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                                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                            Washington, D.C. 20549

                                                   FORM 10-K

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I 1(a) AND (b) OF FORM 10-K AND IS
THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
(Mark One)
|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 2005.
OR
|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from  _____________ to _____________

                                   Commission file number 333-30785

                                California Infrastructure and Economic
                             Development Bank Special Purpose Trust SCE-1
                                     (Issuer of the Certificates)

                                            SCE Funding LLC
                        (Exact Name of registrant as specified in its charter)

                  Delaware                                                 95-4640661
        (State or other jurisdiction                                    (I.R.S. Employer
      of incorporation or organization)                                Identification No.)

         2244 Walnut Grove Avenue,
       Room 212T, Rosemead, California                                        91770
  (Address of principal executive offices)                                 (Zip Code)

                  Registrant's telephone number, including area code:  (626) 302-1850

                   Securities registered pursuant to Section 12(b) of the Act: None

                      Securities registered pursuant to Section 12(g) of the Act:

                            California Infrastructure and Economic Development Bank
                    Special Purpose Trust SCE-1 Rate Reduction Certificates, Series 1997-1:
                          Class A-6 6.38% Certificates; Class A-7 6.42% Certificates,
   maturing serially from 2006 to 2009, and underlying SCE Funding LLC Notes of the same respective classes
---------------------------------------------------------------------------------------------------------------
                                               (Title of Class)

Page

Indicate  by check  mark if the  registrant  is a  well-known  seasoned  issuer,  as defined in Rule 405 of the
Securities Act.  Yes |_|    No |X|

Indicate by check mark if the  registrant  is not  required to file  reports  pursuant to Section 13 or Section
15(d) of the Exchange Act.  Yes |_|    No |X|

Indicate by check mark whether the registrant  (1) has filed all reports  required to be filed by Section 13 or
15(d) of the  Securities  Exchange Act of 1934 during the preceding 12 months (or for such shorter  period that
the  registrant was required to file such reports),  and (2) has been subject to such filing  requirements  for
the past 90 days.
Yes |X|    No |_|

Indicate  by check mark if  disclosure  of  delinquent  filers  pursuant to Item 405 of  Regulation  S-K is not
contained  herein,  and will not be contained,  to the best of registrant's  knowledge,  in definitive proxy or
information  statements  incorporated  by reference in Part III of this Form 10-K or any amendment to this Form
10-K.  |X|

Indicate  by check mark  whether  the  registrant  is a large  accelerated  filer,  an  accelerated  filer or a
non-accelerated  filer. See definition of "accelerated  filer" and "large  accelerated filer" in Rule 12b-12 of
the Exchange Act. (Check One):
Large Accelerated Filer |_|    Accelerated Filer  |_|     Non-accelerated filer   |X|

Indicate by check mark  whether the  registrant  is a shell  company (as defined in Rule 12b-2 of the  Exchange
Act).  Yes |_|    No |X|

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the
registrant as of June 30, 2005 was $0.

                                      DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

Page

                                                    PART I

ITEM 1.  BUSINESS

General

SCE Funding LLC (Note Issuer) is a special purpose, single member limited liability company organized under
the laws of the State of Delaware. Southern California Edison Company (SCE), as the sole member of the Note
Issuer, owns all of the equity securities of the Note Issuer. The principal executive office of the Note
Issuer is located at 2244 Walnut Grove Avenue, Room 212T, Rosemead, California 91770. Its telephone number is
(626) 302-1850. The Note Issuer was organized in June 1997 for the limited purposes of owning the Transition
Property (as described below) and issuing notes secured by the Transition Property and other limited
collateral and related activities, and is restricted by its organizational documents from engaging in other
activities. The Note Issuer's organizational documents require it to operate in a manner such that it should
not be consolidated in the bankruptcy estate of SCE in the event SCE becomes subject to such a proceeding.

The only material business conducted by the Note Issuer has been the acquisition of Transition Property
(which is reported as a note receivable on the financial statements); and the issuance on December 11, 1997,
of $2,463,000,000 in principal amount of the SCE Funding LLC Notes, Series 1997-1, Class A-1 through Class
A-7 (Notes), with scheduled maturities ranging from one to ten years and final maturities ranging from three
to twelve years; the receipt of amounts payable pursuant to the Transition Property; the payment of principal
and interest with respect to the Notes; and related activities. The Notes were issued pursuant to an
indenture between the Note Issuer and Bankers Trust Company of California, N.A., (now Deutsche Bank National
Trust Company), as trustee (Indenture). The Note Issuer sold the Notes to the California Infrastructure and
Economic Development Bank Special Purpose Trust SCE-1, a Delaware business trust (Trust), which issued
certificates corresponding to each class of Notes (Certificates) in a public offering.

The Note Issuer has no employees. It has entered into a servicing agreement (Servicing Agreement) with SCE
pursuant to which SCE is required to service the Transition Property on behalf of the Note Issuer. In
addition, the Note Issuer has entered into an administrative services agreement with SCE pursuant to which
SCE performs administrative and operational duties for the Note Issuer.

Transition Property

The California Public Utilities Code (PU Code) provides for the creation of "Transition Property." A
financing order dated September 3, 1997 (Financing Order) issued by the California Public Utilities
Commission (CPUC), together with the related Issuance Advice Letter, establishes, among other things,
separate non-bypassable charges (FTA Charges) payable by residential electric customers and small commercial
electric customers in an aggregate amount sufficient to repay in full the Certificates, fund the
Overcollateralization Subaccount established under the Indenture and pay all related costs and fees. Under
the PU Code and the Financing Order, the owner of the Transition Property is entitled to collect FTA Charges
until such owner has received amounts sufficient to retire all outstanding series of Certificates and cover
related fees and expenses and the Overcollateralization Amount described in the Financing Order. The
Transition Property is a property right under California law that includes, without limitation, ownership of
the FTA Charges and any adjustments thereto as described in the next paragraph.

Page 1

In order to enhance the likelihood that actual collections with respect to the Transition Property are
neither more nor less than the amount necessary to amortize the Notes in accordance with their expected
amortization schedules, pay all related fees and expenses, and fund certain accounts established pursuant to
the Indenture as required, the Servicing Agreement requires SCE, as the servicer of the Transition Property
(Servicer), to seek, and the Financing Order and the PU Code require the CPUC to approve, periodic
adjustments to the FTA Charges. Such adjustments will be based on actual collections and updated assumptions
by the Servicer as to future usage of electricity by specified customers, future expenses relating to the
Transition Property, the Notes and the Certificates, and the rate of delinquencies and write-offs. On August
19, 2005, SCE filed with the CPUC an anniversary true-up mechanism advice letter filing. The filing confirmed
that the FTA Charges then in effect for residential and small commercial customers were adequate to service
the Notes and therefore no adjustment was necessary at that time. On December 15, 2005, SCE filed with the
CPUC a routine annual true-up mechanism advice letter filing. This filing decreased the FTA Charges for
residential customers by 7.0%, from .843 cents to .784 cents per kilowatt hour, and for small commercial
customers by 7.0% from .892 cents to .829 cents per kilowatt hour, effective January 1, 2006.

In June 2002, the Servicing Agreement was amended to provide for a routine quarterly true-up adjustment
whenever, at the end of any of the first three calendar quarters of a year, the energy usage by SCE's
customers is at least 3% lower than assumed and the balance in the Collection Account (excluding the General
Subaccount) is below the required level. The purpose of the amendment was to further assure that actual
collections are not less than the amounts necessary for the purposes specified in the Note Indenture. Through
December 31, 2005, it was not necessary to file any such routine quarterly true-up adjustment.

Under the Servicing Agreement, during any period in which the Servicer does not maintain a short-term rating
of A-1 or better by Standard & Poor's or P-1 or better by Moody's Investors Service, the Servicer must remit
to the collection account maintained with the trustee for the Notes the total payments of FTA Charges
estimated to have been received by the Servicer on a given business day within two business days after
receipt thereof by the Servicer. Because of downgrades in its short-term ratings, SCE began making such daily
remittances on January 8, 2001. SCE currently has a short-term rating of A-2 from Standard & Poor's and P-2
from Moody's.

The Trust

The Trust was organized in November 1997 solely for the purpose of purchasing the Notes and issuing the
Certificates. It will not conduct any other material business activities.

ITEM 1A.  RISK FACTORS

Not applicable.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

The Note Issuer has no materially important physical properties. Its primary asset is the Transition Property
described above in Item 1 (Business).

The Trust has no materially important physical properties. Its primary assets are the Notes described above
in Item 1 (Business).

Page 2

Information about collections from the Transition Property and payments in respect of the Notes is included
in the Annual Statement (Unaudited) and the Quarterly Servicer's Certificate (Unaudited) attached hereto as
Exhibits 99.1 and 99.3, respectively.

ITEM 3.  LEGAL PROCEEDINGS

No legal proceedings affecting either the Note Issuer or the Trust occurred in 2005.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted with respect to the Note Issuer pursuant to Instruction I of Form 10-K.

No matters were submitted for a vote or consent of holders of the Certificates in 2005.

                                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
         SECURITIES

There is no established public trading market for the Note Issuer's equity securities. All of the Note
Issuer's equity is owned by SCE. The Note Issuer's equity securities, or membership interests, were sold to
SCE in June 1997 in exchange for an initial capital contribution of $5,000. The sale of the Note Issuer's
membership interests to SCE was exempt from registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2) thereof. The Note Issuer has made no other sales of unregistered securities.

The Indenture prohibits the Note Issuer from making any distributions to the sole member from the amounts
allocated to the Note Issuer unless no default has occurred and is continuing thereunder and the book value
of the remaining equity of the Note Issuer, after giving effect to such distribution, is equal to at least
0.5% of the original principal amount of all series of Notes which remains outstanding. As of December 31,
2005, the original principal amount of all series of Notes (Class A-6 through A-7) which then remained
outstanding and is scheduled for liquidation during the years 2006-2007 is $492.6 million. In 2005, the Note Issuer
made a cash distribution of $1.75 million to SCE. There was no distribution in 2004. The Note Issuer made a
cash distribution of $1.0 million in 2003.

The registered owner for each class of the Certificates is Cede & Co., as nominee of The Depository Trust
Company (DTC). The Note Issuer and the Trust are unable to ascertain the number of beneficial holders of
Certificates. The Certificates are not registered on any national securities exchange and do not trade on any
established trading market.

ITEM 6.  SELECTED FINANCIAL DATA

Omitted pursuant to Instruction I of Form 10-K.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of the Note Issuer's results of operations is in an abbreviated format pursuant to
Instruction I of Form 10-K.

As discussed under Item 1 (Business), the Note Issuer was organized in June 1997 for limited purposes, and on
December 11, 1997, the Note Issuer issued Notes in order to purchase Transition Property, which is classified
as a note receivable on the financial statements included under Item 8 (Financial Statements

Page 3

and Supplementary Data). As the Note Issuer is restricted by its organizational documents from engaging in
activities other than those described in Item 1 (Business), income statement effects were limited primarily
to income generated from the Transition Property, interest expense on the Notes and incidental investment
interest income.

In 2005, income generated from the Transition Property was $41 million compared with $57 million in 2004. The
decrease is due to lower outstanding note receivables from SCE. Interest expense in 2005 was $43 million
compared to $59 million in 2004. The decrease is due to lower outstanding balances on the Notes. Interest
expense includes interest on the Notes, amortization of both debt issuance costs and the discount on the
Notes.

During the twelve months ending December 31, 2005, the non-bypassable FTA Charges billed to residential and
small commercial customers totaled $281 million. Collection of FTA Charges totaled $279 million. Scheduled
distributions in 2005 were $291 million. Collections were sufficient to cover 96% of scheduled payments on
the Notes. The remaining amounts were overcollected funds from prior quarters that were deposited into the
reserve subaccounts as required by the note indenture. Interest earnings on restricted and unrestricted funds
and prior period overcollections deposited to various restricted accounts are also used to assist with making
the scheduled payments on the Notes.

Forward-Looking Information

In the preceding Management's Discussion and Analysis of Financial Condition and Results of Operations, and
elsewhere in this annual report, the Note Issuer uses the words could, estimates, expects, anticipates,
believes, and other similar expressions that 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 legal or regulatory proceedings challenging the collection of FTA Charges or payment of
Notes or Certificates.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to the Note Issuer or the Trust.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and related financial information required to be filed hereunder appear on pages F-1
through F-6 of this report and are incorporated herein by reference. In addition, attached with respect to
the Note Issuer and the Trust as Exhibits 99.1, 99.2, and 99.3 are an Annual Statement (unaudited)
summarizing certain information with respect to collections from the Transition Property and payments on the
Notes and Certificates, an Annual Certificate of Compliance (unaudited) with respect to the Servicer's
activities, and the Quarterly Servicer's Certificate (unaudited) for the collection periods September 2005
through November 2005 (dated December 8, 2005).

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Not applicable to the Trust or the Note Issuer.

Page 4

ITEM 9B.  OTHER INFORMATION

None.

                                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to Instruction I of Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

Omitted pursuant to Instruction I of Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted pursuant to Instruction I of Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted with respect to the Note Issuer pursuant to Instruction I of Form 10-K.

Not applicable to the Trust.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Not applicable to the Trust or the Note Issuer.

                                                    PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)     The following documents are filed as part of this report:

        1.     Financial Statements.

               The following financial statements of the Note Issuer and report of independent public
               accountants are included in Item 8 (Financial Statements and Supplementary Data):

               Report of Independent Registered Public Accounting Firm
               Balance Sheets
               Statements of Operations and Changes in Member's Equity
               Statements of Cash Flows
               Notes to Financial Statements

        2.     Financial Statement Schedule.

               None.

        3.     Exhibits.

               See the Exhibit Index of this report below.

Page 5

                                                      SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                               SCE FUNDING LLC
                                                   as Registrant

                                               By:

                                               /s/ Thomas M. Noonan
                                               --------------------------------
                                               Thomas M. Noonan
                                               Chief Executive Officer

                                               Date:  March 7, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.

                     Signature                               Title                  Date
                     ---------                               -----                  ----

                                                        Director, Chief        March 7, 2006
/s/ Thomas M. Noonan                                   Executive Officer
-----------------------------------                      and President
Thomas M. Noonan                                     (Principal Executive
                                                           Officer)

                                                        Director, Vice         March 7, 2006
/s/ Mary C. Simpson                                      President and
-----------------------------------                  Treasurer (Principal
Mary C. Simpson                                          Financial and
                                                      Accounting Officer)

                                                           Director            March 7 , 2006
/s/ Anand Maniktala
-----------------------------------
Anand Maniktala

Page 6

                                                        Exhibit Index
                                                        -------------

   Exhibit
    Number
   -------
     3.1               Certificate of Formation (File No. 333-30785, filed as
                       Exhibit 3.1 to SCE Funding's Form S-3, dated July 3,
                       1997)*

     3.2               Limited Liability Company Agreement (File No. 333-30785,
                       filed as Exhibit 3.2 to SCE Funding's Form S-3, File No.
                       333-30785)*

     3.3               Amended and Restated Limited Liability Company Agreement
                       (File No. 333-30785, filed as Exhibit 3.3 to SCE
                       Funding's Form S-3, dated November 10, 1997)*

     4.1               Note Indenture (incorporated by reference to the same
                       titled exhibit to the Note Issuer's Current Report on
                       Form 8-K filed with the Commission on December 11, 1997)*

     4.2               Series Supplement (File No. 333-30785, filed as Exhibit
                       4.2 to SCE Funding's Form 8-K, dated December 11, 1997)*

     4.3               Note (File No. 333-30785, filed as Exhibit 4.3 to SCE
                       Funding's Form 8-K, dated December 11, 1997)*

     4.4               Amended and Restated Declaration and Agreement of Trust
                       (File No. 333-30785, filed as Exhibit 4.4 to SCE
                       Funding's Form 8-K, dated December 11, 1997)*

     4.5               First Supplemental Agreement of Trust (File No.
                       333-30785, filed as Exhibit 4.5 to SCE Funding's Form
                       8-K, dated December 11, 1997)*

     4.6               Rate Reduction Certificate (File No. 333-30785, filed as
                       Exhibit 4.6 to SCE Funding's Form 8-K, dated December 11,
                       1997)*

     10.1              Transition Property Purchase and Sale Agreement (File No.
                       333-30785, filed as Exhibit 10.1 to SCE Funding's Form
                       8-K, dated December 11, 1997)*

     10.2              Transition Property Servicing Agreement (File No.
                       333-30785, filed as Exhibit 10.2 to SCE Funding's Form
                       8-K, dated December 11, 1997)*

Page 7

     10.3              Note Purchase Agreement (File No. 333-30785, filed as
                       Exhibit 10.3 to SCE Funding's Form 8-K, dated December
                       11, 1997)*

     10.4              Fee and Indemnity Agreement (File No. 333-30785, filed as
                       Exhibit 10.4 to SCE Funding's Form 8-K, dated December
                       11, 1997)*

     10.5              Amendment to Transition Property Servicing Agreement
                       (File No. 333-30785, filed as Exhibit 10.5 to SCE
                       Funding's Annual Report on Form 10-K, dated March 28,
                       2003)*

      23               Consent of PricewaterhouseCoopers LLP

      31               Rule 13a-14(a)/15d-14(a) Certification

      32               Section 1350 Certification

     99.1              Annual Statement (Unaudited)

     99.2              Annual Certificate of Compliance (Unaudited)

     99.3              Quarterly Servicer's Certificate (Unaudited)

_____________________

    *   Incorporated by reference pursuant to Rule 12b-32.

Page 8

                            Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Member of SCE Funding LLC

In our opinion, the accompanying balance sheets and the related statements of operations, cash flows and
member's equity present fairly, in all material respects, the financial position of SCE Funding
LLC at December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

/s/ PricewaterhouseCoopers LLC
Los Angeles, California
March 7, 2006

Page

ITEM 8.  FINANCIAL STATEMENTS

                                       SCE FUNDING LLC
                                        BALANCE SHEETS
                                      As of December 31,
                                        (in thousands)

                     ASSETS                                  2005                    2004
                     ------                                  ----                    ----
Current Assets:
    Cash and equivalents                            $          879          $        1,915
    Restricted funds                                        56,890                  61,375
    Current portion of note receivable                     246,300                 246,300
    Interest receivable                                          2                       8
                                                  ---------------------------------------------
        Total Current Assets                               304,071                 309,598
                                                  ---------------------------------------------

Other Assets and Deferred Charges:
    Note receivable - net of discount                      242,544                 486,953
    Unamortized bond issuance costs                          3,648                   5,473
                                                  ---------------------------------------------
        Total Other Assets and Deferred Charges            246,192                 492,426
                                                  ---------------------------------------------

                  Total Assets                      $      550,263          $      802,024
                                                  =============================================

         LIABILITIES AND MEMBER'S EQUITY

Current Liabilities:
    Interest payable                                $          438          $          656
    Current portion of long-term debt                      246,300                 246,300
    Miscellaneous accrued expenses                          21,636                  29,059
                                                  ---------------------------------------------
        Total Current Liabilities                          268,374                 276,015
                                                  ---------------------------------------------

Long term debt - net of discount                           246,166                 492,397
                                                  ---------------------------------------------
Commitments (Notes 4 & 5)
Member's equity                                             35,723                  33,612
                                                  ---------------------------------------------

      Total Liabilities and Member's Equity         $      550,263          $      802,024
                                                  =============================================

                  The accompanying notes are an integral part of these financial statements.

Page

                                       SCE FUNDING LLC
                   STATEMENTS OF OPERATIONS AND CHANGES IN MEMBER'S EQUITY
                                   Year Ended December 31,
                                        (in thousands)

                                                 2005               2004          2003
                                                 ----               ----          ----
OPERATING REVENUE:
   Interest income                                 $46,087         $60,129       $75,147
                                          ----------------    -------------   -----------------
      Total Operating Revenue                       46,087          60,129        75,147
                                          ----------------    -------------   -----------------

OPERATING EXPENSES:
   Interest expense                                 43,275          59,000        74,299
   Other expenses                                    1,899           2,376         2,986
                                          ----------------    -------------   -----------------
      Total Operating Expenses                      45,174          61,376        77,285
                                          ----------------    -------------   -----------------

      Net Income (Loss)                                913          (1,247)       (2,138)
                                          ----------------    -------------   -----------------

   Member's Equity - beginning of year              33,612          31,293        73,484
   Deemed Dividend to SCE                                -               -       (44,771)
   Member Contributions -- net                       1,198           3,566         4,718
                                          ----------------     ------------   -----------------
      Member's Equity, end of year                 $35,723         $33,612       $31,293
                                          ================     ============   =================

                  The accompanying notes are an integral part of these financial statements.

Page

                                        SCE FUNDING LLC
                                   STATEMENTS OF CASH FLOWS
                                    Year Ended December 31,
                                        (in thousands)

                                                      2005           2004             2003
                                                      ----           ----             ----
Cash flows from Operating Activities:

Net Income (Loss)                                $     913       $  (1,247)      $    (2,138)
Adjustments to reconcile net income (loss)
    to net cash used by operating activities:
Amortizations                                            2               3                 2
Changes in working capital:
    Restricted funds                                 4,485           5,095           (19,217)
    Other receivable                                     6              (3)               (1)
    Interest payable                                  (218)           (219)             (216)
    Miscellaneous accrued expenses                  (7,422)         (6,723)           16,842
                                                 --------------------------------------------
Net Cash Used by Operating Activities               (2,234)         (3,094)           (4,728)
                                                 --------------------------------------------
Cash Flows from Financing Activities:
Payment of principal on rate reduction notes      (246,300)       (246,300)         (246,300)
Capital Transfer from SCE                            1,198           3,566             4,718
                                                 --------------------------------------------
Net Cash Used by Financing Activities             (245,102)       (242,734)         (241,582)
                                                 --------------------------------------------
Cash Flows from Investing Activities:
Note Receivable Collections from SCE               246,300         246,300           246,300
                                                 --------------------------------------------
Net Cash Provided by Investing Activities          246,300         246,300           246,300
                                                 --------------------------------------------
Net Increase (decrease) in cash and equivalents     (1,036)            472               (10)
Cash and equivalents, beginning of year              1,915           1,443             1,453
                                                 --------------------------------------------
Cash and equivalents, end of year                $     879       $   1,915       $     1,443
                                                 =============================================
Cash payments for interest                       $  41,600       $  57,325       $    72,961
                                                 --------------------------------------------

                  The accompanying notes are an integral part of these financial statements.

Page

                                                SCE FUNDING LLC
                                         NOTES TO FINANCIAL STATEMENTS
                                               DECEMBER 31, 2005

1.  Basis of Presentation

The financial statements include the accounts of SCE Funding LLC (also referred to as the Note Issuer), a
Delaware special purpose limited liability company, whose sole member is Southern California Edison Company
(SCE), a provider of electric services to retail customers in central, coastal and southern California. All
of the issued and outstanding common stock of SCE is owned by its parent holding company, Edison
International. SCE Funding LLC was formed on June 27, 1997, in order to effect the purchase from SCE of
Transition Property (as defined below) and to fund such purchase from the issuance of the SCE Funding LLC
Notes, Series 1997-1, Class A-1 through Class A-7 (Notes) to the California Infrastructure and Economic
Development Bank Special Purpose Trust SCE-1 (Trust) which issued certificates (Certificates) with terms and
conditions similar to the Notes. The proceeds from the sale of the Transition Property resulted in a
reduction in revenue requirements sufficient to enable SCE to provide a 10% electric rate reduction to SCE's
residential and small commercial customers in connection with electric industry restructuring mandated by
California Assembly Bill 1890, as amended by California Senate Bill 477 (collectively, the electric
restructuring legislation). This rate reduction became effective January 1, 1998.

SCE Funding LLC was organized for the limited purposes of issuing the Notes and purchasing Transition
Property. Transition Property is the right to be paid a specified amount from non-bypassable tariffs
authorized by the California Public Utilities Commission (CPUC) pursuant to the 1995 electric restructuring
legislation. For financial reporting purposes, the purchase of the Transition Property by the Note Issuer
from SCE was treated as the issuance of a promissory note by SCE to SCE Funding LLC, in the amount of
approximately $2.5 billion. Accordingly, the purchase of the Transition Property is classified as a note
receivable on the accompanying financial statements. Notwithstanding such classification, the Transition
Property, for legal purposes, has been sold by SCE to SCE Funding LLC.

SCE Funding LLC is restricted by its organizational documents from engaging in any other activities. In
addition, its organizational documents require it to operate in such a manner that it should not be
consolidated in the bankruptcy estate of SCE, in the event SCE becomes subject to such a proceeding.

SCE Funding LLC is legally separate from SCE. The assets and revenues of the Note Issuer, including, without
limitation, the Transition Property, are not available to creditors of SCE or Edison International, and the
note receivable from SCE to SCE Funding LLC (i.e., the Transition Property) is not legally an asset of SCE or
Edison International.

2.  Summary of Accounting Policies

Cash Equivalents

Cash equivalents include working funds and short-term investments with initial maturities of 90 days or less.

Page

Restricted Funds

SCE Funding LLC is required to maintain funds of approximately 0.5% of the outstanding principal balance of
the Notes. These funds are invested in short-term securities with maturities of 90 days or less. They are to
be used to make scheduled payments on the Notes to the Trust and to pay other expenses of SCE Funding LLC in
the event that collections of the non-bypassable tariffs prove insufficient to make such payments.

Miscellaneous Accrued Expenses

Effective January 1, 2001, because of lower credit ratings, SCE was required to begin making daily rather
than monthly remittances to the collection account maintained with the trustee for the Notes. The result is
an acceleration of cash collections. These accelerated payments and amounts collected in excess of current
commitments are classified as miscellaneous accrued expenses on the financial statements. These
pre-collection amounts will be applied against SCE's future remittance obligations.

Unamortized Debt Issuance Expenses

The costs associated with the issuance of the Notes to the Trust have been capitalized and are being
amortized over the life of the Notes.

Member's Equity

Pursuant to the indenture for the Notes, SCE Funding LLC is restricted from making distributions to SCE to
the extent that such distributions would cause the book value of the remaining equity in SCE Funding LLC to
decline below 0.5 percent of the original principal amount of all series of Notes which remain outstanding.
As of December 31, 2005, the original principal amount of all series of Notes outstanding was $492.6 million.
In 2005, SCE Funding LLC made a cash distribution of $1.75 million to SCE. There were no distributions in
2004. In 2003, SCE Funding LLC made a cash distribution of $1.0 million to SCE.

In 2003, SCE Funding LLC made a non-cash deemed dividend of $44,771,000 relating to excess collections
previously reflected as capital contributions. This amount was reflected as a reduction of SCE Funding LLC's
Note Receivable from SCE, as well as an increase in the pre-collection amounts included in miscellaneous
accrued expenses.

Income Taxes

SCE Funding LLC is a single-member limited liability company. Accordingly, for federal and state income tax
purposes, any income tax effect of SCE Funding LLC's activities will be reflected in SCE's financial
statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions. These estimates and assumptions may
affect the reported amount of revenue, expenses, assets, and liabilities and disclosure of contingencies.
Actual results could differ from these estimates.

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3.  Fair Value of Financial Instruments

Due to their short maturities, amounts reported for cash equivalents and restricted funds approximate fair
value. In addition to these amounts, at December 31, 2005 and 2004, SCE Funding LLC had a financial asset
(representing its note receivable from SCE), and financial liabilities (representing its Notes to the Trust)
each with a cost basis of approximately $489 million and $733 million, respectively. The note receivable is
carried at cost which approximates fair value. Fair value is estimated based on brokers' quotes of notes with
similar characteristics. Financial liabilities are recorded at cost, with an approximate fair value of $493
million and $739 million at December 31, 2005 and 2004 respectively, and their fair value is based on
brokers' quotes.

4.  Long-Term Debt

In December 1997, SCE Funding LLC issued approximately $2.5 billion of Notes to the Trust. There were
originally seven classes of Notes. The first five classes of Notes (Classes A-1 through A-5) matured in
December 1998, March 2000, 2001, and 2002, and September 2003, respectively. The remaining two classes of
Notes have maturities in 2006 and 2007, respectively, with interest rates of 6.38% and 6.42%, respectively.
The Notes are secured solely by the Transition Property (see Note 1) and certain other assets of SCE Funding
LLC, and the holders of the Notes do not have any recourse to any assets or revenue of SCE or Edison
International. For financial reporting purposes the Transition Property is shown as a note receivable, with
the same scheduled maturities and interest rates as the Notes to the Trust (see table below). Notwithstanding
such classification of the Transition Property, the Transition Property has been sold by SCE to SCE Funding
LLC.

Principal and interest payments on the Notes are due quarterly and are paid from funds deposited with the
Trustee by SCE as servicer of the Transition Property. Because of the negative impact the California energy
crisis has had on SCE's credit ratings, effective January 2001, SCE began making daily rather than monthly
remittances to the trustee. The debt service requirements include an overcollateralization amount of
approximately $1.2 million per year, which will be retained for the benefit of the holders of the Notes. Any
amounts not required for debt service will be returned to SCE Funding LLC and ultimately to SCE. The required
annual liquidation amount of the Notes for the years 2006-2007 is $246.3 million. Scheduled maturities and
interest rates for the Notes payable to the Trust at December 31, 2005, are as follows:

                                    Scheduled           Interest          Amount
           Class                  Maturity Date           Rate        (in thousands)
           -----                  -------------         --------       -----------

            A-6              September 25, 2006          6.38%      $      177,656
            A-7              December 26, 2007           6.42%             314,944
                                                                    ---------------
                                                                    $      492,600
                          Less:  Current Maturities                       (246,300)
                          Less:  Unamortized Discount                         (134)
                                                                    ---------------
                          Long-Term Debt Net of Discount            $      246,166

5.  Significant Agreements and Related Party Transactions

Under the Transition Property Servicing Agreement, SCE, the servicer, is required to manage and administer
the Transition Property of SCE Funding LLC and to collect the non-bypassable tariffs from the electricity
ratepayers on behalf of SCE Funding LLC. SCE Funding LLC shall pay an annual

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servicing fee equal to 0.25% of the outstanding principal balance of the Notes for so long as the
non-bypassable tariff is included as a line item on the bills otherwise sent to electricity ratepayers or
1.5% of the outstanding principal balance of the Notes if the non-bypassable tariff is not included as a line
item on bills otherwise sent to electricity ratepayers but, instead, is billed separately to electricity
ratepayers. SCE Funding LLC incurred a total of $1.7 million in servicing, administration and trustee fees in
2005. SCE is also entitled to receive as compensation any interest earnings on the non-bypassable tariff
collections, and any late payment charges collected from SCE's customers prior to remittance to the Trust.

The Trust was created solely for the purpose of purchasing the Notes from SCE Funding LLC, issuing the
Certificates, and applying the payments received in respect of the Notes to the payment of interest and
principal in respect of the Certificates. Under the Trust Agreement, Deutsche Bank National Trust Company,
the Certificate Trustee, is responsible for purchasing the Notes and authenticating and delivering the
Certificates to the investors. Deutsche Bank National Trust Company, the Delaware Trustee, is responsible for
the maintenance of all records that are necessary to form and maintain the existence of the Trust. All fees
and expenses of the Certificate Trustee and the Delaware Trustee are paid by SCE Funding LLC.
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