s02v02p01 - app · capital investment forecast and operations develop and execute a strategy for...

An EDISON INTERNATIONAL® Company

(U 338-E)

2015 General Rate Case APPLICATION

Workpapers

Human Resources (HR)HR Benefits and Other Compensation SCE-06 Volume 02, P art 01 Chapter IV-V

N ovem ber 2013

Workpaper - Southern California Edison / 2015 GRC - APPLICATION1

1

2

3

4

5

6

7

8

9

10

11

IV.

SHORT-TERM INCENTIVES - RESULTS SHARING

A. Summary of Test Year Request

SCE forecasts Results Sharing expenses of $147.86 million for Test Year 2015. Figure IV-1

below shows recorded and adjusted costs for FERC Accounts 500, 588, 905 and 920/921 for the 2008

2012 plan years, plus forecast costs for the years 2013 through 2015. The total forecast includes the

costs for: (1) Results Sharing, an incentive pay program for exempt and non-exempt (including union-

represented) employees, (2) the Management Incentive Program (MIP), an incentive pay program for

senior managers (approximately 10 percent of all employees), and (3) the Executive Incentive

Compensation Plan (EIC) costs for those executives who are not officers (less than one percent of the

employee population).34

WP: SCE-06, Vol. 2, Pt. 1, pp. 75-82

WP: SCE-06, Vol. 2, Pt. 1, pp. 83-90 IV-1

■WP: SCE-06, Vol. 2, Pt. 1, pp. 91-95

Results Sharino - A ll FERC Accounts Recorded and Adjusted 2008-2012/Forecast 2013-2015

FERC Accounts 500, 588, 905, and 920/921(Constant 2012 $000)

WP SCE 06, Vo . 2, Pt. 1, pp. as follows:

33,U/b______43, U f 4________4B.3Z3______ 43,03f______ bQ.tJZI114.500 137,811 141.787 141.358 174,75

p. 71 p. 70 p. 69 p. 68 p. 67

34 EIC for executive officers is discussed in Exhibit SCE-06, Vol. 01.p. 66

16

Exhibit No. SCE-06 / Human Resources / Vol. 02 / Pt.01 / Ch. IV-VWitnesses: M. Bennett and J. Trapp

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

Workpaper - Southern California Edison / 2015 GRC - APPLICATION

B. Program Description and Scope

Results Sharing is the annual variable pay program that provides employees an opportunity to

earn a cash bonus based on achieving Company and Operating Unit (OU) goals. The design of the

Results Sharing program is established each calendar year by SCE’s senior executive management team.

Results Sharing helps employees to focus on activities that have an impact - both direct and indirect -

on the Company's success. Results Sharing provides variable pay based on achievement of goals related

to customer service, system reliability, public and workplace safety, cost control, and productivity that

employees help create. The program highlights what is important for employees to do to contribute to

the Company’s successful operations and provides a financial stake for employees to achieve Company

and OU goals that align with ratepayer interests.

Through 2012, the design of the Results Sharing program was focused on the achievement of:

(1) Company goals, (2) the Company operations and maintenance (O&M) budget, (3) OU goals, and (4)

OU O&M budget. It was a combination of the achievement of Company goals, Company O&M budget

performance, and the budget authorized by the 2012 GRC that determined the available pool of dollars

allocated to each OU. Fifty percent of the award was subject to adjustment based on the achievement of

OU goals and O&M budget. The remaining 50 percent was not adjusted based on performance against

OU goals and O&M budget. For MIP and EIC participants, the entire award amount was further

adjusted based on individual performance.

Table IV-2 below depicts Company Goals included in the Results Sharing program for 2012:

17



Table IV-2Company Goals Included in Results Sharing Program

2012 Plan Year

SAFETY

COMPLIANCE

OPERATIONAL AND SERVICE

EXCELLENCE

STRATEGICIN IT IA T IV E S

PUBLIC PO LIC Y

ENTERPRISE RISK

M ANAGEM ENT

PEOPLE AND

CULTURE

FINANCIALPERFORMANCE

Improve workplace safety to achieve injury free workplace No serious injuries to the public resulting from system failures

Build and maintain a comprehensive company-wide Ethics and Compliance program with an emphasis on strengthening a culture of compliance_____________________________________________________

Customer SatisfactionMaintain Service Delivery Satisfaction Maintain Customer Favorability

ReliabilityMaintain Power Delivery customer satisfaction and reliability performance Effectively manage Power Supply operations

SONGSAchieve targets for INPO performance indicator index and (18 Month rolling average) capability factor Achieve SONGS Regulatory Performance Goal

Major Capital ProjectsMaintain major projects within currently committed scope, schedule and budget, subject to approved changes, and successfully withstand any challenges to full cost recovery Obtain regulatory approval for the revised cost cap for Tehachapi Renewable Transmission Project (TRTP) that reflects final engineering costs and for Devers Colorado River (DCR) updated cost estimates, as appropriate

DBE Spend■ Provide sufficient opportunities to increase purchases of materials and services with Diverse Business

EnterprisesSuccessfully implement Rate Challenge program that produces a system average rate per kilowatt hour in line with targetAchieve a final 2012 General Rate Case decision, at the earliest possible date, consistent with SCE’s capital investment forecast and operationsDevelop and execute a strategy for educating state policymakers, stakeholders and customers about the costs of public policy programs and their impact on ratesImplement competitive principles to ensure acceptable CAISO Tariff Filing for 3rd Party Transmission Providers requiring the 3rd party transmission providers to bear an appropriate share of risks consistent with FERC Order 1000Ensure effective policy decisions and related communication to advocate for fair and equitable rules to minimize the costs of SCE's procurement portfolio, renewable integration and grid reliability costs_______

Enterprise Risk Management Program■ Strengthen comprehensive company-wide Enterprise Risk Management program with an emphasis on

the company's risk management culture and mitigation practicesBusiness Resiliency■ Advance Edison's ability to rapidly respond and manage through business disruptions and catastrophic

eventsStrengthen pay for performance objectives by increasing the differentiation of bonus and stock awardsImprove representation o f ethnic minorities and females across executive populationImplement improvement plans to address areas of weakness identified by work environment reviews

Achieve the core earnings target *Obtain a 2013 cost o f capital decision by December 31, 2012 that retains the key elements of the existing cost of capital mechanism, and provides a compensatory authorized Return on Equity

*RS excludes SCE Company Earning Per Share (EPS) goal.

The process for establishing Company and OU goals, and determining results under the Results

Sharing program is as follows. Around the middle of each year, the Company begins to identify the

business priorities for the following calendar year, and starts to develop corporate goals accordingly.

Individual OUs also establish the OU goals to be included in the Results Sharing program and

performance targets for the coming year. Progress towards Company and OU goals is reviewed during

18


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


the course of the year, usually on a quarterly basis.35 In January and February of the following year,

goal achievements for the previous year are reviewed and final performance is determined.

OU leaders are required to certify the accuracy of the performance results being reported by their

respective department(s). In addition, year-end results and goal performance must be certified by the

OU leader before the results can be forwarded onto the Board of Directors for review at that level.

Beginning in performance year 2013, the Results Sharing plan design changed to place more

focus on achievement of OU goals directly aligned to the Company operational and service excellence

framework and associated ratepayer benefits and to emphasize employee contributions at an individual

performance level.36 In performance year 2013, 100 percent of the funded award is subject to

adjustment based on performance against OU goals. In addition, for all exempt, non-represented

participants, the entire award amount is further subject to adjustment based on individual performance.

The Management Incentive Program (MIP) is based on the same Company goals included in the

Results Sharing program, but adds an individual performance modifier for greater individual

accountability and allows for higher potential payouts.37 For performance year 2012, MIP was revised

to provide a different bonus target for a select group of senior managers who report to company

executives. Some senior managers received an enhanced bonus target while others’ bonus target

remained unchanged. The increased funding for some of the senior managers bonuses was based on

market data for those positions via benchmarking by a third party consultant. Prior to the 2012 MIP

change, the total compensation for MIP-eligible employees also included long-term incentives in the

form of deferred stock units with a three-year vesting requirement. This group of MIP-eligible

employees last received deferred stock grants in 2009 and any payout for this grant occurred in January

2012 (subject to the vesting condition). Therefore, the MIP-eligible employees who received an

enhanced bonus target in connection with the 2012 MIP change coincided with the elimination of

payouts from the deferred stock grants dating back to 2009 and were intended to keep their

compensation at market.

35 Typically, the individual performance standard or metric is developed for each goal to monitor progress and to determine final results at the end of the calendar year.

36 Additional detail regarding the 2013 Results Sharing/MIP programs can be found in the workpapers for this Exhibit.

37 The bonus for performance year 2012 was paid out to employees in first quarter o f 2013. Additional detail regarding the 2012 MIP program can be found in the workpapers for this Exhibit.

\ |WP: SCE-06, Vol. 2, Pt. 1, pp. 75-82

19


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

192021222324

25

26

27

28


This exhibit also includes short-term incentive program costs for executives who are not officers.

These non-officer executives are eligible for the Executive Incentive Compensation Plan (EIC), which is

based on a set of measurable, challenging Company performance goals approved by the Board of

Directors. These goals include the specific targets of the Results Sharing program that improve value

for the ratepayer and are stressed at all levels of the Company. The executives’ performance is

evaluated based on their ability to lead their teams to successful attainment of these goals.38

C. Ratemaking Policy

Our Test Year forecast for the Results Sharing program - including MIP (for senior managers)

and EIC (only for non-officer executive-related costs) - requests recovery from customers of the full

costs of the program. SCE’s request is consistent with the Commission’s decision in three of the last

four general rate cases, D.04-07-22, D.06-05-016, and D.09-03-025. In its 2012 decision (D.12-11-051),

the Commission determined it was appropriate that ratepayers fund 90 percent of the Company’s

employee short-term incentive pay program.

In SCE’s 2009 GRC, the Commission approved full funding for the Results Sharing program

based upon the results of the Total Compensation Study. In its decision, the Commission stated that the

Total Compensation Study provides a basis for determining the level of compensation required to attract

and retain employees, but does not serve as a basis to address the overall reasonableness of

compensation or recovery by ratepayers:

The Study addresses the narrow issue of whether SCE’s total compensation package is consistent with other similar companies.. .Although the Study does not address the issue of whether SCE’s compensation is ‘reasonable’ or who should bear the costs of this total compensation, e.g., shareholders or ratepayers, the study does provide a basis for assessing the reasonableness of the compensation offered by SCE in terms of what is necessary to attract and retain qualified employees3

The purpose of a total compensation study is to determine how a utility’s compensation

compares to the market. If the total compensation is found to be at market levels, it should be

considered reasonable and therefore recoverable from ratepayers based on standard cost of service

ratemaking principles. If the overall level of total compensation is deemed reasonable, it stands to

38 Additional detail reeardine the EIC program can be found in the workpapers for this Exhibit.

WP: SCE-06, Vol. 2, Pt. 1, pp. 91-95

20


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


reason that ratepayers should be indifferent re: the mix of pay and benefits comprising the total

compensation.

There are several reasons why customers should continue supporting employee variable pay

programs. As variable pay is an important element of an overall total compensation package, provided

to employees for services rendered, it is a legitimate business expense that should be recovered in cost of

service-based rates. Moreover, variable pay is an “at-risk” component of total compensation that orients

employees’ efforts toward the customer-focused operational priorities of the Company, such as

providing quality customer service.

D. Results Sharing Goals Benefit Ratepayers

The Results Sharing program gives employees a financial stake in achieving SCE’s objectives by

focusing employee efforts on achieving operational goals which, in turn, provide value to the ratepayers.

As reflected by Table IV-2 above, the Company goals are overwhelmingly tied to matters benefiting

ratepayers with a heavy focus on customer satisfaction, public and workplace safety, system reliability,

infrastructure improvements, rate equity and mitigation efforts, workforce and supplier diversity, and

programs to rapidly respond to business disruptions or catastrophic events. The goals related to cost

control and productivity directly benefit ratepayers since achievement of these goals enhances the value

obtained by ratepayers through rates and allows for greater investment in system reliability and safety.

Notably, except for EIC participants, the Company goal tied to core earnings is not considered in

assessing annual short-term incentive awards for all other SCE employees (namely, all Results Sharing

and MIP participants).

E. Test Year 2015 Request for Results Sharing (FERC Accounts 500, 588, 905, and 920/921)

1. Description of Accounts

In Test Year 2015, HR will record costs for the Results Sharing program in FERC

Accounts 500 (for expenses incurred in the general supervision and direction of the operation of steam

power generating stations), 588 (for expenses incurred in distribution system operation not provided for

elsewhere), 905 (for miscellaneous customer accounts expenses not provided for in other accounts), and

920/921 (for administrative and general salaries and office supplies and expenses). The Results Sharing

program costs are recorded in the Results Sharing Memorandum Account.40

40 See Exhibit SCE-10, Vol. 1, for additional detail on the operation of the Results Sharing Memorandum Account.

21


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23


2. Analysis of Recorded Data

A combination of factors, including the number of eligible employees, target award

levels, labor expense, and Company and OU performance, drives Results Sharing program costs. As

depicted in Figure IV-1 above, Results Sharing program costs fluctuated between the recorded years

2008 through 2012. Costs in 2009 rose by approximately 24 percent due to a 6 percent increase in the

number of employees receiving awards and the number of employees in the MIP program. In 2009,

there was also slightly better than target performance and funding compared to 2008. Costs remained

relatively stable in 2010 and 2011. Costs increased again in 2012, due primarily to a better than target

performance and funding.2, Pt.1, pp. 663. Test Year 2015 Forecast for Results Sharing

We have selected an Itemized Forecast methodology, which incorporates the Company’s

labor forecast. Our Test Year forecast was determined as follows. First, we obtained the historical

Results Sharing program costs for 2012 of $$174.77 million. Then, we calculated the expense ratio

(stated as a percentage) for the program by dividing the 2012 plan costs by the 2012 recorded labor

expense. Finally, since the Results Sharing program costs are directly impacted by our total labor costs,

we then applied the expense ratio to the projected non-capital labor forecast for 2013-2015. 41

As noted in Figure IV-1 above, application of the methodology described above results in

a Test Year 2015 forecast for FERC Accounts 500, 588, 905 and 920/921 of $147.86 million, a 15

percent decrease from 2012 recorded costs. The forecast amount is due primarily to a decrease in the

number of employees and labor costs directly related to the Company’s Operational Excellence

initiatives.42 Unlike the Linear Trending, Averaging, and Last Recorded Year methodologies, the

Itemized Forecast methodology is appropriate because it takes into account the change in the labor

forecast.

41 Forecast calculation can be found in the workpapers for this Exhibit.

42 See Exhibit SCE-06, Vol. 01.


1

2

3

4

5

6

7

8

9

10

11

12


WP: SCE-06, Vol. 2, Pt. 1, pp. 97-99V.

LONG-TERM I

A. Summary of Test Year Request

SCE forecasts expenses of $18.18 million for long-term incentives related costs in T est Year

2015. The forecast amount pertains to long-term incentives paid to executives. Figure V-2 below,

shows recorded costs for FERC Accounts 920/921 for the 2008-2012 plan years, plus forecast expenses

for the years 2013 through 2015.

Figure V-2 Long Term Incentives

Recorded and Adjusted 2008-2012/Forecast 2013-2015 FERC Accounts 920/921

(Constant 2012 $000)

WP: SCE-06, Vol.B. Program Description and Scope

In order to hire talented executives, many utilities offer long-term incentives (LTI) as a

component of a competitive direct compensation package. Salary, short-term (annual) bonus and

longterm incentives form the three standard elements of direct compensation for utility executives, as

they do for more than 97 percent of U.S. companies with an annual revenue of $10 billion or greater.43

43 According to the 2012 Aon Hewitt Total Compensation Database, 97 percent o f companies with annual revenue of $10 billion or greater surveyed used long-term incentives.

23


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31


Without the compensation value of LTI (which represents from target values of 24 percent to 53 percent

of SCE executives’ total direct compensation, depending on rank), SCE cannot successfully recruit and

retain highly skilled and experienced executives needed to manage essential Company operations.

Although LTI could be replaced by higher salaries and/or bonuses, such a practice would not be

beneficial to SCE’s customers and business operations. Shifting compensation away from variable pay,

that is LTI, by increasing fixed pay, that is base salary, would result in corresponding increases to

benefit costs since many benefits are based on an executive’s base salary, like pension and 401(k).

Likewise, by shifting compensation away from LTI and toward short term incentives (i.e. annual cash

bonuses), SCE loses a substantial measure of its ability to enhance executive focus on the long term

operational, safety, and productivity goals that benefit ratepayers and the Company as a whole and are

central to the Commission’s basic regulatory objectives.

For the vast majority of SCE’s executives, base salary has stayed relatively constant over the last

few years. In 2011, the percentage of executives receiving no salary increase was 52 percent. In 2012,

this percentage increased to 64 percent. The trend continued in 2013 where now 66 percent of

executives received no increase to their salary. During the same period of time, SCE has continued

providing variable compensation in the form of LTI as well as short-term annual bonuses. With salaries

remaining constant for the majority of executives, the LTI component of their total compensation

package becomes even more vital to the Company’s overall effort to retain our executives to operate the

business.

SCE’s increasing reliance on LTI as a component of the executive’s total compensation package

benefits ratepayers in many ways. Greater retention of key executives is realized since LTI is earned

over multi-year periods. As a variable component of total compensation, SCE can decide from year to

year on how much LTI to grant or whether to not grant LTI at all. SCE has demonstrated good faith in

not inflating base salaries to remain competitive on a total compensation basis. Instead, SCE continues

to believe that the use of LTI is the most prudent direction to take, and more advantageous to the

ratepayers. SCE is not increasing salaries of our executives to compensate for the disallowance of LTI

costs since an increase to base salary would have a direct correlation to an increase in costs of benefits

tied to salary, such as pension and 401(k) benefits.

I f awarded, LTI grants are made annually to SCE executives. Grant levels are based on survey

data on compensation levels and trends, and are intended to form part of a total compensation package

for each position that is at the median of total compensation for that position among utilities (or general

24


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


industry for those positions where SCE competes against the broader labor market). Starting in June

2007, LTI grants to executives have been made under the 2007 Performance Incentive Plan, which was

approved by the shareholders of Edison International in April 2007.

LTI grants to executives consist of non-qualified stock options, restricted stock units, and

performance shares. The grant dates for these awards are fixed in advance by the Board of Directors,

which also must approve the values of the grants and the methodology for converting the values into the

number of shares to be granted. The strike prices for stock options are set at the closing price for shares

of Edison International common stock on the grant dates. Options vest 25 percent per year over four

years as long as the executive’s employment with the Company continues.44 Restricted stock units vest

100 percent at the end of three calendar years. Performance shares also vest 100 percent at the end of

three calendar years. Effective with the 2012 grant, two metrics are used for measuring payouts, with

each metric weighted 50 percent. One of the two performance metrics depends on how Edison

International’s three-year total shareholder return (stock price appreciation plus dividends) compares to

that of other utilities in the Philadelphia Utility Index. The other performance metric is based on EIX’s

three-year average annual core earnings per share (“EPS”) measured against target levels. The payouts

for each component can range from zero to 200 percent of target. The mix of options, restricted stock

units and performance shares may change from year to year.

C. LTI is a Vital Part of the Market-Competitive “Total Compensation” Package for SCE’s

Executives

Where the total compensation package offered to executives is essentially at market, the amounts

included in that total are what the market pays to attract and retain employees. Since SCE draws its

talent from the same market, SCE must offer similar compensation arrangements to compete for talent.45

It is not logical to agree that SCE’s total compensation is at market levels - that is, the amount the labor

market requires for an employer to attract and retain employees - and then reduce SCE’s total

compensation by eliminating LTI expenses of approximately $18.2 million and contending the reduced

44 Options and other long-term incentive grants have special vesting provisions for death while employed, disability (as defined for purposes o f the grants), retirement at age 65 or later (or at age 61 or later with at least 5 years o f service), and involuntary termination not for cause. Death and disability result in full vesting, while retirement and severance result in special vesting that generally includes some forfeitures.

45 In fact, all o f our Philadelphia Utility Index peer companies grant LTI.

25


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26


level is still “sufficient to attract and retain employees.”46 Even after the Commission disallowed SCE’s

LTI expenses in the 2012 GRC decision, SCE did not cut executive compensation by eliminating LTI or

reducing 50 percent of short-term executive officer incentives and executive benefits.47 Rather, SCE

continues to maintain that these executive incentives and benefits, including LTI, are essential to keep

its total compensation package market-competitive and attract and retain highly skilled and experienced

executives.

D. SCE’s LTI Program is Necessary for Long-Term Retention of High Performing SCE

Executives Which Benefits Ratepayers

The value of long-term incentives goes beyond the mere compensation value, because they aid in

retention of high-performing executives who focus on the long-term interests of SCE and its customers.

LTI helps SCE retain its executives in two ways. LTI awards vest over three to four years, requiring

executives to remain with the Company in order to vest. They also can offset deficiencies in short-term

compensation that otherwise might result in our losing executives to other companies. As noted earlier

and over the last several years, the vast majority of our executives have not had increases to their base

salary, making LTI an even greater and more important component of their total compensation package.

LTI increases management’s focus on the long-term interests of customers. The ultimate value

realized from LTI depends in part on the market’s assessment of the extent to which executives have

made decisions that will maintain and enhance service delivery, reliability and cost-effectiveness for

customers in the future and thus increase the overall performance of the Company. In some cases,

decisions that are in the long-term interest of customers may have temporary negative effects on

earnings or other factors and executives may as a result receive smaller annual bonuses. For example, as

described earlier in this testimony, upgrading the transmission and distribution system may cause short

term financial strains. However, the prospect of a good payout from the LTI program can support

executives’ determination to act in the long-term best interests of customers. Unlike base salary and

annual bonus, the executive's LTI award for any given year is not truly and fully earned unless that

executive remains continuously employed at SCE for the entire multi-year vesting period.

46 See D.09-03-025, p. 135.

47 SCE’s 2012 GRC decision disallowed costs for 100 percent o f LTI, 50 percent o f short-term incentives for executive officers and 50 percent o f executive benefits. See D.12-11-051, pp. 450 (EIC), 452 (LTI), & 477 (executive benefits).

26


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28


Over the last few years, SCE has placed greater emphasis on strengthening pay for performance

objectives for executives by increasing the differentiation of bonus and LTI. Based on an evaluation of

an executives performance that is tied to the achievement of Company goals, their LTI grant, as well as

their annual bonus, is determined and may vary significantly from executive to executive. In fact, for

the 2013 LTI awards, 46 percent of the executives received an award above or below target, compared

to 14 percent for the LTI awards made for 2011. The LTI award is tied to the achievement of the

executive’s goals, which are generally tied to SCE’s company goals, namely, operational and service

excellence, safety, compliance, reliability and strategic initiatives.

E. Recovery for LTI in Rates is Consistent with Cost-of-Service Ratemaking Principles

As stated by witness Russell Worden in Chapter III, above, ratepayer recovery for LTI is

consistent with Cost-of-Service Ratemaking Principles. The fundamental premise of cost-of-service

ratemaking, as the Commission itself has stated in a decision quoted earlier, “under cost-of-service

regulation, the utility is entitled to all of its reasonable costs and expenses.”48 Denying ratepayer

funding for the costs of long-term incentives violates this fundamental principle of cost-of-service

ratemaking.49

F. Test Year 2015 Request for Long Term Incentives (FERC Account 920)

1. Description of Account

In Test Year 2015, HR will record costs for LTI in FERC Account 920 for administrative

and general salaries.

2. Analysis of Recorded Data

Between 2009 and 2010, there was an increase in stock price, which resulted in higher

recorded expense for deferred stock units subject to liability accounting. Additionally, there was

increased expected payout for performance shares at the end of 2010 as compared to 2009, which

resulted in higher recorded expense for the awards subject to liability accounting. The decrease in

expenses between 2010 and 2011 was due to no deferred stock units being granted after 2009 and, as a

result, there was no expense for deferred stock units in 2011. Additionally, decreased expected payout

for performance shares at the end of 2011 resulted in lower recorded expense for the awards subject to

liability accounting.

48 D.03-02-03 5, p. 6.

49 See Section III.B, supra, for a more in-depth discussion o f cost-of-service ratemaking principles.

27


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19


3. Test Year 2015 Forecast for Long Term Incentives FERC Account 920

SCE forecasts expenses of $18.18 million for long-term incentive compensation costs in

Test Year 2015. The forecast amount pertains to long-term incentives granted to executives. Figure V-2

above shows recorded costs for FERC Accounts 920/921 for the 2008-2012 recorded years, plus

forecast costs for the years 2013 through 2015.

Projected 2015 expense of $18.18 million for long-term incentive compensation was

derived using the Itemized Forecast methodology. This methodology was chosen because: (1) 2008

through 2011 LTI expense is higher than we anticipate in the Test Year due to a decreased number of

employees eligible for LTI; and (2) significant turnover in the executive population occurred in 2012

and may continue in our forecast years, resulting in a lower number of anticipated executives eligible for

LTI in Test Year 2015.

The Itemized Forecast methodology selected for the years 2013-2015 was based on (1)

existing grants made in 2010 through 2013; as their expense is recognized in forecast years 2013-2015,

some of these grants have expense recognition beyond test year 2015; (2) projected grants for 2014 and

2015 based on the assumption that the number of grant recipients will not increase in our forecast years;

and (3) expected rates of forfeiture (grants cancelled prior to vesting) based on historical forfeiture rates.

Notably, the projected 2015 expense under this Itemized Forecast methodology is

significantly lower than the expense that would otherwise be derived by applying either the Linear

Trending, Averaging, or Last Recorded Year methodologies.

28


2015 General Rate Case - APPLICATION INDEX OF WORKPAPERS

EXHIBIT SCE-06, Volume 2, Part 1, Ch. IV-V

DOCUMENT PAGE(S)Results Sharing - A&G - FERC Account 920, 921 1-17Results Sharing - CSBU - FERC Account 905 18-33Results Sharing - GBU - FERC Account 500 34-49Results Sharing - TDBU - FERC Account 588 50-652012 Recorded Results Sharing & 2015 Forecast Results Sharing 66Results Sharing Payout Summary 2008-2012 67-71July 1, 2013 E-mail re: 2013 Goals and Results Sharing/MIP 732012 Results Sharing Program Summary 75-822012 Management Incentive Program Summary 83-90Executive Incentive Compensation Program Summary 91-95Long-Term Incentives FERC Account 920, 921 97-110Long-Term Incentives Forecast 111-112


Beginning of Workpapers for:

FERC A ccoun t: 920,921 Administrative and General Salaries/O ffice Supplies and Expenses

A c tiv ity : RESULTS SHARING - A&G - 920-921

W itness: Mark Bennett

Forecast Method Chosen

2012$ (000)

Recorded2012

Forecast2015

Labor Itemized Forecast 65,826 56,897Non-Labor N/A 0 0Other N/A 0 0Total 65,826 56,897

Description of Activity:

Results Sharing is SCE's annual incentive compensation plan which connects compensation to employees' annual job performance. Employees are eligible to earn a cash bonus based on individual and team (business unit or department) performance related to clear, measurable business goals.

Final Cost Centers included in this activity (See Appendix A for additional detail):

F502959 F503017 F526051


2Workpaper - Southern California Edison / 2015 GRC - APPLICATION




DETERMINATION OF RECORDED/ADJUSTED

\ Recorded Period$ (000)

2008 2009 2010 2011 2012FERC Form 1 Recorded (Nominal $)

Labor 93,928 106,849 122,698 127,416 163,845

Non-Labor (2,616) 601 (142) 2,000 (2,000)

Other 0 0 0 0 0

Total 91,312 107,450 122,556 129,416 161,845

Adjustments- (Nominal $) - see Appendix B for additional deta ilLabor

Non-Labor

Other

(59,693)

2,616

0

(62,519)

(601)

0

(76,972)

142

0

(79,391)

(2,000)

0

(98,019)

2,000

0

Total (57,077) (63,120) (76,830) (81,391) (96,019)

Recorded/Adjusted (Nominal $)Labor

Non-Labor

Other

34,235

0

0

44,330

0

0

45,726

0

0

48,025

0

0

65,826

0

0

Total 34,235 44,330 45,726 48,025 65,826

Escalation:Labor

Non-Labor

Other

1.1414

1.0932

1.0000

1.1070

1.0743

1.0000

1.0701

1.0518

1.0000

1.0327

1.0240

1.0000

1.0000

1.0000

1.0000

Recorded/Adjusted (Constant 2012$)

Labor

Non-Labor

OtherTotal

39,076

0

039,076

49,074

0

0

48,929

0

049,074 48,929

49,597

0

049,597

65,826

0

065,826

70.000

60.000

50.000

40.000

30.000

20.000

10,000

0

Recorded Adjusted 2008-2012 (2012$)

2008 2009 2010 2011 2012

□ Labor (std escl) I Non-Labor (std escl) □ Other (not escl)






Fo recasting M ethods - Sum m ary o f R esults o f all M ethods S tud ied - 2012$ (000)

2 Recorded Years (2011 - 2012):Results o f Averaging (A2)

COoCM ^r

oCM 2015 | sd** | Chosen

Labor 57,712 57,712 57,712 8,114 no

Non-Labor 0 0 0 0 no

Other 0 0 0 0 noTotal 57,712 57,712 57,712 n/a n/a

3 Recorded Years (2010 - 2012):

Results o f Linear Trending (T3 ) Results o f Averaging (A3)

2013 2014 | 2015 | r2* 1 Chosen 2013 | 2014 | 2015 | sd** | Chosen

Labor 71,681 80,129 88,577 0.78 no 54,784 54,784 54,784 7,812 noNon-Labor 0 0 0 0. 00 no 0 0 0 0 noOther 0 0 0 0. 00 no 0 0 0 0 no

Total 71,681 80,129 88,577 n/a n/a 54,784 54,784 54,784 n/a n/a

4 Recorded Years (2009 - 2012):Results o f Linear Trending (T4) Results o f Averaging (A4)

COoCM ^r

oCM 2015 | r2* 1 Chosen

COoCM ^r


Labor 66,088 71,180 76,273 0. 62 no 53,357 53,357 53,357 7,204 noNon-Labor 0 0 0 0.00 no 0 0 0 0 noOther 0 0 0 0. 00 no 0 0 0 0 no

Total 66,088 71,180 76,273 n/a n/a 53,357 53,357 53,357 n/a n/a


LaborNon-LaborOtherTotal

COoCM ^r

oCM 2015 I r2* 1 Chosen

COoCM ^r

oCM 2015 | sd** | Chosen66,708 72,110 77,512 0. 79 no 50,500 50,500 50,500 8,611 no

0 0 0 0. 00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

66,708 72,110 77,512 n/a n/a 50,500 50,500 50,500 n/a n/a

O ther M ethods:

Last Recorded Year (LRY) Itemized Forecast (IF)

LaborNon-LaborOther

Total

COoCM ^roCM 2015 1 | Chosen 2013 |

^roCM 2015 | | Chosen65,826 65,826 65,826 no 59,509 57,242 56,897 yes

0 0 0 no 0 0 0 no0 0 0 no 0 0 0 no

65,826 65,826 65,826 n/a 59,509 57,242 56,897 n/a

Forecast A d jus tm en ts :Base Forecast Method Adjustments*

LaborNon-LaborOther

Total

Method

COoCM ^r

oCM 2015 |

COoCM ^r

oCM 2015 | |IF 59,509 57,242 56,897 0 0 0

N/A 0 0 0 0 0 0N/A 0 0 0 0 0 0

59,509 57,242 56,897 0 0 0

r2 = R Squared (Based on recorded years data) sd = standard deviation (Based on recorded years data) See Appendix B For Additional Detail



FERC A ccoun t: 920,921 Adm inistrative and General Salaries/O ffice Supplies and Expenses



R esults:

Fo recasting R esults

Method Selected 2013 | 2014 | 2015 | |Labor Itemized Forecast 59,509 57,242 56,897

Non-Labor N/A 0 0 0Other N/A 0 0 0

Total 59,509 57,242 56,897

A na lys is o f Fo recasting M ethods

Analysis o f Linear Trending Method:Results Sharing payout is a function of individual and corporate performance and therefore is not necessarily a function of time. Additionally, total Results Sharing payout is a function of SC E labor amounts, which a linear trend against time does not represent.

Analysis o f Averaging Method:Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), the averaging method represents a good indication of future Results Sharing payout. However, as total Res ults Sharing payout is a function of SCE labor amounts, a simple average of historical cost would not accurately represent potential Results Sharing payout especially if our labor costs were to decrease or increase significantly. As a result, the averaging method is rejected.

Analysis o f Last Recorded Year (2012):Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), last recorded year is not a reasonable forecasting method. Additionally, the Results Sharing payout for the Test Year will be a function of the SCE labor forecast, which a last recorded year does not necessarily represent.

Analysis o f Itemized Forecast Method:We have chosen a itemized method to forecast our costs. We used last recorded year costs (2012). We first determined the unit cost of Results Sharing by dividing the Results Sharing costs for 2012 by the labor expense for 2012. To calculate test year costs, we then applied this unit cost to the labor expense fore cast for 2013 through 2015.



FERC A ccoun t: 920,921 Administrative and General S alaries/O ffice Supplies and Expenses



70.000

60.000

50.000

40.000

30.000

20.000

10,000

0

Recorded 2008-2012 / Forecast 2013-2015 2012$ (000)

2008 2009 2010 2011 2012 2013 2014 2015

□ Labor (std escl) ■ Non-Labor (std escl) □ Other (not escl)

R ecorded Period$ (000)

Forecast Expenses (constant 2012$) 2008 | 2009 | 2010 | 2011 | 2012 2013 | 2014 | 2015Labor (standard escalation) 39,076 49,074 48,929 49,597 65,826 59,509 57,242 56,897Non-Labor (standard escalation) 0 0 0 0 0 0 0 0Other (not escalatable) 0 0 0 0 0 0 0 0Total 39,076 49,074 48,929 49,597 65,826 59,509 57,242 56,897

Labor Prior year Total 65,826 59,509 57,242

Change (6,317) (2,267) (345)Total 65,826 59,509 57,242 56,897

Non-Labor Prior year Total 0 0 0Change 0 0 0

Total 0 0 0 0

Other Prior year Total 0 0 0

Change 0 0 0Total 0 0 0 0

Total Change |Labor (6,317) (2,267) (345)

Non-Labor 0 0 0Other 0 0 0

Total N/A (6,317) (2,267) (345)



FERC A ccoun t: 920,921 Adm inistrative and General S alaries/O ffice Supplies and Expenses



This page shows the changes in Labor, Non-Labor, and Other expenditures forecast during 2013 through 2015, including reasons for the addition of personnel (labor), increased office supplies required due to an increase in activity (non-labor).

2012 - 2013

Labor: (6,317)

Reflects a decrease in Results Sharing costs based on a decrease in estimated labor costs for 2013.

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.







2013 - 2014

Labor: (2,267)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t: 920,921 Adm inistrative and General S alaries/O ffice Supplies and Expenses




2014 - 2015______________________________________________________________________________

Labor: (345)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t:

A c tiv ity :

W itness:

920,921 Adm inistrative and General Salaries/O ffice Supplies and Expenses

RESULTS SHARING - A&G - 920-921

Mark Bennett

APPE NDIX A

Detail Description of Final Cost Centers Included in This Activity




Activity: RESULTS SHARING - A&G - 920-921


Description of Final Cost Centers included in this activity:

F502959 CORPORATE BUDGETS - RESULTS SHARING AND MISCELLANEOUS EXPENSESIncludes expenses associated with Results Sharing, Management Incentive Program (MIP) award payments and other miscellaneous general & administrative expenses.

F503017 HUMAN RESOURCES - EXECUTIVE COMPENSATIONIncludes salaries and expenses o f the executive officers o f the com pany .

F526051 SMARTCONNECT - RESULTS SHARINGIncludes Results Sharing and Management Incentive Program (MIP) awards o f employees supporting the Edison SmartConnect program.






Recorded/Adjusted (Constant 2012$) By Final Cost Center$ (000)

2008 2009 2010 2011 2012

F502959 CORPORATE BUDGETS - RESULTS SHARING AND MISCELLANEOUS EXPENSES

32,400 40,623 40,662 42,027 56,838

F503017 HUMAN RESOURCES - EXECUTIVE COMPENSATION

5,535 6,490 5,894 4,832 5,734

F526051 SMARTCONNECT - RESULTS SHARING 1,141 1,961 2,373 2,738 3,254

Total 39,076 49,074 48,929 49,597 65,826

* Due to rounding, totals may not tie to other workpaper pages.



THIS PAGE INTENTIONALLY LEFT BLANK



FERC A ccoun t:

A c tiv ity :

W itness:

920,921 Administrative and General Salaries/O ffice Supplies and Expenses


Mark Bennett

APPENDIX B

Detail of Total Company Adjustments to Recorded




A c tiv ity : RE S U LTS SHARING - A&G - 920-921


Detail o f Total Com pan y A d jus tm en ts to Recorded Expenses

| A d js - (Nom inal $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Labor (59,693) (62,519) (76,972) (79,391) (98,019) 0 0 0Non-Labor 2,616 (601) 142 (2,000) 2,000 0 0 0Other 0 0 0 0 0 0 0 0

Total (57,077) (63,120) (76,830) (81,391) (96,019) 0 0 0

Company W ide Adjustment 1 GRC-DAT-CW -FLSA ACCRUAL

This adjustment removes the FLSA accruals related to shift differential pay.

Labor 0 0 0 0 0 0 0 0Non-Labor 0 0 0 (2,000) 2,000 0 0 0

O ther 0 0 0 0 0 0 0 0

Total 0 0 0 (2,000) 2,000 0 0 0

Company W ide Adjustment 2 GRC-KBS-CW -CORRECT REVERSAL

This adjustment corrects an accrual reversal that recorded to non-labor instead o f labor.

Labor (666) 0 0 0 0 0 0 0Non-Labor 666 0 0 0 0 0 0 0O ther 0 0 0 0 0 0 0 0

Total 0 0 0 0 0 0 0 0

Company W ide Adjustment 3 GRC-JAB-CW -R/S ACCRUALADJ

This adjustment adjusts the Results Sharing accrual am ount to reflect actual Results Sharing paid out less participantcredits.

Labor 2,290 7,937 (549) 1,085 707 0 0 0Non-Labor 0 0 0 0 0 0 0 0O ther 0 0 0 0 0 0 0 0

Total 2,290 7,937 (549) 1,085 707 0 0 0

Company W ide Adjustm ent 4 GRC-JAB-CW -GBU R/S

This adjustment is associated w ith the Employee Compensation "Results Sharing" P rogram . The Results Sharing Program was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing has been removed from FERC account 920-921 and transferred to the FERC accounts where the Results Sharing were paid out.

Labor (20,116) (20,786) (21,078) (22,468) (28,191) 0 0 0Non-Labor 3,058 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0

Total (17,058) (20,786) (21,078) (22,468) (28,191) 0 0 0




A c tiv ity : R E S U LTS SHARING - A&G - 920-921


Detail o f Total C om pany A d jus tm en ts to R ecorded Expenses

A d js - (N om ina l $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Company W ide Adjustm ent 5 GRC-JAB-CW -CSBU R/S

This adjustment is associated w ith the Employee Compensation "Results Sharing" Program. The Results Sharing Program was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing has been removed from FERC account 920 and transferred to the FERC accounts where the Results Sharing were paid out.

LaborNon-LaborOther

(15,272)00

(18,823)00

(20,044)00

(19,394)00

(21,835)00

0 0 0 0 0 0

000

Total (15,272) (18,823) (20,044) (19,394) (21,835) 0 0 0

Company W ide Adjustm ent 6 GRC-JAB-CW -TDBU R/S

This adjustment is associated w ith the Employee Compensation "Results Sharing" Program. The Results Sharing Program was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing has been removed from FERC account 920 and transferred to the FERC accounts where the Results Sharing were paid out.

LaborNon-LaborOther

(33,747)00

(40,551)00

(45,656)00

(46,991)00

(58,915)00

0 0 0 0 0 0

000

Total (33,747) (40,551) (45,656) (46,991) (58,915) 0 0 0

Company W ide Adjustm ent 7 GRC-MHJ-CW -ONETIMEREMOVAL

This adjustment removes expenses which SCE is not seeking recovery in the General Rate Case

LaborNon-LaborOther

000

000

0142

0

000

000

0 0 0 0 0 0

000

Total 0 0 142 0 0 0 0 0

Organizational Unit Adjustm ent 1 A&G HRADM IN-RMA.GMD-OUX-NONOFFICER EXEC TRANSFER

For forecasting purposes, th is adjustment transfers non-officer executive bonuses to the Results Sharing activity in the organization corresponding to each executive's activity grou p.

LaborNon-LaborOther

7,82400

9,70400

10,35500

8,37700

10,21500

0 0 0 0 0 0

000

Total 7,824 9,704 10,355 8,377 10,215 0 0 0




A c tiv ity : R ES ULTS SHARING - A&G - 920-921


Detail o f Total Com pan y A d jus tm en ts to Recorded Expenses

| A d js - (N om inal $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Organizational Unit Adjustm ent 2 A&G RESSHR-GMD.KW K-OUX-NON-RESULTS SHARING TRANSFER

This adjustment transfers Statistical Analysis System (SAS) software costs from Results Sharing to the Information Technology Operating Unit. These costs were incorrectly ch arged to a Results Sharing final cost center.

LaborNon-LaborOther

Total

0735

0

735

Organizational Unit Adjustm ent 3 A&G RESSHR-GMD.RSL-OUX-NON-RESULTS SHARING TRANSFER

This adjustment transfers m iscellaneous, non-Results Sharing costs from Result Sharing A&G 920-921 to Financial Services 923-930 and Financial Services Miscellaneous Expenses 920-921.

LaborNon-LaborO ther

Total

(6)(1,843)

0

(1,849)

0(630)

0

(630)

Organizational Unit Adjustm ent 4 A&G RESSHR-GMD.MJP-OUX-TRANSFER TO OTHER A&G

This adjustment transfers m iscellaneous non-results sharing expenses from the Results Sharing activity to the Other A&G activity.

LaborNon-LaborO ther

Total

O rganizational Unit Adjustm ent 5 A&G RESSHR-GMD.MJP-OUX-EMS TRANSFER

This adjustment transfers Edison Material Supply costs from Controllers to O ther A & G . These costs were ultimately transferred to O ther Operating Revenue (OOR).

Labor 0 0 0 0 0 0 0 0Non-Labor 0 26 0 0 0 0 0 0

Other 0 0 0 0 0 0 0 0

Total 26

0 0 0 0 0 0 0

0 0 0 0 0 0

0 2 0 0 0 0 0 0

0 0 0 0 0 0 0



End of Workpapers for:


A c tiv ity :

W itness:


Mark Bennett




FERC A ccoun t: 905 M iscellaneous Customer Accounts Expenses

A c tiv ity : RESULTS SHARING - CUSTOMER SERVICE - 905



2012$ (000)

Recorded2012

Forecast2015





F502959 F503018



FERC A ccoun t: 905 Miscellaneous Customer Accounts Expenses

A c tiv ity : RESULTS SHARING - CUSTOMER S ERVICE - 905





Labor 0 0 0 0 0

Non-Labor 0 0 0 0 0

Other 0 0 0 0 0

Total 0 0 0 0 0

Adjustments- (Nominal $) - see Appendix B for additional deta i lLabor

Non-Labor

Other

15,272

0

0

18,823

0

0

20,044

0

0

19,394

0

0

21,835

0

0

Total 15,272 18,823 20,044 19,394 21,835


Non-Labor

Other

15,272

0

0

18,823

0

0

20,044

0

0

19,394

0

0

21,835

0

0

Total 15,272 18,823 20,044 19,394 21,835

Escalation:Labor

Non-Labor

1.1414

1.0846

1.1070

1.0775

1.0701

1.0550

1.0327

1.0248

1.0000

1.0000

Other 1.0000 1.0000 1.0000 1.0000 1.0000


Labor

Non-Labor

OtherTotal

17,431 20,837 21,448 20,029 21,835

0 0 0 0 0

0 0 0 0 017,431 20,837 21,448 20,029 21,835

24.000

20.000

16,000

12,000

8,000

4,000

0


2008 2009 2010 2011 2012

□ Labor (std escl) ■ Non-L abor (std escl) □ Other (not escl)




A c tiv ity : RESULTS SHARING - CUSTOMER SE RVICE - 905


Fo recasting M ethods - Sum m ary o f R esults o f a ll M ethods S tud ied - 2012$ (000)

2 Recorded Years (2011 - 2012):Results of Averaging (A2)

COoCM ^r


Labor 20,932 20,932 20,932 903 no



3 R ecorded Years (2010 - 2012):

Results o f Linear Trending (T3) Results of Averaging (A3)

2013 2014 | 2015 | r2* | Chosen 2013 | 2014 | 2015 | sd** | Chosen

Labor 21,491 21,684 21,878 0.04 no 21,104 21,104 21,104 776 noNon-Labor 0 0 0 0.00 no 0 0 0 0 noOther 0 0 0 0.00 no 0 0 0 0 no

Total 21,491 21,684 21,878 n/a n/a 21,104 21,104 21,104 n/a n/a

4 Recorded Years (2009 - 2012):Results o f Linear Trending (T4) Results of Averaging (A4)

COoCM ^r

oCM 2015 | l2* | Chosen

COoCM ^r


Labor 21,431 21,588 21,746 0.0 7 no 21,037 21,037 21,037 682 noNon-Labor 0 0 0 0.00 no 0 0 0 0 noOther 0 0 0 0.00 no 0 0 0 0 no

Total 21,431 21,588 21,746 n /a n/a 21,037 21,037 21,037 n/a n/a

5 R ecorded Years (2008 - 2012):Results o f Linear Trending (T5) Results of Averaging (A5)


COoCM ^r

oCM 2015 I r2* | Chosen

COoCM ^r

oCM 2015 | sd** | Chosen22,716 23,516 24,316 0.52 no 20,316 20,316 20,316 1,566 no

0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

22,716 23,516 24,316 n/a n/a 20,316 20,316 20,316 n/a n/a

O ther M ethods:


LaborNon-LaborOther

Total

COoCM ^roCM 2015 | | Chosen 2013 |


0 0 0 no 0 0 0 no0 0 0 no 0 0 0 no

21,835 21,835 21,835 n/a 22,316 23,226 22,993 n/a


LaborNon-LaborOther

Total

Method

COoCM ^r

oCM 2015 |

COoCM ^r

oCM 2015 | |IF 22,316 23,226 22,99 3 0 0 0

N/A 0 0 0 0 0 0N/A 0 0 0 0 0 0

22,316 23,226 22,99 3 0 0 0

* r2 = R Squared (Based on recorded years data)** sd = standard deviation (Based on recorded years data)*** See Appendix B For Additional Detail



FERC A ccoun t: 905 M iscellaneous Custom er Accounts Expenses



R esults:



Non-Labor N/A 0 0 0Other N/A

ooo

Total 22,316 23,226 22,993


Analysis of Linear Trending Method:Results Sharing payout is a function of individual and corporate performance and therefore is not necessarily a function of time. Additionally, total Results Sharing payout is a function of SCE labor amounts, which a linear trend against time does not represent.

Analysis of Averaging Method:Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), the averaging method represents a good indication of future Results Sharing payout. However, as total Results Sharing payout is a function of SCE labor amounts, a simple average of historical cost would not accurately represent potential Results Sharing payout especially if our labor costs were to decrease or increase significantly. As a result, the averaging method is rejected.

Analysis of Last Recorded Year (2012):Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant u nusual events), last recorded year is not a reasonable forecasting method. Additionally, the Results Sharing payout for th e Test Year will be a function of the SCE labor forecast, which a last recorded year does not necessarily represent.

Analysis of Itemized Forecast Method:We have chosen itemized method to forecast our costs. We used last recorded year costs (2012). We first determined the unit cost of Results Sharing by dividing the Results Sharing costs for 2012 by the labor expense for 2012. To calculate test year costs, we then applied this unit cost to the labor expense forecast for 2013 through 2015.






24.000

20.000

16,000

12,000

8,000

4,000

0


2008 2009 2010 2011 2012 2013 2014

□ Labor (std escl) Non-Labor (std escl) □ Other (not escl)

2015

1 R ecorded Period$ (000)



Change 481 910 (233)Total 21,835 22,316 23,226 22,993


Total 0 0 0 0



Total Change |Labor 481 910 (233)


Total N/A 481 910 (233)







2012 - 2013

Labor: 481

Reflects an increase in Results Sharing costs based on an increase in estimated labor costs for 2013.

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.







2013 - 2014

Labor: 910

Reflects an increase in Results Sharing costs based on an increase in estimated labor costs for 2014.

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t: 905 Miscellaneous Custom er Accounts Expenses




2014 - 2015______________________________________________________________________________

Labor: (233)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t:

A c tiv ity :

W itness:

905 Miscellaneous Custom er Accounts Expenses

RESULTS SHARING - CUSTOMER SERVICE - 905

Mark Bennett

APPENDIX A





Activity: RESULTS SHARING - CUSTOMER SE RVICE - 905



F502959 CORPORATE BUDGETS - RESULTS SHARING AND MISCELLANEOUS EXPENSESIncludes expenses associated w ith Results Sharing, Management Incentive Program (MIP) award payments and other m iscellaneous general & administrative expenses.

F503018 HUMAN RESOURCES - EXECUTIVE COMPENSATION (DEMAND SIDE MANAGEMENT)Includes salaries and expenses of the executive officers o f the com pany.







2008 2009 2010 2011 2012


16,242 19,288 19,739 18,980 20,686

F503018 HUMAN RESOURCES - EXECUTIVE COMPENSATION (DEMAND SIDE MANAGEMENT)

1,189 1,549 1,709 1,049 1,149

Total 17,431 20,837 21,448 20,029 21,835




FERC A ccoun t:

A c tiv ity :

W itness:

905 Miscellaneous Custom er Accounts Expenses

RESULTS SHARING - CUSTOMER SERVICE - 905

Mark Bennett

APPENDIX B




FERC A ccoun t: 905 Miscellaneous Custom er Accounts Expenses

A c tiv ity : RES ULTS SHARING - CUSTOMER SERVICE - 905


Detail o f Total C om pany A d jus tm en ts to Recorded Expenses

A d js - (N om ina l $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Labor 15,272 18,823 20,044 19,394 21,835 0 0 0Non-Labor 0 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0

Total 15,272 18,823 20,044 19,394 21,835 0 0 0

Company W ide Adjustm ent 1 GRC-JAB-CW -CSBU R/S

This adjustment is associated with the Employee Compensation "Results Sharing" Program. The Results SharingProgram was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing hasbeen removed from FERC account 920 and transferred to the FERC accounts where the Results Sharing were paidout.


Total 15,272 18,823 20,044 19,394 21,835 0 0 0




FERC A ccoun t: 905 M iscellaneous Customer Accounts Expenses






FERC A ccoun t: 500 Operation Supervision and Engineering

A c tiv ity : RESULTS SHARING - GENERATION - 500



2012$ (000)

Recorded2012

Forecast2015



Results Sharing is SCE's annual incentive compensation plan which connects compensation to employees' annual job performance. Employees are eligible to earn a cash bonus based o n individual and team (business unit or department) performance related to clear, measurable business goals.


F502959 F503017









Labor 0 0 0 0 0

Non-Labor 0 0 0 0 0

Other 0 0 0 0 0

Total 0 0 0 0 0

Adjustments- (Nominal $) - see Appendix B for additional detailLabor

Non-Labor

Other

17,058

0

0

20,786

0

0

21,078

0

0

22,468

0

0

28,191

0

0

Total 17,058 20,786 21,078 22,468 28,191


Non-Labor

Other

17,058

0

0

20,786

0

0

21,078

0

0

22,468

0

0

28,191

0

0

Total 17,058 20,786 21,078 22,468 28,191

Escalation:Labor

Non-Labor

1.1414

1.1186

1.1070

1.1173

1.0701

1.0861

1.0327

1.0253

1.0000

1.0000

Other 1.0000 1.0000 1.0000 1.0000 1.0000


Labor

Non-Labor

OtherTotal

19,470 23,010 22,555 23,203 28,191

0 0 0 0 0

0 0 0 0 019,470 23,010 22,555 23,203 28,191

32.000

28.000

24.000

20.000

16,000

12,000

8,000

4,000

0


2008 2009 2010 2011 2012

□ Labor (std escl) ■ Non-La bor (std escl) □ Other (not escl)






F o recasting M ethods - Sum m ary o f R esults o f a ll M ethods S tud ied - 2012$ (000)

2 Recorded Years (2011 - 2012):Results o f Averaging (A2)

COoCM ^roCM 2015 | sd** | Chosen

Labor 25,697 25,697 25,697 2,494 no




Results o f Linear Trending (T3) Results o f Averaging (A3)

LaborNon-LaborOther

Total

2013

^roCM 2015 | r2* | Chosen 2013 | 2014 | 2015 | sd** | Chosen30,286 33,104 35,922 0.84 no 24,650 24,650 24,650 2,518 no

0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

30,286 33,104 35,922 n/a n/a 24,650 24,650 24,650 n/a n/a

(2009 - 2012):Results o f Linear Trending (T4) Results o f Averaging (A4)

COoCM ^roCM 2015 | l2* | Chosen

COoCM ^roCM 2015 | sd** | Chosen28,288 29,907 31,526 0.62 no 24,240 24,240 24,240 2,293 no

0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

28,288 29,907 31,526 n/a n/a 24,240 24,240 24,240 n/a n/a

LaborNon-LaborOther

Total



COoCM ^roCM 2015 I r2* | Chosen


0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

28,576 30,340 32,104 n/a n/a 23,286 23,286 23,286 n/a n/a

O ther M ethods:


LaborNon-LaborOther

Total



0 0 0 no 0 0 0 no0 0 0 no 0 0 0 no

28,191 28,191 28,191 n/a 19,336 13,325 10,708 n/a


LaborNon-LaborOther

Total

Method

COoCM ^roCM 2015 |

COoCM ^roCM 2015 | |IF 19,336 13,325 10,708 0 0 0

N/A 0 0 0 0 0 0N/A 0 0 0 0 0 0

19,336 13,325 10,708 0 0 0

* r2 = R Squared (Based on recorded years data)** sd = standard deviation (Based on recorded years data) *** See Appendix B For Additional Detail






R esults:

Fo recasting Results



Total 19,336 13,325 10,708

A na lys is o f Fo recasting Methods


Analysis of Averaging Method:Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), the averaging method represents a good indication of future Results Sharing payout. However, as total Resu lts Sharing payout is a function of SCE labor amounts, a simple average of historical cost would not accurately represent potential Results Sharing payout especially if our labor costs were to decrease or increase significantly. As a result, the averaging method is rejected.

Analysis of Last Recorded Year (2012):Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant un usual events), last recorded year is not a reasonable forecasting method. Additionally, the Results Sharing payout for the Test Year will be a function of the SCE labor forecast, which a last recorded year does not necessarily represent.




FERC A ccoun t: 500 Operation Supervision and Enginee ring

A c tiv ity : RESULTS SHARING - GENERATION - 5 00


32.000

28.000

24.000

20.000

16,000

12,000

8,000

4,000

0


2008 2009 2010 2011 2012 2013 2014 2015


R ecorded Period$ (000)



Change (8,855) (6,011) (2,617)Total 28,191 19,336 13,325 10,708


Total 0 0 0 0



Total Change |Labor (8,855) (6,011) (2,617)


Total N/A (8,855) (6,011) (2,617)







2012 - 2013

Labor: (8,855)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.






This page shows the changes in Labor, Non-Labor, and Other expenditures forecast during 2013 through 2015, including reasons for the addition of perso nnel (labor), increased office supplies required due to an increase in activity (non-labor).

2013 - 2014

Labor: (6,011)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t: 500 Operation Supervision and Enginee ring




2014 - 2015______________________________________________________________________________

Labor: (2,617)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t:

A c tiv ity :

W itness:

500 Operation Supervision and Engineering

RESULTS SHARING - GENERATION - 500

Mark Bennett

APPENDIX A





Activity: RESULTS SHARING - GENERATION - 500



F502959 CORPORATE BUDGETS - RESULTS SHARING AND MISCELLANEOUS EXPENSESIncludes expenses associated with Results Sharing, Management Incentive Program (MIP) award payments and other miscellaneous general & administrative expenses.

F503017 HUMAN RESOURCES - EXECUTIVE COMPENSATIONIncludes salaries and expenses of the executive officers o f the com pany.







2008 2009 2010 2011 2012


18,379 21,691 20,717 21,639 26,494

F503017 HUMAN RESOURCES - EXECUTIVE COMPENSATION

1,091 1,320 1,837 1,565 1,697

Total 19,470 23,011 22,554 23,204 28,191




FERC A ccoun t:

A c tiv ity :

W itness:

500 Operation Supervision and Engine ering

RESULTS SHARING - GENERATION - 500

Mark Bennett

APPENDIX B





A c tiv ity : RE S U LTS SHARING - GENERATION - 500



A d js - (N om inal $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Labor 17,058 20,786 21,078 22,468 28,191 0 0 0Non-Labor 0 0 0 0 0 0 0 0Other 0

oooo

0 0 0

Total 17,058 20,786 21,078 22,468 28,191 0 0 0

Company W ide Adjustm ent 1 GRC-JAB-CW -GBU R/S

This adjustment is associated w ith the Employee Compensation "Results Sharing" Program. The Results SharingProgram was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing hasbeen removed from FERC account 920-921 and transferred to the FERC accounts where the Results Sharing werepaid out.

Labor 17,058 20,786 21,078 22,468 28,191 0 0 0Non-Labor 0 0 0 0 0 0 0 0Other 0

oooo0 0 0

Total 17,058 20,786 21,078 22,468 28,191 0 0 0




FERC A ccoun t: 588 M iscellaneous Distribution Expenses

A c tiv ity : RESULTS SHARING - TRANSMISSION & DISTRIBUTION - 588



2012$ (000)

Recorded2012

Forecast2015





F502959 F503018







I Recorded Period$ (000)


Labor 0 0 0 0 0

Non-Labor 0 0 0 0 0

Other 0 0 0 0 0

Total 0 0 0 0 0

Adjustments- (Nominal $) - see Appendix B for additional detailLabor 33,747 40,551 45,656 46,991 58,915

Non-Labor 0 0 0 0 0

Other 0 0 0 0 0

Total 33,747 40,551 45,656 46,991 58,915

Recorded/Adjusted (Nominal $)Labor 33,747 40,551 45,656 46,991 58,915

Non-Labor 0 0 0 0 0

Other 0 0 0 0 0

Total 33,747 40,551 45,656 46,991 58,915

Escalation:Labor 1.1414 1.1070 1.0701 1.0327 1.0000

Non-Labor 1.0971 1.1039 1.0776 1.0243 1.0000

Other 1.0000 1.0000 1.0000 1.0000 1.0000

Recorded/Adjusted (Constant 2012$)Labor 38,519 44,890 48,855 48,529 58,915

Non-Labor 0 0 0 0 0

Other 0____________ 0____________ 0____________ 0___________ 0Total 38,519 44,890 48,855 48,529 58,915


60,000 — =

50.000 ------------------------------------------------------------------------= = ------------------- -------------------

40.000 --------- ------------------- ------------------- ------------------- -------------------

30.000 --------- ------------------- ------------------- ------------------- -------------------

20.000 -------------------

10,000 -------------------

0 . , . .--------------------2008 2009 2010 2011 2012







Fo recasting M ethods - Sum m ary o f R esults o f all M ethods S tud ied - 2012$ (000)

2 R ecorded Years (2011 - 2012):Results o f Averaging (A2)

COoCM ^roCM 2015 | sd** | Chosen

Labor 53,722 53,722 53,722 5,193 no




Results of Linear Trending (T3) Results o f Averaging (A3)

LaborNon-LaborOther

Total

2013

^roCM 2015 | r2* 1 Chosen 2013 | 2014 | 2015 | sd** | Chosen62,160 67,190 72,220 0.73 no 52,100 52,100 52,100 4,821 no

0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

62,160 67,190 72,220 n/a n/a 52,100 52,100 52,100 n/a n/a

(2009 - 2012):Results of Linear Trending (T4) Results o f Averaging (A4)

COoCM ^roCM 2015 | r2* 1 Chosen


0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

60,734 64,909 69,084 n/a n/a 50,297 50,297 50,297 n/a n/a

LaborNon-LaborOther

Total

5 Recorded Years (2008 - 2012):Results of Linear Trending (T5) Results o f Averaging (A5)


COoCM ^roCM 2015 | r2* 1Chosen


0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

61,271 65,714 70,157 n/a n/a 47,942 47,942 47,942 n/a n/a

O ther M ethods:


LaborNon-LaborOther

Total



0 0 0 no 0 0 0 no0 0 0 no 0 0 0 no

58,915 58,915 58,915 n/a 52,264 56,171 57,262 n/a


LaborNon-LaborOther

Total

Method

COoCM ^roCM 2015 |

COoCM ^roCM 2015 | |IF 52,264 56,171 57,262 0 0 0

N/A 0 0 0 0 0 0N/A 0 0 0 0 0 0

52,264 56,171 57,262 0 0 0







R esults:




Total 52,264 56,171 57,262

A na lys is o f F o recasting M ethods


Analysis of Averaging Method:Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), the averaging method represents a good indication of future Results Sharing payout. However, as total Result s Sharing payout is a function of SCE labor amounts, a simple average of historical cost would not accurately represent potential Results Sharing payout especially if our labor costs were to decrease or increase significantly. As a result, the averaging method is rejected.

Analysis of Last Recorded Year (2012):Results Sharing payout is a function of individual and corporate performance. Because performance varies unpredictably from year-to-year (in normal years, that is year without significant unusual events), last recorded year is not a reasonable forecasting method. Additionally, the Results Sharing payout for the Test Year will be a function of the SCE labor forecast, which a last recorded year does not necessarily represent.







60,000

50.000

40.000

30.000

20.000

10,000

0


2008 2009 2010 2011 2012 2013 2014 2015


Recorded Period$ (000)



Change (6,651) 3,907 1,091Total 58,915 52,264 56,171 57,262


Total 0 0 0 0



Total Change |Labor (6,651) 3,907 1,091


Total N/A (6,651) 3,907 1,091



FERC A ccoun t: 588 Miscellaneous Distribution Expenses



This page shows the changes in Labor, Non-Labor, and Other expenditures forecast during 2013 through 2015, including reasons for the addition of perso nnel (labor), increased office supplies required due to an increase in activity (non-labor).

2012 - 2013

Labor: (6,651)


Non-Labor: 0

Not applicable.

Other: 0

Not applicable.







2013 - 2014

Labor: 3,907

Reflects an increase in Results Sharing costs based on a increase in estimated labor costs for 2014.

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.







2014 - 2015_____________________________________________________________________________

Labor: 1,091

Reflects an increase in Results Sharing costs based on a increase in estimated labor costs for 2015.

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t:

A c tiv ity :

W itness:

588 Miscellaneous Distribution Expenses

RESULTS SHARING - TRANSMISSION & DISTRIBUTION - 588

Mark Bennett

APPENDIX A




FERC A ccoun t: 588 M iscellaneous Distribution Expense s

Activity: RESULTS SHARING - TRANSMISSION & DISTRIBUTION - 588


Description of Final Cost Centers included in this acti vity:

F502959 CORPORATE BUDGETS - RESULTS SH ARING AND MISCELLANEOUS EXPENSES Includes expenses associated with Results Sharing, Management Incentive Program (MIP) award payments and other m iscellaneous general & administrative expenses.

F503018 HUMAN RESOURCES - EXECUTIVE COMPENSATION (DEMAND SIDE MANAGEMENT)Includes salaries and expenses of the ex ecutive officers of the com pany .



FERC A ccoun t

A c tiv ity :

W itness:


2008 2009 2010 2011 2012



Mark Bennett

F502959 CORPORATE BUDGETS - RESULTS 37,404 43,506 47,214 47,324 57,280SHARING AND MISCELLANEOUS EXPENSES

F503018 HUMAN RESOURCES - EXECUTIVE 1,115 1,384 1,640 1,205 1,635COMPENSATION (DEMAND SIDE MANAGEMENT)

Total 38,519 44,890 48,854 48,529 58,915

** Due to rounding, totals may not tie to other workpaper pages.



FERC A ccoun t:

A c tiv ity :

W itness:



Mark Bennett

APPEN DIX B

Detail of Tota l Company Adjustments t o Recorded



FERC A ccoun t: 588 M iscellaneous Distribution Expens es

A c tiv ity : R E S U LTS SHARING - TRANSMISSION & DISTRIBUTION - 588



A d js - (N om inal $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015


Total 33,747 40,551 45,656 46,991 58,915 0 0 0

Company W ide Adjustm ent 1 GRC-JAB-CW -TDBU R/S

This adjustment is associated w ith the Employee Compensation "Results Sharing" P rogram . The Results SharingProgram was recorded in F502959 and F503017 in FERC Account 920. For trending purposes, Results Sharing hasbeen removed from FERC account 920 and transferred to the FERC accounts where the Results Sharing were paidout.


Total 33,747 40,551 45,656 46,991 58,915 0 0 0


Exhibit No. SCE-06 / Human Resources / Vol. 02 / Pt.01 / Ch. IV-V Witnesses: M. Bennett and J. Trapp

CD CD

2012

Rec

ord

ed &

201

2 F

ore

cast

Res

ult

s S

har

ing

(R

S)

(Co

nst

ant

$000

)

Rec

ord

edR

SR

eco

rded

/Ad

jL

abo

rR

S/

Lab

or$

2012

2012

2012

2012

To

tal

Co

mp

any

($00

0)($

000)

($00

0)%

Gen

erat

ion

28,1

9128

,191

334,

834

8.42

%Le

ss P

artic

ipan

ts C

red

its’

Net

Gen

erat

ion

028

,191

028

,191

334,

834

8.42

%T

rans

mis

sion

& D

istr

ibut

ion

58,9

1558

,915

324,

192

18.1

7%C

usto

mer

Se

rvic

e **

21,8

3521

,835

176,

930

12.3

4%A

dmin

istr

ativ

e &

Gen

eral

65,8

2665

,826

363,

300

18.1

2%T

otal

174,

767

174,

767

1,19

9,25

6In

pu

t R

esu

lts

Sh

arin

g %

to

lab

or

PC

G R

ecor

ded

PC

G F

orec

ast

2013

, 20

14 &

201

5 R

S F

ore

cast

:

14.5

7%14

.57%

62,3

7067

,467

To

tal

Co

mp

any

RS

/La

bo

rSF

ore

cast

L

abo

r C

ost

**

RS

Fo

reca

stF

ore

cast

L

abo

r C

ost

**

RS

Fo

reca

stF

ore

cast

L

abo

r C

ost

**

RS

Fo

reca

stF

ore

cast

L

abo

r C

ost

**

RS

Fo

reca

stF

ore

cast

ab

or

Co

st *

RS

Fo

reca

st20

1220

13

|20

1320

14

|20

1420

15

|20

1520

16

|20

1620

17

|20

17%

(S00

0)(S

000)

(S00

0)(S

000)

(S00

0)(S

000)

(S00

0)(S

000)

(S00

0)(S

000)

Gen

erat

ion

8.42

%26

9,97

422

,730

179,

176

15,0

8613

9,28

311

,727

139,

283

11,7

2713

9,28

311

,727

Less

Par

ticip

ants

Cre

dits

(3,3

94)

(1,7

60)

(1,0

18)

(1,0

18)

(1,0

18)

Net

Gen

erat

ion

19,3

3613

,325

10,7

0810

,708

10,7

08T

rans

mis

sion

& D

istr

ibut

ion

18.1

7%28

7,59

652

,264

309,

090

56,1

7131

5,09

457

,262

315,

094

57,2

6231

5,09

457

,262

Cus

tom

er S

erv

ice

**12

.34%

180,

826

22,3

1618

8,20

423

,226

186,

311

22,9

9318

6,31

122

,993

186,

311

22,9

93A

dmin

istr

ativ

e &

Gen

eral

18.1

2%32

8,43

559

,509

315,

925

57,2

4231

4,02

156

,897

314,

021

56,8

9731

4,02

156

,897

Tota

l1,

066,

831

153,

425

992,

395

149,

964

954,

709

147,

860

954,

709

147,

860

954,

709

147,

860

* P

artic

ipan

t C

redi

ts f

or

Res

ults

Sh

arin

g ar

e re

cord

ed in

lab

or fo

r 20

12.

** H

isto

rical

lab

or is

adj

uste

d to

inc

lude

$62

,370

mill

ion

and

fore

cast

lab

or in

clud

es a

n ad

ditio

nal

$67,

467

mill

ion

for

lab

or r

elat

ed t

o P

ublic

Pur

pose

, D

eman

d R

espo

nse

Pro

gram

s



RE

SU

LTS

SH

AR

ING

PA

YO

UTS

1/

2012

SU

MM

AR

YN

omin

al D

olla

rs

Bus

ines

s U

nit

(FE

RC

Acc

t#)

A&

G

(920

)

Gen

erat

ion

(500

)Le

ss p

artic

ipan

t cre

dit

Gen

erat

ion

(500

) A

djus

ted

Tota

l

Tran

s &

Dis

tr

(588

)

Cus

tom

er S

ervi

ce

(905

)

Tota

l

Res

ults

S

hari

ng (

RS

) +

2012

Man

agem

ent

Ince

ntiv

e P

rogr

am (

MIP

) 20

12

Non

-Off

icer

E

xec.

Inc

entiv

e C

omp.

Pla

n +

(NO

EIP

) 20

12

Tota

l Act

ual

Pay

out

x 20

12

Esc

alat

ion

Fact

orC

on

stan

t 201

2 =

Dol

lars

29,4

32,2

6030

,659

,755

5,73

4,29

165

,826

,306

1.00

0065

,826

,306

20,6

10,4

9510

,659

,144

1,69

6,60

632

,966

,245

1.00

0032

,966

,245

(4,7

75,8

91)

28,1

90,3

541.

0000

(4,7

75,8

91)

28,1

90,3

54

45,4

98,2

6311

,781

,983

1,63

5,44

458

,915

,690

1.00

0058

,915

,690

14,9

11,9

225,

773,

661

1,14

8,81

621

,834

,399

1.00

0021

,834

,399

110,

452,

940

58,8

74,5

4310

,215

,157

17

4,76

6,74

917

4,76

6,74

9

Bus

ines

s U

nits

not

incl

uded

in to

tals

abo

ve:

EIX

Edi

son

Car

rier

Sol

utio

ns

Com

mun

ity I

nvol

vem

ent

Pub

lic A

ffairs

Foo

tnot

es:

1- P

ayou

ts in

clud

e R

S,

MIP

and

Non

-Offi

cer

Exe

c. I

ncen

tive

Com

p. P

lan

NO

EIP

.

CD



CD oo

RE

SU

LTS

SH

AR

ING

PA

YO

UTS

1/

2011

SU

MM

AR

YN

omin

al D

olla

rs

Bus

ines

s U

nit

(FE

RC

Acc

t#)

A&

G

(920

)

Gen

erat

ion

(500

)

Less

par

ticip

ant c

redi

t G

ener

atio

n (5

00)

Adj

uste

d To

tal

Tran

s &

Dis

tr

(588

)

Cu

sto

mer

Ser

vice

(9

05)

Tota

l

Res

ults

S

hari

ng (

RS

) +

2011

Man

agem

ent

Ince

ntiv

e P

rogr

am (

MIP

) 20

11

Non

-Off

icer

E

xec.

Inc

entiv

e C

omp.

Pla

n +

(NO

EIP

) 20

11

Tota

l Act

ual

Pay

out

x 20

11

Esc

alat

ion

Fact

orC

on

stan

t 201

2 =

Dol

lars

23,0

24,1

3520

,321

,521

4,67

9,16

448

,024

,820

1.03

2749

,595

,232

17,5

21,5

807,

272,

459

1,51

4,70

526

,308

,744

1.03

2727

,169

,040

(3,8

41,3

72)

22,4

67,3

721.

0327

(3,9

66,9

85)

23,2

02,0

55

37,3

73,4

338,

451,

064

1,16

7,30

046

,991

,797

1.03

2748

,528

,429

13,8

21,4

574,

556,

136

1,01

6,10

019

,393

,693

1.03

2720

,027

,867

91,7

40,6

0540

,601

,180

8,37

7,26

913

6,87

7,68

214

1,35

3,58

2

Bus

ines

s U

nits

not

incl

uded

in t

otal

s ab

ove:

EIX

Edi

son

Car

rier

Sol

utio

ns

Com

mun

ity I

nvol

vem

ent

Pub

lic A

ffairs

Foo

tnot

es:

1- P

ayou

ts in

clud

e R

S,

MIP

and

Non

-Offi

cer

Exe

c. I

ncen

tive

Com

p. P

lan

NO

EIP

.



RE

SU

LTS

SH

AR

ING

PA

YO

UTS

1/

2010

SU

MM

AR

YN

omin

al D

olla

rs

Bus

ines

s U

nit

(FE

RC

Acc

t#)

A&

G

(920

)

Gen

erat

ion

(500

)

Less

par

ticip

ant c

redi

t G

ener

atio

n (5

00)

Adj

uste

d To

tal

Tran

s &

Dis

tr

(588

)

Cus

tom

er S

ervi

ce

(905

)

Tota

l

Res

ults

S

hari

ng (

RS

) +

2010

Man

agem

ent

Ince

ntiv

e P

rogr

am (

MIP

) 20

10

Non

-Off

icer

E

xec.

Inc

entiv

e C

omp.

Pla

n +

(NO

EIP

) 20

10

Tota

l A

ctua

l P

ayou

t x

2010

Esc

alat

ion

Fact

orC

on

stan

t 201

2 =

Dol

lars

21,0

23,2

7719

,194

,616

5,50

8,75

445

,726

,647

1.07

0148

,932

,085

15,8

89,4

926,

782,

609

1,71

7,27

024

,389

,371

1.07

0126

,099

,066

(3,3

11,2

16)

21,0

78,1

551.

0701

(3,5

43,3

32)

22,5

55,7

34

36,1

90,1

587,

932,

850

1,53

2,60

045

,655

,608

1.07

0148

,856

,066

13,8

44,2

644,

602,

732

1,59

6,64

120

,043

,637

1.07

0121

,448

,696

86,9

47,1

9138

,512

,807

10,3

55,2

6513

2,50

4,04

714

1,79

2,58

1

Bus

ines

s U

nits

not

incl

uded

in t

otal

s ab

ove:

EIX

Edi

son

Car

rier

Sol

utio

ns

Com

mun

ity I

nvol

vem

ent

Pub

lic A

ffairs

Foo

tnot

es:

1- P

ayou

ts in

clud

e R

S,

MIP

and

Non

-Offi

cer

Exe

c. I

ncen

tive

Com

p. P

lan

NO

EIP

.

CD CD



o

RE

SU

LTS

SH

AR

ING

PA

YO

UTS

1/

2009

SU

MM

AR

YN

omin

al D

olla

rs

Non

-Off

icer

Bus

ines

s U

nit

(FE

RC

Acc

t#)

Res

ults

S

hari

ng (

RS

) +

2009

Man

agem

ent

Ince

ntiv

e P

rogr

am (

MIP

) 20

09

Exe

c. I

ncen

tive

Com

p. P

lan

+ (N

OE

IP)

2009

Tota

l Act

ual

Pay

out

x 20

09

Esc

alat

ion

Fact

orC

on

stan

t 201

2 =

Dol

lars

A&

G

(920

)17

,964

,378

20,5

04,3

025,

863,

940

44,3

32,6

201.

1070

49,0

76,2

10

Gen

erat

ion

(500

)

Less

par

ticip

ant c

redi

t G

ener

atio

n (5

00)

Adj

uste

d To

tal

15,8

10,1

677,

121,

482

1,19

1,73

724

,123

,386

(3,3

37,8

98)

20,7

85,4

89

1.10

70

1.10

70

26,7

04,5

88

(3,6

95,0

53)

23,0

09,5

35

Tran

s &

Dis

tr

(588

)31

,450

,908

7,84

9,86

71,

249,

500

40,5

50,2

751.

1070

44,8

89,1

54

Cus

tom

er S

ervi

ce

(905

)12

,393

,573

5,03

0,26

51,

398,

501

18,8

22,3

391.

1070

20,8

36,3

29

Tota

l77

,619

,026

40,5

05,9

169,

703,

678

124,

490,

723

137,

811,

229

Bus

ines

s U

nits

not

incl

uded

in to

tals

abo

ve:

EIX

Edi

son

Car

rier

Sol

utio

ns

Com

mun

ity I

nvol

vem

ent

Pub

lic A

ffairs

Foo

tnot

es:

1- P

ayou

ts in

clud

e R

S,

MIP

and

Non

-Offi

cer

Exe

c. I

ncen

tive

Com

p. P

lan

NO

EIP

.



RE

SU

LTS

SH

AR

ING

PA

YO

UTS

1/

2008

SU

MM

AR

YN

omin

al D

olla

rs

Non

-Off

icer

Bus

ines

s U

nit

(FE

RC

Acc

t#)

Res

ults

S

hari

ng (

RS

) +

2008

Man

agem

ent

Ince

ntiv

e P

rogr

am (

MIP

) 20

08

Exe

c. I

ncen

tive

Com

p. P

lan

+ (N

OE

IP)

2008

Tota

l A

ctua

l P

ayou

t x

2008

Esc

alat

ion

Fact

orC

on

stan

t 201

2 =

Dol

lars

A&

G

(920

)15

,553

,844

13,8

32,6

074,

848,

828

34,2

35,2

791.

1414

39,0

76,1

47

Gen

erat

ion

(500

)

Less

par

ticip

ant c

redi

t G

ener

atio

n (5

00)

Adj

uste

d To

tal

14,4

25,1

314,

733,

426

956,

397

20,1

14,9

54

(3,0

56,7

39)

17,0

58,2

15

1.14

14

1.14

14

22,9

59,2

09

(3,4

88,9

62)

19,4

70,2

47

Tran

s &

Dis

tr

(588

)28

,238

,692

4,53

1,02

097

7,10

033

,746

,812

1.14

1438

,518

,611

Cu

stom

er S

ervi

ce

(905

)10

,719

,795

3,50

9,91

71,

041,

755

15,2

71,4

671.

1414

17,4

30,8

52

Tota

l68

,937

,462

26,6

06,9

707,

824,

080

100,

311,

773

114,

495,

858

Bus

ines

s U

nits

not

incl

uded

in

tota

ls a

bove

:E

IXE

diso

n C

arrie

r S

olut

ions

C

omm

unity

Inv

olve

men

t P

ublic

Affa

irs

Foo

tnot

es:

1- P

ayou

ts in

clud

e R

S,

MIP

and

Non

-Offi

cer

Exe

c. I

ncen

tive

Com

p. P

lan

NO

EIP

.



To:Cc:Bcc:Subject:From:

W e've Made Some Changes to Our 2013 Goals and Results Sharing/MIP Ron Litzinger/COM M/SCE/EIX@ EIX - Monday 07/01/2013 05:58 PM

FOR INTERNAL USE ONLY

To: Southern California Edison Employees

The 2013 Operational & Service Excellence (OpX) framework defines our strategic objectives as a company, and the goals we’ve set to help us meet them.

We have finalized a subset of those goals by organizational unit tied to Results Sharing and Management Incentive Program (MIP) plans for 2013. You’ll notice that the OU goals have been organized into seven categories. Two of these categories, Blue Chips and Pacesetter, are new and identify goals that are high-priority initiatives not called out specifically on the OpX framework and those that will help us become an industry leader.

These changes to Results Sharing and MIP are designed to focus and streamline the goals, and create a more direct line of sight to OpX and each OU's top priorities. You will also notice two of the categories, Safety and Affordability, may be met by either your OU or the Company meeting the goal, which is intended to drive teamwork across the organization. Senior leaders in your own OU will share more about your respective goals in upcoming communications.

We have also updated our Results Sharing and MIP plans for 2013 to further support the company’s OpX vision and pay-for-performance philosophy. For the 2013 plans, you’ll see some changes:

• Payouts are tied to fewer goals overall.• OUs must achieve at least five of the seven goal categories to potentially receive a full payout.• An individual performance modifier will now be applied to final payouts for all exempt employees.

Look for program brochures on Portal later this month. For questions about Results Sharing and MIP, please contact the Employee Information Center at 23456 or (626) 302-3456.

Ron



P r o g r a m b a s ic s

W h a t is Results Sharing (RS)?

S o u th e rn C a lifo rn ia E dison is c o m m it te d to o ffe r in g e m p lo ye e s m a rk e t c o m p e tit iv e to ta l co m p e n s a tio n

o p p o r tu n it ie s . To ta l c o m p e n s a tio n con s is ts o f th re e c o m p le m e n ta ry e le m e n ts — base pay, v a r ia b le pay and

re c o g n it io n aw a rds .

2 0 1 2 RS is an a n n u a l v a r ia b le pay p ro g ra m th a t p ro v id e s yo u an o p p o r tu n ity to e a rn a cash b o n u s based

on p e r fo rm a n c e ag a in s t 1) C o m p a n y goa ls , 2) th e C o m p a n y o p e ra t io n s and m a in te n a n c e (O & M ) b u d g e t, 3)

o rg a n iz a tio n a l u n it /d e p a r tm e n t goa ls , and 4) o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M b u d g e t.

2 0 1 2 RS h e lp s yo u fo cu s on a c t iv it ie s th a t have an im p a c t — b o th d ire c t and in d ire c t — o n th e C o m p a n y 's

success. Y our c o n tr ib u t io n s to c u s to m e r se rv ice , sa fe ty , cos t c o n tro l, e ff ic ie n c y and o th e r goa ls h e lp d r iv e SCE

to w a rd th e a c h ie v e m e n t o f its o p e ra t io n a l and f in a n c ia l ta rg e ts d u r in g th e 2 0 1 2 p e r fo rm a n c e p e rio d , w h ic h ru ns

fro m Ja n u a ry 1, 2 0 1 2 th ro u g h D e c e m b e r 31 , 2 0 12 . P a rtic ip a tio n in th is p ro g ra m g ives yo u a f in a n c ia l s take in

a ch ie v in g th o s e ta rg e ts .

2 0 1 2 RS a w a rd s w ill be p a id in th e f ir s t q u a r te r o f 2013.

W h a t determines the 2012 RS payouts?

P ayou t leve ls a re based on th e fo l lo w in g to ta l ta rg e t b o nus o p p o r tu n it ie s :

• 4% o f e lig ib le e a rn in g s fo r n o n e x e m p t and re p re s e n te d e m p lo ye e s

• 8% o f e lig ib le e a rn in g s fo r e x e m p t, n o n re p re s e n te d e m p lo ye e s

Above-target payouts m a y be a ch ie ve d i f 1) th e C o m p a n y ach ie ves 18 o r m o re o f its 23 ta rg e te d 20 12

p e r fo rm a n c e goa ls (see page 5), 2) th e C o m p a n y com es in u n d e r its O & M b u d g e t, 3) y o u r o rg a n iz a tio n a l u n it /

d e p a r tm e n t ach ie ves a t leas t 75% o f its 2 0 1 2 R S/M IP goa ls , a n d /o r 4) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t

do es n o t exceed its O & M b u d g e t. T h e f in a l a d ju s te d a w a rd m a y n o t exceed 150% o f th e to ta l ta rg e t b o n u s

o p p o r tu n ity .

Below-target payouts m a y be a ch ie ve d i f 1) th e C om pa ny ach ie ves fe w e r th a n 18 o f its 23 ta rg e te d 20 12

p e r fo rm a n c e goa ls , 2) th e C o m p a n y com es in o v e r its O & M b u d g e t, 3) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t

ach ie ves less th a n 75% o f its 2 0 1 2 R S /M IP goa ls , a n d /o r 4) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t exceeds its

O & M b u d g e t.

A w a rd s m a y be lim ite d by th e a m o u n t a u th o r iz e d by th e 2 0 1 2 G en e ra l Rate Case.



h o w 2012 r s w o r k s

The funding of the 2012 RS awards starts with a pool of dollars that equals eligible earnings multiplied by a participant's bonus target for all participants, limited by the amount authorized by the 2012 General Rate Case. The pool is then modified as follows:

Achievement of the 2012 Company goals:

Fu

nd

ing

Achievement of... Funding level...*1 18 - 23 goa ls = T a rge t fu n d in g

F e w er th a n 18 goa ls = Less th a n ta rg e t fu n d in g*Limited by the amount authorized by the 2012 General Rate Case.

2Performance against 2012 Company O&M budget.T h e p o o l increases i f w e a re u n d e r b u d g e t and de crease s i f w e go o v e r b u d g e t.

The available pool of funding dollars is then allocated to each organizational unit/department based on the number of eligible participants in each organizational unit/department and their applicable target award percentages. Awards are paid as follows:

3 a

3 b

3c

Achievement of 2012 Company goals and Company O&M budget as set forth in Steps 1 & 2 above.

50% o f th e a llo c a tio n is n o t

s u b je c t to a d ju s tm e n t based on 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t goa ls.

Achievement of at least 75% of 2012 organizational unit/department RS/MIP goals.A c h ie v e m e n t o f less th a n 75% o f th e 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t R S /M IP goa ls w ill

re d u ce th is p o r t io n o f th e a w a rd p a yo u t.

25% o f th e a llo c a tio n is s u b je c t to

a d ju s tm e n t based o n th e a c h ie v e m e n t

o f 20 1 2 o rg a n iz a tio n a l u n it /d e p a r tm e n t

R S /M IP goals.

Performance against 2012 organizational unit/ department O&M budget. E xceed ing th e 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M b u d g e t w ill

e lim in a te th is p o r t io n o f th e a w a rd payo u t.

25% o f th e a llo c a tio n is a w a rd e d o n ly

i f an o rg a n iz a tio n a l u n it /d e p a r tm e n t

do es n o t exceed its O & M b u d g e t.

In o ther words... The entire funded pool amount is based on performance against Company goals and O&M budget and is allocated and paid as follows:

50% o f th e a llo c a tio n

is p a id based so le ly on th e

a c h ie v e m e n t o f C o m p a n y

goa ls and p e rfo rm a n c e ag a ins t

C o m p a n y O & M b u d g e t.

^ 3 b 25% o f th e a llo c a tio n is a d ju s ta b le based

on p e rfo rm a n c e ag a in s t 2 0 1 2 o rg a n iz a tio n a l

u n it /d e p a r tm e n t R S /M IP goals.


i f o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M

b u d g e t goa l is m e t o r u n d e rs p e n t.

2



Ex a m p l e o f h o w 2012 RS W o r k s

E x a m p le # 1

For illustration purposes, we will assume that the Company achieves 18 of its 2012 goals and meets the Company O&M budget. Your organizational unit/department achieves more than 75% of its 2012 RS/MIP goals and meets its O&M budget. This example is based upon an exempt employee with eligible earnings of $80,000 and 8% of total target bonus. Given this scenario, the 2012 RS individual payout would be calculated as shown below:

3 a

3 b

3c

Achievement of at least 18 Company goals results in initial Company funding at the target level.

Eligible Earnings for this Target Award Initial CompanyExempt Employee Percentage Funding

x$ 8 0 ,0 0 0 8 %

r$ 6 ,4 0 0 *

IAchievement of the Company O&M budget results in

no increase or decrease to the initial Company funding.

Initial Company Funding

O&M Budget Outcome (Meets)

Final Company Funded Pool

$ 6 ,4 0 0 + / - N o Im p a c t = $ 6 ,4 0 0

1

Unadjusted award based on Company performance

CompanyFunding Unadjusted percentage RS Payout

$ 6 ,4 0 0 x 5 0 % = $ 3 ,2 0 0

Achievement of 75% or more of organizational unit/department 2012 RS goals

CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department RS goals RS Payout

$ 6 ,4 0 0 x 2 5 % = $ 1 ,6 0 0

Achievement of organizational unit/department 2012 O&M budget

CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department O&M budget RS Payout

$ 6 ,4 0 0 x 2 5 % = $ 1 ,6 0 0

3 aPortion of

award based on Company performance

$ 3 ,2 0 0

3 bPortion of award adjusted to reflect organizational

unit / department performance

$ 1 ,6 0 0

3cPortion of award subject to elimination based on

performance against organizational unit /

department O&M budget

$ 1 ,6 0 0

Total Award

$ 6 ,4 0 0

*For illustration purposes only, percentage w ill vary based on actual achievement and may be limited by the dollar amount authorized by 2012 GRC.

i

2

+ +

3



Ex a m p l e o f h o w 2012 RS W o r k s

E x a m p le # 2

For illustration purposes, we will assume that the Company achieves 18 of its 2012 goals and meets the Company O&M budget. Your organizational unit/department achieves more than 75% of its 2012 RS/MIP goals and exceeds its O&M budget. This example is based upon an exempt employee with eligible earnings of $80,000 and 8% of total target bonus. Given this scenario, the 2012 RS individual payout would be calculated as shown below:

3 a

3 b

3c

Achievement of at least 18 Company goals results in initial Company funding at the target level.

Eligible Earnings for this Target Award Initial CompanyExempt Employee Percentage Funding

x$ 8 0 ,0 0 0 8 %

f$ 6 ,4 0 0 *

I

Achievement of the Company O&M budget results in no increase or decrease to the initial Company funding.




$ 6 ,4 0 0 + / - N o Im p a c t = $ 6 ,4 0 0

1


CompanyFunding Unadjusted percentage RS Payout

$ 6 ,4 0 0 x 5 0 % = $ 3 ,2 0 0

Achievement of 75% or more of organizational unit/department 2012 RS goals

CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department RS goals RS Payout

$ 6 ,4 0 0 x 2 5 % = $ 1 ,6 0 0


CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department O&M budget RS Payout

$ 6 ,4 0 0 x 0 %

O-toll

3 aPortion of


$ 3 ,2 0 0

3 bPortion of award adjusted to reflect organizational


$ 1 ,6 0 0

3cPortion of award subject to elimination based on

performance against organizational unit /

department O&M budget

$ 0

Total Award

$ 4 ,8 0 0

*For illustration purposes only, percentage will vary based on actual achievement and may be lim ited by the dollar amount authorized by 2012 GRC.

i

2

+ +



2012 RS C o m p a n y G o a l s

SCE must achieve 18 or more of these goals and meet the SCE O&M budget to fund the 2012 RS award pool at target (m ay be lim ite d by d o lla r a m o u n t a u th o r iz e d by 2 0 1 2 GRC). D e ta ils on th e goa ls a re a va ila b le o n P o rta l: M y

C o m p a n y > V is io n , S tra te g y & G oa ls > O v e rv ie w > C o m p a n y G oa ls and 2 0 1 2 Business B rie fin g M a te r ia ls > 2 0 1 2 SCE Goals.

SAFETY • Im prove w orkp lace safety to achieve in ju ry free workp lace• No serious in juries to th e public resu l ting fro m system failures

COMPLIANCE • Build and m ain ta in a com prehensive com pany-w ide Ethics and Compliance program w ith an emphasis on strengthening a cu ltu re o f com pliance

OPERATIONAL AND SERVICE EXCELLENCE

Customer Satisfaction• M a in ta in Service Delivery Satisfaction• M a in ta in Custom er Favorability

Reliability• M a in ta in Power Delivery custom er satisfaction and re liab ility perform ance• Effectively manage Power Supply operations

SONGS• Achieve targets fo r INPO perform ance ind ica tor index and (18 M on th ro lling average) capability fac to r• Achieve SONGS Regulatory Performa nce Goal

M ajor Capital Projects• M a in ta in m a jor projects w ith in curren tly com m itted scope, schedule and budget, sub ject to approved

changes, and successfully w iths tand any challenges to fu ll cost recovery• Obtain regu la to ry approval fo r the revised cost cap fo r Tehachapi Renewable Transmission Project

(TRTP) th a t reflects fina l engineering costs and fo r Devers Colorado River (DCR) updated cost estimates, as approp ria te

DBESpend• Provide su ffic ien t opportun ities to increase purchases o f materials and services w ith Diverse Business

Enterprises

STRATEGICINITIATIVES

• Successfully im plem ent Rate Challenge program th a t produces a system average rate per k ilow a tt hour in line w ith target

• Achieve a fina l 2012 General Rate Case decision, at the earliest possible date, consistent w ith SCE's capital investm ent forecast and operations

PUBLIC POLICY • Develop and execute a stra tegy fo r educating state policymakers, stakeholders and customers about the costs o f public policy programs and th e ir im pact on rates

• Im p lem ent com petitive principles to ensure acceptable CAISO Tariff Filing fo r 3rd Party Transmission Providers requ iring the 3rd party transm ission providers to bear an approp ria te share o f risks consistent w ith FERC O rder 1000

• Ensure effective policy decisions and re lated com m unica tion to advocate fo r fa ir and equ itab le rules to m inim ize the costs o f SCE's procurem ent po rtfo lio , renewable in tegration and grid re liab ility costs

ENTERPRISE RISK MANAGEMENT

Enterprise Risk Management Program• S trengthen com prehensive com pany-w ide Enterprise Risk M anagem ent program w ith an emphasis on

the company's risk m anagem ent cult ure and m itiga tion practices

Business Resiliency• Advance Edison's ab ility to rapidly respond and manage th rough business disruptions and catastrophic

events

PEOPLE AND CULTURE

• S trengthen pay fo r perform ance objectives by increasing the d iffe ren tia tion o f bonus and stock awards• Im prove representation o f ethn ic m ino rities and fem ales across executive population• Im p lem ent im provem ent plans to address areas o f weakness iden tified by w o rk environm ent reviews


• Achieve th e core earnings ta rg e t*• Obtain a 2013 cost o f capital decision by Decem ber 31, 2012 th a t retains the key e lem ents o f the

existing cost o f capital mechanism, and provides a com pensatory authorized Return on Equity

*RS excludes SCE Company Earning Per Share (EPS) goal.

5



Pr o g r a m d e t a il s

GeneralA ll n o n -e x e c u tiv e SCE e m p lo y e e s w ith s a tis fa c to ry p e r fo rm a n c e m a y re ce ive an a w a rd fro m 20 1 2 RS e xce p t te m p o ra ry

e m p lo ye e s and th o s e e m p lo y e e s p a r t ic ip a tin g in any o th e r a n n u a l bo n u s p ro g ra m de s ig n e d to re p la ce th e 2 0 1 2 RS

P rog ram (e .g., M a n a g e m e n t In c e n tiv e P rog ram ).

Eligibility

Active EmployeesA c tiv e e m p lo ye e s m u s t w o rk 5 2 0 "a c t iv e " h o u rs fo r SCE d u r in g th e 2 0 1 2 p a y ro ll c a le n d a r y e a r (Pay P e riod #1 be g ins on

D e c e m b e r 19, 2 0 11 , and Pay P e riod #2 6 en ds o n D e c e m b e r 16, 20 1 2 ) and be on th e C o m p a n y 's p a y ro ll on th e la s t day

o f th e b o n u s p e r io d (D e ce m b e r 31, 20 1 2 ) to be e lig ib le fo r an a w a rd . H ow eve r, i f y o u a re s u b s e q u e n tly te rm in a te d fo r

m is c o n d u c t o r p o o r p e r fo rm a n c e b e fo re p a yo u t, y o u w il l a u to m a tic a lly fo r fe i t any a w a rd .

Active/Inactive HoursT h e 5 2 0 "a c t iv e " h o u rs re q u ire d fo r e l ig ib il i ty fo r a c tiv e e m p lo y e e s in c lu d e th o s e h o u rs w h e n yo u a re a c tiv e ly w o rk in g

a t y o u r jo b and in c lu d e h o u rs c o m p e n s a te d as re g u la r pay, o v e r t im e , d o u b le t im e and s u p p le m e n ta l o v e r t im e . H ours

c o m p e n s a te d as C o m p a n y h o lid a ys a re a lso in c lu d e d . H ou rs c o m p e n s a te d as pe rso n a l t im e o f f aw ay fro m w o rk (e .g.,

s ick t im e , v a c a tio n , f lo a t in g h o lid ay , p a rtia l day absences) a re c o n s id e re d v o lu n ta ry o r " in a c t iv e h o u rs ," and d o n o t

c o u n t to w a rd s th e 5 2 0 -h o u r e lig ib il i ty re q u ire m e n t.

Terminated EmployeesE m p loye es w h o s e e m p lo y m e n t is te rm in a te d d u r in g 2 0 1 2 d ue to re t ire m e n t, d e a th o r u n d e r th e c u r re n t Edison

In te rn a tio n a l S everance P lan o r W o rk e r P ro te c tio n B e n e fits A g re e m e n t m a y re ce ive d a p ro ra te d a w a rd based on th e

t im e a c tiv e ly e m p lo y e d d u r in g 2 0 12 . T h e 5 2 0 "a c t iv e " h o u r re q u ire m e n t is w a iv e d fo r te rm in a t io n s d u e to d e a th o r

u n d e r th e E dison In te rn a tio n a l S everance P lan o r W o rk e r P ro te c tio n B e n e fits A g re e m e n t and re d u ce d to 40 "a c t iv e "

h o u rs fo r re tire e s .

Pay Used to Calculate 2012 RSPay used to c a lcu la te 2 0 1 2 RS a w a rd s is based on each e lig ib le e m p lo y e e 's e lig ib le e a rn in g s p a id in th e 20 1 2 p a y ro ll

c a le n d a r y e a r (n o t W 2 w ages) m u lt ip l ie d by th e e lig ib le e m p lo y e e 's a p p lic a b le ta rg e t a w a rd p e rce n ta g e . E lig ib le

e a rn in g s in c lu d e c o m p e n s a tio n fo r a ll a c tiv e h o u rs w o rk e d , as w e ll as so m e in a c t iv e h o u rs , in c lu d in g b u t n o t l im ite d

to pay fo r v a c a tio n , f lo a t in g ho lid ay , t im e o f f du e to illness, p a r tia l da y absences and so m e n o n -d is c re t io n a ry bonuses.

RS a w ards , d is c re t io n a ry b o nuses ( i f e lig ib le ) such as s p o t b o n u se s and A w a rd s to C e le b ra te E xce llence , seve rance

p a yo u ts , and n o n w a g e in c o m e (e .g ., F lex D o lla rs , re lo c a tio n expenses) th a t m ay be re ce ive d d u r in g 2 0 1 2 a re n o t

in c lu d e d in e lig ib le ea rn ing s .

Job Position and Organizational Unit Used for Award Calcu lationIf y o u ea rn a 2 0 1 2 RS a w a rd , i t w il l be based o n th e jo b c la s s ific a tio n and o rg a n iz a tio n a l u n it /d e p a r tm e n t yo u a re in as

o f D e c e m b e r 31, 2 0 12 . H ow eve r, if yo u a re on a te m p o ra ry w o rk a ss ig n m e n t (TW A) and have m o ve d to a lo w e r ta rg e t-

e lig ib le p o s it io n w ith in th e c a le n d a r year, yo u w il l re ce ive th e h ig h e r ta rg e t fo r th e year. For e xa m p le , i f yo u a re an

e x e m p t w h o a cce p ts a TW A to a n o n e x e m p t p o s it io n , yo u w il l s til l be e lig ib le fo r th e 8% ta rg e t p a y o u t. N e ve rth e le ss ,

i f yo u m o ve in to an o rg a n iz a tio n a l u n it /d e p a r tm e n t th a t ea rns a lo w e r p a y o u t th a n y o u r p re v io u s o rg a n iz a tio n a l u n it /

d e p a r tm e n t , yo u w ill re ce ive th e lo w e r p a y o u t. A w a rd s w il l n o t be p ro ra te d based o n th e t im e in each p o s it io n o r

o rg a n iz a tio n a l u n it /d e p a r tm e n t .

If y o u ch a nged o rg a n iz a tio n a l u n its as p a r t o f th e Rate C ha lle nge e f fo r t to ce n tra liz e th e F inance and H um a n

R esources fu n c tio n s , y o u r b o n u s w ill be based o n th e o rg a n iza tio n yo u w e re in p r io r to th e o rg a n iz a tio n a l cha nge on

D e c e m b e r 17, 2012 .

If y o u tra n s fe r d u r in g th e y e a r to Edison In te rn a tio n a l o r its s u b s id ia ry c o m p a n y th a t is n o t SCE, yo u w ill re ce ive a

p ro ra te d a w a rd based on th e a c tiv e t im e in each in c e n tiv e p lan , if th a t t im e is 90 days o r m o re . I f th a t t im e is less th a n

90 days, th e e n tire a w a rd is based on th e p o s it io n and c o m p a n y yo u w e re in fo r th e m a jo r ity o f th e year.

6



Pr o g r a m d e t a il s (c o n t .)

Program PayoutsA n y RS a w a rd s w il l be p a id as lu m p sum s d u r in g th e f i r s t q u a r te r o f 2 0 13 . A w a rd s w il l be s u b je c t to w ith h o ld in g as

s p e c if ie d by fe d e ra l and s ta te law . N o n re p re s e n te d m p lo y e e s w ith u n s a tis fa c to ry p e r fo rm a n c e (2 0 1 2 p e r fo rm a n c e

a p p ra isa l w ith o ve ra ll y e a r-e n d ra tin g s o f "N e e d s Im p ro v e m e n t/N e e d s Im p ro v e m e n t" ) w il l n o t re ce ive a p a yo u t.

N o n re p re s e n te d e m p lo y e e s w h o s e 2 0 1 2 o ve ra ll y e a r-e n d p e r fo rm a n c e ra tin g s a re e ith e r "N e e d s Im p ro v e m e n t /

C o m m e n d a b le ," "C o m m e n d a b le /N e e d s Im p ro v e m e n t," "N e e d s Im p ro v e m e n t / E x e m p la ry " o r "E x e m p la ry /N e e d s

Im p ro v e m e n t" w ill re ce ive a 50% p a y o u t o f th e a w a rd a m o u n t.

Program AdministrationT h e C o m p a n y rese rves th e r ig h t to change , a m e n d o r te rm in a te th e p ro g ra m a t any t im e . C o rp o ra te C o m p e n sa tio n

a d m in is te rs th e 2 0 1 2 RS p ro g ra m and in te rp re ts all p ro g ra m p ro v is io n s . I f y o u have q u e s tio n s , ca ll H u m a n R esources a t

2 3 4 5 6 o r (800) 5 0 0 -4 7 2 3 , and se le c t th e o p tio n fo r th e Em p lo ye e In fo rm a t io n C enter, o r e -m a il a t in fo c n tr@ s c e .c o m .

You can a lso call C o rp o ra te C o m p e n s a tio n a t 2 5 6 2 6 o r (626) 3 0 2 -5 6 2 6 .


mailto:[email protected]


Pr o g r a m b a s ic s

W h a t is 2012 M anagem ent Incentive Program (MIP)?

S o u th e rn C a lifo rn ia E d ison is c o m m it te d to o ffe r in g e m p lo ye e s m a rk e t c o m p e t it iv e to ta l co m p e n s a tio n

o p p o r tu n it ie s . To ta l c o m p e n s a tio n con s is ts o f th re e c o m p le m e n ta ry e le m e n ts — base pay, v a r ia b le pay and

re c o g n it io n aw ards .

2 0 1 2 M IP is an a n n u a l v a r ia b le pay p ro g ra m th a t p ro v id es m a nage rs and s e n io r p ro fe ss io n a ls an o p p o r tu n ity to ea rn

a cash bo n u s based on p e rfo rm a n c e ag a in s t 1) C o m p a n y goa ls, 2) th e C o m p a n y o p e ra t io n s and m a in te n a n c e (O & M )

b u d g e t, 3) o rg a n iz a tio n a l u n it /d e p a r tm e n t goa ls , 4) o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M b u d g e t, and 5) in d iv id u a l

p e rfo rm a n c e .

2 0 1 2 M IP he lps yo u fo cu s on a c t iv it ie s th a t have an im p a c t — b o th d ire c t and in d ire c t — on th e C o m p a n y 's success.

Y our c o n tr ib u t io n s to c u s to m e r se rv ice , sa fe ty , co s t c o n tro l, e ff ic ie n c y and o th e r goa ls h e lp d r iv e SCE to w a rd th e

a c h ie v e m e n t o f its o p e ra t io n a l and f in a n c ia l ta rg e ts d u r in g th e 2 0 1 2 p e r fo rm a n c e p e r io d , w h ic h ru ns fro m Ja n u a ry 1,

2 0 1 2 th ro u g h D e c e m b e r 31, 2 0 12 . P a rtic ip a tio n in th is p ro g ra m g ives yo u a f in a n c ia l s take in a ch ie v in g th o s e ta rg e ts .

A n y e a rn e d 2 0 1 2 M IP p a yo u ts w ill be pa id in th e f i r s t q u a r te r o f 2013 .

W h a t determines the 2012 M IP payouts?

P ayou t leve ls a re based on th e fo l lo w in g to ta l ta rg e t b o n u s o p p o r tu n it ie s :

• 15% - 4 0 % * o f e lig ib le e a rn in g s fo r M IP T ie r O ne e m p lo ye e s (see p a g e 6)

• 15% o f e lig ib le e a rn in g s fo r M IP T ie r T w o e m p lo y e e s (see p a g e 6)

*T o ta l ta rg e t b o n u s o p p o r tu n it ie s va ry d e p e n d in g o n th e jo b . I f y o u w e re re c la ss ifie d in 2 0 1 2 as a re s u lt o f th e

S a la ry S tru c tu re Im p ro v e m e n t P ro je c t (SSIP) o r th e Rate C ha lle nge re o rg a n iz a tio n e ffo r ts , th e h ig h e r ta rg e t bo n u s

o p p o r tu n ity w ill be a p p lic a b le fo r th e 2 0 1 2 p e rfo rm a n c e year.

Above-target payouts m a y be a ch ie ve d i f 1) th e C o m p a n y a ch ie ves 18 o r m o re o f its 23 ta rg e te d 2 0 1 2 p e r fo rm a n c e

goa ls (see p a g e 5 ), 2) th e C o m p a n y com es in u n d e r its O & M b u d g e t, 3) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t ach ieves

a t le a s t 75% o f its 2 0 1 2 R esults S ha rin g (R S )/M IP goa ls , 4) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t do es n o t exceed its

O & M b u d g e t, a n d /o r 5) a w a rd a m o u n ts m a y a lso be inc reased fo r e m p lo y e e s based on in d iv id u a l p e rfo rm a n c e . The

f in a l a d ju s te d a w a rd m a y n o t exceed 150% o f th e to ta l ta rg e t b o n u s o p p o r tu n ity .

Below-target payouts m a y be a ch ie ve d i f 1) th e C o m p a n y ach ie ves fe w e r th a n 18 o f its 23 ta rg e te d 20 12

p e rfo rm a n c e goa ls , 2) th e C o m p a n y com es in o v e r its O & M b u d g e t, 3) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t ach ieves

less th a n 75% o f its 2 0 1 2 R esu lts S ha rin g (R S )/M IP goa ls , 4) y o u r o rg a n iz a tio n a l u n it /d e p a r tm e n t exceeds its O & M

b u d g e t, a n d /o r 5) a w a rd a m o u n ts m a y a lso be a d ju s te d fo r e m p lo y e e s based on in d iv id u a l p e rfo rm a n c e .

A w a rd s m a y be lim ite d by th e a m o u n t a u th o r iz e d by th e 2 0 1 2 G en e ra l Rate Case.



h o w 2012 m i p w o r k s

The funding of the 2012 MIP awards starts with a pool of dollars that equals eligible earnings multiplied by a participant's bonus target for all participants, limited by the amount authorized by the 2012 General Rate Case. The pool is then modified as follows:

Achievement of the 2012 Company goals:

Fu

nd

ing

Achievement of... Funding level...*

1 18 - 23 goa ls = T a rge t fu n d in g

F e w er th a n 18 goa ls = Less th a n ta rg e t fu n d in g*Limited by the amount authorized by the 2012 General Rate Case.

2Performance against 2012 Company O&M budget.T h e p o o l increases i f w e a re u n d e r b u d g e t and de crease s i f w e go o v e r b u d g e t.

The available pool of funding dollars is then allocated to each organizational unit/department based on the number of eligible participants in each organizational unit/department and their applicable target award percentages. Awards are paid as follows:

3 a

3 b

3c

Achievement of 2012 Company goals and Company O&M budget as set forth in Steps 1 & 2 above.

50% o f th e a llo c a tio n is n o t

s u b je c t to a d ju s tm e n t based on 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t goa ls.

Achievement of at least 75% of 2012 organizational unit/department RS/MIP goals.A c h ie v e m e n t o f less th a n 75% o f th e 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t R S /M IP goa ls w ill

re d u ce th is p o r t io n o f th e a w a rd p a y o u t .

25% o f th e a llo c a tio n is s u b je c t to

a d ju s tm e n t based o n th e a c h ie v e m e n t

o f 2 0 1 2 o rg a n iz a tio n a l u n it /d e p a r tm e n t

R S /M IP goals.

Performance against 2012 organizational unit/ department O&M budget. Exceed ing th e 20 12

o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M b u d g e t w ill

e lim in a te th is p o r t io n o f th e a w a rd p a yo u t.


i f an o rg a n iz a tio n a l u n it /d e p a r tm e n t

do es n o t exceed its O & M b u d g e t.

The award amount will then be adjusted based on individual performance:

Adjustment based on 2012 individual performance appraisals. A n y a d ju s tm e n t w ill be a p p lie d to 100%

o f th e a llo c a te d a w a rd a m o u n t. Th is m a y inc re ase o r

de c re a se fin a l a w a rd p a yo u ts . To ta l a w a rd s m a y n o t

exceed th e a llo c a te d po o l.

100% o f th e a w a rd a m o u n t is

s u b je c t to a d ju s tm e n t based u p o n 20 12

p e rfo rm a n c e appra isa ls .4

In o ther words... The entire funded pool amount is based on performance against Company goals and O&M budget a nd is allocated and paid as follows:

50% o f th e a llo c a tio n

is p a id based so le ly on th e

a c h ie v e m e n t o f C o m p a n y

goa ls and p e rfo rm a n c e a g a ins t

C o m p a n y O & M b u d g e t.

P \ 3 b

925% o f th e a llo c a tio n is a d ju s ta b le based

on p e r fo rm a n c e ag a in s t 2 0 1 2 o rg a n iz a tio n a l

u n it /d e p a r tm e n t R S /M IP goals.


i f o rg a n iz a tio n a l u n it /d e p a r tm e n t O & M

b u d g e t goa l is m e t o r u n d e rs p e n t.

100% o f th e a w a rd a m o u n t is th e n a d ju s te d based on in d iv id u a l p e rfo rm a n c e .

2



Ex a m p l e o f h o w 2012 m i p W o r k s

E x a m p le # 1

For illustration purposes, we will assume that the Company achieves 18 of its 2012 goals and meets the Company O&M budget. Your organizational unit/department achieves more than 75% of its 2012 RS/MIP goals and meets its O&M budget. You achieve commendable performance during 2012. This example is based upon an MIP Tier One employee with eligible earnings of $150,000 and 20% of total target bonus. Given this scenario, the 2012 MIP individual payout would be calculated as shown below:

Achievement of at least 18 Company goal s results in initial Company funding at the target level.

Eligible Earnings for this Target Award Initial CompanyMIP Tier One Employee Percentage Funding

x$ 1 5 0 ,0 0 0 2 0 %

r$ 3 0 ,0 0 0 *

I

Achievement of the Company O&M budget results in no increase or decrea se to the initial Company funding.




$ 3 0 ,0 0 0 + / - N o Im p a c t = $ 3 0 ,0 0 0

1

2


CompanyFunding Unadjusted percentage MIP Payout

$ 3 0 ,0 0 0 x 5 0 % = $ 1 5 ,0 0 0

Achievement of 75% or more of organizational unit/department 2012 RS/MIP goals

CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department RS/MIP goals MIP Payout

$ 3 0 ,0 0 0 x 2 5 % = $ 7 ,5 0 0


CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational unit/department O&M budget MIP Payout

$ 3 0 ,0 0 0 x 2 5 % = $ 7 ,5 0 0

-► 3 a

Pay

ou

t C

om

po

ne

nts

3 b

-► 3c

Total award amount is multiplied by an Individual Performance Modifier based on your 2012 performance to arrive at your final award payout:

3 aPortion of


3 bPortion of award

adjusted to reflect organizational


3cPortion of

award subject to elimination based on performa nce

against organizational

unit / department O&M budget

Individual Total Possible Performance

Award Modifier Final Award

$ 1 5 ,0 0 0 + $ 7 ,5 0 0 + $ 7 ,5 0 0 = $ 3 0 ,0 0 0 x 1 0 0 % = $ 3 0 ,0 0 0

4

*For illustration purposes only, percentage w ill vary based on actual achievement and may be limited by the dollar amount authorized by 2012 GRC.

3



Ex a m p l e o f h o w 2012 m i p W o r k s

E x a m p le # 2

For illustration purposes, we will assume that the Company achieves 18 of its 2012 goals and meets the Company O&M budget. Your organizational unit/department achieves more than 75% of its 2012 RS/MIP goals and exceeds its O&M budget. You achieve exemplary performance during 2012. This example is based upon an MIP Tier One employee with eligible earnings of $150,000 and 20% of total target bonus. Given this scenario, the 2012 MIP individual payout would be calculated as shown below:

3 a

3 b

3c

Achievement of at least 18 Company goal s results in initial Company funding at the target level.

Eligible Earnings for this Target Award Initial CompanyMIP Tier One Employee Percentage Funding

x$ 1 5 0 ,0 0 0 2 0 %

f$ 3 0 ,0 0 0 *

I

Achievement of the Company O&M budget results in no increase or decrea se to the initial Company funding.




$ 3 0 ,0 0 0 + / - N o Im p a c t = $ 3 0 ,0 0 0


CompanyFunding Unadjusted percentage MIP Payout

$ 3 0 ,0 0 0 x 5 0 % = $ 1 5 ,0 0 0

Achievement of 75% or more of organizational unit/department 2012 RS/MIP goals

CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational u nit/departm ent RS/MIP goals MIP Payout

$ 3 0 ,0 0 0 x 2 5 % = $ 7 ,5 0 0


CompanyFunding

Percentage awarded to reflect achievement of 2012 organizational u nit/department O&M budget MIP Payout

$ 3 0 ,0 0 0 x 0 %

O-toil

1

2

4

Total award amount is multiplied by an Individual Performance Modifier based on your 2012 performance to arrive at your final award payout:

3 aPortion of


3 bPortion of award

adjusted to reflect organizational


3cPortion of

award subject to elimination based on performa nce

against organizational

unit / department O&M Budget

Individual Total Possible Performance

Award Modifier Final Award

$ 1 5 ,0 0 0 + $ 7 ,5 0 0 + $ 0 = $ 2 2 ,5 0 0 x 1 1 5 % = $ 2 5 ,8 7 5

*For illustration purposes only, percentage will vary based on actual achievement and may be lim ited by the dollar amount authorized by 2012 GRC.



2012 R e su l t s Sh a r i n g / M I P C o m p a n y G o a l s

SCE must achieve 18 or more of these goals and meet the SCE O&M budget to fund the 2012 MIP award pool at target (m a y be lim ite d b y d o lla r a m o u n t a u th o r iz e d b y 20 1 2 GRC). D e ta ils on th e goa ls a re a va ila b le o n P o rta l: M y

C o m p a n y > V is io n , S tra te g y & G oa ls > O v e rv ie w > C o m p a n y G oa ls and 2 0 1 2 B usiness B rie fin g M a te r ia ls > 2 0 1 2 SCE Goals.

SAFETY • Im prove w orkp lace safety to achieve in ju ry free workp lace• No serious in juries to the public resul ting fro m system failures

COMPLIANCE • Build and m ainta in a com prehensive com pany-w ide Ethics and Compliance program w ith an emphasis on strengthening a cu ltu re o f com pliance

OPERATIONAL AND SERVICE EXCELLENCE

Customer Satisfaction• M a in ta in Service Delivery Satisfaction• M a in ta in Custom er Favorability

Reliability• M a in ta in Power Delivery custom er satisfaction and re liab ility perform ance• Effectively manage Power Supply ope rations

SONGS• Achieve targets fo r INPO perform ance ind ica tor index and (18 M on th ro lling average) capability fac to r• Achieve SONGS Regulatory Performance Goal

M ajor Capital Projects• M a in ta in m a jor projects w ith in curren tly com m itted scope, schedule and budget, sub ject to approved

changes, and successfully w iths tand any challenges to fu ll cost recovery• Obtain regulatory approval fo r the revised cost cap fo r Tehachapi Renewable Transmission Project

(TRTP) th a t reflects f ina l engineering costs and fo r Devers Colorado River (DCR) updated cost estimates, as appropria te

DBESpend• Provide su ffic ien t opportun ities to increase purchases o f materials and services w ith Diverse Business

Enterprises

STRATEGICINITIATIVES

• Successfully im plem ent Rate Challenge program th a t produces a system average rate per k ilow a tt hour in line w ith target

• Achieve a fina l 2012 General Rate Case decision, at th e earliest possible date, consistent w ith SCE's capital investm ent forecast and operations

PUBLIC POLICY • Develop and execute a strategy fo r educating state policymakers, stakeholders and customers about the costs o f public policy programs and th e ir im pact on rates

• Im p lem ent com petitive principles to ensure acceptable CAISO Tariff Filing fo r 3rd Party Transmission Providers requ iring th e 3rd pa rty tran smission providers to bear an approp ria te share o f risks consistent w ith FERC O rder 1000

• Ensure effective policy decisions and re lated com m unica tion to advocate fo r fa ir and equitab le rules to m inim ize the costs o f SCE's procurem ent po rtfo lio , renewable in tegration and grid re liab ility costs

ENTERPRISE RISK MANAGEMENT

Enterprise Risk Management Program• S trengthen com prehensive com pany-w ide Enterprise Risk M anagem ent program w ith an emphasis on

the com pany's risk m anagem ent cu ltu re and m itiga tion practices

Business Resiliency• Advance Edison's ab ility to rapidly res pond and manage th rough business d isruptions and catastrophic

events

PEOPLE AND CULTURE

• S trengthen pay fo r perform ance obje ctives by increasing the d iffe ren tia tion o f bonus and stock awards• Im prove representation o f e thn ic m ino rities and fem ales across executive population• Im p lem ent im provem ent plans to address areas o f weakness iden tified by w o rk environm ent reviews


• Achieve th e core earnings ta rg e t*• Obtain a 2013 cost o f capital decision by Decem ber 31, 2012 th a t retains the key e lem ents o f the

existing cost o f capital mechanism, and provides a com pensatory authorized Return on Equity

*MIP excludes SCE Company Earning Per Share (EPS) goal.

5



Pr o g r a m d e t a il s

GeneralA ll M IP -le ve l SCE e m p lo y e e s w ith s a tis fa c to ry p e r fo rm a n c e m a y re ce ive an a w a rd fro m 2 0 1 2 M IP e xce p t te m p o ra ry

e m p lo y e e s and th o s e e m p lo y e e s p a rt ic ip a tin g in any o th e r a n n u a l bo n u s p ro g ra m d e s ig n e d to re p la ce 2 0 1 2 MIP.

EligibilityE lig ib le M IP Job C lass ifica tio ns :

T ie r One

A ll P rin c ip a l Level jo b s , in c lu d in g :

- P rin c ip a l A d v is o r

- P rin c ip a l P ro je c t M a n a g e r

- P rin c ip a l M a n a g e r

M a n a g e r 3

S e n io r A tto rn e y

A tto rn e y

T ie r Two

C o n su ltin g E n g in e e r 5

C o n su ltin g N u c le a r E n g in e e r 5

E nergy C o n tra c t/T ra d in g S pe c ia lis t 2, 3

E n g in e e r - T e le c o m m u n ic a tio n s 5

IT S p e c ia lis t/E n g in e e r 5

M a n a g e r 2

M a n a g e r P ro je c t /P ro d u c t 2

O rg a n iza tio n a l D e v e lo p m e n t C o n s u lta n t 4

Real T im e O p e ra tio n s M a n a g e r 1

R egion M a n a g e r 3

S tra te g ic Pl a n n in g M a n a g e r 2

Tax S pe c ia lis t 3

Active EmployeesA c tiv e e m p lo ye e s m u s t w o rk 5 2 0 "a c t iv e " h o u rs fo r SCE d u r in g th e 2 0 1 2 p a y ro ll c a le n d a r y e a r (Pay P e riod #1 be g ins on

D e c e m b e r 19, 2 0 11 , and Pay P eriod # 2 6 en ds o n D e c e m b e r 16, 20 1 2 ) and be on th e C o m p a n y 's p a y ro ll o n th e la s t day

o f th e b o n u s p e r io d (D e c e m b e r 31, 20 1 2 ) to be e lig ib le fo r an a w a rd . H ow eve r, i f y o u a re s u b s e q u e n tly te rm in a te d fo r

m is c o n d u c t o r p o o r p e r fo rm a n c e b e fo re p a yo u t, yo u w il l a u to m a tic a lly fo r fe i t any a w a rd .

Active / Inactive HoursT h e 5 2 0 "a c t iv e " h o u rs re q u ire d fo r e l ig ib il i ty fo r a c tiv e e m p loyees in c lu d e th o s e h o u rs w h e n yo u a re a c tiv e ly w o rk in g

a t y o u r jo b . H ou rs c o m p e n s a te d as C o m p a n y h o lid a ys a re al so in c lu d e d . H ou rs c o m p e n s a te d as pe rso n a l t im e o f f aw ay

f ro m w o rk (e .g., s ick t im e , v a c a tio n , f lo a t in g ho lid ay , p a rtia l da y absences) a re c o n s id e re d v o lu n ta ry o r " in a c t iv e h o u rs ,"

and d o n o t c o u n t to w a rd s th e 5 2 0 -h o u r e lig ib il i ty re q u ire m e n t.

Terminated EmployeesE m p loye es w h o s e e m p lo y m e n t is te rm in a te d d u r in g 20 1 2 d u e to re t ire m e n t, d e a th o r u n d e r th e c u r re n t Edison

In te rn a tio n a l S everance P lan o r W o rk e r P ro te c tio n B e n e fits A g re e m e n t m a y re ce ive a p ro ra te d a w a rd based on th e t im e

a c tiv e ly e m p lo y e d d u r in g 20 12 . T h e 52 0 "a c t iv e " h o u r re q u ire m e n t is w a iv e d fo r te rm in a t io n s d u e to d e a th o r u n d e r

th e E dison In te rn a tio n a l S everance Plan o r W o rk e r P ro te c t io n B e n e fits A g re e m e n t and re d u ce d to 4 0 "a c t iv e " h o u rs fo r

re tire e s .

Pay Used to Calculate 2012 MIPPay used to c a lc u la te 2 0 1 2 M IP a w a rd s is based o n each e lig ib le e m p lo y e e 's e lig ib le e a rn in g s p a id in th e 2 0 1 2 p a y ro ll

c a le n d a r y e a r (n o t W 2 w ages) m u lt ip l ie d by th e e m p lo y e e 's a p p lic a b le ta rg e t a w a rd p e rce n ta g e . E lig ib le e a rn in g s in c lu d e

c o m p e n s a tio n fo r a ll a c tiv e h o u rs w o rk e d , as w e ll as s o m e in a c tiv e h o u rs , in c lu d in g b u t n o t l im ite d to pay fo r va ca tio n ,

f lo a t in g h o lid ay , t im e o f f d u e to illness and p a rtia l da y absen ces. M IP aw a rd s , d is c re t io n a ry b o nuses such as s p o t bo nuses

and A w a rd s to C e le b ra te E xce llence , seve rance p a yo u ts , and n o n w a g e in c o m e (e .g ., F lex D o lla rs , re lo c a tio n expenses)

th a t m a y be re ce ive d d u r in g 2 0 1 2 a re n o t in c lu d e d in e lig ib le e a rn ing s .

6



Pr o g r a m d e t a il s (c o n t .)

Job Position and Organizational Unit Used for Award CalculationI f y o u e a rn a 2 0 1 2 M IP a w a rd , i t w il l be based o n th e jo b c la s s ific a tio n and o rg a n iz a tio n a l u n it /d e p a r tm e n t yo u a re

in as o f D e c e m b e r 31, 2 0 12 . H ow eve r, if yo u a re on a te m p o ra ry w o rk a ss ig n m e n t (TW A) and have m o ve d to a lo w e r

ta rg e t-e lig ib le p o s it io n w ith in th e c a le n d a r year, yo u w il l rec e ive th e h ig h e r ta rg e t fo r th e year. For e xa m p le , i f y o u are

a M IP T ie r O ne e m p lo y e e w h o a cce p ts a TW A to a M IP T ie r T w o p o s it io n , yo u w il l s t ill be e lig ib le fo r th e h ig h e r ta rg e t

p a yo u t. N e ve rth e le ss , i f yo u m o ve in to an o rg a n iz a tio n a l u n it /d e p a r tm e n t th a t ea rns a lo w e r p a y o u t th a n y o u r p re v io u s

o rg a n iz a tio n a l u n it /d e p a r tm e n t , yo u w ill re ce ive th e lo w e r p a y o u t. A w a rd s w il l n o t be p ro ra te d based o n th e t im e in

each p o s it io n o r o rg a n iz a tio n a l u n it /d e p a r tm e n t .

I f y o u ch a n g e d o rg a n iz a tio n a l u n its as p a rt o f th e Rate C ha lle nge e f fo r t to ce n tra liz e th e F inance and H um a n

R esources fu n c tio n s , y o u r b o n u s w il l be based o n th e o rgan i za tio n yo u w e re in p r io r to th e o rg a n iz a tio n a l cha nge on

D e c e m b e r 17, 20 12 .

If y o u tra n s fe r d u r in g th e y e a r to E dison In te rn a tio n a l o r its s u b s id ia ry c o m p a n y th a t is n o t SCE, yo u w ill re ce ive a

p ro ra te d a w a rd based o n th e a c tiv e t im e in each in c e n tiv e p lan , i f t h a t t im e is 90 days o r m o re . If th a t t im e is less th a n

90 days, th e e n tire a w a rd is based o n th e p o s it io n and c o m p a n y y o u w e re in fo r th e m a jo r ity o f th e year.

Program PayoutsA n y M IP a w a rd s w il l be p a id as lu m p sum s d u r in g th e f ir s t q u a r te r o f 2 0 13 . A w a rd s w ill be s u b je c t to w ith h o ld in g as

sp e c if ie d b y fe d e ra l and s ta te law . M IP e m p lo ye e s w ith u n s a tis fa c to ry p e r fo rm a n c e (2 012 p e rfo rm a n c e a p p ra isa l w ith

o ve ra ll y e a r-e n d ra tin g s o f "N e e d s Im p ro v e m e n t/N e e d s Im p ro v e m e n t" ) w il l n o t re ce ive a p a yo u t. E m p loye es w h o s e

20 1 2 o ve ra ll y e a r-e n d p e r fo rm a n c e ra tin g s a re e ith e r "N e e d s Im p ro v e m e n t/C o m m e n d a b le ," "C o m m e n d a b le /N e e d s

Im p ro v e m e n t," "N e e d s Im p ro v e m e n t/E x e m p la ry " o r "E x e m p la ry /N e e d s Im p ro v e m e n t" w ill re ce ive u p to 50% p a y o u t o f

th e a w a rd a m o u n t.

Program AdministrationTh e C o m p a n y re se rves th e r ig h t to change , a m e n d o r te rm in a te th e p ro g ra m a t any t im e . C o rp o ra te C o m p e n sa tio n

a d m in is te rs 2 0 1 2 R esu lts S h a r in g /M IP and in te rp re ts a ll p ro g ra m p ro v is io n s . If y o u have q u e s tio n s , call H u m a n R esources

a t 2 3 4 5 6 o r (800) 5 0 0 -4 7 2 3 , and se le c t th e o p t io n fo r th e E m p lo ye e In fo rm a t io n C enter, o r e -m a il a t in fo c n tr@ s c e .c o m .

You can a lso call C o rp o ra te C o m p e n s a tio n a t 2 5 6 2 6 o r (626) 3 0 2 -5 6 2 6 .


mailto:[email protected]


EDISON INTERNATIONAL

EXECUTIVE INCENTIVE COMPENSATION PLAN

As Amended and Restated Effective January 1, 2012

WHEREAS, it has been determined that it is in the best interest of Edison International and its affiliates to offer and maintain competitive executive compensation programs designed to attract and retain qualified executives;

WHEREAS, it has been determined that providing financial incentives to executives that reinforce and recognize corporate, organizational and individual performance and accomplishments will enhance the financial and operational performance of Edison International and its affiliates; and

WHEREAS, it has been determined that an incentive compensation program would encourage the attainment of short-term corporate goals and objectives;

NOW, THEREFORE, the Edison International Executive Incentive Compensation Plan has been established by the Compensation and Executive Personnel Committee o f the Board o f Directors originally effective January 1, 1997, and made available to eligible executives o f Edison International and its participating affiliates subject to the following terms and conditions:

1. Definitions. When capitalized herein, the following terms are defined as indicated:

"Board" means the Board o f Directors of a Company.

"CEO" means the chief executive officer o f a Company.

"Chairman" means the Chairman of the Board and Chief Executive Officer of Edison International.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" means Edison International or a participating affiliate.

"Committee" means the Compensation and Executive Personnel Committee o f the Edison International Board of Directors. Where the context requires with respect to officers and other participating employees of Southern California Edison Company, “Committee” shall also mean the Compensation and Executive Personnel Committee of the Southern California Edison Company Board of Directors.



"Participant" means the Chairman, president, executive vice presidents, senior vice presidents, elected vice presidents, and senior managers whose participation in this Plan has been approved by the Committee, Chairman or Board.

"Plan" means the Edison International Executive Incentive Compensation Plan.

2. Eligibility. To be eligible for the full amount of any incentive award, an individual must have been a Participant for the entire calendar year. Pro-rata awards may be distributed to Participants who retired or became disabled during the calendar year, hi the event of the death of a Participant during the calendar year, a pro-rata award may be made at the discretion of the Committee, the Board, or CEO having the authority to approve the Participant's award had the death not occurred. In the event an individual first becomes a Participant after the start of the calendar year, a pro-rata award may be made at the discretion of the Committee, the Board, or CEO having the authority to approve the Participant's award.

3. Company Performance Goals. Each CEO will furnish recommended Company performance goals to the Chairman. In consultation with the Chairman, the Committee will select specific performance goals for the year. The performance goals must represent relatively optimistic, but reasonably attainable goals, the accomplishment o f which will contribute significantly to the attainment of Company strategic objectives.

4. Individual Incentive Award Levels. Company, organizational and individual performance relative to the pre-established goals will determine the award a Participant can receive. The Committee will establish target award levels for the year as a percentage of base salary at the time performance goals are set (and/or at such later time when the individual first becomes eligible to participate in the Plan or is eligible to receive a higher/lower target award level under the Plan because of a promotion/demotion or other approved reason). Any incentive awards becoming payable to Participants who are promoted during the calendar year after the first quarter or otherwise become entitled to receive a higher/lower base salary and/or target award level under the Plan during the calendar year after the first quarter may be calculated based on the Participant’s weighted average base salary and target award level, taking into account the base salary and target award level as of the end of the first quarter and the base salary and target award level(s) during the remainder of the calendar year. All awards are discretionary and will be based on the assessment of corporate and individual performance by the Committee or the CEO.

5. Approval and Payment of Individual Awards. During the first quarter o f the year following the completion of the calendar year, the Chairman, in consultation with each CEO, will assess the degree to which individual and corporate goals and objectives have been achieved. Incentive award recommendations for eligible officers will he developed. The Committee will receive a report from the Chairman as to overall Company performance, will deliberate on management recommendations, and will approve, or recommend for approval by the applicable Board, the officer awards. Awards to nonofficers will be determined and approved by the CEO of each Company, or his/her



designee. All decisions o f the Committee, the Chairman and the CEOs regarding individual incentive awards will be final and conclusive.

Incentive award payments will be made as soon as practical following the appropriate approval (and in all events within two and one-half months after the end of the calendar year to which the award relates). Payment will be made in cash except to the extent an eligible Participant has previously elected to defer payment o f some or all of the award pursuant to the terms of a deferred compensation plan of the Company. Awards made will be subject to any income or payroll tax withholding or other deductions as may required by Federal, State or local law.

Awards under this Plan will not be considered to be salary or other compensation for the purpose of computing benefits to which the Participant may be entitled under any qualified Company retirement plan, including but not limited to the SCE Retirement Plan, the Edison 401 (k) Savings Plan, or any other plan or arrangement o f the Company for the benefit of its employees if such plan or arrangement is a plan qualified under Section 401(a) of the Code and is a trust exempt from Federal income tax under Section 501(a) of the Code. Awards may be considered compensation for nonqualified plan purposes depending on the terms and conditions of the particular nonqualified plan.

Awards payable to Participants under this Plan shall constitute an unsecured general obligation of the Company, and no special fund or trust will be created, nor will any notes or securities be issued with respect to any awards.

6. Plan Modifications and Adjustments. In order to ensure the incentive features of the Plan, avoid distortion in its operation and compensate for or reflect extraordinary changes which may have occurred during the calendar year, the Committee may make adjustments to the Company performance goals or other Plan terms and conditions before, during or after the end of the calendar year to the extent it determines appropriate in its sole discretion. Adjustments to the Plan shall be conclusive and binding upon all parties concerned. The Plan may be modified or terminated by the Committee at any time.

7. Plan Administration, This Plan and any officer awards made pursuant to it are to be approved by the Committee or the Board of the participating affiliate after review by the Committee, Each CEO, or his/her delegate, shall approve any non-officer awards. Administration of the Plan is otherwise delegated to the senior officer of Edison International responsible for Human Resources and designees acting under his/her direction. Such officer is authorized to approve ministerial amendments to the Plan, to interpret Plan provisions, and to approve changes as may be required by law or regulation. No Company, Board, Committee or individual shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan.



8. Successors and Assigns. This Plan shall he binding upon and inure to the benefit of the heirs, legal representatives, successors and assigns of the Company and Participant. Notwithstanding the foregoing, any right to receive payment hereunder is hereby expressly declared to be personal, nonassignable and nontransferable, except by will, intestacy, or as otherwise required by law, and in the event of any attempted assignment, alienation or transfer o f such rights contrary to the provisions hereof, the Company shall have no further liability for payments hereunder.

9. Beneficiaries. Any award approved following the death of a Participant will be made to the Participant's most recently designated beneficiary or beneficiaries under the 2007 Performance Incentive Plan (or any successor equity incentive plan) of the Company. If no beneficiary has been designated by the Participant, or if no beneficiary survives the Participant, or if a designated beneficiary should die after surviving the Participant but before the award has been paid, any award approved will be paid in a lump-sum payment to the Participant's estate as soon as practicable.

10. Capacity. If any person entitled to payments under this Plan is incapacitated and unable to use such payments in his or her own best interest, the Company may direct that payments (or any portion) be made to that person's legal guardian or conservator, or that person's spouse, as an alternative to the payment to the person unable to use the payments. Court-appointed guardianship or conservatorship may be required by the Company before payment is made. The Company shall have no obligation to supervise the use of such payments.

11. No Right of Employment. Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the employ of the Company as an officer or manager of the Company or in any other capacity.

12. Severability and Controlling Law. The various provisions of this Plan are severable in their entirety. Any determination of invalidity or unenforceability of any one provision will have no effect on the continuing force and effect of the remaining provisions. This Plan shall be governed by the laws o f the State of California.

13. Section 409A. This Plan shall be construed and interpreted to comply with Section 409A o f the Code.





A c tiv ity : LONG TERM INCENTIVES

W itness: Jacqueline Trapp


2012$ (000)

Recorded2012

Forecast2015



Long-term incentive expense includes accruals required under the FAS123R rules for equity and liability accounting for stock-based compensation, for outstanding long-term incentive awards such as non-qualified stock options, performance shares, and restricted stock units.


F526552 F990200







Recorded Period

FERC Form 1 Recorded (Nominal $)Labor

Non-Labor

Other

Total

Labor

Non-Labor

Other

Total


Non-Labor

Other

Total

Escalation:Labor

Non-Labor

Other

$ (000)2008 2009 2010 2011 2012

19 20,136 25,888 20,442 18,943

106 0 0 0 0

0 0 0 0 0

125

il

20,136 25,888 20,442 18,943

18,224 0 0 0 0

(106) 0 0 0 0

0 0 0 0 0

18,118 0 0 0 0

18,243 20,136 25,888 20,442 18,943

0 0 0 0 0

0 0 0 0 0

18,243 20,136 25,888 20,442 18,943

1.1414 1.1070 1.0701 1.0327 1.0000

1.0932 1.0743 1.0518 1.0240 1.0000

1.0000 1.0000 1.0000 1.0000 1.0000

20,823 22,291 27,702 21,111 18,943

0 0 0 0 0

0 0 0 0 020,823 22,291 27,702 21,111 18,943


Labor

Non-Labor

OtherTotal


28,000

24.000

20.000

16,000

12,000

8,000

4,000

02008 2009 2010 2011 2012

□ Labor (std escl) I Non-Labor (std escl) □ Other (not escl)






Forecasting M ethods - Sum m ary o f R esults o f all M ethods S tud ied - 2012$ (000)

2 R ecorded Years (2011 - 2012):Results of Averaging (A2)

COoCM ^r


Labor 20,027 20,027 20,027 1,084 no




Results of Linear Trending (T3) Results of Averaging (A3)

2013 2014 | 2015 | r2* 1 Chosen 2013 | 2014 | 2015 | sd** | Chosen

Labor 13,827 9,447 5,068 0.92 no 22,585 22,585 22,585 3,725 noNon-Labor 0 0 0 0.00 no 0 0 0 0 noOther 0 0 0 0.00 no 0 0 0 0 no

Total 13,827 9,447 5,068 n/a n/a 22,585 22,585 22,585 n/a n/a

4 R ecorded Years (2009 - 2012):Results of Linear Trending (T4) Results of Averaging (A4)

COoCM ^r


COoCM ^r


Labor 18,353 16,690 15,027 0.33 no 22,512 22,512 22,512 3,228 noNon-Labor 0 0 0 0.00 no 0 0 0 0 noOther 0 0 0 0.00 no 0 0 0 0 no

Total 18,353 16,690 15,027 n/a n/a 22,512 22,512 22,512 n/a n/a

5 Recorded Years (2008 - 2012):Results of Linear Trending (T5) Results of Averaging (A5)


COoCM ^r


COoCM ^r

oCM 2015 | sd** | Chosen20,692 20,198 19,704 0.06 no 22,174 22,174 22,174 2,965 no

0 0 0 0.00 no 0 0 0 0 no0 0 0 0.00 no 0 0 0 0 no

20,692 20,198 19,704 n/a n/a 22,174 22,174 22,174 n/a n/a

O ther M ethods:


LaborNon-LaborOther

Total



0 0 0 no 0 0 0 no0 0 0 no 0 0 0 no

18,943 18,943 18,943 n/a 19,590 18,918 18,181 n/a


LaborNon-LaborOther

Total

Method

COoCM ^r

oCM 2015 |

COoCM ^r

oCM 2015 | |IF 19,590 18,918 18,181 0 0 0

N/A 0 0 0 0 0 0N/A 0 0 0 0 0 0

19,590 18,918 18,181 0 0 0







Results:




Total 19,590 18,918 18,181


Analysis of Linear Trending Method:In D.89-12-057, the CPUC stated that if recorded expenses in an account have shown a trend in a certain direction over three or more years, the last recorded year is an appropriate base estimate. Recorded expenses in this activity have not shown a trend in a certain direction; therefore, last recorded year is not an appropriate base estimate. See itemized forecast method analysis.

Analysis of Averaging Method:In D.89-12-057, the CPUC stated that for those accounts that have significant fluctuations in recorded expenses from year to year, an average of recorded expenses is appropriate. Although expenses have fluctuated over the recorded period, the averaging forecast methodology is not appropriate because: (1) expense for the year 2008 was affected by transition rules under FAS123R, (2) 2010 expense relates to a population of employees no longer eligible for long term incentives, and (3) it does not take into account the expected change in the grant eligible pop ulation. See itemized forecast method analysis.

Analysis of Last Recorded Year (2012):In D.89-12-057, the CPUC stated that if recorded expenses in an accou nt have been relatively stable for three or more years, the last recorded year is an appropriate base estimate. Recorded expenses have not been relatively stable; therefore, last recorded year is not an appropriate base estimate. See itemized forecast method analysis.

Analysis of Itemized Forecast Method:The itemized method is appropriate because it takes into account: (1) the vesting schedules of all grants, (2) the expected changes in the grant-eligible population, and (3) expected rates of forfeiture (canceled prior to vesting).






28,000

24.000

20.000

16,000

12,000

8,000

4,000

0


2008 2009 2010 2011 2012 2013 2014 2015


Recorded Period$ (000)



Change 647 (672) (737)Total 18,943 19,590 18,918 18,181


Total 0 0 0 0



Total Change |Labor 647 (672) (737)


Total N/A 647 (672) (737)






This page shows the changes in Labor, Non-Labor, and Other expenditures forecast during 2013 through 2015, including reasons for the addition of personn el (labor), increased office supplies required due to an increase in activity (non-labor).

2012 - 2013

Labor: 647

The increase is due to: (1) the vesting schedules of all grants; (2) the expected changes in the grant-eligible population; and (3) expected rates of forfeiture (cancelled p rior to vesting).

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t: 920,921 Administrative and General Salarie s/O ffice Supplies and Expenses




2013 - 2014

Labor: (672)

The decrease is due to: (1) the vesting schedules of all grants; (2) the expected changes in the grant-eligible population; and (3) expected rates of forfeiture (cancelled prior to vesting).

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.






This page shows the changes in Labor, Non-Labor, and Other expenditures forecast during 2013 through 2015, including reasons for the addition of personn el (labor), increased office supplies required due to an increase in activity (non-labor).

2014 - 2015____________________________________________________________________________________

Labor: (737)

The decrease is due to: (1) the vesting schedules of all grants; (2) the expected changes in the grant-eligible population; and (3) expected rates of forfeiture (cancelled p rior to vesting).

Non-Labor: 0

Not applicable.

Other: 0

Not applicable.



FERC A ccoun t:

A c tiv ity :

W itness:


LONG TERM INCENTIVES

Jacqueline Trapp

APPENDIX A

Detail Description of F inal Cost Centers Included in Th is Activity



FERC A ccoun t: 920,921 Administrative and General Salari es/O ffice Supplies and Expenses

Activity: LONG TERM INCENTIVES



F526552 LONG TERM INCENTIVE (LTI) ACCRUAL EXPENSELong-term incentive expense includes accruals required under the FAS123R rules for equity and liability accounting for stock-based compensation, for outstanding long-term incentive awards such as non-qualified stock options, performance shares, and restricted stock units.

F990200 GENERAL LEDGER CONVERSIONExpenses charged directly to the Federal Energy Regulatory Commission (FERC) account and not to a specific final cost center.



FERC A ccoun t

A c tiv ity :

W itness:


2008 2009 2010 2011 2012

920,921 Administrative and General Salaries/O ffice Supplies and Expenses


Jacqueline Trapp

F526552 LONG TERM INCENTIVE (LTI) ACCRUAL 20,823 22,291 27,702 21,111 18,943EXPENSE

F990200 GENERAL LEDGER CONVERSION 0 0 0 0 0

Total 20,823 22,291 27,702 21,111 18,943

** Due to rounding, totals may not tie to other workpaper pages.



FERC A ccoun t:

A c tiv ity :

W itness:



Jacqueline Trapp

APPENDIX B




FERC A ccoun t: 920,921 Administrative and General Sala ries/Office Supplies and Expenses

A c tiv ity : LO N G TERM INCENTIVES


Detail o f Total C om pany A d j ustm ents to Recorded Expenses

| A d js - (Nom inal $) $ (000)2008 2009 2010 2011 2012 2013 2014 2015

Labor 18,224 0 0 0 0 0 0 0Non-Labor (106) 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0

Total 18,118 0 0 0 0 0 0 0

Organizational Unit Adjustm ent 1 A&G HRADMIN-RMA-OU-PERFSHARE XFER

This adjustment transfers costs from Executive Officers 920-921 to Long Term Incentives 920-921.

Labor 11,897 0 0 0 0 0 0 0Non-Labor 0 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0

Total 11,897 0 0 0 0 0 0 0

Organizational Unit Adjustm ent 2 A&G FINC-RSL.RMA-OUX-CNTRLS 2ND QTR FAS 123-R

This adjustment transfers FAS-123R related expense from Financial Services M iscellaneous Expenses 920-921 to Long Term Incentives 920-921.

Labor 0 0 0 0 0 0 0 0Non-Labor 6,221 0 0 0 0 0 0 0

Other______________________ 0__________0__________ 0________ 0___________0__________0___________ 0__________ 0 _Total 6,221 0 0 0 0 0 0 0

Organizational Unit Adjustm ent 3 A&G HRADMIN-RMA-OU-LTI NON-LABOR TO LABOR TRNSFR

For forecasting purposes, this adjustment moves long-term incentive costs recorded in non-labor to labor.

Labor 6,327 0 0 0 0 0 0 0Non-Labor (6,327) 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0

Total 0 0 0 0 0 0 0 0



Pro

ject

ed T

otal

Act

ual/P

roje

cted

G

rant

Val

ue a

fter

____

____

____

____

____

____

____

____

__P

roje

cted

Ann

ual

Exp

ense

Pro

ject

ion

of A

ccru

al E

xpen

se f

or

Exe

cuti

ve L

TI,

SC

E

Gra

nt D

ate

Val

ue*

Forfe

iture

@ 8

%*

2013

2014

2015

2016

2017

2018

2019

Per

form

ance

Sha

res

(PS)

2011

PS

$5,8

42,4

21$5

,375

,027

$1,8

97,0

68$0

$0$0

$0$0

$020

12 P

S$5

,415

,490

$4,9

82,2

51$1

,758

,441

$1,7

58,4

41$0

$0$0

$0$0

2013

PS

$4,9

25,0

16$4

,531

,014

$1,3

32,6

51$1

,599

,182

$1,5

99,1

82$0

$0$0

$020

14 P

S$4

,925

,016

$4,5

31,0

14$0

$1,3

32,6

51$1

,599

,182

$1,5

99,1

82$0

$0$0

2015

PS

$4,9

25,0

16$4

,531

,014

$0$0

$1,3

32,6

51$1

,599

,182

$1,5

99,1

82$0

$020

16 P

S$4

,925

,016

$4,5

31,0

14$0

$0$0

$1,3

32,6

51$1

,599

,182

$1,5

99,1

82$0

2017

PS

$4,9

25,0

16$4

,531

,014

$0$0

$0$0

$1,3

32,6

51$1

,599

,182

$1,5

99,1

8220

18 P

S$4

,925

,016

$4,5

31,0

14$0

$0$0

$0$0

$1,3

32,6

51$1

,599

,182

2019

PS

$4,9

25,0

16$4

,531

,014

$0$0

$0$0

$0$0

$1,3

32,6

51$4

,988

,161

$4,6

90,2

74$4

,531

,014

$4,5

31,0

14$4

,531

,014

$4,5

31,0

14$4

,531

,014

Res

trict

ed S

tock

Uni

ts (

RS

Us)

2011

RSU

$5,3

12,0

46$4

,833

,962

$1,7

06,1

04$0

$0$0

$0$0

$020

12 R

SU$5

,409

,374

$4,9

22,5

31$1

,737

,364

$1,7

37,3

64$0

$0$0

$0$0

2013

RSU

$4,9

20,0

66$4

,477

,261

$1,3

16,8

41$1

,580

,210

$1,5

80,2

10$0

$0$0

$020

14 R

SU$4

,920

,066

$4,4

77,2

61$0

$1,3

16,8

41$1

,580

,210

$1,5

80,2

10$0

$0$0

2015

RSU

$4,9

20,0

66$4

,477

,261

$0$0

$1,3

16,8

41$1

,580

,210

$1,5

80,2

10$0

$020

16 R

SU$4

,920

,066

$4,4

77,2

61$0

$0$0

$1,3

16,8

41$1

,580

,210

$1,5

80,2

10$0

2017

RSU

$4,9

20,0

66$4

,477

,261

$1,3

16,8

41$1

,580

,210

$1,5

80,2

1020

18 R

SU$4

,920

,066

$4,4

77,2

61$1

,316

,841

$1,5

80,2

1020

19 R

SU$4

,920

,066

$4,4

77,2

61$1

,316

,841

$4,7

60,3

09$4

,634

,415

$4,4

77,2

61$4

,477

,261

$4,4

77,2

61$4

,477

,261

$4,4

77,2

61O

ptio

ns20

10 O

ptio

ns$1

0,92

7,85

6$9

,944

,349

$2,4

86,0

87$0

$0$0

$0$0

$020

11 O

ptio

ns$1

1,67

9,86

5$1

0,62

8,67

7$2

,657

,169

$2,6

57,1

69$0

$0$0

$0$0

2012

Opt

ions

$10,

820,

496

$9,8

46,6

52$2

,461

,663

$2,4

61,6

63$2

,461

,663

$0$0

$0$0

2013

Opt

ions

$9,8

33,0

47$8

,948

,073

$2,2

37,0

18$2

,237

,018

$2,2

37,0

18$2

,237

,018

$0$0

$020

14 O

ptio

ns$9

,833

,047

$8,9

48,0

73$0

$2,2

37,0

18$2

,237

,018

$2,2

37,0

18$2

,237

,018

$0$0

2015

Opt

ions

$9,8

33,0

47$8

,948

,073

$0$0

$2,2

37,0

18$2

,237

,018

$2,2

37,0

18$2

,237

,018

$020

16 O

ptio

ns$9

,833

,047

$8,9

48,0

73$0

$0$0

$2,2

37,0

18$2

,237

,018

$2,2

37,0

18$2

,237

,018

2017

Opt

ions

$9,8

33,0

47$8

,948

,073

$2,2

37,0

18$2

,237

,018

$2,2

37,0

1820

18 O

ptio

ns$9

,833

,047

$8,9

48,0

73$2

,237

,018

$2,2

37,0

1820

19 O

ptio

ns$9

,833

,047

$8,9

48,0

73$2

,237

,018

$9,8

41,9

37$9

,592

,868

$9,1

72,7

17$8

,948

,073

$8,9

48,0

73$8

,948

,073

$8,9

48,0

73

Tota

l Pro

ject

ed L

TI E

xpen

se$1

9,59

0,40

8$1

8,91

7,55

7$1

8,18

0,99

2$1

7,95

6,34

7$1

7,95

6,34

7$1

7,95

6,34

7$1

7,95

6,34

7

‘Ass

umpt

ions

:S

ame

perc

enta

ges

of s

alar

y ra

tes

as 2

012

0% a

nnua

l gro

wth

in e

ligib

le p

opul

atio

n (s

ame

as g

row

th in

ove

rall

empl

oyee

pop

ulat

ion)

2012

dol

lars

(i.e

., no

esc

alat

ion-

assu

mes

sal

ary

incr

ease

s w

ill b

e eq

ual t

o la

bor

esca

latio

n fa

ctor

)G

rant

s m

ade

in e

arly

Mar

ch e

ach

year

3-ca

lend

ar-y

ear c

liff v

estin

g fo

r pe

rform

ance

sha

res

and

RS

Us

and

4-ca

lend

ar-y

ear

grad

ed v

estin

g fo

r opt

ions

P

erfo

rman

ce s

hare

pay

out s

ame

as in

itial

gra

nt v

alue

and

exp

ense

spr

ead

even

ly fo

r the

hal

f pay

able

in c

ash

Sev

eran

ce a

nd r

etire

men

t ves

ting

term

s sa

me

as fo

r 20

12 g

rant

s P

erfo

rman

ce s

hare

and

RS

U fo

rfeitu

re r

ate

estim

ated

bas

ed o

n 20

10-2

012

gran

ts

Not

e:

Giv

en th

e re

cent

cha

nges

in e

xecu

tive

popu

latio

n, t

he c

alcu

latio

ns a

bove

use

s 20

13 M

arch

aw

ard

with

a 8

% a

djus

tmen

t for

off-

cycl

e aw

ards

.



SO

UTH

ER

N C

ALI

FOR

NIA

ED

ISO

N C

OM

PA

NY

FAS

123R

RE

CO

RD

ED

EX

PE

NS

E20

06 -

2012

2006

2007

2008

2009

2010

2011

2012

Tota

l

Sto

ck O

ptio

ns24

,249

,996

14,5

65,1

5514

,082

,913

7,70

6,60

910

,177

,428

8,91

4,80

810

,154

,844

89,8

51,7

53

Per

form

ance

Sha

res

Equ

ity3,

218,

136

2,29

8,27

62,

142,

283

1,95

5,55

52,

447,

893

2,21

6,66

52,

538,

981

16,8

17,7

89Li

abili

ty5,

691,

973

4,66

6,31

2(1

,999

,051

)1,

145,

444

3,56

3,05

566

0,02

482

6,83

114

,554

,588

Ret

entio

n D

SU

291,

851

392,

680

(20,

836)

(193

,309

)56

6,99

84,

050,

756

51,3

495,

139,

489

Res

tric

ted

Sto

ck U

nits

1,30

5,37

72,

243,

244

3,30

6,98

94,

500,

455

4,41

6,14

35,

056,

116

20,8

28,3

24

DS

Us

1,98

0,51

11,

670,

230

6,16

7,30

15,

358,

859

15,1

76,9

01

G/L

rec

onci

ling

item

47,0

0047

,000

Sto

ck O

ptio

n D

iffer

entia

l(7

27,7

46)

183,

706

314,

730

(229

,310

)

33,4

51,9

5625

,208

,311

18,1

18,7

8320

,135

,589

25,8

86,9

4220

,442

,102

18,9

42,8

5116

2,18

6,53

5

N3

w:\f

inan

cial

com

plia

nce\

fas1

23rs

asap

p\20

12_2

014g

rc\r

ecor

dede

xp20

06_2

009

7/9/

2013

11:

58 A

M

c.s.

san

ico





A c tiv ity :

W itness:


Jacqueline Trapp


s02v02p01 - app · capital investment forecast and operations develop and execute a strategy for...

Documents