Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Investor Presentation (September 2019)
48 slides from Consolidated Edison's investor presentation, September 2019
Slide 1: September 2019 Investor Meetings
September 2019 Investor Meetings
Slide 2: Available Information; Forward-Looking Statements; Non-GAAP Financial Measure
Available Information On August 1, 2019, Consolidated Edison, Inc. issued a press release reporting its second quarter 2019 earnings and filed with the Securities and Exchange Commission the company’s second quarter 2019 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Organizational Structure
Organizational Structure Market Cap(a): $29.1 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
Complementary Business Mix with Utilities 2018 GAAP EPS Contribution 2018 Adjusted EPS Contribution (Non-GAAP) (a) Regulated Utilities 92% 93% Clean Energy 10% 5% Transmission 3% 3% (5)% Other (b) (1)% a. Represents Adjusted Earnings per Share. Please see slide 42 for reconciliation to GAAP. b. Incl
Slide 5: Long-Range Plan – Complementary Business Mix
Long-Range Plan – Complementary Business Mix • Core utility business expected to continue to dominate the business mix • Investment in contracted renewables expected to complement utility growth • Transmission infrastructure investment opportunities expected to contribute to EPS 2018 Adjusted Earnin
Slide 6: Opportunities for Growth Across Our Businesses
Opportunities for Growth Across Our Businesses 2019 – 2021 Forecasted Capital Investment(a) $10.9 billion $1.0 billion $0.2 billion Regulated Utilities Clean Energy Regulated Businesses Transmission a. From 2018 Form 10-K, page 33. 6
Slide 7: 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 stability opportunities to add valu
Slide 8: Dividend Growth for Shareholders
Dividend Growth for Shareholders • 45 consecutive years of dividend increases • Accelerated growth over past five years • Target dividend payout range: 60 – 70% of adjusted earnings 5-year CAGR (2015-2019) 3.3% 5-year CAGR (2010-2014) 1.3% $2.96* $2.86 $2.76 $2.68 $2.60 $2.46 $2.52 $2.38 $2.40 $2.42
Slide 9: Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources
Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources Reduced regulatory lag • Forward-looking test years • Timely recovery of most fuel and commodity costs • Revenue decoupling mechanism in NY (electric and gas) • Adjustment mechanisms for several major uncontrollable expe
Slide 10: New York Public Service Commission (NYSPSC)
New York Public Service Commission (NYSPSC) Commissioners John Rhodes (D) Chair John Howard (D) Tracey Edwards (D) Diane Burman (R) James Alesi (R) Feb-2021 Feb-2024 Feb-2024 Feb-2024 Feb-2021 Appointed June Appointed July Appointed June 2017 Appointed June Appointed June 2019 2019 2013 2017 PSC Sta
Slide 11: NYSPSC’s Formulaic ROE Approach: Decisions 2006 – 2019 YTD
Rate of return on equity NYSPSC’s Formulaic ROE Approach: 2/3 Discounted Cash Flow model Decisions 2006 – 2019 YTD + 1/3 Capital Asset Pricing model Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 06/11 Niagara Mohawk Electric 9.30% 2 years 10/06 O&R Gas 9.80% 3 years 06
Slide 12: Summary of CECONY Electric & Gas Rate Filings
Summary of CECONY Electric & Gas Rate Filings(a) Company’s Proposed Rate Changes and Capital Expenditures Electric Gas Case number 19-E-0065 Case number 19-G-0066 Rate Rate Capital Rate Rate Capital ($ millions) Change Base(b) Expenditure Change Base(b) Expenditure Rate Year 1: 2020 $470 $21,836 $2,
Slide 13: CECONY Electric & Gas Rate Filings
CECONY Electric & Gas Rate Filings Key Drivers of Proposed 2020 Electric Rate Increase Note: 2020 amounts were proposed in a January 2019 filing. In April 2019, CECONY preliminarily updated its January 2019 request to the NYSPSC. In June 2019, CECONY filed a rebuttal and updated testimony to the NYS
Slide 14: CECONY Electric & Gas Rate Filings (cont'd)
CECONY Electric & Gas Rate Filings (cont'd) Key Drivers of Proposed 2020 Gas Rate Increase Note: 2020 amounts were proposed in a January 2019 filing. In April 2019, CECONY preliminarily updated its January 2019 request to the NYSPSC. In June 2019, CECONY filed a rebuttal and updated testimony to the
Slide 15: CECONY Electric Rate Case – Comparison of Filings
CECONY Electric Rate Case – Comparison of Filings ($ millions) Electric case number 19-E-0065 CECONY NYSPSC CECONY Jan 2019 April 2019 May 2019 June 2019 Rate Year (Jan 2020 – Dec 2020) Filing Update Staff Filing Rebuttal New infrastructure investment $271 $244 $225 $235 Financing costs -- cost of c
Slide 16: CECONY Gas Rate Case – Comparison of Filings
CECONY Gas Rate Case – Comparison of Filings ($ millions) Gas case number 19-G-0066 CECONY NYSPSC CECONY Jan 2019 April 2019 May 2019 June 2019 Rate Year (Jan 2020 – Dec 2020) Filing Update Staff Filing Rebuttal New infrastructure investment $147 $149 $142 $154 Financing costs -- cost of capital 56
Slide 17: Comparison of Rate Changes
Comparison of Rate Changes ($ millions) Rate Year (Jan 2020 – Dec 2020) Electric Gas Total Company Rate Increase (June Rebuttal) $470 $206 $676 Financing costs -- cost of capital (ROE), capital (261) (86) (347) structure Depreciation 89 19 108 O&M adjustments (130) (33) (163) Sales Revenue (71) 1 (7
Slide 18: Safety is our #1 Priority
Safety is our #1 Priority • CECONY and O&R have achieved 60% and 69% reductions in recorded injuries and illnesses since 2009 • 88% of all Company work groups completed 2018 without a recordable injury • Our objective: accident-free workplace Link to Con Edison Sustainability Report: https://www.con
Slide 19: Risk-based Capital Investment Approach
Risk-based Capital Investment Approach • We plan to invest over $3 billion between 2019 and 2021 to fortify CECONY and O&R gas infrastructure, reducing risk and underscoring our commitment to safety and the environment • Over the course of the past 20 years, the O&R team has replaced more than 370 m
Slide 20: CECONY’s Sustained Performance on Main Replacement and Leak Backlog
CECONY’s Sustained Performance on Main Replacement and Leak Backlog CECONY Gas Main Replacement (miles) CECONY Year-End Leak Backlog 950 91.8 86.3 850 Actual 79.1 75.2 750 66.8 740 600 550 523 85 80 70 65 60 Goal Goal 303 239 250 Actual 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Link to Con E
Slide 21: Deploying New Technologies to Enhance Public Safety
Deploying New Technologies to Enhance Public Safety • A Con Edison team rolled out the first of its kind smart-meter- enabled natural gas detectors to improve gas-customer safety by providing alerts of potentially unsafe conditions to our Gas Control Center • We have deployed 4,000 sensors for early
Slide 22: Operational Excellence: Reliability is What Our Customers Demand
Operational Excellence: Reliability is What Our Customers Demand Link to Con Edison Sustainability Report: https://www.conedison.com/ehs/2018-sustainability-report/ 22
Slide 23: Ambitious New York State Environmental Goals
Ambitious New York State Environmental Goals New York State Climate Leadership and Community Protection Act signed into law on July 18, 2019 New York State Climate Leadership and Community Protection Act Requirements • 70% renewable electricity by 2030 • 100% carbon-free power by 2040 • 40% greenhou
Slide 24: Supporting New York’s Energy Storage Goals
Supporting New York’s Energy Storage Goals Energy storage can help ensure reliability and can reduce peak demand on our electric system • In 2018, CECONY commissioned its first battery installation designed for 2 MW / 12 MWh battery in Ozone Park, Queens to support the Brooklyn Queens Demand Managem
Slide 25: Easing Access to Distributed Resources for Customers
Easing Access to Distributed Resources for Customers • 32,000 solar customers across our utility service areas • Working to ensure a seamless connection process • Providing solar energy to low-income residents • Introduced innovative device connecting solar panels and electric vehicles to home meter
Slide 26: Supporting Electric Vehicles
Supporting Electric Vehicles • Vehicle-to-grid school bus demonstration project in White Plains, NY includes five electric school buses that will be used for grid services in the summer • Providing incentives to charge during off-peak hours to reduce system peak load • Working with NYC Department of
Slide 27: Enhancing the Customer Experience Through Smart Systems
Enhancing the Customer Experience Through Smart Systems • Launched $1.4 billion smart meter initiative targeting 5.3 million installations in New York City, Westchester and New Jersey areas by 2022 • More than 2 million smart meters installed to date • Website and digital customer experience leverag
Slide 28: Emphasis on Energy Efficiency and Demand Response
Emphasis on Energy Efficiency and Demand Response Technology is providing customers with new ways to reduce energy use 1.98 million MWh of cumulative electric utility customer energy savings since 2009 2.74 million dekatherms of cumulative gas utility customer energy savings since 2009 28
Slide 29: Our Energy Efficiency Programs Lower Customer Bills
Our Energy Efficiency Programs Lower Customer Bills CECONY Electric & Gas Energy Efficiency Budgets ($ millions) $209.4 $193.7 $181.1 Electric $141.3 $135.2 $106.7 $36.8 $40.2 $30.3 $20.3 $20.3 $14.5 Gas 2017 2018 2019 2020 2021 2022 Approved Proposed 29
Slide 30: Energy Efficiency Also Contributes to Cleaner Air by Lowering Emissions
Energy Efficiency Also Contributes to Cleaner Air by Lowering Emissions Electric Energy Efficiency Gas Energy Efficiency Targets (MWh) 565,359 Targets (Dth) 859,462 485,584 795,462 776,224 434,444 375,798 606,924 606,924 300,000 197,778 303,462 2017 2018 2019E 2020E 2021E 2022E 2017 2018 2019E 2020E
Slide 31: 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 • 70% share of net benefits
Slide 32: Smart Solutions for Natural Gas Customers
Smart Solutions for Natural Gas Customers $223 million in funding through 2025 approval by NYSPSC in February 2019 to offset 84,100 dekatherms of peak-day gas usage* (avoiding 5 million tons of CO2 over life of program) 1. Enhanced Gas Energy Efficiency – Incent customers to install energy efficient
Slide 33: Commitment to Climate Resilience
Commitment to Climate Resilience • $1 billion storm-resiliency investments following Superstorm Sandy completed in 2016 • $100 million commitment for storm resiliency in Westchester began in 2018 • $3 billion annual investment planned over next several years for upgrades to utility infrastructure •
Slide 34: Clean Energy Businesses
Clean Energy Businesses 2.6 GW (AC) • Located in 17 states • 85% solar • 15% wind Copper Mountain Solar 34
Slide 35: Con Edison Transmission
Con Edison Transmission Storage • 41 Bcf of natural gas storage; 99% subscribed 50% ownership • Storage position with top regional utility customers: CECONY, NJNG, PSE&G, NYSEG Pipelines • Total pipeline length of 181 miles with interconnections to Millennium, Tennessee, and Transco pipelines • 3 na
Slide 36: Adopting Governance Best Practices
Adopting Governance Best Practices Board of Directors has an appropriate blend of diversity, tenure and skills Board Diversity Board Skills and Experience (Number of Directors) Leadership 10 30% Ethnically Strategic Planning 10 Diverse Diverse (50%) Corporate Governance 8 30% Women Risk Management 7
Slide 37: Adopting Governance Best Practices
Adopting Governance Best Practices • Independent Lead Director – Chair of Corporate Governance and Nominating Committee Standing Committees of the Board • Audit Committee • Corporate Governance and Nominating Committee • Executive Committee • Finance Committee • Management Development and Compensati
Slide 38: Adopting Governance Best Practices
Adopting Governance Best Practices Board of Directors has oversight of key governance issues • Proxy Access Framework – A stockholder or a group of up to 20 stockholders who have owned at least 3% of the outstanding shares of the Company for at least three years – Can submit nominees for up to 20% o
Slide 39: Adopting Governance Best Practices
Adopting Governance Best Practices Executive compensation tied to key ESG/sustainability measures CECONY Orange & Rockland Clean Energy Businesses Safety Safety • Injury/Illness Incident Rate • Injury/Illness Incident Rate • Injury/Illness Incident Rate • Renewable Portfolio Production • Significant
Slide 40: 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 – $12 billion in annual revenues – $54 billion asset base • Steady earnings, growing dividend – 45 consecutive years of dividend growth • Attractive capex opportunities – Three-year infrastr
Slide 41: Appendix
APPENDIX ED (} conEdison, inc. NYSE
Slide 42: 2018 EPS Reconciliation by Company
2018 EPS Reconciliation by Company Year Ended December 31, 2018 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $3.84 $0.19 $0.46 $0.15 $(0.21) $4.43 Income tax effect of the TCJA — — — — 0.14 0.14 Gain on acquisition of Sempra Solar Holdings, LLC, net of — — (0.39) — 0.03 (0.36) transa
Slide 43: 2Q 2019 vs. 2Q 2018 EPS Reconciliation by Company
2Q 2019 vs. 2Q 2018 EPS Reconciliation by Company Three Months Ended June 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $0.46 $0.01 $(0.03) $0.04 $(0.02) $0.46 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.10 — — 0.10 Income taxes (a) — — (0.03) — — (0.03) HLBV
Slide 44: YTD 2019 vs. YTD 2018 EPS Reconciliation by Company
YTD 2019 vs. YTD 2018 EPS Reconciliation by Company Six months ended June 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $1.73 $0.11 $(0.13) $0.08 $(0.02) $1.77 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.15 — — 0.15 Income taxes (a) — — (0.04) — — (0.04) HLBV
Slide 45: 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, 2015 2016 2017 2018(d) 2019(a)(d) Reported EPS – GAAP basis $4.07 $4.15 $4.97 $4.43 $4.23 Income tax effect of the TCJA — — (0.85) 0.14 0.14 HLBV effects of the Clean Energy Businesses (pre-tax)
Slide 46: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and $165 YTD Assessments (b) Health Care/ Other Employee $222 YTD Benefits $776 YTD Pension/ OPEBs $80 YTD $67 YTD (c) (c) (c) (c) a. Other Expenses generally are either reconciled through
Slide 47: Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (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 • Customer credit started on January 1, 2019 and
Slide 48: Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (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 (
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