Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Q3 2020 Earnings Presentation
52 slides from Consolidated Edison's earnings presentation, Nov 5, 2020
Slide 1: 3rd Quarter 2020 Earnings Release Presentation
3rd Quarter 2020 Earnings Release Presentation November 5, 2020
Slide 2: Available Information and Forward-Looking Statements
Available Information On November 5, 2020, Consolidated Edison, Inc. issued a press release reporting its third quarter 2020 earnings and filed with the Securities and Exchange Commission the company’s third quarter 2020 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Table of Contents
Table of Contents Page Organizational Structure and Plan 4–5 Dividend and Earnings Announcements 6 3Q 2020 Earnings 7 – 10 Environmental, Social and Corporate Governance 11 – 13 The Coronavirus Disease (COVID-19) Pandemic 14 – 20 3Q 2020 Developments 21 – 24 YTD 2020 Earnings 25 – 28 Five-Year Recon
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $26.0 billion (b) Ratings : Baa2 / BBB+ / BBB+ Outlook(b): Stable / Stable / Negative Utilities Transmission Clean Energy Con Edison Con Edison Consolidated Transmission, Orange and Clean Energy Edison Inc. Rockland Businesses, Inc. Company of New York, Inc. U
Slide 5: The Con Edison Plan
The Con Edison Plan Customer Focused Strategic Value Oriented Provide safe and Strengthen core utility Provide steady, reliable service delivery business predictable earnings Enhance the Pursue additional Maintain balance customer experience regulated growth sheet opportunities to add stability valu
Slide 6: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On October 22, 2020, the company issued a press release reporting that the company had declared a quarterly dividend of 76.5 cents a share on its common stock. • On November 5, 2020, the company issued a press release forecasting its adjusted earnings per share
Slide 7: 3Q 2020 Earnings
3Q 2020 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2020 2019 2020 2019 Reported Net Income for Common Stock and EPS – GAAP basis $1.47 $1.42 $493 $473 HLBV effects of the Clean Energy Businesses (pre-tax) 0.03 0.10 9 30 Income taxes (a) (0.01) (0.03) (2) (7) HLBV effects
Slide 8: Walk from 3Q 2019 EPS to 3Q 2020 EPS
Walk from 3Q 2019 EPS to 3Q 2020 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $1.54 $0.01 $0.10 $1.47 $1.48 $1.42 $0.01 $(0.04) $(0.01) $(0.02) $(0.02) $(0.04) $0 $0 (a) 3Q 2019 CECONY O&R CEBs CET Other(a) 3Q 2020 3Q 2019 CECONY O&R CEBs CET Other 3Q 2020 Reported Reporte
Slide 9: 3Q 2020 vs. 3Q 2019 EPS Variances
3Q 2020 vs. 3Q 2019 EPS Variances – Three Months Ended Variation CECONY(a) Changes in rate plans $ (0.02) Primarily reflects lower non-weather related steam net revenues due to lower usage by customers. Operations and maintenance expenses 0.26 Reflects lower costs for pension and other postretiremen
Slide 10: 3Q 2020 vs. 3Q 2019 EPS Reconciliation by Company
3Q 2020 vs. 3Q 2019 EPS Reconciliation by Company Three Months Ended September 30, 2020 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $1.21 $0.08 $0.17 $0.04 $(0.03) $1.47 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.03 — — 0.03 Income taxes (a) — — (0.01) — — (0.01) HL
Slide 11: Con Edison ESG Resources
Con Edison Environmental, Social & Governance (ESG) Resources • ESG Presentation – Con Edison's Environmental Social & Governance presentation on August 26, 2020 • Sustainability Report – Con Edison's 2019 Sustainability report • Our ESG reporting standards: • Edison Electric Institute / American Ga
Slide 12: Con Edison ESG Resources (cont'd)
Con Edison Environmental, Social & Governance Resources (cont'd) • Con Edison’s Clean Energy Vision looking toward a clean energy future • Climate Change Vulnerability Study – December 2019 • The 2019 Diversity and Inclusion Report examines Con Edison's diverse and inclusive culture • 2020 Proxy Sta
Slide 13: Con Edison Sustainability Rankings and Ratings for 2019-2020
Con Edison Sustainability Rankings and Ratings for 2019-2020 • AA out of AAA ESG rating by MSCI • 3rd among utilities in Sustainability Index by J.D. Power • 2nd in Business Customer Satisfaction among large utilities in the East by J.D. Power • 2nd among utilities by Diversity Inc. • 4th among util
Slide 14: Financial Impacts of COVID-19 for the Nine Months Ended September 30, 2020
Financial Impacts of COVID-19 for the Nine Months Ended September 30, 2020 Impact on Income before income tax expense(a) Balance Sheet Impact ($ in millions) ($ in millions) Employee retention tax credit CECONY under the CARES Act $6.4 Foregone late payment (43.5) charges/other charges $319.2 $181.1
Slide 15: Maintaining Focus on Our Core Principles During the Pandemic
Maintaining Focus on Our Core Principles During the Pandemic • Safety and reliable service remain top priorities for Con Edison – Mobilized a pandemic planning team in January and an incident command system structure on March 16th – More than 8,000 of our employees are working from home or remotely
Slide 16: Customer Breakdown of Electric Deliveries and Revenues
Customer Breakdown of Electric Deliveries and Revenues 16
Slide 17: Estimated Non-Weather Impact on Electric Delivery Volume and Revenues
Estimated Non-Weather Impact on Electric Delivery Volume and Revenues for March 16 to October 31, 2020 Impact on Electric Delivery Volume(a) Impact on Electric Delivery Revenues(b) Millions of kWh delivered $ in thousands CECONY CECONY 11% 8% 394 49,252 145 386 46,370 (196) 16,079 (568) (464) (11,10
Slide 18: Liquidity Update
Liquidity Update • Con Edison’s $2,250 million credit facility supports commercial paper borrowing with $1,241 million of remaining capacity available as of September 30, 2020.Additionally Con Edison had $153 million of cash and temporary cash investments as of September 30, 2020. • Financing plan f
Slide 19: Transparent Rate-Making Process
Transparent Rate-Making Process • About 87% of CEI revenues and 94% of Utilities revenues are subject to a regulatory recovery mechanism, e.g. revenue decoupling mechanisms • Rate plans provide for a total of $54 million for bad debt expense at CECONY and O&R for 2020 • Currently we have no open rat
Slide 20: Supporting the Community During the Pandemic
Supporting the Community During the Pandemic • Deployed 1 MW generator to support the field hospital setup located at the Brooklyn Cruise Terminal in Red Hook • Expanded grid service or provided engineering services for emergency field hospitals: – At Westchester County Center to support a 100-bed f
Slide 21: 3Q 2020 Developments
3Q 2020 Developments(a) CECONY & O&R • In March 2020, New York State Governor Cuomo declared a State Disaster Emergency for the State of New York, due to the COVID-19 pandemic and signed the "New York State on PAUSE" executive order that closed all non-essential businesses statewide. New York State
Slide 22: 3Q 2020 Developments (cont'd)
3Q 2020 Developments (cont'd)(a) CECONY & O&R • The Utilities’ New York rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. For the nine month
Slide 23: 3Q 2020 Developments (cont'd)
3Q 2020 Developments (cont'd)(a) CECONY & O&R • In August 2020, Tropical Storm Isaias caused significant damage to the Utilities’ electric distribution systems and interrupted service to approximately 330,000 CECONY electric customers and approximately 200,000 O&R electric customers. As of September
Slide 24: 3Q 2020 Developments (cont'd)
3Q 2020 Developments (cont'd)(a) CECONY & O&R • In October 2020, the NYSPSC issued an order instituting a proceeding to consider requiring New York’s large, investor-owned utilities, including CECONY and O&R, to annually disclose what risks climate change poses to their companies, investors and cust
Slide 25: YTD 2020 Earnings
YTD 2020 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2020 2019 2020 2019 Reported Net Income for Common Stock and EPS – GAAP basis $3.17 $3.20 $1,058 $1,048 HLBV effects of the Clean Energy Businesses (pre-tax) 0.11 0.25 38 79 Income taxes (a) (0.03) (0.07) (9) (19) HLBV
Slide 26: Walk from YTD 2019 EPS to YTD 2020 EPS
Walk from YTD 2019 EPS to YTD 2020 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $3.51 $0.02 $0.04 $3.43 $3.20 $0.09 $0.02 $3.17 $(0.11) $(0.01) $(0.02) $(0.02) $(0.11) $(0.01) YTD 2019 CECONY O&R CEBs CET Other (a) YTD 2020 YTD 2019 CECONY O&R CEBs CET Other (a) YTD 2020 R
Slide 27: YTD 2020 vs. YTD 2019 EPS Variances
YTD 2020 vs. YTD 2019 EPS Variances – Nine Months Ended Variation CECONY(a) Changes in rate plans $ 0.07 Primarily reflects higher gas net base revenues due to gas base rates increase in January 2020 under the company's gas rate plan. Weather impact on steam revenues (0.06) Reflects the impact of wa
Slide 28: YTD 2020 vs. YTD 2019 EPS Reconciliation by Company
YTD 2020 vs. YTD 2019 EPS Reconciliation by Company Nine months ended September 30, 2020 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $2.88 $0.17 $0.03 $0.13 $(0.04) $3.17 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.11 — — 0.11 Income taxes (a) — — (0.03) — — (0.03) H
Slide 29: Five-Year Reconciliation of Reported EPS to Adjusted EPS
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 12 Months Ending December 31, 2016 2017 2018(a) 2019(a) 2020(a)(b) Reported EPS – GAAP basis $4.15 $4.97 $4.43 $4.09 $4.05 Income tax effect of the TCJA — (0.85) 0.14 — — HLBV effects of the Clean Energy Businesses (pre-tax)
Slide 30: Utilities' Rate Adjustments for TCJA
Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)(a) New York State Public Service Commission Order in Case 17-M-0815 – Proceeding on Motion of the Commission on Changes in Law that May Affect Rates (August 9, 2018) CECONY Electric • Pursuant to the rate plan approved on January 1
Slide 31: Utilities' Rate Adjustments for TCJA (cont'd)
Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)(a) O&R Electric and Gas • O&R, pursuant to the November 2018 joint proposal (Case 18-E-0067; 18-G-0068), is reflecting its TCJA net benefits as follows: – annual ongoing savings of $18 million – pass back of 2018 savings (
Slide 32: Tax Update on the CARES Act
Tax Update on the CARES Act Coronavirus Aid, Relief, and Economic Security (CARES) Act: • Enacted on March 27, 2020 in response to the COVID-19 pandemic • Contains $2.3 trillion in economic relief to eligible businesses and individuals impacted by the COVID-19 outbreak Opportunities Applicable to Co
Slide 33: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses(a) ($ in millions) Departmental Other Expenses(b) $1,597 $1,594 $1,612 $1,572 $1,508 $1,521 $1,417 $344 Other $1,096 $1,041 $550 $308 $954 $958 $273 $250 $277 Regulatory $694 Fees and Assessments (c) $469 $464 $275 $476 $444 $219 YTD Healthcare/ $159 $350 $
Slide 34: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of September 30, 2020) CECONY ($ in millions) Electric NY $22,077 Gas NY 6,969 Steam NY 1,487 Total CECONY $30,533 O&R ($ in millions) O&R Electric NY $889 O&R Gas NY 483 RECO NJ 262 Total O&R $1,634 CECONY CECONY Gas CECONY O&R RECO Electric Steam Total Ra
Slide 35: Average Rate Base Balances
Average Rate Base Balances ($ in millions) A GR 5.5% 3-year C $35,844 $33,925 $1,796 $31,972 $1,741 $30,559 $34,048 $1,661 $32,184 $28,515 $1,551 $30,311 $26,014 $1,458 $29,008 $24,522 $25,014 $1,376 $27,057 O&R $1,357 $1,304 $24,638 $23,165 $23,710 CECONY Actual Forecast (a) (a) 2015 2016 2017 2018
Slide 36: Regulated Utilities' Rates of Return and Equity Ratios
Regulated Utilities' Rates of Return and Equity Ratios (12 Months ended September 30, 2020) Regulated Basis Allowed Actual CECONY Electric 8.9% 8.8% Gas 8.9 8.4 Steam 9.3 5.6 (a) Overall – CECONY 8.9 8.6 CECONY Equity Ratio 48.0% 46.8% O&R Electric 9.0% 9.2% Gas 9.0 9.0 RECO 9.5 5.8 (a) Overall – O&
Slide 37: Capital Expenditures
Capital Expenditures ($ in millions) (a) $5,235 $5,249 $248 $1,078 $4,144 (b) $11 $1,791 $3,787 $3,792 $3,606 $3,676 $600 $24 $76 $3,418 $66 $205 $250 $1,235 $400 $447 $248 $823 $3,533 $3,513 $3,210 $3,223 $3,316 $3,093 $2,922 $2,595 (c) 2015 2016 2017 2018 2019 2020E(c) 2021E 2022E (c) Actual Forec
Slide 38: Utilities' Capital Expenditures
Utilities' Capital Expenditures ($ in millions) $3,533 $3,513 $3,223 $3,316 $3,210 $3,093 Steam $2,922 $2,595 Gas Electric Depreciation (a) (a) (a) 2015 2016 2017 2018 2019 2020E 2021E 2022E (b) Actual Forecast Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Dep
Slide 39: Financing Plan for 2020 – 2022
Financing Plan for 2020 – 2022 Financing Plan • Issue between $1,500 million and $2,000 million of long-term debt, primarily at the Utilities, in 2020 and approximately $1,800 million in aggregate of long-term debt at the Utilities during 2021 and 2022, in addition to the issuance of long-term debt
Slide 40: Capital Structure – September 30, 2020
Capital Structure – September 30, 2020 ($ in millions) Consolidated Edison, Inc. Baa2 / BBB+ / BBB+ Debt $ 21,171 53% Equity 18,711 47 Total $ 39,882 100% CECONY O&R Parent and Other Baa1 / A- / A- Baa1 / A- / A- Debt $ 16,197 53% Debt $ 893 53% Debt $ 4,081 55% Equity 14,575 47 Equity 799 47 Equity
Slide 41: Commercial Paper Borrowings
Commercial Paper Borrowings ($ in millions) 41
Slide 42: Utilities' Sales and Revenues – Electric Third Quarter
Utilities' Sales and Revenues – Electric Third Quarter ($ in millions) Electric – 3rd Quarter Millions of Kilowatt-hours Revenues in Millions 2020 2019 2020 2019 Con Edison of New York Residential and Religious 4,001 3,687 $995 $923 Commercial and Industrial 2,627 2,831 556 557 Retail choice custome
Slide 43: Utilities' Sales and Revenues – Electric Year-to-Date
Utilities' Sales and Revenues – Electric Year-to-Date ($ in millions) Electric – Year-to-Date Millions of Kilowatt-hours Revenues in Millions 2020 2019 2020 2019 Con Edison of New York Residential and Religious 8,638 8,203 $2,220 $2,060 Commercial and Industrial 7,145 7,574 1,407 1,405 Retail choice
Slide 44: Utilities' Sales and Revenues – Gas Third Quarter
Utilities' Sales and Revenues – Gas Third Quarter ($ in millions) Gas – 3rd Quarter Thousands of Dekatherms Revenues in Millions 2020 2019 2020 2019 Con Edison of New York Residential 4,314 4,032 $117 $103 General 3,504 4,097 35 45 Firm Transportation 8,668 9,071 70 71 Total Firm Sales and Transport
Slide 45: Utilities' Sales and Revenues – Gas Year-to-Date
Utilities' Sales and Revenues – Gas Year-to-Date ($ in millions) Gas – Year-to-Date Thousands of Dekatherms Revenues in Millions 2020 2019 2020 2019 Con Edison of New York Residential 37,161 41,035 $691 $724 General 22,551 25,018 237 299 Firm Transportation 58,697 60,590 487 444 Total Firm Sales and
Slide 46: Utilities' Sales and Revenues – Steam Third Quarter and Year-to-Date
Utilities' Sales and Revenues – Steam Third Quarter and Year-to-Date ($ in millions) Steam – 3rd Quarter Millions of Pounds Revenues in Millions 2020 2019 2020 2019 Con Edison of New York General 7 6 $1 $2 Apartment House 617 722 12 13 Annual Power 2,023 2,443 33 36 Total Sales (a) 2,647 3,171 $46 $
Slide 47: Income Statement – 2020 Third Quarter
Income Statement – 2020 Third Quarter ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $2,872 $238 $222 $1 $— $3,333 Depreciation and amortization 401 23 58 — — 482 Other operating expenses 1,749 166 72 3 1 1,991 Total operating expenses 2,150 189 130 3 1 2,473 Operating i
Slide 48: Income Statement – 2020 Year-to-Date
Income Statement – 2020 Year-to-Date ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $8,072 $647 $566 $3 $(2) $9,286 Depreciation and amortization 1,187 67 173 1 — 1,428 Other operating expenses 5,031 466 205 8 1 5,711 Total operating expenses 6,218 533 378 9 1 7,139 Oper
Slide 49: Statement of Cash Flows – 2020 Year-to-Date
Statement of Cash Flows – 2020 Year-to-Date ($ in millions) CECONY O&R CEBs CET Other(a) Total Net cash flows from/(used in) operating activities $959 $82 $810 $(8) $(475) $1,368 Net cash flows from/(used in) investing activities (2,412) (150) (438) 16 — (2,984) Net cash flows from/(used in) financi
Slide 50: Balance Sheet – As of September 30, 2020
Balance Sheet – As of September 30, 2020 ($ in millions) CECONY O&R CEBs CET Other(a) Total ASSETS Current assets $3,447 $255 $460 $22 $20 $4,204 Investments 505 26 — 1,599 (6) 2,124 Net plant 38,716 2,410 4,421 17 — 45,564 Other noncurrent assets 5,000 403 1,885 14 401 7,703 Total assets $47,668 $3
Slide 51: Rating Agency Credit Metrics
Rating Agency Credit Metrics Rating Agency Rating Agency Rating Agency Downgrade Rating Agency Rating / Outlook(a) Key Metric(b) Forecast(c) Threshold Moody’s Investors CEI: Baa2 / Stable CFO pre-WC(e) / Debt 15% <13% Services CECONY: Baa1 / Stable 14% - 16% <14% O&R: Baa1 / Negative
Slide 52: List of Notes to 2020 Third Quarter Form 10-Q Financial Statements
List of Notes to 2020 Third Quarter Form 10-Q Financial Statements Page A – Summary of Significant Accounting Policies and Other Matters 20 - 24 B – Regulatory Matters 24 - 29 C – Capitalization 30 D – Short-Term Borrowing 30 - 31 E – Pension Benefits 31 F – Other Postretirement Benefits 32 G – Envi