v3.25.2
Derivative Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Note 6.  Derivative Instruments
Derivative financial instruments are used to manage exposure to commodity price risk resulting from SCE's electricity, natural gas and resource adequacy procurement activities. The risks of fluctuating commodity prices are managed in part by entering into forward commodity transactions, including options, swaps, futures, and Fin Toll arrangements. To mitigate credit risk from counterparties in the event of nonperformance, master netting agreements are used whenever possible, and counterparties may be required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with the transaction.
Certain power and gas contracts contain a provision that requires SCE to maintain an investment grade rating from the major credit rating agencies, referred to as a credit-risk-related contingent feature. If SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover derivative liabilities and the related outstanding payables. The fair value of these derivative contracts and any related collateral were immaterial as of June 30, 2025 and December 31, 2024.
SCE presents its derivative assets and liabilities, recorded at fair value, on a net basis on its condensed consolidated balance sheets when subject to master netting agreements or similar agreements. Derivative positions are also offset against margin and cash collateral deposits. See Note 4 for a discussion of fair value of derivative instruments.
The following table summarizes the gross and net fair values of SCE's commodity derivative instruments:
June 30, 2025
(in millions)
Derivative Assets
Short-Term1
Derivative Liabilities
Short-Term2
Commodity derivative contracts
Gross amounts recognized$196 $20 
Gross amounts offset in the condensed consolidated balance sheets(17)(17)
Cash collateral posted— (3)
Net amounts presented in the condensed consolidated balance sheets$179 $— 
December 31, 2024
(in millions)
Derivative Assets
Short-Term1
Derivative Liabilities
Short-Term2
Commodity derivative contracts
Gross amounts recognized$213 $47 
Gross amounts offset in the condensed consolidated balance sheets(1)(1)
Cash collateral posted— (46)
Net amounts presented in the condensed consolidated balance sheets$212 $— 
1Included in "Other current assets" on SCE's condensed consolidated balance sheets.
2Included in "Other current liabilities" on SCE's condensed consolidated balance sheets.
At June 30, 2025, SCE posted $75 million of cash collateral, of which $3 million was offset against derivative liabilities and $72 million was reflected in "Other current assets" on SCE's condensed consolidated balance sheets. At December 31, 2024, SCE posted $74 million of cash collateral, of which $46 million was offset against derivative liabilities and $28 million was reflected in "Other current assets" on the condensed consolidated balance sheets.
Financial Statement Impact of Derivative Instruments
SCE recognizes realized gains and losses on derivative instruments as purchased power expense and unrealized gains and losses as regulatory assets or liabilities. Both realized and unrealized gains and losses are expected to be refunded to or recovered from customers and therefore do not affect earnings. Cash flows from derivative activities, including cash collateral, are reported in cash flows from operating activities in SCE's condensed consolidated statements of cash flows.
The following table summarizes the gains/(losses) of SCE's economic hedging activity:
Three months ended June 30,Six months ended June 30,
(in millions)2025202420252024
Realized$(3)$(55)$(43)$(126)
Unrealized35 (9)11 (37)
Notional Volumes of Derivative Instruments
The following table summarizes the notional volumes of derivatives used for SCE's economic hedging activities:
CommodityUnit of
Measure		Economic Hedges
June 30, 2025December 31, 2024
Electricity options, swaps and forwardsGigawatt hours6,9143,295
Natural gas options, swaps and forwardsBillion cubic feet104
Congestion revenue rightsGigawatt hours4,1198,141
Fin Toll arrangements
Gigawatt hours240—