This excerpt taken from the EIX 10-K filed Feb 28, 2007.
CRITICAL ACCOUNTING ESTIMATES
The accounting policies described below are viewed by management as critical because their application is the most relevant and material to Edison Internationals results of operations and financial position and these policies require the use of material judgments and estimates. Many of the critical accounting estimates discussed below generally do not impact SCEs earnings since SCE applies accounting principles for rate-regulated enterprises. However, these critical accounting estimates may impact amounts reported on the consolidated balance sheets.