Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Investor Presentation (March 2018)
54 slides from Consolidated Edison's investor presentation, March 2018
Slide 1: Company Update February/March 2018
Company Update February/March 2018
Slide 2: Available Information and Forward-Looking Statements
Available Information On February 15, 2018, Consolidated Edison, Inc. issued a press release reporting its 2017 earnings and filed with the Securities and Exchange Commission the company’s 2017 Form 10-K. This presentation should be read together with, and is qualified in its entirety by reference t
Slide 3: Organizational Structure
Organizational Structure Market Cap(a): $26.0 billion Ratings(b): A3 / BBB+ / BBB+ Outlook(b): Negative / 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: 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 5: Environmental, Social and Governance Highlights
Environmental, Social and Governance Highlights Con Edison’s most recent annual sustainability report is accessible at: https://www.conedison.com/ehs/2016-sustainability- report/index.html. Additional information about the utilities' reduction of its methane emissions is accessible at: http://invest
Slide 6: Dividend Growth for Shareholders
Dividend Growth for Shareholders • 44 consecutive years of dividend increases • Accelerated growth over past five years • Target dividend payout range: 60 – 70% of adjusted earnings 5-year CAGR (2014-2018) 5-year CAGR (2009-2013) 3.0% 1.0% $2.86 $2.68 $2.76 $2.60 $2.46 $2.52 $2.36 $2.38 $2.40 $2.42
Slide 7: Complementary Business Mix with Utilities at the Core
Complementary Business Mix with Utilities 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. 7
Slide 8: Opportunities for Growth Across Our Businesses
Opportunities for Growth Across Our Businesses 2018 – 2020 Forecasted Capital Investment $9.5 billion $1.2 billion $0.4 billion Regulated Utilities Clean Energy Transmission 8
Slide 9: Clean Energy Businesses
Clean Energy Businesses 1.6 GW Renewables portfolio (79% solar) Ranked #5 among solar PV owners in North America 9
Slide 10: Con Edison Transmission: Regional Transmission Opportunities
Con Edison Transmission: Regional Transmission Opportunities Include Gas and Electric Executing on existing projects and pursuing additional strategic growth opportunities across the region Stagecoach • 2.9 Bcf/day of delivery capacity • 41 Bcf of storage capacity 45.7% ownership Mountain Valley Pip
Slide 11: New York Public Service Commission (NYSPSC)
New York Public Service Commission (NYSPSC) • Two new commissioners confirmed in June 2017, reducing the number of open seats to one Commissioners John Rhodes (D) Chair Gregg Sayre (D) Diane Burman (R) James Alessi (R) Feb-2021 Feb-2018 Feb-2024 Feb-2021 Open Seat Appointed June Appointed June 2017
Slide 12: Reforming the Energy Vision (REV) Presents Opportunities
Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves Track 1 Utilities play central role in integration of distributed energy resources into system while customers and third parties own customer-sited resources Track 2 Incentives and new earnings opportunities added to ratema
Slide 13: 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 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 and defer capital infrastructure spending • Solutions aimed at achieving energy savings & reduced load forecasts • Furthers goals of increased
Slide 15: Supporting Electric Vehicles
Supporting Electric Vehicles Supporting NYC goals: 2,000 municipal fleet vehicles and 20% of vehicles sold for use to be electric vehicles by 2025 • Working with NYC to site five fast-charging stations capable of charging more than 12,000 electric vehicles per week • Providing incentives to charge d
Slide 16: Reducing Green House Gas Emissions
Reducing Green House Gas Emissions • Con Edison has been a leader in emissions reduction for over a generation; we converted all of our plants from coal to cleaner fuels in 1972 • Essentially all of CECONY’s heavy-duty fleet is fueled by biodiesel • The reduction of our carbon footprint since 2005 i
Slide 17: Environmental Benefits of Steam
Environmental Benefits of Steam Steam cogeneration production has a significantly lower carbon footprint relative to comparative heating technologies • On average, 60% of CECONY’s steam production is cogenerated • The carbon footprint of our steam system per million BTUs is significantly less than a
Slide 18: Accelerating Gas Main Replacement and Leak Repair
Accelerating Gas Main Replacement and Leak Repair These initiatives will improve safety and benefit 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 focusing on
Slide 19: Orange & Rockland's Efforts to Curb Emissions
Orange & Rockland’s Efforts to Curb Emissions • In 2017, O&R replaced 24 miles of leak prone pipe; on pace to eliminate all cast iron pipes in the O&R system by 2020 • Over the course of the past 20 years, the O&R team has replaced more than 370 miles of leak prone pipe • O&R spends $25 million annu
Slide 20: Smart Solutions for Natural Gas Customers Proposals
Smart Solutions for Natural Gas Customers Proposals Programs help put New York on a path toward a cleaner energy future 1. Enhanced Gas Energy Efficiency – Aim to double gas efficiency gains with additional funding to existing programs – Annual cost: incremental ~$14.5 million per year in 2018 and 2
Slide 21: Striving to Enhance Our Customer Service Experience
Striving to Enhance Our Customer Service Experience Web-based Customer Service Smart Meters Marketplace #1 in business electric & 5.4 million smart Web-based gas customer satisfaction meters to be installed marketplace for energy among large utilities in by 2022 solutions that promote the East (CECO
Slide 22: Appendix: 2017 Earnings Presentation
Appendix: 2017 Earnings Presentation 22
Slide 23: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On January 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 -- an annualized increase of 10 cents over the previous annualized dividend of $2.76 a share and its
Slide 24: 4Q 2017 Earnings
4Q 2017 Earnings Net Income ($ in Millions) Earnings per Share 2017 2016 2017 2016 Reported Net Income and EPS – GAAP basis $505 $207 $1.63 $0.68 Gain on sale of the CEBs' retail electric supply business — (9) — (0.03) Goodwill impairment related to the CEBs' energy service business — 12 — 0.04 Enac
Slide 25: Walk from 4Q 2016 EPS to 4Q 2017 EPS
Walk from 4Q 2016 EPS to 4Q 2017 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.90 $0.03 $1.63 $(0.06) $0.02 $0.03 $0.01 $0.80 $0.06 $0.02 $0.69 $(0.01) $0.06 $0.68 (a) (a) a. Includes parent company and consolidation adjustments. 25
Slide 26: 4Q 2017 vs. 4Q 2016 EPS Variances
4Q 2017 vs. 4Q 2016 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans and regulatory charges Timing of recognition of electric annual revenues $ 0.03 Reflects higher electric net base revenues resulting from the timing of recognition of annual revenues between quarters und
Slide 27: 4Q 2017 vs. 4Q 2016 EPS Reconciliation by Company
4Q 2017 vs. 4Q 2016 EPS Reconciliation by Company 3 months ending December 31, 2017 CECONY O&R CEBs CET Other(a) Total Reported EPS – GAAP basis $0.71 $0.03 $0.90 $0.06 ($0.07) $1.63 Enactment of the TCJA — — (0.87) (0.04) 0.07 (0.84) Net mark-to-market losses — — 0.01 — — 0.01 Adjusted EPS – Non-GA
Slide 28: 4Q 2017 Developments
4Q 2017 Developments(a) Parent • Net income reflects $269 million or $0.87 a share, $11 million or $0.04 a share, and $(21) million or $(0.07) a share for the Clean Energy Businesses, Con Edison Transmission, and the parent company, respectively, regarding the effect of the TCJA. See "Tax Cuts and J
Slide 29: 4Q 2017 Developments
4Q 2017 Developments(a) CECONY & O&R • The Utilities’ current and most recent previous five-year forecasts of average annual growth of the peak demand in their service areas at design conditions for 2018 – 2022 (pages 21, 24, 25, 26, 27) Electric Gas Steam CECONY 0.1 percent 1.2 percent (0.5) percen
Slide 30: 4Q 2017 Developments (cont'd)
4Q 2017 Developments (cont’d)(a) Clean Energy Businesses • In November 2017, Con Edison Development acquired a 25-MW wind project in Montana. (page 28) • 1,561 MW (AC) of renewable energy production projects in service (1,358 MW) or under construction (203 MW). (page 28) • 2,158 million of kWh gener
Slide 31: Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act of 2017 (TCJA)(a) CECONY & O&R • TCJA expected to result in decreased cash flows from operating activities, and require increased cash flows from financing activities, for the Utilities as and when customers' rates are adjusted to reflect the reduction in tax rate • Customer ra
Slide 32: Tax Cuts and Jobs Act of 2017 (cont'd)
Tax Cuts and Jobs Act of 2017 (cont'd)(a) Clean Energy Businesses • Net income for 2017 includes $269 million or $0.88 a share from reduction in deferred income tax liabilities • Full expensing of plant additions • Interest expense fully deductible through 2021, but deductions will be limited in 202
Slide 33: 2017 Earnings
2017 Earnings Net Income ($ in Millions) Earnings per Share 2017 2016 2017 2016 Reported Net Income and EPS – GAAP basis $1,525 $1,245 $4.97 $4.15 Gain on sale of the CEBs' retail electric supply business — (56) — (0.19) Goodwill impairment related to the CEBs' energy service business — 12 — 0.04 En
Slide 34: Walk from 2016 EPS to 2017 EPS
Walk from 2016 EPS to 2017 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.69 $0.08 $4.97 $(0.03) $0.07 $0.01 $4.15 $0.01 $0.04 $0.04 $4.12 $3.99 $0.07 $(0.03) (a) (a) a. Includes parent company and consolidation adjustments. 34
Slide 35: 2017 vs. 2016 EPS Variances
2017 vs. 2016 EPS Variances - Year Ended Variation CECONY(a) Changes in rate plans and regulatory charges $ 0.47 Reflects higher electric net base revenues of $0.10 a share resulting from the increased base rates under the company's new electric rate plan, higher gas net base revenues of $0.21 a sha
Slide 36: 2017 vs. 2016 EPS Reconciliation by Company
2017 vs. 2016 EPS Reconciliation by Company For the year ended December 31, 2017 CECONY O&R CEBs CET(a) Other(b) Total Reported EPS – GAAP basis $3.59 $0.21 $1.08 $0.15 $(0.06) $4.97 Enactment of the TCJA — — (0.88) (0.04) 0.07 (0.85) Net mark-to-market gains — — — — — — Adjusted EPS – Non-GAAP basi
Slide 37: 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, 2013 2014 2015 2016 2017 Reported EPS – GAAP basis $3.62 $3.73 $4.07 $4.15 $4.97 Enactment of the TCJA(a) - - - - (0.85) Gain on sale of the CEBs’ retail electric supply business - - - (0.19) - G
Slide 38: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and Assessments (b) Health Care/ Other Employee Benefits Pension/ OPEBs a. Other Expenses generally are either reconciled through amounts reflected in rates, or represent surcharges that a
Slide 39: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of December 31, 2017) CECONY ($ in millions) Electric NY $18,513 Gas NY 4,723 Steam NY 1,402 Total CECONY $24,638 O&R ($ in millions) O&R Electric NY $759 O&R Gas NY 392 RECO NJ 225 Total O&R $1,376 Total Rate Base $26,014 a. Average rate base for 12 months
Slide 40: Average Rate Base Balances
Average Rate Base Balances ($ in millions) $30,991 $29,331 $27,904 $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 41: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended December 31, 2017) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.3% Gas 9.0 9.2 Steam 9.3 9.5 Overall – CECONY 9.0(a) 9.3 CECONY Equity Ratio 48.0% 48.4% O&R Electric 9.0% 9.7% Gas 9.0 9.7 RECO 9.6 8.2 Overall – O&R 9.1(a) 9
Slide 42: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms ($ in millions) Positive Incentives(a) (b) ($ in millions) (c) a. In 2017, CECONY achieved positive incentives of $12 million, one third of which, pursuant to the accounting rules for alternative revenue recognitio
Slide 43: Capital Expenditures
Capital Expenditures ($ in millions) (a) (1) Actual Forecast(b) a. 2016 includes Stagecoach JV investment of $974 million. b. 2017 Form 10-K, page 31. 43
Slide 44: Utility Capital Expenditures
Utility Capital Expenditures ($ 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 45: 2017 Financing Activity
2017 Financing Activity Equity financing activity: • In August, CEI issued 4.1 million common shares resulting in net proceeds of $343 million (a) Debt financing activity: • In March, CEI issued $400 million 2.00% debentures due 2020 and prepaid the $400 million variable rate term loan that was set
Slide 46: 2018 Financing Plan
2018 Financing Plan Debt and Equity Financing Plan • Capital expenditures of $3,969 million (CECONY: $3,008 million, the CEBs: $400 million, O&R: $201 million, CET: $360 million) • Issue between $1,300 million and $1,800 million of long-term debt at the Utilities • Issue additional debt secured by t
Slide 47: Capital Structure – December 31, 2017
Capital Structure – December 31, 2017 ($ in millions) Consolidated Edison, Inc. A3 / BBB+ / BBB+ Debt $ 16,029 51% Equity 15,425 49 Total $ 31,454 100% CECONY O&R Parent and Other A2 / A- / A- A3 / A- / A- Debt $ 13,265 52% Debt $ 662 50% Debt $ 2,102 48% Equity 12,439 48 Equity 665 50 Equity 2,322
Slide 48: Liquidity Profile
Liquidity Profile ($ in millions) 48
Slide 49: Utility Sales and Revenues – Fourth Quarter and Full Year
Utility Sales and Revenues – Fourth Quarter and Full Year The changes in the energy delivered by the company’s utility subsidiaries, both for actual amounts and as adjusted for variations in weather and billing days, for the three months and year ended December 31, 2017 (expressed as a percentage of
Slide 50: Utility Sales and Revenues – Electric Fourth Quarter
Utility Sales and Revenues – Electric Fourth Quarter ($ in millions) Electric – 4th Quarter Millions of Kilowatt-hours Revenues in Millions 2017 2016 2017 2016 Con Edison of New York Residential and Religious 2,348 2,270 $590 $573 Commercial and Industrial 2,280 2,209 429 422 Retail choice customers
Slide 51: Utility Sales and Revenues – Electric Full Year
Utility Sales and Revenues – Electric Full Year ($ in millions) Electric – Full Year Millions of Kilowatt-hours Revenues in Millions 2017 2016 2017 2016 Con Edison of New York Residential and Religious 9,924 10,400 $2,515 $2,591 Commercial and Industrial 9,246 9,429 1,823 1,803 Retail choice custome
Slide 52: Utility Sales and Revenues – Gas Fourth Quarter
Utility Sales and Revenues – Gas Fourth Quarter ($ in millions) Gas – 4th Quarter Thousands of Dekatherms Revenues in Millions 2017 2016 2017 2016 Con Edison of New York Residential 12,356 12,138 $189 $161 General 7,408 7,227 79 65 Firm Transportation 17,401 17,109 134 95 Total Firm Sales and Transp
Slide 53: Utility Sales and Revenues – Gas Full Year
Utility Sales and Revenues – Gas Full Year ($ in millions) Gas – Full Year Thousands of Dekatherms Revenues in Millions 2017 2016 2017 2016 Con Edison of New York Residential 52,244 47,794 $802 $667 General 30,761 28,098 334 266 Firm Transportation 71,353 68,442 524 426 Total Firm Sales and Transpor
Slide 54: Utility Sales and Revenues – Steam Fourth Quarter and Year-to-Date
Utility Sales and Revenues – Steam Fourth Quarter and Year-to-Date ($ in millions) Steam – 4th Quarter Millions of Pounds Revenues in Millions 2017 2016 2017 2016 Con Edison of New York General 126 121 $6 $6 Apartment House 1,505 1,541 39 40 Annual Power 3,093 3,082 93 94 Total Sales 4,724 4,744 $13
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