EDISON INTERNATIONAL

Nature of Estimates Required. At December 31, 2025, Edison International and SCE have a $1.7 billion long-term asset and a $138 million current asset reflected as "Wildfire Fund contributions" in the consolidated balance sheets for the initial $2.4 billion contribution made during 2019 and the present value of annual contributions SCE committed to make to the Wildfire Fund, reduced by amortization. At December 31, 2025, a long-term liability of $274 million has been reflected in "Other deferred credits and other long-term liabilities" for the present value of unpaid contributions. Contributions were discounted to the present value using US treasury interest rates at the date SCE committed to participate in the Wildfire Fund.

Management concluded it would be most appropriate to account for the contributions to the Wildfire Fund similar to prepaid insurance, ratably allocating the expense to periods based on an estimated period of coverage.

Key Assumptions and Approach Used. The Wildfire Fund does not have a defined life and instead, will terminate when the fund administrator determines that the fund has been exhausted. Estimating the period of coverage of the fund requires significant judgment. Frequency of wildfire events and estimated costs associated with wildfire events caused by participating utilities are among the significant factors used to estimate the fund's period of coverage.

SCE reassess the period of coverage of the fund at least annually in the first quarter each year and when new or additional information becomes available. As of the date of this filing, after considering the current accrued losses for the Eaton Fire, SCE does not have new or additional information that would enable it to change its prior assessment that the Wildfire Fund would provide coverage for an estimated 20 years from the date SCE committed to participate in the Wildfire Fund. When updating its estimate, SCE includes all its fires for which losses can be reasonably estimated, and relies on publicly disclosed wildfire-related losses related to other participating utilities. As discussed in "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides," while SCE believes that it will incur material losses in connection with the Eaton Fire, it is currently unable to reasonably estimate a range of losses that may be incurred. The Wildfire Fund amortization period will be evaluated and adjusted as new or additional information on contributions and wildfire events, including reasonably estimated losses related to the Eaton Fire, becomes available.

Edison International and SCE adjust the period of coverage on a prospective basis and amortize the Wildfire Fund contribution asset ratably over the remaining estimated life of the fund. An impairment will be recorded to the Wildfire Fund contribution asset, if the asset exceeds SCE's ability to benefit from the remaining coverage provided by the Wildfire Fund.

In 2025, management determined that the period of coverage for the Wildfire Fund, based on available historical data from wildfires caused by electrical utility equipment to estimate expected loss, the current accrued losses for the Eaton Fire, as well as based on the fact that it is currently unable to reasonably estimate the range of losses associated with the Eaton Fire, continues to be an estimated 20 years from the date SCE committed to participate in the Wildfire Fund.

Effect if Different Assumptions Used. Changes in the estimated life of the Wildfire Fund, including impairment of the fund, could have a material impact on the expense recognition.