992 1991 % Changt f con ion in 1993 W 1991 Rcwnne Mission First Financiafs 1992 activities includedn 6ncluding interest) s39.6 million $30.5 million 30 m Refinancing its imestment in the I eastr Valley Unit 2 Net income $29.4 milhon s24.5 milhon 20 . Earnings per share 13 cents 11 cents 18 nuclear pmver plant in Pennsylvania to take advantage of Equity imrstment s 186 million s 157 million 19 low interest rates and increase the yield; Anen s 826 million s 690 miuion 20 m Purchasing a 50% interest in a 53-MW generating unit under long-term lease to Utilicorp; . A h. .ssion H.rst h..nancial is an imestment subsidiary whose m Completing - the sale and leaseback of a new Boeing 767 aircraft to American Airlines; and primary focus is energy-related imrytments. fhe company,s a Committing $100 million to fund 30 aflbrdable rental "passne imestment strategv eflectwelv complements
. housing projects when they are completed.
A b. .suon E.nergy's active involvement m dewloping, owning and operating power projects. Mission Land Company Mission First Financial has established a high-quah.ty, diverse investment portfolio that provides good returns at nighlights 1992 1991 % Change reasonable risk. At year-end,68% ofits funded invest-Resenue $46.7 mittion s80.3 million (42) ments wcre energy related-including nuclear, cogenera- Net income $(9.8) million s 9.2 million - tion, hydroelectric and waste-to-energy projects. Earnings per sharc (4) cents 4 cents - Mission First Financial earned a record $29A million, Equin immment 5 237 million s 247 million (4) or 13 cents per share-up 20% from 1991. In the last five ^"en s 493 niun n s 489 muon . I years, its earnings have grown at an average annual rate of 21%, and its return on equity has averaged 16.9% The In 1991, SCEcorp decided no longer to pursue real estate company's 1992 return on common equity was 17.3% dewlopment as one ofits core businesses and to exit the Mission First Financial's objecthr is to expand its role business in an orderly way mer the next five years. A new, as a provider of capital and financial services for energy- experienced management team was hired to implement related projects, products and services. Among its targeted this plan. During the year, Alission Land concentrated on investment areas are electric technologies, electric trans- managing its portfolio of properties to position them for portation, pollution-control and energy-eflicient sale. equipment. In the fburth quarter, the company added $22.5 million Although Mission First Financial primarily tbcuses on to reserves fbr possible losses on real estate projects. This i energy-related investments, it also seeks other investment resulted in a $13.5 million, or 6-cents-per-share, after-tax opportunities with attractive yields. The most important, charge to SCEcorp's earnings, which more than ofTset to date, has been aflordable housing. Since 1989, the positive income from lease rentals and property sales. company has invested in high-quality, affbrdable rental Consequently, Mission Land lost $9.8 million in 1992, housing thr low-income tenants. Mission First Financial compared with earnings of $9.2 million in 1991. has structured these investments to mitigate many tradi- At year-end, Mission Land's net worth was $237 mil-' tional real estate risks. It co-invests only with experienced lion. Total assets were S493 million, compared with $489 sponsors who have secured strong community support in million in 1991. These assets fbr 1992 and 1991 have been the fonn ofland contributions and low-interest loans. restated to reflect the full consolidation of several joint-These subsidies, combined with Mission First invest-venture projects previously accounted for under the equity ments, provide the capital needed to develop high-quality method of accounting. This change increased assets by housing at rents significantly below market levels. The S217 million in 1992 and by $225 million in 1991. company funds projects only after they are completed and substantially occupied. Altogether, the company has imested in, and commit-red approximately 5220 million to more than 70 low-income housing projects with nearly 4,800 rental units.
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. ..: ; y CLEAN POWER FROM THE MISSISSIPPI RIVER Mission First Financial participated in the sale and leaseback of the Sydney A. Murray Jr.
Hydroelectric Station near Vidalia, Louisiana. The 192-megawatt plant sells power under long term contract to Louisiana Power and Light and the City of Vidalia. Mission First Financial has a $43-million equity investment in the plant. 1
nu e SCEcorp Board of . Directors - Executive Officers John E. Bryson* Charles D. Afilleru , g; q y ,gy g 3pn j7 c , g,7\ g Chairman of the Board and Chainnan of the Board and d! $ 7. d h b d d M W :AME M < 5 Chief Executive Otficcr, Chief Executiw OHicer, SCEcorp and Edison Awrv Dennison Corporation, J hn E, Bryson . Alan J. Fohrer Pasadena, California Chairman of the Board and Senior Vice President, Treasurer lioward P. AllenL* Chicf Executhe O$cer and Chief Financial Officer Chairman of the Ewcutiw Michact R. Peewy 2d Gunmittee and Consultant, President, Alichael R. Peeve)
- Richard K. Bushey SCEcorp and Edison SCEcorp and Edison President Vice President and Controller Roy A. AndersonW J. J. Pinola rs Bryant C. Daraer .
Kenneth S. Stewart CIUirman Emeritus, Chairman of the Senior Vic- President and ' - Assistant General Counscl bdheed Corporation, Executhr Committee, General Cwnsel and Gwporate Secretary-Burbank, Cahtiwnia First Interstate Bancorp, - Los Angeles, California N,* ~ .h. . c .,- h.w
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y , -C Q* - " ".k' '- [,. , ~.'1 ;[ MU Norman Barker Jr.2'2d ~ ' Chairman of the Board, James A1. Rosvrza John E. Brysori Ronald Daniels Pacific American income Shares Inc. President, Chairman of the Boarit and Vice President, Los Angeles, Cahfornia California State University, Chief Executive Odicer Regulatory Projects Los Angeles, Warren Christopher us Los Angeles, California Alichael R. Peewy* Chairman, John R. Fielder - t2 President Vice President, O'Atchtny & Mycn. IIenry T. Segerstrom Regulatorv Iblicy and AfTairs los Angeles, Cahfornia Managing Partner. Bryant C. Danner l C. J. Segerstrom & Sons, Senior Vice President and Lawrence D. Hamlin l Camilla C. Frost Costa Sicsa, California Vice President, Tivstcc, Chandict Trusts and General Counsel l her Pmduction Director and Secretary-Treasurer, E.L. Shannon Jr.2*' Alan J. Fohrer Chandis Secunties Company, Chairman of the Board, Senior Vice President, Atargaret II. Jordan Los Angeles, Cahtirnia Santa Fe International Corporation, Trcasurer and Chief Financial Officer Vice President, Heatrh Care Waher B. Gerken*J Charles B. McCarthy Jr. J. Michael Mendez Chairman of the Robert IL Smith *' Senior Vice President Vice President, Regional Leadership Execurne Committee, Former President and Pacific Mutual Life Insurance Chief Operating Otliceg IIarold B. Ray llarry E. Morgan Jr.* Company, BankAmerica Corporation, Senior Vice President - Vice President and Site Manager, - Newport Beach, Cabfiirnia and Former Chairman of the Board " and Chief Executive Odicer, Rnbert IL Bridenbecker Generating Station l Joan C. llanley u Security Pacific Girporation, General Partner, Pasadena, Califi rnia Miramonte Vinevards \ ace President, 88 Icmeculo Cahtilrnia Daniel M. TelleP i $N3m -" bec President, Corporate Communications Carl E 11untsinger u [;} t g; e,, System Planning and Operations Kenneth S. Stewart G:ncral Partncr, bdhecd G>rporation Richard K. Bush DAE Limited Partnership Ltd , Chhasas, Califi>rnia Opi, Cahtiwnia Vice President and 'ontroller ienai er i n. , Monterev Park and East Los' Angeles, Cahfornia Thomas R. McDaniel Alan M. Fenning President, Senior Vice President Mission First Financial and and General CounaI, Mission Land Oxnpany Mission Energy Company James S. Pignatelli John A. Moriarty President, Senior Vice President, Minion Energy Company Minion Land Company Robert M. Edgcu Michael L Noel Executiw Vice President, Senior Vice President and 1 Atcmha grhe aust anmnimt Mission Energy Company Chief Financial Oflicer, Mission Energy Compan" 2 Afcmbe of thrfnanct annmitter Charles W. Johnson 3 Jfonber ofthc ren/vnrarwn ununntrer Execuriw Vice Presient, Lawrence W. Yu 4 Atcmba #the nuurm rennurra Mhsion Land Gimpany Senior Vice President, 5 Afcmba olfthe meninatina ' annmirra Mission First Financial 61&rires in Jfarch 1993 Robert Dietch 7 Rettres m Aprd 1993 Senior Vice President, 8 Rerirrd in January 1903 to bueme Project Management / Operations, U.X Surctarv ofArare Mission Erwrgy Company ___-____-_u_-- _ _ _ _ _ _ _ _ - _ - -_-- -- - - - - - - - - -
Fin:ncialinformation ~ Pyc 25 LManagement's Discussion and Analysis: SCEcorp and Subsidiaries lResultslof Operations Earnings SCEcorp's earnings per share were $3.32 in 1992, compared Both Mission Energy and Mission First Financial performed with $3.21 in 1991 and $3.60 in 1990. SCEcorp's 1992 carnings well in 1992. Mission Energy's car.nings per share rose 2 cents to reflect an ll. cent-per-share Edison charge for a settlement of 40 cents, as it completed construction or acquisition of five litigation with Tucson Electric Ibwer Company and a 6-cent- operating projects. Mission First Financiars earnings per share - per-share Miuion I,and Company charge for possible real estate increased 2 cents to 13 cents, due to new energy-related and < losses, affordable housing imrstments, as well as refinancings of existing _ projects.
' SCEcorp's 1991 earnings included 43 cents per share in one- ; ' time Edison charges for an agreement with the Cahfornia Public The Mission companies' 1991 carnings grew by 10 cents per Utilities Commission's (CPUC) Division of Ratepayer Advocates share from 1990. Earnings in 1990 included an 8-cent-per-share (DRA) to settle disputes about purchased-power payments to loss from discontinued operations at Mission Ibwer Engineering SCEcorp's Mission Energy Company unit, legal and regulatory Company.
reserves, and a corporate restructuring program. Operating Revenue Excluding these charges, earnings declined 15 cents per share fmm 1991, due to lower carnings at Edison and dilution from Electric revenue increased 6% over 1991, mostly due to warmer issuing additional shares of SCEcorp common stock. weather during the summer of1992. In addition, retail rates rose in 1992, reflecting a CPUC-authorized increase of1.9%, for . Edison contributed 85% of SCEcorp's earnings, or $2.83 per Edison's highei operating and maintenance expenses and capital ' l share, up 15 cents per share from 1991. Excluding the special related costs. Retail rates account for over 98% of electric - i charges, Edison's earnings fell 17 cents per share, due to a km er revenue and are regulated by the CPUC. Wholesale rates are authorized rate of return and reduced interest income. In 1991, regulated by the Federal Energy Regulatory Commission. In
' Edison's carnings decreased 49 cents per share from 1990, 1991, electric revenue increased 4% over 1990, mainly due to largely due to the 43 cents per share in nonrecurring charges higher retail rates, previously discussed.
The Mission companies, SCEcorp's nonutility units, earned 49 cents per share in 1992,4 cents per share below 1991. The earnings decrease is attributed to Mission 1.and, whose earnings SCE m p: fell 8 cents per share, principally due to the 6-cent-per-share Dectric Revenue Increases xharge for possible lasses on several real estate projects. In millwm ofMian 4s0 f Rate 170 Rate changes changes am [ b -
, : Rate
- ; changes ,
150cemlume h Sas g' 270 Sales mlume
; changes [ changes
[ [c tL J - 16 Other F ! Sales l volume lJ changes 90 91 92
i. , Financiallnformation Paqc 26 i _ _ . ~ ! Management's Discussion and Analysis: SCEcorp and Subsidiaries i Results of Operations I
- Operating Expenses Other income and Deductions t
4 l Fuel apense increased 18% in 1992, primarily due to Edison's The provision for rate phase-in plan reflects a CPUC-i greater power generation. Fuel opense in 1991 decreased 14% authorized,10-year rate phase-in plan fbr the three Palo Verde l due to lower fuel costs and reduced power generation. Nuclear Generating Station units. Phase-in plans minimize the i effect of construction costs by gradually implementing rate .. l Purchased-power apense increased 2% in 1992 and 6% in increases. Palo Verde's plan deferred $200 million of revenue fbr
- 1991, reflecting higher prices and an increased volume of each unit over a fbur-year period. Tne deferred revenue, includ-
! federally required purchases from nonutility generators. These ing interest, is being collected ewnly over six-year periods ending purchases were maJe under CPUC-nundated fixed price in 1996 tbr Units I and 2, and in 1998 for Unit 3. The provision
- contracts and,in 1992, cost aboct $650 million more than is a non-cash offset to the collection of deferred revenue.
l power available from other sources.
~
j Interest income decreased 46% in 1992, essentially due to ! The provisions for regulatory adjustment clauses minimize lower interest rates and lower balances in Edison's Pak) Verde , rate fluttuations by accumulating ddlerences between estimated phase-in plan and halancing accounts. l and aerual kilowatt-hour sales or energy costs in balancing , accounts. Rate adjustments for prior-period ditTerences are also A settlement of major litigation occurred in September 10"2, l retlected in these provisions. The 1992 decrease in the provisions when Edison paid Theson Electric $40 million. The case arose , is mamly due to kilowatt-hour sales and energy costs greater when SDG&E withdrew from its 1988 merger agreement with ! than CPUC-authoriicd estimates The 1991 increase is largely 'Ibcson Electric and agreed to merge with Edison. The CPUC due to rate increases in the energy-cost balancing account to later denied Edison's and SDG&E's merger application. lbcson ! recoser prior-period ditTerences. Electric had alleged that Edison wrongfully interfered with the
- proposed merger of Tucson Electric and SDG&E.
=
Other operating expenses increa:,ed 6% in 1992, retlecting 4 Edison's authorized increases in energy conservation programs, Taxes on nonoperating income decreased in 1992, principally i partial fundmg of postrctirement twnefits other than pensions, due to the change in the provision for rate phase-in plan anJ the j and Mission I.andi charge tbr possible real estate losses In setticment with Tbcson Electric. ' 1991, other opcrating expenses increased 11%, primarily due to a $15 mi!! ion merger termination fce paid to San Diego Gas & Electric Company (SDG&E), a $25 million resene established ! fbr a corporate restructuring program and higher costs for workeri compensation claims and health care. l SCEcorp: Sources of Revenue Distribution of Revenue in fment in pment tWA 3 Dncrwhed operanom
- 1 Rrmmred carnmp 8 Ulh#'
KM 5 Other enconc S Pubis aorhonnes i 9 ThC' hh 13 Indmtnal had 10 Depredarkm m$ f.25 M W jd 11 hwl ya y b;d W IE ""#" I 35 Rcudemut 13 [i$ [. AM $ 21 Operatior, & m.umenante pyl G
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; Financill'informition Age 27
! Consolidated Statements of Income SCEcorp and Subsidiaries '
. In millions, cxcept per-sharc amounts Year ended December 31, 1992 1991 1990- )
Electric revenue $7,722 - $7,298 - $6,986 '
' Diversified operations 262 258 240 Ltal operating revenue 7,984 7,556 7,226 Fuel 836 709 827 Purchased power 2,251 -2,203 2,072 l Provisions for regulatory adjustment clattses-net 340 384. 206 Other operating expenses 1,294 1,215 1,091 3 Maintenance 362 383 376 Depreciation and decommissioning 807 767 .719. ;
Income taxes 544 453 489' Property and other taxes 207 203 180 Total operating expenses 6,641 6,317 5,960 Operating income 1,343 1,239 1,266 :
. Provision fbr rate phase-in plan (147) (82) 2
. Alknvance for equity funds used during construction 20 16' . 13 Interest income 62 114 149 Settlement of major litigation (40) - -
Taxes on nonoperating income 78 17 ( 17). Other-net '(7) 10 3
%tal other income (deductions)-net (34) 75 150 a
Income before interest and other cxpenses 1,309 1,314- 1,416-Interest on long-term debt 463 491 470 Other interest expense 110 103 137 Aluvatre for borrowed funds used during construction (17) (12) (10) Capitali.ved interest (28) (13) (11) Divider.ds on subsidiary preferred stock 42 42 44 Total interest and other expenses-net 570 -611 630 Net income $ 739 $ 703 $ 786 - Weighted average shares of common stock outstanding 223- 219- 218' Earnings per share $3.32 $3.21 $3.60 Consolidated Statements of Retained Earnings In millions, cxceprper-sharc anmunts Year ended December 31, 1992 1991- :1990 Balance at beginning of year $3,150 $3,038 $2,824 ~
. Net income 739 703- 786 Dividends declared on common stock (626) . (591) (572)
Balance at end of year $3,263 $3,150 $3,038 Dividends declared per common share $2.78 $2.70 $2.62 De accompanyiry notes art an integralpart ofthesefinancial statements.
Fininclilinfoimation - 1hgr28
. Consolidated Balance Sheets In millicms December 31, 1992 .1991 ASSETS Utility plant, at original cost $17,805 $17,772 Less-accumulated prmision Ibr depreciation and decommissioning 6,715 6,339 ;
11,090 -11,433 ' Construction work in progress 724 794 Nuclear fuel, at amortized cost 123 , 247 Total utility plant 11,937 12,474 Nonutility property-less accumulated provision for depreciation of $50 and
$44 at respectne dates 1,024 403 - Nudear decomminioning trusts -648 ~516 Imtstments in partnerships and unconsolidated subsidiaries 1,453 1,202 Investments in leveraged leases 462 382 Other imtstments 19 -46 Total other property and investments 3,606 2,549 Cash and equivalents 496 479 Receivables, including unbilled rewnue, less alknvances of $13 and $ 15 tbr uncollectible accounts at respective dates 876 859 Fuel imentory 108 165 Materials and supplies, at average cost 110 111-Regulatory balancing accounts- net --
158
' Accumulated deferred income taxes-net 194 89 Prepayments and other current assets 201 171-lbtal current assets 1,985. 2,032 Unamertized debt issuance and reacquisition expense 301 300 Rate phase-in plan 488' 613 . Unamortiicd nuclear plant-net 380- -
Other deferred charges 443 375 Total deferred charges 1,612 1,288 lbtal assets $19,140 $ 18,343 The accompanying nota are an integralpart ofthnefinancial statements.
Itrgc291
. SCEcorp and Subsidiaries . In milliorn December 31, 1992- L1991 f CAPITALIZATION AND LIABILITIES '
Conunon shareholders' equity: ; l Convuon stock $ 2,691. . $ 2,531 Retained earnings 3,263 3,150 5,954- 5,681 Preferred st(A - Not subject to mandatory redemption 359 359 Subject to nundatory redemption 278 199 I.ong term debt 6,320 :5,940 Total capitalization 12,911 12,179 Other long-term liabilities 289 306 Current portion oflung term debt and redeemable preferred stock 219 263' Short term debt 758 794 Accounts payab!e -391 619.
. Accrued tnes 342 392.
Accrued interest 120 132 Dividends payable. .161' '153 Regulatorv balancing accounts-net 88 .- Deferred unbilled reirnue and other 742 600 Total current liabilities 2,82'1 2,953' = AccumuIated deferred inwrne taxes-net 2,245 2,081' Accumulated deferred investment tn credits 462 :485 Customer advances and other deferred credits 412 339 Total deferred credits 3,119 2,905
- Conunitments and contingencies (Notcr 2, 8, 9 and 10) i Total capitalization and liabilities $19,140 $18,343 1 77x accompanyina notes are an integralpart ofthesefinancialstatanents.
' Financialinformation Payr 30 Management's Discussion and Analysis: sCEcorp and Subsidiaries i . Financial Condition.
SCEcorp's liquidity is primarily atTected by dividend payments, Edison has $1.0 billion in credit lines for short term debt. It also debt maturities and investing activities. Capital resources include has another $500 million fbr the k>ng-term refinancing of certain cash from operations and external financings. variable-rate pollution-control bonds. The hiission companies have $500 million in credit lines that support short-term debt to SCEcorp reclassified $1.3 billion in property related accumu- finance general cash requirements. lated deferred income taxes, presiously shown as a deduction from utility plant, as a deferred credit (Page 33). Also, some In the CPUC's 1993 cost of capital decision (Page 32), it denied Alission Land partnerships previously accotmted for under the Edison's request to increase its rate-making equity ratio from equiry method are nmv fully consolidated. 46% to 48% to counter increased financial risks from purchased. power commitments. Since these commitments are treated like Cash Flows from Onarating Activities debt by the financial community, three credit rating agencies lowered Edison's debt ratings from double A to single-A-plus. Net cash provided by operating activities totaled $2.0 billion in This downgrade is not expected to materially inhibit Edison's
- 1992, $2.0 billion in 1991 and $1.7 billion in 1990. SCEcorp access to capital markets, continues to meet most of its captal requirements with cash from operatiom. California law pn>hibits Edison from incurring debt for its non-utility atliliates. Additionally, the CPUC regulates Edison's capi.
Cash Flows from Financing Ar.tivities tal structure, limiting the dividends Edison may pay SCEcorp. These restrictions are not expected to affect SCEcorp's ability to Edison's short-term debt is largely used to finance fuel imen- meet its cash obligations. tories and balancing account undercollections. The Alission companies'short-term debt is mainly used for construction pro- Cash Flows from Investing Activities jects muil long-term construction or project loans are secured. l.ong-tema debt is mainly used to finance capital expenditures. The primary uses of cash for imrsting activitics are capital . Edison's' extern.tl financings are influenced by market conditions expenditures, imestments in the Alission companies' activities and other factors, including limitations imposed by its articles of and contributions to nuclear decommissioning trusts. The Alis-incorporation and trust indenture. As of December 31,1992, sion companies' cash used for imesting activities was $763 mil-Edison could issue approximately $5.0 billion of additional first lion in 1992. Edison contributes approximately $96 million per and refunding mortgage bonds and $4.1 billion of preferred year to decommissioning trusts. These contributions will con-i Stock at current interest and dividend rates. tinue until decommissioning, scheduled to start in 2013. Edison: SCEcorp: Regulatory Balancing Accounts Projected Capital and Rate Phase-in Plan Requirements In mulwru efddlan in Iniku ufddian 940 1 no
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I under (mer) colkens M 89 90 91 92
Fin nciilInformItion :Pagc31[
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Consolidated Statements of Cash Flows SCEcorp and Subsidiaries ] In millions Year ended December 31, 1992 1991. 1990L Cash 'ibws from operating activities:
$ 739 5 703 $ 786 j Net income Adjustments (br noncash items:
.. Depreciation and decommissioning 807 767 719 Amortization 150 166 169 Rate phase-in plan 125 43 (54)
Deferred income taxes and imrstment ta credits 32 103 142-
~ Equity in income from partnerships and unconsolidated subsidiaries (148) . (140)- (128) ,
Other long-term liabilities (17) 146 6 ,
' Nonrecurring charges
- 79 -
Other-ner - 56 21 - (42) Changes in working capital components: Receivables (17) . (73) (15) Regulatory balancing accounts 246 68 95 , Fuel imentory, materials and supplies 58 10 (98) Prepayments and other current assets (30) (73) -(11) ,
. Accrued interest and taes (62) (25) (73)'
Accounts payable and other current liabilities (95) 16 129 Distributions from partnerships and unconsolidated subsidiaries 124 149 120' N Net cash provided by operating activities 1,968 1,960 1,745 Cash flows from financing activities: Issuances oflong-term debt 1,611 819 707
. Issuances of preferred su>ck .296- - -
Repayment of k>ng-term debt (1,332) ' -(363) . (543) , Redemption of preferred snick (232) '- (12) (13). Nuclear fuel financing (126) 23 (106) Proceeds from sales of common stock 160 67' - > Short-term debt financings -net (36) (558) 508 Dividends paid (614) (586) (568)- . Net cash used by tinancing activitics (273) -(610) (15)' , Cash flows from investing activities: Capital expenditures (844) ' (1,033) - (963) t; Nuclear decommissioning trusts (132) (131) (115): Imtstments in leveraged leases-net . (44) (26) -(129)' '!
. Imtstments in partnerships and unconsolidated subsidiaries (654) (238) _ ~ (241) i t
Other-net (4) ' 74 ' 50
- Net cash used by investing activities (1,678) L (1,354) (1,398) l Net increase (decrease) in cash and equh alents 17 (4)-- !332
. Cash and equivalents, beginning of year ~479 483. 151' Cash and equivalents, end of year '$ 4961 = $1 479 $ -483 t
< Cash payments for interest and taxes:
Interest- $ 459 $ 520= $ 536 hes ' -457: 380' 393- : Noncash investing and financing activities: '
. Obligation to ftmd imrstment in partnerships and unconsolidated subsidiaries 69. 102 l21 .,
p n
;,1he accompnying notes are an intgralprt ifticefinancialstatements.
1
Financlilinformition ' Pyc J2 - , i LManage:Tient's Discussion and Analysis SCEcorp and Subsidiaries; ; Regulatory Matters Environmental Protection
= The CPUC decreased Edison's rewnue by $217 million, or Costs to protect the emironment continue to grow due to 2.9%, for 1903. The decrease includes a $216 million reduction increasingly stringent laws and regulations. .;
fbr fuel and related costs and a $106 miUion decrease for the lower costs of debt and equity, partially ofhet by a $110 million _ Edison has identified 43 sites fbr which it is, or may be, respons. increase for higher operating costs. The CPUC authorized Edi. ible for remedial action under emironmental laws. Edison is ' son an 11.80% return on equity for 1993, whi:h is expected to participating in imestigations and cleanups at a number of these . reduce 1993 earnings by about 19 cents per share. Authorized sites, and has recorded a $45 million liability fbr its estunated " retum on equity was 12.65% for 1992 and 12.85% tbr 1991. cleanup costs. Additional imestigations and cleanups will be perfbrmed as requested by emironmental authorities or as . .' i
- In November 1992, the CPUC nded on one of nvo previously Fdison deems necessary, which may result in additional costs; ; deferred 1992 general rate case issues. The nding alk>ws recowry The CPUC currently allows rate recovery of emironmental. .;
if $41 miuion in software dewlopment costs, but disallows cleanup costs after reasonableness reviewsc Edison has recorded a t other $9 million. The other issue under CPUC review is $56 $45 million regulatory asset that represents the apected rate . ,
.nillion in research, dewk>pment and demonstration (RD&D) recowry of the estimated cleanup costs. Ihmtver, the CPUC is expemes originally capitalized by Edison through 1991. Addi- currently reviewing alternathe rate-recovery procedures, and -
tionally, in February 1993, the CPUC began an audit of Edison's could substantially change the current procedure. RD&D spending from 1988 through 1992. The probable effect M on net income of these RD&D matters cannot be determined at The 1990 federal Clean Air Act requires power producers to this time, but SCEcorp beliews it will not materially afTect its haw emissions aHowances to emit sulfur dioxide. Ibwer com-SnancM nosition, panies receive emissions allow nces from the federal government [ and may bank or sell excess allowances. Edison expects to hae The DRA previously recommended disallowances fbr payments excess alk)wances under Phase II of the Clean Air Act (2000 made between 1985 and 1991 on several purchased-power and later). The act also calls for a five-year study of regional contracts with nonutility power producers partially owned by haze in the southwestern U.S. In addition, the Emironmenta! ' Mission Energy Edison and the DRA have settled these disputes Protection Agency is conducting a study of the efTect of air ' 'I thr $250 million, which was fully reflected in the 1991 financial contaminant emissions on visibility in Grand Canyon National . statements. A CPUC decision on this settlement is expected in Park The potential effect of these studies on sulfur dioxide emis-early 1993. sions regulations fbr the Mohave coal plant is unknown.
~. The CPUC is resiewing Edison's costs (appmximately $90 y Edison:
'~
million) related to a 1985 steam-pipe mpture at the Mohave Generating Station. Edison beliews the rupture was caused by Average Nitrogen-Oxides a manufacturing defect. The CPUC is also reviewing extendeil Emissions in LA, Basin l outages at the Palo Verde Nuclear Generating Station. The DRA #" ""l** has recommended a total disallowance of $168 mi!! ion on this
- s issue. Edison believes its costs were reasonably incurred and is contesting the proposed disallowance. Ifearings haw not been D
scheduled on eithcr matter. The probable effect of these matters ,3 on net income cannot be determined at this time, but SCEcorp beliews it will not materially affect its financial position. On November 30,1992, Edison discontinued operation of San "
' Onofre Nuclear Generating Station Unit 1. Edison will recmer '
its approximately $350 million imestment in the unit by August [ 1996, with an 8.98% fixed rate of return. is t 9 o I3 80 $4 88 92 . % 00 r3 Projectal
,w -y, . +- -g----- - r,n- -
+w - - _.__m_ _________..__________n._ +-
Page 33 ' New Accounting Standards Edison's projected capital expenditures to protect the A new accounting standard, which must be implemented in environment are $1.4 billion for the years 1993 through 1997, 1993, requires a change from the income statement method to mainly for placing overhead distribution lines underground and the balance sheet method of accounting for income taxes. reducing nitrogen-oxides (NOx) emissions. Edison could spend SCEcorp will not restate prior-period statements when it imple-up to $320 million by 1997 to comply with local NOx emissions ments the new standard. Edison will record balance sheet adjust-regulations. ments of approximatelv $1.6 billion to reflect unrecorded deferred taxes on temporary differences between book and tax The probable effect on net income of these eminumental mat- income. The majority of these deferred taxes will be offset by ters cannot be determined at this time, but SCEcorp believes it regulatory assets and liabilities representing the anticipated will not materially affect its financial position. effects on electric rates. The new stand.ud also requires property-related accumulated deferred income taxes to be classified as a Compctitive Environment deferred credit. This standard is not expected to signifcantly , afTect results of operations or financial position. 1 The Energy Iolicy Act of1992 atTects many aspects of SCEcorp's business strategy The act frees Mission Energy from Financial statements after January 1,1993, will reflect a new presious regulatory requirements and ownership restrictions accounting standard for postretirement benefits other than i when competing for domestic and foreign generating projects. pensions, which requires the expected cost of these benefits to -{ Other provisions enable the Federal Energy Regulatory Com- be charged to expense during employees'senice. Edison began , mission to order utilities to transmit power for third parties, funding its future liability for these benefits with $111 million in - ~l while allowing the utilies to recover all costs of prosiding these contributions in 1991 and 1992. These contributions are charged senices. This expanded transmission access gives Mission Energy to expense over a 12-month period as they are recovered in rates. ) increased opportunities to develop projects throughout the SCEcorp's unfunded liability for prior years ($710 million) will . United States. Mission Energy currently has interests in 30 oper- be amortized over 20 years. Annual expense under the new stan- , ating projects and is the nation's largest independent power dard is estimated at $115 million. In 1992, the CPUC authorized ' l producer. Edison's rate recovery of tax-deductible funding for 1993 and beyond. In early 1993, Edison will seek CPUC approval for its. For Edison, the act promotes electric vehicles, clean fucis and 1993 funding plan. Any difference between expense determined 1 demand. side management programs. Edison is currently under the new standard and amounts authorized for rate recov-engaged in programs that reduce the demand for electricity and cry is not expected to be significant and will be charged to allow a profit fbr encouraging energy c&iciency earnings. In April 1992, the CPUC decided how Edison and other Mission Energy: California utilities will meet new energy needs through the end Operating Project Ownership of this decade. Based on this decision, most of Edison's needs I" "Sa""* over the next eight years will be met through conservation L5" W7 programs. The CPUC also ruled that Edison must obtain 624 megawatts (MW) of new generating resources through com-
- petithe bidding. The decision sets aside 175 MW for renewable ms :
energy resources such as wind, solar and geothermal. Edison's ] 274 MW planned upgrade to its San Pernardino plant will p
. compete against other bids for the remaining 449 MW of new h
- O facilities. Edison is scheduled to solicit bids in early 1993, l-
- with bid awards expected in late 1993. The first plant should 3 l [
r be on-line in 1997. 1 l a7s i 1 0 l ! b oI l I 88 89 90 91 92 _ ._ , m. n i
. _ _ _ _. _ ~_ _ m - . - _ _ -_ .
Financialinformation Pagc 34 i Notes to Consolidated Financial Statements SCEcorp and Subsidiaries . i. l' Notei. Summary of Significant Accounting Policies The consolidated tinancial statements include SCEcorp and its . Depreciation and Decommissioning subsidiaries: Southern Ca!itornia Edison Company, a rate- Depreciation of utility plant is computed on a straight-line, regulated electric utility; and the Mission companies, SCEcorp's remaining-life basis. Depreciation of nonutility properties is com-nonutility subsidiaries. SCEcorp uses the equity method to puted on a straight-line basis over their estimated usefullives. account thr significant imestments in partnerships and subsid- , iaries in which it owns 50% or less. Intercompany transactions Decommissioning of Edison's nuclear generating facilities will have been ehminated, except Mission Energy Company's profits cost an estimated $959 million in current-year dollars. Decom-from energy sales to Edison, which are allowed in utility rates. missioning costs are recovered in rates through annual charges to depreciation expense. These funds, which are held in trust Cer*.an prior-year reclassifications have been made to contbrm until decommissioning begins, are invested in high-grade to the December 31,1992, financial statement presentation. securities and reported at the lower of cost or market value. At December 31,1992, the market value of the trusts was 5683 Accounting Principles million. Approximately 86% af the trust fund contributions The Califbrnia Public Utihties Conunission (CPUC) and the were tax-dedvible. , Federal Energy Regulatory Conunission regulate Edison. The consolidated financial statements reflect the rate making policies In accordance with the Energy Iblicy Act of 1992, Edison , of these conunissions, in conformity with generally accepted recorded a $58 million liability for its share of the estimated accounting principles fbr rate-regulated enterprises, as apphed costs to deconunission three federal nuclear enrichment facilities. to Edison. Edison's share is based on the number of nuclear enrichment units purchased, and will be paid oser a 15-year period. These Cash Equivalents costs are expected to be recovered in rates. Cash equivalems include temporarv investments with original maturities of three months or less. Fair Value of FinancialInstruments The fair salues of financial instruments were determined by: Construction Financing Costs Allowance Ibr funds used during construction (AFUDC) Instrument Ncthaf , represents the estimated cost of dcht and equiry funds that Decommissioning trusts Quoted market prices hnance unlity-plant construction. AFUDC is capitalized as a Federal nuclear facility Discounted future cash fk>ws cost of utility plant and reported in current earningt AFUDC decommissioning fees is recowred in rates through depreciation when completed pniects are plased into tommercial operation. Interenne swaps and caps Quotes from brokers Long-term debt Quotes from brokers Debt issuance and Reacquisition Expense Preferred stock sulfect to Quotes from brokers Debt premium, Jiscount and issuance expenses are amortized mandatory redemption over the life of each issue. Debt reacquisition expemes are Short term financial Due to short maturitics, amortized over the remaining life of the reacquired debt or, if instruments these instruments approximate - refinanced, the life of the new debt. fair value i
+
h
Page35 - Note 2. Regulatory Matters 1 Nuclear Fuel Energy Cost Proceedings TThe cost of nudear fuel, induding disposal, is amortized on Edison purchases power from nonutility power projects partially owned by SCEcorp's Mission Energy subsidiary. In 1988, i the basis of generation and charged to fuel expense. Under CPUC rate making procedures, nuclear fuel financing costs are the CPUC's Division of Ratepayer Advocates (DRA) began capitalized until the fuelis placed into production. resiewing several of these purchases and later recommended . panial disalknvances on three projects, in 1990, the CPUC ' Rate Phase-in Plan ~ disallowed recovery of $48 million (including interest) paid to + The CPUC authorized a 10-year rate phase-in plan that defers one project between mid-1985 and late 1987. Edison contested collection of $200 million in revenue during the first fbur years this disalknvance. The DRA also began reviewing payments .[ of operation for each unit of the Palo Verde Nuclear Generating made to 10 other nonutility power producers partially owned by . Station. Collection of the deferred revenue (including interest) is Mission Energy occurring ewnly over the fmal six years of each unit's plan. The i plans end in 1996 for Units I and 2, and in 1998 for Unit 3. In March 1992, Edison and the DRA signed an agreement to ] settle disputes about Edison's power purchases from these 13 , Regulatory Balancing Accounts nonutility pmver producers. TN settlement resches all affiliate l Balancing accounts accumulate differences terween authorized issues from the inception of the contracts through December 31, 'l and recorded kilowatt-hour sales or energy costs until they are 1991. Edison aho has agreed rot to execute new power-purchase refunded to, or recowred from, utility customers through contracts with Mission Energy. If approwd by the CPUC, the CPUC-authorized rate adjustments (with interest). Income tax settlement will result in disallowances of approximately $250 ~ ctfects on balancing account changes are deferred, million (in present value terms), which is fully reserved. On' y January 8 1993, a CPUC administrathe law judge recom-s CPUC-established target generation lewis act as performance mended. that the CPUC approve the settlement, if ameMed to . incentives for Edison's nudear generating stations. Fuel savings disallow $250 million immediately, which is financially equivai or costs alue or bekwv these targets are shared equally by lent to the original agreement. Edison and the DRA have jointly 1 Edison and its customers through balancing account adjustments. filed reply briefs stating that the $250 million should be amor- j' tized over two years. Howerr, Edison has requested that the Research, Development and Demonstration (RD&D) two-year period start in January 1994. A decision is expected in
. Edison's RD&D costs are charged to expense unless they are early 1993.
expected to result in plant construction. If construction does not y result, any capitalized costs are then charged to expeme. RD&D General Rate Case costs charged to expense are recorded in a balancing account; In Nowmber 1992, the CPUC adopted a settlement agreement ;
~
Edison must refund to customers any authorized but unspent between Edison and the DRA, which alk)ws Edison to recover < RD&D funds at the end of the rate-case cyde. Edison's RD&D $41 million in software dewlopment costs incurred in 1990 and - ] costs charged to expense were $40 million in 1992, $49 million 1991. Edison had requested recovery of $50 million in software - in'1991 and $41 million in 1990. development costs in its 1992 general rate case. The remaining
$9 million es charged to earnings. 'i Revenue Electric rewnue indudes services rendered but unbilled at the In Edison's 1992 general rate case; the CPUC deferred a final ,
deciskm (pending additional infbrmation from Edison) on the -
' nd e of each perkxl.
recovery of $56 million in capitalized RD&D costs incurred ,, Utility Plant ' before 1992. Edison later requested that $35 million of these. , O Plant additkins, induding replacements and betterments, are costs be induded in rate base and $17 million be dassified as i capitalized. Such costs indude direct material and labor, con- RD&D expense. The remaining $4 million was charged to . Struction overhead and AFUDC. Replaced or retired property earnings: Additionally, in February 1993, the CPUC began an and related trmoval costs-less salvage-are charged to the audit of Edison's RD&D spending from 1988 through 1992, ;
' accumulated provision for depreciation. with a final report due in 1993. The probable effect on net :
income cannot be determined at this time, but SCEcorp believes it will not materially affect its financial position.
FinincialInformation . Pagr36
' Notes to Consolidated FinancialStatements Mohave Outage Review Resale Rates In 1986, the CPUC began imestigating a 1985 steam-pipe The Federal Energy Regulatory Conunission requires resale reve- .N rupture at the Moharc Generating Station. Edison, plant opera- nue related to pending rate proceedings to be subject to refund tor and 56% owner, incurred costs of approximately 590 mil- with interest if subsequently disallowed. SCEcorp beliews any . lion, after insurance recowries, to repair damage and provide refunds from pending rate proceedings will not materially atTect replacement power during the six-month outage. In 1991, the results of operations or financial position.-
DRA and its consultant alleged that Edison contributed to the . piping failure by imprudently operating the plant and recom- San Onofre Unit 7 mended disallowance of all accident-related expenditures. On November 30,1992, Edison discontinued operation of San Onofre Nuclear Generating Station Unit L The CPUC- i Edison beliews the accident was caused by a manufacturing approwd action was the result of an agreement between Edison defect in a se.un weld and is contesting these allegations, and the DRA. Edison will recover its imestment of approx-Hearings have not been scheduled. The probable etTect on net imately $350 million (after deferred taxes), including an 8.98% income cannot be determined at this time, but SCEcorp believes rate of return, by August 1996. . it will not materially affect its financial position. The agreement does not alTect Unit l's decommissioning, sched- . Palo Verde Outage Review uled to start in 2013. The estimated current dollar decommis. -In March 1989, Arizona Public Senice Company, operating sioning costs, less amounts presiously funded, are recorded as a agent for Palo Verde, removed Units I and 3 from senice for liability These costs will be collected in rares over the next two nnhtications required by regulatory agencies. As required by years. state law, the CPUC conducted an imestigation of the outages, and ordered the authorized revenue collected during the outages be subject to refund. Units 3 and I resumed operation in December 1989 and July 1990, respectiwly. In April 1992, the CPUC ruled that its reasonableness resiew of replacement power costs from several Unit 2 outages in 1989 and 1990 be consolidated with the Units 1 and 3 imestigation. The DRA recommended a total disalk>wance valued at $168 mil-lion, including: 562 million of revenue collected during the out-ages (including interest through 1992); $5 million for capital projects deemed unnecessary; $50 million in replacement power costs; and 551 million in penalties for emironmental etTects of replacement power and the outages' effect on the regional energy market. In May 1992, Edison filed testimony that its costs were reasonably incurred and is contesting the proposed disallowance. Hearings haw not been scheduled. The probable efTect on net income cannot be determined at this time, but SCEcorp believes it will not materially affect its financial .
- position.
F Papc37L s
. f4ote 3. Debt Long Term Debt long-term debt consisted ofi Califbtnia law prohibiis Edison from incurring or guaranteeing December 31, ,
debt for its nonutility afliliates. 1992 1991 Carrying Fair Carrying In millmns Amount Value Amount . Almost all Edison properties are subject to a trust indenture h.en. First and refunding mortgage bonds: . Edison has pledged first and refunding mortgage bonds as secu, 1993-1996 (5.55% to 9%) $ 625 5 649 51,280 1997-2001 (6%% to 9%) 950 992 650
. rity for bornmed funds obtamed from pollution-coatrol bonds 125 134- 388 2002-2010 (8 % %)
issued by government agencies. Edison uses these proceeds to 2011-2024 (8%% to 10%) 2,025. 2,198 2,025 finance comtruction of pollunon control facilities. Pondholders Ibilution-control bondsi have limited discretion in redeeming certain pollution-control 1999 --2027 (6% to 10%% and variable) 1,209 - 1,243 990 bonds, and Edison has arranged with securitics dealers to : remarket or purchase them in such cases. () (2): 14) {}mstees 1993-2003 in January and February 1993, Edison issued $225 million of (4%% to 10.8% and variable) 1,441 1,465 710. 6%% first and refunding mortgage bonds due 2000; $200 Nudcar fuct indebtedness: million of 5.9% first and refunding mortgage bonds duc 1997; lbreign-currency-denominated
$125 million of 5%% notes due 1998; and redeemed $550 " '"5 -~ ~
38
# P million of first and refunding mortgage bonds, Series Im, , (P*'ioblipm '
CC, GG and 861. Capital lease obligation 153 ;153 - Current portion of capitalleaw -
~
SCEcorp has interest-rate swap and cap agreements to reduce obligation -(19) - the effect of changes in interest rates on $400 million ofits debt. Long-term debe due within one year (195) (19) .- .(251)
'(200)-
Unwrti2cd debt discount-net (61) -. '(51) The fair value of the agreements is the amount required to ter-minate them, which is estimated to cost $28 million. SCEcorp is Total $6,320 $6,682 $5,940 expowd to credit loss from nonperformance by counterparties to the agreements, but does not anticipate such nonperformance. Short Term Debt SCEcorp has lines of credit it can use at negotiated or bank . Commercial paper that finances nuclear fuel scheduled to bc
. inJcx rates. At December 31,1992, such lines totaled $2.0 used more than 12 months after the b: lance sheet date is billion, svith $1.5 billion supporting commercial paper. The clasufied as long-term debt.
renuining $500 million is available for the lon'gterm refmancing - of certain variable-rate pollution-cornal debt.' i
' long term debt maturities and sinking-fund requirements - a for the next five years are: 1993 -$1H million; 1994-$311 Short-term debt consisted of: l million; 1995-5382 million; 1996~$488 million; and : December 31, 1997-$481 million. In millans 1992 1991E ,
Commercial paper: Balancing accounts $ 247 l$ 420-Fuci ' 228' ;372 General purpose L 466 324:
~ Other short term debt 64 16 Amourt reclassific'd as ' io? term (245) - '(333). ,
Un.uwrtized discount (2) (5) .-
'Ibtal $ 758 5 794
't
- ' > . --. , . , . _ 4,,-. ,.--ee,-
- ,, - - , , , , ,. c h s.e. t . we
Financial Inform 1 tion .' Pa,qc 38 ~
! Notes to Consolidated finandal Statements Note 4. Equity The CPUC regulates Edison's capital r tructure, limiting the divi. Edison's authorized shares of original preferred, $25 cumtdatin .
dends Edison may pay SCEcoup. SCEcorp does not expcer this preferred, $100 cunndative preferred, $25 preference and $100 restrierion to affect its ability to meet its cash obligations. preference stock are: 480,000; 24 million; 12 million; 10 niil-tion; and 2 million, respectively All cumulative preferred stocks ' Authorized comnon stock is 400 million shares with no par are redeemable. Manditorily redeemable preferred stocks are value. Outstanding conunon stock was 223,868,027 shares and subject to sinking fund provisions. When preferred shares are 219,953,020 shares at December 31,1992, and 1991, redeemed, the premiuna paid are charged to comnon equity respectively
. SCEcorp issued 3.915,007 (5160 million),1,478,588 ($67 '
million) and zero shares of common stock in 1992,1991 and
.1990, respectively.
Edison's cumulatiw preferred stock not subject to mandatory redemption consisted of: -e December 31.1992 December 31,- Shares Redemption Iktlan in millwns, aupt pe.shart unwunt Outstanding Price 1992 1991 , $25 par value: .
?
4.08% 1,000,000 5 25.50 $ 25 $ 25
~ 4.24 1,200,000 25.80 30 30 4 32 1,653,429 28,75 41' 41 4 78 1,296,769 25.80 33 33 5 80 2,200,000 25.25 55 55 7.36 4,000,000 25.00 100 -
$100 par value: ;
750,000 75-
~
7.58 % 101.00 ' 75 8.70 - - - 50 8.96 - - - 50
' Total $359 $359-Edison's cumulatiw preferred stock subject to mandatory redemption consisted of: .
~ December 31, i December 31,1992 1992 1991 l Shares Redemption Carrying Fair Carrying f l:
. lkilan in millions, ewpt pa-shart amaunts Outstanding Price Amount %Iue ' Amount . '
i !. $100 par value: *
- l. 6.45% 1,000,000 $100.00 $100 $103' $- :i l- 7.23 1,000,000 100.00 100 104 -
- 7. .
7.325 427,381 102.53 "42 44 46-
- 7.80 411,495 _ 103.47 41 43 43
- 8.54 - - - '
55 l 8.70A - - -- -- 39 J 12.31 - - - 6 28 Preferred stock to be redccmed within one par (5) .(6) (12) e Total $278 $288 $199 l l' _.___.2_.__2_21._'_._.__l___ .______E_m _ . - _ ..'r--
. m ,- __ ,_ ___ .__ -- -r.
, i Page39' l Note S. Income Taxes 1 Preferred stock redemption requirements are 55 million per year SCEcorp's subsidiaries are included in its consolidated ' federal l for the next five ) cars. income tax and combined state frandiise tax returnt Under j income tax allocation agreements, each subsidiary calculares its 1l Changes in Edhon's preferred stocks were: own tax liability
]
Year ended December 3l' Current and Deferred Taxes Y In thousands ofsharrs 1992 1991 1990 Income tax expense includes the current ' tax liability from opera- . 6.45% 1,000 - - tions. It also includes dcferred income taxes on certain income 7.23 1,000 - - and expense items reported in different periods for tax and finan- , 2325 (30) (30) (30) l cial reporting purposes. Accumulated deferre'd investment tax
' 236 4,000 - -
credits are amortized mer the ives of the related properties. _ 7.80 (18) (18) -(18) '
, 8.54 (547) (22) (22) . .
8.70 ' ' (500) - - Federal, and composite federal end state statutory income tax ; 8.70A (394) (13) (13) rates were 34% and 40.138%, re: pectively, for all years 8.96 (500) - - presented. 12.31 (277) (34) (50) Net issuances (redemptions) 3,734 (117) - (133) Deferred income ' taxes for tax depreciation befbre 1981 and cer-tain construction overheads have not been provided, because the tax effects of these timing ditTerences are not allowed for retail ratemaking until the taxes become payable. The cumulathe net amount of these timing ditTerences was approxinutely $1.6 billion and $1.8 billion at December 31,1992, and 1991, respectistly. The current and deferred components ofincome tax expense were: Year ended December 31, In milli.ms - 1992 1991 1990' Current: Federal '$324 5219 $244 state 110c 114 120-434 333 364
=-
Defea red-federal and state: Accrued charges . (8) (82'1 (24)~ Dep.cciation 150 163 188-Investment and energy tax credits-net (30) (33) (20) Leveraged leases 93 77 63f Rate phase in plan (50) . (17) 21 Regulatory balancing accounts . (121) - (27) . (29) ~ Resale revenue 34- 22 - - (3) ., Unbilled revenue 4 (5) (21) Other (40) 5 (33)L t 32 103. 142 - Total income tax cxpense $466 $436 5506 Classification ofincome taxes: Included in operating income $544 S453 $489 Included in other income (78) (17) - 17
- Fin:nci11Inforrnation ' t s40 t f Notes to Consolidatcd Finandal Statements Note 6. Employee Benefit Plans A reconciliation of the statutory income tu rate to the effectiw Pension Plan rate is presented below: SCEcorp has a noncontributory, defined-benefit pension plan Year ended December 31, that is administered by a trustee and covers substantially all 1992 1991 1990 full-time employees who fulfill minimum service requirements.
Federal statutory rate 34.0% 34.0 % 34.0 % Benefits are based on years of accredited service and awrage base Depreciation and related timing pay SCEcorp's policy is to fund the plan on a lewl-premium differences not deferred 3.0 4.3 4.3 actuarial method. These annual contributions must meet mini-Imtstment and energy tu credits (2.5) (3.6) (2.5) Merger expemes mum legal funding requirements and do not exceed the muimum (2.1) 0.9 . State tax-ner of federal deduction 4.3 5,7 6.2 am unt deductible under income tax regulations. Prior service
. Other (0.1) -
(3.7) costs from pension plan amendments are fimded owr 30-year Efrective tu rate 38.7% periods. Plan assets are primarily common stocks, corporate and 38.3 % 39.2 % gowrnment Imnds, short-term investments and guaranteed imestment contracts. New Accounting Standard , A new accounting standard, which must be implemented in Net pension cost recognized is calculated under the actuarial 1993, requires a change from the deferred method to the asser- method used for ratemaking. The difference between pension =! and-liability method of accounting for income tues. SCEcorp costs calculated for accounting and ratemaking is recorded as a L will not restate prior-period statements when it implements the deferred item in the consolidated balance sheets. new standard. Edison will record balance sheet adjustments of approximately $1.6 billion to reflect previously unrecorded The plan's fimded status was: deferred taes on temporary differences between book and tu December 31, income. The majority of these deferred tues will be offset by In m & u 1992 1991 regulatory assets and liabilities representing the anticipated . Actuarial present value of benefit l effects on electric rates. Accordingly, this standard is not obligations: l expected to significantly affect results of operations or financia) Vested benefits $1,438 - $1,250 - )
;,;g Nonvested benefits 38 33 Accumulated benefit obligation 1,476 1,283 '
Value of projected future compemation levels 494 557 Projected benefit obligation $1,970 $1,840 ~ Plan assets at fair value $1,947 - $1,889 > Projected benefit obligation in excess of (less than) pl.ui assets - $ 23_ $ - (49) ; Unrecognized net gain 83 175. Unrecognized prior service cost (6) (6)L Unrecognized net obligation being amortized owr 17 years (67) - _73). ( Accrued pension liability $ 33 - $ 47 1 Assumptions for defined-benefit - pension plam e Discount rate 7.0% 7.5% Rate ofincrease in future compensation 5.0% 6.0% Expected long-term rar of rerum on assers 8.0% 8.5% > i i f-l' l
. - - . - . ~ . _ ~ - . - - -
Page41 F The components of pension expense were: Stock Plans SCEcorp has two stock plans that supplement employees' retire-Year ended December 31 ment income. Tne Employee Stock Ownership Plan was funded In malim 1992 1991 1990 primarily by employees and federal income tax benefits. The Net pension expenset Stock Savings Plus Plan recched SCEcorp contributions of $20 Scrvice cou ti>r benefits earned 5 55 5 53 5 58 million in 1992, $18 million in 1991 and $17 million in 1990.' Intercs: cost on projected twnctit obligation 127 126 116 . . Under SCEcorp's kmg-term mcentnc compensation plans,4.1' ; Actual return on plan assets (86) (375) 33 Net amortization and deferral (62) 251 (167) million shares and 1.5 miUion shares of SCEcorp common stock 2 were reserved at December 31,1992, and 1991, respectively, for ' Penmn cost under accounting. standards 34 55 42 issue to key employees in various forms, m.cluding the exercise of .. Regulatory adjumncnt 14 (7) 5 stock options. Here were 3.5 millkm shares and 1.1 million shares reserved for future grants at December 31,1992, and Net pension cost recognized $ 48 $ ,48 5 47 1 1991, respectively. Under SCEcorp's stock option plan, share options accrue dividend equivalents at the same rate as outstand. Postretirement Benefits Other Than Pensions ing common stock; the dividend equivalents may be applied
.)
Employees retiring at or after age 55, who have at least 10 years against the grant price at the time of exercise. of service, are entitled to postretirement heahh care, dental, life insurance and wher benefits. Health care benefits are subject to Activity in the stock option plan was: ; deductibles, copayment provisions and other limitations. The .
~l Share Options Share Pnce costs of these benefits are recognized as expense when p.u.d. l Edison began funding its future liability for these benefits in outstanding, Dec. 31,1990 263,328 532.00-$39.69 1991 with a $62 million contribution. In late 1992, Edison Granted 160,300 37.50- 40.19- .;
Canceled (10,065) 32.37- 39.69 i funded an add. .itional $49 million. %ese contributions are Exercised (1,778) ' 32.37 charged to opense over a 12-month period as they are recovered outstanding, Dec. 31,1991 411,785 32.00- 40.19
. in rates. Total expense was $88 million in 1992, $33 million in C, ranted 197,700 41:31- 46.56-1991 and $24 million in 1990.
Lanceled (41,075) 37.50-.46.56 Exercised (20,708) 32.37- 39.69 Financial statements after January ' 1,1993, will reflect a new Outstanding, Dec. 31,1992 547,702 32 00- 46.56 - accounting standard for postretirement benefits other than pen-skms, which requires the expected cost of these benefits to be Exercisable, Dec. 31,1992 265,729.. 532.00-$46.56 charged to expense during employees' service. SCEcorp will , amortize the transition obligation ($710 million) over a 20-year - ! period. Annua; expense under the new standard is estimated at
$115 million. In a December 3,1992, decision, the CPUC authorized Edison to recover tax. deductible funding of these benefits in rates. In early 1993, Edison will seek CPUC approval j for its 1993 fimding planf Any difference between expeme deter- !
mined under the new standard and amounts authorized for rate ,3 recovery is not opnted to be significant and will be charged to , camings.
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; Fininci:1 Inform: tion Pap 42 Not:s to Consolidated FinancialStatements Note 2 Jointly Owned Utility Projects Edison owns interests in sewral generating stations and trans-mission systems for which each participant pnnides its own financing. The proportionate share of exps nses for each project
-is induded in the consolidated statements ofincome, ffhe inwstment in each project, as indaded in ti consolidated balance sheet as of December 31,1992, was:
- Plant in Accumulated - Under Ownership.
In millwns Service Depreciation Construction Interest Ejdorado liansmission System S 25 5 11 $ 2 60 % Four Corners Coal Generating Station-Units 4 and 5 448 199 2 48 Mohave Coal Generating Station 267 127 9 ~ 56 - Pacific Interrie Transmission System 210 55 2 50 Palo Verde Nuclear Generating Station 1,518 240 40 16 - San Onofre Nuclear Generating Station 4,003 1,135 50 75
. Total $6,471 $1,767 $105 -
l l l
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Page43 4 Note 8. Leases Note 9, Commitments
'I ntrestments in leveraged Leases Construction Program and FuelSupply .
Mission First financial is the lessor in seseral leveraged-lease As of December 31,1992, construction expenditures were - agreements with tenns of 13 to 30 years. All operating, mainte- estimated to be 51.3 billion for 1993, $1.2 billion for 1994 and nance, insurance and decommissioning costs are the responsibility 51.2 billion for 1995. In addition, minimum long-term fuel-of the lessecs. The total cost of these facilities was $1.4 billion supply comminnents were approximately $1.9 billion at . at December 31,1992, and $1.3 billion at December 31,199L December 31,1992. The equity investment in these facilities is 22% of the purchase Long Term Purchased Power and Transmission Contracts price. The remainder is nonrecourse debt secured by first liens Edison has contracted to purchase part of a power plant's gener-on the leased property. The lenders have accepted their security ating output, as well as firm transmission service from another . interests as their only remedy if the lessee defaults. utility Minimum payments are based, in part, on the debt < service requirements of the provider, whether or not the plant or The net itwestment in leveraged leases consiated of: transmission line is operable. Om6er 31. The purchased pmver contract is not expected to provide more - In mittuns 1992 1991 than 5% of current or estimated future operating capacity. Rentah receivable (nct of printipa! and Edison's minimum commitment under this contract is approx-interest on nonrecourse debt) $ 687 ,620 imately $4 million annually for the next five years and approx-Unearned income (261) (267) mately $100 million through the end of the contract in 2017. Imtstment in leveraged leases 426 353 Edison's minimum commitment under the transmission contract - Estimated residual value 36 29 is approximately $5 million annually for the next five years and Deferred income tases (338) (247) approximately $125 million through the end of the contract Net imestment in fewraged leases 5124 $ 135 in 2016. Lease Commitments SCEcorp has operating leases, primarily fbr vehicles, and a capital lease fbr a $170 million nonutility power-production facility. j l Estimated remaimng commitments for n<nicancelable leases at j December 31,1992, were: Edison: OPerating Capital Total Capacity-Generation In millieu Leases Leases < and Load Management l Year ended Ikeember 31, 1993 5 28 5 31 f, ro,,uandi ofm< pram ) m - 22.0 I
'1994 24 25 1
]995- 20 25 . P.rsent capacity a
; 199o 15 25 -: I 1997 12 25 - -
j ' Thereafter - 21 77 *! - i
- p. lin! future commitments $120 208 ; j Anmunt representing interest (11%) (55) 11 o .
Net commitments $153 l
. hak demand 55 :
i 4 \h 83 59 M 91 92 e?
- . . ~ . _ . _ _ -
FinindalInform: tion- Pap 44 Notes to Consolidated Financial Statements Note 10, Contingencies EnvironmentalProtection Nuclear Insurance SCEcorp is subject to numerous legislative and regulatory Federal law limits public liability claims from a nuclear incident enviromnental-protection requirements. L meet these require- to $7.8 billion. Edison and other owners of San Onofre and Palo ments, SCEc rrp will continue to incur substantial costs to oper- Verde have purchased the maximum private primary insurance are existing facilities, construct and operate new facilities, and available ($200 million). The balance is cowred by the industry's mitigate or remove the etTect on the environment of past retrospective rating plan that uses deferred premium charges.
- operations. Federal regulations require this secondary level of financial pro-tection. The maximum deferred premium for each nuclear inci-Edison has identified 43 sites for which it is, or may be, respon- dent is $63 million per reactor, but not more than $10 million sible for remediation under environmental laws. Edison is partici. per reactor may be charged in any one year for each incident.
paring in imestigations and cleanups at a number of these sites Edison could be required to pay a maximwn of $184 million per and has recorded a $45 million liability for its estimated chanup nuclear incident on the basis ofits ownership interests in San costs. Additional investigations and cleanups will be performed Onofre and Palo Verde. However, it would haw to pay no more as requested by environmental authorities or as Edison deents than $29 million per incident in any one year. Such amounts necessarv Additional costs may be incurred as Edison continues include a 5% surcharge if additional funds are needed to satisfy to monitor these obligations. public liability claims and are subject to adjustment for inflation. Insurance for San Onofre Unit I remains in effect pending Current CPUC procedures for rate recowry of emironmental- Nuclear Regtdatory Commission appmval to discontinue the cleanup costs are expected to pennit subsequent recovery of cowrage. these costs, subject to reasonableness rniews. As a result, Edison has recorded a $45 million regulatory asset that represents the Property damage insurance covers losses up to $500 million, expected rate recovery of these costs. In a November 1992 deci- including decontamination costs, at San Onofre and Palo Verde, sion involving another California utility, the CPUC concluded Decontamination liability and property damage coverage exceed-
- i. that the reasonableness revinv procedure may not be an appro- ing the primary $500 million also has been purchased in priate mechanism for detemiining rate recowry of environ. amounts greater than federal requirements. Additional insurance mental-cleanup costs, and that alternative rate-making procedures covers part of replacement power expenses during an accident-should be considered. The CPUC requested interested parties to related nuclear-unit outage. These policies are issued primarily submit comments on these issues by late March 1993. The out- by mutual insurance companies owned by utilities with nuclear come of this matter is expected to set a precedent for rate recov. facilities. Iflosses at any nuclear facility covered by the arrange-ery of environmental-cleanup costs for all Califbrnia utilities. ment were to exceed the accumulated funds fbr these insurance
- Accordingly, the CPUC could significantly modify or eliminate programs, Edison could be assessed retrospective premium -
the current pmcedure used by Edison. In accordance with cur- adjustments of up to $31 million per year. Insurance premiums , rent CPUC procedures, Edison h23 filed fbr a reasonableness are charged to operating expense. review for costs incurred through 1991 at two sites. Hearings haw not been scheduled. , The probable etTect on net mcome of these environmentabpro-tection matters camiot be determined at this time, but SCEcorp beliews it will not materially atTect its financial position.
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- Pape45.
Note 11. Investments in Partnerships Note 12. Business Segments The Mission companies have equity interests in energy genera- SCEcorp's business segments include electric utility operations tion and real estate imestment partnerships. Summarized (Edison) and three nonutility segments: electric power genera.
- financial information of the partnerships was: rion (Mission Energy), financialimrstments (Mission First ' _
Financial) and real estate holdings (Mission Land Company). Income statements: Year ended ikccmber 31, The nonutility segment operations are not individually signifi-
' In millwns 1992 1991 1990 cant for reporting purposes, so they are combined as " diversified I b enue $1,369 $1,267 51,239 operations" beknv.
Expenses 1,040 959 926 S 329 $ 313 SCEcorp's business segment information was:
~ Net income $ 308 Year ended December 31.
Italance sheets: December 31, y, ,gjj,y, 1992 1991 1990' In millwns 1992 1991 16tnue: Current assets $ 762 $ 521 Electric $ 7,722 $ 7,298 -S 6,986
' Other asscts 3,258 3,252 Diwrsified operations 262 258 c240
*Ibtal assets $4,020 . $3,773 Total revenue $ 7,984 S 7,556 - $ 7,226 :
Current liabilities $ 350 5 290 Operating income: Other liabihties 1,919 1,866 Electrie $ 1,750 $ 1,547. $ 1,630' Equiry 1,751 ' t,617 Diwr3ined operations 139 146 125 Total liabilities and equity $4,020 $3,773 'Ibral operating income before taxes 1,889 1,693 '1,755-Income taxes (544) . (453)~ (489) - Corporate items and climinations _(2) - (1) J-Mission Energy: Total opentWncome . $ 1,343 - 5 _l,239 $ 1,266 '. Net income la mi!!wm ofMan Depreciation and um decommissioning: _ Electric $ 797 $ . . _ 759 $ 711' Diversified operations 10 8 _. 8 8f - l Total depreciation and 7s I decommissioning . S '. 807 -S 767 4.$ - 719.- I' l Assets: ' Electric $15,798 _ $15,96l $15,737 so . ! ' Diversi6cd operations 3,344 2,344: - 1,970 _1 Corporate items and climinations '(2) _ 38 '(23) '. l Total assets . $19,140 $18,343 $17,684 n l Capital expenditures: . Electrie ' .$ 787 $ 964'- . $ -. 885 ': Diversified operations 57 69 . 78?
.j i l Total capital expenditures $ - 844 Il 1,033 t' ~ 963 e i I hl i 88 M 90 91 92 e
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Financialinformation Pagc46 Responsibility for Financial Reporting SCEcorp and Subsidiaries The management of SCEcorp is responsible for preparing the Management believes SCEcorp's systems ofinternal control are accompanying financial statements. The statements were prepared adequate to accomplish the objectives discussed herein. Manage-in accordance with generally accepted accounting principles and ment has implemented all of the internal and external auditors' necessarily include amounts based on management's estimates significant recommendations regarding the systems ofinternal and judgment. Management belic es other information in the control. annual report is consistent with the financial statements. The audit committee of the board of directors, which is com-Management maintains systems ofinternal control to proside posed entirely of non-employee directors, meets periodically icasonable assurance that assets are safeguarded, tramactions with both the external and internal auditors. who have unre-
'are properly executed in accordance with management's authori- stricted access to the committee. This committee recommends to ration, and accounting records may be relied upon for the prepa- the board of directors the annual appointment of a firm ofinde-ration of tinancial statements and other financial infbnnarion. pendent public accountants, considers the audit scope and inde.
The design of internal control systems invohes management's pendence of the external auditor, discusses the adequacy of _ judgment concerning the relative cost and expected benefits of internal controls, reviews financial reporting issues and is advised . specific contml measures. T hese systems are augmented by inter- of management's actions regarding these matters. nal audit programs through which the adequacy and efTective-Management is responsible for fbstering a climate in which ness of internal controls, poh. .cies and procedures are evaluated SCEcorp's affairs are conducted m. accordance with the highest and reported to management. standards of personal and corporate conduct, which are reflected in addition, Arthur Andersen & Cu, a3 part ofits independent in SCEcorp's Standards of Conduct. Management maintains audit of SCEcorp's financial statements, is responsible under programs to encourage and assess compliance with these generally accepted auditing standards to evaluate the internal standards. control structures in onier to determine the scope ofits auditing procedures fbr the purpose of expressing its opinion on the g%g . {* financial statements. Richard K. Bushey John E. Bryson l' ice Pmident Chairman ofthe Board and Comtrdler and ChiefEvecurirr Oficer February 5,1993 Report of Independent Public Accountants . To the Shareholders and the Board of Directors, SCEcorp: We haw audited the accompanying consolidated balance sheets estimates made by management, as well as evaluating the overall of SCEcorp (a California corporation) and its subsidiaries as o' financial statement presentation. We believe that our audits December 31,1992 and 1991, and the related consolidated provide a reasonable basis for our ophion. statements ofincome, retained earnmgs and cash flows fbr each . In our opinion, the financ ial statements referred to abow present of the three years m. the period ended December 31,1992.
. . fairh, in all material respects, the financial pos.it ion of SCEcorp These hnancial statements are the responsibility of SCEcorp,5 and its subsidianes as of December 31,1992 and 1991, and management. Oui responsibility is to express an opinion on .
the results of their operations and their cash flows fbr each of theseh.nancial statements based on our audits. the three years in the period ended December 31,1992, m. We conducted our audits in accordance with generally accepted confbrmity with generally accepted accounting principles. auditing standards. Those standards require that we plan and perfbrm the audit to obtain reasonabk assurance almut whether { the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting AwnWR ANtWRSM & CO. the amounts and disclosures in the financial statements. An audit Los Angeles, California also includes assessing the accounting principles used and significant Februarv 5,1993
- FinInciallnformation ' Pagc 47 Quarterly Financial Data l Unandited l In millions, I#
exceptper.sharc amemnts 'Ibtal Fourth Third Second First Thral Fourth - Third Second First
. Operating rewnue $7,984 $1,954 $2,550 $ 1,766 $1,714 57,556- $1,940 $2,251 SIM95 $1,670
- Operating income - 1,343 298- 440 '303 302 1,239 254 386 295 304-Net income 739 152 272 158 157 703 115 -248 168 172-I'er share:
Earnings 3.32 '.68 1.22 .71 .71 3.21 .52 'l.14 as. s9 , Dividends declared 2.78 .70 . .70 .70 .68 2.70 .68 .68 .68 - .66
-Common stock girices liigh $47% $46% 547% $46% S47% S47% '547% 545 % $39% ' $40 Low 40% 42% 44 % 40%- 40% 36 43 % 38% :38 36 Close 44 44 45% 44 % 40% '46% 46% - 44 % 38% -39%.
q Edison: Energy Mix in yment "g~"*"}hl'" 8M58 3 Hydro p-] Illydm Ud 5 hirchaws: r-f[. 10 Ilydro q other ta6nen j - 11 Coal 14 Coal F .__;
.' 14 Coal f ;16 Ntricar
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'.. o:
hg E 22 Ntricar I'~~~ ~ i 17 hnhases:
' 34 hirchawt
;l - other utihtics p.
f Nk f' 24 Gas f.f t 2 M l. f 1 Gas
'. ' hj h~1 ~$
e.
-lJ I ;
- 3? Ga !. ,' 32 hacha^c5 ' 30 j Punhaws:
j wounhty pudtrers ; } -irmtu.ihry producers yf;.. ! i-P:e t ) nz - t_J s 1982 1992 2002
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Fin nclillnftrnution Pagr 48 ; Selected Financial Data: 1988-1992- SCEcorp and Subsidiaries Dollan in milli <ms. nuptper-sharr am<mnts December 31, 1972 1991 1990 1989 1988. SCEcorp and subsidiaries i Operating resenue $ 7,934 $ 7,556 $ 7,226 $ 6,904 $ 6,253 Operating expenses $ 6,641 $ 6,317 $ 5,960 $ 5,737 $ 5,156 Net income $ 739 $ 703 $ 786 $ 778 ~$ 762 Weighted-nerage shares of comme stock outstanding (in millions) 223 219 218 218 218
- Per-share data:
Earnings $3.32 $3.21 $3.60 $3.56 $3.49 Dnidends declared $2.78 $2.70 - $2.62 $2.54 $2.45% 11ook value $26.59 $25.83 $25.19 . $24.21 $23.18 Market value at year end $44 $46% $37% $39% $32% - Disidend payout ratio 83.1% 83.5% ' 72.2 % 70.8 % 69.6% - Rate of return on common equity 12.54 % 12.51% 14.51 % 14.99 % 15.33 % Price / earnings ratio 13.3 14.6 10.5 - 11.1 ' 9.3 Ratio of carnings to fixed charges 2.68 2.53 2.69 2.79 2.86 Assets $19,140 $18,343 $17,684 $16,495 $15,781 i Retained earnings $ 3,263 $ 3,150 $ 3,038 $ 2,824 $ 2,601 Common shareholders' ec;uity $ 5,954 $ 5,681 $ 5,503 $ 5,289 . $ 5,065 - Preferred and preference stock: Not subject to mandatory redemption $ 359 $ 359 $ 359 $ 359 $ 359 Subject to manJatory redemption S 278 $ 199 $ 210 ~$ 224 $ 239 1.ong. term debt $ 6,320 $ 5,940 . $ 5,488 - $ 5,283 $ 5,422.
- Southern California Edison Company Financial data:
Earnings $631 $587 $693 -$679 $685-Earnings per SCEcorp common share $2.83 $2.68 $3.17 . $3.10 - .$3.14 - Internal generation of funds 83% 70 % 76 % 88% 100 % Operating and sales data: lYak demand in megawatts (MW) 18,413 16,709 17,647 15,632 15,987 Generation capacity at peak (MW) 20,712 20,875 20,323 20,136 - -18,893 Kiknatt hour sales (in millions) 74,186 71,146 71,614 69,136 ' 67,886 Customers (in millions) 4,11 4.08 4.03 3.94- 3.83 Employees 16,736 17,110. 16,604 16,627 16,660 Mission Companies Common shareholder's equity $1,169 $1,020 $904 $735 .$505
. Net income - $ 109 $ 116 $ 94 ' $100 $.78 Earnings per SCEu>rp common share $.49 S.53 $.43 . $.46 ' $.35 lYrcent of SCEcorp's earnings per share 14.8% 16.5 % 11.9 % 12.9 % 10.0 %
The tinamiahuram of ths report is printed un rencied paper.
.r shareholder Information 'SCecore and Subsiaiaries .
Annual fAeeting of Shareholders'- Daret April 15,1993 . SCEcorp's Dividend Reimestment Plan, including enrollment, . . Time: 10:00 a.m. withdrawal, terminations, transfers and statements; Lwntion: Industry Hills and Sheraton Resort One Industry llills Parkway . The address of Shareholder Senices is: City ofIndustry, California PO. Ilox 400, Rosemead, California 91770 -
-. FAX: (818) 302-4815 Stock Listing and Ttading information .
y Dividend Reinvestment and Deposit Services SCEcorp Common Stock ' Shareholders can purchase additional' common stock shares by The New York, Pacific, London and Tokyo stock exchanges use . reinvesting their quarterly dii-idends. A prospectus on SCEcorp's ' the ticker symbol SCE, Daily papers list as SCEcp, or SCEcorp. Dividerid Reinvestment Plan is available from Sharehokier Senices. Edison Preferred Stocks The American and Pacific stock exchanges use the ticker symbol . Dividend checks can be mailed directly to your savings institus
- SCE. Previous day's ck> sing prices are listed in the American . tion for deposit. Send instructions to Shareholder Senices, c Stock Exchange table under the symbol SoCalEd. The 6.45%, inchiding your shareholder account number, saviiigs institution 1223%,2325% and 7.80% series are not listed. account number or a blank deposit slip, and the institutiorfs
_ -- address. Transfer Agent and Registrar How to Transfer StockJ Edison maintains shareholder records and is transfer agent and ~A change y>f ownership of shares requires a transfer of stock. . registrar for SCEcorp and Edison stocks. Shareholders may call This can happen jvhen you sell stock, make a gift of stock, or Sharehokler Senices, (800) 347 8625, between 8:00 a.m. and add or delete owners of the stock certificate. Wu should com- < 4:00 p.m. (Pacific time) every business day, regarding: plete the assignment on the back of the certificate and sign it ' o stock transfer and name-change requirements; exactly as your name appears on the front, bur signature must - e address changes, including dividend addresses; be guaranteed by an eligible guarantor institution. A notary's f a taxpayer identification number submission or changes; acknowledgment is not acceptable. %e certificate should then be , o duplicate 1099 and W-9 lbrms; notices of and replacement of sent to Shareholder Services by registered or certified mail with lost or destroyed stock certificates and dividend checks; . complete transfer instructions.: SCEcorp:. SCEcorp:_ Five-Year Stock Price History $1,000 investment in SCEcorp Stock in donm in datan . 47% Rgh pg yl? s 44 Ckm Price , . wrmaiun
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