This MD&A for the three months ended March 31, 2009 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International since December 31, 2008, and as compared to the three months ended March 31, 2008. This discussion presumes that the reader has read or has access to Edison International's MD&A for the calendar year 2008 (the year-ended 2008 MD&A), which was included in Edison International's 2008 annual report to shareholders and incorporated by reference into Edison International's Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission.

This MD&A contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's current expectations and projections about future events based on Edison International's knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact. Other information distributed by Edison International that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," and variations of such words and similar expressions, or discussions of strategy or of plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could impact Edison International or its subsidiaries, include, but are not limited to:

º •
º the cost of capital and the ability to borrow funds and access to capital markets on reasonable terms, particularly in light of current credit conditions in the capital markets;

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º the effect of current economic conditions on the availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations;

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º the ability to procure sufficient resources to meet expected customer needs in the event of significant counterparty defaults under power-purchase agreements;

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º changes in the fair value of investments and other assets;

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º the ability of Edison International to meet its financial obligations and to pay dividends on its common stock;

º •
º the ability of SCE to recover its costs in a timely manner from its customers through regulated rates;

º •
º decisions and other actions by the CPUC, the FERC and other regulatory authorities and delays in regulatory actions;

º •
º market risks affecting SCE's energy procurement activities;

º •
º changes in interest rates, rates of inflation including those rates which may be adjusted by public utility regulators, and foreign exchange rates;

º •
º governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market;

º •
º environmental laws and regulations, both at the state and federal levels, or changes in the application of those laws, that could require additional expenditures or otherwise affect the cost and manner of doing business;

º •
º risks associated with operating nuclear and other power generating facilities, including operating risks, nuclear fuel storage, equipment failure, availability, heat rate, output, availability and cost of spare parts, and cost of repairs and retrofits;

º •
º the cost and availability of labor, equipment and materials;

º •
º the ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and to recover the costs of such insurance;

º •
º effects of legal proceedings, changes in or interpretations of tax laws, rates or policies, and changes in accounting standards;

º •
º creditworthiness of suppliers and other project participants and their ability to deliver goods and services under their contractual obligations to EME and its subsidiaries or to pay damages if they fail to fulfill those obligations;

º •
º the outcome of disputes with the IRS and other tax authorities regarding tax positions taken by Edison International;

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º the continued participation of Edison International's subsidiaries in tax-allocation and payment agreements;

º •
º supply and demand for electric capacity and energy, and the resulting prices and dispatch volumes, in the wholesale markets to which EMG's generating units have access;

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º the cost and availability of coal, natural gas, fuel oil, nuclear fuel, and associated transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts;

º •
º the cost and availability of emission credits or allowances for emission credits;

º •
º transmission congestion in and to each market area and the resulting differences in prices between delivery points;

º •
º the ability to provide sufficient collateral in support of hedging activities and purchased power and fuel;

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º the risk of counterparty default in hedging transactions or power-purchase and fuel contracts;

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º the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities and technologies;

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º the difficulty of predicting wholesale prices, transmission congestion, energy demand and other aspects of the complex and volatile markets in which EMG and its subsidiaries participate;

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º general political, economic and business conditions;

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º weather conditions, natural disasters and other unforeseen events; and

º •
º the risks inherent in the development of generation projects as well as transmission and distribution infrastructure replacement and expansion including those related to siting, financing, construction, permitting, and governmental approvals.

Additional information about risks and uncertainties, including more detail about the factors described above, are discussed throughout this MD&A and in the "Risk Factors" section included in Part I, Item 1A of Edison International's Annual Report on Form 10-K. Readers are urged to read this entire report, including the information incorporated by reference, and carefully consider the risks, uncertainties and other factors that affect Edison International's business. Forward-looking statements speak only as of the date they are made and Edison International is not obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by Edison International with the Securities & Exchange Commission.

In this MD&A, except when stated to the contrary, references to each of Edison International, SCE, EMG, EME or Edison Capital mean each such company with its subsidiaries on a consolidated basis. References to Edison International (parent) or parent company mean Edison International on a stand-alone basis, not consolidated with its subsidiaries.

This MD&A is presented in 9 major sections. The company-by-company discussion of SCE, EMG, and Edison International (parent) includes discussions of liquidity, market risk exposures, and other matters (as relevant to each principal business segment). The remaining sections discuss Edison International on a consolidated basis. The consolidated sections should be read in conjunction with the discussion of each company's section.

                                                                PAGE

  Edison International: Management Overview                       46
  Southern California Edison Company                              50
  Edison Mission Group Inc.                                       58
  Edison International (Parent)                                   79
  Results of Operations and Historical Cash Flow Analysis         80
  New Accounting Pronouncements                                   96
  Commitments, Guarantees and Indemnities                         97
  Off-Balance Sheet Transactions                                  97
  Other Developments                                              98

Introduction

Edison International is a holding company whose principal operating subsidiaries are SCE, a rate-regulated electric utility, and EMG, the holding company of Edison International's competitive power generation (EME) and financial services (Edison Capital) segments. EME is engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities, and Edison Capital provides capital and financial services, with no plans to make new investments.

Areas of Business Focus

Commodity Prices

Continuing economic recessionary conditions, among other things, were a contributing factor to a decline in electrical demand as well as a decline in natural gas and power prices during the first quarter of 2009. These factors have had an adverse impact on EMG's results of operations. Fluctuations in commodity prices do not impact SCE's results of operations due to ratepayer recovery of purchased power costs. As a result of lower prices, SCE projects that it will recover its under-collected purchased power costs recorded in the ERRA balancing account without an increase in rates. See "SCE: Regulatory Developments-Current Regulatory Developments-Energy Resource Recovery Account Proceedings" in the year-ended 2008 MD&A.

The electrical load, calculated from published data by PJM, for the Northern Illinois and PJM West Hub locations declined 6% and 2%, respectively, compared to the first quarter of 2008. The decline in natural gas prices together with lower electrical demand have resulted in significantly lower energy prices. Furthermore, spot energy prices affecting the Illinois Plants were adversely impacted by congestion affecting power exported from the Northern Illinois control area. The average 24-hour PJM market price for energy per MWh at the Northern Illinois Hub and the PJM West Hub declined to $34.06/MWh and $49.09/MWh, respectively, during the first quarter of 2009 as compared to $53.38/MWh and $68.52/MWh, respectively, during the first quarter of 2008. In the first quarter of 2009, the average realized energy prices per MWh were higher than the average 24-hour PJM market prices due to higher hedge prices. As reflected in the net income summary below, these factors had an adverse impact on the results of operations during the first quarter of 2009. Lower electrical load has also generally decreased congestion in the eastern power grid, thereby resulting in lower trading income in the first quarter of 2009.

Business Development and Capital Commitments

SCE

SCE's growth strategy includes improving reliability and expanding the capability of its distribution and transmission infrastructure, constructing and replacing generation assets, and deploying advanced metering infrastructure. SCE continues to implement its growth strategy and revised its 2009 - 2013 capital investment plan to be consistent with the revenue requirements authorized in its 2009 GRC final decision, as well as other CPUC and FERC proceedings. SCE's significant planned projects are as follows:

Transmission and Distribution Projects

º •
º Devers-Palo Verde II - A transmission project that will install a high voltage (500 kV) transmission line from the Valley substation in Romoland, California via the Devers substation near Palm Springs, California to a new substation to be constructed near Palo Verde, west of Phoenix, Arizona. SCE

continues its efforts to obtain the regulatory approvals necessary to construct the DPV2 project. The project is currently expected to be placed in service in 2013, subject to licensing and regulatory approvals. Over the period 2009 - 2013, SCE expects to spend $723 million for the California portion of the project. If SCE and the relevant regulatory agencies determine that construction of the Arizona portion is in the interest of California ratepayers, SCE will seek regulatory approvals for the Arizona portion, and would expect to spend $304 million.

º •
º Tehachapi Transmission Project - An eleven segment project consisting of new and upgraded transmission lines and associated substations built primarily to enable the development of renewable energy generated primarily by wind farms in remote areas of eastern Kern County, California. Tehachapi segments one through three are under construction and are expected to be placed in service at various dates over the next two years. SCE continues to seek the necessary licensing permits for Tehachapi segments four through eleven, which are expected to be placed in service between 2011 and 2013, subject to receipt of licensing and regulatory approvals. SCE expects to spend $2.1 billion over the period 2009 - 2013.

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º Rancho Vista Substation Project - A new 500 kV substation in the City of Rancho Cucamonga that is under construction and expected to be placed in service in 2009. SCE expects to spend $38 million in 2009.

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º Other non-project specific capital investments consist of $3.1 billion for transmission development and $9.7 billion for distribution projects to improve reliability and expand capability of its infrastructure over the period 2009 - 2013.

Generation Projects

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º San Onofre Steam Generator Replacement Project - Recently, SCE took delivery of the first two of four steam generators. The project is intended to enable San Onofre to operate until the end of its initial license period in 2022, and beyond if license renewal proves feasible. SCE expects to spend $456 million over the period 2009 - 2011.

º •
º Solar Photovoltaic Program - A program to develop up to 160 MW of utility-owned Solar PV generating facilities (generally ranging in size from 1 to 2 MW) each on commercial and industrial rooftop and other space in SCE's service territory. See "SCE: Liquidity-Capital Expenditures-Solar Photovoltaic Program" for further discussion.

Other Projects

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º EdisonSmartConnecttm - SCE's advanced metering project that will install state-of-the-art "smart" meters in approximately 5.3 million households and small businesses throughout its service territory. SCE expects to begin deploying meters in 2009, and anticipates completion of the deployment in 2012. SCE estimates capital costs of $1.2 billion over the period 2009 - 2012 and has obtained CPUC authorization to recover $1.6 billion of capital and operating costs related to this deployment phase.

SCE's 2009 - 2013 revised total capital investment plan includes capital spending in the range of $16.7 billion to $20.2 billion. See "SCE:
Liquidity-Capital Expenditures" for further discussion.

EMG

At March 31, 2009, EME had 1,015 MW of wind projects in service and another 170 MW of wind projects under construction, with scheduled completion dates during 2009. EME's wind projects under

construction are currently funded through equity. During the first quarter of 2009, EME completed construction and commenced operations of the 80 MW Elkhorn Ridge project located in Nebraska.

EME is continuing to preserve capital by focusing on a selective growth strategy, primarily on completion of projects under construction and development of sites for future renewable projects deploying current turbine commitments. EME has contracts for the purchase of 942 MW of new turbines with scheduled payment obligations of up to $667 million in 2009 and $240 million in 2010. Turbine payments scheduled during the first quarter of 2009 were deferred by agreement with certain suppliers. EME and Suzlon Wind Energy Corporation are discussing a number of contractual performance matters and related turbine payments. With respect to turbine payments scheduled for the balance of 2009, EME has continued to engage in discussions with each of the turbine suppliers to defer the payment of the remaining commitments under each of the turbine supply agreements. At March 31, 2009, EME had recorded wind turbine deposits of $336 million, included in other long-term assets on its consolidated balance sheet. Under certain of these agreements, EME may terminate the purchase of individual turbines, or groups of turbines, for convenience. If EME terminated one or more turbine supply agreements, it would result in a charge related to such termination.

EME plans to defer construction expenditures for new wind projects until financing becomes available, which may require power purchase agreements. EME has observed a trend toward delays in the award of power purchase agreements by potential offtakers. As a result, the time to complete development of new wind projects has increased, thereby delaying EME's expectation on timing of new projects. If EME is unable to obtain power purchase agreements, complete development of wind projects, and obtain project financing on acceptable terms and conditions, it may terminate a portion of the turbines on order. Such an event would likely result in a material charge. EME plans to store turbines that are delivered until needed for construction of new wind projects.

Federal and State Income Taxes

In April 2009, Edison International was advised by the IRS that the Staff of the Joint Committee on Taxation, a committee of the United States Congress (the "Joint Committee"), completed its review of the Global Settlement, and did not recommend any adjustments to the terms of the Global Settlement submitted for review. Pursuant to the Global Settlement, Edison Capital subsequently terminated its interests in its cross-border leases and Edison International and the IRS finalized the Global Settlement on May 5, 2009. See "Edison International Notes to Consolidated Financial Statements-Note 4. Income Taxes" and "Other Developments-Federal and State Income Taxes" for further information.

Environmental Developments

As discussed in the Edison International 2008 Annual Report on Form 10-K, Midwest Generation is subject to various commitments with respect to environmental compliance for the Illinois Plants. Midwest Generation is testing selective non-catalytic NOX removal technologies and reagent based SO2 removal technologies that may be employed to meet compliance requirements. These technologies would be deployed at the Illinois Plants in a manner which could optimize compliance during 2010 through 2015, subject to approval of construction permits by the Illinois EPA. A decision regarding whether or not to proceed with the alternative compliance program will occur following completion of testing and evaluation of results. Under the current conditions, Midwest Generation cannot predict what specific method will be used or the costs that will be incurred to comply with the Combined Pollutant Standard.

Earnings Performance

The table below presents Edison International's earnings for the three months
ended March 31, 2009 and 2008, and the relative contributions by its
subsidiaries.

                                                                           Three Months Ended
                                                                               March 31,

In millions                                                                2009         2008

Earnings (Loss) from Continuing Operations:
          SCE                                                            $     208    $     150
          EMG                                                                   45          159
          Edison International (parent) and other                               (6 )         (5 )

Edison International Earnings from Continuing Operations                       247          304

Edison International Earnings (Loss) from Discontinued Operations                3           (5 )

Edison International Net Income                                          $     250    $     299

Earnings (Loss) from Continuing Operations

SCE's earnings from continuing operations were $208 million in the first quarter of 2009, compared with earnings of $150 million in the first quarter of 2008. The increase in 2009 was primarily due to SCE's 2009 GRC decision in March, which was effective January 1, 2009, and expense timing differences arising from the delay in receiving the GRC decision.

EMG's earnings from continuing operations were $45 million in the first quarter of 2009, compared with earnings of $159 million in the first quarter of 2008. The decrease in 2009 was primarily due to significant decline in Midwest Generation and Homer City results from lower power prices and generation levels as well as reduced trading income and a loss from the termination of two lease agreements at Edison Capital in 2009. These decreases were partially offset by higher earnings from the wind projects in operation. Results for the first quarter of 2008 also included the favorable buy-out of a coal contract at Midwest Generation.

SCE: REGULATORY MATTERS

Current Regulatory Developments

This section of the MD&A describes significant regulatory issues that may impact SCE's financial condition or results of operations.

2009 General Rate Case Proceeding

On March 12, 2009, the CPUC issued a final decision in SCE's 2009 GRC, authorizing a $4.83 billion base revenue requirement for 2009. The CPUC also authorized a methodology for calculating post-test year revenue requirements that would result in an approximate base revenue requirement of $5.04 billion in 2010 and $5.25 billion in 2011. In addition, the 2009 GRC decision establishes new balancing account regulatory treatment for SCE's medical, dental, and vision expenses, and its share of Palo Verde operation and maintenance expenses, and modifies SCE's existing pension and PBOP balancing accounts to allow annual recovery or refund of the recorded year-end balances. During the first quarter of 2009, SCE implemented the updated revenue requirement retroactive to January 1, 2009 consistent with the CPUC authorization. In addition, SCE has slightly revised its capital expenditure forecasts for the period 2009 - 2013. See "SCE: Liquidity-Capital Expenditures" for further discussion.

Peaker Plant Generation Projects

As discussed under the heading "Peaker Plant Generation Projects," in the year-ended 2008 MD&A, SCE pursued development of five combustion turbine peaker plants, four of which were placed online in August 2007 to help meet peak customer demands and other system requirements. In April 2009, the California Coastal Commission approved the coastal development permit for the fifth peaker, reversing the City of Oxnard's denial. SCE is moving forward with the construction of the fifth peaker plant at the original site.

SCE: OTHER DEVELOPMENTS

Navajo Nation Litigation

As discussed under the heading, "SCE: Other Developments-Navajo Nation Litigation" in the year-ended 2008 MD&A, the Navajo Nation filed a complaint in June 1999 against SCE, among other defendants, and filed a related case against the U.S. Government in December 1993 arising out of the coal supply agreement for Mohave. In April 2009, in a related case against the U.S. Government, the U.S. Supreme Court found that the Navajo Nation did not have a claim for compensation. SCE cannot predict the outcome of the Tribes' complaints against SCE or the ultimate impact of the April 2009 U.S. Supreme Court decision on these complaints.

Federal and State Income Taxes

Edison International files its federal income tax returns on a consolidated basis and files on a combined basis in California and certain other states. SCE is included in the consolidated federal and state combined income tax returns. See "Other Developments-Federal and State Income Taxes" for further discussion of these matters.

SCE: LIQUIDITY

Overview

As of March 31, 2009, SCE had $2.4 billion of available liquidity made up of
$1.18 billion of cash and equivalents and short-term investments ($83 million of
which was held by SCE's consolidated VIEs), as well as $1.22 billion remaining
under credit facilities. The following table summarizes the status of SCE's
credit facilities at March 31, 2009:

                                                                       Credit
In millions                                                        Facilities(1)

Commitment                                                          $        3,000
Less: Unfunded commitment from Lehman Brothers subsidiary                      (81 )

                                                                             2,919
Outstanding borrowings                                                      (1,558 )
Outstanding letters of credit                                                 (137 )

Amount available                                                  $          1,224

º (1)
º SCE has two credit facilities with various banks. In March 2008, SCE amended its existing $2.5 billion five-year credit facility, extending the maturity to February 2013. The amendment also provides four extension options which, if all exercised, and agreed to by lenders, will result in a final termination in February 2017. In March 2009, SCE entered into a new $500 million 364-day revolving credit facility terminating on March 16, 2010. SCE expects to use the additional liquidity provided by the facility to address potential requirements of SCE's ongoing procurement-related needs.

During the first quarter of 2009, SCE made net repayments of $335 million on amounts borrowed under its $2.5 billion credit facility.

. . .