Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — 2015 American Gas Association Financial Forum
45 slides from Consolidated Edison's conference presentation, May 17, 2015
Slide 1: 2015 American Gas Association Financial Forum
Con Edison, Inc. May 17-18, 2015 2015 American Gas Association Financial Forum 1
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measure
Forward-Looking Statements This presentation includes certain forward-looking statements intended to qualify for safe-harbor provisions of the Federal securities laws. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates,"
Slide 3: Business Environment
Business Environment We Power New York, One Of The Most Dynamic Regions of the World • Vibrant local economy continues to gain momentum • Job growth in the region is outpacing the nation • Growing industries include: Technology, Health, Education, Hospitality, Tourism, and Business Services • Touris
Slide 4: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – Twelve Months Ended March 31, 2015) Con Edison, Inc. (ED) EPS $3.76 Rate Base: $23.8 billion Market Cap: $18 billion Regulated Utilities Con Edison Transmission Orange and Rockland EPS $0.21 Con Edison of New York EPS $3.66 Competitive Energy Bu
Slide 5: NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades
NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades • Con Edison, National Grid, Iberdrola and Fortis to own NY Transco • NY Transco filed jointly for FERC wholesale transmission rates on December 4, 2014 • Con Edison ownership share: 46% Edic–to–Pleasant Valley Fr
Slide 6: Regulated Utilities are the Core of Con Edison, Inc.
Regulated Utilities are the Core of Con Edison, Inc. Con Edison of New York (CECONY) • 3.4 million electric customers • 1.1 million gas customers • 1,700 steam customers • 700 MW of regulated generation CECONY and O&R • Delivered 40.8% of NYS 2014 electric peak delivered 44% of NYS 2014 electric pea
Slide 7: Five-Year Growth Rates in Normalized Peak Usage
Five-Year Growth Rates in Normalized Peak Usage Historic Historic 2015-2019 2002-2007 2008-2013 Five-Year (Pre-Recession) (Recession*) Forecast CECONY (%) Electric 1.8 (1.1) 0.9 Gas 1.0 1.6 2.8 Steam (0.8) (2.3) (0.8) O&R (%) Electric 2.6 (0.6) 0.9 Gas (0.8) (0.6) 0.6 * Officially the recession bega
Slide 8: 1Q15 Earnings Per Share
1Q15 Earnings Per Share First Quarter Earnings Were Higher Than the Period Last Year. . . • Due to growth from oil-to-gas conversions • Lower O&M expenses at CECONY Earnings per Share 1Q15 1Q14 GAAP basis (basic) $1.26 $1.23 LILO transactions (a) - (0.02) Net mark-to-market effects of the CEBs (b) (
Slide 9: 1Q15 vs 1Q14 Earnings Per Share
1Q15 vs 1Q14 Earnings Per Share ED’s 1Q15 Adjusted EPS of $1.25 compares to $1.17 in 1Q14 Con Con Con Edison Edison Edison 3 months ending March 31, 2015 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $1.19 $0.07 $0.01 $0.01 $(0.02) $- $1.26 Mark-to-Market losses/(gai
Slide 10: Improvement in 1Q15 EPS Over 1Q14 EPS
Improvement in 1Q15 EPS Over 1Q14 EPS ED’s adjusted 1Q15 EPS of $1.25 compares to $1.17 in 1Q14 $1.30 $1.25 $1.25 $0.05 $1.20 $0.01 $0.01 $0.01 $1.17 $1.15 $1.10 $1.05 $1.00 1Q14 EPS CECONY O&R CED CES CEE Parent 1Q15 EPS 10
Slide 11: Rates of Return and Equity Ratio
Rates of Return and Equity Ratio (for twelve months ended March 31, 2015) Regulated Basis SEC Basis CECONY Allowed Actual Electric 9.2% 9.4% Gas 9.3% 7.7% Steam 9.3% 12.4% Overall - CECONY 9.2%* 9.3% 9.7% CECONY Equity Ratio** 48.0% 50.3% O&R Electric 9.6% 10.7 Gas NA 5.0% RECO 9.8% 8.9% Overall – O
Slide 12: Departmental and Other Expenses
Con Edison of New York Departmental and Other Expenses March 31, 2015 ($ millions) 1,600 1,477 1,533 1,470 1,417 1,394 1,400 1,384 1,296 1,312 1,313 1,284 1,254 1,261 1,265 450 503 1,200 431 434 315 344 1,000 902 800 508 285 505 503 519 553 596 600 310 357 400 343 116 478 519 485 467 200 364 364 307
Slide 13: Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type March 31, 2015 4,200 customers #6 Oil 1,599 converted, 38% Completed Conversions January 2011 to March 2015 Total Conversion Potential 2,800 customers As of December 2010 #4 Oil 892 converted, 32% 14,000
Slide 14: US Solar (Photovoltaic) Market
US Solar (Photovoltaic) Market Residential solar segment is forecasted to grow the fastest. CAGR 60 ’11-’14 ’14-’20 54 Solar PV Capacity Installed Cumulative (GW) 48 48% 26% 44 45 39 36 38% 19% 30 24 17 15 104% 22% 12 7 4 0 2011 2014 2017 2020 Utility Commercial Residential 14 Source: IHS CERA 2015
Slide 15: Solar Photovoltaic (PV) Ownership Ranking
Con Edison Development Solar Photovoltaic (PV) Ownership Ranking Con Edison ranked #6 in North America Megawatts Source: IHS EER (as of year-end 2014) 15
Slide 16: Annual Renewable Portfolio Build Out
Con Edison Development Annual Renewable Portfolio Build Out 700 600 75 500 105 400 300 501 446 200 299 100 118 25 0 0 2010 2011 2012 2013 2014 YTD 2015 Operating (MW AC) Construction (MW AC) 16
Slide 17: Reforming the Energy Vision (REV) Objectives
Reforming the Energy Vision (REV) Objectives • Empower customers to manage energy use and electricity bill • Encourage innovation by third parties to create new market-based products and services • Enable Distributed Energy Resources to manage load and optimize the system • Reduce carbon emissions a
Slide 18: Where We are in the REV Process
Where We are in the REV Process PSC Track 1 Order issued in February 2015 addresses business scope for utilities and 3rd parties: • Utilities will serve as the Distributed System Platform • Utilities can own distributed energy resources only in limited circumstances • Utilities will file an annual D
Slide 19: Issues to be Decided in the REV Track Process
Issues to be Decided in the REV Track 1 Process • What are the core technical requirements and market functions of the Distributed System Platform? • Is Advanced Metering Infrastructure considered a foundational investment to enable REV? • How can the bill be used as a customer engagement tool? • Wh
Slide 20: REV Next Steps
REV Next Steps Key Rate and Regulatory Concepts in Track 2 Track 2 Straw Proposal expected in July 2015 • Regulatory treatment of platform investments • The role of fee-based revenues • Performance-based incentives • Longer-term rate plans • Rate design 20
Slide 21: An Initial Demonstration: Brooklyn-Queens Demand Management (BQDM)
An Initial Demonstration Brooklyn-Queens Demand Management (BQDM) • $200 million investment to defer a $1.2 billion substation configuration using portfolio of alternative investments – Deferral of about 5 years – 41 MW customer and 11 MW utility solutions • Make utility more indifferent to traditio
Slide 22: Capital Expenditures
Capital Expenditures ($ millions) Con Edison of New York Orange and Rockland Competitive Energy Businesses $3,000 $2,661 $2,694 $2,500 $2,375 $2,135 $2,132 $2,057 $2,000 $1,866 $1,909 $1,778 $1,500 $1,000 $835 $492 $447 $378 $366 $500 $137 $142 $135 $162 $182 $374 $127 $135 $111 $177 $28 $114 $10 $0
Slide 23: Infrastructure Investment
Electric Gas Steam Depreciation Con Edison of New York Actual Infrastructure Investment 2009 1596 339 122 744 2010 1421 334 111 787 ($ millions) 2011 1354 335 89 829 2012 1375 426 108 894 $3,000 Steam 2013 1471 536 128 946 Gas $2,694 2014 1500 549 83 991 $2,661 Electric Forecast $2,500 Depreciation
Slide 24: Orange and Rockland Infrastructure Investment
Electric Gas Depreciation Orange and Rockland Infrastructure Investment Actual 2009 85 42 42 ($ millions) 2010 99 36 44 2011 79 32 48 2012 98 39 53 $200 2013 98 37 56 Gas $182 2014 105 37 61 $180 Electric $177 Forecast Depreciation $162 2015 125 37 69 $160 2016 137 45 74 $142 $140 $135 $137 $135 201
Slide 25: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) Pike (PA) 23,646 RECO (NJ) 22,691 O&R Gas (NY) 5-year CAGR 21,311 21,760 20,545 O&R Electric (NY) (2009-2014) 3.82% 19,605 CECONY Steam (NY) CECONY Gas (NY) 18,077 CECONY Electric (NY) 16,298 14,757 13,453 12,418 2004 2005 2006 2007 2008 2009 2
Slide 26: Composition of Rate Base
Composition of Rate Base (as of March 31, 2015) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 17,231 Gas (NY) $ 3,749 Steam (NY) $ 1,531 Total CECONY $ 22,511 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 15 Rockland Electric (NJ) (distribution) $ 179 (transmission) $ 2
Slide 27: 2015 Financing
2015 Financing • Issue between $1,000 million and $1,500 million of long-term debt, including maturities • No equity issuance other than through the company’s stock plans Schedule of Debt Maturities ($ millions) 2015 2016 2017 2018 2019 Con Edison, Inc. – parent company $ 2 $ 2 $ 2 $ 2 $ 3 Con Ediso
Slide 28: Capital Structure — March 31, 2015
Capital Structure — March 31, 2015 ($ millions) Con Edison, Inc. A3 / BBB+ / BBB+ Debt $12,190 49% Equity 12,770 51 Total $24,960 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,214 50% Debt $599 50% Debt $377 28% Equity 11,198 50 Equity 600
Slide 29: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 29
Slide 30: A Compelling Dividend Record
A Compelling Dividend Record 41 Consecutive Years of Dividend Increases Indicated dividend for 2015 = $2.60 Dividend Increases 2010 – 2015 Dividend Payout Ratio 2010 – 2015 $0.10 90% $0.09 85% The only utility in the $0.08 S&P 500 with 30 r more consecutive years of 80% $0.07 dividend increases targ
Slide 31: Consolidated Edison, Inc. Investment Thesis
Consolidated Edison, Inc. Investment Thesis • The largest of the few publicly-traded, T&D-focused utility companies – Limited commodity exposure • Reduced regulatory lag – Forward-looking test years – Timely recovery of most fuel and commodity costs – Revenue decoupling mechanism in NY (electric and
Slide 32: Appendix
te APPENDIX ED GconEdison, inc. NYSE
Slide 33: Reconciliation of 2014 and 2013 Earnings Per Share
Reconciliation of 2014 and 2013 Earnings Per Share Con Con Con Edison Edison Edison 12 months ending Dec. 31, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $3.61 $0.20 $0.15 $0.06 ($0.26) ($0.03) $3.73 Gain on sale of solar energy projects ($0.09) - - - (0.09) M
Slide 34: Energy Efficiency Impacts Historic Electric Volumes
Con Edison of New York Energy Efficiency Impacts Historic Electric Volumes (Weather Normalized) 60,000 58,000 56,000 Historic Energy Efficiency as % of Sendout* 2008 0.60% GWh 54,000 2009 0.40% 2010 0.49% 2011 0.84% 52,000 2012 0.42% 2013 0.45% 2014 0.49% 50,000 48,000 2000 2001 2002 2003 2004 2005
Slide 35: Average Normalized Electricity Use per Customer
Con Edison of New York Average Normalized Electricity Use per Customer 16,000 Annual kWh per customer: 1991 - 2014 15,000 kWhrs 14,000 13,000 12,000 5.00% % change over prior year Residential 4.00% Commercial 3.00% 2.00% 1.00% 0.00% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20
Slide 36: Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type 2015 YTD through March 31st 700 618 Number of gas service installations 600 544 513 520 500 400 343 #2 Oil 313 #4 Oil 300 280 260 #6 Oil 199 200 152 108 100 91 66 62 70 44 23 6 0 2010 2011 2012 2013 2014 201
Slide 37: Distributed Generation
Con Edison of New York Distributed Generation Adoption Trends in Service Area Total Installations Total Installed Capacity 8000 200 180 7000 160 6000 CHP 140 5000 120 4000 100 PV 3000 80 PV 60 2000 40 1000 CHP 20 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 201
Slide 38: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Audrey Zibelman (D) Diane Burman Chair (R) Patricia Acampora Gregg Sayre (D) (R) Feb-2018 Feb-2018 Feb-2018 Feb-2015 Appointed June Appointed June 2013 Appointed June Vacant* Appointed June 2005 2012 2013 PSC Staff Office of Accounting Office
Slide 39: NY PSC Staff's Discounted Cash Flow Model
NY PSC Staff’s Discounted Cash Flow Model • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R)2 + (1+R)3 +…… • Solving for an equity return, R, where: – D1 through D4 = Value Line estimates – D5 through D∞ = Value Line estimates based on future earnings retention and share g
Slide 40: NY PSC Staff's Capital Asset Pricing Model
NY PSC Staff’s Capital Asset Pricing Model • Staff solves for an equity return, R R = RUST + (RMKT – RUST)*β • Where: – RUST is the risk-free return: average of prior three monthly yields for 10-year and 30-year Treasuries – RMKT is the market rate of return: BofA Merrill Lynch’s monthly Quantitativ
Slide 41: NY PSC's Formulaic ROE Approach: Recent Decisions
NY PSC’s Formulaic ROE Approach: Recent Decisions 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 06/11 O&R Electric 9.20% 1 year 08/07 Keyspan Gas 9.80
Slide 42: Population (Thousands)
Con Edison of New York Record Population is Expected to Continue to Grow 10000 Actual October 2014 Forecast Population (Thousands) 9000 8000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 42 Source: US Dept of Census and Moody’s Economy.com
Slide 43: Number of Permits Issued
Con Edison of New York Residential Building Permits Are On the Rise 40,000 36-year high occurred due to extension and then expiration of NYC tax abatement program 35,000 YTD 2015 figures are up 45% year over year 30,000 Number of Permits Issued 25,000 21-Yr Average 20,000 15,000 10,000 5,000 0 2015
Slide 44: New York City's Record-Breaking Tourism Adds to Economic Strength
Con Edison of New York New York City’s Record-Breaking Tourism Adds to Economic Strength • 56.4 million visitors in 2014 • 89% average hotel occupancy • 7.3% increase in hotel room nights sold • 115,000 hotel rooms to be added by 2017 60 Domestic International 2.9% CAGR 4.3% CAGR 50 1998-2014 1998-2
Slide 45: New York City's Diverse Employment By Sector
Con Edison of New York New York City’s Diverse Employment By Sector Jobs in 000s % of Total NYC Employment Education =5% 4,000 Leisure & Hospitality =10% 3,500 Other Service =4% 3,000 Prof & Bus. Svcs. =16% Trade =12% 2,500 Government =13% 2,000 Manufacturing =2% 1,500 Construction =3% 1,000 Health
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