Edison International · NYSE:EIX
Edison International — Corporate Update (May 2014)
49 slides from Edison International's corporate update, May 2, 2014
Slide 1: Business Update
Leading the Way in Electricity SM Business Update May 2014 May 2, 2014 0 EDISON INTERNATIONAL®
Slide 2: Forward-Looking Statements
Leading the Way in Electricity SM Forward-Looking Statements Statements contained in this presentation about future performance, including, without limitation, operating results, asset and rate base growth, capital expenditures, San Onofre Nuclear Generating Station (SONGS), and other statements tha
Slide 3: SCE Highlights
Leading the Way in Electricity SM SCE Highlights • One of the nation’s largest electric utilities Nearly 14 million residents in service territory Approximately 5 million customer accounts 50,000 square-mile service area • Significant infrastructure investments: 1.4 million power poles 700
Slide 4: SCE Decoupled Regulatory Model
Leading the Way in Electricity SM SCE Decoupled Regulatory Model Regulatory Model Key Benefits Decoupling of Regulated • SCE earnings are not affected by changes in retail Revenues from Sales electricity sales • Differences between amounts collected and authorized levels are either billed or refunde
Slide 5: SCE Historical Rate Base and Core Earnings
Leading the Way in Electricity SM SCE Historical Rate Base and Core Earnings ($ billions) 2008 – 2013 CAGR Rate Base2 10% $21.0 $21.12 Core Earnings 12% $18.8 $16.8 $15.0 $13.1 2008 2009 2010 2011 2012 2013 Core Earnings $2.25 $2.68 $3.01 $3.33 $4.10 $3.88 1 Recorded rate base, year-end basis. See N
Slide 6: SCE Capital Expenditures Forecast
Leading the Way in Electricity SM SCE Capital Expenditures Forecast ($ billions) $15.1 – $17.2 billion forecasted capital program 2014 – 2017 Distribution Transmission Generation $4.5 $4.4 • Capital expenditures forecast $4.1 $4.2 reaffirmed • CPUC GRC focused on infrastructure replacement • Include
Slide 7: SCE Rate Base Forecast
Leading the Way in Electricity SM SCE Rate Base Forecast ($ billions) 7 – 9% CAGR projected rate base 2014 – 2017 $29.2 $27.0 • Growth rate reaffirmed • Driven by infrastructure $24.4 replacement, reliability investments, and public policy $22.4 requirements • FERC rate base includes CWIP and is app
Slide 8: SCE System Investments
Leading the Way in Electricity SM SCE System Investments ($ millions) Distribution Transmission • Aging system reaching equilibrium • Large transmission projects: replacement rate Techachapi – $3,174 million total • 2015 GRC request includes ~120% project cost; 2016-17 in service date increase in
Slide 9: SCE 2015 CPUC General Rate Case
Leading the Way in Electricity SM SCE 2015 CPUC General Rate Case • November 2013, 2015 GRC Application A.13-11-003 filed March 2014, Scoping Memo issued Updates, ordered by the scoping memo, to remove SONGS and Four Corners testimony and forecast costs from the GRC submitted April 7th • Request
Slide 10: CPUC and FERC Cost of Capital
Leading the Way in Electricity SM CPUC and FERC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/13 – 3/31/14) = 5.13% 100 basis point +/- Deadband 6 Rate (%) 5 Starting Value – 5.00% 4 3 10/1/12 10/1/13 10/1/14 10/1/15 • CPUC – 10.45% Return on Eq
Slide 11: 2014 Core and Basic Earnings Guidance
Leading the Way in Electricity SM 2014 Core and Basic Earnings Guidance 2014 Earnings 2014 Earnings Guidance as of Guidance as of Key Assumptions: 2/25/14 4/29/14 • Midpoint rate base of $22.1 billion Low Mid High Low Mid High • Approved capital structure – SCE $3.85 $3.85 48% equity, 10.45% CPUC &
Slide 12: EIX Dividend Growth
Leading the Way in Electricity SM EIX Dividend Growth $3.85 Guidance Midpoint 2008 – 2013 CAGR 2014 $1.42 (37%) SCE Core EPS 12% $3.88 2013 EIX Dividend 2% $1.35 (35%) $4.10 2012 $1.30 (32%) • EIX targets paying out 45 – 55% of SCE earnings $3.33 2011 $1.28 (38%) • Dividend growth rate slowed to hel
Slide 13: Creating Shareholder Value
Leading the Way in Electricity SM Creating Shareholder Value Create Sustainable Position for Resolve Earnings and Transformative Uncertainties Dividend Growth Sector Change • SCE 2013 cost of capital • 10% 5-year SCE rate base • Acquired SoCore Energy What We’ve • SCE 2012 FERC formula rate CAGR (20
Slide 14: Changes Since Our Last Presentation
Leading the Way in Electricity SM Changes Since Our Last Presentation • Quarterly updates • SCE 2015 CPUC General Rate Case (p. 8) • 2014 Core and Basic Earnings Guidance (p. 10) • Residential Rate Design OIR (p. 18) – new slide • Rooftop Solar – Grid Interaction (p. 22) • Energy Storage (p. 24) • S
Slide 15: Appendix – Regulatory
Leading the Way in Electricity SM Appendix – Regulatory May 2, 2014 14 EDISON INTERNATIONAL®
Slide 16: SCE 2013 Bundled Revenue Requirement
Leading the Way in Electricity SM SCE 2013 Bundled Revenue Requirement 2013 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 4,285 5.8 Fuel & Purchased Power (38%) Distribution – poles, wires, substations, service centers; 3,820 5.2 Edison SmartConnect®
Slide 17: SCE Customer Demand Trends
Leading the Way in Electricity SM SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2013 2012 2011 2010 2009 Residential 29,889 30,563 29,631 29,034 30,078 Commercial 40,649 40,541 39,622 39,318 40,076 Industrial 8,472 8,504 8,490 8,507 8,522 Public authorities 5,012 5,196 5,206 5,336
Slide 18: SCE Historical Capital Expenditures
Leading the Way in Electricity SM SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $3.5 $2.9 $2.4 2008 2009 2010 2011 2012 2013 Note: 2013 distribution reliability spend up $300 million, offset by completion of SmartConnect in 2012 ($300 million); lower FERC ($300 million) and lower S
Slide 19: Residential Rate Design OIR
Leading the Way in Electricity SM Residential Rate Design OIR • June 2012, CPUC opened Order Instituting OIR Phase 2 Settlement Summary Rulemaking (OIR) R.12-06-013: Comprehensive review of residential rate structure 35 Transition to Time of Use (TOU) rates 31.94 AB327 rate design 30 27.94 Tie
Slide 20: SCE Residential Net Metering Rate Structure
Leading the Way in Electricity SM SCE Residential Net Metering Rate Structure • Residential solar customer generation Solar Subsidies offsets total retail rate • Average retail rate of 28.3¢/kWh vs. actual 30 20.1¢ 28.3¢ generation cost of 8.2¢/kWh • Resulting 20.1¢/kWh is a subsidy funded 25 by all
Slide 21: Solar PV Cost Trends
Leading the Way in Electricity SM Solar PV Cost Trends ≤ 10 kW 10-100 kW > 100 kW $12.00 $11.00 Median Value per Watt (2012$ ) $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 1998 2000 2002 2004 2006 2008 2010 2012 Over the past decade, real installed solar system prices fallen by nearly 50% Note: Dollar
Slide 22: All Generation Cost Trends, Unsubsidized
Leading the Way in Electricity SM All Generation Cost Trends, Unsubsidized Distributed Central Station / Utility Scale Generation Generation $0.250 $0.204 $0.206 $0.200 $0.150 $0.145 $0.149 $0.144 $/kWh $0.122 $0.123 $0.104 $0.100 $0.087 $0.108 $0.095 $0.109 $0.067 $0.086 $0.089 $0.086 $0.050 $0.065
Slide 23: Rooftop Solar – Grid Interaction
Leading the Way in Electricity SM Rooftop Solar – Grid Interaction Typical Residential Rooftop Solar Customer Profile1,2 3.5 3.0 Summer Customer uses grid to export excess power 2.5 2.0 Kilowatt 1.5 SCE Provides 1.0 Customer generation, Power grid support needed SCE Provides 0.5 Power 0.0 1 2 3 4 5
Slide 24: CAISO Net Load
Leading the Way in Electricity SM CAISO Net Load Renewables CAISO ‘Peaking’ Duck Chart • Current 33% RPS by 2020 set as floor for CPUC per AB327 28,000 CAISO Net Load --- 2012 through 2020 • More variable and less predictable 26,000 output 24,000 • Output does not fully match demand 22,000 20,000 •
Slide 25: Energy Storage
Leading the Way in Electricity SM Energy Storage • AB2514 directs CPUC to establish SCE 2014 Existing Storage procurement targets and policies for energy storage 50 • CPUC final decision in Energy Storage OIR 30 MW (R.10-12-007) 16.40 1,325 MW target for IOUs by 2024 13.68 10 (580 MW SCE share)
Slide 26: California Climate Change Policy
Leading the Way in Electricity SM California Climate Change Policy • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16% reduction) AB32 Emissions • Cap and trade program basics: Reduction Programs State-wide cap in 2013 – decreases over time Compl
Slide 27: California Renewables Policy
Leading the Way in Electricity SM California Renewables Policy • On April 12, 2011, Governor Brown signed SB X 1 2, which codifies a 33% Renewables Portfolio Standard (RPS) for Actual 2012 Renewable Resources: California by 2020 20% of SCE’s portfolio Allows use of Renewable Energy Credits (RECs)
Slide 28: 2012 SCE Energy Portfolio
Leading the Way in Electricity SM 2012 SCE Energy Portfolio 1 (Billion kWh – Retail Sales) 75.6 30.8 Market Source 2 Coal Natural Gas Nuclear Low Carbon Large Hydro 52% Wind 5.4 41% Solar 15.8 Small Hydro 7% Geothermal Biomass & Waste Carbon Neutral 31% 5.3 21% 3.1 Renewables 7% 6.2 20% 4% 1.0 0.6 6
Slide 29: SCE Energy Efficiency Programs
Leading the Way in Electricity SM SCE Energy Efficiency Programs Annual kWh Savings (billions) Energy efficiency programs updated for 2013 – 2014 • SCE is a national leader 1.7 1.6 2012 energy savings = 1.8% of retail sales1 1.1 0.9 • 2014 budget of $352 million2 • Target 0.9 billion kWh average a
Slide 30: SCE Rates and Bills Comparison
Leading the Way in Electricity SM SCE Rates and Bills Comparison 2013 Average Residential Rates Key Factors (¢/kWh) 16.5¢ • SCE’s residential rates are above national average due, in part, to a cleaner fuel mix – 12.4¢ cost for renewables are higher than high 33% carbon sources Higher • Average mont
Slide 31: Appendix – Financial
Leading the Way in Electricity SM Appendix – Financial May 2, 2014 30 EDISON INTERNATIONAL®
Slide 32: First Quarter Earnings Summary
Leading the Way in Electricity SM First Quarter Earnings Summary Q1 2014 Q1 2013 Variance SCE Key Core Earnings Drivers Core EPS1 Higher revenue $0.15 SCE $0.93 $0.78 $0.15 SONGS impact (0.02) EIX Parent & Other (0.03) (0.01) (0.02) Lower O&M2 0.06 Higher depreciation (0.05) Core EPS1 $0.90 $0.77 $0
Slide 33: Non-GAAP Reconciliations
Leading the Way in Electricity SM Non-GAAP Reconciliations ($ millions) Reconciliation of EIX Core Earnings to EIX GAAP Earnings Earnings Attributable to Q1 Q1 Edison International 2014 2013 Core Earnings SCE $304 $256 EIX Parent & Other (10) (4) Core Earnings $294 $252 Non-Core Items SCE $(96) $– E
Slide 34: SCE Results of Operations
Leading the Way in Electricity SM SCE Results of Operations ($ millions) • Utility earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Utility cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specif
Slide 35: SCE Core EPS Non-GAAP Reconciliations
Leading the Way in Electricity SM SCE Core EPS Non-GAAP Reconciliations Reconciliation of SCE Core Earnings Per Share to SCE Basic Earnings Per Share Earnings Per Share Attributable to SCE 2008 2009 2010 2011 2012 2013 CAGR Core EPS $2.25 $2.68 $3.01 $3.33 $4.10 $3.88 12% Non-Core Items Tax settleme
Slide 36: Appendix – SONGS & EME
Leading the Way in Electricity SM Appendix – SONGS & EME May 2, 2014 35 EDISON INTERNATIONAL®
Slide 37: SONGS Settlement – Summary
Leading the Way in Electricity SM SONGS Settlement – Summary Term Description • Steam Generator Replacement Project (“SGRP”) removed from rates as of February 1, 2012, Steam with book value balance disallowed. Revenues related to the SGRP collected after February 1, Generators 2012, refunded to cust
Slide 38: SONGS Settlement – Third-Party Recoveries
Leading the Way in Electricity SM SONGS Settlement – Third-Party Recoveries • SCE’s share of recoveries from NEIL and MHI will be allocated between SCE and customers • Litigation fees recovered prior to SCE / customer sharing SCE Share NEIL All 17.5% MHI • First $100 million 85% Non-Core Earnings •
Slide 39: SONGS Settlement – Accounting
Leading the Way in Electricity SM SONGS Settlement – Accounting • Q2 2013, SCE recorded $575 million pre-tax and $365 million after-tax impairment based on management’s judgment of the recoverability of SONGS investment Developed based on a range of possible outcomes Each quarter, management mus
Slide 40: Updated ERRA Recovery Forecast
Leading the Way in Electricity SM Updated ERRA Recovery Forecast ($ millions) Dec 2013 June 2014 Jan 2015 SAR1 15.7 16.6 16.5 – 17.3 Key Items 2014 ERRA: Based on final decision Decommissioning Trust: recorded O&M recovered from Trust beginning June 2013 SONGS Settlement: Capital and O&M 644 1,649 (
Slide 41: SONGS Settlement – Regulatory Asset
Leading the Way in Electricity SM SONGS Settlement – Regulatory Asset ($ millions) December 31, March 31, Authorized Category 20131 2014 Return Base Plant $488 2.62% SGRP - n/a CWIP2 $2,166 406 2.62% Materials and Supplies 78 2.62% Nuclear Fuel 404 Commercial Paper Rate Asset Impairment (575) (5) n/
Slide 42: SONGS Settlement Impact
Leading the Way in Electricity SM SONGS Settlement Impact Regulatory Regulatory Profit In Millions Asset Liability (Loss) As of June 7, 2013 $2,096 $— $— Impairment (575) — (575) Additions 70 — — Authorized Revenues in excess of revenue recorded — 266 — As of December 31, 2013 1,591 266 (575) Reduct
Slide 43: SONGS Third-Party Recovery – MHI
Leading the Way in Electricity SM SONGS Third-Party Recovery – MHI Warranty Summary Request for Arbitration • 20-year warranty: • October 2013, Request for Arbitration filed Repair or replace defective items with the International Chamber of Commerce per MHI contract Specified damages for certai
Slide 44: SONGS Third-Party Recovery – NEIL Insurance
Leading the Way in Electricity SM SONGS Third-Party Recovery – NEIL Insurance • Accidental property damage and accidental outage insurance through Nuclear Electric Insurance Limited (“NEIL”) Accidental Property Damage Policies – $2.5 million deductible; $2.75 billion liability limit Accidental O
Slide 45: SONGS – Decommissioning
Leading the Way in Electricity SM SONGS – Decommissioning Decommissioning Trusts • Decommissioning Trust contributions recovered in rates approved by CPUC in triennial proceeding • December 2012, A.12-12-013 Joint Filing with SDG&E submitted • July 2013, updated early retirement scenario total decom
Slide 46: 2014 Bulk Electricity Outlook
Leading the Way in Electricity SM 2014 Bulk Electricity Outlook 2014 CAISO On-Peak Resources (MW) 9,800 2,322 63,190 50,177 891 47,413 • California planning reserve margin is approximately 33% versus 15 – 17% target • Local transmission constraints Existing Additions Imports Demand Total Demand can
Slide 47: SCE System Reliability
Leading the Way in Electricity SM SCE System Reliability • Short-term SONGS closure solutions Transmission – 220 kV Barre-Ellis reconfiguration Voltage support – Huntington Beach 3 and 4 synchronous condensers Substations – Santiago, Viejo, Johanna capacitor bank upgrades Generation – El Seg
Slide 48: EME Bankruptcy Settlement Implementation
Leading the Way in Electricity SM EME Bankruptcy Settlement Implementation • April 2014, amended Plan of Reorganization completed • EME emerged from bankruptcy and remains subsidiary of EIX Consolidated for tax purposes • Reorganization Trust established to receive tax benefit payments from EIX Cash
Slide 49: Use of Non-GAAP Financial Measures
Leading the Way in Electricity SM 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. Co