Chairman's Remarks - Edison International

Page 1 of 10Remarks at Annual Meeting of ShareholdersTed CraverEdison InternationalApril 23, 2009At last year’s shareholder meeting, I expressed my pride and excitement atthe prospect of leading this great company during a time of enormouschange for our industry. Little did any of us know just how significantthose changes would be, or how quickly they would be upon us.Let me address at the outset an issue that I suspect is on many minds thismorning: the weakened economy and its impact on our business these lastseveral months.Edison International encountered a paradox in 2008. We largely achievedthe performance goals we set for ourselves. Net income grew 11 percentin 2008 to a record $1.22 billion. And yet our stock price declined 39.8percent for the year.Neither you, nor we, are pleased with what happened to our stock price.Although this performance largely mirrored what took place in the marketas a whole, our desire is to provide you with superior results and performbetter than the overall market.Those of you who have been invested in Edison International for manyyears know the company has dealt with tough and unpredictable financial

Page 2 of 10times before. We aren’t wringing our hands over the state of affairs, andwe don’t have the luxury to just sit around waiting for the economy torecover. We must do all we can to insure we come out of this periodstronger than ever.I believe Edison International’s growth potential is among the very best inthe industry. To achieve this potential and realize superior value for you,we are focused on three priorities.Financial disciplineSuperior executionAnd, Innovative approaches.Let me describe these focus areas a little more, starting with financialdiscipline.Our natural inclination is to manage financial risk on the conservative side.As a precautionary measure, we built our liquidity in 2008 to more than$5.5 billion at year-end. Thanks in part to several highly favorablerefinancings over the last two years, we have no major long-term debtmaturities until 2012.So our financial position is strong. It is a competitive advantage we wantto protect and extend through continued financial discipline.

Page 5 of 10innovations involved complex engineering work. For example, the designand construction of the Big Creek hydroelectric system in the early 1900’s,is the subject of industry and California legend. But one of my favoritestories reaches even further back into the company’s history.In 1898, the Edison Electric Company, as it was called at the time, wasstruggling to keep up with rapidly growing demand in downtown LosAngeles. The challenge: How to get power from a recently constructedhydroelectric plant on the Santa Ana River to Los Angeles, more than 80miles away. Never before had such a long transmission line beenattempted. The key to success was to increase the voltage of the line, butthis required a much improved insulator. The story goes that a companyengineer named Orville Ensign envisioned a new type of insulator madefrom porcelain instead of glass, and used his pocket knife to whittle thedesign from soft clay. The “Redlands” insulator was created, and thefollowing year the transmission line into Los Angeles was complete. TheJournal of Electricity, Power and Gas wrote that the 83-mile, 33,000 voltline was “for years unequaled, both in length and voltage, by any line inthe world.”Many of our innovations were less technical in nature, but involvedinnovative solutions to the most difficult business problems of the time. I’llshare just one more story:

Page 6 of 10In late March, 1896, Walter Wright of the West Side Lighting Company,another of our predecessor companies, discovered the existence of afranchise to operate in Los Angeles. Wright bought the franchise, which isessentially a permit for a utility to do business, for the bargain price of$100. But there was a catch: The franchise included a provision requiringinstallation of electric lights in Los Angeles City Hall, or it would becomenull and void – and the deadline was only two weeks away. The challengewas on to string a distribution line the three and one-half miles that wouldbe required. Every employee of the industrious little company – all eight ofthem including the treasurer and the book-keeper – pulled on overalls tohelp. At 4:55 PM on April 14, the day before the franchise was to expire,clusters of electric lights were burning in the City Hall tower. The franchisewas safe.These are fun stories to tell, but they also hold important messages fortoday. The common thread is our company’s consistent ability to tackletough problems with engineering know-how, business acumen and a candoattitude.Many of us believe we are on the cusp of major change in the way wegenerate, deliver and consume energy in this country and in the world.The ability to develop innovative approaches to enable this massivetransformation will be one of the distinguishing characteristics of successfulcompanies.

Page 7 of 10The same national policy preference for cleaner energy that supports ourgrowth strategy also creates challenges, most notably for our 7,400megawatt coal-fired generation fleet at Edison Mission Group.Over the last decade, we have invested more than $600 million in our coalplants to reduce emissions of mercury, nitrogen oxide and sulfur dioxide.But we need to achieve further emissions reductions and we must reduceour carbon footprint as well. Meeting this challenge will require bothinnovative technical solutions and creative business strategies, just as thechallenges of the past have required.EMG has been active on the technical engineering side by researchingvarious means for reducing CO2 emissions from the coal plants. Forexample, EMG has been testing whether it can replace some of the coalfuel it burns with a renewable bio-fuel grass called Miscanthus. And EMG’sPowerton plant in Illinois is one of five host sites in the country for testingcarbon capture retrofit and storage technologies.Since the financial restructuring of EMG was completed in 2004, our coalfleet has generated approximately $1.5 billion in profits. It is important tonote that instead of sending these profits to Edison International, EMG hasreinvested all of them in building new renewable energy generationprojects. Simply put, EMG has a strategy of using 100 percent of the

Page 8 of 10profits from its coal fleet to fund its transformation into a leading supplierof clean renewable energy and an operator of cleaner coal-fired generatingplants.Much public attention is being focused today on transforming the electricgrid and to extending the use of electricity into transportation as a meansof greening America and reducing greenhouse gases. We believe there areexciting opportunities to make the delivery and consumption of powermore efficient, and we have been actively developing innovations in theseareas for some time.A wonderful recognition of your company’s efforts in these new areasoccurred a little more than a month ago, in Pomona, California, asPresident Barack Obama delivered a nationally televised speech on U.S.energy policy. Behind him was something quite special: a sparkling-whiteSouthern California Edison hybrid electric utility bucket truck.President Obama came to Pomona to visit our Electric Vehicle TechnicalCenter. At the Tech Center our engineers are studying advanced batterystorage technology, and the impact of plug-in electric vehicles on thepower grid, preparing for the day when millions of Americans fill their carswith electricity from the plug, not gasoline from the pump. Our Edisonemployees are demonstrating how the “garage of the future” as we call it,will integrate smart electricity meters, rooftop solar panels, home battery

Page 9 of 10storage units and electric vehicles to change the way Americans use andeven think about electricity.It was an honor and a great source of pride for the employees of EdisonInternational to have the President accept our invitation for a tour of ourTech Center. It further affirmed our industry leadership and recognizedour dedication to finding innovative solutions that will enable tomorrow’scleaner, more efficient electric system.Neither the financial crisis nor the weakened economy has altered the mostsignificant drivers of Edison International’s growth potential. We operatefrom a position of financial strength. We have the scale and stability ofone of the nation’s largest electric utilities, coupled with the upsideopportunity and strategic flexibility of our competitive generation business.We have skilled and committed employees, led by a seasonedmanagement team. And our growth opportunities enjoy significantnational and state public policy support.One of the most fundamental characteristics of our business is that wedeliver an essential product for society. Our customers count on us forreliable electric power, delivered at a reasonable price and with goodservice. Throughout our company’s long history, our employees haverecognized the special responsibility this places upon them. It is what sooften inspires them to excellence. In this time of great change, we are

Page 10 of 10committed to the complex job of building value for all those who count onus to perform: our customers, our employees, our communities, and you,our shareholders. I am incredibly excited about the opportunity to build onour proud tradition of conducting our business in a manner that serves thepublic, and by doing so, continue to grow your company and build value.Thank you for your support.