Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Barclays Capital 2014 CEO Energy/Power Conference
46 slides from Consolidated Edison's conference presentation, September 2014
Slide 1: Barclays Capital 2014 CEO Energy/Power Conference
Con Edison, Inc. September 2-3, 2014 Barclays Capital 2014 CEO Energy/Power Conference 1
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measure
Forward-Looking Statements This presentation includes certain forward-looking statements intended to qualify for safe-harbor provisions of the Federal securities laws. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates,"
Slide 3: Con Edison: Where Our Business is Going
Con Edison: Where Our Business is Going 3
Slide 4: Consolidated Edison, Inc. Investment Thesis
Consolidated Edison, Inc. Investment Thesis • The largest of the few publicly-traded, T&D-focused utility companies – Limited commodity exposure • Reduced regulatory lag – Forward-looking test years – Timely recovery of most fuel and commodity costs – Revenue decoupling mechanism in NY (electric and
Slide 5: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – 12 Months Ended June 2014) Con Edison, Inc. (ED) EPS $4.34* Rate Base: $23.2 billion Market Cap: $16.9 billion Regulated Utilities Orange and Rockland EPS $0.20 Con Edison of New York EPS $3.74 Competitive Energy Businesses Con Edison Con Edison
Slide 6: Regulated Utilities are the Core of Con Edison, Inc.
Regulated Utilities are the Core of Con Edison, Inc. Con Edison of New York (CECONY) • 3.4 million electric customers • 1.1 million gas customers • 1,703 steam customers • 702 MW of regulated generation CECONY and O&R • Delivered 40% of NYS 2013 delivered 43% of electric peak consumption NYS 2013 el
Slide 7: Composition of Rate Base
Composition of Rate Base (as of June 30, 2014) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 16,893 Gas (NY) $ 3,542 Steam (NY) $ 1,531 Total CECONY $ 21,966 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 14 Rockland Electric (NJ) (distribution) $ 179 (transmission) $ 20
Slide 8: Factors Reshaping the Utility Industry
Factors Reshaping the Utility Industry • Environmental regulations • Physical and cyber security threats • Increased frequency and severity of storms • Customer demands for greener products and better services • New technologies 8
Slide 9: Reforming the Energy Vision (REV)
Reforming the Energy Vision (REV) On April 24, 2014, the NYSPSC initiated an order instituting a proceeding to align electric utility practices and the regulatory paradigm with technological advances in information management and power generation and distribution The order focuses on: • Clean techno
Slide 10: REV Proceeding Timeline
REV Proceeding Timeline Goals and Timetables • Track 1: Reach generic policy determinations with respect to Distributed System Platform Providers and related issues – May 12, 2014: initial meeting of collaborative – May 22, 2014: public symposium addressed both tracks – July 10, 2014: technical conf
Slide 11: Focus on Getting the Basics Right
Focus on Getting the Basics Right • Operations performance • Business improvement • Safety of our employees and the public 11
Slide 12: Focus on Getting the Basics Right: Operations Performance
Focus on Getting the Basics Right: Operations Performance Storm hardening measures will enhance operations performance and reliability through $1 billion of capital expenditures from 2013 to 2016 (Dollars in millions) CECONY 2013 2014F 2015F 2016F Total Electric $77 $180 $278 $287 $823 Gas 1 5 37 57
Slide 13: Focus on Getting the Basics Right: Business Improvement
Focus on Getting the Basics Right: Business Improvement • 63 operations systems replaced by one IT system • $20 million in annual savings from new IT systems are flowing back to customers • Expanding quality control programs are improving operations and staff functions 13
Slide 14: Focus on Getting the Basics Right: Safety of our Employees and the Public
Focus on Getting the Basics Right: Safety of our Employees and the Public 14
Slide 15: Getting the Basics Right: Gas Distribution Infrastructure Investment
Con Edison of New York Getting the Basics Right: Gas Distribution Infrastructure Investment ($ millions) $700 $600 $500 Main replacement annual targets: $400 2014 – 60 miles 2015 – 65 miles 2016 – 70 miles $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015 2016 $339 $334 $335 $426 $536 Forecast Fo
Slide 16: Focus on Getting the Basics Right: Safety of our Employees and the Public
Focus on Getting the Basics Right: Safety of our Employees and the Public • Robust stray voltage detection effort is ongoing • Water-level detection devices installed in our steam system • CECONY employee injury rate dropped 60% since 2009 • 1.24 OSHA incidence rate at CECONY in 2013 • O&R had best-
Slide 17: Where is the Business Going?
Where is the Business Going? • Rethinking the role of the utility in a post-generation environment • Doing what is best for the customer – Less energy consumption and cleaner energy – Higher reliability – Better service • Fair and equitable returns for capital providers 17
Slide 18: Doing What is Best for the Customer: Energy Efficiency
Doing What is Best for the Customer: Energy Efficiency • 200,000 customers have participated in energy efficiency programs over past five years • Customers saved 155,000 MWhrs and 285,000 dekatherms through energy efficiency programs in 2013 • 250,000 tons of carbon kept out of the atmosphere 18
Slide 19: Doing What is Best for the Customer: Green Energy
Doing What is Best for the Customer: Green Energy • 173 MW of total distribution-level distributed generation in CECONY service area at end of 2013 – Includes 35 MW of solar PV – Expect solar PV to be larger proportion in future • 3,000 applications for distributed generation – Expedited, self-certi
Slide 20: Doing What is Best for the Customer: Reliability Varying Approaches
Doing What is Best for the Customer: Reliability Varying Approaches • Storm hardening – 20,000 storm outages avoided this year • New transmission: Indian Point Contingency – $371 million investment for Ramapo-Rock Tavern and Staten Island Un-bottling transmission projects – 2016 in-service dates • M
Slide 21: Doing What is Best for the Customer: Better Service
Doing What is Best for the Customer: Better Service • Enhanced mobile apps • New customer outage dashboard – Outages – Road closures – Job status – Restoration times • Area Growth approach to oil-to-gas conversions – Focus connections and work by area – Revenues and costs are analyzed by area as a w
Slide 22: Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type January 2011 to June 2014 Completed Conversions 4,200 customers Total Conversion Potential #6 Oil 1,272 converted, 30% as of December 2010 2,800 customers #4 Oil 687 converted, 25% 14,000 customers1,254
Slide 23: Five-year growth rates in peak usage
Five-year growth rates in peak usage* Historic Historic Current 2002-2007 2008-2013 Five-Year (Pre-Recession) (Recession**) Forecast CECONY (%) Electric 1.8 (1.1) 1.4 Approximately 80% attributable Gas 1.0 1.6 2.8 to oil-to-gas conversions Steam (0.8) (2.3) (0.8) O&R (%) Electric 2.6 (0.6) 0.9 Gas (
Slide 24: Solar Investment Portfolio
Con Edison Development Solar Investment Portfolio Actual / Expected Project Location MW (AC) PPA Offtaker PPA Term SREC Term In-service Date Operating - Projects > 3MW Pilesgrove NJ 9 N/A N/A 3 years 3Q11 Flemington NJ 8 N/A N/A 3 years 4Q11 PA Solar PA 10 N/A N/A 5 years 4Q12 Alpaugh 50 CA 25 PG&E
Slide 25: A Compelling Dividend Record: 40 Consecutive Years of Dividend Increases
A Compelling Dividend Record: 40 Consecutive Years of Dividend Increases Annualized Dividend 1975 - 2014 Dividend Payout Ratio 1975 – 2013 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 25
Slide 26: Appendix
B- Appendix ED GconEdison, inc. NYSE
Slide 27: Index of Employment Growth Since November 2009 - New York City v. U.S.
Index of Employment Growth Since November 2009 - New York City v. U.S. Index of Job Gains 109.5 109.5 107.5 New York City 105.5 106.1 103.5 U.S. 101.5 99.5 Source: Cushman & Wakefield 27
Slide 28: New York City's Record-Breaking Tourism
New York City’s Record-Breaking Tourism 55 11.4 50 10.6 10.9 9.7 45 8.9 9.5 8.6 Millions of Visitors 7.3 42.9 40 6.8 6.1 40.3 41.1 39.1 35 4.8 37.1 37.6 37.0 6.6 6.8 5.7 5.1 35.8 36.5 30 6.0 33.0 33.8 29.8 29.4 29.5 30.2 25 27.1 20 15 10 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20
Slide 29: CECONY Residential Building Permits Are On the Rise
Con Edison of New York CECONY Residential Building Permits Are On the Rise 40,000 36-year high occurred due to extension 35,000 and then expiration of NYC tax abatement program 30,000 Number of Permits Issued 25,000 30-Yr Average 20,000 15,000 10,000 5,000 0 1994 1995 1996 1997 1998 1999 2000 2001 2
Slide 30: Average Normalized Electricity Use per Customer
Con Edison of New York Average Normalized Electricity Use per Customer 16,000 Annual kWh per customer: 1990 - 2013 15,000 kWhrs 14,000 13,000 12,000 % change over prior year 5.00% Residential 4.00% Commercial 3.00% 2.00% 1.00% 0.00% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20
Slide 31: Historical Electricity Peak Demand
Con Edison of New York Historical Electricity Peak Demand* 14,000 13,000 9/11 The Great (2001) Recession 12,000 Electric Peak (MW) Decline (2009-2012) Enlightened 11,000 Energy Program Stock Market Crash 10,000 (1987) Oil Embargo (1973) Oil Shock 9,000 Iranian Revolution Iran/Iraq War (1979) 8,000 N
Slide 32: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) Pike (PA) 22,691 21,760 21,311 RECO (NJ) 5-year CAGR 20,545 19,605 (2008-2013) 4.65% O&R Gas (NY) 18,077 O&R Electric (NY) 16,298 14,757 CECONY Steam (NY) 13,453 CECONY Gas (NY) 11,869 12,418 11,087 11,231 CECONY Electric (NY) 2001 2002 2003 20
Slide 33: Infrastructure Investment: Con Edison of New York
Con Edison of New York Electric Gas Steam Depreciation Infrastructure Investment Actual 2008 1,743 338 121 672 ($ millions) 2009 1,596 339 122 744 2010 1,421 334 111 787 2011 1,354 335 89 829 $3,000 2012 1,375 426 108 894 2013 1,471 536 128 946 Steam Forecast Gas 2014 1,617 524 82 993 $2,500 2015 1,
Slide 34: Infrastructure Investment: Orange and Rockland
Orange and Rockland Infrastructure Investment ($ millions) 2014 2015 2016 ($ millions) Forecast Forecast Forecast $180 Gas Storm Hardening $19 $17 $12 $160 Electric Depreciation $140 Electric Gas Depreciation $120 Actual 2009 85 42 42 $100 2010 99 36 44 2011 79 32 48 2012 98 39 53 $80 2013 98 37 56
Slide 35: Capital Expenditures
Capital Expenditures ($ millions) Con Edison of New York Orange and Rockland Competitive Energy Businesses $3,000 $2,481 $2,500 $2,347 $2,223 $2,135 $2,057 $2,000 $1,866 $1,909 $1,778 $1,500 $1,000 $492 $470 $500 $378 $360 $365 $127 $135 $111 $137 $135 $160 $158 $142 $10 $28 $114 $0 2009 2010 2011 2
Slide 36: Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type 2014 YTD through June 30th 600 513 520 500 Number of gas service installations 400 343 332 313 287 #2 Oil 300 260 #4 Oil 199 #6 Oil 200 152 137 91 100 66 44 23 6 0 2010 2011 2012 2013 2014 YTD Note: Multi-fa
Slide 37: Oil-to-gas conversions by oil type
Con Edison of New York Oil-to-gas conversions by oil type* January 2011 to June 2014 Converted MMBTU Conversion Potential MMBTU as of 12/2010 #6 Oil 17,333 MMBTU 5,250 MMBPU converted, 30% 6,023 MMBTU #4 Oil 1,478 MMBPU converted, 25% 14,042 MMBTU** #2 Oil 1,248 MMBPU converted, 9% - 5,000 10,000 15
Slide 38: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Audrey Zibelman (D) Gregg Sayre (D) Diane Burman (R) Garry Brown (D) Patricia Acampora (R) Chair Feb-2018 Feb-2018 Feb-2015 Feb-2015 Feb-2018 Appointed June Appointed June Appointed Dec Appointed June 2013 2007 Appointed June 2005 2012 2013 P
Slide 39: Summary of Rate Plans
Summary of Rate Plans Amortization To Income Authorized Effective of Net Regulatory Return on Equity Period Rate Changes Rate Base (Assets) and Liabilities (ROE) (a) (Millions of Dollars, except percentages) CECONY– Electric (b) January 2014 - Yr. 1 - $(76.2) Yr. 1 - $17,323 $(37) over 2 yrs. 9.2% D
Slide 40: Rates of Return and Equity Ratio
Rates of Return and Equity Ratio (for twelve months ended June 30, 2014) SEC Basis (excludes MTM Regulated Basis and LILO impact) CECONY Allowed Actual Electric 9.2% 9.2% Gas 9.3% 8.9% Steam 9.3% 13.6% Overall - CECONY 9.2%* 9.4% 10.4% CECONY Equity Ratio 48.0% 51.8% O&R Electric 9.5% 9.2% Gas 10.4%
Slide 41: Reconciliation of 2nd Quarter 2014 and 2nd Quarter 2013 Earnings Per Share
Reconciliation of 2nd Quarter 2014 and 2nd Quarter 2013 Earnings Per Share Con Con Con Edison Edison Edison 3 months ending June 30, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $0.58 $0.03 $0.12 $0.01 ($0.01) $- $0.73 Gain on sale of solar energy projects - -
Slide 42: Reconciliation of 1st Half of 2014 and 1st Half of 2013 Earnings Per Share
Reconciliation of 1st Half of 2014 and 1st Half of 2013 Earnings Per Share Con Con Con Edison Edison Edison 6 months ending June 30, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $1.73 $0.10 $0.14 $0.03 ($0.03) $(0.01) $1.96 Gain on sale of solar energy projects
Slide 43: Reconciliation of 2013 and 2012 Earnings Per Share
Reconciliation of 2013 and 2012 Earnings Per Share Con Con Con Edison Edison Edison 2013 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $3.48 $0.22 $(0.23) $0.02 $0.13 $- $3.62 Mark-to-Market losses/(gains) - - - - (0.14) - (0.14) Lease In/Lease Out transactions - - 0
Slide 44: 2014 Financing Needs
2014 Financing Needs • Capital expenditure of $2,835 million (CECONY - $2,223 million, O&R - $142 million, CEB - $470 million) • Plan for 2014: Issue between $1.5 to $2.0 billion of long-term debt, primarily at CECONY • Activity so far: In March, CECONY issued $850 million of 30-year debentures with
Slide 45: Capital Structure — June 30, 2014
Capital Structure — June 30, 2014 ($ millions) Con Edison, Inc. A3 / BBB+ / BBB+ Debt $11,129 47% Equity 12,455 53 Total $23,584 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $10,216 48% Debt $603 49% Debt $310 27% Equity 10,998 52 Equity 632 5
Slide 46: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 2,200 Commercial paper Letters of credit 2,000 6/30/14 LOCs = $49 million 1,800 CP = $1,531 million 1,600 Average = $585 million 1,400 $ Millions 1,200 1,000 800 600 400 200 0 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-1
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