Edison International · NYSE:EIX
Edison International — Corporate Update (September 2016)
51 slides from Edison International's corporate update, Sep 2, 2016
Slide 1: Business Update September 2016
September 2, 2016 Business Update September 2016 Exhibit 99.1
Slide 2: Forward-looking statements
September 2, 2016 1 Statements contained in this presentation about future performance, including, without limitation, operating results, capital expenditures, rate base growth, dividend policy, financial outlook, and other statements that are not purely historical, are forward-looking statements. T
Slide 3: Table of Contents
September 2, 2016 2 Page New (N) or Updated (U) from July 2016 Business Update EIX Shareholder Value 3 U SCE Highlights, Regulatory Model 4‐5 Capital Expenditures and Rate Base History and Forecast 6‐8 U 2018 GRC Overview 9‐10 N Distribution and Transmission Capital Expenditure Detail 11‐15 U,N CPUC
Slide 4: EIX Strategy Should Produce Superior Value
September 2, 2016 3 EIX Strategy Should Produce Superior Value Sustainable Earnings and Dividend Growth Positioned for Transformative Change Rate Base and Core Earnings Growth • 8.5% average annual rate base growth through 2020 Constructive Regulatory Structure • Decoupling • Balancing accounts • Fo
Slide 5: SCE Highlights
September 2, 2016 4 One of the nation’s largest electric utilities • 15 million residents in service territory • 5 million customer accounts • 50,000 square-mile service area Significant infrastructure investments • 1.4 million power poles • 725,000 transformers • 103,000 miles of distribution and t
Slide 6: SCE Decoupled Regulatory Model
September 2, 2016 5 SCE Decoupled Regulatory Model Decoupling of Regulated Revenues from Sales Major Balancing Accounts • Fuel • Purchased power • Energy efficiency • Pension-related contributions Advanced Long-Term Procurement Planning Forward-looking Ratemaking • SCE earnings are not affected by c
Slide 7: SCE Historical Rate Base and Core Earnings
September 2, 2016 6 SCE Historical Rate Base and Core Earnings Rate Base Core Earnings 8% 7% 2010 – 2015 CAGR ($ billions) Note: Recorded rate base, year-end basis. See Earnings Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. 2013-2015 rate base excludes SONGS $16.8 $18.
Slide 8: SCE Capital Expenditure Forecast
September 2, 2016 7 SCE Capital Expenditure Forecast Note: Forecasted capital spending includes CPUC, FERC and other spending. See “Capital Expenditure/Rate Base Detailed Forecast” in Appendix. ($ billions) $3.8 $4.5 $5.0 $5.2 $4.9 2016 2017 2018 2019 2020 Distribution Transmission Generation Tradit
Slide 9: SCE Rate Base Forecast
September 2, 2016 8 SCE Rate Base Forecast • Incorporates 2015 GRC final decision, except “rate-base offset” excluded because of write off of regulatory asset related to 2012-2014 incremental tax repairs • CPUC rate base based on request levels from 2018 GRC • FERC rate base is approximately 19% of
Slide 10: 2018 GRC Application overview
September 2, 2016 9 • 2018 GRC Application (A. 16-09-001) filed September 1st • Addresses major portion of CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital an
Slide 11: 2018 GRC grid modernization and new items
September 2, 2016 10 • Capital expenditures include $2.1 billion of proposed grid modernization capital to support improved safety and reliability and increased levels of distributed energy resources (DER) Requested approval to establish a memorandum account to facilitate $210 million of grid mode
Slide 12: SCE Distribution System Investments
September 2, 2016 11 SCE Distribution System Investments 1. Other includes: Energy Storage, Charge Ready Pilot and Mobile Home Park Conversion Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing 46% of total distribution capital spend, but not
Slide 13: Grid modernization capital spending
September 2, 2016 12 $0.03 $0.18 $0.64 $0.75 $0.71 2016 2017 2018 2019 2020 Building next generation electric grid will require accelerating traditional Transmission and Distribution / Information Technology programs and investing in new capabilities • Increased capacity: Upgrade portions of the gri
Slide 14: Energy Storage
September 2, 2016 13 Energy Storage SCE has already met the aggregate 2016 targets • CPUC Energy Storage Program: – Storage Rulemaking (R.10-12-007) established 1,325 MW target for IOUs by 2024 (580 MW SCE share; spread as biennial targets during 2014-20) – Ownership allowed up to 50% of total targe
Slide 15: SCE Charge Ready Program
September 2, 2016 14 SCE Charge Ready Program • Electric vehicle Charge Ready Program Phase 1 pilot approved by CPUC January 2016 − Authorizes spend of $22 million on pilot implementation for charger installations and Market Education Programs ($12 million rate base) − Advice letter approval to spen
Slide 16: SCE Large Transmission Projects
September 2, 2016 15 SCE Large Transmission Projects Note: Total Project Costs are nominal direct expenditures, subject to CPUC and FERC cost recovery approval. 1. CPCN approved August 2016 2. Presently under CPUC environmental review 3. Morongo Transmission holds an option to invest up to $400 mill
Slide 17: CPUC Cost of Capital
September 2, 2016 16 CPUC Cost of Capital 3 4 5 6 7 10/1/12 10/1/13 10/1/14 10/1/15 10/1/16 10/1/17 R a t e ( % ) CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/15 – 6/30/16) = 5.14% 100 basis point +/- Deadband Starting Value – 5.00% Return on Equity (ROE) adjust
Slide 18: 2016 Earnings Guidance
September 2, 2016 17 $4.09 $3.91 (0.18) 2016 SCE EPS Midpoint Guidance EIX Parent & Other 2016 Core EIX EPS Midpoint Guidance As of May 2, 2016 As of July 28, 2016 Low Mid High Low Mid High EIX Basic EPS $3.82 $3.92 $4.02 $3.82 $3.92 $4.02 Less: Non-Core Items1 0.01 0.01 0.01 0.01 0.01 0.01 EIX Core
Slide 19: SCE Growth Drivers Beyond 2017
September 2, 2016 18 SCE Growth Drivers Beyond 2017 Infrastructure Reliability Investment • Sustained level of infrastructure investment required until equilibrium replacement rates are achieved and then maintained - includes underground cable, poles, switches, and transformers1 Grid Modernization •
Slide 20: SCE System Average Rate
September 2, 2016 19 (0.3¢) (0.5¢) (1.4¢) (0.1¢) 0.3¢ 0.4¢ 0.3¢ 2015 SAR 2015 ERRA Settlement 2015 GRC Expiration of Prior Refunds Other CPUC 2016 FERC 2016 ERRA Changes January 2016 SAR FERC Balancing Account June 2016 SAR 16.2¢ 14.9¢ 15.0¢ 2016 System Average Rate SCE’s system average rate is lowe
Slide 21: SCE Key Regulatory Proceedings
September 2, 2016 20 SCE Key Regulatory Proceedings Proceeding Description Next Steps Key SCE Proceedings Cost of Capital CPUC capital structure, cost of capital, and return on equity CPUC approved the Joint Petition for Modification to suspend adjustment mechanism through 2017; Filing of 2018 appli
Slide 22: SCE Operational Excellence
September 2, 2016 21 SCE Operational Excellence Top Quartile • Safety • Cost efficiency • Reliability • Customer service Optimize • Capital productivity • Purchased power cost High performing, continuous improvement culture Defining Excellence Measuring Excellence • Employee and public safety metric
Slide 23: EIX is Responding to Industry Change
September 2, 2016 22 EIX is Responding to Industry Change • Public policy and large commercial customers prioritizing sustainability objectives • Innovation facilitating conservation and self-generation • Regulation supporting new forms of competition • Flattening domestic demand for electricity • P
Slide 24: Edison Energy Focus: Commercial & Industrial
September 2, 2016 23 • Create energy services that help simplify and optimize energy needs for large commercial & industrial customers: – Help customers better assess and capture the value of energy optimization, paving the way for greater third-party energy services – Help customers manage through
Slide 25: Edison Energy: Acquired Businesses
September 2, 2016 24 Edison Energy: Acquired Businesses Summary • Provides comprehensive renewable energy advisory and procurement services to leading Fortune 1000 companies, universities and municipalities • Created a proprietary market access platform where it typically procures energy for its cli
Slide 26: Grid Assurance launch
September 2, 2016 25 On May 9, 2016, six electric power companies announced the official launch of Grid Assurance, LLC, an independent company providing transmission sparing solutions for critical electric transmission equipment. The company is offering its subscribers a cost-effective way to enhanc
Slide 27: EIX Annual Dividends Per Share
September 2, 2016 26 EIX Annual Dividends Per Share $0.80 $1.00 $1.08 $1.16 $1.22 $1.24 $1.26 $1.28 $1.30 $1.35 $1.42 $1.67 $1.92 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: See use of Non-GAAP Financial Measures in Appendix Twelve Years of Dividend Growth Target dividend
Slide 28: Appendix
September 2, 2016 27 Appendix Exhibit 99.1
Slide 29: SCE Tax Memorandum Account
September 2, 2016 28 SCE Tax Memorandum Account • 2018 GRC continues tax accounting memorandum account (TAMA) established in 2015 GRC decision, which tracks tax benefits or costs associated with changes in: - tax accounting methods - tax laws and regulations impacting depreciation or tax repair - fo
Slide 30: SCE Historical Capital Expenditures
September 2, 2016 29 SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $3.5 $4.0 $3.9 2010 2011 2012 2013 2014 2015 Exhibit 99.1
Slide 31: Detailed Capital Expenditures – 2016-2020
September 2, 2016 30 Detailed Capital Expenditures – 2016-2020 2016 2017 2018 2019 2020 Total Core Distribution1,2 $2.9 $2.9 $3.2 $3.2 $3.1 $15.3 Mobile Home Park Conversion 0.1 0.1 - - - 0.2 Grid Modernization 0.0 0.2 0.6 0.8 0.7 2.3 Subtotal Distribution $3.0 $3.2 $3.9 $3.9 $3.8 $17.8 Transmission
Slide 32: Distribution Power Grid of the Future
September 2, 2016 31 Distribution Power Grid of the Future One-Way Electricity Flow • System designed to generate electricity from large central plant • Very few distributed energy resources • Voltage relatively simple to maintain • Limited situational awareness and visualization tools for power gri
Slide 33: Grid Modernization Framework
September 2, 2016 32 Grid Modernization Framework SCE will leverage its automation and infrastructure replacement programs to implement circuit-specific solutions that improve safety and reliability, while updating the system for continued DER adoption Distribution Automation Installation of more se
Slide 34: Grid Modernization Highlights
September 2, 2016 33 Computing intelligence inside electrical substations Future circuit designs integrate Distributed Energy Resources and increase flexibility The distribution system will require transformative technologies in planning, design, construction and operation Net benefits to customers
Slide 35: CPUC Distributed Energy Resources Proceedings
September 2, 2016 34 CPUC Distributed Energy Resources (DER) Proceedings Expanded scope • Competitive DER solicitation framework: product definition, rules, plans, standard contracts, “review groups,” and DER valuation methodology • Electric power company roles in DER markets, business models, and f
Slide 36: Grid Modernization Road Map
September 2, 2016 35 2015 - 2017 2018 - 2020 2021 – 2023 + Implement foundational information technology, communication systems, and system planning tools Enhance automation and improve interoperability with Distributed Energy Resources Optimize operation of Distributed Energy Resources and distribu
Slide 37: SCE 2016 Bundled Revenue Requirement
September 2, 2016 36 SCE 2016 Bundled Revenue Requirement Note: Rates in effect as of June 1, 2016. Represents bundled service which excludes Direct Access customers that do not receive generation services SCE Systemwide Average Rate History (¢/kWh) 2010 2011 2012 2013 2014 2015 14.3 14.1 14.3 15.9
Slide 38: System Average Rate Historical Growth
September 2, 2016 37 9.7¢ 16.2¢ 14.9¢ 8.0¢ 10.0¢ 12.0¢ 14.0¢ 16.0¢ 18.0¢ 20.0¢ 22.0¢ 24.0¢ 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Energy Crisis and return to normal Higher gas price forecast post-Katrina leads to higher rates with subsequent refund of over collection D
Slide 39: Residential Rate Design OIR Decision
September 2, 2016 38 Residential Rate Design OIR Decision • CPUC Order Instituting Ratemaking R.12-06-013 comprehensively reviewed residential rate structure including a future transition to time of use rates • July 2015 CPUC Decision D.15-07-001 includes: - Transition to 2 tiered rates by 2019 - “S
Slide 40: SCE Net Metering Rate Structure
September 2, 2016 39 SCE Net Metering Rate Structure 7¢ 24¢17¢ 0 5 10 15 20 25 30 ¢ / k W h Solar Subsidies (Illustrative) Avoided Generation (excludes RPS Premium) Subsidy Paid by Other Ratepayers Equivalent Solar Offset NEM Rate Developments: • NEM allows residential customers to receive full-reta
Slide 41: Residential Solar Installations in SCE Territory
September 2, 2016 40 Note: NEM solar installations in SCE service territory include projects with solar PV only less than 1 MW Residential Solar Installations in SCE Territory 10 20 30 40 50 60 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2010 2011 2012 2013 2014 2015 2016 M W Installed N u m b e r o f
Slide 42: SCE Rates and Bills Comparison
September 2, 2016 41 SCE Rates and Bills Comparison 13.1 16.5 US Average SCE 26% Higher 2015 Average Residential Rates (¢/kWh) 2015 Average Residential Bills ($ per Month) ¢ ¢ SCE’s average residential rates are above national average, but residential bills are below national average due to lower en
Slide 43: SCE Customer Demand Trends
September 2, 2016 42 SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) Residential Commercial Industrial Public authorities Agricultural and other Subtotal Resale Total Kilowatt-Hour Sales Customers Residential Commercial Industrial Public authorities Agricultural Railroads and railwa
Slide 44: California's Energy Policy
September 2, 2016 43 California’s Energy Policy • On October 7, 2015, Governor Brown signed SB 350, which requires that 50 percent of energy sales to customers come from renewable power and a doubling of energy efficiency in existing buildings for California by 2030 - Also requires Transportation El
Slide 45: AB32 Emissions Reduction Programs
September 2, 2016 44 AB32 Emissions Reduction Programs Cap & Trade 22% Other 23% Low Carbon Fuel Standard 19% RPS 14% Energy Efficiency 15% High GWP Gases 7% California Cap and Trade Program • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16% reducti
Slide 46: Second Quarter Earnings Summary
September 2, 2016 45 Q2 2016 Q2 2015 Variance Basic Earnings Per Share (EPS) SCE $0.97 $1.18 $(0.21) EIX Parent & Other (0.11) (0.02) (0.09) Discontinued Operations (0.01) (0.01) Basic EPS $0.85 $1.16 $(0.31) Less: Non-Core Items SCE $ $ $ EIX Parent & Other1 0.01 0.01 Discontinued Operati
Slide 47: YTD 2016 Earnings Summary
September 2, 2016 46 YTD 2016 YTD 2015 Variance Basic Earnings Per Share (EPS) SCE $1.85 $2.12 $(0.27) EIX Parent & Other (0.17) (0.04) (0.13) Discontinued Operations Basic EPS $1.68 $2.08 $(0.40) Less: Non-Core Items SCE $ $ $ EIX Parent & Other1 0.01 0.02 (0.01) Discontinued Operations
Slide 48: SCE Results of Operations
September 2, 2016 47 $6,305 — 1,977 1,915 334 — 4,226 2,079 (525) 64 1,618 507 1,111 113 $998 $5,180 4,266 913 — — — 5,179 1 (1) — — — — — $— $11,485 4,266 2,890 1,915 334 — 9,405 2,080 (526) 64 1,618 507 1,111 113 $998 $1,368 (370) $998 SCE Results of Operations • Earning activities – revenue autho
Slide 49: Earnings Non-GAAP Reconciliations
September 2, 2016 48 Earnings Non-GAAP Reconciliations Note: See Use of Non-GAAP Financial Measures in Appendix ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings SCE EIX Parent & Other Discontinued operations Basic Earnings Non-Core Items SCE EIX Parent & Other Discontinued opera
Slide 50: SCE Core EPS Non-GAAP Reconciliations
September 2, 2016 49 SCE Core EPS Non-GAAP Reconciliations Basic EPS Non-Core Items Tax settlement Health care legislation Regulatory and tax items Write down, impairment and other charges Insurance recoveries Less: Total Non-Core Items Core EPS Reconciliation of SCE Basic Earnings Per Share to SCE
Slide 51: Use of Non-GAAP Financial Measures
September 2, 2016 50 Use of Non-GAAP Financial Measures Edison International's earnings are prepared in accordance with generally accepted accounting principles used in the United States. Management uses core earnings internally for financial planning and for analysis of performance. Core earnings a
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