Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Credit Suisse Energy Summit 2015
46 slides from Consolidated Edison's conference presentation, Feb 25, 2015
Slide 1: Con Edison, Inc. Credit Suisse Energy Summit
Con Edison, Inc. February 25, 2015 Credit Suisse Energy Summit 1
Slide 2: Forward-Looking Statements and 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, Inc. Investment Thesis
Consolidated Edison, Inc. Investment Thesis • The largest of the few publicly-traded, T&D-focused utility companies – Limited commodity exposure • Reduced regulatory lag – Forward-looking test years – Timely recovery of most fuel and commodity costs – Revenue decoupling mechanism in NY (electric and
Slide 4: Regulated Transmission and Distribution Focused
Regulated Transmission and Distribution Focused (EPS – Twelve Months Ended December 30, 2014) Con Edison, Inc. (ED) EPS $3.73 Rate Base: $23.4 billion Market Cap: $16.6 billion Regulated Utilities Con Edison Transmission Orange and Rockland EPS $0.20 Con Edison of New York EPS $3.61 Competitive Ener
Slide 5: 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 Fortis to own NY Transco • NY Transco filed jointly for FERC wholesale transmission rates on December 4, 2014 • Con Edison ownership share: 46% Edic–to–Pleasant Valley Fr
Slide 6: Reconciliation of 2014 and 2013 Earnings Per Share
Reconciliation of 2014 and 2013 Earnings Per Share Con Con Con Edison Edison Edison 12 months ending Dec. 31, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $3.61 $0.20 $0.15 $0.06 ($0.26) ($0.03) $3.73 Gain on sale of solar energy projects ($0.09) - - - (0.09) M
Slide 7: Rates of Return and Equity Ratio
Rates of Return and Equity Ratio (for twelve months ended December 31, 2014) Regulated Basis SEC Basis CECONY Allowed Actual Electric 9.2% 9.2% Gas 9.3% 7.5% Steam 9.3% 11.5% Overall - CECONY 9.2%* 9.1% 9.6% CECONY Equity Ratio** 48.0% 50.9% O&R Electric 9.6% 10.5% Gas NA 5.3% RECO 9.8% 8.1% Overall
Slide 8: Departmental and Other Expenses
Con Edison of New York Departmental and Other Expenses ($ millions) 1,600 1,476 1,489 1,470 1,422 1,384 1,394 1,400 1,312 1,313 1,284 1,254 1,261 1,265 1,296 449 503 1,200 432 434 315 344 1,000 902 800 508 285 505 503 519 553 596 600 310 400 478 519 485 467 200 364 364 307 0 b c2009d e f2010g h i201
Slide 9: Regulated Utilities are the Core of Con Edison, Inc.
Regulated Utilities are the Core of Con Edison, Inc. Con Edison of New York (CECONY) • 3.4 million electric customers • 1.1 million gas customers • 1,700 steam customers • 700 MW of regulated generation CECONY and O&R • Delivered 40.8% of NYS 2014 electric peak delivered 44% of NYS 2014 electric pea
Slide 10: One World Trade Center
Con Edison of New York One World Trade Center • Adding to the vitality of Lower Manhattan, One World Trade Center opened its doors to the first new tenants in November 2014. • The One World Observatory opens in NYC in 2015. 10 Source: Jennifer Stahmer.
Slide 11: Hudson Yards
Con Edison of New York Hudson Yards • Hudson Yards has begun to revitalize the west side of Manhattan above 30th Street. • 17.4 million sf of building space • 14 acres of park and public space • Includes office, residential, retail, hotel, cultural center and school space Source: Related Companies.
Slide 12: MTA Line Extensions
Con Edison of New York Second Avenue Subway MTA Line Extensions Phase 1 is 78.7% complete as of February 1st On target for completion in December 2016 The 7 line extension is 99% complete expected to open in 2Q15 12 Source: Related Companies and MTA.
Slide 13: Silicon Alley
Con Edison of New York Silicon Alley • Tech firms leased more than 5.0 million square feet of office space in 2014, accounting for 16.2% of Manhattan leasing activity in 2014. • Tech firms provided 66,200 jobs by December 2014, improving 6.4% year-over-year. CORNELL TECH - Roosevelt Island is antici
Slide 14: New York City's Record-Breaking Tourism
Con Edison of New York New York City’s Record-Breaking Tourism • 56.4 million visitors in 2014 • 89% average hotel occupancy • 7.3% increase in room nights sold • 115,000 rooms to be added by 2017 60 Domestic International 2.9% CAGR 4.3% CAGR 50 1998-2014 1998-2014 12.2 10.9 11.4 10.6 9.7 8.8 9.5 8.
Slide 15: New York City Employment By Sector
Con Edison of New York New York City Employment By Sector Jobs in 000s % of Total NYC Employment 4,000 Education =5% Leisure & Hospitality =10% 3,500 Other Service =4% 3,000 Prof & Bus. Svcs. =16% 2,500 Trade =12% Government =13% 2,000 Manufacturing =2% 1,500 Construction =3% 1,000 Health Care Servi
Slide 16: CECONY Service Area Population
CECONY Service Area Population More robust population growth expected 10000 Actual October 2014 Forecast Population (Thousands) 9000 8000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 16 Source: US Dept of Census and Moody’s Economy.com
Slide 17: CECONY Residential Building Permits Are On the Rise
Con Edison of New York CECONY Residential Building Permits Are On the Rise 40,000 36-year high occurred due to extension 35,000 and then expiration of NYC tax abatement program 2014 figures are up 11.2% year over year 30,000 Number of Permits Issued 25,000 30-Yr Average 20,000 15,000 10,000 5,000 0
Slide 18: Residential Development
Con Edison of New York Residential Development • New residential development continues at a strong pace across the city. • 30 Park Place will be the tallest residential tower downtown with a 926 foot tall tower. • This building will feature a 189-key Four Seasons Hotel at the base and 157 Four Seaso
Slide 19: Brooklyn Queens Demand Management Program
Brooklyn Queens Demand Management Program Background: • Growing demand in Brooklyn and Queens is overloading the capabilities of Brownsville substation, where 85% of accounts served are residential. • By 2018, demand could outpace system capability by approximately 70 MW for approximately 40 – 50 pe
Slide 20: CECONY Historic Electric Volumes
Con Edison of New York CECONY 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 2009
Slide 21: Average Normalized Electricity Use per Customer
Con Edison of New York Average Normalized Electricity Use per Customer 16,000 Annual kWh per customer: 1991 - 2014 15,000 kWhrs 14,000 13,000 12,000 % change over prior year 5.00% Residential 4.00% Commercial 3.00% 2.00% 1.00% 0.00% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20
Slide 22: Five-Year Growth Rates in Normalized Peak Usage
Five-Year Growth Rates in Normalized Peak Usage Historic Historic 2015-2019 2002-2007 2008-2013 Five-Year (Pre-Recession) (Recession*) Forecast CECONY (%) Electric 1.8 (1.1) 0.9 Gas 1.0 1.6 2.8 Steam (0.8) (2.3) (0.8) O&R (%) Electric 2.6 (0.6) 0.9 Gas (0.8) (0.6) 0.6 * Officially the recession bega
Slide 23: Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Market for Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type January 31, 2015 4,200 customers #6 Oil 1,552 converted, 37% Completed Conversions January 2011 to January 2015 Total Conversion Potential 2,800 customers As of December 2010 #4 Oil 851 converted, 30% 14
Slide 24: New York Public Service Commission (NY PSC)
New York Public Service Commission (NY PSC) Commissioners Audrey Zibelman (D) Diane Burman Chair (R) Rev. Floyd Flake Patricia Acampora Gregg Sayre (D) (R) Feb-2018 (D) Feb-2018 Feb-2018 Appointed June announced Feb-2015 Appointed June Appointed June 2013 January 2015 * Appointed June 2005 2012 2013
Slide 25: Reforming the Energy Vision (REV)
Reforming the Energy Vision (REV) On April 24, 2014, the NY PSC initiated a proceeding to align electric utility practices and the regulatory paradigm with technological advances in information management and power generation and distribution The order focuses on: • Clean technologies and energy eff
Slide 26: 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 $1,000 $492 $447 $378 $375 $366 $500 $137 $142 $135 $162 $182 $374 $127 $135 $111 $177 $28 $114 $10 $0
Slide 27: Consolidated Edison, Inc. Rate Base Growth
Consolidated Edison, Inc. Rate Base Growth ($ millions) Pike (PA) 23,646 RECO (NJ) 22,691 21,760 O&R Gas (NY) 5-year CAGR 20,545 21,311 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 11,869 11,087 11,231 2001 2002
Slide 28: 2015 Financing
2015 Financing • Capital expenditure of $2,912 million (CECONY - $2,375 million, O&R - $162 million, CEB - $375 million) • Issue between $1,000 million and $1,500 million of long-term debt, including maturities • No equity issuance other than through the company’s stock plans Schedule of Debt Maturi
Slide 29: Capital Structure — December 31, 2014
Capital Structure — December 31, 2014 ($ millions) Con Edison, Inc. A3 / BBB+ / BBB+ Debt $12,191 49% Equity 12,585 51 Total $24,776 100% Con Edison of New York Orange and Rockland Competitive and Parent A2 / A- / A- A3 / A- / A- Debt $11,214 50% Debt $600 49% Debt $377 33% Equity 11,188 50 Equity 6
Slide 30: Liquidity Adequacy
Liquidity Adequacy $2,250 million CEI Consolidated revolving credit facility 30
Slide 31: A Compelling Dividend Record: 41 Consecutive Years of Dividend Increases
A Compelling Dividend Record: 41 Consecutive Years of Dividend Increases Indicated dividend for 2015 = $2.60 Dividend Increases 2010 – 2015 Dividend Payout Ratio 2010 – 2015 $0.10 90% $0.09 5 year dividend growth rate of 1.8% 85% The only utility in the $0.08 S&P 500 with 30 r more 80% consecutive y
Slide 32: APPENDIX
te APPENDIX ED GconEdison, inc. NYSE
Slide 33: Reconciliation of 4th Quarter 2014 and 2013 Earnings Per Share
Reconciliation of 4th Quarter 2014 Earnings Per Share and 4th Quarter 2013 Earnings Per Share Con Con Con Edison Edison Edison 3 months ending Dec. 31, 2014 CECONY O&R Development Energy Solutions Parent Total Reported EPS – GAAP basis $0.52 $0.04 ($0.02) $0.01 ($0.26) ($0.01) $0.28 Mark-to-Market l
Slide 34: Solar and Wind Investment Portfolio
Con Edison Development Solar and Wind Investment Portfolio February 19, 2015 PPA Actual / Expected Project Type Location MW (AC) Offtaker PPA Term SREC Term In-service Date Operating - Projects > 3MW Solar Pilesgrove Solar NJ 9 N/A N/A 3 years 3Q11 Flemington Solar NJ 8 N/A N/A 3 years 4Q11 PA Solar
Slide 35: Manhattan Leasing Activity for 2014
Con Edison of New York Manhattan Leasing Activity for 2014 Financial Services High-Tech Legal Services Media & Entertainment Advertising/Marketing/PR Business Services Information Apparel/Textile Government Retail Trade Healthcare Nonprofit Education Real Estate Insurance Architects & Engineers Manu
Slide 36: Historical Electricity Peak Demand
Con Edison of New York Historical Electricity Peak Demand* 14,000 13,000 9/11 The Great (2001) Recession 12,000 Electric Peak (MW) Decline (2009-2011) Enlightened Energy Program 11,000 Stock Market Crash 10,000 (1987) Oil Embargo (1973) Oil Shock Iranian Revolution 9,000 Iran/Iraq War (1979) 8,000 N
Slide 37: Composition of Rate Base
Composition of Rate Base (as of December 31, 2014) Rate Base* ($ millions) Con Edison of New York Electric (NY) $ 17,094 Gas (NY) $ 3,699 Steam (NY) $ 1,536 Total CECONY $ 22,329 Orange and Rockland Pike Gas (PA) $ 2 Pike Electric (PA) $ 15 Rockland Electric (NJ) (distribution) $ 180 (transmission)
Slide 38: Infrastructure Investment
Electric Gas Steam Depreciation Con Edison of New York Actual Infrastructure Investment 2008 1743 338 121 672 2009 1596 339 122 744 ($ millions) 2010 1421 334 111 787 2011 1354 335 89 829 $3,000 Steam 2012 1375 426 108 894 Gas $2,694 2013 1471 536 128 946 $2,661 Electric 2014 1500 549 83 991 $2,500
Slide 39: Orange and Rockland Infrastructure Investment
Electric Gas Depreciation Orange and Rockland Infrastructure Investment Actual 2009 85 42 42 ($ millions) 2010 99 36 44 2011 79 32 48 2012 98 39 53 $200 2013 98 37 56 Gas $182 2014 105 37 61 $180 Electric $177 Forecast Depreciation $162 2015 125 37 69 $160 2016 137 45 74 $142 $140 $135 $137 $135 201
Slide 40: Gas Distribution Infrastructure Investment
Con Edison of New York Main replacement Gas Distribution Infrastructure Investment annual targets: ($ millions) 2014 – 60 miles 2015 – 65 miles 2016 – 70 miles $900 $808 $800 $700 $679 $687 $600 $536 $549 $500 $426 $400 $339 $334 $335 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fo
Slide 41: Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type
Con Edison of New York Annual Multi-Family and Commercial Oil-to-Gas Conversions by Oil Type 2014 YTD through January 31st 700 618 Number of gas service installations 600 544 513 520 500 400 343 #2 Oil 313 #4 Oil 300 280 260 #6 Oil 199 200 152 100 91 66 44 37 23 21 23 6 0 2010 2011 2012 2013 2014 20
Slide 42: Distributed Generation
Con Edison of New York Distributed Generation Adoption Trends in Service Area Total Installations Total Installed Capacity 8000 200 180 7000 160 6000 CHP 140 5000 120 4000 100 PV 3000 80 PV 60 2000 40 1000 CHP 20 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 201
Slide 43: NY PSC's Formulaic Approach to ROE
NY PSC’s Formulaic Approach to ROE Recent Rate Decisions in New York Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 09/10 CECONY Steam 9.60% 3 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 08
Slide 44: 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 45: 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 46: Summary of Rate Plans
Summary of Rate Plans Amortization To Income Authorized Effective of Net Regulatory Return on Equity Period Rate Changes Rate Base (Assets) and Liabilities (ROE) (a) (Millions of Dollars, except percentages) CECONY– Electric (b) January 2014 - Yr. 1 - $(76.2) Yr. 1 - $17,323 $(37) over 2 yrs. 9.2% D
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