Edison International · NYSE:EIX
Edison International — Corporate Update (February 2018)
48 slides from Edison International's corporate update, Feb 23, 2018
Slide 1: Business Update February 2018
Business Update February 2018 February 23, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this presentation about future performance, including, without limitation, operating results, capital expenditures, rate base growth, dividend policy, financial outlook, and other statements that are not purely historical, are forward- looking state
Slide 3: Table of Contents
Table of Contents Page Updated (U) or New (N) from October 2017 Business Update EIX Shareholder Value 3 U SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U California Wildfire Risk Mitigation 7 N Capital Expenditures and Rate Base History and Forecast 8-11 N,U 2018 General Rate Ca
Slide 4: EIX Strategy Should Produce Superior Value
EIX Strategy Should Produce Superior Value Sustained Earnings and Dividend Electric-Led Clean Energy Future Growth Led by SCE SCE Rate Base Growth Drives Earnings EIX Vision • 9.7% average annual rate base growth • Lead transformation of the electric power through 2020 at request level industry • SC
Slide 5: SCE Highlights
SCE Highlights One of the nation’s largest electric utilities • 15 million residents in service territory • 5 million customer accounts • 50,000 square-mile service area Significant infrastructure investment • 1.4 million power poles • 725,000 transformers • 118,000 miles of distribution and transmi
Slide 6: SCE Long-Term Growth Drivers
SCE Long-Term Growth Drivers Description Timeframe/Regulatory Process Sustained level of infrastructure investment • Ongoing - current and future GRCs Infrastructure required until equilibrium replacement rates Reliability achieved and then maintained Accelerate circuit upgrades, automation, • Today
Slide 7: SCE Decoupled Regulatory Framework
SCE Decoupled Regulatory Framework Regulatory Mechanism Key Benefits Decoupling of Revenues from • Earnings not affected by variability of retail electricity sales Sales • Differences between amounts collected and authorized levels either billed or refunded • Promotes energy conservation • Stabilize
Slide 8: California Wildfire Risk Mitigation
California Wildfire Risk Mitigation Hardening the Allocation of risk and Prevention and mitigation infrastructure liability • Effective statewide fire • Partnering with state • Policies around allocation of suppression resources agencies on improved financial risks, including fire • Effective vegeta
Slide 9: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) 2012– 2017 CAGR Rate Base 6% Core Earnings 2% $27.8 $25.9 $24.6 $23.3 $21.0 $21.1 2012 2013 2014 2015 2016 2017 Core EPS $4.10 $3.88 $4.68 $4.20 $4.22 $4.58 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-G
Slide 10: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) $13.7 Billion 2018-2020 Capital Program Traditional Capital Spending: Distribution 1 Transmission Generation • Capital expenditure forecast incorporates GRC, FERC and Grid Modernization Capital Spending: non-GRC CPUC spending Grid Modernization2 GRC de
Slide 11: SCE Rate Base Forecast – Request Level
SCE Rate Base Forecast – Request Level ($ billions) Traditional Grid Modernization 3-year CAGR of 9.7% $34.6 CPUC $31.8 • Rate base based on request levels from $29.1 2018 GRC Tax Reform February Update $26.2 FERC • FERC rate base, including Construction Work in Progress (CWIP), is approximately 19%
Slide 12: SCE Rate Base Forecast Updates
SCE Rate Base Forecast Updates ($ billions) GRC Request Case 2018 2019 2020 Prior Outlook – October 2017 $ 29.2 $ 31.7 $ 34.3 Tax Reform CPUC (0.0) 0.1 0.3 FERC 0.1 0.1 Subtotal Tax Reform (0.0) 0.2 0.4 Other FERC Changes* Incentive CWIP Approval 0.2 0.3 0.5 FERC Capital Changes (0.2) (0.5) (0.6)
Slide 13: 2018 SCE General Rate Case (GRC)
2018 SCE General Rate Case (GRC) • 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital an
Slide 14: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case Set CPUC base revenue requirement, capital Ongoing workshops and data requests; intervenor and (A. 16-09-001) expenditures and rate base for 2018-2020 rebuttal testimony submitted; Briefs and
Slide 15: CPUC Cost of Capital
CPUC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/17 – 02/20/18) = 4.21% 100 basis point +/- Deadband 6 Rate (%) 5 4 Starting Value – 5.00% ROE fixed at ROE fixed at 10.30% 10.45% for 2017, for 2018 and 2019, independent of independent of trigg
Slide 16: 2018 Financial Assumptions
2018 Financial Assumptions ($ billions) SCE Capital Expenditures SCE Weighted Average Rate Base Distribution $3.4 Traditional $28.8 Transmission 0.6 Grid Mod 0.3 Generation 0.2 2018 Request $29.1 2018 Plan $4.2 • Based on 2018 forecasted expenditures at • FERC comprises about 20% of total rate base
Slide 17: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing 45% of total 2018 – 2020 Capital Spending Forecast distribution capital spend, but not yet reaching for Distribution1,2 equilibrium replacement rate $10.9
Slide 18: Energy Storage
Energy Storage CPUC Energy Storage Program Requirements: Given counting rules, SCE has already met the • Storage Rulemaking (R.10-12-007) established 1,325 MW target for aggregate 2016 targets IOUs by 2024 (580 MW SCE share; spread as biennial targets during 2014-20); ownership allowed up to 290 MW
Slide 19: California GHG Emissions Overview
California GHG Emissions Overview California’s goals to reduce total GHG emissions by 40 percent from 1990 levels by 2030 is 42% from current levels • Recent Governor Order set a 2050 target of 80% below 1990 levels 2015 California GHG Emissions Many of California's policies to date focused on elect
Slide 20: SCE Transportation Electrification Proposals
SCE Transportation Electrification Proposals On January 20, 2017, SCE filed with the CPUC a wide-ranging plan to increase electrification of cars, buses, medium- and heavy-duty trucks and industrial vehicles and equipment • SCE proposed 6 near-term, priority review projects and 2 longer-term, standa
Slide 21: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost3 (as of Dec 31, 2017) Date West of Devers1,2 $848 million $757 million 2021 Mesa Substation1 $646 million $568 million 2022 Alberhill System $486 million $449 mill
Slide 22: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and • Customer service reliability (SAIDI, SAIFI, MAIFI) • Cost efficiency • J.D. Power customer Optimize satisfaction • Capital productiv
Slide 23: Responding to Industry Change
Responding to Industry Change Long-Term Industry Trends Strategy • The technology landscape is evolving at SCE Strategy an unprecedented pace, with innovation • Clean the power system by accelerating driving advances in cost and capabilities of the de-carbonization of electricity supply distributed
Slide 24: Edison Energy Group Summary
Edison Energy Group Summary Edison Energy SoCore Energy • Edison Energy is an advisory and services • Provider of distributed solar solutions company with the capabilities to develop and focused on the following segments: integrate an array of energy solutions to help Commercial & Industrial comme
Slide 25: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Fourteen Years of Dividend Growth $2.42 $2.17 $1.92 $1.67 $1.42 $1.35 $1.26 $1.28 $1.30 $1.22 $1.24 $1.16 $1.08 $1.00 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Target dividend growth at a higher than industry average growth rate w
Slide 26: Appendix
Appendix February 23, 2018 25
Slide 27: 2018 SCE GRC
2018 SCE GRC Items Carried Over from New Items from 2018 Previous Intervenor 2015 GRC GRC Testimony • Requests continuation of Tax • Capital expenditures of $1.8 • ORA - Proposed no Grid Accounting Memorandum billion for grid modernization Modernization capital Account (TAMA) adjusting capital to su
Slide 28: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.0 $3.9 $3.8 $3.5 $3.5 2013 2014 2015 2016 2017 February 23, 2018 27
Slide 29: Capital Expenditure/Rate Base Detailed Forecast
Capital Expenditure/Rate Base Detailed Forecast ($ in billions) Detailed Capital Expenditures – 2017-2020 2017 2018 2019 2020 Total (Actual) Distribution1,2 $3.1 $3.4 $3.2 $3.0 $12.7 Transmission1 0.5 0.6 0.8 0.9 2.7 Generation1 0.2 0.2 0.2 0.2 0.8 Total Traditional $3.8 $4.2 $4.1 $4.1 $16.3 Grid Mo
Slide 30: Distribution Power Grid of the Future
Distribution Power Grid of the Future Current State Future State One-Way Electricity Flow Variable, Two-Way Electricity Flow • System designed to distribute electricity • Distribution system at the center of the from large central generating plants power grid • Increasing penetration of distributed
Slide 31: Grid Modernization Highlights
Grid Modernization Highlights Devices that provide Devices that provide stable voltage and power quality more flexibility during outage events Future circuit designs integrate State of the art Distributed operating tools Energy Resources for utility and increase operators and flexibility engineers S
Slide 32: SCE Grid Modernization – Request Level
SCE Grid Modernization – Request Level ($ billions) $1.3 Billion Capital Request for 2019-20201,2 $0.65 Building next generation electric grid requires accelerating traditional Transmission and Distribution / Information Technology programs and investing in new capabilities • Upgrade portions of gri
Slide 33: Distributed Energy Resources (DER) Proceedings
Distributed Energy Resources (DER) Proceedings 2018 Activities • DER Hosting Capacity analysis • Locational Net Benefits Distribution •Integration of DERs in distribution planning and operations • DER forecasting and Resource Plan (DRP) •Development of tools and methodologies, distribution planning
Slide 34: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2013 2014 2015 2016 2017 Residential 29,889 30,115 29,959 29,141 29,765 Commercial 40,649 42,127 42,207 41,565 41,873 Industrial 8,472 8,417 7,589 7,056 6,559 Public authorities 5,012 4,990 4,774 4,645 4,639 Agricultural and other 1,88
Slide 35: California’s Energy Policy
California’s Energy Policy • On October 7, 2015, Governor Brown signed SB 350, which 2017 Renewable Resources (Preliminary): requires that 50 percent of energy sales to customers come 32.1% of SCE’s portfolio from renewable power and a doubling of energy efficiency in Small Hydro existing buildings
Slide 36: SCE 2017 Bundled Revenue Requirement
SCE 2017 Bundled Revenue Requirement 2017 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 5,130 7.1 Fuel & Purchased Power (45%) Distribution – poles, wires, substations, service centers; Edison 4,386 6.1 SmartConnect® Distribution Generation – owned ge
Slide 37: System Average Rate Historical Growth
System Average Rate Historical Growth ¢/kWh Comparative System Rates reduced due to the implementation of 1) Average Rates the SONGS Settlement, including NEIL insurance CAGR % Delta benefits, 2) lower fuel & purchased power 20-yr 10-yr 5-yr EIX – 15.7¢ -- costs, and 3) a lower 2015 GRC revenue ('97
Slide 38: Community Choice Aggregation (CCA) Overview
Community Choice Aggregation (CCA) Overview • An Order Instituting Rulemaking (OIR R.17-06-026) was opened on June 29, 2017 to review, revise, and consider alternatives to the “Power Charge Indifference Adjustment” or PCIA While not an impact on earnings, for every 1% of departing load, $6 million
Slide 39: Residential Rate Design OIR Decision
Residential Rate Design OIR Decision • CPUC Order Instituting Ratemaking R.12-06-013 comprehensively reviewed residential rate structure, including a future transition to time of use (TOU) rates In 2018, 400,000 residential customers migrated to TOU rate structure; remainder to be migrated by 2020
Slide 40: SCE Net Metering Rate Structure
SCE Net Metering Rate Structure NEM Rate Developments: • NEM allowed residential customers to receive rate credit for exported generation, and use these credits to offset energy Solar Subsidies purchased from the electric power company, leading to a cost-shift (Illustrative) to non-NEM customers 25
Slide 41: Residential Solar Installations in SCE Territory
Residential Solar Installations in SCE Territory Monthly Installations and MW Installed Key Dates 7000 40 July 1, 2017 • Official start of NEM successor tariff; 35 customers are subject to: 6000 Mandatory Time-Of-Use rate Non-bypassable charges Number of Residential Installations 30 5000 Appli
Slide 42: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2016-17 Average Residential Rates (¢/kWh) Key KeyFactors Factors 16.4 ₵ • SCE’s residential rates are above national 13.3 ₵ average due, in part, to a cleaner fuel mix, 23% Higher high cost of living in the state, and lower system load factor than rest of the country.
Slide 43: Fourth Quarter Earnings Summary
Fourth Quarter Earnings Summary Q4 Q4 Variance Key SCE EPS Drivers 2017 2016 Basic Earnings Per Share (EPS)1,2 Revenue5 $0.14 - CPUC – Escalation 0.11 SCE $(0.33) $1.01 $(1.34) - CPUC – Other 0.02 EIX Parent & Other (1.34) (0.04) (1.30) - FERC revenue (0.01) Discontinued Operations 0.04 (0.04) - O
Slide 44: Full Year 2017 Earnings Summary
Full Year 2017Earnings Summary 2017 2016 Variance Key SCE EPS Drivers Basic Earnings Per Share (EPS)1 Revenue,4,5,6 $0.45 - CPUC – Escalation 0.44 SCE $3.10 $4.22 $(1.12) - CPUC – Other 0.04 EIX Parent & Other (1.37) (0.23) (1.14) - FERC revenue (0.07) Discontinued Operations 0.03 (0.03) - Other o
Slide 45: SCE Annual Results of Operations
SCE Annual Results of Operations ($ millions) • Earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specific project or program costs, subject to rea
Slide 46: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Earnings Attributable to Edison International Q4 Q4 2017 2016 2017 2016 (*) SCE $(109) $328 $1,012 $1,376 EIX Parent & Other (436) (12) (447) (77) Discontinued Operations – 13 – 12 Basic Earnings
Slide 47: EIX Core EPS Non-GAAP Reconciliations
EIX Core EPS Non-GAAP Reconciliations Reconciliation of Edison International Basic Earnings Per Share to Edison International Core Earnings Per Share Earnings Per Share Attributable to Edison International 2015 2016 2017 CAGR Basic EPS $3.13 $4.02 $1.73 (26%) Non-Core Items SCE Write down, impairmen
Slide 48: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Edison International's earnings are prepared in accordance with generally accepted accounting principles used in the United States. Management uses core earnings internally for financial planning and for analysis of performance. Core earnings are also used when com
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