Edison International · NYSE:EIX
Edison International — Corporate Update (May 2019)
48 slides from Edison International's corporate update, May 1, 2019
Slide 1: Business Update
Business Update May 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 March 2019 Business Update EIX Shareholder Value 3 U 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 U 2018 General Rate Case Proposed Decisi
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 • 8.0% 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 Reliability 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: SCE 2018 General Rate Case Proposed Decision
SCE 2018 General Rate Case Proposed Decision On April 12, 2019, the CPUC issued a proposed 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 revenue r
Slide 11: SCE 2018 General Rate Case Proposed Decision
SCE 2018 General Rate Case Proposed Decision On May 2, 2019, SCE will file opening comments on the 2018 GRC proposed decision (PD). We will discuss the following key topics: Topic PD Proposal • PD seeks to assign the costs (~$114 million) of six service centers to shareholders; these were previously
Slide 12: CPUC and FERC Cost of Capital Summary
CPUC and FERC Cost of Capital Summary CPUC Cost of Capital FERC Rate Case Component % Cost Weighted Cost Breakdown of Return on Equity (ROE) Cost Conventional ROE 10.60% Conventional ROE 11.12% Wildfire Risk ROE 6.00% Wildfire Risk ROE 6.00% Common Equity 52.0% 16.60% 8.63% Requested ROE + 17.12% Lo
Slide 13: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) $29.6 $27.8 $25.9 $24.6 $23.3 $21.1 2013 2014 2015 2016 2017 2018 Core EPS $3.88 $4.68 $4.20 $4.22 $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) Distribution1,2 Wildfire mitigation-related spend Long Term Growth Drivers Transmission Wildfire mitigation-related spend range Generation Transportation Electrification • Recently approved $356 million ($242 million of capital $4.6 spending) medium- and
Slide 15: SCE Rate Base Forecast – GRC Proposed Decision
SCE Rate Base Forecast – GRC Proposed Decision ($ billions) $33.1 $30.7 $28.4 2018 2019 2020 (PD) (PD) (PD) Prior Forecast $29.1 $31.8 $34.7 Delta ($0.7) ($1.1) ($1.6) Note: Weighted-average year basis; based on 2018 GRC proposed decision, subject to change. FERC based on latest forecast and current
Slide 16: 2019 Financial Assumptions
2019 Financial Assumptions ($ billions) SCE Capital Expenditures SCE Weighted Average Rate Base Distribution $3.2 Total $30.7 Transmission 0.7 • FERC comprises about 20% of total rate base in 2019 Generation 0.2 • Based on 2018 GRC proposed decision (subject to change) Wildfire Mitigation 0.4 Total
Slide 17: 2019 HoldCo Financing Plan
2019 HoldCo Financing Plan ($ billions) 2019 EIX Long-Term Financing Plan Overview • $1.0 billion HoldCo debt to support SCE rate base $2.5 $2.5 growth and HoldCo operating expenses EIX OpEx and Other: $0.2 • $1.5 billion equity program (internal programs and At-The-Market) SCE Capital Proceeds to
Slide 18: Wildfire Mitigation and Prevention Summary
Wildfire Mitigation and Prevention Summary • SCE’s comprehensive risk mitigation program focuses on three key areas: Grid hardening: Significant investment to prevent ignitions including covered conductor, non- expulsion fuses, and remote-controlled automatic reclosers Increased situational awar
Slide 19: Wildfire Legislation Update
Wildfire Legislation Update Summary of Senate Bill 901 Key Components Wildfire Mitigation • Requires annual detailed wildfire mitigation plans with objectives, preventive strategies, costs, metrics Plans and specific details regarding de-energization protocols, vegetation management and inspections
Slide 20: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case Sets CPUC base revenue requirement, capital Proposed decision issued on April 12, 2019; pending final commission (A. 16-09-001) expenditures and rate base for 2018-2020 approval; Comments due
Slide 21: 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 – 04/28/19) = 4.82% 100 basis point +/- Deadband 6 Rate (%) 5 Starting Value – 5.00% 4 ROE fixed at 10.45% ROE fixed at 10.30% for 2017, independent for 2018, independent of trigg
Slide 22: SCE Transportation Electrification (TE) 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 prog
Slide 23: Energy Storage
Energy Storage CPUC 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 SCE 2018 Storage Portfolio 2014-20); ownership allowed up to 290 MW for SCE 350 • Flexibility to transfer acro
Slide 24: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost5 (as of March 31, 2019) Date West of Devers1,2 $848 million $545 million 2021 Mesa Substation1 $646 million $367 million 2022 Alberhill System3 $486 million $447 m
Slide 25: 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 26: 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 27: Edison International's ESG Strategy
Edison International’s ESG Strategy “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 vision,
Slide 28: 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 29: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Fifteen Consecutive Years of Dividend Growth $2.42 $2.451 $2.17 $1.92 $1.67 $1.42 $1.35 $1.26 $1.28 $1.30 $1.22 $1.24 $1.16 $1.08 $1.00 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Target dividend growth within target payout rat
Slide 30: Appendix
Appendix May 1, 2019 Energy for What's Ahead* 29
Slide 31: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.4 $4.0 $3.9 $3.8 $3.5 2014 2015 2016 2017 2018 May 1, 2019 30
Slide 32: Capital Expenditure/Rate Base Detailed Forecast
Capital Expenditure/Rate Base Detailed Forecast ($ in billions) Detailed Capital Expenditures – 2017-2020 2017 2018 2019 2020 Total (Actual) (Actual) (Plan) (PD) 2019-2020 Distribution1,2 $3.1 $3.5 $3.2 $2.9 $6.1 Transmission1 0.5 0.7 0.7 0.8 1.5 Generation1 0.2 0.2 0.2 0.2 0.4 Subtotal $3.8 $4.4 $4
Slide 33: Credit Ratings Summary
Credit Ratings Summary S&P Moody’s Fitch Date of Report March 18, 2019 March 5, 2019 March 11, 2019 Edison International Corporate / Outlook BBB/Negative Watch Baa3/Negative BBB-/Negative Watch Senior Unsecured BBB- Baa3 BBB- Commercial Paper A-2 P-3 F3 Southern California Edison Corporate / Outlook
Slide 34: 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 35: Grid Modernization Highlights
Grid Modernization Highlights Devices that provide Devices that provide stable voltage and power quality more flexibility during outage events Future circuit designs integrate State of the art Distributed operating tools Energy Resources for utility and increase operators and flexibility engineers S
Slide 36: 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 37: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2019 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond 4,869 7.0 Fuel & Purchased Power Charge (44%) Distribution – poles, wires, substations, service 4,362 6.2 centers; Edison SmartConnect® Distribution Generation – owned generat
Slide 38: 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 15.9¢ -- purchased power costs, and 3) a lower 2015 (‘
Slide 39: 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 40: 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 41: 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 42: Number of Solar Residential Installations
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (3/19) Installations and MW Installed • 305,306 combined residential and non-residential projects – 2,580 MW installed 7000 40 • 99.8 % solar projects • 298,349 residential (6.7% of all residential customers) – 1,625 MW 35
Slide 43: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2018 Average Residential Rates (¢/kWh) Key KeyFactors Factors 26% 16.3 ₵ Higher • SCE’s residential rates are above national 12.9 ₵ 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 44: First Quarter Earnings Summary
First Quarter Earnings Summary Q1 Q1 2019 2018 Variance Key SCE EPS Drivers Revenue $ 0.08 Basic Earnings Per Share (EPS)1 - CPUC revenue 0.06 SCE $ 0.90 $ 0.88 $ 0.02 - FERC revenue 0.02 Higher O&M (0.18) EIX Parent & Other (0.05) (0.21) 0.16 Higher depreciation (0.04) Basic EPS $ 0.85 $ 0.67 $ 0.1
Slide 45: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Q1 Q1 Earnings Attributable to Edison International 2019 2018 SCE $293 $286 EIX Parent & Other (15) (68) Basic Earnings $278 $218 Non-Core Items SCE 1 $72 — EIX Parent & Other 2 — (44) Total Non-C
Slide 46: SCE Annual Results of Operations
SCE Annual Results of Operations ($ 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 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