Edison International · NYSE:EIX
Edison International — Investor Presentation (July 2016)
48 slides from Edison International's investor presentation, Jul 29, 2016
Slide 1: Business Update July 2016
July 29, 2016 Exhibit 99.1Exhibit 99.1 Business Update July 2016
Slide 2: Forward-Looking Statements
July 29, 2016 Exhibit 99.1 1 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 historica
Slide 3: Table of Contents
July 29, 2016 Exhibit 99.1 2 Page New (N) or Updated (U) from May 2016 Business Update EIX Shareholder Value 3 U SCE Highlights, Regulatory Model 4‐5 Capital Expenditures and Rate Base History and Outlook 6‐10 U CPUC Cost of Capital 11 U 2016 Guidance 12 U Growth Drivers Beyond 2017, Power Grid of t
Slide 4: EIX Strategy Should Produce Superior Value
July 29, 2016 Exhibit 99.1 3 EIX Strategy Should Produce Superior Value Sustainable Earnings and Dividend Growth Positioned for Transformative Change Rate Base and Core Earnings Growth • 6-7% average annual rate base growth through 2017 Constructive Regulatory Structure • Decoupling • Balancing acco
Slide 5: SCE Highlights
July 29, 2016 Exhibit 99.1 4 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 investments • 1.4 million power poles • 725,000 transformers • 103,000 miles of distribut
Slide 6: SCE Decoupled Regulatory Model
July 29, 2016 Exhibit 99.1 5 SCE Decoupled Regulatory Model Decoupling of Regulated Revenues from Sales Major Balancing Accounts • Fuel • Purchased power • Energy efficiency • Pension-related contributions Advanced Long-Term Procurement Planning Forward-looking Ratemaking • SCE earnings are not affe
Slide 7: SCE Historical Rate Base and Core Earnings
July 29, 2016 Exhibit 99.1 6 SCE Historical Rate Base and Core Earnings Rate Base Core Earnings 8% 7% 2010 – 2015 CAGR ($ billions) Note: Recorded rate base, year-end basis. See Earnings Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. 2013-2015 rate base excludes SONGS $
Slide 8: SCE Capital Expenditure Forecast
July 29, 2016 Exhibit 99.1 7 Outlook - $3.8 $4.3 Range - $3.7 $4.2 Outlook - $4.1 $4.2 Range - $4.0 $4.1 SCE Capital Expenditure Forecast Note: Forecasted capital spending subject to timely receipt of permitting, licensing, and regulatory approvals. Forecasted capital spending includes CPUC, FERC an
Slide 9: SCE Distribution System Investments
July 29, 2016 Exhibit 99.1 8 SCE Distribution System Investments 1. Excludes DRP and Energy Storage spending. Includes Mobile Home Park conversions Distribution Trends • 2015 GRC includes 94% increase in infrastructure replacement, but power grid not yet reaching equilibrium replacement rate • Distr
Slide 10: SCE Large Transmission Projects
July 29, 2016 Exhibit 99.1 9 SCE Large Transmission Projects Large Transmission Projects Tehachapi 4-11 • $2.5 billion total project cost; remaining investment $180 million • 2016-17 in-service date West of Devers • $1.1 billion total project cost; remaining investment $1.0 billion • 2021 in-service
Slide 11: SCE Rate Base Forecast
July 29, 2016 Exhibit 99.1 10 SCE Rate Base Forecast • Incorporates 2015 GRC final decision with bonus depreciation provision, except “rate base offset” excluded because of write off of regulatory asset related to 2012-2014 incremental tax repairs • Includes incremental rate base for the pole loadin
Slide 12: CPUC Cost of Capital
July 29, 2016 Exhibit 99.1 11 CPUC Cost of Capital 3 4 5 6 7 10/1/12 10/1/13 10/1/14 10/1/15 10/1/16 10/1/17 R a t e ( % ) CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/15 – 6/30/16) = 5.14% 100 basis point +/- Deadband Starting Value – 5.00% Return on Equity (RO
Slide 13: 2016 Earnings Guidance Reaffirmed
July 29, 2016 Exhibit 99.1 12 $4.09 $3.91 (0.18) 2016 SCE EPS Midpoint Guidance EIX Parent & Other 2016 Core EIX EPS Midpoint Guidance As of May 2, 2016 As of July 28, 2016 Low Mid High Low Mid High EIX Basic EPS $3.82 $3.92 $4.02 $3.82 $3.92 $4.02 Less: Non-Core Items1 0.01 0.01 0.01 0.01 0.01 0.01
Slide 14: SCE Growth Drivers Beyond 2017
July 29, 2016 Exhibit 99.1 13 SCE Growth Drivers Beyond 2017 Infrastructure Reliability Investment • Sustained level of infrastructure investment required until equilibrium replacement rates are achieved and then maintained - includes underground cable, poles, switches, and transformers1 Distributio
Slide 15: Distribution Power Grid of the Future
July 29, 2016 Exhibit 99.1 14 Distribution Power Grid of the Future One-Way Electricity Flow • System designed to generate electricity from large central plant • Very few distributed energy resources • Voltage relatively simple to maintain • Limited situational awareness and visualization tools for
Slide 16: Smart Grid Highlights
July 29, 2016 Exhibit 99.1 15 Computing intelligence inside electrical substations Future circuit designs integrate Distributed Energy Resources & increase flexibility The 21st century distribution system will require transformative technologies in planning, design, construction, and operation. Net
Slide 17: CPUC Distributed Energy Resources Proceedings
July 29, 2016 Exhibit 99.1 16 CPUC Distributed Energy Resources (DER) Proceedings Expanded scope • Competitive solicitation framework: product definition, rules, plans, standard contracts, “review groups,” and valuation methodology • Electric power company roles, business models, and financial inter
Slide 18: Smart Grid Modernization Roadmap
July 29, 2016 Exhibit 99.1 17 2015 - 2017 2018 - 2020 2021 – 2023 + Implement foundational information technology, communication systems, and system planning tools Enhance automation and improve interoperability with Distributed Energy Resources Optimize operation of Distributed Energy Resources and
Slide 19: SCE DRP Capital Expenditure Estimates
July 29, 2016 Exhibit 99.1 18 July 2015 SCE DRP Capital Expenditure Estimates Time Period Capital Expenditures CPUC Approval Mechanism 2016-2017 Distribution Automation $40-70 million • Proposed memorandum account to record associated revenue requirement until expenditures are authorized by CPUC Sub
Slide 20: SCE Key Regulatory Proceedings
July 29, 2016 Exhibit 99.1 19 SCE Key Regulatory Proceedings Proceeding Description Next Steps Key SCE Proceedings Cost of Capital CPUC capital structure, cost of capital, and return on equity CPUC approved the Joint Petition for Modification to suspend adjustment mechanism through 2017; Filing of 2
Slide 21: SCE 2016 Bundled Revenue Requirement
July 29, 2016 Exhibit 99.1 20 SCE 2016 Bundled Revenue Requirement Note: Rates in effect as of June 1, 2016. Represents bundled service which excludes Direct Access customers that do not receive generation services SCE Systemwide Average Rate History (¢/kWh) 2010 2011 2012 2013 2014 2015 14.3 14.1 1
Slide 22: SCE Operational Excellence
July 29, 2016 Exhibit 99.1 21 SCE Operational Excellence Top Quartile • Safety • Cost efficiency • Reliability • Customer service Optimize • Capital productivity • Purchased power cost High performing, continuous improvement culture Defining Excellence Measuring Excellence • Employee and public safe
Slide 23: EIX is Responding to Industry Change
July 29, 2016 Exhibit 99.1 22 EIX is Responding to Industry Change • Public policy and large commercial customers prioritizing sustainability objectives • Innovation facilitating conservation and self-generation • Regulation supporting new forms of competition • Flattening domestic demand for electr
Slide 24: Edison Energy Focus: Commercial & Industrial
July 29, 2016 Exhibit 99.1 23 • Create energy services that help simplify and optimize energy needs for large commercial & industrial customers: – Help customers better assess and capture the value of energy optimization, paving the way for greater third-party energy services – Help customers manage
Slide 25: Edison Energy: Acquired Businesses
July 29, 2016 Exhibit 99.1 24 Edison Energy: Acquired Businesses Summary • Provides comprehensive renewable energy advisory and procurement services to leading Fortune 1000 companies, universities and municipalities • Created a proprietary market access platform where it typically procures energy fo
Slide 26: Grid Assurance Launch
July 29, 2016 Exhibit 99.1 25 On May 9, 2016, six electric power companies announced the official launch of Grid Assurance, LLC, an independent company providing transmission sparing solutions for critical electric transmission equipment. The company is offering its subscribers a cost-effective way
Slide 27: EIX Annual Dividends Per Share
July 29, 2016 Exhibit 99.1 26 EIX Annual Dividends Per Share $0.80 $1.00 $1.08 $1.16 $1.22 $1.24 $1.26 $1.28 $1.30 $1.35 $1.42 $1.67 $1.92 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: See use of Non-GAAP Financial Measures in Appendix Twelve Years of Dividend Growth Target
Slide 28: Appendix
July 29, 2016 Exhibit 99.1 27 Appendix
Slide 29: 2015 General Rate Case: Tax Repair Accounting
July 29, 2016 Exhibit 99.1 28 Tax Repair Accounting • As a result of the rate base offset, SCE wrote down $382 million of regulatory assets associated with deferred income taxes related to 2012-2014 incremental tax repair deductions Because this rate base offset will be implemented at SCE through
Slide 30: SCE Tax Memorandum Account
July 29, 2016 Exhibit 99.1 29 SCE Tax Memorandum Account • 2015 GRC decision established tax accounting memorandum account (TAMA), which tracks 2015 – 2017 tax benefits or costs associated with following events: - changes in tax accounting methods - changes in tax laws and regulations impacting depr
Slide 31: SCE Historical Capital Expenditures
July 29, 2016 Exhibit 99.1 30 SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $3.5 $4.0 $3.9 2010 2011 2012 2013 2014 2015
Slide 32: Energy Storage
July 29, 2016 Exhibit 99.1 31 Energy Storage SCE has already met the aggregate 2016 targets • CPUC Energy Storage Program: – Storage Rulemaking (R.10-12-007) established 1,325 MW target for IOUs by 2024 (580 MW SCE share; spread as biennial targets during 2014-20) – Ownership allowed up to 50% of to
Slide 33: SCE Charge Ready Program
July 29, 2016 Exhibit 99.1 32 SCE Charge Ready Program • Electric vehicle Charge Ready Program Phase 1 pilot approved by CPUC January 2016 − Authorizes spend of $22 million on pilot implementation for charger installations and Market Education Programs ($12 million rate base) − Advice letter approva
Slide 34: Residential Rate Design OIR Decision
July 29, 2016 Exhibit 99.1 33 Residential Rate Design OIR Decision • CPUC Order Instituting Ratemaking R.12-06-013 comprehensively reviewed residential rate structure including a future transition to time of use rates • July 2015 CPUC Decision D.15-07-001 includes: - Transition to 2 tiered rates by
Slide 35: SCE Net Metering Rate Structure
July 29, 2016 Exhibit 99.1 34 SCE Net Metering Rate Structure 7¢ 24¢17¢ 0 5 10 15 20 25 30 ¢ / k W h Solar Subsidies (Illustrative) Avoided Generation (excludes RPS Premium) Subsidy Paid by Other Ratepayers Equivalent Solar Offset NEM Rate Developments: • NEM allows residential customers to receive
Slide 36: Residential Solar Installations in SCE Territory
July 29, 2016 Exhibit 99.1 35 Note: NEM solar installations in SCE service territory include projects with solar PV only less than 1 MW Residential Solar Installations in SCE Territory 10 20 30 40 50 60 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2010 2011 2012 2013 2014 2015 2016 M W Installed N u m
Slide 37: 2016 System Average Rate
July 29, 2016 Exhibit 99.1 36 (0.3¢) (0.5¢) (1.4¢) (0.1¢) 0.3¢ 0.4¢ 0.3¢ 2015 SAR 2015 ERRA Settlement 2015 GRC Expiration of Prior Refunds Other CPUC 2016 FERC 2016 ERRA Changes January 2016 SAR FERC Balancing Account June 2016 SAR 16.2¢ 14.9¢ 15.0¢ 2016 System Average Rate SCE’s system average rat
Slide 38: System Average Rate Historical Growth
July 29, 2016 Exhibit 99.1 37 9.7¢ 16.2¢ 14.9¢ 8.0¢ 10.0¢ 12.0¢ 14.0¢ 16.0¢ 18.0¢ 20.0¢ 22.0¢ 24.0¢ 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Energy Crisis and return to normal Higher gas price forecast post-Katrina leads to higher rates with subsequent refund of over col
Slide 39: SCE Rates and Bills Comparison
July 29, 2016 Exhibit 99.1 38 SCE Rates and Bills Comparison 13.1 16.5 US Average SCE 26% Higher 2015 Average Residential Rates (¢/kWh) 2015 Average Residential Bills ($ per Month) ¢ ¢ SCE’s average residential rates are above national average, but residential bills are below national average due to
Slide 40: SCE Customer Demand Trends
July 29, 2016 Exhibit 99.1 39 SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) Residential Commercial Industrial Public authorities Agricultural and other Subtotal Resale Total Kilowatt-Hour Sales Customers Residential Commercial Industrial Public authorities Agricultural Railroads a
Slide 41: California's Energy Policy
July 29, 2016 Exhibit 99.1 40 California’s Energy Policy • On October 7, 2015, Governor Brown signed SB 350, which requires that 50 percent of energy sales to customers come from renewable power and a doubling of energy efficiency in existing buildings for California by 2030 - Also requires Transpor
Slide 42: AB32 Emissions Reduction Programs
July 29, 2016 Exhibit 99.1 41 AB32 Emissions Reduction Programs Cap & Trade 22% Other 23% Low Carbon Fuel Standard 19% RPS 14% Energy Efficiency 15% High GWP Gases 7% California Cap and Trade Program • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16
Slide 43: Second Quarter Earnings Summary
July 29, 2016 Exhibit 99.1 42 Q2 2016 Q2 2015 Variance Basic Earnings Per Share (EPS) SCE $0.97 $1.18 $(0.21) EIX Parent & Other (0.11) (0.02) (0.09) Discontinued Operations (0.01) (0.01) Basic EPS $0.85 $1.16 $(0.31) Less: Non-Core Items SCE $ $ $ EIX Parent & Other1 0.01 0.01 Discontinue
Slide 44: YTD 2016 Earnings Summary
July 29, 2016 Exhibit 99.1 43 YTD 2016 YTD 2015 Variance Basic Earnings Per Share (EPS) SCE $1.85 $2.12 $(0.27) EIX Parent & Other (0.17) (0.04) (0.13) Discontinued Operations Basic EPS $1.68 $2.08 $(0.40) Less: Non-Core Items SCE $ $ $ EIX Parent & Other1 0.01 0.02 (0.01) Discontinued O
Slide 45: SCE Results of Operations
July 29, 2016 Exhibit 99.1 44 $6,305 — 1,977 1,915 334 — 4,226 2,079 (525) 64 1,618 507 1,111 113 $998 $5,180 4,266 913 — — — 5,179 1 (1) — — — — — $— $11,485 4,266 2,890 1,915 334 — 9,405 2,080 (526) 64 1,618 507 1,111 113 $998 $1,368 (370) $998 SCE Results of Operations • Earning activities – reve
Slide 46: Earnings Non-GAAP Reconciliations
July 29, 2016 Exhibit 99.1 45 Earnings Non-GAAP Reconciliations Note: See Use of Non-GAAP Financial Measures in Appendix ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings SCE EIX Parent & Other Discontinued operations Basic Earnings Non-Core Items SCE EIX Parent & Other Discontin
Slide 47: SCE Core EPS Non-GAAP Reconciliations
July 29, 2016 Exhibit 99.1 46 SCE Core EPS Non-GAAP Reconciliations Basic EPS Non-Core Items Tax settlement Health care legislation Regulatory and tax items Write down, impairment and other charges Insurance recoveries Less: Total Non-Core Items Core EPS Reconciliation of SCE Basic Earnings Per Shar
Slide 48: Use of Non-GAAP Financial Measures
July 29, 2016 Exhibit 99.1 47 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 e
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