Edison International · NYSE:EIX
Edison International — Corporate Update (July 2019)
48 slides from Edison International's corporate update, Jul 29, 2019
Slide 1: Business Update
Exhibit 99.1 Business Update July 26, 2019
Slide 2: Forward-Looking Statements
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 historical, are forward-looking statem
Slide 3: Table of Contents
Table of Contents Updated (U) or New (N) from Page May 2019 Business Update EIX Shareholder Value 3 SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U California’s GHG Emissions Overview, SCE’s Clean Power and Electrification Pathway 7-8 2019 Wildfire Legislation Update 9 N 2018 Ge
Slide 4: EIX Strategy Should Produce Long-Term Value
EIX Strategy Should Produce Long-Term Value Sustained Earnings and Dividend Electric-Led Clean Energy Future Growth Led by SCE SCE Rate Base Growth Drives Earnings EIX Vision • 8.4% average annual rate base • Lead transformation of the electric growth through 2020 power industry • SCE earnings shoul
Slide 5: SCE Highlights
SCE Highlights 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 • 724,000 transformers • 118,000 miles of distribution/transmissio
Slide 6: SCE Long-Term Growth Drivers
SCE Long-Term Growth Drivers Description Timeframe/Regulatory Process Sustained level of infrastructure investment • Ongoing - current and future GRCs Infrastructure required until equilibrium replacement Replacement rates achieved and then maintained • 2018-2020 – Approximately $590 million of capi
Slide 7: SCE Decoupled Regulatory Framework
SCE Decoupled Regulatory Framework Regulatory Mechanism Key Benefits Decoupling of Revenues from • Earnings not affected by variability of retail electricity sales Sales • Differences between amounts collected and authorized levels either billed or refunded • Promotes energy conservation • Stabilize
Slide 8: California's GHG Emissions Overview
California’s GHG Emissions Overview • On October 7, 2015, Governor Brown signed SB 350, which requires a doubling of energy efficiency in existing buildings for California by 2030 • On September 8, 2016, Governor Brown signed SB 32, which requires statewide GHG emissions to be reduced to 40% below t
Slide 9: SCE's Clean Power and Electrification Pathway
SCE’s Clean Power and Electrification Pathway Electric Power Company Roles • Emissions targets met through • Accelerate electrification of the • Electrify nearly one-third of optimization of renewables transportation sector residential and commercial • Implementation of upcoming ➢ At least 7 million
Slide 10: 2019 Wildfire Legislation Update
2019 Wildfire Legislation Update Summary of Assembly Bill 1054 and Assembly Bill 111 Safety • Creates Wildfire Safety Division1 to provide additional wildfire safety oversight Oversight • Initial safety certification issued by CPUC Executive Director within 30 days of IOU request requires: 1) an app
Slide 11: SCE 2018 General Rate Case Decision
SCE 2018 General Rate Case Decision On May 16, 2019, the CPUC issued a final decision which is focused on SCE’s safety and reliability investments in infrastructure replacement and grid modernization, while mitigating customer rate impacts through lower operating costs • 2018 base revenue requiremen
Slide 12: CPUC and FERC Cost of Capital Summary
CPUC and FERC Cost of Capital Summary CPUC Cost of Capital FERC Rate Case Component % Cost Weighted Cost Breakdown of Return on Equity (ROE) Cost Conventional ROE 10.60% Conventional ROE 11.12% Wildfire Risk ROE1 6.00% Wildfire Risk ROE1 6.00% Common Equity 52.0% 16.60% 8.63% Requested ROE + 17.12%
Slide 13: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) $29.6 $27.8 $25.9 $24.6 $23.3 $21.1 2013 2014 2015 2016 2017 2018 Core $4.22 EPS $3.88 $4.68 $4.20 $4.58 $4.42 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financ
Slide 14: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) Long Term Investment Drivers Distribution Wildfire mitigation-related spend Transmission Wildfire mitigation-related spend range Transportation Electrification Generation $4.9 • Approved $356 million ($242 million of capital spending) $4.6 $4.7 medium- a
Slide 15: SCE Rate Base Forecast
SCE Rate Base Forecast ($ billions) $33.4 $30.7 $28.5 2018 2019 2020 Prior Forecast $28.5 $30.7 $33.2 Delta $0.0 $0.0 $0.2 Note: : Weighted-average year basis. FERC based on latest forecast. CPUC excludes the “rate-base offset” adjustment related to the 2015 GRC write off of the regulatory asset for
Slide 16: Mitigating Catastrophic Wildfire Risk
Mitigating Catastrophic Wildfire Risk • SCE’s comprehensive risk mitigation program focuses on three key areas: ➢ Grid hardening: Increase the use of fire-resistant poles, composite cross-arms and covered conductor in high fire risk areas; evaluate design approaches and next-generation engineering t
Slide 17: Wildfire Mitigation Summary
Wildfire Mitigation Summary Increased Situational Grid Hardening Enhanced Operational Practices Awareness Capabilities • 200+ circuit miles of covered • In-house team of fire weather • Completed Enhanced Overhead conductor installed with hundreds experts staffing our 24/7 Inspections of 400,000+ T&D
Slide 18: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2020 Cost of Capital Sets CPUC cost of capital and capital structure Application filed April 22, 2019; Scoping Memo issued July 2, 2019; (A. 19-04-014) for 2020-2022 Intervenor and supplemental testimony due August
Slide 19: CPUC Cost of Capital (2013-2019)
CPUC Cost of Capital (2013-2019) 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/18 – 07/25/19) = 4.68% 100 basis point +/- Deadband 6 5 Rate Rate (%) Starting Value – 5.00% 4 ROE fixed at 10.45% ROE fixed at 10.30% for 2017, independent for 2018, independent of
Slide 20: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing a large 2019 – 2020 Capital Spending Forecast for Distribution excluding Wildfire1 portion of total distribution capital spend, but not $6.4 Billion yet re
Slide 21: SCE Transportation Electrification Proposals
SCE Transportation Electrification (TE) Proposals • Proposals build on SCE’s Clean Power and Electrification Pathway, which is an integrated approach to reduce GHG emissions and air pollution by taking action in three California economic sectors: electricity, transportation and buildings • These pro
Slide 22: SCE Energy Storage
SCE Energy Storage CPUC Energy Storage Program Requirements: • Storage Rulemaking (R.10-12-007) established 1,325 MW target SCE 2018 Storage Portfolio for IOUs by 2024 (580 MW SCE share; spread as biennial targets during 2014-20); ownership allowed up to 290 MW for SCE 350 • Flexibility to transfer
Slide 23: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost5 (as of June 30, 2019) Date West of Devers1,2 $848 million $525 million 2021 Mesa Substation1 $646 million $345 million 2022 Alberhill System3 $486 million $447 mi
Slide 24: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and reliability (SAIDI, SAIFI, • Customer service MAIFI) • Cost efficiency • Customer satisfaction Optimize calculation based on internal
Slide 25: Responding to Industry Change
Responding to Industry Change Long-Term Industry Trends Strategy • The technology landscape is evolving at SCE Strategy an unprecedented pace, with innovation • Clean the power system by accelerating driving advances in cost and capabilities of the de-carbonization of electricity supply distributed
Slide 26: Edison Energy Summary
Edison Energy Summary Edison Energy • Energy is a significant risk large commercial and industrial customers face. Edison Energy creates competitive advantage for market leaders by Renewables & Supply quantifying this risk and designing the portfolio solution to protect shareholder value threatened
Slide 27: 2019 EIX Core Earnings Guidance
2019 EIX Core Earnings Guidance 2019 Core Earnings Per Share Guidance – Key Assumptions Building from SCE Rate Base Total Rate Base $30.7 billion $0.20 ($0.33) • FERC comprises ~20% of total $0.41 ($0.18) CPUC $4.62 $4.71 • HoldCo Return on Equity 10.3% • Financing operating • Previously (ROE) and o
Slide 28: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Fifteen Consecutive Years of Dividend Growth 1 $2.42 $2.45 $2.17 $1.92 $1.67 $1.42 $1.35 $1.28 $1.30 $1.22 $1.24 $1.26 $1.16 $1.08 $1.00 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Target dividend growth within target payout ra
Slide 29: Appendix
Appendix July 26, 2019 Energy for What's Ahead 28
Slide 30: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.4 $4.0 $3.9 $3.8 $3.5 2014 2015 2016 2017 2018 July 26, 2019 29
Slide 31: Credit Ratings Summary
Credit Ratings Summary S&P Moody’s Fitch Date of Report July 26, 2019 July 12, 2019 July 18, 2019 Edison International Corporate / Outlook BBB/Stable Baa3/Negative BBB-/Negative Senior Unsecured BBB- Baa3 BBB- Commercial Paper A-2 P-3 F3 Southern California Edison Corporate / Outlook BBB/Stable Baa2
Slide 32: Distribution Power Grid of the Future
Distribution Power Grid of the Future Current State Future State One-Way Electricity Flow Variable, Two-Way Electricity Flow • System designed to distribute electricity • Distribution system at the center of the from large central generating plants power grid • Voltage centrally maintained • System
Slide 33: EIX's 2018 Sustainability Report Highlights
EIX’s 2018 Sustainability Report Highlights “At Edison International, we are leading the transformation of the electric power industry toward a clean energy future by focusing on opportunities in clean energy, efficient electrification, the grid of the future, and customer choice. As we pursue this
Slide 34: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2014 2015 2016 2017 2018 Residential 30,027 30,093 29,579 30,221 29,865 Commercial 42,004 42,396 42,189 42,514 42,369 Industrial 8,392 7,623 7,162 6,659 6,786 Public authorities 4,975 4,795 4,715 4,711 4,510 Agricultural and other 2,01
Slide 35: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2019 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond 4,268 7.2 Fuel & Purchased Power Charge (44%) Distribution – poles, wires, substations, service 3,680 6.2 centers; Edison SmartConnect® Distribution Generation – owned generat
Slide 36: System Average Rate Historical Growth
System Average Rate Historical Growth ¢/kWh Comparative System Rates reduced due to the implementation of Average Rates 1) the SONGS Revised Settlement, including CAGR % Delta to SCE NEIL insurance benefits, 2) lower fuel & 29-yr 20-yr 10-yr SCE 16.4¢ -- purchased power costs, and 3) a lower 2015 (‘
Slide 37: Community Choice Aggregator (CCA) Overview
Community Choice Aggregator (CCA) Overview • Assembly Bill 1171 permits cities and counties, and Joint Powers Agencies (JPAs) to act as CCAs to purchase and sell electricity on behalf of the utility customers within their jurisdiction • An Order Instituting Rulemaking (OIR R.17-06-026) was opened on
Slide 38: Residential Rate Design OIR Decision
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 ➢ In March 2018, SCE began to migrate 400,000 residential customers to TOU rate structures ➢ Remaining e
Slide 39: Impacts of Abundant Solar Energy (Duck Curve)
Impacts of Abundant Solar Energy (Duck Curve) New Time-of-Use (TOU) Periods • On March 1, 2019, SCE changed its basic TOU pricing period definition for the first time in over 30 years • Abundant mid-day renewable energy lowers prices from 8am-4pm • Highest cost period is now 4pm-9pm, all-days1 Seaso
Slide 40: SCE Net Energy Metering
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (6/19) Installations and MW Installed • 315,756 combined residential and non-residential projects – 2,649 MW installed 7000 40 • 99.8 % solar projects • 308,576 residential (6.9% of all residential customers) – 1,686 MW 35
Slide 41: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2018 Average Residential Rates (¢/kWh) KeyKey Factors Factors 28% 16.4 ₵ Higher • SCE’s residential rates are above national 12.8 ₵ average due, in part, to a cleaner fuel mix, high cost of living, and lower system load factor • SCE’s residential customer usage is lowe
Slide 42: Second Quarter Earnings Summary
Second Quarter Earnings Summary Q2 Q2 Key SCE EPS Drivers3 2019 2018 Variance Test Year 2018 GRC true-up $ 0.20 Basic Earnings Per Share (EPS)1 Higher revenue 0.34 - CPUC revenue 0.28 SCE $ 1.28 $ 0.91 $ 0.37 - FERC and other operating revenue 0.06 EIX Parent & Other (0.08) (0.06) (0.02) Lower O&M 0
Slide 43: Year to Date Earnings Summary
Year to Date Earnings Summary YTD YTD Key SCE EPS Drivers4 2019 2018 Variance Test Year 2018 GRC true-up $ 0.20 Basic Earnings Per Share (EPS)1 Higher revenue 0.43 - CPUC revenue 0.34 SCE $ 2.18 $ 1.79 $ 0.39 - FERC and other operating revenue 0.09 EIX Parent & Other (0.13) (0.27) 0.14 Higher O&M (0
Slide 44: SCE Annual Results of Operations
SCE Annual Results of Operations ($ millions) • Earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specific project or program costs, subject to rea
Slide 45: Earnings Per Share Non-GAAP Reconciliations
Earnings Per Share Non-GAAP Reconciliations Reconciliation of EIX Basic Earnings Per Share Guidance to EIX Core Earnings Per Share Guidance EPS Attributable to Edison International 2019 Low Midpoint High SCE $4.88 EIX Parent & Other (0.32) Basic EPS1 $4.46 $4.56 $4.66 Non-Core Items SCE2,3 (0.15) (0
Slide 46: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Q2 Q2 YTD YTD Earnings Attributable to Edison International 2019 2018 2019 2018 SCE $419 $297 $712 $583 EIX Parent & Other (27) (21) (42) (89) Basic Earnings $392 $276 $670 $494 Non-Core Items SCE
Slide 47: EIX Core EPS Non-GAAP Reconciliations
EIX Core EPS Non-GAAP Reconciliations Reconciliation of Edison International Basic Earnings Per Share to Edison International Core Earnings Per Share Earnings Per Share Attributable to Edison International 2018 2017 Basic EPS ($1.30) $1.73 Non-Core Items SCE Wildfire-related claims, net of recoverie
Slide 48: Use of Non-GAAP Financial Measures
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 are also used when com