Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Corporate Update (May 2018)
49 slides from Consolidated Edison's corporate update, May 2018
Slide 1: Company Update May 2018
Company Update May 2018 GconEdison
Slide 2: Available Information; Forward-Looking Statements
Available Information On May 3, 2018, Consolidated Edison, Inc. issued a press release reporting its first quarter 2018 earnings and filed with the Securities and Exchange Commission the company’s first quarter 2018 Form 10-Q. This presentation should be read together with, and is qualified in its e
Slide 3: Con Edison: Poised for a Strong Future
Con Edison: Poised for a Strong Future • Regulated utility serving growing customer base – $49 billion asset base ranks among largest transmission and distribution utilities in the United States • Steady earnings, growing dividend – 44 consecutive years of dividend growth • Attractive capex opportun
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $24.0 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 5: 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 6: 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 7: 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 8: 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. 8
Slide 9: 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 9
Slide 10: Clean Energy Businesses
Clean Energy Businesses 1.6 GW 1.6 GW Renewables portfolio Renewables portfolio (79% solar) (79% solar, 21% wind) Ranked #5 among solar PV Ranked #5 among solarowners in North America PV owners in North America 10
Slide 11: Con Edison Transmission: Regional Transmission Opportunities Include Gas and Electric
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 12: 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 13: Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources
Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources • Reduced regulatory lag • Forward-looking test years • Timely recovery of most fuel and commodity costs • Revenue decoupling mechanism in NY (electric and gas) • Adjustment mechanisms for several major uncontrollable ex
Slide 14: NYSPSC's Formulaic ROE Approach: Decisions 2006 – 2018 YTD
Rate of return on equity NYSPSC’s Formulaic ROE Approach: Decisions 2006 – 2018 YTD 2/3 Discounted Cash Flow model + 1/3 Capital Asset Pricing model Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 06/11 Niagara Mohawk Electric 9.30% 2 years 10/06 O&R Gas 9.80% 3 years 06
Slide 15: Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves
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 16: Distributed Generation Adoption Trends in CECONY Service Area
Distributed Generation Adoption Trends in CECONY Service Area Total Installations Total Installed Capacity # installed MWs 25,000 250 Note: 2018 projected CECONY electric peak demand: 13,300 MW 20,000 200 CHP 15,000 150 PV 10,000 100 CHP PV 5,000 50 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: 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 24: 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 ~$14.5 million per year in 2018 and 2
Slide 25: Striving to Enhance Our Customer Service Experience
Striving to Enhance Our Customer Service Experience Web-based Customer Service Smart Meters Marketplace #1 in business electric & 5.4 million smart Web-based gas customer satisfaction meters to be installed marketplace for energy among large utilities in by 2022 solutions that promote the East (CECO
Slide 26: Appendix: 1st Quarter 2018
Appendix: 1st Quarter 2018 Earnings Presentation 26
Slide 27: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On April 19, 2018, the company issued a press release reporting that the company had declared a quarterly dividend of 71.5 cents a share on its common stock. • On May 3, 2018, the company issued a press release in which it confirmed its previous forecast of adju
Slide 28: 1Q 2018 Earnings
1Q 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $428 $388 $1.38 $1.27 Net mark-to-market effects of the CEBs — (2) — — Adjusted Earnings and Adjusted EPS – non-GAAP basis $428 $386 $1.38 $1.27 28
Slide 29: Walk from 1Q 2017 EPS to 1Q 2018 EPS
Walk from 1Q 2017 EPS to 1Q 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.15 $0.15 $1.38 $1.38 $(0.01) $0.00 $0.00 $(0.01) $0.00 $0.00 $1.27 $(0.03) $1.27 $(0.03) (a) (a) a. Includes parent company and consolidation adjustments. 29
Slide 30: 1Q 2018 vs. 1Q 2017 EPS Variances
1Q 2018 vs. 1Q 2017 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans $ 0.22 Reflects higher electric and gas net base revenues of $0.12 a share and $0.08 a share, respectively, and growth in the number of gas customers of $0.02 a share. Electric and gas base rates increas
Slide 31: 1Q 2018 vs. 1Q 2017 EPS Reconciliation by Company
1Q 2018 vs. 1Q 2017 EPS Reconciliation by Company 3 months ending March 31, 2018 CECONY O&R CEBs CET Other(a) Total Reported EPS – GAAP basis $1.26 $0.07 $0.02 $0.03 $— $1.38 Adjusted EPS – Non-GAAP basis $1.26 $0.07 $0.02 $0.03 $— $1.38 3 months ending March 31, 2017 CECONY O&R CEBs CET Other(a) To
Slide 32: 1Q 2018 Developments
1Q 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 33: 1Q 2018 Developments (cont'd)
1Q 2018 Developments (cont'd)(a) Clean Energy Businesses • The 25-MW (AC) Big Timber wind energy project in Montana went into service. The Clean Energy Businesses have 1,561 MW (AC) of renewable energy production projects in service (1,383 MW) or under construction (178 MW). (page 54) • 531 million
Slide 34: 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 35: 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 $5.08 Enactment of the TCJA(b) - - - (0.85) (0.86) Gain on sale of the CEBs’ retail electric supply business - - (0.
Slide 36: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and Assessments (b) $71 YTD Health Care/ Other Employee Benefits $109 YTD Pension/ OPEBs $393 YTD $39 YTD $18 YTD (c) (c) a. Other Expenses generally are either reconciled through amounts
Slide 37: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of March 31, 2018) CECONY ($ in millions) Electric NY $18,766 Gas NY 4,877 Steam NY 1,388 Total CECONY $25,031 O&R ($ in millions) O&R Electric NY $765 O&R Gas NY 402 RECO NJ 215 Total O&R $1,382 Total Rate Base $26,413 a. Average rate base for 12 months en
Slide 38: Average Rate Base Balances
Average Rate Base Balances ($ 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 39: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended March 31, 2018) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.2% Gas 9.0 10.1 Steam 9.3 11.5 Overall – CECONY 9.0(a) 9.5 CECONY Equity Ratio 48.0% 48.4% O&R Electric 9.0% 8.1% Gas 9.0 10.1 RECO 9.6 7.5 Overall – O&R 9.1(a) 8
Slide 40: 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 $12 million, one third of which, pursuant to the accounting rules for alternative revenue recognitio
Slide 41: Capital Expenditures
Capital Expenditures ($ in millions) (a) (1) Actual Forecast(b) a. 2016 includes Stagecoach JV investment of $974 million. b. 2017 Form 10-K, page 31. 41
Slide 42: Utility Capital Expenditures
Utility Capital Expenditures ($ 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 $56 2014 1,500 549 83 991 105 37 61 2015 1,658 671 106 1,
Slide 43: Capital Structure – March 31, 2018
Capital Structure – March 31, 2018 ($ in millions) Consolidated Edison, Inc. A3 / BBB+ / BBB+ Debt $ 16,021 51% Equity 15,661 49 Total $ 31,682 100% CECONY O&R Parent and Other A2 / A- / A- A3 / A- / A- Debt $ 13,266 51% Debt $ 661 49% Debt $2,094 47% Equity 12,662 49 Equity 681 51 Equity 2,318 53 T
Slide 44: Liquidity Profile
Liquidity Profile ($ in millions) 44
Slide 45: Utility Sales and Revenues – First Quarter
Utility Sales and Revenues – First Quarter 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 ended March 31, 2018 (expressed as a percentage of 2017 amounts): First Quart
Slide 46: Utility Sales and Revenues – Electric First Quarter
Utility Sales and Revenues – Electric First Quarter ($ in millions) Electric – 1st Quarter Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 2,410 2,278 $623 $574 Commercial and Industrial 2,415 2,305 453 430 Retail choice customers
Slide 47: Utility Sales and Revenues – Gas First Quarter
Utility Sales and Revenues – Gas First Quarter ($ in millions) Gas – 1st Quarter Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 27,227 24,607 $390 $337 General 14,513 12,803 154 133 Firm Transportation 34,791 30,415 260 222 Total Firm Sales and Tr
Slide 48: Utility Sales and Revenues – Steam First Quarter
Utility Sales and Revenues – Steam First Quarter ($ in millions) Steam – 1st Quarter Millions of Pounds Revenues in Millions 2018 2017 2018 2017 Con Edison of New York General 338 293 $16 $14 Apartment House 2,712 2,469 84 77 Annual Power 5,947 5,298 216 197 Total Sales 8,997 8,060 $316 $288 48
Slide 49: List of Notes to 2018 Form 10Q Financial Statements
List of Notes to 2018 Form 10Q Financial Statements Page A – Summary of Significant Accounting Policies 19 - 22 B – Regulatory Matters 22 - 24 C – Capitalization 25 D – Short-Term Borrowing 25 E – Pension Benefits 25 - 26 F – Other Postretirement Benefits 26 G – Environmental Matters 26 - 28 H – Oth