Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — EEI Financial Conference 2018
56 slides from Consolidated Edison's conference presentation, November 2018
Slide 1: EEI Financial Conference
EEI Financial Conference November 11-13, 2018
Slide 2: Available Information; Forward-Looking Statements
Available Information On November 1, 2018, Consolidated Edison, Inc. issued a press release reporting its third quarter 2018 earnings and filed with the Securities and Exchange Commission the company’s third quarter 2018 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Organizational Structure
Organizational Structure Market Cap(a): $24.0 billion Ratings(b): Baa1 / BBB+ / BBB+ Outlook(b): Stable / Stable / Stable Utilities Transmission Clean Energy Con Edison Con Edison Consolidated Clean Energy Orange and Transmission, Edison Businesses, Rockland Inc. Company of Inc. New York, Inc. Utili
Slide 4: Complementary Business Mix with Utilities as Core
Complementary Business Mix with Utilities as Core at the Core 2017 GAAP EPS Contribution 2017 Adjusted EPS Contribution (Non-GAAP)* Regulated Utilities 76% 92% Clean Energy 21% 5% Transmission 3% 3% *Represents Adjusted Earnings per Share. Please see Appendix for reconciliation to GAAP. 4
Slide 5: Opportunities for Growth Across Our Businesses
Opportunities for Growth Across Our Businesses 2018 – 2020 Forecasted Capital Investment(a) $9.5 billion $2.6 billion $1.5 billion(b) $1.1 billion $0.4 billion Regulated Utilities Clean Energy Regulated Businesses Transmission a. 2018E updated as of September 30, 2018. 2019E and 2020E from 2017 Form
Slide 6: The Con Edison Plan
The Con Edison Plan Customer Focused Strategic Value Oriented Provide safe and Strengthen core Provide steady, reliable service utility delivery predictable business earnings Enhance the Pursue additional Maintain customer regulated growth balance sheet experience opportunities to add stability valu
Slide 7: Safety is our #1 Priority
Safety is our #1 Priority • Reduced employee injuries by 60% since 2009 • Achieved best employee safety record in Company history in 2017 • Our electric system and gas distribution systems are surveyed 13 times a year, exceeding industry standards of once per year • In conjunction with ULC Robotics,
Slide 8: Reliability is What Our Customers Demand
Reliability is What Our Customers Demand 99.996% CECONY provides the best electric system reliability in the U.S. Link to Con Edison Sustainability Report: https://www.conedison.com/ehs/2016-sustainability-report/safety-and-environment/public-safety/ 8
Slide 9: Accelerating Gas Main Replacement and Leak Repair
Accelerating Gas Main Replacement and Leak Repair These initiatives will improve safety and are beneficial for the environment by reducing methane emissions • We are accelerating CECONY’s gas main replacement targets from 85 miles in 2018 to 100 miles by 2021 • We are also helping curb emissions by
Slide 10: Orange & Rockland's Efforts to Curb Emissions
Orange & Rockland’s Efforts to Curb Emissions • In 2018, O&R completed all cast iron pipe replacement and retired its low-pressure gas system • Over the course of the past 20 years, the O&R team has replaced more than 370 miles of gas distribution pipe • O&R tracks workable and total gas leak backlo
Slide 11: Smart Meter Initiative: Building an Advanced, Smarter Grid
Smart Meter Initiative: Building an Advanced, Smarter Grid • 5.4 million smart meters to be installed by 2022 • $1.4 billion investment • Expected to improve operations and reduce expenses • Empowers customers to manage their bills and energy usage in new ways Utilities' Approved Annual AMI Capital
Slide 12: Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves
Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves • Reforming the Energy Vision (REV) was introduced in 2014 • REV is transforming New York State’s energy policy and initiatives to place energy efficiency and clean, locally-produced power at the core of the State’s energy
Slide 13: Emphasis on Energy Efficiency and Demand Response
Emphasis on Energy Efficiency and Demand Response Technology is providing customers with new ways to reduce energy use 1.6 million MWh of cumulative utility customer energy savings since 2009 13
Slide 14: Non-wires Solutions Expand our Toolkit to Solve System Needs
Non-wires Solutions Expand our Toolkit to Solve System Needs Non-wires solutions have the potential to reduce customers’ electric bills, improve reliability, defer capital infrastructure spending, and help advance clean energy goals of New York State Customer Perspective Shareholder Perspective • 70
Slide 15: Smart Solutions for Natural Gas Customers Proposals for a Cleaner New York
Smart Solutions for Natural Gas Customers Proposals for a Cleaner New York October 2018 filing with NYSPSC seeks $305 million in funding through 2025 to offset 84,500 dekatherms of peak-day gas usage* (avoiding 5 million tons of CO2 over life of program) 1. Enhanced Gas Energy Efficiency – Incent cu
Slide 16: Average Rate Base Balances
Average Rate Base Balances ($ in millions) $30,991 $29,093 $27,725 $26,014 $24,522 $25,014 $23,795 $22,311 O&R CECONY Actual Forecast(a) 2013 2014 2015 2016 2017 2018E 2019E 2020E Electric $ 16,235 $ 17,403 $ 17,599 $ 17,971 $ 18,513 $ 19,530 $ 20,277 $ 21,569 CECONY Gas 3,395 3,593 4,023 4,267 4,72
Slide 17: Clean Energy Businesses (CEB)
Clean Energy Businesses (CEB) 17
Slide 18: CEB Utility-Scale Renewable Energy Production Projects
CEB Utility-Scale Renewable Energy Production Projects Cumulative Installed in MW 18
Slide 19: CEB Deliberate Approach to Managing Its Renewables Portfolio
CEB Deliberate Approach to Managing Its Renewables Portfolio Low-risk, low-volatility business model consists of… • Long-term PPAs with investment grade off-takers • Leveraged with non-recourse, self-amortizing debt • Amortization of tax credits over the life of the renewable assets • Returns commen
Slide 20: Clean Energy Businesses: Sempra Solar Holdings Transaction
Clean Energy Businesses: Sempra Solar Holdings Transaction Transaction Overview Simplified Transaction Structure • Consolidated Edison Development, Inc. (“CED”), a Sempra Energy Consolidated Edison, Inc. wholly-owned subsidiary of Consolidated Edison, Inc. (“CEI”) (NYSE: SRE) (NYSE: ED) (“CEI”), has
Slide 21: Sempra Solar Holdings Investment Highlights
Sempra Solar Holdings Investment Highlights • Forecasted returns expected to exceed regulatory return • Long-term, contracted cash flows with creditworthy counterparties • Efficiencies from operating co-owned and co-located assets • Familiarity with assets and markets of operation • Consistent with
Slide 22: CEB Pro Forma Portfolio of Renewable Assets: Synergies from Geographic Proximity
CEB Pro Forma Portfolio of Renewable Assets: Synergies from Geographic Proximity Acquired assets are co-located with existing CEBs assets with development opportunities in attractive growth markets 22
Slide 23: CEB is Among Top Owners of Utility-Scale Solar PV in the Country
CEB is Among Top Owners of Utility-Scale Solar PV in the Country The solar portfolio would nearly double with the purchase of Sempra Solar Holdings U.S. Solar PV Asset Ownership (GW) Pro Forma (end 2017) 2.2 2.1 1.5 1.5 1.3 1.2 1.1 Pro Forma Source: Company information and IHS EER (as of year-end 20
Slide 24: CEB is Committed to Clean Air
CEB is Committed to Clean Air 5.4 million metric tons of carbon dioxide emissions avoided annually (pro forma) Big Timber, Montana 24
Slide 25: Con Edison: Poised for a Strong Future
Con Edison: Poised for a Strong Future • One of the nation’s largest investor-owned energy-delivery companies – Longest continuously listed company of the NYSE – $12 billion in annual revenues – $49 billion asset base • Steady earnings, growing dividend – 44 consecutive years of dividend growth • At
Slide 26: Appendix
Appendix ED (} conEdison, inc. NYSE
Slide 27: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) by Company
Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non- GAAP) by Company For the year ended December 31, 2017 CECONY O&R CEBs CET Other(a) Total Reported EPS – GAAP basis $3.59 $0.21 $1.08 $0.15 $(0.06) $4.97 Enactment of the Tax Cuts and Jobs Act — — (0.88) (0.04) 0.07 (0.85) Net mark-to-market
Slide 28: Con Edison Transmission
Con Edison Transmission Storage • 41 Bcf of natural gas storage; 99% subscribed • Storage position with top regional utility customers: CECONY, NJNG, PSE&G, 50% ownership NYSEG Pipelines • Total pipeline length of 181 miles with interconnections to Millennium, Tennessee, and Transco pipelines • 3 na
Slide 29: Sempra Solar Holdings Operating Assets
Sempra Solar Holdings Operating Assets Operating investments have a weighted average remaining PPA life of 19 years JV Assets Project State MW(b) COD Offtaker PPA Term Tax Equity Project Debt Copper Mountain Solar 3(a) NV 128 2015 SCPPA 20 years — Mesquite Solar 1(a) AZ 83 2012 PG&E 20 years — C
Slide 30: Accounting Considerations for Sempra Solar Holdings Acquisition
Accounting Considerations for Sempra Solar Holdings Acquisition There are two significant non-cash accounting effects that are a result of the acquisition: accounting resulting from the acquisition itself, and ongoing accounting for the tax equity partner’s interests in four projects Ongoing Partner
Slide 31: Forecasted GAAP Net Income from Sempra Solar Holdings Acquisition
Forecasted GAAP Net Income from Sempra Solar Holdings Acquisition(a) Assumes closing of acquisition and application of purchase accounting adjustment at December 31, 2018 $155 Purchase accounting adjustment – one-time gain, net of transaction costs and including NYS and CA tax apportionment Income f
Slide 32: Forecasted Return of Equity Used for Sempra Solar Holdings Acquisition
Forecasted Return of Equity Used for Sempra Solar Holdings Acquisition We expect the increase in our net cash flows over the next 10 years resulting from the acquired assets to return approximately 90% of our equity investment ~$100 million average increase in net (a) annual cash flows ~$30 million
Slide 33: Sources and Uses of Funds in Transaction
Sources and Uses of Funds in Transaction • CEBs had consolidated non-recourse ($ in millions) project debt of $890 million as of September 30, 2018 Existing Existing Project • CEBs expect to consolidate $506 million Project Debt Debt of project debt associated with the JV Assets that is currently no
Slide 34: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On October 18, 2018, the company issued a press release reporting that the company had declared a quarterly dividend of 71.5 cents a share on its common stock. • On November 1, 2018, the company issued a press release forecasting its adjusted earnings per share
Slide 35: 3Q 2018 Earnings
3Q 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $435 $457 $1.40 $1.48 TCJA re-measurement 42 — 0.14 — Sempra Solar Holdings, LLC transaction costs (pre-tax) 14 — 0.04 — Income taxes (a) (4) — (0.01) — Sempra Solar Holdings,
Slide 36: Walk from 3Q 2017 EPS to 3Q 2018 EPS
Walk from 3Q 2017 EPS to 3Q 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.08 $0.00 $0.02 $0.01 $0.03 $0.01 $0.08 $0.00 $1.57 $1.48 $1.47 $(0.02) $1.40 $(0.19) (a) (a) a. Includes parent company and consolidation adjustments. 36
Slide 37: 3Q 2018 vs. 3Q 2017 EPS Variances
3Q 2018 vs. 3Q 2017 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans $0.22 Reflects primarily higher electric and gas net base revenues of $0.19 a share and $0.01 a share, respectively, and growth in the number of gas customers of $0.01 a share. Electric and gas base rate
Slide 38: 3Q 2018 vs. 3Q 2017 EPS Reconciliation by Company
3Q 2018 vs. 3Q 2017 EPS Reconciliation by Company Three Months Ended September 30, 2018 CECONY O&R CEBs CET Other(b) Total Reported EPS – GAAP basis $1.38 $0.07 $0.10 $0.04 $(0.19) $1.40 TCJA re-measurement — — — — 0.14 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 0.04 In
Slide 39: 3Q 2018 Developments
3Q 2018 Developments(a) CECONY & O&R • In August and November 2017, the NYSPSC issued orders in its proceeding investigating a subway power outage. NYSPSC Case 17-E-0428 – In The Matter of an Investigation into the April 21, 2017 Metropolitan Transportation Authority Subway Power Outage and Consolid
Slide 40: 3Q 2018 Developments (cont'd)
3Q 2018 Developments (cont'd)(a) Con Edison Transmission • As a result of challenges to certain federal and state regulatory approvals for the Mountain Valley Pipeline, construction has been delayed on the project. In October 2018, Mountain Valley Pipeline LLC indicated that the project has an estim
Slide 41: Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)
Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)(a) New York 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 • Customer credit will start on January 1, 2019 and will i
Slide 42: Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)
Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)(a) O&R Electric and Gas • O&R, in its ongoing rate proceedings (Case 18-E-0067; 18-G-0068), intends to reflect its TCJA net benefits as follows: – annual ongoing savings of $18 million – pass back of 2018 savings ($21 million
Slide 43: YTD 2018 Earnings
YTD 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $1,051 $1,020 $3.38 $3.33 TCJA re-measurement 42 — 0.14 — Sempra Solar Holdings, LLC transaction costs (pre-tax) 14 — 0.04 — Income taxes (a) (4) — (0.01) — Sempra Solar Holdi
Slide 44: Walk from YTD 2017 EPS to YTD 2018 EPS
Walk from YTD 2017 EPS to YTD 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.24 $0.03 $0.24 $0.03 $0.03 $3.56 $0.01 $3.33 $3.38 $3.32 $(0.01) $(0.05) $(0.01) $(0.22) (a) (a) a. Includes parent company and consolidation adjustments. 44
Slide 45: YTD 2018 vs. YTD 2017 EPS Variances
YTD 2018 vs. YTD 2017 EPS Variances - Nine Months Ended Variation CECONY(a) Changes in rate plans $ 0.69 Reflects primarily higher electric and gas net base revenues of $0.48 a share and $0.13 a share, respectively, and growth in the number of gas customers of $0.05 a share. Electric and gas base ra
Slide 46: YTD 2018 vs. YTD 2017 EPS Reconciliation by Company
YTD 2018 vs. YTD 2017 EPS Reconciliation by Company Nine Months Ended September 30, 2018 CECONY O&R CEBs CET Other(b) Total Reported EPS – GAAP basis $3.12 $0.17 $0.19 $0.11 $(0.21) $3.38 TCJA re-measurement — — — — 0.14 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 0.04 I
Slide 47: Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 12 Months Ending December 31, 2014 2015 2016 2017 2018 (a) Reported EPS – GAAP basis $3.73 $4.07 $4.15 $4.97 $5.03 TCJA re-measurement — — — — 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 Income ta
Slide 48: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and Assessments (b) $211 YTD $220 YTD $1,147 YTD $1,186 YTD Health Care/ Other Employee Benefits $355 YTD $335 YTD Pension/ OPEBs $127 YTD $132 YTD $44 YTD $53 YTD (c) (c) a. Other Expense
Slide 49: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of September 30, 2018) CECONY ($ in millions) Electric NY $19,588 Gas NY 5,342 Steam NY 1,403 Total CECONY $26,333 O&R ($ in millions) O&R Electric NY $789 O&R Gas NY 417 RECO NJ 221 Total O&R $1,427 Total Rate Base $27,760 a. Average rate base for 12 month
Slide 50: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended September 30, 2018) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.3% Gas 9.0 9.4 Steam 9.3 11.0 Overall – CECONY 9.0(a) 9.4 CECONY Equity Ratio 48.0% 47.6% O&R Electric 9.0% 7.8% Gas 9.0 8.0 RECO 9.6 9.3 Overall – O&R 9.1(a)
Slide 51: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms ($ in millions) (d) Positive Incentives(a) (b) ($ in millions) (c) (d) a. In 2017, CECONY achieved positive incentives of $12 million, one third of which, pursuant to the accounting rules for alternative revenue re
Slide 52: Capital Expenditures
Capital Expenditures ($ in millions) (a) (b) Actual Forecast(b) a. 2016 includes Stagecoach JV investment of $974 million. b. 2018E includes Con Edison Development subsidiary’s agreement to acquire Sempra Solar Holdings, LLC. c. 2018E updated as of September 30, 2018. 2019E and 2020E from 2017 Form
Slide 53: Utility Capital Expenditures
Utility Capital Expenditures ($ in millions) Steam Gas Electric Actual Forecast(a) Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Depreciation Electric Gas Depreciation 2013 $1,471 $536 $128 $946 $98 $37 $56 2014 1,500 549 83 991 105 37 61 2015 1,658 671 106 1,
Slide 54: 2018 Financing Plan and Activity
2018 Financing Plan and Activity Debt and Equity Financing Plan • Capital expenditures of $5,313 million (CECONY: $3,023 million, the CEBs: $1,840 million, O&R: $201 million, CET: $249 million) • Issue between $1,800 million and $2,400 million of long-term debt at the utilities • Issue up to $825 mi
Slide 55: Capital Structure – September 30, 2018
Capital Structure – September 30, 2018 ($ in millions) Consolidated Edison, Inc. Baa1(a) / BBB+ / BBB+ Debt $ 16,608 51% Equity 15,898 49 Total $ 32,506 100% CECONY O&R Parent and Other A3(a) / A- / A- Baa1(a)/ A- / A- Debt $ 13,662 51% Debt $ 733 52% Debt $2,213 49% Equity 12,869 49 Equity 690 48 E
Slide 56: Liquidity Profile
Liquidity Profile ($ in millions) 56