v3.26.1
Derivative Instruments
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
Derivative financial instruments are used to manage exposure to commodity price risk resulting from SCE's electricity and natural gas 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 of SCE's derivative contracts contain credit-risk-related contingent features that require posting of collateral upon a downgrade of SCE's credit ratings to below investment grade by one or more major credit rating agencies. If SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover derivative liabilities
and related outstanding payables. As of March 31, 2026 and December 31, 2025, the fair values of derivative liabilities were immaterial, for which SCE posted collateral of $60 million and $105 million collateral, respectively. If the credit-risk-related contingent features underlying these contracts were triggered on March 31, 2026 and December 31, 2025, SCE would have been required to post an additional $5 million and $3 million of collateral, respectively, most of which is related to outstanding net payables under the contracts.
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:
March 31, 2026
(in millions)
Derivative Assets
Short-Term1
Derivative Liabilities
Short-Term2
Commodity derivative contracts
Gross amounts recognized$19 $35 
Gross amounts offset in the condensed consolidated balance sheets(1)(1)
Cash collateral posted— (34)
Net amounts presented in the condensed consolidated balance sheets$18 $— 
December 31, 2025
(in millions)
Derivative Assets
Short-Term1
Derivative Liabilities
Short-Term2
Commodity derivative contracts
Gross amounts recognized$48 $57 
Cash collateral posted— (57)
Net amounts presented in the condensed consolidated balance sheets$48 $— 
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 March 31, 2026, SCE posted $53 million of cash collateral, of which $34 million was offset against derivative liabilities and $19 million was reflected in "Other current assets" on SCE's condensed consolidated balance sheets. At December 31, 2025, SCE posted $66 million of cash collateral, of which $57 million was offset against derivative liabilities and $9 million was reflected in "Other current assets" on the condensed consolidated balance sheets.
Financial Statement Impact of Derivative Instruments
SCE recognizes realized gains and losses on derivative instruments as purchased power expense and unrealized gains and losses as regulatory assets or liabilities. Both realized and unrealized gains and losses are expected to be recovered from customers and therefore do not affect earnings. Cash flows from derivative activities, including cash collateral, are reported in cash flows from operating activities in SCE's condensed consolidated statements of cash flows.
The following table summarizes the gains/(losses) of SCE's economic hedging activity:
Three months ended March 31,
(in millions)20262025
Realized$(38)$(40)
Unrealized(8)(23)
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
March 31, 2026December 31, 2025
Electricity options, swaps and forwardsGigawatt hours6,0193,249
Natural gas options, swaps and forwardsBillion cubic feet24
Congestion revenue rightsGigawatt hours1,2325,566
Fin Toll arrangements
Gigawatt hours236228