Edison International · NYSE:EIX
Edison International — Investor Presentation (November 2021)
45 slides from Edison International's investor presentation, Nov 3, 2021
Slide 1: Business Update
Business Update November 3, 2021
Slide 2: Forward-looking statements
1 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 statements. These forward-looki
Slide 3: Edison International is leading the transformation of the electric power industry
2 Edison International is leading the transformation of the electric power industry One of the nation’s largest electric-only utilities, serving over 15 million residents EIX’s principal subsidiary, with ~$5+ billion annual electric infrastructure investment opportunity Growth driven by investment i
Slide 4: EIX is well positioned for a decarbonized future, with no coal or gas LDC exposure
3 EIX is well positioned for a decarbonized future, with no coal or gas LDC exposure and high electric sales growth potential UTY1 EEI Index2 Electric-Only & No Gas LDC Exposure (# of Companies) 6 of 20 11 of 39 ✓ No stranded asset risk with increased electrification No Coal Generation Ownership (#
Slide 5: Sustainability is central to Edison's vision
4 Sustainability is central to Edison’s vision to lead the transformation of the electric power industry Social Environmental Governance Targeting 100% carbon-free power delivered by 2045; ~43% carbon-free power in 20201 Over $800 million in approved SCE funding to expand transportation electrificat
Slide 6: Our Sustainable Financing Framework
5 Our Sustainable Financing Framework underscores the strong link between our strategy and financing activities November 3, 2021 Primary Category1 U.N. Sustainable Development Goals Alignment Green Renewable Energy Clean Transportation Energy Efficiency & Carbon Reduction Climate Change Adaptation S
Slide 7: Thesis: Wires-focused electric utility with regulated rate base growth
6 Thesis: Wires-focused electric utility with regulated rate base growth aligned with state’s aggressive clean energy goals Constructive California and Federal regulatory structures Aggressive climate goals met with clean, efficient, economy- wide electrification Significant investment required to s
Slide 8: California's regulatory mechanisms provide revenue certainty
7 California’s regulatory mechanisms provide revenue certainty, even as load and payment patterns change Revenue Decoupling means earnings aren’t affected by changes in electricity sales Long-standing regulatory mechanism that breaks the link between retail electricity sales and revenue; promotes en
Slide 9: Reaching California's 2045 GHG goals requires near-complete transformation of energy use
8 Reaching California’s 2045 GHG goals requires a near- complete transformation of energy use economy wide November 3, 2021 100% of grid sales with carbon-free electricity 80 GW of utility-scale clean generation 30 GW of utility-scale energy storage 30% of space and water heating to be electrified b
Slide 10: SCE delivered ~43% carbon-free electricity to customers in 2020
9 SCE delivered ~43% carbon-free electricity to customers in 2020 Decarbonizing transportation sector, ~40% of GHG emissions, requires widespread vehicle electrification State’s commitment highlighted by requiring all new passenger vehicles sold to be zero-emission by 2035 and operations of MD/HD ve
Slide 11: Significant incremental grid investments required by 2045
10 Significant incremental grid investments required by 2045 to serve load growth and integrate renewables and storage November 3, 2021 1. In 2019 dollars under Balanced Scenario Source: SCE’s Pathway 2045 analysis. See Pathway 2045 Appendices for additional information on the analysis and its metho
Slide 12: Decarbonized, electrified world produces energy cost savings for households
11 Annual residential household energy costs (2019$)1 2019 2045 By 2045, a greater reliance on electricity, combined with population and economic growth, will result in a 60% increase in electricity sales from the grid Household savings driven by reduced gasoline consumption due to high market penet
Slide 13: Increased energy storage is essential to the transition to a carbon-free future
12 Increased energy storage is essential to support the transition to a carbon-free future – 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2020 2021 2022 2023 2024 2025 2026 Future Procurement Requirements Procured or Under Construction Online 1. SCE’s proportional procurement obligation under D.21-06-0
Slide 14: SCE leads the largest utility transportation electrification programs in the U.S.
13 SCE leads the largest utility transportation electrification initiatives and programs in the U.S. $872 $414 $314 $205 $191 $133 $118 EIX PCG ED PEG SRE XEL AGR 1. Low Carbon Fuel Standard. The LCFS program at the California Air Resources Board (CARB) funds SCE’s vehicle rebate programs through th
Slide 15: AB 1054 provides a strong regulatory construct for wildfire liability and cost recovery
14 AB 10541 provides a strong regulatory construct for determining wildfire liability and cost recovery November 3, 2021 Established safety certification process and additional wildfire safety oversight Under AB 1054, SCE can obtain an annual safety certification upon submission of required safety i
Slide 16: AB 1054 and the Wildfire Insurance Fund provide a ceiling on liability
15 • Pay out claims to claimants subject to fund administrator approval • Subrogation claims settled at ≤40% approved unless exceptional facts and circumstances; higher amounts may be approved by fund administrator Fund payment of “eligible claims”4 AB 1054 and the Wildfire Insurance Fund provide cl
Slide 17: Wildfire Fund Illustrated
16 Wildfire Fund Illustrated: Eligible claims paid by Fund and IOUs reimburse up to cap only to degree found imprudent1,2 November 3, 2021 SCE does not reimburse Fund for eligible claims1 above annual aggregate retention of $1 billion If found 100% prudent2 SCE’s Insurance/ Retention Wildfire Insura
Slide 18: SCE's wildfire mitigation practices have evolved since 2018
17 Many of SCE’s wildfire mitigation practices have been in place for years and have greatly evolved since 2018 November 3, 2021 Longstanding wildfire mitigation efforts at SCE Pre-2018 practices and enhancements Foundational strategy established in 2018–2019 GS&RP (2018) and 2019 WMP Advance techno
Slide 19: Foundational strategy for mitigating wildfire risk continues
18 Foundational strategy for mitigating wildfire risk continues; increased focus on risk-prioritization and customer impacts 2020–2022 Wildfire Mitigation Plan Hardening the Grid Covered Conductor1 ~3,700 circuit miles by end of 2022 2020: 965 | 2021: ~1,300 | 2022: 1,100-1,400 Undergrounding Consid
Slide 20: SCE's publicly available real-time data enhances situational awareness
19 SCE’s publicly available real-time data enhances situational awareness and informs critical operational decisions Live HD camera feeds provide critical information to fire agencies for effectively deploying air and ground resources Provide real-time weather data, including wind speed and gust, te
Slide 21: SCE's execution of its wildfire mitigation strategy is reducing risk
20 SCE’s execution of its wildfire mitigation strategy is reducing risk of wildfires associated with utility infrastructure November 3, 2021 Note: Data as of September 30, 2021. Blue check marks indicate met or exceeded target. Green arrows indicate execution is on track. Community Resource Centers
Slide 22: Substantial progress on grid hardening and situational awareness measures
21 SCE has made substantial progress on grid hardening and situational awareness measures November 3, 2021 Investments to harden the grid and enhance situational awareness targeted through 2023 Green shading represents completed measures through Sept. 30, 2021, as proportion of GRC approval by 2023
Slide 23: SCE is making meaningful progress in mitigating wildfire risk
22 SCE is making meaningful progress in mitigating wildfire risk for its customers November 3, 2021 Covered conductor has reduced faults, which could lead to ignitions High fire risk inspection program has reduced remediation needs Expanded vegetation management and tree removal has reduced faults 7
Slide 24: Wildfire mitigation and PSPS have reduced probability of catastrophic losses
23 SCE estimates its wildfire mitigation and PSPS have reduced probability of losses from catastrophic wildfires by ~55-65%1,2 1. Baseline risk estimated by RMS using its wildfire model, the location of SCE’s assets, and SCE reported ignitions from 2014-2020. Risk reduction calculated by applying SC
Slide 25: California has increased investments in wildfire suppression and prevention
24 California has continued to increase investments in wildfire suppression and prevention1 November 3, 2021 CAL FIRE budget support along with actions to increase staffing and improve effectiveness ~$2.5–2.8bn/year ~7,180–8,134 Increases to firefighting crews Helicopter replacements continue Air ta
Slide 26: SCE has significant capital expenditure opportunities
25 Range Case2 5.2 6.0 5.2 5.2 5.2 5.3 6.2 5.3–5.7 6.0 6.8 2021 2022 2023 2024 2025 SCE has significant capital expenditure opportunities driven by investments in the safety and reliability of the grid November 3, 2021 Capital deployment expected to increase beyond the current GRC cycle and will be
Slide 27: 2021 GRC track decision provides rate base visibility through 2023
26 Range Case2 35.2 38.2 41.2 43.8 46.6 2021 GRC track 1 decision provides rate base visibility through 2023; future applications expected to extend growth November 3, 2021 1. Weighted-average year basis. Excludes rate base associated with ~$1.6 billion of wildfire mitigation-related spend that shal
Slide 28: SCE's long-term growth drivers are aligned with California's public policy goals
27 SCE’s long-term growth drivers are highly aligned with California’s public policy goals Overarching Goals SCE Growth Drivers Safe, Reliable, and Affordable Electricity Service Infrastructure Replacement Sustained investment required to reach and maintain equilibrium replacement rate Wildfire Miti
Slide 29: Memo account recovery and securitization strengthens balance sheet
28 Cash flow from memo account recovery and securitization strengthens our balance sheet and credit metrics November 3, 2021 Approved Applications Application Balance @ Sept. 30 Recovery Through Rate Recovery by Year Q4 ’21 2022 2023 2024 ✓ GRC Track 1 (Jan.–Sept. 2021 Balance) 722 Dec. ’23 80 321 3
Slide 30: 2017/2018 Wildfire/Mudslide Events Update
29 2017/2018 Wildfire/Mudslide Events Update: Less than 30% of best estimate remains; SCE resolves enforcement action November 3, 2021 SCE continues to make substantial progress resolving claims Remaining expected potential losses, $ in Billions 7.5 2.2 Best Estimate of Total Losses Remaining Expect
Slide 31: SCE's requested 2022 cost of capital
30 SCE’s requested 2022 cost of capital would result in an ROE of 10.53%, while keeping customer rates unchanged On August 23, SCE filed request to set CPUC cost of capital for 2022–2024 and to reset cost of capital mechanism (CCM) Proposed alternative would suspend CCM for 2022, maintain SCE’s ROE,
Slide 32: Track record of meeting EPS guidance and growing dividend
31 EIX has a strong track record of meeting or exceeding EPS guidance and growing its dividend 0.80 2.65 2004 2021 7.3% CAGR …and has 17 consecutive years of dividend growth2 Dividends per Share (in Dollars) 1. EPS guidance was not provided in 2012 or 2018 because of the timing of final decisions in
Slide 33: EIX and SCE committed to investment grade credit ratings
32 EIX and SCE are committed to maintaining their investment grade credit ratings SCE EIX Moody’s Baa2 Stable Baa3 Stable S&P BBB Stable BBB Stable Fitch BBB- Stable BBB- Stable Long-term Issuer Rating and Outlook As of November 2, 2021 Investment grade ratings at SCE and EIX, targeting EIX long-ter
Slide 34: Edison Energy empowers organizations in energy challenges
33 Edison Energy empowers organizations to conquer biggest challenges in energy today: Cost. Carbon. Complex Choices. Partners with market leaders to align energy spend with strategic, financial, and sustainability goals Provide independent, expert advice and services Using an integrated approach to
Slide 35: EIX narrows 2021 core EPS guidance to $4.42–4.52
34 EIX narrows 2021 core EPS guidance to $4.42–4.52 November 3, 2021 YTD Recorded1 2021 Guidance1 SCE 2021 Rate Base EPS $3.65 $4.89 SCE Operational Variances 0.32 0.34–0.42 SCE Operational Results 3.97 5.23–5.31 EIX Parent and Other (0.36)(0.56)–(0.54) EIX Operational Results 3.61 4.67–4.77 SCE Cos
Slide 36: 2021 EIX Core Earnings Guidance Assumptions and Preliminary 2022 Considerations
35 2021 EIX Core Earnings Guidance Assumptions and Preliminary 2022 Considerations November 3, 2021 1. Beginning in 2023, Intervenors have an annual opportunity to terminate the TO2019A Formula Rate. The earliest any new rate could become effective is January 1, 2024 2. Does not include securities w
Slide 37: EIX expects to achieve a 5–7% EPS CAGR from 2021 to 2025
36 EIX expects to achieve a 5–7% EPS CAGR1 from 2021 to 2025 November 3, 2021 Rate base and dividend growth expected to be financed with: • SCE cash from operations & financings • Parent debt issuances • On average, up to $250 million of equity content per year for 2022–20254 – May include preferred
Slide 38: Appendix
Appendix EDISON INTERNATIONAL®
Slide 39: SCE has delivered 7.2% annualized rate base growth since 2015
38 SCE has delivered 7.2% annualized rate base growth since 2015, driven by growing capital investment Historical Recorded Rate Base $ in Billions, Weighted-average basis Historical Capital Expenditures $ in Billions 3.9 3.5 3.8 4.4 4.8 5.5 2015 2016 2017 2018 2019 2020 23.9 25.1 26.6 28.5 30.8 33.8
Slide 40: SCE Key Regulatory Proceedings
39 SCE Key Regulatory Proceedings Proceeding Description and Next Steps Base Rates 2021 GRC Track 4 (A.19-08-013) Set CPUC base revenue requirement for third attrition year (2024) Track 4 to be filed Q2 2022 2022 Cost of Capital (A.21-08-013) Establish cost of capital for 2022 and reset cost of capi
Slide 41: SCE's 2021 General Rate Case will be approved in four tracks
40 SCE’s 2021 General Rate Case will be approved in four tracks over 2021–2023 SCE Testimony Intervenor Testimony SCE Rebuttal Opening & Reply Briefs CPUC Proposed Decision Track 1: 2021–2023 GRC Revenue Requirement ✓ ✓ ✓ ✓ ✓ (Approved) Track 2: 2018–2019 FMA Update1 ✓ ✓ ✓ N/A due to settlement ✓ (A
Slide 42: SCE plans to securitize ~$1.6 billion of AB 1054 capex
41 SCE plans to securitize ~$1.6 billion of AB 1054 capex upon CPUC approval November 3, 2021 Applica- tion # Cost Recovery Financing Order Issue Recovery Bonds Proceeding/ Category AB 1054 Capex1,2 Serve Testimony CPUC Approval Serve Testimony CPUC Approval 1 GS&RP 327 ✓ ✓ ✓ ✓ ✓ 2 GRC Tracks 1 & 2
Slide 43: SCE's average rate has grown less than inflation over 20 years
42 SCE’s average rate has grown less than inflation over the last 20 years, even with recent increases to mitigate wildfire risks November 3, 2021 21.6 23.3 28.0 SCE PG&E SDG&E 1. All rates include California Climate Credit 2. Inflation data based on CPI Los Angeles-Long Beach-Anaheim region: as of
Slide 44: Earnings Per Share Non-GAAP Reconciliations
43 Low High Basic EIX EPS2 $1.62 $1.72 Total Non-Core Items2 (2.80)(2.80) Core EIX EPS $4.42 $4.52 1. EPS is calculated on the assumed weighted-average share count for 2021 of 379.7 million 2. There were ($1,065) million, or ($2.80) per share of non-core items recorded for the nine months ended Sept
Slide 45: Use of Non-GAAP Financial Measures
44 Edison International's earnings are prepared in accordance with generally accepted accounting principles used in the United States. Management uses core earnings (losses) internally for financial planning and for analysis of performance. Core earnings (losses) are also used when communicating wit
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