Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — FY2019 Earnings Presentation
49 slides from Consolidated Edison's earnings presentation, Feb 20, 2020
Slide 1: 2019 Earnings Release Presentation
2019 Earnings Release Presentation February 20, 2020
Slide 2: Available Information and Forward-Looking Statements
Available Information On February 20, 2020, Consolidated Edison, Inc. issued a press release reporting its 2019 earnings and filed with the Securities and Exchange Commission the company’s 2019 Form 10-K. This presentation should be read together with, and is qualified in its entirety by reference t
Slide 3: Table of Contents
Table of Contents Page Organizational Structure and Plan 4–5 Dividend and Earnings Announcements 6 4Q 2019 Earnings 7 – 10 4Q 2019 Developments 11 – 13 2019 Earnings 14 – 17 Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 18 CECONY Electric & Gas Rate Plans 19 Earnings Adj
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $30.1 billion (b) Ratings : Baa1 / BBB+ / BBB+ (b) Outlook : Negative / 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.
Slide 5: 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 opportunities to add stability valu
Slide 6: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On January 16, 2020, the company issued a press release reporting that the company had declared a quarterly dividend of 76.5 cents a share on its common stock -- an annualized increase of 10 cents over the previous annualized dividend of $2.96 a share and its 46
Slide 7: 4Q 2019 Earnings
4Q 2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $0.89 $1.06 $295 $331 HLBV effects of the Clean Energy Businesses (pre-tax) 0.06 — 19 — Income taxes (a) (0.02) — (5) — HLBV effects of the Cl
Slide 8: Walk from 4Q 2018 EPS to 4Q 2019 EPS
Walk from 4Q 2018 EPS to 4Q 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.10 $0.01 $1.06 $0 $0.01 $0.89 $0.10 $0.01 $0.01 $0.87 $(0.28) $(0.01) $0.77 $(0.02) (a) (a) 4Q 2018 CECONY O&R CEBs CET Other 4Q 2019 4Q 2018 CECONY O&R CEBs CET Other 4Q 2019 Reported Reporte
Slide 9: 4Q 2019 vs. 4Q 2018 EPS Variances
4Q 2019 vs. 4Q 2018 EPS Variances – Three Months Ended Variation CECONY(a) Changes in rate plans $ 0.19 Reflects higher electric and gas net base revenues of $0.11 a share and $0.04 a share, respectively, due primarily to electric and gas base rate increases in January 2019 under the company's rate
Slide 10: 4Q 2019 vs. 4Q 2018 EPS Reconciliation by Company
4Q 2019 vs. 4Q 2018 EPS Reconciliation by Company Three Months Ended December 31, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $0.82 $0.03 $— $0.05 $(0.01) $0.89 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.06 — — 0.06 Income taxes (a) — — (0.02) — — (0.02) HLBV e
Slide 11: 4Q 2019 Developments
4Q 2019 Developments(a) CECONY & O&R • In January 2020, the New York State Public Service Commission (NYSPSC) approved an October 2019 Joint Proposal for CECONY electric and gas rate plans for the three-year period January 2020 through December 2022 reflecting an 8.8 percent return on common equity
Slide 12: 4Q 2019 Developments (cont'd)
4Q 2019 Developments (cont'd)(a) CECONY & O&R • In January 2020, the NYSPSC issued an order directing energy efficiency targets and budgets for New York utilities. The order approved $2,000 million statewide for electric and gas energy efficiency programs and heat pump budgets, and associated target
Slide 13: 4Q 2019 Developments (cont'd)
4Q 2019 Developments (cont'd)(a) Clean Energy Businesses • The Clean Energy Businesses have 3,045 MW (AC) of utility-scale renewable energy production projects in service (2,628 MW) or in construction (417 MW) and 56 MW (AC) of behind-the-meter renewable energy production projects in service (54 MW)
Slide 14: 2019 Earnings
2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $4.09 $4.43 $1,343 $1,382 HLBV effects of the Clean Energy Businesses (pre-tax) 0.31 — 98 — Income taxes (a) (0.09) — (24) — HLBV effects of the
Slide 15: Walk from 2018 EPS to 2019 EPS
Walk from 2018 EPS to 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $4.43 $0.02 $0.03 $4.38 $4.33 $0.02 $0.03 $0.01 $(0.04) $0.19 $4.09 $0.01 $(0.04) $(0.52) (a) 2018 CECONY O&R CEBs CET Other 2019 2018 CECONY O&R CEBs CET Other (a) 2019 Reported Reported Adjusted Adju
Slide 16: 2019 vs. 2018 EPS Variances
2019 vs. 2018 EPS Variances – Year Ended Variation CECONY(a) Changes in rate plans $ 0.76 Reflects higher electric and gas net base revenues of $0.53 a share and $0.16 a share, respectively, due primarily to electric and gas base rate increases in January 2019 under the company's rate plans, higher
Slide 17: 2019 vs. 2018 EPS Reconciliation by Company
2019 vs. 2018 EPS Reconciliation by Company Year Ended December 31, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $3.80 $0.21 $(0.06) $0.16 $(0.02) $4.09 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.31 — — 0.31 Income taxes (a) — — (0.09) — — (0.09) HLBV effects of
Slide 18: Five-Year Reconciliation of Reported EPS to Adjusted EPS
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 12 Months Ending December 31, 2015 2016 2017 2018(c) 2019(c) Reported EPS – GAAP basis $4.07 $4.15 $4.97 $4.43 $4.09 Income tax effect of the TCJA — — (0.85) 0.14 — HLBV effects of the Clean Energy Businesses (pre-tax) — — —
Slide 19: Summary of CECONY Electric & Gas Rate Plans
Summary of CECONY Electric & Gas Rate Plans On January 16, 2020, the New York State Public Service Commission (NYSPSC) approved the October 2019 Joint Proposal for CECONY’s electric and gas delivery service rate plans for January 2020 through December 2022 Rate Changes and Capital Expenditures Elect
Slide 20: CECONY Earnings Adjustment Mechanisms and Positive Incentives
CECONY Earnings Adjustment Mechanisms (EAMs) and Positive Incentives Earnings Adjustment Mechanisms(a) 90 80 ($ in millions) 70 $58 60 EAMs and positive 50 $42 $43 incentives do not count 40 $25 toward the calculation of 30 $18 earnings-sharing 20 $13 thresholds 10 0 (b) 2017 2018 2019 Positive Ince
Slide 21: EAMs Promote Energy Efficiency and Clean Technologies
Earnings Adjustment Mechanisms (EAMs) Promote Energy Efficiency and Clean Technologies New rate period EAMs bring greater complexity and new challenges to reach NYS energy efficiency goals Earned Adjustment Mechanism Description Goal Lifetime MMBTU (one million British Thermal Reduce the unit cost o
Slide 22: Potential 2020 CECONY Earnings Adjustment Mechanisms
Potential 2020 CECONY Earnings Adjustment Mechanisms* Improvement in energy efficiency outcomes and changes in customer behavior are required in order for CECONY to achieve 2020 EAM targets established in the NYSPSC's New Efficiency: New York (NENY) Order 2020 Threshold 2019 Actual Performance to Va
Slide 23: Positive Incentives Promote Safety and Customer Service
Positive Incentives Promote Safety and Customer Service Earned Adjustment Mechanism Description Goal Electric / Gas Meet targets for residential service terminations, Residential Service Targets for decrease in residential bad debt write-offs and arrears each rate year; Termination / service termina
Slide 24: Potential 2020 CECONY Positive Incentives
Potential 2020 CECONY Positive Incentives Continued efforts related to gas safety and customer operations are required in order for CECONY to achieve 2020 positive incentive targets set forth in the CECONY Rate Plan 2020 Threshold 2019 Actual Performance to Variance From Possible Incentive Range Pos
Slide 25: Energy Efficiency Budgets in CECONY Rate Plan
Energy Efficiency Budgets are Addressed in CECONY Rate Plan Energy efficiency spending of approximately $700 million over rate plan aligns with New Efficiency: New York initiative goals CECONY Electric & Gas Energy Efficiency Budgets ($ in millions) a. 2020-2022 amounts approved in the January 2020
Slide 26: Lowering Emissions with Energy Efficiency Targets
Lowering Emissions with Energy Efficiency Targets New energy efficiency efforts from CECONY customers are expected to avoid 2.7 million metric tons of carbon dioxide equivalent over 2019-2022 a. 2020-2022 amounts subject to the New Efficiency: New York Order, Case 18-M-0084 b. 2020-2022 Electric inc
Slide 27: Utilities' Rate Adjustments for 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 • Pursuant to the rate plan approved on January 1
Slide 28: Utilities' Rate Adjustments for 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 $18 million – pass back of 2018 savings (
Slide 29: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) $1,652 $1,553 $1,563 $1,528 $1,464 $1,477 $1,417 $344 Other $1,140 $1,072 $352 $550 $998 $1,002 $304 $294 $321 $891 Regulatory Fees and $252 Assessments (b) $469 $464 $476 $444 $350 Health Care/ Other Employee
Slide 30: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of December 31, 2019) CECONY ($ in millions) Electric NY $21,149 Gas NY 6,408 Steam NY 1,451 Total CECONY $29,008 O&R ($ in millions) O&R Electric NY $842 O&R Gas NY 455 RECO NJ 254 Total O&R $1,551 CECONY CECONY Gas CECONY O&R RECO Total Rate Base $30,559
Slide 31: Average Rate Base Balances
Average Rate Base Balances ($ in millions) % AGR 5.4 3-year C $35,783 $33,872 $1,796 $31,930 $1,741 $33,987 $30,559 $1,661 $32,131 $28,515 $1,551 $30,269 $26,014 $1,458 $29,008 $24,522 $25,014 $1,376 $27,057 O&R $1,357 $1,304 $24,638 $23,165 $23,710 CECONY Actual Forecast (a) 2015 2016 2017 2018 201
Slide 32: Regulated Utilities' Rates of Return and Equity Ratios
Regulated Utilities' Rates of Return and Equity Ratios (12 Months ended December 31, 2019) Regulated Basis Allowed Actual CECONY Electric 9.0% 8.9% Gas 9.0 8.9 Steam 9.3 9.4 (a) Overall – CECONY 9.0 9.0 CECONY Equity Ratio 48.0% 47.8% O&R Electric 9.0% 10.2% Gas 9.0 9.3 RECO 9.6 3.9 (a) Overall – O&
Slide 33: Capital Expenditures
Capital Expenditures ($ in millions) $5,235(a) $5,249 $248 $1,078 $1,791 (b) $3,944 $3,937 $11 $24 $3,792 $3,606 $3,676 $400 $76 $400 $3,418 $1,235 $66 $205 $400 $447 $248 $823 $3,533 $3,513 $3,210 $3,223 $3,316 $3,093 $2,922 $2,595 2015 2016 2017 2018 2019 2020E (c) 2021E (c) 2022E (c) Actual Forec
Slide 34: Utilities' Capital Expenditures
Utilities' Capital Expenditures ($ in millions) $3,533 $3,513 $3,210 $3,223 $3,316 Steam $3,093 $2,922 $2,595 Gas Electric Depreciation 2015 2016 2017 2018 2019 2020E (a) 2021E (a) 2022E (a) Actual Forecast (b) Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Dep
Slide 35: 2019 Financing Activity
2019 Financing Activity Equity Financing Activity(a) • In March, Con Edison issued approximately 5.6 million common shares for $425 million upon settlement of the remaining portion of the November 2018 equity forward transaction • In June, Con Edison issued 4.75 million common shares for $400 millio
Slide 36: Financing Plan for 2020 - 2022
Financing Plan for 2020 - 2022 Financing Plan • Issue between $1,500 million and $2,000 million of long-term debt, primarily at the Utilities, in 2020 and approximately $1,800 million in aggregate of long-term debt at the Utilities during 2021 and 2022, in addition to the issuance of long term debt
Slide 37: Capital Structure – December 31, 2019
Capital Structure – December 31, 2019 ($ in millions) Consolidated Edison, Inc. Baa1 / BBB+ / BBB+ Debt $ 19,973 52% Equity 18,213 48 Total $ 38,186 100% CECONY O&R Parent and Other A3 / A- / A- Baa1 / A- / A- Debt $ 14,964 51% Debt $ 818 52% Debt $ 4,191 56% Equity 14,147 49 Equity 762 48 Equity 3,
Slide 38: Commercial Paper and Letters of Credit
Commercial Paper and Letters of Credit ($ in millions) 38
Slide 39: Utilities' Sales and Revenues – Electric Fourth Quarter
Utilities' Sales and Revenues – Electric Fourth Quarter ($ in millions) Electric – 4th Quarter Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 2,357 2,423 $611 $635 Commercial and Industrial 2,334 2,244 440 417 Retail choice custom
Slide 40: Utilities' Sales and Revenues – Electric Full Year
Utilities' Sales and Revenues – Electric Full Year ($ in millions) Electric – Full Year Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 10,560 10,797 $2,671 $2,846 Commercial and Industrial 9,908 9,588 1,845 1,850 Retail choice cus
Slide 41: Utilities' Sales and Revenues – Gas Fourth Quarter
Utilities' Sales and Revenues – Gas Fourth Quarter ($ in millions) Gas – 4th Quarter Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 13,367 14,259 $219 $238 General 8,217 8,421 85 92 Firm Transportation 21,121 20,846 147 143 Total Firm Sales and Tr
Slide 42: Utilities' Sales and Revenues – Gas Full Year
Utilities' Sales and Revenues – Gas Full Year ($ in millions) Gas – Full Year Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 54,402 57,815 $943 $966 General 33,235 34,490 384 390 Firm Transportation 81,710 82,472 593 595 Total Firm Sales and Trans
Slide 43: Utilities' Sales and Revenues – Steam
Utilities' Sales and Revenues – Steam Fourth Quarter and Full Year ($ in millions) Steam – 4th Quarter Millions of Pounds Revenues in Millions 2019 2018 2019 2018 Con Edison of New York General 142 151 $7 $7 Apartment House 1,588 1,688 41 45 Annual Power 2,957 3,498 91 108 Total Sales (a) 4,687 5,33
Slide 44: Income Statement – 2019 Fourth Quarter
Income Statement – 2019 Fourth Quarter ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $2,573 $215 $161 $1 $1 $2,951 Depreciation and amortization 353 21 57 — — 431 Other operating expenses 1,696 168 85 2 3 1,954 Total operating expenses 2,049 189 142 2 3 2,385 Operating
Slide 45: Income Statement – 2019 Full Year
Income Statement – 2019 Full Year ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $10,821 $893 $857 $4 $(1) $12,574 Depreciation and amortization 1,373 84 226 1 — 1,684 Other operating expenses 7,100 670 429 9 6 8,214 Total operating expenses 8,473 754 655 10 6 9,898 Oper
Slide 46: Balance Sheet – As of December 31, 2019
Balance Sheet – As of December 31, 2019 ($ in millions) CECONY O&R CEBs CET Other(a) Total ASSETS Current assets $3,543 $243 $511 $2 $(27) $4,272 Investments 461 26 — 1,585 (7) 2,065 Net plant 37,414 2,336 4,121 17 1 43,889 Other noncurrent assets 5,139 401 1,896 14 403 7,853 Total assets $46,557 $3
Slide 47: Statement of Cash Flows – Year Ended December 31, 2019
Statement of Cash Flows – Year Ended December 31, 2019 ($ in millions) CECONY O&R CEBs CET Other(a) Total Net cash flows from/(used in) operating activities $2,502 $190 $199 $194 $49 $3,134 Net cash flows from/(used in) investing activities (3,124) (218) (258) (184) 2 (3,782) Net cash flows from/(us
Slide 48: Rating Agency Credit Metrics
Rating Agency Credit Metrics Rating Agency Rating Agency Rating Agency Downgrade Rating Agency Rating / Outlook(a) Key Metric(b) Forecast(c) Threshold Moody’s Investors CEI: Baa1 / Negative CFO pre-WC(e) / Debt 13% - 16% <15% Services CECONY: A3 / Negative 14% - 17% <17% O&R: Baa1 / Ne
Slide 49: List of Notes to 2019 Form 10-K Financial Statements
List of Notes to 2019 Form 10-K Financial Statements Page A – Summary of Significant Accounting Policies and Other Matters 111 – 120 B – Regulatory Matters 120 – 134 C – Capitalization 134 – 136 D – Short-Term Borrowing 136 E – Pension Benefits 137 – 142 F – Other Postretirement Benefits 142 – 146 G