Edison International · NYSE:EIX
Edison International — Corporate Update (February 2017)
47 slides from Edison International's corporate update, Feb 22, 2017
Slide 1: Business Update February 2017
February 22, 2017 Business Update February 2017 Exhibit 99.1
Slide 2: Forward-looking statements
February 22, 2017 1 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 statements. T
Slide 3: Table of Contents
February 22, 2017 2 Page New (N) or Updated (U) from November 2016 Business Update EIX Shareholder Value 3 U SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 N Capital Expenditures and Rate Base History and Forecast 7-9 U 2018 GRC Overview 10-11 CPUC Cost of Capital 12 U Key Regula
Slide 4: EIX Strategy Should Produce Superior Value
February 22, 2017 3 EIX Strategy Should Produce Superior Value Sustained Earnings and Dividend Growth Led by SCE Positioned for Transformative Change SCE Rate Base Growth Drives Earnings • 8.6% average annual rate base growth through 2020 at request level • SCE earnings should track rate base growth
Slide 5: SCE Highlights
February 22, 2017 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 investment • 1.4 million power poles • 725,000 transformers • 103,000 miles of distribution and tr
Slide 6: SCE Long-Term Growth Drivers
February 22, 2017 5 SCE Long-Term Growth Drivers Description Timeframe/Regulatory Process Sustained level of infrastructure investment required until equilibrium replacement rates achieved and then maintained • Ongoing - current and future GRCs Accelerate automation, communication, and analytics cap
Slide 7: SCE Decoupled Regulatory Model
February 22, 2017 6 SCE Decoupled Regulatory Model Decoupling of Regulated Revenues from Sales Major Balancing Accounts • Fuel • Purchased power • Energy efficiency • Pension expense Advanced Long-Term Procurement Planning Forward-looking Ratemaking • SCE earnings not affected by variability of reta
Slide 8: SCE Historical Rate Base and Core Earnings
February 22, 2017 7 SCE Historical Rate Base and Core Earnings Rate Base Core Earnings 7% 5% 2011 – 2016 CAGR ($ billions) Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures. 2013-2016 rate base excludes SONGS $18.8 $21.0 $21.1
Slide 9: SCE Capital Expenditure Forecast – Request Level
February 22, 2017 8 SCE Capital Expenditure Forecast – Request Level Note: Forecasted capital spending includes CPUC, FERC and other spending. See Capital Expenditure/Rate Base Detailed Forecast for further information, including potential investment excluded in forecasts. 2021-2022 Delta reflects c
Slide 10: SCE Rate Base Forecast – Request Level
February 22, 2017 9 SCE Rate Base Forecast – Request Level CPUC • Rate base based on request levels from 2018 GRC and 2018 positive true-up from authorized to forecast 2017 rate base FERC • FERC rate base is approximately 19% of SCE’s rate base by 2020; includes Construction Work in Progress (CWIP)
Slide 11: 2018 GRC Overview
February 22, 2017 10 • 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital and other pote
Slide 12: 2018 GRC Overview – Key Items
February 22, 2017 11 • Capital expenditures of $2.1 billion for grid modernization capital to support improved safety and reliability and increased levels of distributed energy resources (DER) Requested approval to establish memorandum account to facilitate $210 million of grid modernization capit
Slide 13: CPUC Cost of Capital
February 22, 2017 12 3 4 5 6 7 10/1/12 10/1/13 10/1/14 10/1/15 10/1/16 10/1/17 10/1/18 10/1/19 R at e (% ) CPUC Cost of Capital CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/16 – 02/01/2017) = 4.60% 100 basis point +/- Deadband Starting Value – 5.00% Return on Eq
Slide 14: SCE Key Regulatory Proceedings
February 22, 2017 13 SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case (A. 16-09-001) Set CPUC base revenue requirement, capital expenditures and rate base for 2018-2020 Ongoing workshops and data requests; awaiting schedule to be set by ALJ
Slide 15: SCE Distribution System Investments
February 22, 2017 14 SCE Distribution System Investments 1. Other includes GRC energy storage, Charge Ready Phase I and mobile home pilot programs Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing 44% of total distribution capital spend, but
Slide 16: SCE Large Transmission Projects
February 22, 2017 15 SCE Large Transmission Projects 1. CPUC approved 2. Presently under CPUC environmental review 3. Morongo Transmission holds an option to invest up to $400 million, or half of the estimated cost of the transmission facilities only, at the in-service date. If the option is exercis
Slide 17: Energy Storage
February 22, 2017 16 Energy Storage Given counting rules, SCE has already met the aggregate 2016 targetsCPUC Energy Storage Program Requirements: • 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 a
Slide 18: SCE Transportation Electrification Proposals
February 22, 2017 17 SCE Transportation Electrification Proposals • On January 20, 2017, SCE filed with the CPUC a wide-ranging plan to increase electrification of cars, buses, medium- and heavy-duty trucks and industrial vehicles and equipment SCE proposed 6 near-term, priority-review projects an
Slide 19: Transportation Electrification Overview
February 22, 2017 18 Transportation Electrification Overview • California’s goals to reduce total GHG emissions by 40 percent from 1990 levels by 2030 is 42% from current levels Recent Governor Order set a 2050 target of 80% below 1990 levels • Many of California's policies to date focused on elec
Slide 20: 2017 Core Earnings Per Share Guidance
February 22, 2017 19 $4.05 $4.14 (0.25)0.34 SCE 2017 EPS from Rate Base Forecast SCE Variances EIX Parent & Other EIX 2017 Core EPS Midpoint Guidance • O&M and financing benefits - $0.31 • Energy efficiency - $0.03 2017 Core Earnings Per Share Guidance – Building from SCE Rate Base • SCE authorized
Slide 21: SCE Operational Excellence
February 22, 2017 20 SCE Operational Excellence Top Quartile • Safety • Reliability • Customer service • Cost efficiency Optimize • Capital productivity • Purchased power cost High performing, continuous improvement culture Defining Excellence Measuring Excellence • Employee and public safety metric
Slide 22: Responding to Industry Change
February 22, 2017 21 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 electricity • Power gr
Slide 23: Edison Energy Focus: Commercial & Industrial
February 22, 2017 22 • Create portfolio energy services that help simplify and optimize energy needs for large commercial & industrial customers: Help customers capture the maximum value of energy optimization by managing risk and making better decisions around procuring energy, investing in capit
Slide 24: EIX Annual Dividends Per Share
February 22, 2017 23 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 $2.17 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: See Use of Non-GAAP Financial Measures Thirteen Years of Dividend Growth Target dividend
Slide 25: Appendix
February 22, 2017 24 Appendix
Slide 26: EIX and SCE Tax Reform
February 22, 2017 25 Key Reform Considerations Impact on Customer / Shareholder Comments No interest deductibility Negative Negative • Permanent increase in customer rates (top concern) • Costs passed through but lowers tax shield Lower tax rate (15%-20%) Positive Negative at EIX holding company • L
Slide 27: SCE Historical Capital Expenditures
February 22, 2017 26 SCE Historical Capital Expenditures ($ billions) $3.9 $3.5 $4.0 $3.9 $3.5 2012 2013 2014 2015 2016
Slide 28: Capital Expenditure/Rate Base Detailed Forecast
February 22, 2017 27 Detailed Capital Expenditures at Request Level – 2016-2020 2016 (Actual) 2017 2018 2019 2020 Total Core Distribution1,2 $2.9 $3.0 $3.2 $3.2 $3.1 $15.4 Mobile Home Pilot Program - 0.1 - - - 0.1 Grid Modernization - 0.2 0.6 0.8 0.7 2.3 Subtotal Distribution $2.9 $3.3 $3.8 $4.0 $3.
Slide 29: Distribution Power Grid of the Future
February 22, 2017 28 Distribution Power Grid of the Future One-Way Electricity Flow • System designed to distribute electricity from large central generating plants • Very few distributed energy resources • Voltage centrally maintained • Limited situational awareness and visualization tools for powe
Slide 30: Grid Modernization Highlights
February 22, 2017 29 Computing intelligence inside electrical substations Future circuit designs integrate Distributed Energy Resources and increase flexibility The distribution system will require transformative technologies in planning, design, construction and operation Net benefits to customers
Slide 31: Grid Modernization Capital Expenditures
February 22, 2017 30 $0.03 $0.18 $0.64 $0.75 $0.71 2016 (Actual) 2017 2018 2019 2020 Building next generation electric grid requires accelerating traditional Transmission and Distribution / Information Technology programs and investing in new capabilities • Increased capacity: Upgrade portions of th
Slide 32: Distributed Energy Resources (DER) Proceedings
February 22, 2017 31 Distributed Energy Resources (DER) Proceedings Expanded scope • Competitive DER solicitation framework: product definition, rules, plans, standard contracts, “review groups,” and DER valuation methodology • Electric power company roles in DER markets, business models, and financ
Slide 33: SCE Customer Demand Trends
February 22, 2017 32 2016 29,141 41,565 7,056 4,645 1,776 84,183 1,794 85,977 4,417,340 565,222 10,445 46,133 21,233 133 22 5,060,528 38,076 23,091 SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) Residential Commercial Industrial Public authorities Agricultural and other Subtotal Re
Slide 34: California's Energy Policy
February 22, 2017 33 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 Transportation El
Slide 35: SCE 2017 Bundled Revenue Requirement
February 22, 2017 34 SCE 2017 Bundled Revenue Requirement Note: Rates in effect as of October 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 2016 2017 14.3 14
Slide 36: System Average Rate Historical Growth
February 22, 2017 35 9.7¢ 15.8¢ 8.0¢ 10.0¢ 12.0¢ 14.0¢ 16.0¢ 18.0¢ 20.0¢ 22.0¢ 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Energy Crisis and return to normal cost of service rates Higher gas prices post-Katrina leads to higher rates with subsequent refund of over collection Delay in 2012 GRC l
Slide 37: Residential Rate Design OIR Decision
February 22, 2017 36 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 (TOU) rates • July 2015 CPUC Decision D.15-07-001 includes: Transition to 2 tiered rates by 201
Slide 38: SCE Net Metering Rate Structure
February 22, 2017 37 SCE Net Metering Rate Structure 7¢ 24¢17¢ 0 5 10 15 20 25 30 ¢/ kW 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 full-retail
Slide 39: Residential Solar Installations in SCE Territory
February 22, 2017 38 Note: NEM solar installations in SCE service territory include projects with solar PV only less than 1 MW Residential Solar Installations in SCE Territory July 1, 2017 • NEM customers will be required to take service under mandatory Time-of-Use rate • SCE is not expected to hit
Slide 40: SCE Rates and Bills Comparison
February 22, 2017 39 SCE Rates and Bills Comparison SCE’s average residential rates are above national average, but residential bills are below national average due to lower usage • SCE’s residential rates are above national average due, in part, to a cleaner fuel mix – cost for low carbon energy ar
Slide 41: Fourth Quarter Earnings Summary
February 22, 2017 40 Q4 2016 Q4 2015 Variance Basic Earnings Per Share (EPS)1,2 SCE $1.04 $(0.25) $1.29 EIX Parent & Other (0.02) 0.03 (0.05) Discontinued Operations 0.04 (0.02) 0.06 Basic EPS $1.06 $(0.24) $1.30 Less: Non-Core Items SCE3 $ − $(1.14) $1.14 EIX Parent & Other4 − 0.04 (0.04) Discontin
Slide 42: Full Year 2016 Earnings Summary
February 22, 2017 41 2016 2015 Variance Basic Earnings Per Share (EPS)1 SCE $4.22 $3.06 $1.16 EIX Parent & Other (0.23) (0.04) (0.19) Discontinued Operations 0.03 0.11 (0.08) Basic EPS $4.02 $3.13 $0.89 Less: Non-Core Items SCE2 $ − $(1.14) $1.14 EIX Parent & Other3 0.02 0.06 (0.04) Discontinued Ope
Slide 43: SCE Results of Operations
February 22, 2017 42 $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 (370) $1,368 SCE Results of Operations • Earning activities – revenue authorized
Slide 44: 2016 Retroactively Adjusted EPS by Quarter
February 22, 2017 43 2016 Retroactively Adjusted EPS by Quarter 20161 Q4 Q3 Q2 Q1 Earnings (loss) per share attributable to Edison International Continuing Operations SCE $4.22 $1.01 $1.34 $0.98 $0.90 Edison International Parent & Other (0.23) (0.04) (0.05) (0.11) (0.04) Discontinued Operations 0.03
Slide 45: Earnings Non-GAAP Reconciliations
February 22, 2017 44 Earnings Non-GAAP Reconciliations Note: See Use of Non-GAAP Financial Measures ($ 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 Discontinued Operations Total
Slide 46: SCE Core EPS Non-GAAP Reconciliations
February 22, 2017 45 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 Share to SCE
Slide 47: Use of Non-GAAP Financial Measures
February 22, 2017 46 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 earnings a
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