Edison International · NYSE:EIX
Edison International — Q2 2012 Earnings Presentation
45 slides from Edison International's earnings presentation, Jul 31, 2012
Slide 1: Second Quarter 2012 Financial Teleconference
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 0 Second Quarter 2012 Financial Teleconference
Slide 2: Forward-Looking Statements
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 1 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), EME liquidity
Slide 3: Second Quarter Earnings Summary
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 2 Second Quarter Earnings Summary 1 See Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. The impact of participating securities is included in EIX parent company and other and was zero per share for the
Slide 4: SCE Second Quarter Highlights
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 3 SCE Second Quarter Highlights Items mainly driven by 2012 GRC delay: Depreciation Net interest expense SONGS inspection and repair O&M reductions and other Total $(0.05) (0.04) (0.05) 0.08 $(0.06) Recent Developments • SONGS Uni
Slide 5: SONGS – Supplemental Data
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 4 SONGS – Supplemental Data 1 Energy and capacity net of avoided nuclear fuel costs. Represents about 7% of SCE’s total fuel and purchased power expense incurred year to date June 30, 2012. 2 Net of accumulated depreciation. Inclu
Slide 6: SONGS – Warranty and Insurance
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 5 SONGS – Warranty and Insurance MHI Warranty • 20-year warranty with Mitsubishi Heavy Industries Repair or replace defective items Specified damages for certain repairs $137 million liability limit – subject to applicable e
Slide 7: SCE Capital Expenditures Forecast
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 6 1 Currently forecasted 2012-2014 FERC and CPUC capital spending, while final GRC decision is pending, subject to timely receipt of permitting, licensing, and regulatory approvals. Forecast range reflects an 11% variability to an
Slide 8: EMG Second Quarter Highlights
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 7 EMG Second Quarter Highlights Recent Developments • EME has entered into agreements with advisors representing certain unsecured bondholders for the purpose of engaging in discussions regarding EME's financial condition, liquidi
Slide 9: Liquidity Profile
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 8 Credit Facility Credit Facility (availability) Cash & Cash Equivalents1 Available Liquidity Liquidity Profile 1 EME had corporate cash of $879 million at June 30, 2012. Corporate cash is defined as cash and cash equivalents of E
Slide 10: EME Financial Status
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 9 EME Financial Status • Simultaneous needs to fund operating losses, install environmental upgrades and meet upcoming debt maturities when power prices are expected to exhaust EME liquidity • EME will need to consider all options
Slide 11: 2012 Business Assumptions
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 10 Southern California Edison • Average rate base range of $19.9 - $20.8 billion • Capital structure: 48% equity, 11.5% ROE (CPUC), 11.1% ROE (FERC) • No energy efficiency earnings • AFUDC offsets other costs outside CPUC rate cas
Slide 12: Appendix
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 11 Appendix
Slide 13: Updates Since Our Last Presentation
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 12 Updates Since Our Last Presentation • Q2 2012 results and standard information • SONGS – Supplemental Data (p. 4) – New Slide • SONGS – Warranty and Insurance (p. 5) – New Slide • EME Financial Status (p. 9) – New Slide • Divid
Slide 14: Delivering Superior and Sustained Value
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 13 Delivering Superior and Sustained Value Edison International • Diversified platform (regulated and competitive) best positions EIX in an industry undergoing unprecedented change • Positioned for long-term earnings and dividend
Slide 15: Financing Strategies
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 14 Financing Strategies • No financial support from, or distributions to, Edison International • Consider all options, including: Asset sales Conservation of cash otherwise applied to payment of obligations Restructuring or
Slide 16: Dividend Growth
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 15 Dividend Growth SCE earnings and rate base growth has expanded faster than EIX’s dividend as a result of large utility capital program $1.08 $1.16 $1.22 $1.24 $1.26 $1.28 $1.89 $2.07 $2.25 $2.68 $3.01 $3.33 $0.00 $0.50 $1.00 $1
Slide 17: Year-to-Date Earnings Summary
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 16 Year-to-Date Earnings Summary 1 See Earnings Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. The impact of participating securities is included in EIX parent company and other and was zero for the p
Slide 18: SCE Year-to-Date Highlights
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 17 Items mainly driven by 2012 GRC delay: Depreciation Net interest expense SONGS inspection and repair O&M reductions and other Lower AFUDC Total SCE Year-to-Date Highlights 1 See Use of Non-GAAP Financial Measures in Appendix fo
Slide 19: EMG Year-to-Date Highlights
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 18 EMG Year-to-Date Highlights 1 See Use of Non-GAAP Financial Measures in Appendix for reconciliation of core earnings per share to basic earnings per share. 2 Homer City’s financial results are reported as non-core for both peri
Slide 20: Debt Maturity Profiles
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 19 Calendar Year Short- and Long-Term Debt Maturities SCE EME1,2 EIX Expiration of Credit Facilities SCE3 MWG4 EIX3 Debt Maturity Profiles 2013 2012 2014 2015 $300 33 18 $— — — June 30, 2012 ($ millions) $— 578 — $— — — $1,200 291
Slide 21: Non-GAAP Reconciliations: Earnings Attributable to Edison International
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 20 Earnings Attributable to Edison International Core Earnings1 SCE EMG EIX parent company and other Core Earnings Non-core items EMG – Homer City operations2 EMG – discontinued operations Total Non-core items GAAP Earnings Non-GA
Slide 22: Our Shareholder Value Proposition
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 21 Our Shareholder Value Proposition • Dual platform operating across the full spectrum of the electric industry • Southern California Edison Among the best domestic electric utility growth platforms Supportive regulatory fram
Slide 23: SCE Appendix
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 22 SCE Appendix
Slide 24: Rate Base
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 23 Rate Base 7-9% 2012 – 2014 CAGR2 • Rate base forecast1,3 based on 2012 CPUC GRC and 2012 FERC Formula Rate requests including consolidated FERC CWIP in rate base • Forecast subject to change based on timely receipt of permittin
Slide 25: SCE Historical Rate Base and Core Earnings
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 24 $11.4 $12.5 $13.1 $15.0 $16.8 $18.8 2006 2007 2008 2009 2010 2011 Rate Base1 Core Earnings2 11% 12% 2006 – 2011 CAGR 1 Recorded rate base, year-end basis. 2 See Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in
Slide 26: SCE 2012 CPUC General Rate Case
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 25 SCE 2012 CPUC General Rate Case • Application filed November 23, 2010, to set base revenue requirement for 2012 – 2014 (A.10-11-015) Rate increase driven by system reliability, load growth, capital-related expense, and techno
Slide 27: SCE 2012 Cost of Capital Application
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 26 SCE 2012 Cost of Capital Application Cost of Capital Capital Structure Adjustments • On April 20, 2012, SCE filed its application to set the capital structure and cost of capital for 2013 (A.12-04-015) • Requested Return on Com
Slide 28: SCE ROE Mechanism – Current and Proposed
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 27 4 5 6 7 8 9 10 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Ra te (% ) Moody’s Baa Utility Index SCE ROE Mechanism – Current and Proposed Current Starting Index = 6.26% Moody’s Baa Utility
Slide 29: SONGS – Outage Update
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 28 SONGS – Outage Update • Unit 2 and Unit 3 remain off-line for ongoing extensive inspection, testing, and analysis of the steam generators • NRC Augmented Inspection Team report released on July 19 Design changes were appropri
Slide 30: SONGS – Regulatory
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 29 SONGS – Regulatory Nuclear Regulatory Commission (NRC) • Restart timing dependent on NRC regulatory process outlined in Confirmatory Action Letter • NRC could also impose additional inspections, assessment processes, or license
Slide 31: SCE Transmission Program
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 30 SCE Transmission Program Transmission expenditures are needed to improve system reliability and increase access to renewable energy Eldorado Ivanpah San Joaquin Cross Valley Loop Los Angeles Vincent San Diego Pardee Antelope Pa
Slide 32: Transmission Project Status
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 31 ER11-3697 06/03/11 Settlement discussions on formula rate in progress. Settlement conference held on July 25 and 26, 2012. FERC ROE FERC rejected SCE’s request for rehearing on ROE, and SCE has initiated court appeal SCE reply
Slide 33: SCE Results of Operations
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 32 SCE Results of Operations ($ millions) Six Months Ended Jun 30, 2011 Six Months Ended Jun 30, 2012 1 See Use of Non-GAAP Financial Measures. Utility Earning Activities Utility Cost Recovery Activities Total Consolidated Utility
Slide 34: SCE Non-GAAP Reconciliation
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 33 Earnings Per Share Attributable to SCE Core EPS1 Non-core items Tax settlement Health care legislation Regulatory and tax items Generator settlement/refund incentive Total non-core items Basic EPS SCE Non-GAAP Reconciliation 1
Slide 35: EMG Appendix
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 34 EMG Appendix
Slide 36: EME Business Platform
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 35 Owned and Operated1 Coal2 Natural Gas Wind3 Other Total MW 7,096 1,269 1,660 153 10,178 % 70 12 16 2 100 Under Construction Wind Natural Gas4 Wind Development Pipeline5 MW 120 479 MW ~700 67 44 19 244 190 357 5,172 167 133 305
Slide 37: Midwest Generation Operating Results
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 36 1 Includes the price of energy, capacity, ancillary services, etc. 2 Average realized gross margin is equal to all-in average realized price less average fuel and emission costs. 3 See Other Non-GAAP Reconciliations and Use of
Slide 38: Midwest Generation Hedging & Capacity Sales
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 37 June 30, 2012 Midwest Generation Hedging & Capacity Sales1 Total GWh (NI, AEP/Dayton, and Indiana Hubs) Average price ($/MWh) Coal under contract (millions of tons)3 1 See “Market Risk Exposures – Commodity Price Risk” in EME’s
Slide 39: EME 2006 Illinois CPS Agreement
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 38 EME 2006 Illinois CPS Agreement NOx SO2 Construction timeline Fleet-wide average emission rate (lb/mmbtu) Construction timeline Fleet-wide average emission rate (lb/mmbtu) Mercury Construction timeline Fleet-wide average emissi
Slide 40: Midwest Generation Compliance Cost
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 39 Midwest Generation Compliance Cost Unit Crawford 532 2,400 8.5% To be shutdown September 2012 Fisk 326 1,589 5.6% To be shutdown September 2012 Waukegan 7, 8 689 3,898 13.9% 2013/2014 $160 Joliet 6 290 1,675 5.9% 2018 $75 Jolie
Slide 41: EME Wind Strategy & Financing
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 40 EME Wind Strategy & Financing Refocused Wind Strategy Project Debt Other Recent Wind Developments Wind Project Financing Capacity 1 Includes Storm Lake project (108 MW) that was impaired in the quarter ended December 31, 2011.
Slide 42: EME Capital Expenditures
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 41 EME Capital Expenditures Midwest Generation Environmental expenditures3 Plant capital expenditures Walnut Creek Project4 Renewable Energy Projects Capital & construction Turbine commitments Other capital expenditures Total 2013
Slide 43: Reconciliation to Earnings – EMG Adjusted EBITDA
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 42 Reconciliation to Earnings EMG1 – Adjusted EBITDA Q4 09 Q1 11 Earnings Addback (Deduct): Discontinued operations Income from continuing operations Interest expense Interest income Income taxes (benefits) Depreciation and amorti
Slide 44: EME Other Non-GAAP Reconciliations
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 43 EME Other Non-GAAP Reconciliations Reconciliation of Midwest Generation Operating Revenues and Fuel Costs to All-in Average Realized Price/MWh and Average Realized Fuel Cost/MWh Generation (GWh) Operating revenues Less: Unreali
Slide 45: Use of Non-GAAP Financial Measures
EDISON INTERNATIONAL® Leading the Way in Electricity SM July 31, 2012 44 Edison International’s earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. Our