Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Q3 2019 Earnings Presentation
47 slides from Consolidated Edison's earnings presentation, Nov 4, 2019
Slide 1: 3rd Quarter 2019 Earnings Release Presentation
Exhibit 99.2 3rd Quarter 2019 Earnings Release Presentation November 4, 2019
Slide 2: Available Information and Forward-Looking Statements
Available Information On November 4, 2019, Consolidated Edison, Inc. issued a press release reporting its third quarter 2019 earnings and filed with the Securities and Exchange Commission the company’s third quarter 2019 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Table of Contents
Table of Contents Page Organizational Structure and Plan 4 – 5 Dividend and Earnings Announcements 6 3Q 2019 Earnings 7 – 10 3Q 2019 Developments 11 – 12 YTD 2019 Earnings 13 – 16 Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 17 CECONY Electric & Gas Joint Proposal 18 –
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $31.4 billion Ratings(b): Baa1 / BBB+ / BBB+ Outlook(b): Stable / Stable / Stable Utilities Transmission Clean Energy Con Edison Con Edison Clean Energy Consolidated Transmission, Orange and Businesses, Edison Inc. Company of Rockland Inc. New York, Inc. Utili
Slide 5: The Con Edison Plan
The Con Edison Plan Customer Focused Strategic Value Oriented Provide safe and Strengthen core utility Provide steady, reliable service delivery business predictable earnings Enhance the Pursue additional Maintain balance customer experience regulated growth sheet opportunities to add stability valu
Slide 6: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On October 17, 2019, the company issued a press release reporting that the company had declared a quarterly dividend of 74 cents a share on its common stock. • On November 4, 2019, the company issued a press release forecasting its adjusted earnings per share fo
Slide 7: 3Q 2019 Earnings
3Q 2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $1.42 $1.40 $473 $435 HLBV effects of the Clean Energy Businesses (pre-tax) 0.10 — 30 — Income taxes (a) (0.03) — (7) — HLBV effects of the Cl
Slide 8: Walk from 3Q 2018 EPS to 3Q 2019 EPS
Walk from 3Q 2018 EPS to 3Q 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $1.57 $0.09 $0.01 $1.54 $1.40 $0.18 $1.42 $(0.13) $(0.13) $(0.03) $0.00 $0 $0.00 $0 (a) (a) 3Q 2018 CECONY O&R CEBs CET Other 3Q 2019 3Q 2018 CECONY O&R CEBs CET Other 3Q 2019 Reported Reported A
Slide 9: 3Q 2019 vs. 3Q 2018 EPS Variances
3Q 2019 vs. 3Q 2018 EPS Variances – Three Months Ended Variation CECONY(a) Changes in rate plans $ 0.11 Reflects higher electric and gas net base revenues of $0.19 a share and $0.01 a share, respectively, due primarily to electric and gas base rates increases in January 2019 under the company's rate
Slide 10: 3Q 2019 vs. 3Q 2018 EPS Reconciliation by Company
3Q 2019 vs. 3Q 2018 EPS Reconciliation by Company Three Months Ended September 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $1.25 $0.07 $0.07 $0.04 $(0.01) $1.42 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.10 — — 0.10 Income taxes (a) — — (0.03) — — (0.03) HL
Slide 11: 3Q 2019 Developments
3Q 2019 Developments(a) CECONY & O&R • In October 2019, CECONY, the staff of the New York State Public Service Commission (NYSPSC) and other parties entered into a Joint Proposal for CECONY electric and gas rate plans for the three-year period January 2020 through December 2022 reflecting an 8.8 per
Slide 12: 3Q 2019 Developments (cont'd)
3Q 2019 Developments (cont'd)(a) Clean Energy Businesses • The Clean Energy Businesses have 2,634 MW (AC) of utility-scale renewable energy production projects in service (2,616 MW) or in construction (18 MW) and 54 MW (AC) of behind-the-meter renewable energy production projects in service (46 MW)
Slide 13: YTD 2019 Earnings
YTD 2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $3.20 $3.38 $1,048 $1,051 HLBV effects of the Clean Energy Businesses (pre-tax) 0.25 — 79 — Income taxes (a) (0.07) — (19) — HLBV effects of
Slide 14: Walk from YTD 2018 EPS to YTD 2019 EPS
Walk from YTD 2018 EPS to YTD 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $3.56 $0.05 $0.02 $3.51 $3.38 $0.01 $0.01 $0.19 $3.20 $(0.13) $(0.13) $(0.25) $0.00 $0.00 (a) YTD 2018 CECONY O&R CEBs CET Other YTD 2019 YTD 2018 CECONY O&R CEBs CET Other (a) YTD 2019 Reporte
Slide 15: YTD 2019 vs. YTD 2018 EPS Variances
YTD 2019 vs. YTD 2018 EPS Variances – Nine Months Ended Variation CECONY(a) Changes in rate plans $ 0.59 Reflects higher electric and gas net base revenues of $0.42 a share and $0.12 a share, respectively, due primarily to electric and gas base rates increases in January 2019 under the company's rat
Slide 16: YTD 2019 vs. YTD 2018 EPS Reconciliation by Company
YTD 2019 vs. YTD 2018 EPS Reconciliation by Company Nine months ended September 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $2.99 $0.18 $(0.06) $0.11 $(0.02) $3.20 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.25 — — 0.25 Income taxes (a) — — (0.07) — — (0.07)
Slide 17: Five-Year Reconciliation of Reported EPS to Adjusted EPS
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 12 Months Ending December 31, 2015 2016 2017 2018(d) 2019(a)(d) Reported EPS – GAAP basis $4.07 $4.15 $4.97 $4.43 $4.25 Income tax effect of the TCJA — — (0.85) 0.14 — HLBV effects of the Clean Energy Businesses (pre-tax) — —
Slide 18: Summary of CECONY Electric & Gas Joint Proposal
Summary of CECONY Electric & Gas Joint Proposal On October 18, 2019, CECONY, NYSPSC staff and other parties entered into a Joint Proposal, which is subject to NYSPSC approval, with respect to the company’s rates for electric and gas delivery service. Proposed Rate Changes and Capital Expenditures El
Slide 19: Key Drivers of Proposed 2020 Electric Rate Increase
CECONY Electric & Gas Joint Proposal (cont'd) Key Drivers of Proposed 2020 Electric Rate Increase 1,000 800 $93 $16 $(33) $(70) ) s n 600 o $218 i l l i M n i $101 $(578) $ 400 ( $146 200 $220 $113 0 New Property and Depreciation Amortization of Sales Financing Operating Other (net) Income Total inf
Slide 20: Key Drivers of Proposed 2020 Gas Rate Increase
CECONY Electric & Gas Joint Proposal (cont'd) Key Drivers of Proposed 2020 Gas Rate Increase 350 300 $(7) $67 $(11) $(40) 250 ) $(2) s $28 n o 200 i l l i $58 M $(158) n i 150 $ ( 100 $149 50 $84 0 New Property and Depreciation Amortization of Operating Financing Sales Other (net) Income Total infra
Slide 21: CECONY Electric Rate Case – Comparison of Filings
CECONY Electric Rate Case – Comparison of Filings (cont'd) ($ millions) 21
Slide 22: CECONY Gas Rate Case – Comparison of Filings
CECONY Gas Rate Case – Comparison of Filings (cont'd) ($ millions) 22
Slide 23: Comparison of Rate Changes
Comparison of Rate Changes (cont'd) ($ millions) 23
Slide 24: Impact of Changes to Proposed Rate Base and ROE
CECONY Electric and Gas Joint Proposal - Impact of Changes to Proposed Rate Base and ROE • The Joint Proposal reflects an 8.8% return on equity (ROE) and the current rate plan reflects a 9.0% ROE • The net income impact of the 20 basis point difference is $26 million in 2020, $30 million in 2021, an
Slide 25: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Joint Proposal includes potential additional return on equity for each rate year of up to 48 basis points for CECONY electric and 42 basis points for CECONY gas based on proposed annual rate base for each service Earnings Adjustment Mechanisms $
Slide 26: Utilities' Rate Adjustments for TCJA
Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)(a) New York State Public Service Commission Order in Case 17-M-0815 – Proceeding on Motion of the Commission on Changes in Law that May Affect Rates (August 9, 2018) CECONY Electric • Pursuant to the October 2019 joint proposal (Ca
Slide 27: Utilities' Rate Adjustments for TCJA (cont'd)
Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)(a) O&R Electric and Gas • O&R, pursuant to the November 2018 joint proposal (Case 18-E-0067; 18-G-0068), is reflecting its TCJA net benefits as follows: – annual ongoing savings of $18 million – pass back of 2018 savings (
Slide 28: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) $1,566 $1,528 $1,553 $1,464 $1,477 $1,489 $1,417 $1,384 $354 $344 Other $1,140 $1,110 $352 $519 $998 $1,002 $313 Regulatory $550 Fees and $294 $321 $250 YTD Assessments (b) $469 $468 $1,190 YTD Health Care/ $47
Slide 29: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of September 30, 2019) CECONY ($ in millions) Electric NY $20,948 Gas NY 6,177 Steam NY 1,442 Total CECONY $28,567 O&R ($ in millions) O&R Electric NY $825 O&R Gas NY 442 RECO NJ 249 Total O&R $1,516 CECONY CECONY Gas CECONY O&R RECO Total Rate Base $30,083
Slide 30: Average Rate Base Balances
Average Rate Base Balances ($ in millions) 3-year CAGR 5.9% $33,872 $31,930 $1,741 $30,211 $1,661 $32,131 $28,515 $1,557 $30,269 $1,458 $28,654 $25,014 $26,014 $23,795 $24,522 $1,376 $27,057 O&R $1,304 $1,357 $24,638 $1,297 $23,710 $22,498 $23,165 CECONY Actual Forecast 2014 2015 2016 2017 2018 2019
Slide 31: Regulated Utilities' Rates of Return and Equity Ratios
Regulated Utilities' Rates of Return and Equity Ratios (12 Months ended September 30, 2019) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.0% Gas 9.0 8.8 Steam 9.3 10.5 Overall – CECONY 9.0(a) 9.0 CECONY Equity Ratio 48.0% 47.5% O&R Electric 9.0% 10.2% Gas 9.0 6.8 RECO 9.6 5.0 Overall – O&R 9
Slide 32: Capital Expenditures
Capital Expenditures ($ in millions) (a) $5,235 $5,249 $248 $1,078 (b) $1,791 $3,936 $3,897 $3,606 $3,632 $400 $400 $66 $3,418 $1,235 $200 $447 $200 $823 $2,721 $447 $3,536 $3,497 $3,093 $3,210 $3,232 $2,922 $2,595 $2,274 2014 2015 2016 2017 2018 2019E 2020E (c) 2021E (c) Actual Forecast CECONY & O&
Slide 33: Utilities' Capital Expenditures
Utilities' Capital Expenditures ($ in millions) Steam $3,536 $3,497 $3,232 $3,093 $3,210 $2,922 Gas $2,595 $2,274 Electric Depreciation (a) (a) 2014 2015 2016 2017 2018 2019E 2020E 2021E Actual Forecast Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Depreciatio
Slide 34: Financing Activity to Date and Debt Maturities
Financing Activity to Date and Debt Maturities 2019 Financing Activity to Date • In February, CEI borrowed $825 million under a new two-year term loan due February 2021 and prepaid in full an $825 million term loan that was due in June 2019 • In March, CEI issued approximately 5.6 million common sha
Slide 35: Capital Structure – September 30, 2019
Capital Structure – September 30, 2019 ($ in millions) Consolidated Edison, Inc. Baa1 / BBB+ / BBB+ Debt $ 19,451 52% Equity 18,134 48 Total $ 37,585 100% CECONY O&R Parent and Other A3 / A- / A- Baa1 / A- / A- Debt $ 14,374 51% Debt $ 754 49% Debt $ 4,323 57% Equity 14,079 49 Equity 771 51 Equity 3
Slide 36: Commercial Paper and Letters of Credit
Commercial Paper and Letters of Credit ($ in millions) 36
Slide 37: Utilities' Sales and Revenues – Third Quarter and Year-to-Date
Utilities' Sales and Revenues – Third Quarter and Year-to-Date The changes in the energy delivered by the company’s utility subsidiaries, both for actual amounts and as adjusted for variations in weather and billing days, for the three and nine months ended September 30, 2019 (expressed as a percent
Slide 38: Sales and Revenues – Electric Third Quarter
Utilities' Sales and Revenues – Electric Third Quarter ($ in millions) Electric – 3rd Quarter Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 3,687 3,777 $923 $988 Commercial and Industrial 2,831 2,706 557 542 Retail choice custome
Slide 39: Sales and Revenues – Electric Year-to-Date
Utilities' Sales and Revenues – Electric Year-to-Date ($ in millions) Electric – Year-to-Date Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 8,203 8,374 $2,060 $2,211 Commercial and Industrial 7,574 7,343 1,405 1,433 Retail choice
Slide 40: Sales and Revenues – Gas Third Quarter
Utilities' Sales and Revenues – Gas Third Quarter ($ in millions) Gas – 3rd Quarter Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 4,032 4,469 $103 $118 General 4,097 4,191 45 54 Firm Transportation 9,071 9,211 71 71 Total Firm Sales and Transport
Slide 41: Sales and Revenues – Gas Year-to-Date
Utilities' Sales and Revenues – Gas Year-to-Date ($ in millions) Gas – Year-to-Date Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 41,035 43,731 $724 $728 General 25,018 25,894 299 298 Firm Transportation 60,590 61,628 444 448 Total Firm Sales and
Slide 42: Sales and Revenues – Steam Third Quarter and Year-to-Date
Utilities' Sales and Revenues – Steam Third Quarter and Year-to-Date ($ in millions) Steam – 3rd Quarter Millions of Pounds Revenues in Millions 2019 2018 2019 2018 Con Edison of New York General 6 12 $2 $2 Apartment House 722 781 13 16 Annual Power 2,443 2,711 36 45 Total Sales 3,171 3,504 $51 $63
Slide 43: Income Statement – 2019 Third Quarter
Income Statement – 2019 Third Quarter ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $2,877 $241 $247 $1 $(1) $3,365 Depreciation and amortization 346 22 53 — — 421 Other operating expenses 1,808 173 94 2 — 2,077 Total operating expenses 2,154 195 147 2 — 2,498 Operating
Slide 44: Income Statement – 2019 Year-to-Date
Income Statement – 2019 Year-to-Date ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $8,248 $678 $696 $3 $(2) $9,623 Depreciation and amortization 1,020 63 169 1 — 1,253 Other operating expenses 5,403 502 344 7 3 6,259 Total operating expenses 6,423 565 513 8 3 7,512 Oper
Slide 45: Balance Sheet – As of September 30, 2019
Balance Sheet – As of September 30, 2019 ($ in millions) CECONY O&R CEBs CET Other(a) Total ASSETS Current assets $3,005 $255 $458 $— $(137) $3,581 Investments 436 26 — 1,528 (7) 1,983 Net plant 36,885 2,299 4,033 17 — 43,234 Other noncurrent assets 4,482 355 1,885 14 406 7,142 Total assets $44,808
Slide 46: Statement of Cash Flows – 2019 Year-to-Date
Statement of Cash Flows – 2019 Year-to-Date ($ in millions) (a) CECONY O&R CEBs CET Other Total Net cash flows from/(used in) operating activities $1,490 $168 $285 $150 $(133) $1,960 Net cash flows from/(used in) investing activities (2,437) (163) (142) (143) 1 (2,884) Net cash flows from/(used in)
Slide 47: List of Notes to 2019 Third Quarter Form 10-Q Financial Statements
List of Notes to 2019 Third Quarter Form 10-Q Financial Statements Page A – Summary of Significant Accounting Policies and Other Matters 19 – 24 B – Regulatory Matters 24 – 28 C – Capitalization 29 – 30 D – Short-Term Borrowing 30 E – Pension Benefits 30 – 31 F – Other Postretirement Benefits 31 – 3