Slide 1: Con Edison, Inc. Company Update
CON EDISON, INC. Company Update August 11, 2016
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measure
Forward-Looking Statements This presentation contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are st
Slide 3: The Con Edison Story
The Con Edison Story Customer Focused Strategic Value Oriented Safety and Strengthen core Steady, predictable reliability utility delivery earnings business Customer Pursue additional Balance sheet experience regulated growth stability opportunities to add value in the evolving industry Operations G
Slide 4: Organizational Structure
Organizational Structure Market Cap (1): $24.4 billion Issuer Ratings: A3 / A- / BBB+ Outlook: Stable / Negative / Stable Regulated Utilities Regulated Transmission Competitive Energy Businesses Consolidated Con Edison Orange and Consolidated Con Con Con Edison Gas Pipeline Rockland Edison Edison Ed
Slide 5: Consolidated Edison Investment Thesis
Consolidated Edison Investment Thesis • Core regulated energy delivery business with growing energy infrastructure platform − Limited commodity exposure − Reduced regulatory lag through forward-looking test years, revenue decoupling and adjustment mechanisms • Ability to invest in our core regulated
Slide 6: Core Business is Regulated Energy Delivery
Con Edison’s Core Business is Regulated Energy Delivery Regulated Utility Breakdown 2015 Earnings per Share Contribution • Con Edison of New York (CECONY) − 3.4 million electric customers − 1.1 million gas customers − 1,700 steam customers − 724 MW of regulated generation − Delivered 38.5% of NYS 20
Slide 7: Constructive Regulatory Environment in New York
Constructive Regulatory Environment in New York Where Reform is Underway Features of NY Regulation: • Reduced regulatory lag − Forward-looking test years − Timely recovery of most fuel and commodity costs − Revenue decoupling mechanisms in NY (electric and gas) − Adjustment mechanisms for several ma
Slide 8: 2016 CECONY Electric and Gas Rate Filings
2016 CECONY Electric and Gas Rate Filings Proposed Rate plan details Electric Gas Rate Proposal filed on January 29, 2016 and updated in March and June for new rates effective January 1, 2017: Rate Increase Year 1 $498 million $125 million ROE 9.75% 9.75% Equity Ratio 48% 48% Supplemental Informatio
Slide 9: Reforming the Energy Vision Puts NY at the Forefront
Reforming the Energy Vision (REV) Puts NY at the Forefront of the Evolving Energy Industry Generation becomes more flexible Electric usage and flows become more interactive and dynamic Grid becomes smarter all the way up to and including the meter Greater adoption of distributed energy resources Emp
Slide 10: REV Presents Opportunities as Industry Evolves
REV Presents Opportunities as Industry Evolves Track One: Implementation • Order issued February 2015 • Utilities’ initial Distribution System Implementation Plans (DSIP) submitted June 30, 2016; supplemental DSIP due on November 30, 2016 • Key decisions made on distribution-level market design, tec
Slide 11: Over $12 Billion in Capital Investment Over the Next Three Years
Over $12 Billion in Capital Investment Over the Next Three Years ($ millions) $5,378 (1) $1,235 $3,755 $3,754 (2) (1) (1) $3,418 $1,090 $400 $400 $171 $179 $823 $2,648 $2,721 $2,538 $378 $447 $2,029 $2,003 $492 $28 $114 $3,053 $3,184 $3,175 $2,595 $2,270 $2,274 $2,001 $1,889 $2,046 2010 2011 2012 20
Slide 12: Advanced Meter Infrastructure (AMI)
Advanced Meter Infrastructure (AMI) Technology to improve operations and customer experience • AMI includes smart meters and a two-way communications network between the customer and the utility • CECONY $1,285 million deployment plan Capital Expenditures Year Electric Meters Gas Meters ($millions)
Slide 13: Solar Progress Partnership
Solar Progress Partnership In April 2016, the Partnership filed comments with the NYSPSC to propose a compensation model that supports the development of solar power in New York • All of the New York investor-owned utilities and three leading solar companies formed the Solar Progress Partnership • T
Slide 14: Growing Portfolio of Renewable and Regulated Transmission Assets
Growing Portfolio of Renewable Energy and Regulated Gas and Electric Transmission Assets Renewables Regulated Transmission • Estimated 5th largest owner of solar generation in Gas pipelines and storage: US(IHS EER as of year-end 2015) • Mountain Valley Pipeline (12.5% ownership) • Growing renewable
Slide 15: Con Edison Development: Net-Income Focused Growth
Con Edison Development: Net-Income Focused Growth From Renewable Investments Adjusted Earnings ($ millions) $27 $28 $18 $5 $3 $1 (1) 2010 2011 2012 2013 2014 2015 GAAP Earnings: $1 $3 $5 $(68)(2) $43(3) $28 (1) 2013 GAAP and adjusted earnings include a net income gain from prior period taxes of appr
Slide 16: Con Edison Development: 5th Largest Owner of PV Solar
Con Edison Development: 5th Largest Owner of PV Solar in United States Conservative, measured approach aimed at contracted infrastructure development and focused on investment-grade off-takers 1,200 2016 Operating Capacity 1,000 336 Wind 800 130 153 MW 20% 600 105 400 748 768 Solar 615 MW 446 80% 20
Slide 17: Con Edison Transmission: Natural Gas Services Assets
Con Edison Transmission: Overview of Natural Gas Services Assets Provides an opportunity for Con Edison to further expand its FERC-regulated-transmission business into growth markets Natural Gas Pipeline & Storage Footprint Asset Description Stagecoach Storage (Joint venture) • 41 Bcf of natural gas
Slide 18: Con Edison Transmission: NY Transco Projects
Con Edison Transmission: NY Transco Projects Indian Point Contingency and Proposed AC Transmission Upgrades • Con Edison, National Grid, Avangrid (Iberdrola), and Central Hudson (Fortis) own NY Transco Edic–to–Pleasant Valley • NYSPSC approved • FERC approved the NY Transco formula rate on • RFP sub
Slide 19: Steady Growth in Adjusted Earnings per Share
Consolidated Edison, Inc. Steady Growth in Adjusted Earnings per Share $4.08 $3.89 $3.75 $3.80 $3.64 $3.45 2010 2011 2012 2013 2014 2015 GAAP $3.49 $3.59 $3.88 $3.62 $3.73 $4.07 Earnings: Please refer to appendix for GAAP reconciliation 19
Slide 20: 42 Consecutive Years of Dividend Increases
42 Consecutive Years of Dividend Increases Only Utility in S&P 500 with 30 or More Straight Years of Dividend Increases 2016 Indicated Dividend = $2.68 Dividend Increases 2012 – 2016 Dividend Payout Ratio 2012 – 2015 90% 85% $0.08 $0.08 80% $0.06 75% Target payout range 70% $0.04 65% $0.02 60% 55% 5
Slide 21: Appendix
Appendix S conEdison, inc.
Slide 22: Business Environment: Building Permits and Peak Usage
Business Environment • Con Edison is at the forefront of the transformation of the energy landscape • Vibrant local economy with job growth in the region outpacing the nation • Job growth from Technology, Health, Education, Hospitality, Tourism and Business Services • Tourism at record levels Reside
Slide 23: Distributed Generation Adoption Trends in CECONY Service Area
Distributed Generation Adoption Trends in CECONY Service Area Total Installations Total Installed Capacity 12000 200 180 10000 160 CHP 140 8000 120 PV 6000 100 80 4000 PV 60 40 2000 CHP 20 0 0 Source: Consolidated Edison Company of New York. 23
Slide 24: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Patricia Acampora Gregg Sayre Audrey Zibelman Diane Burman (R) (D) (D) (R) Feb-2015 Feb-2018 Feb-2018 Feb-2018 Appointed June 2005 Appointed June 2012 Appointed June 2013 Appointed June 2013 PSC Staff Office of Energy Office of Accounting Off
Slide 25: NYC PSC Staff's Formulaic Approach to Returns on Equity
NYC PSC Staff’s Formulaic Approach to Returns on Equity Discounted Cash Flow Model (2/3 weighting) • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R) + (1+R)3 +…… 2 • Solving for an equity return, R, where: – D1 through D4 = Value Line estimates – D5 through D∞ = Value Lin
Slide 26: NY PSC's Formulaic ROE Approach: Decisions 2006-2016 YTD
NY PSC’s Formulaic ROE Approach: Decisions 2006 – 2016 YTD 2/3 Discounted Cash Flow model + Rate of return on equity 1/3 Capital Asset Pricing model Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 09/10 Energy East (RGE/NYSEG) 10.00% 40 months 10/06 O&R Gas 9.80% 3 years
Slide 27: Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) $30,000 Pike (PA) 5-year CAGR (‘10-’15) RECO (NJ) 3.5% $25,000 O&R Gas (NY) O&R Electric (NY) CECONY Steam (NY) $20,000 CECONY Gas (NY) CECONY Electric (NY) $15,000 $10,000 $5,000 $- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total
Slide 28: Composition of Rate Base
Composition of Rate Base(1) (as of June 30, 2016) CECONY ($ millions) Electric NY $17,757 Gas NY 4,156 Steam NY 1,516 CECONY Gas Total CECONY $23,429 CECONY O&R ($ millions) Steam O&R Electric NY $727 O&R CECONY O&R Gas NY 358 Electric Rockland NJ 197 Pike(2) PA 17 Total O&R $1,299 Total Rate Base $
Slide 29: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (Trailing 12 Months ending June 30, 2016) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.1% Gas 9.3% 8.2% Steam 9.3% 5.5% Overall – CECONY 9.1%(1) 8.7% CECONY Equity Ratio(2) 48.0% 48.8% O&R Electric 9.0% 10.8% Gas 9.0% 12.0% RECO 9.8% 8.1% O
Slide 30: CECONY Infrastructure Investment
CECONY Infrastructure Investment ($ millions) Forecasted CECONY Gas Main Capex 2016 2017 2018 2019 Forecast Forecast Forecast Forecast Gas Main Replacement $148 $251 $273 $301 Capex Mileage for 70 80 85 90 Replacement Annual CECONY Infrastructure Capex $3,500 Electric Gas Steam Depreciation $3,000 2
Slide 31: O&R Infrastructure Investment
O&R Infrastructure Investment ($ millions) Annual O&R Infrastructure Capex $200 $180 Electric Gas Depreciation $160 2010 $99 $36 $44 $140 2011 79 32 48 $120 2012 98 39 53 2013 98 37 56 $100 2014 105 37 61 $80 2015 118 42 68 $60 2016 Forecast 140 48 68 $40 2017 Forecast 137 48 74 $20 2018 Forecast 13
Slide 32: Con Edison Development: Overview and Timeline
Con Edison Development: Overview and Timeline • CED was formed in 1997 and through acquisitions, expansions, and greenfield development built a portfolio of fossil- fueled, merchant generation assets that totaled 1,700 MW (portfolio divested in 2008) • The company now has refocused its efforts on re
Slide 33: Con Edison Development: Strengths and Strategy
Con Edison Development: Strengths and Strategy CED Strengths CED Ranks #5 in United States in PV Solar(1) • Project development 1,400 1,200 1,000 MW AC • Construction 800 600 400 • O&M 200 - • Asset management CED Renewable Investment Strategy Disciplined Growth of CED Renewables Portfolio High Low
Slide 34: Con Edison Development: Renewable Asset Summary
Con Edison Development: Renewable Asset Summary CED has built a renewables portfolio consisting of 768 MW operating projects and 336 MW under construction (expected as of year end 2016) Production Actual / Expected Project Name MW-DC MW-AC Location (State) Technology In-Service Date Wholly owned pro
Slide 35: Con Edison Development: Asset Geographic Diversification
Con Edison Development: Asset Geographic Diversification 35
Slide 36: Gas Pipeline and Storage Portfolio with Growth Opportunities
Gas Pipeline and Storage Portfolio with Growth Opportunities The JV’s strategic position in the Northeast presents growth opportunities in areas where Con Edison has a long-term operating history Transaction Rationale and Benefits Gas Demand Flows • JV is situated within the core of the Northeast Pe
Slide 37: Mountain Valley is CET's First Gas Pipeline Investment
Con Edison Transmission: Mountain Valley is CET’s First Gas Pipeline Investment Mountain Valley Pipeline 300 mile pipeline (2 million Dt/day) that connects Equitrans Description (EQT) pipeline in northwestern West Virginia to Columbia Gas Transmission and Transco pipelines Location West Virginia and
Slide 38: Consolidated Edison, Inc. 2Q 2016 Earnings
Consolidated Edison, Inc. 2Q 2016 Earnings Earnings per Share Net Income ($ Millions) 2016 2015 2016 2015 Reported EPS and Net Income – GAAP basis $0.78 $0.75 $232 $219 Impairment of Pilesgrove solar electric production 0.02 — 5 — investment Net mark-to-market – effects of the CEBs (0.20) 0.03 (58)
Slide 39: Consolidated Edison, Inc. 1H 2016 Earnings
Consolidated Edison, Inc. 1H 2016 Earnings Earnings per Share Net Income ($ Millions) 2016 2015 2016 2015 Reported EPS and Net Income – GAAP basis $1.83 $2.01 $542 $589 Impairment of Pilesgrove solar electric production 0.02 — 5 — investment Net mark-to-market – effects of the CEBs (0.07) 0.02 (20)
Slide 40: Walk from Q2 2015 EPS to Q2 2016 EPS
Walk from Q2 2015 EPS to Q2 2016 EPS – Non-GAAP Basis $0.78 (0.18) (0.01) 0.02 (0.04) 0.03 $0.60 0 (1) 2Q 2015 CECONY O&R CED CEE CES CET Parent 2Q 2016 EPS EPS 1. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and storag
Slide 41: Q2 2015 to Q2 2016 Adjusted EPS Variance Explanation
Q2 2015 to Q2 2016 Adjusted EPS Variance Explanation Variance Explanation EPS CECONY Regulatory Reserves $(0.06) Changes in regulatory charges Higher O&M (0.06) Increased emergency response, municipal infrastructure support and stock-based compensation Lower ROE at CECONY (0.02) CECONY electric allo
Slide 42: Q2 2016 vs. Q2 2015 Adjusted Earnings Per Share
Q2 2016 vs. Q2 2015 Adjusted Earning Per Share 3 months ending June 30, 2016 CECONY O&R CED CEE CES CET(1) Parent Total Reported EPS – GAAP basis $0.54 $0.01 $0.03 $- $0.21 $- $(0.01) $0.78 Impairment of Pilesgrove solar electric production investment - - 0.02 - - - - 0.02 Mark-to-market losses/(gai
Slide 43: Walk from 1H 2015 EPS to 1H 2016 EPS
Walk from 1H 2015 EPS to 1H 2016 EPS – Non-GAAP Basis $2.03 (0.32) $1.78 0.02 0.02 (0.01) 0.01 0 0.05 (1) 1H 2015 CECONY O&R CED CEE CES CET Parent 1H 2016 EPS EPS 1. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and sto
Slide 44: 1H 2015 to 1H 2016 Adjusted EPS Variance Explanation
1H 2015 to 1H 2016 Adjusted EPS Variance Explanation Variance Explanation EPS CECONY Gas Net Revenues $0.02 Retention of revenues, oil-to-gas customer growth Weather (0.12) Weather impact on steam revenues (warmer than avg. winter) Higher O&M (0.10) Increased emergency response, municipal infrastruc
Slide 45: 1H 2016 vs. 1H 2015 Adjusted Earnings Per Share
1H 2016 vs. 1H 2015 Adjusted Earning Per Share 6 months ending June 30, 2016 CECONY O&R CED CEE CES CET(1) Parent Total Reported EPS – GAAP basis $1.59 $0.10 $0.03 $0.01 $0.10 $- $- $1.83 Impairment of Pilesgrove solar electric production investment - - 0.02 - - - - 0.02 Mark-to-market losses/(gains
Slide 46: Historical Adjusted Earnings Reconciliation
Historical Adjusted Earnings Reconciliation 12 Months Ending December 31, 2011 2012 2013 2014 2015 2016(1) Reported EPS – GAAP Basis $3.59 $3.88 $3.62 $3.72 $4.07 $3.88 Impairment of Assets Held for Sale - - - - 0.01 0.01 Impairment of Pilesgrove Solar Electric Production Investment - - - - - 0.02 G
Slide 47: CECONY Departmental and Other Expenses
CECONY Departmental and Other Expenses June 30, 2016 ($ millions) $1,536 $1,476 $1,489 $1,498(E) $1,464 $1,422 $1,416 $1,384 $1,369 $1,296 $1,312 $1,313 $1,317(E) $1,265 $440 $488 $420 $233 $498 $316 $770 $522 $246(A) $517 $502 $517 $533 $274 $554 $491 $216(A) $728(A) $478 $519 $485 $174 $467 $364 $
Slide 48: 2016 Financing Plan and Activity
2016 Financing Plan and Activity • Capital expenditures of $5.39 billion (CECONY: $2.87 billion, CEBs: $1.24 billion, CET: $1.09 billion, O&R: $0.19 billion) • Issue between $1.0 billion and $1.8 billion of long-term debt, most of which would be at the utilities • Activity so far: • CEB issued $218
Slide 49: Capital Structure – June 30, 2016
Capital Structure – June 30, 2016 ($ millions) Con Edison, Inc. A3 / A- / BBB+ Debt $14,493 51% Equity 13,958 49 Total $28,451 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,983 51% Debt $667 51% Debt $1,843 51% Equity 11,566 49 Equity 633 4
Slide 50: Liquidity Adequacy
Liquidity Adequacy $2.25 billion CEI Consolidated Revolving Credit Facility 50