Edison International · NYSE:EIX
Edison International — Investor Presentation (May 2018)
46 slides from Edison International's investor presentation, May 2, 2018
Slide 1: Business Update May 2018
Business Update May 2018 Exhibit 99.1
Slide 2: 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 statements. These forward-lookin
Slide 3: Table of Contents
Page Updated (U) or New (N) from February 2018 Business Update EIX Shareholder Value 3 SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U California Wildfire Risk Mitigation 7 Capital Expenditures and Rate Base History and Forecast 8-10 2018 General Rate Case 11 Key Regulatory Proc
Slide 4: EIX Strategy Should Produce Superior Value
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 Constructive Regulatory
Slide 5: 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 • 725,000 transformers • 118,000 miles of distribution and transmission lines • 3
Slide 6: SCE Long-Term Growth Drivers
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, and analytics capab
Slide 7: SCE Decoupled Regulatory Framework
SCE Decoupled Regulatory Framework 6 Regulatory Mechanism Key Benefits Decoupling of Revenues from Sales • Earnings not affected by variability of retail electricity sales • Differences between amounts collected and authorized levels either billed or refunded • Promotes energy conservation • Stabili
Slide 8: California Wildfire Campaign
California Wildfire Campaign 7 Prevention and mitigation Hardening the infrastructure Allocation of risk and liability • Effective fire suppression resources • Effective vegetation management policies • Hazardous fuels reduction • Zoning regulations for residential and commercial development in high
Slide 9: SCE Historical Rate Base and Core Earnings
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 SONGS. $4.20$4.68$4.
Slide 10: SCE Capital Expenditure Forecast
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 $4 million for Charge Ready 2. 2017 and 2018 capital expenditures related to grid modernization are
Slide 11: SCE Rate Base Forecast – Request Level
SCE Rate Base Forecast – Request Level CPUC • Rate base based on request levels from 2018 GRC Tax Reform February Update FERC • FERC rate base, including Construction Work in Progress (CWIP), is approximately 19% of SCE’s rate base by 2020 • Reflects latest capital forecast and Incentive CWIP treatm
Slide 12: 2018 General Rate Case
• 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital and other potential SCE capital pro
Slide 13: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case (A. 16-09-001) Set CPUC base revenue requirement, capital expenditures and rate base for 2018-2020 Updated Testimony filed on February 16, 2018; hearing held March 19, 2018 Z-Factor Advice Le
Slide 14: CPUC Cost of Capital
3 4 5 6 7 10/1/12 10/1/13 10/1/14 10/1/15 10/1/16 10/1/17 10/1/18 10/1/19 R a te ( % ) CPUC Cost of Capital CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/17 – 04/30/18) = 4.32% 100 basis point +/- Deadband Starting Value – 5.00% Two year settlement approved for 2
Slide 15: 2018 Financial Assumptions
2018 Financial Assumptions ($ 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) EIX will provide 2018
Slide 16: SCE Distribution System Investments
SCE Distribution System Investments 1. Other includes GRC energy storage, Charge Ready Pilot 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 energy resources has be
Slide 17: SCE 2018 Storage Portfolio
200 120 50 0 50 100 150 200 250 Transmission Distribution Customer M W SCE 2018 Storage Portfolio *85 MW excess may offset T&D 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 targe
Slide 18: Transportation Electrification Overview
17 Transportation Electrification Overview Per SB 32, California’s goal to reduce total GHG emissions by 40 percent from 1990 levels by 2030 is 42% from current levels • Governor Order set a 2050 target of 80% below 1990 levels Many of California's policies to date focused on electric power, but oth
Slide 19: SCE Transportation Electrification Proposals
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 2 longer-term, standa
Slide 20: SCE Large Transmission Projects
SCE Large Transmission Projects FERC Cost of Capital 11.5% ROE in 2018 (subject to refund): • ROE = Requested Base of 10.3% + CAISO Participation + weighted average of individual project incentives Application for 2018 FERC Formula recovery mechanism filed on October 27, 2017 Requested 50 bp CAI
Slide 21: SCE Operational Excellence
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 metrics • System performanc
Slide 22: Responding to Industry Change
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 choices and alternatives, a
Slide 23: Edison Energy Summary
• Energy is a significant risk large commercial and industrial customers face. Edison Energy creates competitive advantage for market leaders by quantifying this risk and designing the portfolio solution to protect shareholder value threatened by complex energy policies, technological advancements,
Slide 24: EIX Annual Dividends Per Share
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 $2.42 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1. 2018 Dividend annualized based on December 7, 2017 declaration increase Fourteen Years of Dividend Gr
Slide 25: Appendix
Appendix 24May 2, 2018
Slide 26: 2018 SCE GRC
1. Cost of removal is the cost to remove existing equipment that is being replaced 2018 SCE GRC 25 Items Carried Over from 2015 GRC New Items from 2018 GRC Previous Intervenor Testimony • Requests continuation of Tax Accounting Memorandum Account (TAMA) adjusting revenues annually for over and under
Slide 27: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $3.5 $4.0 $3.9 $3.5 $3.8 2013 2014 2015 2016 2017 26May 2, 2018
Slide 28: Capital Expenditure/Rate Base Detailed Forecast
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 $4.2 $4.8 $4.7 $17.6 Cap
Slide 29: Distribution Power Grid of the Future
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 visualization tools for power gr
Slide 30: Grid Modernization Highlights
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 include increased saf
Slide 31: Next generation electric grid investments
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 technology obsolescence •
Slide 32: Distributed Energy Resources Proceedings
Distributed Energy Resources (DER) Proceedings 2018 Activities • Incentive Pilot Solicitation • Approval of DER contracts • Pilot Report on lessons learned • Societal Cost Test • Programs, Tariffs, and Streamlined Procurement 2018 Activities • DER Hosting Capacity analysis • Locational Net Benefits
Slide 33: SCE Customer Demand Trends
SCE Customer Demand Trends Note: See 2017 Edison International Financial and Statistical Reports for further information. 32 2013 2014 2015 2016 2017 Kilowatt-Hour Sales (millions of kWh) Residential 29,889 30,115 29,959 29,141 29,765 Commercial 40,649 42,127 42,207 41,565 41,873 Industrial 8,472 8,
Slide 34: California's Energy Policy
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 Electrification investm
Slide 35: SCE 2018 Bundled Revenue Requirement
SCE 2018 Bundled Revenue Requirement 34 Note: Rates in effect as of January 1, 2018. Represents bundled service which excludes Direct Access/CCA customers that do not receive generation services. SCE Systemwide Average Rate History (¢/kWh) 2010 2011 2012 2013 2014 2015 2016 2017 2018 14.3 14.1 14.3
Slide 36: System Average Rate Historical Growth
35 9.7¢ 16.2¢ 8.0¢ 10.0¢ 12.0¢ 14.0¢ 16.0¢ 18.0¢ 20.0¢ 22.0¢ 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 ¢/kWh System Average Rate Historical Growth SCE’s system average rate has grown in line with inflation over the last 10 years SCE System Average Rate Los Angeles Ar
Slide 37: Community Choice Aggregation Overview
• Assembly Bill 1171 permits cities and counties or a Joint Power Authority (JPA) 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 June 29, 2017 to review, revise, and consid
Slide 38: 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, nearly 400,000 residential customers migrated to TOU rate structures Remaining reside
Slide 39: Impacts of Abundant Solar Energy (Duck Curve)
Impacts of Abundant Solar Energy (Duck Curve) Season Existing Proposed On-Peak Summer Weekdays: 12-6pm Weekdays: 4-9pm Mid-Peak Summer Weekdays: 8am-12pm; 6pm-11pm Weekends: 4-9pm Winter Weekdays: 8am-9pm Weekdays and Weekends: 4-9pm Off-Peak Summer Weekdays: 11pm-8am Weekends: All Weekdays and Week
Slide 40: Residential Solar Installations in SCE Territory
39 • 262,576 combined residential and non-residential projects – 2,211 MW installed • 99.8 % solar projects • 256,387 residential – 1,382 MW • 6,189 non-residential – 829 MW • Approximately 4,038,536 MWh/year generated Note: NEM solar installations in SCE service territory include projects with sola
Slide 41: SCE Rates and Bills Comparison
12.9 ₵ 16.4 ₵ US Average SCE 27% Higher SCE Rates and Bills Comparison 40 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 cos
Slide 42: First Quarter Earnings Summary
First Quarter Earnings Summary 41 1. See Earnings Non-GAAP reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. Impact of hypothetical liquidation at book value (HLBV) accounting method and expected loss on sale of SoCore Energy 3. SCE’s 2018 core EPS drivers other than income taxes
Slide 43: SCE Annual Results of Operations
SCE Annual Results of Operations • 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 reasonableness r
Slide 44: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations 43 1. Impairment and other charges of $66 million ($48 million after-tax) in the first quarter of 2018 resulting from Edison International's agreement to sell SoCore Energy to a third party. The net assets of SoCore Energy have been recorded at fair value, less expe
Slide 45: EIX Core EPS Non-GAAP Reconciliations
EIX Core EPS Non-GAAP Reconciliations 44 Reconciliation of Edison International Basic Earnings Per Share to Edison International Core Earnings Per Share Note: See Use of Non-GAAP Financial Measures. Earnings Per Share Attributable to Edison International 2015 2016 2017 CAGR Basic EPS 3.13 $4.02 $1.7
Slide 46: 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
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