Edison International · NYSE:EIX
Edison International — Corporate Update (February 2017)
47 slides from Edison International's corporate update, Feb 22, 2017
Slide 1: Business Update February 2017
Business Update February 2017 February 22, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 statem
Slide 3: Table of Contents
Table of Contents Page New (N) or Updated (U) from November 2016 Business Update EIX Shareholder Value 3 U SCE Highlights, SCE Long‐Term Growth Drivers, Regulatory Model 4‐6 N Capital Expenditures and Rate Base History and Forecast 7‐9 U 2018 GRC Overview 10‐11 CPUC Cost of Capital 12 U Key Regulato
Slide 4: EIX Strategy Should Produce Superior Value
EIX Strategy Should Produce Superior Value Sustained Earnings and Dividend Positioned for Growth Led by SCE Transformative Change SCE Rate Base Growth Drives Earnings Wires-Focused SCE Strategy • 8.6% average annual rate base • Infrastructure replacement –safety and growth through 2020 at request le
Slide 5: SCE Highlights
SCE Highlights 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 investment • 1.4 million power poles • 725,000 transformers • 103,000 miles of distribution and transmi
Slide 6: SCE Long-Term Growth Drivers
SCE Long-Term Growth Drivers Description Timeframe/Regulatory Process Sustained level of infrastructure • Ongoing - current and future GRCs Infrastructure investment required until equilibrium Reliability replacement rates achieved and then maintained Accelerate automation, communication, • 2017 - G
Slide 7: SCE Decoupled Regulatory Model
SCE Decoupled Regulatory Model Regulatory Model Key Benefits Decoupling of Regulated • SCE earnings not affected by variability of retail electricity Revenues from Sales sales • Differences between amounts collected and authorized levels either billed or refunded • Promotes energy conservation • Sta
Slide 8: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions) 2011 – 2016 CAGR Rate Base 7% Core Earnings 5% $25.9 $24.6 $23.3 $21.0 $21.1 $18.8 2011 2012 2013 2014 2015 2016 Core EPS $3.33 $4.10 $3.88 $4.68 $4.20 $4.22 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations an
Slide 9: SCE Capital Expenditure Forecast – Request Level
SCE Capital Expenditure Forecast – Request Level ($ billions) $19.3 Billion Capital Program Traditional Capital Spending: for 2017-2020 Distribution Transmission Generation Grid Modernization Capital Spending: • Capital expenditure forecast incorporates GRC, FERC and Grid Modernization non-GRC CPUC
Slide 10: SCE Rate Base Forecast – Request Level
SCE Rate Base Forecast – Request Level ($ billions) Traditional Grid Modernization 4-year CAGR of 8.6% $34.6 $32.0 CPUC $29.3 • Rate base based on request levels from 2018 GRC and 2018 positive true-up from $26.2 $24.9 authorized to forecast 2017 rate base FERC • FERC rate base is approximately 19%
Slide 11: 2018 SCE General Rate Case (GRC)
2018 SCE General Rate Case (GRC) • 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses 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 12: 2018 SCE GRC (cont.)
2018 SCE GRC (cont.) Items Carried Over from 2015 GRC New Items from 2018 GRC • Requests continuation of Tax Accounting • Capital expenditures of $2.1 billion for grid Memorandum Account (TAMA) adjusting modernization capital to support improved revenues annually for over and safety and reliability
Slide 13: CPUC Cost of Capital
CPUC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/16 – 02/01/2017) = 4.60% 100 basis point +/- Deadband 6 Rate (%) 5 4 Starting Value – 5.00% ROE fixed at ROE fixed at 10.45%, for 2017 10.30%, for 2018 independent of independent of trigger mech
Slide 14: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case Set CPUC base revenue requirement, capital Ongoing workshops and data requests; awaiting (A. 16‐09‐001) expenditures and rate base for 2018‐2020 schedule to be set by ALJ; intervenor testimon
Slide 15: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Continued focus on safety and reliability with 2017 – 2020 Capital Spending Forecast infrastructure replacement representing 44% of total for Distribution1 – Request Level distribution capital spend, but not yet reaching $14.9 Billion equilib
Slide 16: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Project Name Total Cost4 Remaining Investment In-Service Date West of Devers1,3 $1.1 billion $1.02 billion 2021 Mesa Substation1 $608 million $585 million 2020-2021 Alberhill System2 $397 million $361 million 2021 Riverside Trans
Slide 17: Energy Storage
Energy Storage Given counting rules, SCE has already met the aggregate CPUC Energy Storage Program Requirements: 2016 targets • 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
Slide 18: SCE Transportation Electrification Proposals
SCE Transportation Electrification Proposals • On January 20, 2017, SCE filed with the CPUC a wide-ranging plan to increase electrification of cars, buses, medium- and heavy-duty trucks and industrial vehicles and equipment SCE proposed 6 near-term, priority-review projects and 2 longer-term, stan
Slide 19: Transportation Electrification Overview
Transportation Electrification Overview • California’s goals to reduce total GHG emissions by 40 percent from 1990 levels by 2030 is 42% from current levels Recent Governor Order set a 2050 target of 80% below 1990 levels 2014 California GHG Emissions • Many of California's policies to date focuse
Slide 20: 2017 EIX Earnings Per Share Guidance
2017 EIX Earnings Per Share Guidance 2017 Earnings Per Share Guidance as of February 21, 2017 Key Assumptions Low Mid High • SCE authorized rate base $26.2 billion SCE $4.39 • Energy efficiency earnings $0.03 per EIX Parent & Other (0.25) share EIX Basic EPS $4.04 $4.14 $4.24 • Authorized CPUC capit
Slide 21: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and • Customer service reliability (SAIDI, SAIFI, MAIFI) • Cost efficiency • J.D. Power customer Optimize satisfaction • Capital productiv
Slide 22: Responding to Industry Change
Responding to Industry Change Long-Term Industry Trends Strategy • Public policy and large commercial SCE Strategy customers prioritizing sustainability • Invest in, build, and operate the next objectives generation electric power grid • Innovation facilitating conservation and • Operational and ser
Slide 23: Edison Energy Focus: Commercial & Industrial
Edison Energy Focus: Commercial & Industrial Changing Customer Needs The Opportunity: Trusted Advisor and Solution Integrator • Create portfolio energy services that help simplify and optimize energy needs for large commercial & industrial customers: Help customers capture the maximum value of ene
Slide 24: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Thirteen Years of Dividend Growth $2.17 $1.92 $1.67 $1.42 $1.30 $1.35 $1.24 $1.26 $1.28 $1.22 $1.16 $1.08 $1.00 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Target dividend growth at a higher than industry average growth rate within its t
Slide 25: Appendix
Appendix February 22, 2017 24
Slide 26: EIX and SCE Tax Reform
EIX and SCE Tax Reform Key Reform Impact on Comments Considerations Customer / Shareholder • Permanent increase in customer rates (top concern) No interest deductibility Negative Negative • Costs passed through but lowers tax shield Negative at EIX • Lower customer rates Lower tax rate (15%-20%) Pos
Slide 27: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $3.9 $4.0 $3.9 $3.5 $3.5 2012 2013 2014 2015 2016 February 22, 2017 26
Slide 28: Capital Expenditure/Rate Base Detailed Forecast
Capital Expenditure/Rate Base Detailed Forecast ($ in billions) Detailed Capital Expenditures at Request Level – 2016-2020 2016 2017 2018 2019 2020 Total (Actual) Core Distribution1,2 $2.9 $3.0 $3.2 $3.2 $3.1 $15.4 Mobile Home Pilot Program - 0.1 - - - 0.1 Grid Modernization - 0.2 0.6 0.8 0.7 2.3 Su
Slide 29: Distribution Power Grid of the Future
Distribution Power Grid of the Future Current State Future State One-Way Electricity Flow Variable, Two-Way Electricity Flow • System designed to distribute • Distribution system at the center of electricity from large central the power grid generating plants • System designed to manage • Very few d
Slide 30: Grid Modernization Highlights
Grid Modernization Highlights Devices that provide Devices that provide stable voltage and power quality more flexibility during outage events Future circuit designs integrate State of the art Distributed operating tools Energy Resources for utility and increase operators and flexibility engineers S
Slide 31: SCE Grid Modernization – Request Level
SCE Grid Modernization – Request Level ($ billions) $2.3 Billion Capital Request for 2017-20201,2 $0.75 $0.71 Building next generation electric grid requires accelerating traditional Transmission and $0.64 Distribution / Information Technology programs and investing in new capabilities • Increased c
Slide 32: Distributed Energy Resources (DER) Proceedings
Distributed Energy Resources (DER) Proceedings Scope elements Distribution • Integration of DERs in planning and • Integration Hosting Capacity • Locational Net Benefits operations Resource Plan • Identification of optimal locations and • Data Access • Planning alignment value of DERs (Near term • P
Slide 33: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2016 2015 2014 2013 2012 Residential 29,141 29,959 30,115 29,889 30,563 Commercial 41,565 42,207 42,127 40,649 40,541 Industrial 7,056 7,589 8,417 8,472 8,504 Public authorities 4,645 4,774 4,990 5,012 5,196 Agricultural and other 1,77
Slide 34: California’s Energy Policy
California’s Energy Policy • On October 7, 2015, Governor Brown signed SB 350, which 2016 Preliminary Renewable Resources: requires that 50 percent of energy sales to customers come 28.3% of SCE’s portfolio from renewable power and a doubling of energy efficiency in existing buildings for California
Slide 35: SCE 2017 Bundled Revenue Requirement
SCE 2017 Bundled Revenue Requirement 2017 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 5,130 7.1 Fuel & Purchased Power (45%) Distribution – poles, wires, substations, service centers; Edison 4,386 6.1 SmartConnect® Distribution Generation – owned ge
Slide 36: System Average Rate Historical Growth
System Average Rate Historical Growth ¢/kWh Comparative System Average Rates CAGR % Delta 20‐yr 10‐yr 5‐yr EIX – 15.8¢ -- Rates reduced from implementation of ('97‐’17) ('07‐'17) ('12‐'17) 1) the SONGS Settlement, including NEIL SCE System Average Rate PG&E – 18.8¢ 19% 2.4% 0.7% 0.5% insurance benef
Slide 37: Residential Rate Design OIR Decision
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 (TOU) rates • July 2015 CPUC Decision D.15-07-001 includes: Transition to 2 tiered rates by 2019 “Super User Elect
Slide 38: SCE Net Metering Rate Structure
SCE Net Metering Rate Structure NEM Rate Developments: Solar Subsidies • NEM allows residential customers to receive full-retail rate (Illustrative) credit for exported generation and use these credits to offset energy purchased from the electric power company, leading 30 to a cost-shift to non-NEM
Slide 39: Residential Solar Installations in SCE Territory
Residential Solar Installations in SCE Territory Monthly Installations and MW Installed Key Dates 7000 60 July 1, 2017 6000 • NEM customers will be 50 required to take service under mandatory Time-of-Use rate Number of Residential Installations 5000 40 • SCE is not expected to hit 5% NEM cap (2,240M
Slide 40: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2015-16 Average Residential Rates (¢/kWh) Key KeyFactors Factors 16.2 ¢ [1] • SCE’s residential rates are above national 13.0 ¢ average due, in part, to a cleaner fuel mix – 24.3% cost for low carbon energy are higher than Higher high carbon sources • Average monthly r
Slide 41: Fourth Quarter Earnings Summary
Fourth Quarter Earnings Summary Q4 Q4 Variance Key SCE EPS Drivers 2016 2015 Basic Earnings Per Share (EPS)1,2 Revenue6,7 $0.16 - CPUC – Escalation 0.09 SCE $1.04 $(0.25) $1.29 - CPUC – GRC return on pole loading rate base (0.03) EIX Parent & Other (0.02) 0.03 (0.05) - CPUC – Other 0.09 Discontinued
Slide 42: Full Year 2016 Earnings Summary
Full Year 2016 Earnings Summary 2016 2015 Variance Key SCE EPS Drivers Revenue5,6 $0.41 Basic Earnings Per Share (EPS)1 - CPUC – Escalation 0.35 SCE $4.22 $3.06 $1.16 - CPUC – GRC return on pole loading rate base 0.05 EIX Parent & Other (0.23) (0.04) (0.19) - CPUC – Other (0.06) Discontinued Operati
Slide 43: SCE Results of Operations
SCE Results of Operations ($ millions) • Earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specific project or program costs, subject to reasonable
Slide 44: 2016 Retroactively Adjusted EPS by Quarter
2016 Retroactively Adjusted EPS by Quarter 20161 Q4 Q3 Q2 Q1 Earnings (loss) per share attributable to Edison International Continuing Operations SCE $4.22 $1.01 $1.34 $0.98 $0.90 Edison International Parent & Other (0.23) (0.04) (0.05) (0.11) (0.04) Discontinued Operations 0.03 0.04 (0.01) Edis
Slide 45: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Earnings Attributable to Edison International Q4 Q4 2016 2015 2016 2015 SCE $339 $(80) $1,376 $998 EIX Parent & Other (7) 9 (77) (13) Discontinued Operations 13 (8) 12 35 Basic Earnings $345 $(79)
Slide 46: SCE Core EPS Non-GAAP Reconciliations
SCE Core EPS Non-GAAP Reconciliations Reconciliation of SCE Basic Earnings Per Share to SCE Core Earnings Per Share Earnings Per Share Attributable to SCE 2011 2012 2013 2014 2015 2016 CAGR Basic EPS $3.33 $4.81 $2.76 $4.46 $3.06 $4.22 5% Non-Core Items Tax settlement — — — — — — Health care legisla
Slide 47: Use of Non-GAAP Financial Measures
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 are also used when com
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