Edison International · NYSE:EIX
Edison International — Q4 2012 Earnings Presentation
41 slides from Edison International's earnings presentation, Feb 26, 2013
Slide 1: Fourth Quarter 2012 Financial Teleconference
Leading the Way in Electricity SM Fourth Quarter 2012 Financial Teleconference February 26, 2013 0 EDISON INTERNATIONAL®
Slide 2: Forward-Looking Statements
Leading the Way in Electricity SM Forward-Looking Statements Statements contained in this presentation about future performance, including, without limitation, operating results, asset and rate base growth, capital expenditures, San Onofre Nuclear Generating Station (SONGS), EME bankruptcy and restr
Slide 3: Changes in Financial Reporting
Leading the Way in Electricity SM Changes in Financial Reporting Financial Reporting • On December 17, 2012, Edison Mission Energy (EME) filed for relief under Chapter 11 of the U.S. Bankruptcy Code resulting in the following changes: For 2012, Edison International (EIX) reports results of EME as
Slide 4: Fourth Quarter Earnings Summary
Leading the Way in Electricity SM Fourth Quarter Earnings Summary Q4 2012 Q4 2011 Variance SCE Key Core Earnings Drivers Core EPS 2012 CPUC GRC true-up $0.82 SCE $1.85 $0.76 $1.09 Higher operating revenue 0.09 EIX Parent & Other (0.06) 0.03 (0.09) Rate base growth Operating revenue Core EPS $1.79 $0
Slide 5: Full-Year Earnings Summary
Leading the Way in Electricity SM Full-Year Earnings Summary 2012 2011 Variance SCE Key Core Earnings Drivers Core EPS Higher operating revenue $0.63 SCE $4.10 $3.33 $0.77 Rate base growth EIX Parent & Other (0.18) (0.02) (0.16) Operating revenue O&M reductions 0.21 Core EPS $3.92 $3.31 $0.61 Severa
Slide 6: SCE Historical Rate Base and Core Earnings
Leading the Way in Electricity SM SCE Historical Rate Base and Core Earnings ($ billions) 2007 – 2012 CAGR Rate Base 11% $21.0 Core Earnings 15% $18.8 $16.8 $15.0 $12.5 $13.1 2007 2008 2009 2010 2011 2012 Core Earnings $2.07 $2.25 $2.68 $3.01 $3.33 $4.10 Note: Recorded rate base, year-end basis. See
Slide 7: Capital Expenditures Forecast
Leading the Way in Electricity SM Capital Expenditures Forecast ($ billions) $4.2 2013 – 14 Forecast $3.9 $4.0 by Classification $ % Generation 1.0 12 Transmission 2.2 27 Distribution 5.0 61 Forecast pending GRC Notice of Intent filing Q3 2013 Total 8.2 100 By Jurisdiction 2012 2013 2014 2015 2016 2
Slide 8: Rate Base Forecast
Leading the Way in Electricity SM Rate Base Forecast ($ billions) 7 – 8% Projected Rate Base Growth from 2013 – 14 $23.6 • Driven by infrastructure $21.8 replacement, reliability Smart investments, and public Grid policy requirements • FERC rate base includes Forecast pending GRC CWIP and is approxi
Slide 9: SONGS Cost Recovery Tracker
Leading the Way in Electricity SM SONGS Cost Recovery Tracker December 31, 2012 Items Covered Key Issues Status Opening Briefs issues: • Phase 1 reasonableness • Revenue requirement SONGS OII • CPUC legal authority to reduce rates evidentiary hearings May • Repair & maintenance • Date that rates are
Slide 10: SONGS – Supplemental Data
Leading the Way in Electricity SM SONGS – Supplemental Data December 31, 2012 ($ millions) Outage Impacts (SCE share) Inspection & Repair Costs – Incurred $102 Net Market Costs – Incurred $300 Net Market Costs Incurred % of Total Purchased Power 8% Regulatory (SCE share) Steam Generator Replacement
Slide 11: Cost of Capital Mechanism
Leading the Way in Electricity SM Cost of Capital Mechanism 9 Proposed Moody’s Baa Utility Index Spot Rate Moving Average (10/1/2012 – 1/31/2013 = 4.55%) 8 7.63% 100 basis point +/- Deadband 7 Rate (%) Prior Starting Index = 6.26% 6.05% 6 5.75% 5.00% Proposed Starting Index = 5.00% 5 4 3 Sep-08 Sep-
Slide 12: FERC Return on Equity
Leading the Way in Electricity SM FERC Return on Equity • August 2011 – FERC accepted SCE’s formula rates effective January 1, 2012 FERC • Rates remain subject to refund and settlement Formula • Next settlement conference February 27-28, 2013 Rates • September 2012 – Formula Rate update filed for 20
Slide 13: 2013 Core and Basic Earnings Guidance
Leading the Way in Electricity SM 2013 Core and Basic Earnings Guidance 2013 Earnings Guidance as of 2/26/13 0.31 Low Mid High $3.45 $3.55 $3.65 $3.55 (0.15) 2013 EPS from Rate Base Forecast: • Average rate base $21.8 billion – 80/20% CPUC/FERC $3.39 • Income tax • Approved capital structure – repai
Slide 14: Creating Shareholder Value
Leading the Way in Electricity SM Creating Shareholder Value Create Sustainable Position for Resolve Earnings and Transformative Uncertainties Dividend Growth Sector Change What We’ve Done • EME bankruptcy filing • 5-year rate base CAGR of 11% • Leadership and development • SCE 2012 GRC • 15% Core E
Slide 15: Appendix
Leading the Way in Electricity SM Appendix February 26, 2013 14 EDISON INTERNATIONAL®
Slide 16: What’s New Since Our Last Presentation
Leading the Way in Electricity SM What’s New Since Our Last Presentation • SONGS Cost Recovery Tracker (p. 8) • FERC Return on Equity (p. 11) • 2013 Core and Basic Earnings Guidance (p. 12) • Creating Shareholder Value (p. 13) • SCE Historical Capital Expenditures (p. 17) • SCE Key Regulatory Events
Slide 17: SCE Highlights
Leading the Way in Electricity SM SCE Highlights • One of the nation’s largest electric utilities Nearly 14 million residents in service territory Approximately 5 million customer accounts 50,000 square-mile service area Over 103,000 miles of distribution and transmission lines • 7 – 8% proj
Slide 18: SCE Historical Capital Expenditures
Leading the Way in Electricity SM SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $2.9 $2.4 $2.2 2007 2008 2009 2010 2011 2012 February 26, 2013 17 EDISON INTERNATIONAL®
Slide 19: SONGS – Warranty and Insurance
Leading the Way in Electricity SM SONGS – Warranty and Insurance MHI Warranty • 20-year warranty with Mitsubishi Heavy Industries Repair or replace defective items Specified damages for certain repairs $138 million liability limit and excludes consequential damages (e.g., replacement power)
Slide 20: SCE Large Transmission Projects
Leading the Way in Electricity SM SCE Large Transmission Projects December 31, 2012 Project Total Project In Service FERC 2013 – 2014 Name Costs Date Incentives Forecast Status • Cost estimates for potential Chino Hills undergrounding to be filed with the 125 bps Tehachapi 1-11 $2,500 million 2015 $
Slide 21: SCE Key Regulatory Events Calendar
Leading the Way in Electricity SM SCE Key Regulatory Events Calendar Q1 2013 Q2 2013 Q3 2013 Q4 2013 2014 SONGS OII Phase 1 Opening Evidentiary Proposed Briefs Hearings Decision (2/25/13) (5/13-17/13) (July) 2012 FERC Formula Rate Filing Settlement Conference (2/27-28/13) 2008 FERC CWIP ROE Appeal O
Slide 22: SCE Decoupled Regulatory Model
Leading the Way in Electricity SM SCE Decoupled Regulatory Model Regulatory Model Elements Key Benefits Decoupling of Regulated • SCE earnings are not affected by changes in retail Revenues from Sales electricity sales • Differences between amounts collected and authorized levels are either billed o
Slide 23: California Renewables Policy
Leading the Way in Electricity SM California Renewables Policy • On April 12, 2011, Governor Brown signed SB X 1 2, which codifies a 33% Renewables Portfolio Standard (RPS) for California by 2020 Allows use of Renewable Energy Credits (RECs) for up to 25% of target with decreasing percentages over
Slide 24: SCE Renewable Portfolio
Leading the Way in Electricity SM SCE Renewable Portfolio Renewable Resources Actual 2011 Renewable Resources: (billion kWh) 28.1 21.1% of SCE’s portfolio Small Hydro 6% Solar 6% 81% Increase Biomass 6% 15.5 Geothermal 47% Wind 35% 2011 2020 Actual 33% RPS Deliveries Goal In order to meet the 33% RP
Slide 25: 2011 SCE Energy Portfolio
Leading the Way in Electricity SM 2011 SCE Energy Portfolio 1 (Billion kWh – Generation Level) 80.1 12.2 Market Source2 Low Carbon 6.3 77% Coal 15% Natural Gas 21.4 Nuclear 8% Large Hydro Wind Solar Small Hydro 19.2 Carbon Neutral 27% 50% Geothermal Biomass & Waste 5.5 Renewables 3 24% 19% (21.1% of
Slide 26: California Climate Change Policy
Leading the Way in Electricity SM California Climate Change Policy • Assembly Bill 32 (2006) – reduces State GHG emissions to 1990 levels by 2020 (~16% reduction) • Cap and trade program basics: AB32 Emissions State-wide cap in 2013 – decreases over time Reduction Programs Compliance met through
Slide 27: California Once-Through Cooling Policy
Leading the Way in Electricity SM California Once-Through Cooling Policy Area MW Name & Permit Holder MW CAISO 18,505 Nuclear Plants LADWP 2,654 Diablo Canyon – PG&E 2,240 Total 21,159 San Onofre – SCE 2,150 Independent Generators Alamitos – AES 2,010 Redondo Beach – AES 1,343 Huntington Beach – AES
Slide 28: SCE Energy Efficiency Programs
Leading the Way in Electricity SM SCE Energy Efficiency Programs Energy efficiency programs updated for 2013 – 2014 • SCE is a national leader 2011 energy savings = 2% of retail sales1 Annual kWh Savings • 2013 budget of $347 million2 – all balancing (billions) account based 1.9 • Target 0.9 billi
Slide 29: SCE Distribution Program
Leading the Way in Electricity SM SCE Distribution Program • Distribution expenditures required to meet customer and load growth, infrastructure needs, information technology and related general plant • Demonstrated operational capability to execute infrastructure replacement programs 2013 – 2014 GR
Slide 30: SCE Rates and Bills Comparison
Leading the Way in Electricity SM SCE Rates and Bills Comparison 2012 Average Residential Rates Key Factors (¢/kWh) 15.9¢ • SCE’s residential rates are above national average due, in part, to a cleaner fuel mix – 12.3 ¢ cost for renewables are higher than high 29% Higher carbon sources • Average mon
Slide 31: SCE Rate Design
Leading the Way in Electricity SM SCE Rate Design 2012 Sales by Class of Service 2012 Revenue Requirement by Source Total Sales (millions kWh): 88,215 Agricultural, FERC Resale & Other Other 7% 4% Public CPUC Residential Authorities 12% 35% 6% Fuel & Industrial Purchased 9% Power 33% CPUC GRC Base R
Slide 32: SCE Residential Net Metering Rate Structure
Leading the Way in Electricity SM SCE Residential Net Metering Rate Structure 2012 SCE Residential Rate Structure1,2 Solar Subsidies3,4 35 30 30.8¢ 18.5¢ 26.7¢ 30 Tier 5 25 27.3¢ Tier 4 25 23.8¢ 20 20 Tier 3 ¢/kWh ¢/kWh 15.5¢ 15 15 Tier 2 12.6¢ 10 10 8.2¢ Tier 1 5 5 0 0 0 200 400 600 800 1,000 1,200
Slide 33: SCE Operational Excellence Framework
Leading the Way in Electricity SM SCE Operational Excellence Framework VISION MISSION VALUES To be an industry pacesetter Safely delivering reliable, affordable Integrity, Excellence, Respect, providing safe, reliable, and electricity to our customers. Continuous Improvement, affordable electric ser
Slide 34: EIX Transaction Support Agreement Summary
Leading the Way in Electricity SM EIX Transaction Support Agreement Summary The agreement between EIX, EME, and a majority of EME bondholders defines the terms under which EIX is to transition its ownership position in EME at the end of the bankruptcy process Term Description Equity • Creditors get
Slide 35: EIX Dividend Growth
Leading the Way in Electricity SM EIX Dividend Growth 2013 2007 – 2012 CAGR $1.35 SCE Core EPS 15% $4.10 2012 EIX Dividend 2% $1.30 (32%) $3.33 2011 $1.28 (38%) • EIX targets paying out 45 – 55% of SCE earnings 2010 $3.01 • Dividend not growing at same rate as $1.26 (42%) SCE core earnings and is be
Slide 36: Non-GAAP Reconciliations
Leading the Way in Electricity SM Non-GAAP Reconciliations ($ millions) Reconciliation of EIX Core Earnings to EIX GAAP Earnings Earnings Attributable to Edison International Q4 2012 Q4 2011 2012 2011 Core Earnings SCE $602 $247 $1,338 $1,085 EIX Parent and Other (20) 9 (60) (9) Core Earnings $582 $
Slide 37: Quarterly Earnings Per Share Highlights
Leading the Way in Electricity SM Quarterly Earnings Per Share Highlights 2011 Q1 Q2 Q3 Q4 2011 SCE $0.68 $0.65 $1.25 $0.76 $3.33 EIX – Parent and Other (0.03) (0.02) (0.01) 0.03 (0.02) Core EPS $0.65 $0.63 $1.24 $0.79 $3.31 Non-core items 0.02 0.01 (0.03) (0.11) (0.11) EIX Parent and Other – Discon
Slide 38: SCE Results of Operations
Leading the Way in Electricity SM SCE Results of Operations ($ millions) 2012 2011 Utility Utility Utility Cost- Utility Cost- Earning Recovery Total Earning Recovery Total Activities Activities Consolidated Activities Activities Consolidated Operating Revenue $6,682 $5,169 $11,851 $6,257 $4,320 $10
Slide 39: SCE Core EPS Non-GAAP Reconciliations
Leading the Way in Electricity SM SCE Core EPS Non-GAAP Reconciliations Reconciliation of SCE Core Earnings Per Share to SCE Basic Earnings Per Share Earnings Per Share Attributable to SCE 2007 2008 2009 2010 2011 2012 CAGR Core EPS $2.07 $2.25 $2.68 $3.01 $3.33 $4.10 15% Non-Core Items Tax settleme
Slide 40: Use of Non-GAAP Financial Measures
Leading the Way in Electricity SM 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. Co
Slide 41: Investor Relations Contacts
Leading the Way in Electricity SM Investor Relations Contacts Scott Cunningham, Vice President (626) 302-2540 scott.cunningham@edisonintl.com Felicia Williams, Senior Manager (626) 302-5493 felicia.williams@edisonintl.com February 26, 2013 40 EDISON INTERNATIONAL®