Edison International · NYSE:EIX
Edison International — Investor Presentation (February 2018)
48 slides from Edison International's investor presentation, Feb 23, 2018
Slide 1: Business Update February 2018
February 23, 2018 Business Update February 2018 Exhibit 99.1
Slide 2: Forward-looking statements
February 23, 2018 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.
Slide 3: Table of Contents
February 23, 2018 2 Page Updated (U) or New (N) from October 2017 Business Update EIX Shareholder Value 3 U SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U California Wildfire Risk Mitigation 7 N Capital Expenditures and Rate Base History and Forecast 8-11 N,U 2018 General Rate
Slide 4: EIX Strategy Should Produce Superior Value
February 23, 2018 3 EIX Strategy Should Produce Superior Value Sustained Earnings and Dividend Growth Led by SCE Electric-Led Clean Energy Future SCE Rate Base Growth Drives Earnings • 9.7% average annual rate base growth through 2020 at request level • SCE earnings should track rate base growth Con
Slide 5: SCE Highlights
February 23, 2018 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 • 118,000 miles of distribution and tr
Slide 6: SCE Long-Term Growth Drivers
February 23, 2018 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 circuit upgrades, automation, communication,
Slide 7: SCE Decoupled Regulatory Framework
February 23, 2018 6 SCE Decoupled Regulatory Framework Decoupling of Revenues from Sales Major Balancing Accounts • Sales • Fuel and Purchased power • Energy efficiency • Pension expense Advanced Long-Term Procurement Planning Forward-looking Ratemaking • Earnings not affected by variability of reta
Slide 8: California Wildfire Risk Mitigation
February 23, 2018 7 California Wildfire Risk Mitigation Hardening the infrastructure Prevention and mitigation Allocation of risk and liability • Effective statewide fire suppression resources • Effective vegetation management policies • Hazardous fuels reduction • Policies for residential and comme
Slide 9: SCE Historical Rate Base and Core Earnings
February 23, 2018 8 SCE Historical Rate Base and Core Earnings Rate Base Core Earnings 6% 2% 2012– 2017 CAGR ($ billions, except per share data) Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures. Since 2013, rate base excludes
Slide 10: SCE Capital Expenditure Forecast
February 23, 2018 9 SCE Capital Expenditure Forecast 1. Includes 2018 – 2020 capital expenditures of $105 million for Mobile Home Park, $49 million for Energy Storage, $10 million for Transportation Electrification, and $4 million for Charge Ready 2. 2017 and 2018 capital expenditures related to gri
Slide 11: SCE Rate Base Forecast – Request Level
February 23, 2018 10 SCE Rate Base Forecast – Request Level CPUC • Rate base based on request levels from 2018 GRC Tax Reform February Update FERC • FERC rate base, including Construction Work in Progress (CWIP), is approximately 19% of SCE’s rate base by 2020 • Reflects latest capital forecast and
Slide 12: SCE Rate Base Forecast Updates
February 23, 2018 11 SCE Rate Base Forecast Updates ($ billions) *Note: Numbers may not foot due to rounding. Incentive CWIP Approval at FERC for Mesa, Alberhill and Eldorado-Lugo-Mohave accelerates the inclusion of capital spend into FERC rate base. Previously projects would have accrued AFUDC unti
Slide 13: 2018 General Rate Case
February 23, 2018 12 • 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 14: SCE Key Regulatory Proceedings
February 23, 2018 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; intervenor and rebuttal testimony
Slide 15: CPUC Cost of Capital
February 23, 2018 14 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 a te ( % ) CPUC Cost of Capital CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/17 – 02/20/18) = 4.21% 100 basis point +/- Deadband Starting Value – 5.00% Two year sett
Slide 16: 2018 Financial Assumptions
February 23, 2018 15 2018 Financial Assumptions ($ billions) SCE Capital Expenditures SCE Authorized Cost of Capital Other Items CPUC Return on Equity 10.3% CPUC Capital Structure 48% equity 43% debt 9% preferred FERC Return on Equity 11.5% with incentives (subject to refund pending FERC decision) E
Slide 17: SCE Distribution System Investments
February 23, 2018 16 SCE Distribution System Investments 1. Other includes GRC energy storage, Charge Ready Phase I and mobile home pilot programs 2. 2018 Grid Modernization spending, included in distribution, is focused on safety and reliability; most spending focused on integration of distributed
Slide 18: Energy Storage
February 23, 2018 17 Energy Storage Given counting rules, SCE has already met the aggregate 2016 targets 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 2014-20); ownership
Slide 19: California GHG Emissions Overview
February 23, 2018 18 California GHG Emissions 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 electric power
Slide 20: SCE Transportation Electrification Proposals
February 23, 2018 19 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 and
Slide 21: SCE Large Transmission Projects
February 23, 2018 20 SCE Large Transmission Projects 1. CPUC approved 2. 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 exercised, SCE’s rate base would be offset by that a
Slide 22: SCE Operational Excellence
February 23, 2018 21 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 23: Responding to Industry Change
February 23, 2018 22 Responding to Industry Change Long-Term Industry Trends Strategy • The technology landscape is evolving at an unprecedented pace, with innovation driving advances in cost and capabilities of distributed energy resources • Customer expectations are changing with increasing choice
Slide 24: Edison Energy Group Summary
February 23, 2018 23 • Edison Energy is an advisory and services company with the capabilities to develop and integrate an array of energy solutions to help commercial and industrial customers improve management of their energy costs and risks in dealing with increasingly complex tariff and technolo
Slide 25: EIX Annual Dividends Per Share
February 23, 2018 24 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 $2.42 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: See Use of Non-GAAP Financial Measures. Fourteen Years of Dividend Growth Tar
Slide 26: Appendix
February 23, 2018 25 Appendix
Slide 27: 2018 General Rate Case Overview
February 23, 2018 26 • Capital expenditures of $1.8 billion for grid modernization capital to support improved safety and reliability and increased levels of distributed energy resources (DER) • Increased depreciation expense to reflect updated cost of removal estimates1 Limiting cost of removal r
Slide 28: SCE Historical Capital Expenditures
February 23, 2018 27 SCE Historical Capital Expenditures ($ billions) $3.5 $4.0 $3.9 $3.5 $3.8 2013 2014 2015 2016 2017
Slide 29: Capital Expenditure/Rate Base Detailed Forecast
February 23, 2018 28 Detailed Capital Expenditures – 2017-2020 2017 (Actual) 2018 2019 2020 Total Distribution1,2 $3.1 $3.4 $3.2 $3.0 $12.7 Transmission1 0.5 0.6 0.8 0.9 2.7 Generation1 0.2 0.2 0.2 0.2 0.8 Total Traditional $3.8 $4.2 $4.1 $4.1 $16.3 Grid Modernization3 - - 0.6 0.6 1.3 Total $3.8 $4.
Slide 30: Distribution Power Grid of the Future
February 23, 2018 29 Distribution Power Grid of the Future One-Way Electricity Flow • System designed to distribute electricity from large central generating plants • Increasing penetration of distributed energy resources • Voltage centrally maintained • Limited situational awareness and visualizati
Slide 31: Grid Modernization Highlights
February 23, 2018 30 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 32: Grid Modernization capital deployment
February 23, 2018 31 Building next generation electric grid requires accelerating traditional Transmission and Distribution / Information Technology programs and investing in new capabilities • Upgrade portions of grid (such as 4kV system) to increase capacity, improve reliability, and address techn
Slide 33: Distributed Energy Resources Proceedings
February 23, 2018 32 Distributed Energy Resources (DER) Proceedings 2018 Activities • Incentive Pilot Solicitation • Approval of DER contracts • Pilot Report on lessons learned • Societal Cost Test 2018 Activities • DER Hosting Capacity analysis • Locational Net Benefits • DER forecasting and distri
Slide 34: SCE Customer Demand Trends
February 23, 2018 33 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 35: California’s Energy Policy
February 23, 2018 34 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 36: SCE 2017 Bundled Revenue Requirement
February 23, 2018 35 SCE 2017 Bundled Revenue Requirement Note: Rates in effect as of October 1, 2017. 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 1
Slide 37: System Average Rate Historical Growth
February 23, 2018 36 9.7¢ 15.7¢ 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 ¢/kWh System Average Rate Historical Growth SCE’s system average rate has grown in line with inflation over the last 25 years SCE System Average Rate Los Angeles Area Infl
Slide 38: Community Choice Aggregation Overview
February 23, 2018 37 • An Order Instituting Rulemaking (OIR R.17-06-026) was opened on June 29, 2017 to review, revise, and consider alternatives to the “Power Charge Indifference Adjustment” or PCIA While not an impact on earnings, for every 1% of departing load, $6 million is shifted to other cu
Slide 39: Residential Rate Reform
February 23, 2018 38 • CPUC Order Instituting Ratemaking R.12-06-013 comprehensively reviewed residential rate structure, including a future transition to time of use (TOU) rates In 2018, 400,000 residential customers migrated to TOU rate structure; remainder to be migrated by 2020-2021 • July 201
Slide 40: SCE Net Metering Rate Structure
February 23, 2018 39 SCE Net Metering Rate Structure NEM Rate Developments: • NEM allowed residential customers to receive rate credit for exported generation, and use these credits to offset energy purchased from the electric power company, leading to a cost-shift to non-NEM customers Through tie
Slide 41: Net metering key dates and solar installations
February 23, 2018 40 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 • Official start of NEM successor tariff; customers are subject to: Mandatory Time-Of-Use rate Non-bypassa
Slide 42: SCE Rates and Bills Comparison
February 23, 2018 41 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, high cost of living in the sta
Slide 43: Fourth Quarter Earnings Summary
February 23, 2018 42 Q4 2017 Q4 2016 Variance Basic Earnings Per Share (EPS)1,2 SCE $(0.33) $1.01 $(1.34) EIX Parent & Other (1.34) (0.04) (1.30) Discontinued Operations 0.04 (0.04) Basic EPS $(1.67) $1.01 $(2.68) Less: Non-Core Items SCE3 $(1.48) $ $(1.48) EIX Parent & Other3 (1.29) (1.29) Di
Slide 44: Full-Year 2017 Earnings Summary
February 23, 2018 43 2017 2016 Variance Basic Earnings Per Share (EPS)1 SCE $3.10 $4.22 $(1.12) EIX Parent & Other (1.37) (0.23) (1.14) Discontinued Operations 0.03 (0.03) Basic EPS $1.73 $4.02 $(2.29) Less: Non-Core Items SCE2 $(1.48) $ $(1.48) EIX Parent & Other2 (1.29) 0.02 (1.31) Discontinue
Slide 45: SCE Annual Results of Operations
February 23, 2018 44 $11,830 4,527 2,737 1,998 351 — — 9,613 2,217 (541) 79 1,755 256 1,499 123 $1,376 — $1,376 $5,326 4,527 798 — — — — 5,325 1 (1) — — — — — $— $6,504 — 1,939 1,998 351 — — 4,288 2,216 (540) 79 1,755 256 1,499 123 $1,376 $12,254 4,873 2,671 2,032 372 716 (8) 10,656 1,598 (589) 97 1
Slide 46: Earnings Non-GAAP Reconciliations
February 23, 2018 45 Earnings Non-GAAP Reconciliations (*) 2016 Income Statement was updated to reflect the implementation of the accounting standard for share-based payments effective January 2016 1. Includes impairment and other charges of $716 million ($448 million after-tax) related to the Revis
Slide 47: EIX Core EPS Non-GAAP Reconciliations
February 23, 2018 46 EIX Core EPS Non-GAAP Reconciliations Basic EPS Non-Core Items SCE Write down, impairment and other charges Re-measurement of deferred taxes Insurance recoveries Edison International Parent and Other Re-measurement of deferred taxes Edison Capital sale of affordable housing port
Slide 48: Use of Non-GAAP Financial Measures
February 23, 2018 47 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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