827052--2/27/2008--EDISON

related topics

{cost, regulation, environmental}

{debt, indebtedness, cash}

{gas, price, oil}

{loss, insurance, financial}

{competitive, industry, competition}

{condition, economic, financial}

{regulation, change, law}

{acquisition, growth, future}

{operation, natural, condition}

Edison International s cash flows and earnings could be adversely affected by tax developments relating to Edison Capital s lease transactions. Edison International and its subsidiaries are subject to costs and other effects of legal proceedings as well as changes in or additions to applicable tax laws, rates or policies, rates of inflation, and accounting standards. Edison International s subsidiaries are subject to extensive environmental regulations that may involve significant and increasing costs and adversely affect them. SCE s financial viability depends upon its ability to recover its costs in a timely manner from its customers through regulated rates. SCE s energy procurement activities are subject to regulatory and market risks that could adversely affect its financial condition, liquidity, and earnings. SCE relies on access to the capital markets. If SCE were unable to access capital markets or the cost of capital were to substantially increase, its liquidity and operations could be adversely affected. SCE is subject to extensive regulation and the risk of adverse regulatory decisions and changes in applicable regulations or legislation. There are inherent risks associated with operating nuclear power generating facilities. SCE s financial condition and results of operations could be materially adversely affected if it is unable to successfully manage the risks inherent in operating its facilities. SCE s insurance coverage may not be sufficient under all circumstances and SCE may not be able to obtain sufficient insurance. EME has substantial interests in merchant energy power plants which are subject to market risks related to wholesale energy prices. EME s financial results can be affected by changes in fuel prices, fuel transportation cost increases, and interruptions in fuel supply. EME may not be able to hedge market risks effectively. EME is exposed to credit and performance risk from third parties under supply and transportation contracts. EME is subject to extensive energy industry regulation. EME is subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs. EME s development projects or future acquisitions may not be successful. A substantial portion of wind turbines purchased by EME may not perform as expected during start-up or operations, thereby adversely affecting the expected return on investment. Competition could adversely affect EME s business. EME may not be able to raise capital on favorable terms, to refinance its or its subsidiaries existing indebtedness, or to fund operations, capital expenditures, future acquisitions and development activities, which could affect its results of operations. EME and its subsidiaries have a substantial amount of indebtedness, including long-term lease obligations. Restrictions in the instruments governing EME s indebtedness and the indebtedness of its subsidiaries limit EME s and its subsidiaries ability to enter into specified transactions that EME or they otherwise may enter into. EME s projects may be affected by general operating risks and hazards customary in the power generation industry. EME may not have adequate insurance to cover all these hazards. The accounting for EME s hedging and proprietary trading activities may increase the volatility of its quarterly and annual financial results.

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827052--2/27/2008--EDISON_INTERNATIONAL