Earning activities in 2023 compared to 2022 were primarily affected by the following:
| ● | Higher operating revenue of $4 million is primarily due to: |
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| ● | An increase of CPUC-related revenue of $411 million due to the escalation mechanism set forth in the 2021 GRC decision. |
| ● | A decrease of CPUC-related revenue of $358 million due to lower wildfire-related expenses that had been |
authorized for recovery during 2022 through Track 2 and Track 3.
| ● | A decrease of CPUC-related revenue of $49 million related to lower CSRP revenue requirements approved in 2023 than in 2022. |
| ● | Lower operation and maintenance costs of $482 million primarily due to the following: |
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| ● | In 2022, SCE recognized $404 million of previously deferred wildfire-related expenses upon approval of Track 2 and Track 3, compared to $54 million previously deferred expenses recognized in 2023 primarily related to the Track 3 in 2023. These wildfire-related expenses were offset in revenue. |
| ● | In 2022, SCE recognized a charge of $95 million related to the POD on SCE's Upstream Lighting Program. This consisted of $76 million of disallowed costs reclassified from cost recovery activities and $19 million of fines. |
| ● | Lower uncollectible expenses of $40 million primarily due to prior period expenses not subject to cost recovery recorded in 2022. A CPUC decision in 2022 required SCE to change its methodology for calculating the portion of uncollectible expenses incremental to GRC authorized revenues. |
| ● | In 2023, SCE recognized a probable disallowance of $30 million related to the 2021 NDCTP. See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" for more information. |
| ● | Wildfire-related claim charges were $665 million and $1.3 billion in 2023 and 2022, respectively, primarily related to the 2017/2018 Wildfire/Mudslide Events. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides." |
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| ● | Higher depreciation and amortization expense of $48 million primarily due to increased plant balances, partially offset by the CSRP decision received in 2022, which authorized SCE to recover $134 million of previously deferred depreciation expense. |
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| ● | Higher property and other taxes of $57 million primarily due to higher property assessed value in 2023. |
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| ● | Impairments were recorded in 2022, of which $17 million related to the CPUC decision in Track 3 and $47 million related to a settlement agreement between SCE and TURN in the CSRP proceeding during 2022. |
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| ● | Higher interest expense of $335 million primarily due to higher interest rates on long-term debt, short-term debt and balancing account overcollections, as well as increased long-term borrowings. |
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| ● | Higher other income of $197 million primarily due to higher interest rates applied to balancing account undercollections. |
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| ● | See "Income Taxes" below for the explanation of $293 million increase in income tax expenses. |
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| ● | Higher preference stock dividend requirements of $16 million primarily due to dividends paid on Series E preference stock at a higher rate. See "Notes to Consolidated Financial Statements—Note 14. Equity— Preferred and Preference Stock of Utility." |
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