ML19347D261

Participation Agreement Among Utils & Cities of Riverside & Anaheim,Ca.Forms 10-K,10-Q & S-16 & Prospectus Encl

ML19347D261
Person / Time
Site:	San Onofre
Issue date:	11/12/1980
From:	RIVERSIDE, CA, SAN DIEGO GAS & ELECTRIC CO., SOUTHERN CALIFORNIA EDISON CO.
To:
Shared Package
ML13302A498	List: ML13302A497 ML19347D254 ML19347D261 ML19347D264 ML19347D268 ML19347D271 ML19347D274 ML19347D275 ML19347D276 ML19347D279 ML19347D281 ML19347D282 ML19347D287 ML19347D289 ML19347D290 ML19347D293 ML19347D294 ML19347D295 ML19347D297 ML19347D299 ML19347D300
References
NUDOCS 8103110684
Download: ML19347D261 (340)

Text

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SAN ONOFRE UNITS 2 5 AND.3 PARTICIPATION AGREEMENT 6

7 8

AMONG 9

10 11 i SOUTHERN CALIFORNIA EDISON COMPANY 12 SAN DIEGO GAS & ELECTRIC COMPANY CITY OF RIVERSIDE 13 , CITY OF ANAHEIM 14 15 16 .

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81031 W^ NOV 121980 t

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SAN ONOFRE UNITS 2 3 AND 3 PARTICIPATION AGREENENT O

TABLE OF CONTENTS 5

SECTION PAGE 1 PARTIES 1

, 2 RECITALS 1 3 AGREEMENT 2 4 DEFINITIONS 2 11 5 OWNERSHIP 11 12 6 TRANSFER OF RIGHTS AND OBLIGATIONS 13 1s 7 COST RESPONSIBILITIES 19 14 8 BILLING AND PAIMENT 25 15 9 ADMINISTRATION 26 le 10 LIABILITY AND INSURANCE 27 17 -

11 NUCLEAR FUEL 29 18 12 TAEES 39 19 13 RELATIONSHIP OF PARTIES 40 20 14 TERMINATION 41 21 15 ADDITIONAL GENERATING UNITS 42 22 16 UNCONTROLLABLE FORCES 43 23 17 NOTICES 44 24 18 ARBITRATION 44

25 19 MISCELLANEOUS PROVISIONS 45

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l 2 A MAPS 3 B DESCRIPTION OF COMMON FACILITIES AREA O C DESCRIPTION OF SWITCHIARD AREA 5 D DESCRIPTION OF UNIT 1 AREA 6 E DEPCRIPTION OF UNITS 2 AND 3 AREA l

7 F CONSTRUCTION AGREEMENT l

8 G, OWNERSHIP AGREEMENT 9 E SAN ONOFRE UNITS 2 AND'3 LETTER AGREEMENT l 10 I UNIT 1 OPERATING AGREEMENT l

11 J PERMITS, LICENSES, AND 3DLTERIAL EQUIPMENT 12 AND SERVICE SUPPLIER'S AGREEMENTS LISTING 13 14 le 17 18 19 l

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1 SAN ONOFRE UNITS 2 i AND 3 PARTICIPATION AGREDENT 2

3 1. PARTIES: The Parties to this. Participation Agreement 4 are? SOUTHERN CALIFORNIA EDISON COMPANY, a California

• 5 corporation (" Edison") ; SAN DIEGO CAS & ELECTRIC O COMPANY, a California corporation (" San Diego") ; CITY i

l 7 C RIVERSIDE, a municipal corporation of the State of 8 California (" Riverside"): and CITY OF ANAHEIM, a 9 municipal corporation of the State of California 10 (" Anaheim") ; individually " Party," collectively l 11 -

" Parties."

i 12 2. RECITALS: his Participation Agreement is made with reference to the following facts, among others:

13 14 2.1 Edison and San Diego presently own, as 15 tenants-in-common, a nuclear generating station 18 located on a site of approximately 90 acres in the 17 northwest corner of the Marine Corps Base, Camp

• 18 Pendleton, California, and known as the San Onofre 19 Nuclear Generation Station (" San Onofre") .

(

20 2.2 Edison, Riverside, Anaheim, and the City of 21 pnning entered into the Settlement Agreement, dated 22 August 4, 1972, under which Edison offered to Riverside, 23 Anaheim, and the City of Banning participation in the 24 ownership and output of Units 2 and 3 at San Onofre.

l 25 2.3 Riverside and Anaheim by letters to Edison l 26 dated April 8, 1977 and April 5, 1977, respectively,

__ _ _ _ - _ _ _ - _ _ _ _ _ _ _ _ _ . ' I

I have indicated their intent to participate in Units 2 2 and 3 at San Onofre in accordance with the terms and 3 conditions of the Settlement Agreement.

4 2.4 The Parties desire to provide in this

• 5 Participation Agreement the terms and conditions under 6 which Riverside and Anaheim participate in the 7 ownership and output of Units 2 and 3 at San Onofre.

8 3. AGREDENT : The Parties agree as follows:

9 4. DEFINITIONS: When used herein, the following terms 10 shall have the following meanings:

11 4.1 Additional Generatine Unit: Any facility 12 for the generation of electrical energy (inc1" ding all 13 anvd 11=7 and associated equi;unent) constructed or 14 installed at San Onofre other than Unit 1, Unit 2, or 15 Unit 3 or generating facilities necessary for the lo operation of Unit 1, Unit 2, or Unit 3.

17 4.2 Common Facilities: Those facilities which 18 will serve in connection with the operation and 19 noint'anance of all of Units 1, 2, and 3 and which consist 20 of the administrative, warehouse and shop building, 21 including any associaisd facilities installed therein 22 for the use of all of Units 1, 2, and 3; the security 23 system; the sewage treatment plant; the microwave 24 facility; the common fencing and landscaping; the 25 environmental monitoring equipment; a portion of the 28 railroad spur track; the plant access roads; the

. j

I 1 probable maximum flood protect).on facilities; and such 2 other facilities as the Parta.es may agree upon from time 3 to time.

4 4.3 Common Facilities Area: The entire land

• 5 area covered by the Project Easements except for the l

6 Unit 1 Area, the Units 2 and 3 Area, and the Switch-7 yard Area, as more fully described,in Exhibit B and 8 shown in Evhibit A, both attached hereto.

g 4 . '. Construction Agreement: The San Onofre 10 Units 2 and 3 construction Agreement between Edison 11 and San Diego, dated May 24, 1973, as amended by 12 Amendment No. 1 dated March 8, 1977, attached hereto

• 13 as Tvh4 hit F.

14 4.5 Construction Costs: Those costs described 15 by Sections 4.2 and 6.1 of the Construction Agreement.

16 4.6 Coordinating Representativea: The repre-17 sentatives established pursuant to Section 7.1.1 of '

18 the construction Agreement.

19 4.7 Current operating capacity: The =mv4=um 20 Units 2 and 3 output in kilowatts available to the 21 Edison Switchyard and San Diego Switchyard less the 22 simultaneous power required for operation of all 23 process and auxiliary equipment and systems used or 24 useful in connection with the operation and 25 maintenance of Units 2 and 3, 26 4.8 Edison Switchyard: The 220-kV switchrack l

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d 1 and related facilities at San onofre connected to and 2 located north of the Interconnection Facilities 3 except for the power circuit breakers, transformer 4 side disconnect switches, conductors, structures, founda-

• 5 tions, and dead-end assemblies associated with the main o transforiner leads and reserve auxiliary transformer leads, y or any environmental radiation monitoring equipment 8 installed therein. In addition, the controls associated g with the Edison Switchyard located in the Units 2 and 3 10 control-administration building are considered to be 11 part of the Edison Switchyard.

12 4.9 Generation Entitlement Shmve: The per-13 centage entitlannnt of each Party to the Net Energy 14 Generation and to the Current Operating Capacity. Each 15 Party's such percentage entitlement to Units 2 and 3 le shall be as follows:

l 17 4.9.1 Edison - 76.55 percent .

18 4.9.2 San Diego - 20.00 percent 19 4.9.3 Riverside -

1.79 percent 20 4.9.4 Anaheim -

1,66 percent l 21 ; 4.10 Interconnection Facilities: The power i

l 22 circuit breakers, conductors, bus support structures, l 23 disconnect switches, current transformers, potential I

i 24 transformers, relaying, metering, relaying and meter-25 ing interface cabinets and tapa to the 220-kV buses 26 located in or associated with the bus sectionalizing

-4 l 7 a-. - . . _ - - _ _ - . . - - - - ---.- --- - - - - - - - - - - - - - - - - - - -

1 position through which the Edison Switchyard and the f 2 San Diego Switchyard are connected and the common air 3 conditioning unit and associated controls for the 4 relay houses.

5 4.11 Net Energy Generation: The energy 6 (kilowatthours) generated by Units 2 and 3 over any 7 Period of time less the energy required for operation 8 of all process and suxiliary equipment and systems used 9 in connection'with the operation and maintenance of 10 Units 2 and 3.

11 4.12 Nuclear Fuel: Any special nuclear or

! 12 byproduct material as defined in the Atomic Energy Act 13 of 1954, as amended and as may be amended from time to 14 time,' including irradiated fuel and radioactive waste -

15 and other products resultin~g directly or as a result 16 of reproces, sing, possessed or utilized in connection 17 with Unit 2 or Unit 3, or produced or remaining as a 18 result of the operation of Unit 2 or Unit 3. Where 19 the term " supply of Nuclear Fuel" is used, it shall 20 mean and include arrangements with respect to all 21 aspects of the nuclear fuel cycle, including the mi;ing, 22 milling, design and licensing, conversion, enrichment, 23 fabrication, transportation, reprocessing, acorage and 24 disposal of Nuclear Puel.

25 4.13 Nuclear Fuel Agreement: Any agreement 26 entered into by the Project Director (or Operating t

the supply of Nuclear Fuel, including, 2 without limitation, agreements for the purchase, sale, 3 lease, transfer, disposition, management, storage, 4 transportation, mining, milling, cor. trsion, enrichment,

• 5 processing, design and licensing, fabrication, repro-6 cessing, and disposal of Nuclear Fuel.

l 7 4.14 Operating Agent: Edison, who, pursuant to 8 the San Onofre Units'2 and 3 Letter Agreement, is p r. 9 designated the Company having responsibility for the 10 operation and maintenance of Unit 2 and Unit 3.

11 4.15 Ownership Agreement: The San Onofra 12 Ownership Agreement between Edison and San Diego, 1

13 dated October 5, 1967, and attached hereto as 14 Exhibit G.

15 4.16 Plant Site: An a'ea r of land used for the 16 major portion of San Onofre described in an easement 17 granted for such purpose by the United States to 18 Edison and San Diego on May 12, 1964 and recorded in 19 the Official Records, Office'of the County Recorder of 20 San Diego County, in series 5, Book 1964, Page No. 85B87 21 as amended by the Amendment to Grant of Easement recorded 22

.on July 6, 1977 in the Official Records, Office of the 23 County Recorder of San Diego County, in Book 1977, 24 Page No. 77-268984.

25 4.17 Project Director: Edison, who, as agent for 26 San Diego, Riverside, and Anaheim, and as principal on its T

I l

l 1 own behalf, is designated the Party having the 2 responsibility for the performance and completion of 3 the " Project Work" under t.he Construction Agreement.

Project Easements:

• 4 4.18 The interests acquired 5 under (1) three easements in favor of Edison and San a Diego granted by the United States of America, covering 7 respectively, the Plant Site, including the aseaciated 8 exclusion area, the Access Road Area, and the Spur s

9 Track Area, all recorded in the Official Records of e ,

10 San Diego County and hereinafter sometimes referred to 11 respectively as the Plant Site Easement, the Access 12 Road Easement and the Spur Track Easement; (2) the 13 easement-lease covering the off-shore Land; (3) a 10 license granted to Edison and San Diego by the 15 Atchison, Topeka and Santa Fe Railway perfecting the 16 rights of Edison and San Diego for those portions of 17 the Access Road Area lying within the railroad right 18 of way; and (4) any subsequent Acquisition; all initial 19 capitalized terms in this section shall have the 20 meanings defined in this Participation Agreement or, 21 if not defined herein, in the ownership Agreement.

22 4.19 San Diego Switchvard: The 220-kV switchrack 23

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and related facilities at San Onofre connected to and 24 located south of the Interconnection Facilities 25 except for the power circuit breakers, transformer 26 side disconnect switches, conductors, structures,

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10

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I foundations, and dead-end assemblies associated 2

with the main transfcrmer leads and reserve auxiliary 3 transformer leads, or any environmental radiation l

4 monitoring equipnent installed therein.

5 4.20 San Onofre Nuclear Generatine Station 6 (" San Onofre") : The' entire nuclear generating facility 7 located on a site of approximately 90 acres in the 8

northwest corner of the Marine Corps Base, Camp

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9 Pendleton, California, consisting of the Plant Site,

" 10 the Access Road Area, the Spur Track Area, and Off-11 Shore Land, any Subsequent Acquisitions, Unit 1, Unit 2, 12 Unit 3, the Common Facilities, the Edison 13 Switchyard, the San Diego Switchyard, the Interconnection 14 Facilities, and any Additional Generating Units subse-15 quently constructed or installed, as such terms are 16 defined in this Participation Agreement or, if not 17 defined herein, in the ownership Agre' ament.

18 4.21 San Onofre Units 2 and 3 Letter Agreement:

19 The letter agreement between Edison and San Diego, 20 dated January 22, 1970 and ag' reed to by San Diego on 21 l

January 23, 1970, relating to the ownership, construc-22 tion, operation, maintenance,- and use of Units 2 and 3, 23 and which is attached hereto as Exhibit H.

24 4.22 Switchyard Area: The land area covered by 25 the Project Easements and generally used for the Edison 26 Switchyard, the San Diego Switchyard, and the Inter-If l

Facilities as more fully described in 1

2 Exhibit C and shown in Exhibit A, both ittached h eeto.

3 4.23 0::it 1: The first nuclear generating unit o at San Onofre currently rated at approximately 436 5 megawatts (net) of electric power and consisting of a 6 nuclear steam supply system, a turbine generator, and y all related equipment and facilities which are necessary 8 for the safe and efficient generation of electrical 9 energy including the power circuit breakers, transformer 10 side disconnect switches, conductors, structures, 11 foundations, and dead-end assemblies installed in the 12 Switchyard Area and associated with the Unit 1 main 13 transformer l'eads and reserve auxiliary transformer 14 leads, but excluding the Common Facilities.

15 4.24 Unit 1 Area The, land area covered by 16 the Project Easements and generally used for Unit 1, 17 -

as more fully described in Exhibit D and shown in 18 Exhibit A, both attached hereto.

19 4.25 Unit 1 Off-shore Land: That portion of the 20 Unit 1 Area designated as Parcel 2 in Exhibit A and 21 Exhibit D, both attached hereto.

22 4.26 Unit 1 Operating Agreement: ~

The Amended 23 San Onofre Operating Agreement between Edison and 24 San Diego, dated July 30, 1970, as amended by Amendment 25 No. 1 to Amended San Onofre Operating Agreement dated 26 August 30, 1971, and attached hereto as Exhibit I.

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1 4.27 Unit 2: The second nuclear generating 7 2 unit at San onofre designed to generate approximately 3

1,100 mcgawltts (net) of electric power and consisting 4 of a nuclear steam supply system, a turbine generator  :

l 5 and all related equipment and facilities which are 6 necessary for*the safe and efficient generation of 7

electrical energy, including the power circuit brer.kers, 8

transformer side disconnect switches, conductors, 9

structures, foundations, and dead-end assemblies installed 10 in the Switchyard Area and associated with the Unit 2 11 main transformer leads and reserve auxiliary transformer 12 leads, and that equipment necessary to connect Unit 2 13 with those facilities existing as part of Unit 1 and 14 i

those facilities that will be part of Unit 3, installed 15 l

on the Plant Sitr, but excluding the Common Facilities.

16 4.28 Unit 3: The third nuclear generating unit 17 at San Onof- e designed to generate approximately 1,100 18 l megawatts (net) of electric power and consisting of a 19 nuclear steam supply system, a turbine generator and all 20 related equipment and facilities which are necessary 21 for the safe and efficient generation of electrical .

22 energy, including the power circuit breakers, transformer 23 side disconnect switches, conductors, structures, 24 foundations, and dead-end assemblies installed in the 25 Switchyard Area and associated with the Unit 3 main 26 transformer leads and reserve auxiliary transformer f3 t

e

1 leads, and that equipment necessary to connect Unit 3 2 with those facilities that will be part of Unit 7 3 installed on the Plant Site, but excluding the Common 4 Facilities. -

• 5 4.29 Units 2 and 3 Area: The land area 6

covered by the Project Easements and generally 7

used for Units 2 and 3, as more fully described in 8

Evh4 hit E and shown in Exhibit A, both attached hereto.

9 4.30 Units 2 and 3 off-shore Land:

. That portion of 10 the Units 2 and 3 Area designated as Parcel 2 in Exhibit A 11 and Erhibit E, both attached hereto.

12 4.31 Uranium Rextuirements: The most current is projection by calendar yeitr of the quantity of natural 14 uranium U308 concentrates necessary for the refueling 15 ~

of Unit 2 and Unit 3 for the remaining operating life 16 of the unit as developed by the Project Director (or 17 operating Agent) and updated on an annual basis.

18 5. OWNERSHIP:

Upon execution of this Participation Agreement:

19 5.1 Edison, San Diego, Riverside, and Anaheim 20 shall own Units 2 and 3 as tenants-in-common in pro-21 1, portion to their respective Generation Entitlement 22 Shares.

23 5.2 Edison, San Diego, Riverside, and Anaheim 24 shall own the Conunon Facilities as tenants-in-common 25 ,, gorio,,,

26 5.2.1 Edison shall own an undivided 77.12 ik

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I 1 percent interest therein;

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5.2.2 San Diego shall own an undivided 20.00 3 percent interest therein;

. 1 4 5.2.3 . t Riverside shall own an undivided 1.49  :

5 percent interest therein; and '

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5.2.4 Anaheim shall own an undivided 1.39 7 ' percent interart therein. ,

8 5.3 Edison, San Diego, Riverside, and Anaheim 9

shall have the following interests in the Project 10 Easements:

11 5.3.1 Edison shall have the following 12 undivided co-tenancy interests therein: '

13 5.3.1.1 Unit 1 Area - 80.004 14 5.3.1.2 Units 2 and 3 Area - 76.'554 15 5.3.1.3 16 Common Facilities Area - 77.174

, 5.3.1.4 Switchyard Area - 80.00%

17 5.3.2 San Diego shall have the following 18 undivided co-tenancy interests therein:

19 5.3.2.1 Unit 1 Area - 20.004 20 5.3.2.2 Unita 2 and 3 Area. - 20.004 21 5.3.2.3 N Common Facilities Area - 20.004 5.3.2.4 Swi hyard Area - 20.004 l

23 5.3.3 Riverside shall have the following 24 undivided co-tenancy interests therein:

25 5.3.3.1 Unit 1 Area - 0.004 26 5.3.3.2 Units 2 and 3 Area - 1.79%

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% w-.,-+-1 -

l 1 5.3.3.3 Common Facilities Area - 1.49%

2 5.3.3.4 Switenyard Area - 0.004 3 5.3.4 Anaheim shall have the following

• i 4

o undivided co-tenancy interests therein:

• 5 5.3.4.I Unit 1 Area - 0.004 0 5.3.4.2 Units 2 and 3 Area - 1.6Gt 7 5.3.4.3 Common Facilities Area - 1.39%

8 5.3.4.4 Switchyard Area - 0.004 9 Where neceanary, facilities associated with and 10 incidental to a specific portion of San Onofre may be 11 installed on or over any portion of the Plant Site.

12 6. TRANSFER OF RIGHTS AND OBLIGATIONS:

13 6.1 Edison hereby sells and Riverside and Anaheim 14 each hereby purchase the respective ownership interest 15 -

of Riverside and Anaheim in that portion of Units 2 18 knd 3 for which Edison has paid as of the date of 17 execution of this Participation Agreement.

18 6.2 Edison hereby sells and Riverside'and Anaheim 19 each hereby purchase the respective ownership interest 20 of Riverside *: .J Anaheim in that portion of the Common  !

21 Facilities for which Edison has paid as of the date of j

22 execution of this Participation Agreement. j 23 6.3 Upo'n receipt of payment pursuant to 24 Section 8.5) Edison shall assign to Riverside and 25 Anaheim their respective interests in the Project 26 Easements. Edison shall make initial contacts

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l 1 with the necessary persons and agencies concerning 2 assignment of the Project Easements, after 3 which Edison and San Diego shall assist and 4 cooperate with Riversida and Anaheim in effecting .

5 such assignments however, Riverside and Anaheim 6 shall have primary responsibility for drafting 7 and for taking other appropriate actions to 8 effect said assignments. Assignment of the 9 Project Easements shall in no way affect 10 Edison's and San Diego's rights to install 11 Additional Generating Units or other 12 facilities in the Switchyard Areas, the Unit 1 j 13 Area, the Common F?.cilities Area, and any areas 14 available for future use, in which Riverside and .

Anaheim shall be neither granted nor denied 18 an ownership interest by reason of any provision 17 of this Participation Agreement

. 6.4 Edison hereby assigr,4 to Riverside an undivided 1.79 percent interest and to Anaheim an l 20 undivided 1.66 percent interest in the construction 21 Agreement as it pertains to Units 2 and 3. Edison 22 hereby assigns to Riverside an undivided 1.49 percent 25 interest and to Anaheim an undivide.1 1.39 percent interest in the Construction Agreement as it 25 pertains to Common Facilities. Riverside and 28 Anaheim hereby acquire all rights and assume all 17

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1 duties and obligations of a "Co=pany" under the 2

Construction Agreement applicable to their undivided 3

interests therein. The Construction Agreenent shall 4

be amanded to provide for Riverside's and Anaheim's

• 5 acquisition of a portion of Edison's rights and 6

obligations under the Construction Agreement. Except 7

as mutual y agreed or except as provided by this -

I Participation Agreement, no significant departures I

shall be made from the arrangaments previously agreed 10 to by Edison and San Diego and set forth in the 11 Construction Agreemant. Edison shall rammin the 12 Project Director. Edison and San Diego shall cooperate 13 14 with Riverside and Anaheim in - nd4na the Construction Agreement; however, Riverside and Anaheim shall have 15 primary responsihility for drafting contract language 16 and for performing other work necessary to amend the 17 Construction Agreement.

18 6.5 Edison, San Diego, Riverside, and 19 An=haim shall own Units 2 and 3 and the Common '

20 Facilities under obligations, terms and conditions 21 22 no less favorable than those set forth in the Ownership Agreement, a supplemented by the San Onofre Units 2 and 3 Letter Agreement, and those set forth 24 herein. The ownership Agreement shall be amanded, and SS executed by the Parties, to provide for Riverside's 1

and Anaheim's ownership interests as set forth in this

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1 Participation Agree:nent. I:xcept as =utually agreed 2 or except as provided by this Participation 1 j

3 Agree:nent, no significant departures shall be t l

4 made from the arrangements previously agreed l .

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5 to by Edison and San Diego and' set forth in 6

the ownership Agreement as supplemented by the San 7 onofre Units 2 a:id 3 Letter Agreement. Edison 8

and San Diego shall cooperate with Riverside 9

and Anaheim in am nding the ownership Agreement; 10 however, Riverside and Anahei= shall have primary 11 responsibility for drafting contract language and 12 for performing other work necessary to a:nend the 13 i ownership Agreement. The following facts shall l'

be recognized by and incorporated in the = = nd= nt i 15 to the ownership Agrea m nt: I 16 t Significant changes have occurred 6.5.1 '

17 in the description and location of certain facilities; 6.5.2 Unless agreed otherwise, Riverside and Anaheim shall have no ownership interest, cost 20 responsibility, rights or obligations in Unit 1, the 21

• San Diego Switchyard, the Edison Switchyard, ncr the 22 '

l Interconnection Facilities under this Participation 23 Agreement; 24 6.5.3 The definitions of the San Diego 25 SwitchW, Idison Switchyard, Interconnection l 28 Facilities, tnit 1, Unit 2, Unit 3, Additional 1

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1 Generating Unit, Plant Site, and San Onofre Nuclear 2 Generating Station shall be amended to coincide with 3 the definitions con'tained in this Participation 4 Agreement; and

• 5 6.5.4 The Pa.rties each reserve any rights which 6 they may have either by contract or by law, to participate 7 in any Additional Generating Unitt provided, however, that 8 Riverside and Anaheim shall be neither granted nor denied 3 participation rights by reason of any provision of thin lo Participation Agreement.

11 6.6 Edison, San Diege, Riverside, and Anaheim 12 shall negotiate in' good faith and execute an operating 13 agreement covering the operation and maintenance of 14 Units 2 and 3. Except as mutually agreed or except as 15 provided by this Participation Agreement, said operat-16 ing agreement shall provide for the operation and 17 maintenance of Units 2 and 3 in substantially the same 18 manner and under substantially the same terms and 19 conditions as the Unit 1 Operating Agreement provides 20 for Unit 1 as supplemented by the San Onofre Units 2 21 and 3 Letter Agreement. Edison shall be the Operating 22 Agent for Units 2 and 3. The Parties hereby appoint the 23 Operating Agent as their agent, and the Operating Agent 24 shall undertake as their agent and as principal on 25 its own behalf, to carry out the duties and responsi-26 bilities provided hereunder to be performed by it.

l 2c l

1 6.7 Edison has or will install communication 2 facilities at locations other than San onofre which 3 are required.in the performance of its duties as 4 Operating Agent. Edison, San Diego, Riverside, and ,

5 Anaheim shall negotiate in good faith and execute an 6 off-site _- -mication facilities agreement,providing 7 for the allocation of costs associated with the 8 off-site ce===nmication facilities owned by the 9 Operating Agent and required in the performance of 10 3an onofre operation and maintenance functions.

11 6.8 Edtson, San Diego, Riverside, and Anaheim 12 shall cooperate in identifying and in amending or 13 assigning where necessary the permits, licenses and 14 material, equipment and service suppliers' agreements 15 held in connection with Units.2 and 3r however, Riverside 16 and Anaheim.shall have primary responsibility for 17 drafting and for taking other appropriate actions to 18 effect such amendments and assignmen*ts of permits and 19 licenses. Edison shall have primary responsibility for 20 drafting and for taking other appropriate actions to 21 effect such amendments and assignments of material, 22 .

equipment and service suppliers' agreements. A listing 25 of said permits, licenses, and material, equipment and 24 service suppliers' agreements identified to date is 25 attached hereto as Rwhihit J.

28 6.9 Except as provided otherwise herein, Edison

__.__n._.

l I and San Diego agree, upon request of Riverside or Anaheim, j 2 to make, execute or deliver, as may be reasonably 3 required, any and all documents needed to implement or l i

4 effectuate the transfer of rights and obligations . j 5 Provided for in this Participation Agreement. l 0 6.10 Anaheim and Riverside each shall be entitled 7 to their proportionate share of the benefits of, and 8

shall each be bound by and pay their proportionate share s of all costs and liabilities incurred by Edison in the 10 Performance of its duties under, all cutterial, equipment -

11 and service suppliers' agreements entered into by 12 Edison or Edison and San Diego for the construction, 13 operation and maintenance of Units 2 and 3 and the 14 Comunon Facilities. Said benefits, costs and liabilities 15 shall anure to or become the responsibility of 10 Anah=im and Riverside in their respective proportionate 17 shares regardless of whether Anaheim and Riverside or l 18 either of them have become parties to such agreements.

19 7. COST RESPONSIBILITIES l

l 20 7.1 Riverside and Anaheim shall reimburse Edison  !

21 for all recorded costs and expenses (including ad valorem 22 taxes incurred by Edison and prorated as of November 1,  ;

23 1977, construction Costs including costs of the Units 2 24 and 3 off-Shore Land, Edison's allowance for funds used 25 during construction, and administrative and general 26 expenses) expended on or prior to the date hereof by 21.

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1 Edison on its own behalf in connection with Units 2 i 2 and 3 as follows:

3 7.1.1 Riverside shall reimburse Edison for 4 2.2375 percent of such costs and expenses; and .

l 5 7.1.2 Anaheim shall reimburse Edison for I

e 2.0750 percent of such costs and expenses.

7 7.2 Riverside and Anaheim shall reimburse Edison 8 for the reproduction costs new (including applicable 9 overhanda, allowance for funds used during construction, 10 and administrative and general expenses) less depre-l l 11 ciation of Comunon Facilities paid for by Edison and San 12 Diego on or prior to the date hereof as follows:

13 7.2.1 The total amount of the reproduction 14 cost new less depreciation of such casumon Facilities 15 as of the date hereof shall be deemed to be .

le $8,600,000.00; '

17 7.2.2. Riverside shall reimb~rse u Edison for 18 1.49 percent of such total amount; and 19 7.2.3 l

Anaheim shall reimburse Edison -for 20 1.39 percent of such total amount.

21 7.3 construction costs associated with Units 2 22 and 3 incurred subsequent to the date hereof shm11 be 23 borne by the Parties as follows:

24 7.3.1 Edison shall bear 76.55 percent of 25 such costs; 26 l

7.3.2 San Diego shall bear 20.00 percent l

73

1 -of such costs:

2 7.3.3 Riverside shall bear 1.79 percent of 3 such costs; and 4 7.3.4 Anaheim shall bear 1.66 percent of

• 5 such costs.

l 0 7.4 construction costs associated with cozanon 7 Facilities incurred subsequent to the date hereof a shall be borne by the Parties as follows:

9 7.4.1 Edison shall bear 77.12 percent of 10 such costs; 11 7.4.2 San Diego shall bear 20.00 percent 12 of such costs; 13 , 7.4.3 Riverside shall bear 1.49 percent 14 of such costs; and 15 7.4.4 Anaheim shall bear 1.39 percent of 16 such costs.'

17 7.5 costs c.,f all Project Easements, except for the 18 Plant Site easement, the Unit 1 off-Shore Land easement-19 J. ease, and the Units 2 and 3 Off-Shore Land easement-20 lease, incurred subsequent to the date hereof shall be 21 borne by the Parties as follows:

l 1

22 7.5.1 Edison shall bear 77.12 percent of 23 such costar 24 7.5.2 San Diego shall bear 20.00 percent of 25 such cor.ts; 26 7.5.3 Riverside shall bear 1.49 percent of j 21

3 I such costs; and 2 7.5.4 Anaheim shall bear 1.39 percent of 3 such costs. .

7.6

• 4 Costs of the Plant Site easement incurred 5 subsequent to the date hereof sh511 be borne by the 6 Parties as follows:

7 7.6.1 Edison shall bear 77.8915 percent of a such costs:

9 7.6 2 San Diego shall bear 20.0000 percent of 10 such costs; 11 7.6.3 Riverside shall bear 1.0921 percent 12 of such costar and 13 7.6.4 Anaheim shall bear 1.0164 percent of IQ such costs.

15 7.7 Costs of the Units 2 and 3 off-Shore Land is easement-lease incurred subsequent to the date hereof 17 shall be borne by the Parties as followst 18 7.7.1 Edison shall bear 76.55 percent of 19 such costs; 20 7.7.2 San Diego shall bear 20.00 percent of 21 such costst 22 7.7.3 Riverside shall bear 1.79 percent of 23 such costs; and 24 7.7.4 Anaheim shall bear 1.66 percent of 25 such costs.

28 7.8 Costs of the Unit 1 off-Shore Land easement-lease 1:

1 incurred subsequent to the date hereof shall be borne 2 by the Parties as follows:

3 7.8.1 Edison shall bear 80.00 percent of such costs;

• 4 5 7.8.2 San Diego shall bear 20.00 percent of O such costs; 7 7.8.3 Riverside shall bear 0.00 percent of 8 such costs; and 9 7.8.4 Anaheim shall bear 0.00 percent of 10 such costs.

11 7.9 If, pursuant to Section 5.3, facilities 12 associated with ad incidental to a specific portion 13 of San onofre are installed on or over any portion of 14 the Plant Site act designated for such use and if 15 the coordinating c - 4ttee established under the 16 Construction Agreement or the Board of Review to be 17 established under the operating agreement for Units 2 & 3 18 determines that suchi installation significantly alters the 19 benefits derived from the Project Easements by each of the  ;

20 Parties, the Parties shall amend Sections 7.5, 7.6, 7.7 21 and 7.8, hereof, or the definitive agreement which 22 supersedes such Sections.

23 7.10 Riverside and Anaheim shall reimburse 24 Edison for the acquisition, rental, and developmental 25 expenses incurred by Edison on its s3n rad Jan Diego's 26 beh.9 ? in connection with San ons!W t J.nl rights Of.

1 (other than the Units 2 and 3 off-Shore Land rights, 2 the cost of which shall be considered a Construction 3 Cost under Sectica 7.1, hereof) as follows:

4 7.10.1 The amount of such expenses is .

5 deessed to be $1,366,300.00; i

6 7.10.2 Riverside shall reimburse Edison

- 7 for 1.1651 percent of such amount; and

! 8 7.10.3 Anaheim shall reimburse Edison for 9 1.0836 percent of such amount.

l l

10 7.11 Except for costs incurred in negotiating 11 and preparing this Participation Agreement and the 12 definitive Project Agreements among Edison, San Diego, 13 Riverside, and Anaheim, Riverside and Anaheim shall 14 reimburse Edison and San Diego for all costs incurred 15 by each of'them to effect Riverside's and Anaheim's 16 participation in Units 2 and 3 as follows:

17 7.11.1 Riverside shall reimburse Edison and 18 > San Diego for 50 percent of such costs; and 19 7.11.2 Anaheim shall reimburse Edison and 20 San Diego for 50 percent of such costs. ,

21 7.12 Except as mutuaily agreed or except as 22 provided by Section 11 hereof, operation and maintenance 25 costs and expenses shall be borne by the Parties in 24 proportion to their respective ownership interests in 25 the facility for-which such costs and expenses are 26 incurred.

27

. _ _ _ . ~ - _ - - _-. _ -

1 8. BILLING AND PAYMENT.: l 1

2 8.1 Edison shall submit to each of Riverside l 3 and Anaheim, upon or subsequent to execution of this 4 Participation Agreement, an invoice fr2 the amount of .

l 5 those costs and expenses covered by Section 7.1.

6 Riverside and Anaheim shall pay the invoice amount to 7 Edison within fifteen (15) days after receipt of 8 such invoice.

9 8.2 Edison shall bill, and Riverside and Anaheim lo shall pay, those costs covered by Sections 7.3 and 7.4 11 in the manner presently used between Edison and San 12 Diego and set forth in Sections 6.7 and 6.9 of the 13 construction Agreement.

14 8.3 Until such time as the Project Easements are 15 assigned pursuant to Section 6.3 and arrangements are 10 made to provide for direct payment by Riverside and 17 Anaheim to the agencies issuing easements and until.

l l 18 such time as all assessments and taxes for which 1

19 Riverside and Anaheim are responsible pursuant to 20 Section 12.1 are assesses and levied directly against 21 Riverside and Anaheim, Edison shall bill Riverside and 22 Anaheim for their proportionate share of costs covered 23 by Sections 7.5, 7.6, 7.7, and 12.1. Such billing shall 24 be made on or before 20 days prior to the date said cost, l

25 assessment or tax becomes due to the issuing agency 26 or taxing authority. Riverside and Anaheim shall l .

M

l l

l l

1 l

I pay to Edison the amount specified by such billing l l

2 prior to the date said cost becomes due to the '

3 issuing agency or taxing authority.

4 8.4 Riverside and Anaheim shall pay to Edison 5 the amounts set forth in Section 7.2 and Section 7.10

g within ten uys after execution of this Participation 7 Agreement.

8 8.5 Edison,and San Diego shall submit to River-9 side and Anaheim, no more frequently than monthly, t 10 invoices for the amount of costs covered by Section 7.11.

i 11 Riverside and Anaheim shall pay the invoiced amount to 12 Edison and San Diego within fifteen (15) days after 13 receipt of such invoice.

14 8.6 Edison shall bill, and Riverside and Anaheim 15 shall pay, all operation and maintenance costs in the le manner to be set forth in the operating agreement l 17 executed pursuant to Section 6.6, hereof.

1 i

18 8.7 Payments not made to Edison and/or San Diego l

19 by Riverside and Anaheim on or before the due date 20 shall be payable with interest accrued at the rate of 21 ten percent (10%) per annum or the maximum legal rate 22 of interest, whicliever is less, computed from the due 23 date to the date payment is received by Edison and/or 24 San Diego.

25 9. ADMINISTRATION:

26 9.1 As a means of securing effective cocperation 31

information, Riverside and Anaheim 2 shall, within ten days after the execution of this 3 Participation Agreement, designate representatives in 4 accordance with Section 7 of the Construction

• 5 Agreement.

6 9.2 The representatives of Riverside and Anaheim 7 appointed pursuant to ,Section 9.1 shall have the rights 8 and obligations set forth in Section 7 of the 9 Construction Agreement; provided, however, that the 10 representation of Riverside and Anaheim shall not be 11 effective until such time as Riverside and Anaheim 12 begin paying funds pursuant to Section 8.

13 10. LIABILITY AND INSURANCE:

14 10.1 This Participation-Agreement shall be 15 deemed to be a " Project Agreement" under the 16 Construction Agreement and the provisions of Section 8, 17 Project Insurance, and Section 9,, Liability, of the 18 Construction Agreement shall apply except as follows:

19 10.1.1 The term " Company" or " Companies,"

20 when used in Sections 4.33, 8 and 9 of the Construction 21 Agreement, shall include Edison, San Diego, Riverside, 22 and Anaheim.

23 10.1.2 The percentages to be paid or shared 24 as set forth in Sections 9.5 and 9.7 of the Construction 25 Agreement shall be changed to the following:

26 10.1.2.1 Edison - 76.55%;

30

(

l 10.1.2.2 San Diego - 20.00%;

2 10.1.2.3 Riverside - 1.79%; and l

3 10.1.2.4 Anaheim 1.66%.

4 10.2 Riverside and Anaheim shall be added as

• 5 named insureds on those policies of insurance presently 0 in effect pursuant to Sections 8.1.1 and 8.3.1 of the 7 Construction Agreement.

8 10.3 Riverside and Anaheim shall each make 9 application to Nuclear Mutual, Ltd., to become member 10 insureds under the policies of insurance presently in 11 effect for San Onofre Units 2 and 3 for (i) all risk-12 builders' risk insurance covering loss or damage to 13 project work under course of construction and (ii) 14 nuclear property damage insurance.

15 10.3.1 If such application is accepted, i 10 Riverside and Anaheim shall, through the Project 17 Director (or operating Agent) , obtain and maintain said 18 insurance coverage in effect dtiring their participation 19 in the ownership of San Onofra Units 2 and 3.

20 10.3.2 If such application is not accepted, 21 Riverside and Anaheim shall each for itself secure and 22 maintain in effect said insurance coverage from the 23 Nuclear Energy Liability-Property Insurance Association 24 and the Mutual Atomic Energy Reinsurance Pool or their 3 equivalent.

" 10.4 Riverside and Anaheim hereby release 31

. _ - - - . , _ . _ . . . , , . . . . . - , . , _ _ . _ , . . . _ . _ , . . , ~-- -

1 Edison and San Diego from any and all liability to P.iverside 2 and Anaheim or either of them resulting from damage to or 3 loss or use of Units 2 and 3 which is caused by or is a 4 result of the construction, operation or maintenance of

• 5 Unit 1, the Edison Switchyard, the San Diego Switchyard, the 6 Interconnection Facilities, or any Additional Generating 7 Units. Edison and San Diego hereby release Riverside and 8 Anaheim from any and all liability to Edison and San Diego 9 or either of them resulting from damage to or loss of use of 10 Unit 1, which is caused by or is the result of the construc-11 tion, operation or maintenance of Units 2 or 3, or any 12 Additional Generating Units. Except as otherwise provided 13 in Section 9.3 of the Construction Agreement, the terms of 14 this Section 10.4 are not applicable where a Party has com-

~

15 mitted Willful Action as defined in Section 4.33 of the 16 Construction Agreement.

17 11. NUCLEAR FUEL:

18 11.1 Supply of Nuclear Fuel: Except as provided in 19 Section 11.3, the Project Director (or Operating Agent) 20 shall make all arrangements for the supply of Nuclear Fuel 21 consistent with the Nuclear Fuel Budget most recently 22 adopted by the Coordinating Representatives. In doing so, t

E the Project Director (or Operating Agent), acting as princi-24

. pal on its own behalf and as agent for the other Parties 25 shallnegotiate, execute,admi'n$. ster,performandenforce 26 Nuclear Fuel Agreements as it deems necessary or appropriate ,

l .

I n

I

ed Nuclear Fuel Agreements shall hc submitted to l 2 the Coordinating Representatives (or other representatives 3 established by the operating agreement for Unit 2 and Unit O 3) for approval, or'for the purpose of informing the Coordi-5 nating Representatives if their approval is not required, 6 prior to execution; provided, that any Nuclear Fuel Agree- i t

7 ment may be executed by the Project Director (or Operating l'

8 Agent) without its being submitted to the Coordinating 9 Representatives so long as obligations of the Parties pur-10 suant to such Nuclear Fuel Agreement are within and consis-11 tent with the nuclear fuel budget most recently adopted by 12 the Coordinating Representatives (or other representatives M established by the operating agreement for Unit 2 and Unit 14 3). The Project Director (or Operating Agent) shall prompt- -

l 15 ly Jurnish each Party with copies of all Nuclear Fuel Agree- .

16 ments executed as agent for such Party. If the Coordinating 17 Representatives (or other representatives established by the 18 operating agreement for Unit 2 and Unit 3) are unable or 18 i fail to reaci. unanimous approval of a Nuclear Fuel Agreement ,

20 any Party may call for submission of the matter to arbitra-21 tion in accordme e with Section 12.1 of the Construction 22 Agreement (or such other section as may be provided in the 23 operating agreement for Unit 2 and Unit 3). Pending the 24 final decision of the arbitrator, the Project Director (or 25 Operating Agent) is authorized and obligated to take such 26 action with respect to the supply of Nuclear Fuel as in its 33

1 discretion is necessary.

2 11.2 Costs and Financine of Nuclear Fuel: Except as s provided in Section 11.3 and 11.4, all costs incurred by the 4 Project Director (or Operating Agent) in connection with the

• 5 Nuclear Fuel shall be shared by each Party in propor-6 tion to its Generation Entitlement Share. The costs of 7 Nuclear Fuel shall include: (i) all costs incurred and pay-8 ments made by the Project Director (or Operating Agent) pur-9 suant to any Nuclear Fuel Agreement; and (ii) all other costs 10 and expenses not a part of a Nuclear Fuel Agreement incurred 11 by the Project Director (or Operating Agent) in connection 12 with: (a) the receiving, storing, and handling of fuel as-13 semblies at the Plant Site; (b) the shipment of fuel assem-14 blies from the Plant Siter and (c) the acquisition, engineer -

15 ing, and fuel management of Nuclear Fuel. Each Party shall 16 own an undivided interest in all Nuclear Fuel equal to its 17 Generation Entitlement Share, and may determine its own 18 method of financing its share of costs arid expenses associ--

19 ated with such interest, provided that no Party shall enter 20 into any arrangement which imposes any obligation upon any 21 other Party or restricts or limits the rights of the other 22 Parties to finance the costs associated with their respec-23 tive undivided interests. A Party may sell or assign all or 24 part of its interest in Nuclear Fuel to any person or entity 25

(" Fuel Lessor") for leaseback to such Party subject to the 26 conditions that: (i) the Fuel Lessor shall waive irrevocably 3-1

i l

l l

l

\

l all right to partition of such Nuclear Fuel; (ii) such Party 2 shall indemnify all other Parties against any costs or ex-3 penses incurred by them because of such Party's sale and 4 leaseback of its interest in Nuclear Fuel.

M 11.3 Special Provisions Regarding the Sucply and 6 Cost of Uranium Concentrates:

l 7 11.3.1 Any Party may elect to provide 8 directly all or a portion of its share of natural 9 uranium U308 concentrates not covered by an existing 10 Nuclear Fuel Agreement entered into in accordance with 11 Section 11.1; provided, however, that the ==v4=1m quantity 12 so supplied by a Party shall be no greater than the 13 product of its Generation Entitlement Share and the 14 Uranium Requirements and that the =4n4= = quantity so l 15 supplied by a Party in any single delivery shall be not is less than the =4n4= = quantity specified in Nuclear Fuel 17 Agreement (s) for conversion services (currently 20,000 lbs.

18 0308 Net).

19 11.3.2 An election by any Party to provide 20 natural uranium 0308 concentrates shall, in each 21 instance, be e-micated to the Project Director (or 22 operating Agent) sufficiently in advance so as not to 23 interfare in any way'with the Project Director's (or 24 operating Agent's) performance of its responsibilities 25 under Section 11.1, and such an election shall not be 26 allowed when submitted after the Project Director (or g

1 Operating Agent) has begun, pursuant to an authorized 2 nuclear fuel budget, to arrange for the supply of such 3 natural uranium U308 concentrates.

4 11.3.3 Once the Project Director (or

• 5 Operating Agent) has acknowledged a Party's election to 6

l provide natural uranium U308 concentrates, such Party 7

shall be responsible for providing and delivering such 8

natural uranium U308 concentrates, and shall extend its 9

best efforts to fulfill such responsibility.

10 11.3.4 If, subsequent to any Party's 11 election to supply natural uranium U308 concentrates 13 pursuant to Sections 11.3.1 and 11.3.2, the Uranium 13 i

Requirements for Unit 2 or Unit 3 change due to fuel 14 management decisions by the Project Director (or 15 Operating Agent), operating circumstances, decisions, 18 or consequences, government enrichment policies, or the 17 availability of recycle uranium and/or plutonium, then 18 such Party shall be responsible for supplying a pro-18 portionate amount of any increased Uranium Requirements, 20 or inventorying a proportionate amount of any decreased Uranium Requirements.

22 11.3.5 Where a Party chooses to provide its own natural urani.un U308 concentrates, it shall bear 24 the costs of such , and such cor.;ts shall not be included 25 -

in the costs to be shared pursuant to Section 11.2. With 26 respect to the Parties not choosing to provide their own

-, -- -. > , , , . - . . - ,n -,,,,.en .-.- _-,--_.,a__ ,--,.,n.. ,,, . .- ,,,

1 natural uranium U308 concentrates, the Project Director 2 (or Operating Agent) shall provide such uranium concentrates 3 as part of the suppl'f of Nuclear Fuel, and the cost of 4 providing such shall be shared by such Parties in

5 proportion to their Generation Entitlement Shares.

l 6 11.4 Evidence of Supply of Uranium Concentrates:

l 7 It is recognized that failure of any Party to fulfill t

l

8. the responsibilities provided in Sections 11.1 or 11.3 could 9 dela.y the availability of fuel and thus impair operation 10 of Unit 2 or Unit 3. Accordingly, the following pro-11 visions are adopted to assure the timaly and dependable 12 availability of all natural uranium U308 concentrates 13 required for Unit 2 and Unit 3:

14 11.4.1 One year prior to each date on which

(

l 15 natural uranium U308 concentrates are scheduled by the i

16 Project Director (or Operating Agenti to be delivered 17 for conversion, the Project Director (or Operating 18 Agent) shall notify all Parties of the quantity and speci-19 fications of natural uranium U308 concentrates required,

)

the date on which delivery is requirac , and the place at 21 which delivery is required to be made and the quantity 22 which each Party has a responsibility to deliver. Within 23 one month of such notification, each Party shall provide 24 the Project Director (or Operating Agent) and the Coordinat-25 ing Representatives with evidence that the Party has firm i 23 commitments for providing the required quantity and quality 37

.- . - - - - . .. ':::: -. - ~:: .  : T -- : ~.-._ - _ - - . _ , . . . _ - _ _ . -

i 1 of natural uranium U308 concentrates on or before the 2 specified delivery dates.

s 11.4.2 If the Project Director (or Operating o Agent) reasonably concludes that any such Party 5 (" deficient Party") has not provided satisfactory 6 evidence as required by Section 11.4.1, the Project 7 Director (or operating Agent) shall proceed to acquire 8 and arrange for the delivery of the quantity of such 9 uranium concentrates required to be provided by the 10 deficient Party; the actual costs of acquiring such 11 natural uranium U308 concentrates shall be billed to 13 the deficient Party as incurred (or invoiced) and paid 13 within five days after receipt of each such bill (or, a 14 where an invoice instead of a bill is provided to the 15 deficient Party, within the time provided by the invoice).

10 The Project Director (or Operating Agent) shall make a 17 reasonable effort to acquire such natural uranium U308 18 concentrates on terms whf,ch are reasonable in the 19 commercial context which exists at the time of the i 20 acquisition; however, neither the Project Director (or i 21 operating Agent) nor any Party shall have any obligation l 22 to supply such material from its own inventories of or 23 rights. to natural uranium U308 concentrates or to afford 24 the deficient Party access to the benefits of any 25 favorable business opportunities available to the Project Director (or Ooerating Agent) or any other Party; I N

l l

1 and, provided further that no Party shall incur any )

2 liability to any other Party as a result of carrying out  !

l' 3 the provisions of this Section 11.4 except as provided l 4 herein. . :

5 11.4.3 If at any time after the provisions l l

6 of Section 11.4.1 have been complied with, the Project 7 Director (or Operating Agent) reasonably concludes that 8 a Party's ability to provide natural uranium U308 1

9 concentrates specified in a notice pursuant to Section 10 11.4.1 is in doubt, the Project Director (or Operating 11 Agent) shall se notify the deficient Party. If within 12 15 days after receipt of such notice the deficient Party 13 has not provided reasonable assurance of its ability to 14 provide such natural uranium U308 concentrates, the '

15 l Project Director (or Operating Agent) may implement the 16 provisions of section 11.4.2. If a Party actualle fails to make a delivery required by 0 notice pursuant to II Section 11.4.1, the Project Dia <t ror (or Operating 19 Agent) may, upon 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> notice to such Party, and at 20 the deficient Party's sole cost, acquire and arrange for 21 delivery of such natural uranium U308 concentrates on 22 any terms which may be immediately available.

23 11.4.4 If the Project Director (or Operating 24 '

Agent) is unable to acquire and arrange for delivery of 25 26 natural uranium U308 concentrates to cover a deficient Party's commitment, and as a result the available cycle '

i 39

zgy in the succeeding cycle is less than it would have been had 2 there been a full supply of natural uranium U308 concentrates, then the 3 deficient Party shall be subjected to an w e iate reduction in its 4 entitlement to the Net brgy Generation during such cycle.

• 5 11.4.5 With respect to rections 11.4.2, 11.4.3, and 11.4.4; 6 if the Winatig %aatatives reasonably concitrie that the 7 ability of the Project Director (or Operating Agent) ac*dng as princi-8 pal en its own behalf to provide natural uranitza concentrates which it 9 is obligated to yrovide is in doubt, then the determinations and 10 actions assigned to the Project Director (or Operatig Qnt) by 11 those sections shall be nam w by the Coordinatig W nta*dves.

12 In this case the representative of the Project Director 13 (or operating' Agent) shall not be entit5ed to vote on 14 the determinations, approvals or actions under 15 consideration.

13 11.5 Advancement of Funds for Nuclear Puel:

17 Except as provided in Section 11.3 and 11.4, each Party l la shall pay to the Project Director (or Operating Agent) 19 its proportionate share of the total amount due for the 20 purchase of Nuclear Fuel for Unit 2 and Unit 3 in advance 21 of the dates on which payments therefor by the Project 22 Director (or Operating Agent) become due under any Nuclear 23 Fuel Agreement. The operating agreement for Unit 2 and 24 Unit 3 shall include detailed procedures for the payment 25 of Nuclear Fuel related costs, including procedures for the 26 allocation of costs of Nuclear Fuel where electric energy l

40

vered to the account of one or more Parties differs fra the 2 respective Generation Entitlement Shares.

3 11.6 Prorwinres for Contrcl of the Supoly of Nuclear Puel: By 4 @mm7 1,1978 and on each October 31 thereafter until work related to 5 the supply of Nuclear Fuel has been ccnipleted (or until temination 6 of the Owneruhip Agreenent, whichever ocars sooner), the Project 7 Director (or Operating Agent) shall sut;mit to the Coordinating Repre-8 sentatives (or other representatives established by the operating agne I i

9$ ment for Unit 2 and Unit 3) for review and ww.1, modification, or 10 other action a revised nuclear fuel budget effective as of the succeeding 11 January 1 in fama and content ww.d by the Winating Representa-12 tives, divided by calerdar quarter for the sucmeding two years and by 13 calendar year for at least the third, fourth, and fifth succeeding 14 years (and for such additional succeeding years as the Project Director 15 (or Operati.z; Agent) may, in its discretion, peoride).

18 11.7 Information: 1be Project Director (or Operating Agent) shall 17 keep the parties full and pcmptly infomed as to significant matters 18 involving the supply of p elear Fuel.

19 11.8 Additional Matters: The parties recognize 20 that additional matters with respect to the supply of 21 Nuclear Fuel, not provided for in the preceding sections 22 of this Section 11, may require additional agreement 23 between the Parties and agree to negotiate with respect 24 to such ad'ditional matters as part of the San Onofre 25 Units 2 and 3 operating Agreement or as a separate 26 agreement. -

9 t

1 12. TAXES:

2 12.1 All taxes or assessments levied against each 3 ' Party's ownership or beneficial interest in San Onofre, 4 excepting those taxes or assessments levied against an ,

5 individual Party in behalf of any or all of the other l 6 Parties, shall be the sole responsibility of the Party upon 1

t 7 whose such ownership said taxes or assessments are i 8 levied.

9 12.2 The Parties shall use their best efforts to 10 have any taxing authority imposing any assessments, 11 property taxes or other taxes, excluding any 12 sales or use taxes, assess and levy such taxes and

{ 13 assessments directly against the Party responsible

{ 14 for s:sch tax or assessment.

15 12.3 Except as provided in Section 12.4, Riverside 18 shall raimburse Edison or San Diego for any and all taxes l 17 which are levied on Edison or San Diego as a result of the 18 transfer to Riverside of a portion of Edison's ownership 19 interests in Unit 2, Unit 3, or the Common Facilities.

20 Except as provided in Section 12.4, Anaheim uhall reimburse 21 Edison or San Diego for any and all taxes which are levied 1

22 on Edison or San Diego as a result of the transfer to 23 Anaheim of a portion of Edison's ownership interests in 24 Unit 2, Unit 3, or the Common Facilities.

25 12.4 Taxes described in Section 12.3 shall not 26 include any tax on capital gains which may result from "l

l 1 the transfer to Anaheim and Riverside.

l 2 13. RELATIONSHIP OF PARTIES:

3 13.1 The covenants, obligations and liabilities -

of the Parties under this Participation Agreement are

• 4 5 intended to be several and not joint or collective, 6 and nothing herein contained shall ever be construed '

y to create an association, joint venture, trust or 8 partnership, or to impose a trust or partnership g covenant, obligation or liability on or with regard to 10 any of the Parties. Each Party shall be individually 11 responsible for its own e venants, obligations and 12 liabilities as herein provided. No Party shall be under 13 the control of or shall be deemed to control another 14 Party. No Party shall have a right or power to bind 15 another Party without its express written consent, 16 except as expressly provided in this Participation 17 Agreement.

18 13.2 The Parties hereby elect to be excluded from 19 the application of Subchapter "K" of Chapter 1 of 20 Subtitle "A" of the Internal Revenue Code of 1954 or 21 such portion or portions thereof as may be permitted or 22 authorized by the Secretary of the Treasury or his 23 delegate insofar as such subchapter, or any portion 24 or portions thereof, may be applicable to the Parties 25 under this Participation Agreement.

• • / .

I a3

l 1

1 14. TERMINATION: l i

1 i 2 14.1 Riverside or Anaheim may withdraw from l

3 participation in San Onofre and terminate this Partici-4 pation Agreement if, after using its best efforts, it 5 is unable to obtain any required approval from regula-6 tory and other authorities. In the event of t.armination y by a Party pursuant.to this Section 14.1 and if ,

a construction of Unita 2 and 3 is not continued by the <

g other Parties, the accumulated Construction Costs and 10 all other costs incurred by the terminating Party in 11 connection with San Onofre pricir to the date of 12 termination shall be borne by such terminating Party.

13 If construction of Units 2 and 3 is continued by 10 the other Parties, Edison shall acquire the terminating.

l l

15 Party's interest in San Onofre and shall reimburse such i

10 taminating Party for its incurred Construction Costs 17 (including its allowance for funds used during

! 18 construction but excluding those costs covered by 19 Section 7.11 and the terminating Party's own administra-20 tive and general expenses).

21 14.2 Prior to such time as the Construction 22 Agreement is amended pursuant to Section 6.4, 23 and prior to the initial operation of Unit 2, this 24 Participation Agreement may be terminated in the manner 25 and for the reasons set forth in Section 17 of the Con-26 struction Agreement.

stJ

1 14.3 When Edison believes the obligations of 2 this Participation Agreement have been met, Edison shall 3 serve notice of that fact upon the other Parties. If 4 nc.no of the rarties objects and notifies the other Parties

• l 5 of such objection within 60 days after receipt of such

~

l 6 notice, this Participation Agreement shall then 7 tami nate.

8 15. ADDITIONAL GENERATING UNITS:

9 15.1 The Parties each reserve any rights which 10 they may have, either by contract or by law, to 11 participate in any Additional Generating Unit; provided, 12 however, that Riverside and Anaheim shall be neither 13 granted nor denied participation rights by reason of 14 any provision of this Participation Agreement.

15 15.2 If Additional Generating Units are construc-18 ted, interests in the Project Easements shall be 17 reallocated among the participants such that each 18 participant's interest in the land area used for a 19 specific unit or facility is the same as that partici-20 pant's interest in the unit or facility occupying such 21 land area; cost responsibilities for each Project Ease-22 ment, including et.st responsibilities for past 23 acquisition, rental, and developmental expenses of such l

l 24 easement, shall be reallocated on the basis of each 25 participant's interest in each of the units or 2e facilities occupying such easement and the proportionate qi

l 1 land areas occupied by each unit or facility on such 2 easement. Interests in and cost responsibilities for s the Common Facilities shall be reallocated among the 4 participants of all the units at San onofre on the basis .

5 of the rated operating capacity of each unit and the O reproduction cost new, less depreciation for said 7 Common Facilities.

8 16. UNCorffROLLABLE FORCES: No Party shall be considered 9 to be in breach of any of *.ne obligations hereunder, 10 ,

other than the obligation to pay money, to 11 the extent failure of performance sht il be due to an 12 uncontrollable force. The term " uncontrollable force" 13 shall mean any cause beyond the control of a Party 14 unable to perform' such obligation, including, but not 15 limited to, failure of facilities, flood, earthquake, 18 storn, fire, lightning, and other natural catastrophies, 37 epidemics, war, riot, civil disturbance, labor dispute, l

1e sabotage, government priorities, restraint by court 19 order or public authority, and action or non-action by 20 or inability to obtain the necessary authorizations or 21 approvals from any government agency or authority, 22 which by exercise of reasonable diligence and foresight 23 such Party could not reasonably have been expected to 24 avoid and which by exercise of reasonable diligence it 25 has been unable to overcome. Any Party rendered unable 26 to fulfill any obligation by reason of an uncontrollable 46

1 force shall exercina due diligence to remove such i

2 inability with all reasonable dispatch. No*hg s contained herein shall be construed so as to require a 4 Party to settle any strike or labor dispute in which it .

5 may be involved.

6 17. NOTICES: All notices under this Participation ,

7 Agreement shall be in writing and shall be delivered 8 in person or sent by registered or certified mail to e the applicable of the following addressees:

lo Southern California Edison Company c/o Sec~etary 11 P. O. Box 800 Rosemead, California 91770 12 l San Diego Gas & Electric Company M c/o Vice President, Project Management P. O. Box 1831 14 San Diego, California 92112 15 City of Riverside e/o Public Utilities Director 18 3900 Main Street

• Riverside, California 92522 City of Anaheim 18 c/o Utilities Director P. O. Box 3222 19 '

Anaheim, California 92803 l

20 By notice.sent to the other Parties, any Party may 21 designate different persons or different addresses for 22 the giving of notices hereunder.

25 18. ARBITRATION: If the Parties, acting through their 24 respective Coordinating Representatives, are unable 25 to reach agreement with respect to a matter herein .

26 specified to be appsi.,v.d, established, determined, or 47

- _ _ __. _ __ ~ -__ _ _

E l

i

~,

1 resolved by agreement of the Parties, any Party may r 2 call for submission of such matter or dispute to 3 arbitration in the manner set forth in See: ion 12 of 4 the Const. Won Agreement, which call s1411 be

• 5 binding upon the other Party or Parties P.o the dispute.

6 , The Project Director shall continue to do all things 7 and make all expenditures necessary pending the final 8 decision of the arbitrator.

9 19. MISCELLANEOUS PROVISIONS:

10 19.1 Edison shall, within twelve (12) months 11 after receipt of payment pursuant to Section 8.1, 12 procure a release of the interests transferred pur- .

13 suant to Section 6.1 from the lien of Edison's trust 14 1 indenture and deliver to Riverside and to Anaheim a 15 bill of sale covering Riverside's and Anaheim's 16 respective ownership interasts in such portion of Units

, 17 2 and 3.

18 ~

19.2 Edison shall, within twelve (12) months 19 after receipt of payment pursuant to Section 8.5, procure a release of the interests transferred pursuant 21 22 to Section 6.2 frost the lien of Edison's trust indenture and deliver to Riverside and'to Anaheim a bill of sale 23 covering Riverside's and Anaheim's respective ownership 24 interests in such portion of the Common Facilities.

25 19.3 The Parties agree to negotiate in good faith 26 and to proceed with diligence to complete all necessary W

1 definitive agreements pertaining to Units 2 and 3.

l 2 19.4 Unless mutually agreed or unless provided l

l 3 otherwise herein, no significant departures.shall be l 4 made from the arrangements between Edison and San Diego .

5 for ownership, construction, operation and maintenance -

3 of Units 2 and 3 or, where no such arrangements exist 7' for Units 2 and 3, the arrangemepts under which Edison 8 and San Diego have particly: ,od in Unit 1.

! g 19.5 Each Party sl'All be responsible for making i <

l 10 arrangements necessary to transmit its entitlement of l

11 San Onofre power from San onofre to its electric system.

12 19.6 Except as provided in Section 6.8, 13 Riverside and Anaheim each shall be responsible for 14 oba4n4ng, at its own expense, its required 15 authorizations and approvals, if any, relating to its 10 participation in the construction or reconstruction 17 and operation of San Onofre and to its performance 18 of the provisions of this Participation Agreement, 19 from federal, state, or local regulatory authorities 20 having jurisdiction to issue such authorizations and 21 approvals,,and shall keep the Project Director and 22 Operating Agent informed of its applications therefor.

23 19.7 The Parties do not intend to dedicate and 24 nothing in this Participation pgreement shall be con-25 strued as constituting a dedication by any Party of 26 its properties or facilities, or any part thereof, to l -

g

1 any other Party or to the customers of any 7 arty.

2 19.8 For itself and its successors and assigns, 3

Edison, San Diego, Riverside and Anaheim, each, until 4

expiration or tamhation of the ownership Agreement 5

as it may be amended from time to time, waives the ,

6 right to seek partition of San Onofre and the Project 7

. Easements (whether by partitionment in kind or by sale 8

and division of the proceeds thereof) . Edison, San Diego, 8

Riverside and Anaheim, each further agrees that it will 10 not resort to any action at law or in equity to partition the same (in either such manner) and to that extent 12 waives the benefits of all laws that may now or hereafter 13 authorize such partition.

14 .

19.9 If a Party desires to assign to another 15 Party any or all of its interest in Unit 2 or Unit 3, 16 ~

the provisions of Section 8 of the ownership Agreement shall not apply. If a Party desires 18 i 19 to assign to an entity other than another Party any or 20 all of its interest in Unit 2 or Unit 3, the other 21 Parties each shall have the right of first refusal, as provi*.ed by the Ownership Agreement, to purchase such 22 interest in proportion to the respective Generation 23 24 Entitlement Shares of the Parties seeking to exercise the right of first refusal.

25

-26 19.10 Riverside and Anaheim each represent and go

. . -~ _

l 1 warrant that it has obtained all necessary approvals, 2 including voter approval if required, for its project t 3 contractual undertakings including this Participation i

4 Agreement and for its means of financing its

• 5 participation in the construction, operation and O maintenance of Units 2 and 3 and that it has legal 7

i 1 authority to enter into and be bound by all of its 8

project contractual undertakings including this 9 Participation Agreement.

10 19.11 l

Riverside and > =hain shall have the right 11 to auiat the books and records of Edison directly 12 per+=4ning to Units 2 and 3, the Cceanon Facilities, and 13 the Plant Site. Should any audit reveal errors, 14 omissions or items not properly chargeable to Units 2 15 and 3, the Common Facilities and the Plant Site or to 16 Riverside and Anaheim in the amounts billed, appropriate 17 adjustment shall be made.

18 19.12 Effectiveness of this Participation Agree-18 ment shall be subject to its being accepted for filing 20 by the regulatory agency having jurisdiction.

21 IN WITNESS WHEREOF, the Parties have caused this

• 22 Participation Agreement to be executed on their behalf 8

and the signatories hereto represent that they have M )

been duly authorized to enter into this Participation 26 Agreement on hah =1f of the Party for whom they sign.

/

l

il

,' 1 Executed as of the 1st day of November,1977.

!! 2 2

%TTEST: SOUTHERN CALIFORNIA EDISON COMPANY g s7 ND' f .7 5 */ b BY

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11- /- g/s/ro Assism secasm ' ylc_M:ggg gg,q

,g - 6 I!d ll a 7 ATTEST: SAN DIEGO GAS & ELECTRIC COMPANY

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9. d 9 '(Nd m 4ECETABX ny /h' 'b yICE P.ftESIDENI ~

/ . Tb/k' f 5 10 11 ATTEST: CITY OF RIVERSIDE

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12 is AUCE A. HARE ny _4 BCT 3 0 1980 ,

14 Er V'> % ;_N--

ASEI5 IGX _CIU CLEn%

15 ATTEST: b CITY OF IN 16 ' -

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COMMON FACILITIES AREA l

That certain real propcrty in the County of San Diego, State of California, described as follows:

PARCEL 1r l That portion of the Rancho Santa Margarita y Las Flores, as described in the Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et sec., i of Paten:s in the office of the County Recorder of said County, being also portions of Section 24 in Township 9 South, Range 7 West, and Section 30 in Township 9 South, Range 6 West, as shown on Record of Survey Map No. 6242 filed June 13, 1963 in the office of said County Recorder, described as follows:

Beginning at a 6 inch by 6 inch concrete highway monument, set in the Southwesterly line of U. S. Highway 101, said monu-ment being North 56* 12' 04" West 2123.77 feet, measured along said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned concrete highway monument bears South 02* 52' 15" East 4207.25 feet from a 1-1/2 inch iron pipe, with brass cap, set for the Northeast corner of Section 24 in Township 9 South, Range 7 West, as shown on said

• Record of Survey Map, said first above mentioned concrete highway monument being also at the beginning of a tangent curve, concave Southwesterly and having a radius of 4940 feet; thence l Northwesterly along said curve, through an angle of 12' 00' 00",

! a distance of 1034.63 feet; thence continuing along said South-westerly line and tangent to said last mentioned curve, North 68* 12' 04" West, 503.81 feet to the beginning of a tangent curve, concave to the Northeast and having a radius of 2060 feet; thence Northwesterly, along said last mentioned curve, through an angle of 04* 54' 28" a distance of 176.47 feet to a point, a radial line of said last mentioned curve passing thecugh said last mentioned point bears South 26' 42' 24" West; thence South 33* 00' 00" West, 785.32 feet to the Mean High tide Line of the Pacific Ocean; thence Southeasterly, along said Mean High Tide Line of the Pacific Ocean to a line that is parallel with and 4500 feet Southeasterly, measured at right angles, from the course hereinabove described as having a bearing of South 33* 00' 00" West and a length of 785.32 fee t; thence North 33* 00* 00" East, along said parallel line, 663.39 feet to a po'nt in said Southwesterly line of U. 5.

Highway 1G1, said last mentioned point being in a curve le said Southwesterly line, said curve being concave Southwest.erly i

' and having a radius of 11,440 feet and being also tangent to the course hereinabove described as having a bearing of North 56*

125 04* West and a length of 2123.77. feet, a radial line to l .

said curve passing through said last mentioned point bears North 37* 12' 19". East; thence Northwesterly, along said curve, EXHIBIT "B" -

4

9 through an angle of 03* 24' 23", a distance of 680.14 feet to the second above mentioned 6 inch by 6 inch concrete highway monument; thence North 56* 12' 04" West, 2123.77 feet to the Iroint of Beginning . l l

1 EXCEPTING THEREFROM that portion thereof described as follows: l l -

j That portion of the Rancho Sanca Margarita y Las Flores,

\

I described in Patent from the United States of America, dated i March 28,1879, and recorded in Book 7, page 18 et seq., of Patents in the office of the County Recorder of the County of San Diego, and being also a portion of Section 24, Township 9 South, Range 7 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, in said office of the County Recorder, described as follows:

Beginning at a point in the Northwesterly boundary line of the land described in that certain Grant of Easement from '

the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887, of Official Records in said  !

i office' of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said point being South 33* 00' 00" West,143.21 feet, measured along said l Northwesterly boundary line, from the Northwesterly corner thereof; thence the following courses and distances: South 57' 00 ' 00" East,102.80 feet; South 68 ' 59 ' 50" East, 434.90 feet; South 07' 00' 56" East,167.65 feet; South 57' 00' 00*

East, 208.00 feet; North 33' 00 ' 00" East, 22.50 feet; North 73

• 5 7 ' 2 0 ' Ea st , 35.09 feet; South 57' 0 0 ' 0 0" East,121.00 feet; South 12 ' 0 0 ' 00" East , 80.61 feet; South 57' 00' 00" East,145.00 feet; South 12* 00' 00" East, 79.20 feet; South 57 ' 0 0 ' 00

• Ea st , 75.73 feet ; South 04' 55' 29" West, 60.07 feet; South 37' 00' 00" East,134.00 feet and South 33' 00' 00" West, 375.00 feet to a point in the Southwesterly boundary line of said land, said point being North 52' 00' 51" West, 03.62 feet, measured along said Southwesterly boundary line, t from the Southeasterly terminus of that certain course shown as having a bearing of " South 52' 00 ' 51" East" and a dis-  ;

tance of "299.95 feet" as shown on Record of Survey Map No.

6242; thence along said Southwesterly boundary line the follow-ing courses and distances: No r th 52' 0 0 ' 51" We st , 296. 33

)

feet; North 58' 35 ' 26" West, 289.39 feet; North 65* 56' 29" ,

' West, 300.23 feet; North 68* 16' 51" West, 301.02 feet and North 61' 30' 25" Weet, 308.74 feet to said Northwesterly  !

boundary line of the land shown on Record of Survey Map No.

6242; thence along said Northwesterly boundary line North l 33' 00 ' 00" East, 642.11 *eet to the Point of Beginning.

l

~

EZEIBIT "B" -

l

.su

ALSO EXCEPTING THEREFROM that portion thereof described as follows: l

~ -

)

That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seg, of Patents in the office of the County Recorder of the County of San Diego, and being also portions of Section 24, Township 9 .

South, Range 7 West and Section 30, Township 9 South, Range 6

• West, as shown on Record of Survey Map No. 6242, filed June 13, i .

1963, in said office of the County Recorder, described as follows :

Beginning at a 6 inch by 6 inch concrete highvay monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Official Records, in said office of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said concrete highway monument being also the Northwesterly terminus of that certain course shown as having a bearing of

" North 56' 12' 04" West" and a distance of "2123.77 feet" on said Record of Survey Map No. 6242; thence Northwesterly, tangent to said last mentioned course along a curve concave Southwesterly, having a radius of 4940.00 feet, through a central angle of 00* 25' 46", a distance of 37.02 feet to the interdection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing through said point bears North 46' 45' 03" West; thence Southwesterly along said curve through a central angle of 09' 25' 25" a distance of 22.20 feet to a point in a reverse curve conc, ave Northwesterly, having a radius of 135.00 feet; thence Southwesterly along said last mentioned curve through a central angle of 54

• 17 ' 5 7 " , a d is-tance of 127.94 feet to a point, a radial line of'said curve passing through said point bears South Ol' 52' 30" East; thence the following courses and distances: South 33' 00 '

00" West, 45.00 feet; South 57' 00' 00" East, 45.00 feet; South 33* 00' 00" West, 123.00 feet; South 57' 00' 00" East, 1095.00 feet; North 33* 00' 00" East,12.00 feet; South 57' 00 ' 00* East,185.51 feet; North 0 6 " 0 6 ' 31" East , 80.73 feet; and North 13* 18' 05" East, 211.24 feet to a point in the Northeasterly boundary line of the land shown on said i

Record of Survey Map No. 6242; thence along said Northeasterly boundary line, North 56' 12' 04" West, 1121.00 feet to the point of beginning.

ALSO EXCEPTING THEREFROM that portion thereof described as follows:

EZHIBIT "B" . .

57

That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated )

March 28, 1879 and recorded in Book 7, page 18 et seq. of  !

Patents in the office of the County Recorder of the County of San Diego, and being also portions of Section 24, Township 9 South, Range 7 West and Section 30, Township 9 South, Range 6 West, as shown on Record of Survey Map No. 6242, filed June 13, .

1963, in said office of the County Recorder, described as follows:

Beg' inning at a 6 inch by 6 inch concrete highway monument set in the Bortheasterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Official Records, in said office of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said concrete highway monument being also the Northwesterly teczinus of that certain course shown as having a bearing of

" North 56* 12' 04" West" and a distance of "2123.77 feet" on said Record of Survey Map No. 6242; thence Northwesterly, tangent to said last mentioned course along a curve concave Southwesterly, having a radius of 4940.00 feet, through a central angle of 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing through said point bears North 46' 45 ' 03" We st ; thence Southwesterly along said curve through

' a central angle of 09* 25' 25", a distance of 22.20 feet to a point in a reverse curve concave Northwesterly, having a radius of 135.00 feet; thence Southwesterly along said last mentioned curve through a central angle of 54

• 17 ' 5 7" , a d is-tance of 127.94 feet to a point, a radial line of said curve passing through said point bears South Ol* 52' 30" East; thence South 33' 00' 00" West, 45.00 feet; thence South 57*

00 ' 0 0

• East , 45.00 feet; thence South 33* 00' 00" West, 123.00 feet to the TRUE POINT OF BEGINNING of this des-cription; thence the following courses and distances: South 57* 00' 00* East, 1095.00 feet; North 33* 00' 00" Ea st , 12. 00 feet; South 57* 00' 00" East,185.51 feet; South 06* 06' 31" West, 76.25 feet; South 35 ' 3 6 ' 25" East , 208.36 feet; South 33* 00

• 00" West,102.00 feet; North 64* 48' 28" West, 301.80 feet and South 33' 00' 00" Nest, 245.30 feet to a point in the Southwesterly boundary line of the land shown on said Record of Survey Map No. 6242; thence along said South-

• westerly boundary line the following courses and distances:

horth 68* 35' 07" West, 172.49 feet; North 73* 50' 00" West, 301.73 feet; North 65

• 2 4 ' 53" West,169.60 feet; North 57' i 24 ' 41" We st , 14 6. 24 feet ; Nor th 4 9 ' 3 4 ' 15 " We st , 300.24 feet; North 50' 06' 17" West, 300.13 feet and North 52' 00'

~

EKHIBIT "B" -

SE

51" West, 03.62 feet to a point in said Southwesterly boundary line which is South 52' 00' 51" East, 296.33 feet, from the Northwesterly terminus of that certain course shown as having l a be ar ing o f " South 52 ' 0 0 ' 51" Ea s t " and a distance of "299.95 feet"; thence leaving said Southwesterly boundary line North 33

• 00 ' 00" East, 426.00 feet; thence South 5 7 ' 0 0 ' 0 0 " Ea st ,

161.00 feet; thence North 3 3 ' 0 0 ' 0 0 " Ea st , 167.00 feet to the true point of beginning.

• PARCEL 2:

That portion of the Rancho Santa Margarita y Las Flores, des.cribed in Patent from the United States of America, dated March 28,1879, and recorded in Book 7, mage 18 et sec., of Patents in the office of the County Recorder of the County of San Diego, and being also a portion of Section 24, Township 9 i South, Range 7 West , as shown on Record of Survey Map No. 6242, l

l filed June 13, 1963, in said office of the County Recorder, described as follows:

Beginning at a point in that certain course having a

be ar ing o f "So uth 5 2 ' 0 0 ' 51" Eas t" and a distance of "299.95 '

feet" in the Southwesterly boundary line of the land shown on ,

Record of Survey Map No. 6242, filed June 13, 1963 in the office of ~the County Recorder of San Diego County, said point being North 52' 00' 51" West, 03.62 feet from the Southeasterly termi-aus of said certain course; thence North 3 3 ' 0 0 ' 0 0 " Eas t ,

105.00 feet; thence North 57

• 00 ' 00 " We st , 10.00 feet to the  ;

TRUE POINT OF BEGINNING of this description; thence continuing l l North 57' 00' 00" West, 40.00 feet; thence North 33' 00' 00" i East,110.00 feet; thence South 57

• 0 0 ' 0 0 " Ea s t , 40.00 feet i t

and thence South 33* 00' 00" West, 110.00 feet to the true i point of beginning.

PARCEL 3A (Access Road):  !

A strip of land, Forty (40) feet wide, the centerline of l

l which is hereinafter described, lying within the Rancho Santa Margarita y Las Flores, as described in the Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seq., of patents in the office of the County Recorder of said County, and being also a portion of Section 24, Township 9 South, Range 7 West, as per Record of Survey Map No. 6242 filed June 13, 1963 in the office of said County Recorder.

The centerline of said strip of land is described as follows:

. EXEIBIT *B" -

~

in

i I

r Beginning at a 6 inch by 6 inch concrete highway monument, set in the Southwesterly line of U. S. Highway 101, said monu-ment being North 56

• 12 ' 0 4 " We st , 2123.77 feet, measured along i

said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned concrete highway

' monument bears South 02

• 52 ' 15" East , 4207.25 feet from a 1-1/2 inch iron pipe, with brass cap, set for the Northeast corner of Section 24 in Township 9 South, Range 7 West, as shown on said ,

Record of Survey Map, said first above mentioned concrete high-way monument being also at the beginning of a tangent curve concave Southwesterly and having a radius of 4940 feet; thence Northwesterly, along said curve, through an angle of 12* 00' 00*, a distance of 1034.63 feet; thence continuing along said Southwesterly line and tangent to said last mentioned curve, North 68* 12' 04" West, 503.81 feet to the beginning of a tangent curve concave to the Northeast and having a radius of 2060 feet; thence Northwesterly, along said last mentioned curve, through an angle of 04* 54' 28" a distance of 176.47 feet to a point, a radial line of said last mentioned curve t

passing through said last mentioned point bears South 26' 42' 24" West; thence South 33' 0 0 ' 0 0 " We st , 118. 21 fee t to the TRUE POINT OF BEGINNING of this description; thence North 57' 00 ' 0 0" West , 473.57 feet to the beginning of a tangent curve concave Northeasterly and having a radius of 1912.67 feet; thence Northwesterly, along said last mentioned curve, through an angle of 29* 47' 14" a distance of 994.37 feet; thence tangent to said last mentioned curve, North 27* 12 ' 4 6" West ,

65.16 feet to the beginning of a tangent curve concave to the Southeast and having a radius of 129.64 feet; thence North-westerly, Northerly and Easterly, along said last mentioned curve through an angle of 151* 00' 42" a distance of 341.68 feet; thence tangent to said last mentioned curve, South 56*

12' 04" East,152.16 feet, to the beginning of a tangent curve concave to the Southwest and having a radius of 100.00 feet; thence Southeasterly along said last mentioned curve, through an angle of 14* 38' 12", a distance of 25.55 feet; thence tangent to said last mentioned curve, South 41' 3 3 ' 5 2 " Ea st ,

161.32 feet te the beginning of a tangent curve concave to the Northeast and having a radius of 100.00 feet; thence

, Southeasterly, along said last mentioned curve through an angle of 14' 38' 12", a distance of 25.55 feet; thence tangent to said last mentioned curve, South 56* 12' 04" East, 1651.27 feet to the beginning of a tangent curve concave to the North-east and having a radius of 100.00 feet; thence Southeasterly along said last mentioned curve through an angle of 09' 48' 07" a distance of 17.11 feet; thence tangent to said last mentioned curve, South 66* 00' 11" East,153.29 feet to the beginning of a tangsat curve concave Southwesterly and having a radius of 60.00 feet; thence Southeasterly and Southerly alona said last mentioned curve, through an angle of 90* 00' 00", a distance of 94.25 feet to a point hereinafter referred to as Point "A";

EXEIBIT "B" *

-6 ,

40

thence tangent to said last mentioned curve, South 23" 59' 49" West, 33 feet to a point in the Northeasterly line of U. S.

l Highway 101, said last mentioned point being in a curve in said Northeasterly line, said curve being concave Southwesterly and having a radius of 5060 feet, a radial line to said last mentioned curve passing through said last mentioned point bears North 23* 5 9 ' 4 9 " Ea st , said last mentioned point being .

Easterly 194.13 feet measured along said Northeasterly line from.a 6 inch by 6 inch concrete highway monument, said hichway monument bears South 10' 20' 14" West, 3668.46 feet from a

! 1-1/2 inch iron pipe with brass cap, set for the Northeast corner of said Section 24.

The side lines of said strip of land, hereinabove described and designated as Parcel 3A, shall be prolonged or shortened so as to terminate in the Northeasterly line of said U. S. Highway 101.

PARCEL 3B (Access Road):

That portion of the Rancho Santa Margarita y Las Flores, as described in the patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seq.,

of Patents in the office of the County Recorder of said County and being also a portion of Section 24 in Township 9 South, Range 7 West, as shown on the Record of Survey Map No. 6242, filed June 13, 1963 in the office of said County Recorder, described as follows: "

i Beginning at Point "A" hereinabove referred to in the centerline description of the strip of land hereinabove de-scribed and designated as Parcel 3A; thence South 66' 00' 11" East, 20 feet to the beginning of a non-tangent curve concave ,

to the East and having a radius of 40.00 feet; thence Southerly along said curve through an angle of 55' 32' 58" a distance i of 38.78 feet to a point in the Northeasterly line of U. S.

Highway 101, said last mentioned point being in a curve concave to the South and having a radius of 5060 feet, a radial line of said last mentioned curve passing through said last mentioned point bears North 24' 25' 12" East; thence Westerly along said last mentioned curve through an angle of 00* 50' 46" a distance of 74.72 feet to a point, a radial lihe of said last mentioned curve passing through said last mentioned point bears North 23' 34' 26" East, said last mentioned point being also at the beginning of a non-tangent curve concave to the West and having a radius of 40.00 feet; thence Northerly along said last mentioned curve through an angle of 55* 32' 58" a distance of 38.78 feet to a point, a radial line to caid last mentioned curve passing through said i I

last mentioned point bears South 66* 00' 11" East; thence South 66* 00' 11" East, 20 feet to the point of beginning.

EXHIBIT "B" ~

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t EXCEPTING from the land hereinabove described and desig-nated as Parcel 3B that portion thereof lying within the strip of land hereinabove described and designated as Parcel 3A.  :

PARCEL 4 (Spur Track Area): t l

l l A strip of land, One Hundred (100) feet wide, lying

• Porty-seven and one-half (47.5) feet Northeasterly and Fifty-two and one-half (52.5) feet tiouthwesterly of the hereinafter l described reference line, said strip of land lying within the l Rancho Santa Margarita y Las Flores, as described in the  ;

Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seq., of Patents in t

j the office of the County Recorder of said County, and being '

also a portion of Section 24 in Township 9 South, Range 7 West, l as shown on the Record of Survey Mao No. 6242, filed June 13, >

1963 in the office of said County Recorder.

The reference line referred to above is described as follows:

Beginning at a 6 inch by 6 inch concrete highway monument, set in' the Southwesterly line of U. S. Highway 101, said monument being North 56* 12' 04" West, 2123.77 feet, measured along said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned concrete highway montaient bears South 02* 52' 15" East, 4207.25 feet from a 1-1/2 inch iron pipe, with brass cap, set for the Northeast corner of Section 24 in Township 9 South, Range 7 West, as shown on said Record of Survey Map, said first above mentioned concrete highway monument being also at the beginning of a tangent curve concave Southwesterly and having a radius of 4940 feet; thence Northwesterly, along said curve , through an angle of 12* 00' 00", a distance of 1034.63 feet; thence continuing along said Southwesterly line and tangent to said last mentioned curve, North 68* 12' 04* West, 503.81 feet to to the beginning of a tangent curve concave to the Northeast i and having a radius of 2060 feet; thence Northwesteriv, along said last mentioned curve, through an angle of 04* 54' 28" a distance of 176.47 feet to a point, a radial line of said last mentioned curve passing through said last mentioned ooint bears South 26' 42' 24' West; thence South 33' 0 0 ' 4 0" West, 115.71 feet to the TRUE POINT OF BEGINNING of this description; thence North 57' 00' 00" West, 473.57 feet to the beginning of a tangent curve concave Northeasterly and having a radius of 1910.17 feet; ubence Northwesterly along said last mentioned curve, through an angle of 29' 47' 14" a distance of 993.07 feet; thence tangent to said last mentioned curve North 27* 12' 46" West, 456.60 feet to the beginning of a tancent curve concave Southwesterly and having a radius of 573.69 feet; thence Northwesterly along said last mentioned curve through an angle of 20' 00' 00" a distance of 200.26 feet to the -

EXIIBIT "B"

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beginning of a compound curve concave Southwesterly and having a radius of 736.76 feet; thence Northwesterly along said last mentioned curve through an angle of 8' 59' 18" 115.59 feet to a point in the centerline of the 100 foot right of way of The f Atchison, Topeka and Santa Fe Railway Company, said point being North 56* 12' 04" West, 700 feet, measured along said last

' mentioned centerline from its intersection with the centerline of U. S. Highway 101 (140 feet wide) . *

. PARCEL 5 (Exclusion Area):

That portion of the Rancho Santa Margarita y Las Flores, as described in the Pate,nt from the United States af America, dated March 28, 1879, and recorded in Book 7, page 18 et seq.,

of Patents, in the office of the County Recorder of said County and being also portions of Sections 19 and 30 in Township 9 l South, Range 6 West, and of Section 24 in Township 9 South, l Range 7 West, as shown on a Record of Survey Map No. 6242 filed l

June 13, 1963 in the office of said County Recorder described

, as follows:

[

Beginning at the Southwest corner of the 83.63 Acre parcel of land, shown on said Map filed on June 13, 1963 as Map No.

6242 of Records of Survey in the office of said County Recorder; thence North 33' 00' 00" East, along the Northwesterly boundary

line of said 83.63 Acre parcel, a distance of 516.11 feet to the beginning of a tangent curve concave Southerly and having a radius of 1967.50 feet; thence Northerly and Easterly along said curve , through an angle of 90* , a distance of 3090.54 feet; thence Douth 57* 0 0 ' 0 0" East, 565.00 feet to the begin-ning of a tangent curve concave Westerly and having a radius of 1967.50 feet; thence Easterly and Southerly alonc said last mentioned curve, through an angle of 90* , a distance of 3090.54 feet to a point in the Southeasterly boundary line of said 83.63 Acre parcel; thence along said Southeasterly boundary line and tangent to said last mentioned curve' South 33' 00' 00" West, 235.17 feet to the Southeast corner of said 83.63 Acre parcel; thence Northwesterly along the various courses and distances in the Southwesterly boundary line of said

, 83.63 Acre parcel to the point of beginning.

EXCEPTING THEREFROM that omrtion thereof lying South-westerly of the Southwesterly line of U. S. Highway 101.

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EIHIBIT *B"

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i SWITCHYARD AREA  ;

That certain real property in the County of San Diego, State of California, described as follows:

That portion of the Rancho Santa Margarita y Las Flores, .

described in Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seq. of Patents in the office of the County Recorder of the County of San Diego, and being also portions of Section 24, Township 9 South, Range 7 West and Section 30, Township 9 South, Range 6 West, as shown on Record of Survey Map No. 6242, filed June 13, l

1963, in said office of the County Recorder, described as follows:

Beginning at a 6 inch by 6 inch concrete highway monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement from the United States of l America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Official Records, in said office of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said concrete highway monument being also the Northwesterly terminus of that certain course shown as having a bearing of L

' North 56* 12' 04" West" and a distance of "2123.77 feet" on said Record of Survey Map Ao. 6242; thence Northwesterly tangent to said last mentioned course along a curve conca,ve Southwesterly, having a radius of 4940.00 feet, through a central angle of 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing through said point bears North 46' 45' 03* West; thence Southwesterly along said curve through a central angle of 09' 25' 25" a distance of 22.20 feet to a point in a reverse curve conc, ave Northwesterly, having a

' radius of 135.00 feet; thence Southwesterly along said last

' mentioned curve through a central angle of 54

• 17 ' 5 7", a dis-tance of 127.94 feet to a point, a radial line of said curve passing through said point bears South Ol* 52' 30" East; thence the following courses and distances: South 33' 00' 00" West, 45.00 feet; South 57' 00' 00" East, 45.00 feet; I

South 33' 00 ' 00" West,123.00 feet; South 57' 00 ' 00" East, 1095.00 feet; North 33' 00' 00" East,12.00 feet; South 57*

00 ' 00" East , 185. 51 feet ; Nor th 0 6

• 0 6 ' 31" East, 80.73 feet; and North 13

• 18 ' 0 5" East , 211.24 feet to a point in the Northeasterly boundary line of the land shown on said Record ofline, boundary Survey Map No. 6242; thence along said Northeasterly North 56* 12' 04" West, 1121.00 feet to the point of beginning.

EXEIBIT "C' -

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UNIT 1 ARIA .

l PARCEL 1:

Tha t c er ta in r eal pr ope r ty in the Co un ty o f San Diego ,

State of California, described as follows:

That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated Maren 28, 1879, and recorded in Book 7, page IS et seq., of Pa 2nts in the o~ffice of the County Recorder of the County of San Diego, and being also a portion of Section 24, Townsnip 9 So uth , Range 7 West , as snown on Record of Survey Map No. 6242, filed June 13, 1963, in said office of the County Recorder, described as follows:

l - Beginning at a point in the Northwesterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and '

Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887, of Official Records in said office of the County Recorder, s4.id land being also shown l on said Record of Survey Map No. 6242, said point being i South 33

• 0 0 ' 0 0 " We st , 143.21 feet, measured along said Northwesterly boundary line, from the Northwesterly corner l

thereof; thence the following courses and distances: South 57' 00' 00" East, 102.80 feet; South 68* 59' 50* East, 434.90 feet; South 07' 00' 56" East,167.65 feet; South 57* 00' 00" East, 208.00 feet; North 33* 00' 00" East, 22.50 feet; North 73

• 5 7 ' 20" East , 35.09 feet; South 57' 00 ' 00" East, 121.00 feet; south 12' 00' 00" East, 80.61 feet; South 57' 00' 00" Sast,145.00 feet; South 12

• 0 0 ' 0 0" East, 79.20 feet; South i 57' 00' 00" East, 75.73 feet; South 04* 55' 29" West, 60.07 l feet; South 57' 00 ' 00

• East,13 4. 0 0 feet and South 33' 00 '

00* West, 375. 00 f ee t to a poin t i- e Soutswesterly coundary t

line of said land, said point Oc ' .g No r th 5 2 ' 0 0 ' 51" We st ,

03.62 feet, measured along said southwesterly > boundary line, from the Southeasterly terminus of that certain course shown as having a bearing of " South 52 ' 00 ' 51" Ea s t" and a dis-tance of "299.95 feet" as shown on Record of Survey Map No.

6242; thence along said Southwesterly boundary line the follow-ing courses and distances: No r th 52 ' 0 0 ' 51" We st , 296.33 l feet; Nor th 58' 35' 26" West, 289.39 feet; Nor th 65

• 5 6 ' 29 "

l West, 300.23 feet; North 68* 16' 51" West, 301.02 feet and No r th 61

• 30 ' 25" We st , 308.74 feet to said Northwesterly l boundary line of the land shown on Record of Survey Map No.

6242; thence along said Northwesterly boundary line North 33' 00' 00' East, 642.11 feet to .the Point of Beginning .

EXEIBIT "D" Gi

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EXCEPTING THEREFROM that certain rectangular parcel of land, described as follows:

Beginning at a point in that certain course havinc a bearing of " South feet" in the Southwesterly52' 00' 51" East" and a distance of "299.95 boundary line of the land shown o'n Record of Survey Map No. 6242, filed June 13, 1963 in the office

• of the County Recorder of San Diego County, said point being North 52' 00' 51" West, 03.62 feet from the Southeasterly termi-nus of said certain course; thence North 33' 00' 00" East, 135.00 feet; thence North 57' 00 ' 00" West,10.00 feet to the TRUE Nor th 57POINT

' 0 0 ' OF 00 " BEGINNING We st , 40.00 of this description; thence continuing i

feet; thence North 33* 00' 00" l

East, 110.00 feet; thence South 57* 00' 00* East, 40.00 feet and thence South 33* 00 ' 00" West,110.00 feet to the true point of beginning. ,

j PARCEL 2 (Off-Shore Land):

A strip of tide and submerged land, one-hundred (100) l t feet wide, in the County of San Diego, State of California, the center line of which is described as follows:

Beginning at a point in that certain course in the i

Southwesterly boundary of the 83.63 Acre parcel of land l

shown on Record of Survey Map filed on June 13, 1963, as Map No. 6242 of Records of Survey in the office of County l

I.

Recorder of said County, said certain course is shown on said map as having a, bearing of "S 52' 00' 51" E" and a length' of "299.95 feet", said point being South 52 ' 00 ' 51" Ea s t 18. 71 feet from thence the Northwesterly terminus of said certain course; South 33' 00' 00" West, 3,310.11 feet, containing 7.599 acres more or less.

The side lines of said strio of land shall be shortened at the Northeasterly terminus thereof so as to terminate in the Southwesterly boundary line of said 83.63 Acre parcel of land, shown on said Record of Survey Map.

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EXHIBIT "D" 66

UNITS 2 & 3 AREA l PARCEL 1:

l That certain real property in t'e County of San Diego, State of California, described as follows:

That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the Unit ed States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seg. of Patents in the office of the County Recorder of the County of San Diego, and being also portions of Section 24, Township 9 South, Range 7 West and Section 30, Township 9 South, Range 6 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, in said office of the County Recorder, described as follows:

Beginning at a 6 inch by 6 inch concrete highway monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May .12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Official Records, in said office of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said concrete highway monument being also the Northwesterly terminus of that certain course shown as having s bearing of

" North 56* 12' 04" West" and a distance of "2123.77 feet" on said Record of Survey Map No. 6242; thence Northwesterly, l tangent to said last mentioned course along a curve concave i Southwesterly, having a radius of 4940.00 feet, through a I

central angle of 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing through said point bears North 46' 45' 03" Wests thence Southwesterly along said curve through

' central angle of 09' 25' 25", a distance of 22.20 feet to a point in a reverse curve concave Northwesterly, having a radius of 135.00 feetr thence Southwesterly along said last mentioned curve through a central angle of 54

• 17 ' 5 7" , a d is-tance of 127.94 feet to a point, a radial line of said curve passing through said point bears South Ol* 52' 30" East; thence South 33* 00' 00" West, 45.00 feet; thence South 57*

00' 00" East, 45.00 feet; thence South 33' 00' 00" West, 123.00 feet to the TRUE POINT OF BEGINNING of this des-cription; thence the following courses and distances: South 57

• 00 ' 00* East , 1095. 00 feetr North 33* 00' 00" East, 12.00 feet; South 57' 00' 00" East,185.51 feetr South 06* 06' 31" West, 76.25 feet; South 35' 36' 25" East, 208.36 feet; i South 33* 00' 00" West,102.00 feet; North 64* 48' 28" West, EZHIBIT "E" -

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301.80 feet and South 33* 00' 00" West, 245.30 feet to a point in the Southwesterly boundary line of the land shown on said Record of Survey Map No. 6242; thence along said South-westerly boundary line the following courses and distances:

North 68

• 3 5 ' 0 7" West,172.49 feet; North 73

• 5 0 ' 00" West, 301.73 feet; North 65* 24' 53" West, 169.60 feet; North 57' 24' 41" West, 146.24 feet; North 49' 34' 15" West, 300.24 ,

feet; North 5 0 ' 0 6 ' 17 " We st , 300.13 feet and North 52' 00' 51' West, 03.62 feet to a point in said Southwesterly boundary line which is South 5 2 ' 0 0 ' 51" Ea st , 296.33 feet, from the Northwesterly terminus of that certain course shown as having a bearing of " South 52' 00' 51" East" and a dic.snee of "299.95 feet"; thence leaving said Southwesterly boundary line North 33* 00' 00" East, 426.00 feet; thence South 57' 00' 00* East, 161.00 feet; thence North 33* 00' 00" East,167.00 feet to the true point of beginning.

I l FARCEL 2 (Off-Shore Land):

s Those certain tide and submerged lands in the f.ounty of San Diego, State of California, described as follows:

Beginning at the Easterly terminus of that certain course in the Southwesterly boundary line of the 83.63 Acre parcel of land shown on Record of Survey Man filed on June 13, 1963 as Map

{ No. 6242 of Record of Surveys, in the office of the County Recorder af said County, said certain course is shown on said map as having a bearing of " South 49' 34' 15" East and a length of 300.24 feet"; thence South 57' 2 4 ' 41' East , 8.64 feet to the TRUE POINT OF BEGINNING of this description; thence the following courses and distances: South 33' 00' 00" West, 56.61 feet; South 39' 44 ' 55" West, 2347.44 feet; North 57' 00' 00" West, 58.14 feet; South 33' 00' 00" West, 140.00 feet; South 57' 00' 00" Ea st , 50.00 feet; South 33' 00' 00" West, 681.39 feet; North 57' 00' 00" West, 20.00 feet; South 33*

00' 00" West, 140.00 feet; South 57* 00' 00" East, 20.00 feet; South 33* 00' 00" West, 5029.50 feet; South 57' 0 0 ' 0 0" East ,

40.00 feet; North 33* 00' 00" Eact, 5029.50 feet; South 57*

0 0 ' 0 0 " Ea st , 80.00 feet; North 33* 00' 00" East,140.00 feet; North 57' 00' 00" West, 50.00 feet; North 33* 00' 00" East, 681.39 feet; South 57* 0 0 ' 0 0" East , 20.00 feet; North 33*

00 ' 00" East,140.00 feet; North 57' 00 ' 00" West,11.37 feet; North 39' 4 4 ' 5 5" East, 543.88 feet; South 50

• 15 ' 0 5" East ,

70.00 feet; North 39' 44' 55" East, 140.00 feet; North 50' 15' 05" West, 45.00 feet; North 39' 44' 53" East, 1660.88 feet; South 61* 03' 16" East, 21.05 feet; South 26* 17' 55" i West, 2343.08 feet; North 57' 00' 00" West, 11.43 feet; South l 33

• 0 0 ' 00 " We st , 140.00 feet; South 57' 00' 00" East, 20.00 feet; South 33' 00' 00" West, 681.38 feet; North 57' 00' 00" West, 50.00 feet; South 33' 00' 00" West, 140.00 feet; South 57' 00 ' 00" East, 80.00 feet; South 33* C J' 00" West, 2699.50 EXHIBIT "E" U

West, 58.09 feetr North 2 6

• 17 ' 5 5 " Ea st , 2347.21 feet and Nor th 3 3

• 0 0 ' 00" East , 64.97 feet to a' point in the South-westerly boundary line of the 83.63 Acre parcel of land shown on said Record of Survey Map No. 6242; thence along said {

Southwesterly line, the following two courses: North 65*  !

24' 53" West, 48.94 feet and North 57* 24' 41" West, 137.60 feet to the true point of beginning. .

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EXHIBIT "E" '

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SAN ONOFRE UNITS 2 AND 3 I CONsrauiCTION AGR m l AND AMENDMENT NO. 1 SAN ONOFRE UNITS 2 AND 3 I CONSTRUCTION AG. N  ;

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8 SAN ONOFRE UNITS 2 AND 3 ,

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8 CONSTRUCTION AGREEMENT l .9 t

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l 11 e BETWEEN  ;

12 13 14 i

15 le SAN DIEGO GAS & ELECTRIC COMPANY -

17 18 AND 19 90 SOUTHERN CALIFORNIA EDISON COMPANY 21 26 25 SS

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. . - _ _ . _ _ . . . - . . - _ _ = -- --.- - . - - - -

3 4

5 8 SAN ONOFRE UNITS 2 AND 3 '

7 8 CONSTRUCTION AGP_*.TMENT

.9 10 11 BEThTEN 12 13 .

l 14 15 SAN DIEGO GAS & ELEC"RIC COMPANY 17

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• AND IJ 20 Sou urxN CALIFORNIA EDISCN COMPANY 21 22 ,

23 24 25 26 S

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l 2 SAN ONOFRE UNITS 2 AND 3 I CONSTRUCTION AGP N 9;T 5

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6 7 SECTION PAGE 3 1 PARTIES 1

.g 2 RECITALS 1 10 3 AGREEMENT 2 11 4 DEFINITIONS 2 12 4.1 COMPOSITE BUDGET 2 13 4.2 CONSTRUCTION COSTS 3 14 4.3 COORDINATING REPRESENTATIVES 3 l 15 4.4 DATE OF FIRM OPERATION 3 1

16 4.5 DATE OF INITIAL FULL POWER 3 OPERATION 17 4.6 DATE OF INITIAL OPERATION 3 l 18 4.7 EDISON SWITCHYARD 3*

l 4.8 ENGINEER-CONSTRUCTOR 4 4.9 ENGINEERING REPRESENTATIVES 4 4.10 FINAL COMPLETION REPORT 4 4.11 FISCAL REPRESENTATIVES 4 4.12 FPC ACCOUNTS 4 4.13 INSURANCM RMPRESENTATTVES 5 g 4.14 NUCLEAR INFORMATION CENTER 5

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SECTION PAGE 2 l g 4.15 OPERATING AGENT 5 4 4.16 PARTICIPATION SHARE 5 l

5 4.17 PLANT SITE 5 6 4.18 ' PROJECT AGRLT.MENTS 5 7 4.19 PROJECT DIRECTOR 6

3 4.20 PROJECT INSURANCE 6 9 4.21 PROJECT WORK 6 10 4.22 QUALITY COh"fROL 6 11 4.23 QUALITY CONTROL REPRESENTATIVES 7 i

12 4.24 REQUEST FOR FUNDS 7 13 4.25 SAN DIEGO SWITCETARD 7 14 4.26 SAN ONOFRE NUCLEAR GENERATING 7 STATION 15 4.27 SAN ONOFRE OWNERSHIP AGREEMENT 8 le 4.28 SITE A 8 4.29 START-UP PERIOD 8 4.30 UNIT 1 8 4.31 UNIT 2 8

, 4.32 UNIT 3 9 l 21 4.33 WILLFUL ACTION 9 g 5 PROJECT WORK 11 6 COMSTRUCTION COSTS 16 7 ADMINISTRATION 26 25 8 PROJECT INSURANCE 31 28 71

__ _ ____.___...4..

1 SECTION PAGE 9 LIABILITY 36 3

10 AUTHORIZATIONS AND APPROVALS 40 4

11 RELATIONSHIP OF PARTIES 43 ,,

12 ARBITRATION 44 8

13 PAYMENT OF '?JWES 47 i T

14 START-UP 48 8

15 NOTICES 48 9 l 16 UNCONTROLLABLE FORCES 49 l 10 17 TERMINATION 49 11 i 18 ADDITIONAL AGREEMENTS AND CONSENTS 50 is 19 OTHER AGREEMENTS 51 13 20 COMPLETION OF PROJECT WORK 51 21 TERM 52 l 18 17 18 19 m .

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I 1, SAN ONOFRE UNITS 2 AND 3 3 CONSTRUC" ION AGP M 7 l -

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5 1. PARTIES: This Agreement is entered into as of the g # day of 2T e <1 , 1973, by and between 7 SAN DIEGO GAS & ELECTRIC MPANY, a California corporation 8 (" San Diego") and SOUTHERN CALIFORNIA EDISON COMPA!W, 9 a California corporation (" Edison"), individually called 10 " Company" and collectively called "Cor::panies".

11 2. RECITALS: This Agreement is made with reference 12 to the following facts, among others:

1 i 13 2.1 The Companies entered into the San Onofre

! 14 Ownership Agreement, dated October 5, 1967, in connection 15 with the San .Onofre Nuclear Generating Station (hereinafter 18 called " San Onofre"), and Unit 1 in particular.

17 2.2 The Companies entered into a letter agreement,

, 18 dated January 22, 1970, pertaining to the intent of the -

l 19 c = p=nies with regard to the ownership, construction, opera-

1. tion, maintenance and use of Units 2 and 3 at San onofre. As 21 provided in said letter agreement, the Companies also entered 22 into supplemental agreements concerning liability and E

insurance, dated August 21, 1970, and project costs prior to 84 l

executiot. of this Agreement, dated September 9, 1970, both in l connection with Units 2 and 3.

88 2.3 The Companics entered into a letter agreement, 7f

1 y dated December 22, 1970, that provides for the retire =ent 2 f the existing switchyard facilities and the construction '

3 f new switchyard facilities at Site A.

4 2.4 The Companies entered into an agreement, dated 5 June 30, 1970, amended September 30, 1970 and October 2, 1972, 6 with the English Electric Company, Limited, for purchase of two y turbine-generators for Units 2 and 3.

8 2.5 The companies intend to enter into an i

g agreement with Combustion Engineering, Inc., for purchase of 10 the nuclear steam supply systems, including fuel fabrication 11 for the first fuel loading, for Units 2 and 3.

12 2.6 The companies intend to enter into agreements is with others for the fuel supply and the fuel reprocessing i 14 for all units at the San onofre Nuclear Generating Station.

15 2.7 The Companies intend to enter into an la agreement with others for engineer-constructor services for 17 Vnits 2 and 3.

18 2.8 Edison and San Diego desire to provide in this 19 Agreement for their respective rights and obligations with 20 respect to the construction of Units 2 and 3.

21 3. AGREEMENT: The Companies agree as follows:

22 4. DEFINITIONS: When used herein, the following 23 terms shall have the following meanings:

l 24 4.1 Composite Budget: The budget described in

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25 Section 6.5 hereof that the Companies jointly prepare to 26 project the Construction Costs.

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1 4.2 construction costs: Those costs described in i 2 Section 6.1 hereof incurred by the Companies in the perfor-3 mance of Project Work.

4 4.3 Coordinating Representatives: The representa-5 tives established pursuant to Section 7.1.1 hereof.

6 4.4 Date of Firm Operation: The date, in each case 7 for Unit 2 and Unit 3, on which that unit is formally released 8 by the Prcject Director to the system dispatchers for opera-9 tion as a reliable source of generation and can be reasonably 10 expected to operate continuously at its rated capacity.

11 4.5 Date of Initial Full Power Operation: The 12 date, in each case for Unit 2 and Unit 3, on which that unit 13 shall have first achieved two .iadred (200) continuous hours 14 of operation at full power.

15 4.6 Date of Initial operation: The date, in each 16 case for Unit 2 and Unit 3, on which that unit's generator is 17 first synchronized to each company's electric system and 18 generates power.

19 4.7 Edison Switchyard: The 220-kV switchrack and 20 related facilities at San onofre constructed for Edison's E exclusive use, including the 220-kV bus sections to which 22 '

l Edison's transmission lines are connected, but not including E the power circuit breakers, transformer side disconnect 24 switches, conductors, and dead-end assemblies associated with the main transformer leads and reserve auxiliary transformer leads or any environmental radiation monitoring equipment 77

l y, installed therein. In addition, the following ite=s located 2 in the Unit 1 control-administration building are considered 3 to be part of the Edison Switchyard: '

4 4.7.1 Controls, indicating lights and  ;

i 5 instruments associated with Edison's l 6 220-kV switchrack facilities.

y 4.7.2 Meters and devices for interconnection 8 metering and Edison's associated i g telemetering equipment.

l 10 4.8 Engineer-constructor: A corporation which 11 shall perform major engineering and cons cuetion portions 12 of the Project Work under a separate contract with the 13 Companies. .

14 4.9 Engineering Reprocentatives: The represen-15 tatives established pursuant to Sec" ion 7.1.2 hereof.

18 4.10 Final Completion Report: A complete 17 summary of the Construction Costs incurred in the performance 18 of the Project Work and each Company's portion of said 19 Construction Cests.

20 4.11 Fiscal Representatives: The representatives 21 established pursuant to Section 7.1.3 hereof.

22 4.12 FPC Accounts: The Federal Power Commission's 23 Uniform system of Accounts prescribed for Public Utilities 24 and Licensees (class A and Class B), in effect on

~

1. January 1, 1970, as amended. Reference in this. Agreement to 26 any specific FPC account number shall mean the FPC account 7?

1 number in effect as of the effective date of this Agreement, 2 or any successor FPC account nu=ber.

i 3 4.13 Insurance Representatives: The represen-4 tatives established pursuant to Section 7.1.4 hereof.

5 4.14 Nuclear Information Center: The structures 8 and associated facilities that will be constructed or re-7 located at the Plant Site, for the purpose of educating a visitors about nuclear power generation and its effect on j g the environment.

10 4.15 ogerating Acent: Edison, who, pursuant to 11 the January 22, 1970 letter agrement between the companies 12 referred to in Section 2.2 hereof, is designated the ccmpany i

13 having responsibility for the operation and maintenance 14 of Unit 2 and Unit 3. i 15 4.16 Participation Share: The respective undivided 18 percentage ownership interest of each company in Units 2 and 17 3 which is eighty percent (80%) for Edison and twenty percent 18 (20%) for San Diego.

19 4.17 Plant Site: An araa of land used for the 20 major portion of San Onofre described in an easement granted 21 for such purpose by the United States to the Comapnies on 22 May 12, 1964 and recorded in the Official Racords, Office 33 of the County Recorder of San Diego County, in Series 5, 24 Book 1964, Page No. 85887.

SS 4.18 Project Aereements: Those agreements which 28 have been executed, or will be executed during the term of 99 I

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. l 1 this Agreement, by San Diego and Edison, between themselves, 2 or jointly with third parties, which relate to the construction 3 of Units 2 and 3.

4 4.19 Project Director: Edison, who, as agent for 5 San Diego and principal on its own behalf, is designated the **

4 l

6 company having the responsibility for the performance and i

7 completion of the Project Work.

8 4.20 Project Insurance: Policies of insurance 9 relating to the Project Work to be secured and maintained as 10 provided in Section 8 hereof.

11 4.21 Project Work: All engineering, design, 12 construction, contract preparation, purchasing, supervision, 13 expediting, inspection, accounting, testing, start-up, and 14 regulatory licensing of and for Units 2 and 3 and other 15 related facilities (but not the, switchyard facilities at is Site A, the Edison Switchyard and the San Diego Switchyard) 17 as such work is more particularly described in Section 5 18 hereof.

• 19 4.22 Quality control: All those planned and l 20 systematic actions necessary or approtpriate to provide, 21 in accordance with 10 C.F.R. Part 50. Appendix B, as it may 22 be amended from time to time, adequate assurance to the 23 companies that the construction and operation of Units 2 and 3 l ,

M will not pose an unduo risk to the health and safety of the 25 public, and that Units 2 and 3 will provide continuous and 88 reliable generation of electric power.

TO

l l

1 4.23 Quality control Reeresentatives: The repre-2 sentatives established pursuant to Section 7.1.5 hereof.

3 4.24 Recuest for Funds: The request of the Project 4 Director pursuant to Section 6.7 hereof for funds required 5 from San Diego for its portion of construction Costs.

6 4.2S San Diego Switchyard: The 220-kV switchrack i 7 and related facilities constructed at San onofre for San 8 Diego's exclusive use, including the 220-kV bus sections to 9 which San Diego's transmission lines are connected, but not 10 including the power circuit breakers, transformer side dis-11 connect switches, conductors, and dead-end assemblies 12 associated with the main transformer leads and reservs 13 auxiliary transformer leads or any environmental radiation 14 monitoring equipment installad therein.

15 4.26 San Onofre Nuclear Generating Station (" San I

16 t

onofre"): The entire nuclear generating facility located 17 on a site of approximately 90 acres in the northwest corner of 18 the Marine Corps Base, Camp Pendleton, California, consisting

' 18 of the Plant Site, the Access Road Area, the Spur Track E

Area, the Off-Shore Land, any Subsequent Acquisitions, Unit 1, Unit 2, Unit 3, the Nuclear Information Center, the Edison 22 Switchyard, the San Diego Switchyard, and any Additional E

Generating Units subsequently constructed or inatalled, as 24 l such terms are defined in the San Onofre ownership Agreement 25 or this Agreement.

//

p l

1 4.27 San onofre Ownership Acreement: The 2 agreement the Cc=panies entered into on October 5, 1967, 3 which provides for the ownership of the San Onofre Nuclear l

4 Generating Station.

5 4.28 Site A: The area of land at San onofre 6 on which Edison and San Diego have constructed new

{ 7 switchyard facilities for use during a portion of the 8 construction period of Units 2 and 3.

p 4.29 Start-Up Period: The period, for each 10 unit, commencing on the date when the auxiliary bus of

, 11 each unit is first energized for testing, and terminating I

i 12 on the Date of Firm Operation of such unit, during which l

13 any necessary alterations and adjustments shall be i

14 made to provide for said unit's safe and dependable operation ~.

15 4.30 Unit 1: The first nuclear generating 16 unit at San onofre, consisting of a nuclear steam supply 17 system, a turbine-generator designed to generate approximately

(

19 430 megawatts (net) of elsetric power, and all related l

l 19 equipment and facilities which are necessary for the safe 20 and efficient generation of alectrical energy.

E 4.31 Cnit 2: The second nuclear generating 22 unit at San Onofre, consisting of a nuclear steam 23 supply system, a turbine-generator designed to generate 24 approximately 1,140 megawatts (net) of electric power,

1. and all related equipment and facilitics which are necessary 26 for the safe and efficient generation of c1ccerical energy, g

l l

l l

1 including that equipment neceSSary to connect Unit 2 2 with those facilities existing as part of Unit 1 and those 3 facilities that will be part of Unit 3, installed on 4 the Plant Site, but excluding thosie co= mon facilities

[

installed along with Unit 1 or Unit 3. **

5  :

6 4.32 Unit 3: The third nuclear generating ,

7 unit at San onofre, consisting of a nuclear steam supply '

8 system, a turbine-generator designed to generare approximately I

g 1,140 megawatts (net) of electric power, and all related 10 equipment and facilities which are necessary for the safe 11 and efficient generation of electrical energy, including 12 that equipment necessary to connect Unit 3 with those facilities 13 existing as part of Unit 1 and those facilities that will 14 be part of Unit 2, installed on the Plant Site, but 15 excluding those common facilities installed along with 16 Unit 1 or Unit 2.

17 4.33 Willful Action: Action taken or not taken by 18 a company at the direction of its directors, officers or 19 employees having management or administrative responsibility 20 affecting its performance under any of the Project Agreements, 21 which action:

22 4.33.1 is knowingly or intentionally taken or 23 failed to be taken with conscious 24 indifference to the consequences there-25 of, or with intent that injury or 26 l damage would result or would probably 9

1

1 result therefrom; 2 4.33.2 has been date.-Aed by final arbitra-3 tion award or final judgment or judic-4 ial decree to be a material default 5 under any of the Project Agreements and 6 which occurs or continues beyond the y time specified in such arbitration 8 award or judgment or judicial decree g for curing such default, or, if no time lo to cure is specified therein, occurs or 11 continues thereafter beyond a reason-12 able time to cure such default:

13 4.33.3 is knowingly or intentionally taken or 14 failed to be taken with the knowledge

~

15 that such action taken or failed to be 16 taken is a material default under any

~

17 of the Project Agreements.

18 Willful Action does not include any act or 19 failure to act which is merely involuntary, accidental

1. or negligent. As used in this Section 4.33, the phrase 21

" employees having management or administrative responsibility" 22 refers to employees of a company who are responsible for 23 one or more of the executive or administrative functions.of 24 planning, organizing, coordinating, directing, controlling E

and supervising such Company's performance under any of 26 the Project Agreements.

-10~ fJ

1 5. PROJECT WORK: The Project Work shall be performed 2 and completed as follows:

3 5.1 Edison shall be the Project Director.

4 5.2 San Diego hereby appoints Edison as its agent, 5 and Edison hereby undertakes as San Diego's agent and as 6 principal on its own behalf, the responsibility to perform i

7 and complete the Project Work in accordance with the terms 5 and conditions set forth herein, g 5.3 As part of such responsibility and subject to 10 the terms and conditions set forth herein, the Project Director 11 shall, in regard to the Project Wer'k:

12 5.3.1 Contract for, furnish and obtain is services and studies.

14 5.3.2 Purchase and procure equipment, 15 apparatus, machinery, materials, tools, le and supplies.

17 5.3.3 Secure and maintain Project Insurance.

18 5.3.4 Investigate, adjust and settle claims 19 .

against the Companies for which pay-20 ment is not made by Project Insurance, 21 and claims of the Companies against 22 any insurer or third party for losses 83 and damages. The Project Director shal.1 24 obtain the prior consent of the 1

25 Coordinating Representatives before 26 agreeing to a settlement of any claim l

1 N

~ ' ~ ' ' ' ~ ' ' '~'

l I

y or combination of claims exceeding '

2 $100,000 arising out of the same trans-3 action or event and not covered by 4 Project Insurance.

5 5.3.5 Assist any insurer in the investiga- **

6 tion, adjustment and settlement of any y loss or claim covered by Project l 8 Insurance, g . 5.3.6 Determine what contractors, if any, 10 shall be required to furnish insurance 11 as provided in Section 8.1 hereof, and 12 faithful performance and payment bonds.

13 5.3.7 Execute, administer and enforce con-14 tracts in the name of Edison, acting as 15 principal on its own behalf and as 16 agent for San Diego, for the Project 17 Work; provided, that agreements with

! 18 third parties concerning the nuclear 19 steam supply systems, fuel supply, l

20 fuel reprocessing, turbine generators 21 and the Engineer-constructor will be l 22 executed and enforced by both Edison .

i

! 23 and San Diego.

24 5.3.8 Comply with laws and regulations 25 applicable to the Project Work, includ-I. 26 ing the provisions of any workmen's

1 compensEtion acts.

2 5.3.9 Keep and maintain records of monies re- l 3 ceived and expanded, obligations in- '

4 curred, credits accrued, estimates of l 5 Construction Costs (excluding ad valorem l 6 taxes and the allowance for funds used l

y during construction), and contracts 8 entered into in the performance of g Project Work.

10 5.3.10 Expand funds advanced by San Diego to l 11 the Project Director only for Construc-12 tion Costs and in accordance with the 13 terms and conditions of this Agreement.

-- 14 5.3.11 Keep Units 2 and 3 free from liens ex-15 -

capt for liens for taxes or assessments le not yet due or liens incidental to 17 construction; provided, that the Project 18 Director may in good falta contest the 19 lawfulness or validity of any lien if 20 such lien cannot be fore-closed during 21 the pendency of the contest.

22 5.3.12 Keep San Diego, through its Engineering 23 Representativo, fully and promptly 84 informed as to significant matters l

N involving the Project Work.

SS 5.3.13 obtain or cause to be obtained, in

! accordance with Section 10 hereof, 1

I 2 e nstruction permits, temporary 1

3 access rights and other licences i

4 and approvals required to perform 5 and complete Project Work.

6 5.3.14 Construct or cause to be constructed y Units 2 and 3 with the objective:

8 5.3.14.1 for Unit 2, of having a 3 Date of Firm Operation 10 by October 1, 1979; 11 and l

12 5.3.14.2 for Unit 3, of having~a 13 . Date of Firm Operation by 14 October 1, 1980.

j' 15 The Project Director shall use its 18 , best efforts in the performance of 17 its responsibilities hereunder to 18 complete the Project Work as 19 scheduled above and shall promptly 20 inform the Coordinating Representatives 21 of any factors affecting such 22 schedules.

25 5.3.15 Subsequent to the Date of Initial M Full Power Operation of each Unit, 25 make final equipment modifications

1. necessary to meet the specified

1 1 requirements thereof, and conduct l

l 2 tests to verify that specified 3 efficiencies of major equipment 4 items have been achieved.

5 5.3.16 Construct or cause to be constructed 6 a Nuclear Information Center on y the Plant Site with convenient access 8 by the public, parking facilities g and landscaping.

10 5.4 Each company shall provide the other with 11 any available information pertaining to the Project Work 12 that will assist the other Company in responding to a 15 request for such information by any regulatory agency.

14 The Companies shall keep each other informed on such 15 responses to regulatory agencies.

16

• 5.5 The Project Director shall prepara and 17 provide San Diego with a summary of Construction Costs, 18 in a form which will allow San Diego to classify its 19 portion of such Construction Costs to appropriate FPC 20 Accounts, as soon as practicable after the Date of Firm.

21 Operation of Unit 2 and Unit 3.

22 5.6 The Project Director shall prepara and provide 25 San Diego with a Final Completion Report within one year after M the completion of Project Work.

" 5.7 The Project Director shall use the FPC Accounts 26 in preparing the summary of Construction Costs and the Final D

1 l

i

)

1 Completion Report and any supplements thereto. i 2 6. CONSTRUCTION COSTS:  ;

l 3 6.1 Construction Costs shall consist of payments 4 made and obligations incurred (other than obligations for the 5 allowance for funds used during construction and ad valorem 8 taxes) for the account of Project Work. Construction Costs y shall include, but shall not be limited to, all payments made 8 and obligations incurred in connection with the following:

g 6.1.1 All cost of labor, services and studies lo authorized by the Project Director.

11 6.1.2 Payroll of the Companies' employees who 12 Perform Project Work, including 13 customary labor loading charges applic-14 able thereto such as Social Security 15 Tax, unemployment taxes and time-off 18 allowances.

17 6.1.3 All components of the costs of con-18

• struction including overhead costs 19 associated with construction, temporary 20 facilities, land and land rights, 21 structures and improvements, and 22 equipment for Units 2 and 3, as set 25 forth in the FPC Accounts.

24 6.1.4 All costs, including those of consul-25 tants and attorneys retained for the 26 purpose of the Project Work and San

y San Diego's general counsel (but 2 excluding those direct costs of 3 Edison's attorneys whose costs and l 4 expenses are included in administrative 5 and general expenses provided for in **

6 Secti n 6.1.8 hereof, and those costs y of San Diego's general counsel involved g in pre-licensing anti-trust review

, activities), incurred by the Companies 10 in regard to:

11 6.1.4.1 Land rights (excluding 12 transmission land rights).

13 6.1.4.2 Procurement of the nuclear 14 steam supply systems (in- '

15 cluding the initial fuel is loadings), turbine-genera-17 tors and services of the 18 Engineer-Constructor, i

19 6.1.4.3 Preparation of applications

! 20 or reports required to 21 obtain necessary regulatory 23 approvals for Units 2 and 3, 23 6.1. 4 . 4 Preparation of the agree-24 ments relating to Project 25 Work (excluding this Agree-28 ment, the letter and supple->

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i I

1 mental agreements referred l 2 to in Sections 2.2 and 2.3 3 hereof, agreements relating  ;

4 'to the ownership, operation 5

and maintenance and any l 6 other agreement or amendment l

y to an agreement relating l

8 to Units 2 and 3 that the l g Companies have or may enter 10 into between themselves 11 exclusively).

l 12 6.1.5 All costs, including any rental is -

charges, of materials, supplies, tools, 14 machinery, equipment, apparatus and 15 construction power.

16 6.1.6 All costs of injuries and damages 17 referred to in Section 9.5 hereof, 18 workmen's compensation incurred 19 referred to in Section 5.3.8 hereof 20 and Project Insurance, except that 21 i insurance described in Section 8.2 22 hereof. I 23 6.1.7 All federal, state or local taxes of 24 any character imposed upon Project 25 Work.

i l

l 96 6.1.8 An allowance for administrative ahd l

l 9t  !

l

i i

i 1

l i

y general expenses to cover the costs of 2 services ren ere by each Ccmpany in 1

3 the performance of Project Work. Said 4 allowance for each Cc=pany shall be the 5 sum ( wen y-e g. and one-half l

6 Percent (28.5%) of the labor portion of i

7 each respective Company's direct pay-8 r 11, including overheads, of employees 9 who perform Project Work, (2) three-10 f urths of one percent (3/44)~ of one-l 11 half of the Construction Costs, such 12 Construction Costs first being reduced l

13 by the aforementioned labor portion, l

14 and (3) ene-half of one percent (1/2%)

15 . of the remaining one-half of the is Construction Costs, such Construction 17 Costs first being reduced by the afore-la mentioned labor portion.

i 19 As used in this Section 6.1.8, the l

20 Construction Costs base for the appli-21 cation of the percentages referred to 22 above shall not include:

25 6.1.8.1 Any allowance for adminis-24 trative and general expenses.

25 6.1.8.2 Costs and expenses referred SS to in Section 9.5 hereof.

93 e

l l

1 l

7 6.1.8.3 Legal fees incurred by 2 8"" Di'9

• 3 6.1.9 Expenses of the Operating Agent 4 ' incurred during the engineering l

5 design period, the construction 6 Period and the Start-Up Pellod of each y unit.

8 6.1.10 Any training expenses charged to g Construction Costs in accordance with 10 an agreement providing for the opera-l 11 tion of Units 2 and 3.

12 6.2 Except as otherwise agreed by the Companies, 13 any costs incurred in connection with the retirement of the 14 switchyard facilities at Site A, the construction of the 15 Edison Switchyard and the construculon of the San Diego Switch-18 yard shall be borne solely by the Company owning such facility.

17 6.3 Neither Company shall be entitled to a fee, 18 price, percentage or any other compensation over and above 19 the costs of services rendered by it in the performance of 20 Project Work.

21 6.4 Edison shall pay eighty percent (80%) and 22 San Diego shall pay twenty percent (20%) of all Construction 25 Costs.

'84 6.5 Budgets for the expected expenditures of 25 Construction Costs will be established by the Companies in Se the following manner:

W

6.5.1 Within thirty working days after exe-2 cution of this Agreement, each Company 3 shall prepare and submit to the Fiscal 4 Representatives expenditure curves of 5 its expected expenditures for Construc-6 tion Costs for the term of this Agree-

7 ment, and a detailed budget of its 8

expected monthly expenditures for 9

Construction Costs for the 1973 and 10 1974 calendar years.

11 6.5.2 Within fifteen working days after re- i 12 caipt of each Companies' curves and 13 budget, the Companies, through their, M

Fiscal Representatives, shall jointly:

15 -

6.5.2.1 Develop a Composite Budget, 18 which will consist of a 17 composite expenditure curve 18 for the term of this Agree-19 '

ment and a composite de-20-tailed budget by monthe for 21 the 1973 and 1974 calendar 22 ,

years.

E 6.5.2.2 Suhmit such Composite Budget 24 to the Coordinating Repre-SS sentativcs for their review Se and approval.

21- 95 w.,- ,.,y,. ._

e y 6.5.3 The Coordinating P.epresentatives shall 2 review such Co=posite Budget and i=ple- '

ment any necessary actions so that Such 4 Composite Budget will receive their 5 approval within twenty working days 6 a re e p t e p site Budget.

7 6.5.4 Such Composite Budget shall for= the g basis for projecting the Construction 9 Costs; provided, that the Companies' 10 failure to devel p such Composite 11 Budget shall not in any way prevent 12 the Project Director from perforring is in a timely fashion the Project kork.

14 6.5.5 By September 1 of each succeeding year 15 thereafter and until the termination of is this Agreement, each Co=pany shall .

f 17 Prepara and submit to the Fiscal la Representatives a detailed budget of i 19 .

its expected monthly expenditures for 20 Construction Costs for the two next 21 following years.

22 6.5.6 Within fifteen working days after re-23 ceipt of each Company's detailed 96

, budget for the two next following 25 years, the Companies, through their SS Fiscal Representatives, shall jointly i

.gg, N w n-m-- ,me- --- og4 yw-m e- m- y w, ---

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3 revise the Co=posite Budget according-2 ly and submit such revised Composite 3 *9 * # "" "I *E#"**"~

4 tatives for their review and approval. ,,

5 6.5.7 The Coordinating Representatives shall 6 review such revised Composite Budget y and implement any necessary actions so 8 that such revised Composite Budget will 9 receive their approval by October 1 of 10 each succeeding year.

11 6.5.8 The Companies shall promptly advise 12 each other if and when it becomes 13 apparent that actual costs will differ 14 materially from projected costs sub-15 mitted by such Company. If from time la to time it becomes evident that the 17 Composite Budget is in need of material is revision, the Companies, acting through 19 their Fiscal Representatives, shall 20 promptly revise such Composite Budget 21 and submit it to the coordinating 22 Representatives for their approval.

i 23 6.6 San Diego shall submit to the Project Director, 24 no more frequently than weekly, an invoice for actual 25 Construction Costs incurred by San Diego for the period 26 covered by such invoice.

l l

l 97

y 6.7 San Diego shall advance funds weekly to the 2 Pr act Direct r, so that the Project Director may reimburse 3 itself and pay ot.jers for constructica costs to be incurred, 1 I

4 as follows:

5 6.7.1 On Thursday of each week, the Project 6 - Direct r shall submit to San Diego a 7 Request for Funds (in the form des-8 cribed in Exhibit A attached hereto), l 9 to cover San Diego's portion of 10 expected expenditures for Construction 11 Costs fer the calendar week following 12 such request. San Diego shall make 13 such advance payment to the Project 14 Director within three working days 15 after receipt by San Diego of such le request.

17 6.7.2 In making any Request for Funds, the 18 Project Director shall take into 19 account any unexpended balance in or 20 deficiency of funds previously ad-21 vanced by San Diego and statements 22 of Construction Costs previously 23 sukmitted by San Diego.

24 6.7.3 Funds not advanced to the Project 28 Director by San Diego in response to 26 a Request for Funds on or before the t

9E

y due date shall be payable with 2 interest accrued at the rate of ten 3 Percent (10%) per annum or the 4 maximum legal rate of interest, which-5 ever is lesser, computed from the due 6 date to the date cf payment.

7 6.8 The Project Director shall make its records 8 relating to Construction costs available'to the Fiscal g Representatives at reasonable times and places.

10 6.9 A cash adjustment shall be made between 11 Edison and San Diego so that each item of the Construction 12 Costs shall be shared between the Companies in proportion is to their Participation Shares as follows:

14 6.9.1 When the total and final Construction 15 Costs shall have been incurred and la calculated, San Diego shall pay to 17 Edison for any deficit between total l 18 advances made by it and its Participa-l 19 tion Share of the total and final 20 Construction costs, or shall be 21 reimbursed by Edison for any credit 22 between said total advances made by .

23 it and its Participation Share of the 24 total and final Construction Costs. ,

25 6.9.2 Such deficit or credit shall be payable 2e with interest at an annual interest 9

99

i i

1 rate charged to prime unsecured 2 borrowers by the Bank of America, l

3 N.T. and S.A., San Francisco, then 4 in effect, accrued from the date of 5

the last cash transaction between the 6 Companies resulting from a Request for 7 Funds and until the date of payment of 8

such deficit or credit.

l 9 7. ADMINISTRATION:

10 7.1 As a means of securing effective cooperation 11 and interchange of information and of providing consultation 12 on a prompt and orderly basis between the Companies in 13 I

t connection with various administrative and technical problems i 14 which may arise from time to time in connection with the .

15 performance of the Project Agreements, each Company shall 16 designate qualified representatives, as listed below, who 17 shall contact each other directly regarding Project Work 18 matters and shall be responsible for' developing procedures 19 as required to provide for effective liaison between the 20 Companies.

21 7.1.1 A Coordinating Representative to be 22 appointed by each Company:

25 -

7.1.1.1 To provide liaison 24 between the Companies at the SS Management level.

26 7.1.1.2 To review and discuss

-2G-too

1 issues and problems relating 2

to Units 2 and 3 and to seek 3

to resolve issues referred to 4

it by the Engineering, Fiscal, ,,

5 Insurance, or Quality Control 6

Representatives.

7 7.1.2 An Engineering Representative to be l 8 appointed by each Company:

8 7.1.2.1 To provide liaison between 1

10 the Companies at the l 11 project engineering level 12 and to provide a point of 13 contact for all Project 14 .

l Work except matters specif-15 ically assigned to other

! 16 l

representatives provided for l 17 18 in this Section 7.

7.1.2.2 To review and discuss issues 19 and problems and to take 20

, 21 such actions as are necessary l

to implement the provisions l 22 of this Agreement.

23 7.1.2.3 To perform such other l 24 25 functions and duties as may 26 be assigned to the= by the t

Coordinating Representatives.

to:

1 i

l i

1 7.1.3 A Fiscal Representative to be appointed 2 by each Company:

3 7.1.3.1 To provide liaison between l 4 the Companies and to provide ,,

5 a Point of contact for all 6 matters concerning plant y accounting, audits, billings, 8 construction expense account-g ing and other related fiscal 10 matters. .

11 7.1.3.2 To review and discuss issues 12 and problems and to take is such actions as are necessary 14 to implement the provisions 15 of this Agreement.

1 -

l 16 7.1.3.3 To develop procedures for 17 providing proper accounting 18 '

between the Companies 19 .

incidental to the Construc-20 tion Costs.

21 7.1.3.4 To perform such other 22 functions and duties as may '

23 be assigned to them by the 24 Coordinating Representatives.

25 7.1.4 An Insurance Representative to be 26 appointed by anch Company:

10 1

- - , , . - - , - . , . . . . . - - - +-+ .-..- .-,- .-...-. ..,--.,.,n~---... , . . - - - - - , . ~ . ~ . . - - - , - - - . . - - - - - , , - - - - - - - . , -

i 1 7.1.4.1 To provide liaison between i

2 the Companies and to provide

! 3 a point of contact for all l

l 4 matters concerning Project ..

5 Insurance. ,

6 7.1.4.2 To review and discuss issues 7 and problems and take such 8 actions as are necessary to 9 implement the provisions of lo this Agreement.

11 7.1.4.3 To perform such other 12 , functions and duties as may 13 be assigned to them by the.

14 Coordinating Representatives.

15 7.1.5 A Quality control Representative to be 16 appointed by each company:

17 7.1.5.1 To provide liaison between 18 the Companies and to pro-19 vide a point of contact for 20 all matters concerning 21 Quality control.

22 7.1.5.2 To review and discuss issues i

83 and problems, and take such 84 actions and institute such 25 procedures as are necessary as to implement the provisions 103

1 f this Agreement.

2 7.1.5.3 To perform such other 3 functions and duties as may 4 be assigned to them by the 5 Coordinating Representatives.

6 7.2 Within ten days after execution of this Agree-7 ment, each Company by notice to the other Company shall 8 designate its Coordinating, Engineering, Fiscal, Insurance and g Quality Control Representatives.

10 7.3 Each Company shall notify the other Company 11- promptly of any change in its representatives.

12 7.4 The Companies, acting through their Coordin-13 ating Representatives, shall have the right to establish 14 ad hoc committees when, in the opinion of the coordinating -

15 Representatives, such committees are required. The authority 16 of any such committee shall be set forth in the written 1

17 agreement between the coordinating Representatives establishing 18 such committee and shall be subject to the provisions of

• 19 the Project Agreements.

20 7.5 Representatives established pursuant to this 21 Agreement shall have no authority to modify any of the 22 provisions of the Project Agreements; provided, that this 23 Agreement may be modified in writing and when duly executed 84 by an officer of each Company.

7.6 Any action, agreement or determination made 26 by the Coordinating Representatives shall be reduced to i

, g .f 9

1 writing and shall become effective when signed by the 2 Coordinating Representative of each Company.

3 8. PROJECT INSURANCE:

4 8.1 During the performance of Project Work '

5 hereunder, the Project Director shall secure and maintain in 6 effect the following non-nuclear insurance coverages, to y the extent available, covering the Project Work. Such 8 coverages may be provided by either the companies or 9 contractors.

10 8.1.1 Comprehensive bodily injury and 11 property damage liability insurance, 12 excluding automobile liability.

13 8.1.2 All risk-builder's risk insurance 14 covering loss or damage to Project 15 Work under course of construction, 16 including materials and supplies 17 while in transit and while stored at 18 the Plant Site.

19 8.2 During the performance of Project Work here-20 under each Company shall secure and maintain in effect the 21 following insurance coverages for itself:

22 8.2.1 Automobile liability protection 23 covering liabilities arising out of 24 the use by such Company of owned, 25 non-owned, or hired automobiles 26 used in the performance of Project Ici

I

{

l 1l Work.

l 2 8.2.2 Workmen's co=pensation benefits I

)

3 covering such Company's own l

l 4 employees in compliance with i 5 statutory requirements of the 6 relevant jurisdiction.

7 8.3 The c g eies shall, prior to the delive_f of 8

nuclear fuel for Unit,2 and Unit 3 to the Plant site, 8

secure and maintain in effect the following nuclear 10 insurance and other coverages with respect to said  ;

11 units:

12 8.3.1 nuclear liability insurance against U'

l liability arising out of or resulting  ;

l 14 '

from a " nuclear incident" as defined i 15 in Section liq of the Atomic Energy l 18 l Act of 1954, as amended. Such ^

insurance shall include (a) 18 '

liability insurance from the Nuclear 19 Energy Liability Insurance Association i 20 and the Mutual Atomic Energy 21 Liability Underwriters, or I i 22 eqdvalent insurance in such amount 25 and in such form as shall meet the 24 i

l financial protection requirements of  !

25 the Atomic Energy Commission pursuant 26 ,

to Subsection 170b of the Atomic f o r,,  ;

P F

f 1 Energy Act of 1954, as amanded, 2

and (b) a Government Indemnity 3

Agreement with the Atomic Energy

• Commission pursuant to Subsection ..

5 170c of the Atomic Energy Act of 1954, 6

as a m and.

7 8.3.2 Nuclear property damage insurance I

from the Nuclear Energy Property 8

Insurance Association and the 10 Mutual Atomic Energy Rei: insurance Pool, or Nuclear Mutual, Ltd., or 2 '

equivalent insurance, and any additional nuclear preperty damage 14 insurance coverage in such amount 15 and such form as are agreed upon is by the companies.

17 8.4 The insurable values, limits, deductibles, 18 retentions, and other special terms, covenants and 19 conditions of the Project Insurance shall be agreed upon 20 by the companies prior to the placement of such insurance.

21 8.5 Both Companies shall be named insureds, 22 -

individually and jointly, on the insurance described in 23 i Sections 8.1 and 0.3 hereof, and the comprehensive bodily l 24 injury and property damage liability insurance referred

-25 to in Section 8.1.1 hereof shall carry cross liability endorsements.

1 8.6 Project Insurance policies shall be prima.m.f 2 insurance for all purposes and shall be so endorsed; provided, f 3 that the liability insurance referred to in Section 8.1.1 may 4 be excess of insurance being provided by a contrac*ar. Any 5 other insurance carried by a Company individually shall not i 6 participate with the Project Insurance as respects any loss y or claim for which valid and collectible Project Insurance 8 shall apply. Such other insurance shall apply solely as

! g respects the individual interests of the Company carrying l

10 such other insurance.

l 11 8.7 Each of the policies of Project Insurance shall l

12 be endorsed so as te provide that all additional named insureds -

13 shall be given the same advance notice of cancellation or 14 material change as that required to be given to the Project

! 15 Director.

18 8.8 The Project Director shall furnish each 17 Company with either a certified copy of each of the policies 18 of Project Insurance or a certified copy of each of the policy t

19 forms of Project Insurance, together with a line sheet therefor 20 (and any subsequent amendments) naming the insurers and 21 underwriters and the extent of their participation. When l

22 the policies or policy forms of Projact Insurance have been 23 approved in writing by both Companies, saf.d policy forms 24 shall not be modified or changed by any Company without the 25 prior written consent of the other company, except for 26 minor and insubstantial changes or modifications, as to

'C#

t -

1 which notification shall be given by the Project Director to 2 the Companies.

3 8.9 The Project Director may at its option be in 1

4 whole or in part a self-insurer for workmen's compansation to 5 the extent the benefits thereunder may be extended to employees 6 f the Project Director at Units 2 and 3.

l 7 8.10 If either Ccmpany's insurance program affords 8 equal or better coverage on a more favorable cost basis than g that available to the Project Director, the Companies may 10 agree that such insurance program may be utilized to afford all 11 or part of the insurance required by Sections 8.1 and 8.3 12 hereof.

13 8.11 Nothing herein shall prohibit the Project 14 Director or any Company from furnishing a policy of Project 15 Insurance which combines the coverage required by this le Agreement with coverage outside the scope of that required 17 by this Agreement. If the Project Director or either Company 18 furnishes such a policy of Project Insurance, the Companies l

19 shall agree on the portion of the total premium cost which 20 is allocable to Project Insurance. If the Companies are 21 unable to agree on such allocation, the Project Director may l 22 make an estimated allocation and bill the Companies on the l 23 basis thereof, with adjustment to be made when the disputa 24 is resolved.

25 8.12 Except as provided in Section 8.13 hereof, 26 if either Company desires changes in any Project Insurance fo9

cy, such Company shall notify the Project Director 2 and the other Company in writing of the desired changes not 3 less than ninety days prior to the renewal or anniversary 4 date of such Project Insurance policy.

5 8.13 Each Company shall have the right by written 6 notice to the Project Director to name any mortgagee, trustee 1 7 or secured party on all or any of the Project Insurance 8 policies as loss payees or additional insureds as their 9 interest may appear.

10 8.14 If the companies are unable to agree upon 11 any matters relating to the Project Insurance, the Project 12 Director, pending resolution of such disagreement, shall is procure such policies of insurance as in its best judgment 14 are necessary and required to protect the companies against 15 the insurable risks for which Project Insurance is required.

16 During any period of negotiations with an insurer,.or other 17 negotiations which are pending at the expiration of the .

18 period of coverage of a Project Insurance policy, or if a 19 Project Insurance policy is cancelled, the Project Director 20 shall renew or bind policies as an emergency measure or may 21 procure policies of insurance which are identical to those 22 which were cancelled, or may to the extent possible secure 23 replaceable policies which will provide substantially the 24 same coverage a the policy expiring or cancelled.

25 9. LIABILITY:

26 9.1 As used in this Section 9, the followi:.] terms rc

2 have the following meanings exclusively:

2 9.1.1 " Damage means any 1 ss, damage,

, .ost, cha=g. or .xpense .su m n, 4 from the performance or nonperformance 5 by a Company or the Companies of l 6 Project Work, or the performance 7 or nonperformance by a Company or the i

8 Companies of any of the Project l 9 Agreements.

10 9.1.2 " Nuclear Incident" means a nuclear 11 incident as defined in Section 11q or 12 the Atomic Energy Act of 1954, as is amended.

14 9.1.3 " Uninsured Damage" means Damage not 15 Paid for by Project Insurance.

16 9.2 Except as provided in Section 9.3 hereof, 17 neither company will be liable to the other Company for 18 Uninsured Damage resulting from a Nuclear Incident.

19 9.3 Neither Company, its directors, officers or i 20 employees shall be obligated to discharge any liability to 1

21 thc other Company in excess of $2,000,000 for any single 22 decurrence for any direct, indirect or consequential

! 23 Uninsured Damage of any kind or nature suffered by the other 24 Company, resulting from Willful Action and resulting from or l 25 arising out of a Nuc1 car Incident. 10ach Company exprcasly l ,

2e releases the other Company, its directors, officers and e

. ~. . . - - - . . - . - - - . _ . . . - . . - _ . . _ _ . - - . _ _ . . . - - - _ . . - ._. .

1 empi yees frem any such liability in excess of $2,000,000 per 3 occurrence and from any judgment in excess of S2,000,000 per 3 occurrence obtained against a company, its directors, 4 officers or employees, for any such liability. Neither 5 Company shall execute, levy or otherwise enforce such a i

6 judgment, or record or effect a judgment lien, against the y other Company, its directors, officers or employees for any i

8 part of such judgment in excess of $2,000,000 per occurrence.

y 9.4 Subject to Sections 9.2 and 9.3 hereof and 10 except for Uninsured Damage resulting from Willful Action 11 (and not resulting from or arising out of a Nuclear Incident),

12 neither Company, its directors, officers or employees shall is be obligated to discharge any liability to the other Company, 14 for any direct, indirect or consequential Uninsured Damage 15 of any kind or nature suffered by the other Company, whether is or not resulting from the negligence of a Company, its 17 directors, officers, employees or any other person or entity la whose negligence would be imputed to a company. Subject to 19 the exceptions contained in this Section 9.4, each Company 20 expressly releases the other company, its directors, officers 21 and employees for any such liability. Neither Company shall "

22 execute, levy or otherwise enforce a judgment for such 23 liability, including recording or offacting a jud sent lien, 24 against the other Company, its directors, officers, or 25 employees.

28 9.5 Subject to Sections 9.2 and 9.3 hereof and W e

1 except for liability for Uninsured Da= age resulting frc=

F i

2 Willful Acti n (and not resulting from or arising out of 3 a Nuclear Incident), and except as provided in Sections 9.6 4 and 9.7 hereof, Edison shall pay eighty percent (80%) and 5 San Diego shall pay twenty percent (20%) of: , . . .

6 9.5.1 The costs and expenses of discharging 7 liability of one or both of the 8 Companies for any direct, indirect 9 or consequential Uninsured Damage 1

10 f any kind or nature suffered by 11 any party other than a Company, whether 12 or not resulting from the negligence l

15 of a Company, its directors, officers 14 and employees or any other person 15 or entity whose negligence would be, 16 imputed to a Company; and 17 9.5.2 The costs and expenses incurred in 18 settlement of injuries and damage 19 claims, including attorneys' fees and 20 the cost of labor and related supplies 21 and expenses incurred in injuries and 22 damages activities (all as referred 23 to in FI'C Account 925) resulting 24 from or arising out of such liability.

25 9.6 Except for liability for Uninsured Damage

> 26 resulting f cm Willful Action, either Company whose ultimate l

l I

r shall make a claim or demand or bring an action l 2 for any damage (including death or injury) arising out of I

3 electric service to such ultimate consumer shall indemnify and 4 hold harmless the other company, its directors, officers, and ,,

5 employees from and against any claim, damand or liability 6 for such damage. The term " ultimate consumer" means any 7 electric customer, except an electric utility system to which I

8 electric power is delivered for resale.

9 9.7 Except for liability for Uninsured Damage 10 (including death or injury) resulting from Willful Action, 11 each Company shall bear the total costs of discharging all 12 legal liability imposed upon it or the other Company, 13 including attorneys' fees and other associated costs, arising 14 out of workmen's compensation claims, or employers' liability 15 claims, brought by its employees; provided, that the 16 cost of discharging such liability, including attorneys' fees 17 and other associated costs, arising out of such workmen's 18 compensation claims brought by a company's personnel whose 19 labor expenses are charged or allocated to the Project Work 20 shall be shared eighty percent (80%) by Edison and twenty 21 percent (20%) by San Diego.

l 22 l 10. AUTHORIZATIONS AND APPROVALS: The Project Director, 23 assisted as necessary by San Diego,. will be responsible for.

, 24 obtaining the required authorizations and approvals for the 25 Project Work. Such authorizations and approvals may include, 26 but are not necessarily limited to, the following (those items 1

l 1 marked with an asterisk (*) indicate the areas in which the 2 Companies will make joint application):

l j 3 10.1 Atomic Energy Ce= mission l 10.1.1 4 Construction permit

• 5 10.1.2 Operating license

• 6 10.1.3 Special nuclear material license

• 7 . 10.2 Public Utilities Commission

! 8 10.2.1 Certificates of convenience and l 9 necessity

• 1 10 10.2.2 Authorization for financial agreement i 11 relative to the financing of the 12 English Electric turbine-generators

• 13 10.3 State Resources Agency 14 10.3.1 Siting agreement

• 15 10.4 State Lands Commission le 10.4.1 Sand disposal and temporary working 17 area permit

• 18 10.4.2 , offshore conduit easement and 19 construction permit

• 20 10.5 San Diego Regional W'ter a Quality Control Board 1

21 10.5.1 Sand disposal permit

• l 22 , 10.5.2 Industrial waste discharge resolution

• 23 10.6 State Water Resources Control Board 24 10.6.1 Certification of compliance with water 25 quality standards

• 28 10.7 Army Corps of F.ngineers i

og l o

l l

1 10.7.1 offshore conduit construction permit

• 2 10.7.2 Sand disposal permit

• 10.7.3 3 Discharge permit

• l j 4 10.8 U.S. Coast Guard .

5 10.8.1 Aid to navigation agreement 6 10.9 State Denartment of Public Health y Radiological monitoring program 10.9.1 8 Approval * ,

g 10.9.2 Radioactive materials license 10 10.10 U.S. Marine Cores 11 10.10.1 Soil disposal agreement 12 10.10.2 Temporary easement for 220-kV trans-13 mission lines 14 10.10.3 Sand disposal permit 15 10.10.4 Telephone line relocation approval le 10.11 Santa Fe Railway 17 10.11.1 Temporary right-of-way encroachment 18 permit 19 10.11.2 Spur track approval 20 10.12 State Department of Highways 21 10.12.1 U.S. Highway 101 relocation

. SS 10.13 State Department of Highways /U.S. Marine Corps l 25 , 10.13.1 Encroachment permit for permanent i 34 access road 25 10.13.2 Temporary encroachment permits for:

SS 10.13.2.1 Access road to Site A l .

Ub

-- - - , - . , - - . - , , , - . , - - , , , . . , , ,,,, ,_ ,,,-._,., ,.-,, ,,,. , ,.,.. - , _--. --,,-- - - w -, - . , , ,

1 10.13.2.2 220-kV and 138-kV te=pora.f  !

2 lines on shoulders of old l

3 U.S. 101 4 10.13.2.3 Duct bank and fireline 5 installation 8 10.14 Pacific Telephone and Telecraph Comeany y 10.14.1 Approval to relocate U.S. Marine corps 8 P'"4 cation cable within PT&T 9 Cornpany's easement 10 , 10.14.2 Duct bank and fireline crossing 11 10.15 california coastal Zone comission 12 10.15.1 Any permits required under the 13 california coastal Zone conservation 14 Act of 1972.

• 15 10.16 Switchyard and Transmission Line Anorovals le 10.16.1 Each company shall be responsible for 17 obtaining at its own expense, its 18 required authorizations and approvals, 19 if any, relating to its switchyard at 20 Site A, the Edison Switchyard, the 21 San Diego Switchyard, and transmission 88 lines into and out of said switchyards.

25 11.

l RELATIONSHIP OF PARTIES:

8' 11.1 The covenants, obligations and liabilities

" of the Companies under the Project Agreements are intended 88 to be several and not joint er collective, and nothing l' 7

1 herein contained shall ever be construed to create an 2 association, joint venture, trust or partnership, or to l 3 impose a trust or partnership covenant, obligation or 4 liability on or with regard to either of the Companies. ..

5 l Each Company shall be individually responsible for its own 6

covenants, obligations and liabilities as herein provided.

7 Neither company shall be under the control of or shall be

8 deemed to control the,other Company. No Company shall have 9

a right or power to bind the other Company without its 10 express wr'.tten consent, except as expressly provided in 11 the Project Agreements. -

12 11.12 The Companies hereby elect to be' excluded U

from the application of Subchapter "K" of Chapter 1 of 14 Subtitle "A" of the Internal Revenue Code of 1969, or such portion or portions thereof as may be permitted or authorized 18 by the Secretary of the Treasury or his delegate insofar as l 17 I

such subchapter, or any portion or portions thereof, may 18 be applicable to the C=p=4es under the Project Agreements.

19

12. ARBITRATION:

20 12.1 If the Companies, acting through their 21 respective Coordinating Representatives, are unable to reach 22 agreement with respect to a matter herein specified to be 23 approved,' established, determined, or resolved by agreement Se of the companies, or by their representatives appointed 95 pursuant to this Agreement, either Company may call for Se submission of such matter or dispute to arbitration in the

1 manner herein set forth, which call shall be binding upon 2 the other Company to the dispute. The Project Director shall 3 continue to do all things and make all expenditures necessary 4 for the Project Work p ding the final decision of the 5 arbitrators.

6 12.2 The Company calling for arbitration shall 7 give notice to the other Company, setting forth in such 8 notice in adequate detail the issues to be arbitrated, and 9 within ten days from receipt of such notice,the other 10 Company may by notice to the first company set forth in 11 adequate detail additional related issues to be arbitrated.

12 12.3 Within twenty days from its notice cmiling 13 for the arbitration, the first company shall appoint a l 14 perswn to serve as one arb3trator, and shall give notice 15 to the other company of such appointmer.t, and within 16 fifteen days after receipt of notice of appointment of the 17 first arbitrator, the other company shall appoint a person 18 to serve as a second arbitrator, and shall give notice to l the first company of such appointment. The two persons so 20 l appointed shall then agree upon and secure a third arbitrator.

21 If the second arbitrator should not be appointed within fifteen days from the appointment of the first or ii the 25 third arbitrator should not be secured within fifteen days 24 from the appointment of the second, either Company may with 25 notice to the other Company call upon the American Arbitration Se Association (or upon a similar organization if the American E7

1 Aribtration Association should not at that time exist) for 2 appointment of an arbitrator or arbitrators skilled with '

i 3 respect to the matter to be arbitrated, and 1 hose appointment 4 shall be binding on both companies. No person shall be i 5 eligible for appointment by the American Arbitration 6 Association who is an officer, employee, shareholder of, or 7 otherwise interested in either of the companies or in the 8 matter to be arbitrated, i

9 12.4 The arbitrators so appointed shall hear lo evi6 ace submitted by both Companies and may call for l 11 additional information, which additional information the 12 Companies or company called upon shall furnish to the l 13 extent feasible. A decision or determination signed by a l

14 majority of the arbitrators shall be conclusive with respect 15 to the issues submitted and shall be binding upon both 16 Companies.

17 12.5 Except as otherwise provided in Sections 12.1, 18 12.2, 12.3, and 12.4 hereof, the arbitration shall be governed 19 l by the rules of practice and procedure of the American 20 Arbitration Association from time to time in force, except 21 that, if such rules and practice as herein modified shall 22 conflict with the California Code of Civil Procedure or any 25 other provision of California law then in force, such 84 California rules and provisions shall govern. This submission 8

and agreement to arbitrate shall be specifically enforceable.

Se The award of the arbitrators or a majority of them upon any r

1 question sub=itted to them hereunder shall be final and I

2 binding upon the companies to the extent and in the manner 3 provided by the California Code of Civil Procedure.

4 12.6 Each Company shall bear the fee and personal 5 expenses of the arbitrator appointed by it, together with 6 the fees and expenses of its own counsel and of its own 7 witnesses, and all other costs and expenses of the arbitration 8

shall be borne equally by the Companies, unless a decision of 9

the arbitrators shall specify a different apportionment of 10 any or all of such costs and expenses.

11 13. PAYMENT OF TAXES 12 13.1 The c 7 e4as shall use their best efforts 13 to have any enving authority i= posing any property taxes 14 or other taxes, excluding any sales or use taxes, and 15 assessments on Units 2 and 3 assess and levy such taxes and le assessments directly against each Company in proportion to its 17 Participation Share.

13.2 All taxes or assessments levied against each l

19 l Company shall be the sole responsibility of the Company upon 20 whom such taxes and assessments were levied directly against one Company in behalf of both companies. '

22 13.3 If any property taxes and other taxes and 23 assessments on Units 2 and 3 are levied and assessed in a manner other than specified in Section 13.1 hereof, such 25 taxes or assessments will be paid by the Company against 26 whom such tax or assessment is levied. The amount of such

i 1 taxes or assessments will be charged to the proper account i

2 for cost sharing in proportion to the Participation Shares.

l 3 14. START-UP:

4 14.1 Edison, as Operating Agent, shall establish ,,

5 a separate account for accumulation of all costs relating to e the Start-Up Period of Units 2 and 3. Charges in such account l 7 shall include (a) the cost (normally capitalized in accordance 8 with FPC Accounts) of all expenses (excluding the cost of the 9 Engineer-Constructor start-up crews) and (b) an allowance l 10 for the payroll loading and administrative and general expense 11 determined in accordance with Section 6 hereof.

12 14.2 Edison, as Project Director, shall charge all 13 such costs accumulated in such account to Construction Costs.

14 14.3 During the Start-Up Period for Unit 2 and I 15 Unit 3, the Companies shall be obligated to take delivery le of power and energy generated by and available from each 17 such unit in proportion to their Participation Shares.

18 15. NOTICES: All notices under this Agreement shall 19 be in writing and shall be delivered in person or sent by registered or certified mail to the applicable of the U following addressees E

l Southern California Edison Company 25 c/ Secretary Post Office Box 800 l g Rosemead, California 91770 SS San Diego Gas & Electric Company I

' c/o Vice President - Electric gg Post office Box 1831 San Diego, California 92112 I

..__-____.--____0__.-..___ _ _ . -_ , _ - .

I 1 By notice sent to the other company, 2 either Company may designate different persons or different 3 addresses for the giving of notices hereunder.

4 16. UNCONTROI1ABLE FORCES: Neither Company shall be ,,

l considered to be in breach of any of the obligations hereunder  :

5 I 6 to the extent failure of performance shall be due to y uncontrollable forces. The term " uncontrollable forces" shall i

8 mean any cause beyond the control of a Company unable to 9 perform such oblig'ation, including, but not limited to, 10 failure of facilities, flood, earthquake, storm, fire, 11 lightning, and other natural catastrophies, epidemics, war, 12 riot, civil disturbance, labor dispute, sabotage, Government 13 priorities, restraint by Court order or public authority, 14 and action or non-action by or failure to obtain the necessary 15 authorizations or approvals from any Government agency or 16 authority, which by exercise of reasonable diligence and 17 foresight such company could not reasonably have been expected 18 to avoid and which by exercise of reasonable diligence it 19 has been unable to overcome. Any Company rendered unable to

1. fulfill any obligation by reason of uncontrollable forces 21 shall exercise due diligence to remove such inability with 22 all reasonable dispatch. Nothing contained herein shall be 23 construed'so as to' require a Company to settle any strike or 24 labor dispute in which it may be involved.

25 17. TERMINATION:

88 17.1 Either Company may terminate its obligations M

1 under this Agreenent by notice to the other Company if, after 2 using its best efforts, it is unable to obtain any required 3 authorization or approval referred to in Section 10 hereof 4 or any other authorization or approval as required by law or ,,

5 if any such authorization or approval, when issued, made or 6 effected shall include an unforeseen condition that would 7 have a substantial adverse economic effect on such company.

8 17.2 In the event of a termination by either 9 Company pursuant to Section 17.1 hereof, all costs and 10 expenses (including interest during construction) incurred by 11 the ta min = ting company in connection with Units 2 and 3 and 12 the taminating Company's Participation Share of accumulated 13 Construction Costs incurred up to the date of such temination 14 shall be' borne by the terminating company.

15 17.3 The interests of such terminating Company in 16 Units 2 and 3 may be acquired by the other Company for an 17 amount equal to the terminating Company's then contribution 18 .

to Construction Costs aud all other costs and expenses (includ-18 ing the allowance for funds used during construction) incurred by such tamin= ting Company in connection with Units 2 and 3.

" 17.4 If the company not taminating does not wish to acquire the interests of the terminating Company, all costs and expenses incurred to implement such total termination of Units 2 and 3 shall be shared in proportion to the

" Participation Share of each Company.

13. ADDITION 7.L AGREEMENTS AND CONSENTS: Each Company

'd

1 agrees to negotiate in good faith and to proceed with 2 diligence to obtain all agreements and consents required 3 by it to be obtained, necessary to implement this Agreement, 4 between such Company and the other Company or other parties.

5 19. OTHER AGREEMENTS: This Agreement supersedes the 6 letter agreement between the Companies concerning liability y and insurance dated August 21, 1970, and shall operate to 8 terminate the letter agreement between the Companies concerning g project costs prior to a definitive Construction Agreement 10 dated September 9, 1970, both in connection with Units 2 and 3.

11 20. COMPLETION OF PROJECT WORK: The Project Work shall 12 be deemed to have been completed as follows:

13 20.1 When the Project Director' deems the Project 14 Work to be completed in accordance with this Agreament, the

! 15 Project Director shall serve notice of that fact upon San 16 Diego. If San Diego does not object within one hundred and l 17 twenty days after its receipt thereof, by notice to Edison, 18 acting'as Project Director, which notice shall specify the 19 items of Project Work claimed not to be completed, the 20 Project Work shall be deemed to have been completed one 21 hundred and twenty days after receipt of such notice by 22 San Diego from the Project Director.

25 .20.2 If objection is made by San Diego under 24 Section 20.1 hereof, the Project Work shall be deemed to 25 have been completed when both Companies agree, or when a 88 binding determination through arbitration or otherwise has ~

(14 1 been made to that effect.

2 21. TERM Except as provided in Section 13 hereof, l 3 this Agreement shall become effective as of January :::,1970, 4 when it has been duly executed by Edisen and San Diego, and l

5 shall continue in force until the obligations of the '

6 Companies have been performed or otherwise discharged.

i y IN WITNESS WHEREOF, the C 7 =n4es have caused this s Agreement to be executed in duplicate on their behalf as of I

g the date first written above.

1 10

11. ATTEST: SAN DIEGO GAS & ELECTRIC COMPANY 22; -

I 15.

j 14 ,hdM By h ,1 , u .

~

1, awn t==u:enstbar Le 1

R j817 3 ATTEST: SOUTHERN CALIFORNIA EDISON COMPANY d 'A i_' { 4 M I i :.e -

s N

dC_ _./ _ By i d-

• s.,ess v 22 -

l 5

26 25 l 88 G

REQUEST FOR FUNDS - SAN CSOFRE UNITS 213

$AN D:Ec0 ScVTMrase ..

CA$ AN D CALIF O RMI A TcTc EL t cT RIC totsow 3c*b S*s l

Oteovest for Week Ending . I fngineer - Ccnstructor Requirements . *

- Construction f[ Engmeer - Constructor Recuirements

- Engineenng TWne donerator ,

Nuclear Steern Supply System Proiect Director *e Labor Consultants Other Project Director's Costs I

TOTAL Protect Requests to Date . .

s Engineer - Constructor Reauiremo .ts .

- Construction .

t Engineer - Constructor Requirements

( - Engineering l -

l Tertinne Generator .

i Nuclear Steam Supcty System i Project Director's Labor .

1 i

l Consultants .

Other Progect Director's Costs TOTAL

-3 .

I L EMORAN Dum: Protect Pianager To Transfer Funes To i

84*C8'AACO BY . ficout37 NO. DATE

'I7 cw Mocso t tm.

Act,eiae.s iiw, t, em.m,,s,,

e u tm ew ut Southern con /ornos Edoson Constany .Me FY M i o.tT l

1 2 .

3 4

5 ~

6 7

AhENDMENT NO.1 8

8 SAN ONOFRE UNITS 2 AND 3 0

1- CONSTRUCTION AGREEMENT 11 12 BETh*EEN l 13

. 14 SAN DIEGO GAS 4 ELECTRIC COMPANY ,

15 AND -

16 '

SOUTHERN CALIFORNIA EDISON COMPANY 17 l 18 19 20 l

22 23 24 25 .

26 l

l l -

/ti t

l

[ . . . . ... . . . . . . . . . . . - . . . . . . - - . - . - - - - - -

f 1 A)!END.' TENT NO.1 SAN ONOFRE UNITS 2 AND 3 2 CONSTRUCTION AGREEMENT 3 1. PARTIES: The Parties to this Amendment ho. 1 to the San 4 .

Onofre Units 2 and 3 Construction Agreement (" Construction 5 Agreement") are: SAN DIEGO GAS 5 ELECTRIC COMPANY i

t 6 (" SAN DIEG0"), a California corporation, and SOUTHERN 7 CALIFORNIA EDISON COMPANY (" EDISON"), a California 8 corporation.

9 2. RECITALS: This Amendment No. I to the Construction 10 Agreement is made with reference to the following facts, 11 among others:

12 2.1 The Parties entered into the San Onofre Units 13 2 and 3 Construction Agreement, dated May 24, 1973,-to

> 14 provide for their respective rights and obligations with 15 respect to the construction of Units 2 and 3 at San Onofre.

18 2.2 The Parties desire to amend certain provisions of the Construction Agreement to more clearly provide 8

for their respective rights and obligations with respect 19 to the construction of switchyard facilities at San 20 l

Onofre, to provide for a single arbitrator to resolve 21 disputes and to revise the responsibility for preparation l

of the Composite Budget.

23

3. AGREEMENT: The Parties agree as follows:

24 3.1 Add Section 4.34 to the Construction Agreement 25 as follows:

26 ,

"4. 34 Interconnection Facilities: The power circuit

, n . - -

e 1 breakers, conductors, bus support structures, disconnect 2 -

switches, current transformers, potential transformers, 3 relaying, metering, relaying and metering interface l 4 cabinets and taps to the 220 ky buses located in or 1

5 associated with the bus sectionaliiing position through 6 which the Edison Switchyard and the San Diego Switchyard 7 are connected and the common air conditioning unit 8 and associated controls for the relay houses."

9 3.2 Amend Section 4.7 of the Construction ,\greement 10 to read as follows:

11 "4.7 Edison Switchyard: The 220 kV switchrack 12 and related facilities at San Onofre connected to and 13 located to the north of the Interconnection Facilities 14 except for the power circuit breakers, transformer 15 side disconnect switches, conductors, and dead-end

[

l 16 assemblies associated with the main transformer leads 17 '

and reserve auxiliary transformer leads, or any environ-18 mental radiation monitoririg equipment installed therein.

In addition, the controls associated with the Edison 20 Switchyard located in the Units 2 and 3 control-administra-tion building are considered to be part of the Edison 22 t

Switchyard."

3.3 Amend Section 4.21 of the Construction Agreement

" to read as follows:

l

' 25 "4.21 Project Work: All engineering, design l construction, contract preparation, purchasing, super-l l

2- -

1 vision, expediting, inspection, accounting, testing, 2 start-up, and regulatory licensing of and for Units 2 and 3 3, the Interconnection Facilities, and other related 4 facilities (but not the switchyard facilities at Site A, 5 the Edison Switchyard and the San Diego Switchyard) as such 6 work is more particularly described in Section 5 hereof."

7 3.4 Amend Section 4.25 of the Construction Agreement 8 to read as follows: .

9 "4.25 San Diego Switchyard: The,220 kV switchrack 10 and related facilities at San Onofre connected to and 11 located to the south of the Interconnection Facilities 12 except for the power circuit breakers, transformer side l

13 disconnect switches, conductors, and dead-end 14 assemblies associated with the main transformer . leads 15 and reserve auxiliary transformer leads, or any environ-16 mental radiation monitoring equipment installed therein."

17 3.5

~

Amend Section 6.1.3 of the Construction Agree-18 ment to read as follows:

18 "6.1.3 All components of the costs of construction 20 including overhead costs associated with construction, 21 temporary facilities , land and land rights , structures 22 and improvements, and equipment for Units 2 and 3, and 23 the Interconnection Facilities, as set forth in the 24 FPC Accounts."

25 3.6 Amend Section 6.4 of the Construction Agreement 26 to road as follows:

3 lit i.

1 "6.4 $dison shall pay eighty percent (801) and 2 San Diego shall pay twenty ' percent (20%) of all Construc-3 tion Costs except for those Construction Costs incurred 4

in connection with the Interconnectior. Facilities. Edison ,,

5 shall pay fifty percent (50%) and San Diego shall pay 6

fifty percent (50%) of all Construction Costs incurred 7

.in connection with the Interconnection Facilities; pro-a vided, however, that the costs of engineering and design 8

for the Interconnection Facilities shall be shared as 10 provided by the San Onofre Switchyard Letter Agreement

- 11 cetween Edison and San Diego, dated May 6,1974."

12 3.7 Amend Section 6.S.5' of the Construction Agree-13 ment to read as follows:

14 "6.5.5 Annually or more often, each Compa'ny shall 15 prepare and submit to the Engineering Representatives 16 '

a detailed budget of its expected monthly expenditures 17 for Construction ~ Costs for the two next following years."

18 '

19 3.8 Amend Section 6.5.6 of the Construction Agree-ment to read as follows:

20 '

"6.5.6 The Companies, through their Engineering 21 22 Representatives, shall jointly revise the Composite 23 Budget accordingly and submit such revised Composite Budget to the Coordinating Representatives for their

- 24 review and approval."

25 3.9 Amend Section 6.5.8 of the Construction Agree-26 l ment to read as follows:

g g l

1 "6.5.8 The Companies shall promptly advise each i

1 2

• other if and when it becomes apparent that actual s costs will differ materially from projected costs sub-

! 4 mitted by such Company. If frcm time to time it becomea 5 evident that the Co=posite Budget is in need of material **

6 revision, the companies, acting through their Engineer-7 ing Representatives, shall promptly revise such Composite 8 Budget and submit it to the Coordinating Representatives 9 for their approval."

10 3.10 Amend Section 12.1, Page 45, Line 5, of the 11 Construction Agreement by deleting the word " arbitrators" 12 and inserting the word " arbitrator".

13 3.11 Amand Section 12.3 of the construction Agree-

- 14 ment to read as follows:

15 "12.3 Within twenty (20) days after the date of le receipt of the initial notice of arbitration, the Parties, 17 acting through their Coordinating Representatives, shall 18 meet for the purpose of selecting one (1) a.bitrator. In i

19 the event the Coordinating Representatives shall fail 20 to select such arbitrator as herein provided, then such 21 representativos shall request the American Arbitration 22 Association (or a similar organization if the American 24 Arbitration Association should~not at that time exist) to provide a list of arbitrators, the number of which 25 shall be one (1) more than there are sides to the dispute.

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1 The arbitrator selected above, if any, and all arbitraters 2 -

on such list shall be available to serve and shall be 3 skilled and experienced in the field C.ich gives rise 4 to the dispute, and no person shall be eligible for I

5 ,

appointment as an arbitrator who is an officer, employee 6 or shareholder of any of the parties to the dispute or 7 is otherwise interested in the matter to be arbitrated.

8 Within thirty (30) days after the date of receipt of i

l 9 such list, the Coordinating Representatives shall take i

10 turns striking names from said list. The last name 11 remaining on said list shall be the selected arbitrator.

12 Within ten (10) days after such selection, the Parties 13 shall submit to such arbitrator the written notices pre-b 14 pared, pursuant to Section 12.2 hereof."

15 3.12 Amend Section 12.4 of the Construction Agree-16 ment to read as follows:

17

• 12.4 The arbitrator shall consider evidence sub-18 mitted by the Parties and may call for* additional informa-10 The Parties shall use their best efforts to tion.

l- 30 furnish such additional inf.or=ation. The decision of 21 the arbitrator shall be binding upon all the Parties."

22 3.13 Amend Section 12.5, Page 46, Line 26, of the 23 l ~

Construction Agreement by deleting the words " arbitrators 24 or a majority of them" and inserting the word " arbitrator".

25 3.14 Amend Section 12.6 of the Construction Agree-26 ment to read as follows:

nd

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_____ _ _ _ _ _ _ m_

1 "11.6 The fees and expenses of the arbitrator 2 ,

shall be shared by the Parties equally, unless the decision 3

of the arbitrator shall specify some other apportionment l 4 of such fees and expenses. A1,1 other expenses and costs 5 ..

of the arbitration shall be borne by the Party incurring 8 -

the same."

7 3.15 Except as provided herein, the Construction 8

Agreement shall remain in full force and effect in accord-9 ance with its terms.

10 '

IN WITNESS h* HEREOF, the Parties hereto have caused 11 this Amend =ent No. 1 to the Construction Agreement to be 12 executed in duplicate as of the n+h day of March ,1977.

13 .

1' ATTEST:

SAN DIEGO GAS 4 ELECTRIC CO)!PANY 15 /Wy CL.%% a 4 EECT.E"4AJG Is

% / ,-1 By: M d ., . . .u 17 Am .~. a .,3 to /o :I/ ' e BW Cors ton , Mce Presdent-

'4 4 Project blanagement 18 **["5NIuCZ[.

19 v *

. ' ' ur.nn t.dii5i.~If 20 ATTEST:

SOUTilERN CALIFORNIA EDISON CO)!PANY

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22 .' / Y/

By: >rnh

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! A. Arenal, Vice President 23 24 25 20 l

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SAN ONOFRE OhMEIP AGRE22G:NT I

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SAN ONOFRE OWNERSHIP AGREEMENT BETWEEN i

SAN DIEGO GAS & ELECTRIC COMPANY I .

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1 i SOUTHERN CALIFORNIA EDISON COMPANY S

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1 1 SAN ONOFRE CWERSHIP AGFN'T 2

3  ; TABLE OF CONTENTS '

4 5 SECTION PAGE e 1 DEFINITIONS 7 1.1 Access Road Area 2 ,

a 1.2 Additional Generating Unit 2 9 1.3 Amended San Onofre operating l Agreement 2

10 1.4 Capital Addition 3 1.5 Capital Betterment -

3 1.6 Capital Improvement 3 3

1.7 Capital Replacement 3 g 1.8 Edison Switchyard 4 1.9 Edison Switchyard Area 5 g7 1.10 FPC Accounts ,

5'.

l 18 3 1.12 off-shore Land 5 ,

, 1.13 Operating Emergency -

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g 1.14 Plant Site 6 g 1.15 Prescribed Accounting Practice 7 l g 1.16 Project Easements ,

7 g 1.17 San Diego Switchyard 7 3 ,

1.18 San Diego Switchyard Area 8 .

28 1.19 San On'ofra Interconnection Agreement 8 I

13 2 I

1 SECTION PACE 2 1.20 San Onofre Nuclear Generating Sta. ion 8  !

3 .- ,

1.21 Spur Track Area 9 l 1.22 Subsequent Acquisition 9 1.23 Unit 1 9 6

2 OWNERSHIP 10 7

3 ADDITIONAL GENERATING UNITS 13 4 8 4 NUCLEAR INFORMATION CENTER 18 9

5 SWITCHYARDS 18 6 DESTRUCTION, DAMAGE OR CONDDINATION 11 OF UNIT 1 19 12 7 MORTGAGE AND CREATION OF SECURITY INTERESTS 20 13 .

8 RIGHT OF FIRST REFUSAL 21 9 WAIVER OF RIGHT TO PARTITION 28 10 COVENANTS RUNNING WITH THE LAND 29 11 nrulTTONSHIP OF PARTTEM 31 l 18 13 NO DEDICATION OF FACILITIES 32 14 TERM 33 15 , NOTICES 33 16 PRIOR AGREEMENTS 34 25 * -

24 .

26 11 9

l 2 SAN ONOFRE OWNERSHIP AGPIEMENT s -

4 THIS AGREEMENT, made as of this 5th day of 5 October , 1967, between SAN DIEGO GAS & ELECTRIC 6 COMPANY, hereinafter called " Sac Diego", and SOUTHERN 7 CALIFORNIA EDISON COMPANY, hereinafter called " Edison",

8 corporations organized and existing under and by virtue of 9 the laws of the State of California, hereinafter referred to lo individually as " Company" and collectively as " Companies".

u g l i g g g S g i g:

12 WHEREAS, San Diego and Edison have entered into 13 ' an agreement entitled " Edison-San Diego Agreement" of 14 March 8,1963, to previde for their joint pcrticipation in 15 the procurement, construction and operation of the San Onofre 16 Nuclea:. Generating Station.

17 WHEREAS, Edison and San Diego propose to enter 18 into the Amended San Onofre Operating Agreement and the San l 419 Onofre Interconnection Agreement,  ;

20 WHEREAS, Edison and San Diego des' ire to-l 21 supplement the aforesaid Edison-San Diego Agreement in regard i .

22 to incidents of ownership as tenants in common, waiver of 23 partition, transfer of ownership and other matters with 24 respect to the San OnofrYNuclear Generating Station. ,

25 NOW THEREFORE, in consideration of the terms 26 and conditions herein set forth to be performed by each of l -

,J c er

1 the Companies, respectively, the Companies agree as follows:

2 1. DEFINITIONS 3 , Whenever used herein, the following terms shall 4 have the following meanings, exclusively: )

5 1,1 Access Road Area:

c An area of land described in an easement l 7 granting rights for access and other purposes l 8 relating to the San Onofre Nuclear Generating 9 Station by the United States to Edison and San lo Diego on May 12, 1964, recorded in the official 11 Records, Office of the County Recorder of San 12 Diego County, in Series 5, Book 1964, Page No.

13 85889, such land area consisting of approxi-14 mately 3.68 acres in the northwest corner of the 15 Marine Corps Base, Camp Pendleton, California, 16 is shown in Exhibit A and further described in l

17 Exhibit A-1, both attached hereto. -

18 1.2 Additional Generating Unit:

19 Any facility for the generation of electrical' -

20 energy (including all auxiliary and associated 21 equipment) constructed or installed at the San 22 Onofre Nuclear Generating Station other than 23 Unit 1 or generating facil:i. ties necessary for the 24 operation of Unit 1.

25 1.3 Amended San Onofre Operating Agreement:

26 The agreement the Companies propose to enter

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1 into which will provide for the operation and 2 maintenance of Unit 1 and other portions of the 3 San Onofre Nuclear Generating Station to the 4 extent provided therein.

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5 1.4 Capital Addition:

6 Any item of property which is added to Unit 1 7 and which does not replace any pre-existing unit 8 of property constituting a part of Unit 1 or any 9 added land or land right, which does not replace lo any existing land or land right, necessary for 11 the operation of Unit 1 and which, in accordance l

12 with Prescribed Accounting Practice, would be 13 capitalized.

14 1.5 Capital Betterment:

15 The enlargement or improvement of any unit of .

16 property constituting a part of Unit 1 or the 17 replacement thereof, where such replacement 18 constitutes an enlargement or improvement of the 1

19 unit of property replaced and which, in 20 accordance with Prescribed Accounting Practice, ,

j 21

• would be capitalized. j l

22 1.6 Capital Improvement-23 A Capital Replacement, Capital Betterment'or 24 Capital Addition. -

1 25 Capital Reolacement:

).7 es The replacement of any unit of property 9

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I constituting a part of Unit 1 where such 2 replacement does not constitute an enlargement 3 or improvement of the unit'of property replaced 4 and which, in accordance with Prescribed 5 Accounting Practice, would be capitalized.

s 1.8 Edison Switchvard: -

7 The 220-kv switchrack and related facilities 8 located within the Edison Switchyard Area and 9 any facilities subsequently installed or con-10 structed therein by Edison, but not including 11 the conductors and . dead-end assemblies for the 12 220-kv Unit 1 main transformer leads or any 13 ' environmental radiation monitoring equipment 14 installed therein. For purposes of this 15 Agreement, the following items located in the 16 Unit 1' control-administration building are'also 17 . considered to be part of the Edison Switchyard:

18 1.8.1 Controls, indicating lights and 19 instrumenes associated with Edison's .

i 20 220-kv a .hrack facilities. .

21 1.8.2 Tap chang,.. ontrols and associated 22 indicating taters for San Diego's 23 220/138-kv autotransformers.

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24 1.8.3 Meterst and devices for interconnection ,

25 metering and Edison's associated tele-l 26 metering equipment..

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1 1.9 Edison Switchyard Area:

2 , An area of land used as the site of the Edison 3  : Switchyard and, at present, as the site of the 4 Nuclear Information Center. Such land area 5 " consisting of approximately 3.66 acres within 6 the Plant Site is shown in Exhibit A and further 7 described in Exhibit A-2 both attached hereto.

8 1.10 FPC Accounts:

9 ' The Federal Power Commission's " Uniform System

- 10 of Accounts Prescribed for Public Utilities and 11 Licensees (Class A and Class B), in Effect on 12 March 1, 1965, Subject to the Provisions of the 13 > Federal Power Act".

14 1 1 Nuclear Information Center:

15 The structures and associated facilities 16 designated in Exh.ibit A (attached hereto) as 17 the Nuclear Information Center located within tlie 18 unfenced portion of the Edison Switchyard Area-

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19 and*any subsequent improvements of or additions t 20 to said structures and facilities.

l 21 1.12 off-shore Land:

22 A strip of tide and submerged land used for 23 circulating water conduits for the San Onofre 24 Nuclear Generating Station described in an ease-25 ment-lease.for such purpose from the State of 26 California to Edison and San Diego beginning on Nu

1 September 24, 1964 and recorded in the Official 2 Records, Office of the County Recorder of San 3  : Diego County, in Series 5, Book 1964, Page No.

4 235236. Such land area consisting of approxi-5 mately 7.599 acres is shown in Exhibit A and l

6 further described in Exhibit A-3, both attached 7 hereto.

a 1.13 Operating Emergency:

9

'Any unanticipated event or circumstance which, lo at the time of such event or circumstance, either 11 reduces or will.have the reasonably anticipated 12 effect ef reducing the generation of electrical l

i 13 energy by Unit 1 or either impairs or will have 14 the reasonably anticipated effect of impairing 15 the~ operation of the switchyard facilities.

16 1.14 Plant Site:

17 An area of land used for the major portioh of 18 the San Onofre Nuclear Generating Station 19 described in an easement granted for such pur-20 pose by the United States to Edison and San 21 Diego on May 12, 1964 and recorded in the 22 i

Official Records, Office of the County Recorder 23 of San Diego County, in Series 5, Book 1964, 24 Page No. 85887. Such land area consisting of 25 approximately 83.63 acres in the northwest 26 corner of the Marine Corps Base, Camp Pendleton, L . .

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1 California, is shown in Exhibit A and further 2 described in Exhibit A-4, both attached hereto.

3 1.15 Prescribed Accounting Practice:

4 Generally accepted accounting principles, in 5 -

accordance with FPC Accounts, applicable to e electric utility operations.

7 1.16 Project Easements:

8 The interests acquired under (1) three easements 8

in favor of Edison and San Diego granted by the lo United States of America, covering respectively, 11 the Plant Site, including the associated l

12 exclusion area, the Access Road Area, and the 13 Spur Track Area, all recorded in the Official 14 Records of San Diego County and hereinafter some-15 times referred to respectively as the Plant Site l

le Easement, the Access Road Easement and the Spur 17 Track Easement; (2) the easement-lease covering 18 the Off-Shore Land; (3)'a license granted to the 19 Companies by the Atchison, Topeka and Santa Fe 20 Railway perfecting the rights of the Companies 21 .

for those portions of the Access Road Area 22 lying within the railroad right of way; and (4) 23 any Subsequent Acquisition.

M 1.17 San Diego Switchyard:

25 The 220-kv and 138-kv switchracks, 220/138-kv '

26 autotransformers, and related facilities located O

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l 1 within the San Diego Switchyard Area and any 2 facilities subsequently installed or constructed 3 therein by San Diego, but not including the con-4 ductors and dead-end assemblies for the 138-kv 5 auxiliary "C" transformer leads.

6 1.18 San Diego Switchyard Aren:

7 An area of land used as the site of the San Diego 8 Switchyard. Such land area consisting of approxi--

8 mately 2.72 acres within the Plant Site is shown lo in Exhibit A and further described in Exhibit A-5 11 both attached hereto. .

12 1.19 San Onofre Interconnection Agreement:

13 The agreement the C e n4es propose to enter 14 into which will provide for the operation and 15 maintenance of the Edison and San Diego Switch-16 , yards through which their respective systems are 17 interconnected.

18 1.20 San Onofre Nuclear Generating Station:

18 The entire nuclear generating facility located 20 on a site of approximately 90 acres in the 21 northwest corner of the Marine Corps Base, Camp 22 Pendleton, California, consisting of the Plant 23 Site (including the Edison Switchyard Area and 24 San Diego Switchyard Area), the Access Road Area, .

25 the Spur Track Area, the Off-Shove Land, any 26 Subsequent Acquisitions, Unit 1, the Huclear

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1 Information Center, the Edison Switchyard, the

2 San Diego Switchyard, and any Additional l

3 Generating Units subsequently constructed or 4 installed.

5 1.21 -

Sour Track Area:

! 6 An area of land used for a railroad spur track, 7 P ipelines, and comrmmication lines for the San 8 Onofre Nuclear Generating Station described in p .an easement granted for such purpose by the l

10 United States to Edison and San Diego on May 12, 11 1964 and recorded in the officini Records, 12 Office of the County Recorder of San Diego 13 County, in Series 5, Book 1954, Page No. 85888.

14 Such land area consisting of appro=imately 5.14 15 acres in the northwest corner of the Marine ' Corps 16 Base, Camp Pendleton, California, is shown in 17 Exhibit A and further described in Exhibit A-6, 18 both attached hereto. .

19 1.22 Subsequent Acquisition: .

20 Any future acquisition by either Edison or San 21 Diego of land or land rights necessary for the i

22 operation of Unit 1.

23 1.23 Unit 1: ,

o.

24 Yne first nuclear generating unit, consisting 25 ,

of a nuclear steam supply system, a turbi te-26 generator designed to generate approximately e9-IVf L

1 450 megawatts (gross) of electric power, and 2 all related equipment and facilities which are s necessary for the safe and efficient generation 4 of electricity, installed on the Plant Site, the 5 . Access Road Area, the Spur Track Area, and the 6 Off-Shore Land, but excluding the Edison Switch-7 yard, San Diego Switchyard, and the Nuclear 8 Information Center. -

9 2. OWNERSHIP lo 2.1 Unit 1: Edison and San Diego r, hall receive 11 title to Unit 1 and thereafter own Unit 1 as

, 12 tenants in co:mnon as follows:

I l 13- 2.1.1 Edison shall own an undivided eighty (80) 14 percent interest therein; 15 2.1.2 San Diego shall own an undivided twenty 16 (20) percent interest therein.

17 2.2 'Switchvards : Edison and San Diego shall receiva

. 18 title to and thereafter cr.m the Switchyards con-19 structed at the San Onofre Nuclear Generating l 20 Station as follows: .

21 2.2.1 Edison shall be the sole owner of the 22 Edison Switchyard; -

23 2.2.2 San Diego shall be the sole owner of l 24 the San Diego Switchyard;

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25 provided, however, that this Section 2.2 shall

! 2e in no way affect the interests of the companies l "

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in the Plant Site Easement.

1 1 2 2.3 Nuclear Information Center: Notwithstanding any I 3

, agreement between the Companies concerning the 4

sharing of costs of operating the Nuclear Infor- ,

5 mation Center, Edison and San Diego shall receive 6

title to and thereafter own as tenants in common 7 the Nuclear Information Center as follows:

8 2.3.1 Edison shall own an undivided eighty (80) percent interest therein; 10 2.3.2 San Diego shall own an undivided twenty 11 (20) percent interest therein.

2.4 Additional Generating Units: In the event that 12 Additional Generating Units are installed or 13 constructed at the San Onofre Nuclear Generating 14 15 Station, Edison and San Diego shall receive ~

le title to and thereafter own as tenants in common all the facilities comprising each such 17 la Additional Generating Unit in accordance with.

19 Section 3 hereof and the agreements executed by.

20 the Companies in connection with the installation i

21 or construction of such unit.

22 2.5

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Project Easements: Edison and San Diego shall 23 receive title to the Project Easements and o.

24 thereafter own the Project Easements as tenants 25 in common as follows:

2s 2.5.1 Edison shall own an undividt; eighty (80)

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. i i percent interest therein; 2 2.5.2 San Diego shall own an undivided twenty (20) 3 percent interest therein.

4 2.6 Subsequent Accuisitions: In the event that 5

• either Company makes a Subsequent Acquisition, l

it shall be deemed to have done so jointly with e

7 the other Company. Edison and San Diego shall 8 receive title to and thereafter own as tenants 9 in common any interest acquired in a Subsequent 10 Acquisition, as follows:

11 2.6.1 Edison shall own an undivided eighty (80) 12 percent interest therein; 13 2.6.2 San Diego shall own an undivided twenty 14 (20) percent interest therein.

15 Immediately following any Subsequent is Acquisition the Companies will erecute and '

17 record appropriate instruments establishing their 18 respective ownershi.p interests as set forth in 19 this Section 2.6. - -

20 , 2.7 Capital Improvements: Edison and San Diego 21 shall receive title to and thereafter own any 22 Capital Improvements as tenants in common as l

l 23 gollows:

O en 24 2.7.1 Edison shall own an undivided eighty (80) 25 percent interest therein; 26 2.7.2 San Diego shall own an undivided twenty (20)

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percent interest therein.

2 3. ADDITIONAL GENERATING UNITS l

3 3.1 in order to utilize effectively the site of the

! 4 San Onofre Nuclear Generating Station and to 5 coordinate its development with the generating 8 resources requirements of each Company, Edison

7 and San Diego will conduct joint studies for the f

8 construction and operation of Additional Genera-9 ting Units at the San Onofre Nuclear Generating l 10 Station. The Companies will prepare a plan for 11 site development, (hereinafter called the 'Tlan") ,

12 including any Additional Generating Units, no l

13 later than January 1, 1968. Said Plan will 14 there fter be meintained and amended by the 15 Comp is to show any changes made thereto pur-16 sucr.t to Sections 3.2 end 3.3 hereof. At all 17 times the Plan will set forth the expected size, 18 proposed date of commitment, date of commercial 19 operation, technical description, and estimated 20 costs of any proposed Additional Generating ,

21

• Units. Tne Plan will also specify the partici-l 22 pation, if any, desired by San Diego, which 23 participation will not be less than ten (10) 24 percent nor more than fifty (50) percen't. ~

Said.

25 Plan shall not operate to obligate or bind 26 either Company in any manner except as provided G

13

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l 1 i in Section 3.4 hereof.

I 2 3.2 l

Proposed amendments to the Plan will be sub- '

l 3 -

l mitted in writing by the proposing Company to 4

the other Company. If both Co=panies agree to 5 '

such am W =nt, it shall be signed by the 6

appropriate ' representatives of each Company, and 7

such a.nendment will thereafter become a part of a

the Plan.

9 3.3 In the event the Companies disagree with respect 10 to a proposed amendment or any part thereof, an 11 i amendment will be prepared in writing, embodying 12 all matters upon which the Companies agree and 13'

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, the Edison proposals in matters where the 14 Companies do not agree; provided, however, that i 15 any disagreement with respect to San Diego's le proportionate participation shall be resolved in 17 accordance with San Diego's proposal. Said 18 amendment will be signed by appropriate represen-19 tatives of both Companies and will thereafter 20 become a part of the Plan. Except as.provided 21 in Section 3.4 hereof, any amendment prepared in .

22 accordance with this Section 3.3 which has not 23 been signed within thirty (30) days of its sub-24 mission to the O w nies shall, at the 25 expiration of said thirty (30) days, be deemed 26 -

an effective amendment to the Plan.

In A

i 1 3.4 On the date of commitment specified in the Plan, 2 an appropriate officer of each Company shall l

3 attend a Final Amendment Meeting (hereinafter l

1 4 referred t.o as the " Meeting"). At the Meeting, 5 .

the Plan vill be reviewed and confirmed or final e

amendments to the Plan, if any, shall be' pre-7 Pared. No amendments received after the Meeting a has adjourned shall become effective unless 9 permitted under Sections 3.4.1 or 3.4.2 hereof.

10 3.4.1 If an amendmant pursuant to Section 3.3 11 is prepared at the Meeting and said amendment

12 1 substantially changes the Plan, San Diego may at 13 any time within the next thirty .(30) days mend 14 the Plan to change its percentage participction 15 l within the range of ten (10) to fifty (50) per-

! 16 -

cent, or San Diego may decline to participate in i 17 the proposed Additional Generating Unit; pro- '

is yided, however, that San Diego must declare at 19

! the Meeting whether it considers said amendment 20 to be substantial.' Upon such declaration by San 21 Diego, the officers shall specify the dates on 22 which the thirty (30) day periods provided in 23 this section and in Section 3.4.2 shall expire.

- 24 3.4.2 If San Diego amends the Plan or declines to 25 .

participate, pursuant to Section 3.4.1 above, 26 Edison may within thirty (30) days of its receipt '

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1 of notice of such action, elect not to proceed 2 with the Plan. If such election is made, the s , date of commitment shall be deemed to be extended 4 for six (6) months. In the event San Diego 5 declines to participate pursuant to Section 3.4.1 i 6 above, Edison may proceed to construct an I 7 Additional Generating Unit without p icipation l

8 by San Diego. Any such Additional Generating 9 Unit will be constructed in substantial l lo accordance with the Plan.

11 3.4.3 At such time during the sixty (60) days 12 following the date of commitment as both l

l 1s companies are foreclosed from further' amendments 14 to the Plan or elections to withdraw pursuant to 15 Sections 3.4.1 or 3.4.2 hereof, the Plan shall 16 be deemed final and the Cg="4es shall be bound, 17 each to the other, to construct, own and operate l

18 the Additional Generating Unit in accordance 19 ~ with the final Plan -

20 3.4.4 The Companies may, at any time, by written 21 agreement waive any of the foregoing provisions 22 of this Section 3.4.

23 3.5 If pursuant to Section 3.4 hereof the Companies t

l' 24 become bound t,o jointly construct and own an 25 . Additional Generating Unit they will promptly negotiate all necessary agreements for the owner-26 l

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1 ship, construction and operation of the proposed 2 Additional Generating Unit on terms and conditions 3 not less favorable proportionately to each 4 Company than those provided for in this San 5 -

Onofre ownership Agreement and other agreements e directly related thereto. If the Companies are 7 unable to agree on any such necessary agreements, 8 the ownership, operation and construction of the 9 Additional Generating Unit will, subject to l 10 Section 3.6 hereof, be governed by this Agreement 11 and all others directly related thereto, in all 12 matters other than the proportionate s' haring of 13' costs and output of such Additional Generating 14 Unit. -

15 3.6 In the event that an Additional Generating Unit le is constructed and is to be owned or operated in 17 'different proportionate participation than in l 18 Unit 1, the Companies will amend this San Onofre 19 Ownership Agreement and directly related agree-20 ments to apportiori the ownership, use and cost 21 of the Project Easements and any facilities, 22 which are common to Unit 1 and such Additional 23 Generating Unit so as to reflect such changes in 24 proportionate, participation. The C M anies will .

25 also exercise their best efforts to provide each

- 28 other with suitable releases from the liens of isb 8 e

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l 1 their respective trust indentures or the Co=pany j 2 not securing such a release shall provide the l

s other with an opinion by its general counsel that 4 no such release is required.

5 3.7 -

If San Diego does not participate in the e construction, ownership or operation of an 7 Additional Generating Unit, its right to partici-8 Pate in subsequent Additional Generating Units, e as set forth hereinabove, will be in no way 10 diminished or prejudiced. -

11 4. NUCLEAR INF02MATION CENTER i

12 The Nuclear Information Center shall be removed or is demolished when construction or installation of an 14 Additional Generating Unit causes Edison to require 15 additional switchyard facilities which it deems cannot is be adequately installed in the Edison Switchyard Area 17 without such removal or demolition. The costs and 1B salvage value incurred in connection with such removal I 19 or demolition shall be shared on the basis of the 20 Companies' participation in such Additional Generating i 21 Unit. In the event of such removal or demolition the 22 -

Companies may agree to relocate or rebuild the Nuclear 23 Information Center.

24 5. SwntnxARDS -

25 Each Company shall exercise exclusive control over its 26 Switchyard and Switchyard Area; provided, however, that

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1 in the event of an Operating Emergency, personnel of l 2 either Co=pany may enter any Switchyard Area for the t

l 3 pu-pose of undertaking any 4-ediately necessa_7 action, 4 in accordance with procedures to be established and 5 approved by the C r W es.

6 6. DESTRUCTION, DAFAGE OR CONDE!O'ATION OF IEIT 1 j 7 6.1 If all, or substantially all, of Unit 1 should 8 be destroyed, damaged or conde=ned, then the 9 Companies by agreement may elect to repair, re-10 store or reconstruct the damaged, destroyed or 11 condemned facilities in such a manner as to I 12 restore the facilities to substantially the sa=e l 13 general character or use as the original, or to i 14 such other character or use as the Companies I 15 may then mutually agree. In the event of such 16 election, the costs of such repair, restoration .

17 or reconstruction shall be shared eighty (80) 18 percent by Edison and twenty (20) percent by 19 San Diego, and, upon completion thereof, the 20 . Companies' rights, titles and interests therein 21 shall remain as provided in this Agreement.

22 6.2 Failure,to reach such agreement within a 23 reasonable period of time shall be deemed to be 24 an election not to repair, restore or reconstruct L 25 the damaged, destroyed or condemned facilities, 2s in which event the proceeds from any insurance, l$ E

1 or from any awcrd shall be distributed eighty 2 (80) percent to Edison and cuenty (20) percent s to San Diego, and remainirig Unit 1 facilities 4 shall be disposed of by the Companies in a 5 manner to be mutually agreed upon and the pro-e caeds resulting therefrom or the costs incurred i 7 thereby shall be shared eighty (80) percent by a Edison and twenty (20) percent by San Diego.

9 6.3 In the event that less than substantially all of lo Unit 1 shall be destroyed, damaged or condemned, 11 it chall be the obligation of the Companies to 12 repcir, restore or reconstruct the damaged, 13' destroyed or condemned facilitics in such a 14 manner as to restore such facilities to sub-15 stantially the same general character or use as 18 the' original. The costs of such repair, 17 'restcration or reconstruction shall be shared 18 eighty (80) percent by Edison and twenty (20) 19 percent by San Diego. -

20 7. MORTGAGE AND CREATION OF SECURITY IhM_ESTS 21 7.1 Edison and San Diego shall have the right at any 22 time, and from time to time, to mortgage, or 23 otherwise encumber their respective rights, 1

-- 24 titles and interests in the San Onofre Nuclear 25 _ Generating Station and the Project Easements by 1

28 conveyance to a trustee or trustees under deeds O

. +- s .

-- -- g

1 of trust, mortgages or indentures, or by 2

execution of security agreements or other i 3 '

1 obligations or securities, and to any successors

~4 or assigns thereof, without need for the prior 5

written consent of the other Company.

6 7.2 Any mortgage, trustee or secured party under 7

present or future deeds of trust, mortgages, 8

indentures or security agreements of either 9

Company and any successors or assigns thereof, lo and any receiver, referee or trustee in bank-11 ruptcy or reorganization of either Company, and 12 any successor by action of law or otherwise, 13 and any purchaser, transferee or assignee of 14 any of the aforementioned secured parties, may 15 succeed to and acquire all the rights, titles 16 and interests of such Company in the San Onofre 17 Nuclear Generating Station and the Projeci: Ease-18 ments, and may take possession of or foraciose 19 upon said property, rights,. titles and interests 20 of such Company, without need for the prior '

21 written consent of the other Company.

22 7.3 Any transfer, assignment, merger or consolidation 23

.. made. pursuant to the provisions of this Section 7 ,

24 shall not be subject to the terms and conditions 25 set forth and contained in Section 8 hereof.

26 g, gydHT OF FIPJT REFUSAL

/r,c

i 1 8.1 Except as is otherwise provided in Section 7 2 and Section 8.15 hereof, should either Co=pany 3 desire to assign, transfer, convey or otherwise 4 dispose of (hereinafter collectively referred to t

5 as " Assign") its rights, titles and interests in l l 6 the San Onofre Nuclear Generating Station, the 7 Project Easements or its entitlement to electric 8 capacity and associated energy in Unit 1 or any 9 part thereof or interest therein (hereinafter l

10 referred to as " Transfer Interest"), to any

( 11 person, company, corporation, governmental agency 12 or any other party (hereinafter referred to as 13 Third Party"), the remaining Company shall have

! 14 the right of first refusal, as hereinafter 15 described, to purchase for itself such Transfer 16 Interest.

17 8.2 After its receipt of a bona fide written offer is from a Third Party to purchase a Transfer 19 Interest and at least three (3) years prior to 20 its intended date to Assign, the Company desiring '

21 -

to Assign its Transfer Interest shall serve 22 written notice of its intention to do so upon the 23 other Company.

l Such notice shall contain the 24 proposed date to Assign, the terms and conditions 25 of said bona fide written offer received by such 26 Company, and a proposal to Assign its Transfer .

e IW .

a e

- =-- - - -e, ,- y -- -wa - rw-- - *'

1 1 Interest to the remaining Company. The ter=s

, 2 and conditions contained in such proposal l

l s . shall be at least as favorable to the re=aining s Company as the terms and conditions of said bona fide written offer, or may be the same terms and

5 i

e conditions het forth in said offer.

1 7 8.3 The remaining Company shall signify its desire l 8 to purchase the Transfer Interest, or its desire '

s not to purchase the Transfer Interest by serving i 10 written notice of such intention upon the Company 11 desiring to Assign pursuant to Section 15 hereof 12 within one hundred eighty (180) days after such is service pursuant to Section 8.2 of the written l

14 notico of intention to Assign. Failure by a 15 Company to serve notice as provided hereunder 16 within the time period specified shall be con-17 clusively deemed to be notice of its intention '

la not to purchase the Transfer Interest.

l 19 8.4 Such right of first refusal shall exist as of 20 the effective date of this Ownership Agreement l 21 and shall continue for the term of this l 22 Ownership Actreement. '

23 8.5 When intention to purchase the Transfer Interest 24 has been indicated by a notice to purchase duly 25 -

given pursuant to Section 8.3 hereof, the 26 Companies shall thereby incur the following M S te2.

99 me 4

. . , -.-,,-.e --- -

I

)

l l

1 obligations:

2 8.5.1 The Company desiring to Assign and the 3 Company desiring to purchase the Transfer

! 4 Interest shall be obligated to proceed in good 5 faith and with diligence to obtain all required 6 authorizations and approvals to Assign; 7 8.5.2 The Company desiring to Assign shall be 8 obligated to obtain the release of any liens 9 imposed by or through it upon any 'part of the 10 Transfer Interest, and to Assign the Transfer 11 Interest at the earliest practicable date there-12 after; and 13 8.5.3 ' The company desiring to purchase the 14 Transfer Interest shall be obligated to perform 15 all terms and conditions required of it to le complete ** nurchase of the Transfer Interest.

17 8.6 Purchaw a Transfer Interest pursuant tio la Section 8.5 hereof shall be fuU y consummated 19 within thirty (30) months following the date 20 upon which the notice to purchase required t'o be 21 given under this section 8.3 has been duly served ,

22 unless the Companies are then diligently pursuing 23 applications to appropriate regulatory bodies 24 (if any) for required authorizations to effect 25 such Arsignment or are then diligently 26 prosecuting or defending appeals from orders ,

10 m

e.---,, ,y e---.s - - - - +-..-,-,._,..._-.,_~._,,___,.s- , _ . , _ _ --

- _ - . _ _ - . . _ _ _ . . . _ _ _ ,, - - , ,_v-- ,

l 1 entered or authorizations issued in connection 2 with such applications. In the event such s applications or appeals cre in progress at the 4 end of said thirty (30) months, the purchase of the Transfer Interest shall be fully consu:r::nated 5

a upon completion of se.id applications or appeals.

7 If the Company desiring to purchase the Transfer 8 Interest is barred from doing so by any regula-9 tory body or court from whose decision no appeal lo may be taken, the Company desiring to Assign may 11 proceed to dispose of the Transfer Interest as 12 if the other Company had declined to purchase

l. 13 the Transfer Interest.

14 8.7 If the intention not to purchase the Transfer l 15 Interest has been indicated by a notice duly 16 given hereunder or by failure to give such 17 notice as provided in Section 8.3, the Company 18 desiring to Assign shall be free to Assign all 19 but not less than all of 1% Transfer Interest 20 to the Third Party that made the bona fide 21 -

written offer upon the terms and conditions set 22 forth in said bona fide written offer. If such.

23 Assignment of the entire Transfer Interest to 24 the Third Party is not completed within eighteen 25 (l8) months after the proposed date to Assign 26 specified in the notice given pursuant to Shetion ~

S

- U-n,J er e --w - ,-- - -

.-v. . .., - ,, - , 4--- - - - - - - . e, , , - - - - , - - - - ,

1 8.3 hereof, the Company desiring to Assign its 2 Transfer Interest must, unless it is then 3 diligently pursuing it: ap'plications to appro-4 priate regulatory bodies (if any) for required i 5 autherizations to effect such Assign =ent, or is 6 then diligently prosecuting or defending' appeals 7 from orders entered or authorirations issued in 8 connection with such applications, give another 9 complete new right of first refusal to the other l 10 Company pursuant to the provisions of this 11 Section 8, before such Company shall be free to 12 Assign a Transfer Interest to said Third Party. '

13' 8.8 Any Third Party who purchases the Transfer 14 Intere:t shall receive title to and shall otm 15 the Transfer Interest as a tenant in common, sub-

~

18 ject to the same rights and obligations as are 17 ' applied to the Transfer Interest in the hands of 18 the Assigning Company.

19 8.9 Except as is otherwise provided in Section 8.10 20 and Section 8.11 liereof, no Assignment of a 21 Transfer Interest shall relieve the Assigning 22 Company from continuing full liability and 23 financici responsibility for performance of all 24 obligations imposed by this Agreement, the .

25 Amended San Onofre Operating Agreement an'd the 26 San Onofre Interconnection Agreement.

l l .

l mi

8.10 1 To the extent that Edison delegates to San 2 Diego the functions of operating Unit 1, pursuant 3 , to Section 8.14 hereof, Edison shcil be relieved  ;

I 4 of such duties.

~

5 8.11 An Assigning Company shall be relieved of its 6 duties and obligations under this Agreement, the 7 Amended San Onofre Operating Agreement and the 8 San Onofre Interconnection Agreement if and when:

9 8.11.1 Its Assignee agrees in writing with the 10 2.emaining Company to assume such obligations 11 and duties; and 12 8.11.2 The remaining Company agrees in writing to 13 the Assignor's release from such obligations.

14 8.12 Any Third Party who may succeed to the Transfer 15 Interest pursuant to this Section 8 shall 16 specifically agree in writing with the remain #ng 17 Company at the time of such Assignment that it .

t ,

18 will not Assign all or any portion of the l

19 Transfer Interest so acquired without complying 20 with the terms and conditions of this Sect 5.on 8.

21 8.13 Any purported Assignment of a Transfer Interest l

22 (other than one provided for in Section 7 hereof) 23 failing to comply with the requirements of this 24 Section 8 shall be void.

25 8.14 In the event Edison desires to Assign all or 26 substantially all of its interest in -the San 4

t

1 Onofre Nuclear Generating Station, other than l

2 pursuant to Section 7 or Section 8.15 hereof, l 3 San Diego shall have the option to assume a.11 4 duties of operating Unit 1 and the Companies shall complete all,necesscry contractuni arrange-5 6 ments and modifications to make San Diego 7 operating agent of Unit 1, as of the time such 8 assignment becomes effective.

9 8.15 Edison and San Diego each shall have the right 10 to Assign its respective rights, titles and 11 interests in the San Onofre Nuclear Generating l 12 Station and the Project Ea'sements without the 13 need for prior written consent of the other 14 Company, and without complying with Sections 8.1 I .

15 through 8.7, inclusive, and Section 8.14. hereof 16 at any time to the following:

17 8.15.1 Any corporation or other entity acquiring 18 all or substantially all of the property of such 19 Company; or 20 8.15.2 Any corporation or entity into which or l 21 -

with which such Company mcy be merged or 22 consolidated.

23 9. WAIVER OF RIGHT.TO PARTITION 24 For itself and its successors and assigns, Edison and ,

25 San Diego, each, until expiration or termination of this se Agreement, waives the right to seek partition of the San e

IQ

. em e.

1 Onofre Nuclear Generating Station and the Project Ense-2 ments (whether by partionment in kind or by sale and 3 division of the proceeds thereof).' Edison and San Diego, 4 each, further agrees that it will not resort to any 5 action' at lau or in quity to partition the same (in either ,

l e such manner) and to that extent waives the benefits of l 7 all laws that may now or hereafter authorize such 8 partition.

9 10. COVENANTS RUIMING WITH THE LAND lo 10.1 Except as otherwise provided in Section 10.3 11 hereof, all of the respective covenants and 12 obligations ~of Edison and San Diego set forth 13 ' and contai e d in this Agreement, the Amended San 14 Onofre Operating Agreement and the San Onofre 15 Interconnection Agreement shall bind and shall l -

le be and become the respective obligations of:

17 10.1.1 Edison and San Diego; 18 10.1.2 All mortgagees, trustees and secured 19 parties under all present i:.nd future -

~

20 mortgages, indentures and deeds of trust, 21 and security agreements which are or may 22 become a lien upon any of the' properties 23 of Edison or San Diego; 24 10.1.3 All receivers, assignees for the benefit 25 of creditors, bankruptcy trustees and "

26 referees of Edison and San Diego; 101

, , . . . . , - - - . , , . , , - , , , - - . _ , _ . ,, y _ _..-.. .--- ,_.- . . , - - . - , , , . , , . .

i l

- l 1 10.1.4 All other persons, firms, partnerships or 2 corporctions claiming through or under any l I

s of the foregoing; and

~

4 10.1.5 Any sucetscors or assigns of any of those 5 mentioned in this Section 10.1; j e and shall be obligations rimnf ng with the Companies' 7 rights, titles and interests in the San Onofre Nuclear -

8 Generating Station and the Project Easements. It is i e the specific intention of this provision that all of t 10 such covenants and obligations shall be binding upon l

11 any party which acquires any of the rights, titles 12 or interests of either Edison or San Diego in the is San Onofre Nucicar Generating Station or the Project 14 Easements and that such pcrty shc11 be obligated to l

15 use such rights, titles and interests for the purpose le of discharging such covenants and obligctions.

17 10.2 The rights, titles and interests of Edison and' 18 San Diego in the San Onofre Nuclear Generating Station 19 and the Project Easements shall inure to the benefig 20 of their successors and assigns.

21 10.3 Any mortgagee, trustee or secured party, or any 22 receiver or trustee appointed pursuant to the pro-23 visions of any present or future mortgage, deed of l 24 trust, indenture or security agreement creating a 25 lien upon or encumbering the rights, titles or 26 ,

interests of either Company in the San Onofre Nuclear Is 9

, , . . - - . - ,-- , , . , - - , . ._. ., - - . - . - ~ . . - . . . , , , , - . . . . , . , . - , . ~ - , . . -, ,

1 Generating Station or the Project Easements, and any 2 successors thereof by cetion of law or otherwise, and 3 any purchaser, transferee, or assignee of~any thereof, l

I 4 shall not be obligated to pay any menies accruing on 5 account of any of the obligations or duties of such 6 Company under this Agreement or the Amended San Onofre 7 Operating Agreement incurred prior to the taking of 8 possession or the initiation of foreclosure or other 9 remedial proceedings by such mortgagee, trustee or 10 secured party.

11 10.4 Edison and San Diego shall use their best efforts l

12 to obtain from the trustee (s) of their respective l

13 crust, indentures valid commitments obligating said 14 trustees to honor all the covenants set forth in l 15 Section 10.1 herein in the event they enter into le possession of the San Onofre Nuclear Generating

~

17 Station. Such commitments may be in the form of 18 releases, concents or any other form ultimately agreed 19 upon with said trustee (s). To the extent that either 20 Company has secured such a commitment prior to the 21 effective date of this Agreement such Company shall 22 not incur any duty or obligation under this 23 Section 10.4.,

= 24 11. RELATIONSHIP OF PARTIES 25 The duties, obligations and liabilities of Edison and l 26 San Diego hereunder are intended to be several and not 9

- 31 -

r70 e

0 0

0

- ~ . - , - - - ,. .,, , - ,, -, ,~n., .-- - , _ ,. - - - - - . . ~ , , , . . , _ - .

1 joint or collective, and nothing herein contained shall 2 ever be construed to create an association, trust or 3 partnership or i= pose a trust or phrenership duty, 4 obligation or liability on or with regard to Edison or

, D San Diego. Edison and San Diego shall be individually 6 responsible for their own obligations as bercin provided.

7 Neither Edison nor San Diego shall have the right or 8 power to bind the other except as expressly provided in 9 this Agreement, the Amended San Onofre Operating Agree-10 ment or the~Sen Onofre Interconnection Agreement.

11 12 MISCELLANEOUS PROVISIONS 12 12.1 Edison and San Diego. agree, upon request, to 13' make, execute and deliver any and all documents 14 reasonably required to implement the terms of 15 this Ownership Agreement.

16 12.2 The captions and finadings appearing in this 17 Agreement are inserted merely to facilitate 18 reference and shall have no bearing upon the 19 interpretation of the provisions hereof.

20 12.3 This Agreement is made under and'shall be 21 governed by the laws of the State of California.

22 12.4 The recitals on page 1 of this Agreement are 23 intended to serve as informational provisions

• • 24 only and are not to be construed as binding upon l 25 either Company in any way.

\ '

es 13. NO DEDICATION OF FACILITIES r,o l .

, 1

1 Any undertching by one Company to the other under any 2 provision of thi: Agreement shall not constitute the 3 dedication of the system or any portion thereof of any 4 Company to the public or to the other Compcny, and it 5 is understood and agreed that any such undertaking shall 6 cease upon the termination of this Agreement.

7 14. TEmi 8 This Agreement shall become effective when it has been t

9 duly executed by both Edison and San Diego, and shc11 10 .

continue in effect until termination of the easement 11 recorded in the Official Records, Office of the County 12 Recortler, San Diogo County, in Series 5, Ecok 1964, at l

13 Page No. 85887, granted to the Companies by the United 14 States of America for the San Onofre Nucient Generating 15 Station, or such errlier date as the Comp:nies may agree 16 to cease operation of Unit 1.

17 Upon termination of this Agreement, the Companies-l 18 shall agree upon further operation of Unit 1 or upon i 19 its disposition. In the event the Companies agree to 20 dispose of Unit 1, the proceeds resulting therefrom 21 or the costs incurred thereby shall be shared eighty 22 (80) percent by Edison and twenty (20) percent by 23 San Diego. -

c.

M 15. NOTICES -

25 All notices under this Agreement shall be in writing 26 and shall be delivered in person or sent by registered I? L

1 or certified m:11 to the applicable of the follouing 2 addresses:

l ,

3 Southern California Edison Company c/o Secretary 4 Post Office Boc. 351 Los Angeles, California 90053 5

San Diego Gas & Electric Co=pany a c/o President Post Office Box 1831 7 San Diego, California 92112 8 By notice sent to the other Company, either Edison or p ,

San Diego may designate different persons or different 10 addresses for the giving of notices hereunder.

11 16. PRIOR AGREE 4ENTS 12 It is the intention of the Companies to supersede 13 hereby the Edison-San Diego Agreement of. March 8, 1963 14 to the extent that it provides for matters covered.

15 he;ein. The Companies intend to remain bound and 1

16 obligated by those provisions of that agreement whI.ch 17 relate to construction costs, the AEC Assistance 18 Contract, Edison's appointment as San Diego's agent, is as well as.all other matters not covered herein. In 20 the event that the Edison-San Diego Agreement of I

21 March 8, 1963, is inconsistent with this Agreement, l

22 the provisions of this Agreement shall'be controlling.

23 24 .

25 26 l 19 1 s

1 In gIGESS WIEREOF, the Companies have caused this 2 Agreement to be executed in duplicate on their behalf.

3 Artest: SAN DIEGO GAS & ELECTRIC COMPANY 4 (SEAL) j 5 Assictant /s/ D.R.Oreen By /s/ J. F. Sinnett Secretcry Presicent l 7 Attest: SOUTHERN CALIFORNIA EDISON COMPAh"I 8 (SEAL) 9 /s/ C. D. Lester By /s/ William R. Gould Secretary Vice President 11 STATE OF CALIFORNIA COUNTY OF San Dieeo ) '

The foregoing instrument was acknowledged before g me this s;th day of oeend , 1967, by g

J. F. Sinnott , President of SAN DIEGO GAS &

ELECTRIC COMPA!PI, a corporation organi=ed and existing under and by virtue of th. laws of the State of California, on y, behalf of said corporation.

20 '

/,f Florence La Monte 21 Notary Puolic 22 My Commission Expires:

2s -

24 March 13, 1970 Florence LaMonte .

- Nota y Public 25 Principal Office, San Diego Co.,Ca11t.

26

- 35 -

l l

1 STATE OF CALIF 02NIA 2 ***

ComsTl 07 Los Angeles )

3 Tne foregoing in tru= ant was aci:nowledged before 4 4th me this day of October , 1967, by 5 William R. Gould, Vice-President of SounirxN CALIFORNIA 6

l 1

EDISON COMPANY, a corporation organized and existing under and 7

by virtue of the laws of the State of California, on behalf 8

of said corporation.

9 10 '

jf Dona Marv Wilee-b n Notcry Fuolic 12 13'

'y Ce sion W aas*

l Dona Mary Wilco =b June 27, 1969 Notary Public - California 14 Principal Office in

. 15 Los Anseles Ocunty l

l 16 17 18 19 20 .

l 22 i

23

.. g 26

. . n*

e

1 EXRIBIT A-1 2 DESCRIPTION OF ACCESS ROAD AREA 3 -

• 4 That certain real property in the County of San Diego, State of California, described as follous:

1 5 PARCEL 1:

6 A strip of land, Forty (40) feet vide, the center line 7 of which is hereinafter described lying within the Rancho Santa Margarita y Las Flores, as described in the Patent from 8 the United States of America, dated March 28, 1879 and l 9 recorded of the County in Book Recor 7, der of said County, and being also apage 18 et seq.

portion of S::ction 24, Totmahip 9 South, Range 7 West as 10 per Record of Survey Map No. 794 filed January 17,19I+0 in the office of said County Recorder.

11 The center line of'said strip of land is described as 12 follows:

13 -

Beginning at a 6 inch by 6 inch concrete highwan 14 monument, set in the Southwesterly line of U. S. Highway 101, said monument being North 56* 12' 04" West 2123.77 feet 15 measured along said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned le concrete highuay monument bears South 02* 5 2' 15" Eas t, -

4207.25 with brass cap, set for the feetNortheast from a 1-1/2 inchofiron corner pipe,4 Section 2 in Township 9 17 South Range 7 West as shown on said Record of Survey Map, l

18 said Eirst above men,tioned concrete highway monumazit being l also at the beginning of a tangent curve concave South-19 westerly and having a radius of 4940 feet; thence North-westerly, along said curve, through an angle of 12* 00' 00",

I 20 a distance of 1034.63 feet; thence continuing along said Southwesterly line and tangent to said last mentioned curve, 21 North 68* 12 04" West, 503.81 feet to the beginning of a tangent curve concave to the Northeast and having a radius 22 of 2060 feet; thence Northwesterly along said last mentioned curve, through an angle of 04* 54 ,28" a distance of 176.47 feet to a point, a radial line of said last mentioned curve 23 assing through said last mentioned point bears South 26*

, 2' 24 West; thence South 33* 00' 00" West,118. 21 feet to the TRUE POINT OF BEGINNING of this description; thence 25 North 57* 00' 00" West, 473.57 feet to the beginning of a tangent curve concave Northeasterly and having a radius of 26 1912.67 feet; thence Northwesterig along said last mentioned curve, through an angle of 29* 47 ,14" a distance of 994.37 Ob es

-mp--- ,sy,s, ,4,,, ,--,np y--,q qw--g te -e w - -,,- m-,, e,vp---e, - e ,, ,., , , -,-,--w--+ , , ,y..ewnv,emum w -

1 fect* thence tangent to said inst mentioned curve, North 27*

12' d6" Ucs t, 65.16 feet to the beginning of a tcngent curve 2 concave to the Southeast and having a radius of 129.64 feet; thence Northuasterly, Northerly and Easterly, along said last 3 mentioned curve through an angle of 151* 00 42" c diotence of 341.68 feet; thence tangent to said last mentioned curve, 4 South 56* 12' 04" East, 152.16 feet to the beginning of a tangent curve concave to the Southuc,st and having a radius of 5

100.00 curve, fe~et; thence through Southeasterly an angle of alon14* 38' , a 12"g said last distance of mentioned 25.55 6 feet

• thence tangent to said last mentioned curve, South 41*

33' $2" East,161.32 feet to the beginning of a tangent curve 7 concave to the Northeast and having a radius of 100.00 feet; thence Southeasterl 8 an angle of 14* 38'y,12", along said last of a distance mentioned 25.55 fect; curve through thence tangent to said last mentioned curve, South 56* 12' 04" East, 9 1651.27 feet to the beginning of a tangent curve concave to the Northeast and having a radius of 100.00 feet; thence lo Southeasterly along"said last mentioned curve through an angle of 09* 48' 07 a distance of 17.11 feet; thence tangent 11 to said last mentioned curve, South 66* 00' 11" 153.29 feet to the beginning of a tangent curve concave SoutEast,hwesterly i

12 thence Southeasterly and and having a radius of 60.00 feet;d curve, through an angle Southerly is of 90* 00' alon 00"g, said last mentione a distance of 94.25 feet to a point herein-after referred to as Point "A" thence tangent to said last 14 mentioned curve, South 23' 59';49" West, 33 feet to a point 15 in the Northeasterly line of U. S. Highway 101, said last mentioned point being in a curve in said Northeasterly line, is said curve being concave Southwesterly and having a radius of 5060 feet, a radial line to said inst mentioned curve l

17 passine through said last mentioned point bears North 23*

59' 49" East, said last mentioned point being Easterly 194.13 18 feet measured along said Northeasterly line from a 6 inch by 6 inch concrete highway monument, said highway monume.nt bears 19 South 10* 20' 14" West 3668.46 feet from a 1-1/2 inch. iron pipe with brass cap, set for the Northeast corner of said Secti n 24 20 21 The side lines of said strip of land, hereinabove described and designated as Parcel 1, shall be prolonged or 22 shortened so as to terminate in the Northeasterly line of said U. S. Highway 101. ',

23 '

,, PARCEL 2:

24 That i asdescrib$ortionoftheRanchoSantaMargaritayLasFlores, d in the Patent from the United States of America, 25 j dated March 28, 1879 2e of Patents in the Office of the County Recorand recorded in Book 7, der of sa County and being also a portion of Sect: ion 24 in Township 9 l 17 7

1 South, Range 7 West, as shown on the Record of Survey Map No. 794, filed January 17, 1940 in the office of said Count'y 2 Recorder, described as follous:

3 Beginning at Point "A" hereinabove referred to in the center line description of the serie of land hereinchove 4 described and designated as Parcel 1; thence South 66* 00' 11"' East 20 feet to the beginning of a non-tangent curve 5

concave Southerlytoalong the Eastsaidand curvehaving a radius through of 40.00 an angle of 55' fectI 32 thence 58" 6 e distance of 38.78 feet to a point in the Northeasterly linc of U. S. Highway 101, said last mentioned point being in a 7 curve concave to the South and having a rsdius of 5060 feet, a radial line of said last mentioned curve passing through B said inst mantioned point bears North 24* 23 ' 12" East; 9 thence of angle Westerly alon00* a 50'distance 46"g saidoflast74.72 mentioned curve feet to a point,through an 10 a radial line of said last mantioned curve passing through said la:t mentioned point bears North 23 ' 34 ' 26" Eas t , caid 11 last montioned point being niso at the beginning of a non-tangent curve concave to the West and having a radius of 40.00 feet; thence Northerl 12 through an angle of 55' 32'y 58" along said last mentioned a distance of 38.78 feet curve to 13 a point, said through a radial last line to saidpoint mentioned last mentioned bears Southcurve 66* 00passing 11" 14 East; thence South 66* 00' 11" East 20 feet to the point of beginning.

15 EXCEPTING from the land hereinabove described and designated as Parcel 2 that portion thereof lying nithin 16 the strip of land hereinnbove described and designated as Parcel 1.

17 18 ,

19 - '

20 21

• 22 -

23 l ..

24 ,

25 26

. 77 f t

l l

1 EDIIBIT A-2 2 DESCRIPTION OI' EDISON SWITCHYARD /.REA 3

4 That portion of the Pancho Sante Mergerita y Lcc riores, as described in the Patent from the United Statcc of 5 Amarica, dated March 28, 1879 and recorded in Book 7, pcge 18 ce seq. , of Patents in the office of the County Recorder of

' c scid County, being also portions of Section 24 in Totmship 9 South, Range 7 West and Section 30 in Township 9 South, Pengo 7 6 West, as shotm on Record of Survey Maps No. 794 filed January.17, 1940- in the office of said County Recorder, 8 described as follows: -

9 Beginnin" at a 6 inch by 6 inch concrete hightc monument, s.ct in t.he Southsosterly line of U.S. High =yy 101, lo said monue. ant beers South 02' 52' 15" Ecst 4207.25 fect from a 1-1/2 inch iron pipe, with brase cap, set for the Northeast 11 corner of Section 24 in Township 9 South, Range 7 West j shown on said Record of Survey Map; thence South 56*.1$'as04" 12 a Es.st along distence of scid Southwasterly 50 fect; line33' thence South of U.S. Highucy 101, 00' 00" 12 fact to 13 ' the TRUE FOD?T O'1 BEGDMING of this description: West,thence l South 56* 12 ' 04" East paraI.lel with said Southwesterly line 34 of U.S. Hi:hway 101 a distance of 556 feet; thence South l

\

33* 00' 00' West 266 feet to a point in a line which pcsses 15 through a point that bears South 33' 00' 00" West 286 feet from the hereinbefore referred to 6 x 6 concrete monumant in le the Southwesterly line of said U.S. Highway 101 thence 17 Northwesterlyalongsaidinstmentionedline59dfeetj North 33* 00 00" East, 154 feet; thence South 56* 12 thence 04" East, 38 feet; thence North 33' 00' 00" East 120 feet to the 18 TRUE PODiT OF BEGINNING of this description.

I l 19 .

20 -

~

21 22 ~

23 25 26 179

1 EYHIBIT A-3 2

DESCRIPTION OF OFF SIIORE LAlq 4 A STRIP OF TIDE AND SUDIERGED LAND

, WIDE, IN THE GULF OF sat:TA CATALU11 ORE-HUNDRED SAN DIEGO COUNTY, THE (100) FECT

! 5 CENTER LINE OF UHICH IS DESCRIBED AS FOLLOWS:

e BEGINNING AT A POIUT IN THAT CERTAIN COURSE IN TIE SOUTH-WESTERLY BOUNDARY OF TIIE 83.63-ACRE PARCEL OF IldTD SHO'RI ON 7 THE LICENSED SURVEYOR'S MAP FILED ON JUNE 13, 1963, AS liAP NO. 6242 0F RECORDS OF SURVEY IN THE OFFICE OF COUNTY 8 RECORDER OF SAID COUNTY, SAID CERTAIN COURSE IS SHOUN ON SAID MAP AS HAVING A BEARING OF "S 5 2' 00 ' 51" E" AND A 9 LENGTl! 0F "299.95 FEET", SAID POINT EEING SOUTH 52* 00' 51" EAST 18.71 FEET FROM THE NORTillESTERLY TERHINUS OF SAID 10 CERTAIN COUltSE: TIF;NCE SOITfIl 33* 00' 00" UEST, 3,310.11 FEET, CONTAINING 7.599 ACRES MORE OR LESS.

l 11 THE SIDE LINES OF SAID STRIP OF LAND SHALL BE SIIOPJENED AT 12 THE NORTI1 EASTERLY TERNIIRIS THEREOF SO AS TO IIRMIN#fE IN THE SOUTHUESTERLY DOUNDARY LINE OF SAID 83.63-ACRE PARCEL OF l'3 LAND, S110WN ON SAID LICENSED SURVEYOR'S MAP.

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1 E*GISIT A-4 .

2 DESCR7PT7nN OF PLANT SITE

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4 That certain real property in the County of San Diego, State of California, described cs follows:

5 That portion of the Rancho Santa Margarita y Las Flores, e as described in the Patent fron the United States of Americc, dated March 28, 1879 and recorded in Book 7, page 18 et seq.,

7 of Patents in the office of the County Recorder of said County, being also portions of Section 24 in Totmship 9 South 8 Range 7Wes.andSection30inTounship9' South, Range 6 West) as shown on Record of Survey Map No. 794 filed January 17, 9 1940 in the office of scid County Recorder, described as' fallows:

10 Beginning at a.6 inch by 6 inch concrete high$ay monument ,

11 see in the Southwesterly line of U. S. Highway 101, said mmment being North 56 12' 04" West . 2123.77 feet, measured 12 from a 6 inch by 6 inch concret c along highway said Southwesterly n.cnun.ent, line,bove said first a mentioned concrete higtnmy 15 monument hears South 02* 52' 15" East 4207. 25 feet from a 1-1/2 14 inch iron pipe, with 1.rcss cap, set for the Northeast corner of Section 24 in Township 9 South, Range 7 West, as shown on 15 said Record of Survey Map, said first above centioned concreta highway monument being also at'the beginning of a tangent cur 9c, 16 concave Southwesterly and.having a radius of 4940 feet thenec Northwesterly along said curve, through an angle of 12; 00',

17 a distance of 1034.63 feet; thence continuing along said Southewesterl North 68* 12'y04" lineWest, and tangent 503.81 to said feat lastbeginning to the mentionedofcurve, a 18 tangent curve, concave te the Northeast and having a radius of 2060 fect; thence Northwesterl along said last mentioned 18 curve, through an angle of 04* 54y,28" a distance of 176.47 20 feet to a p61nt a radial line of said last mentioned curve passing through,said last mentioned point bears South 26* 42' 21 24" West; thence South 33* 00' 00" West, 785.32 feet to the l

22 Mean al ng High said Tide Mean Line High of the Line Tide Pacific of Ocean; the Paci fic Ocean to a linethence Southeas that is parallel with and 4500 feet Southeasterly, measured 23 at right angles, from the course hereinabove described as

" having a bearing of South 33* 00' 00" West and a length of 24 785.32 feet; thence North 33* 00' 00" East, along said l parallel line, 663.39 feet to a point in said Southwesterly 25 line of U. S. Highway 101, said last mentioned point being in a curve in said Southwesterly line, said curve being concavs 26 Southwesterly and having a radius of 11440 feet and being also tangent to the course hereinabove described as having a stt

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1 1 becring of liorth 56* 12' 04" West and c length of 2123.77 feet, e radiril line to said curve pcssing through said last mentioned-E point benrs liorth 37* 12' 19 ' East; thence 11erthwesterly, niong said curve, through cu cngic of 03 24 ' 23" a distance of l

5 680.14 feet 6 inch i

to the concreto highucy second cbove monument; thence mentioned lierth 56* 12'6, 04inch by' Ucst,

,4 2123.77 feet to the point of beginning. <

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1 E::HIBIT A-5 2 -

DESCRIPT705 0F SAN DIECO SUITCnYARD AREA 3 .

4 That portion of the Rancho Scnta Mergarita y Lc: Floren, as dcocribed in the Patent from the United States of America, 5 dated Mcrch 28, 1879 cnd recorded in Book 7, page 18 et seq.,

of Patente in the office of the County Recorder of caid e County, ~being nico portions of Section 24 in Township 9 South, 7 Range 7 Uect end Section 30 in Tounchig 9 South, Rcnge 6 West, as shot n on Record of Survey Hep. No. 94 filed Jcnuary 17, 8

1940 in the office of said County Recorder, deceribed at follous:

9 Ecginning at a 6 inch concrete high eay monument, cet in the Souchuantarly line of U. S. Highuay 101, onid monuennt 10 beers South 02

• 5 2 ' 15" Eas t 4207. 25 feet from a 1-1/2 inch iron pipe. vith brace cap, set for the Northenot corner of 11 Laction 24 in Tounship 9 South, Range 7 Heat, an shown on thence South 56* 12' 04" Eact 12 seid alongRecord of Survey Mapline of U. S. Highucy 101, a dictcnce caid Southucsterly 13 of 50 feet; thence South 33* 00' 00" Ucst 12 zoct; thence South 56* 12'. 04" Ecot, parallel with said Southus:terly line 14 of U.

33' 00'S.00"ghuey Hi 101 a distance of 556 fact; thence South Ucst18lecttotheTRUEPOINTOFDEGINNIHGof this description thence South 56* 12' 04" Ecst parnlici uith 15 said Southuesterly line of U. S. Highuay 101, a distance of 16 105 fact to e point; thence Easterly in a direct line to a acint that is North 33* 00' 00" Enct 15 feet and South 56* 12' 17 d4" East 18 foot from the Icot mentioned point- thence South 18 56*

fect;12' 04" East thence 347 feet;thence Northuesterly South 33* 00 I 00" Uest 470 feet to a point that beers, 240 South 33* 00' 00" West 242 feet from the TRUE POIUT OF l

19 LEGINITING of thic dcocription; thence North 33* 00' 00" East 242 feet to the TRUE POINT OF BEGINNING of this, description.

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1 EXHIBIT A-6 ,

2 DESCRIPT70N OF SPUR TRACK AREA 3

4 Thct certain real property in the County of Scn Diego, State of California, described as follous:

A strip cf Innd One Hundred (100) feet vide, lying o Forty-ccven and one-h$1f (47.5) feet Northcasterly and Fif ty-two and one-half (5 2.5 7 after described referen)ce line, caid strip of land lyingfeet Southuesterly o i

uithin the Rancho Santa Margarita y Los Flores, as described 8 in the Patent from the United States of America, dated March 28 1879 and recorded in Booh 7, page 18 et seq., of g Patents In the office of the County Recorder of said County, and being also a portion of Section 24 in Tounship 9 South, 10 Range 7 West, cs shon on the Record of Survey Map No. 794, filed January 17, 1940 in the office of said County Recorder.

11 follous:The reference line referred to above is described as 12 i

13' .Beginning at a 6 inch by 6 inch concrete highway monu-ment, set in the Southwesterl 14 said monument being North So*y 12'line 04"ofWest U. S.2123.77 Highwayfeet, 101, measured along caid Southresterly fromabove line,first a 6 inch by mentioned 15 6 inch concrete highucy monument, said concrete highway monument bearc South 02* 5 2' 15" East, is 4 207. 25 feet from a 1-1/2 inch iron pipe with brass cap, set for the Rortheast corner of Section 24 in Tounship 9 South Range 7 Ucst as shown on said Record of Survey Map 17 said Eirst above men,tioned concrete highuay monument being, la also at the beginning of a tangent curve concave South-westerly and havin thence North-19 Westerly, along se.g a radius of 4940 feet;id curve, through an angle of 12' 00' ,

a distance of 1034.63 feet; thence continuing along'said 20 Southwesterl line and tangent to said last mentioned curve, 21 North 68* 12 04" West, 503.81 feet to the beginning of a tangent curve concave to the Northemse and having.a radius of 2060 feet; thence Northuecterly along said inst mentioned.

22 curve, through an angle of 04* 54 ,28" a distance of 176.47 feet to a point a radini line of said last mentioned curv 23 passing through,said last mentioned point bears South 26' e 24 4 2' 24 West; thence South 33* 00' 00" Wes ,115.71 feet to the TRUE POINT OF BEGINNING. of this description; thence 25 North 57* 00' 00" West 473.57 feet to the beginning of a

' tangent curve concave Northeasterly and having a radius of 1910.17 feet; thence Northwesterly along said last mentioned 2e

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I through an engle of 29' 47' 14" c distance of 993.07 curve, feat; thence tar. gent te said inst mentioned curve I; orth 27*

2 12' 46" West 455.60 feet to the beginning of a tangent curve concave Southwesterly cnd hcving c radius of.573.69 feet; 3 thence Northuesterly cinns said last mentioned curve through an angic of 20' 00' 00" a distance of 200.26 feet to the ,

4 beginning of a compound curve concave Southuesterly and having a radius of 736.76 fect; thence Northwesterly alon 5 scid inst mentioned curve through an angic of 8' 59 18" g 115.59 feet to a point in the center line of the 100 foot 6 right of way of c:1c Atchison, Topcha and Santa Fe Railucy Company, said point being North 55* 12 ' 04" West 700 feet, 7 measured along said inst mentioned center line from its intersection uith the center line of UNS.111ghway 101 (140 e feet wide).

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SAN ONOFRE UNITS 2 AND 3 LETfER AGREEMENT f

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Southern California Ecfison Company P. O. DOE $ $ $

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wem R. Gov 6D LOS AseOLLES,CALorossesta 90053

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January 22, 1970 San Diego Gas & Electric Company P. O. Box 1831 San Diego, California 92112 Gentlemen: ,

This letter sets forth the agreement of San Diego Gas & Electric Conpany (San Diego) and Southern California -

l Edison Company (Edison) pursuant to the San Onofre Ownership l Agreement, dated October 5, 1967, to proceed with the con-struction of two additional generating units (Units 2 and 3) at the San Onofre Nuclear Generacing Station. The Companies agree, as provided in this letter, to share in the ownership, construction, operation, maintenance and use of Units 2 and 3 and to proceed with the award of major contracts for such units. The Companies agree that, with respect to Units 2 and 3, this letter shall substitute for the procedures des-cribed in Section 3 of the San onofre Ownership Agreement.

The commitments in this letter shall be superseded by definitive agreements described in Section 4 hereof.

The Companies agree as follows:

1. UNITS 2 AND 3 1.1 Units 2 anii 3 shall'be substantially l

identical generating units utilizing a pressurized water reactor nuclear steam supply system, together with initial core fuel assemblies and the necessary

. appurtenances. The nuclear steam supply system and the initial core fuel assemblies will be furnished by Combustion Engineering, Inc. Each unit shall be designed to produce approxi-

mately 1,140 megawatts net electrical output.

2. SCHEDULES 2.1 The Companies intend to make an award

. to Combustion Engineering, Inc. for the It 7

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nuclear steam supply systems and initial core fuel assemblies for Units 2 and 3 on or before January 23, 1970. The award will be r.ade in the names of both Companies. .

2.2 in accordance with Section 3.4 of the San Onofre Ownership Agreement, the Companies conf 1 a that the scheduled dates for initia; full power operation of Units 2 and 3 will be June 1,1975, and June 1,1976, respectively. In order to permit a shake-down period and adequate time to establish said units as reliable generating resources, the commercial operating date for each unit will be scheduled for one year after the scheduled date of init,1al full power opera-tion of such unit.

3 PARTICIPATIO:1 31 in light o't the exercise by San Diego of its participation option pursuant to the San Onofre Ownership Agreement, the Companies shall acquire and own Units 2, and 3, as tenants in common, as follows:

3 1.1 San Diego shall own an undivided twenty per cent (20%) interest therein; and 31.2 Edison shall own an undivided eighty per cent (80%) interest therein.

32 The capacity entitlement of each Company in each of Units 2 and 3 shall be the product of its percentage participation share and the net effective generating capacity of such unit.

33 Each Company shall be responsible for transmitting its capacity entitlement and energy associated therewith from San Onofre Nuclear Generating Station to its system.

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4. DEFINITIVE AGREEMENTS 4.1 The Companies agree to negotiate in good faith and to proceed with dili6ence to e obtain all necessary project agreements, including those pertaining to the follow-ing:

4.1.1 Agreements with the suppliers of the nuclear steam supply systems and turbine-generators, to be executed by both Companies with

such suppliers.

4.1.2 Construction.

. 4.1 3 Fuel supply, to be executed by both Companies with the supplier.

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4.1.4 Agreement with the Engineer-Constructor, to be executed by both Companies with the Engineer-Constructor.

4.1 5 ownership.

4.1.6 'Operatio'n and maintenance.

l 4.1 7 Puel reprocessing, to be executed l

by both Companies with the l

Reprocessor.

l 5 REGULATORY APPROVALS 51 The Companies agree to proceed with diligence to obtain all necessary regulatory approvals for the construction and operation of Units 2 and 3 l 6. PROJECT CCSTS 6.1 Costs incurred by the Companies which are properly chargeable to the construction of Units 2 and 3 shall be set forth in budgets to be approved in advance by the Companies.

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6.2 San Diego shall be entitled to proportionate reimbursement by Edison for costs incurred by San Diego, which costs contribute to the advancement and are properly chargeable to the .

construction of Units 2 and 3 63 Edison shall be entitled ta proportionate reimbursement by San Diego for costs incurred by Edison, which costs contribute to the advancement and an properly chargeable to the construction of Units 2 and 3 6,4 The de, tails of the payment of those costs incurred by Edison prior to the effective date of the Construction Agreement shall be set forth in a supplement to this letter.

It is anticipated that such payments shall be made on a monthly basis.

7. LIABILITY AND INSURANCE 71 The companies agree to negotiate and complete, within sixty (60) days after the date of execution of this letter, a supplement 'to this letter containing (a) liability provisions governing the construction of Units 2 and 3, and (b) any necessary insurance arrangements for said units.

8. INTERCONNECTION 8.1 For system security reasons, the Companies intend to arrange in connection with the construction of Units 2 and 3 the interconnee-tion facilities located at the San Onofre Nuclear Generating Station in such a manner that a certain amount of capacity compatible

- to both systems from said station will be available to both Companies during times when the two systems are not operating in parallel.

The arrangement and operation of such inter-connection and the amount of capacity to be isolated on the respective systems will be subjects of joint studies to be performed by the Companies assuming various contingencies of planned and forced outages.

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! 9 'PROJELt MANAGER AND OPERATING AGENT l

l 91 The Companies hereby appoint Edison as Project flanager and Operating Agent.

Edison shall perform, or cause to be performed, as agent for San Diego and as principal on its own behalf the project -

work for Units 2 and 3

10. LIAISON

• i 10.1 The Canpanies shall promptly inform each other concerning significant matters

involving the project work.

10.2 Each Company shall promptly notify the other in advance of important meetings

! with equipment vendors, regulatory l agencies and otacrs so that representa-tives of both Companies may participate in such meetings.

10 3 The Companies shall meet periodically at the management icvel to riview and discuss policy matters affecting the project work, and at the engineering staff level to review and discuss the project work.

l 10.4 San Diego shall designate a project representative to provide direct contact between Edison and San Die 6o in matters pertaining to the project work.

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-6 If the foregoing properly expresses our mutual agreement, please confirm by signing in the space provided below and returning one copy to me.

• Sincerely, 30 M CALIFORNIA EDISON COMPANY Et -

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Senior Vice President

. t-Accepted and agreed to this Y3 day of C ,z is c.4 w , 1970.

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,s h DIEGO GAS & ELECTRIC COMPhNY By u V

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m TnIT I AMENDED SAN ONOFRE OPERATING AGREEMENT l l

AND l AMENDMENT NO. 1 TO AMENDED SAN ONOFRE OPERATING AGREEMENT l i

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I AMENDED SAN ONOFRE OPERATING Ar:nEMIENT i 1

l SAN DIEGO GAS & ELECTRIC COMPANY - J l SOUTHERN CALIFORNIA EDISON COMPANY l

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l 2 AMENDED SAN ONOFRE OPERATING AGREEMENT 3

4 TABLE OF CONTENTS l 5 SECTION PAGE o 1 DEFINITIONS 4 7 1.1 Access Road 4 a 1.2 Additional Generating Unit 4 e

9 1.3 Board of Review 5 lo 1.4 Capital Improvement 5 11 1.5 Edison Switchyard 5 12 1.6 Edison Switchyard Area 6 13 1.7 Edison Transmission Lines 6 14 1.8 FPC Accounts 6 15 1.9 Fuel Service Contract ,

6 le 1.10 Nuclear Information Center 7 17 1.11 off-shore Land 7 18 1.12 Plant Site 7 19 1.13 Prescribed Accounting Practice 8 20 1.14 San Diego Switchyard 8

[ 21 1.15 San Diego Switchyard Area 8 l

22 1.16 San Diego Transmission Lines 8 23 1.17 San Onofre Agreements 8 24 1.18 San Onofre Interconnection Agreement 9 25 1.19 San Onofre Nuclear Generating Station 9 2e 1.20 San Onofre ownership Agreement 10 l i

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1 SECTION PAGE l l 2 1.21 Spur Track Area 10 3 1.22 Station Site 10 4 1.23 Subsequent Acquisition 11 ,,

5 1.24 Unit 1 11 e 1.25 Unit 1 220-kv Output 11 7 1.26 Unit 1 Auxiliary "C" Transformer 11 8 1.27 Unit 1 Auxiliary "C" Transformer Demand 11 l 9 1.28 Unit 1 Current Operating Capacity 11 10 1.29 Unit 1 Effective Operating Capacity 12 11 1.30 Unit 1 Insurance 12 12 1.31 Unit 1 Fin 4 - Output 12 13 1.32 Unit 1 Net Output 12 14 1.33 Unit 1 Operating I===4 ==nt 12 15 1.34 Willful Action 13 le 2 PARTICIPATION IN THE OIERATION AND MAINTE- 15 17 NANG OF THE SAN ONOFRE NUCf7JLR GENERATING STATION 18 3 BOARD OF REVIEW AND LIAISON 17 19 4 OPERATION AND MAINTENAN s 23 20 5 AUDCATION OF CAPACITY AND SCHEDULING OF 28 I

ENERGY 21 22 6 CAPITAL IMPROVEMENTS 30 23 7 OPERATION AND MAINTENANG EXPENSES 34 24 8 NUCLEAR FUEL COSTS 41 25 9 ENVIRONMENTAL RADIATION MONITORING 44 26 10 INSURANs 45 I

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l 1 SECTION PAGE  :

i 2 11 AD VAIDREM TAXES 50 s 12 PAIMEh*IS 51 4 13 UNIT 1 OPERATING IMPAIRMENT 57 ,,

5 14 ATOMIC ENERGY CCMMISSION REGUIATORY MATTERS 58 6 15 METER TESTS 60 7 16 LIABILITY 61 s 17 ARBITRATION 65 9 18 FORCE MAJEURE 68 10 19 REIATIONSHIP OF PARTIES 69' 11 20 NOTICES 70 12 21 TERM 70 y

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3 A M ED SAN ONOFRE OPERATING AGREEMENT 4 ,,

5 THIS AGREEMENT, executed on the 80 #-- day of s

7 J4 , /r74 ELECTRIC COMPANY, hereinafter called " San Diego", and SOUTHERN

, between SAN DIEGO GAS &

s CALIFORNIA EDISON COMPANY, hereinafter called " Edison",

9 corporations organized, created, and existing under and by

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l lo virtue of the laws of the State of California, hereinaft er 11 referred to individually as " Company" and collectively as 12 "C v ies".

u E II N 11 S E I 3.:

14 WHEREAS, San Diego and Edison have entered into an 15 agreement entitled " Edison-San Diego Agreement" of March 8, is 1963, to provide for their joint participation in the procure-17 ment, construction, and operation of the San Onofre Nuclear is Generating Station.

19 WHEREAS, Edison and Westinghouse Electric Corporation se entered into a contract entitled " San Onofre Nuclear Generating 21 Station Unit No.1 Contract for Fuel Service", dated June 12, as 1963, to provide long-term fuel service for Unit 1.

23 WHEREAS, Edison assigned to San Diego an undivided 34 20 per cent interest in said Contract for Fuel Service by a 25 document entitled " Assignment of Interest in Contract for se Fuel Service", dated June - 21, 1963.

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1 WHEREAS, Edison and San Diego have entered into an 2 agreement and Modification No.1 thereto with the United States s of America, represented by the Atomic Energy Conunission, dated 4 March 31, 1964, hereinafter referred to as the " Assistance 5 Contract".

e WEEAS, the Edison-San Diego Agreement provides 7 that Edison and San Diego shall enter into an operating agree-8 ment which shall contain the terms and conditions under which l 9 the San Onofre Nuclear Generating Station shall be operated 10 and maintained and the method of sharing the costs thereof 11 and the output therefrom.

12 WHEREAS, pursuant to the Edison-San Diego Agreement, 13 (i) Edison assigned a 20 per cent undivided interest to San 14 Diego in the contract entitled " Agreement for Coast Nuclear 15 Station, Unit No.1", hereinafter called the "NPPC", entered is into by Edison on January 11, 1963, with Bechtel Corporation 17 and Westinghouse Electric Corporation, and (ii) San Diego 18 irrevocably appointed Edison as its agent, and Edison agreed 19 to undertake as San Diego's agent, as well as in Edison's own 20 behalf, the performance of all specified Edison obligations 21 under the NPPC, the handling of all transactions and relations 22 with Bechtel and Wes + ghause under the NPPC, the performance 2s of all Edison's obligations therein specified and the handling 24 of all transactions and relations with Westinghouse under the 25 Fuel Service Contract, the performance of the terms and condi-l l

l 2s tions of the Assistance Contract with the Atomic Energy l

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1 Consnission, the making on behalf of Edison and San Diego of 2 reports to the AEC and the California Public Utilities Com-3 mission, the issuance of publicity and conducting public 4 relations except those involving San Diego's service territory, 5 and liaison with the California Coordinator of Atomic Energy a Development and Radiation Protection.

7 W FRFAS, the Companies desire that Unit 1 shall be 8 so operated and maintained that its value and usefulness as l 9 a power gen.erating resource will provide benefits to Edison lo and San Diego in proportion to their ownership thereof.

11 WHEREAS, the Companies desire to obtain and share 12 mari== experience and tra4*g benefits from the operation is and maintenance of Unit 1.

14 W ERFAR, Edison and San Diego entered into an agree-15 ment entitled " San Onofre Ownership Agreement", dated is October 5, 1967, and recorded on October 6, 1967, in Series 8, 17 Book 1967, Page 154649 of Official Records in the office of la the County Recorder of the County of San Diego, to supplement 19 the Edison-San Diego Agreement in regard to certain incidents 20 of ownership of the San Onofre Nuclear Generating Station.

21 WHEREAS, Edison and San Diego entered into an 22 agreement entitled " San Onofre Operating Agreement", dated 23 June 1, 1966, which provides certain terms and conditions 24 under which Edison shall operate and maintain Unit 1.

25 WERFAS, Edison and San Diego desfre to amend and as restate the San Onofre Operating Agreement to provide for the 201 i

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i 1 making of Capital Improvements, the sharing of expenses, the 2 providing of insurance, and other matters in connection with i 3 the operation and maintenance of Unit 1.

! 4 NOW TIEREFORE, in consideration of the terms and I

5 conditions herein set forth to be performed by each of the e Companies, respectively, the parties hereto agree as follows:

! 7 1. DEFINITIONS 8 Whenever used herein, the following terms shall have 9 the following meanings, exclusively:

10 1.1 Access Road Area: An area of land described in an 11 easement granting rights for access and other pur-12 poses relating to the San Onofre Nuclear Generating 13 Station by the United States to Edison and San Diego 14 on May 12, 1964, recorded in Series 5, Book 1964, 15 Page 85889 of Official Records in the office of the 16 County Recorder of the County of San Diego. Such 17 land area consisting of approximately 3.68 acres in 18 the northwest corner of the Marine Corps Base, 19 Camp Pendleton, California, is shown in Exhibit A l

20 attached hereto.

21 1.2 Additional Generating Unit: Any facility for the l

22 generation of electrical energy (including all l

• - 23 auxiliary and associated equipment) constructed or 24 installed at the San Onofre Nuclear Generating Sta-25 tion other than Unit 1 or auxiliary generating 26 facilities necessary for the operation of Unit 1.

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g 1 1.3 Board of Review: The board established pursuant to 2 Section 3.1 hereof.

3 1.4 Capital Improvement: The addition of any unit of 4 property, land or land right to Unit 1 or the Station l 5 Site or the replacement, enlargement or improvement I e of any unit of property, land or land right con-l 7 stituting a part of Unit 1 or the Station Site, 8 which, in accordance with Prescribed Accounting 9 Practice, would be capitalized. ,

lo 1.5 Edison Switchyard: The 220-kv switchrack and related 11 facilities located within the Edison Switchyard Area 12 and any facilities subsequently installed or con-( 13 structed therein by Edison, but not including the i .

l 14 conductors and dead-end assemblies for the 220-kv 15 Unit 1 main transformer leads or any environmental

! la radiation monitoring equipment installed therein.

l 17 For purposes of this agreement, the following items 18 located in the Unit 1 control-administration build-19 ing are also considered to be part of the Edison so Switchyard:

21 1.5.1 Controls, indicating lights, and instruments 22 associated with Edison's 220-kv switchrack

,, as facilities.

24 1.5.2 Tap changing controls and associated indi-25 cating meters for San Diego's 220/138-kv 96 autotransformers.

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1 1 1.5.3 Meters and devices for interconnection tneter- l l 2 ing and Edison's associated telemetering

) equipment.

l 3  ;

i l 4 1.6 Edison Switchvard Area: An area of land used as the 5 site of Edison Switchyard and, at present, as the e site of the Nuclear Information Center. Such land 7 area consisting of approxiznately 3.66 acres within 8 the Plant Site is shown in Exhibit A.

9 1.7 Edison Transmission Lines: The 220-kv transmission e

10 lines connecting the Edison Switchyard with the 11 remainder of the Edison system.

12 1.8 FPC Accounts: The Federal Power Cournission's 13 " Uniform System of Accounts Prescribed for Public 14 Utilities and Licensees (Class A and Class B), in 15 Effect on March 1,1965, Subject to the Provisions le -of the Federal Power Act", as Junended on or before 17 the execution date of this agreement.

. 18 1.9 Fuel Service Contract: A contract entitled 1

19 " San Onofre Nuclear Generating Station Unit 1 90 Centract for Fuel Service" entered into as of 21 June 12, 1963, by Edison and Wes*ghause Electric 22 Corporation, in which contract Edison assigned to

., 25 San Diego an undivided 20 per cent interest on l 34 June 21, 1963; as amended by Amsmdment No. I thereto l

25 on March 27, 1964, and Amendment No. 2 thereto on as March 27, 1967, and as it may thereafter be amended.

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1.10 Nuclear Information Center: The structures and l 1

2 associated facilities designated in Exhibit A as 3 the Nuclear Information Center, located within the l

i 4 presently unfanced portion of the Edison Switchyard 5 Area and any subsequent improvements of or additions a to said structures and facilities, y 1.11 Off-shore Land: _

A strip of tide and submerged land a used zor circulating water conduits for the San 9 , Onofre Nuclear Generating Station des,cribed in an lo easement-lease for such purpose from the State of 11 California to Edison and San Diego beginning on 12 September 24,19M, and recorded in Series 5, is Book 19 % , Page 235236 of Official Records in the 14 office of the County Recorder of the County of 15 San Diego, as such easement-lease was amended on is December 5, 1968, and may hereafter be amended.

i 17 Such land area consisting of approximately 7.599 la acres is shown in Exhibit A.

19 1.12 Plant Site: An area of land used for the major 90 portion of the San Onofre Nuclear Generating Station 21 described in an easement granted for such purpose by 22 the United States to Edison and San Diego on May 12,

, as 19% , and recorded in Series 5, Book 19% ,

l 24 . Page 85887 of Official Records in the office of the 25 Coun.ty Recorder of the County of San Diego. Such as land area consisting of approximately 83.63 acres zos

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1 in the northwest corner of the Marine Corps Base, ,

l 2 Camp Pendleton, California, is shown in Exhibit A.

l 3 1.13 Prescribed Accounting Practice: Generally accepted 4 accounting principles, in accordance with FPC 5 Accounts, applicable to electric utility operations.

e 1.14 San Diego Switchyard: The 220-kv and 138-kv switch-7 racks, 220/138-kv autocransformers, and related 8 facilities located within the San Diego Switchyard 9 Area and any facilities subsequently installed or lo constructed therein by San Diego, but not including 11 the conductors and dead-end assemblies for the 12 Unit 1 Auxiliary "C" Transformer leads.

Is 1.15 San biezo Switchyard Area: Ari area of land used as 14 the site of the San Diego Switchyard. Such land 15 area consisting of approximately 2.72 acres within is the Plant Site is shown in Exhibit A.

17 1.16 San Diego Transmission TAnes: The 138-kv trans-18 mission lines connecting the San Diego Switchyard 19 with the r==inder of the San Diego system.

30 1.17 San Onofre Agreements: The Edison-San Diego Agree-21 ment referred to on page 1 hereof, the San Onofre l 22 Ownership Agreement, this Ananded San Onofre as Operating Agreement, the Puel Service. Contract, 24 the Assistance Contract, the Special Nuclear l 35 Material Laase Agreement No. 264 dated July 1, 1968, i as between the United States and the Companies, the aoc,

l 1 fuel reprocessing agreement to be entered into by 2 the fuel reprocessor and the Companies covering the 3 reprocessing of spent fuel, the three easements 4 granting rights by the United States to Edison and 5 San Diego for the Access Road, the Plant Site, and l e the Spur Track Area, and the easement-lease granting 7 rights by the State of California to Edison and a San Diego for the Off-Shore Land.

p 1.18 San Onofre Interconnection Agreement: The agreement l 10 the Companies propose t:o execute to provide, among 11 other matters, for the operation and maintenance of 12 the Edison and San Diego Switchyards and for the is interconnection of their systems through such Switch-14 yards, as such agreement may thereafter be amended.

15 1.19 San Onofre Nuclear Generating Station: The entire is nuclear generating facility located on a site of 17 approximately 90 acres in the northwest corner of 18 the Marine Corps Base, Camp Pendleton, California, 19 consisting of the Plant Site (including the Edison So Switchyard Area and San Diego Switchyard Area), the i 21 Access Road Area, the Spur Track Area, the Off-22 . Shore Lend, any Subsequent Acquisitions, Unit 1,

,, as the Nuclear Information Center, the Edison Switch-24 yard, the San Diego Switchyard, and any Additional 25 _ Generating- Units subsequently constructed or as installed.

l 9

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i 1 1.20 San Onofre Ownership Agreement: The agreement the 2 Companies have executed as of October 5, 1967, which  !

l s was recorded on Octobar 6, 1967, in Series 8,

( 4 Book 1967, Page 154649 of official Records in the 5 office of the County Recorder of the County of a San Diego, supplementing the Edison-San Diego Agree-7 ment of March 8, 1963, in regard to incidents of l 8 ownership as tenants in common, waiver of partition, 9 transfer of ownership, and other mattiers with 10 respect to the San Onofre Nuclear Generating Station.

l 11 as such agreement may thereafter be amended.

12 1.21 Spur Track Area: An area of land used for railroad 13 spur track, pipelines, and consnunication lines for l

14 the San Onofre Nuclear Generating Station described 15 in an easement granted for such purpose by the la United States to Edison and San Diego on May 12, 17 1964, and recorded in Series 5, Book 1964, Is Page 85888 of Official Records in the office of the 19 County Recorder of the County of San Diego. Such so land area consisting of approximately 5.14 acres 21 in the northwest corner of the Marine Corps Base, 22 Camp Pendleton, California, is shown in Exhibit A.

25 1.22 Station Site: The Access Road Area, the Spur Track se Area, the Off-Shore Land, Subsequent Acquisitions, l

25 and that portion of the Plant Site not included with-se in either the Edison ir San Diego Switchyard Area.

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I 1.23 Subsecuent Acquisition: Any future acquisition by 2 either Edison or San Diego of land or land rights 3 necessary for the operation and maintenance of 4 Unit 1.

5 1.24 Unit 1: The first nuclear generating unit, consist-e ing of a nuclear steam supply system, a turbine-7 generator designed to generate approximately a 450 megawatts (gross) of electric power, and all 9 related equipment and facilities which are necessary 10 for the safe and efficient generation of electricity 11 therefrom installed on the Plant Site, the Access 12 Road Area, the Spur Track Area, and the Off-Shore 13 Land, but excluding the Edison Switchyard, San Diego l 14 Switchyard, and Nuclear Information Center.

15 1.25 Unit 1220-kv output: The output in kilowatts of is Unit I delivered to and measured at the Edison i 17 220-kv Switchyard.

l la 1.26 Unit 1 Auxiliary "C" Transformer: The 138/4-kv, 19 three-phase transformer connected to the San Diego 30 Switchyard t.o supply a portion of the Unit 1 21 auxiliary power requirement.

as 1.27 Unit 1 Auriliary "C" Transformer Demand: The

, , , 23 demand in kilowatts of the Unit 1 Auxiliary "C" 24 Transformer delivered from and measured at the 35 San Diego Switchyard.

as 1.28 Unit 1 Current Operating Capacity: The inarinn=

l l

l .

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i l

l i

1 Unit 1 Net Output available to the Edison and 2 San Diego Transmission Lines at any given time.

3 1.29 Unit 1 Effective Operating capacity: The full load 4 net electrical capability of Unit 1 as established 5 from time to time pursuant to performance tests a within the operating limits authorized by the 7 Atomic Energy Commission, which is reported to l 8 regulatory agencies and others as the effective l

l 9 operating capacity of Unit 1.

10 1.30 Unit 1 Insurance: Insurance coverages (including 11 the Government Indemnity Agreement referred to in 12- Section 10.2.1 hereof) for Unit 1, the Station Site, 13 -

and Edison personnel regularly assigned to Unit 1, 14 to be provided by Edison or Edison and San Diego 15 pursuant to Sect' ions 10.1 and 10.2 hereof.

16 1.31 Unit 1 Minimum Output: The =4E4== Unit 1 Net 17 Output at which Unit 1 can be satisfactorily l

18 operated.

19 1.32 Unit 1 Net Output; Unit 1 220-kv Output less the 20 simultaneous Unit 1 Auxiliary "C" Transformer 21 Demand.

22 1.33 Unit 1 Operating Impairment: Any unanticipated

,, 25 event or circumstance, including any action, order, 24 or directive of any regulatory authority having as competent jurisdiction, which at the time of such 26 event or circumstance either reduces or has the p

I reasonably anticipated effect of reducing the genera-2 tion of electric energy by Unit 1, or the operating s reliability of Unit 1.

4 1.34 Willful Action:

5 1.34.1 Action taken or failed to be taken by a l e Company at the direction of its directors, 7 corporate officers or employees having a management responsibility affecting its 9 performance under any of the , San Onofre lo Agreements, which action:

11 1.34.1.1 is knowingly or intentionally 12 taken or failed to be taken with l

15 conscious indifference to the 14 consequences thereof or with 15 -

intent that injury or damage is would result or probably would 17 result therefrom; la 1.34.1.2 has been determined by final 19 arbitration award or final so judgment or judicial decree to be 21 a material default under any of 22 the San Onofre Agreements and

c. 25 which action occurs or continues 94 beyond the time specified in such 25 arbitration award or j%-t or -

as judicial decree for curing such g

G 4

I 1 default, or if no i

2 time to cure is 3 specified therein, 4 occurs or continues 5 thereafter beyond a e reasonable time to 7 cure such default; l 8 1.34.1.3 is knowingly or 9 . intentionally taken lo or failed to be taken 11 with the knowledge that l

12 such action emira or is failed to be taken is 14 a material default 15 under any of the San is Onofre Agreements.

l 17 1.34.2 Willful Action does not include l

! 18 any act or fai.btre to act which 19 is merely involuntary, acci-20 dental or negligent.

21 1.34.3 The phrase " employees having 22 wagement responsibility','

> 23 as used in this Section 1.34 24 means the employees of a 25 Company who are responsible 26 for one or more of the ti t

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1 executive functions of plan-2 -

ning, orgar. icing, coordinating, 3 directing, controlling, and 4 supervising such Company's 5 performance under any of the -

6 San Onofre Agreements, with l 7 responsibility for results. '

8 Included among such employees ,

9 for Edison are the Generating 10 Station Superintendent, 11 referred to in Section 3.2.1 l

12 hereof and, during his is absence from the station, the 14 Edison employee who has been 15 dssignated to act and is act-16 .

ing for the Generating Sta-17 tion Superintendent, and 18 such employee's non-field 19 supervisors who are respon-20 sible for one or more of said 21 executive functions, 22 2. PARTICIPATION IN THE OPERATION AND p- 23 MAINTENANCE OF THE SAN ONOFRE 24 NUCLEAR GENERATING STATION 25 2.1 Edison shall, for the term of this agreement, per-26 form all operation and maintenance of Unit- 1 and the 1

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l 1 Station Sice upon the terms, covenanes, and condi-2 tions set forth herein. The operation and mainte-3 nance of Additional Generating Units shall be 4 provided for in subsequent agreements.

5 2.2 Edison shall perform the operation and maintenance e of Unit 1 and the Station Site in accordance with 7 . standards comparable to those followed at Edison's 8 other thermal generating plants and in accordance 9 with generally accepted electric utility industry lo standards and practices, subject to any requirements 11 imposed by the Atomic Energy Commission or any other.

12 regulatory agency having jurisdiction over such is operation and maintenance.

14 2.3 San Diego and Edison through the Board of Review 15 will jointly make policy determinations concerning 18 the operation and maintenance and use of Unit 1 and l

17 the Station Site; provided, however, that all matters 18 relating to Additional Generating Units shall be 19 subject to Section 3 of the San Onofre Ownership 20 Agreement. In addition, San Diego will be entitled 21 to participate in and review the operation and 22 inaintenance of Unit 1 and the Station Site, as 25 herein provided, through its designated representa-24 tives, in order that San Diego may realize value 25 from Unit 1 both as a power generating resource and as as a source of nuclear power plant operating 16-v1

1 experience; provided, however, such participation 2 and review by San Diego shall be conducted in a 3 manner and at times that will not materially hamper 4 or materially increase the costs of the operation 5 and maintenance of Unit 1 and the Station Site.

e 2.4 Edison shall operate and maintain the Edison Switch-7 yard and San Diego shall operate and maintain the a San Diego Switchyard in accorda.nce with the San 9 Onofre Interconnection Agreement. Neither Edison lo nor San Diego shall separate its system from Unit 1 11 or from the system of the other Company at the San 12 Onofre Nuclear Generating Station in such a manner 13 as to interfere with the operation and maintenance 14 of Unit 1 or restrict the use by the other Company 15 of its entitlement in the capacity and energy of la Unit 1 except as provided in the San Onofre Inter-17 connection Agreement.

Is 3. BOARD OF REVIEW AND LIAISON 19 3.1 A Board of Review is hereby established to consist 20 of one member, and an alternate authorized to act l 21 in the absence of such member, appointed by each

22 Company within ten days after the date of execution

( 23 of this agreement. The Board of Review shall hold 24 meetings at such times and places as may be neces-25 sary to carry out its duties hereunder. Any action, as agreement or determination made by the Board of 74 L

l i

1 Review shall be reduced to writing and shall become 2 effective when signed by the member from each Company 3 or an authorized alternate. Meetings may be called 4 by either member by giving written notice of the 5 time, place, and agenda at least seven days in a advance; except that the members may waive such 7 notice. It shall be the duty of the Board of Review l 8 to review and approve the following with respect to 1

9 Unit 1 and the Station Site:

• i lo 3.1.1 The annual capital expenditures budget; 1

11 3.1.2 The annual manpower budget; 12 3.1.3 The annual operation and unintenance 13 expense budget; 14 3.1.4 The annual fuel expense budget; 15 3.1.5 The establishment of the Unit 1 Effectiv'e 10 Operating Capacity; 17 3.1.6 The schedule of planned outages for over-la hauls, inspections, at.d refueling operations; Ig 3.1.7 Procedures for providing nuclear training 20 for Edison and San Diego employees and for 21 personnel other than employees of the 22 Companies; and i

23 3.1.8 other matters as are set forth in this 24 agreement and the San Onofre Interconnection -

25 ' Agreement.

l ss In addition, the Board of Revi w shall resolve any 2tco

1 questions arising in the implementation of this 2 agreement which cannot be resolved by the respective s Company representatives appointed pursuant to 4 Section 3.2 hereof and perform such other duties as i

5 may be agreed to by the Companies from time to time.

6 3.2 Each Company will designate qualified representa-7 tives, and alternates authorized to act in the 8 absence of such representatives, as listed below, 9 who shall contact each ot21er directly regarding 10 operating and maintenance matters and shall be 11 responsible for developing procedures as required to 12 provide for effective liaison between the Companies.

13 3.2.1 A Generating Station Superintendent to 14 be appointed by Edison to directly supervisc ,

15 the operation and maintenance of Unit 1 and

~

is the Statien Site end to be the primary 17 Edison contact on all Unit 1 matters not 18 delegated to other Edison representatives.

19 3.2.2 A San Dieg,o Plant Representative to be 20 appointed by San Diego and to be the primary 21 San Diego contact on all Unit 1 matters not 22 delegated to other San Diego representatives.

g 23 Such representative shall, subject to AEC 24 regulations:

25 3.2.2.1 Be subject to all plant rules and l Se regulations to the same extent as T7 l

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1 the Generating Station Super-2 intendent.

3 3.2.2.2 Have access to the plant at any 4 time to the smne extent as the 5 Generating Station Superintendent.

e 3.2.2.3 Have the right to confer with the 7 Generating. Station Superintendent 8 at all reasonable times.

9 3.2.2.4 Have access to all, plant files 10 except for confidential personnel 11 records.

12 3.2.2.5 Receive copies of plant corre-13 spondence to the same extent as 14 the Generating Station Superin-l 15 tendent except for correspondence l

is dealing with confidential per-17 sonnel records.

18 3.2.2.6 Have at the plant suitable desk 19 space, file space, furnishings,

20. parking space, and locker facili-21 tias.

22 3.2.2.7 Have access to and use of such a 23 duplicating facilities as may be 24 provided at the plant.

25 3.2.2.8 Be advised as far in advance as ,  :

as possible of special operating and Itf

-- , - . - - - ~ - - , . . , . .

l 1 maintenance plans, tests, and 2 other important or out-of-the-3 ordinary plant activities.

4 3.2.2.9 Be promptly notified of meetings 5 between the Generating Station 6 , Superintendent and equipment t 7 vendors, personnel from regulatory 8 agencies, etc.

9 3.2.3 The Edison Dispatcher and the San Diego Load 10 Supervisor shall be the primary contacts 11 with regard to the loading of Unit 1 and the 12 delivery of San Diego's share of Unit 1 out-13 put.

l 14 3.2.4 A Public Relations Representative to be i

15 appointed by each Company to serve as a con-Is tact on all matters concerning plant visits 17 and tours, other than visits by persons, j la including Edison and San Diego employees, 19 having business to transact at the plant.

So 3.2.5 A Fiscal Representative to be appointed by 21 each Company to serve as a contact on all 22 matters concerning plant accounting, audits, 25 billing, operation and maintenance expense 24 accounting, and other fiscal matters.

25 3.2.6 An Insurance Representative to be appointed se by each Company to serve as a contact on 217 -

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1 all matters conterning insurance.

2 3.2.7 A Public Information Representative to be 3 appointed by each Company to serve as a 4 contact on all matters concerning publicity 5 and news releases relating to the San Onofre e Nuclear Generating Station.

7 3.2.8 An Engineering Representative to be appointed 8 -

to serve as a point of contact on Unit 1 9 engineering activities, including those 10 ,

related to regulatory and nuclear fuel 11 matters. Such Representatives, when 12 authorized by their respective Companies, 13 may represent them in formal meetings, 14 formal proceedings and negotiations con-15 ,

cerning regulatory and nuclear fuel matters.

l 1e 3.3 The representatives appointed pursuant to Section 1

17 3.2 hereof shall have responsibilities for contact l

l 18 and coordination between Edison and San Diego on ,

19 all Unit 1 and Station Site matters pertaining to 20 their areas of responsibility. It is not intended, 21 however, that this will preclude additional full i

22 and free exchange of information at all C v y

, 25 levels.

24 3.4 The representatives appointed pursuant to Section 25 3.1~or Section 3.2 bareof shall serve at the se pleasure of the Company by which they are appointed.

220

1 Each Ccmpany shall prc=ptly notify the other Cc=pany 2 of the representatives so appointed, or of any 3 <-hanges of said representatives.

4 4 OPERAn0N AND MAINTENANCE 5 4.1 Edison shall provide all manpowa_: required for the e operation and maintenance of Unit 1 and the Station 7 Site. On or before the first of September of each c year, Edison shall prepare and subu:it to the Board 9 of Review, for its review and approval, a manpower lo budget for Unit 1 and the Station Site for the l 11 ensuing calendar year. On or before the fifteenth 12 of October of each year, the Board of Review shall is approve a manpower budget for Unit 1 and the Station 14 Site for the ensuing calendar year. Said manpower  !

15 budget may be revised at any time during the year l

le with the approval of the Board of Review. Edison {

i 17 shall furnish San Diego with job descriptions for la each position as required. If personnel in addition l

19 to regular Edison employees are required for special l- 20 testing, operations, mah tenance, or other special l 21 work, such personnel shall be obtained from regular l

l 22 San Diego employees to the extent that qualified 3 23 personnel are available, and the use of such per-24 sonnel by Edison will be economical and practical.

25 San Diego employees ,so assigned shall work under 28 the direction and supervision of Edison personnel 23- j 27J t m J

1 in charge of such special work.

2 4.2 Edison may use Unit 1 facilities and personnel as 3 may be necessary to train employees to man Unit 1.

4 In addition to training personnel for plant manning, 5 the Unit 1 facilities and personnel may be used at i

e the request of either Company to provide nuclear 7 training for its employees in accords.nce with a principles and procedures approved by the Board of 9 Review. Training of personnel, other than employees 10 of the Companies, shall be conducted in accordaner.

11 with principles and procedures approved by che Board 12 of Review.

l 13 4.3 Edison shall prepare and issue all station ord?.rs 14 and instructions necessary for the operation and 15 maintenance of Unit 1 and the Station Site. Copies l

16 of all such instructions and orders will be furnished 17 to the San Diego Plant Representative. To the extent lo practicable, Edison will consult with the San Diego 19 Plant Representative and will submit such instruc-20 tions and orders to him for his review and comment 21 prior to issuance.

22 4.4 Edison will procure all materials, equipment, and 23 supplies (except nuclear fuel) necessary for the 24 operation and maintenance of Unit 1 and the Station 25 Site. Edison shall own an undivided eighty (80) 26 percent interest, and San Diego shall own an 1

i zre.

_ . _ _ . _ , , , . , . . -- . . . --,,.....~,,,...,..,,,,n. , . , - -. , - - , , , , . - - , - . - - . - , _ - ,

1 undivided twenty (20) percent interest in such 2 nateria sl , equipment, and supplies.

s 4.5 On or before the first of September of each year, 4 Edison will prepare aad submit to the Board of 5 Review, for its review and approval, an operating e and maintenance expense budget and a fuel expense 7 budget for Unit 1 and the Station Site for the 8 ensuing calendar year. On or before the fifteenth 9 of October of each year, the Board of Review shall 10 approve an operating and maintenance expense budget 11 and a fuel expense budget for Unit 1 and the Scation ,

12 Site for the ensuing calendar year. Said operating 13 and maintenance expense and fuel expense budgets may 1

l 14 be revised at any time with the approval of the ,

15 Board of Review.

Is 4.6 Edison and San Diego shall enter into agreements 17 between themselves or jointly with third parties 18 with respect to the procurement, ownership, manage-If ment, and reprocessing of nuclear fuel required for 20 the operation of Unit 1.

21 4.7 Edison, in consultation with San Diego, shall pre-l 22 pare and submit annually to the Board of Review,

. 23 for its review and approval prior to the fifteenth ,

24 of October of each year, a schedule of planned 25 outages for overhauls, inspections, and refueling 28 operations for Unit 1 for the ensuing five-year 25-7.,13

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1 period. Other scheduled outages for Unit 1 shall be 2 P l anned by Edison in consultation with San Diego.

3 Edison, as plant operator, shall have the authority 4 for taking an unschedulec'. outage of Unit 1 or limit-5 ing the Unit 1 Current 0 .' rating Capacity if, in e Edison's judgment, such action is necessary for the 7 safety of personnel, to prevent damage to equipment, 8 or to perform emergency repairs or maintenance. To 9 tha extent practicable, the Edison Dispatcher shall lo consult with the San Diego Load Supervisor in order l

11 to take such unscheduled outages or limit the 12 Unit 1 Current Operating Capacity at times mutually is agreed upon.

14 4.8 The Edison Dispatcher and the San Diego Load Super-15 visor shall contact each other regarding day-to-day is Unit 1 operating matters, and the San Diego Load 17 Supervisor shall notify the Edison Dispatcher of 18 .' San Diego's desired output of Unit 1. With respect 19 to such matters, the Edison Dispatcher shall issue 20 all orders to the Unit 1 control operator, except 21 as otherwise provided in emergency operating pro-22 cedures approved by the Board of Review.

23 4.9 San Diego shall provide a direct conenmication link l

24 between the San Diego Load Supervisor and the Unit 1 25 control room so that San Diego may be advised of and Se may obtain first-hand information about plant

. 11J

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l I conditions. To the extent practicable, the Unit 1 i

) 2 control operator d.11 s % 1 taneously advise the 3 Edison Dispatcher and the San Diego Load Supervisor i 4 of plant operating conditions. l

i l 5 4.10 Edison shall prepare and maintain records and l t

l 6 reports re @ d in connection with the operation i

7 and maintenance of Unit 1 and the Station Site.

s San Diego shall be supplied with a tabulation of all 9 records and reports routinaly prepared and main-10 tained and shall be supplied with copies of such l i

11 records and reports as it requires. A copy of any 12 special report required in connection with the 13 operation and stintenance of Unit 1 and the Station 14 Site shall be supplied to San Diego. Through t 15 appropriate representatives, San Diego will advise ,

is Edison of informar4an needed for regulatory reports  :

17 to be submitted by San Diego, and Editon vill make l la r.tch informetion available to San Diego in a* timely ,

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19 mnner. San Diego also will be furnished a list of 20 all plant drawings, equipment, specifications, l 21 manufacturers' operating -1s, etc. , and will be  ;

22 supplied with at least one espy of such of these ,

, 25 items as it requests.

i 24 4.11 The Edison and San Diego Public Relations Repre- .

25 seatatives, in consult:ation with the Generating l as Station Superintendent, will prepare and submit 1

27- i n '.

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1 to the Board of Review, for its review and approval, 2 rules and procedures covering plant visits and tours.

s 4.12 In the event the operating and maintencnce expeuse 4 budget, the fuel expense budget, the manpower budget, 5 or any revision of any of such budgets has been l

l e submitted but has not been approved by the Board of 7 Review as provided in Sections 4.1 and 4.5 hereof, 8 Edison shall continue to take all actions necessary 9 for the operation and maintenance of , Unit 1 and the 10 Station Site until the budget or revision in ques-11 tion is approved.

12 5. ALIDCATION OF CAPACITY AND SCHEDULING OF ENERGY l

1s 5.1 Edison and San Diego shall each have a capacity 14 entitlement in Unit 1 equal to eighty (80) percent 15 and twenty (20) percent, reapsetively, of the Unit 1 la Effective Operating Capacity and such capacity 17 entitlements shall be used for reporting and 18 resources planning; provided, however, the amount 19 'of Unit 1 capacity available to each of Edison and 1

20 San Diego shall, at any given time, be equal to l l 21 eighty (80) percent and twenty (20) percent, 22 respectively, of the Unit 1 Current Operating l 25 Capacity. The Edison Dispatcher will keep the San l

24 Diego Load Supervisor advised of the Unit 1 Current  !

. I 25 Operating Capacity.

26 5.2 Edison and San Diego shall each be entitled to l

l i

2M ,

1 schedule generation on Unit 1 (including associated 2 reactive power), for its account at any time, up to s the amount of Unit 1 Current Operating Capacity 4 available to it.

s 5.3 Unit 1 shall be operated whenever Edison or San 6 Diego requests its operation, provided that the 7 Company requesting such operation schedules genera-8 tion, for its account, in an amount at least equal 9 to eighty (80) percent, for Edison, or twenty (20) 10 Percent, for San Diego, of the Unit 1 Min 4== Output.

11 A Company not requesting operation shall, neverthe-l l 12 less, be required to schedule additional genaration

\

l 13 to the extent necessary to increase load to the 14 Unit 1 M4n4== Output.

15 5.4 Metering devices have been installed in the Edison le and San Diego Switchyards to provide input to the 17 Edison and San Diego load frequency control equip-18 m t such that an amount of power equal to the sum 19 of twenty (20) percent of the Unit 1 220-kv Output l

20 plus eighty (80) percent of the Unit 1 Auxiliary "C" ,

21 Transformer Demand will automatically flow across 22 the interconnection from the Edison Switchyard to 23 the San Diego Switchyard, in addition to any 24 scheduled interchange from Edison to San Diego.

25 Edison and San Diego will thereby automatically as receive into their Transmission Lines eighty (80)

, l 37 l -

1 Percent and twenty (20) percent, respectively, of 2 the Unit 1 Net Output. During periods when Unit 1 3 is r.ot ge> aerating, Edison and San Diego will thereby 4 automatically supply from their systems eighty (80) 5- percent and twenty (20) percent, respectively, of a the Unit 1 auxiliary load.

l 7 5.5 In the event either Company wishes to receive less 8 than its full entitlement to Unit 1 Net Output, the 9 Edison Dispatcher and the San Diego Load Supervisor 10 will arrange for each Company to receive its desired 11 share of Unit 1 Net output in accordance with pro-12 cedures to be approved by the Board of Review.

13 6. CAPITAL IMPROVEMENTS 14 6.1 on or before the first of September of each year, 15 Edison shall prepare and submit to the Board of la Review, for its review and approval, a Capital 17 Improvements budget for the ensuing calendar year.

18 On or before the fifteenth of October of each year, 19 the Board of Review shall approve a Capital Improve-20 ments budget for the ensuing caleadar year, which 21 said budget may at any time during the year be 22 revised with the approval of the Board of Review.

23 6.2 Edison shall make all Capital Improvements approved 24 by the Board of Review.

25 6.3 The costs of all Capital Improvements made by Edison 26 pursuant to Sections 6.2,13 and 14 hereof shall be I

O as

1 shared eighty (80) percent by Edison and twenty (20) 2 percent by San Diego.

s 6.4 The costs of any Capital Improvement shall include 4 all costs incurred by Edison which confoi o the 5 provisions of Electric Plant Instruction 3 or the i 6 FPC Accounts entitled " Components of Construction 7 Cost"; provided, however, for the purpose of billing a San Diego for its share of such costs, Edison shall l 9 abide by the following qualifications to said I lu Electric Plant Instruction 3:

. 11 6.4.1 Charges pursuant to Item (8) " Injuries and 12 Damages" and Item (14) " Insurance" shall not is include any costs shared by San Diego pur-14 suant to Section 10 hereof which provides 15 for insurance coverage with respect to is Unit 1. However, such charges shall in dade 17 costs of any injuries or damages arising out is of and occurring during the course of con-19 struction of a Capital Isipsevement and the so cost of any additional insurance which the 21 Insurance Representatives deem necessary to as protect the interests of the Companies in

> 23 such a Capital Improvement prior to the time l 24 the coverage provided in Section 10 hereof 25 becomes applicable thereto.

6.4.2 Ss Charges pursuant to Item (12) " General l E7

,,-r . . . . .-

=g 1 administration capitalized" shall be as 2 follows:

l 3 6.4.2.1 If any Capital Improvement is made 4 by Edison forces, the snount of l 5 general administration expense i

e (includes pensions and benefits and 7 other ah4n4 atrative and general 8 expenses) allocable to such Capital 9 Improvement shall be determined by lo multiplying the amount of Edison 11 direct labor costs chargeable 12 thereto by the Capital A&G Ratio.

Is The Capital A&G Ratio shall be 14 determined in accordance with the 15 method shown in Exhibit r. Esti-la mated ratios shall be used and 17 year-end adjustments shall be made 18 in a manner similar to that 19 described in Sectiena 7.4.1 and so 7.4.2 hereof.

21 _6.4.2.2 If any Capital Improvement is made 22 by a contractor, the amount of

,- 23 general administration expense 24 allocable to such Capital Improve-25 ment shall be determined by multi-Es plying the total work order cost 13C

l

)

l l

l i

i thereof by 0.01; provided, however, I i ,

l 2 such allocable amount shall not be i 3 less than the lesser of $50.00 or 4 five (5) percent of the total work 5 order cost. As used in this -

6 Section 6.4.2.2, " tots 1 work order 7 cost" does not include the Edison 8 overhead costs of (1) interest 9 during construction, (2) taxes l lo during construction, (3) injuries 11 and damages, and (4) general 12 administration expense.

13 6.4.2.3 The procedures and ratios involved 14 in determining the amount of 15 general administration expense to le be allocated to any Capital 17 Impsevement, as described in this la Section 6.4.2, shall be reviewed 19 from time to time by the Fiscal 20 Representatives and, if necessary, 21 be revised so that the application 22 -

thereof shall continue to be f -23 equitable to Edison and San Diego.

24' Any such revision shall be agreed l '25 to in writing by the Fiscal SC Representatives and approved by w

_ . _ . _ _ , - _ - . _ _ . _ _ . . _ . _ _ _ ._____ . m _____.

- -~

1 the Board of Review.

2 6.4.3 Charges pursuant to Item (16) " Taxes" shall 3 not include any taxes shared by San Diego 4 pursuant to Section 11 hereof.

5 6.4.4 There shall be no charges made pursuant to e Item (1D " Interest du ing construction".

7 6.5 Edison, at its own expense, shall make all improve-8 ments to the Edison Switchyard, and San Diego, at its 9 own expense, shall make all img evements to the lo San Diego Switchyard, as is more fully provided in 11 the San Onofre Interconnection Agreement.

12 7. OPERATION AND MAINTENANCE EXPENSES l -

! 13 7.1 The expenses incurred by Edison on behalf of itself 14 and San Diego for the operation and mahtenance of l 15 Unit 1 and the Station Site which are chargeable to le FPC Accounts 517, 519 through 525, inclusive, 526 l 17 through 532, inclusive, 560, 562, 566, 568, 569, p 570, and 573 shall be shared eighty (80) percent by 19 Edison and twenty (20) percent by San Diego.

20 Charges to such scounts include the following:

21 7.1.1 Overhead expenses incurred by EdiLon which 22 are allocable to the operation and mainte-

> 23 nance of Unit 1 and che Station Site. Such l *24 overhead expenses shall be determined in PS accordance with the allocation procedures ,

as shown in Exhibit B.

34

\

u t-

. , . - . _ _ . - . . . ,.- _ _ . . _ . . - , . . . _ - - _ _ _ _ . . . _ . ~ . . _

7.1.2 Nuclear training expenses for the initial 2 manning of Unit 1 and for Unit 1 personnel ,

3 replacements requir'ed by normal attrition, f 4 such as promotions, resignations or neces-5 sary transfers. Other nuclear tra4ning s expenses for the training of personnel to 7 provide ==nning of other generating facili- .

a ties shall not be charged to the operation 9 and zuintenance of Unit 1. Any disagreement 10 with respect to charging any nuc1 car training 11 expenses to the operation and maintenance of l

12 Unit 1 shall be resolved by the Board of I 13 Review.

14 7.1.3 Payments made by Edison to San Diego, pur-15 suant to Section 12.6 hereof, for the use of is San Diego personnel in the operation 4:nd i

l 17 -

maintenance of Unit 1 and the Station Site.

la 7.2 Yayroll tax expenses incurred by Edison on behalf of 19 itself and Sea Diego which are allocable to the 20 operation and maintenance of Unit 1 and the Station 21 Site shall be shared eighty (80) percent by Edison 22 and twenty (20) percent by San Diego. The amount of 23 such allocable expenses shall be determined by 24 multiplying the Edison labor cost portion of the r j SS expenses determined in a;cordance with Section 7.1 Se hereof by a decimal fraction, hereinafter referred

I to as the Payroll Tax Ratio. The Payroll Tax Ratio 2 shall be determined and applied as follows:

3 7.2.1 During each calendar year, an estimated Pay-4 roll Tax Ratio shall be used to determine 5 the amount of payroll tax expenses to be e paid monthly by San Diego. Such estimated 7 Payroll Tax Ratio shall be determined in 8 accordance with rhe method shown in Exhibit C 9 hereof based on Edison's expenses for the lo preceding year; provided, however, by agree-11 ment of the Fiscal Representatives, such 12 ratio may be changed to more nearly reflect 13 the expected expenses of the current year.

14 7.2.2 As soon as practicable after the end of each 15 calendar year, the actual Payroll iax Ratio le for such year shall be determined in accord-l 17 ance with the method shown.in Exhibit C 18 hereof. Using said actual Payroll Tax Ratio, ,

19 the payroll tax expenses for which San Diego

-20 is obligated hereunder shall be determined 21 for such year. To the extent that such 22 expenses are more or less than those already 25 paid by San Diego during said year, Edison 24 shall receive from or pay to San Diego, as -

25- -he case may be, tba amount of such as difference.

l 1 7.3 Pensions and benefits expenses (including payroll  !

2 tax expenses and Worlenen's Co=pensation expenses l 3 applicable thereto) incurred by Edison on b half of 4 itself and San Diego which are allocable to the 5 operation and maintenance of Unit 1 and the Station a Site shall be shared eighty (80) percent by Edison 7 and twenty (20) percent by Can Diego. The amount of 8 such allocable expenses shall be determined by multi-9 plying the Edison labor cost portien ,of the expenses  ;

lo determined in accordance with Section 7.1 bereof by  :

11 a decimal fraction, hereinafter referred to as the i

12 Benefits Ratio. The Benefits Ratio shall be deter- l 13 mined and applied as follows:

14 7.3.1 During each calendar year, an estimated 15 Benefits Ratio shall be used to determine la the amount of pensions and benefits expenses i

17 to be paid monthly by San Diego. Such l l 18 estimated Benefits Ratio shal'l .be determined 19 in accordance with the method shown in so Exhibit E hereof based on Edison's expenses l 21 for the preceding yes ; provided, however, i

23 by agreement of the Fiscal Representatives, '

25 such ratio may be changed to more nearly .

24 reflect the expected expenses of the current ,

i 25 year. '

as 7.3.2 As soon as practicable after the end of each 1

21:

.- . - _ - _ . .o.. -_. .- . , . - . _ . _ - . _ , . , _ _ _ - . . . . _ _ _ _ . _ . . ~ , , . ~ . . . - , -

1 calendar year, the actual Benefits Ratio for f 2 such year shall be determined in accordance l

l 3 with the method shown in Exhibit E hereof.

4 Using said actual Benefits Ratio, the pen-l 5 sions and benefits expenses for which San e Diego is obligated hereunder shall be deter-7 mined for such year. To the extent that 8 such expenses are more or less than those 9 already paid by San Diego during said year, lo Edison shall receive from or pay to San

, 11 Diego, as the case may be, the amount of l

l 12 such difference, t

13 7.4 A m istrative and general expenses (including pay-

14 roll tax expenses, Workmen's Compensation expens'es, 15 and pensions and benefits egenses applicable there-

! le to) incurred by Edison on behalf of itself and San i 17 Diego which are allocable to the operation and s 18 maintenance of Unit 1 and the Station Site shall be 19 shared eighty (80) percent by Edison and twenty (20) 20 percent by San Diego. The amount of such allocable 21 expenses shall be determined by multiplying the 22 Edison 3. abor cost portion of the expenses deter-P 23 mined in accordance with Section 7.1 hereof by a l

l 24 decimal fraction, hereinafter referred to as the 25 A & G Ratio. The A & G Ratio shall be determined se and applied as follows:

1%

l l

l l

l l

l 1 7.4.1 During each calendar year, an estimated 2 A-& G Ratio shall be used to deter =ine the 3 amount of a &4nistrative and general expenses j 4 to be paid monthly by San Diego. Such esti- l 3 mated A & G Ratio shall be determined in l l

e accordance with the method shown in  !

7 Exhibit F hereof based on Edison's expenses '

i 8 for the preceding year; provided, however, I

9 by agreement of the Fiscal Re,presentatives, I

10 such ratio may be changed to more nearly 11 reflect the expected expenses of the current 12 year.

Is 7.4.2 As soon as practicable after the end of each l 14 calendar year, the actual A & G Ratio for l l

15 such year shall be determined in accordance  ;

la with the method shown in Erh4 hit F hereof.

17 Using said actual A E G Ra.io, the a h4n4=-

l .

I 18 trative and general expenses for-which San 19 Diego is ol: ligated hereunder shall be deter-20 mined for such year. To the extent that such 21 expenses are more or less than those already 22 paid by San Diego during said year, Edison P 23 shall receive from or pay to San Diego, as 24 the case may be, the amount of such 25 difference.

Es 7.5 The procedures referred to in Section 7.1.1 hereof

s. . -

. _ . _ _ - , _ _ _ . ~ _ _ _ . _ . _ . _ _ _ . - - _ _ _ - - _ -__. _ _ _ - - .

1 and the methods for deter 4ning and applying the 2 Payroll Tax Ratio, Benefits Ratio, and A & G Ratio  ;

3 referred to in Sections.7.2, 7.3, and 7.4 hereof 4 shall be reviewed from time to time by the Fiscal l

5 Representatives and, if necessary, he revised so e that the application thereof shall continue to be 7 equitable to Edison and San Diego. Any such revi-

, a sion shall be agreed to in writing by the Fiscal l

l 9 Representatives and approved by the Board of Review.

I lo 746 Nuclear training expenses incurred prior to l 11 January 1, 1967, for the initial manning of Unit 1 12 which have been charged to FPC Account 926 shall be 13 shared eighty (80) percent by Edison and twenty (20) 14 percent by San Diego. Any training expenses for 15 Unit 1 personnel incurred on or after January 1, is 1967, which are charged to FPC Account 926 shall be 17 shared through application of the Benefits Ratio la pursuant to Section 7.3 hereof.

i 19 7.7 Each Company shall pay all expenses of its repre-l l 20 sentatives referred to in Section 3 hereof except 21 for such expenses properly chargeabig to Unit 1.

22 7.8 Edison shall pay all operation and maintenance 25 expenses of the Edison Switchyard and San Diego 24 shall pay all operation and =mintenance expenses of

25 the San Diego Switchyard. Such expenses shall not ,

98 be shared by the Companies in connection with the l

l

?Il m

operation an mahtenance~ of Unit 1 except for the i 2 costs of meter tests as specified in Section 13.

, 3 7.9 Edison shall pay directly to the United States its t

O eighty (80) percent share and San Diego shall pay 5 directly to the United States its twenty (20) per-e cent share of the annual use charges due under the 7 terms and conditions of the grants of easements for 8 the Plant Site, Spur Track Area, and Access Road 9 Area. .

10 8. NUCIZAR FUEL COSTS 11 8.1 During the term of the Fuel Service Contract, Edison 12 shall make all payments to and receive all moneys 13 and credits from Westinghouse, the Atomic Energy 14 C w 4=sion, and others, which arise under the Fuel l 15 Service Contract and directly related contracts.

18 San Diego shall pay to Edison its share of such -

17 payments and shall receive from Edison its share 18 of moneys and credits, as hereinafter specified, in 19 the manner provided in Section 12 hereof.

20 8.2 Payments for fuel under Article VI-C of the Fuel 21 Service Contract shall be shared as follows:

22 8.2.1 The fixed monthly payment shall be shared 25 eighty (80) percent by Edison and twenty (20) 24 percent by San Diego.

25 8.2.2 The portion of all energy payments equal to as -

the zero net load fuel costs for Unit 1 u ')

?

l

\

t 1 shall be shared eighty (80) percent by Edison 2 and twenty (20) percent by San Diego. Such j s zero net load fuel costs shall be deter =ined l l

0 each bi11%g period in accordance with pro- i 5 cedures to be approved by *h Scard of f e Review.

j 7 8.2.3 h rema4ning portion of all energy payments 8 shall be shared by E:ison and Sa= Diego is l l

3 direct proportion to the amount of energy '

i lo delivered for the account of each Company l i

11 from Unit 1 during the period covered by  !

12 such payments.

13 8.3 Any additional payment (including any non-caH'ornia ,

14 taxes associated with reprocessing charges) or credit  !

15 which may arise under Article VII of the Fuel Se.mrict ,

is Contract, except for those arising under Subdivision  !

17 D, shall be shared by Edison and San Diego in direct  :

18 proportion to the sums of the energy paymenen 19 charged to each C m y under Sections B.2.2 and 20 8.2.3 bereof, chMng the period in which the fuel, b

l 21 to which such additional payment or credit applies,  ;

i as was used; provided, h v e , if any such additional  !

E 25 payment or. credit applies to fuel which will be used l 24 in the future, it shall be shared in4 H =117 eighty  !

as (80) percent by Edison and twenty (20) percent by as San Diego and appropriate adjustments shall be i

p r

v e.

3

___m

1 made periodically, as such fuel shall be used, to 2 provide sharing of such additional payment or credit s as first specified above in this Seccion 8.3.

4 8.4 Any additional payment with respect to California 5 State and local sales and use taxes which may arise e under Article VIII of the Fuel Service Contract shall 7 he shared by Edison and San Diego in the same propor-8 tion as they share (or shared) the payments to which 9 said taxes apply. Any other payments which may arise 10 under Article VIII of the Fuel Service Contract shall 11 be shared eighty (80) percent by Edison and twenty l 12 (20) percent by San Diego.

13 8.5 For the purpose of establishing a scheduled refuel-14 ing date with Westinghouse pursuant to Article III 15 of the Fuel Service Contract, Edison and San Diego la each shall estinate che rate at which it expects to 17 schedule energy from Unit 1 during the r - 4ning

. 18 period of operation before refueling and each shall 19 advise the other thereof. Any additional payment 20 which may be required under Article III-B or 21 Article III-D of the Fuel Service Contract, as a 22 result of scheduling energy from Unit 1 at a lesser 25 rate than that estimated, shall be shared by Edison 24 and San Diego in direct proportion to the amounts by 25 which the amounts of energy estimated to be scheduled SS from Unit 1 exceed the amounts of eneegy actually sw

~

1 taken from Unit 1 by each Company. Neither Company 2 shall schedule energy at a rate greater than that 3 estimated during the r==4 ming period of operation 4 before refueling, with ut the consent of the other 5 Company.

l 6 8.6 Any additional payments which may arise under 7 Article III-C of the Fuel Service Contract, as a 8 result of operat.ing Unit 1 at less than ninety (90) 9 percent capacity factor, shall be shared by , Edison lo and San Diego in direct proportion to the amounts, 11 if any, by which the amounts of energy corresponding

~

12 to ninety (90) percent capacity factor operation 13 exceed the amounts of energy actually taken from 14 Unit 1 by each Company.

15 8.7 All other payments, costs, charges, or credits which 16 inay arise under or in connection with the Fuel 17 Service Contract or directly related contracts, or 18 any other agreed upon costs incurred by Edison on 19 beha? ? of itself and San Diego for the operation cf l 20 Unit 1 which are chargeable to FPC Accounts 157, 21 158, 159 or 518 shall be shared eighty (80) percent 22 by Edison and twenty (20) percent by San Diego 25 unless otherwise determined-by the Board of Review.

24 9. ENVIRONMENTAL RADIATION MONITORING 25 Edison shall perform or cause to be performed all as environmental radiation monitoring activities which are 2n

1 necessary in connection with the operation of Unit 1, 2 including those which ::rast be performed outside of or 3 gway from the San Onofre Nuclear Generating Station.

4 Such activities include, but are not li=ited to, (1) the 1

I 5 procur - t, installation, operation, and maintenance of 6 monitoring equipment and supplies, (ii) the collection 7 and analysis of data, and (iii) the reporting of such 8 activities and analyses to governmental agencies and 9 others. All costs incurred by Edison in connection 4th lo or allocable t.o such envi m.tal radiation e.dtoring 11 activities shall be shared eighty (80) percent by Edison 12 and twenty (20) percent by San Diego.

13 10. INSURAN2 14 10.1 For the protection of Edison and San Diego with 15 respect to liabilities and risks arising out of the le or:nership, operation, or maintenance of Unit 1 and

! 17 the Station Site, Edison shall secure and maintain

{

18 in force policies of insurance of the following .

19 tygms, in form, and with companies satisfactory to 20 the Insurance Representatives, and with premiums to 21 be shared by Edison and San Diego as set forth in l 22 Section 10.3-hereof. Such insurance coverage shall

• • 23 be subject to periodic review and revision to assure 24 the maintenance of insurance protection as deemed

• 25 to be required by mutual agreement of the Insurance as Representatives. In the event of any disagreement l ,

. T'l t

i l

1 concerning the securing of or the subsequent revi-2 sion of such insurance coverage, the matter shall be 3 submitted to the Board of Review.

4 10.1.1 Comprehensive General Liability Insurance -

5' Non-nuclear (Including Motor Vehicles) l e Edison shall extend its comprehensive 7 general liability insurance to provide 8 coverage for Unit 1 and the~ Station Site 9 with San Diego added as an a,dditional named 10 insured respecting such coverage.

11 10.1.2 Workmen's Compensation and Employers' 12 _ Liability Insurance -

13 ,

Edison shall extend its Workmen's Com-14 pensation and Employers' Liability Insurance 15- to the extent of permissible self-insurance la and insured excess to include operating and 17 maintenance personnel of Edison regularly .

18 assigned to Unit 1.

19 10.1.3 Physical Damane Insurance - Non-nuclear 20 To the extent possible,, Edison shall 21 extend coverage under its Physical Damage 1

22 Insurance policies to provide non-nuclear 23 physical damage coverage-for Unit 1 and the 24 Station Site for risks not covered by the l 25 nuclear property damage insurance referred

-as to in Section 10.2.2 hereof, with San Diego

av

1 added as an additional named insured respect-l 2 ing such coverage. This insurance is I

s applicable to all real and personal property 4 of every description, subject to policy 5 exclusions. In the event Edison is unable l

e to obtain such coverage for Unit 1 and the

! 7 Station Site under its present program, 8 such coverage shall be provided in the 9 marmer a'nd to the extent agreed upon by the 10 Insurance Representatives.

Il 10.2 Nuclear Insurance 12 Edison and San Diego shall secure and maintain in 13 force the following insurance and other coverages 24 with respect to Unit 1 and the Station Site:

15 10.2.1 Protection against liability arising out

.le of, or resulting from, a " nuclear incident" 17 as defined in the Atomic Energy Act of 18 1954, as amended, to includa (a) liability 19 insurance from the Nuclear Energy i

so Liability Insurance Association and/or 21 the Mutual Atomic Energy Liability Under-22 writers, or equivalent insurance in such 53 amount and in such form ac shall meet

! M the financial protection requirements of 25 the Atomic Energy Commission pursuant to as Subsection 170(b) of the Atomic Energy We

. . . . , . . . - . . m . - . . _ . . . _ , _ . . . . _ _ _ . . _ . . . _ _ . . . . _ -

1 Act of 1954, as amended; and (b) a 2 Governmene Inde:::nity Agreement with the 3 Atomic Energy Cor::=ission pursuant to the l 4 Subsection 170(c) of the Atomic Energy 5 Act of 1954,.as amended; and 6 10.2.2 Nuclear property damage insurance from the 7 Nuclear Energy Property Insurance Associa-a tion and/or the Mutual Atomic Energy 9 Reinsurance Pool, or equivalent insurance, lo 'and any additional nuclear property damage 11 insurance coverage, in such amount and such 12 form as are agreed upon by the Insurance is Representatives.

14 10.3 The premium costs allocable to the additional non-15 nuclear insurance coverage with respect to Unit 1 l

l 1s and the Station Site described in Section 10.1 l 17 hereof and for the nuclear insurance described in is Section 10.2 hereof shall be shared eighty (80) 19 percent by Edison and twenty (20) percent by San 20 Diego. All dividends, return premiums, and credits 21 received respecting Unit 1 insurance policies 22 shall be shared in the same proportions.

• • 25 10.4 San Diego shall provide, at its sole expense, 24 Workmen's Compensation and Employers' Liability 25 Insurance to cover the San Diego Plant Representa-28 tive, San Diego personnel used for special work on ,

i 24

l 1 Unit 1 pursuant to Section 4.1 hereof, Saa Diego l 2 personnel receiving training at the San Onofre '

s Nuclear Generating Station pursuant to Section 4.2 4 hereof, and any other San Diego personnel while at i

t 5 the San Onofre Nuclear Generating Station.

e 10.5 Edison shall investigate, adjust and settle claims 7 asserted by any party other than a Company against 8 the Companies or either of them, which are claims 9 of the type referred to in See. tion 16.3 hereof; 10 however, San Diego shall investigate, adjust and 11 settle claims asserted by any of its ultimate l

12 consumers, which are claims of the type referred to 13 in Section 16.4 hereof. At the request of Edison, 14 San Diego shall assist in the investigation, adjust- '

15 ment and settlement of any such claims.

is 10.6 Edison shall present and prosecute claims for I 17 losses and damages against any insurer or third l 18 party. Costs incurred by Edison in presenting and 19 prosecuting such claims and any other costs so incurred by Edison arising out of the operation I 21 and wintenance of Unit 1 and the Station Site 28 which are chargeable to FPC Account 924, will be

- 25 shared eighty (80) percent by Edison and twenty

~

se (20) percent by San Diego. '

a5 10.7 Through the appointed Insurance Representatives, as Edison shall consult with San Diego on ms.tters p7

1 of insurance with respe.:t to Unit 1 and the Station 2 Site and shall provide San Diego copies of the I s following:

4 10.7.1 Policies of nuclear insurance and certifi-5 cates of insurance applicable to non-nuclear e coverages in effect.

i 7 10.7.2 Invoices applicable to insurance costs.

8 10.7.3 Notices of losses in excess of $1,000 9 .

applicable to physical damage, third party

! 10 liability, and Worlanen's Compensation.

1 l 11 10.7.4 Notices of Workmen's Compensation claims ,

12 filed with the Workmen's Compensation .

Is , ,

Appeals Board.

14 10.7.5 Annual snrmnaries of Workmen's compensation 15 claims.

Is ,

10.7.6 Status reports of all claims involving a 17 potential loss in excess of $1,000.

i 18 10.8 San Diego shall pay to Edison its share of premium 19 costs and other insurance costs in the manner 30 provided in Section 12 hereof.

21 11. AD VAIDREM TAXES as 11.1 Edison and San Diego shall use their best efforts to 23 have any taxing authority imposing ad valorem taxas l**

34 or assessments on the San Onofre Nuclear Generating 25 Station assess and levy such taxes and assessments as directly against each Company on the basis of its L <

1 1

50- y(

y.,- - - , ,, n ,. ,--+--e,-- e--- w --w * - - - -

i I

i t

1 Percentage ownership in the property taxed.

l i

l 2 11.2 All ad valorem taxes or assessments so levied l

s against each Company shall be the sole responsi-4 bility of the Company upon whom said taxes or 5 assessments are levied, a 11.3 If any ad valorem taxec or assessments are assessed 7 and levied in a manner other than that specified in 8 Section 11.1 hereof, it shall be the responsibility 9 of the Board of Review to establish procedures for lo the equitable apportionment of such taxes or assess-11 ments and the payment thereof.

12 12. PAYMENTS 13 12.1 As soon as practicable after the date of execution 14 of this agreement, Edison shall submit to San Diego 15 an accounting report showing:

16 12.1.1 All expenditures in connection with the

( 17 operation and maintenance of Unit 1 and 18 the Station Site (except for such expendi-l 19 tures which have been or will be capitalized 20 and shared under the Edison-San Diego 21 Agreement) which have been made by Edison 22 on behalf of itself and San Diego on or l** 23 before the last day of the calendar month 84 in which this agreement is executed; 25 12.1.2 San Diego's share of such expenditures S8 determined in accordance with the g

I provisions of Sections 6, 7, 8, 9, 10, 14, 2 15 and 16 hereof; 3 12.1.3 The inonth and year in which such expendi-4 tures were made; and 5 12.1.4 The amount of interest then due on San 6 Diego's share of such expenditures computed 7 from the fifteenth day of the month in a which such expenditures were made at the 9 rate of six (6) percent per annum.

10 12.2 San Diego shall pay to Edison its share of the 11 expenditures and accumulated interest shown in said 12 accounting report within ten days after receipt by is San Diego of said accounting report.

14 12.3 With respect to Unit 1 and Station Site expenditures j 15 made after the last day of the calendar month in I is which this agreement is executed, Edison shall 17 notify San Diego of San Diego's share of such Unit 1 18 and Station Site expenditures made pursuant to 19 Sections 6, 7, 9, 14, 15 and 16 hereof and San Diego 20 shall pay its share of such expenditures to Edison, 21 in the manner specified below:

22 12.3.1 On or before the first day of each calendar

• • 25 month, Edison shall submit in writing to 1

24 San Diego (a) an estimate of all such 25 expenditures which Edison expects to make SS on behalf of itself and San Diego during

1 ' that calendar month, (b) an estimate of 2 San Diego's share of such expenditures l

l 3 determined in accordance with the provisions 4 of this agreement, and (c) the amount of 5 money to be paid by San Diego.in payment of e its share of expenditures. In determining 7 such amount, Edison shall take account of a any unexpended balance of funds previously 9 advanced by San Diego purs.sant hereto or lo any deficiency in . funds previously so 11 advanced by San Diego.

12 12.3.2 San Diego shall pay to Edison the amount of 15 money so specified on or before the

.14 fifteenth day of the calendar month for 15 which expenditures have been estimated.

Is 12.3.3 As soon as practicable after the close of 17 nach calendar month, Edison shall furnish to j 18 San Diego an accounting report covering all 19 Unit 1 and Station Site costs incurred by so Edison on behalf of itself and San Diego 21 during that month.

22 12.3.4 Upon termination of this agreement and after

'- 23 all Unit 1 and Station Site costs incurred l

24 under this agreement have been determined, 25 Edison shall pay to San Diego any unexpended l

Sa balance of funds previously advanced by l

l nt l

1 San Diego or San Diego shall pay to Edison 2 any deficiency in funds previously advanced s by San Diego, i l 4 12.4 With respect to expenditures to be made pursuant to i 5 Section 8 hereof after the last day of the calendar 6 month in which this agreement is executed, Edison l l  !

i l

7 shall notify San Diego and San Diego shall pay its I

s share of such expenditures in the manner specified l i

9 below:

lo 12.4.1 Not less rh n five business days prior to  !

i 11 the date Edison must make such expenditures, l  !

12 Edison shall provide San Diego with a 13 written statement of San Diego's share of l 14 such expenditures. l 15 12.4.2 San Diego shall pay its share of such le expenditures to Idisen no later than the 17 date Edison must make such expenditures.

la 12.4.3 In the event Edison is unable to make an l i l 19 accurate determination of San Diego's share so in sufficient Mme to give San Diego the l 21 notice provided for in Section 12.4.1 f 32 hereof, Edison shall estimate San Diego's  :

- 25 share and San Diego shall pay such esti- [

24 mated amount. The following billing will 25 be adjusted by the amount such estimated as share differs from San Diego's actual 54-

1. 1

s. - -__ . _. - . - . . . _ _ . . - . _ - . _ , . . . - . . _ _ _ - . . _ - - - . _ _ - - - --

1 share subsequently determined.

i, 12.4.4 Upon written agreement of the Fiscal 3 Representatives, San Diego may pay its share 4 of all or any of the expenditures described 5 in Section 8 hereof, other than payments to 6 Westinghouse, the Atomic Energy Commission, 7 or the fuel reprocessor, in the marmer 8 described in Section 12.3 hereof.

p 12.5 With respect to . 7enditures ro be made by Edison 10 pursuant to Section 10 hereof after the last day of 11 the calendar month in which this agreement is 12 executed, Edison shall provide San Diego a written is statement of San Diego's share of such expenditures 14 not less than eight business days in advance of the 15 date Edison must make such expenditures. San Diego 16 shall pay its share or such expenditures to Edison 17 no later than the date that Edison must make such 18 expenditures.

19 12.6 If and to the extent that San Diego personnel are l

30 used for special work on Unit 1 and the Station l 21 Site, as provided in Section 4.1 hereof, San Diego 22 shall pay all wages, salaries, and other expenses 23 associated with such use of San Diego personnel.

34 San Diego shall advise Edison in advance of the l 26 basis of the charges to be made by San Diego for L se the use of its personnel and Edison shall make

-p.

I

1 payment to San Diego thereof on completion or dur-2 ing the course of such work, as the Companics may 3 ' agree. Edison shall charge any such payment to 4 Unit 1 and the Station Site.

5 12.7 The accounting reports submitted by Edison covering .

6 Unit 1 and Station Site costs shall be in a forzn 7 satisfactory to San Diego with sufficient detail to 8 enable San Diego to allocate costs to the proper 9 FPC Accounts and to ascertain the accuracy and 10 correctness of such costs.

Il 12.8 San Diego chall have the right to post-audit the 12 books and records of Edison perta4ning to Unit 1 and is the Station Site. Should any post-audit reveal 14 arrors, omissions or items not properly chargeable 15 to Unit 1 and the Station Site or to San Diego in 18 the amounts billed, appropriate adjust 2nents shall 17 be made.

Is 12.9 Annually or at such other interva*.s agreed upon by 19 the Fiscal Representatives, Ed b ra shall prepare 7 and distribute complete compilations of Unit 1 and 21 Station Site costs which are required for fiscal i

l 22 purposes by the c m anies. . San Diego will assist o- 23 in such preparations as necessary.

24 12.10 Any disagr<<ement as to whether San Diego's share as of Unit 1 and Station Site costs has been properly 96 determined in accordance with the provisions of 2s4

.- ^

1 l

1 this agceement, which is not resolved within sixty 2 days of the date written notice of such disagreement 3 is , een, shall be referred to the Board of Review.

l 4 If afr:r thirty days the Board of Review has not 5 'esolved the dispute, the matter may be submitted e to arbitration as provided in Section 17 hereof.

7 12.11 Any payment by either Company to the other under i

8 this agreement which is not made when due shall 9 thereafter be payable with interest! computed at the lo rate of ten (10) percent per annum from the date 11 payment is due until the date payment is received.

12 12.12 In the event either Company disputes any portion is of any payment which it is required to make to the 14 other Company under this agreement, the disputing 15 Company shall give written notice thereof and shall is pay the full amount of such payment on or before 17 the date when such payment is due. In the event 18 ,

it is determined subsequently that the disputing 19 Company is entitled to a refund of all or any por-so tion of such payment, then the other Company shall 21 thereupon pay to the disputing Company the amount 22 of such refund with interest computed at the rate oa 25 of ten (10) percent per annum from the date of 24 -

payment to the date of reimbursement.

25 13. UNIT 1 OPERATING IMPAIRMENT se In the event of a Unit 1 Operating 17=4-nent, l 6

1- Edison shall take all actions reasonably necessa.y and 2 required to restore or maintain the operating capability 3 and reliabflity of Unit 1 in a timely ranner; provided, 4 however, i all or substantially all (as determined by 5 the Board of Review) of Unit 1 is destroyed, damaged, or a condemed, no such restoration shall be undertaken unless 7 the Co=paniet etee thereto. As soon as practicable a after the commencement of any Unit 1 Operating Impairment, 9 EdL:an shall advise San Diego of the occurrence and i lo nature of such Unit 1 Operating Impairment and the actions 11 being taken and contemplated to be t: ken to restore or j

. 12 maintain the operating capabild.ty and reliability of l l

13 Unit 1.

I' 14 14. ATOMIC ENERGY COMMISSION REGUIATORY MAT"ERS 15 14.1 Edison, in consultation with San Diego, shall be is responsible for the preparation and filing with the ,

17 Atomic Energy Comission of any application fer a l l

18 construction permit and a license to acquire, 19 possess, and use Unit 1, including any amendments 20 thereof, to extend the term of the provisional 21 operating license or to acquire a pemanent l 32 operating icense, and for handling all we.her l 25 matters with the Atomic Energy Comission in l 24 connection therewith, except for any such matters 25 which the Atomic Energy Comission may require  !

96 San Diego to handle independently. Edison shall )

l 19 l

. . 1

1 sdomit such applications to San Diego for approval 2 and execution prior to filing.

3 14.2 The Companies, through and as agreed upaa by their 4 appropriate representatives, shall meet or e-mi-5 cate regularly to cdvise, inform, and consult with e each other on all significant matters and upcoming l

7 meetings connected with the regulation of the 8 San Onofre Nuclear Generating Station by the Atomic 9 Energy Commission or other regulatory agencies.

10 San Diego's representatives shall have the right to 11 attend and participate in all such meetings, 12 whether in-house, with the AEC, or others.

13 14.3 Excspt as the Companies may otherwise imztually ,

14 agree, Edison and San Diego shall take all actions, 15 including the = *4ng cf Capital Improvements, which le are reasonably necessary to obtain regulatory 17 approval for the operation of Unit 1, including all 18 such actions which are reasonably necessary to j 19 obtain without unreasonable delay a permanent so operating license foe Unit 1. <

21 14.4 Engineering costs incurred by Edison which are as required in connection with its activities pursuant 25 to Section 14.1 hereof shall be included among the 24 expenses to be shared by the Companies pursuant to 35 Section 7.1 hereof, except for any such costs as which shall be chargeable to Capital Improvements

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. _ _ _ _ -_ _ _ . . _. . . _ _ _ _ _ _ _ _ _ . _ _ . . _ _ _ _ _ . _ _ _ _ __ i.-. _.- _ - _ _ _ _

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l 1 required in connection therewith and shared pursuant 2 to Section 6 hereof. If it should be dete.rmined j s subsequently that such costs are not chargeable to 4 any of the FPC Accounts referred to in Section 7.1 5 hereof, such costs shall nevertheless be treated, 8 for purposes of this agreement, as if they were so 7 chargeable.

l s 15. METER TESTS 9 15.1 In accordance with test procedures approved by the 10 Board of Review, Edison shall make routine tests of 11 the meters in the Edison Switchyard which measure 12 (a) energy deliveries between Unit 1 and tha 2dison is Switchyard, (b) energy deliveries from the San 14 Diego Switchyard to the Unit 1 A=414 =7 "C" Trans-15 former, and (c) energy deliveries over the inter-le connection between the Edison and San Diege l 17 Switchyards. Edison shall malra such tests during 18 the month of June of each year or at such other 19 times as may be agreed upon. Edison shall adjust 20 or replace any meter which is found to be inac-21 curate. Edison shall, at the request of San Diego, 22 or may, on its own initiative, make special tests 25 of said meters. Edison shall give San Diego rea-24 sonable notice of the time when meter tests will be 25 made and San Diego shall have the right to have a 28 representative witness the tests. The costs of 23l

L.s 1 meter tests shall be shared eighty (80) percent by 2 Edison and twenty (20) percent by San Diego, except 3 that the requesting or initiating Company shall pay 4 the entire cost of any special tests it requests or 5 initiates wherein the percentage error is found to a be less than one (1) percent slow or fast.

7 15.2 If any test shows any meter to be inaccurate by a more than one (1) percent or if any meter fails to 9 register, corrections, equal to the amount of error lo as found, shall be made to the records of the l 11 measurements made by such meter during the period l

l 12 of such erroneous meter registration or, if such 13 period ea- nt be determined or reasonably esti-14 mated, for half the per'.od from the date of the

'15 last preceding test. Billing adjust:ments or energy is exchanges corresponding to such corrections shall 17 be made in accordance with procedures approved by l 18 the Board of Review.

l 19 16. LIABILITY l

so 16.1 Each Company shall be responsible for the conse-21 quences of its Willful Action, and shall indemnify W the other Company from the consequences thereof.

23 16.2 Except for any loss, damage, cost, charge, or E4 expense (hereinafter collectively referred to as l 25 " Damage") resulting from Willful Action, and Se except to the extent of any Damage covered by valid

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1 2nd collectible Unit i Insurance, no Company (First 2 Company), its directors, officers or employees shall i

a be obligated to discharge any liability to the other 4 Company (Second Company) for any direct, indirect or 5 consequential Damage of any kind ce. nature incurred 6 by the other Company (Second Cc any) resulting 7 [whether or not from the negligence of a Company 8 (First Company), its directors, officers, employees 9 or any other person or entity whose negligence would 10 be imputed to such Company (First Company)] from 11 (1) the ownership, operation, maintenance or use of 12 the San Onofre Nuclear Generating Station, or (ii) 13 the performance or non-performance of the obliga-14 tions of a Company under any of the San Onofre 15 Agreements. Subject to the exceptions in this is Section 16.2, each Company (Second Company) 17 expressly releases the other Company (First Company),

is its directors, officers, and employees from any 19 such liability, or from any j%-t obtained so against such other Company (First Company), its 21 directors, officers or employees, for any such 22 liability, and such Company (Second Company) shall

• • 23 not execute, levy or otherwise enforce such a judg-34 ment (including recording or effecting a judgment i 35 lien) against the other Company (First Company),

28 .its directors, officers or employees.

30

1 16.3 Except for any liability resulting fron Willful 2 Action, except as provided in Sections 16.4 and s 16.5 hereof, and except for any liability paid for 4 by Unit 1 Insurance, Edison shall pay eighty (80) 5 percent and San Diego shall pay twenty (20) percent 6 of (i) the costs and expenses of discharging lia-7 bility of one or both of the Companies for any 8 Damage of any kind or nature (including direct, 9 indirect or consequential Damage) suffered or 10 incurred by any party other than a Company (whether 11 or not resulting fr e the negligence of any Company, 1

12 its directors, officers, employees, or ey other 15 person or entity whos,e negligence would be imputed 14 to such Company) resulting from (a) the oenership, 15 operation, maintenance or use of Unit 1 or the is Station Site, or (b) the performance or non-17 performance of the obligations of a Comp ~any under 18 any of the San Onofre Agreements, rend (ii) the 19 costs and expenses incurred in settlement of ,

20 injurie: and damages claims, including attorneys' 21 fees and the cost of labor and related supplies and 22 expenses incurred in injuries and damages activities f

25 (all as referred to in FPC Account 925), resulting 24 from or arising out of such liability.

25 16.4 Except for any liability resulting from Willful as Action and except for any liability paid for by

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_____.n

i 1 insurance or the Govermnent Indemnity Agreement 2 referred to in Section 10.2.1 hereof, either Company 3 whose ultimate consumer shall make a claim or demand, 1

4 or bring an action for any death, injury or Damage 1 5 arising out of electric service to such ultimate con-l e sumer anu resulting from (i) the ownership, operation, 7 maintenance or use of Unit 1 or the Station Site, or l 8 (ii) the performance or non-psrformance of the obliga-9 tions of a Company under any of the San Onefre Agree-10 ments shall indemnify and hold harmless t2 : other 11 Company, its directors, officers and employees from 12 , and against any claim, demand or liability for such 13 death, injury or Damage. The teta " ultimate consumer" 14 incans an electric consumer to whom no electric power 15 or energy is delivered for resale.

la 16.5 Except for any liability resulting from Willful Action, 17 each Congsy shall . bear the total cost of discharging 18 all legal liability imposed upon it or the other 19 Company, including attorneys' fees and other associ-1 20 ated costs, arising out of Workmen's Compensation 21 claims (or employer's liability c1m4==) brought by its 22 employees, provided, however, the total cost of dis-23 charging such liability, including attorneys' fees and i 24 other associated costs, arising out of such Workmen's 25 Compensation claims brought by Edison personnel whose as labor expenses are charged or allocated to the opera-i-

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1 tien and raintenance of Unit 1 and the Station Site 2 pursuant to Section 7.1 hereof, shall be shared eighty 5 (80) percent by Edison and twenty (20) -percent by 4 San Diego.

5 17. ARBITRATION '

6 17.1 In the event that San Diego and Edison, acting through 7 their respectin redirs on the Board of Review, should a be unable to reach agreement with respect to a matter 9 herein specified to be approved, established. deter-10 mined, or resolved by agreement of the Companies, or by 11 their representatives appointed pursuant to this agree-12 ment, either Company may call for submission of such is matter or dispute to arbitration in the manner herein 14 set. forth, which call stiall be binding upon the other 15 Company to the dispute. Edison shall continue to do is all things and make all expenditures necessary for the 17 operation and maintenance of Unit 1 and the Station 18 Site pending the final decision of the arbitrators.

19 17.2 The Company calling for arbitration shall give notice to 20 -

the other Company, setting forth in such notice in ade-

, 21 quate detail the issues to be arbitrated, and within ten 22 days from receipt of such notice the other Company may 25 by notice to the first Company set forth in adequate 24 detail additional related issues to be arbitrated.

25 17.3 Within twenty days from its notice calling for the se arbitration, the first Company shall appoint a ze

.. . - -.- . .- - ..- -,--. . . - - .-_ _ l ____ _ __ _ __: _ - _

1 person to serve as one arbitrator, and shall give 2 notice to the other Cog any of such appointment, and 3 within fifteen days after receipt of notice of 4 appointment of the first arbitrator, the other 5 Company shall appoint a person to serve as a second 6 arbitrator, and shall give notice to the first 7 Company of such appoiatment. The two persons so 8 appointed shall then agree upon and secure a third 9 arbitrator. If the second arbitrator should not be lo appointed within fifteen days after receipt of 11 notice of appointment of the first, or if the third 12 arbitrator should not be secured within fifteen 13 days from the appointment of the second, either 14 Company may with notice to the other Company call l 15 upon the American Arbitration Association (or upon 16 a similar organization if the American Arbitration 17 Association should not at that time exist) for 18 -

appointment of an arbitrator skilled with respect to 19 the matter to be arbitrated, and whose appointment 20 shall be binding on both Companies. No person 21 shall be eligible for appointment by the American l

22 Arbitration Association who is an officer, 1om i 23 employee, shareholder of, or otherwise interested 24 in either of the.c g =M es hereto or in the matter 25 to be arbitrated.

l 26 17.4 The arbitrators so appointed shall hear evidence l

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1 submitted by both Companies and may call for addi-1 2 tional information, whi h additional information l

3 che Companies or Company called upon shall furnish 4 to the extent feasible. A decision or determina-5 tion signed by a majority of the arbitrators shall 6 be conclusive with rerpect to the issues submitted 7 and shall be bincing upon both Companies.

8 17.5 Except as otherwise provided in Sections 17.1, 9 17.2, 17.3, and 17.4 hereof, the arbitration shall 10 be governed by the rules of practice and procedure 11 of the American Arbitration Association from time 12 to time in force, except that, if such rules and is practice as herein modified shall conflict with the 14 California Code of Civil Procedere or any other 15 provision of California law then in force, such is California rules and provisions shall govern. This 17 submislion and agreement to arbitrate shall be 18 specifically enforceable. The award of the 19 arbitrators or a majority of them upon any question 20 submitted to them hereunder shall be final and 21 binding upon the CManies to the extent and in the 22 manner provided by the California Code of Civil 23 Procedure.

24 17.6 Each Company shall bear the fee and personal -

25 expenses of the arbitrator appointed by it, 88 together with the fees and expenses of its own l -

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1 counsel and of its own witnesses, and all other 2 costs and expenses of the arbitration shall be borne 3 ene-half by the Co=pany calling for arbitration and  ;

I 4 one-half by the other Company involved, unless a l 5 decision of the arbitrators shall specify a dif-6 farent apportionment of any or all of such costs 7 and expenses.  ;

8 18. FOR 2 MAJEURE i 9 Neither Company shall be considered to be in breach r

-b lo of any of the obligations hereunder to the extent failure l

11 of perfotmance shall be due to uncontrollable forces. t i 12 The term " uncontrollable forces" shall mean any cause l

13 beyond the control of a Company unable to perform such  !

14 obligation, including, but not limited to, failure of  !

l 15 facilities, flood, earthquake, storm, fire, lightning, [

18 and other natural catastrophes, epidemic, war, riot, 17 civil disturbance, labor dispute, sabotage, Govemt l 18 priorities, restraint by Court order or public authority, 19 and action or non-action by or failure to obtain the 20 necessary authorizations or approvals from any Gove mt l 21 agency or authority, which by exercise of reasonable l

22 diligence and foresight such Company could not reasonably i

.. l 23 have been expected to avoid and which by exercise of  !

24 reasonable diligence it has been unable to overcome. I 25 Nothing contained herein shall be construed so as to i

se require a Company to settle any strika or labor dispute L l

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1 in which it r.ay be involv0d. Any Cc.=:pany rendered unable ,

i 2 to fulfill any obligation b.t reason of uncontrollable  !

3 forces shall exercise due diligence to remove such 4 inability with all reasonable dispatch.

5 19. REIATIONSHIP OF PARTIES 6 19.1 The covenants, obligations, and liabilities of the j 7 Companies are intended to be several and not joint 8 . or collective, and nothing herein contained shall

, 9 ever be construed to create an association, joint 10 venture, trust or partnership, or to impose a trust 11 or partnership covenant, obligation or liability on 12 or with regard to either of the Companies. Each 13 Company hereto shall be individually responsible 14 for its own covenants, obligations, and liabilities 15 as herein provided. Neither Company shall be under

. le the control of or shall be deemed to control the 17 other Company. No Company shall have a right or l 18 power to bind the other Company without its express 19 written consent, except as expressly provided in l 20 the San Onofre Agreements.

21 19.2 The Companies hereby elect to be excluded from the I t

l 22 application of Subchapter "K" of Chapter 1 of Sub-25 title "A" of the Internal Revenue Code of 1954, or 24 such portion or portions thereof as may be permitted 25 or authorized by the Secretary of the Treasury or se his delegate insofar as such subchaptar, or any

rtion or portions thereof, may be applics.ble to l 2 the Co=panies under the San Onofre Agreements, s 20 NOTICES 4 All notices under this agreement shall be in writing l

5 and shall be delivered in person or sent by registered or e certified mail to the applicable of the following 7 addresses:

l l 8 Southern California Edison Company j c/o Secretary 8

i Post Office Box 351 10 los Angeles, California 90053 11 San Diego Gas & Electric Company I c/o President l 12 Post Office Box 1831 l 3 San Diego, California 92112 l

14 By notice sent to the other Company, either Edison 15 or San Diego may designate different persons or different l 18 addresses for the giving of notices hereunder.

17 21. TERM 18 This agreement shall be effective as of October 5, 19 1967, and shall continue in effect until termination of

.30 the easement for the Plant Site, or such earlier date.

21 as the Companies may agree to cease operation of Unit 1.

22 The San Onofre Operating Agr a t is hereby superseded 23 as of October 5, 1967.

! 24 IN' WITNESS WHEREOF, the O v ies have caused '

25 this agreement to be executed in duplicate on their 26 behalf.

3E

9 1 SAN DIEGO GAS & EIICIRIC COMPANY 2

1 4 ATTEST: By bbh  : i 5

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EXEIBIT B ALLOCATION OF OVEREEAD EXPDISES Overhead expenses incurred by Edison which are allocable to the San Onofre Nuclear Generating Station are comprised of the following:

1. All of the following expenses incurred at the San Onofre Nuclear Generating Stai; ion:

a) The salaries and expenses of the Station Chief ar.d his superviscry, administrative, engineering, and clerical and accounting staff assigned to the San Onofre Nuclear Generating Str3 tion; l b) Stationery aid office supplies expenses; c) The payroll and other costs incurred in processing grievances; ' d) The payroll and other costs incurred in attending job training meetings by employees assigned to the San Onofre Nuclear Generating Station; e) Miscellaneous overhead expenses not assignable to other functions of the San Onofre Nuclear Generating Station.

2. A portion of the following expenses incurred :n Edison's Steam Generation Division:.

a) The salaries and expenses of the Superin-i tendent of Steam Generation and his supervisory, administrative, engineering, 1 and clerical and accounting staff; b) Station 7ry and office supplies expenses;

 **        c)   A portion (which is applicable to the Steam Generation Division) of the payroll and other costs incurred ,in the operation of Edison's operators' training school.and the salaries and expenses of Steam Generation Division personnel while attending such school;.

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l d) Miscellaneous overhead expenses not assign-able to other functions of the Steam Genera-tion Division. Such portion shall be determined by multiplying the i total of such salaries and expenses by a ratio, the numerator of which is the total payroll for the San Onofre Nuclear Generating Station and the denominator of which is the total payroll supervised by the 4 Superintendent of Steam Generation and his staff. 3 A portion of the following expenses incurred in Edison's i Power Supply Department: l a) The salaries and expenses of the Manager of Power Supply and the Superintendent of i System Operation and their supervisory, , ' administrative, engineering, and clerical  : and accounting staffs, but excluding system - I dispatchers; b) Stationery and office supplies expenses; ' c) Expenses (but not payroll costs) incurred i in attending, certain conventions and com-  ; mattee meetings by Power Supply Department personnel; d) Miscellaneous overhead costs not assignable to other functions of the Power Supply Department. Such portion shall be determined by multiplying the i total of such salaries and expenses by a ratio, the numerator of which is the total payroll for the San Onofre Nuclear Generating Station and the denominator of which is the total payroll super-  ! vised by the Manager of Power Supply and his staff.

4. The overhead exnenses of Edison's Steam Maintenance Division will be charged to the San Onofre Nuclear Generating Station only to the extent that Steam Maintenance Division personnel are employed at the San Onofre Nuclear Generating Station.

The total of such allocable overhead expenses  ! shall be allocated and charged tc the appropriate FPC electric plant and operation and r.aintenance expense accounts for Unit 1 and the Edison Switchyard on the t basis of the direct Edison labor charges to such accounts.

EXFIBIT C PAYROLL TAI RATIO The Payroll Tax Ratio shall be detemined in the following sanner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Com-r.ission ("PPC Pom 1"): Payroll Taxes for 1967 Payroll taxes applicable to labor charged to operation and maintenance, construction, and other accounts, per PPC Pom 1, Page 352: P.I.C.A. 82,711,186 H.I.T. 347,596 P.U.T.A. 134,311 S..U.I. 755,a94 Total $3,948.587 Labor Base for 1967 Total labor charged to operation and maintenance, construction, and other accounts, per PPC Porn: 1, Page 356: s107,586.271 Payroll Tax Ratio for 1967 = $ 10 5

                                                                =   0.0367 l                                                                               t l

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EXHIBIT D WORKMEN'S COMPENSATION RATIO The Workmen's Compensation Ratio, to be applied as

        . shown in Exhibits E, F, and G, shall be determined in the following manner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Com-mission ("FPC Form 1"):

l l Workmen's Compensation Expenses for 1967 (Not Capitalized) Employee injuries expenses, per FPC Form 1, Page 226:

          ,       Disability Allowance and Compensation - Employees .. $270,298 Medical Expenses .............. 91,662 First Aid Kits ................ 63.531
                                                            $   425,491 Portion of liability insurance premium allocable to Workmen's Compensation coverage:          8.507 Total Workmen's Compensation expenses:          $   433,998 Less the amount of such expenses which have been shared by the Companies pursuant to Sections 10 and 16 hereof:                      $          0 Net expenses to be allocated:                   $   433,998 l            Labor Base for 1967 Total labor charged to operation and maintenance, per FPC Form 1, Page 356:          $72,770,976 Total labor charged to other accounts, per FPC Form 1, Page 356:                           979.429 Total labor base:                               873.750,405 Less the amount of labor charged to the operation and maintenance of Unit 1 and the Station Site pursuant to Section 7 1 hereof:                                             166.524 4

Net labor base: 473.583,881 l' Workmen's compensation Ratio = $ 433.998 473,553,551

                                                            =  0.0059 21 J

I EXHIBI'! E l BENEFITS RATIO l ' The Benefits Ratio shall be detemined in the follow-l ing manner using, where indicated, expenses reported in the l Annual Report of Edison to the Federal Power Commission ("FPC Fom 1"): Pensions and Benefits Expenses for 1967 Labor

• Total l

l Employee pensions and benefits $1,051,144 8 10,522,097 l charged to Account 926, per FPC Form 1, Page 419: , Plus employee pensions and i benefits capitalized: - 3.516,521 Sub-total $1,051,144 $ 14,038,618 l Payroll taxes 8 3.67% of labor 38,577 Workmen's Compensation 6 0 59% of labor 6.202 i Total pensions and benefits expenses: $ 14.083,397 Labor Base for 1967 Total labor charged to operation and $107,586,271 maintenance, construction, and other accounts, per FPC Form 1, Page 356: Less labor charged to FPC Account 926: 1,051,144 Net labor base: $106,535,127 r Benefits Ratio for 1967 = $ 14.083.397 = 0.1322 l 4106,535,127

• Includes direct and indirect labor II

EXHIBIT F A & G RATIO The A & G Ratio shall be determined in the following manner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Commission ("FPC Form 1"): Administrative and General Expenses A11ocable to Operation and Maintenance for 1967 (per FPC Perm 1, Page 419) , t l Labor

• Tot al l A/C 920 Administrative and general salaries: $10,565,273 $10,565,273 l 921 Office supplies and expenses: 216.355 3,695,474 Total Accounts 920 and 921: $10,781,628 $14,260,747 0.6308 (See Exhibit H) of Accounts 920 and 921 applicable to operation and maintenance: $ 6,801,051 $ 8,995,679 A/C 923 Outside services (see Note 1): - 407,443 932 General maintenance 1,033,843 1,784,991 Sub-total 5 7,834,894 $11,188,113 Payroll taxes 8 3 675 of. labor $ 287,541 Workmen's Compensation 6 0 59% of labor 46,226 Pensions and benefits a 13 225 of labor 1,035,773 Total A & G expense allocable to operation End maintenance: $12,557,653 Operation and Maintenance Labor Base for 1967 Total labor charged to operation and mainte-nance accounts, per FPC Form 1, Page 356: $72,770,976 l Less the amount of such labor charged to l administrative and general expense accounts:

Direct labor, per FPC Form 1, Page 355: 412,891,459 l Indirect labor included in the amount ! reported in FPC Form 1. Page 356, Column C, Line 92: 392,065 Total 13,283,524 Net operation and maintenance labor base: $59,487,452 A & G Ratio for 1967 = $12,557,653 = 0.2111 559,457,452 Note 1: The amount shown for A/C 923 shall be the amount charged thereto except that it shall not exceed the greater of (a) $500,000 er (b) 150% of the average of the charges to A/C 923 for the two most recent preceding years. O Includes direct and indirect labor H t)

 . _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _                        _  _ _ _ . . . _ _ _ _ _ _ _ . _ _ _ . _ _ . _ _ .           ~      _ _ _-            -

EXHIBIT G CAPITAL A & G RATIO The Capital A & G Ratio shall be deter =ined in the following manner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Co=nission ("FPC Pere 1"): ' , Administrative and Genera 1' Expenses A11ocatie to Construction for 1967 (per FPC Perm 1, Page 419) l Labore Total A/C 920 Ad=inistrative and general salaries: 310,565,273 $10,565,273 921 Office supplies and expenses: 216,355 3,695,274 i Total Accounts 920 and 921 $10,781,628 $14,260,747 l ' 0 3538 (See Exhibit B) of Accounts 920 and 921 applicable to construction: $ 3,868,448 $ 5,116,756 Payroll taxes 8 3.67% of labor 141,972 l Workmen's Compensation f 0.59% of labor 22,824 i Pensions and benefits i 13 225 of labor 511,409 6 Total A & G expense allocable to construction $ 5,792,961 l Total pensions and benefits expense allocable to total labor charged to construction accounts: 0.1322 x $33,835,866 =

                                                                            $ 4,473,101 Total A & G plus pensions and benefits expenses 1

allocable to construction: 510,266,062 Less enount of A & G plus pensions and benefits expenses allocable to contract construction: 0.01 2 $169,200,000 =

                                                                           $ 1,692,000 Remainder of A & G plus pensions and benefits cxpenses allocable to Edison construction:                           $ 8,574,06s' Construction Direct Labor Base for 1967 Total direct labor charged to construction accounts, par FFC Form 1, Page 356:                                            $20,428,022 l                 Capit,a1 A & G Ratio for 1967    =  $ 8.574,062
                                                     $20,425,022   =   0.4197                 ,

l l a M2#5=AC'n raie9W"* ** "- ,, n . -_ -. . . -

EXHIBIT H DETERMINATION OF OPERATION & MAINTENANCE AND CONSTRUCTION LABOR RATIOS TO BE USED IN EXHIBITS F & G Labor Charges for 1967 Total labor charged to operation and mainte-nance accounts, per FPC Form 1, Page 356: $72,770,976 Less the amount of such labor charged -to administrative and general expense accounts: Direct labor, per FPC Form 1, Page 355: $12,891,459 Indirect labor included in the amount reported in FPC Form 1, Page 356, Column C, Line 92: 392,065 Total 13,283,524 Net labor charged to operation and maintenance .

accounts

459,487,452 Total labor charged to other accounts, per FPC Form 1, Page 356: 979,429 Total labor charged to construction accounts, per FPC Form 1, Page 356: 33,835,866 _

Total labor base for this computkiion: $94,302,747 Ratio of net operation and maintenance = $59.487,45? labor to total labor: 494,302,747

                                                                =   0.6308 Ratio of construction labor to total      -=
                                                 $33.835.866    =   0 3588
 .. labor:                                       494,302,747 ilt

1 CONFORMED COPY  : 1 2 - AMENDIGIC NO. 1 TO 3 A E N D E D S A N O N O F R E O P E R A T I N G A G P N .:.N T  ; 4 ' 5 THIS AENDEIC NO.1 to the AENDED SAN ONOFRE OPERATING 6 AGREEENT is entered into as of the 80 day of 7 8e#&

                                         , 1971, by and between SAN DIEGO GAS &

8 ELECTPlc COMPANY, a California curporation (" San Diego") and 9 SOUTEFJi CALITOPJIIA EDISON COMPANY, a California corporation 10 (" Edison"), hereinafter sometimes individually called 11 " Company" and collectively called " Companies." 12 RECIT/J.S 13 This Amendment is made with reference to the following , 14 facts: 15 San.Diego and Edison entered into the Amended San 16 Onofre Operating Agreement as of July 30, 1970. On the same

      ~

17 date San Diego and Edison entered into a lettes'asreement I 18 that modified in part the provisions of Section 16 l 19 (Liab111ty) of the Amended San Onofre Operating Agreem2nt. l 20 San Diego and Edison now w3.sh to. amend Section 16 and 21 Section 10 of the Amended San Or.afre Operating Agreement and 22 to supersede the aforementioned letter agreement as herein-23 after set forth. - 24 AGREDEh"I r 25 The, Companies agree as follows: 28 / , Q% AN 1_ . e i

• 9 i

                                                      .                                                                    i T

1 AENDENT TO SECTION 16 2 Section 16 of.the Amended San Onofre Operating Agreement 3 is hereby amended to read as follows: 4 16. LIABILITY 5 16.1 As used in this Section 16, the following terms 6 shall have the following meanings: y 16.1.1 " Damage" means any loss, damage", cost, 8 charge or expense resulting from the p ownership, operation, maintenance or use 10 [ of Unit 1 or the Stition Site, or the per-

        ,11                                                 fo:T.ance or non-performance by a Company 12                              .,                 or the Companies of any of the San Onofre 13                                                 A greements .                              ,

14 - 16.1.2 " Nuclear Incident" means a nuclear inci ' 17 dent as defined in Section 11q of the le . Atomic Energy Act of 1954, as amended. 17 16.1.3 " Uninsured Damage" means Damage not paid - 18 . for by Unit 1 Insurance. 19 16.2 Except as permitted under Section 16.3 hereof, 20 neither Company sha'1 1 be liable to the other Com-21 pany for~ Uninsured Damage resulting from a Nuclear 22 Incident. 23 16.3 Neither Company,.its directors, officers or em-l 34 ployees shall be obligated to discharge any liabil-25 ity to the other Company in excess of $2,000,000 28 for any single occurrence for any direct, indirect M

-.o         . _ _ . . - - . _ _    .

4 1 or consequ'ential Uninsured Damage of any kind or 2 nature suffered by the other Company, resulting 3 from Willful Action and resulting from or arising 4 out of a Nuclear Incident. Each Company expressly 5 releases the other Company, its directors, 6 officers and employees from any such liability in y excess of $2,000,000 per occurrence and from any , 8 judgment in excess of $2,000,000 per occurrence g . obtained against a Company, its directors, 10 ,

                                    . officers or employees,. for any such liability.            ;

• 11 Neither Company shall execute, levy or otherwise

            '12                         enforce such a judgment, or record or effect a 13                         judgment lien, against the other Company, its ;                     .

14 . directors, officers or employees for any part of . 15 such judgment in excess of $2,000,000 per . 16 occurrence. 17 16.4 Subje'et to Sections 16.2 and 16.3 hereof and 18 except for Uninsured Damage resulting from Willfd 19 , Action (and not resulting from or arising out of, 20 a Nuclear Incident),'neither Company, its - 21 directors, officers or employees shall be obligated 22 to discharge an'y liability to the other Company, f3 for any direct, indirect or consequential Uninsured 24 Damage of any kind or nature suffered by the other 25 Company, whether or not resulting from the negli-28 gence of a Company, its directors, officers, h _~ + _ _ _ _ _

N 1 g loyees or any other person or entity whose 2 negligence would be imputed to a Company. Subject-3 to the exceptions contained in this Section 16.4, 4 each Company expressly releases the other Co=pany, l 5 its directors, officers and employees from any 6 stch liability. Neither Co=pany shall execute, 7 lievy or otherwise enforce a judgment for such 8 liability, including recording or effecting a 9 , judgment lien,.against the other Company, its 10 . directors, officers or employees. t 11 16.5 Subject to Sections 16.2 and 16.3 hereof and 1 12 , except for liacility for Uninsured Damage resulting  ! 13 from W1'11rul Action (and not resulting from ora , l 14 - arising out of a Nuclear Incident) and except as .

15. provided in Sections 16.6 and 16.7 hereof, Edison .

lo shall pay eighty percent (80%) and San Diego shall 17 pay twenty percent (20%) of: ', , 18 16.5 1 The costs an;l expenses of discharging 19 liability of one or both of the Companies 20 for a:4 direct", indirect or consequential - I 21 Uninsured Damage of any kind or nature 22 suffered by any party other than a

    .. 23                                                 Company' whether or not resulting from the 24                                                 negligence of a Company, its directors, 25                       -                         officers and empicyees or any other person 26                                                 or entity whose negligence would be
                                                                           ~k-
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u,

                    +                                                                                          !
                                                                                                           '\

1, imputed t'o a Company; and 2 16.5.2 '"he costs and expenses i med in l 3 settlement of injuries and damages 4 claims, including attorneys' fees and the 5 cost of labor and related supplies and 6 expenses incurred in injuries and da= ages 7 activities (all as referred to*in ?PC 8 Account 925) resulting from er arising 9 out of such liability. + g I . 10 16.6 Except for liability for Uninsured Da= age result-  ; 11 in5 from Willful Action, either Company whose 12 - ultimate consumer shall make a c11 Lim or de=and, or 13 bring an action for any damage (1.rluding death . 14 or injury) arising out of electric ser*# ce to such 15 ultimate consumer shall inde.Nfy and hold harm- i 1B less the other Company, its directors, officers

                                                                    ~
       . 17                 and employees from and against any claim, demand 18                 or liability for such damage.                       The' term " ultimate i

19 - consumer'" means an electric consumer to whom no l 20 electric power or energy is delivered for resale. l 21 16.7- Except for liability for Uninsured Damage (includ-22 ing death or injury) resulting from Willful Action,

 **         23                 each Co=pany shall bear the total cost of dis-                                 l 24                 charging all                  egal liability imposed upon it or the 25            . other Co=pany, including attorneys' fees and other 28                 associated costs, arising out of Workmen's
              ~

l l .

                                                                                                        $3

I i i 1, wensation clai=s er e=ployers' liability l 2 ' k...=s,.hrought 3 ::s e=ployees; provided that j i

                                                                                                   ~

s tne cost of discharging such liability, including 4 attorneys' fees and other associated costs, ( 5 arising out of such Wrk=en's Co=pensation claims 6 brought by Edisen personnel whose labor expenses 7 are charged or allocated te the operatien and  : 8 maintenance of Unit 1 and the Station Site l 9 pursuant to Section 7.1 hereof,shall be shared , i

- o eighty percent (80%) by Edison and twenty percent 10 i

3 [ t 11 (20%) by San Diego. 12 AMDOMENT TO SECTION 10 l 13 Section 10.5 of the Amended San Onofre Operating Agree,- L 14 ment i$ hereby amended to read as follows: - 15 10,5 Edison 2all investigate, acust and settle cla1=s 18 asseO ed by any party other than a Co=pany against  !

  -   ' 17                     the Co=; .nies or either of them, wliich are claims 18                     of the type referred to in Section 16.5 hereof.                     :

19 Edison shall obtain the prier consent of the ' 20 Soard of Review me=Sers before agreeing to a ' 21 settlement of any claim or combination of claims , 22 exceeding $100,000 arising out of the same trans-23 action or event and not covered by Unit 1 24 7aisurance . At the request of Edison, San Diego 25 , shall assist in the investigation, acuttment and . 28 settlement of any such clai=s., Each Co=pany shall l #

                                                   ~6 G

Li '!

s

                                                                                                              \

l 1

                                                                              .                                \

1 investigate, adjus't 3 ,d :ettic claims asserted by 2 any of itr uJ eimate ,ons.aers, which are c1PMm of. 3 the type fe m d to in Section 16.6. hereof. 4 SUPERSEDE Lt n:.:t AGREEMENT 5 This Amendment supersedes the letter agreement of July 30, 6 1970 between the Companies that modified in part the provisions 7 of Section 16 of the Amended San Onofre Operating Agreement. , 8 TERM I 9 . The term of this Amendment shall be coincident with the l  ;

      , 10       term of the Amended San Onofre Operatin5 Agreement.

11 IN WITNESS WHEREOF, the Companies have caused this Amend-12 ment to be executed in duplicate on their behalf. 13 SAN DIEGO GAS & ELECTRIC COMPAIE; . 14 ATTEST: 15

• By Mh it ., H \ e. -

16  ?".rb4 < ?zM./ 17 SOUTHERN CALIFORICA EDISON COMPA1E 18 ATIEST: [.

                                                                            ~

19 sy , / 20 ,,$& && A ' y -- 22 i L2s,1 : t;nF:31s 25 - 24 ~EG. E ca y

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                 ; ;t") e' s                                    .
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l 1 l PERMITS, LICENSES, AND MATERIAL, EQUIPMENT AND SERVICE SUPPLIER'S AGP' N S WHICH MAY REQUIRE AMENDMENT OR ASSIGNMENT . . .. .. . .

1. American Society for Mechanical Engineering ,

A. Owner's Certificate of Authorization '

2. Army Corps of Engineers l A. Offshore Conduit Construction Permit B. Sand Disposal Permit C. Permit Assigned Not Applicable D. Marine Monitoring Buoys (12)

E. Del Mar Boat Dock and Groimd4ng Pad

                                                                     ~

3. Nuclear Regulatory Commission (Formerly A.E.C.)

A. Construction Permit , ' B. Operating License , C. Special Nuclear Material License D. Uranium Enrichment Agreemant l E. Cont ==4na_ted Equipment License

4. Coastal Zone Commission

            . A. Coastal Zone Commission Construction Permit No. 183-73 B. Guarantee Agreement C. Trust Fund Agreement and Marine Review Committee D. Site Drainage (Berm)

5. U.S. Coast Guard A. Aid to Navigation Agreement B. Buoys - Sand Disposal EXHIBIT

• J

                                                                                                                                                                        ;t b
 -- ? _ _ r t::    _ ~ __    .    - - .         .   ._         .--     .      - -

6. Environmental Protection Agency ,

A. Concrete NLtch Plant Approval to Construct l i B. Oper.tting Permit - Batch Plant C. Auxiliary Boiler Const.vJ.on/Opcating Permit D. Other Ane w J ' Equi; ent That'Could Emit Air Con * = 4 w ..- E. NPDES #0031?- ' a nn* 2perating) l l P. NPDES #CA0107328 (Construction Dewatering) *

7. U.S. Marine Corps A. Construction Parking B. Grant Easement C. Plant and Mesa Site License NF (R)22928 (1) Access Road .

(2) Parcels: A, B, C, D, E, F, G, Conduit Baul Road, and Evap. Pond (3) Beavy Haul Road and Boat Dock . D. Jap Hesa . (1) Temporary PKS Waterline - NF(R)23305 (2) Extension of Permit , i E. Sand Disposal . F. Jobsite Security Plan G. Telephone Line Relocation ' E. Temporary Easement for 220 kV Lines I. T/S Const.h n Laydown Area J. Mutual Aid Agreement K. Onshore Tracer Study Agreement

                                                                                                    =

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i i i

8. Pacific Telephone and Telegraph Ccmpany A. Fill Over Easement B. Relocation of U.S.M.C. Cable into PT&T Easement l

C. Construction Parking I D. Duct Beam and Fireline Crossing *

9. Public Utilities C - 4ssion A. Authorization for Financial Agreement B. Certificate of Convenience and Necessity C. Certificate of Convenience and Necessity for Transmission Lines

10. City of San Clemente A. Temporary Service Agreement J

11. San Diego Couzity - A.P.C.D.

A. Auxi.'.iary Boiler Construction / Operating Permit B. Batch Plant Construction C. Batch Plant Operating

12. San Diego Water Quality Control Board A. Dewatering Disc. cage 74-4 (NPDES CA0107328)

B. Sand Disposal . (1) 70-R42 (2) Addendum #1 (3) Monitoring and Reporthg Program 471-6 C. Operation Order 476-21 (NPDES CA0003395)

13. Santa Fe Railway l A. Eaul Road Overcrossing License l

l B. Overhead Wire Crossing Agreement 1 i EZHIBIT

• J .

gt _ _ _m.. m_. _ -~ -

14. Sounhern Califer ia Gas A. Eighway 101 Relocation Permit B. Off-Eighway Haul Route Permit C. Temporary Info:: nation Center

15. State Department of Parks and Recreation

• A. Access Road Agreement B. Construction Parking C. Temporary Waterline D. Highway 101 Realignment E. Main Plant Access F. Signalization of Highway 101 .hin Plant Access Lighting G. Circ. Conduit Haul Road .

H. Signal at Highway 101 and Jap Mesa Haul Road I. AMERON Satch Plant Evaporation Pond J. Heavy Haul Road

16. State Depa.ht of Public Health A. Radiological Monitoring Program Approval  ;

B. Source Material License (RA 226)  ; C. Conta=4nated Equipment License r l

17. State Department of Transportation A. Construction Parking and Hopper (ll74-E-762, 668)

! B. Relocate Power Pole (1173-0-743-943) . ' Install Guard Rail (ll71-E-761-930) ' String 220 kV Across IS (1170-0-782-727) Temporary 138 kV and 220 kV Across IS (1170-0-782-701) C. Jap Mesa Road Access (ll73-E-762-565) ' EXHIBIT

• J M

h 99  :

         --~~-~__-_m--s

t ( D. Main Plant ' fl) Access , (2) Rider to Move Road (1173-I:-762-565) E. Off-Eighway Haul Route (ll73-E-762-565) i F. Offsite Drainage Structure Permit (1174-E-762-633 ) *

,                             G. U.S. 101 Realignment (ll74-E-762-633)                             :

1 . l E. Temporary IS Crossing  : i, I. Duct Beam and Fireline Installation  ! J. Floor Protection Beam , t

18. State Lands Commission. i A. Buoys - Sand Disposal (F=&e Monitoring - 3 Buoys)

B. Offshore Easement i i

                                                                                              .        1 (1)   Const.W on Permit                                            !

(2) Conduit Site ' l C. Sand Disposal (1) Work Area - (2) Extension of Permits

• i

19. State Resources Agency  !

A. Siting (1) Agreement and Amendment  ! , (2) Amand==nt to Resources Agreement

20. State Water Resources Control Board  !

l A. Sand Disposal Certificate of Confomance f 70-12 B. Flant Operation Certificate of Confomant e 472-28 l EZEIBIT " J 290 -

                            . . . .   .     ..                                                                     ~
                                                                                         .. .                                                                ~ ~ ~
           /                                                                                            -

21. Testorary Construction Power P'ermits  ! N. Heavy Baul Contract between 1;dison and Rigging International A. All Required Permits for Temporary Construction Power l I. Off-Shore Circulating Water System Contract between

22. Department of Motor vehicles l Edison and Guy F. Aekinnan thpany A. Licensing , j

23. . Federal Aviation ad=inistration .

A. Air Bavigation Approval .

3. Transportation Facilities Air Naval Approval

24. Federal Co==nnications Commissilon

• A. License 1so Construct and Operate Electronic Transmission Equipment (1) Mobile System .

(2) Telemetering System *

              ,         (3) Microwave System

25. Tri-Cities Municipal water District

26. Material, Equipment and iervice Suppliers' Agreements

• A. Engineering and Conatruction Contract - San Onofre Nuclear Generating Etation Units 2 and 3 among Edison, San Diego, tr.d sechtel Power Corporation -

   ~

3. Nuclear Steam Supply System Contract among Edison, j San Diego, and Combustion Engineering C. Nuclear Steam Supply System Spare Parts Master Agreement '

between Edison and Combustion Engineering D. Preservice Ex==ination Agreement between Edison and Combustion Engineering E. General Engineering Services Master Agreement between j Edison and Combustion Engineering . P. Turbine Generator Contract among Edison, San Diego j and GEC-English Electric Corporation , G. Turbine Generator Spare Parts Mascar Agreement between . { Edison and GEC-English Electric Corporation

                                                                                                    =

• ErwTnIT
• J REIBIT
• 3

                                                                                                  ,                                                                                                                                                                                                                                                         3-):                                                                                            24fL

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                     "           THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,1979                                         Commission File Number 1-2313 SOUTHERN CALIFORNIA EDISON COMPANY (Exact name of registrant as specified in its charter)

California 95-1240335 (State or other jur!sdiction of incorporation or organization) (IRS Employer Identification No.) 2244 WALNUT GROVE AVENUE (P.O. BOX 800), ROSEMEAD, CAllFORNIA 91770 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (213) 572-1212 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered

          -Capital Stock Original Preferred                                                        American ard Pacific (Par Value $8% per share)

Cumulative Preferred (Par Value $25 per share) 'American and Pacific 4.08% Series 4.24% Series 4.32% Series 4.78% Series 5.80% Series 8.85% Series 9.20% Series

                 $100 Cumulative Preferrect (Par Value $100 per share)                                               American and Pacific 7.58% Series 8.54% Series 8.70% Series 8.96% Series Preference
                -(Ps.: Value $25 per share)                                               American and Pacific 6.20% Convertible Series C)mmon Stock                                                             New York and Pacific

('?ar Value $8% per share) Funded Debt . Fist and Refunding Mortgage Bonds American

               - (Series F through Series S, Series Y through Series CC, Series EE through Series JJ and Series MM)
                                   ~

3%% Convertible Debentures, New York and Pacific Due 1980 Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /. No .

         > The total number of shares outstanding at December 31,1979 'of the Company's Common

Stock, $8% par value, was 64,894,936.

_ =_ _ __ a

l TABLE OF CONTENTS j PARTI l Item Page

1. Business  :

                                                                                                     -   3

2. Summary of Operations 11

3. Properties . . . 11

4. Parents and Subsidiaries . . . 15

5. I.egal Proceedings . . . . 15

6. Increases and Decreases in Outstanding Securities and

            -Indebtedness     ....      .         .         .                            .              19

7. Changes in Securities and Changes in Security for Registered Securities . 20

8. Defaults upon Senior Securities . 20

9. Approximate Number of Equity Security Holders . 20

10. Submission of Matters to a Vote of Security Holders 21

11. . Indemnification of Directors and Officers . 21

12. Financial Statements, Exhibits Filed and Reports on Form 8-K 21 PARTli

13. Security. Ownership of Certain Beneficial Owners and Management 56

14. Directors and Executive Officers of the Registrant .. . . 56

15. Management Remuneration and Transactions . .. 56 Signatures . . . . . . .. . 57 Exhibit'1. . .. .. .. . . . . . . . ... . 59 2

FARTI Item 1. Business Southern California Edison Company (" Company") was incorporated in 1909 under Cali-fornia law and is a public utility primarily engaged in the business of supplying electric energy to a 50,000 square-mile area of central and southern California, excluding the City of Los Angeles and certain other cities. This area includes some 800 cities and communities and a population of more than eight million people. As of December 31,1979, the Company had 12,917 employees. General problems of the industry

        'The electric utility industry in gerieral is currently experiencing problems relating to (i) high costs of fuel, wages and materials (ii) vast capital outlays and longer construction periods for the larger and more complex new generating units needed to meet current and future service requirements of customers, (iii) greater reliance on capital markets with high costs of both equity and borrowed capital, (iv) an uncertain supply of natural gas, (v) effects of compliance with numerous regulatory and environmental requirements, and (vi) difficulties and delays in obtaining needed rate increases. The Company is, to varying degrees, currently experiencing all of these problems.

Regulation ' The retail operations of the Company are subject to regulation by the California Public Utilities Commission. ("CPUC"), which has the auttority to regulate, among other things, retail rates, issuances of securities and accounting arti depreciation practices. The Company's resale operations are subject to regulation by the, Federal Energy Regulatory Commission ("FERC") as to rates on sales for resale, as we!' as other matters, including accounting and depreciation practices. The Company is subject to the jurisdiction of the Nuclear Regulatory Commission ("NRC") with respect to nuclear power plants. NRC regulations govern the granting of operating licenses for the construction and operation of nuclear power plants and subject such power plants to continuing review and regulation. The Company's plant construction, planning and siting are subject to the jurisdiction of the California Energy Commission. The Company is subject to rules and regulations promul-gated by the California Air Resources Board ("ARB") and local air pollution control districts with respect to the emission of pollutants into the atmosphere, and the regulatory requirements of the California Water Resources Control Board and regional boards with respect to the dis-

 ' charge of pollutants inio waters of the state. The Company is also subject to regulation by
 -the Environmental Protection Agency (" EPA"), which administers certain federal statutes relating to environmental matters, and to certain other federal, state and local laws and regula-tions relating to environmental protection and land use.'

The Department of Energy has regulatory authority over certain aspects of energy con-servation, solar energy development, power plant- fuel use,: coal conversion, public utility

 . regulatory policy and natural gas pricing.

RATE MATTERS Retail rates Effective January 1,1979, the Company was granted a general rate increase designed to produce annual revenues of approximately $124,000,000, based on a 1979 test year. This amount included a $102,000,000 interim rate increase which became effective in July 1978. The 3

1 decision authorized an increase in rate of return on common equity from 12.63% to 13.49% and raised the authorized rate of return on rate base from 8.98% to 9.60%. . On December 26, 1979, the Company filed with the CPUC a general rate application designed to increase annual revenues by approximately $340,000,000, based on a 1981 test year. The application requests rate relief as a result of a general increase in operating expenses ' and financing costs. In addition, the application requests an average annual rate of return on common equity of 15% and on rate base of 10.78% for the period 1981-82. Because of the two-year cycle adopted by the CPUC in granting general rate increases, the rate request takes , into consideration increases in costs expected to occur in the year following the test year. I Energy cost adjustment clause The Company's Energy Cost Adjustment Clause ("ECAC"), adopted by the CPUC in 1976, provides for adjustments in rates, subject to CPUC approval, to reflect changes in energy costs. Under the ECAC procedure, a balancing account has been established in which energy costs above or below those used in establishing rate 3 are accumulated, and the accumulated amount is reflected in succeeding rate adjustments. The balance in the ECAC balancing account, repre-senting accumulated net undercollections and accrued interest, was approximately $303.600.000 at December 31,1979. Under present ECAC procedures, changes in energy costs subject to CPUC jurisdiction should not affect the Company's reported earnings because such costs are

 - reported as operating expenses only as they are reflected in electric rates and thereby offset by revenues.

From January 1,1979 to March 1,1980, the Company experienced an increase of approp-mately 80% in fuel oil costs (see " Fuel Supply" below), a portion of which has been recognizeo in previous ECAC adjustments. This increase (as well as increases in other energy costs), coupled with an inherent lag in the recovery of cost increases under the ECAC procedure and past delays in receiving CPUC approvals, has resulted in increased short-term borrowing requirements.

       ' On' October 23,1979, the CPUC granted, effective November 1,1979, an annual increase in ECAC revenues of approximately $431,600,000 out of the Company's $466,600,000 ECAC request.

The CPUC decision deferred consideration of approximately $35,000,000 of ECAC undercollec- , tions pending evaluation of the results of a consultant's report on the_ reasonableness of oper-ating capacity factors at the Company's coal-fired power plants. The Company believes that operating practices at its coal-fired plants have beer, prudent and reasonable. On January 29,1980, the CPUC issued three orders designed to improve the operation of the ECAC. First, the CPUC granted a Company petition to modify the October 23 ECAC decision by accelerating the collection of approximately $81,000,000 in revenues during the period February 3 through April 30,1980. Second, as part of its continuing investigation into the operation of the ECAC, the CPUC issued an interim order providing for more timely recovery of increases in energy costs. This interim order provides for adjustments in rates three times a year rather than twice yearly,  ; with each adjustment based on estimates of fuel prices and balancing account amounts at the j adjustment date and forecasted energy ' mix and sales : estimates, in contrast to historical data. In addition, the period over which amounts in the balancing account are to be amortized will be determined at the time of each adjustment, and will no longer be a fixed 12-month period as previously called for.

       = Third, the CPUC increased the rate for accruing interest on undercollections or over-       t collections in the balancing account from a fixed rate of 7% to a variable rate equal to the -

Federal Reserve Bank three-month Prime Commercial Paper rate. 4

On March 5,1980, the Company filed in application under the revised ECAC procedure requesting e . Increase in ECAC revenues, effective May 1,1980, of approximately S740.600,000 annually and amortization of undercollections in the balancing account over a six-month period. The Company believes that the revised interim ECAC procedures should provide more timely recovery of accumulated undarcollections in the balancing account and should reduce its short-term borrowing requirements from those which would otherwise be required. However, any significant delay in receiving ECAC adjustments or recovering ECAC undercollections could result in serious financing and cash flow problems for the Company. Resale rates Under FERC procedures, increases in resale rates are permitted to become effective, subject to refund with interest to the extent that the FERC subsequently determines that the

              - requested increases are inappropriate. The Company's January 15,1979 filing with the FERC, designed to increase resale rates at an annual level of approximately $5,500,000, became
               . effective, subject to refund, on August 16,1979. On August 1 and August 22,1979, the FERC issued decisions on the_ Company's rate filings which became effective, subject to refund, on August 4,1974 and February 1,1976, respectively. Ce:tain of the Company's municipal resale customers have intervened in these proceedings, alleging an anti-competitive " price squeeze" with respect to the filed rates.
                       , The August 1 decision affirmed the August 4,1974 rate increase filed by the Company with respect to cost of service issues, but provided that it remain subject to refund pendir,g
              - resolution of the " price squeeze" issues. The August 22 decision ordered the Company to file a revised tariff to reduce annual revenues by approximately $3,600,000. Although such decision, if it were to become final, would require a refund of approximately $13,700,000. revenues in
             - excess of this amount had been deferred in the Company's financial statements and the related interest accrued. The decision also found that the Company's resale customers had established a prima facie case of a price squeeze with respect to the filed rates and ordered the case re-manded to an admirustrative law judge for hearings to determine tne extent of a price squeeze, if any, with respect to the filed revised rates. Both the Company and certain intervenors have petitioned for a rehearing.
                       ~I f a price squeeze is ultimately determined with respect to the above proceedings, the FERC may impose further rate reductions as a remedy, which would result in additional refunds.

The FERC decisions could also affect the pending antitrust litigation in federal district court

             ' discussed under " Antitrust !itigation" under item 5.

As of December 31,1979, approximately $377,800,000 in incremental revenues attributable

               ' to resale rate increases had been billed, of which approximately $364,100,000 has been recorded
               -as revenues. Of the amount billed, approximately $46,600,000 is no longer subject to refund by virtue of the appeals relative to a May 2,1974 fuel clause adjustment having become final sub-

• sequent to December 31,1970. The Company does not believe that any other amounts which the FERC may require the Company to refund as a result of the proceedings relative to these

             ; increases will have. a material financial effect. (See Note 3 to Financial Statements.)

5

        )

1 / a,s. m -

     -       -                         .       .     - . _ -       .- -.        ~_.

FUEL SUPPLY Fuel costs Fuel and purchased powec costs amounted to approximately $1.5 billion in 1979, 27.2 % i higher than in 1978. Sources of energy and unit costs of fuel for 1975 through 1979 were as l follows: Sources of energy Average cost per rnillion BTU's i

                                                              ~

1975 1976 1977 1978 19U 1975 1976 1977 1978 1979 Oil 46 % 47 % 56 % 43 % 44 % 267c 252c 254c 291c 340c Natural gas - 13 11 15 18 23 87 125 185 205 239 Coal . 14 14 14 10 11 28 36 41 53 71 Nuclear 5 3 3 3, 4 17 29 34 36 43 All fuels' 'a 75 88 74 82 176 180 200 224 258 Hydroelectric .. . 8 4 2 9 8 (1) Purchased and ~ interchanged power . 14 21 10 17 10 (2) _1_00% , _ 10_0% ~ ' 100% 100 % _ 100 % (1) There are no fuel costs associated with the Company's hydroelectric generation. (2) For the year ended December 31, 1979, the cost of purchased power (primarily hydro-electric) was 1.631 cents per kilowatt-hour. 1

          .The prices for oil now under contract are subject to various adjustments based on, among other factors, specified foreign prices for crude oil (including prices established by OPEC nations),: import license fees and duties, royalties, taxes and transportation charges. From January 1,1979 to March 1,1980 the Company experienced an increase of approximately

80% in fuel oil costs. (See " Energy cost adjustment clause" under " Rate Matters" above.)

Average fuel costs, expressed in cents per kilowatt-hour for the year ended December 31,' 1979 were:' oil 3.300c;: natural gas 2.516c; coal 0.823c; and nuclear 0.464c. Fuel costs per - kilowatt-hour for the month of February 1980 were: oil 4.238c; natural gas 3.269c; coal 0.787c; and nuclear 0.565c. Natural gas supply A number of the Company's major steam electric generating units are designed to burn oil Eor natural gas as a primary boiler fuel. The Company's use of natural gas boiler fuel is dependent

  .upon the amount of gas available from the. Company's primary gas supplier as well as upon applicable federal and state laws-and regulations; The Company cannot predict with any
  - certainty the extent to which natural' gas will continue to be a significant source of fuel for the
                              ~
  . generation of electric energy. To the extent the Company's use of natural gas is restricted, it
  'will be forced to rely more heavily _ on fuel oil, with resulting increases in fuel expenses.

Fuel oil supply Air poll'ution control laws and regulations applicable to the Company's oil- and ' gas-fired ; steam electric generating units have required the Company to depend to an increasing extent on more costly 0.25%~ low-sulphur fuel oil. The Company now has under contract approximately .

  '90% :of its estimated requirements for. 0.25% sulphur oil through 1986. The balance of its fuel oil requireme.nts is expected to be met with oil to be purchased on the spot market and -

under short-term contracts or through flexibility in existing long-term contracts. 6

c, i E. a At March 1,1980, the Company had in inventory enough low-sulphur fuel oil to supp y % Company's oil-burning facilities for at least 90 days, assurmng projected utilization of the Company's coal-burning, nuclear and hydroelectric facilities anc purchased and interchanged power. If the Company cannot purchase enough lov.-sulphur fuel Oi l to meet its fuel oil re-quirements in the future, i may still be able to acquire higher-tulphur fuel oil. However, the Company's ability to burn such higher-sulphur fuel oi! would be dependent upon Obtaining variances under air pollution control regulations. Nuclear fuel supply The Company has contractual arrangements covering 100% of the nuclear fuel cycla for San Onofre Nuclear Generating Statie.n (" San Onofre") through the years indicated below: Un,ts Un:t 1 2&3 Mining and milling to produce concentrates (1) 1984 1984 Conversion 1990 1990 Enrichment 2014 2009 Fabrication 1992 1934 Spent fuel storage (2) 1992 1992 (1) The Company has contracted for approximately 50% of the uranium concentrates required for San Onofre Units 1. 2 and 3 from 1985 through 1990. Approximately 47% of the Com-pany's uranium concentrate requirements for the period 1980 through 1990 are expected to be provided by a mine and mill in which Mono Power Company (" Mono"), a wholly-owned subsidiary of the Company, is a participant. (See Note 1 to Financial Statemer'ts for more information on Mono's activities.) (2) The dates indicated assume full utilization of the capacities of on-site storage now existing and under construction and off-site storage currently under contract for normal operations of these Units, including interpool transfers. If additional storage or permanent disposal is unavailable when storage limits are reached, other arrangements will be required, the availability or cost of which the_ Company cannot predict at this time. Participants in the Palo Verde Nuclear Generating Station Units 1,2 and 3 ("Palc Verde") have contractual commitments for the supply of uranium concentrates, conversion services and related fuel fabrication services required for approximately 17 years of operation for all three nuclear units. Contracts have also been entered into with the Department of Energy for uranium enrichment services covering the estimated life of the three units. Although the Palo Verds participana have no commitments for off-site storage of fuel discharged from reactors, on-site storage for spent fuel is being planned to acccmmodate normal operation through 1990 for Unit 1 and through later dates for Units 2 and 3. The timing of when and the extent to which off-site storage may be required cannot be accurately predicted at this time. Coal supply Coal aupplies for the operation of the Mohave and Four Corners Projects (see item 3) are obtained pursuant to purchase contracts which extend over the expected useful lives of those projects and provide for the purchase of low-sulphur coal to support anticipated levels of operation during such periods. 7

Powern'et and Industrial Fuel Use Act of 1978 F -11. plementation of the Powerplant and Industrial Fuel Use Ac' ' 1F Mministm ' , the ' *w mment of Energy through the Economic Regulatory Adminic wm prer 5 % :he util,w or: of natural gas and petroleum fuels in new po ver pla7ts .w .e :imn 1e . . otic of nue.t s and petroleum fuels in existing power p' c :s, un! sss s v .m q 1ptL. And-ards t d rocedures are implemented. The PN., 7 pact or, ther Com; , s not prL +y determn. cole. Presiden"s energy proposals in July 1979, President Carter announced a program calling for, among other things, reduc-ing oilimports over the next ten years, requiring utilities to reduce current oil usage by 50% by 1990 and requ: ling electric and gas utilities to offer long-term financing to their residential and commercial customers for conservation improvements to structures, with the loans being included in utility rate bases and being repaid when the structures are sold. The President's proposed program has now evoNed to includa as its goal a reduction of oil and gas consumption by electric utilities by one n ~llion barrels. of oil (equivalent) per day, to be accomplished by a mandatory Phase I conversion to coal program and a voluntary Phase il oil and gas

 . displacement program with partial federal grant assistance in both phases. The Company has no plants anticipated to be included in Phase 1, and it is unable at this time to determine the extent to which any such program, if implemented, would affect its operating cost and capital expenditure levels.

ENVIRONMENTAL MATTERS Legislation and regulation Legislative and regulatory activities in the areas of air pollution, water pollution, waste management, noise abatement, land use, aesthetics and nuclear control continue to result in the imposition of numerous restrictions on the operation by the Company of its existing facilities and on the timing, cost, location, design, construction and operation by the Company of new facilities required to meet its future load requirements. These activities substantially affect future planning and will continue to require modifications of the Company's existing facilities and operating procedures. They also increase the risk of forced abandonment of construction projects with a resultant loss of design, engineering and construction costs and the payment of cancellation charges which in the aggregate could be substantial. The two principal federal environmental statutes are the Clean Air Act, as amended, and the Clean Water Act. Both regulatory schemes are administered by the EPA in conjunction with state and local governments. The Clean A'r Act provides the statutory framework to implement a program for achieving national ambient dr quality standards and provides for maintenance of air quality in areas exceeding such standards. As a result, the Company may incur additional expenses in reducing or eliminating emissions at existing facilities and in constructing new facilities. However, because major regulations relating to the 1977 amendments to the Act have not as yet been finalized, the Company is unable at this time to determine the extent to which such e tendments will affect its operations and capital expenditures. Regulations under the Clean Water Act require the obtaining of permits for toe discharge of certain- pollutants into the waters of the United States. Under the Act, the EPA issues effluent limit #on guidelines, pretreatment standards and new source performance standards 8

                  -for the control of certain pollutants. Individual states may impose still more stringent limitations.
                . In order to comply with guidelines and standards applicable to steam electric power plants, the Company is incurring adriitional expenses and capital expenditures. Additional regulations will be issued but the Company is unable to predict the extent to which such additional regula-tions will affect its operations and capital expenditure requirements. The Company presently has discharge permits for all its facilities.

The State of California has adopted a policy discouraging the use of fresh water for plant

                - cooling purposes at inland locations. Such a policy, when taken in conju :: tion with existing federal and state water quality regulations and coastal zone land use restnctions, could sub-stantially increase the difficulty of siting new generating plants anywhere in California.
                        , -_ Currently pe' ding environmental rulemaking and compliance proceedings and litigation involving the Corapany are discussed under 'l Environmental administrative proceedings and litigation" ur, der item 5._ The effect of the Company's use of low-sulphur fuel required by air quality regulations is discussed under " Fuel Supply" above.
                - Environmental expenditures
                            ;The Company's estimated capitalized expenditures for environmcntal protection for the years 1969 through 1979 and its projected capital expenditures for such purposes for the years
               ' 1980 through 1984 (based upon the Company's December 20,1979 plant budget / forecast) are:

(Thcusands of Dollars)

                                                                ' Air          Water         Solid           Noise              Additional pollution      pollution      waste          abate-                 plant      Miscel-
                     . . Years '               . Total .       contro!      . control      disposal          ment    Aesthetics  capacity   laneous                                 t 1969-1979           3672,098           $ 55,'851 -      $ 24.060      $ 2,750        $ 4,153 -   $536,713   $ 3,746    S 44,825 1980
                                          -212.874            . 29,090         21,293            280          5,488   108,758        168      47,797 1981.           _185.619              61,593           9,907             15           483-   89,876             23,745 1982         ^ 151,121                60,141 .         2,178.            18           174    81,588          25      S,097-

1983 94,442 14,557 -o- -o- 174 78,039 106 1,566

                         '19641               .-80,026 -               19                                83    78,172        357       1,395
                           . These estimates include currently effective legislation and do not include potential costs
               -associateo with certain' environmental proceedings.' ,(See." Environmental administrative pro-s              ceedings and litigation" underitem 5.) Projected capital expenditures for environmental pro-itection are. subject to continuous review and periodic revisions;because of escalation in y engineering and construction costs, additions and deletions of planned facilities, changes in-technology,' evolving' environmental regulatory requirements and.other factors beyond the

Company's control. zThe Company believes that costs-incurred for these environmental pur-f poses will be recognized by the CPUC and the FERC as reasonable and necessary' costs of

                . service for rate purposesc o
                                                                   -i
  ' ]#.

l.

                                        . _             s E.
                                                          -"                          ~

i>=+=____ _ _ . _ _ _ _ _ _ _ _

1 SOUTHERN CAUFORNIA ED! SON COMPANY OPERATING STATISTICS Year Ended December 31, p ofg 1975 1976 1977 1978 1979 Tcta! Energy Generated and Purchased-KWH (000): Generated-Net Station Output Hydroelectric Plants 4,732.201 2,550,415 1,509,058 5.887,687 5.009.320 7.6 Thermal Plants 42.925.421 44.671,019 55.417.884 47,183.394 54.389.360 82.1 Total Generated 47,657,622 47,221,434 56.926.942 53,071,081 59.398.680 89.7 Purchased Power 4,773.360. 11,933,835 6.009.426 10.535,636 6,084.396 9.2 Power Interchanged (Net) 2.692.853 272.658 408.338 270,399 733.834 1.1 Total Generated, Purchased and interchanged 55,123.b35 59.427,927 63.344.706 63.877,116 66,216.910 100.0 i- Company Use (116,100) (94,364) (119,748) (115.050) (110.334) - Losses and Unaccounted for . (3.680.227) (5.648,185) (5.498.685) (6.735.031) (6.588.715) - Total Energy Consumption _51.327.508 53.685.378 57,726.273 57.02_7,035 _5_9.51_7.861 _- Energy Consumption - KWH (000):

      . Residential .                                           13.493,387     13.946.809          14.285.971    15.369,184      16,191,091     27.2 Agricultural.                                            1,074,606      1,275A43            1,377,939       851.017         975.311       1.6 Commercial                                       .      12,036,129     12.951.697          13.388.075    13.937,000      14.454.319     24.3     1
      ' Industrial                                              15.055.646     15.622,603          16.393.105    16.652.243      17,351,728     29.2 Public Authorities -          .                          5.578,669      5,621.955           5.666.173     5.813.443       5.559,687       9.3 Interdepartmental                                               962               914               731        1,015           1,134    -

Rasale 4.088,109 ' 4.265.757 6.614.279 4,403.133 4.984.591 8.4 Total Energy Consumption 51,327,508 53.685.378 57.726.273 57,027.035 59,517.861 100.0 Operating Revenues - (000):- ' Residential , $ 564,389 $ 58J,397 $ 616.520 $ 704.658 $ 764,595 29.8 Agricultural - 37,521 '45.338 50,7C1 40,4 9 47,146 1.8 Commercial 413.456 464,254 505.469 610,735 663.678 25.9

      . Industrial                                                  389,829       430.427             481,587       593.580         683.013     26.7 Public Authorities                                          153,850        166,038            188,054       206,838         225.351       8.8 Interdepartmental                                                29                27                22.           30               39  -

Resale 97,439 120.459 208.145 138.253 169.304 6.6 Customer Refunds (20.881) 17,072 - - - - Operating Revenues-Sales 1,635.634 1.833.012 2,050.578 2.294,543 2.553.126 99.6 Other . 11.500 13.528 14,336 34.255 10,848 0.4 Total Operating Revenues $1.647.134 $1.846.540 $2.064,914 $2.328,798 $2.563,974 100.0 Numberof Customers: Residential , .. 2,438.903 2,497,076 2.572.826 2,648,841 2.733,435 88.7 1 Agricultural s 4. , ,.. . 24.997 25,465 25,888 25.802 25,768 0.8

      ~ Commercial             .                    . ..            222,694        227,143            234,276       242.264         252,594       8.2 Industrial               3_                        _         30.410         31.405            . 33.791        35,126          35,792      1.2 Public Authorities            ,         .        .. .        32.658         33,294              34.053        34,491          34.769      1.1 Interdepartmental                     ,                           2                  2                2                2             2  -

Resale . 16 18 20 19 22 -, Total Customers 2.749.680 2.814.403 2.900.856, _2,986.545 __. 1_3._08_2.382__1_00.0 Annual Use Per Residential Customer (KWH) . 5.596 5.650 5,630 5.883 6,010 Annual Revenue Per Residential Customer (a) - $234.07 . $238.77 $242.98 $269.73 $283.81 Revenue Per KWH(a): Residential - . 4.18c 4.23c 4.32c 4.58c - 4.72c

         - Commercial                     , ,                          3.44c             3.58c             3.78c       - 4.38c           4.59c industrial ' .                                              2.59c           - 2.76c _           2.94c         3.56c           3.94c
      ;(c) Does not reflect Customer Refunds.

10 .

l item 2. Summary of Operations Information responding to this item is included with the financial statements in item 12(a)(1) beginning on page 21 and in Exhibit 1, and should be read in conjunction with Management's Discussion and Analysis of Statements of income oeginning on page 22. Item 3. Properties Existing generating facilities The Company owns and operates 11 oil- and gas-fueled electric generating piants, one diesel-fueled generating plant,36 hydroelectric plants and San Onofre (in which the Company owns an undivided 80% interest), all located in central and southern California. In addition, the Company owns two small fossil-fueled electric generating units in Arizona and a 48% undivided interest (768 megawatts ("MW")) in Four Corners Units 4 and 5, a coal-fueled steam c!ectric generating plant in New Mexico (the "Four Corners Project") all of which are op-erated by another utility. The Company also operates and owns a 56% undivided interest (885 MW) in the Mohave Project, two coal-fueled steam electric generating units in Clark County, Novaoa (the "Mohave Project"). The Company also operates certain hydroelectric gener.ating units owned by others in Arizona. Of the existing Company-owned generating capacity, approximately 79% is dependent on gas and oil fuel,12% on coal, 3% on nuclear fuel and 6% is hydroelectric. San Onofre, the Four Corners Project, certain of the Company's substations and certain portions of its transmission, distribution and communication systems are located on lands of the United States or others under (with minor exceptions) licenses, permits, easements or leases or on public streets or highways pursuant to franchises. Certain of such documents obligate the Company, under specified circumstances, at its exrense to relocate transmission, distribution and communication facilities located on lands owned or controlled by federal, state or local governments. With certain exceptions, major and certain minor hydroelectric plants, with related reservoirs, having an effective operating capacity of 875 MW and located in whole or in part on lands of the United States, are owned and operated under government licenses which expire at various times between 1980 and 2009. Such licenses impose numerous restrictions and obligations on the Company, including the right of the United States to acquire the project or the FERC to issue a license to a new licensee under certain conditions upon payment of specified compensation. Any new licenses issued to the Company are expected to be issued upon terms and conditions less favorable than those of the expired licenses. Applications of the Company for the relicensing of certain of the hydroelectric plants referred to above with an aggregate effective operating capacity of 21.4 MW are pending, and until such proceedings are completed, the Company has been issued annual license renewals for such projects. As of March 1,1980, the total Company area system operating capacity (summer rating) available to the Company under favorable operating conditions was approximately 15,163 MW. The record peak area instantaneous demand experienced on the Company's interconnected system through March 1,1980, was 12,662 MW on September 11, 1979. Substantially all of the properties of the Company are subject to the lien of a trust indenture securing First and Refunding Mortgage Bonds, of which $2,627,530,000 principal amount was outstanding on December 31, 1979. Such lien and the Company's title to its properties are subject to the terms of franchises, licenses, easements, leases, permits, contracts and other instruments under which properties are held or operated, certain statutes and governmental regulations, liens for taxes and assessments, the lien of another trust indenture to the extent referred to below, and liens of the trustees under such indentures, in addition 11

l l such liens and the Company's title to its properties are subject to certain other tiens, prior rights ano other encumbrances, none of which, with minor or unsubstantial exceptions, effects the Company's right to use such properties in its business, unless the matters with respect to  ; the Company's interest in the Four Corners Project and the related easement and lease  ; referred to below may be so considered. The properties acquired by the Company pursuant to the merger in 1963 of California Electric Power Company, tCgether with all substitutions, replacements, additions, alterations,  ! improvements and enlargements to, of, or upon such properties are, with certain exceptions, also subject to the prior tien of another trust indenture securing $66,000,000 principal amount of First Mortgage Bonds originally issued by that company and now outstanding. The Company's rights in the Four Corners Project, which is locateo on land of the Navajo Tribe of Indians under an easement from the United States and a lease from the Navajo Tribe, may be subject to possible defects, including possible conflicting grants or encumbrances not , ascertainable because of the absence of or inadequar,ies in the applicable recording law and the record system of the Bureau of Indian Affairs and the Navajv Tribe, the possible inability of the Company to resort to legal process to enforce its rights against the Navajo Tribe without Con-gressional consent and, in the case of the lease, possible impairment or termination under cer-tain circumstances by Congress or the Secretary of the Interior. The Company cannot predict [ what effect, if any, such possible defects may have on its interest in the Four Corners Project. Generating facilities under construction The Company currently has a;, proximately 5,000 MW of new generating facilities and 1,000 MW of new purchased power planned through 1989. Of the new generating facilities, 47% will use nuclear fuel,28% will use natural gas and fuel oil,19% will use coal,4% will be hydroelectric and 2% will use other energy sources. The major generating facilities ur*r , construction are the following nuclear plants being built jointly with other utilities:  ! Corepany's share of Recorded , Percent costs comp 5eted Estimated as of - as of Net totat December December Initial Full capacity cost (1) 31,1979(1) Facinty - Location 31,1979 Poner Facility (MW) (000) (000) San Onofre San Clemente, 76 1981-1983 80.0*. 1.760 $2.s97,000 51.w6.327 2, 3 CA Palo Verde Wintersburg. 28 1983-1984 15.8 % s79 899 000 235.529 1,2 & 3 AZ - & 1966

                                                                                                                                              ~

(1) Exclusive of fuel and related off-site transmission facilities Estimates are subject to revision because of numerous factors, some of which are beyond the Company's control. The application for an operating license for San Onofre Units 2 and 3 currently is under administrative review by an Atomic Safety Licensing Board, which has given persons opposed to cperation of the units permission to intervene in the paceedings.

      ' Nuclear power developments
             - As a result of evaluations of the accident at Three Mile Island Nuclear Power Plant ("TMl"),

the NRC required a review of the design and operating procedures of all operating nuclear power plants and in March 1979 initiated a pause in issuing licenses for nuclear power plants not yet in operation; On February 28,1980, the NRC voted to resume licensing nuclear power ' plants. 12 t i F e -s va- W "T - + ' " " " '

                                                                                   +Oi8' * " - ~                    """ ' ~ - -   - * " " - -

in October 1979 the President's Commission on the accident at TMI submitted its report (the "Kemeny Report") to President Carter and released its findinge and recommendations to the public. The Kemeny Report recommends a restructuring of the NRC and numerous changes in existing policies and procedures in order to emphasize safety. A number of such recommen-dations have been or are in the process of being implemented by the Company. San Onofre Unit 1 has been operating under a provisional operating license since 1968. Although the Unit is different in design from TMI, the Company has been ordered to implement certain design and operating procedure changes. Pursuant to an NRC order, the Company removed Unit 1 from service on January 26,1980 to perform the initial required design changes, and on February 10,1980 the Company returned the Unit to service. The Company expects to remove the Unit from service in April 1980 for routine refueling, at which time additional TMI design changes will be implemented. The Company expects to remove the Unit from service gain in late 1980 to perform the remaining currently required design changes. SJn Onofre Units 2 and 3, which are currently under construction, will also require certain

 .4esign modifications as a result of the TMt accident. The Company believes that currently required modifications can be accomplished without delaying the construction of such Units.

However, because the NRC pause resulted in slowed administrative procedures in processing licenses by the NRC staff, the completion and operation dates of the Units have been rescheduled to April 1981 and December 1981, respectively, for Unit 2 and to mid-1982 and early 1983, respectively, for Unit 3. The Company estimates that the delays will increase its share of the total project cost for the Units by approximately $112,000,000, resulting primarily from the cost of carrying money invested in the project for the longer period. The Company will incur addi-tional costs to make up any necessary generating capacity. The Company cannot predict what other effects, if any, including legislative or regulatory actions, the TMI accident may have upon it or upon the construction, licensing or future opera-tion of its San Onofre Units or the extent of any additional costs it may incur as a result thereof. Construction expenditures Fur?ds used by the Company for construction expenditures tatated $500,269,000 in 1977,

$567,831,000 in 1978 and $674,147,000 in 1979. Construction expenditures for the 1980-1984 period are cstimated as of February 22,1980, as follows:

(Thousands of dollars) 1980 1981 1982 1983 1984 Electric generating plants ' $621.052 $ 730,568 $544.027 $384,046 $519,042 Electric transmission lines and substations 67,115 93,502 56,205 110,761 156,437 Electric distribution lines and substations 179.631 168.850 178,580 187.605 187,182 Other expenditures - 27.033 14.888 9.852 12.276 20,112 Total construction additions 894 831 1,009.808 788,664 694,688 882,773 Less allowance for funds used durmg construction 167,000 212,000 148.000 73.000 60.000 Funds required for construction expenditures . $727.831 $ 797,808 $640.664 $621,688 $822,773 Approximately 50% of the total electric generating plant expenditures for the years 1980 through 1984 are related to the construction of the new nuclear units at San Onofre and Palo Verde. The Company's construction program and related expenditures are subject to con-tmuous review and periodic revisions because of changes in estimated system load growth, -rates of inflation, receipt of adequate and timely rate relief, the availability and timing of environmental, siting and other regulatory approvals, the scope of modifications required by 13

regulatory agencies, the availability and costs of external sources of capital and other factors beyond the Company's control. To finance its construction program as shown in the above table for the five years through 1984, and to meet lorg-term debt maturities and preferred stock sinking fund requirements aggregating $507,017,000 during such years, the Company estimates that approximately $2.5 billion will be required from external sources. (For more information concerning long-term debt and sinking fund requirements of the Company, see 140tes 8 and 9 to Financial Statements). The balance of funds required for those purposes is expected to be obtained from internal sources. The Company's ability to finance a portion of its continuing construction program from internal sources is largelv dependent upon the timely recovery of increased energy costs through the operation of its EC'U. (See " Energy cost adjustment claune" under " Rate Matters" under Item 1.) The timing, type and amount of all additional external financing are dependent upon market conditions, rate relief and other factors, including restrictions imposed by the Company's Articles of Incorporation and trust indenture. Effect of governmental utilities and utility districts Under various acts of Congress, federal power projects have been constructed in California j and neighboring staMs. Municipally-ovvned utilities, cooperative utilities and other public bodies have certain preference over investor-owned utilities in the purchase of electric power provirted by federalN funded power projects and, in addition, have certain preference over investor-owned utilities in connection with the acquisition of licenses to build hydroelectric power plants on federal lands. Any energy which is or may be generated at these projects and transmitted for the account of such other utilities and public bodies over present or future government or utility-owned lines into the territory or markets served by the Company wouid result in a loss of sales by the Company. Under the laws of California, utility districts may be formed and may include incorporated as well as unincorporated territory. Such districts, as well as municipalities, have the right to construct, purchase or condemn and operate electric facilities. In addition, when a city owning an electric systcm Onnexes adjacent unincorporated territory which the Company has previously served, the Company may experience a loss of customers. The Company's construction permits for San Onofre Units 2 and 3 contain certain condi-tions, the terms of which require the Company (i) to permit privately or publicly-owned utilities, including the Company's resale customers, within or adjacent to the Company's service area, on timely notice, to participate on mutually agreeable terms in future nuclear units initiated by the Company, and (ii) to interconnect and coordinate reserves with, furnish emergency service to, sell to and purchase bulk power from, and provide certain transmission services for, such utilities. The Company has also entered into agreements with certain of its resale customers which contemplate their possible participation in jointly-owned generating projects initiated by the Company, and the integration of power sources asquired by each such customer, including the dispatching, reserve sharing, partial power supply requirements and transmission services required in conjunction with such integrated operstions. Pursuant to these agreements, two resale customers have exercised an option to participate in the Company's ownership entitle-ment in San Onofre Units 2 and 3. The Company has recently negotiated definitive agreements g with these two resale customers which specify the services to be provided. The foregoing conditions and agreements involve the potential loss of generation and transmission capacity and sales of power. The Company is unable to determine what effect, if any, these potential losses will have on its business and operations. 14

        -      -      . - _ ~      ..      -.     . - _ - _ -           .- -          .          _ _ - _ . _. _    .

Item 4. Parents and Subsidiaries All subsidiaries of the Company are California corporations and are wholly-owned by the Company. The subsidiaries, if considered in tne aggregate as a single subsidicry, would not constitute a significant subsidiary, investments in these subsidiaries are accounted for by the equity method. (See Note 1 to Financial Statements.) ltem 5. Legal Proceedings Antitrust litigation In 1978, five of the Company's resale customers, the California cities of Anaheim, Riverside,

Banning, Colton and Azusa, filed a suit against the Company in the U.S. District Court for the Central District of California alleging violation of certain antitrust laws. The complaint seeks certain injunctive relief and damages in excess of $23,00J,000, consequential damages and the trebling of such damages.

One principal contention set forth in the complaint is that the Company is engaging in anti-competitive behavior by charging more for wholesale electricity sold to the resale customers than the Company charges certain classes of "s retail customers. The plaintiffs have alleged that there is a resulting anti-competitive " price squeeze" in that the resale customers, to recover their higher costs of supply, are required to raise some or all of their retail rates to levels

          ' exceeding the Company's comparable retail rates. The plaintiffs allege that this has the effect of inhibiting the resale customers' ability to persuade their existing or potential customers to remain or locate within their service areas and preventing such resale customers from remaining as viable electric systems.

1 4' Another principal contention is that the Company,in violation of the antitrust laws, has taken i actions alone and in concert with other utilities to prevent or limit such resale customers from obtaining bulk power supplies from other sources to reduce or replace the resale customers' ' , wholesale purchases from the Company. The Company is alleged to have entered into agreements and understandings with other investor-owned utilities to preempt bulk power supplies available from other utilities in the Pacific Northwest and in California and to have unilaterally restricted the sale of transmission services to and within California in such a way that the resale customers are prevented from obtaining transmission services to transmit bulk  ; power supplies from outaide California. l In May 1979, the Court continued a stay of the proceedings pending resolution of the FERC proceedings described below. On February 15, 1980, the Court lifted the stay on discovery and set February 10,1981, for the next status conference. The same five resale customers have intervened in the Company's three resale rate proceedings currently before the FERC alleging, among other things, that the Company has . engaged in certain anti-competitive activities similar to those describnd above. (See " Resale rates'.' under " Rate Matters" under item 1.) Four of the same resale customers also have made charges with the FERC in separt.te prc-ceedings alleging that the Company, through contracts for the purchase of power over the Pacific Intertie and through its participation in the California Power Poo' Agreement, has 7 engaged in anti-competitive conduct by restricting access to the Intertie transmission facilities and by preventing the' resale customers from purchasing power from suppliers in the Pacific Northwest. The . resale customers have asked the FERC to modify these contracts and to

          . order the Company to provide transmission service to them. Hearings before the FERC are currently in progress in connection with this latter proceeding.

These FERC proceedings could adversely affect the pending district court antitrust litigation described above. However,'these judicial and administrative ' proceedinga involve complex 15

issues of law and fact, and, although the Company is unable to predict their final outcoma or the possible effect of the FEPC proceedings on the district court ema, it categorically denies the allegations of these resale customers. Fair employment practices matters in 1972 a charge was filed with the Federal Equal Employment Opportunity Commission ("EEOC"), and in 1974 a class action lawsuit was filed in federal court, both of which alleged that the Company had engaged in unlawful, discriminatory employment practices against women , and certain minorities. Although denying that it had engaged in any unlawful emplop, cat practices, the Company entered into a Conditional Settlement with the EEOC

• 1 the representatives of most of the class action plaintiffs which was submitted to the federal court for approval as a consent decree in 1977. The estimated cost of this settlement is initially $700,000 with the possibility of an addi-tional estimated $300,000 in payment on individual awards after hearings.

On December 31,1979, the Court filed a memorandum indicating that it intends to approve the Conditional Settlement. It is not known at tHs time whether an appeal would be taken from any such approval. If the Court's approval were to be reversed on appeal and the case tried,it is the opinion of Company counsel that the Company has a number of defenses which i should be sustained by a court and which, among other things, have the effect of limiting monetary damages. The Company believes, based on a current analysis of the applicable law and facts, that the amount of any recovery for monetary damages, including back pay, should not have a material financial effect. Environmental administrative proceedings and litigation Four Corners Project in 1978 the EPA issued citations alleging excessive emissions of particulates and violations of the opacity regulations applicable to Four Corners Units 4 and S. Because of the way the standards have evolved. Arizona Public Service Company, the operating agent, believes that no such violations of applicable standards have occurred to date. However, if more recently enacted New Mexico regulations are rejected by the EPA, that agency might attempt to exact fines from the participants of up to $25,000 per pollutant per day for past alleged violations. Such an attempt would be resisted by the Company and the other participants as being without merit. In 1978, the Four Corners participants, New Mexico regulatory agencies and environmental groups reached a settlement providing for the installation of emission control systems for com-pliance with state sulphur dioxide ("SO2") and particulate emission rules. The Company's share of the total project cost had been estimated at $163,680,000 and was scheduled for operation in December 1982. However, as a result of technical problems relating to a propcsed horizontal scrubber system, the Four Corners participants have elected not to proceed further with the application of horizontal scrubbers for SO2 removal, but rather to pursue alternate technologies for that purpose. While the cost of an alternative technology is presently unknown, the par-ticulate removal program continues as planned at an estimated cost to the Company of $86,400,000, in June 1979, the New Me ico Environmental Improvement Board was requested to recon-sider the applicable SO2 emission requirement. The reconsideration could lead to the adoption of a more stringent regulation, further increasing the costs of the Four Corners Project. To date, however, data indicates that emission levels are well below ambient standards and it is possible that the Board may eliminate or substantially ease the SO2 regufation. Other parties to the settlement have brought suit in a New Mexico state court seeking to enjoin Arizona Public 16

_ . _ _ . . _ _ . __ _ -. ._ _ _ _ _ _ ___.._ _ . _. _ ._____m . _ _ _ _ _ _ _ i ,I i Service Company from pursuing such a change in the regulation, citing a provision in the settlement document to the effect that the regulation was to remain unchanged if initial monitor- i ing indicated that the regulation's emission limitations were sufficient to achieve the ambient "

standards.

If SO2controls are required,it now appears doubtful that the design and installation of SO 2 equipment could be completed before December 1982, the compliance date required by the . Clear Air Act, even if a necessity for such equipment were established at an early date. Further,

if the New Mexico rule is approved by the EPA as part of New Mexico's State implementatiort Plan, noncompliance penalties, which are the current subject of EPA rulemaking, cauld be*

assessed according to a formula based upon the " economic benefit" of delay. An extehsion of [ the final compliance period of a federally-approved rule can only be adopted by the Congress ,

through an amendment to the Clean Air Act. Several bills have been introduced in the Congress '

to extend the compliance period. i The design and compliance date problems are further complicated by receipt of conflicting i

;    indications from the EPA as to the acceptability of the New Mexico regulations. Regardless of                       f

_ the EPA's de;ision, however, the rule could continue to have the effect of state law in New Mexico. In such event, the December 1982 final compliance date does not permit delay for an orderly progression of design, procurement, and construction of the equipment needed for  ! compliance. While it is not certain what approach the State would take in the event of delayed ' t compliance, any attempt to enjoin the plant's operation would be resisted th bil of the partici-  ! pants.

                                   .                                                                                      i Oxides of Niftogen Rules All of the Company's conventional oil- and gas-fueled generating plants, which are located in South Coast Air Basin, are subject to oxides of nitrogen rules ("NOx Rules")

promulgated by the ARB for the South Coast Air Quality Management District ("SCAOMD") ~ and the Ventura County Air Pollution Control District. The NOx Rules are designed to achieve l (1) a 90% reduction in NOx on a demonstration unit equal to or greater than 100 MW by January 1,1982; (2) a 50% reduction in NOx on conventional generating units in the South Coast Air Basin by December 31,1982; and (3) a 90% reduction in NOx on conventional generating units 7 in the South Coast Air Basin by January 1,1990. The NOx Rules could require the Company to make substantial expenditures for pollution control equipment. It has been estimated that 50% reduction and 90% reduction would cost the Company $180,000,000 (1981 dollars) and $1.3 billion (1981 dollars), respectively, in

,    capital and outage costs to retrofit the affected generating units. The ARB, however, is presently reconsidering the NOx Rules - because the Congress may ultimately require the 2
   . Company to reduce its use of oil, which could make some controls unnecessarv. Due to these efforts to reconsider the NOx Rules, the Company appeared before the SCAOMD Hearing Board and obtained a variance until March 31, 1980. It is expected tha, the ARB will hold a hearing prior to the expiration of the variance to reconsider the NOx rule.

Alamitos and Redondo Generating Stations On April 11, 1979, the Company stipulated to an order with the SCAOMD to implement , measures designed to prevent further emissions of particulates near the Company's Alamitos and Redondo Generating Stations. Compliance with the order will involve the expeditious refitting of certain of the power plants' machinery and equipment with more corrosion-resistant

                                                                     ~

materials, and the early implementation'of specific stack washing and boiler cleaning tech-

   .niques. .Some disagreement exists between the technical staffs of the SCAOMD and the
   ' Company as to the-extent of action required under certain of the order's provisions. Cost r

17.

estimates for implementation, therefore, presently range between $15,000,000 and $25.000,000. A further hearing before the SCAOMD hearing board may be held to resolve these disagreements. The Company will conduct a final test of the above particulate reduction measures between March 1981 and September 1981 and submit the data to the SCAOMD for consideration if the implemented measures are accepted by the SCAOMD, the orders will be lifted in March 1982. The Company would then be required to maintain the effectiveness of such measures. In October 1979 the Company filed an answer to a SCAOMD civil complaint alleging a r smoking violation at the Alamitos Generating Station in May 1979. The maimum exposure is a $500 fine. In January 1980 the Company received notice of a SCAQMD misdemeanor criminal com-plaint alleging a smoking violation at the Alami os Station in November 1979. The maximum possible fine is $500. Other Matters in November 1979 the Company received a notice from the San Diego County Air Pollu-tion Control District alleging that the Company had operated an abrasive blast machine and a paint spray booth at the San Onofre construction site without a permit from the district. In December 1979 the Company received notice of another such a!!eged violation. The alleged j violations could result in civil complaints being issued. The maximum exposure is a $500 fine in each case. In February 1980 the Company was served with an EPA civil administrative complaint alleging certain violations of the Toxic Substance Control Act concerning the handling, storage and disposal of polychlorinated biphenyls. The complaint proposes to assess a civil penalty of 59,000. Tax litigation The Navajo Tribal Council has adopted, but not yet implemented, a possessory interest tax, a business activity tax and a sulphur emissions tax which could apply to the Four Corners Project. The validity of these taxes is currently being litigated by participants in the Project. The Company cannot predict the ultimate effect of these taxes, if implemented, upon future costs associated with the Four Corners Project or their effect upon costs of power or fuel derived from certain other Arizona and New Mexico operations. 18

ltem 6. Increases and Decreares in Outstanding Securities and indebtedness Changes in the amount of equity securities Common stock sold by the Company during 1979 which is registered under the Securities

                       ' Act of 1933:

Number of Net proceeds shares to Corapany Common stock outstanding as of December 31,1976 62,536,581 Add: Issuances through the Company's Dividend Reinvestment and Stock Purchase Plan (Registration File No. 2-6f $25)* February 16,1979 223.657 $5,707,730 May 16,1979 285,177 6,720,706 August 16,1979 294,868 7,232,456 November 16,1979 361,371 8,307,023 issuances through the Company's Employee Stock Purchase Plan (Registration File No. 2-54685)* April 2,1979 170,344 4.539,157 July 2,1979 183,717 4,721,600 October 1,1979 190,015 4,882,492 December 31,1979 212.351 5,296,544 issuances through tt'e Company's Employee Stock Cuership . Plan (Registration File No. 2-65941)** February 16,1979 6,921 184,445 May 16,1979 7,647 190,984 August 16,1979 7,633 195,596 November 16,1979 8,081 194,752 Miscellaneous issuances of common stock resulting from the conversion of 553,140 shares of Preference Stock,5.20% Convertible Series, at various times throughout the year * - 406,573 Total common stock outstanding as of December 31,1979 64,894,936

• Not previously reported because the aggregate number of shares issued did not exceed 5%

of total outstanding common stock.

                        **Not previously reported because common stock issued and sold through the Company's Employee Stock Ownership Plan was not registered under the Securities Act of 1933 prior to December 3,1979.

On April 25, 1979 the Company' issued and sold 525,000 shares of $100 Cumulative Preferred Stock,8.70% Series A. (Reported on Form 10-Q for the quarter ended March 31, 1979.)

                             . On September 13,1979 the Company issued and sold 750,000 shares t,f $100 Cumulative Preferred Stock,8.54% Series. -(Reported on Form 10-Q for the quarter ended September.30, i-                      1979.)

On February 13,1980, the Company issued and sold 7,000,000 shares of common stock

(Registration File No. 2-66416).

19 L:

The net proceeds from the sales of the above common stock and Preferred Stock were used to reimburse the Company for monies expended for its construction program, exclusive of maintenance of service and replacements. The amounts so reimbursed became a part of the general treasury funds of the Company and, among other things, were used to retire short term obligations outstanding at the date of such issuances. Increase in the amount of debt securities On June 29,1979 the Company issued and sold by private placement $105,000,000 principal amount of First and Refunding Mortgage Bonds, Series KK, Due 2004. (Reported on Form 10-Q for the quarter ended June 30,1979.) in September 1979, the Company entered into a financing agreement with certain foreign banks that permits the Company to borrow up to $50,000.000 at any time before September 18, 1980, at which time the Company is required to borrow any additional amount necessary to bring the total borrowings up to $50,000,000. The borrowings will be secured by the concurrent issuance of an equal principal amount of First and Refunding Mortgage Bonds, Series Lt., Due 1987. There were no outstanding borrowings under this agreement at December 31,1979. (See Note 8 to Financial Statements.) (Reported on Form 10-Q for the quarter ended September 30, 1979.) On October 18, 1979, the Company issued and sold $200,000,000 principal amount of First and Refunding Mortgage Bonds, Series MM, Due 2004. (Reported on Form 10-0 for the quarter ended September 30, 1979.) < Item 7. Changes in Securities and Changes in Security for Registered Securities On May 17,1979, as a result of the cumulative effect of issuances of additional shares of common stock through the Company's Dividend Reinvestment and Stock Purchase Plan, Em-ployee Stock Ownership Plan and Employee Stock Purchase Plan, the conversion price at which the 3% % Convertible Debentures, Due 1980, may be converted into the Company's common stock was reduced from $37.50 to $37.00. 1 Item 8. Defaults Upon Senior Securities None. Item 9. Approximate Number of Equity Security Holders Approximate Number of Title of Class Record Holders

• Original Preferred . , 1,454 Cumulative Preferred (all series) 30,060

          $100 Cumulative Preferred (all series)                                   8,664 Preference (all series)            .                   .          .

2,510 Common . 138,441 3%% Convertible Debentures, Due 1980 . 1,053 _182d 82 I

• Data shown for various classes of equity securities is as of January 5,1980. Data shown for 3%% Convertible Debentures is as of December 31,1979.

20

o item 10. Submission of Matters to a Vote of Security Holders (a) Date and type of meeting: Annual Meeting of Shareholders held April 19,1979. (b) Proxies for the meeting were solicited pursuant to Regulation 14A; there was no solicitation in opposition to the management's nominees as listed in the proxy statement and all of such nominees were elected. (c) No matters wt te voted upon other than election of directors and approval of inde-pendent public accc"HJnts. Item 11. Indemnification of Directors and Officers The information required is unchanged from the 1976 Form 10-K. Item 12. Financial Statements, Exhibits Filed and Reports on Form 8-K 12(a)(1) Financial Statements Pe3e Management's Discussion and Analysis of Statements of income 22 Report of Independent Public Accountants 24 Statements of Income-Five Years Ended December 31,1979 25 Balance Sheets- December 31,1978 and 1979 26 Statements of Changes in Financial Position-Five Years Ended December 31,1979 28 Statements of Earnings Reinvested in the Business and Statements of Addit!onal Paid-in Capital-Five Years Ended December 31,1979 29 Notes to Financial Statements 30 Supplementary Information to Disclose ite Effects of Changing Prices (Unaudited) 45 Schedules Supporting Financial Statemei\fs: Schedule V-Property, Plant and Equipment for the Years Ended December 31,1978 and 1979 _ 48 Schedule VI- Accumulated Depreciation a. d Amortization of Property, Plant and Equipment for the Years Ended December 31,1978 and 1979 50 Schedule Xil-Reserves for the Years Ended December 31,1978 and 1979 52 Information Required by Schedules IX, XIll and XVI is shown in the Financial Statements or Notes thereto. Schedules I to XIX, inclusive, except those referred to above, are omitted as not requ;,ed or not applicable. 21

7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF STATEMENTS OF INCOME 1979 compared with 1978 j Primary earnings per share increased $1.04. or 29.5%, reflecting an increase in earnings available for common and original preferred stock of $90.255,000, or 44.6%, principally due to the net effect of the items discussed below. Operating revenues increased by $235,176,000, or 10.1%, primarily due to the con.olned effect of a 7% increr.e in average revenue per kilowatt-nour ("KWH") and an increase in KWH consumption of 4.4%. The higher average revenue was largely attributable to a general rate increase, a substantial portion of which became effective in July 1978, and the balance of which became effective January 1,1979. Approximately 32% of the increase in revenues, however, was attributable to the Company's Energy Cost Adjustment Clause ("ECAC"). The increase in KWH consumption resulted primarily from an increase of nearly 96,000 in the total number of customers. ' Fuel expense increased by $347,607,000, or 32%, primarily because of increases in fuel oil and gas costs. However, energy costs lereased only $103,994,000, or 8.4%, due primarily to the impact of the ECAC, which defers energy costs until reflected in succeeding rate adjust-ments. (See " Energy cost adjustment clause" under " Rate Matters" under item 1) s Other operation expenses increased $38,569,000, or 13.6%, primarily due to the impact of inflation on the costs of labor.. materials ark services and additional operation costs associated with system growth. The lower rate of increase over 1978, as compared with that of 1978 over 1977, reflected the increased emphasis by the Company on productivity improvement. Maintenance expenses increased $13,296,000, or 8.1%, resulting primarily from the impact of inflation. Depreciation expense increased by $21,434,000, or 13.6%, reflecting, in part, additional plant, but primarily the implementation, effective September 1,1978, of higher depreciation rates authorized by the CPUC. The increase in taxes on income of $27,489,000, or 37.8%, reflected the net effect of higher pre-tax net income, which was due primarily to the rate increase which became effective January 1,1979, partially offset by the reduction from 48% to 46% in the federal statutory tax rate and an increase in the net investment tax credit. ADC increased 51.2% in 1979 due to more construction work-in-progress, approximately two-thirds of which was related to _the San Onofre Nuclear Generating Station, in addition, there was an increase in the ADC rate from 6.96% to 7.76% effective January 1,1979. The increase in total interest charges of $22,424,000, or 12.3%, reflected the combined effects of higher short-term interest rates and additional long-term debt outstanding during 1979. 1978 compared with 1977 Primary earnings per share cecreased 28c, or 7.4%, reflecting a decrease in earnings available for common and original preferred stock of $4,104,000, or 2.0%, principally due to the net effect of the items discussed below. Operating revenues increased by $263.884,000, or 12.8%, due largely to higher ECAC revenues, which do not affect earnings but do represent cash flow. Total KWH consumption decreased by 1.2% as sales to special contract custorr.ers were down sharply due to the easing of drought conditions and consumption by customers, other than special contract customers, was up by only 2.7%. 22

7

     ~

Although fuel expense declined $26,977,000, or 2.4%, and purchased power expense increased $42,129,000, or 55.0%, each reflecting primarily the greater availability of energy from off-system sources due to easing of drought conditions, energy costs increased by

            $199,938,000, or 19.2%, due to the effect of the ECAC. Such provision for 1978 of $35,280,000 reflected the amount by which ECAC revenues for the year recovered energy costs previously              ;

deferred. Other operation expenses increased o' y $41,659,000, or 17.2%, primarily due to the impact i of inflation on costs of labor, materials and services and additional operating costs associated

           -with system growth.

Maintenance expenses increased by $30,945,000, or 23.2%, primarily as a result of mainte-nance necessitated by severe storm damage in the first quarter of 1978. Allowance for debt and equity funds used during construction ("ADC") increased by

            $18,183,000, or 30.2%, due to more construction work-in-progress primarily related to the San Onofre Nuclear Generating Station.

The increase in total interest charges of $21,580,000, or 13.4%, reflected the combined effects of higher short-term interest rates and additional long-term debt outstanding during 1978. I 5 'e 1 23

• A ,

I REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

 . To Southern Calrornia Edison Company:

We have examined the balance sheets of Southern California Edison Company (a California corporation, hereinafter referred to as the " Company") as of December 31,1978 and 1979, and the related statements of income, earnings reinvested in the business, additional paid-in capital and changes in financial position for each of the five years in the period ended December 31, 1979, and the supporting schedules listed in the accompanying index. Our examinations were mado in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, and also included similar examinations of the financial statements for each quarter within 1978 and 1979. In our opinion, the financial statements referred to above present fairly the financial position of the Company as of December 31,1978 and 1979, and the results of its operations and the changes in its financial position for each of the five years in the period ended December 31, 1979, the quarterly financial data set forth in Note 2 of " Notes to Financial Statements" summarize fairly the results of operations for each quarter within 1978 and 1979, and the supporting schedules referred to above present fairly the information required to be set forth therein, allin conformity with generally accepted accounting principles applied on a consistent basis. ARTHUR ANDERSEN & CO. Los Angeles, California February 8,1980.

   /

24

SOUTHERN CALIFORNIA EDISON COMPANY STATEMENTS OF INCOME The Statemen's of Income should be read in conjunction with the other financial statements, related notes and " Management's Discussion and Analysis of Statements of Income" included in this Report. The Statements of Income for the five years ended December 31,1979 have been examined by Arthur Andersen & Co., independent pubdc accountants, as set forth in their report included herein. (Thousands of Dollars) Year Ended December 31, 1975 1976 1977 1978 1979 Operating 7tevenues: Sales (Notes 1 and 3) $1.635.634 $1,833,012 $2.050,578 $2,294,543 $2,553,126 Other . 11,500 13.528 14.336 34.255 10.848 Total operating revenues (Note 2) 1,647.134 1.846.540 2,064,914 2.328.798 _2,563,974 Operating Expenses: Fuel (Note 3) 768,843 818.932 1,113,028 1,086,051 1,433,658 Purchased power (Note 11) 55,983 84,515 76,569 118,698 99.245 Provision for energy cost adiustments (Notes 1,3 and 5) - 12,684 (149.506) 35.280 (188,830) Subtotal-energy costs 824.826 916.131 1,040,091 1,240,029 1,344,023 Other operation expenses (Notes 3,6 and 7) 201,385 223.647 241,963 283.622 322,191 Maintenance (Note 1) 93.716 113.188 133.166 164,111 177,407 Provision for depreciation (Note 1) 120,410 124,802 140,520 157,203 178,637 Taxes on income-current and deferred (Notes 1 and 5) 46,623 59,506 68,792 72.803 100,292 Property and other taxes 93,568 102,126 109.660 86.429 56,428 Total operating expenses (Note 10) . 380,528 1,539,400 1,734,192 2,004.197 2,178,978 Operating income (Note 2) 266.606 307,140 330,722 324,601 384,996 Other Irw.ome and income Deductions: Allowance for equity funds used during construction (Note 1) 20.548 36,541 46,233 58,471 92,019 Other-Net (Notes 1 and 5) 9.587 16,416 22.097 31,319 47,739 Total other income and income deductions 30,135 52,957 68.330 89,790 139,758 Total income before Interest Charges 296,741 360,097 399,052 414,391 524,754 Interest Charges: It'lerest on long-term debt (Note 8) 124,674 134,423 143,152 154,301 179,626 Other interest and amortization (Notas 1 and 8) 1,511 9,945 17,926 28,357 25,456 Total interest charges . 126,185 144,368 161,078 182,658 205,082 Allowance for debt funds used durh.g construction (Note 1) (6,225) (11.069) (14,005) (19,950) (26,547) Net interest charges 119,960 133,299 147,073 162,708 178,535 Not locome (Note 2) 176,781 226,798 251,979 251,683 346,219 Dividende on Cumulative Preferred and Preference Stock . 39.604 41,751 45,649 49,457 53,738 Earnings Available for Common and Original Preferred Stock $ 137,177 $ 185,047 $ 206,330 $ 202,226 $ 292,481 Weighted Average Shares of Common and Original Preferred Stock Outstanding and Common Stock Equivalents (000) 47,965 48,678 54,347 57,477 64,202 Earnings Per Sr,are (Notes 1 and 2) Primary $2.86 $3.80 $3.80 $3.52 $4.56 Fully Diluted (Enhibit 1) $2.75 $3.61 $3.63 $3.38 $4.39 Dividende Declared per Common Share (Note 9) $1.68 $1.68 $2.06 $2.30 $2.60 The accompanying notes are an integral part of these statements. 25 i

SOUTHERN CALIFORNIA EDISON COMPANY BALANCE SHEETS ASSETS (Thousands of Dollars) December 31 1978 1979 UTILITY PLANT: Utility plant, at original cost less contributions (Notes 1,3,10 and Schedute V) $5,303,746 $5,502,984 Less- Accumulated provision for depreciation (Notes 1,10 and Schedule VI) 1,519,174 1,676,148 Net utility plant 3,784,572 3,826,836 Construction work in progress (Notes 6,10 and Schedule V) 1,493.573 2,058,958 Nuclear fuel, at amortized cost (Schedules V and VI) 13.572 15,728 Total utility plant 5,291,717 5,901,522 OTHER PROPERTY AND INVESTMENTS: I Real estate and other, at cost-less accumulated provissan

        . for depreciation                                                        7,658            11,110 Subsidiary companies (Note 1)                                              85,818           93,725 Total other property and investments                          93,476          104,835 CURRENT A* SETS:

Cash (Note 4) , . 7,458 4,705 Temporary cash investments . _ 80,532 - Receivables, less reserves of 9.000 and $8,496,000 for uncoller.tible accounts at respet ' dates (Notes 1, 8 and Schedule Xil) - . 211,625 212,728 Fuel stock, at cost (first-in, first-out)-(No; 'I and 4) 163,021 284,827 Materials and supplies, at average cost . . 28,463 39,388 Deferred energy cocts (Notes 1,3 and 5) 102,369 303,622

     . Prepayment.= and other (taxes, insurance, etc.)                           42,022            80,266 Total current assets _                   _                 635,490           925,536 DEFERRED CHARGES:
     - Unamortized debt expense (Note 1)                .                        14,703            16,589 Other deferred charges                        .                           22,305            28,755 Total deferred charges                         -             37,014            45,344
 !:                                                                         $6,057,697       $6,977,237 The accompanying notes are an integral part of these balance sheets.

26 i L.

SOUTHERN CALIFORNIA EDISON COMPANY 8ALANCE SHEETS C A PIT A LIZ ATION AND LI ABILITIES (Tt.eusands of conus) Dece,ter 31, 1978 1973 CAPITALIZATION: Preferred Stock-Subject to mandatory redemption requirements (Note 9): Cumulative preferred stock $ 135,000 S 262,500 Preference stock . 62,000 62,000 Preferred Stock- Other (Note 9): Original preferred stock 4,000 4,000 Cumulative preferred stock 458,755 458,755 Preference stock 40,895 27,067 Common stock, including add.tional stated capital. 90,000,000 shares authorized, 62,536,581 and 64,894,936 shares out-standing at respective dates (Noto 9) 547,166 577,259 Other Shareholders' Equity: Additional paid-in capital . 569,673 601,578 Earnings reinvested in the business 931,217 1,054,296 Long-Term Debt (Notes 1,4 end B) 2.477,474 2.746,207 Total capitalization 5,226,180 5,7F3,662 CURRENT LIABILITIES: Accounts payable . 154,495 288,897 Ccmmercial paper payable (Note 4) - 134,340 Notes payable to banks (Note 4) . 19,986 19,840 Current maturities of long-term debt (Note 8) 33,737 84,544

  -Customer refunds-current                                                     52,724                 58,139 Taxes accrued (Note 5)                                                    92,550                 73,312 Interest accrued                               -

51,069 55,619 Customer deposits . 15,601 14,583 Dividends declared 43,205 48,381

  - Accumulated deferred income taxes- net (Notes 1 and 5) ..                   53,928                 88,076 Other.                     .

23,612 19,947 Total current liabilities . .. 540,907 885,678 COMMITMENTS AND CONTINGENCIES (Note 3) RESERVES AND DEFERRED CREDITS: Customer advances and other deferred credits .. . 46,115 . 51,598 Customer refunds . -.. . .. . . .. 107,774 58,454 Accumulated deferred income taxes and I'1 vestment tax credits (Notes 1 and 5) . . 110,096 155,297-Reserves for pensions, incurance, etc. (Note 7 and Schedule Xil) . . . - 26,625 32,548 Total reserves and deferred credits . 290.610 297,897

                                                                            $6,057,697            $6,977,237 The accompanying notes are an integral part of these balance sheets.

27 i

SOUTHERN CAUFORNIA EDISON COMPANY STATEMENTS OF CHANGES IN FINANCIAL POSITION tThousands of Dollars) Year Ended December 31, 1975 1976 1977 1978 1979 FUNDS PROVIDED BY: Operations - Net incorre (Note 2) $ 176,781 $ 226,798 $ 251,979 $ 251,683 $ 346,219 Non-fund eMms: DepreciaCon (Note 1) ........ 120,410 124,802 140,520 157,203 178.637 Equity in earnings of unconsolidated cubsidiaries (Note 1) . ......... (290) (968) (551) (608) (3,133) Allowance for debt and equity funds used... during construction (Note 1) . . (26.773) (47,610) (60.2384 (78,421) (118,566)  ; investment tax credit deferred-net. (Notes 1 and 5) 6,624 16,366 26,886 32,568 45.533 Other - net .... 5,746 15,417 8.152 4,788 9,269 Earnings distributed from unconsolidated.... .. subsidiaries 3,500 1,000 1,000 1,000 . _ 1,000 Total from operations . 285,998 335,805 367,748 368,213 458,959 Long-term financing - Preferred stock (Note 9) - . 50,000 - 60,000 - 127,500 Preference stock (Note 9) - - 42/ 9* (14.522)* (13.828)* Common stock (Note 9) - 123,951 r,,323* 203,364* 62.002" Long-term debt (Note 8) , 161,641 126,263 200,000 200,000 355,000 Total from long-term financing . 211,641 250214 345,742 388,842 530,674 Other sources - Construction advances and other 9,404 5,529 9,102 9,258 11,628 Sale of non-current assets . - - 10,883 - - Decrease in working capital ,

                                                                                       -             140,431               -                   13,067                    3,918 Total from other sources .                                         9,404          145,960            19,985                 22,3d                   15.546 Total funds provided                            S 507,043          $ 731,979         $ 733,475          $ 779,380                 $1,005,179
                                                                             ^^~~ ~            ~~           ~      -                                            ~
                                                                                                                                '     ' ~ ~ " ' ~                            -~

FUNDS APPLIED TO: Construction expenditures - net . . . . . . . . . . . . . . . . $ 407,903 . $ 547,936 $ 560,507 $ 646,252 $ 792,713 Less-allowance for debt and equity funds used during construction (Note 1) 26,773 47,610 60,238 78,421 118,566 Funds used for construction expenditures 381.130 500,326 500,269 567,831 674,147 Advances to unconsolidated subsidiaries 8,375 5,900 .(999) 3,630 5,769 ' Dividends .... ... ..,... ,,..... 120.186 125,101 157,561 182,738 . 221,400 Repayment of long-term debt (Note 8) - 80,840 - 35,500 33,736 Customer refunds-net (9,881) 5,076 . (4,774) (36,918) 49,321 Other-net . , ,. ..... - 14,736 ' 2,015 ~ 26,599 20,806 Increase in working capital 7.233 - 79,403 - - Total funds applied , S 507,043 $ 731,979 $ 733,475 $ 779,380 $1,005,179 L WORKING CAPITAL CHAMGES (Other than current maturities of long-term debt): . . Receivaoles and temporary cash investments 3 (66,401) $ 3,639 $ _ 86,554 $ 79,155 $ (79,429)

            ' Fuel etock and materials and supplies (Notes 3 and 4)-        <                 . 2.           42,729         (124,614)           84,672           (114,118)                   132,731
             - Prepayments'and other . . . . . . . . . . . . . , . . . . .          (35,033)           6,418 '            9,243            (21,454)                   38,244 Deferred energy costs-net (Notes 1,3, and 5)                             -             (10,122)           72.849             (14.286)                  167,105 Notes and accounts payable .            ,                             (10,350)          (2,418)        (145.639)                68,803               (270,346)-

Taxes and Mterest accrued , .70.243 (2,107) (19,918) (64) 14,688 Other,- net , , _

                                                          ,                           6.045        -(11,277)            (8.358)            (11,103)                    (6,911)

Increase'-(Decrease) in working capital $ _ 7,233 $ (140,431) $ 79,403 $ (13,067) $ (3,918)

        '

• These amounts include conversior of Preference Stock,5.20% Convertible Series, to Common Stock.-

iThe accompanying notes are an integral part of these statements. V 1-28 h 1 w h- _ e .

                                                                                              - . _ . ~ . .

4 i SOUTHERN CALIFORNIA EDISON COMPANY STATEMENTS OF EARNINGS REINVESTED IN THE BUSINESS (Thousands or Dollars) Year Ended December 31, 1975 1976 1977 1978 1979 Balance at January 1 $ 616,562 $ 671,548 $ 769.425 $ 862,956 $ 931,217 Add: Net income (Note 5) 176,731 226,798 251,979 251,683 346,219 Transfer of amortization reserve- Federal (a) - - - 3,801 - 793,343 898,346 1,021,404 1 118,440 1,277,42S Deduct: Dividends declared on capital stock (Note 9): Original Preferred 806 806 922 1,075 1,219 Cumulative Preferred 35,705 37,851 38,423 42,532 47,574 Preference 3,900 3,900 6,844 6,926 6,164 Common 79,775 82,544 111.372 132,205 166,443 Capital stock expenso 1,609 3.820 887 4,485 1,740 121,795 128,921 158,448 187,223 223,140 Balance at December 31(b) $ - r 1,548 $ 769,425 $ 862,956 $ 921.217 $1.054,296 (a) Pursuant to a regulatory order, an operating reserve relating to certain federally-licensed hydroelectric projects was transferred to Earnings Reinvested in the Business end became an appropriation thereof. (b) Includes undistributed earnings of unconsolidated subsidiaries of $10,753,000 at Decem-ber 31,1979. STATEMENTS OF ADDITIONAL PAID-IN CAPITAL (Thousands of Dollars) Year Enced December 31, 1975 1976 1977 1978 1979 Balance at January 1 .$ 350,503 $ 350,503 $ 427,422 . $ 443,109 $ 569,673 Pia nlum received on sale of Common Stock - 76,919 15,690 126,572 31,900 Payments made in lieu of issuing fractional shares of Common Stcck . - - (3) (8) (3)

 ' Balanc3 at December 31             $ .350,503. $ 427,422 $ 443,109 $ 569.673 $ 601,578 The accompanying notes are an integral part of these statements.

29

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS Note 1 -Summary of Significant Accounting Policies l General-The Company is a public utility primarily engaged in the business of supplying electric energy in portions of central and southern California, excluding the City of Los Angeles and certain other cities. The accounting records of the Company are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Com-mission (FERC) and adopted by the California Public Utilities Commission (CPUC). Utility plant-Additions to utility plant and replacements of retirement units of property are capitaliza at original cost, which includes labor, material, indirect charges for engineering, supervision, transportation, etc., and an allowance for debt and equity funds used during construction. Maintenance is charged with the cost of repala and minor renewals; plant accounts with the replacement of property units; and tne depreciation reserve with the cost, less net salvage, of property units retired. Depreciation - Depreciation of utility plant is computed on a straight-line remaining life basis for financial statement purposes, and approximated 2.9% of average depreciable plant for 1975 and 1976, 3.1% for 1977,3.2% for 1978 and 3.5% for 1979. Although the eventual cost of retiring a nuclear geiterating unit cannot be predicted with certainty, the Company hIs estimated that decommis-sioning costs will approximate $36,000,000 for nuclear generation facilities in service. The Company's rates are designed to recover such costs through depreciation expense over the estimated remaining useful lives of such facilities. Income taxes-

        ' Accounting policies with respect to income taxes, including investment tax cradits applic-l able thereto, are set forth in Note 5, together with supplementary income tax information.

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

    -Revenues -
        ' Customers are billed monthly, except for most residential customers who are billed bi-monthly. Revenues are recorded when customers are billed.

Deferred energy costs-Deferred energy costs result from the Company's Energy Cost Adjustment Clause (ECAC), which requires monthly entries to adjust the results of operations and the maintenance of a balancing account for ove< collections or undercollections. Variations between ECAC revenues and the related energy costs included in rates are deferred until such variations are refunded to, or- recovered from, utility. customers' through CPUC-authorized rate adjustments. ECAC-Lrelated energy costs include incurred transportation and storage costs related to spent nuclear-fl0

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENT 3 (Continued) Note 1 -Summary of Significant Accourting Policies (continued) fuel. The income tax offects of ECAC also are deferred. For income tax purposes, billed revenues and incurred energy costs are utilized in the determination of taxable income. Subsidiaries - Investments in unconsolidated subsidiary companies, all of which are wholly owned, are accounted for by the equity method. None of the Company's five wholly owned subsidiaries is considered significant for financial reporting purposes. Mono Power Company (Mono), a non-public utility,is engaged primarily in the acquisition and development of mineral properties and interests therein. Mono has entered into agreements to conduct uranium, oil, coal, gas and geothermal exploration and development, substantially all of the costs and benefits of which are being reflected in the Company's energy costs. . ( Allowance for funds used during construction (ADC)- ADC is the generally accepted utility accounting procedure designed to capitalize the cost of both debt and equity funds used to finance plant additions during construction periods and to restore net incorge to the level which would have been experienced without the construction program through a transfer of such costs from the income statement to the balance sheet as utility plant construction work in progress. Although ADC increases net income, it does not represent current cash earnings. Such costs are recovered from custonters as a cost of service through provisions for depreciation in future periods. The ADC rate authorized by the CPUC was 8.0% for 1975 and 1976. Effective January 1,1977, a FERC Order requlees the use of a prescribed formula for computing the ADC rate and permits semi-annual compounding. Based upon the formula, an effective annual ADC rate of 6.96% was utilized during the years 1977 and 1978, and an effective annual ADC rate of 7.76% was utilized during 1979. The formula also provides for the separate computation of ADC applicable to debt funds and to equity funds. 1 Prior to 1977, separate rates were not required to be determined. ADC for periods prior to January 1,1977 have been reclassified to conform to the new presentation The reclassification was based upon the then current ratio of the debt and equity portions of ADC to total ADC as determined by the application of the formula. , Earnings per share-Primary earnings per share are based on the weighted average shares of Common and Original Preferred Stock outstanding, giving effect to the participating provisions of the Original Preferred Stock and Common Stock Equivalents for funds held by the Employee Stock Purchase Plan Trustee in each period, and after providing for cumulative preferred and preference dividend requirements. Fully-diluted earnings per share also give effect to the dilution which would result from the conversion of the Preference Stock, S.20% Convertible Series, and the 3%% Convertible Debentures, Due 1980, 31

I i SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 2-Quarterly Financial Data Earnings (Thousands of Dollars) Per Share Operating Operatrng Net Fully Three Months Ended F.evenues income income Primary D6!uted March 31.1978 $547.518 $ 64.050 $ 46.470 $0 62 $0.59 June 30.1978 545.444 70.612 50.912 0.69 0.67 Septe mber 30. 1978 634 934 90.778 68.846 1.00 0.96 Cecember 31.19r8 600.902 99.162 85.455 1.19 1.15 March 31,1979 603.733 96 159 83 677 1.13 1.09 June 30,1979 566.656 81,748 71.183 0 91 0.88 September 30,1979 684.334 106.738 98.822 1.32 1.27 December 31,1979 709 252 100,352 92.538 1.19 1.15 Note 3-Commitments and Contingencies Construction program and fuel supply-The Ccmpany has significant purchase commitments in connection *with its continuing construction program. As of December 20,1979 (the date of the Company's latest approved budget), funds required for construction expenditures are estimated at $767,831,000 for 1980,

 $753,808,000 for 1981 and $627,864,000 for 1982. Minimum long-term commitments of approximately $8.4 billion existed on December 31, 1979 under the Company's fuel supply and transportation arrangements.

Government licenses - The terms and provisions of licenses granted by the United States covering the Company's major and certair, minor hydroelectric plants, together with certain storage and regulating reservoirs and related transmission facilities, expire at various times between 1980 and 2009. They contain numerous restrictions and obligations on the part of the Company, including the right of the United States to acquire Company properties or the FERC to issue a license to a new licensee under certain conditions upon the payment of specified compensation. Resale revenues - Pursuant to FERC pr0cedures, on August 4,1974, Fettuary 1,1976, and August 16,1979, increases in the Companis resale rates became effective subject to refund with interest to the extent that any of the increases are subsequently deten iined to be inappropriate. Effective May 2,1974, a Fuel Clause Adjustment (FCA) was added to the Company's resale rates and was modified effecuve February 1,1976. As of December 31,1979, approximately $377,800,000 has been billed subject to refund. Of this amount, appr>ximately $46,600,000 is no longer subject to refund by virtue of appeals relative to the May 2,1974 FCA becoming final subsequent to December 31,1979. The Company believes that any other amounts which the FERC may require the Company to refund as a result of the proceedings relative to these increases should not have a material financial effect on the Company. An August 1,1979 FERC decision, which affirmed the August 4,1974 rate increase with respect to cost of service, provided, however, that the rate increase remain subject to refund pending resolution of the " price squeeze" issue raised by the intervenors. 32

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 3-Commitments and Contingencies (continued) An August 22,1979 FERC decision on the February 1,1976 rate increase required the Company to file a revised cost of service which reduced the annual revenues by approximately

        $3.600,000. Revenues billed in excess of this revised cost of service had previous!y been deferred and the related interest accrued. Both the Company and certain intervenors have petitioned for rehearing. The decision also provided that to determine the extent of a " price squeeze " if any, with respect to the filed revised rates, *he case would be remanded to an Administrative Law Judge for hea.dngs on that issue. If a " price squeeze" is determined, a further rate reduction may be imposed which could result in additional refunds, but the Com-pany believes that they would not have a material financial effect.

Energy cost adjustment clause ("ECAC")- On October 23, 1979, the CPUC granted approximately S431,600,000 of the Cor'pany's requested $466,600,000 increase pursuant to the ECAC. Such increase became effective on November 1,1979. The requested amount was reduced by approximately $35,000,000 as a result of the CPUC's determination to dafer consideration of the reasonableness of operating capacity factors at the Company's coal-bre power plants until the results of a consultant's report on such plants can be evaluated. The Company believes that operating practices at its

     . coal-fired power plards have been prudent and reasonable.

Legal matters - antitrust and employment practices - Antitrust-In March 1978, five resale customers filed a suit against the Company in Federal Court alleging violation of certain antitrust laws. The complaint seeks damages in excess of $23,000,000, consequential damages and a trebling of such damages and certain injunctive reliu, and alleges that the Company (i) is engaging in anti-competitive behavior by charging more for wholesale electricity sold to the resale customers than the Company charges certain classes of its retail customers, and (ii) has taken actiens alone and in concert with other utilities to prevent or limit such resale customers from obtaining bulk power supplies from other sources to reduce or replace the resale customers' wholesale purchases from the Company. In May 1979, the Federal Court continued a stay of the proceedings pending reso-lution of the Company's FERC resale rate filing which became effective on February 1,1976, and of the FERC proceedings involving bulk power contracts and substantially the same antitrust issues. The resafe customers have asked the FERC to modify these contracts and to order the Company to provide additional transmission services to them. On February 15,1980, the Court lifted the stay on. discovery and set February 10,1981 for the next status conference. The foregoing proceedings involve complex issues of law and fact, and, although the Company is unable to predict their final outcome, it has categorically denied the allegations of these resale customers. The August 22, 1979 FERC decision discussed above under " Resale

      . revenues"_ could affect the pending antitrust litigation.

Employment Practices-In 1972, a charge was filed with the Federal Equal Employment Opportunity Commission ("EEOC") and a class action lawsuit was filed in Federal Court in 1974,

     ' both of which alleged that the Company had engaged in unlawful, discrimlnatory employment practices.

Although denying that it has engaged in any unlawful employment practices, the Company has entered into a Conditional Settlement with the EEOC and the representatives of most of the 33

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 3-Commitments and Contingencies (continued) class action plaintiffs which, on November 7,1977. was submitted to the Federal Court for approval as a consent decree. The estimated cost of this settlement is initially $700,000 with the possibili!y of an additional estimated $300.000 in payment on individual awards after hearings. On December 31, 1979, the court filed a memorandum indicating it would approve the . Agreement. It is not known at this time whether an appeal will be taken from a judgment. , if the decision were to be reversed on appeal and the cases tried, it is the opinion of Company counsel that the Company has a number of defenses which should be sustained by a court and which, among other things, have the effect of limiting monetary damages. The Company believes, based on a current analysis of the applicable law and facts, that the amount of any recovery for monetary damages, including back pay, should not have a material financial effect on the Company. Leases and rentals - The Compsny has entered into various arrangements to lease automotive egoipment, computer equipment, nuclear fuel, office space and other incidental equipment and property which are accounted for as operating leases in accordance with ratemaking practices. Neither the annual gross lease expense nor the present value of the minimum commitments of capital leases are material. Note 4 - Compensating Balances and Short-Term Debt in order to continue lines of credit with various banks, which amounted to approximately

$170,000,000 on December 31,1978 and $198,000,000 on December 31, 1979, the Company presently maintains deposits aggregating approximately $12,000.000 which are not legally restricted as to withdrawal. None of tuch lines of credit was used during 1978 and 1979.

The Company has an additional $150,000,000 line of credit which may be utilized only for the purchase of fuel oil through the use of bankers' acceptances. Notes issued under 'his - agreement are secured by a pledge of the Company's fuel oilinventory. The maximum amouc of bankers' acceptances outstanding during 1978 was $68,545,000 with average daily borrow- . ings of $24,259,000 and a weighted average annual interest rate (total interest divided by average daily borrowings) of 7.87%. There were no bankers' acceptances. outstanding during 1979. The maximum amount of commercial paper outstanding during 1978 and 1979 was

 $165,273,000 and $184,340,000, respectively. The average daily borrowings for these same periods were $113,414,000 and $65,057,000, respectively, with weighted average annual interest rates of 7.23% and 11.00%, respectively. Of the amount outstanding at December 31, 1979,
 $50,000,000 is expected to be refinanced and has been classified in the balance sheet as long-term debt.

The maximum amount of notes payable outstanding during 1978 and 1979 was $87,970,000 and $20,078,000, respectively. The average daily borrowing for these same periods were

 $41,402,000 and $20,052,000, respectively, with weighted average annual interest cates of 8.23%

and 11.01%, respectively. These notes are unrelated to the lines of credit referred to above. 34

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 5-Taxes As required by the CPUC, no provisions are made for income tax reductions (net) which result from reporting certain transactions for income tax purposes in a period different from that in which they are reported in the financial statements, except for certain investment tax credits (lTC) discussed below, the tax effects of the ECAC balancing account provisions and certain resale revenues. Effec'ive January 1,1976, pursuant to FERC procedure, the Company began providing deferred income taxes for certain timing differences allocable to resale rates. The revenues related to such deferred income taxes are being collected subject to refund, as discussed in Note 3, pending action by the FERC.

           . ITC not deferred have been applied as a current reduction of income tax expense. Ad-ditional ITC, made available to the Company under the provisions of the Tax Reduction Act of 1975 and the Tax Reform Act of 1976, have been deferred and are beitig amortized to income tax expense ratably over the service lives of the properties generating such credits.

The Company has reduced its deferred income tax provision Mr 1979 and the balance of accumulated deferred income taxes-net, in the amount of $68,128,000, representing ITC in excess of those utilized to date or to be utilized on the 1979 federal income tax return, pending their utilization in future income tax returns. Such ITC were generated in 1979 and, if not utilized, would expire in 1986. [. i 35

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 5-Taxes (continued) ' Supplementary information regarding taxec is set forth in the following table: (Thousands of Dollars) Year Ended December 31, 1975 1976 1977 1978 1979 Current: Federal $ 37,897 $ 25,165 $(48,360) $(49,219) $ 6,717 State 12.481 14,344 1.233 3.567 4,019 50.378 39.509 (47,127) (45.652) 10,736 Deferred-Federal and State: Investment tax credits-net 6.624 16.366 26,886 32.568 45,533 Deferred energy costs - (11,269) 81,101 (15,904) 34,148 Customer refunds (11,000) 5,651 (5.315) 78.801 - Otner (2,144) 3,432 1,345 2,208 (13.644) (6.520) 14 M 104.017 97,673 66.037 Total taxes on Irmme $ 43.858 $ 53 6 $ 56.630 $ 52.021 $ 76,773 Taxes on income included in operating expenses $ 46,623 $ Sv.506 $ 68,792 $ 72.803 $100,292 Taxes on income included in other income (2,765) (5,817) (11,902) (20,782) (23,519) Total taxes on income $_43,858_ _$,53.68_9 ,$_ _56.890 $ 52.021 $ 76,773

                                              ~          ' ~'                " ' '             ~

Differences between the federal statutory tax

                                                                                                                ~ " ~ ~

rate and the Company's effective tax rate are reconciled as follows: Federal statutory tax rate 48.0 % 48.0 % 48.0 % 48.0 % 46.0 % Excess of tax over boc,k depreciation (11.6) (9.1) (6.0) (3.4) - Allowance for debt and equity funds used during construction (5.8) (8.1 ) (9.4) (12.4) (12.9) Percentage repair allowance . - (2,1) (2.9) (4.7) (3.3) Administrative and general expenses capitalized . (3.0) (2.4) (2.3) (2,7) (2.2) Investment tax credits -net . (3.1) (4.9) (6.6) (8.4) (8.1) Federal deduction for state taxes on income (4.6) ( 1.9) (2.9) (2.7) (2.2) Ad valorem lien date deduction (0.6) (0.7) (0.5) 4.2 (0.2) All other differences (4.0) (4.7) (3.5) (5.5) (3.7) State tax provision 4.6 5.0 4.5 4.7 4.7 Effective tax rate _17,1 *[. 19.9 %i _ _19.1 %_ _18.4 % _1_8 1 %_ Property and other taxes included in operating expenses: Property $ 84,%5 $ 91,601 $ 98,370 $ 74,665 $ 48,300 Payro!! and other 8,603 10.525 11,290 11,764 P.128

                                               $ 93,568      $102.126         $109,660          $ 86,429        $ 56,428 Note 6-Research and Development Research and Development ("R&D") expenditures are expensed currently if they are of a general nature. Plant-related R&D expenditures are accumulated in construction work in progress ("CWIP") until a determination is made whether or not such projects will result in construction of electric plant, if no construction of electric plant ultimately results, the expendi-tures are charged to operating expense. The balance of R&D expenditures included in CWIP at December 31,1978 and 1979 was $17,178,000 and $29,438,000, respectively.

e 36

           - -                ._ --       _----     _ _ - .    -.       .-         -    _-. -- -                   .-. ~

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) 1 Note 4- Research and Development (continued) (Thousands of Dollars) Year Ended December 31, 4 1975 1976 1977 1978 1979 R&D 6xpensed $ 9.636 $10,887 $12.710 $14.442 $ 15.778 R&D charged to CY - net 4.814 5,551 2.407 3.847 12.260 Total R&D expenditures $16.438 $15.117 $28 038

                                                               $_14.450                            $18.289_

Note 7-Retirement Plans The Company's current pension program is based on a trusteed non-contributory pension plan. Company contributions are determined on the basis of a level premium funding method and prior service costs are funded. Pension costs are funded or reserved for on an actuarial basis and amounted to $23,702,000 for 1975; $23,417,000 for 1976; $27,689,000 for 1977;

       $32,236,000 for 1978; and $37,456,000 for 1979. Accumulated pension funds and reserves exceed vested benefits under the program.
            . Under the Employee Stock Purchase Plan adopted to supplement employees' income after retirem.ent, employees may elect to contribute specified percentages of their compensation to a trustee for the purchase of Company Common Stock and the Company contributes to the Plan an amount eque' to one-half of the aggregate contributions of employees, less forfeitures.

The Company's contooution amounted to $2,473,000 for 1975; $2,461,000 for 1976; $2,591,000 for 1977; $2.785,000 for 1978; and $3,263.000 for 1979. In addition, employees may contribute up to 5*6 of t'ieir regular monthly base pay through supplemental contributions without regard to their years 3f service. These supplemental contributions are not matched by the Company. The Tax Peduction Act of 1975 introduced a provision for an additional 1% ITC if the funds

     .gonerated therefrom are invested in the purchase of employer securities for the benefit of employees and transferred into an Employee Stock Ownership Plan (ESOP). Eligible securities include Common Stock -or .=ecurities convertible into Common Stock. The Company has established an ESOP and has elected the additional 1% ITC for the years 1976,1977 and 1978.

As of December 31,1979,336,423 shares of Common Stocli applicable to the plan have been issued In' trust.

           -The Tax Reform Act of 1976 provided for.an additional %% ITC for the purchase of employer securities, similar to the provision for the additional 1% ITC discussed above, for eligible employees who provide matching contributions. An election to obtain such additional
      %% ITC was made with respect to 1978. The availability of the additional % % ITC is contingent upon a favorable determination by the Internal Revenue Service that the ESOP, as amended to incorporate the %% ITC, continues to qualify under the Internal Revenue Code.

The Company has recorded as a liability to ESOP approximately $13,681,000 for the 1% ITC for the years 1978 and 1979 in excess of those utilized or to be utilized on the federal income

   - tax returns for those years.. An additional %% ITC of approximately $3,088,000 was elected for
    '1978, and it is expected that approximately $3,971,000 will be elected for 1979, both amounts of L
   .which are in excess of those utilized or to be utilized on the fe:!eral income tax returns for
   . those years. Such 1% and % % ITC were generated in 1978 and 1979 and, if not utilized, would expire in 1985 and 1986, respectively.

37 l - _ _a

i i SOUTHERN CALIFORNIA EDISON COMPANY 1 NOTES TO FINANCIAL STATEMENTS (Continued) Note 8 - Long-Term Debt A summary of long-terr:1 debt outstanding f 0!!0ws: (Thousands of Do!!ars) Decemter 31, 1978 1979 fr:terest Series Maturity Rate Principal Ar o nt First and Refundirig Mortgage Bonds F 1979 3 *. $ 30.000 $ - G 1981 3% 4.000 40.000 H 1932 4% 37.500 37,500 1 1982 44 40.000 40.003 J 1932 45 40.000 40.000 K 1933 4h 50,000 50.000 L t935 5 30.000 30.000 M 1955 4% 60.000 60.000 N 1956 4h 30.000 30.000 0 1987 4% 40.000 40.000 P 1997 4% 50.000 50.C00 0 1968 4h 60.0C0 60.000 R 1929 4% 60.000 60,000 S 1993 4h 60.000 60,000 T 1991 5% 75.000 75.000 U 1991 6% 80.000 80,000 V 1992 Sh 80D30 80.000 W 1993 6% 100.000 100.000 X 1994 7% 75.000 75.000 Y 1994 8% 100.000 100,000 Z 1995 Th 100,000 100.000 AA 1996 8 100.000 100.000 BB 1997 7% 125.000 125.000 CC -1999 8% 100.000 100.000 DDP 1999 7 15.030 15.030 EE .1961 9 100.000 10020 FF 20C0 8% 150,000 150.000 GG 2001 8h 125.000 125,000 HH 2002 8% 125.000 125.000

                                     - Il                             1984           7%                75.000          75.000 JJ                             2003           9%               200.000         2 M.000 KK                             2004          916                   -

105.000 LL 1987 94 - - MM 2004 11 4 _, 200.000 2.352.530 2.627.530 First Mortgage Bonds (Ca:ectric) 1980-1991 1%-54 66.000 66.000 Convertib'e Debentures . 1980 3% 74.902 74.902 Promssory Notes . 1979-1933 54 17.953 14.217 Short-Term Debt Expected to be Refmanced - Comrnercial Paper . ..

                                                                                                           -           50.000 Prircipal AmouMs Outstanding       .    .. .              ..      .    .                  2.511.385       2.832.649 Current Maturities of Long-Term Debt           .       ..           .    . . .     .        (33.737)        (84.544)

Unamortized Premium or (Discount)-pet .. ... . .. (174) (LE38). /j Total Long-Term Debt . . .. . .. ._ .. . . ... 52.477.474 52.746.207 38- t = _ _a

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 8-Long-Term Debt (continued) The authorized principal amount of each series of First and Refunding Mortgage Bonds is equal'to the amount outstanding. The Trust Indenture under which these bonds are issued permits the issuance from time to time of additional bonds, including additional bonds equal in principal amount to bonds retired, pursuant to the restrictions and conditions contained

    ' therein. Each of the bond indentures requires semiannual deposits with the Trustees of 1% %

of the principal amount of its outstanding First and Refunding Mortgage Bonds and the First

    ' Mortgage Bonds of Calectric. The Catectric Indenture requires an annual deposit with the Trustee of 1% of the principal amount of First Mortgage Bonds issued less certain bonds retired, plus an amount equivalent to the excess of 15% of gross operating revenues over costs of maintenance of the property subject to the lien of such indenture. These deposit requirements of $77,780,900 in 1979 were satisfied by property additions and replacements, and by delivery and cancellation of bonds outstanding under the applicable indenture. The Series DDP and KK, First and Refunding Mortgage Bonds, are subject to mandatory sinking fund requirements commencing on July 1,1990 and June 15,1985, respectively.

In September 1979, the Company entered into a financing agreement with certain foreign banks that permits the Company to borrow, at any time through September 17,1980, up to

      $50,000,000 at a floating interest rate based on the London Interbank Offered Rate. On Sep-tember .18,1980, as . required by the agreement, the Company will borrow the additional amount necessary to bring the total borrowings to $50,000,000. Commencing on that date,

the principal outstanding will bear interest at the fixed rate of 9%% per annum. The borrow-ings will oe secured by the concurrent issuance of an equal principal amount of the Company's First and Refunding Mortgage Bonds, Series LL, due March 18,1987. The financing agreement contains no restrictive covenants. There weie no outstanding borrowings under the agreement at December 31,1979. Because the Company expects to refinance $50,000,000 of short-term obligations through the operation of the agreement, such amount has been classified as long-term debt in the balance sheet at December 31, 1979.

Current maturities of long-term debt on December 31, 1979 included convertible deben-tures, due August 15,1980 (3% %), in the amount of $74,902,000; First Mortgage Bonds (Calectric), due June 1,1980, in the amount of $6,000,000; 5%% Promissory Notes, due Feoruary 28,1980, in the amount of $1,832,000 and due August 31, 1980, in the amount of

    - $1,810,000. The amounts of Tang-term debt maturing in the four years subsequent to December 31,' 1980 will be: $143,548,000 in 1981; $121,025,000 in 1982; $53,01,000 in 1983; cnd
      $83,000,000 in 1984.

At . December 3.,- 1978 and 1979, the 3%% Convertible Debentures, due 1980, were convertible at the adjusted rate of one share of Common Stock for each $37.50 and $37.00, respectively, of the principal amount of such ' debentures. 'Any such debentures which are converted may not be reissued.

  ~

The Company has entered.into a financing agreement, as amended,.with certain English banks pursuant to which it issued promissory notes payable in pounds sterling. These notes are secured by a pledge of the Company's customer accounts receivable. On June 28, 1976, the Company entered into forward exchange contracts with a United States bank to purchase, at various times from r bruary a 1979 to ' August 1983, pounds sterling to repay substantially all of the promissory r .tes. 39

I I SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 9-CapitalStock Transactions in the capital stock accounts for the five years ended December 31, 1979 were as follows: In 1975, 2,000,000 shares of Cumulative Preferred Stock, 9.20% Series were issued; in 1976, 5,000,000 shares of Common Stock were issued at an initial public offering price of

   $22% per share; in 1977, 2,480,000 shares of Preference Stock, 7.375% Series and 600,000 shares of $100 Cumulative Preferred Stock,7,80% Series, were issued; in 1978,6,000,000 shares of Common Stock were issued at an initial public offering price of $25.375 per share; and in 1979, 525,000 shares of $100 Cumulative Preferred Stock,8,70% Series A, and 750,000 shares of $100 Cumulative Preferred Stock,8.54% Series, were issued. Additional shares of Common Stock were issued as follows:

Shares issued 1975 1976 1977 1978 1979 Dividend Reinvestment and Stock Purchase Plan - 87,65G 323.932 637,014 1,165,073 Employee Stock Purchase Plan - $56,191 540,081 631,521 756,427 Employee Stock Ownership Plan - - 102,262 203,879 30,282 Conversion of 783.126, 580,854, and 553,140 shares in respective years of Preference Stock, 5.20% Convertible Series - - $51,452 417,710 406,573 The quarterly dividend rate was increased from 42c per share to 50p, per share effective with the dividend paid on Common Stock on April 30,1977, and with the dividend paid on Orig-inal Preferred Stock on June 30,1977; to 56c per share effective with the dividend paid on Common Stock on. January 31,1978, and with the dividend paid on Original Preferred Stock on March 31,1978; to 62c per share effective with the dividend paid on Common Stock on January

 ' 31,1979, and with the dividend paid on Original Preferred Stock on March 31,1979; and to 68C per share efiective with'the dividend paid on Common Stock on October 31,1979, and with the
 - dividend paid on Original Preferred Stock on December 31,1979.

40

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 9-Capital Stock (continued) A summary of the capital stock accounts follows: December 31,1979 (Thousands of Dolfars) Redemption December 31, Shares Price Per Outstanding Share 1978 1979 Preferred Stock-Subject to Mandatory Redemption Requirements (a)(b):

            $100 Cumulative Preferred:

7.325% Series 750,000 $110.00 $ 75,000 $ 75.000 7.80% Series 600,000 110.00 60,000 60,000 8.54% Series 750,000 108.54 - 75.000 8.70% Series A 525,000 110.00 - 52,500

                                                                                                          $135.000        $2_62,500 Preference:

7.375% Series 2,480.000 26.25 $ 62,000 $ 6270J Preferred Stock - Other(a)(b): Original Preferred - 5%, prior, cumulative, participat-ing, not redeemable 480,000 $ 4.000 ,$ 4.000

          ' Cumulative Preferred:

4.08% Series 1,000,000 $ 25.50 $ 25,000 $ 25,000 4.24% Series 1,200,000 25.80 30,000 30.000 4.32% Series 1,653,429 28.75 41,336 41,336 4.78% Series 1,296,769 25.80 32,419 32.419 5.80% Series . 2,200,000 25.65 55,000 55.000 8.85% Series 2,000,000 26.50 50,000 50,000 9.20% Series 2.000,000 27.25 50,000 50,000

            $100 Cumulative Preferred:

7.58% Series 750,000 105.00 75,000 75,000 8.70% Series 500,000 111.00 50.000 50.000 8.96% Series . 500,000 111.00 50,000 50,000

                                                                                                          $458,755         $458,755 Preference (c):

5.20% Convertible Series . 1.082,604 25.00 $ 40,895 $ 27,067

          . $100 Preference Common Stock -including additional stated capital (a)(c)(d)(e)(f)                    . ..           ,    64,894,936                     _$5J4166         $577f5_9 (a) The Company's Articles of Incorporation authorize the issuance of:

Shares Authorized Par Value Class of Stock (000) Per Share .

                  - Original Preferred                                                               480           $ 8%

Cumulative Preferred 24,000 - 25

                   $100 Cumulative Preferred .                                                    6,000               100 Preference          ,                                                ..       10,000                25
                   $100 Preference         .         .      .   .. ..                 .            2,000              100 Common                    .,             .                              ,     90,000                 8%

41 l --

I l SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 9-Capital Stock (continued) (b) Cumulative Preferred and Preference Stock Redemption Provisions- All series of $100 Cumulative Preferred Stock, Cumulative Preferred Stock and Preference Stock are redeem-able at the option of the Company. The various series of $100 Cumulative Preferred Stock, the Cumulative Preferred Stock,8.85% Series and 9.20% Series, and the Preference Stock, 7.375% Series, are subject to certain restrictions on redemption for refunding purposes. The $100 Cumulative Preferred Stock,7.325% Series, has a cumulative sinking fund provi-sion requiring the redemption of 30,000 shares annually at $100 per share plus accumulated unpaid dividends, commencing July 31,1983, and continuing until all shares are redeemed. Commencing November 30,1983, and continuing until all shares are redeemed, the $100 Cumulative Preferred Stock,7.80% Series, has a cumulative sinking fund provision requiring the annual redemption of a specified percentage of the shares originally outstanding (2.5% in 1983 and increasing to 5.5% by 2003) at $100 per share plus accumulated unpaid dividends. Commencing September 1,1984, and continuing until all shares are repurchased, the Company has a contractual obligation to offer to purchase a minimum of 496,000 shares ( annually of its Preference Stock,7.375% Series, at $25 per share plus accumulated unpaid dividends. Commencing June 30,1985, and continuing until all shares are redeemed, the

        $100 Cumulative Preferred Stock,8.70% Series A, has a cumulative sinking fund provision requiring the annual redemption of a specified percentage of shares originally outstanding (2.5% in 1985 and increasing to 9.5% by 2000) at $100 per share plus accumulated unpaid dividends. Commencing June 30,1986, and continuing until all shares are redeemed, the
        $100 Cumulative Preferred Stock,8.54% Series, has a mandatory sinking fund provision requiring the annual redemption of 22,500 shares at $100 per share plus accumulated unpaid dividends. For each of the five years subsequent to 1979, the aggregate mandatory redemp-tion requirements will be: none for 1980 through 1982, $4,500,000 for 1983, and $16,900,000 for 1984.

(c) Under a prescribed formula, the conversion prices of convertible securities are adjusted when additional shares of Common Stock are sold by the Company. At December 31, 1978 and 1979, the shares of Common Stock reserved for the conversion of the Preference Stock,5.20% Convertible Series amounted to 1,202,809 and 796,088, respectively, at the adjusted conversion price of $34.00 per share. In addition, 1,997,388 and 2,024,380 shares of Common Stock were reserved at those respective dates for the conversion of 3%% Convertible Debentures, Due 1980, at the adjusted conversion prices of $37.50 and $37.00 per share, respectively. (d) At December 31,1979, there were 886,325,3,315,780 and 663,577 authorized and unissued shares of Common Stock rescrved for sale and issuance under provisions of the Company's Dividend Reinvestment and Stock Purchase Plan, Employee Stock Purchase Plan, and Employee Stock Ownership Plan, respectively. On February 14,1980, the Company issued 378,842 shares of Common Stock under the Employee Stock Ownership Plan, and, on February 19,1980, issued 415,281 shares of Common Stock under the Dividend Reinvest-ment and Stock Purchase Plan. (e) On February 13, 1980, 7,000,000 shares of Common Stock were issued at an initial public offering price of $23.125 per share.

 . (f) . The book value per share of Common Stock, after giving effect to the participating provi-sion of the Original Preferred Stock, was $32.57 and $34.22 at December 31,1978 and 1979, respectively.

42

l l SOUTHERN CALIFORNIA EDISON COMPANY ' NOTES TO FINANCIAL STATEMENTS (Continued) l Note 10-Jointly-Owned Electric Utility Plants '

   . The Company owns undivided interests in several jointly-owned generating and transmis-sion facilities for which each participant must provide its own financing. The Company's propor-tionate share of expenses pertaining to such facilities is included in the appropriate category of operating expenses in the Statements of income. In the table below, the dollar amounts repre-sent the Company's share as recorded on the Balance Sheet for each such facility.

(Thousands of Dollars) December 31,1979 Estimated Electric Accumulated Construction Plant in Provision for Work in Ownership Facility Service Depreciation Progress interest Axis Generating Station . $ 12,155 $ 6,449 $ 17 33.3 % 800 KV DC System . 67,506 14,451 40 50.0 El Dorado System . 19,414 4,578 205 60.0(1) Four Corners Generating Station 97,049 26,978 16,373 48.0 Mohave Generating Station 169,043 36,649 8,878 56.0 Palo Verde Generating Station - - 243,179 15.8 San Onofre Generating Station 163,453 39,340 1,553,46S 80.0 Solar Power Project - - 2,128 80.0 Total $ 528,620 $ 128,445 $1,824,286 (1) Represents a composite rate. 43

                                                       ~

i i SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 11 - Long-Term Contracts for the Purchase of Power Under certain contracts, the Company has agreed to purchase portions of the generating output of certain facilities. Although the Company has no investment in such facilities, these contracts provide that the Company pay certain minimum amounts (which are based at least in part on the debt service requirements of the supplier) whether or not the plant is operating. None of such contracts provides, or is expected to provide, in excess of five percent of the Company's current or estimated future operating capacity, The cost of power obtained under the contracts, including payments made when a plant is not operating, is included in Purchased Power in the Statements of Income. Information as of December 31,1979 pertaining to such ' contracts is summarized in the following table: Oroville-Thermalito Navajo Hoover Sales Power Sale Layoff Agreement Agreement Agreement Date of Expiration September 30,1989 or May 31,1987*

• April 1,1983 upon five years' no-tice from U.S. Bureau of Reclamation. Cur-rent estimated termi-nation date is Janu-ary 1,1985.

Share of Effective Operating Capacity . 327.5 MW* 331 MW 340 MW Share of Energy Output 14.6 % 7.9% 37.6 % Estimated Annual Cost $32,596,000 $1,872,000 $5,985,000 Portion of Estimated Annual Cost Applicable to Supplier's Annual Minimum Debt Serv-ice Requirement . $ 1,978,000 $ 456,000 $5,234,000 Allocable Portion of Interest of Supplier in-cluded in Annual Minimum Debt Service Requirement $ 571,000 $ 96,000 $4,601,000 Related Long-Term Debt or Lease Obliga-tions Outstanding of Company . None None None

• The Company has agreed to certain reductions in its share of effective operating capacity prior to the estimated Jar'uary 1,1985 termination date.

" The Company has certain renewal rights under the existing agreement. 44~

Supplementary Information to Disclose the Effects of Changing Prices (Unaudited) In accordance with the requirements and guidelines of the Financial Accounting Standards Board, the supplementary in'ormation presented below is intended to proviL certain information about the effects of both general inflation and changes in specific prices. It should be viewed  ; as an estimate of the approximate effect of inflation, rather than as a precise measure. 1 STATEMENT OF EARNINGS AVAILABLE FOR COMMON AND ORIGINAL PREFERRED STOCK ADJUSTED FOR CHANGING PRICES For the Year Ended December 31, 1979 (Thousands of Dollars) As Reported in the Primary Average 1979 Dollars Financial Statements Constant Dollar Current Cost Total Operating Revenues $2.563.974 $2,563.974 $2,563.974 Operating Expenses: Energy costs 1.344,023 1,344.023 1,344.023 Provision for depreciation 178.637 350.000 415,000 Taxes on income 100,292 100,292 100,292 Other operating expenses 556,026 556.026 556,026 Other income and deductions (139,758) (139.758) (139.758) Net interest charges 178.535 178,535 178.535 Dividends on cumulative preferred and preference stock 53.738 53.738 53,738 2.271,493 2.442,856 2,507.856 Earnings available for common and original preferred stock (exclud-ing reduction of utility plant to net recoverable cost) $ 292.481 $ 56,118 _$ 121.118 Excess of increase in general price level of $1.468.000.000 over increase in specific prices of $1,417,000,000 of utihty plant held during the year (a) $ (51.000) Reduction of utility plant to net recoverable cost S (561.000) $ (445,000) Gain from decline in purchasing power of net monetary liabilities S 452,000 $ 452,000 (a) At December 31,1979, current cost of utility plant, net of accumulated depreciation, was

       $12,133,000,000 while related historical cost and net recoverable cost was $5,902,000,000.

The difference of $6,231,000,000, which includes $1,417,000,000 for the current year, represents the changes in specific prices (current cost) of utility plant from the date the plant was originally acquired. 45

l l FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES i l (in Thousands of Dollars Except Per Share Data) Average 1979 Dollars 1975 1976 1977 1978 1979 Total Operating Revenues $2,223.000 $2.357,000 $2.476,000 $2,593.000 $2.563.974 Historical Cost Information Adjusted for General , inflation (Constant Dollar): Earnmgs available for common and original preferred stock * $121,118 Earnings per share on common and original preferred stock * $1.89 Net assets at year-end at net recoverGie cost $2,101.000

 - Current Cost Information:

Earnings available for common and original preferred stock * $56,118 Earnings per share on common and original preferred stock S.87 Excess of increase in general price level over increase in specific prices of utility plant after reduction to net recoverable cost $496,000 Net assets at year-end at net recoverable cost . 32,101.000 General Information: Gain from decline in purchasing pcwer of net monetary liabilities $452.000 Cesh dividends declared per common share $2.26 $2.14 $2.45 $2.53 $2.57 Market price per common share at year-end $25.68 $28.56 $30.84 $27.62 $23.05 Average consumer price index 161.2 170.5 181.5 195.4 217.6 "

• Excludes reduction of utility plant to net recoverable cost.

   " ' Estimated.

Constant dollar amounts represent historical costs of utility plant restated in terms of

  -dollars of equal purchasing power, as measured by the Consumer Price Index for all Urban Consumers. Current cost amounts reflect the changes in specific prices of utility plant from the date the plant was acquired to the present, and differs from constant dollar amounts to the extent that prices in general have increesed more or less rapidly than specific prices. The current cost of utility plant was dctermined by restating its historical cost using Company projections of year-end indices to be reported in the Handy-Whitman Index of Public Utility
  . Construction Costs.

The provision fer depreciation on constant dollar and current cost bases was determined by applying primary 'inancial statement depreciation rates to restated utility plant accounts. Since only historical costs are deductible for income tax purposes, the income tax expense in the primary financial statements was not adjusted. Fuel inventories and the cost of fuel used in the generation of electricity have not been restated ' otn their historical cost since rate regulation limits the recovery of fuel and purchased power costs to recorded costs. As such, fuel inventories are effectively monetary assets and

 - have been included in the computation of purchasing power gain or loss.

Under ratemaking ~ procedures prescribed by the regulatory commissions exercising rate jurisdiction over the Company, only the historical cost of utility plant is recoverable through future depreciation charges. Therefore, the cost of utility plant, stated in terms of constant

 ' dollars or current cost, exceeding the historical cost of utility plant is not presently recoverable 46 1

through depreciation charges, and, accordingly, the excess is reflected as a reduction of utility plant to net recoverable cost. While the ratemaking process gives no recognition to the current cost of replacing utility plant, based on past ratemaking practices the Company believes it will be allowed to recover and earn a return on the increased cost of its investment when replace-ments of utility plant occur. During a period of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary liabilities experience a gain. The gain from the decline in purchasing power of net monetary liabilities is primarily attributable to the substantial amount of debt which has been used to finance utility plant. However, to properly reflect the economics of rate regulation, the gain from the decline in purchasirig power of net monetary liabilities, including Cumulative Preferred and Preference Stock, offsets the reduction to net recoverable cost of utility plant. The Company, therefore, does not have the opportunity to realize such holding gain on net monetary liabilities. t 47

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 1978 (Thousands of Do!!ars) Balance at Balance at Beginning Additions Other End Classification of Period at Cost Retirements Change >s of Period Steam Production $1,302,084 $ 23,829 $ (2,310) $ -

                                                                                                    $1,323,603 Nuclear Production                    133,516       12,051               (2)           -

145,565

   - Hydro Production                      215,523          391             (267)           -           215,647 Other Production                      201,088     148,914             -                -

350,002 Transmission . 1.127,702 39,693 (3,058) 186 1,164,523 Distribution . 1,820,103 128,404 (18,052) (189) 1,930,266 General 130,978 12,370 (3,968) (6) 139,374 Plant Held for Future Use 29,226 (851) (2) - 28,373 ( Experimental Electric -

     - Plant Unclassified                       699        (482)           -                -

217 Other Utility Plant . 3,969' 2,24y (38) - 6,176 Subtotal-Utility Plant. 4.964,888 366,564 (27,697) (9) 5,303,746 Construction Work in Progress 1,209,502 285,122 (1,051) - 1,493,573 Nuclear Fuel . 37,213 608 - (1,468)(a) 36,353 G. css Utility Plant $6,211,603 - $ 652,294 $_ s28,748) $ (1,477) $6,833,672_ Nonutility Property ,

                                       $     5,725 $       1,123 $       (2,783) $         3,117 $         7,182
    - (a) Represents nuclear fuel sold and leased back.
                                                    .48 1

l SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 1979 i Sousands of Dollars) Balance at - Balance Beginning of Additions Othcr at End

       . Classificatio.1           . Period       at Cost           Retirements       Changes         of Penod Steam Production            $1,323,603     $     18,515       $      (1,278)    $      -       $1,340,840 Nuclear Production .             145,565         10,493.                  (31)         -            156,027 Hydro Production                 215,647.         1,333                  (161)            (10)      216,809 Other Production                 350,002          4,678                -               -            354,680 Transmission                 .1.164,523         30,276               (6,628)        (2,136)      1,186,035
   ' Distribution                 1,930,266        158,939             (19,576)             (198)    2,069,431 General                          139,374          7,4"4              (2,999)         2,950          146,821
   ' Plant Held for Future Use                     28,373          1,615              (1,636) -      (2,283)          26,069 Experimental Electric Plant Unclassified      .                217            107               -

(217) 107 Other Utility Plant 6,176 1,019 (10) (1,020) 6,165 Subtotal-Utility Plant . 5,303,746 234,471 (32,319) (2,914) 5,502,984 Construction Work - in Progress 1,493,573 564,504 881 - 2,058,958 Nuclear Fuel ~ 36,353 4,263 - - 40,616

         ~ Gross Utility
            ' Plant             $6,833,672     $ 803,233         $ (31,438)         $   (2,914)    $7,602,558
                                                        ~

Nonutility Property- $ 7,185: $ 4,4]  ? (2,411) .$ _

                                                                                                   $      9,2 69 F

L'

                                                       ,49'

i SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI- ACCUMULATED DEPRECIATION AND AMORTIZATION l OF PROPERTY, PLANT AND EQUIPMENT (a) FOR THE YEAR ENDED DECEMBER 31, 1978 (Thousandsof Dollars) Additions Add (Deduct) Balance at Charged to Balance at Beginning Costs and Other End Description of Period Expenses Retirernents Changes (b) Salvage of Period Steam Production . . . $ 500,979 $ 39,503 $ (472) $ 242 $ 2 $ 540,254 Nuclear Production 24,405 5,800 - - - 30,205 Hydro Productio 82,163 3,119 (265) (40) 2 84,979 Other Produciton 32,258 11,469 - (1,318) - 42,409 Transmission . 189,057 25,026 (2,976) 599 1,188 212,944

   - C;m.;bution          .                526,102       69,197        1 17,541)       (4,221)         5,779        579,316 General                                 29,205        5,791         (3,989)            (71)           463           31,399                          (

Experimental Electric Plant Unclassified 208 95 - (302) - 1 Ritirement Work in Progress (2,172) - (925) 426 (536) (3,207) Other Utility Plant Reserves 804 103 (34) - 1 874 Subtotal- ., _1,383,009 160,103 (26,152) (4,685) 6,899 1,519,174 Nuclear Fuel Amortization 19,870 2,911 - - - 22,781 Total Utility Plant Reser,fes . $1,402,879 $ 163,014 $ (26,152) $ (4,685) $ 6,899 $1,541,955 Nonutility Property. Rese s -$ 1,133 $ 134 $ -

                                                                                                                $                   1,267 (c) Depletion is not applicable.

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

50

3 -K-SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE VI- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (a) i FOR THE YEAR ENDED DECEMBER 31, 1979 (Thousandsof Dollars) Balance at Ca d to Balance at Beginning Costs and Other End Description of Period Expenses Retirements Changes (b) Salvage of Period Stram Production . $ 540,254 $ 38,876 $ (1,140) $ 11 $ 31 $ 578,032 Nuclear Production 30,205 9,000 (30) (15) - 39,169 Hydro Production - 84,979 3,322 (172) (40) 20 88,109 Other Production 42,409 15,250 - (12) - 57,647 Transmission 212,944 32,026 (6,265) (760) 2,943 240,888

 ,.    . Distribution                      579,316      76,292         (19,453)        (4,120)          7,228       639,263 E    ~ G:neral                             31,399          6,719        (2,877)           (240)          791         35,792 Experimental Electric Plant Unclassified                             1              5        -             -              -

6

      ' R tirement Work in Progress -                       (3,207)       - -

774 (1,560) 227 (3,766) Other Utility Plant Reserves 874 143 (9) (1) 1 1,008 Subtotal . 1,519,174 - 181,642 (29,172) (6,737) 11,241 1,676,148 Nuclear Fuel Amortization. 22,781 2,107 - - - 24,888 Total Utility Plant Reserves - $1,541,955 $ 183,749 $ (29,172) $ (6.737) $ 11,241 $1,701,0'o6

      . Nonutility Property
         - Reserves                    S     1,267 $           78 $       '(872) $_ _ 478

_ $_ $ 951 (c) Depletion is tot applicable.

      -(b) includes removal costs related to facilities retired, damage claims and relocation costs coll- cted from others, and various other adjustments of depreciation and amortization.

51'

SOUTHERN CALIFORNIA EDISON COMPANY SCHEDULE Xil-RESERVES FOR THE YEAR ENDED DECEMBER 31, 1978 (Thousands of Dollars) Additions Bafance at Charged to Charged to Balance at Beginning Costs and Otner End Description of Period Expenses Acet unts Deductions of Period Group A: Unco!!ectible Accounts Customers . $ 2,050 $ 4,110 $ 15 $ 4,116 $ 2,059 All Other _ 3,664 1,097 _- 1,212 3,549 Total $_5,714 $ 5,207 15 _ . _ __$_ _5,328(a) $_5,608 Group B: ( Pensions and Benefits $17,497 $ 869 $ 8,335(b) $11,165(c) $15,536 Insurance, Casualty and Other - 11,956 28,757 - 29,624(d) 11,089 Total $29,453 $29,626 __

                                                                                   $ 8,335           $40,789_.     $_26,625                    J (a) ' Accounts written off, net.
 '~(b) Principally, charges are to various plant and expense accounts as a payroll additive for employees' paid absences.

(c) Includes pension payments to retired employees, amounts paid to 'ctive employees during r.:7riods of illness and the funding of certain pension benefits. (d) Pursuant to a FERC order,' operating reserves relating to certain federally-licensed hydro-electric projects in the amount of $3,801,000 were transferred to Earnings Reinvested in the Business and became_ an appropriation thereof. Other. deductions were principally

      . charges from work orders closed and amounts charged to operations that were not covered by insurance.
                                                       . 52

                           . SOUTHERN CAllFORNIA EDISON COMPANY SCHEDULE Xil-RESERVES FOR THE YEAR ENDED DECEMBER 31, 1979 (Thousands of Do!!ars)

Additions Balance at Charged to Charged to Balance at Beginning Cests and Other End Description of Period Expenses Accounts Deductions of Period Group A: Uncollectible Accounts 4 Customers $ 2,059 $ 4,770 $- $ 4,566 $ 2,263 All Other 3,549 3,565 - 881 6,233 Total $ 5,608 $ 8,335 $- $ 5,447(a) $ 8,496 Group B: Pensions and Benefits $15,536 $ 5,728 $ 8,705(b) $12,230(c) $17,739 insurance, Casualty and Other . 11,089 23,282 - 19,562(d) _ 14,809 . - Total $26.625 $29.010 $ 8,705 $31,792 $32,548

                                               -- -                 =- =               . = _ = = - - -  = = = =           ====

(a) Accounts written off, net.- (b) Principally, charges are to various plant and expense accounts as a payroll additive for employees' paid absences. (c) includes pension payments to retired employees, amounts paid to active employees during periods of illness and the funding of certain pension benefits.

 . (d) Principally charges from work orders closed and amounts charqed to operations that were not covered by insurance.

53 f

     - ..           .        .                         =_     -         . - . .            - .       . _-                         .-         .

t T-t I 12(a) (2) Exhibits Filed Exhibit 1.-Computation of Fully Diluted Earnings Per Share tshibit 2.- Forty-Third Supplemental Indenture, dated as of September 15,1979 Exhibr. 3.-Ret.olution creating First and Refunding Mortgage Bonds, Series LL, Due  ; j 1987, dated August 16,1979 7 The following exhibits have heretofore been physically filed with the Securities and Exchange  ; Commission (" Commission") (specified document and file number noted) and are incorporated

,-          - herein by reference pursuant to Rule 12b-32:

(a) Trust Indenture, dated as of October 1,1923 (Form A-2, File Number 2-1369, effective April 19,1935) (b,) Third Supplemental Indenture, dated as of June 24,1935 (Form A-2. File Number 2-1602, effective September 16, 1935) (c) Fourth Supplemental Indenture, dated as of September 1,1935 (Form A-2, - File Number 2-4522, effective October 8,1940) (d) Sixth Supniemental Indenture, dated as of September 1,1940 (Form S-7, _ File Number 2-59199, effective Junc 30, 1977) (e) Eighth Supplemental Indenture. dated as of August 15,1948 (Form S-1, , File Numter 2-7610, effective August 10, 1948) , (f) - Twenty-Fourth Supplemental Indenture, dated as of February 15, 1964 (Form S-9, File Number 2-22056, effective February 17, 1964) (g) Forty-Fourth Supplemental Indenture, dated as of October 1 - 1979 (Form , . S-16, File Nu.nber 2-65493, effective October 3,1979) (h)' Resolution creating First and Refunding Mortgage Bonds, Series MM, Due , 2004, dated October 11 1979 -(Form S-16, File Number 2-65493, effective October 3,1979) C ,12(b) Reports on Form 8-K - No reports on Form 8-K have been filed during the last quarter of 1979.

            ~ Executive Officers of the Registrant
                                       ' Age at December 31                                        .

Effective Executive Officer 1979 . Company Position Date Jack K. Horton 63 Chairman of the Board, Chief Executive Officer April 18,1968 and Director ' William R. Gould 60' President and Director - February 1,1978 Howard P. Allen - 54- Executive Vice President December 20,1973

            ; .H. Fred Christie                46 J  . Senior Vice President and Chief Financial Officer      January 1,1977 David J. Fogarty -              52    ' Senior Vice President -                                September 1,1977
             ' A. Arenal                        54   . Vice President (Engineering and Construction)          January 1,1980 Glenn J. Bjorklund -             47     Vice President (System Development)                  August 1,1979
              . Robert Dietch                   41.;  : Vice President (Nuclear Engineering and Operations) . January 1,1980
            . C. E. Hathaway                    45   : Vice President (Personnel) ~

January 1,1980  ;

                                                                                - 54
                                        . . . .           ,     e   , ,           ,. +         ,N       .--                 , ~ .    ----l.,   .- , - ,

1 Age at December 31 Effective Executwe Officer 1979 Company Position Date Joe T. Head Jr. 58 Vice President (Power Supply) November 21,1974 P. L Martin 50 Vice President (Customer Service) September 1.1978 A. L Maxwell 58 Vice President and Comptrol!er July 17.1975 Edward A. Myers. Jr. 56 Vice President (Conservation, Communications August 19,1971 and Revenue Services) Lawrence T. Papay 43 Vice President ( Advanced Engineering) January 1,1980 William H. Seaman 62 Vice President (Fuel Supply) Jaiv 17,1967 Robert E. Umbaugh 42 Vice President (Administration) Septembar 1.1976 John R. Bury 52 General Counsel Sectember 1.1978 Michael L Noet 38 Treasurer September 1,1976 Honor Mutter 51 Secretary Novemoer 1,1979 None of the Company's executive officers are related to each other by blood or marriage. All of the executive officers have been actively engaged in the business of the Company for more than five years. All officers have been employees of the Company for the past five years. Those officers who have not held their present position for the past five years had the following business experience during that period: h William R. Gould Executive Vice President December 1973 to January 1978 H. Fred Christie Senior Vice President September 1976 to December 1976 Vice President and Treasurer July 1975 to August 1976 Treasurer March 1970 to July 1975 David J. I ogarty Vice President - Customer Service September 1976 to August 1977 Vice President - Power Supply December 1974 to August 1976

                       - A. Arenal                 Vice President- Advanced                      August 1979 to Engineering                                 December 1979 Vice President-System                         September 1976 to Development                                 July 1979 Manager of Engineering and                    November 1971 to Construction                                August 1976 Glenn J. Bjorklund        Divrsion Vice President - Eastern Division    May 1978 to August 1979 Administrator of Department Operations-       May 1975 to
                                                 - Customer Service Staff                        May 1978 Robert Dietch            Division Manager - Southeastern Division       August 1979 to December 1979 Assistant Division Manager-                    October 1978 to Southeastern Division                       July 1979 Manager of Projects-                           January 1978 to Pro;ect Management Organization           - September 1978 Manager of Engineering -Design Organization    January 1976 to December 1978 Manager cf Construction and Transmission /     February 1975 to Substation Engineering '                    December 1976 55

1 C E. Hathaway Division Vice President-Eastern Division August 1979 tc ' December 1979 Division Vice P .sident-Southeastern Division September 1978 to July 1979 Division Vice President - Central Division January 1978 to August 1978 Asaistant Division Manager - Central Division May 1975 to December 1977 Joe T. Head, Jr. Vice President-System Development December 1974 to August 1976 P. L Martin Division Vice President - Southeastern September 1977 to Division August 1978 Manager of Customer Service-Southeastern December 1973 to Dinsion August 1977 A. L Maxwell Comptroller November 1968 to July 1975 Lawrence T. Papay General Superintendent - Power Supply October 1978 to December 1979 Director of Research and Development August 1970 to September 1978 Robert E. Umbaugh Manager of Data Processing January 1974 to August 1976 John R. Bury Assistant General Counsel December 1973 to ) August 1978 Michael L Noel Assistant Treasurer December 1975 to August 1976 f Manager of Corporate Planning September 1974 to ( November 1975 Honor Muller Assistant Secretary December 1978 to October 1979 Executive Secretary February 1959 to December 1978 PART11 Item 13. Security Ownership of Certain Beneficial Owners'and Management Information responding to item 13 was included in a proxy statement filed by the Company on or about February 29,1980 with the Commission pursuant to Regulation 14A and is omitted herein pursuant to General Instruction H. Item 14. Directors and Officers of the Registrant Information concerning directors and officers of the Company is set forth after item 12 in , Part I, pursuant to Instruction 4 to item 3(b) of Regulation S-K. Other information responding to '

 ' -Item 19 was included in a proxy statement filed by the Company on or about February 27,1980 with the Commission pursuant to Regulation 14A and is omitted herein pursuant to General instruction H.

Item .15. Management Remuneration and Transactions Information responding to item 15 was included in a proxy statement filed by N Company on or about February 29,1980 with the Corr. mission pursuant to Regulation 14A and is omitted

    .herein pursuant to General Instruction H.~

56

SIGNATURES Pursuant to the requirements of Section 13 or 15(d's of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SOUTHERN CAllFORN!A EDISON COMPANY (Registrant) By H. FRED CHRISTIE H. Fred Christie Senior Vice President and Chief FinancialOfficer DATE: March 11,1980 57

1 l CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS l As independent public accountants, we hereby consent to the incorporation by reference of our report appearing in the annual report on Form 10-K for the year ended December 31, 1979 of Southern California Edison Company in the Registration Statement on Form S-16 which I became effective on October 19,1978 (File No. 2-62625). ARTHUR ANDERSEN & CO. March 11,1980 f 58

l Exhibit 1 1 SOUTHERN CALIFORNIA EDISON COMPANY COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (Thousands of Dollars) j_ Year Ended December 31, 1975 1976 1977 1978 1979 Net income $176,781 $226,798 $251,979 $251,683 $346,219 Less: Preferred and Prefer-ence dividend requirements 40,410 42,557 46,571 50,532 54,967 Add: Original Preferred - dividends - 806 806 922 1,075 1,229 Addi . Convertible Preference dividend requirements 3,900 3,900 3,212 2,354 1,592 Add: Interest on 3%% Con-vertible Debentures 2,341 2,341 2,341 2,341 2,341 Less: Tax effect of interest on 3%% Convertible Deben-tures(A) .1,233 1,233 1,233 1,233 1,190 Adju !ed amount available $142,185 $190,055 $210,650 $205,688 $295,224 Weighted average shares - Original Preferred '480,000 480,000 480,000 480,000 480,000

            -Common (B)             .        47,484,883 48,198,116 54,136,673 57,199,490 63,887,178 Common shares reserved for
         - conversion of:

3%% Convertible Debentures 1,804,868 1,896,254 1,920,565 1,997,388 . 2,024,380 Preference Stock,5.20% - Convertible Series 2,026,960 2,112,606 1,561,039 1,202,809 796,088

       . Total weighted average shares       51,796,711 52,686,976 58,098,277 60,879,687 67,187,646 Fully diluted earnings per
         -share (C)          .,       .         $2.75        $3.61          $3.63          $3.38        $4.39 Notes:

(A) l Composite tax rate _ 52.68 % 52.68 % 52.68 % . 52.68 % 50.86 %

           /(B) includes Common Stock equivalents and Common Stock issued due to conversions
                  - during 19',I,1978 and 1979, adjusted as if they were outstanding at the beginning of the year.

(C) Adjusted amount available divided by total weighted average shares. 59

  .= .

f4 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30,1980 Commission File Number 1-2313 SOUTHERN CALIFORNIA EDISON COMPANY (Exact name of registrar,t as specified in its charter) CALIFORNIA 95-1240335 (State or other jurisdiction of (1.R.S. Employer incorporation or organization) Identification No.) 2244 Walnut Grove Avenue (P.O. Box 800) Rosemead, California 91770 (Address of principal executive offices) 213-572-1212 _(Registrant's Telephone Number) Indicate by check mark whether the registrant (1) has filed all reparts required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1S34 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes v' No indicate the number of shares of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at September 30,1980 Common Stock, $8% par value 74.202,726 shares

SOUTHERN CALIFORNIA EDISON COMPANY [ INDEX Page No.

Part 1. Financial Information

l Management's Discussion and Analysis of Statements of income 3 Report of Independent Public Accountants 5 Financial Statements: Statements of Income-Three, Nine and Twelve Months Ended September 30, 1579 and 1980 6 Balance Sheets-September 30,1979 and 1980 7 Statements of Changes in Financial Position-Three, Nine and Twelve Months Ended September 30,1979 and 1980 9 Statements of Earnings Reinvested in the Business and Statements of Additional Paid-in Capital-Three, Nine and Twelve Months Ended September 30,1979 and 1980 . 10 Notes to Financial Statements 11 Exhibit A-Computation of Fully Diluted Earnings Per Share - lhree, Nine and Twelve Months Ended September 30,1979 and 1980 25 Part 11. Other Information 26 l 2

i PART I elNANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF STATEMENTS OF INCOME Three Months Ended September 30,1980 and 1979 Primary eamings per share decreased by 33c or 25%. This was due to a decrease in earnings available for Common and Original Preferred Stock of $11,584,000 which reduced eamings by 18e and also a 15c per share reduction resulting from the dilutive effect of a higher average number of shares. The lower eamings ava!!able for Common and Original Preferred Stock reflected the net effect of the factors discussed below. Operating revenues increased by $374,582,000, or 55%; of which revenues frem the Company's Energy Cost Adjustment Clause ("ECAC") accounted for 95% of the increase. Such revenues are for the purpose of recovering higher energy costs and do not increase eamings. Furthermore, the increase in revenues was due in part to the effect of the conversion, commencing in March 1980, from bi-monthly billing to monthly billing. Total energy costs increased. by $362.808.000, or 103%. Fuel expense was up by

    $70,047,000, despite a reduction in the volume of oil bumed. The reduction in oil-generated energy was made possible large!y by a greater availability of energy from off-system sources and through increased gas-generated energy. Of the increase in total energy costs, S233,645,000 was attributable to ECAC adjustments in the current period related to the recovery of under-collections of energy costs which occurred in prior periods.

Other operation expenses increased by $16,690,000, or 21%. This was due largely to higher labor costs caused by wage increases, an increase in employees, the impact of inflation on costs of materials and services, and additional costs associated with system growth. Maintenance expenses, which increased by $16,105.000, or 37%, are subject to the same

 . inflationary pressures and effects of system growth as are other operation expenscs. In addi-tion, charges relating to the $20,000,000 repair program at the San Onofre Nuclear Generating Station Unit 1 involving " sleeving" of 7,500 tubes in the plant's three steam generators began in September and are expected to run through December.

Taxes on income decreased by $21,662.000 due in part to lower pre-tax net income and

 .in part to transactions reported for tax purposes in a period different than for financial reporting purposes.

The a!!cwance for debt and equity funds used during construction ("AFUDC") increased

  $10,901,000, or 36%, due to more construction work-in-progress related primarily to the San Onofre Nuclear Generating Station. In addition, there was an increase in the AFUDC rate from 7.76% to 7.82% effective January 1,1980.

The increase in other income-net resulted from a $3,879,000 increase in taxes on income included in other income (credit). Total interest charges increased $20,592,000 which reflected an increase in long-term debt, higher interest rates, and increased short-term debt. Three' Months Ended September 30, 1980 and June 30, 1980 Primary eamings per share increased by 15c, or 18%. Tnis reflected the combined effect of an increase in eamings avai!able of $11.518.000, or 19%, which was partially offset by the minor dilution resulting from a higher average number of shares of Common Stock outstanding. Operating revenues increased by $230,888,000 or 2S%, reflecting increased ECAC revenues of $185,477,000. 3

Total energy costs increased by $194,026,000, or 37%, of which $134,231,000 was attribut-able to fuel expense, and $60,419,000 was attributable to the provisions for ECAC. aintenance expense increased by $5,363,000, or 10%, due to the same factors discussed above. Taxes on income increased by $18,035,000 due primarily to higher pre-tax net income. Interest income decreased by $6,748,000, or 59%, which resulted primarily from reductions in the ECAC balancing account. Nine Months Ended September 30,1980 and 1979 Primary earnings per share decreased by 56c, or 17%. A $12,219,000 decline in earnings available reduced earnings by 19c per share while the remaining 37c was due to the dilutive effect of the issuance of additional shares of Common Stock. The lower earnings reflected the increase in dividends on Cumulative Preferred Stock and the net effect of the factors discussed below. Operating revenues increased by $837,168,000, or 45%, over the same period in 1979. ECAC revenues were higher by $729,326,000, due to increases in ECAC billing factors. Total energy costs increased by $780,762,000, or 82%, and other operation expenses increased by $48,737,000, or 21%, while maintenance expense and total interest charges increased by $43,534,000 and $60,068,000, respectively. These increases were slightly offset by a decrease in taxes on income of $46,222E0, or 56%. Other income-net and interest income increased by $11,740,000, or 69%, and $12,878,000, or 83%, respectively. The factors which combined to cause these fluctuations were the same as those discussed for the comparative three-month periods ended September 30,1980 and 1979. Twelve Months Ended September 30,1980 and 1979 Primary earnings per share decreased by 60c, or 13%. A $7,697,000 decline in earnings available reduced earnings by 12c per share while the remaining 48e was due to the dilutive effect of the issuance of additional shares of Common Stock. The lower earnings reflected the increase in dividends on Cumulative Preferred Stock and the net effect of the

factors discussed below.

Operating re 'enues increased by $945,518,000, or 39%, over the similar period in 1979. ECAC revenues were higher by $800,613,000, due to increases in ECAC billing factors. lotal energy costs increased by $863,662,000, or 68%, and other operation expenses increased by $63,177,000, or 21%, while maintenance expense and interest charges increased by $61,021,00s and $70,153,000, respectively. These increases were slightly offset by a decrease in taxes on income of $56,543,000, or 51%. The factors which combined to cause these fluctuations were the same as those discussed , for the comparative three-month periods ended September 30,1980 and 1979. 4

l 1 I i REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ' To Southern California Edison Company: We have examined the balance sheets of Southern California Edison Company (a California corporation, hereinafter referred to as the " Company") as of September 30,1979 and 1980, and the related statements of income, earnings reinvested in the business, additional paid-in capital and changes in financial position for the three, nine and twelve-month periods then ended. Our examinations were made in accordance with generally accepted auditing standards and, accord-ingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, tne financial statements referred to above present fairly the financial position of the Company as of September 30,1979 and 1980, and the results of its operations and the changes m its financial position for the three, nine and twelve-month periods then ended, in conformity with generally accepted accounting principles applied on a consistent basis. ARTHUR ANDERSEN & CO. Los Angeles, Ca!ifornia November 7,1980 l 5

FINANCIAL STATEMENTS SOUTHERN CALIFORNIA EDISON COMPANY STATEMENTS OF INCOME (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1979 1980 1979 1980 1979 1980 Operating Revenues: Sales (Notes 1 and 2) 5680.893 $1,053,928 $1,846,708 $2,671,959 32,432,888 $3.378,378 Other 3,441' 4.988 8,014 19,931 22.736 22,764 Total operating revenues 684,334 1,058.916 1,854,722 2.691,890 2.455.624 3.401,142 0;,e sting Espenses: Fuel (Note 2) 408,839 478,886 997,470 1,255,737 1,367,570 1,691,925 Purchased power (Note 10) 22,119 81,235 80,706 185,923 91,724 204,462 Provisions for energy cost adjustments (Notes 1, 2 and 4) (77,704) 155.941 (131,137) 286.141 (198,171) 228.398 Subtotal-energy costs 353,254 716,062 947,039 1,727,801 1,261,123 2.124,785 Other operation expenses (Notes 2,5 and 6) 80,731 97,421 237,360 286,097 307,750 370,927 Maintenance (Note 1) 43,760 59.865 127,620 171,0 4 159,920 220,941 Provision for depreciation (Note 1) 44,909 47,387 133,348 139,663 176.682 184,953 Taxes on income-current and deferred (Notes 1 and 4) 39,479 17,817 82,533 36,311 110,613 54,070 Property and other taxes (Note 4) 15,463 17,353 42,178 50.379 55,730 64,628 Total operating expenses (Note 9) 577,596 955.905 1,570.078 2.411,405 2,071.818 3,020,304 Operating income . 106,738 103,011 284,644 280.485 383.806 380,838 Other income and income Deductione: Allowance for equity funds used . during construction (Note 1) . 23,762 31,081 66.341 88,670 82,550 114,349 Interest income 5,704 4,769 15,458 28,336 19,803 35,738 Other-Net (Notes 1 and 4) 6,628 10,586 16,960 28,700 23,305 36,617 Totsl other income and income deductions 36,094 46.436 98.759 145,7G6 125.658 186,704 Total Income Before Interest Charges 142,832 149,447 383,403 426,191 509,464 567,542 interest Charges: Interest on long-term debt (Note 7) 45,032 57,956 130,077 166,276 170,555 215,825

Other interest and amortization (Notes 1 and 7) 5,833 13,501 18,783 42.652 24.442 49,325 Total interest charges 50,865 71,457 148,860 208,928 194,997 265,150 Allowance for debt funds used during construction (Note 1) (6,855) (10g7) (19,139) (29,778) (24,670) (37,186)

Net interest charges 44.010. 61,020 129,721 179,150 170,G27 227,964 Not income 98,822 88,427 253,682 247,041 339,137 339,578 i Dividende on Cumulative Preferred and Preference Stock . 13,609 14,798 38,871 44,449 51,178 59,316 Earnings Availaide for Common and Original Preferred Stock $ 85,213 5 73,629 $ 214,811 S 202,592 S 287,959 3 280,262 Weighted Average Shsree of Common and Original Preferred Stock Outstanding and Common Stock Equivalents (000) 64,488 74,580 63,9 J3 72,394 63,161 70,685 Earninge Per Share (Note 1): Primary - $1.32 3 .99 $3,36 $2.80 $4.56 $3.96 Fully Difuted (Exhibit A) 51.27 5 .98 $3.24 32.78 54.39 $3.94 Dividende Deciated por Common Share S .68 $ .74 31.92 $2.10 $2.54 $2.78 The accompanying notes are an integral part of these statements. 6

l i l SOUTHERN CALIFORNIA EDISON COMPANY BALANCE SHEETS ASSETS (Thousands of Dollars) September 30, 1979 1980 UTILITY PLANT: Utility plant, at original cost (Notes 1,2 and 9) $5,467,929 $5,724,752 Less- Accumulated provision for depreciation (Notes 1 and 9) 1,638,700 1,798,559 Net utility plant 3,829,229 3,926,193 Construction work in progress (Notes 5 and 9) 1,869,328 2,470,222 Nuclear fuel, at amortized cost . 15.210 19,276 Total utility plant . 5,713,767 6,415,691 OTHER PROPERTY AND INVESTMENTS: Real estate and other, at cost -less accumulated provision for depreciation 9,195 12,445 Subsidiary companies (Note 1) 93,899 96,721 Total other property and investments . 103,094 109,166 CURRENT ASSETS: Cash and temporary cash investments (Note 3) . 8,157 12,363 Receivables, less reserves of $7,454,000 and $7,946,000 for uncollectible accounts at respective dates (Notes 1 and 7) 210,067 291,979 Fuel stock, at cost (first-in, first-out) (Notes 2 and 3) 218,630 593,130 Materials and supplies, at average cost 35,451 47,150 Deferred energy costs (Notes 1,2 and 4) , 241,192 38,415 Prepayments and other (taxes, insurance, etc.) 84,214 78,787 Total current assets ., . 797,711 1,061,824 i DEFERRED CHARGES: Unamortized debt expense (Note 1) . 14,325 17,947 Other deferred charges . . . 25,236 22,737 Total deferred charges . 39,561 40,684

                                                                                  $6,654,133 $7,627,365 i-I The accompanying notes are an integral part of these balance sheets.

7

                                   ,          -,,    ~ _ . -            , .-. .
                                                                                                .  .,ve-.       ,

SOUTHERN CALIFORNIA EDISON COMPANY BALANCE SHEETS CAPITAllZATION AND LIABILITIES (Thousands of Dollars) September 30, 1979 1980 CAPITAllZATION: Preferred Stock-Subject to mandatory redemption / repurchase requirements (Note 8): < Cumulative preferred stock $ 262,500 $ 262,500 Preference stock . 62,000 62,000 Preferred Stock- Other (Note 8): Original preferred stock 4,000 4,000 Cumulative preferred stock , 458,755 458,755 Preference stock 28,927 21,497 Common Stock, including additional stated capital, 140,000,000 shares authorized,64,065,442 and 74,202,726 shares outstanding at respective dates (Note 8) 568,967 658,971 Other Shareholders' Equit/. Additional paid-in capital 589,329 738,022 Earnings reinvested in the business 1,022,138 1,095,750 Long-Term Debt (Notes 1,3 and 7) 2,547,823 2,901,047 Total capitalization 5,544,439 6,202,542 CUFIRENT LIABILITIES: Accounts payable 242,273 315,295 Commercial paper payable (Note 3) 76,345 365,800 Notes payable to banks (Note 3) 19,774 19,783 Current maturities of long-term debt (Note 7) , 84,544 43,548 Customer refunds-current . . 57,205 63,301 Taxes accrued (Note 4) . 84,794 156,356 Interest accrued 42,384 68,306 Dividends declared 53,137 66,014 Accumulated deferred income taxes-net (Notes 1 and 4) 124,452 2,577 Other .

                                                 .                               32,022         33,310 Total current liabilities                                     816,930 ~i,134,290 j COMMITMENTS AND CONTINGENCIES (Note 2)

RESERVES AND DEFERRED CREDITS: Customer advances and other deferred credits 52,730 57,514 Customer refunds 71,762 17,041 Accumulated Investmnt tax credits and deferred income taxes (Notes 1 and 4) . . 137,998 175,981 Reserves for pensions, insurance, etc. (Note 6).. 30,274 39,997 Total reserves and deferred credits 292,764 290,533_

                                                                          $6,654,133 $7,627.365 The accompanying notes are an integral part of these balance sheets.

8

SOUTHERN CALIFORNIA EDISON COMPANY STATEMENTS OF CHANGES IN FINANCIAL POSITION (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Months Ended September 30, Septerr. der 30, September 30, 1979 1980 1979 1980 1979 1980 FUNDS PROVIDED BY: Operations - Net income .

                                                        $ 98,822 $ 88,427 $ 253,682 $ 247,041 $ 339,137 $ 339,578 Non-fund items:

Depreclation (Note 1) 44,909 47,387 133,348 139,663 176,682 184,953 Equity in eamings of unconsolidated subsidiaries (Note 1), , , (721) (796) (1,519) (1,481) (1,882) (3,095) Allowance for debt and equity funds used during construction (Note 1) (30,617) (41,518) (85,480) (118,448) (107,220) (151,535) Investment tax credit deferred - net (Notes 1 and 4) 13,580 6,162 28,015 20,oG4 35,674 38,413 Other-not ,, 1,484 (3,346) 6,022 12,544 (1,762) 17,585 Earnings distributed from unconsolidated subsidiaries . - - - - 1,000 1,000 Total from operations 127,457 96,316 334.068 300,213 441,629 426.899 Long-term financing-Preferred stock (Note 8) 75,000 - 127,500 - 127,500 - Preference stock (Note 8)* (2,162) (1,607) (11,968) (5,569) (16,492) (7,430) Common stock (Note 8)* 14,312 18,710 41,461 218,160 211,221 238,702 Long-term debt (Note 7) 50,000 - 155,000 200,000 355,000 403.000 Total from long-term financing 137,150 17,103 311,993 412,591 677,229 631,272 Other sources - Construction advances and other , 4,174 2,723 9,393 4,559 10,149 6,794 Decrease in working capital 10,312 _234.809 62,995 153,320 - 94,243 Total from other sources . 14,486 237,534 72,388 157,879 10,149 101,037 Total funds provided $279,093 $ 350.953 $ 718,449 $ 870,683 $1,129,007 $1,159,208 FUNDS APPLIED TO: Construction expenditures ,

                                                       $203,483 $ 219,458 $ 557,533 $ 655,520 $ 763,737 $ 890,700 Less - allowance for debt and equity funds used during construction (Note 1)                        30,617         41,518       85,480         118,448         107,220      151,535 Funds used for construction expenditures .

172,866 177,940 472.053 537,072 656,517 739,165 Advances to unconsolidated subsidiaries . 3,363 1,729 6,557 1,367 808 580

 ' Dividends                                               57,274        70,215      161,623          200,130        213,063      259,908 Repayment of long-term debt (Note 7)                    31,838        76,712        33,736          84,544         33,736        84,544 Customer refunds-net -                                  12,912        17,001       36,013           41,413           7.138      54,721 Other-not       ,

820 7,356 8,467 6,157 19,776 20,290 Increase in working capital - - - - 197,969 - Total funds applied ,

                                                       $279,093 3 350.953 $ 718,449 $ 870,683 $1,129,007 $1,159,208 WORKING CAPITAL CHANGES (Other than current maturities of long-term debt):

Receivables and temporary cash investments $ 15.233 $ 34,668 $ (82,090) 3 80,452 $ 33,923 $ 83,113 Fuel stock and materials and supplies (Notes 2 and 3) (4,969) (60,657) 62,597 282,984 (74,107) 386,199 Prepayments and other 62,312 42,405 42,192 31,602 41,579 (5,427) Deferred energy costs-net (Notes 1,2 and 4) 39,851 (92,375) 68,299 (179,708) 100,525 (80,902) Notes and accounts payable (92,341) (30,960) (161,950) (264,967) 15,760 (373,363) Taxes and interest accrued (26,585) (127,223) 16,441 (95,731) 94,948 (97,484) Other-not (3,813) (667) (8,484) (7,952) (14,659) (6,379) increase (Decrease) in working capital $(10,312) S (234,L05) $ '(62,995) $ (153,320) $ 197,969 $ (94.243)

• These amounts include conversions of Preference Stock, S,20% Convertible Series,into Common Stock, The accompanying notes are an integral part of these statements, 9

SOUTHERN CALIFORNIA EDISON COMPANY STATEMENTS OF EARNINGS REINVES1ED IN THt: BUSINESS (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30 September 30, 1979 1980 1979 1980 1979 1980 Balance at beginning of period $ 981,555 $1,077,625 $ 931,217 $1,054,297 $ 901,687 $1,022,138 Add: Net income . 98,822 88,427 253,682 247,041 339,137 339.578 1,080,377 1,106.052 1,184,899 1,301,338 1,240,824 1,361,716 Deduct: Dividends declared on capital stock (Note 8): Original Preferred 298 326 893 979 1,162 1,305 Cumulative Preferred 11,775 13,375 33,878 40,129 44,511 53,826 Preference 1,515 1,422 4,673 4,321 6,347 5,812 Common 43,666 55,092 122,179 154,701 161,043 198,965 Capital stock expense 965 87 1,138 5,458 5,623 6.058 58,239 70,302 162,761 205,588 218,686 265,966 B: lance at end of period * $1,022,138 $1,095,750 $1,022,138 $1,095,750 $1,022.138 $1,095,750

• Includes undistributed earnings of unconsolidated subsidiaries of $10,140,000 at September 30,1979 and $12,234,000 at September 30,1980.

STATEMENTS OF ADDITIONAL PAID-IN CAPITAL (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30 September 30, 1979 1980 1979 1980 1979 1980 Balance at beginning of period $ 581,230 $ 726,696 $ 569,673 $ 601,578 $ 458,866 $ 589,329 Premium received on sale of-Common Stock 8,100 11,327 19,659 136,451 130,468 148,698 Payments made in lieu of issuing fractional shares of

, Common Stock                            (1)            (1)         (3)             (7)         (5)             (5)

Balance at end of period S 589,329 $ 738,022 $ 589,329 $ 738,022 $ 589,329 $ 738,022 The accompanying notes are an integral part of these statements. 10

1 l SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS Note 1-Summary of Significant Accounting Policies General-The Company is a public utility primarily engaged in the business of supplying electric energy in portions of central and southern California, excluding the City of Los Angeles and certain other cities. The accounting records of the Company are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Com-mission (FERC) and adopted by the California Public Utilities Commission (CPUC). Utility plant-Additions to utliity plant and replacements of retirement units of property are capitalized at original cost, which includes labor, material, indired charges for engineering, supervision, transportation, etc., and an allowance for debt and equity funds used during construction. Maintenance is charged with the cost of repairs and minor renewals; plant accounts with the replacement of property units; and the depreciation reserve with the cost, less net salvage, of prcperty units .etired. Depreciation - Depreciation of utility plant is computed on a straight-line remaining life basis for f%ocial statement purposes, and approximated 3.5% of average depreciable plant for the three, nine and twelve months ended September 30,1979 and 1980. Although the eventual cost of retiring a nuclear generating unit cannot be predicted with certainty, the Company has estimated that decomm:ssioning costs will approximate $36,000,000 for nuclear generation facilities in serv!ce. The Company's rates are designed to recover such costs through depreciation expense over the estimated remaining useful lives of such facilities. Income Tawes Accounting policies with respect to income taxes, including Investment tax credits appli-cable thereto, are set forth in Note 4, together with supplementary income tax information. Debt premium and discount-Debt premium or discount and related expenses are amortized to income over the lives of the issues to which they pertain. Revenues - Revenues are recorded when customers are billed. Customers are billed on a cyclical basis

   . monthly, except for those customers who have not as yet been converted from bi-monthly to monthly billings. The conversion, which began in March 1980, is expected to be completed during 1960.

Deterred energy costs-Deferred energy costs result primarily from the Company's Energy Cost Adjustment Clause (ECAC), which requires monthly entries to adjust the results of operations and the maintenance of a balancing account for overcollections or undercollections and accrued interest thereon. Varfations between ECAC revenues and the related energy costs included in rates are deferred until such variations are refunded to, or recovered from, utility customers through CPUC-authorized rate adjustments. ECAC-related energy costs include transportation and storage 11

l l

                                                                                                     \

I SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 1-Summary of Significant Accounting Policies (continued) costs related to spent nuclear fuel. The income tax effects of ECAC also are deferred. For income tax purposes, billed revenues and incurred energy costs are utilized in the determination of taxable income. Subsidiaries - Investments in unconsolidated subsidiary companies, all of which are wholly-owned, are accounted for by the equity method. None of the Company's five wholly-owned subsidiaries is considered significant for financial reporting purposes. Mono Power Company (Mono), a non-public utility, is engaged primarily in the acquisition and development of mineral properties and interests therein. Mono has entered into agreements to conduct uranium, oil, coal, gas and geothermal exploration and development, substantially all of the costs and benefits of which are being reflected in the Company's energy costs. Allowance for funds used during construction (AFUDC)- AFUDC is the generally accepted utility accounting procedure designed to capitalize the cost of both debt and equity funds used to finance plant additions during construction periods and to restore net income to the level which would have been experienced without the con-struction program through a transfer of such costs from the income statement to the balance sheet as utility plant construction work in progress. Although AFUDC increases net income, it does not represent current cash earnings. Such costs are recovered from customers as a cost of service through provisions for depreciation in future periods. The effective annual AFUDC rates for the years 1979 and 1980 are 7.76% and 7.82%, respectively, based upon a formula prescribed by the FERC which permits semi-annual compounding. Earnings per share-Primary earnings per share are based on the weighted average shares of Common and Original Preferred Stock outstanding, giving effect to the participating provisions of the Original Preferred Stock and Common Stock Equivalents for funds held by the Employee Stock Purchase Plan Trustee in each period, and after providing for cumulative preferred and preference dividend requirements. Fully-diluted earnings per share also give effect to the dilution which l would result from the conversion of the Preference Stock, S.20% Convertible Series, and the 3% % Convertible Debentures, Due 1980. The latter were redaemed on August 15,1980 and was not included in the computation of fully diluted earnings per share for the periods ended September 30, 1980. l Note 2-Commitments and Contingencies l Construction program and fuel supply-The Company has significant purchase commitments in connection with its continuing construction program. l.a of October 16,1980 (the date of the Company's latest approved budget), funds required for construction expenditures are estimated at $743,374,000 for 1980,

 $862,088,000 for 1981 and $679,727,000 for 1982. Minimum long-term commitments of approx-imately $8.5 billion existed on September 30,1980 under the Company's fuel supply and trans-portation arrangements.

12

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 2-Commitments and Contingencies (continued) Government licenses-The terms and provisions of licenses granted by the United States coverir,g the Company's major and certain minor hydroelectric plants, together with certain storsge and regulating reservoirs and related transmission facilities, expire at various times between 1981 and 2009. They contain numerous restrictions and obligations on the part of the Company, including the power of the United States to acquire Company properties or of the FERC to issue a license to a new licensee under certain conditions upon the payment of specified compensation. Resale revenues-Pursuant to FERC procedures, on August 4,1974, February 1,1976, and August 16,1979, increases in the Company's resale rates became effective, subject to refund with interest to the extent that any of the increases are subsequently determined to be inappropriate. A Fuel Clause Adjustment (FCA) was added to the Company's resale rates effective May 2,1974 and was modified on February 1,1976 and August 16,1979. As of September 30,1980, approximately

    $433,000,000 has been billed subject to refund. The Company believes that any amounts which the FERC may require the Company to refund as a result of the proceedings should not have a material financial effect on the Company.

An August 1,1979 FERC decision affirmed the August 4,1974 rate increase with respect to cost of service. The decision provided that the rate increase remain subject to refund pending resolution of the " price squeeze" issue raised by the intervenors. On May 23,1980, the FERC Administrative Law Judge granted the Company's motion for summary disposition in the " price squeeze" proceedings relating to the August 4,1974, rate increase. The inter-venors and the FERC staff hFve filed exceptions to the Administrative Law Judge's ruling with the FERC. An August 22,1979 FERC decision on the February 1,1976 rate increase required the Company to file a revised cost of service which reduced the annual increase in revenues. Revenues billed in excess of the revised cost of service had previously been deferred and the related interest accrued. Both the Company and certain intervenors petitioned for a rehearing which was denied on March 20, 1980 by the FERC. In the order denying rehearing, the FERC required the Company to make certain revisions to its working cash requirements and a supplemental compliance was filed reflecting such revisions. Intervenors have challenged both compliance filings on various grounds. Both the Company and intervenors have filed petitions with the Court of Apper;s for review of the August 22,1979 decision. The August 22, 1979 decision also provided it.at, to determine the extent of a " price squeeze," if any, with respect to the n!ad revised aes, the case would be remanded to an Administrative Law Judge ' for hearings on that issue. If a " price squeeze" is determined to exist, a further rate reduction i may be imposed which could result in additional refunds, but the Company believes that they would not have a material financial effect. i

     . Energy cost adjustment clause-On October 23,1979, *.he CPUC granted ECAC rate increases of rpproximately $431,600,000 annually of the Company's requested $466,600,000 increase filed pursuant to the ECAC Cuch increases became effective on November 1,1979. The requested amount was reduced by approximately $35,000,000 as a result of the CPUC's determination to defer consideration of the reasonableness of operating capacity factors at the Company's coal-fired power plants 13

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 2-Commitments and Contingencies (continued) until the results of a consultant's report on such plants could be evaluated. The Company believes that operating practices at its coal-fired power plants have been prudent and reason-able. On January 29,1980, the CPUC approved a request, on petition, to reopen the proceeding referred to in the precedi1g paragraph, to increase the ECAC rates, effective February 1,1980, to amortize one-half of the ECAC balancing account as of JJIy 31, 1979, excluding the

      $35,000,000 previously deferred. The increase, amounting to approximately $81,000,000 during the period from February 1,1980 to May 1,1980, was made effective on February 3,1980.

On March 5,1980, the Company filed with the CPUC a request for a further increase in ECAC rates in the amount of approximately $740,600,000 annually, effective May 1,1980. By decision issued and effective May 20,1980, the CPUC approved approximately $560,000,000 of the increase, the lower level of increase being attributable to the availability of greater quantitles of lower-cost gas and purchased power than anticipated in the filing. On July 23, 1980, the Company made a further filing proposing a reduction in the ECAC rates, effective September 1,1980, having an annual revenue effect of approximately

     $236,300,000. Also, the Company proposed to modify its ECAC tariff provision so as to incorpo-
  , r 'e a Fuel Oil Inventory Adjustment provision to reflect in the ECAC balancing account carrying c, sts associated with fuel oil inventory levels in excess of $50,000,000 above or below the CPUC authorized level of inventory then in effect. A final decision concerning this filing has not yet been rendered although the CPUC issued an interim decision on October 8,1980 authorizing the full amount of the requested reduction.

Legal matters-antitrust and employmont practices-Antitrust-In March 1978, five resale customers filed a suit against the Comps.,y in Federal Court alleging violation of certain antitrust laws. The complaint seeks damages in excess on $23,000,000, consequential damages and a trebling of such damages and certain i injunctive relief, and a!!eges that the Company (i) is engaging in anti-competitive behavior by charging more for wholesale electricity sold to the resale customers than the Company I charges certain classes of its retail customers, and (ii) has taken actions alone and in concert l with other utilities to prevent or limit such resale customers from obtaining bulk power supplies from other sources to reduce or replace the resale customers' wholesale purchases from the Company. In May 1979, the Federal Court continued a stay of the proceedings pending reso-lution of the Company's FERC resale rate filing which became effective on February 1,1976, and of the FERC proceedings involving bulk power contracts and substantially the same antitrust issues. The resale customers have asked the FERC to modify these contracts and to order the Company to provide additional transmission services to them. On February 15,1980, the Court lifted the stay on discovery and set February 10,1981 for the next status conference. The foregoing proceedings involve complex issues of law and fact, and, although the Company is unable to predict their finai dcome, it has categorically denied the allegations of these

 . resale customers. The August 22,1979 FERC decision and the May 23, 1980 Administrative Law Judge's Order discussed above under " Resale revenues" could affect the pending antitrust litigation.

14

        .    . -            -                 - _ - _ _ - - _ _ -            --                   -              . -- _ - = - . . . -
    ,                                     SOUTHERN CALIFORNIA EDISON COMPANY                                                                                  I NOTES TO FINANCIAL STATEMENTS (Continued)

Note 2-Commitments and Contingencies (continued) Employment Practices-In 1972, a charge was filed with the Federal Equal Employment Opportunity Commission ("EEOC") and a class action lawsuit was filed in Federal Court in 1974, both of which alleged that the Company had engaged in unlawful, discriminatory employment practices. Although denying that it has engaged in any unlawful employment practices, the Company has entered into a Conditional Settlement with the EEOC and the representatives of most of the class action plaintiffs which, on Novemie- 7,1977, was submitted to the Federal Court for approval as a consent decree. Tne estimated cost of this settlement is initially $700,000 with i

      ,         the possibility of an additional estimated $300,000 in payment on individual awards after hearings.

' On September 23, 1980, the Court entered a consent decree which incorporated by reference the settlement agreement. It is not known at this time whether an appeal will be taken. The appeal period runs 60 days from the date of entry of the order. If the Court's approval were to be reversed on appeal and the cases tried, it is the opinion of Company ccunsel that, although there are no controlling judicial precedents conceming a number of issues presented, the Company has a number of defenses which should be sustained by a court and which, among other things, have the effect of limiting, eliminating or mitigating ciaims for monetary damages. The Company believes, based on a current analysis of the applicable law and facts, that the amount of any recovery for monetary damages, including

            . back pay,'should not have a material financial effect on the Company.

Leases and rentals-The Company has entered into varicus arrangements to lease automotive eqiipment, comouter equipment, nuclear fuel, office space arid other incidental equipmed rd ,noperty which are accounted for as operating leases in accordance with ratemaking practices. Neither the annua? gross lease expense nor the present value of the minimum commitments of captial leases are material. Note 3-Compensating Balances and Short-Term Debt t

                    .In order to continue lines of credit with various banks, which amounted to approximate!y
              $170,000,000 on September 30,1979 and $555,000,000 on September 30,1980, the Company f;

presently maintains deposits aggregating approximately $12,000,000 which are not legally

           - restricted as to withdrawal.' None of such lines of credit was used during the res active periods.

The Company has an additional $150,000,000 lire of credit which may be utilized only for

           ' the purchase o(fuel oil through the use of bankers' acceptances. Notes issued under this agreement are secured by a pledge of the Company's fuel oil inventory. There were no bankers' acceptances outstanding during the three mor.ths ended September 30, 1980. The maximum amount of bankers' acceptances outstanding for".ie nine and twelve months ended September
          ' 30,1980. was $30,860,000. The average daily borrowings for these same periods were                                                               :
            $10,316,000 and $7,723,000, respectively, with weighted average annual interest rates (total                                                     l interest divided.by average daily borrowings) of 17.32% and 17.35%, respectively.

The maximum amount of; commercial paper outstanding for the three, nine and twelve

months ended September.30,1980 was $489,395,000. The average daily borrowings for these same periods were $401,644,000, $311,727,000 and $253,994,000, respectively, with weighted 15 qy t w. ( y- g-9 w -r ew+c y y aa. .y.- %, --w.=w g99%e .- myy 9 *,e, 9 *g ay.

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 3-Compensating Be:ances and Short-Term Debt (continued) average annual interest rates of 9.22%,11.63% and 11.77%, respectively. Of the amount outstanding at September 30,1979, $50,000,000 was expected to be refinanced and was classified in the balance r,heet as long-term debt. The entire amount was refinanced through the issuance of First and Refunding Mortgage Bonds, Series LL, Due 1987 (9%%) on September 18, 1980. The maximum amount of notes payable outstand'ng for the three months ended September 30,1980 was $23,987,000 and $45,996,000 for th6 mne and twelve months then ended. The average daily borrowings for these same periods were $19,477,000, $20,413,000 and $20,262,000, respectively, with weighted average annual interest rates of 9.78%,12.05% and 12.43%, respectively. These notes are unrelated to the lines of credit referred to above. Note 4-Supplementary income Data Taxes on income-As required by the CPUC, no provisions are made for income tax increases or decreases (net) which result from reporting certain transactions for income tax purposes in a period different from that in which they are reported in the financial natements, except for certain investment tax credit (lTC) discussed below, the tax effects of the energy cost balancing accounts provisions and certain resale revenues. Effective January 1,1976, pursuant to FERC procedure, the Company began providing deferred income taxes for certain timing differences allocable to resale rates. The revenues related to such deferred income taxes are being collected subject to refund, as discussed in Note 2, pending action by the FERC. ITC not deferred have been applied as a current reduction of income tax expense. Addi-tional ITC, made available to the Compan under the provisions of the Tax Reduction Act of 1975 and the Tax Reform Act of 1976, have been deferred and are being amortized to income tax expense ratably over the service lives of the properties generating such credits. The Company reducad its deferred income tax provision for 1979 and the balance of i accumulated deferred income taxes-net, in the amount of $68,128,000, representing ITC in i excess of those utilized in its federal income tax returns through 1979, pending their utilization t in future income tax returns. Such ITC were generated in 1979 and, if not used, would expire in 1986. During the first nine months of 1980, $51,096,000 of this amount was used to reduce the current liability to reflect its anticipated use in the 1980 federal income tax return. 16

SOUTHERN CAllFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 4-Sepplementary income Data (continued) Supplementary information regarding taxes is set forth in the following table: (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Mo9ths Ended September 30 September 30, Sep! ember 30, 1979 1980 1979 1980 1979 1980 Current Taxes on incomo: Federal $(19,980) $ 46,668 $(26,231) $ 44.794 $(115,580) $ 77.742 State 697 17.575 5.133 31,474 (9.099) ___ 30.361 (19.283) 64.243 (21,098) 76.268 (124.679) 108.103 Deterred Taxes on income-Federal and State: Investment tax credits-net 13,580 6,162 28.015 20,894 35.674 38.413 Deferred energy costs 41,247 (60,936) 70,524 (85,505) 106,400 (121,881) Customer refunds - - - - 78.801 - Other (2.211) (1.677) (11.953) (4.213) (6.528) (5.905) 52.616 (56.451) 86.586 (68.824) 214.347 (89.373) Total taxes on income . $ 33.333 $ 7,792 $ 65.488 $ 7,444 $ 89.668 $ 18.730 Taxes on income included in operating expenses. $ 39,479 $ 17,817 $ 82,533 $ 36.311 $ 110,613 $ 54,070 Taxes on income included in other income (6.146) (10.025) (17.045) .28.867) (20.945) (35.340) Total taxes on income $ 33.333 $ 7.792 $ 65.488 $ 7,444 3 89.668 $ 18.730 Differencos between the federal statutory tax rate and tiv:, Coripany's effective tax rate are reconcile ( as follows: Federal statutory tax rate 46.0 % 46.0 % 46.0% 46.0 % 46.5%

• 46.0 %

Allowance for debt and equity funds used during construction (10.7) (19.8) (12.3) (21.4) (11.6) (19.4) Percentage repair allowance (2.3) (3.0) (2.8) (3.4) (3.8) (3.7) Administrative and general expenses capitalized . (2.0) (3.1) (2.1) (3.4) (2.1) (3.2) Investment tax credits-net (7.5) (5.6) (6.7) (6.8) (6.6) (8.4) Federal deduction for state taxes on income (2.6) (1.2) (2.2) (1.0) (2.4) (1.2) Nuclear fuel interest capitalized (0.8) (2.9) (0.8) (3.3) (0.8) (2.7) All other differences (0.7) (4.9) (3.5) (5.9) (3.4) (4.8) State tax provision , 5.8 2.6 4.9 2.1 5.1 2.6 Effective tax rate 25.2 % 8.1 % 20.5 % 2.9% 20.9 % 5.2% j Property and other taxes included in operating l expenses: Property $ 12,514 $ 13,147 $ 36,255 $ 37,924 $ 48,753 $ 49,969 Payroll and other 2,949 4.206 5,923 12.455 6,977 14,659

                                                        $ 15.463 $ 17,353 $ 42,178 $ 50.379 $ 55,730 $ 64.628

• Weighted average due to the reduction in the federal statutory tax rate from 48.0% to 46.0%

effective January 1,1979. Other-The amounts of taxes, depreciation and maintenance charged to other accounts and royalties paid are not significant. Advertising costs included in operating expenses are less than 1% of revenues. 17

SOUTHERN CALIFORNIA ELISON COMPANY NOTES TO FINANCIAL STATEMENTS (Cont!nued) Note 5-Research and Developmt.nt Research and Development (R&D") expenditures are expensed currently if they cre of a general nature. Plant-related R&D expenditures are accumulated in construction work in progress ("CWIP") until a determination is made whether or rot such projects wil: result in construction of electric plant. If no construction of electric plant ultimately results, the expenditures are charged to operating expense. The balance of R&D expenditures included in CWIP at September 30,1979 and 1980, was $26,102,000 and $31,218,000, respectively. (Thousands of Dollars) 3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1379 1980 1979 1980 1979 1980 R&D expensed S 4,148 5 6,328 3 9,936 $13,984 $14,417 $19,826 R&D charged to CWIP-not 4.580 5.051 8.024 12.634 9.815 15.970 Total R&D expent turas S 8.728 $11.379 $18.860 $26.618 $24.232 $35.796 Note 6-Retirement Plans Pension Plan-The Company's current pension program is based on a trusteed non-contributory pension plan. Company contributions are determined on the basis of a level premium funding method and prior service costs are funded Pension costs are funded or reserved for on an actuarial basis and amounted to $10,7C9,000, $28,208,000, and $36,980,000 for the three, nine and twelve months ended September 30,1979, respectively, and $10,174,000, $30,178,000 and $39,426,000 for the three, nine and twelve months ended September 30,1980, respectively. A comparison of accumulated plan benefits and plan net assets for the Company's pension plans is presented below: (Thousands of Dollars) December 31, 1978 1979* Actuarial present value of accumulated plan benefits: Vested

                                                                                      $270,142          $301,429 Nonvested 25.387            19.965 Net assets available for benefits                                                    $3                $37

• Latest available benefit information.

An assumed rate of return of 5.5% was used in determining the actuarial present value of accumulated plan benefits for both 1978 and 1979. Employee Stock Purchase Plan-Under the Employee Stock Purchase Plan adopted to supplemant employees' income after retirement, employees may elect to contribute specified percentages of their compensation to a trustee for the purchase of Company Common Stock and the Company contributes to the Plan an amount equal to one-half of the aggregate contributions of employees, less forfeitures. The Company's contribution amcunted to $822,000, $2,445,000 and $3,126,000 for the three, nine i 18

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 6-Retirement Plans (continued) and twelve months ended September 30, 1979, respectively, and $972,000, $2.776,000 and

   $3,768,000 for the three, nine and twelve months ended September 30,1980, respectively. In addition, employees may contribute u- o 5% of their regular monthly base pay through supple-mental contributions without regard to uteir years of service. These supplemental contributions are not matched by the Company.

Employee Stock Ownership Plan-The Tax Reduction Act of 1975 introduced a provision for an additional 1% ITC If the funds generated therefrom are invested in the purchase of employer securities for the benefit of employees and transferred into an Employee Stock Ownership Plan (ESOP). Eligible securities include Common Stock or securities convertible into Common Stock. The Company has estab-lished an ESOP and has elected the additional 1% ITC for the years 1976 through 1979, and the Company expects to elect the additional 1% for 1980. As of September 30, 1980, 621,311 shares of Common Stock applicable to the 1% portion of the plan have been issued in trust. The Tax Reform Act of 1976 provided for an additional %% ITC for the purchase of employer securities, similar to the provision for the additional 1% ITC discussed above, for eligible employees who provide matching contributions. Elections to obtain such additional i%% ITC were made with respect to 1978 and 1979. The Company expects to elect the additional %% for 1980. As of September 30, 1980, 173,832 shares of Common Stock applicable to the % % portion of the plan have been issued in trust. The following amounts for which Common Stock had not been issued as of September 30, 1980 were recorded as a liability to ESOP for the periods shown: 3 Months 9 Months Year Ended Ended Ended December 31, September 30, Ser.,' ember 30, 1979 1980 '98o 1% ITC $ 7,934,000 $1,155,000 $3,810,000

      % % ITC .                                      3,971,000          578,000        1,905.000 Total                                    $11,905,000       $1.733.000       $5,715.000 L

The 1978 and 1979 amounts are in excess of amounts utilized or to be utilized in the federal income tax returns for those years. If not utilized in future income tan returns, such ITC would exp!ra in 1985 and 1986, respectively, in which event the Company would be allowed a tax deduction for the amounts contributed to the ESOP. Common Stock has been issued for j the 19781% and %% ITC. 19

SOUTHERN CALIFORNIA EbiSON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 7-Long-Term Debt A summary o'long-term debt outstanding follows: (Thousands of Dollars) Interest Series Maturity Rate 1979 1980 First and Refunding Mortgage Bonds G 1981 3% % $ 40,000 $ 40,000

f. 1982 4% 37,500 37,500 1 1982 4% 40,000 40,000 J If82 4% 40,000 40,000 ,

K 1983 4% 50,000 50,000 L 1985 5 30,000 30,000 M 1985 4% 60,000 60,000 N 1986 4% 30,000 30,000 0 1987 4% 40,000 40,000 P 1987 4% 50,000 50,000 0 1988 4% 60,000 60,000 R 1989 4% 60,000 60,000 S 1990 4% 60,000 60,000 T 1991 5% 75,000 75,000 U 1991 6% 80,000 80,000 V 1992 5% 80,000 80,000 W 1993 6% 100,000 100,000 X 19^,, 7% 75,000 75,000 Y 1994 8% 100,000 100,000 Z 1995 7% 100,000 100,000 AA 1996 3 100,000 100,000 BB 1997 7% 125,000 125,000 CC 1999 8% 100,000 100,000 DDP 1999 7 15.030 15,030 EE 1981 9 100,000 100,000 FF 2000 87/o 150,000 150,000 GG 2001 8% 125,000 125,000 HH 2002 8% 125,000 125,000 j ll 1984 7% 75,000 75,000 JJ 2003 9% 200,000 200,000 KK 2004 9.95 105,000 105,000 , LL 1967 9% - 50,000 MM 2004 11 % - 200,000 NN 2005 15 % - 200,000 2,427,530 2,877,530 First Mortgage Bonds (Cafectric) 1980-1991 2%-5% 66,000 60,000 Convertible Debentures . 1980 3% 74,902 - Promissory Notes 1079-1983 5% 1 A,217 10.576 Short-Term Debt Refinanced-Commercial Paper , , 50,000 - Principal Amounts Outstanding 2,632,649 2,948,106 Current Maturities of Long-Term Debt (84,544) (43,548) Unamortized Premium or (Discount)-not . (282) (3.511) Total Long-Term Debt . . $2,547,823 $2,901.047 20

i l~ l SOUTHERN CALIFORNIA EDISON COMPANY i NOTES TO FINANCIAL STATEMENTS (Continued) i i Note 7-Long-Term Debt (continued)

The authorized principal amount of each series of First and Refunding Mortgage Bonds is

! equal to the amount outstanding. The Trust indenture under which these bonds are issued permits the issuance from time to time of additional bonds, inc!uding additional bor.ds equal in principal amount to bonds retired, pursuant to the restrictions and conditions contained therein. Each of the bond indentures requires semiannual deposits with the Trustees of 1%% of the principal amount of its outstanding First and Refunding Mortgage Bonds and the First i Mortgage Bonds of Calectric. The Calectric Indenture requires an annual cash deposit with the Trustee of 1% of the principal amount of Calectric First Mortoage Bonds issued less certain i bonds retired, or 166%% of such amount if property aoaitions are used to satisfy the annual deposit requirements. In addition, an amount equivalent to the excess of 15% of defined operating revenues.over costs of maintenance of the property subject to the lien of such indenture is required to be deposited with the trustee annually. These deposit requirements of such indentures may be or have been satisfied by property additions and replacements, and j by delivery and cancellation of bonds outstanding under the applicable indenture. The Series DDP and KK, First and Refunding Mortgage Bonds, are subject to mandatory sinking fund , requirements commencing on July 1,1990 and June 15, 1985, respectively. i in September 1979, the Company entered into a financing agreement with certain foreign

                                              ~

banks that permitted the Company to borrow, at any time through September 17,1980, up to J

               - $50,000,000 at a floating interest rate based on the London Interbank Offered Rate. There were no outstanding borrowings under the agreement through September 17,1980. On September 18, 1980, as required by the agreement, the Company borrowed the entire $50,000,000, bearing i
;'              interest at a fixed rate of 9%% per annum. The borrowings have been secured by the con-current issuance of an equal principal amount of the Company's First and Refunding Mortgage Bonds, Series LL, Due March 18, 1987. The financing agreement contains no restrictive l

covenants. Because the Company refinanced $50,000,000 of short-term obilgations through a  !

              ' operation of the agreement, such amount was classified as long-term debt in the balance she p                at September 30,1979.

Current maturities of long-term debt ces September 30, 1380, include 5%% Promissory l ~ Notes Due February 27,1981, in the amount of $1,786,000 and Duc August 31,1981 in the amount of $1,762,000 and First and Refunding Mortgage Bonds, Series G, Due April 15,1981 [

              ;(3%%) in the amount of $60,000,000. The amounts of long-term debt mamring in the four l                twelve-month .. periods Fut: sequent to September 30, 1981 will be: $221,025,000 in 1982;

j. $53,501,000 in 1983; $83,000,000 in 1984; and $96,000,000 in 1985.

L

                         ~ The Company has entered into a financing agreement, as amended, with certain English banks pursuant to which it Isaued promissory notes payable in pounds sterling. These notes
             . are secured by a pledge of the Company's customer accounts receivable. On June 28, 1976, the Company entered into forward exchange contracts with a United States bank to purchase
              ~ at various times from February 1979 to August 1983, pounds sterling to repay substantially l             ' all of the promissory notes.
                         - During November 1980, the Company plans to sell $150,000,000 principal amount of First and Refunding Mortgage Bonds,~ Series 00, Due 2010.               _

21

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Pv--P" e*- PPv-="*--merewO---Te--*

                                                                                                               -v     &w*%e e' en-   1-e-v e eP-yw e w "y v N *--=rervM-T-es-- W- veg e + 9-v r

I SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 8-Capital Stock A f.ummary of the capital stock account ; follows: September 30,1980 (Thousands of Dollars) Redemp* Stated Value - Shares tion Price September 30, Out- Per standing Share 1979 1980 Preferred Stock - Subject to Mandatory Redemption / Repurchase Requirements (a)(b)(e):

        $100 Cumulative Preferred-par value $100 per share:

7.325% Series . . , 750,000 $110.00 $ 75,000 $ 75,000 7.80% Series , , 600,000 110.00 60,000 60,000 8.54% Series . . . 750,000 108.54 75,000 75.000 8.70% Series A . . 525,000 110.00 52.500 52,500

                                                                                              $262.500        $262,500 Preference-par value $25 per share:

7.375% Series 2,480,000 25.75 $ 62.000 $ 62.000 Preferred Stock-Other: Original Preferred-5%, prior, cumulative, partici-pating, not redeemable, authorized 480,000 shares, par value $8% per share . . 480,000 $ 4,000 $ 4,000 Cumulative Preferred-authorized 24,000,000 shares, par value $25 per share (a): 4.08% Series , , , 1,000,000 $ 25.50 $ 25,000 $ 25,000 4.24% Series , , 1,200,000 25.80 30,000 30,000 4.32% Series . 1,653.429 28.75 41,338 41,338 4.78% Series . . 1,296,769 25.80 32,419 32,419 5.80% Series . 2.200,000 25.65 55,000 55,000 8.85% Series 2,000,000 26.50 50,000 50.000 9.20% Series . . . 2,000,000 27.25 50,000 50,000

      $100 Cumulative Preferred-authorized 6,000,000 shares, par value $100 per share (s):

l 7.58% Serwas 750,000 105.00 75,000 75,000 8.70% Series . 500,000 111.00 50,000 50,000 8.96% Series . 500,000 107.00 50,000 50.000 ! $458.755 $458,755 i ' Preference - authorized 10,000,000 shares, par value

         $25 per share (s)(c):

5.20% Convertible Series 859,890 25.00 $ 28,927 $ 21,497

      $100 Preference-authorized 2,000,000 sha:es, par

, value $100 per share . - - ! Common Stock - authorized 140,000.000 shares, par I value $8% per share, including additional stated capital (c)(d) 74,202,726 $568,967 $658.971 (a) All series of $100 Cumulative Preferred Stock, Cumulative Preferred Stock and Preference Stock are redeemable at the option of the Company, The various series of the $100 Cumu-lative Preferred Stock, the Cumulative Preferred Stock, 8.85% Series and 9.20% Series, and the Preference Stock,7.375% Series, are subject to certain restrictions on redemption for refunding purposes. Authorized shares of Preferred Stock-Subject to Mandatory Redemption or Repurchase Requirements are included under Preferred Stock-Other. 22

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 8-Capital Stock (coatinued)

    "M Preferred Stock Subject to Mandatory Redemption or Repurchase Requirements:
                                                                    $100 Cumulative Preferred                            Preference 7.325 %       7.80 %           8.54 %           8.70 %          7.375 %

Redemption or Repurchase Series Series Series Senes A Series

                                                                                                        ~

Commencement Date . 7/31/83 11/30/83 e!N/86 6/30/85 2/1/85 Number of Shares Annually 30,000 15,000(1) 22.500 13,125(2) 496,000(3) Price Per Share (4) $100 $100 $100 $100 $25 (1) Based upon 2.5% of shares originally outstanding and increasing to 3.5% by 2003. (2) Based upon 2.5% of shares originally outstanding and increasing to 9.5% by 2000. (3) Commencing September 1,1984, the Company is contractually obligated to offer to purchase annually 496,000 shares of Preference stock,7.375% Series. (4) Plus accumulated unpaid dividends. Rodemption or repurchase to continue annually until all shares are redeemed or repurchased. For each of the five 12-month periods subsequent to September 30,1980, the aggregate mandatory redemption or repurchase requirements will be: none for 1981 through 1982,

        $3,000,000 for 1983, 34,500,000 for 1984 and $18,212,500 for 1985.

(c) Under a prescribed formula, the conversion prices of convertible securities are adjusted whun additional shares of Common Stock are sold by the Company. The shares of Common Stock reserved for conversion and the adjusted conversion prices per share wece as follows: Preference Stock. 3%% Convertible 5.20% Convertible Series Debentures. Due 1980 September 30, September 30, 1979 1980 1979 ;983*

Shares of Common Stock Reserved 850,791 661,453 2.024,380 -

hijusted Conversion Price Per Share , $34.00 $32.50 $37.00 -

• Redeemed on August 15, 1980.

(d) At September 30,1980, the authorized and unissued shares of Common Stock reserved for sale and issuance under provisions of the Company's stock purchace plans were as follows: Number ! of Shares Dividend Reinvestment and Stock Purchase Plan 5,673.222(1) Employee Stock Purchase Plan 2.850,497(2) Employee Stock Ownership Plan 2.204.857(3) Total . .10.728,576 (1) includes $36,520 shares issued on November 3,1980. (2) includes 232,510 shares issued on October 1,1980. (3) includes 24,672 shares issued on October 1, 1980, 485.695 shares issued on October 10,1980, and 22,116 shares issued on November 3,1980. (e) On October 22,1980, the Company issued and sold 750,000 shares of $100 Cumulative Preferred Stock,12% Series, at a price of $100 per share. 23-

SOUTHERN CALIFORNIA EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Note 9-Jointly Owned Electric Utility Plants The Company owns undivided interests in several jointly-owned generating and transmis-sion facilities for which each participant provided its osn financing. The Company's pro-portionate share of expenses pertaining to such facilities la included in the appropriate category of operating expenses in the Statements of income. In the table below, the dollar amounts represent the Company's share as recorded on the Balance Sheet for each such faellity. (Thousands of Dollars) September 30,1980 Estimated Electnc Accumulated Construction Plant in Provision for Work in O*nership Facility Service Depreciation Progress interest Axis Generating Station . $ 12,155 3 6.720 3 107 33.3 % 800 KV DC System 67,837 15.969 42 50.0 El Dorado System . 19.206 4,657 483 60.0* Four Comers Generating Station 99,563 29,199 21,042 48.0 Mohave Generating Station 176,966 40,288 8.006 56.0 Palo Verde Nuclear Generating Station. - - 341,588 15.8 San Onofre Nuclear Generating Station. 168,536 46,4c9 1,840,191 80.0 " Solar Power Generating Station - - 4.973 80.0 Total 3544.263 $143.242 $2.216.432

• Represents a composite rate.

"On November 4, ;98o, the Company completed the safe of a portion of San Onofre Units 2 and 3 to the Cities of Riverside and Anaheim, which reduced the Company's ownership interest to 76.55%.

Nate 10-Long-Term Contracts for the Purchase of Power Under fixed contracts, the Company has agreed to purchase portions of the generating output of certain facilities. Although the Company has no investment in such facilities, these contracts provide that the Company pay certain minimum amounts (which are based at least in part on the debt service requirements of the supplier) whether or not the plant is operating. None of such contracts provides, or is expected to provide, in excess of five percent of the Company's current or estimated future operating capacity. The cost of power obtained under the contracts, including payments made when a plant is not operating, is included in Purchased Power in the Statements of Income. Information as of September 30,1980 pertain!ng to such contracts is summarized in the following table: Orovifle. Therma!ito Navajo Hoover Safes Power Sale Layoff Agreement Agreement Agreerr ent Date of Expiration . January 1,1985(1) May 31,1987(3) April 1,1983(4) Share of Effective Operating Capacity 327.5MW(2) 331 MW 340 MW Share of Energy Output . 14.6 % 7.9% 37.6 % Estimated Annual Cost $32,596,000 $1,872,000 $5.985.000 Portion of Estimated Annual Cost Applicable to Supplier's Annual Minimum Debt Service Requirement . $ 1,976.000 $ 456.000 35,234,000 AMocable Portion of interest of Supplier included in Annual Minimum Debt Service Requiremant . S 535,000 $ 88,000 $4,601,000 Related Long-Term Debt or Lease Obligations Outstanding of Company . None None None (1) The United States Bureau of Reclamation has given the Company notice that the Agreement will terminate on January 1,1965. (2) The Company has agreed to certain reductions in its share cf effective operating capacity prior to the January 1,1965 termination da'e. (3) The Company has certain renewal rights under the existing agreement. (4) The Company has obtained entitlement of 350 megawatts (MW) from April 1,1983 through December 31, 2004, subject to termination upon five years' notice from the California Department of Water Resources. 24

SOUTHERN CALIFORNIA EDISON COMPANY COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (Thousands et Dollars) 3 Months Ended 9 Months Ended 12 Menths Ended September 30, September 30, Sept 3mber 30, 1979 1980 1979 1980 1979 1980 Net income. S 98,822 S 88,427 $ 253,682 $ 247,041 $ 339,137 $ 3?'.578 Less: Preferred and Preference dividend requirements 13,917 15,124 39,773 45,428 52,349 65,622 Add: Original Pre-ferred dividttds. 308 326 902 979 1,171 1,306 Add: Convertibla Preference dhidend requirements 372 279 1,244 892 1,774 1,240 Add: Interest on 3% % Convertible Debentures .. 585 - 1,756 - 2,341 - Less: Tax effect of interest on 3% % Convertible Debentures (a) . 298 - 893 - 1,201 - Adjusted amount available .. .. S 85,872 $ 73,908 $ 216,918 S 203,484 S 290.873 S 281,502 Weighted average shares - Original Preferred. 480,000 480,000 480,000 480,000 480,000 480,000 Common (b) . . 64,037,044 74,126,434 63,575,913 71,994. M3 62,906,556 70,315,253 Common shares reserved for con-version of: 3%% Convertible Debentures . 2,024,380 - 2,024,380 - 2,024.380 - Preference Stock, 5.20% Con-vertible Series . 850.791 661,453 810,791 6G1,453 850,791 661,453 Total weighted aver-age shares. 67,392,215 75,267,887  % ,931,084 73,135,516 66.261,727 71.456,706 Fully diluted earnings por share (c). .. $1.27 $ .98 $3.24 $2.78 $4.39 $3.94 ('2) Compositetax rate . .. . 50.86 % - 50.86 % - 51.32 % * - (b) includes Common Stock equivalents and Common S1ock issued due to conversions during the period, adjusted as if they were outstanding at the beginnirg of the period. -(q) Adpusted amount available divided by total weighted avera,7e shares.

• Weighted average due to the rcduction in the fede *al statutory tax rate from 48% to 46% effective January 1,1979.

Exhibit A 25

PART 11-OTHER INFORMATION Item 1. Legal Proceedings Federal Energy F:4gulatory Commission ("FERC") Proceedings For a discussion of FERC proceedings, see " Resale revenues" in Note 2 of " Notes to Financial Statements." This item was previously reported on Form 10-K for the year ended December 31,1979 and Form 10-Q for the quarters ended March 31 and June 30,1980. California Public Util!!ies Commission ("CPUC") Rate Proceedings General Rafe Matters in December 1979, the Company filed with the CPUC a general rate application designed to increase annual revenues by approximately $340,000,000 which, under various assumptions made at the date of filing, would afford the Company a reasonable cpportunity to earn an average rate of return on common equity of 15% and on rate base of 10.78% for the 1981-82 period. General rate relief procedures and the two-year cycle adopted by the CPUC in authoriz-int; general rate increases, called for estirrates regarding' the level of revenues, sales and expenses during 1981 as we.n as consideration of increases in costs expected to occur in 1982 tor purposes of determining an attrition allowance. A recent Company comparison of the assumptions made in its rate filing submitted in 1979 w!!h its most current projections regarding levels of sales, revenues and certain expense items for the 1981-82 period based on more recent experience, reveals that there is a need for between $80 and $100 million of additional revenues in 1981 not requested by the Company's application and which, together with an appropriate attrition allowance would be necessary to achieve the requested rate of return. The Company has urged the CPUC to consider these later projections when acting upon the Company's request for $340,000,000 of rate relief. Additional hearings have been set to commence November 18, 1980 to receive further evidence on limited issues. The Company presently l expects that the CPUC will issue a decision in December 1980, authorizing new rates to go into effect on January 1,1981. Energy Cost Adjustment Clause ("ECAC") Filings l The Company's ECAC, adopted by the CPUC in 1976, provides for adjustments in rates, subject to CPUC aporoval, to reflect changes in energy costs. Under the ECAC procedure, a balancing acco' rd has been established in which energy costs above or below those used in establishing rates are accumulated, and the accumulated amount is reflected in succeeding l rate adjutments. The balance in the ECAC balancing account, representing accumulated net undercollections and accrued interest, was $38,100,000 at September 30, 1980. Effective May 20, 1980, the CPUC authorized an increase in the Company's revenues l under ECAC of approximately $560,000,000 on an annual basis. The Company reduced its original request for a $740,600,000 increase to $666,600,000 during public hearings as a result l of lower than expected undercollections in the balancing account and the Company's con-version from bi-monthly to monthly billing. The CPUC further reduced the requested increase due to availability of greater quantities of natural gas and purchased power than anticipated in the fMng. These hearings also considered the imposition of a system of incentives applicable to the Company's coal-fired plants and whether the Company should be allowed to recover

    $35,000,000 included in the ECAC balancing account balance and deferred by an earlier CPUC decision. A CPUC decision concerning these matters has not yet been rendered. The Company and the CPUC staff, the only parties presenting direct evidence, both recommended that the Company be allowed to recover the entire $35,000,000 previously deferred.

26 l;

On July 23, 1980, the Company made a filing proposing a reduction in ECAC rates, to be effective September 1,1980, of approximately $236,300.000 on an annual basis, which amount gives effect to the $35,000,000 previously deferred. Also, the Company proposed a modification in the ECAC to reflect in the balancing account carrying costs associated with fuel oil inventory levels in excess of $50,000,000 above or below the CPUC authorized level of inventory then in effect. A final decision concernmg this filing has not yet been rendered although the CPUC issued an interim decision on October 8,1980 authorizing the full amount of the requested reduction. On November 10, 1980, the Company made a further filing proposing a reduction in ECAC rates, to be effective January 1,1981, of approximately $193,800,000 on an annual basis. Hearings on this filing have not yet been scheduled. For a discussion of ECAC, see " Energy cost adjustment clause" in Note 2 of " Notes to Financial Statements." This item was previously reported on Form 10-K for the year ended December 31, 1979 and Form 10-Q for the quarters ended March 31 and June 30,1980. Environmental Litigation and Administrative Proceedings Four Corners Project The Four Corners Generating Station ("Four Corners") is a coal-fired, steam-electric power plant located in New Mexico, consisting of five generating units operated by Arizona Public Service Co.npany ("APS"). Units 4 and 5, with 1,600 MW of capacity, are jointly owned. The Company's share of these units is 48%, or 768 MW of capacity. The current New Mexico sulfur dioxide ("SO2") emission rule requires that Units 4 and 5 achieve a 67.5% removal rate by December 1982. This rule has been approved by the Environmental Protection Agency (" EPA") as part of the State implementation Plan in accord-ance with the Clean Air Act. Substantial disagreement between APS and the New Mexico regulatory agencies, along with environmental Groups, concerning the interpretation of a 1978 settlement agreement regarding the degree of SO2 removal required by such rule resulted in litigation On August 21, 1980, a settlement agreement was entered by the New Mexico state court as final judgment in the litigation. Tho terms of the set:iement agreement contemplate the adoption of a new SO 2 rule which will triquire that Ur6 4 and 5 achieve a 72% removal rate by December 1984. The settlement agreement is conditioned on approval of the new rule by the New Mexico Environ-mental improvernent Board (" Board") and the EPA prior to August 30, 1981. The Board has l scheduled a hearing on the new rule for November 20, 1980. Because the December 31, i 1982 compliance date in the existing rule and certain interim dates set out in an existing com-pliance schedule do not allow for an orderly progression of design, procurement, and con-l struction of the equipment needed for compliance, Four Corners will remain subject to the l possibility of non-compliance penalties or unit shut down for SO 2 violations until the new l regulation is approved by the State and Federal regulatory bodies. The recent settlement l agreement does not assure approval of the new rule. Installation of the SO2 removal eouipment which would be required by the new rule will be in addition to the instalTation of the equipment now being constructed to meet the require-ments of the New Mexico particu' ate emissions rule. APS has estimated that the cost for control of both pollutants will be $540,000,000. The Company's share of such estimated costs is approximately $260,000,000. This item was previously reported on Form 10-K for the year ended December 31,1979 and Form 10-Q for the qua ters ended March 31 and June 30,1980. 27

Oxides of Nitrogen Rules All of the Company's conventional oil- and gas-fueled generating plants, which are located in the South Coast Air Basin, are subject to oxides of nitrogen rules ("NOx Rules") promulgated by the Air Resources Board ("ARB") for the South Coast Air Quality Management District ("SCAOMD") and the Ventura County Air Pollution Control District. The NOx Rules are designed to achieve a 90% reduction in NOx emissions from conventional generating units by January 1,1990. The NOx Rules could require the Company to make substantial expenditures ($1.3 billion in 1981 dollars) for pollution control equipment designed to effect a 90% reduction in NOx emissions. The ARB conducted a hearing on November 5 and 6,1980 to reconsider the NOx rules, which hearing is scheduled to reconvene November 13, 1980. In response to a law uit filed t>y the Company challenging the ARB's adoption process, the techMcal feasibility of compilance, and the associated environmental impacts, the Los Angeles County Superior Court halted implementation of the rules and ordered the ARB to appear on December 3,1980 to show cause why its NOx Rules should not be vacated. This item was previously reported on Form 10-K for the year ended December 31,1979 and Form 10-Q for the quar %rs ended March 31 and June 30,1980.

,            Alamitos and Redondo Generating Stations in April 1979, the Company stipulated to an order with the SCAOMD to implement measures designed to prevent further emissions of particulates near the Company's Alamitos and Redondo Generating Stations. Compliance with the order y "I involve the expeditious refitting of certain of the power plants' machinery and equipment with more corrosion-resistant materials, use of fuel additives and the early implementwlon of specific stack washing and boiler cleaning
        , techniques. The total estimated cost of compliance for both stations is approximately
         $21,000,000.

The Company has undertaken a study to determine the health effects of fuel additives as required by the order. Study results will be used, among other things, as a besia M dNermine the acceptability of fuel additives as a fa!! cut abatement measure. According to a recent modification of the order, further control requirements could be thereafter required for Redondo, which requirements could be appealed to the SCAOMD Hearing Board. l The Company will conduct a final test of the above particulate reduction measures in the i winter of 1981-82 for Alamitos and approximately one year later for Redondo and submit the data to the SCAOMD for consideration. If the implemented measures are acceptable

       - to the SCAOMD, the order will be lifted in April 1982 for Alamitos and in April 1983 for Redondo.
       'The Company would then be required to maintain the effectiveness of such measures.

I This item was previously reported on Form 10-K for the year ended December 31, 1979. Fair Employment Practices Matters For a discussion of fair employment practices matters, see " Legal Matters" in Note 2 of

        " Notes to Financial Statements."

i This item was previously reported on Form 10-K for the year ended December 31, 1979. i 28

Item 5. Increase in Amount Outstanding of Securities or Indebtedness. Amount Number of (Aggregate shares Per Value)

                  $100 Cumulative Preferred Stock Outstanding as of September 30,1980.                                 4,375,000        $437,500,000 Add: $100 Cumulative Preferred Stock,12% Series, Issued October 22,1980                               750,000          75,000,000
                 $100 Cumulative Preferred Stock Outstanding to Date                  .                           5,125,000         $512,500,000 Pursuant to an Underwriting Agreement dated October 1d,1980 between the Company and Salomon Brothers and E. F. Hutton & Company Inc. as repreentatives of a group of 78 underwriters (none of whom were affiliates of the Company), the Company, on October 22,1980, issued and sold 750,000 shares of $100 Cumulative Preferred Stock,12% Series ("New Stock")

at a price of $100 per share to such underwriters. The net proceeds to the Company before the deduction of expens7s payable by the Company, es'imated at $200,000, were $74,175,000. The net proceeds were used by the Company: (a) te reimburse the Company for a portion of its construction program, exclusive of maintenance of service and replacements. The amounts so reimbursed became a part of the general treasury funds of the Company. The Company used a portion of such treasury funds to repay a portion of its outstanding short-term debt, which aggregated approximately

              $355,000,000 at the time of the receipt of the proceeds from the sale of the New Stock.

(b) to pay and discharge expenses incurred in connection with the issuance and sale of the New Stock. A Registration Statement covering the New Stock was filed under the Securities Act of 1933 on Form S-16 under File No. 2-69271 on September 25,1980, and a First Amendment to said Registration Statement was filed on October 15,1980, and became effective on October 15,1980. f The gross proceeds of $75,000,000 were credited to the appro'priate capital share account.

j. Item 8. Other Materially important Events.

Nuclear power developments l As a result of evaluations of the acc: dent at Three Mile Island Nuclear Power Plant ("TMl"), the Nuclear Regulatory Commission ("NRC") required a review of the design and operating procedures of all operating nuclear power plants. San Onofre Unit 1 has been operating under a provisional operating license since 1968. Although Unit 1 is different in design from TMI, the Company has been ordered to implement certain design and operating procedure changes to allow continued operations. Pursuant to NRC order, the Company removert Unit 1 from service from January 26,1980 to February 10, 19SO to perform certain required design changes. Additional design changes have been and are being implemented during an outage which began on Aprii 9,1980. The Company presently expects to remove Unit 1 from service again in early 1981 to perform remaining currently required design changes. The Company's share of the total cost of TMI related modifications to Unit 1 is currently estimated at $20,000,000, which cost was included in the funds required for construction expenditures appearing in its Form 10-K for the year ended December 31, 1979 estimated as of February 22,'1980.

3 ^ i i i i { inspection of the steam generators during this shutdown revealed deterioration of a number , of the steam generator tubes. A proposed remedy is being developed with the steam generator j manufacturer which employs insertion of sleeves into affected tubes. The Company presently j expects that Unit 1 will return to service in December 1980; however, the return of Unit 1 to ' I service is subject to successful completion and NRC approval of the remedial modification I being made. The Company's cost of such modification is expected to be approximately

                               $20,000,000. The Company anticipates adequate generating capacity will be avai!able from

other generating resources during the Unit 1 shutdowns.

San Onofre Units 2 and 3, which are currently under construction, will also require certain design modifications as a result of the TMI accident. The Company's cost of such modifications is currently estimated at $24,000,000, which cost was included in the funds required for con- } .struction expenditures appearing in its Form 10-K for the year ended December 31, 1979, estimated as of February 22,1980. The Company believes that currently required modifications

can be accomplished without delaying the construction of such Units. However, because of slowed administrative procedures in processing licenses by the NRC staff, the completion and operation dates of the Units have been rescheduled to the second and fourth quarters of 1981,

respectively, for Unit 2 and to the third quarter of 1982 and the first quarter of 1983, respectively,  !

3 for Unit 3. The Company estimates that the delays have increased its share of the total project !- cost for the Units by approximately $112,000,000, resulting primarily from the cost of carrying money invested in the project for the longer period. Construction of Units 2 and 3 was , temporarily halted from October 8,1980 to October 31, 1980 by a work stoppage involving

a dispute with the International Brotherhood of Bollermakers. A tentative settlement with the i boilermakers has resulted in removal of the picket lines, allowing construction work to resume.

! The boilermakers will not return to work until the settlement has been ratified; such ratification . l Is expected by mid-November. The Company cannot predict what effect, if any, this strike or  ! i a further work stoppage will have on its scheduled completion of such Units. l The Company expects to receive approximately $90,000,000 in November 1980 from the sale of an undivided 3.45% interest in San Onofre Units 2 and 3 to two of its resale customers. The Company will retain a 76.55% interest in such Units. Although higher energy costs will be incurred for alternative generating capacity during l_ the periods that these units are not in operation, such costs will be included in future ECAC filings. The Company cannot predict what other effects, if any, including legislative or regu-latory actions, the TMl accident may have upon it or upon the construction, licensing or future operation of its San Onofre Units or the extent of any additional costs it may incur as a result

                           ' thereof.

Capital requirements and generation mix The Company's projection of funds needed for construction expenditures appearing in its Form 10-K for the year ended December 31,1979, has been modified to reflect the Company's plans to obtain increased quantities of purchased power, the deferral of two generation projects I and the addition of $174,000,000 of expenditures for the reduction of sulfur dioxide emissions from the coal-fired Four Corners Generating Station. The Company- presently anticipates ~ that -it will need approximately 6,000 megawatts

                            -("MW") of additional energy resources to serve its projected customer needs through 1990.

_ Approximately 2,300 MW of new nuclear generating facilities are under construction (San

h. Onofre Units 2_and 3 and Palo Verde Units 1,2 and 3), and the Company plans to purchase approximately 1,400 MW of. energy from sources outside.its service territory. On October 17, 1980, the Company announced its intent to pursue the accelerated development of alternative b

and renewable energy resources (i.e. wind, geothermal, solar, fuel cells, hydroelectric and 30 l _, _. _ c;&, . _ _ __ . _ _ . _ . _ , _ . _ _ . _ , _ _ , _ . _ _ . - _ . _ _ _ . _ _

co-generation) to meet a portion of its future energy resource requirements. The Company's present goal is to obtain substantially all of its remaining energy resource requirements from alternative and renewable energy resources. However, because the Company cannot presently predict with certainty its rate of growth of megawatt demand and the timeliness of the development of new technologies, it is continuing to pursue conventional coal-fueled energy generation resources. The Company's construction program and related expenditures are subject to continuous review and periodic revisions because of changes !n estimated system load growth, rates of inflation, receipt of adequate and timely rate relief, the availability and timing of environmental, siting and other regulatory approvals, the scope of modifications required by regulatory agencies, the availability and costs of external sources of capital, the development of new technology and pther factors beyond the Company's control. Item 9. Exhibits and Reports on Form 8-K. (a) Exhibits

4. The following exhibit has heretofore been physically filed with the Securities and Exchange Commission (specified document and file number noted) and is incorporated herein by reference pursuant to Rule 12b-23:

(a) Certificate of Determination of Preferences of the $100 Cumulative Preferred Stock,12% Series (Form S-16, File No. 2-69271, effective October 15, 1980)

11. Statement re: Computation of Fully Diluted Earnings Per Share (see Exhibit A to Part I on Page 25).

(b) Reports on Form 8-K None. { l t 31

                 -     .       .-                    ._=               -.       _.                     _ _ -        - ,-.

t SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHERN CALIFORNIA EDISON COMPANY (Registrant) By H. FRED CHRISTIE H. Fred Christie Executive Vice President and Chief Financial Officer By R. W. SCOFl"LD R. W. Scofield Assistant Comptroller November 10, 1980 4 L h 32

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report appearing in the Quarterly Report on Form 10-0 for the period ended September 30, 1980 of Southern California Edison Company in the Registration Statement on Form S-16 which became effective on April 7,1960 (File No. 2-66939). 1 ARTHUR ANDERSEN & CO. November 10, 1960 f i

5.4 PROSPECTUS

                                           .5CE                                                              !

8,000,000 Shares l Southern California Edison Company Common Stock ($8% par v0lue) The outstanding shares of Common Stock are. and the shares offered hereby will be, listed on the New York and Pacific Stock Exchanges. The reported last sale price of the Common Stock on the New York Stock Exchange on January 22,1981, was $24% per share. THESE SECURITIES HAVE NOT REEN APPROVED OR UlSAPPR0t'ED R1' THE SECURITIES AND ENCHANGE COMMISS;0N NOR HAS THE COMMISSION PASSED UPON THE ACCURAC1' OR ADEQL AC1' 0F THIS PROSPECTUS. ANl' REPRESENTATION TO THE CONTRARV IS A CRIMINAL OFFENSE.

                                                                                                      ~~

t 'nderw ru5ng Price to Discounts and Pnn reds to Public Commissions (t) Compans (2) Per Share $24.375 S0.83 $23.545 Total S t 95.000,000 S0.640,000 S188,360,000 (1) The Company has agreed tc indemni(y the severo: Underwriters against certain civil liabili ties, including liabilities under the Securities Act of 1933. (2) Before deduction of expenses payable by the Company estimated at $280,000. The Comt on Stack is offered by the several Underwriters named herein when, as and if received and accepted by them, subject to their right to reject orders in whole or in part and subject to certain other conditions, it is expected that delivery of the shares will be made in Los Angeles, California, on or about January 29,1981. Dean Witter Reynolds Inc. Blyth Eastman Paine Webber incorporated E. E Hutton & Company Inc. Merrill Lynch White Weld Capital Markets Group Merrill Lynch, Pierce, Fenner A Smith incorporated Junuary 22,1981

i l IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR l EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK AND PACIFIC STOCK EXCHANGES, IN THE OVER-THE COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. AVAILABLE INFORMATION Southern California Edison Company (" Company") is subject to the informational require-ments of the Securities Exchange Act of 1934 (" Exchange Act") and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commis-sion (" Commission"). Such reports, proxy statements and other information on file can be inspected and copied at the offices of the Commission at Room 6101, 1100 L Street, N.W., Washington, D.C.; Room 1204, Everett McKinley Dirksen Building,219 South

Dearborn Street,

Chicago, Illinois; Room 1102, Federal Building, 26 Federal Plaza, New York, New York; and Suite 1710, Tishman Building,10960 Wilshire Boulevard, Los Angeles, California. Copies of this material can also be obtained at prescribed rates from the Commission at its principal office at 500 North Capitol Street, N.W., Washington, D.C. 20549. Certain securities of the Company are listed on the New York, American and Pacific Stock Exchanges. Reports, proxy statements and other information concerning the Company can De inspected at the respective offices of these exchanges at Room 401,20 Broad Street, New York, New York; 26 Trinity Place, New York, New York; and 115 Sansome Street, San Francisco, California. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with tne Commission by the Company are incorporated by reference in this Prospectus:

1. Annual Report on Form 10-K for the year ended December 31,1979.

2. Quarterly Report on Form 10-0 for the period ended March 31,1980.

3. Quarterly Report on Form 10-0 fer the period ended June 30,1980.

4. Quarterly Report on Form 10-0 for the period ended September 30,1980.

5. Definitive Proxy Statement dated March 5,1980 for the Company's Annual Meeting of Shareholders held on Antil 17,1980.

All documents filed by the Company pursuant to Sections 13,14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the New Common Stock covered by this Prospectus shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing such documents. The Company hereby undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus other than exhibits to such documents. Written requests for such copies should be directed to: Southern Califortila Edison Company, P.O. Box 800, Rosemead, California 91770, Attention: Vice President and Treasurer. No dealer, salesman or other person has been authorized to give any information or to make any representation other than as contained hereinc and,if given or made, such information or representation must not be relied upon as having been authorized by the Company or any Underwriter. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstance create any implication that there have been no changes in the affairs of the Company since the data hereof. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the New Common Stock in any state to any person to whom it is unlawful to make such offer or solicitation in such state. 2

l l [ SELECTED INFORMATION The following material is qualified in its entirety by the detailed in'ormation and financial statements appearing elsewhere in this Prospectus, including the documents incorporated by reference in this Prospectus, l THE OFFERING issuer Southern California Edison Company Issue 8,000,000 Shares of Common Stock Estimated Number of Shares of Common and Original Preferred Stock Outstanding after the Offering .84,000,000 Listed (Symbol: SCE) New York and Pacific Stock Exchanges Price Range (composite) from January 1,1980 through January 21,1981 $27% - $20% THE COMPANY Customers (December 31, 1980) 3,164,000 Total Area Operating Capacity - Summer Rating (Kilowatts) (December 31, 1980) 15,504,000 Kilowatt-Hour Sales (1980) 59,915,187,000 Funds Required for Construction Expenditures (1981-1985) $4,135,000,000 Energy Sources (1980) Natural Gas 30% ; Oil 28%; Coal 12%; Hydroelectric 9%; Nuclear 1%; Pur-chased Power 20% 7 FINANCIAL INFORMATION (Dollars in Thousands Except Per Share Data) Year Ended December 31, 1976 1977 1978 1979 1980 (Unaudited) Income Statement Data: , Total Operating Revenues $1,846,540 $2,064,914 $2,328,798 $2,563.974 $3,661,117 Operating income 307,140 330,722 324,601 384,996 372,134 Net income 226,798 251,979 251,683 346,219 317,536 Earnings Available for Common and Original Preferred Stock 185,047 206.330 202,226 292,481 256,586 Primary Earnings Per Share $3.80 $3 80 $3.52 $4.56 $3.50 i

   - Fully Diluted Earnings Per Share                      .                 $3.61          $3.63          $3.38         $4.39            $3.48 Dividends Declared Per Common Share                                 $1.68          $2.06          $2.30         $2.60            $2.84 Current Indicated Annual Dividand Rate Per Common Share-$2.96 dook Value Per Common Shr.re at December 31,1980- $33.19 Outstanding           As Adjusted

• December 31,1980 Amount Percent Capitalization (Unaudited):

Long-Term Debt $3.089,372 33,089,372 46.1 % Preferred and Preference Stock . 882.152 882,152 13.2 Common Equity . 2,529,577 2,,724,577 40.7 Total Capitalization $6,501,101 $6,696,101 100.0 %

• Gives effect to the proposed issuance of the % Ce timM Stock.

                                                          .~- , ~

3

THE COMPANY The Company, incorporated in 1909 under California law, is a public utility primarily engaged in the business of supplying electric energy in portions of central and southern California, excluding the City of Los Angeles and certain other cities. The mailing address and telephone number of the Company are, respectively, P.O. Box 800, Rosemead, California 91770 and (213) 572-1212. USE OF PROCEEDS AND CONSTRUCTION PROGRAM The net proceeds from the sale of 8,000,000 shares of Common Stock (the !!ew Common Stock") will be used to reimburse the Company for a portion of its construction %penditures. The amounts so reimbursed will become a part of the general treasury funds of the Company and will be used to repay its outstanding short-term debt expected to aggregate approximately

$205,000,000 at the time of receipt of the proceeds from the sale of the New Common Stock.

Funds used by the Company for construction expenditures totaled $567,831,000 in 1978,

$674,147,000 in 1979 and $781,510,000 in 1980. Construction expenditures for the 1981-1985 period are currently estimated as follows:

(Dollars in Millions) 1981 1982 1983 1984 1985 Total Electric generating plants S 831 $ 629 $ 478 $ 360 $ 475 $2.773 Electric transtnission lines and substations 103 60 141 189 129 622 Electric distribution lines and substations 213 239 258 287 319 1.316 Other expenditures . 42 20 29 23 16 130 Total construction additions 1,189 948 906 859 939 4.841 Less allowance for funds used during construction 236 180 100 93 103 706 Funds required for construction expenditures $ 953 $ 768 $ 806 $ 769 $ 839 $4.135 Approximately 50% of the total electric generating plant expenditures for the years 1981 through 1985 are related to the construction of new nuclear units at San Onofre and Palo Verde. The Company's share of the total cost of construction for these units is estimated to be $2.6 billion and $1.0 billion, respectively, of which $1,835,000,000 and $367,000,000, respec-tively, had been expended through December 31,1980. The above estimates of funds required for construction expenditures include increases over the Company's previous estimates resulting from the impact of inflation, higher costs for distribution lines and related equipment, delays in the projected operation dates of the new nuclear units at San Onofre, the Company's plans to obtain increased quantities of purchased power, the deferral of two generation projects and the addition of $174,000,000 - of expenditures for the reduction of sulfur dioxide emissions from the coal-fired Four Corners Generating Station. The Company presently anticipates that it will need approximately 6,000 megawatts (MW") of additional energp resources to serve its projected customer needs through 1990. Approximately 2,300 MW of new nuclear generating facilities are under construction (San Onofre Units 2 and 3 and Palo Verde Units 1,2 and 3), and the Company plans to purchase  ; approximately 1,400 MW from sources outside its service territory. In October 1980, the Company announced its intent to pursue the~ accelerated development of alternative and renewable energy resources (i.e. wind, geothermal, solar, fuel cells, hydroelectric and co-generation) to meet a portion of its future energy resource requirements. The Company's present goal is to obtain substantially all of its remaining energy resource requirements from alternative and renewable energy resources. However, because the Company cannot presently predict with certainty its rate of growth of megawatt demand and the timeliness of the develop-4

ment of new technologies, it is continuing to pursue conventional coal-fueled energy ge neration resources. The Company's construction program and related expenditures are subject to continuous review and periodic revision because of changes in estimated system load growth, rates of inflation, receipt of adequate and timely rate relief, the availability and timing of environmental, siting and other regulatory approvals, the scope of modifications required by regulatory agencies, the availability and costs of external sources of capital, the development of new technology and other factors beyond the Company's control. FINANCIWs PROGRAM To finance its construction program as shown in the preceding table for the five years through 1985, and to meet long-term debt maturities and preferred stock sinking fund require-ments aggregating $529,536,000 during such years, the Company estimates that approximately

   $2.8 billion will be required from external sources. The balance of funds required for those purposes is expected to be obtained from internal sources.

The Company's estimates of funds available from internal sources assume the receipt of adequate and timely general rate relief, the timely inclusion of the new San Onofre Units and the Palo Verde Units in its rate base and the realization of its assumptions regarding cost increases, including the cost of capital. The Company's estimates and underlying assumptions are subject to continuous review and periodic revision. COMMON STOCK DIVIDENDS AND PRICE RANGE The Company has paid dividends on its Common Stock in each year since its incorporation in 1909 and cash dividends have been paid quarterly since 1910. The 1980 fourth quarter dividend of 3.74 per common share payable to shareholders of record as of January 5,1981 will not be received by purchasers of the New Common Stock. The following rates have been paid quarterly on January 31 April 30, July 31 and October 31 for each of the periods set forth below: Quarterly Rate Per Share

                      ~ April 30,1974 through January 31,1977                    $ .42
                       - April 30,1977 through October 31,1977                      .50 January 31,1978 through October 31,1978                     .56 January 31,1979 through July 31,1979                        .62 October 31,1979 through July 31,1980                        .68 October 31,1980 (current rate)                              .74 The Company advised its shareholders that 76% of the dividends paid on its Common Stock in 1979 constituted a return of capital for federal income tax purposes. This resulted primarily from the recognition of certain income and expense items, especially fuel, in different periods for financial accounting and income tax purposes. During 1978 and 1979 significant amounts of fuel costs were deferred for financial statement purposes under the Company's energy cost adjustment ch use ("ECAC"), but were deducted for tax purposes. Recent modi-fications of the ECAC procedures should alleviate the impact of these timing differences. No portion of the Company's 1980 dividend paid on its Common Stock is expected to constitute a return of capital for federal income tax purposes. Because of the many uncertainties per--

taining to 1981, it is'not possible at this time to make a reasonable estimate of the return of capital portion, if any, of the 1981 Common Stock dividend. The Company- has a Dividend Reinvestment and Stock Purchase Plan that permits common stockholders to reinvest their dividends, and to invest optional cash payments up to $5,000 per quarnr, in newly-issued shares of Common Stock. Under such Plan, the purchase price of tue shares is 95% in the case of reinvested dividends, and 100% in the

 - case of optional payments, of the average of the high and low sales prices on the New York Stcck Exchange on the dividend payment date.

5 L ,

l l The Common Stock of the Company is listed on the New York and Pacific Stock Exchanges. 1 The reported high and low sale prices per share for the periods indicated were as follows I (prices are as reported on a composite basis in the Western Edition of The Wall Street Journal): 1979 1980 1981* High Low High Low High Low First Quarter $27% $25% $247/s $20 /4 $26% $24% Second Quarter 27 % 24 % 27 % 21 % Third Quarter 26 % 25 % 26 % 24 % Fourth Quarter 26 % 23 % 26 % 23 %

• T' agh January 21,1981.

For a recent price of the Common Stock, see the cover page. FINANCIAL INFORMATION Unaudited results for the year ended December 31, 1980 reflect total operating revenues of $3,661,117,000, earnings available for common and original preferred stock of $256,586,000 and primary earnings per share of $3.50 as compared with total operating revenues of

  $2,563,974,000, earnings available for common and original preferred stock of $292,481,000 and primary earnings per share of $4.56 for the year ended December 31, 1979. Unaudited results for the fourth quarter of 1980 reflect earnings available for common and original pre-ferred stock of $53,994,000 and primary earnings per share of $.71 as compared with earnings available for common and original preferred stock of $77,671,000 and primary earnings per share of $1.19 for the fourth quarter of 1979.

Although operating revenues for the year ended December 31, 1980 increased by

  $1,097,143,000 over 1979 (primarily as a result of higher ECAC revenues which were offset by increased energy costs), earnings available for common and original preferred stock declined by $35,895,000. This decrease, which occurred in a year between general rate cases, was primarily attributable to increases in operation expenses, maintenance expenses and interest charges, which more than offset an increase of $43,721,000 in the non-cash allowance for funds used during construction, an increase of $11,193,000 in other :.1come (primarily non-cash interest income related to undercollections in the ECAC balancing account) and a decrease of
  $68,448,000 in taxes on income. Of the $1.06 decrease in primary earnings per share for the year ended December 31,1980, approximately $.56 was attributable to the decline in earnings available for common and original preferred stock and approximately $.50 was attributable to
 .the dilutive effect of the issuance of additional shares of Common Stock.
                                       .RECENT DEVELOPMENTS California Public Utilities Commission ("CPUC") Rate Proceedings
    - General Rate Matters in December 1979, the Company filed with the CPUC a general rate application designed to increase annual revenues by approximately $340,000,000 based on a 1981 test year which, under various assumptions made at the date of filing, would have afforded the Company a reasonable opportunity to earn an average rate of return on common equity of 15% for the 1981-82 period. On December 30, 1980, the CPUC issued a general rate decision which authorized new rates effective January 1,1981 designed to increase the Company's revenues 6

by approximately $294,000,000 annually. The CPUC decision also authorized a general rate increase effective January 1,1982 designed to produce additional annual revenues of approxi-mately $92,000,000 to offset higher operating and capital costs expected to be incurred irt the year following the 1981 test year. The CPUC decision is designed to enable the Col pany to earn a 14.95% rate of return on common equity. The decision also provides that, should actual base rate revenues exceed authorized base rate revenues, the excess revenues will be subject to refund. Energy cost adjustment clause The Company's ECAC, adopted by the CPUC in 1976, provides for adjustments in rates, subject to CPUC approval, to reflect changes in energy costs. Under the ECAC procedure, a balancing account has been established in which energy costs above or below those used in establishing rates have been accumulated, and the accumulated amount has been reflected in succeeding rate adjustments. Effective May 20, 1980, the CPUC authorized an increase in the Company's revenues under ECAC of approximately $560,000,000 on an annual basis. As a result, ECAC under-collections experienced in 1978 and 1979, together with interest, were fully recovered in 1980. On December 31, 1980, the balance in the ECAC balancing account, representing net over-collections and accrued interest, was $38,076,000. On October 8,1980,~ the CPUC issued an interim decision approving a Company filing providing for a reduction in revenues under the ECAC of approximately $236,300,000 on an annual basis, including recovery of $35,000,000 in the ECAC balancing account which had been deferred by an earlier CPUC decision. A final decision on this matter has not yet been rendered. On December 30, 1980, the CPUC approved a further annual reduction in ECAC revenues of approximately $194,000,000. On December 5,1980, the CPUC modified energy cost adjustment procedures for Cali-fornia utilities. In addition to various procedural changes, the revised ECAC procedures will provide for the application of ECAC to 98% of the Company's energy costs with the remain-ing 2% being subject to annual base rate treatment. The revised ECAC also will enable the Company to recover certain inventory carrying costs associated with fuel oil price increases. Resale Rates Pursuant to Federal Energy Regulatory Commission ("FERC") procedures, on August 4, 1974, February 1,1976, and August 16,1979, increases in the Company's resale rates became effective, subject to refund with interest to the extent that any of the increases are subsequently determined to be inappropriate.

       'An August 1,1979 FERC decision affirmed the August 4,1974 rate increase with respect to cost of service.' The' decision provided that the rate increase remain subject to refund pending resolution of an anti-competitive " price squeeze" issue raised by intervenors. . On May 23,1980, the FERC Administrative Law Judge granted the Company's motion for summary disposition in the " price squeeze" proceedings relating to the August 4,1974 rate increase.

The intervenors and the FERC staff have filed exceptions to the Administrative Law Judge's ruling with the FERC. An August 22,1979 FERC decision on the February 1,1976 rate increase required the Company to file a revised cost of service which reduced the annual increase in revenues. . Revenues billed in excess of the revised cost of service had previously been deferred and the related interest accrued.' Both the Company and certain intervenors petitioned for a rehearing -whic'w was denied on March 20,1980 by the FERC. The August 22,1979 decision also found 7

that the Company's resale customers had established a prima facie case of a " price squeeze" and provided that the case would be remanded to an Administrative Law Judge for hearings to determine the extent of such " price squeeze," if any, with respect to the filed revised rates. If a " price squeeze" is determined to exist, a further rate reduction may be imposed which , could result in additional refunds. Both the Company and intervenors have filed petitions with the Court of Appeals for review of the August 22,1979 decision. At December 31, 1980, approximately 3473,100,000 had been billed subject to refund. The Company believes that any amounts which the FERC may require the Company to refund as a result of the above proceedings should not have a material financial effect on the Company. The FERC decisions could adversely affect the pending antitrust litigation instituted in federal district court on March 2,1978 by five of the Company's resale customers. Plaintiffs seek, among other relief, damages in excess of $23,000,000, consequential damages and a trebling of such damages. However, these proceedings involve complex issues of law and fact, and the Company is unable to predict their final outcome or the possible effect of the FERC decisions on the district court case. Although the Company categorically denies the allegations of these resale customers, a judicial decision awarding substantially the relief requested could have a material adverse effect on the Company. In December 1980, the Company filed an application with the FERC requesting an increase in resale rates designed to generate $18.600,000 in revenues. This increase is expected to become effective, subject to refund, by mid-year 1981. Nuclear Power Developments As a result of evaluations of the accident at Three Mile Island Nuclear Power Plant ("TMl"), the Nuclear Regulatory Commission ("NRC") required a review of the design and operating procedures of all operating or planned nuclear power plants. San Onofre Unit 1 has been aperating under a provisional operating license since 1968 and the Company's share of its capacity is 349 MW. Although Unit 1 is different in design and manufacture from TMI, the Company has been ordered to implement certain design and operat-ing procedure changes to allow continued operations. Pursuant to NRC order, the Company removed Unit 1 from service from January 26,1980 to February 10. 1980 to perform certain required design changes. Additional design changes have been and are being implemented during an outage which began on April 9,1980. The Company presently expects these design changes to be completed concurrently with the steam generator sleeving work described below. The : uipany's share of the total cost of TMI-related modifications to Unit 1 is currently estimated at $20,000,000. Inspection of the steam generators during the current shutdown revealed deterioration of a number of the steam generator tubes. A remedy has been developed with the steam generator manufacturer which employs insertion and welding of sleeves into affected tubes. The remedy has received tentative approval by the NRC subject to final inspection. Although implementa-tion of the sleeve insertion and welding process has encountered some technical problems, the Company presently anticipates that the Unit can be returned to service in the second quarter of 1981. The Company's share of the cost of the sleeving work is expected to be approximately

$32,000,000. 'If the current sleeving remedy is unsuccessful, the implementation of alternative remedies could involve significant additional expenditures. The Company anticipates adequate i generating capacity will be available from other generating resources during the Unit 1 shutdown. I San Onofre Units 2 and 3, which are currer,tly under construction, will also require certain design modifications as a result of the TMI accident. The Company's cost of such modifications is currently estimated at $24,000,000. _ The Company believes that currently required modifi-cations could be accomplished without delaying the construction of such Units. However, 8

because of slowed administrative processing of license applications by the NRC subsequent to TMl, the Company now projects a further delay in the operation date of Unit 2 from the fourth quarter of 1981 to the second quarter of 1982, and of Unit 3 from the first quarter of 1983 to the third quarter of 1983. Because of these further delays, the Company's share Jf the total project cost has increased by approximately $140,000,000, primarily as a result of increased costs of carrying money invested in the project. An amount corresponding to such carrying costs will be reflected in the Company's statements of income as a part of the allowance for funds used during construction. Although higher energy costs will be incurred for alternative generating capacity during the periods that these units are not in operation, such costs will be included in future ECAC filings. The Company cannot predict what other effects, if any, including legislative or regu-latory actions, the TMI accident may have upon it or upon the construction, licensing or future operation of its San Onofre Units or the extent of any additional costs it may incur as a result thereof. Environmental Matters Oxides of Nitrogen Rules All of the Company's conventional oil- and gas-fueled generating plants which are located in the South Coast Air Basin are subject to oxides of nitrogen rules ("NOx rules") promulgated by the Air Resources Board ("ARB") for the South Coast Air Quality Management District and the Ventura County Air Pollution Control District on December 18,1980. The NOx rules are designed to achieve an 80% reduction in oxides of nitrogen emissions from conventional generating units by December 31,1989. The NOx rules could require the Company to make substantial expenditures (up to $500 million in 1981 dollars) for pollution control equipment designed to effect an 80% reduction in oxides of nitrogen emissions. Unless a stay or variance is obta!ned by the Company, the NOx rules would require the submission of a final compliance plan on or before March 1,1981. A suit against the ARB is already on file regarding a prior version of the NOx rules and the Company is continuing its challenges to the most recent version of the NOx rules. Four Corners Project The Four Corners Generating Station ("Four Corners") is a coal-fired, steam-electric power plant located in New Mexico, consisting of five generating units operated by Arizona Public Service Company ("APS"). Units 4 and 5, with 1,600 MW of capacity, are jointly owned. The Company's share of these units is 48%, or 768 MW of capacity. A prior New Mexico sulfur dioxide ("SO2") emission rule required that Units 4 and 5 achieve a 67.5% removal rate by December 31, 1982. This rule has been approved by the Environmental Protection Agency (" EPA") as part of the State implementation Plan in accord-ance with the Clean Air Act. Substantial disagreement between APS and the New Mexico regulatory agencies, along with environmental groups, concerning the interpretation of a 1978 settlement agreement regarding the degree of SO2 removal required by such rule resulted in litigation. On August 21, 1980, a settlement in the form of a stipulated termination of litigation was entered into by the parties before the New Mexico state court. The terms of the settlement agreement contemplate the adoption of a new SO2 rule which will require that Units 4 and 5 achieve a 72% removal rate by December 31,1984. -The settlement agreement is conditioned on approval of the new rule by the New Mexico Environmental Improvement Board and the EPA p> lor to August 30, 1981. The New Mexico Environmentalimprovement Board on November 20,1M30 adopted a new rule (together with a new compliance schedule) consistent with the settlement agreement. This new rule and schedule of compliance were submitted by the Governor of New Mexico to the EPA for approval on November 24,1980. No action thereon has as yet been taken by the 9

I l EPA. Because the December 31, 1982 compliance date in the prior rule (which remains part of the EPA approved State Implementaticn Plan) and certain interim dates set out in the related compliance schedule do not allow for an orderly progression of design, procurement I and construction of the equipment needed for compliance, Four Corners may remain subject  ; to the possibility of non-compliance penalties or pr.it shutdown for SO2 violations unless and until the new rule is approved by the EPA. The settlement agreement does not assure approval of the new rule by the EPA. Installation of the SO2 removal equipment which would be required by the new rule will be in addition to the installation of the equipment now being constructed to meet the mquire-ments of the New Mexico particulate emissions rule. APS has estimated that the cest for control of both pollutants will be $540,000,000. The Company's share of such estimated costs is approximately $260,000,000. Other The Company has recently been contacted by, and is holding discussions with, the Los Angeles County District Attorney's office regarding alleged violation of certain regulations regarding the storage, disposal and clean-up of polychlorinated biphenyls, a substance utilized in certain electrical equipment. It is not anticipated that this matter, which may result in litigation, will have a material adverse effect on the Company. DESCRIPTION OF CAPITAL STOCK General The following information is, except as otherwise indicated, a brief summary of pertinent provisions of the Articles of incorporation. Parenthentical references are to sections of such Articles. The authorized capital stock of the Company consists of the following classes, listed in order of preferential rank: (1) Original Preferred Stock ($8% par value); (2) Cumulative Preferred Stock ($25 par value) and $100 Cumulative Preferred Stock ($100 par value); (3) Preference Stock ($25 par value) and $100 Preference Stock ($100 par value); and (4) Common Stock ($8% par value). There is no $100 Preference Stock outstanding at the present time. All classes other than the Original Preferred Stock and the Common Stock may be authorized by the Board of Directors to be issued from time to time in series and the Board is authorized, as to ar'y wholly unissued series, to fix the number of shares thereof and the dividend righla, dividend rate, conversion rights, voting rights (in addition to the voting rights provided in the Articles), rights and terms of redemption (including sinking fund provisions), redemption price or prices and/or voluntary liquidation preferences thereof. Transfers of the Common Stock are effected by the Company at Rosemead, California. The registrar for such stock is Security Pacific National Bank, Los Angeles, California. The Common Stock is listed on the New York and Pacific Stock Exchanges and the shares offered by this Prospectus have been authorized for listing on such Exchanges upon official notice of issuance. Dividend Rights The Original Preferred Stock is entitled to cumulative quarterly dividends, as declared, at the rate of 5% (of the par value thereof) per annum in preference to all other classes of stock 10

and, in addition, has certain participating rights with each other class, including the Common Stock. Subject to the prior dividend rights of all senior classes of securities and the participating rights of the Original Preferred Stock, the Common Stock is entitled to receive such dividends as may be lawfully declared by the Board of Directors. (Article Sixth, Section 3(a)) The payment of dividends on the Common Stock and certain classes of Preference Stock would be restricted if the Company fails to make sinking fund payments or meet repurchase obligations on certain classes of its $100 Cumulative Preferred Stock and Preference Stock. For a discussion of sinking fund provisions of certain series of Cumulative Preferred Stock, repurchase obligations with respect to the Company's Preference Stock,7.375% Series, and the dividend rates of senior classes of securities, see Note 8 of " Notes to Financial Statements" contained in the Quarterly Report on Form 10-Q for the quarter ended September 30,1980. The Trust Indenture securing the Company's First and Refunding Mortgage Bonas provides, in substance, that the Company shall not pay any cash dividends except out of its surplus at December 31, 1921, and out of earnings (as defined) subsequent thereto. None of the Com-pany's present earnings reinvested in the business are restricted by this provision. Voting Rights Shares of all outstanding classes except the Cumulative Preferred Stock are entitled to one vote per share. Shares of Cumulative Preferred Stock are entitled to three votes per share. Votes may be cumulated in electing directors. (Article Sixth) The preferred capital stock may be increased or diminished by a vote of the holders of at least two-thirds of the entire subsenbed or issued capital stock. ( Article Fifth) The affirmative vote of the holders of various specified percentages, voting as a class or series, of Cumula*ive Preferred Stock and $100 Cumulative Preferred Stock is required to effect certain changes in the capitalization of the Company or the rights, preferences and privileges of such class or series, and to authorize certain other transactions (including the consolidation or merger of the Company or the sale, lease, conveyance or parting with control of substantially all of the Company's property or business) which might affect their rights. ( Article Sixth, Section 3(c)) If six or more quarterly dividends, whether consecutive or not, payable with respect to any one or more series of Cumulative Preferred Stock, $100 Cumulative Preferred Stock, Preference Stock or $100 Preference Stock shall be in default, holders of all such classes, voting together, shall have the additional right to elect two directors until such dividends have been paid. ( Article Fif th, Section 2) Under the California General Corporation Law, the authorized number of shares of Common Stock may be increased by resolution of the Board of Directors and the vote or written consent of a majority of the outstanding shares of Common Stock and a majority of the voting power of the Company. Liquidation Rights On any liquidation of the Company, the Original Preferred Stock is entitled to be paid its par value, plus unpaid accrued dividends, before payment to any classes junior thereto. Subject to the prior rights of the class or classes senior thereto, the other classes of preferred stock, in order of preferential rank as set out under " General" in this " Description of Capital Stock," are eniltled to be paid upon involuntary liquidation their respective par values per share, together with unpaid accrued dividends, and upon voluntary liquidation, the liquid; tion preference fixed by the Board of Directors for each series, such preference, in the case of the series now outstanding, being an amount corresponding to their respective then current redemption prices, including unpaid accrued dividends. Subject to the prior rights of the other classes of stock, upon any liquidation of the Company, the Common Stock is entitled to its par value. Any assets and funds of the Company remaining after such distribution are to be distributed ratably to the Original Preferred Stock and Common Stock. (Article Sixth, Sections 2(b), 3(b), 4(b) and 5(b)) 11

l Other Provisions The Original Preferred Stock is not redeemable. Outstanding series of other classes of preferred stock were redeemable as of September 30,1980 under certain circumstances at prices set forth in Note 8 of " Notes to Financial Statements" contained in the Quarterly Report on Form 10-0 for the quarter ended September 30,1980. Neither the Original Preferred Stock nor any outstanding series of Cumulative Preferred Stock or $100 Cumulative Preferred Stock has any conversion rights. The Preference Stock,5.20% Convertible Series, is convertible at the option of its holders into shares of Common Stock at any time prior to redemption at the conversion price of $32.50 per share (as of December 31,1980). The conversion price is subject to adjustment upon the happening of certain events, including but not limited to, certain issuances of Common Stock for consideration less than the conversion price. In view of the probability that additional issues of Common Stock will be made at market prices substantially below the conversion price of the Preference Stock, it is likely that further downwara adjustments in the conversion price will occur. None of the classes of stock of the Company has any preemptive rights. All of the shares now outstanding are, and the New Common Stock offered by this Prospectus, when issued, will be, fully paid and nonassessable. EXPERTS The financial statements and schedules incorporated by reference in this Prospectus for the periods indicated in their reports have been examined by Arthur Andersen & Co., independ-ent public accountants, and are included in this Prospectus in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. LEGAL OPINIONS O'Melveny & Myers,611 West '3ixth Street, Los Angeles, California 90017, special counsel for the Company, John R. Bury, General Counsel, or Charles R. Kocher, Assistant General Counsel, of the Company, and Sullivan & Cromwell,125 Broad Street, New York, New York 10004, counsel for the Underwriters, are to deliver opinions to the effect that the securities offered hereby will be, under California law, validly issued, fully paid and nonassessable. As to matters governed by Arizona and Nevada law, such counsel will rely upon opinions of Snell & Wilmer,3100 Valley Center, Phoenix, Arizona 85073, and Woodburn, Wedge, Blakey and Jepp-son, a Nevada professional corporation, First National Bank Building, One East First Street, Reno, Nevada 89505, respectively; and as to matters governed by New Mexico law and (with regard to matters affecting the interest of the Company in the Four Corners Generating Station in New Mexico and the easement and lease therefor) federal and Navajo Tribal law, such counsel will rely upon the opinion of Rodey, Dickason, Sloan, Akin & Robb, P.A., a New Mexico professional corporation, 20 First Plaza, Suite 700, Albuquerque, New Mexico 87103. As to the incorporation of the Company and all other matters governed by California law, Sullivan & Cromwell will rely upon the opinions, to the extent applicable, of O'Melveny & Myers and Mr. Bury or. Mr. Kocher, The statements of law and legal conclusions under the following captions of the Com-pany's Annual Report on Form 10-K for the year ended December 31,1979, which is incorporated by reference in this Prospectus have, to the extent indicated, been reviewed by the counsel indicated and have been included in this Prospectus upon the authority of such counsel: under 12

     " Regulation" by O'Melveny & Myers, Mr. Bury and Mr Kocher; and under " Fair employment practices matters" in the first sentence of the third paragraph by Mr. Kocher.

Mr. Bury and Mr. Kocher are employees of the Company and as such are salaried and share in the benefits accruing to such employees. As of December 31, 1980, Mr. Bury and Mr. Kocher had a direct or indirect interest in 3,796 and 408 shares of the Company's Common Stock, respectively. These shares include 150se credited and conditionally credited to their respective accounts as of December 31, 1980 with the trustees of the Company's Employee Stack Ownership Plan and Employee Stock Purchase Plan and with the agent for the Company's Cividend Reinvestment and Stock Purchase Plan. UNDERWRITING Upon the terms and subject to the conditions in the Underwriting Agreement (a copy of which is filed as an exhibit to the Registration Statement), the Underwriters named below have severally agreed to purchase from the Company the following respective numbers of shares of the New Common Stock: Number Number Name of Shares Name of Shares Dean Witter Reynolds Inc. 713.000 Daiwe.Secur; ties America Inc. 30.000 Blyth Eastman Paine Webber incorporated 713,000 D. A. Davidson & Co. Ir.corporated 7,000 E. F. Hutton & Company Inc. . 713,000 Davis, Skaggs & Co., Inc. 30.000

   - Merrill Lyncl , Pierce, Fenner & Smith                                     R. G. Dickinson & Co.                          14.500 Incorporated                        .        .        . 713,000 Di!!on, Read & Co. Inc.                       140.000 Advest. Inc.                                                 30,000        Doft & Co., Inc.

14,500 Arnhold and S. Bleichroeder, Inc. . .. 30.000 Donaldson, Lufkin & Jenrette Securities

   . Atlantic Capital Corporation ;          . .                  80,000          Corporation .                               140,000 Bache Halsey Stuart Shields incorporated .                  140.000        Drexel Burnham Lambert incorporated           140,000 Bacon, Whipple & Co.                                         30,000      ' Edelstein. Campbell & Co., Inc. .              14.500 Robert W. Baird & Co. Incorporated .                         30.000       A. G. Edwards & Sons, Inc. .                    80.000 Basie Securities Corporation .             . .                80,000        Elkins & Co.            .                       7,000 Bateman Eichler, Hill Richards                                            Eppler, Guerin & Turner, Inc.                   30.000 Incorporated                                              140,000       Fahnestock & Co.                                30.000 George K. Baum & Company .                                     7,000       Ferris & Company, incorporated .                 7,000 Bear, Stearns & Co.. ..           .                          140,000       First Affiliated Securities, Inc.                7,000 Belford, Hammerbeck. Inc.                                      7,000       First Albany Ccrporation                        14,500 Sanford C. Bemstein & Co., Inc.                               30,000       The First Boston Corporation                   140,000 Birr, Wilson & Co., Inc.                                      30,000       First Manhattan Co.                              7,000 William Blair & Company                                       30.000       First of Michigan Corporation        .          30,000 Blunt E!!Is & Lo6wi Incorporated                              30.000       Foster & Marshall Inc.                     . 30,000 Boettcher & Company                  .       .                30,000       Fraser Wilks & Darnali, Inc.                     7,000 J. C. Bradford & Co., incorporated ,.                  .      30,000       Goldman, Sachs & Co.        .

140.000 Alex. Brown & Sons .. . 80,000 Gruntal & Co. . . 14,500 Bruns, Nr.,-deman. Hea & Co. .. . 14,500 Hambrecht & Quist . . 3c,000 Burgess & Lee incorpsrated ., . 7,000 Hanifen, Imhoff inc. . . 7,000 Butcher & Singer Inc. . . .. 14,500 Bemard Herold & Co.,Inc. . 7,000 The Chicago Corporat'on . . .... 14,500 Herzfeld & Stem 14.500 B. C. Christopher & C 2.~ . .. ... . 14,500 J. J. B. Hilliard, W. L L*,ons, Inc. 30,000

 ' Craigie incorporated .                                  .      14,500       Holt & Collins .       .       ..          . 7,000
  . CroweII, Woodon & CC         .....                ..         140,000 ~     Howe. Bames & Johnson, Inc. . .                  7,000

Dain Bosworth incorportted . .. . 30.000 The Illinois Ccmpany incorporated . . 7,000 13

Number Number Name of Shares Name of Shares interstate Secunties Corporation 14.500 Ouinn & Co., Inc. 7.000 Janney Montgomery Scott Inc. 30.000 Rauscher Pierce Refsnes, Inc. 30.000 Jesup & Lamont Securities Co., Inc. 14.500 W. H. Reaves & Co., Inc. 30.000 Johnson, Lane, Space, Smitr & Co., Inc. 14.500 Robertson. Cofman Stephens & Woodman 30.000 Johnston, Le ncn & Co. Incogorated 7,000 The Robinson-Humphrey Company, Inc. 30.000 Edward D. Jeneu & Co. 3] 000 Rodman & nenshaw Inc. 14.500 Josepntha! A Co. IrcorporatO 14,500 Wm. C. Roney & Co. 14.500 Kidder. Peabody & Co. Incorporated 140.000 Rotan Mosie Inc. 30.000 Kirkpatrick. Pettis, Smith, Polian Inc. 7,000 L F. Rothschild, Unterberg. Tombin 140.000 Ladenburg. Tha!mann & Co. Inc. 30,000 R. Rowland & Co., incorporated 14.500 Emmett A. Larkin Company, Inc. 14.500 Salomon Brothers '40.000 Cyrus J. Lawrence incorporated 30.000 San D; ego Secunties incorporated 7,000 Lazard Freres & Co. 140,000 Sanyo Securities America Inc. 7,000 Legg Mason Wood Wa!ker, incorporated . 30,000 Scott & String'eMow, Inc. 7,000 Lehman Brothers Kuhn t.oeb incorporated 140.cc0 Shearson Loeb Rhoades Inc. 140.000 Manfey. Bennett, Mcdonald & Co. 14,500 Smith Barney, Harns Upha.n & Co. Mason Brothers 7,000 Inc rporated 40.000 A. E. Muten & Co. Incorporated 7,000 Smith, Moore & Co. 7.000 Mcdonald & Company 30,000 Stern Brcthers & Co. 4,.500 The Milwaukee Company . 14,500 Stifel Nicolaus & Company incorporated " 1.000 Moctgomery Secunties 30.c00 Stix & Co. Inc. 7,000 Moore & Schley, Cameron & Co. 14,500 Stone & Youngberg 4,500 Morgan, Oimstead, Kennedy & Gardner Sutro & Co. Incorporated 80.000 incorporated 30.000 Henry F. Swift & Co. 14,500 Moseley, HaI!garten. Estab'ook & Thomson McKinnon Secunties Inc. 80,000 Weeden Inc. 30 000 Tucker, Anthony & R L Day, Inc. 30.000 Neuberger & Berman 14,500 Underwood. Neuhaus & Co. Incorporated 14,500 New Court Securities Corporation . 80,000 van Kasper & Company, incorporated . 7,000 Newhard, Cook & Cc Nrporated 30.000 Edward A. Viner & Co., Inc. 7.000 The Nikko Securities Co. International, Inc. 30J "J Wagenselier & Durst, Inc. 30.000 N;ppon Kangyo Kakumaru international Inc. 7 10 Warburg Panbas Becker incorporated 140.000 Nomura Secuntres internationat, Inc. 30c]00 Wedbush, Noble, Cooke. Inc. 30,000 The ohio Company - 30,000 Wheat. First Secunties, Inc. 30,000 Oppenheimer & Co., Inc. 80,000 Wer*.heim & Co., Inc. 140,000 Parker / Hunter incorporated 14,500 Wuttf, Hansen & Co. 14,500 Pf!ueger & Baerwald inc. 7,000 Yamaichi International ( Ameri a), Inc. 30,000 Philips, Appel & Walden, Inc. 14,s430 Young. Smith & Peacock, Inc. 7,000 Piper, Jaffray & Hopwood incorporate-$ 30.0 0 Prescott, Ball & Turben 30,00 Total { 000.000 The Underwriting Agteement provides that the obligations of the Underwriters are subject to certain conditions precedent, and that :he Underwriters will not be obligated to purchase any of the shares of the New Common Stock to be purchased by them unless all such Shares are purchased, except that under certain circumstances involving the default of some but not all of the Underwriters, the Company may elect to proceed with the sale of less than all of the New Common Stock, Dean Witter Reynolds Inc., Blyth Eastman Paine Webber incorporated, E, F. Hutton & Com-pany Inc., and Merri!! Lynch, Pierce, Fenner & Smith incorporated, as Representatives of the Underwriters, have advised the Company that as such Representatives they have been authorized 14

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1979 Annua Report Sout aern Caifornia Ecison Company )' . W W MRBCATB

Southern California Edison Company 7.--- Southern California Edison Company provides electric

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service in a 50,000 square-mile area of Central and N,,2 . cm:, S uthern California. This area includes some 800 cities g and communities with a population of more than eight j j ,,y, million people. 3 Edison's gross investment in utility plant totals nearly

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S;.6 billion. The installed Company-owned generating j j ,L capcity at the end of 1979 was 13.a63 megawatts of which J/ 799 is composed of oil and gas-fired generating units. SCE's interest in coal-fired generating units accounts for d "^ " another 2 29, and 6G is 'n hydroelecrac plants. The 4 h,w.ue Company's 807 interest > a ndear plant accounts for s., r, . S't c' the remaining 39. In addi; ion, Edison had 1,670 mega-1

                            'g                                       n                  watts of capacity under contiact from other utility sources p ay. m ;. )
                                                                              *i        at year-end.

The Company, incorporated in 1909 under the laws of

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y California, is a public utility and its retail operations are Sad %g ' "*" A subject to regulation by the California Public Utilities

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Commissien which has the power, among other things, g , to establish retail rates and to regulate securities issues, j h \j r- accounting and depreciation. The Company's resale opera-

                                          ')       (       }'                         l tions are subject to regulation by the Federal Energy Regulatory Commission as to rates on sales for resale, as
                                                    =

se 5,rrk< Territory well as to other matters including accounting and

= Extra-Hid Voltage tEHV) Transmission Lines                                            depreciation.

Under the National Energy Act, the federal Department of Energy has been granted regulatory authority over certain aspects of energy conservation, solar energy development, power plant fuel use, coal convemua, public utility regulatory policy and natural gas pricing. The Cem,~ny's planning and siting of new plant construc-tion are subject to :be jurisdiction of the California Energy Commission. Edison also is subject to various governmental licensing requirements, to Securities and Exchange Com-mission filing and disclosure requirements, and to certain other federal, state and local laws and regulations, including those related to nuclear energy and nuclear plant construc-tion, environmental protection, fuel supplies and land use. Contents 2: Letter to Shareholders 4: Review of 1979 12: Financial Review 24: Capital Stock - Dividend and Price Information 15: Reports of Afanagement and Independent Public Accountants 4 t-4 16: Financial Statements A y  ?" 29: Commentary on Summary of Operations

                                                                                  ' 4   30: Summary of Operations and
                                                              -j Comparative Statistics of Progress 196 9-1979

for the accounts of the several Underwriters to offer such put of the New Common Stock as the Representatives may determine to selected dealers (among whom any of the Underwriters may be included) at a concession of 63c per share and that the Underwriters and such dealers may reallow a concession of 20c per share to certain other dealers. After the initial public offering, the public offering price and concessions and discounts to dealers may be changed by the Representatives.- REGISTRATION STATEMENT i This Prospectus contains information concerning the Company and its New Common Stock, but does not contain all of the information set forth in the Registration Statement, and the exhibits relating thereto, which the Company has filed with the Securities and Exchange Com-mission, Washington, D.C., under the Securities Act of 1933, as amended, and to which reference is hereby made. 4 15

i l i 1 1 Southern California Edison Company gE 8,000,000 Shares Common Stock ($8% por s olue) PROSPECTUS Dean (Vitter Reynolds Inc. l Blyth Eastman Paine IVebber l Incorporated E. E Hutton & Company Inc. Merrill Lynch IVhite IVeld Capital Markets Group Merrilllynch, Pierce. Fenner & Smith incorporated l l

                        . January 22, 1981
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r7 Souttom Cahtornia Edison TABLE OF CONTENTS

                         -Table . Chart                                                                                                                Page 1                      SCE Funds Required for Construction Expenditures and Refundings . . . . . . . . . . . . . . . . . . . . . . .                                        1 2                      SCE Financings . . . . . . . . . . . . . . . . . . . . . .                                          2 3                      Price Indices.     . . . . . . . . . . . . . . . . . . . . . .                                      3 4                      Short-Term Money Rates . . . . . . . . . . . . . . . . . .                                          4 1          4-6 Month Commercial Paper and the GNP Implicit Price Deflator .  . . . . . . . . . . . . . . . . . . . . . . .                                       5 5'                     Long-Tern Bond Yields.           . . . . . . . . . . . . . . . . . .                                6 2A' ' Bond. Yields for Moody's Public Utilities .                                . . . . . . . .               7 2B         Bond Yields for > body's Aa Public Utilities Versus GNP

Implicit Price Deflator. . . . . . . . . . . . . . . . . 7 6 Preferred Stock Yields . . . . . . . . . . . . . . . . . . 8 3A Preferred Stock Yields for Moody's Pub'lic Utilities. . . . 9 3B . Moody's aa Public Utility' Preferred Stock Yields Versus E Aa Public. Utility Bond Yields. . . . . . . . . . . . . . 9 7 SCE'-Imbedded Cost of Debt and Preferred Stock. . . . . . .

                                                                ~

10 10 SCEjCapital Expenditure, Kilowatt-Hour and Kilowatt

                                                        . Demand Reductions.       . . . . . . . . . . . . . . . . . . .                                11 94A lSCE' Funds Required for Construction. . . . . . . . . . . .                                                 12 4B        SCE Kilowatt-Hour Sales. . . . . . . . . . . . . . . . . .
                                                            ~

13

                                       '4C       ' SCE Peak Demand.' . . .            . . . . . . . . . . . . . . . . . .                              .13 9                  .20 Largest Electric Utilities' Electric Plant, Kilowatt-Hour Sales , Employees , and Customer Growth . . . . . . .                                    -14 5A         Employees Per 10,000 Customers'.                    . . . . . . . . . . . . .                      15
                                       -5B      ' Electric Plant Per Customer. . . . . . . . . . . . . . . .                                            15 5C         Kilowatt'-Hour Sales Per Customer . . . . . . . . . . . . .                                        15 10-         .
                                                 Average Capital Ratio Comparisons. . . . . . . . . . . . .                                           16 61        Averagq Debt Ratios. .            . . . . . . . . . . . . . . . . . .                               17 11-                      Long-Term Debt and Preferred Stock Nominal Cost lComparisonJ.   . . . . . . . . . . . . . . . . . . . . . .                                      18
                          -12                      _ Bond l Price Change From Yield Differential As of June 30, 1979. . .       . . . . . . . . . . . . . . . . . . .                                 19
               .            13                      Preferred 6 Preference Price Change From Yield-Differential .     . . . . . . . . . . . . . . . . . . . . .                                   20 Dilution of SCE Stock From. Common Stock Issues .
                                                                  ~

1<4 ' . . . . . 21 7 Earnings Ratios for Selected l Aa 6 A. Utilities. . . . . . . 22

                   <        15                     _1978 Operating Characteristics of the .20 Largest Electric
..                                                       Utilities with Single A or Better Bond Rating.                               .. . . .          23'
                         -16'                       1978- Financial Characteristics _ of. the 20 Largest Electric Utilities. . .     . .. . . . . . . . . . . . . . . . . . . .                                  24
             ,           117E                   : Earnings :and _ Dividends per Share Comparisons . . . . . . .                                         25
           +              118                      Return on Average Common Equity. . . . . . . . . . . . . .                                           26
                          ,19                   -Year-End Common. Stock-Price Comparisons. . . . . . . . . .                                            27
                         -201                     , Year-End _ Earnings / Price Ratios . . . . . . . . . . . .. . .-                                   -28 V6                       ( 21 _                 -Year-End Price / Book Comparisons. . .. . . . . . . . . . .
                                                                                                                                                   .   ;29 12 2 .            .
                                                - SCE Price ~ Booki Adjusted Return-on Connon Equity. . . . . .                                        _30 9                                    8f    :SCE / Adjusted ~ Commod' Equity Cost .Versus Moody's At .

Public Utility' Bond Yields:. . . .,. . . .

                                                                                                                           . . . . . . . .              31-423                       SCE Earnings / Price Cost ofECapital .                       . . . . . . . ... . .                   32 D24                  -
                                                 .Weighted-Average Cost of1 Capital . .                         . . . .        .1 . .      . - . . . 33 j                  '8-2-79                 -

17 e m' -

  '.,a                                                                                                                                               i      ,
                                  ~' - '              .L._. s

Southern Calii0rrua Edtson TABLE 1 SCE FUNDS REQUIRED FOR CONSTRUCTION EXPENDITURES AND REFUNDINGS Funds Required (Millions) Line Const ruct ion bu111ons Percent No. Year Refundings Expenditures Total Inte rnal External Internal Exte rnal (1) (2) (3) (4) (5) (6) (7) (8) A. Recorded Period

1. 1974 $ -- $ 320.7 $ 320.7 , 140.2 $ 180.5 43.7% 56.3%

2. 1973 -- 381.1 381.1 52.8 328.3 13.8 86.2

3. 1976 80.8 500.3 581.1 344.9 236.2 59.1 40.6

4. 1977 -- 500.3 500.3 55.2 445.1 11.0 89.0

5. 1978 35.5 567.8 603.3 410.4 192.9 68.0 32.0

6. Total $116.3 $2,270.2 $2,386.5 $1,003.5 $1,383.0 -- --

7 Average 23.3 454.0 477.3 200.7 276.6 39.2% 60. 8'e

8. Percent 4.9% 95.1% 1.00.0% 42.0% 58.0*6 -- --

B. Forecast Period Without Rate Relief 1979 $ 33.8 $ 695.2 $ 729.0 $ 50.6 $ 678.4 6.9% 93.1%

10. 1980 84.6 670.2 754.8 22.8 732.0 3.0 97.0

11. 1981 143.7 516.2 659.9 63.2 596.7 9.6 90.4

12. ~1982 121.0 478.2 599.2 145.6 453.6 24.3 75.7

13. 1983 53.2 581.7 634.9 157.7 477.2 24.8 75.2

14. Total $436.3 $2,941.5 $3,377.8 5 439.9 $2,937.9 -- --

15. Ave rage 87.3 588.3 675.6 88.0 587.6 13. 7'. 86. 3'.

16. Percent 12.9% 87.1% 100.0% 13.0% 8 7 . 0 *. -- --

  . C. Forecast Period With Rate Relief

17. 1979 $ 33.8 $ 695.2 $ 729.0 $ 50.6 $ 678.4 6.9% 93.1%

18, 1980 84.6 670.2 754.8 22.8 732.0 3.0 97.0

19. 1981 143.7 516.2 659.9 263.8 396.1 40.0 60.0

20. 1982 121.0 478.2 599.2 257.4 341.8 43.0 57.0

21. 1983 53.2 581.7 634.9 412.5 222.4 65.9 35.0

22. Total $436.3 $2,941.5 $3,377.8 $1,007.1 $2,370.7 -- --

23. Average 87.3 588.3 673.6 201.5 474.1 31.6% 68.4's

24. Percent 12. 9 *. 87.1% 100.0** 29.8% 70.2% -- --

Sources: Annual P. ports Plant Construction Budget and Forecast, Second Quarter,1979 8-24-79 1

r~ 1 Southem CaMomia E& son TABLE 2 SCE FINANCINGS (Millions) i Long-Term Long-Term P referred Short-Term Total ! Line Common Stock Subtotal Investment Borrowings Change Financings l~ No. Yar _ Debt Stock (6) (7) (8) (9) ! (1) (2) (3) (4) (5)

                           . A. .. Recorded Period'
                     .l        1973             -$':--           $     --           $---        .    $ --           $ --           $ 92.5    $ --         $ --
                     ' 2. '1974'                      ~222.5        50.0                 67.2               339.7       66.7          --

(159.2) 180.5

3. -1975-- 161.6 50.0 -- 211.6 -- 50.0 116.7 328.3

[' i

                     . 4 .- 1976:                      126.3                          123.9                 250.2       --            36.0      (14.0)        236.2
                     ~5.       1977: .               '200.0         .-I3                 43.3I *I           345.7       , . -       135.4         99.4        445,1

6. 1978 200.0 ~ fl02.4 (14.5) *l*}' 203.3 *I I 388.8 80.5 20.0 (195.9) 192.9

                    - 7.       Total
                                                .$     910.4 '$187.9                $437.7           $1,536.0           --            --     $(153.0) $1,383.0

8. Average 182.1 37.6- 87.5 307.2 -- --

(30.6) 276.6

                     ~9.       Percent                   65.8%       13.6%               31.7%              111.1%      --            --

(11.1)% 100,0% B. : Forecast Period Without Rate Relief

                   .10.        1979               $ 305.0 .$115.5 D)                $ 56.3           $ 476.8            --         $14a 1    $ 201.6      $ 678.4
                   - 11.       1980                    400.0-        63.0           .231.0                  694.0        --          179.1        38.0        732.0

12. 1981- .300.0 63.0 220.8 583.8 --- 192.0 12.9 596.7

                   .13.(1982                          ~300.0 ~       45.1(b) .155.0                         500.1        --          145.5       (46.5)       453.6 L-
                  .14.         1983'                  -300.0         50.0           -120.0              -.470.0
                                                                                                                         --        '152.7-          7.2       477.2

15. Total, -$1,605.0 $336.6- $783.1 $2,724.7 -- --

                                                                                                                                             $ 213.2       $2,937.9

16. . Average 321.0 ' 67.3 156.6 . 545.0 -- -.' 42.6 587.6

                   -17,        Percent --                54.6%--11.5%.                   26.6%                92.7%   - - -            --           7.3%       100.0%

JC. ~ Forecast Period With Rate Relief b) $ 201.6 $ 678.4

                                                                     $115.5((b); 231.0 3 476.8 s18. .1979'                                                           ,56.3                            --       '$141.1 419.       1980

$ 1305.0 400.0 . 63.0 694.0- ~-- 179.1 38.0 732.0

20. 1981 300.0 63.0(b) 80.5 .443.5 ~-- 132.5 .(47.4) 396.1 21, 1982. 300.0 45.1(b}.' 85.3 -430.4 - - - - 43.9 (88.6) 341.8

22. 1983 - 2250.0- 50.0 94.3 394.3- $128.0- --

(171.9) 222.4 s234 . Total .$1,555.0 $336.6- .3547.4- $2,439.0 . - , -- $ (68.3) $2,370.7

                   .-24. ; Average                  ' 311.0        - 67. 3 .         -109.5                 487.8 -      --             --

(13.7) 474.1

                   -25. -Percent,                      ;65.6%: ' 14.2% -                 23.1%              102.9%;      --             --
                                                                                                                                                   -(2.9)%     100.0%

r .:

                                      -lConvertible preference stock was. converted to comon stock; $19.6 million in
                                                                                      ~

c1977,-and $14.5 million in 1978.

                                                                                              ~
                                      - Conve. die preference ' stock . is projected to be converted .to comon stock -
                                          -through.19821 $12 million in 1979,1980, .and 1981; and $4.9 million in 1982.

Source; ' $1 nan'cla15 8 Statistical Report', t1978

                                                  . Financial Simulation,: July 1979 5

4,y -

         .i L'

f

y. 24-791 . <

j_ s au ~, D 4

Southern Cahtornra Edison TABLE 3 PRICE INDICES GNP Implicit Consumer Price Price Index Producer Line De flat or Pe rcent United States Percent Price Index Percent No. Year (1969 = 100) Change (1969 = 100) Change (1969 = 100) Cl.ange_ (1) (2) (3) (4) (5) (6) (7)

1. 1969 100.00 --

100.00 -- 100.00 --

2. 1970 10'.35 5.35% 105.92 5.92t 103.66 3. 6b *.

3. 1971 '40.72 5.10 110.47 1.30 106.95 3.17 4 1972 115.31 4.15 114.12 3.30 111.83 4.56

5. 1973 122.00 5.80 121.22 6.22 126.48 13.10

6. 1974 133.79 9.6' 154.52 10.97 150.33 18.06

7. 1975 146.62 9.59 146.81 9.14 164.23 9 20

8. 1976 154.24 5.20 155.28 5.77 171.83 4.63

9. 1977 163.30 5.87 165.30 6.45 182.33 6.12

10. 1973 175.33 7.40 177.87(a) 7.60 196.53 7.73 Average Annual Trend Rtte(b)

11. 1969-1978 6.63*. 6.80% 8.68%

12. 1969-1973 5.00 4.70 5.61

13. 1974-197S h.71 7.01 b.6' (a)

           @) CPI revised in 1978; hence not directly co:tparable to prior years.

Exponeratial Curve Fit (y = aebx) Sources: Col. 2, lines 1-!0: Survey of Current Business Cols. 4 and 6, lines 1-10: Monthly Labor Review, Bureau of

1. abor Statistics 8-2-79 3

                           . . .        . -                             -      . -         -        . .                  -                       . = . . - -                   .-               .~. . .        . .   -,

p Souttom Califortua Edism TABLE 4 SHORT-TERM MONEY RATES (") ' Commercial Banker's Treasury ,

                           .Line Paper               Acceptance                                   Bills                                  !

No. Year Prime 4-6 Months 90 Day 90 Day (1) (2) (3) (4) (5)

                                  '1'.                 1969                        7. 96't                        7.83%                      7.61%                                 6.67%

2. 1970 7.91 7.72 7.31 6.39

3. 1971 5.72 5.11 4.85 4.33

4. 1972 5.25 4.69 4.47 4.07 8.03 7.03 15 ~. 1973 8.15 8.08

16. 1974 10.81 9.87 9.92 7.84

17. 1975 7.86 6.33 6.30 5.80

8. 1976 6.84 5.35 5.19 4.98

9. 1977 6.83 5.60 5.59 5.27

10. 1978 9.06 7.99 8.11 7.19 i ~

                                '11.                 Average.                      7.63%                          6.86%                      6.74%                                  5.96%

197E Monthly

12.- January 7.93% 6~79%

                                                                                                                     .                       6.86%                                 6.44%

13. February 8.00 -

6.60 6.82 6.45

14. March 8.00 6.80 6.79 6.29

,                                 15.                April-                        8.00                           6.86                       6.92                                   6,29                                  *
                               '16.                -May                          '8.27                            7.11                       7.32                                   6.41                                  -

17. - June 8.63. 7.63. 7.75 6.75

18. - July' 9.00' 7.91 8.02 7.01

19. . August 9.01 "7.90 7.98 7.08'

20. September 9.41; 8.44 8.54 7.85

                              -21.                - October                        9.94                           9.03                       9.32                                   7.99

22. -November 10.94 10.23- - 10.53 t.64 123. ' December' 11.55 10.~43 10.55 9.68

                                                                                                           ' 1979' Monthly

. 24.- 1Jan'uary ~ '11.75% '10.32% 10.29% 9.35%

                                                                                                                                                                                 -9.32
          ~
                               . 25. '      4
                                                  ; February                   '11.75'                         10.01                       - 10.01

26. - March' 11.75- - 19 . 9 6 - 9.94 9.48 12 7 . . April' 11.75 - 9.87 9.90 9.46-

28. May- - 11.75. -9.98 9.98 9.61

29. fJune

_ 11.65f 9.71 9.79 9.06 2

                                                *) Average 1 Yields.
                                            -Sourcesi FederalfReserve Bulletins an'd Federal Reserve Statistical-
        *                                                       ' Release G-13

..y.. .- ~ .--

c - i8-2 '4 9 FT ' M M -g--V -.g'g g g ww,g. $- nT- e, -- w a 9 y beypg m 't 9 6yg n g+g- e.y (.. g py 9,49g m 9,, y, -,p iyy,y y 9 - 7- y

4oE E,3 $ E h = u8 m . Iy2i - - 8 7

                                                         -   ,                                              9
                                                               /

- 1 7 7

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                                                                                                         .9

- E IL / 1 M P MM /, O I P / C N ' H R j G O E . P 2 T A L A 8 / 7 9 1 L _ F E A t

                                                                                              ,N D

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E C R E P o o'NI D n e w

Southern CaMortua Edison TABLE 5 LONG-TERM BOND YIELDS Moody's Public Utilities (*) U.S. Government Difference Long-term Line Yields from Aa Difference No. Year Aa A Baa A Ba T Yield From Aa (1) (2) (3) (4) (5) (u) (7) (8)

1. 1969 7.34% 7. 5 4*. 7.93% 0.20% 0.59% b.33% (1.01)%

2. 1970 8.52 8.69 9.18 0.17 0.o6 6.86 (1.66)

3. 1971 8.00 8.16 8.63 0.16 0.63 C.12 (1.88)

4. 1972 7.60 7.72 8.17 0.12 0.57 6.01 (1.59)

                 ' 5.          1973                  7.72     7.84      8.17             0.12      0.45     7.12        (0.60)

6. 1974 '9.04' 9.59 9.84 0.46 0.80 8.05 (0.99)

7. 1975 9.44 10 ,8 10.96 0.65 1.52 8.19 (1.25)

                  .8.          1976                  8.97        .29    9.82             0.37      0.90'    7.86        (1.06)
                 -9.          -1977                  8 . 4.3  8.61      9.06             0.18      0.63     7.67        (0.76)

10. 1978 9.40 9.29 9.62 0.19 0.52 8.48 (0.62)

11. - Average. 8.41% 8.67% 9.14% 0.26% 0.735 7.27% (1.14)%

1978 Monthly )

                -12.       January                   8.76C.8.92% 9.27% 0.16% 0.51% 8.14%                                (0.62)%.

13. February 8.79 8.97 9.29 0.18 0.50 8.22 (0. 57)

14. ' March 8.79 8.98 9.37 0.19 0.58 8.21 (0.58)

15. . April .8.86 9,09. :9.54 0.23 0.68 8.32 (0.54)

16. May. 9.02 =9.22' 9.70. '0.20 0.68 8.44 (0.58)

17. ' June 9.19- 9.40 9.78- 0.21 0.,59 8.53 (0.66)

                '18. ! July 9.26     9.51-     9.73. 0.25;                0.47-    8.60        (0.57)
                '19. ' August'.
                                                                ~

9.11 9.32 9.53 0.21 0.42 8.45 (0.66)

20. -- September 9.09 9.28' 9.47 0.19 0.38 8.47 (0.62)

21. October -9.28 9.46 9.69 0.18 0.41 8.69 (0.59)

22. November 9.46 9.68 9.99- 0.22 0.53 8.75 (0.71)

23. . December . 9.56 . 9.70. 10.08 0.14 0.52 8.90 (0.66)

                                                                       -1979 Monthly
               ,24. . January 9.70%' 9.90% 10.29% .0.20% 0.59% 8.98%        .

(0.72)%

25. JFebruaryl 9.74. -9.84 .10.27 0.10- 0.53 9.03 (0.71).

               .26.        March                   9.89 10.04 10.53- 0.15                          0.64    -9.08       L(0.81)
               '27. April '.                .9.92 .10.10'_10.56- 0.18 0.64 9.12                                         (O.80).
               '28. =May                    10.19 10.30 10.70                            0.11 -0.51         9.21        (0.98)

29. June: 9.95 10.14 '10.56'- 0.19 0.42 8.91 (1.04)

(*) Seasoned issue ~ average '

                        -Sources: Moody's Public' Utility' Manual, 1978 Land M sdy's Bond Survey
                                 -  Feder'l              a Reserve Bulletin and-Press' Release G-13 8L2179i-                                                                 6 '.

4 . ?l - .

                                     - _____- -____.                     . - . _ _            .-    --_:_.____ -___ . . . _      - _  . - __ - A

Southem Califomsa Edison CHART 2 2A BOND YlELDS FOR MOODY 15 PUBLIC UTILITIES PERCENT

                   "~

x. ,/ .,,

                                -.a                                                   j          .

20- ....... / ,.s .

                                                                                   /             s.

9 ,.*..,

                                                                            *j
                                                                                                               . .,/. .s* . . . . . . .

l v

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• g **..,
• f .l

                                /*

• 8-f,/ s
• w .,.-

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7

                         /./
                       /

6-

                     .T 1969      1970     1971     1972       1973         1974     1975         1976     1977      1978 BOND YlELDS FOR MOODY'S Aa PUBLIC UTILITIES 20 VERSUS GNP IMPLICIT PRICE DEFLATOR MOODY'S A.PUBLIC UTILITIES
                              =*=*          GNP IMPLICIT PRICE oEFLATOR 10'
                                                                                    *=.

9 \ 8-

                                                                              /               \.
                                                                           /                    \.                          .

1 *

                                                                                                   \.                    ./
                                                                        ./                                             /

6 / \. *j

                                                                   /                                  \ ,/

s. ,. s

                       ..'.s.~.~~.N.V 4; ,

1969 1970 1971 1572 1973 1974 1975 1976 1977 1978 8-2-79 7

Southem Cattfornia Edison TABLE 6 PREFERRLD STOCK YIELDS Di f fe rence Line Moody's Rating r aa No. Quarter aa a baa a baa (1) (2) (3) (4) (5) (6) 1975

1. September 9.64% 10.72% 11.11% 1. 0 8*. 1.47%

2. Decembe r 9.33 10.25 10.67 0.92 1.34 i 1976

3. March 8. 9 2 ** 9. 5 2*e 9. 73*e 0.60*5 0. 81 *.

4. June 8.92 9.46 9.79 0.54 0.87

5. September 8.58 9.04 9.45 0.46 0.87

6. December 8.28 8.80 9.15 0.52 0.87 1977

7. March 8.218 8.75% 9.01% 0.58'5 0. 80'.

8. June 8.03 8.47 8.92 0.44 0.89

9. September 7.95 8.32 8.87 0.37 0.92

10. December 8.14 8.59 9.03 0.45 0.89 1976 - Monthly l

11. January 8.31% 8. 70*. 9 .17 *. 0.39's 0.86*6

12. Februa ry 8.38 8.74 9.17 0.36 0.79

13. March 8.35 8.79 9.34 0.44 0.99 14 Ap ril 8.51 8.88 9.34 0.37 0.83

15. May 8.61 9.07 9.54 0.46 0.93

16. June 8.84 9.39 9.81 0.55 0.97

17. July 8.80 9.33 3.76 0.53 0.96

18. August 8.56 8.97 9.54 0.41 0.98

19. September 8,43 8.82 9.62 0.39 1.19

20. October 8.61 9.07 9.66 0.46 1.05

21. November 8.75 9.27 9.89 0.52 1.14

22. Decembe r 8.94 9.65 10.4S 0.71 1.54 1979 - Monthly

23. January 9.05% 9.61% 10.42*. U . . i '- 1. 37*.

24. February 9.11 9.66 10.37 0.55 1.26

25. March 9.10 9.63 10.33 0.53 1.23 26 April 9.15 9.71 10.43 0.56 1.26

27. May 9.21 9.91 10.82 0.70 1.61

28. J une 9.03 9.55 10.49 0.52 1.46 Sources: Moody's Public Utility Manual Moody's Bond Record 8-8-79 8

Southern Colstorrus Edison CHART 3 3A PREFERRED STOCK YlELDS FOR MOODY'S PUBLIC UTILITIES 10.5 - /

                                  ...... m                                                                        /
                                  ..- .                                                                      /
                                       - m                                                                /

to

                                                                                                       /
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g ne i t I i e l I l l 12n6 3/77 6n7 9/77 12n? 3n8 6n8 9n8 12n8 3/79 Gng 3B MOODY'S sa PUBLIC UTILITY PREFERRED STOCK YlELDS VERSUS As PUBLIC UTILITY BOND YlELDS to -

                                   **..**. PREF E RRED STOCK 9.5                        BOND 9                                              g                                          ,/

4 /

                          's                                                        .*   8 8..,,.*'

5 '** .*., ,.'.*. 8., O.g ,* O., ,* 8.,* s *..,.**,.'

                        -                        \

T I I  % I e i 1 e 1 1 1 12ns 3n7 6n7 907 12n7 3n8 Sn8 9/78 12/78 3/79 8/79 8-2-79 9

     ~
       ,.,- ..         <. -         _         .             a.w -           - - - -          -. --         --

m g 3 7 SCE IMBEDDED COST D 7 0F U DEBT AND PREFERRED STOCK { 2 Long-Term Debt Preferred and Preference Stock Line Proceeds Annual Cost Effective Proceeds Annual Dividends Effective Year (000) Rate (000) (000) Rate No. (000) (1) (2) (3) (4) (5) (6) (7) $ A. Recorded Period

                                      $1,932,960    $114,145        5.91%       $553,506           $37,151       6.71%

1. 1974 2,088,218 128,030 6.13 602,106 41,751 6.93 2 1975 2,130,512 136,899 6.43- 602,106 41,751 6.93

3. 1976 7.10

4. 1977: 2,328,243 152,795 6.56 704,431 49,985 2,490,007 -171,067 6.87 690,257 49,230 7.13 0 5. 1978 2,592,695 181,394 7.00 735,622 53,423 7.26

                  .6. '1979 (June)

R- Forecast Period (8) t

                  ' 7. 1979          $2,757,186     $204,003       7.40%       $805,062           $59,879       7.40%

3 068,058 '240,432 7.84 867,675 66,080 7.62

8. 1980 -

3,224,270 258,822 8.03 930,288 72,581 7.80

                   -9. 1981 7.90 3.401,248       282,449      8.30          975,060           77,076
                 .10. 1982-
                                                                                                                       -4 as (a) Financings per Tabic 2

y, o . . + . .

                                                                         .           -e       ,        -.                ., ._                                   -__ _ .      -    . - - _ _ .      - - - - ~ - - _, _

o , - b%' {

          )                                                                               ,

L

              ~?

g

                                                                ,                                               S0tTIllERN CALIFORNIA EDISON CAPITAL EXPENDITURE " KILOWArr-Il0UR f

3 g

                         .                                               ,                  ,                  AND KILOWATT DEMAND REDUCTIONS                                                                          Q t esa G

1. ~

                                                                                                                                                             . .                                                       t g
                                                                                -Construction Expenditures                               Kilowatt-llour Sales (*I                 Kilowatt Demand (b) 1974             1979                              1974           1979                        1974             1979 Line                                   Forecast        Forecast ~ Di fference         Forecast            Forecast    Difference - Forecast Forecast Difference                    S'*

,4-

      ^                      '
                                    'No.                   Year       .(millions) :(millions) -(2 - 3)_ (millions) '(millions)                             (5 - 6)          (MW)             (MW)         (8 - 9)
                                                           ~ (1) .g
                                                                  -         _(2)'             (3)           (4)                '{5)             (b)-           (7)          (8)             (9)              (10) iI                                                                                                                                                                                          12,130(d) 1,280
                                                                       ^

13,410

                                                                             ~

1.. .1'979 $1,132.0- $- 695.2 $ "436.8 64,01'4 59,182' 4,467 l~ 2. 1980 s1,077.0 670.2- 406.8 68,362 61,435 7,071 14.080 12,400 1,680 l

                                      .' 3                 1981.               947.0            516.2        430.8-          73,006           :63,165       9,909          14,780          12,870          1,910 4 .'           1982                980.0            478.2        501.8         -77,936             65,525      12,411          15,520          13,350          2,170
                                      - 5 .-              '1983-              -892.0          l581.7-         310.3          83,319-           67,433      15,886          16,300          13,860          2,440 Total                                                         Annual Trend Rate (C)
                >a                        .           .             .
                                            .6 .    .1979-1983~ '$5,028.0                 -$2,941.5       $2,086.5              6.80%           3.31%                       5.00%            3.46%

s i-(*) Total' Edison System j ) Main System Edison Net Annual Peak Demand Exponential Trend Rate (y = aebx) d Recorded peak demand of 12,221 MW on June 12, 1979, exceeded the 1979 forecast.

                                                        -If recorded were used, the annual . trend rate would be 3.31.

!- Sources: ' Annual Reports Column 2: Electric System Planning, " Financial Alternatives Study", November 12, 1973. Column 3: Plant Construction Budget and Forecast, Second Quarter, 1979. Columns 5 and 8: Electric System Planning, " System Forecast 1974-2000", q { March 1974. > Column 6: Electric System Planning, Short Run Forecast found in y Chapter 7, Table 7A of "Results of Operation". m Columns 6.and 9: Electric System Planning, " System Forecasts 1978-2000", December 1978 Update. oo

Southern Catoforrua Edison CHART 4 Sheet 1 of 2 SOUTHERN CALIFORNIA EDISON COMPANY FUNDS REQUIRED FOR CONSTRUCTION

      .Wi! ions of Dollars O June,1979 Construction Forecast 1,200
                                                                     @ November,1973 Construction Forecast 1132
                   ,                       1077
                               /

4 ' 1 1,000- '  ; 980

                                                 >           947             c
                                                                             ,            /          892 f
                                                          .        i         4         i                    <   ,,

yg k q ,

                     .       .          h                y           -

3 695 . k 4 , , 670 W

                                                         ?            i        's
                                                                                                  ~

4 b 600- ' 6 /  ! , 22 g 516 . k b) 478 k,)

                               '4'               2                 f:                     B                   :
          .0 -                 !g                j.                p                      u
                               &;9               0 C               lA                     N N                $'

2 4 r1 9 w n 9 D / 'l (2 h h Ek '1

                                                                                                            /

m- u .- [*' gl x

                               ..)

f ] > r. Z 3 0 k f i#d k h 1981

                                                                                    -1982 k

1983 {N 1979 1980 8-2-79 12 I

Soumern CaMortua Esson CHART 4 Sheet 2 of 2 SOUTHERN CALIFORNI A EDtSON KILOWATT HOUR SALES (BILLIONS) 4B RECORDEO

                                        -e==       1914 F GHEC AST                                                          ,

80 ******** 1919 FORECAST ,/

                                                                                                                   /
                        ?$.

10' . l

                                                                                               /

65

                                                                                                                    .****,e e
                                                                                          /

so. ./ ....=**..e,,. 55 ,,.*** 50 ' e5< 43 h5 1969 1971 1973 1975 1977 1979 1981 1983 4C SOUTHERN CALIFORNI A EDISON PEAK DEMAND (GtGAWATTS) 17< RECORDED

                                                                                                                          /

16< = = = . 1974 FCnECAST

                                     ........ 1979 FORECAST

• 15- j e

                                                                                                 /

e4 f .* e **,.

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7'

                              .1969      1571       1973       1975       1577         1979         1983               1983 8-2 79,                                                        13
 .s

e 20 LARGEST ELECTRIC ITTILITIES' ELECIRIC PILT, k y KILOWATT-110UR SALES, EMPLOYEES. AND Cl!STOMER GR0h'Til g 00 3 g, Avera ge p c Average El ec t ric Electric Plant (3) Kilcwatt-liaur Sales Average Cus t ome rs(a) R (millions) (millions) Total Employees (b) (thousands) $ Line So Calif. 20 Largest So. Cali f. 20 Largest So. Calif. 20 Largest So. Ca li f. 20 Largest p No. Year Edison Electrics Edison Ele ct ri cs Edison Electrics Edison E le ct ri cs a s!) (2) (3) (4) (5) (6) (7) (8) (9) 3

1. 1969 $3,321.8 $1,011.1 42,602 14,692 11,603 4,566 2,357 653

2. 1970 3,596.4 1,136.7 45,881 15,831 12,249 4,782 2,411 669

3. 1971 3,864.8 1,283.3 48,856 16,872 12,687 4,962 2,468 687 g

4. 1972 4,114.1 1,446.9 52,310 18,396 13,106 5,138 2,532 708 sus

5. 1973 4,390.1 1,630.0 54,093 20,166 13,711 5,361 2,596 732

6. 1974 4,659.1 1,838.1 51,090 20,264 13,598 5,484 2,659 752

7. 1975 4,963.8 2,061.8 51,328 20,808 13,452 5,468 2,721 768

8. 1976 5,414.0 2,306.8 53,685 22,024 12,971 5,554 2,782 784

9. 1977 5,938.5 2,580.9 57,726 23,378 13,182 5,717 2,858 504

10. 1978 6,516.2 2,896.0 57,027 24,575 13,476 6,007 2,944 827

• Indicated Trends (1969 = 100)

11. 1969 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

12. 1970 108.3 112.4 107,7 107.8 105.6 104.7 102.3 102.5

13. 1971 116.3 126.9 114.7 114.8 109.3 108.7 104.7 105.2 14 1972 123.9 143.1 122.8 125.2 113.0 112.5 107.4 108.5

15. 1973 132.2 161.2 127.0 137.3 118.2 117.4 110.2 112.2

16. 1974 140.3 181.8 119.9 137.9 117.2 120.1 112.8 115.2

17. 1975 149.4 203.9 120.5 141.6 115.9 119.8 115.4  !!7.6

18. 1976 163.0 228.1 126.0 149.9 111.8 121.6 118.0 120.0

19. 1977 178.8 255.3 135.5 159.1 113.6 125.2 121.2 123.1

20. 1978 196.2 286.4 133.9 167.3 116.1 131.6 124.9 126.6 Average Annual Trend Rates (C}

21. 1969-1978 7.47% 12.43*6 2.821 5.65% 1.241 2.76% 2 . 4 7 *, 2.661

22. 1969-1973 7.17 12.71 6.28 8.15 4.10 4.01 2.45 2.90

23. 1974-1978 8.87 12.00 3.43 '.15 (.38) 2.29 2.56 2.38

                                                                                                                                       -4 (a) Year-end average                                                                                                         C2 (b) 12-month average                                                                                                         F1 (c) Exponential Curve I:it (y = aebx)

Source: Unifom Statistical Reports

Y 4 Southem Calotoma Edison CHA7.T 5 EMPLOY E ES PE R 10,000 CUSTOME RS 5A

a. ,.a.. - - - . . _ **"_._~..._. . . . a.: :. ,.~.

                                                                      ,,,*,.3.                                                                                                               . _ . . .
                                                                ,9 es
                                                                              - SE f 20 Lancist titCt#ICS 64             * = .13 ao EtICTe.CS g4 w.

e 1: ... T 1 .... ,,n an un an ,,,. a,, >. nn ,,,, J ELECTRIC PLANT PER CUSTOMER 58

                                                           *%                                                                                                                               * *.# +.

g[' .# 4 %e .. %ll,:;;c,,,,

                                                                                                                                                                                        *".s snee.                                                                                                                  ** *s
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                                                           '%ee s'F-sus       sie      sin s                  sin . ns,s       sis.                             se,s        sin    sen      se,s 2
                              %-                                                 ' KILOWATT HOUR SALES l000) PE R CUSTOME R                                                                    SC p'.W 4-sa
                                                                                . - sCe 3,
                                                              ,,,                ~ -zo tamorse siscraes                                                                          g ~.p.U8'#p
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8-23-79 15-

                                                                                                              +

i M.

e m AVERACE CAPITAL. RATIO COMPARISONS k la k= Q$ Percent Debt I") Percent Preferred Percent Common D 20 La rgest Electrics 20 Largest Electrics 20 jy Largest Elect rics ia* Line So, Calif. Total So. Ca ll f. Total So. Cali f. Total No. Year _ Edison Aa Only Group Edison Aa Only Group Edison Aa Only Group _ (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) g

1. 1969 53.84% 52.26% 52.82% 10.31% 9.97% 9.81% 35.85% 38.6C% 37.87%

2. 1970 53.80 53.78 54.28 11.14 9.95 9.94 35.06 37.10 36.28

3. 1971 52.83 54.37 54.77 11.87 9.63 9.83 35.30 36.00 35.40

4. 1972 52.43 53.95 54.20 12.13 10.47 10.76 35.44 35.58 35.04 (!

5. 1973 50.94 52.89 53.23 13.76 10.97 11.50 35.30 36.13 35.27

6. 1974 49.93 53.27 5 3. 72 14.61 11.25 11.81 35.46 35.48 14.47

7. 1975 50.65 53.63 53.96 14.66 11.88 12.34 34.69 34.49 33.71

8. 1976 49.85 52.59 53.09 14.35 12.47 12.71 35.80 3J.94 34.21

9. 1977 48.65 51.96 52.38 14.38 12.35 12.51 36.98 35.70 35.12

10. 1978 48.11 51.18 51.44 14.02 12.80 12.71 37.87 36.09 35.89 Averages

11. 1969-1978 51.10% 52.99% 53.39% 13.12% 11.17*. 11.39% 35.78% 36.91% 35.33%

12. 1969-1973 52.77 53.45 53.86 11.84 10.20 10.37 35.39 36.68 35.97

13. 1974-1978 49.44 52.53 52.92 14.40 12.15 12.42 36.16 35.34 34.68 Indir,ated Trends (1969 = 100)

14. 1969 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

15. 1970 99.9 102.9 102.8 108.1 99.8 101.3 97.8 96.1 95.8

16. 1971 98.1 104.0 103.7 115.1 96.6 100.2 98.5 93.3 93.5

17. 1972 97.4 103.2 102.6 117.7 105.0 109.7 98.9 92.2 92.5

18. 1973 94.6 101.2 100.8 133.5 110.0 117.2 98.5 93.6 93.1

19. 1974 92.7 101.9 101.7 141.7 112.8 120.4 98.9 91.9 91.0

20. 1975 94.1 102.6 102.2 142.2  !!9.2 125.8 96.8 89.4 89.0

21. 1976 92.6 100.6 100.5 139.2 125.1 129.6 99.9 90.5 90.3

22. 1977 90.4 99.4 99.2 139.5 123.9 127.5 103.2 92.5 92.7

23. 1978 89.4 97.9 97.4 136.0 128.4 129.6 105.6 93.5 91.8 g

(") Debt includes debt maturing within one year and excludes net unamort i zed discount s and premiums. $ m Sources: Annual Reports G Statistical Supplements -. Moody's Public Utility Manual

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                                                                              ,             ' IMG-TERM DEBT- AND PREFERRED STOCK .

NOMINAL COST CO6FARIS0N' {g m j Cost Difference

                                                                                     -Nominal Cost                                        Long-Term Debt          Preferred Stock
                                                             .Long-Tern Debt-                              Preferred Stock                   (bLt Manus                 (dLL Minus l                             Linet .                      . 20 Largest Electrics                        20 Largest Electrics ~ 20 Largest Electrics) 20 Largest Electrics)

No.' Year .SCE .Aa unly, Total Group. SCE Aa Only Total Group lAa Only Total Group Aa Only Total Group l(1), _(2)- .(3)- (4)- (5): (6) (7) (8) (9) (10) (12)

           +

1. 1969. 5.065- ~5.684 5.64 5 ' 3.604- 4. 67 5. t 4.47% (.62) (.58) (1.07) (.87)

2. :1970 5.24 5.81 5.90: 4.79 4.63 4.69 (.57) (.66) .16 .10

3. 1971 5.27- 5.42 ' 5.59 : 5.06 5.69 5.72 '(.15) (.32) (.63) (.66)

(g .4 1972 5.42 5.59 -5.76' 5.49- 5.70' 5.96 (.17) (.34) (.21) (.47)

5. 1973 5.51. 5.60 5.85 6.52 6.08' 6.26 (.09) (.34) .44 .26 6.- 1974 "5.85 6.05 6.37- - 6.59 - 6.54 6.71- (.20) (.52) 05 (.12) l

                              .7. -1975               6.04'        6. 50 '-        6.75'         6.93        7.12          7.24-       (.46)         (.71)        ( 19)        (.31)
  ~
                              .' b. '197'6 1 6.34--

7.01 7.11 6.93 7.59 '7.54 (.67) (.77) (.66) (.61)

19. 1977 6.46' ;7.17 7.25 7.13 7.62 7.60 (.71) (.79) ( .49) (.47) 10.' 1978 6.76- 7.19 -7.32 7.17- 7.63 7.63 (.43) (.56) (.46) ( . 4 6)

Sources: Uniform Statistical Reports', 1971-1978-Moody's Public Utility Manuals ~ 1969-1971 q tn i p ~ m N

                                                                                                                 --     y        rp          -y<                                r -      -w     m + ---

Southem CaMome Edison TABLE 12 B. AD I R 10 OIANC1' F1.M 1if I U 0!!!! H NT I SL

                                                   -.        - " ' *f  W* b.? ' I?k l

Years Frice Change lane Series to f acid-to. Mat uritLpe rjha re ,rer 3h,4re 3 Ronds Total ( u g , ,

                                                                             !!F                      Nt st AIdl Pg        9. I ' ?,

No. 50. Ca l t f . f d i son Nrd s Mat uri ty Q 101 9-10. 10-11, l ' : . l l 's (1) (2) (33 (41 f5) toa i) is! i9) ito)

3. G 3 5/8% 2.0 $ 903.59 $486.97 1870.75 16 62 It. 22 40,000 5 654,800 $

( 4 * . 8 m'

2. H 4 1/4 2.5 895.74 8'5.53 855.68 20.21 19.*5 37,500

                                                                                                                                >    6'S       '36,8',

3.0 890.40 666.76 841.69 23.h4 22.8? 94 5,e>f o 914,

• o <

3. 1 4 3/4 4 a . ct =)

4 J 4 7/8 3. 0 893.62 869.94 e47.01 23.68 22.93 40,000 9 8 7 . .'"o 91' 10 855.71 826. 50 795.09 29.41 2R.21 50,0 9 1.4'0,5 00 1,410,5

5. k 4 5/8 4.0 1,051,000 6, 1. 5 5.5 829.42 792.34 757 2. 37.08 35.12 30,000 1.112,400 7, M 4 3/s 6.0 789.13 750.72 714.51 38.41 16.21 60,0e0 2,3u4.t"0 2,17 2,6* n 782.14 741.68 703.64 40.40 3 ? . fr9 30,000 1,213,800 1,139,7J0

8.  % 4 1/2 6.5 741.94 701.58 o61.21 J 1. it- 40.35 40,000 1.'34,800 1 el4,000

9. 0 4 1/4 7.5 2,12',5'0

10. P 4 1/4 8.5 721.95 6?5.87 613.*2 46.08 42.55 50,000 2 . 30 4 ,0f u) 4 3/R 9.0 718.80 671.23 62'.47 47.57 43.76 60,000 2, e 5 4,2em 2,n;5,eco

11. Q

12. R 4 3/8 9.! 70s.?8 thv.10 615.50 48.68 44.60 60,000 2,929,Ac0 2,nT6,000

13. 5 4 1/2 10.5 698.39 647.42 601.05 50.97 46.3? 60,000 3.358,200 2,782.200

14. T 5 1/4 12.0 '28.21 672 28 621.83 55.93 $0.39 75,000 4,194,7S0 1,*79,250

15. U 6 t/8 12.0 791.61 732.65 679.45 58.99 53.22 80,000 4,718,430 4,257,eoc

16. V 5 7/8 13.0 763.33 703.51 649.90 59.82 51.o1 80,000 4,'P 5,t,00 4.28R,600 6 3/8 13.5 79?.20 714.60 675.61 62.60 55.99 100,000 6,267,000 5,59s,000

17. W

18. X 7 t/8 14.5 849.79 782.35 722.30 67.44 60.05 75,000 5,058,000 4,50%,'s 5 15.5 92?.62 853.82 788.34 73.80 65.48 100,000 7,3#0,000 b ,5 ' P .t 00

19. Y 8 1/8 6,552,000 16.5 904.23 829.97 ~64.45 74.28 65.52 100,000 ',428,000 2G. 2 7 7/8 6,e61,000

21. A4 8 17.0 913.77 838.0' 7't.'4 75.70 66.63 100,000 7,5'O,000

22. BB ' 3/8 18.0 RSA.46 782.s2 718.41 73.t l e4.41 125,0G0 9,205,000 8 ,0 51, . 5 ')

23. CC 8 1/4 19.5 931.64 851.10 780.99 20,54 *0.12 100,000 8,054,000 7.012.04m

24. DDP

25. tf 9 2.0 1,000.00 982.27 964.95 17.73 17.32 100,200 1,773.000 1,732,000 26, FF 8 7/8 20.5 988.40 902,72 928.33 85.68 '4.39 150,000 12,852,000 11,159.500

27. CO 8 './8 21.5 988.20 901.30 526.14 #6.90 75.16 125,000 10,862,5e0 9,395,000

28. HI 8 1/ 4 23.0 92' 67 843.55 771.30 84.12 72 25 125,000 10,515,0V0 9,011,250 5.0 950.7e 893.83 56.93 35.16 25,000 .,709,750 2,63',000

29. 11 7 1/4 858 6i

30. JJ 9 5/8 24.0 1,085.47 988.70 905.56 96.77 83.14 200,000 __19,354,000 16.629,u90

31. Suhtotal $145,ee8,3'5 $128,655 775 Cat Elect ric bonds 8.89 8.?7 2,000 17,780 17,540

32. 2 7/ 8*. 1.0 $ 942.65 $933.76 $924.99 1.0 942.65 933.76 924.99 8.77 4,000 35,5bo '>,c80

33. 2 7/8 8.89 251,760

34. 3 1/4 5.0 772.51 719.39 707.92 33.12 31.4'7 8,000 264,9eo 754.94 682.19 17.46 35.29 6 TOO 224,760 211,?JO

35. 1 5/8 6.0 ,17.48 312,4RO 36, 4 1/2 7.0 757.21 715.41 676.35 41.80 39.D6 8,000 334,400 37, 754.26 666.52 45.53 42 21 6,000 273,180 25 3,2o0 4 5/8 8.0 708.'3 516,'20

38. 4 1/2 8.5 ?3h.59 6e9.96 646.90 46.63 43 Dh 12,000 559,560 11.0 732.93 679.15 630.37 53.78 48.78 12,000 645,460 585,3eo

39. 3 If 8 440,450 396,e40

40. 5 12.0 710.09 655.03 605.45 55.C+ 49.58 8,0C0 I 2,696,P43 12,5 AO ,5 h3

41. Subtotal

42. Total 5147,764,415 $111,236 ]_5_5 2 8-7-79 19

co k h 0 PREFERRED 6 PREFERENCE PRICE OIANGE FROM (* YIELD DIFFERENTIAL k T Annual Number of Total Change Line Market Yield Price Change Stock (000) No. Series 9% 10% 11% 9-10% 10-11% Outstanding 9 - 10'. 10-11% (1) (2) ( 3) (4) _(5) (6) (7) (8) (9) Cumulative Preferred ($25 par) m

1. 4.08% $11.33 $10.20 $ 9.27 $1.13 $u.93 1,000,000 $1,130.0 $ 9 30.0

2. 4.24 11.78 10.60 9.64 1.18 0.96 1,200,000 1,416.0 1,152.0

3. 4.32 12.00 10.80 9.82 1.20 0.98 1,653,429 1,9 84 .1 1,620.4

4. 4.78 13.28 11.95 10.86 1.33 1.09 1,296,769 1,724 .7 1,413.5

5. 5.80 16.11 14.50 13.18 1.61 1.32 2,200,000 3,542.0 2,904.0 w 6. 8.85 24.56 22.10 20.09 2.46 2.01 2,000,000 4,920.0 4,020.0

7. 9.20 25.56 23.00 20.91 2.56 2.09 2,000,000 5,120.0 4,180.0 Cumulative Preferred ($100 par)

8. 7.3251,I") $86.77 $80.19 $ 74. 39 $6.58 $5.80 750.000 $4.935.0 $4.350.0

9. 7.58 84.22 75.80 68.91 8.42 6.89 750,'000 6,313.0 5,167.5

10. 7.80f ") 90.26 82.97 76.60 7.29 6.37 600,000 4.374.0 3,822.0

11. 96.67 87.00 79.09 9.67 7.91 500.000 - 4,835.0 3,955.0

12. 8.70 8.70A (" 97.15 89.25 82.33 7.90 6.92 525,000 4,147.5 3,633.0

13. 8.96 99.56 89.60 81.45 9.96 8.15 ~500,000 4,980.0 4.075.0 Preference ($25 par)

14. 5.20% $14.44 $13.00 $11.82 $1.44 $1.18 1.635,820 $2,355.6 $1,930.3

15. 7.375I ") 22.73 21.49 20.33 1.24 1.16 2.480,000 3.075.2 2.876.8_

                                                                                                                             -.4

16. Total $ 54 ,8 54.1 $46,0 2) . 5 b

(") Sinking fund stocks. g

Southern Cahtorrua Edisx TABLE 14 DILUTION,0F SCE STOCK FROM C0410N STOCK ISS"'3 c I Adjusted Year-End Recorded Year-End Percent Common Shares Book Shares Book Dilution , Line Equity Outstanding Value Outstanding Value Caused by No. Year l (000) (000) (213) (000) (215) Issues l (1) (2) (3) (4) (5) (6) (7) l

1. 1974 $1,366,744 47,965 $28.50 46,238 $29.56 3.59%

2. 1975 1,421,760 47,965 29.64 46,238 30.75 3.61 3, 1976 1.,643,588 53,609 30.66 49,899 32.94 6.92

4. 1977 1,780,439 55,126 32.30 51,144 34.81 7.21

5. 1978 2,052,056 63,017 32.56 56,639 36.23 10.13 Source: Annual Reposts and Statistical Supplements 1

8-8-79 21

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0,0 , N 4 ka 4 O (D 1978 GPi kATING Ot% 8' TIRI5 llc $ OF THt 201.ARList Il!C1ft!C t trllt.!Tils hl1H SIVJ F 4 OR Rf lll H DIND RATING

                                                                                                                                                                       , .?
                                                      ~ nperat     Ing Revene (a)     Tue! 4 Pursbased Power                   i Aor I spenselb)

Tercent of Percent of d Line AdeuT Pertent

                                                                                      ' Amount      Terieet o'T      Anwmnt'~                        ke g enue f o r      G No.            I' largest f lect rics             (militans)        llettric      (milliend      Revenues     teilliens)             kevenues   rapit al Need de )    3 01                             (2)              (3)            (4)           til           (01                 (7)               (8)

Ibt4ble A Pat e.1

1. Commonwenit h I J s son $2142.8 100.0% $ 804.6 3 2 . 9'. $ 628.6 l'.5% 49.6%

2. 3. Houston Industries Pennsylvania Power & Light 1303.6 795.3 100.0 99.5 687.1 235.0 52.' 29.4 126.5 101.9 9.' 20.3 3 7. t. 50.3 g usu

4. Cleveland ticctric illum. 717.1 98.6 298.1 41.0 119.2 16.6 41.M

5. laquesne Light 573.1 98.1 2 e' ? ^ M.2 96.5 l er . 3 48.0 6 OklahomJ Gas & Elect ric 541.0 100.0 286.2 52.9 t. l . 7  !!.4 35 7

7. Public Sersice Co. of Indian 558.4 100.0 185.M 35.! 75.4 14.0 50.9

8. litah Power f. 16ght 428.6 99.9 130.2 10.9 76.3 13.1 51.0

9. Tampa f'lectric 3%.9 too.u 181.6 45.9 52.7 13.3 40.8

10. Southwestern Public Servlee %5.4 100.0 206.1 56.4 45.9 12.b 31.0

11. Kansas City Power 6 Light 318.7 98.5 85.4 26.R 61.6 19.1 53.9

12. Kentucky lit tlit ies 306.l 100.0 156.8 51.2 32.8 10.7 18.1 g 13. Double A Average $ 726.8 99.6% $ 288.5 4 0. 9'. $ lit.b 15 0) 4 4 . I '.

(A S,,ingl_e A NatcJ

14. Florida Power & l.ight $l647.2 100.0% $ 532.s 32.3% $ 254.9 15.5% 52.2%

15. Virginia Electric & Power 1464.9 9tn 5 595.0 40.6 162.9  !!.I 49 3

16. Tbke Power 1400.4 99.7 560.6 39.3 317 ' - 22.' 3M 0

17. Union flectric 904.0 93.4 255.3 28.2 157.3 17.4 54.4

18. Ohio Edison 863.0 99.4 h4. 8 42.3 151.4 17.5 40.2

19. Florida Power Corp. 7tt.2 100.0 331.0 44.1 81.5 10.8 45.1

20. Gulf States lit tlit ies 747.0 90.3 3te.9 49.4 71.1 4.5 41.1

21. Potomac Elec. Power 714.7 100.0 255 2 %7 104.0 18.6 49.'

22. Single A Average $1061.6 97.4% $ 408.0 39.0% $ l b2.t. 14.M 46.1%

23, 20 largest Average $ 860.7 9M.7* $ 3%.3 40.1% $ 132.0 15.0% 44 91

24. Standard Deviation 542.5 2.6 19M.1 91' 99.7 3.s 6.8

25. High $2442.8 100.0% $ 504.6 56.4% $ 428.6 12.71 54 4%

26. Low $ 306.1 90. % $ 85.4 26.8% $ 31.K 9 55 II'"I

27. Southern Cal kf. LJison $2329.3 100.0% $1204.5 St." $ %9.6 15.9% 32.4%

I*I 1otal Operations (b) Wages 6 Salaries plus Pensions 4 Benefit s for lotal Op. rat ions (c) Column 8 = 100% - (Column 5

• Column 7) q p

Sourc e : Unitorm Statistical Reports CD r-rT)

   ;                       r       --

7. ,

i L -

          .                                                                                                                       .1975 PIRANCI AL CHAR 4CTERISTICS _.
       . O> ;                                                                                                                                      oy 44                                                                                                                                                                                                                                                  3 y                                                                                                                - TNE 20 f.ARGEST FLII*TRIC F7ILITIES .

0.., e sM' '

       ' 10 g:                                                                                                                                                                                                                                        {

Comma Stock a g _. 3377 g gy, _ . 7 ear-end haber of . Det Can o t rwet lan'" f?g .

                                 ..Lla*      J Bond Rat i ng s -                      Shares.                ,         Shares Per                  llt ti t t                        Percent        S W

Woody's St andard 6 Ponr's . Outstanding ' Numeer of' Shareholder Percen t Plant a) l ,, pg,,, 3 Compan7 Name ,1, 9,,,79 Der at ed , JR - Der a t ed ( M't) ' Shareholder * (6 t 7) Inst t tut lne(ellitons) t ot1itanQ (18 4 IO) h.

                                                                                                                                                                                        . (s)
                                                                                                        .(33                                                                (?)

l - ,t i l (2). (ll . 153 Ost 19) (top (44) (136 Dnubt'e A Ratet-l .' c Cleveland Electric illum.' As - ' 1975 Asa- Aa - AA -- 1974 AAA-AA. 33,995.4 - e * .630

                                                                                                                                                                         .                 412        3 4. 9*. -

S t .N13 $ 299, 16.6T

3. Commonwealt h Ed19en ' As '1979 Ase-Aa 44, 1973 444-44 76,0$0.3 ne,0n2 - - 341 1s.0 S b94 1,316 22.3

                                       - 3.      Duquesne Light                             A        1979 A4-A            A4. .                    31.7S4),0(bl 110,261 I                 244          2.3           4.697               200              II s      zum
                                       ' 44 ' Howetan Industries               .
                                                                                       . Am          1973 Aaa-Am        ^AA       1973 4 4 %. 4%    31.089.1          30.369 "I        1.021         38.2            2.437               454              13.6
                                         .S.. Kanese Cit? Power 6        Light              Aa - 1971 Asa-Aa               44      11      a 44      9,968.s          33,2a3              299         12.1               a97             in6             20.7 ots 14-A
                                       '6.       Edeteckytltllities'         ,

Aa 44 s.661.5 31,30n ' 277 6.a - 6S2 ss 13.7

7. Oklahoma Gas & Electric As A. 26.964,0 .37,247 -722 - 24.2 1.230 Amt IS J e, Penamylvanta Power & Light' - As A+ 1971 44-4 39.073,3 149.589(b) 263 3.2 2,652 434 16.4 9 Public Servlee of Indiana Aa ' A4 ' 26.957.7 33,367 768 33.1 1.Sie 29e 19.6

10. , Southwestern Public Service AA ' , AA. - IS,93s.1 , 40,744 637 II.4 650 . 359 24.S

ll. ' Tampa Elect ric As AA 15,253.1 15,547 Sal 33.s 744 to 6.2 12,'4:tah Pueer & Light -A'. . AA . 32,712,7 - 63.224 ' S34 11,7 8.342 262 19.5

• 13.1 Double A Average . S of 12 ' - S of 12 30.195.8 73,449 S42 87.3 1,793 327 17.1 N.

4 ] Single A Rated

                                   , 41, Duke, Power                                        A.       1970 Aaa-Am          A-      1970 AAA-AA      72.132.2         IO7,057(b)            674        16.7            3.993               629             IS.m
                                                                                         ..          3973 As-4                    1972.AA-A

15. tFloride Power Corporet tan A 1974 Aa-A A+ 1974 AA-4 14.976.4 31.309 161 2n.2 1.491 108 7.2

16. Florida Power & Light - -A 1974 Aa-A A* 1970 AA-A. 40,314.6 - 32.0s9 1,256 3n.6 3,653 4S8 12.3

                                    - 17. Gulf States utilittes                             A        1979 Aa-A            4       1979 AA-A        3u,302.4           S4,6st              700        17,n            1.Se7               278             87.3 18 Chio Edison -                                    A        1974 Ana-Am .        A-      1970 AAA-A       S2,120,2         157.646               331          9.0           2.396               391             16.S 8976 Aa-A                    1975 A4- A
                                   ^19.. Potomac Electric Power                        ,A            1970 44,%            A,                       41.664.7         122.759               331          H.4           1.693               373              'o.3
                                      '20. .L'aies Electric .                               A        1975 Aa-A          'A        1979 AA-A'       S1,909.3        157,956                329          3.3           2,249               316             gl.1
                                   > 21,         Virstela Electric & Power             'A            1974 Aa-A            A       1974 M-A .       53.241.1       -135.320                S49        13.5            4,146               SMS             12.2
                                      .22.       $$ngle A Average '                                  s of M                       7 nr s            49.3ms.m       102.366                S79        17.0            2.6SI               357             13,29

23. 20 Largest Averog's 13 of 20 12 of 20 37.N72.9 sS,012 SS7 -

17.2 2,136 339 IS.S 24.. Standard Deviation 21.32').2 64,449 2s7 It.e I.363 276 4.7 25 Nigh' aS.241.1 229,082 8.256 3m.6 S.m94 1,316 24.8

26, Los u.661 1 15.517 245 2.3 650 46 6.2 27, Southern Callferela Esttuon . As M 63.017 138,032 457 22.s 4.798 642 L3.4 S

f (a)Encludes Nuclear f uel ' M th)lg7s Annual Reports or Statistical Supplements W (c)Per Telephone Conversation - I"" (d)lactudes 460,000 shares of Origina1 Preferred St'ack (71

                                                ' Sources:  Cat. 6, 7f g 10; Lintform Statistical Reports

! ' St andard k Poor's Stock Guide, January 1979 W Col. 9

. y... ~ v

                                                                                                                                                                                           ~

(/) 8 DJ D 8 4 O Os R AR41NGS A.4D DIVIDtMDS PIM SHARE C11NPARISONS a Os fTl 4 GMP Earnings Per Nhare Dtyteende Per phare Implicit Price Peyout Rattos Line So. Calli. 20 Largest Standard k h.or's Su. Calif. 2T Larmeet standard 6 b wr's Def1stor G a. a l 6 f.7) Largest s t ander.1 & Wer 's un. Year totann Elec t ric o 4rrs Industriale Edison t a ect rt< e 400 Indusertete (1969 a 100) s'n t e..a f lec t ric e 4 wn ladustriale (1) (2) (3; t4) (S) (6) (7) (gj p. ) (Jo) gg;j

l. 1969 $2.3S $1.94 $ 6.13 41.49 S t .26 s 3.23 100 00 59 6% 64.9% S3.01

2. 1970 2.70 1.99 S.41 1.4a 1.32 3.20 105.35 $4.5 66.3 S9.1 3 1973 2.46 2.oS S.97 1.50 1,37 3.16 110.72 61.0 46.m S2,9 4, 1972 2,SI 2.39 8.M3 1. S6 1.39 3.22 IIS.31 62,2 63.S 47.1 S. 1973 2.67 2.27 8.n9 1.S6 1.44 3.46 122.00 S4.4 63.4 3n.9 6 1974 2.RJ 2.10 9.61 1.6S 1.49 3.71 133.79 Sm.9 71,0 38 6 7, 1975 2,m6 2.33 s,Se 1.6H 3.53 3.72 146.62 Sn.7 6S.7 43.4 S. 1976 3.20 2.41 10,g9 L.6a 1.59 4.22 1S1.24 64.2 66.0 39.3 9 1977 3.no 2.*7 11.S4 1.92 3.6n 4.95 153.30 30,5 63.4 42.9 10 1973 3.32 2.54 13.17 2.24 1,7s S.35 175.3a ha.6 70.1 43.6 Average Annual Trend bred U Avert.rs tJ f.f1 18. 1969 1978 S.3a 3.16 10.09 4.27 3.62 B.92 6.63 $7.19 U . ll 45.60 12 1969 1973 1.84 4.18 10.2A 2.73 3.24 1,32 S.00 5'J . 20 64.534 50,20

13. 1974 197a 7.70 4.90 9,71 7.73 4.39 10.71 6.71 SS lu 67.,4 41. m1 Indicated TrenJs (1960 e 100) 14 1969 100.0 100.0 1n0.0 100.0 190,0 100,0 Itk), a ,3.t o loo.o IS. 1970 114.9 102.6 MM 3 103.7 104.s 9M.S #19 102.1 Ill.S 16 1971 104.7 105.7 97.4 107.1 10M.7 97.2 102.3 102 9 99 n 17 1972 166,4 112,9 Ill 4 Ill.4 104.s 99.1 106.4 9 7. m na,9 la. 1973 113.6 117.0 143.0 114.4 114.3 106.5 9n.0 97.7 73.4

19. 1974 139.1 108.2 I S6. m 137.9 ans.3 114.2 98.8 1-9.4 72,n 20 1975 121.7 120.1 140.0 12n.o 121.4 414,5 94.5 IJI.2 #1.9

21. 1976 161.7 124,2 174.4 120.0 126,2 129.m 74,2 I rtl . 7 Y4.S 22, 1977 161.7 132,5 las.3 137.1 133.3 152.3 m4.7 Iv ,a no.9 23, 1978 149.8 130.9 214.m 160.0 141.3 164.6 L.m.7 ans.o 7s e I*I rmponentist Trend Rate (y = sehn, Sources: Standard & Poor's St ock C.utdes Annus! Peport s and St at istler! Supplement e d St anda rd & Poor's Analyet 's Handh*w.h 1970 197N )>

Servey of Current buelnese Q f"* m s* N

Southem Celotomia Edsson TABLt: 18 RETURN ON AVERAGE COMON EQUITY 20 Largest Electrics Line So. Calif. Averages Deficiencies No. Year Edison Aa Only Total Groug Aa Only Total Group (1) (2)- (3) (41 (5) (6)

               .1.      1969'     10.37 %           13.99%           13.54%          3.62%            3 . 17 *.

2. .1970 11.18 13.84 13.35 2.66 2.17

3. 1971 9.77 13.14 12.73 3.37 2.96 4.- 1972.~ 9.42 13.44 12.75 4.02 3.33

5. 1973 9.59 12.83 12.47 3.24 2.88

6. 1974 9.52' 12.26 11.34 2.74 1.82 7 .^ ;1975- 9.84' '12.54 12.01 2.70 2.17

^ 8.- ~1976 12.07- 13.15 .12.43 1.08 .36

              - 9.      1977'     12.05             12.94          -12,59              .89              .54-

10. .1978 :10.55- ' 11.85l 11.69 1.30 ' . 14 Averages i

11. 1969-78 10144% 13.00% 12.49*. 2. 5 6*. 2.05%

  +           12.-1969        10.07-            13.45           12.97           3.38              2.90 13.'1974-78.       '10.81             12.55           12.01            1.74             1.21' Sources: JAnnual~ Reports and Statistical Supplements -

18-2-79_2- 26L l

Southern Catotoma Edison TABLE 19 YEAR-END C0bHON STOCK PRICE COMPARISONS 20 Largest i Line' So. Calif. Electrics Standard 6 Poor's No. . Year Edison Aa Only Total 400 Industrials (1) (2) (3) (4) (5)

1. 1969 -$30.13 $25.46 $25.92 101.49

2. 1970 32.13 28.28 28.27 100.90

                               .'3.       1971.        29.50                   27.70                                               26.97                                           112.72

4. 1972 27.75 27.36- 27.16 131.87

5. 1973 .8.50 21.03 19.85 109.14

6. 1974 17.50 16.09 14.14 76.47

7. 1975 19.63~ 20.67 19.66 100.88

8. 1976 l22.88 24.24 22.67 119.46

9. 1977 26.38 '23.19 21.94 104.71

10. 1978 25.75 19.77 19.08 107.21 Indicated Trends (1969 = 100)

                            ' 11 ~.      1969.       _100.0                   100.0'                                              100.0                                            100.0

12. '1970 106.6- 111.1 109.1 99.4

13. 1971 97.9 108.8 104.1 111.1

                             .14.        1972                 92.1.          107.5                                                 104.8                                           129.9 f-                       15.       -1973                 61.4.               82.6-                                             50.6'                                          107.5

16. 1974- 58 1: 63.2 -54.6 '75.3 17.~ 1975- 65.1 81.2 75.8 99.4

                            .18.        .1976                75.9                95.2                                                 87.5                                         117.7
   ^

19. -1977_ 87.6 91.1- 84.6 -103.2

20. 1978 85.5 _77 7 73.6 105.6

                                ^

Sources: = Standard 6' Poor's-Stock Guide, Standard I, Poor's Analyst's Handbook'

                      .'8-2-79J                                                    l27<

a; ' YEAR-END [. g la EARNINGS / PRICE RATIOS = f R 20 Largest Electrics ' h SCE Standard 6 Poor's 400 Industrials 8 L _ Ratio Cost Difference i ' Cost Difference

                                          -Line                . So. Calif.'               . Total.                Total             So. Calif.            Total

,_ No. Year Edison Aa Only Group Aa Only Group- Ratio Edison Aa Only Group _ (1). (2) (3)- -(4)_ .(5) (6) (7) (8) (9) (10) ggg ,l i

1. .1969 7.80% 7.99% 7.66% (.19)t .14% 6.04% 1.76% 1.95% 1.62%

                                             '2.      -1970'       '8.40         ~7.63       7.36            .77    1.04    5.36       3.04        2.27    2.00 E                                               3.        1971-       8.34         7.74:      ' . 75 7               .60     .60    5.30       3.04        2.44    2.45
                                             'l 4.       1972      - 9. 04 -      8.'67      8.36            .37     .68    5.18       3.86        3.49    3.18

5. 1973 14.43 10.99 11.49 3.44 2.94' 8.15 6.28 2.84 3.34 <

6. - 1974 16.00 14.03 15.28 1.97 .72 12.67 3. 33 1.36 2.61

7. 1975- 14.57. 11.76- 11.82 2.81 2.75 8.48 6.09 3.28 3.34 L S! 8. 1976 16.61 10.78 10.77 5.83 5.82 8.94 7.67 1.84 1.83

9. 1977 14.41 11.19 11.61 3.22 2.80 11.05 3.36 .14 .56

10. 1978 13.67-- 12.20 12.80 1.47 .87 12.28 1.39 (.08) .52 Averages

11. 1969-1978 12.33 10.30 10.49 2.03 1.84 8.35 3.98 1.95 2.15

12. 1969-1973 9.60 S.60 8.52 1.00 1.08 6.01 3.60 2.60 2.52 ,

                                            -13. 1974-1978     .15.05         11.99      12.46          3.06    2.59   10.68        4.37        1.31   1.77
                                                                                                                                                                    -4 Sources: Annual Reports and Statistical Supplements                                                             E Standard 6 Poor's Stock Guides Standard 6 Poor's Analyst's Handbock                                                                 g t

                  , .                 ~            , . _ .          ,

f n .E, L T2 '

                                                       '                               YEAR-END PRICE / BOOK'.                                                      k
       - '7L                                                                                COMPARISONS                                                             $
          ~.

e . ii 5

                ,                                                             20 Largest Electrics.                   Standard & Poor's 400 Industrials
                             '                                              . Ratio                     Deficit                         Deficit                     @
                    ' =Line:            .

So. Calif. Total Total So. Calif. -Tota 1 $ L No. iYear Edison- Aa Only' Group. Aa Only, Group Ratio Edison Aa Only Group

                                             .(1)              (2)      -(3)        (4)      -(5)             .(6)    (7).      (8)             (9)        (10)
                            'I.            '1969 .            1.28     1.76.        1.77        .48            .49  1.96        .68-            .20      .19
                             -2.            1970'            '1.30     1.85-        1.83        .55            .53- l'.92       .62             .07      .09-

3. 11971 ~1.13 1.74- 1.66 .61 .53 2.04 .91 .30 .38

                            '4.            -1972c             1.02'    1.57         1.54        .55            .52  2.26      1.24              .69      .72
                           -5.              1973..             . 55. 1.16-        1.08        .51            .43- 1.74      1.09              .58      .66 l-                              6.           1974-              .61       .86         . 76 -     .25            .15' 1.13        .52             .27      .37 g                           t   7.           1975               .66     1.06         1.01        .40-           .35  1.42        .76             .36      .41 j                            '8.             1976..             .75-    1.18         1.13        .43            .38  1.57        .82             .39      .44 l

y'- l9. ;1977- .82 1.09 1.05 .27 .23 1.27 .45. .18 .22

10. '1978. .79' .91 .89 .12 .10 N.A. -- -- --

? , i Averages

                         ' 11. -1969-1978                      .90     1.32         1.27        .42            .37  1.70(")     .79f ")         .34(a)   .39f ")

12. -1969-1973 1.08 1.62 1.58 .54 .50 1.98 '37

13. 1974-1978- .73- -1.02 .97 .29 .24 1.35(b) '9I(b)

                                                                                                                                .64             .30 N    *4I(b)
                                                                                                                                                         .36 1

i ! N.A.: .Not Available (")

                                     .(b)1969-1977 l                                             1975-1977                                                                                                             y i     ,

m l Sources: Annual Reports and Statistical Supplements E L Standard G Poor's Stock Guide w Standard 6 Poor's Analyst's Guide " l- . L- . _ _ _ _

Southern Cahtornia Edison TABLE 22 l S0lfrlfERN CALIFORNI A EDISON PRICE BOOK AIUUSTED RETURN 09 C05B10N EQUITY Moody's I Return on Year-end Adjusted Aa Public

           .ine                  Common              Price / Book     Return  Utility Bond No.         Year      Equi t y(a)            Ratio (a)     (253)      Yields (1)         (2)                 (3)           (4)        (5)

1. 1973 9 . 5 9 *. .65 14.8% 7. 7 2'.

2. 1974 9.52 .61 15.6 9.04

3. 1975 9.84 .66 14.9 9.44

4. 1976 12.07 .75 16.1 8.92

5. 1977 12.05 .82 14.7 8.43

6. 1978 10.54 .79 13.3 9.10 Averages

7. 1973-1978 14.9. 9. 0 0'.

I")1973-1977 Restated Sources: Annual Reports and Statistical Supplements Survey of Current Business Moody's Bond Surveys 8-2-79 30 1

E

 =                                           SCE ADIUSTED COMMON EQUITY COST                        i h                                                          VERSUS                                  6 E

MOODY'S Aa PUBLIC UTILITY BOND YlELDS i PERCENT l 8~ kl MOODY'S Aa FUBLIC UTluTY BOND YlELDS 14- _ E SCE PRICE / BOOK ADJUSTED RETURN 12- ON COMMON EQUITY 10' l 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 , i

Southem CaMoma Edrson TABLE 23 S0lfriiERN CALIFORNIA EDISON EARNINGS / PRICE COST OF CAPITAL Recorded Expected Per Share Basisf ") Per Share Basis ( Line Average Cost Total Year-end Cost No. Year Earnings Price (213) Earnings Price (536) (1) (2) (3) (4) (5) (6) (7)

1. 1974 $2.80 $18.04 15.5% $2.75 $17.500 15 . 7 *.

2. 1975 2.86 18.83 15.2 3.00 19.625 15.3

3. 1976 3.80 20.71 18.3 3.79 22.875 16.6

4. 1977 3.80 24.73 15.4 4.26 26.375 16.2

5. 1978 3.52 25.55 13.8 4.16 25.750 16.2 Averages

6. 1974-1978 15.6% 16. 0 '.

f*) Restated Earnings 1974-1977 (b) Exponential Curve Fit, (y = ac ). Restated Earnings 1974-1977. Source: Annual Reports 4 Statistical Supplements 8-2-79 32

Southern Cahtorrus Edison TABLE 24 WEIGilTED AVERAGE COST OF CAPITAL Line Capital Cost Weighted After Tax No. Ratio Factor Cost Interest Cove rage

                                ,              (2)      (3)    (4)             (5)

A. Decision No. 89711

                                           ~

Test Year 1979 '~~

1. Long term Debt 47.84's 7.14% 3.42%

2. Preferred Stock 13.73 7.29 1.00

3. Senior Capital 61.57% 7.18 4.42% 9 . 6 0'.

4. Common Equity 38.43 13.49 5.18 13 42's

5. Total Equity 100.009 9.60% 2.81x B. Projected Rate of Return with 15% Return on Common Equity Test Year 1980

6. Long term Debt 47.00% 7.84% 3.68%

7. Preferred Stock 13.00 7.62 .99

8. Senior Capital 60.00'. 7.78 4.67% 10.67%

9. Common Equity 40.00 15.00 6.00 +3.68

10. Total liquity 100.00% 10.67% 2.90x Test Year 1981

11. Long term Debt 47.00% 8.03% 3.77%

12. Preferred Stock 13.00 7.80 1.01

13. Senior Capital 60.06T 7.97 4.78% 10.78%

14. Common Equity 40.00 15.00 6.00 +3.77

15. Total Equity 100.00% 19.]8% 2.86x Test Year 1982

16. Long term Debt 47.00%. 8.30% 3.90%

17. Preferred Stock 13.00 7.90 1.03

18. Senior Capital 60.00% 8.22 4.93% 10.93%

19. Common Equity 40.00 15.00 6.00 43.90

20. Total Equity 100.00% 10.93) 2.80x 11-9-79 33}}