To the Customers of Southern California Edison

To the Customers of Southern California Edison

Southern California Edison’s decision to close the San Onofre Nuclear Generating Station (SONGS) was necessary and

in our customers’ best interests. Closing it was the best solution, when compared with the growing cost and regulatory

uncertainty of trying to reopen the plant.

Now the process has begun of deciding how to best decommission SONGS safely and address the remaining costs.

Southern California Edison (SCE) is vigorously pursuing recoveries from Mitsubishi Heavy Industries, the company

responsible for designing and manufacturing the faulty components that caused the SONGS shutdown. Likewise,

SCE is pursuing insurance recovery for outage costs.

There may be costs that are not recovered from Mitsubishi and the insurers, and these could be significant. SCE is now

participating in a process before the California Public Utilities Commission to determine just how these remaining costs

should be addressed.

The U.S. system of providing electrical power is the least expensive and most reliable in the world. It is founded on the

principle of attracting low-cost capital and sharing the system costs among all users. This is important because electricity

is essential to modern life.

Utilities like SCE rely on attracting private capital in order to build the electric system. We are obligated to offer electric

service to every person in our franchise service territory. Unlike other businesses that invest, produce and sell their

products for whatever price the market will bear, our prices are set by our regulator, the Public Utilities Commission.

Our rates allow us to recover our operating costs, without any mark-up or profit. We are also allowed to recover at

cost our investment in system assets, over time. We earn our profit by receiving a reasonable rate of return on our

invested capital, as determined by our regulator. These important and long-standing principles are called the

“regulatory compact.”

Across America, these principles have been applied again and again to utility assets, including power plants. Many

utility assets, like our 100-year-old hydroelectric system in the Sierra Nevada Mountains, last longer than the time

required to recover the cost of the investment. Customers continue to benefit from these assets. Conversely, if a

utility asset must be retired before the end of its expected life, the utility recovers from customers its reasonable

investment costs.

The long-established principles of the regulatory compact must guide us as we work through the SONGS shutdown.

More than 40 years ago, SCE relied on this principle to attract the billions of dollars from investors required to build

SONGS. SCE’s customers have benefited from over four decades of affordable, emission-free energy.

The American utility system works because everybody is in it together. Everyone shares the benefits and the costs.

These private investment and cost recovery principles have worked for decades, providing customers safe, reliable

and affordable power. SCE’s position is that the costs associated with the shutdown of SONGS that are not recovered

from Mitsubishi or through insurance should be borne fairly in accordance with these principles.

The process that is now under way before the California Public Utilities Commission will determine exactly how

these costs will be addressed, and SCE is committed to communicating with its customers frequently and candidly

throughout that process at

www.songscommunity.com

.

We pledge that we will work to develop a solution that ensures appropriate compensation from Mitsubishi and the

insurers and fair treatment of both SCE customers and investors.