827052--3/2/2009--EDISON

related topics

{debt, indebtedness, cash}

{cost, regulation, environmental}

{competitive, industry, competition}

{gas, price, oil}

{condition, economic, financial}

{loss, insurance, financial}

{regulation, change, law}

{acquisition, growth, future}

{operation, natural, condition}

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 and improving its facilities. SCE s insurance coverage may not be sufficient under all circumstances and SCE may not be able to obtain sufficient insurance. The global financial crisis may have a material adverse impact on EME s access to capital necessary to fund contractual obligations and the ability of EME s counterparties to perform their contractual obligations. 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 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 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. EME is subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs. EME is subject to extensive energy industry regulation. 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 and lease obligations of its subsidiaries limit EME s and its subsidiaries ability to enter into specified transactions that EME or they otherwise may enter into. The creditworthiness of EME s customers, suppliers, transporters and other business partners could affect EME s business and operations. 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--3/2/2009--EDISON_INTERNATIONAL