In late 2004, Edison International retired all of its debt with cash on hand, thereby strengthening the consolidated companies' credit metrics. A December 2004 California Public Utilities (CPUC) decision administratively extended legislative protection of the electric procurement component of operating cash flow that was set to expire in late 2005. State legislation directs the CPUC to support creditworthiness. The CPUC has recognized that operating leverage should be considered in connection with the formulation of resource procurement plans. The financial challenges facing Mission Energy Holding Co., Edison Mission Energy, and their subsidiaries are not expected to spread to Edison International, Southern California Edison Co. (SCE), or Edison Funding. Debt leverage and operating leverage constitute a sizable debt burden. Ongoing procurement activities
