Edison International · NYSE:EIX
Edison International — Corporate Update (November 2021)
45 slides from Edison International's corporate update, Nov 3, 2021
Slide 1: Business Update
Business Update November 3, 2021
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 statem
Slide 3: Edison International is leading the transformation of the electric power industry
Edison International is leading the transformation of the electric power industry Holding company focused on opportunities in clean energy, efficient electrification, grid of the future, and customer choice One of the nation’s largest electric-only utilities, serving over 15 million residents EIX’s
Slide 4: EIX is well positioned for a decarbonized future, with no coal or gas LDC exposure
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 stranded asset risk with No Gas LDC Exposure (# of Companies) 6 of 20 11 of 39 increased electrification No Coal Generation No coal generat
Slide 5: Sustainability is central to Edison's vision to lead the transformation
Sustainability is central to Edison’s vision to lead the transformation of the electric power industry We have made long-term, public commitments related to clean energy, transportation electrification, diversity and inclusion, and safety Environmental Social Governance Targeting 100% carbon-free Re
Slide 6: Our Sustainable Financing Framework underscores the link between strategy and financing
Our Sustainable Financing Framework underscores the strong link between our strategy and financing activities Green, Social, and Sustainability instruments will fund In June, EIX published its projects that provide distinct environmental or social benefits Sustainable Financing Eligible Project Cate
Slide 7: Thesis: Wires-focused electric utility with regulated rate base growth
Thesis: Wires-focused electric utility with regulated rate base growth aligned with state’s aggressive clean energy goals Decoupling of sales Constructive California and Forward-looking ratemaking Federal regulatory structures Premium California ROE Wildfire prudency standard Aggressive climate goal
Slide 8: California's regulatory mechanisms provide revenue certainty
California’s regulatory mechanisms provide revenue certainty, even as load and payment patterns change Revenue Decoupling Long-standing regulatory mechanism that breaks the link between retail means earnings aren’t electricity sales and revenue; promotes energy efficiency, helps stabilize affected b
Slide 9: Reaching California's 2045 GHG goals requires a near-complete transformation of energy use
Reaching California’s 2045 GHG goals requires a near- complete transformation of energy use economy wide Pathway 2045: Key steps California must take to reach carbon neutrality 100% of grid sales with 76% of light-duty vehicles carbon-free electricity need to be electric 80 GW of utility-scale clean
Slide 10: SCE is a catalyst for achieving California's GHG and clean energy goals
SCE is a catalyst for achieving California’s aggressive GHG and clean energy goals via economy-wide electrification Achieving 80% GHG reduction by 2050 will require fuel SCE delivered ~43% carbon-free use changes in all sectors electricity to customers in 2020 State Carbon Emissions Reduction Pathwa
Slide 11: Significant incremental grid investments required by 2045
Significant incremental grid investments required by 2045 to serve load growth and integrate renewables and storage At least a third of incremental grid investment fits CAISO-wide investment required at squarely within IOU jurisdictions various voltage levels and to address CAISO-wide grid investmen
Slide 12: A decarbonized, electrified world produces energy cost savings for households
A decarbonized, electrified world produces energy cost savings for an average household Total energy cost for an average household decreases By 2045, a greater reliance on by about one-third by 2045 electricity, combined with Annual residential household energy costs (2019$)1 population and economic
Slide 13: Increased energy storage is essential to support the transition
Increased energy storage is essential to support the transition to a carbon-free future SCE has installed or procured ~2,810 MW of storage SCE is in the process of procuring capacity and must procure ~3,685 MW more by 20261 2,800 MW for 2023 and 2024 Energy storage capacity procured and online (MW)
Slide 14: SCE leads the largest utility transportation electrification initiatives in the U.S.
SCE leads the largest utility transportation electrification initiatives and programs in the U.S. Edison’s large suite of TE programs enables By 2030, SCE will administer over $1 California’s leadership of EV adoption billion of EV purchase incentives and Approved Electric Utility Transportation Ele
Slide 15: AB 1054 provides a strong regulatory construct for wildfire liability and cost recovery
AB 10541 provides a strong regulatory construct for determining wildfire liability and cost recovery Established safety Under AB 1054, SCE can obtain an annual safety certification upon submission of certification process and required safety information, including an approved wildfire mitigation pla
Slide 16: AB 1054 and the Wildfire Insurance Fund provide clear pathway to determine prudency
AB 1054 and the Wildfire Insurance Fund provide clear pathway to determine IOU’s prudency and ceiling on liability AB 1054 Wildfire Insurance Fund Mechanics1 IOUs contribute $10.5 billion Customers contribute non-bypassable charge PG&E: $4.8Bn initial + $193MM annually through 2028 Customers contrib
Slide 17: Wildfire Fund Illustrated: Eligible claims paid by Fund and IOUs reimburse up to cap
Wildfire Fund Illustrated: Eligible claims paid by Fund and IOUs reimburse up to cap only to degree found imprudent1,2 Example of Wildfire Insurance Fund operations, reimbursement, and IOU liability from a hypothetical wildfire resulting in $5 billion of paid claims $ in Billions; Example based on S
Slide 18: Many of SCE's wildfire mitigation practices have evolved since 2018
Many of SCE’s wildfire mitigation practices have been in place for years and have greatly evolved since 2018 Longstanding Foundational Advance technology Build on successes wildfire mitigation strategy established and risk modeling and incorporate efforts at SCE in 2018–2019 capabilities lessons lea
Slide 19: Foundational strategy for mitigating wildfire risk continues
Foundational strategy for mitigating wildfire risk continues; increased focus on risk-prioritization and customer impacts 2020–2022 Wildfire Mitigation Plan Hardening Covered ~3,700 circuit miles by end of 2022 1 the Grid Conductor 2020: 965 | 2021: ~1,300 | 2022: 1,100-1,400 Undergrounding Consider
Slide 20: SCE's publicly available real-time data enhances situational awareness
SCE’s publicly available real-time data enhances situational awareness and informs critical operational decisions Cameras on ALERT Wildfire Threat Index Emergency Operations Wildfire Network HD Weather Stations Predictive Model Center (EOC) Live HD camera feeds Provide real-time weather Helps fire a
Slide 21: SCE's execution of its wildfire mitigation strategy is reducing risk
SCE’s execution of its wildfire mitigation strategy is reducing risk of wildfires associated with utility infrastructure 2021 Completed 2021 Completed Completed/Target Since 2018 Completed/Target 113% Since 2018 375/375 100% 1,430+ Distribution 185,000/163,000 completed 769,300+ weather stations ins
Slide 22: SCE has made substantial progress on grid hardening and situational awareness
SCE has made substantial progress on grid hardening and situational awareness measures 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 20231,2 Targeted by 20231
Slide 23: SCE is making meaningful progress in mitigating wildfire risk
SCE is making meaningful progress in mitigating wildfire risk for its customers Covered Expanded High fire risk Today’s PSPS use conductor has vegetation inspection would have reduced faults, management program has prevented majority which could lead and tree removal reduced of damage from to igniti
Slide 24: Wildfire mitigation and PSPS have reduced probability of catastrophic losses
SCE estimates its wildfire mitigation and PSPS have reduced probability of losses from catastrophic wildfires by ~55-65%1,2 Methodology Substantial risk reduction due to SCE’s mitigation measures RMS, a leading provider of Pre- Estimated climate and natural disaster 2018 Now Risk Reduction risk mode
Slide 25: California has continued to increase investments in wildfire suppression and prevention
California has continued to increase investments in wildfire suppression and prevention1 CAL FIRE budget support Substantial increase in Budget continues along with actions to wildfire suppression budget suppression support increase staffing and to address shifting and adds focus on improve effectiv
Slide 26: SCE has significant capital expenditure opportunities
SCE has significant capital expenditure opportunities driven by investments in the safety and reliability of the grid Capital deployment expected to increase beyond the current 2021 GRC track 1 supports $5.3 GRC cycle and will be proposed in future applications billion of annual capital spending Cap
Slide 27: 2021 GRC track 1 decision provides rate base visibility through 2023
2021 GRC track 1 decision provides rate base visibility through 2023; future applications expected to extend growth From a 2021 base, rate base growth forecast of 7–9% 2021 GRC track 1 final decision through 2025, reflecting future incremental investment supports solid rate base growth Rate Base1 $
Slide 28: SCE's long-term growth drivers are aligned with California's public policy goals
SCE’s long-term growth drivers are highly aligned with California’s public policy goals Overarching Goals SCE Growth Drivers Sustained investment required to reach Infrastructure and maintain equilibrium replacement Safe, Reliable, and Replacement rate Affordable Electricity Service Significant inve
Slide 29: Cash flow from memo account recovery and securitization strengthens balance sheet
Cash flow from memo account recovery and securitization strengthens our balance sheet and credit metrics GRC, Wildfire-related, and Wildfire Insurance Applications $ in Millions Approved Applications Balance @ Recovery Rate Recovery by Year Application Sept. 30 Through Q4 ’21 2022 2023 2024 GRC Tr
Slide 30: 2017/2018 Wildfire/Mudslide Events Update
2017/2018 Wildfire/Mudslide Events Update: Less than 30% of best estimate remains; SCE resolves enforcement action SCE continues to make substantial progress resolving claims Claims settled in most recent Remaining expected potential losses, $ in Billions quarter (3Q21): ~$485 million 7.5 Bellwether
Slide 31: SCE's requested 2022 cost of capital would result in an ROE of 10.53%
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 Authorized Cost of Capital and 2022 Request CPUC cost of capital for 2022–2024 and Capital 2021 2022 2022 Alt. to reset cost of capital mechanism
Slide 32: EIX has a strong track record of meeting EPS guidance and growing dividend
EIX has a strong track record of meeting or exceeding EPS guidance and growing its dividend EIX has consistently met or exceeded Core EPS guidance… …and has 17 consecutive years of dividend growth2 Core EPS Relative to Guidance Range Dividends per Share (in Dollars) 2004 Exceeded 2005 Exceeded 2.65
Slide 33: EIX and SCE are committed to maintaining investment grade credit ratings
EIX and SCE are committed to maintaining their investment grade credit ratings Long-term Issuer Rating and Outlook Investment grade ratings at SCE and EIX, As of November 2, 2021 targeting EIX long-term FFO-to-Debt ratio SCE EIX of 15–17% Moody’s Baa2 Baa3 Total liquidity of $4.7 billion1 Stable Sta
Slide 34: Edison Energy empowers organizations to conquer biggest energy challenges
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, Using an integrated approach to design and implement strategi
Slide 35: EIX narrows 2021 core EPS guidance to $4.42–4.52
EIX narrows 2021 core EPS guidance to $4.42–4.52 EIX 2021 Core Earnings Per Share Guidance Range Key components of variances Building from SCE Rate Base EPS from SCE rate base EPS1 YTD 2021 SCE Operational Variances Recorded1 Guidance1 Financial, operating, and 0.34–0.42 other variances from auth. S
Slide 36: 2021 EIX Core Earnings Guidance Assumptions and Preliminary 2022 Considerations
2021 EIX Core Earnings Guidance Assumptions and Preliminary 2022 Considerations 2021 2022 Assumption Preliminary Considerations CPUC Rate Base ($ in Billions) $28.1 Rate base growth as projected Return on Equity (ROE) 10.30% 2022 ROE subject to CPUC decision on SCE’s Equity in Capital Structure 52.0
Slide 37: EIX expects to achieve a 5–7% EPS CAGR from 2021 to 2025
EIX expects to achieve a 5–7% EPS CAGR1 from 2021 to 2025 5–7% Driven by rate base Rate base and dividend growth 2021–2025 expected to be financed with: growth of ~7–9% Core EPS CAGR1 • SCE cash from operations & financings • Parent debt issuances ~4%+ Target dividend • On average, up to $250 millio
Slide 38: Appendix
Appendix
Slide 39: SCE has delivered 7.2% annualized rate base growth since 2015
SCE has delivered 7.2% annualized rate base growth since 2015, driven by growing capital investment Historical Capital Expenditures Historical Recorded Rate Base $ in Billions $ in Billions, Weighted-average basis ~$25.9 billion 2015–2020 7.2% 33.8 5.5 CAGR 30.8 4.8 28.5 26.6 4.4 25.1 23.9 3.9 3.8 3
Slide 40: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description and Next Steps Base 2021 GRC Track 4 Set CPUC base revenue requirement for third attrition year (2024) Rates (A.19-08-013) Track 4 to be filed Q2 2022 2022 Cost of Capital Establish cost of capital for 2022 and reset cost of capital mechanism (A.
Slide 41: SCE's 2021 General Rate Case will be approved in four tracks over 2021–2023
SCE’s 2021 General Rate Case will be approved in four tracks over 2021–2023 Estimated timeline for 2021 General Rate Case tracks and milestones Opening CPUC SCE Intervenor SCE & Reply Proposed Testimony Testimony Rebuttal Briefs Decision Track 1: 2021–2023 GRC Revenue Requirement (Approved
Slide 42: SCE plans to securitize ~$1.6 billion of AB 1054 capex
SCE plans to securitize ~$1.6 billion of AB 1054 capex upon CPUC approval Steps Required to Issue Securitized Recovery Bonds $ in Millions Cost Recovery Financing Order Applica- Issue tion Proceeding/ AB 1054 Serve CPUC Serve CPUC Recovery # Category Capex1,2 Testimony Approval Testimony Approval Bo
Slide 43: SCE's average rate has grown less than inflation over the last 20 years
SCE’s average rate has grown less than inflation over the last 20 years, even with recent increases to mitigate wildfire risks Among California IOUs, SCE has SCE’s system average rate has grown at an annualized the lowest system average rate ~2.1% vs. local inflation of ~2.5% since 19902 System Aver
Slide 44: Earnings Per Share Non-GAAP Reconciliations
Earnings Per Share Non-GAAP Reconciliations Reconciliation of EIX Basic Earnings Per Share Guidance to EIX Core Earnings Per Share Guidance1 2021 EPS Attributable to Edison International 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 calcul
Slide 45: 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 (losses) internally for financial planning and for analysis of performance. Core earnings (losses) are
Edison International — Corporate Update (November 2021) on 6ix