Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — 2014 EEI Finance Conference
39 slides from Consolidated Edison's conference presentation, November 2014
Slide 1: 2014 EEI Finance Conference
Con Edison, Inc. November 11 – 13, 2014 2014 EEI Finance Conference 1
Slide 2: Forward-Looking Statements
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: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – Twelve Months Ended September 30, 2014) Con Edison, Inc. (ED) EPS $4.25* Rate Base: $23.4 billion Market Cap: $16.6 billion Regulated Utilities Con Edison Transmission Orange and Rockland EPS $0.20 Con Edison of New York EPS $3.73 Competitive En
Slide 4: NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades
NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades • Con Edison, National Grid, Iberdrola and Fortis to own NY Transco • NY Transco to file jointly for FERC wholesale transmission rates Edic - to - Marcy Pleasant Valley South Series Compensation Oakdale - to - Fra
Slide 5: Capital Expenditures
Capital Expenditures ($ 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 $378 $360 $365 $500 $137 $142 $135 $160 $158 $127 $135 $111 $28 $114 $10 $0 2009 2010 2011 2
Slide 6: One World Trade Center
One World Trade Center One World Trade Center opened its doors to the first new tenants in November 2014, adding to the vitality of Lower Manhattan. 6
Slide 7: New York City Employment By Sector
Con Edison of New York New York City Employment By Sector Jobs in 000s 4,000 % of Total NYC Employment Financial Activities =11% 3,500 Government =13% Trans/Utilities =3% 3,000 Construction =3% 2,500 Information =4% 2,000 Trade =12% Biggest jobs gains/(losses) and % change since 1990 * Education & H
Slide 8: New York City's Record-Breaking Tourism
Con Edison of New York New York City’s Record-Breaking Tourism 55 Domestic International 11.4 50 2.9% CAGR 5.1% CAGR 10.9 1998-2013 1998-2013 10.6 9.7 45 8.9 9.5 8.6 7.3 Millions of Visitors 40 6.8 42.9 40.3 41.1 6.1 39.1 35 4.8 37.1 37.6 37.0 6.6 6.8 35.8 36.5 5.7 5.1 6.0 33.0 33.8 30 29.8 29.4 29.
Slide 9: 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 September 2014 YTD figures are up 24% 30,000 year over year Number of Permits Issued 25,000 30-Yr Average 20,000 15,000 10,
Slide 10: Five-year growth rates in peak usage
Five-year growth rates in peak usage* Historic Historic 2015-2019 2002-2007 2008-2013 Five-Year (Pre-Recession) (Recession**) Forecast CECONY (%) Electric 1.8 (1.1) 0.9 Gas 1.0 1.6 2.8 Steam (0.8) (2.3) (0.8) O&R (%) Electric 2.6 (0.6) 0.9 Gas (0.8) (0.6) 0.6 * Annualized growth rates shown ** Offic
Slide 11: Reforming the Energy Vision (REV)
Reforming the Energy Vision (REV) On April 24, 2014, the NY PSC initiated 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 technologies and energy eff
Slide 12: 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 13: Solar and Wind Investment Portfolio
Con Edison Development Solar Investment Portfolio PPA Actual / Expected Project Location MW (AC) 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 14: 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 4,200 customers #6 Oil 1,419 converted, 34% Completed Conversions January 2011 to September 2014 Total Conversion Potential 2,800 customers As of December 2010 #4 Oil 764 converted, 27% 14,000 customers
Slide 15: 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 15
Slide 16: 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 17: Appendix
te APPENDIX ED GconEdison, inc. NYSE
Slide 18: 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 19: 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 20: 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 Energy Program 11,000 Stock Market Crash 10,000 (1987) Oil Embargo (1973) Oil Shock Iranian Revolution 9,000 Iran/Iraq War (1979) 8,000 N
Slide 21: Composition of Rate Base
Composition of Rate Base (as of September 30, 2014) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 16,980 Gas (NY) $ 3,617 Steam (NY) $ 1,532 Total CECONY $ 22,129 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 15 Rockland Electric (NJ) (distribution) $ 178 (transmission)
Slide 22: 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 23: Infrastructure Investment
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 $2,500 2015 1,
Slide 24: Orange and Rockland Infrastructure Investment
Orange and Rockland Infrastructure Investment ($ 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 $80 2013 98 37 56
Slide 25: Gas Distribution Infrastructure Investment
Con Edison of New York Gas Distribution Infrastructure Investment ($ 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 Forecast Forecast $524 $586
Slide 26: 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 September 30th 600 513 520 500 475 434 Number of gas service installations 400 343 313 #2 Oil 300 260 #4 Oil 214 #6 Oil 199 200 152 91 100 66 44 23 6 0 2010 2011 2012 2013 2014 YTD Note: Mul
Slide 27: 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 28: NY PSC's Formulaic Approach to ROE
NY PSC’s Formulaic Approach to ROE Recent Rate Decisions in New York Date Company ROE Term Date Company ROE Term 09/10 CECONY Steam 9.60% 3 years 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 06/11 Niagara Mohawk Electric 9.30% 2 years 08
Slide 29: NY PSC Staff's Discounted Cash Flow Model
NY PSC Staff’s Discounted Cash Flow Model • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R)2 + (1+R)3 +…… • Solving for an equity return, R, where: – D1 through D4 = Value Line estimates – D5 through D∞ = Value Line estimates based on future earnings retention and share g
Slide 30: NY PSC Staff's Capital Asset Pricing Model
NY PSC Staff’s Capital Asset Pricing Model • Staff solves for an equity return, R R = RUST + (RMKT – RUST)*β • Where: – RUST is the risk-free return: average of prior three monthly yields for 10-year and 30-year Treasuries – RMKT is the market rate of return: BofA Merrill Lynch’s monthly Quantitativ
Slide 31: 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 $(37) over 2 yrs. 9.2% D
Slide 32: Departmental and Other Expenses Through September 30, 2014
Con Edison of New York Departmental and Other Expenses Through September 30, 2014 ($ millions) 1,600 1,477 1,453 1,417 1,430 1,400 1,296 1,313 1,284 1,312 1,260 1,254 1,261 1,265 450 1,200 431 468 1,099 315 1,056 344 1,000 902 361 800 508 676 285 505 503 517 553 600 306 388 310 400 198 519 478 485 4
Slide 33: Rates of Return and Equity Ratio
Rates of Return and Equity Ratio (for twelve months ended September 30, 2014) Regulated Basis SEC Basis CECONY Allowed Actual Electric 9.2% 9.1% Gas 9.3% 9.1% Steam 9.3% 12.7% Overall - CECONY 9.2%* 9.3% 10.0% CECONY Equity Ratio 48.0% 51.5% O&R Electric 9.6% 10.4% Gas 10.4% 6.3% RECO 9.8% 7.6% Over
Slide 34: Reconciliation of 3rd Quarter 2014 and 3rd Quarter 2013 Earnings Per Share
Reconciliation of 3rd Quarter 2014 and 3rd Quarter 2013 Earnings Per Share Con Con Con Edison Edison Edison 3 months ending Sept. 30, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $1.36 $0.07 $0.03 $0.01 $0.03 $(0.01) $1.49 Mark-to-Market losses/(gains) - - - -
Slide 35: Reconciliation of 1st 9-Months of 2014 and 2013 Earnings Per Share
Reconciliation of 1st 9-Months of 2014 and 1st 9-Months of 2013 Earnings Per Share Con Con Con Edison Edison Edison 9 months ending Sept. 30, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $3.09 $0.17 $0.17 $0.04 $- $(0.02) $3.45 Gain on sale of solar energy proj
Slide 36: 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 37: 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 $850 million of 30-year debentures with
Slide 38: Capital Structure — September 30, 2014
Capital Structure — September 30, 2014 ($ millions) Con Edison, Inc. A3 / BBB+ / BBB+ Debt $11,195 47% Equity 12,716 53 Total $23,911 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $10,216 48% Debt $602 48% Debt $377 31% Equity 11,219 52 Equity
Slide 39: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 39