Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Wolfe Research Power & Gas Leaders Conference 2015
34 slides from Consolidated Edison's conference presentation, Sep 29, 2015
Slide 1: Wolfe Research Power & Gas Leaders Conference
Con Edison, Inc. September 29, 2015 Wolfe Research Power & Gas Leaders Conference 1
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measure
Forward-Looking Statements This presentation includes certain forward-looking statements intended to qualify for safe-harbor provisions of the Federal securities laws. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates,"
Slide 3: Consolidated Edison Investment Thesis
Consolidated Edison Investment Thesis • Core regulated energy delivery business with growing renewable energy portfolio – Limited commodity exposure • Reduced regulatory lag – Forward-looking test years – Timely recovery of most fuel and commodity costs – Revenue decoupling mechanism in NY (electric
Slide 4: Where Are Our Growth Opportunities?
Where Are Our Growth Opportunities? • Delivering energy to a growing service area • Energy conservation programs • Oil-to-gas conversions • Development of renewable energy • Energy infrastructure investments – Electric and gas transmission – Electric and gas storage 4
Slide 5: Business Environment
Business Environment • Vibrant local economy continues to grow • Job growth in the region is outpacing the nation • Growing industries include: Technology, Health, Education, Hospitality, Tourism, and Business Services • Tourism at a record level • Residential building permits on the rise • Energy l
Slide 6: Annual Multi-Family and Commercial Oil-to-Gas Conversions
Con Edison Company of New York (CECONY) Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type 2015 YTD through July 31st 2000 1800 Number of gas service installations 1600 553 1400 1200 306 520 #6 Oil 1000 #4 Oil 800 264 #2 Oil 313 260 600 202 995 400 199 44 23 152 540 481 200 6 343
Slide 7: Target Market for Conversion of Large Multi-Family and Commercial Buildings from Oil to Gas
CECONY Target Market for Conversion of Large Multi-Family and Commercial Buildings from Oil to Gas July 31, 2015 25.2% converted Target Market: 21,000 buildings Converted: 5,285 Remaining: 15,715 Note: Includes multi-family buildings of 5 or more families, and #2 oil burners rated 350,000 BTUs or hi
Slide 8: Gas Infrastructure Investment
CECONY Gas Infrastructure Investment ($ millions) $900 $808 $800 $679 $687 $700 $600 $536 $549 $500 $426 2014 2015 2016 2017 (miles) $400 Actual Target Target Target $339 $334 $335 Gas Main 65 65 70 80 Replacement $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Forecast Forecast Forec
Slide 9: Electric Infrastructure Investment
CECONY Electric Infrastructure Investment ($ millions) $2,000 $1,868 $1,827 $1,800 $1,596 $1,598 $1,600 $1,471 $1,500 $1,421 $1,375 $1,400 $1,354 $1,200 Includes: $1,000 2015 2016 2017 ($ millions) Forecast Forecast Forecast $800 Advanced Metering $8 $ 69 $174 Infrastructure $600 $400 $200 $0 2009 2
Slide 10: Energy Efficiency Impacts Historic Electric Volumes
CECONY Energy Efficiency Impacts Historic Electric Volumes (Weather Normalized) 60,000 58,000 56,000 Historic Energy Efficiency as % of Sendout* 2008 0.60% GWh 54,000 2009 0.40% 2010 0.49% 2011 0.84% 52,000 2012 0.42% 2013 0.45% 2014 0.49% 50,000 48,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 11: Brooklyn-Queens Demand Management: An Initial Demonstration
CECONY An Initial Demonstration Brooklyn-Queens Demand Management • $200 million investment to defer a $1.2 billion substation configuration using portfolio of alternative investments – Deferral of about 5 years – 41 MW customer and 11 MW utility solutions • Allowed ROE on invested capital plus ince
Slide 12: Reforming the Energy Vision Proposed Demonstration Projects
Reforming the Energy Vision Proposed Demonstration Projects CECONY • Residential Solar and Energy Storage Aggregation – Partnering with SunPower and SunVerge • Commercial Distributed Energy Resources Marketplace – Partnering with Retroficiency • Residential Targeted Offerings – Partnering with Opowe
Slide 13: Advanced Metering Infrastructure is Foundational to Reforming the Energy Vision
Advanced Metering Infrastructure (AMI) is Foundational to Reforming the Energy Vision • AMI includes smart meters and a two-way communications network between the customer and the utility • 50 million AMI meters deployed in U.S reaching 43% of homes nationwide* • CECONY-proposed $1.5 billion capital
Slide 14: Renewable Portfolio
Con Edison Development Renewable Portfolio 1000 900 800 320 700 600 500 105 400 300 556 446 200 299 100 118 0 0 25 2010 2011 2012 2013 2014 2Q 2015 Operating (MW AC) Construction (MW AC) 14
Slide 15: NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades
NY Transco Projects for Indian Point Contingency and Proposed AC Transmission Upgrades • Con Edison, National Grid, Iberdrola and Central Hudson (Fortis) own NY Transco Edic–to–Pleasant Valley • NY Transco filed jointly for FERC wholesale ($1,200 million estimated cost – nearly 1,000 MW of transmiss
Slide 16: Forecasted Capital Expenditures by Segment
Forecasted Capital Expenditures by Segment ($ millions) Rate Base* ($ millions) 2-Year Forecast 2015-2016 Total investment $7,200 CECONY $5,036 Competitive Energy Businesses (Mainly renewables) $1,820 O&R $344 16
Slide 17: Growth Opportunities Benefit Customers, Shareholders and the Environment
Growth Opportunities Benefit Customers, Shareholders and the Environment • Delivering energy to a growing service area • Energy conservation programs • Oil-to-gas conversions • Development of renewable energy • Energy infrastructure investments – Electric and gas transmission – Electric and gas stor
Slide 18: Appendix
te Appendix ED GconEdison, inc. NYSE
Slide 19: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – Twelve Months Ended June 30, 2015) Con Edison, Inc. (ED) EPS $3.78* Rate Base: $24 billion Market Cap: $17 billion Regulated Utilities Orange and Rockland Con Edison Transmission (O&R) EPS $0.16 Con Edison Company of New York Competitive Energy
Slide 20: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Audrey Zibelman (D) Diane Burman Chair (R) Patricia Acampora Gregg Sayre (D) (R) Feb-2018 Feb-2018 Feb-2018 Feb-2015 Appointed June Appointed June 2013 Appointed June Vacant* Appointed June 2005 2012 2013 PSC Staff Office of Accounting Office
Slide 21: NY PSC Staff's Discounted Cash Flow Model
NY PSC Staff’s Discounted Cash Flow Model • The Staff employs a dividend discount model. D1 D2 D3 Value = (1+R) + (1+R)2 + (1+R)3 +…… • Solving for an equity return, R, where: – D1 through D4 = Value Line estimates – D5 through D∞ = Value Line estimates based on future earnings retention and share g
Slide 22: NY PSC Staff's Capital Asset Pricing Model
NY PSC Staff’s Capital Asset Pricing Model • Staff solves for an equity return, R R = RUST + (RMKT – RUST)*β • Where: – RUST is the risk-free return: average of prior three monthly yields for 10-year and 30-year Treasuries – RMKT is the market rate of return: BofA Merrill Lynch’s monthly Quantitativ
Slide 23: NY PSC's Formulaic ROE Approach: Recent Decisions
NY PSC’s Formulaic ROE Approach: Recent Decisions Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 09/10 Energy East (RGE/NYSEG) 10.00% 40 months 10/06 O&R Gas 9.80% 3 years 06/11 Niagara Mohawk Electric 9.30% 2 years 06/11 O&R Electric 9.20% 1 year 08/07 Keyspan Gas 9.80
Slide 24: Annual Growth Rates in Weather-Adjusted Peak Usage
Annual Growth Rates in Weather-Adjusted Peak Usage 10-Year Historic 5- Year Forecast 2004 - 2014* 2015 - 2020 CECONY (%) Electric 0.6 0.9 Gas 3.2 2.3 Steam -1.0 -0.8 O&R (%) Electric 1.1 0.9 Gas -0.4 0.6 * For Gas and Steam, historical CAGR’s are from winter ending 2005 through winter ending 2015. 2
Slide 25: Capital Expenditures
Capital Expenditures ($ millions) Con Edison of New York Orange and Rockland Competitive Energy Businesses $3,000 $2,661 $2,694 $2,500 $2,375 $2,135 $2,132 $2,057 $2,000 $1,866 $1,909 $1,778 $1,500 $985 $1,000 $835 $492 $447 $378 $500 $137 $142 $135 $374 $127 $135 $111 $162 $182 $177 $28 $114 $10 $0
Slide 26: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) Pike (PA) 23,646 RECO (NJ) 22,691 O&R Gas (NY) 5-year CAGR 21,311 21,760 20,545 O&R Electric (NY) (2009-2014) 3.82% 19,605 CECONY Steam (NY) CECONY Gas (NY) 18,077 CECONY Electric (NY) 16,298 14,757 13,453 12,418 2004 2005 2006 2007 2008 2009 2
Slide 27: Composition of Rate Base
Composition of Rate Base (as of June 30, 2015) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 17,342 Gas (NY) $ 3,826 Steam (NY) $ 1,537 Total CECONY $ 22,705 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 16 Rockland Electric (NJ) (distribution) $ 180 (transmission) $ 20
Slide 28: 1H15 vs 1H14 Earnings Per Share
1H15 vs 1H14 Earnings Per Share ED’s 1H15 Adjusted EPS of $2.03 compares to $1.82 in 1H14 Con Con Con Edison Edison Edison 6 months ending June 30, 2015 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $1.91 $0.05 $0.05 $0.02 $- $(0.02) $2.01 Mark-to-market losses/(gain
Slide 29: Improvement in 1H15 EPS Over 1H14 EPS
Improvement in 1H15 EPS Over 1H14 EPS ED’s 1H15 Adjusted EPS of $2.03 compares to $1.82 in 1H14 $2.05 $2.03 $0.18 $2.00 $1.95 $1.90 $0.08 $1.85 $0.02 $1.82 $1.80 $(0.01) $(0.01) $1.75 $(0.05) $1.70 $1.65 $1.60 1H14 EPS CECONY O&R CED CES CEE Parent 1H15 EPS 29
Slide 30: Departmental and Other Expenses
CECONY Departmental and Other Expenses June 30, 2015 ($ millions) 1,600 1,477 1,533 1,478 1,417 1,384 1,394 1,400 1,284 1,296 1,312 1,313 1,254 1,261 1,265 450 503 1,200 431 426 315 344 1,000 902 800 508 285 505 503 519 553 596 600 221 690 310 357 400 280 478 519 485 467 200 364 364 307 182 0 2009 2
Slide 31: Rates of Return and Equity Ratio
Rates of Return and Equity Ratio (for twelve months ended June 30, 2015) Regulated Basis SEC Basis CECONY Allowed Actual Electric 9.2% 10.0% Gas 9.3% 7.5% Steam 9.3% 12.1% Overall - CECONY 9.2%* 9.7% 10.0% CECONY Equity Ratio** 48.0% 49.8% O&R Electric 9.6% 9.5% Gas NA 0.9% RECO 9.8% 8.4% Overall –
Slide 32: 2015 Financing
2015 Financing • Issue between $1,000 million and $1,500 million of long-term debt, including maturities • Activity so far: In June 2015, O&R issued $120 million aggregate principal amount of 4.95% debentures, due 2045. Also in June 2015, a Con Edison Development subsidiary issued $118 million aggre
Slide 33: Capital Structure — June 30, 2015
Capital Structure — June 30, 2015 ($ millions) Con Edison, Inc. A3 / BBB+ / BBB+ Debt $12,385 49% Equity 12,788 51 Total $25,173 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,215 50% Debt $678 54% Debt $492 34% Equity 11,232 50 Equity 585 4
Slide 34: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 2,200 Commercial Paper Letters of Credit 6/30/15 2,000 LOCs = $56 million CP = $1,245 million 1,800 1,600 1,400 Average Liquidity Used = $630 million $ Millions 1,200 1,000 800 600 400 200 0 Jan 2011 Apr 2011 Jun 2011 Jun 2
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