Slide 1: Con Edison, Inc. September Update
CON EDISON, INC. September Update September 29, 2016
Slide 2: Forward-Looking Statements; 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: The Con Edison Story
The Con Edison Story Customer Focused Strategic Value Oriented Safety and Strengthen core Steady, predictable reliability utility delivery earnings business Customer Pursue additional Balance sheet experience regulated growth stability opportunities to add value in the evolving industry Operations G
Slide 4: Organizational Structure
Organizational Structure Market Cap(1): $24.0 billion Issuer Ratings: A3 / A- / BBB+ Outlook: Stable / Negative / Stable Regulated Utilities Regulated Transmission Competitive Energy Businesses Consolidated Orange and Con Edison Consolidated Con Con Con Edison Rockland Gas Pipeline Edison Edison Edi
Slide 5: Consolidated Edison Investment Thesis
Consolidated Edison Investment Thesis • Core regulated energy delivery business with growing energy infrastructure platform − Limited commodity exposure − Reduced regulatory lag through forward-looking test years, revenue decoupling and adjustment mechanisms • Ability to invest in our core regulated
Slide 6: The Evolving Industry Offers Growth Opportunities and Customer Benefits
The Evolving Industry Offers Growth Opportunities and Customer Benefits • Delivering energy to a growing service area • Energy conservation programs • Oil-to-gas conversions • Renewable energy production • Electric & gas transmission and storage 6 6
Slide 7: Con Edison's Core Business is Regulated Energy Delivery
Con Edison’s Core Business is Regulated Energy Delivery Regulated Utility Breakdown 2015 Earnings per Share Contribution • Con Edison of New York (CECONY) − 3.4 million electric customers − 1.1 million gas customers − 1,700 steam customers − 724 MW of regulated generation − Delivered 38.5% of NYS 20
Slide 8: 2016 CECONY Electric and Gas Joint Proposal Filed
2016 CECONY Electric and Gas Joint Proposal Filed Electric Electric Electric Gas Joint Proposal Rate Plan Rate Average Capital Gas Rate Average Gas Capital Details Change Rate Base Expenditures Change Rate Base Expenditures Joint Proposal filed Sept. 20, 2016; new rates effective Jan. 1, 2017 ($ mil
Slide 9: 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 10: 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 11: Advanced Meter Infrastructure (AMI)
Advanced Meter Infrastructure (AMI) Technology to improve operations and customer experience • AMI includes smart meters and a two-way communications network between the customer and the utility • CECONY $1,285 million deployment plan Capital Expenditures Year Electric Meters Gas Meters ($millions)
Slide 12: Oil-to-Gas Conversions
Oil-to-Gas Conversions: Progress and Growth Opportunities in Multi-Family & Large Commercial Markets Estimated Market Opportunity for Oil-to-Gas Conversions by Peak Demand – MDt per Day(1) #6 Oil 115 40 #4 Oil 55 80 #2 Oil 50 310 360 Completed Conversions (January 2011 to June 2016) 20-Year Forecast
Slide 13: Con Edison Development: Net-Income Focused Growth From Renewable Investments
Con Edison Development: Net-Income Focused Growth From Renewable Investments Adjusted Earnings ($ millions) $27 $28 $18 $15 $5 $3 $1 (1) 2010 2011 2012 2013 2014 2015 YTD-16 GAAP $1 $3 $5 $(68)(2) $43(3) $28 $10(4) Earnings: (1) 2013 GAAP and adjusted earnings include a net income gain from prior pe
Slide 14: Con Edison Development: 5th Largest Owner of Solar in US
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 336 Wind 130 153 MW 20% 105 Solar 615 MW 748 768 80% 446 292 28 127 95% of capacity is under 2011
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: 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 17: Over $12 Billion in Capital Investment Over the Next Three Years
Over $12 Billion in Capital Investment Over the Next Three Years ($ 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 2010 2011 2012 20
Slide 18: 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% $0.02 60% 55% 5
Slide 19: Appendix
Appendix WG conEdison, inc.
Slide 20: Business Environment
Business Environment • Con Edison is at the forefront of the transformation of the energy landscape • Vibrant local economy with job growth in the region outpacing the nation • Job growth from Technology, Health, Education, Hospitality, Tourism and Business Services • Tourism at record levels Reside
Slide 21: Distributed Generation Adoption Trends in CECONY Service Area
Distributed Generation Adoption Trends in CECONY Service Area Total Installations Total Installed Capacity 12000 200 180 10000 160 CHP 140 8000 120 PV 6000 100 80 4000 PV 60 40 2000 CHP 20 0 0 Note: 2016 service area electric peak demand forecast is 13,650 MW Source: Consolidated Edison Company of N
Slide 22: NY PSC Staff's Formulaic Approach to Returns on Equity
NY PSC Staff’s Formulaic Approach to Returns on Equity 2/3 Discounted Cash Flow model + Rate of return on equity 1/3 Capital Asset Pricing model Discounted Cash Flow Model (2/3 weighting) • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R)2 + (1+R)3 +…… • Solving for an equ
Slide 23: NY PSC's Formulaic ROE Approach: Decisions 2006 – 2016 YTD
NY PSC’s Formulaic ROE Approach: Decisions 2006 – 2016 YTD Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 09/10 Energy East (RGE/NYSEG) 10.00% 40 months 10/06 O&R Gas 9.80% 3 years 06/11 Niagara Mohawk Electric 9.30% 2 years 08/07 Keyspan Gas 9.80% 5 years 06/11 O&R Ele
Slide 24: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) $30,000 (1) Pike (PA) 5-year CAGR (‘10-’15) RECO (NJ) 3.5% $25,000 O&R Gas (NY) O&R Electric (NY) CECONY Steam (NY) $20,000 CECONY Gas (NY) CECONY Electric (NY) $15,000 $10,000 $5,000 $- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 To
Slide 25: Composition of Rate Base
Composition of Rate Base(1) (as of June 30, 2016) CECONY ($ millions) Electric NY $17,757 Gas NY 4,156 Steam NY 1,516 CECONY Gas Total CECONY $23,429 CECONY O&R ($ millions) Steam O&R Electric NY $727 O&R CECONY O&R Gas NY 358 Electric Rockland NJ 197 Pike(2) PA 17 Total O&R $1,299 Total Rate Base $
Slide 26: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (Trailing 12 Months ending June 30, 2016) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.1% Gas 9.3% 8.2% Steam 9.3% 5.5% Overall – CECONY 9.1%(1) 8.7% CECONY Equity Ratio(2) 48.0% 48.8% O&R Electric 9.0% 10.8% Gas 9.0% 12.0% RECO 9.8% 8.1% O
Slide 27: Con Edison Development: Overview and Timeline
Con Edison Development: Overview and Timeline • CED was formed in 1997 and through acquisitions, expansions, and greenfield development built a portfolio of fossil- fueled, merchant generation assets that totaled 1,700 MW (portfolio divested in 2008) • The company now has refocused its efforts on re
Slide 28: Con Edison Development: Strengths and Strategy
Con Edison Development: Strengths and Strategy CED Strengths CED Ranks #5 in United States in PV Solar(1) • Project development 1,400 1,200 1,000 MW AC • Construction 800 600 400 • O&M 200 - • Asset management CED Renewable Investment Strategy Disciplined Growth of CED Renewables Portfolio High Low
Slide 29: Con Edison Development: Renewable Asset Summary
Con Edison Development: Renewable Asset Summary CED has built a renewables portfolio consisting of 768 MW operating projects and 336 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 30: 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 31: Con Edison Transmission: 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 32: Consolidated Edison, Inc. 1H 2016 Earnings
Consolidated Edison, Inc. 1H 2016 Earnings Earnings per Share Net Income ($ Millions) 2016 2015 2016 2015 Reported EPS and Net Income – GAAP basis $1.83 $2.01 $542 $589 Impairment of Pilesgrove solar electric production 0.02 — 5 — investment Net mark-to-market – effects of the CEBs (0.07) 0.02 (20)
Slide 33: Walk from 1H 2015 EPS to 1H 2016 EPS – Non-GAAP Basis
Walk from 1H 2015 EPS to 1H 2016 EPS – Non-GAAP Basis $2.03 (0.32) $1.78 0.02 0.02 (0.01) 0.01 0 0.05 (1) 1H 2015 CECONY O&R CED CEE CES CET Parent 1H 2016 EPS EPS 1. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and sto
Slide 34: 1H 2015 to 1H 2016 Adjusted EPS Variance Explanation
1H 2015 to 1H 2016 Adjusted EPS Variance Explanation Variance Explanation EPS CECONY Gas Net Revenues $0.02 Retention of revenues, oil-to-gas customer growth Weather (0.12) Weather impact on steam revenues (warmer than avg. winter) Higher O&M (0.10) Increased emergency response, municipal infrastruc
Slide 35: 1H 2016 vs. 1H 2015 Adjusted Earning Per Share
1H 2016 vs. 1H 2015 Adjusted Earning Per Share 6 months ending June 30, 2016 CECONY O&R CED CEE CES CET(1) Parent Total Reported EPS – GAAP basis $1.59 $0.10 $0.03 $0.01 $0.10 $- $- $1.83 Impairment of Pilesgrove solar electric production investment - - 0.02 - - - - 0.02 Mark-to-market losses/(gains
Slide 36: 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 $3.72 $4.07 $3.88 Impairment of Assets Held for Sale - - - - 0.01 0.01 Impairment of Pilesgrove Solar Electric Production Investment - - - - - 0.02 G
Slide 37: Con Edison 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 $3.45 2010 2011 2012 2013 2014 2015 1. Please refer to appendix for GAAP reconciliation. 37
Slide 38: CECONY Departmental and Other Expenses
CECONY Departmental and Other Expenses June 30, 2016 ($ millions) $1,536 $1,476 $1,489 $1,498(E) $1,464 $1,422 $1,416 $1,384 $1,369 $1,296 $1,312 $1,313 $1,317(E) $1,265 $440 $488 $420 $233 $498 $316 $770 $522 $246(A) $517 $502 $517 $533 $274 $554 $491 $216(A) $728(A) $478 $519 $485 $174 $467 $364 $
Slide 39: 2016 Financing Plan and Activity
2016 Financing Plan and Activity • Capital expenditures of $5.39 billion (CECONY: $2.87 billion, CEBs: $1.24 billion, CET: $1.09 billion, O&R: $0.19 billion) • Issue between $1.0 billion and $1.8 billion of long-term debt, most of which would be at the utilities • Activity so far: • CEB issued $218
Slide 40: Capital Structure – June 30, 2016
Capital Structure – June 30, 2016 ($ millions) Con Edison, Inc. A3 / A- / BBB+ Debt $14,493 51% Equity 13,958 49 Total $28,451 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,983 51% Debt $667 51% Debt $1,843 51% Equity 11,566 49 Equity 633 4
Slide 41: Liquidity Adequacy
Liquidity Adequacy $2.25 billion CEI Consolidated Revolving Credit Facility 41