EDISON INTERNATIONAL

AND

SOUTHERN CALIFORNIA EDISON COMPANY

NOTICE OF ANNUAL MEETING

AND

JOINT PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

April 22, 2010

What is included in the proxy materials?

The proxy materials include:

Why did the Company mail a Notice of Internet Availability of proxy materials instead of a printed copy of the materials?

Making the proxy materials available to shareholders via the Internet will save us the cost of printing and mailing documents and will reduce the impact of the Annual Meeting on the environment.

If you received only a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy materials unless you request it. The Notice of Internet Availability includes instructions on how to:

Why did some shareholders receive printed or e-mail copies of the proxy materials?

We are distributing printed copies of the proxy materials to shareholders who have previously requested printed copies. We are providing shareholders who have previously requested electronic delivery of proxy materials with an e-mail containing a link to the website where the materials are available via the Internet.

Who can vote?

All owners of voting stock at the close of business on March 2, 2010 (the record date) are entitled to vote. This includes registered, street name, and 401(k) Plan shareholders.

On each item of EIX business, holders of EIX Common Stock are entitled to one vote per share.

On each item of SCE business, holders of SCE

Cumulative Preferred Stock are entitled to six votes per share and EIX, as the holder of SCE Common Stock, is entitled to one vote per share. All shares of SCE Common and Cumulative Preferred Stock vote together as one class.

Who can attend the Annual Meeting?

All shareholders on the record date, or their duly appointed proxies, may attend the meeting. All shareholders will be required to pass through a security inspection area and check in at the registration desk at the meeting. The registration desk will open at 8:00 a.m. and meeting room doors will open at 8:30 a.m., Pacific Time. For the privacy of other attendees and to avoid distraction, shareholders will not be permitted to use cameras or recording devices at the meeting.

If you are a registered shareholder or a 401(k) Plan shareholder, we will be able to verify your share ownership from the share register with proper identification. No admission pass is required.

If your shares are held in street name, you will need to bring proper identification and a letter or an account statement from your broker or other nominee reflecting your stock ownership as of the record date.

Individual shareholders may bring their spouse or domestic partner to the Annual Meeting. A shareholder that is a corporation, partnership, association or other entity is limited to three authorized representatives at the Annual Meeting.

How do I vote?

Your vote is important. You can save us the expense of a second mailing by voting promptly. Please follow the appropriate instructions described below:

By Internet – Shareholders who received a Notice of Internet Availability may vote via the Internet by following the instructions on the Notice. Shareholders who received a proxy card by mail may vote via the Internet by following the instructions on the proxy card. When voting via the Internet, all shareholders must have available the control number included on their Notice of Internet Availability or proxy card. Under California law, you may transmit a proxy via the Internet.

By Telephone – Registered or 401(k) Plan shareholders may vote by telephone by calling 1-800-560-1965 and following the recorded instructions. Most shareholders who hold their shares in street name may vote by phone by calling the number provided by their broker. When voting by telephone, all shareholders must have available the control number included on their Notice of Internet Availability or proxy card.

By Mail – Shareholders who received a paper copy of these proxy materials may vote by mail by completing, signing, dating and returning their proxy card as indicated.

In Person – Registered shareholders may vote in person by attending the Annual Meeting and completing a ballot distributed at the meeting. Shareholders who hold their shares in street name may vote in person by attending the Annual Meeting only if they have requested and received a legal proxy from their broker or other nominee, and deliver the proxy to the inspector of election before or at the meeting. 401(k) Plan shareholders may not cast votes in person at the Annual Meeting.

What is the deadline to vote and how do I change my vote?

If you are a registered shareholder, the inspector of election will accept your proxy by telephone or the Internet until 9:00 p.m., Pacific Time, on April 21, 2010, and by mail if it is received by the inspector of election before the polls close at the Annual Meeting. Registered shareholders may change their vote prior to the deadline by writing to the Corporate Secretary, voting again by mail, telephone or the Internet, or voting in person at the Annual Meeting.

If you hold shares in street name, most brokers will accept your proxy by telephone or the Internet until 9:00 p.m., Pacific Time, on April 21, 2010, and by mail if it is received by 9:00 a.m., Pacific Time, on April 22, 2010. Contact your broker or other nominee before the Annual Meeting to determine the actual deadline and whether and how you can change your vote.

If you are a 401(k) Plan shareholder, your proxy must be received by 9:00 p.m., Pacific Time, on April 20, 2010 for the 401(k) Plan trustee to vote your shares. 401(k) Plan shareholders may change their vote at

any time prior to this deadline by voting again. The last vote received within this timeframe will be the vote that is counted.

What does it mean if I get more than one Notice of Internet Availability or proxy card?

It indicates that your shares are held in more than one account, such as two brokerage accounts, or you hold both registered and street name shares. You should use the specific control numbers provided on each Notice of Internet Availability or proxy card and vote each Notice or proxy card to ensure that all of your shares are voted.

What shares are covered by the proxy card?

This depends on how you hold your shares, and whether you hold shares in EIX, SCE, or both EIX and SCE.

For EIX registered and 401(k) Plan shareholders, you will receive or have Internet access to a single proxy card that covers all shares of common stock in your registered and 401(k) Plan accounts, including all fractional shares held in the 401(k) Plan but excluding fractional shares held in the Dividend Reinvestment and Direct Stock Purchase Plan.

For SCE registered shareholders, you will receive or have Internet access to separate proxy cards for each series of preferred stock registered in your name.

If you hold shares in both EIX and SCE, you will receive or have Internet access to separate proxy cards for each Company.

If you hold shares of EIX and/or SCE in street name, you will receive or have Internet access to separate proxy cards from each broker or other nominee.

What happens if I submit my proxy card but do not indicate my voting preference?

The proxies and 401(k) Plan trustee will vote “FOR” election of all nominees for Director (Item 1), ratification of the appointment of the independent registered public accounting firm (Item 2), and approval of executive compensation (Item 3, EIX only), and “AGAINST” the shareholder proposal (Item 4, EIX only).

What happens if I submit my proxy card but do not sign or date my card?

Those shares will be treated as unvoted shares on all matters and will not be considered as present and part of the quorum.

What happens if I do not vote?

If you are a registered shareholder, your shares will not be voted.

If you hold your shares in street name and you do not provide a proxy card, the broker or other nominee may be authorized to vote your shares as it chooses. If your broker or other nominee lacks discretionary authority to vote on an item, your shares will not be voted on that item and will be treated as a “broker non-vote” on that item.

If you are a 401(k) Plan shareholder, the 401(k) Plan trustee will vote your shares in the same proportion to the 401(k) Plan shares voted by other 401(k) Plan shareholders, unless contrary to ERISA.

How many votes do you need to hold the meeting?

A quorum is required for the Company to transact business at the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast constitutes a quorum. All shares represented by a properly executed proxy will be considered as present and part of the quorum, even if you or your bank or other nominee abstains or withholds votes on any or all matters.

As of the record date, EIX had 325,811,206 shares of EIX Common Stock outstanding, 325,797,265 of which are entitled to cast a total of 325,797,265 votes. SCE had 4,800,198 shares of Cumulative Preferred Stock outstanding and entitled to cast a total of 28,801,188 votes, and 434,888,104 shares of Common Stock outstanding and entitled to cast a total of 434,888,104 votes. Voting together as a class, the SCE shareholders have the right to cast a total of 463,689,292 votes.

What vote is required to adopt the proposals at the meeting?

For Item 1, the 12 nominees receiving the highest number of affirmative or “FOR” votes will be elected as Directors of EIX, and the 13 nominees receiving the highest number of affirmative or “FOR” votes will be elected as Directors of SCE. Votes withheld for any of the nominees and broker non-votes will have the effect of reducing the number of affirmative votes a candidate might otherwise have received.

For Item 2, (both EIX and SCE) and Items 3 and 4 (EIX only), the following two votes must be obtained to adopt each proposal:

Who will count the votes?

Wells Fargo Bank, N.A., will tabulate the votes and act as the inspector of election. To protect the confidentiality of votes cast under the 401(k) Plan, 401(k) Plan shareholders’ voting instructions are given directly to Wells Fargo. Wells Fargo will tabulate those votes and provide aggregate voting results directly to the 401(k) Plan trustee. EIX will not have access to any of the 401(k) Plan shareholders’ voting instructions, and 401(k) Plan voting results are only reported in the aggregate.

Whom may I call with any questions?

You may call Wells Fargo at 1-800-347-8625 or visit their Internet website at www.wellsfargo.com/shareownerservices.

What happens if additional matters are presented at the Annual Meeting?

The Board is not aware of, and does not intend to present, any business to be acted upon at the Annual Meeting other than the items of business described in this Joint Proxy Statement. If you submit a proxy and any other matters should properly come before the Annual Meeting, including matters incident to the conduct of the Annual Meeting, the persons named as proxy holders will have the discretionary authority to vote your shares in accordance with their best judgment. Should any of the nominees for election to the Board become unavailable to stand for election as a Director, the proxies will also have the authority to vote for substitute nominees as they choose.

How much will this proxy solicitation cost?

We have retained Laurel Hill Advisory Group, LLC to assist us with the solicitation of proxies and will pay an aggregate fee of $20,000 (EIX $18,000 and SCE $2,000) plus expenses. This fee does not include the costs of printing and mailing the proxy materials. Some of the Directors, officers and other employees of the Company also may solicit proxies personally, by mail, by telephone or by other electronic means for no additional compensation. We will also reimburse brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners and obtaining voting instructions.

What is the deadline to submit shareholder proposals or other business to be included in the proxy materials for next year’s Annual Meeting?

To be considered for inclusion in the 2011 Joint Proxy Statement, shareholder proposals for the

Company’s 2011 Annual Meeting must be received by November 12, 2010.

Shareholders intending to bring any other business before an Annual Meeting, including Director nominations, must give written notice to the Corporate Secretary of the business to be presented. The notice must be received at our offices within the periods, and with the information and documents, specified in the Bylaws.

Assuming that the 2011 Annual Meeting is held on April 28, 2011, as currently specified by the Bylaws, the period for the receipt by the Corporate Secretary of written notice of other business to be brought by shareholders before the 2011 Annual Meeting, including Director nominations, will begin on September 13, 2010 and end on November 12, 2010.

How are potential Director nominees identified and selected by the Board to become nominees?

The Nominating/Corporate Governance Committee, comprised solely of independent directors under NYSE Euronext rules and our Corporate Governance Guidelines, is responsible for recommending Director candidates to the Board.

The Committee will consider candidates recommended by shareholders if they are submitted in writing to the Corporate Secretary and include all of the information required by Article II, Section 4 of our Bylaws plus a written description, together with any supporting materials, of the following:

The Committee also considers candidates recommended by our Directors, senior management, and any third-party director search firm retained by the Committee. Mr. Bindra’s nomination was recommended by a search firm retained to identify candidates with experience in a capital intensive industry. There are no differences in the manner in which the Committee evaluates a candidate based on the source of the recommendation.

If, based on a preliminary evaluation of the candidate’s qualifications, qualities and skills, the Committee determines to continue its consideration of a candidate, one or more Committee members and others as determined by the Committee, interview the candidate. The Committee conducts any further research on the candidate that it deems appropriate. The Committee then determines whether to recommend that the candidate be nominated as a Director. The Board considers the recommendation and determines whether to nominate the candidate for election.

What information does the Nominating/Corporate Governance Committee consider when recommending a Director nominee?

For the Committee to recommend a Director nominee, the candidate must at a minimum possess the qualifications, qualities and skills in our Corporate Governance Guidelines, including:

The Committee also considers other factors and information, including the Board’s current need for additional members, the candidate’s potential for increasing the Board’s range of experience, skills and diversity, the candidate’s independence, and specific skills and experience that are relevant to our business strategy.

How does the Nominating/Corporate Governance Committee consider diversity in identifying director candidates?

Our Corporate Governance Guidelines state the Board’s policy that the value of diversity on the Board should be considered. The Committee considers ethnic and gender diversity, as well as diversity of skills, backgrounds and qualifications represented on the Board, in recommending nominees for election. The Committee instructed a director search firm retained in 2008 to identify candidates reflecting ethnic and gender diversity. In 2009, the Committee discussed the value of diversity at four Committee meetings.

The Committee evaluates its effectiveness in achieving diversity on the Board through its annual review of Board composition, which identifies ethnicity, gender and industry experience, prior to recommending nominees for election.

How does the Board determine which Directors are considered independent?

Our Corporate Governance Guidelines require that the Board consist of at least a majority of independent Directors. The Company uses the NYSE listing standards to determine independence.

Additionally, the Audit, Compensation and Executive Personnel, and Nominating/Corporate Governance Committees are required to be comprised solely of independent Directors. The Audit and Compensation Committee charters contain additional independence requirements for committee membership.

No Director will be considered independent if he or she would not qualify as independent under NYSE listing standards. Other Directors are determined to be independent unless the Director has a material relationship with the Company or its subsidiaries.

The Board has determined that the categories of relationships in Section B of Exhibit A-1 to our Corporate Governance Guidelines are not material for purposes of determining Directors’ independence.

For relationships not prohibited by NYSE rules and not covered under the categories of immaterial relationships in our Guidelines, the determination of whether a relationship is material or not, and therefore whether a Director is independent or not, is made in good faith by the Directors, provided that the Director whose relationship is under consideration abstains from the vote regarding his or her independence.

Which Director nominees has the Board determined are independent?

The Board has determined that Director nominees Bindra, Chang, Córdova, Curtis, Freeman, Nogales, Rosser, Schlosberg, Sutton, and White are independent.

The Board reviews the independence of our Directors at least annually, and periodically as needed. In February 2010, prior to recommending Director nominees for election, the Board confirmed that the independent Director nominees had no relationships or transactions that automatically disqualified them as independent. The Board reviewed the following relationships and transactions that existed or occurred

since the beginning of 2009, all of which fell within the categories of immaterial relationships in our Corporate Governance Guidelines:

The Board concluded that the relationships and transactions described above are not material and do not affect the independence of Messrs. Bindra, Rosser or White.

The Board did not review relationships or transactions if (i) the Director nominee held only a director, trustee or similar position with, or an immediate family member held a non-executive officer position with, or the Director nominee or family member beneficially owned less than 5% of, an organization that had a relationship or transaction with the EIX companies, or (ii) the amount involved was less than $120,000.

Who is the Lead Director and what are the Lead Director’s duties and responsibilities?

The Lead Director is designated annually by the independent Directors, must be independent, and is expected to devote a greater amount of time to Board service than the other Directors. The current Lead Director is Bradford M. Freeman, who has served in

that role since April 2008. The Lead Director’s duties and responsibilities are described in our Corporate Governance Guidelines and include all of the following:

Why are the positions of Chairman of the Board and Chief Executive Officer combined?

The Board believes that the CEO is best situated to serve as Chairman because he is the director most familiar with our business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Independent directors and management have different perspectives and roles in strategy development. Our independent directors bring experience, oversight and expertise from outside the Company and industry, while the CEO brings company-specific experience and expertise. The Board believes that the combined role of Chairman and CEO also facilitates information flow between management and the Board, which is essential to effective governance and risk oversight. The CEO’s day-to-day presence and interaction with management and other employees makes him most familiar with emerging risks that should be addressed by the Board.

The Board expanded the duties of the Lead Director in 2008. The Board has determined that the combined role of Chairman and CEO, together with an

independent Lead Director having the duties described above, is in the best interest of our shareholders because it provides the appropriate balance between effective leadership of the Company and independent oversight of management. However, the Board continues to follow trends in this area and could, under different circumstances, reach a different conclusion.

What role does the Board have in risk oversight?

The Board annually reviews key enterprise risks identified by management, such as financial, reputational, safety and security, and compliance risks, and monitors key risks through reports and discussions regarding key risk areas at Board meetings. The Board focuses on specific strategic and emerging risks in periodic strategy reviews. The Board annually reviews and approves corporate goals and capital budgets.

Board committees have responsibility for risk oversight in specific areas as follows:

The Audit Committee is responsible for oversight of (i) risk assessment and risk management policies, (ii) major financial risk exposures, and (iii) the steps management has taken to monitor and control these exposures. In carrying out these responsibilities, the Committee annually reviews the Company’s risk management processes and key enterprise risks, and receives regular reports on litigation, internal audits and compliance. The Committee also annually reviews and approves the internal audit plan and reviews with the Chief Ethics and Compliance Officer the processes for monitoring compliance with the Ethics and Compliance Code.

The Compensation Committee assesses and monitors risks in the Company’s compensation program. The Committee’s risk assessment process and factors considered in assessing risk are discussed under “Compensation Discussion and Analysis – Assessment of Risk” below.

The Finance Committee monitors risk in the Company’s capital investment activities. The Committee regularly monitors the level of capital investment relative to approved capital budgets and must approve significant capital spending variances and projects that are not included in approved capital budgets.

The Nominating/Corporate Governance Committee advises the Board with respect to Board and committee composition, Board structure and corporate governance practices that help position the Board to effectively carry out its risk oversight responsibility.

How many times did the Board meet in 2009?

The Board met six times in 2009. Each Director attended 75% or more of all Board and Board committee meetings he or she was eligible to attend. The Board held three executive sessions of the non-employee Directors and one executive session of the independent Directors.

Does the Company have a policy on attendance of Director nominees at Annual Meetings?

Director nominees are expected to attend Annual Meetings. All of the current Directors attended the 2009 Annual Meeting.

Are Directors required to hold EIX Common Stock?

Yes. Within five years from the date of their initial election to the Board, Directors are required to beneficially own an aggregate number of shares of EIX Common Stock or derivative securities convertible into common stock, excluding stock options, having a value equivalent to four times the amount of the annual Board retainer.

All current Directors exceed these stock ownership guidelines.

Does EIX have a policy on shareholder rights plans?

The EIX Board has a policy to seek prior shareholder approval of the adoption of any shareholder rights plan unless, due to time constraints or other reasons consistent with the EIX Board’s fiduciary duties, a committee consisting solely of independent Directors

determines that it would be in the best interests of EIX shareholders to adopt the plan prior to shareholder approval. Any rights plan adopted by the EIX Board without prior shareholder approval will automatically terminate one year after adoption of the plan unless the plan is approved by EIX shareholders prior to such termination.

Is SCE subject to the same corporate governance stock exchange listing standards as EIX?

No. SCE is listed on the NYSE Amex Equities stock exchange, which exempts SCE from designated corporate governance standards for Board and Board committee composition, including director independence, the director nominations process, and the process to determine executive compensation. SCE is exempt from these rules as a controlled company because (i) over 50% of its voting power is held by its parent company, EIX, and (ii) SCE has listed only preferred stock on the exchange.

How may I communicate with the Board?

Shareholders and other interested parties may communicate with the Board or individual Directors by following the procedures described on our website at www.edisoninvestor.com, under “Corporate Governance.”

Where can I find the Company’s corporate governance documents?

The EIX Bylaws, Corporate Governance Guidelines, and Board committee charters, and the Ethics and Compliance Code applicable to all Directors, officers and employees of the EIX companies, are posted on our website at www.edisoninvestor.com, under “Corporate Governance.”

The SCE Bylaws, Corporate Governance Guidelines and Board committee charters are posted on our website at www.sce.com/AboutSCE/CompanyOverview/CorporateGovernance.

It is the Company’s policy that the Nominating/Corporate Governance Committee review at least annually, and periodically as needed, any transaction in the prior calendar year or any proposed transaction between the EIX companies and a related person in which the amount involved exceeds $120,000 and the related person has a material interest. A related person is generally a Director, a Director nominee, an executive officer, or a greater than 5% beneficial owner of any class of voting securities of EIX or SCE, and their immediate family members. This policy is stated in writing in the Nominating/Corporate Governance Committee charter.

The Committee’s regular procedure is to obtain from management annually, and periodically as needed, a list of the transactions with related persons described above, and to review these transactions at a meeting held in advance of recommending Director nominations to the Board. The list is based on

information from questionnaires completed by our Directors, Director nominees, and executive officers, together with information obtained from our accounts payable and receivable records. The Committee’s procedure is evidenced in the minutes and records for the Committee meeting at which the review occurred.

Director Olson is a partner of the law firm of Munger, Tolles & Olson LLP, which provided legal services to the EIX companies in 2009. Such services are expected to continue in the future. The amount paid to Munger, Tolles & Olson LLP for legal services during 2009 was $2,200,622. Mr. Olson provided only two hours of service to the EIX companies in 2009.

We believe that the relationship with Munger, Tolles & Olson LLP is comparable to that which would have been undertaken under similar circumstances with nonaffiliated entities or persons.

Audit Committee

The Audit Committee’s duties and powers, which are further described in its charter, include the following:

Compensation and Executive Personnel Committee

The Compensation and Executive Personnel Committee’s duties and powers, which are further described in its charter, include the following:

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee’s duties and powers, which are further described in its charter, include the following:

Finance Committee

The Finance Committee’s duties and powers, which are further described in its charter, include the following:

The Audit Committee has selected PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for calendar year 2010. PricewaterhouseCoopers is an international accounting firm which provides leadership in public utility accounting matters.

Representatives of PricewaterhouseCoopers are expected to attend the Annual Meeting to respond to appropriate questions and to make a statement if they wish.

The Company is not required to submit these appointments to a shareholder vote. Ratification would be advisory only. However, if the shareholders of either EIX or SCE do not ratify the appointment, the appropriate Audit Committee will investigate the reasons for rejection by the shareholders and will reconsider the appointment.

The Board recommends that you vote “FOR” Item 2.

In December 2009, the EIX Board adopted a policy to give shareholders an advisory vote on executive compensation, commonly known as “Say-on-Pay,” beginning with this year’s Annual Meeting. Under the policy, shareholders will be able to cast an annual non-binding advisory vote on our executive compensation philosophy, policies and procedures as described in the Compensation Discussion and Analysis section of the Joint Proxy Statement.

The EIX Board adopted this policy after considering the merits of “Say-on-Pay” in light of recent corporate governance trends, potential federal legislation, and input from shareholders following a shareholder proposal that passed in 2009. However, the EIX Board will continue to monitor pending “Say-on-Pay” legislation and emerging trends, and may modify the policy in the future in response to further developments.

The EIX executive compensation program is reviewed and approved by the EIX Compensation and Executive Personnel Committee. The objectives of our executive compensation program are described in “Compensation Discussion and Analysis” below, which we encourage you to read carefully.

The EIX Board believes our competitive compensation structure aligns executive compensation with shareholder value and serves shareholders well. This advisory vote gives shareholders the opportunity to endorse or not endorse our executive compensation program through the following resolution:

“Resolved, that the shareholders approve EIX’s overall executive compensation philosophy, policies and procedures as described in the Compensation Discussion and Analysis section of this Joint Proxy Statement.”

EIX values constructive dialogue with shareholders on compensation and other important governance matters. Because your vote is advisory, it will not be binding upon the EIX Board. However, the Compensation and Executive Personnel Committee will consider the outcome of the vote and any constructive feedback from shareholders when making future executive compensation decisions as it deems appropriate.

The EIX Board recommends that you vote “FOR” Item 3.

4 – Shareholder Say on Executive Pay

RESOLVED – the shareholders of our company recommend that our board of directors adopt a policy requiring that the proxy statement for each annual meeting contain a proposal, submitted by and supported by Company Management, seeking an advisory vote of shareholders to ratify and approve the board Compensation’s Committee Report and the executive compensation policies and practices set forth in the Company’s Compensation Discussion and Analysis.

This proposal topic won our 51% support at our 2009 annual meeting. The Council of Institutional Investors www.cii.org recommends that management adopt shareholder proposals upon receiving their first majority vote.

Votes on 2009 “Say on Pay” resolutions averaged more than 46% in favor. More than 20 companies (including Edison International) had votes over 50%, demonstrating strong shareholder support for this reform.

“There should be no doubt that executive compensation lies at the root of the current financial crisis,” wrote Paul Hodgson, a senior research associate with The Corporate Library http://www.thecorporatelibrary.com, an independent research firm. “There is a direct link between the behaviors that led to this financial collapse and the short-term compensation programs so common in financial services companies that rewarded short-term gains and short-term stock price increases with extremely generous pay levels.”

Nell Minow said, “If the board can’t get executive compensation right, it’s been shown it won’t get anything else right either.”

The merits of this Executive Pay proposal should also be considered in the context of the need for improvements in our company’s corporate governance. In 2008 and 2009 the following governance issues were identified:

The Corporate Library said there was concern regarding our company’s executive pay practices. Edison granted 75% of the long-term incentive award as stock options. A heavy reliance on option awards raised concerns over the link between executive pay and company performance. Small increases in our company’s share price (which can be totally unrelated to management performance) can result in large financial awards.

Additionally our company did not disclose the exact breakdowns of its annual and long-term incentive awards. It merely gave a general overview as it named the performance metrics but did not reveal targets and/or target payouts. The Corporate Library said it is better for annual and long-term incentives to be tied to fully disclosed, performance-based metrics.

Our CEO John Bryson retired in 2008 with almost $65 million. And our company was ordered to pay fines, etc. of $146 million due to faked customer satisfaction and health and safety survey data

Our directors also served on boards rated “D” by The Corporate Library: Luis Nogales, KB Home (KBH); Richard Schlosberg, eBay Inc. (EBAY) and Ronald Olson, City National Corporation (CYN). Our

directors have still failed to adopt a 2005 shareholder proposal winning 58% support to subject golden parachutes to a shareholder vote.

The above concerns shows there is need for improvement. Please encourage our board to respond positively to this proposal: Shareholder Say on Executive Pay – Yes on 4.

EIX Board Recommendation “Against” Item 4

The EIX Board has carefully considered the shareholder proposal entitled “Shareholder Say on Executive Pay.” The Board recommends that you vote “AGAINST” the shareholder proposal because EIX has already adopted and implemented a “Say-on-Pay” policy that is substantially the same as the policy requested by the shareholder proposal.

As discussed in Item 3 above, the EIX Board has adopted a policy to give shareholders an annual advisory vote on our executive compensation

philosophy, policies and procedures. The EIX Board has already implemented this policy by providing shareholders with an opportunity to cast an advisory vote at this year’s Annual Meeting.

The shareholder proposal requests that shareholders also ratify and approve the Compensation Committee Report included in the Joint Proxy Statement. The EIX Board believes that a shareholder vote on the Compensation Committee Report is not necessary or meaningful because the Compensation Committee Report contains only the Committee’s recommendation that the Compensation Discussion and Analysis be included in the Joint Proxy Statement and Annual Report on Form 10-K. The Compensation Committee Report does not include any information about our executive compensation program.

For the foregoing reasons, the EIX Board recommends that you vote “AGAINST” Item 4.

This section explains our executive compensation philosophy, policies and procedures and the material elements of our executive compensation program for the named executive officers (“Named Officers”).

The EIX Named Officers are:

The SCE Named Officers are:

Overview of Key 2009 Compensation Actions

Our executive compensation philosophy, policies and procedures are reflected in the following key 2009 compensation actions, each of which is discussed in more detail later in this section:

Compensation Committee Role and Responsibilities

The Compensation and Executive Personnel Committee has the authority and responsibility to review and determine the compensation paid to most Company officers, including the Named Officers. The Committee determines each Named Officer’s compensation following an annual review of corporate performance and the officer’s individual performance.

The EIX CEO provides the Committee with recommendations regarding the compensation of the Named Officers (other than his own). Other Named Officers participate in developing and reviewing compensation recommendations, but do not participate in recommendations regarding their own compensation.

In determining the compensation of the EIX CEO, the EIX Committee Chair solicits input on his performance from the non-employee Directors. The Chair provides a report to the Committee on the input received. The Committee discusses the report and determines the compensation of the EIX CEO in executive session without the EIX CEO present. The Chair also provides a report to the EIX Board in a non-management executive session on the input received and the Committee’s compensation determination.

For officers who are not EIX Section 16 Officers, the Committee has authorized the EIX CEO and the EIX Senior Vice President for Human Resources to jointly approve special relocation, recruitment and retention awards within specific limits pre-approved by the Committee, and has authorized mid-year compensation determinations and adjustments to be made within pre-approved guidelines.

Compensation Consultant

The Committee has the sole authority to retain and terminate any compensation consultant engaged to assist in the evaluation of officer compensation, including the Named Officers. The Committee has retained Frederic W. Cook & Company, Inc.

(“F.W. Cook”), as its independent compensation consultant to assist with the following:

F.W. Cook’s responsibilities include:

F.W. Cook has not performed any services for the Company unrelated to executive compensation, and all interactions with management are incidental to its work for the Committee.

Compensation Objectives

Our executive compensation program seeks to achieve three fundamental objectives:

Material Elements of Compensation

The material elements of our executive compensation program include:

The Committee believes that each element is appropriately structured to help achieve one or more of the executive compensation program objectives.

Assessment of Risk

Our executive compensation policy directs that the total compensation structure should not encourage inappropriate or excessive risk-taking. The Committee takes risk into consideration when reviewing and approving executive compensation.

The Committee has concluded that the current executive compensation program does not encourage inappropriate or excessive risk-taking, noting the following characteristics which limit risk:

Benchmarking

All elements of executive compensation are regularly benchmarked against executive compensation in peer companies. Base salary, annual incentive awards, and long-term incentive compensation are benchmarked annually, while other employee benefits and perquisites are benchmarked at least every three years.

The Committee selected the following companies as the 2009 peer group, which includes all companies in the Philadelphia Utility Index except AES Corporation, plus Sempra Energy. The same peer group was used for 2008 and 2007.

AES Corporation is excluded from the group because its mix of business revenues differs significantly from that of EIX and the other companies in the group, and Sempra Energy is included due to its California nexus. The Committee believes this peer group provides more relevant comparative compensation data.

The target value of total direct compensation for each Named Officer is set at approximately the median level for that position among the peer group companies. The reasons supporting the Committee’s determination to use the median level include:

Tally Sheets

The Committee received tally sheets for each EIX Named Officer as of December 31, 2009. Tally

sheets provide the Committee with information about the following components of compensation paid over a three-year period:

These tally sheets are intended to enhance the Committee’s overall understanding of our executive compensation program. However, the Committee does not rely on tally sheets when making specific compensation decisions.

2009 Executive Compensation Program Elements

Base Salaries

None of the Named Officers has a contractual right to receive a fixed base salary.

Each Named Officer is assigned to an executive band based on his or her position. Each band has a base salary range consisting of a minimum, median and maximum. The median of the base salary range is the average of market median salaries for comparable positions in that band at the peer group companies.

Each December, the Committee approves the base salary range for each band for the upcoming year. At that time, the Committee may adjust the salary range for one or more bands based on peer group data. In December 2008, the Committee did not increase the base salary median for any band that includes Named Officers.

Each February, the Committee determines each Named Officer’s base salary for the current year. In February 2009, the Committee determined the 2009 base salary for each Named Officer. Base salary changes are effective in March of each year.

The base salary that was paid to each Named Officer in 2009 is the amount reported in column (c) of the “Summary Compensation Table” below.

The salary increases between 2008 and 2009 shown in the Summary Compensation Table for Messrs. Craver, Scilacci, Litzinger and Pizarro primarily reflect the fact that these officers were promoted during 2008. Thus, their lower 2008 salaries reflect a partial year at the pre-promotion salary rate.

The higher salary amounts in 2009 for Messrs. Fohrer and Fielder and Ms. Yazdi reflect the fact that salary increases for 2008 were not effective until March 2008. Thus, their lower 2008 salary amounts compared to 2009 reflect a partial year in 2008 at the 2007 rate.

The 2008 year-end salary rates for Messrs. Craver, Fohrer and Fielder and Ms. Yazdi were not increased for 2009. For Messrs. Scilacci, Litzinger and Pizarro, the Committee determined that their 2008 promotions did not bring their salaries up to market median and therefore increased the salary rates for 2009 for Messrs. Scilacci and Litzinger by 11% and Mr. Pizarro by 3%.

Annual Incentives

The annual incentive program for executives is the EIX Executive Incentive Compensation Plan. None of the Named Officers has a contractual right to receive a fixed annual incentive award.

Each December, the Committee approves the target and maximum potential annual incentive awards for each executive band for the upcoming year. The target award is stated as a percentage of base salary. It is based on the median level of target annual incentive awards for comparable positions at the peer group companies. The maximum award is two times the target amount, which the Committee’s

independent compensation consultant has advised is the most prevalent practice among the peer group companies. The 2009 target and maximum annual incentive award amounts for the Named Officers are in the “Grants of Plan-Based Awards” table below.

In December 2008, the Committee did not increase the target or maximum annual incentive award for any band that includes Named Officers.

Each February, the Committee determines the annual incentive award amounts for Named Officers for the prior year, based on its judgment of corporate performance relative to pre-established goals (generally determined in February of the prior year), other factors that the Committee determines are important, and individual performance. Corporate performance for each Named Officer is evaluated based on performance relative to the goals of EIX, SCE or EMG, depending on where the officer serves.

The Committee approved 2009 goals for each of EIX, SCE and EMG. The Committee also assigned a relative weight to goal areas to assist in assessing corporate performance. Financial performance, measured by core earnings per share, is weighted most heavily. Subject to the Committee’s discretion, if threshold levels of core earnings per share had not been met, no incentive award would have been paid.

The table below shows, for EIX, SCE and EMG, the relative weight for financial performance, the target for 2009 core earnings per share, and the 2009 actual core earnings per share achieved.

The table below shows the relative weights for the non-financial performance areas.

The goals (and weights assigned to the goals) are intended as guidelines and many of the goals are qualitative in nature. There is no pre-set formula for incentive awards. Assessment of performance and final incentive award determinations are based on the Committee’s subjective judgment.

Important factors in determining EIX’s non-financial performance were as follows:

Important factors in determining SCE’s non-financial performance were as follows:

Important factors in determining EMG’s non-financial performance were as follows:

In determining corporate performance, the Committee has discretion to consider other factors it may not have anticipated or that it otherwise determines to be important. In determining the annual incentive award for each Named Officer, the Committee takes into consideration its judgment of the officer’s individual performance.

In February 2010, the Committee evaluated 2009 corporate and individual Named Officer performance and determined the 2009 annual incentive awards for the Named Officers. Each Named Officer’s 2009 annual incentive award earned is set forth in column (g) of the “Summary Compensation Table” below.

To qualify annual incentive awards as deductible performance-based compensation under Section 162(m) of the Internal Revenue Code, the EIX Committee adopted the 2009 Executive Bonus Program (“2009 Bonus Program”) pursuant to the provisions of the 2007 Performance Incentive Plan. Under the 2009 Bonus Program, an overall maximum annual incentive award for 2009 was established for each participating Named Officer as a specified percentage of an annual incentive award pool, with the aggregate award pool having a maximum value equal to 1.5% of EIX’s 2009 consolidated earnings from continuing operations, subject to adjustment for the effects of any special charges to earnings.

The actual annual incentive for 2009 awarded to each participating Named Officer was less than the applicable maximum determined under the 2009 Bonus Program. This was designed to establish each participating Named Officer’s annual incentive award in a manner that complied with the performance-based compensation requirements of Section 162(m), while still preserving the Committee’s flexibility to determine the actual annual incentive award for each Named Officer under the Executive Incentive Compensation Plan up to the maximum amount determined under the 2009 Bonus Program.

Long-Term Incentives

Our policy is that the Named Officers’ long-term incentives should be directly linked to the value provided to shareholders of EIX Common Stock. Therefore, 100% of the Named Officers’ long-term incentives is awarded in the form of equity instruments reflecting, or valued by reference to, EIX’s Common Stock.

In 2009, each Named Officer’s long-term incentive award value was in the form of:

This allocation is different than in 2008, when 75% of most Named Officers’ long-term incentive award value was in the form of EIX non-qualified stock options and the remaining 25% was in the form of EIX performance shares. The Committee changed the long-term incentive award allocations and awarded restricted stock units to strike an appropriate balance among equity awards that reward:

The Committee also reduced the percentage of long-term incentive award value allocated to stock options because (i) full value awards (such as performance shares and restricted stock units) are less dilutive to shareholders than options because the same award value can be delivered using fewer shares; and (ii) the Committee’s independent compensation consultant advised that this approach is more consistent with long-term incentive award practices among the peer group companies.

This change in allocation is reflected in the 2009 Stock Award and Option Award values included in the Summary Compensation Table, resulting in Stock Award values for 2009 that are generally greater than prior years and Option Award values for 2009 that are generally less than prior years.

Each December, the Committee approves the target long-term incentive award value for each executive band for the upcoming year. The target value is stated as a percentage of base salary and is based on the median level of target long-term incentive award values at the peer group companies.

In December 2008, the Committee did not increase the target long-term incentive award value for any band that includes Named Officers.

The Committee approved grants of stock options, performance shares, and restricted stock units to the Named Officers on February 25, 2009, with a grant date of March 3, 2009. Ms. Sullivan received additional awards at the end of the quarter in which she was elected Senior Vice President, Chief Financial Officer and Acting Controller of SCE. The value of each grant is listed in the “Grants of Plan- Based Awards” table below.

The EIX Committee approved the grant values and methodology for converting those values into the number of options, performance shares, and restricted stock units at the time of each long-term incentive grant.

Named Officers will realize value in the stock option portion of their long-term award only if the EIX stock price appreciates after the grant date.

Named Officers will realize value in the restricted stock unit portion of their long-term award at the end of the three-year vesting period commensurate with the value realized by shareholders from dividends and appreciation in the stock price.

Named Officers will realize value in the performance share portion of their long-term award only if EIX’s total shareholder return over the three-year period is on par with, or better than, the peer group companies.

Retirement Benefits and Other Post-Termination Benefits

The Named Officers receive retirement benefits under qualified and non-qualified defined-benefit and defined-contribution retirement plans. The SCE Retirement Plan and 401(k) Plan are both qualified retirement plans in which the Named Officers participate on substantially the same terms as other participating employees.

Due to maximum limitations imposed by ERISA and the Internal Revenue Code, the benefits payable to the Named Officers under the SCE Retirement Plan and the 401(k) Plan are limited. Because we do not believe that it is appropriate for retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we have established non-qualified supplemental defined-benefit and defined-contribution retirement plans that permit the Named Officers to receive the full amount of benefits that would be paid under the qualified plans but for such limitations, and certain additional benefits described below.

The non-qualified defined-benefit retirement plan is the Executive Retirement Plan. Defined-benefit retirement values are calculated using full salaries and annual incentive awards, subject to reduction for benefits under the SCE Retirement Plan, the profit sharing benefit feature of the 401(k) Plan, and a portion of their Social Security benefits.

The non-qualified defined-contribution retirement plan is the Executive Deferred Compensation Plan, which permits Named Officers to defer up to:

We make a matching deferred contribution on base salary deferrals in amounts that are intended to correspond to the matching contribution that would have been made under the 401(k) Plan absent IRS limits, and on annual incentive award deferrals at one-half the rate of matching contributions on salary. Amounts deferred under this plan are credited with interest, as participants essentially are lending to the Company as unsecured general creditors, the amounts they otherwise would have been paid in salary, annual incentive awards, long-term incentives, or other payouts.

We believe that providing the Named Officers with deferred compensation opportunities is a cost-effective way to permit officers to receive the tax benefits associated with delaying income tax on the compensation deferred, even though the related deduction for the Company is also deferred.

The Company also sponsors survivor and disability benefit plans in which the Named Officers are eligible to participate.

Severance Benefits

Our policy regarding severance protection for Named Officers stems from its importance in recruiting and retaining executives. Executives are recruited from well-compensated positions in other companies or have attractive opportunities with other companies. We believe offering one year’s worth of compensation and benefits if any officer is involuntarily severed without cause offers financial security to offset the risk of leaving another company or foregoing an opportunity with another company. Severance benefits are not offered for resignation for “good reason” or other constructive termination in the absence of a change in control. The Company also provides severance protection for non-executive employees whose positions are eliminated.

The current executive compensation plans offer additional benefits in the event of a change in control of EIX. We believe that the occurrence, or potential occurrence, of a change-in-control transaction would create uncertainty regarding continued employment for Named Officers. This uncertainty would result from the fact that many change-in-control transactions result in significant organizational changes, particularly at the senior executive level.

To encourage the Named Officers to remain employed with the Company during a time when their prospects for continued employment following the transaction would be uncertain, and to permit them to remain focused on the Company’s interests during the change in control, the Named Officers would be provided with enhanced severance benefits if their employment were actually or constructively terminated without cause within a defined period of a change in control. Constructive termination would include occurrences such as a material diminution in duties or salary, or a substantial relocation.

Given that none of the Named Officers has an employment agreement that provides for fixed positions or duties, or for a fixed base salary or annual incentive award, we believe that a constructive termination severance trigger is needed to prevent potential acquirors from having an incentive to constructively terminate a Named Officer’s employment to avoid paying any severance benefits at all.

Pursuant to the EIX Executive Severance Plan effective January 1, 2001, as part of their change-in-control severance benefits, Named Officers would be reimbursed for the full amount of any excise taxes imposed on their severance payments and any other payments under Section 4999 of the Internal Revenue Code, and for all taxes due on the amount of that reimbursement. This excise tax gross-up provision is intended to preserve the level of change-in-control severance protections that the Committee has determined to be appropriate.

We do not believe that Named Officers should be entitled to receive their cash severance benefits merely because a change-in-control transaction occurs. Therefore the payment of cash severance benefits would only be triggered by an actual or constructive termination of employment.

However, if there is a dissolution, sale of all or substantially all of the EIX stock or assets, merger or reorganization, or other event where EIX is not the surviving corporation, and following the transaction, outstanding equity awards would not be continued or assumed, then Named Officers would receive immediate vesting of their outstanding equity awards. Outstanding options would become immediately vested and exercisable, restricted stock units would become immediately vested, and the Named Officers’ outstanding equity awards that had performance-based vesting conditions would become vested based on performance during a shortened performance period ending on the day prior to the change in control.

Although this vesting would occur whether or not employment terminated, we believe it is appropriate to fully vest equity awards in situations where EIX is not the surviving corporation and the equity awards are not assumed, because such a transaction effectively ends the Named Officers’ ability to realize any further value with respect to the equity awards.

In addition, in order to structure restricted stock units in a manner that complies with the requirements of Section 409A of the Internal Revenue Code, restricted stock units would immediately vest upon a change in control of EIX even if these awards would be continued or assumed.

Amendments to Benefit Plans

In 2008 and 2009, no amendments were made to our executive compensation program which increased the benefits to participants under the plans described above.

Perquisites

The Named Officers received certain perquisites. Perquisites are benchmarked at least every three years and reviewed and approved by the Committee. No tax “gross-up” payments are made on taxable perquisites.

The perquisites provided to each Named Officer in 2009 are reported in column (i) of the “Summary Compensation Table” below, and are further described in footnote (6) to that table.

Stock Ownership Guidelines

To underscore the importance of linking executive and shareholder interests, the Company has adopted stock ownership guidelines. The guidelines require the Named Officers to own an amount ranging from two to five times their annual base salary in the form of EIX Common Stock (or equivalents) as follows:

The Named Officers are expected to achieve their ownership targets within five years from the date they became subject to the guidelines. EIX Common Stock owned outright, shares held in the 401(k) Plan, and vested and unvested restricted stock units whose payout does not depend on performance measures are included in determining compliance with the guidelines.

Shares that Named Officers have the right to acquire through the exercise or payout of stock options and performance shares are not included in the calculation of stock ownership for guideline purposes until such time as the options or performance shares

are actually exercised, or paid, as the case may be, and the shares are acquired.

Section 162(m) Policy

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction by public companies for compensation over $1,000,000 paid to their chief executive officers and their other most highly compensated executive officers unless certain tests are met. EIX’s general intention is to design and administer its executive compensation program to preserve the deductibility of compensation payments to Named Officers whenever possible and still achieve its executive compensation objectives.

Under the EIX 2007 Performance Incentive Plan, non-qualified stock options, performance shares and annual incentive awards awarded to the EIX Named Officers are structured to constitute performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code. However, restricted stock units are not deductible performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code. This is consistent with EIX’s philosophy that its goal of preserving the deductibility of compensation is secondary in importance to achievement of its compensation objectives.