EDISON INTERNATIONAL
8-K, 2000-09-26
ELECTRIC SERVICES
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 8-K



                                 CURRENT REPORT



                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934




      Date of Report (Date of earliest event reported): September 25, 2000



                              EDISON INTERNATIONAL
             (Exact name of registrant as specified in its charter)



            CALIFORNIA                    001-9936               95-4137452
(State of principal jurisdiction of   (Commission file        (I.R.S. employer
  incorporation of organization)           number)           identification no.)



                            2244 Walnut Grove Avenue
                                 (P.O. Box 800)
                           Rosemead, California 91770
          (Address of principal executive offices, including zip code)

                                  626-302-2222
              (Registrant's telephone number, including area code)



<PAGE>


Items 1 through 4, 6, 8 and 9 are not included because they are inapplicable.

Item 5.  Other Events

As previously disclosed in the registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, Southern California Edison Company (SCE) has
been experiencing adverse impacts from unusually high prices for energy and
ancillary services procured through the California Power Exchange and the
California Independent System Operator. Because of the high prices, in May 2000
SCE experienced the first month in which it received insufficient revenues from
customers to cover all costs of providing service during that month. This
condition has continued during each month from May 2000 through August 2000, and
is expected to continue at least through September 2000. The amount by which
revenues are insufficient to cover costs is recorded as a negative balance, or
undercollection, in a regulatory balancing account called the transition revenue
account. The amount of SCE's transition revenue account undercollection was $644
million as of June 30, 2000, $1.1 billion as of July 31, 2000, and approximately
$1.97 billion as of August 31, 2000.

Under existing decisions of the California Public Utilities Commission (CPUC),
SCE may carry over transition revenue account undercollections from month to
month, and may recover the undercollections from future positive revenues until
the end of the statutory rate freeze. Under California law, the statutory rate
freeze period ends for SCE as of the earlier of March 31, 2002, or the date when
SCE has recovered all of its generation-related assets and obligations (commonly
referred to as "stranded costs"). Thus far, the CPUC has denied requests by SCE
and other California utility companies to allow recovery of transition revenue
account undercollections after the end of the statutory rate freeze. The CPUC
has also prohibited California utility companies from offsetting these
undercollections with overcollections of other stranded costs. These decisions
pre-dated the unforeseen run-up in wholesale market prices beyond the level of
prices that should have been produced by functioning competitive markets.
Pacific Gas and Electric Company appealed a decision of the CPUC to that effect,
but on September 6, 2000, the California Court of Appeal denied their petition
for review. On September 18, 2000, Pacific Gas and Electric Company filed a
petition with the California Supreme Court for review of the decision of the
Court of Appeal.

SCE believes that the CPUC's prior refusal to allow recovery of the transition
revenue account undercollections past the end of the statutory rate freeze is
based on a misinterpretation of California's restructuring law, AB1890. That law
placed California electric utility companies at risk for recovery of their
stranded costs, but did not place them at risk for recovery of the costs of
procuring electricity for customers. The market conditions extant when the CPUC
initially adopted the transition revenue account have materially changed,
leading SCE to conclude that the CPUC should reconsider its prior ruling. As
noted below, recent California legislative activity supports this conclusion.
SCE is currently planning to file in the near future an application with the
CPUC seeking authority to recover its transition revenue account
undercollections after the end of the statutory rate freeze period. SCE is also
considering other options, including litigation, to ensure recovery of these
costs.

                                       2
<PAGE>

On September 7, 2000, the CPUC issued an order expanding its existing
investigation into the wholesale electric market and retail rates to include
issues identified in California Assembly Joint Resolution No. 77 adopted by the
California Legislature on August 30, 2000. The joint resolution requires the
CPUC to review the impact of the current electricity crisis on consumers and
California investor-owned utilities, such as SCE, with emphasis on options for
correcting the electricity market, methods to eliminate price volatility for
consumers, and methods for cost recovery and cost allocation.

SCE believes that it has solid grounds for requesting authority to fully recover
its transition revenue account undercollections and that it is entitled to be
paid for these procurement costs incurred on behalf of its customers. Based on
historical experience, SCE also believes that the CPUC will cooperate with this
objective, as it supported cost recovery during the oil price shocks of the
1970s, because strong utility companies are essential to electricity
reliability, the California economy, and consumer protection. SCE is also
working with the CPUC, the Federal Energy Regulatory Commission, the California
Electricity Oversight Board, the California Power Exchange, and the California
System Operator to fix the market problems that have resulted in the current
high prices for wholesale energy and ancillary services.

As of August 31, 2000, the book value of stranded assets to be recovered by the
end of the statutory rate freeze, less credits from the market valuation or
pending sale of remaining generation assets is shown below. Also shown is the
transition revenue account undercollection balance as of August 31, 2000.

 In millions
---------------------------------------------------------------------------

 Unamortized nuclear investment - net                           $   855
 Unamortized loss on sale of plant                                   81
 Transition-related balancing accounts                             (158)
 Flow-through taxes                                                 148
 Other regulatory assets                                             38
---------------------------------------------------------------------------

 Subtotal                                                           964
 Book value of remaining generation plant                           365
---------------------------------------------------------------------------

 Total stranded assets                                            1,329
 Less credits:
     Excess of market value over book for hydro assets             (500)
     Proceeds from pending sale of generating plants             (1,083)
---------------------------------------------------------------------------

---------------------------------------------------------------------------
 Net amount of stranded assets (overcollection)                  $ (254)
---------------------------------------------------------------------------

 Transition revenue account (TRA) undercollection                 1,971
---------------------------------------------------------------------------


There are many factors that affect SCE's ability to recover its costs and its
transition revenue account undercollections. Based on the valuations of
generating assets that have been filed with the CPUC, SCE expects to be able to
fully recover its stranded costs. Based on the

                                       3
<PAGE>

considerations discussed above, SCE expects to be able ultimately to recover its
transition revenue account undercollections. However, the recovery of those
undercollections depends on favorable regulatory actions as described above, as
well as other factors such as weather conditions, the market prices of gas and
electricity, and economic conditions. If events were to occur that make the
recovery of any of SCE's costs no longer probable, SCE would be required to
write off the unrecoverable portion as a one-time charge against earnings.

With the unexpected, rapid increase in the balance of transition revenue account
undercollections, SCE has used virtually all of its CPUC-authorized capacity for
short-term borrowing. SCE currently is restructuring certain credit arrangements
and arranging additional short-term borrowing capacity to meet its liquidity
needs.SCE expects to be able to repay short-term borrowings from the proceeds of
generating asset divestitures and recovery of transition revenue account
undercollections. SCE believes that it will be able to obtain sufficient
financing on acceptable terms and conditions. In addition, SCE will need
authorization from the CPUC to issue additional short-term debt. SCE has filed
applications for authorization with the CPUC and expects to receive favorable
decisions in the near future.

In the preceding discussion and elsewhere in this report, the words "expects,"
"believes," and other similar expressions are intended to identify
forward-looking information that involves risks and uncertainties. Actual
results or outcomes could differ materially as a result of such important
factors as further actions by state and federal regulatory bodies setting rates
and implementing the restructuring of the electric utility industry including
the sale or retention and ongoing operation of remaining generation assets; the
effects, unfavorable interpretations and implementations of new or existing laws
and regulations relating to restructuring, taxes and other matters; the effects
of increased competition in the electric utility business and other
energy-related businesses, including direct customer access to retail energy
suppliers and the unbundling of revenue cycle services such as metering and
billing; changes in prices of electricity and fuel costs; changes in financial
market conditions; the amount of revenue available to recover both transition
and non-transition costs; the ability to sell or retain electric generation
assets; the ultimate selling price of those plants that are sold; new or
increased environmental liabilities; the ability to create and expand new
businesses such as telecommunications; weather conditions; and other unforeseen
events, some of which are discussed above.


Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(a)      Not applicable

(b)      Not applicable

(c)      Exhibits

         None


                                       4
<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       EDISON INTERNATIONAL
                                           (Registrant)



                                        KENNETH S. STEWART
                         -------------------------------------------------
                                        KENNETH S. STEWART
                         Assistant General Counsel and Assistant Secretary


September 25, 2000



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