This MD&A for the three- and six-month periods ended June 30, 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- and six month periods ended June 30, 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:

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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;

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

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

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º market risks affecting SCE's energy procurement activities;

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

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º governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market and price mitigation strategies adopted by ISOs and regional transmission organizations;

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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;

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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;

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

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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;

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

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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;

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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;

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º supply and demand for electric capacity and energy, and the resulting prices and dispatch volumes, in the wholesale markets to which EME'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;

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

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

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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

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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 10 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          52
  Southern California Edison Company                 58
  Edison Mission Group Inc.                          66
  Edison International (Parent)                      87
  Results of Operations                              89
  Historical Cash Flow Analysis                     106
  New Accounting Pronouncements                     108
  Commitments, Guarantees and Indemnities           108
  Off-Balance Sheet Transactions                    110
  Other Developments                                110

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

Federal and State Income Taxes

Global Settlement

As previously disclosed, Edison International and the IRS finalized the terms of a Global Settlement on May 5, 2009. The Global Settlement resolves federal tax disputes related to Edison Capital's cross-border, leveraged leases through 2009, and all other outstanding federal tax disputes and affirmative claims for tax years 1986 through 2002. Pursuant to the Global Settlement, Edison Capital terminated its interests in the cross-border leases and received net proceeds of $1.385 billion, including $121 million in the first quarter of 2009. See "Off-Balance Sheet Transactions-Leveraged Leases" for further discussion of the termination of the cross-border leases.

The Global Settlement and termination of the Edison Capital cross-border leases resulted in the following impacts:

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º Edison International recorded a consolidated after-tax earnings charge of $274 million through the second quarter of 2009 ($11 million of which was recorded in the first quarter of 2009) and expects that the Global Settlement together with the termination of the Edison Capital cross-border leases will result in a positive cash impact over time of approximately $380 million. The cash impacts of the Global Settlement will occur over the next few years. See "Edison International (parent)-Liquidity-Intercompany Tax-Allocation Agreement" for further discussion of cash flows.

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º The Global Settlement and related lease terminations resulted in a loss of $628 million, after tax, for Edison Capital through the second quarter of 2009, reflected in "Lease termination and other" ($920 million pre-tax), and "Income tax expense (benefit)" on the consolidated statements of income
(loss). Edison Capital's overall net cash outflow from the Global Settlement will be approximately $300 million over time.

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º The Global Settlement also resolves all of SCE's federal income tax disputes and affirmative claims through tax year 2002. During the second quarter of 2009, SCE recorded after-tax earnings of $300 million reflected in "Income tax expense (benefit)" on the consolidated statements of income
(loss) primarily related to settlement of two affirmative claims associated with the taxation of balancing account overcollections and taxation of proceeds received in consideration for transferring control of SCE's transmission and distribution system to the ISO as part of California's deregulation process. Both claims created tax timing differences that resulted in an interest refund from the IRS for prior period tax overpayments, but did not result in a permanent reduction in Edison International's and SCE's federal income tax liability. SCE expects an overall positive cash impact resulting from the Global Settlement of approximately $640 million over time, including the cash benefit of prior tax deposits of approximately $200 million.

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º On a combined basis, all other federal tax disputes involving the Edison International consolidated group for tax years 1986 - 2002 resulted in after-tax earnings of $54 million and expected positive cash flow over time of approximately $40 million. The earnings are attributable to miscellaneous net income tax benefits arising from the Global Settlement.

As a consequence of the cross-border lease terminations and Global Settlement, Edison Capital may be required to pay outstanding medium-term loans in the amount of $92 million (at June 30, 2009) and purchase certain affordable housing projects for approximately $20 million (at June 30, 2009) under existing guarantees. Edison International does not expect such payments to have a material adverse impact on its results of operations, financial position, or cash flows.

Edison International is addressing the impacts of the Global Settlement with state tax authorities and is awaiting receipt of final interest calculations from the IRS. Resolution of such matters with such authorities may change the estimated cash and earnings impacts described above.

Commodity Prices

Continuation of the economic recession, among other factors, contributed to declines in electrical demand for Northern Illinois and PJM West Hub locations during the six months ended June 30, 2009. The electrical load, calculated from published data by PJM, for the Northern Illinois and PJM West Hub locations declined 6% and 4%, respectively, compared to the six months ended June 30, 2008. The decline in price of natural gas, which often serves as the marginal fuel source in the region, together with lower electrical demand have resulted in significantly lower energy prices. Furthermore, spot energy prices affecting the Illinois Plants were adversely impacted, particularly during some off-peak periods, by congestion affecting the Northern Illinois control area. The average 24-hour PJM market price for energy at the Northern Illinois Hub and the PJM West Hub declined to $30.08/MWh and $41.40/MWh, respectively, during the six months ended June 30, 2009 as compared to $52.42/MWh and $72.17/MWh, respectively, during the six months ended June 30, 2008. In the first six months ended June 30, 2009, Midwest Generation's and EME Homer City's average realized energy price 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 second quarter and six months ended June 30, 2009. Lower electrical load has also generally decreased congestion in the eastern power grid, thereby resulting in lower trading income in the second quarter and six months ended June 30, 2009.

Fluctuations in commodity prices and demand for electricity do not impact SCE's results of operations due to the recovery of purchased power costs in rates and the decoupling of electric sales from rates. As a result of lower commodity 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.

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

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º Devers-Palo Verde 2 - A transmission project that, as modified, would install a high voltage (500 kV) transmission line from Romoland, California east to Blythe, California. SCE continues its efforts to obtain the regulatory approvals necessary to construct the DPV2 project. The California portion of 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 $718 million for the project (excluding the previously proposed Arizona portion of the project). As originally proposed, the project would have continued the transmission line from Romoland to a new substation near Palo Verde, west of Phoenix, Arizona. However, the line will now terminate at the Colorado River switch yard east of Blythe rather than continuing into Arizona as originally proposed. SCE is continuing to evaluate its transmission needs in western Arizona, but does not currently intend to seek regulatory approval for the Arizona 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 appropriate transmission facilities in western Arizona at that time.

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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 on this project.

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º Rancho Vista Substation Project - A new 500 kV substation in the City of Rancho Cucamonga was completed and placed in service in May 2009. The total construction cost of the project from inception to completion was approximately $200 million.

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º Other capital investments consisting of $3.4 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 which are expected to be placed in service in the fourth quarter of 2009. 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 $457 million over the period 2009 - 2011.

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º Solar Photovoltaic Program - In June 2009, the CPUC issued a final decision approving a program to develop up to 250 MW of utility-owned Solar Photovoltaic 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. SCE expects to spend $790 million over the period 2009 - 2013. See "SCE: Liquidity-Capital Expenditures-Solar Photovoltaic Program" for further discussion.

Other Projects

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º EdisonSmartConnect™ - 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 full deployment of meters in 2009, and anticipates completion of the deployment in 2012. SCE estimates capital costs of $1.2 billion over the period 2009 - 2012.

SCE's 2009 - 2013 revised total capital investment plan includes capital spending in the range of $16.8 billion to $20.4 billion. See "SCE:
Liquidity-Capital Expenditures" for further discussion.

EMG

At June 30, 2009, EME had 1,085 MW of wind projects in service and one project (100 MW) under construction (completed in July 2009). EME's wind projects under construction are currently funded through internally generated funds and cash on hand. During the second quarter of 2009, a subsidiary of EME completed a $202 million project financing of EME's interests in the Wildorado, San Juan Mesa and Elkhorn Ridge wind projects. For further discussion of this financing, see "EMG: Liquidity and Capital Resources-Wind Financing."

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 wind turbines with scheduled payment obligations of up to $596 million in 2009 and $242 million in 2010. A significant portion of turbine payments scheduled during the first half of 2009 were deferred by agreement with certain suppliers. EME has executed non-binding letter agreements with two of its vendors to provide vendor financing. EME and such vendors are in the process of negotiating definitive agreements based on the non-binding letter agreements, but there is no assurance that final binding agreements will be executed or executed on terms that conform to the letter agreements. If definitive agreements are executed substantially in accordance with the terms of the letter agreements, turbine commitments would be reduced to approximately $191 million in 2009, $229 million in 2010, and $210 million in 2011, and the remaining $206 million due based on specified conditions (expected during the time period of 2011 and 2014). These commitments would be further reduced during this period if a third turbine supplier agrees to provide vendor financing. Furthermore, EME can elect under the existing turbine supply agreement with this supplier to terminate the agreement for convenience which would further reduce turbine commitments to $9 million in 2009 and $49 million in 2010 (in such case, EME would write off approximately $90 million in previously made non-refundable deposits).

Subject to completion of definitive agreements discussed above, EME plans to use the wind turbines currently under contract to complete the Big Sky wind project. EME plans to defer construction expenditures for other new wind projects until financing becomes available, which may require power purchase agreements. EME continues to participate in requests for proposals issued by potential customers and negotiate with potential customers for which proposals have been short-listed, but there is no assurance that these power purchase agreements will be executed or executed in a timely manner. Furthermore, delays by customers in the award of new power purchase agreements would increase the time to complete development of new wind projects, 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.

Environmental Developments

Environmental Compliance Plans and Costs

As discussed in the 2008 Annual Report on Form 10-K, Midwest Generation is subject to various commitments with respect to environmental compliance for the Illinois Plants under the CPS. During the second quarter of 2009, Midwest Generation conducted tests of selective non-catalytic NOX removal technologies and reagent based SO2 removal technologies that may be employed to meet CPS requirements. Based on this testing, Midwest Generation has preliminarily concluded that installation of selective non-catalytic NOX removal technologies, in lieu of selective catalytic removal technologies, should meet the NOX portion of the CPS. Testing of the flue gas desulfurization technology based on injection of dry sodium sorbent demonstrated significant reductions in SO2; however, further analysis and evaluation are required to determine the appropriate path forward to comply with the SO2 portion of the CPS. These technologies may be deployed at the Illinois Plants in a manner which could optimize compliance, subject to approval of construction permits by the Illinois EPA. A decision regarding whether or not to proceed with the alternative compliance program, as described above, will occur following further analysis and evaluation of results. Under current conditions, Midwest Generation cannot predict what specific method will be used or all costs that will be incurred to comply with the CPS.

Climate Change Legislation

On June 26, 2009, the American Clean Energy and Security Act was passed by the U.S. House of Representatives. The bill would establish a 20% mandatory federal combined efficiency and renewable electricity standard for retail electricity suppliers like SCE and establish a cap-and-trade system for carbon emissions commencing in 2012. Under the cap-and-trade system, a cap to reduce aggregate greenhouse gas emissions from all covered entities would be established and decline over time. Emitters of greenhouse gases would be required to have allowances for greenhouse gas emissions emitted during a relevant measurement period. The bill would provide for stated portions of required allowances to be allocated (including allocation to merchant generators) free of charge in declining amounts over time. Emitters of greenhouse gases would have to purchase the remainder of their required allowances in the open market, although a portion may be provided by so-called offset credits (for alternative greenhouse gas conservation efforts). Legislation to regulate greenhouse gas emissions is now being considered by the U.S. Senate, and the timing, content, and potential effects on Edison International of climate change legislation, if any, that may be ultimately passed by the Congress and signed into law by the President remain uncertain.

Earnings Performance

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