Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Investor Presentation (November 2016)
40 slides from Consolidated Edison's investor presentation, November 2016
Slide 1: Con Edison, Inc. November 2016 Company Update
CON EDISON, INC. November 2016 Company Update
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: Organizational Structure
Organizational Structure Market Cap(1): $22.9 billion Issuer Ratings: A3 / A- / BBB+ Outlook: Stable / Negative / Stable Regulated Utilities Regulated Transmission Competitive Energy Businesses Consolidated Orange and Con Edison Consolidated Con Con Con Edison Rockland Gas Pipeline Edison Edison Edi
Slide 4: The Con Edison Strategy
The Con Edison Strategy Customer Focused Strategic Value Oriented Ensure safety and Strengthen core Provide steady, reliability utility delivery predictable business earnings Enhance the Pursue additional Maintain customer regulated growth balance sheet experience opportunities to add stability valu
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 • Investing in core regulated franchise f
Slide 6: Con Edison's 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: Reforming the Energy Vision (REV) 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 8: Reforming the Energy Vision (REV)
Reforming the Energy Vision (REV) Track One: Business Framework • Unlock full value of Distributed Energy Resources (DERs) • Integrate DERs into system planning, design, procurement, operations • Achieve environmental benefits and cost reductions • Order issued February 2015; initial Distributed Sys
Slide 9: 2016 CECONY Electric Joint Proposal Reflects REV Goals
2016 CECONY Electric Joint Proposal Reflects REV Goals Expand Energy Efficiency • From current 0.3% energy efficiency of sales to 0.7% by 2019 Continue System Peak Reduction • Work with customers and market partners to offer advanced technologies such as battery storage systems and building manageme
Slide 10: 2016 CECONY Electric and Gas Joint Proposal Filed
2016 CECONY Electric and Gas Joint Proposal Filed Electric Electric Electric Gas Joint Proposal Rate Plan Rate Average Capital Gas Rate Average Gas Capital Details Change Rate Base Expenditures Change Rate Base Expenditures Joint Proposal filed Sept. 20, 2016; new rates effective Jan. 1, 2017 ($ mil
Slide 11: NY PSC Staff's Formulaic Approach to Returns on Equity
NY PSC Staff’s Formulaic Approach to Returns on Equity 2/3 Discounted Cash Flow model + Rate of return on equity 1/3 Capital Asset Pricing model Discounted Cash Flow Model (2/3 weighting) • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R)2 + (1+R)3 +…… • Solving for an equ
Slide 12: NY PSC's Formulaic ROE Approach: Decisions 2006-2016 YTD
NY PSC’s Formulaic ROE Approach: Decisions 2006 – 2016 YTD 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 08/07 Keyspan Gas 9.80% 5 years 06/11 O&R Ele
Slide 13: Con Edison Development: 5th largest owner of solar in US
Pursue non-utility growth Con Edison Development: 5th largest owner of solar in US Conservative, measured approach aimed at contracted infrastructure development and focused on investment-grade off-takers 2016 Operating Capacity 380 Wind 153 MW 17% 130 105 Solar 883 730 MW 748 83% 446 292 28 127 Ove
Slide 14: Con Edison Development: Renewable Asset Summary
Con Edison Development: Renewable Asset Summary CED has built a renewables portfolio consisting of 883 MW operating projects and 380 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 15: Con Edison Transmission: Overview of Natural Gas Services Assets
Con Edison Transmission: Overview of Natural Gas Services Assets Provides an opportunity for Con Edison to further expand its Federal Energy Regulatory Commission-regulated-transmission business into growth markets Natural Gas Pipeline & Storage Footprint Asset Description Stagecoach Storage (50% ow
Slide 16: Con Edison Transmission: Portfolio with Growth Opportunities
Con Edison Transmission: Portfolio with Growth Opportunities The strategic position of Stagecoach and Mountain Valley Pipeline (MVP) presents growth opportunities in areas where Con Edison has a long-term operating history Rationale and Benefits Gas Demand Flows • Assets are situated within the core
Slide 17: 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 18: Con Edison Transmission: NY Transco Projects
Con Edison Transmission: NY Transco Projects Completed Projects and Proposed Transmission Upgrades • Con Edison, National Grid, Avangrid (Iberdrola), and Central Hudson (Fortis) own NY Transco • Con Edison ownership share: 45.7% • Growth fostered by generator retirements and connecting large scale r
Slide 19: Steady Growth in Earnings per Share
Con Edison Steady Growth in Earnings per Share GAAP Earnings $3.88 $4.07 $3.49 $3.59 $3.62 $3.73 2010 2011 2012 2013 2014 2015 Adjusted Earnings1 $3.89 $4.08 $3.64 $3.75 $3.80 $3.45 2010 2011 2012 2013 2014 2015 1. 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% $0.02 60% 55% 5
Slide 21: 3rd Quarter 2016 Earnings Release Supplement
CONSOLIDATED EDISON, INC. 3rd Quarter 2016 Earnings Release Supplement 21
Slide 22: Consolidated Edison, Inc. 3Q 2016 Earnings
Consolidated Edison, Inc. 3Q 2016 Earnings Net Income ($ Millions) Earnings per Share 2016 2015 2016 2015 Reported EPS and Net Income – GAAP basis $497 $428 $1.63 $1.46 Gain on sale of retail electric supply business (47) - (0.15) - Gain on acquisition of Pilesgrove solar investment (5) - (0.02) - I
Slide 23: Walk from 3Q 2015 EPS to 3Q 2016 EPS
Walk from 3Q 2015 EPS to 3Q 2016 EPS – Non-GAAP Basis $0.03 $1.51 $(0.01) $0.02 $0.01 $0.01 $1.45 $0.01 $(0.01) (1) 3Q 2015 EPS CECONY O&R CED CEE CES CET Parent 3Q 2016 EPS 1. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeli
Slide 24: 3Q 2015 to 3Q 2016 Adjusted EPS Variances
3Q 2015 to 3Q 2016 Adjusted EPS Variances Variance Explanation EPS CECONY Regulatory Reserves $0.01 Changes in regulatory charges Lower ROE at CECONY (0.01) Changes in rate plans (allowed ROE dropped from 9.2% to 9.0%) Lower O&M - Operations 0.04 Lower stock-based compensation and uncollectibles Oth
Slide 25: 3Q 2016 vs. 3Q 2015 Adjusted EPS by Company
3Q 2016 vs. 3Q 2015 Adjusted EPS by Company 3 months ending September 30, 2016 CECONY O&R CED CEE CES CET(1) Parent Total Reported EPS – GAAP basis $1.27 $0.09 $0.01 $0.01 $0.24 $0.03 $(0.02) $1.63 Gain on sale of retail electric supply business - - 0.07 - (0.22) - - (0.15) Gain on acquisition of Pi
Slide 26: 3Q 2016 Developments
3Q 2016 Developments • Note B: Regulatory Matters (see pages 19-22 of 3Q 2016 Form 10-Q) − Joint Proposal for CECONY electric and gas rate plans filed in September 2016 (pages 19-21) − At September 30, 2016, CECONY had regulatory liability of $28 million for June 2014 plastic fusion proceeding and N
Slide 27: 3Q 2016 Developments
3Q 2016 Developments • Note P: Acquisitions, Investments and Dispositions (see pages 41-42 of 3Q 2016 Form 10-Q) − 106 MW Texas Solar 7 electric production project reached commercial operation in 3Q-16 (page 41) − In June 2016, Con Edison Development recorded an $8 million ($5 million, net of taxes)
Slide 28: 3Q 2016 Developments
3Q 2016 Developments • Management’s Discussion and Analysis: Results of Operations (see pages 44-73 of 3Q 2016 Form 10-Q) − CECONY: Summer 2016 electric peak demand of 12,652 MW occurred on August 11, 2016. At design conditions, electric peak demand in the company's service area would have been abou
Slide 29: Consolidated Edison, Inc. YTD 2016 Earnings
Consolidated Edison, Inc. YTD 2016 Earnings Net Income ($ Millions) Earnings per Share 2016 2015 2016 2015 Reported EPS and Net Income – GAAP basis $1,039 $1,017 $3.47 $3.47 Gain on sale of retail electric supply business (47) - (0.15) - Impairment on assets held for sale – Pike - 3 - 0.01 Net mark-
Slide 30: Walk from YTD 2015 EPS to YTD 2016 EPS
Walk from YTD 2015 EPS to YTD 2016 EPS – Non-GAAP Basis $3.47 $0.04 $0.01 $3.30 $0.04 $0.02 $0.05 $(0.01) $(0.32) (1) YTD 2015 CECONY O&R CED CEE CES CET Parent YTD 2016 EPS EPS 1. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pi
Slide 31: YTD 2015 to YTD 2016 Adjusted EPS Variances
YTD 2015 to YTD 2016 Adjusted EPS Variances Variance Explanation EPS CECONY Retention of Gas Revenues $0.02 Changes in rate plans (oil-to-gas conversions) Regulatory Reserves (0.05) Changes in regulatory charges Lower ROE at CECONY (0.05) Change in rate plans (allowed ROE dropped from 9.2% to 9.0%)
Slide 32: YTD 2016 vs. YTD 2015 Adjusted EPS by Company
YTD 2016 vs. YTD 2015 Adjusted EPS by Company 9 months ending September 30, 2016 CECONY O&R CED CEE CES CET(1) Parent Total Reported EPS – GAAP basis $2.87 $0.18 $0.04 $0.02 $0.34 $0.04 $(0.02) $3.47 Gain on sale of retail electric business - - 0.07 - (0.22) - - (0.15) Mark-to-market losses/(gains)
Slide 33: 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 $3.73 $4.07 $4.08 Impairment of assets held for sale - - - - 0.01 - Gain on sale – solar projects - - - (0.09) - - Gain on sale of retail electric bu
Slide 34: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses September 30, 2016 ($ millions) Operations Other Expenses* $1,464 $1,497(E) $1,489 $1,476 $1,384 $1,422 $1,416 $1,312 $1,313 $1,343(E) $1,265 $1,296 $388 $440 $119 $420 $488 $316 $498 $401 $517 $517 $130 $502 $533 $554 $1,109(A) $345 $87 $478 $519 $485 $467
Slide 35: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (Trailing 12 Months ending September 30, 2016) Allowed Actual CECONY Electric 9.0% 9.2% Gas 9.3% 7.8% Steam 9.3% 5.8% Overall – CECONY 9.1%(1) 8.7% CECONY Equity Ratio(2) 48.0% 48.9% O&R Electric 9.0% 11.0% Gas 9.0% 12.6% RECO 9.8% 7.8% Overall – O&
Slide 36: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(1) (as of September 30, 2016) CECONY ($ millions) Electric NY $17,805 Gas NY 4,229 Steam NY 1,504 CECONY Gas Total CECONY $23,538 CECONY O&R ($ millions) Steam O&R Electric NY $720 O&R CECONY O&R Gas NY 355 Electric Rockland NJ 212 Total O&R $1,287 Total Rate Base
Slide 37: Con Edison's Capital Investment Over the Next Three Years
Con Edison’s Capital Investment Over the Next Three Years ($ 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 (3) (3) 2010 2011 2012 2
Slide 38: 2016 Financing Plan and Activity
2016 Financing Plan and Activity • Capital expenditures of $5.38 billion (CECONY: $2.86 billion, CEBs: $1.24 billion, CET: $1.09 billion, O&R: $0.19 billion) • CEI issued $724 million of common equity in May(1) • Issue between $1.0 billion and $1.8 billion of long-term debt, most of which would be a
Slide 39: Capital Structure – September 30, 2016
Capital Structure – September 30, 2016 ($ millions) Con Edison, Inc. A3 / A- / BBB+ Debt $14,093 50% Equity 14,275 50 Total $28,368 100% Con Edison of New York Orange and Rockland Parent and Other A2 / A- / A- A3 / A- / A- Debt $11,584 50% Debt $666 51% Debt $1,843 50% Equity 11,793 50 Equity 650 49
Slide 40: Liquidity Adequacy
Liquidity Adequacy $2.25 billion CEI Consolidated Revolving Credit Facility 40
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