Company: SCE-PL
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0000827052-25-000022
Chunk: 53

Company: SOUTHERN CALIFORNIA EDISON Co
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7
Chunk 53
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 and SCE used the following critical assumptions to determine expense for pension and PBOP for 2024:

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Table of Contents

(in millions)PensionPlansPBOPPlans Discount rate15.04 %5.06 %Expected long-term return on plan assets26.75 %4.88 %Assumed health care cost trend rates3*6.50 %

*Not applicable to pension plans.

1The discount rate enables Edison International and SCE to state expected future cash flows at a present value on the measurement date. Edison International and SCE select its discount rate by performing a yield curve analysis. This analysis determines the equivalent discount rate on projected cash flows by matching the timing and amount of expected future benefit payments to the corresponding yields from the Willis Towers Watson RATE: Link 10th – 90th percentile yield curve model on the measurement date.

2To determine the expected long-term rate of return on pension plan assets, current and expected asset allocations are considered, as well as historical and expected returns on plan assets. A portion of PBOP trusts asset returns are subject to taxation, so the 5% rate of return on plan assets above is determined on an after-tax basis. Actual time-weighted, annualized returns on the pension plan assets were 5.6%, 5.2% and 6.6% for the one-year, five-year and ten-year periods ended December 31, 2024, respectively. Actual time-weighted, annualized returns on the PBOP plan assets were 3.5%, 1.8% and 4.3% over these same periods. Accounting principles provide that differences between expected and actual returns are recognized over the average future service of employees.

3The health care cost trend rate gradually declines to 5.00% for 2029 and beyond.

As of December 31, 2024, Edison International and SCE had unrecognized net pension gains of $138 million and $120 million, respectively, and unrecognized PBOP gains of $1.5 billion. The unrecognized pension and PBOP gains primarily consisted of the cumulative impact of the increased discount rates on the respective benefit obligations and the cumulative difference between the expected and actual rate of return on plan assets. Of these deferred gains, $133 million of SCE's pension gains and $1.5 billion of SCE's PBOP gains are recorded as regulatory liabilities, respectively, and are expected to be amortized to expense over the expected future service of the employees (subject to