Edison International · NYSE:EIX
Edison International — Corporate Update (November 2014)
40 slides from Edison International's corporate update, Nov 6, 2014
Slide 1: Business Update
Leading the Way in Electricity SM Business Update November 2014 November 6, 2014 1 EDISON INTERNATIONAL®
Slide 2: Forward-Looking Statements
Leading the Way in Electricity SM Forward-Looking Statements 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), and other statements tha
Slide 3: Table of Contents
Leading the Way in Electricity SM Table of Contents New (N) or Page Updated (U) Highlights & Regulatory Model 4-5 Historical Capital Expenditures, Rate Base, Core Earnings 6-7 Forecast Capital Expenditures, Rate Base 8-9 U System Investments, Growth Drivers Beyond 2017 10-11 California Climate Chang
Slide 4: SCE Highlights
Leading the Way in Electricity SM SCE Highlights • One of the nation’s largest electric utilities Nearly 14 million residents in service territory Approximately 5 million customer accounts 50,000 square-mile service area • Significant infrastructure investments: 1.4 million power poles 700
Slide 5: Decoupled Regulatory Model
Leading the Way in Electricity SM SCE Decoupled Regulatory Model Regulatory Model Key Benefits Decoupling of Regulated • SCE earnings are not affected by changes in retail Revenues from Sales electricity sales • Differences between amounts collected and authorized levels are either billed or refunde
Slide 6: Historical Capital Expenditures
Leading the Way in Electricity SM SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $3.5 $2.9 $2.4 2008 2009 2010 2011 2012 2013 Note: 2013 distribution reliability spend up $300 million, offset by completion of SmartConnect in 2012 ($300 million); lower FERC ($300 million) and lower S
Slide 7: Historical Rate Base and Core Earnings
Leading the Way in Electricity SM SCE Historical Rate Base and Core Earnings ($ billions) 2008 – 2013 CAGR Rate Base2 10% $21.0 $21.12 Core Earnings 12% $18.8 $16.8 $15.0 $13.1 2008 2009 2010 2011 2012 2013 Core Earnings $2.25 $2.68 $3.01 $3.33 $4.10 $3.88 1 Recorded rate base, year-end basis. See E
Slide 8: Capital Expenditures Forecast
Leading the Way in Electricity SM SCE Capital Expenditures Forecast ($ billions) $15.4 – $17.4 billion Distribution Transmission Generation forecasted capital program 2014 – 2017 $4.6 $4.5 • Capital expenditures cumulative $4.1 $4.2 forecast increased $200 million primarily from new CPUC mobile home
Slide 9: Rate Base Forecast
Leading the Way in Electricity SM SCE Rate Base Forecast ($ billions) 7 – 9% CAGR projected rate base 2014 – 2017 $29.3 • Reflects 2015 GRC rebuttal $26.7 testimony update for 2013 lower recorded Capex, offset by higher $24.0 FERC transmission spend and $22.4 CPUC mobile home park meter conversion p
Slide 10: System Investments
Leading the Way in Electricity SM SCE System Investments ($ millions) Distribution Transmission • Aging system reaching equilibrium • Large transmission projects: replacement rate Tehachapi – $3.2 billion total project • 2015 GRC request includes ~120% cost; 2016-17 in service date increase in inf
Slide 11: Growth Drivers Beyond 2017
Leading the Way in Electricity SM SCE Growth Drivers Beyond 2017 Infrastructure Reliability Investment • Sustained level of infrastructure investment required until equilibrium replacement rates are achieved - includes underground cable, poles, switches, and transformers1 Grid Readiness • Accelerate
Slide 12: California Climate Change Policy
Leading the Way in Electricity SM California Climate Change Policy • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16% reduction) AB32 Emissions • Cap and trade program basics: Reduction Programs State-wide cap in 2013 – decreases over time Compl
Slide 13: New Technology Grid Impacts
Leading the Way in Electricity SM New Technology Grid Impacts 1 3 1 2 1 2 Future state based on evolving energy landscape 1 1 More automated and digital, with more sophisticated voltage control and protection 2 schemes 2 Facilitates increasing 1 renewables & two-way power flow 3 Cyber mitigation mus
Slide 14: Distribution Grid of the Future
Leading the Way in Electricity SM Distribution Grid of the Future Current State Future State One-Way Electricity Flow Variable and Two-Way Electricity Flow • System planned and designed to serve • System planned and designed to serve customer demand variable customer demand • Very few distributed en
Slide 15: Energy Storage
Leading the Way in Electricity SM Energy Storage • AB2514 directed CPUC to establish SCE 2014 Existing Storage procurement targets and policies for storage 50 • CPUC final decision in Energy Storage OIR (R.10-12-007) 30 MW 1,325 MW target for IOUs by 2024 16.40 (580 MW SCE share) 13.68 10 Three
Slide 16: Electric Vehicles (EV)
Leading the Way in Electricity SM Electric Vehicles (EV) • October 2014, electric vehicle Charge Ready Program application submitted to CPUC (A.14- 10-014) • Pro-active, two-phased program over five years to support installation of up to 30,000 EV charging stations to be included in rate base Phas
Slide 17: 2015 CPUC General Rate Case
Leading the Way in Electricity SM SCE 2015 CPUC General Rate Case • November 2013, 2015 GRC Application A.13-11-003 sets 2015 – 2017 base revenue requirement Includes operating costs and CPUC jurisdictional capital Excludes fuel and purchased power (and other utility cost-recovery activities), c
Slide 18: 2015 GRC – Intervenor Testimony
Leading the Way in Electricity SM SCE 2015 GRC – Intervenor Testimony ($ in millions) • In August, Office of Ratepayer Advocate (ORA) and The Utility Reform Network (TURN) submitted 2015 GRC testimony Proposed $680 million 2015 test year decrease Proposed $356 million O&M expense reduction large
Slide 19: CPUC and FERC Cost of Capital
Leading the Way in Electricity SM CPUC and FERC Cost of Capital CPUC Adjustment Mechanism 7 Moody’s Baa Utility Index Spot Rate Moving Average (10/1/14 – 10/10/14) = 4.69% 100 basis point +/- Deadband 6 Rate (%) 5 Starting Value – 5.00% 4 3 10/1/12 10/1/13 10/1/14 10/1/15 • CPUC – 48% common equity
Slide 20: Key CPUC Regulatory Events Calendar
Leading the Way in Electricity SM SCE Key CPUC Regulatory Events Calendar 2H 2014 1H 2015 2H 2015 2016 SONGS Oct 9 – Proposed Decision Settlement (I.12-10-013) Nov/Dec – Final Decision July – Revised Scoping Jan – Update Hearing 2015 GRC Memo (A.13-11-003) Aug – ORA/TURN testimony Sept - Evidentiary
Slide 21: 2014 Core and Basic Earnings Guidance
Leading the Way in Electricity SM 2014 Core and Basic Earnings Guidance (per share) 2014 Earnings 2014 Earnings Guidance as of Guidance as of 4/29/14 10/28/14 Low Mid High Low Mid High SCE $3.85 $4.43 Key Assumptions: EIX Parent & Other (0.15) (0.13) • Midpoint rate base of $22.1 billion 1 EIX Core
Slide 22: EIX Dividend Growth
Leading the Way in Electricity SM EIX Dividend Growth $4.43 Guidance Midpoint 2008 – 2013 CAGR 2014 $1.42 (32%) SCE Core EPS 12% $3.88 EIX Dividend 2% 2013 $1.35 (35%) $4.10 2012 $1.30 (32%) • EIX targets paying out 45 – 55% of SCE earnings $3.33 • Dividend growth rate slowed to help 2011 $1.28 (38%
Slide 23: EIX is Responding to Industry Change
Leading the Way in Electricity SM EIX is Responding to Industry Change Long-Term Industry Trends Strategy • Public policy prioritizing environmental • SCE Strategy sustainability Invest in, build, and operate the next • Innovation facilitating conservation and self- generation electric grid genera
Slide 24: Creating Shareholder Value
Leading the Way in Electricity SM Creating Shareholder Value Create Sustainable Position for Resolve Earnings and Transformative Uncertainties Dividend Growth Sector Change • EME restructuring • 10% 5-year SCE rate base • Acquired SoCore Energy What We’ve • SONGS OII settlement CAGR (2008 – 2013) (c
Slide 25: Appendix
Leading the Way in Electricity SM Appendix November 6, 2014 25 EDISON INTERNATIONAL®
Slide 26: Customer Demand Trends
Leading the Way in Electricity SM SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2013 2012 2011 2010 2009 Residential 29,889 30,563 29,631 29,034 30,078 Commercial 40,649 40,541 39,622 39,318 40,076 Industrial 8,472 8,504 8,490 8,507 8,522 Public authorities 5,012 5,196 5,206 5,336
Slide 27: 2014 Bundled Revenue Requirement
Leading the Way in Electricity SM SCE 2014 Bundled Revenue Requirement 2014 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 5,071 6.9 Fuel & Purchased Power (41%) Distribution – poles, wires, substations, service centers; 3,867 5.3 Edison SmartConnect®
Slide 28: Rates and Bills Comparison
Leading the Way in Electricity SM SCE Rates and Bills Comparison 2014 Average Residential Rates Key Factors (¢/kWh) • SCE’s residential rates are above national 16.6¢ average due, in part, to a cleaner fuel mix – 12.6¢ cost for renewables are higher than high 33% carbon sources Higher • Average mont
Slide 29: Residential Rate Design OIR
Leading the Way in Electricity SM Residential Rate Design OIR • June 2012, CPUC opened Order Instituting OIR Phase 2 Settlement Summary Ratemaking (OIR) R.12-06-013: Comprehensive review of residential rate structure 35 32.10 Transition to Time of Use (TOU) rates AB327 rate design 30 28.10 Tie
Slide 30: Residential Net Metering Rate Structure
Leading the Way in Electricity SM SCE Residential Net Metering Rate Structure • Residential solar customer generation Solar Subsidies offsets total retail rate (Illustrative) • Average retail rate of 30.6¢/kWh vs. actual 35 generation cost of 8.7¢/kWh 21.9¢ 30.6¢ 30 • Resulting 21.9¢/kWh is a subsid
Slide 31: Energy Efficiency Programs
Leading the Way in Electricity SM SCE Energy Efficiency Programs Energy efficiency programs updated for 2013 – 2014 • SCE is a national leader – 2012 energy savings = 1.8% of retail sales • 2014 budget of $352 million • Target 0.9 billion kWh average annual savings for 2013-14 cycle – Reduced goals
Slide 32: Third Quarter Earnings Summary
Leading the Way in Electricity SM Third Quarter Earnings Summary Q3 Q3 SCE Key Core Earnings Drivers Variance 2014 2013 Core EPS1 Higher revenue $0.20 SCE $1.54 $1.46 $0.08 SONGS impact (0.03) Higher depreciation (0.04) EIX Parent & Other (0.02) (0.04) 0.02 Income taxes and other (0.05) Core EPS1 $1
Slide 33: Year-to-Date Earnings Summary
Leading the Way in Electricity SM Year-to-Date Earnings Summary YTD YTD SCE Key Core Earnings Drivers Variance 2014 2013 Core EPS1 Higher revenue $0.51 SCE $3.58 $3.09 $0.49 SONGS impact (0.02) Lower O&M2 0.05 EIX Parent & Other (0.08) (0.11) 0.03 Higher depreciation (0.15) Core EPS1 $3.50 $2.98 $0.
Slide 34: Earnings Non-GAAP Reconciliations
Leading the Way in Electricity SM Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX Core Earnings to EIX GAAP Earnings Earnings Attributable to Q3 Q3 YTD YTD Edison International 2014 2013 2014 2013 Core Earnings SCE $503 $477 $1,168 $1,007 EIX Parent & Other (7) (14) (26) (34) Co
Slide 35: Core EPS Non-GAAP Reconciliations
Leading the Way in Electricity SM SCE Core EPS Non-GAAP Reconciliations Reconciliation of SCE Core Earnings Per Share to SCE Basic Earnings Per Share Earnings Per Share Attributable to SCE 2008 2009 2010 2011 2012 2013 CAGR Core EPS $2.25 $2.68 $3.01 $3.33 $4.10 $3.88 12% Non-Core Items Tax settleme
Slide 36: Results of Operations
Leading the Way in Electricity SM SCE Results of Operations ($ millions) • Utility earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Utility cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specif
Slide 37: SONGS Settlement – Summary
Leading the Way in Electricity SM SONGS Settlement – Summary Term Description • Steam Generator Replacement Project (“SGRP”) removed from rates as of February 1, 2012, with Steam book value balance disallowed. Revenues related to the SGRP collected after February 1, 2012, Generators refunded to cust
Slide 38: SONGS Settlement – Third-Party Recoveries
Leading the Way in Electricity SM SONGS Settlement – Third-Party Recoveries CPUC SONGS OII Settlement • SCE’s share of recoveries from NEIL and MHI will be reported in non-core earnings • Customer share of recoveries from NEIL and MHI will be credited to balancing accounts and reduce SONGS regulator
Slide 39: SONGS – Units 2 and 3 Decommissioning
Leading the Way in Electricity SM SONGS – Units 2 and 3 Decommissioning Decommissioning Trusts • Decommissioning Trust contributions recovered in rates approved by CPUC in triennial proceeding • Updated site-specific decommissioning cost study estimate (2014 dollars, all owners): $4.4 billion, or $1
Slide 40: Use of Non-GAAP Financial Measures
Leading the Way in Electricity SM 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. Co
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