Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — EEI Finance Conference 2015
43 slides from Consolidated Edison's conference presentation, Nov 8, 2015
Slide 1: Con Edison, Inc. EEI Finance Conference
Con Edison, Inc. November 8-10, 2015 EEI Finance 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: Consolidated Edison, Inc.: Who We Are
Consolidated Edison, Inc.: Who We Are • Longest continuously-listed company on the NYSE • Provides the world’s highest electric reliability • Operates the world’s largest district steam system • 6th largest operator of solar energy in North America • #1 ranked “green” utility in the U.S. by Newsweek
Slide 4: Consolidated Edison Investment Thesis
Consolidated Edison Investment Thesis • Core regulated energy delivery business with growing renewable energy portfolio – Limited commodity exposure • Reduced regulatory lag – Forward-looking test years – Timely recovery of most fuel and commodity costs – Revenue decoupling mechanism in NY (electric
Slide 5: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – Twelve Months Ended September 30, 2015) Con Edison, Inc. (ED) EPS $3.75* Rate Base: $24.3 billion Market Cap: $19.6 billion Regulated Utilities Orange and Rockland Con Edison Transmission (O&R) EPS $0.16 Con Edison Company of New York Competitiv
Slide 6: Where Are Our Growth Opportunities?
Where Are Our Growth Opportunities? • Delivering energy to a growing service area • Energy conservation programs • Oil-to-gas conversions • Development of renewable energy • Energy infrastructure investments – Electric and gas transmission – Electric and gas storage 6
Slide 7: Business Environment: Number of Building Permits Issued
Business Environment • Con Edison is at the forefront of the transformation of energy landscape • Vibrant local economy with job growth in the region outpacing the nation • Job growth from Technology, Health, Education, Hospitality, Tourism, and Business Services • Tourism at record levels Residenti
Slide 8: Annual Growth Rates in Weather-Adjusted Peak Usage
Annual Growth Rates in Weather-Adjusted Peak Usage 5- Year Forecast 2016 - 2020 CECONY (%) Electric 0.2 Gas 2.3 Steam -0.8 O&R (%) Electric 0.3 Gas 0.6 8
Slide 9: Con Edison of New York Infrastructure Investment
Con Edison of New York Infrastructure Investment Electric Gas Steam Depreciation Actual ($ millions) 2009 1596 339 122 744 2010 1421 334 111 787 $3,000 Steam 2011 1354 335 89 829 Gas 2012 1375 426 108 894 $2,694 $2,661 Electric 2013 1471 536 128 946 $2,500 Depreciation $2,375 2014 1500 549 83 991 Fo
Slide 10: Orange and Rockland Infrastructure Investment
Electric Gas Depreciation Orange and Rockland Infrastructure Investment Actual 2009 85 42 42 ($ millions) 2010 99 36 44 2011 79 32 48 2012 98 39 53 $200 2013 98 37 56 Gas $182 2014 105 37 61 $180 Electric $177 Forecast Depreciation $162 2015 125 37 69 $160 2016 137 45 74 $142 $140 $135 $137 $135 201
Slide 11: CECONY Oil-to-Gas Conversions by Oil Type
CECONY Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type 2015 YTD through September 30th 2000 1800 Number of gas service installations 1600 553 1400 1200 306 361 #6 Oil 1000 520 #4 Oil 800 #2 Oil 259 313 260 600 995 400 199 44 640 23 152 540 200 6 343 91 0 66 2010 2011 2012 2013
Slide 12: Market for Multi-Family and Commercial Oil-to-Gas Conversions
Con Edison of New York Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type As of September 30, 2015 26.7% converted Target Market: 21,000 buildings Converted: 5,598 Remaining: 15,402 #6 Oil 4,200 customers 1,899 converted, 45% Completed Conversions January 2011 to September 201
Slide 13: Historic Electric Volumes
CECONY Historic Electric Volumes (Weather Normalized) 60,000 58,000 56,000 GWh 54,000 52,000 50,000 48,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Consolidated Edison Company of New York, NYISO. 13
Slide 14: Brooklyn-Queens Demand Management
CECONY An Initial Demonstration: Brooklyn-Queens Demand Management • $200 million investment to defer a $1.2 billion substation configuration using portfolio of alternative investments – Deferral of about 5 years – 41 MW customer and 11 MW utility solutions • Allowed ROE on invested capital plus pot
Slide 15: Reforming the Energy Vision Proposed Demonstration Projects
Reforming the Energy Vision Proposed Demonstration Projects CECONY • Residential Solar and Energy Storage Aggregation – Partnering with SunPower and SunVerge • Commercial Distributed Energy Resources Marketplace – Partnering with Retroficiency • Residential Targeted Offerings – Partnering with Opowe
Slide 16: Advanced Metering Infrastructure is Foundational to REV
Advanced Metering Infrastructure (AMI) is Foundational to Reforming the Energy Vision • AMI includes smart meters and a two-way communications network between the customer and the utility • 50 million AMI meters deployed in U.S reaching 43% of homes nationwide* • CECONY-proposed $1.3 billion capital
Slide 17: Solar Photovoltaic Ownership Ranking for North America
Con Edison Development Solar Photovoltaic Ownership Ranking for North America Con Edison ranks #6 in North America Megawatts Source: IHS EER (as of year-end 2014) 17
Slide 18: Renewable Portfolio
Con Edison Development Renewable Portfolio Contracted infrastructure development focused on investment-grade off-takers 1000 900 Wind 800 153 MW 272 17% 700 600 500 105 Solar 400 725 MW 606 83% 300 446 200 299 100 25 118 95% of capacity is under 0 0 long-term power purchase 2010 2011 2012 2013 2014
Slide 19: Distributed Generation
CECONY Distributed Generation Adoption Trends in CECONY Service Area Total Installations Total Installed Capacity (Megawatts) 8000 200 180 7000 160 6000 CHP 140 5000 120 4000 100 PV 3000 80 PV 60 2000 40 1000 CHP 20 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011
Slide 20: NY Transco Projects for Indian Point Contingency and AC Transmission Upgrades
NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades • Con Edison, National Grid, Iberdrola and Central Hudson (Fortis) own NY Transco Edic–to–Pleasant Valley ($1 billion estimated cost – • NY Transco filed jointly for FERC wholesale nearly 1,000 MW of additional tr
Slide 21: Forecasted Capital Expenditures by Segment
Forecasted Capital Expenditures by Segment ($ millions) Rate Base* ($ millions) 2-Year Forecast 2015-2016 Total invested $7,200 CECONY $5,036 Competitive Energy Businesses (primarily renewables) $1,820 O&R $344 21
Slide 22: A Compelling Dividend Record
A Compelling Dividend Record 41 Consecutive Years of Dividend Increases Indicated dividend for 2015 = $2.60 Dividend Increases 2011 – 2015 Dividend Payout Ratio 2011 – 2015 $0.10 90% $0.09 85% The only utility in the $0.08 S&P 500 with 30 r more consecutive years of 80% $0.07 dividend increases targ
Slide 23: Growth Opportunities Benefit Customers, Shareholders and the Environment
Growth Opportunities Benefit Customers, Shareholders and the Environment • Delivering energy to a growing service area • Energy conservation programs • Oil-to-gas conversions • Development of renewable energy • Energy infrastructure investments – Electric and gas transmission – Electric and gas stor
Slide 24: Appendix
te Appendix ED GconEdison, inc. NYSE
Slide 25: Regulated Utilities are the Core of Con Edison, Inc.
Regulated Utilities are the Core of Con Edison, Inc. Con Edison of New York (CECONY) • 3.4 million electric customers • 1.1 million gas customers • 1,700 steam customers • 700 MW of regulated generation CECONY and O&R • Delivered 40.8% of NYS 2014 electric peak delivered 44% of NYS 2014 electric pea
Slide 26: New York City's Diverse Employment By Sector
CECONY New York City’s Diverse Employment By Sector Jobs in 000s % of Total NYC Employment Education =5% 4,000 Leisure & Hospitality =10% 3,500 Other Service =4% 3,000 Prof & Bus. Svcs. =16% Trade =12% 2,500 Government =13% 2,000 Manufacturing =2% 1,500 Construction =3% 1,000 Health Care Services =
Slide 27: Capital Expenditures
Capital Expenditures ($ millions) Con Edison of New York Orange and Rockland Competitive Energy Businesses $3,000 $2,661 $2,694 $2,500 $2,375 $2,135 $2,132 $2,057 $2,000 $1,866 $1,909 $1,778 $1,500 $985 $1,000 $835 $492 $447 $378 $500 $137 $142 $135 $374 $127 $135 $111 $162 $182 $177 $28 $114 $10 $0
Slide 28: Con Edison Development Annual Capital Investment and Adjusted Earnings
Con Edison Development Annual Capital Investment and Adjusted Earnings ($millions) $900 Capital Expenditures Adjusted Earnings 2013: $219 million solar $800 $780 energy project finance completed $700 2014: Sale of solar energy $600 projects netted after-tax gain of $26 million not $500 $466 included
Slide 29: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) Pike (PA) 23,646 RECO (NJ) 22,691 O&R Gas (NY) 5-year CAGR 21,311 21,760 20,545 O&R Electric (NY) (2009-2014) 3.82% 19,605 CECONY Steam (NY) CECONY Gas (NY) 18,077 CECONY Electric (NY) 16,298 14,757 13,453 12,418 2004 2005 2006 2007 2008 2009 2
Slide 30: Composition of Rate Base
Composition of Rate Base (as of September 30, 2015) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 17,494 Gas (NY) $ 3,919 Steam (NY) $ 1,540 Total CECONY $ 22,953 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 16 Rockland Electric (NJ) (distribution) $ 181 (transmission)
Slide 31: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Audrey Zibelman (D) Diane Burman Chair (R) Patricia Acampora Gregg Sayre (D) (R) Feb-2018 Feb-2018 Feb-2018 Feb-2015 Appointed June Appointed June 2013 Appointed June Vacant* Appointed June 2005 2012 2013 PSC Staff Office of Accounting Office
Slide 32: 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 33: 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 34: NY PSC's Formulaic ROE Approach: Recent Decisions
NY PSC’s Formulaic ROE Approach: Recent Decisions 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 06/11 Niagara Mohawk Electric 9.30% 2 years 06/11 O&R Electric 9.20% 1 year 08/07 Keyspan Gas 9.80
Slide 35: 3Q15 vs 3Q14 Earnings Per Share
3Q15 vs 3Q14 Earnings Per Share ED’s 3Q15 Adjusted EPS of $1.45 compares to $1.49 in 3Q14 Con Con Con Edison Edison Edison 3 months ending September 30, 2015 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $1.28 $0.07 $0.05 $- $0.07 $(0.01) $1.46 Impairment of assets h
Slide 36: 1st 9-months 2015 vs 2014 Earnings Per Share
1st 9-months 2015 vs 1st 9-months 2014 Earnings Per Share ED’s 9-months 2015 Adjusted EPS of $3.47 compares to $3.31 for 9-months 2014 Con Con Con Edison Edison Edison 9 months ending September 30, 2015 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $3.19 $0.12 $0.09
Slide 37: Improvement in 3Q15 EPS Over 3Q14 EPS
Improvement in 3Q15 EPS Over 3Q14 EPS ED’s 3Q15 Adjusted EPS of $1.45 compares to $1.49 in 3Q14 $1.52 $0.02 $0.02 $0.01 $1.50 $1.49 $1.48 $(0.01) $1.46 $1.45 $1.44 $1.42 $(0.08) $1.40 $1.38 $1.36 3Q14 EPS CECONY O&R CED CEE CES Parent 3Q15 EPS 37
Slide 38: 1st 9-months 2015 vs 2014 Earnings Per Share
1st 9-months 2015 vs 1st 9-months 2014 Earnings Per Share ED’s 9-months 2015 Adjusted EPS of $3.47 compares to $3.31 for 9-months 2014 $3.50 $3.47 $3.45 $0.10 $0.09 $3.40 $3.35 $0.03 $3.31 $3.30 $(0.01) $(0.01) $(0.04) $3.25 $3.20 $3.15 9M14 EPS CECONY O&R CED CEE CES Parent 9M15 EPS 38
Slide 39: Departmental and Other Expenses
Con Edison of New York Departmental and Other Expenses September 30, 2015 ($ millions) 1,600 1,477 1,533 1,481 1,417 1,391 1,400 1,384 1,296 1,312 1,313 1,284 1,254 1,261 1,265 440 488 1,200 420 453 316 1,074 1,040 344 1,000 902 334 800 517 285 517 502 533 553 574 600 433 310 400 478 519 485 467 200
Slide 40: Regulated Returns on Equity and Equity Ratios
Regulated Returns on Equity and Equity Ratios (for twelve months ended September 30, 2015) CECONY Allowed Actual Electric 9.2% 9.9% Gas 9.3% 7.3% Steam 9.3% 11.5% Overall - CECONY 9.2%* 9.6% CECONY Equity Ratio* 48.0% 49.3% O&R Electric 9.6% 9.3% Gas NA 1.3% RECO 9.8% 10.3% Overall – O&R 9.8%* 7.2%
Slide 41: 2015 Financing
2015 Financing • Issue between $1,000 million and $1,500 million of long-term debt, including maturities • Activity so far: In June 2015, O&R issued $120 million aggregate principal amount of 4.95% debentures, due 2045. Also in June 2015, a Con Edison Development subsidiary issued $118 million aggre
Slide 42: Capital Structure — September 30, 2015
Capital Structure — September 30, 2015 ($ millions) Con Edison, Inc. A3 / A- / BBB+ Debt $12,282 48% Equity 13,049 52 Total $25,331 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,215 50% Debt $575 49% Debt $492 32% Equity 11,430 50 Equity 59
Slide 43: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 43