Edison International · NYSE:EIX
Edison International — Corporate Update (August 2014)
47 slides from Edison International's corporate update, Aug 1, 2014
Slide 1: Business Update
Leading the Way in Electricity SM Business Update August 2014 August 1, 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: 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 4: 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 5: 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 ($300 million) and lower S
Slide 6: Historical Rate Base and Core Earnings
Leading the Way in Electricity SM SCE Historical Rate Base and Core Earnings ($ 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 $3.88 1 Recorded rate base, year-end basis. See E
Slide 7: Capital Expenditures Forecast
Leading the Way in Electricity SM SCE Capital Expenditures Forecast ($ billions) $15.1 – $17.2 billion forecasted capital program 2014 – 2017 Distribution Transmission Generation $4.5 $4.4 • Capital expenditures forecast $4.1 $4.2 reaffirmed • CPUC GRC focused on infrastructure replacement • Include
Slide 8: Rate Base Forecast
Leading the Way in Electricity SM SCE Rate Base Forecast ($ billions) 7 – 9% CAGR projected rate base 2014 – 2017 $29.2 $27.0 • Growth rate reaffirmed • Driven by infrastructure $24.4 replacement, reliability investments, and public policy $22.4 requirements • FERC rate base includes CWIP and is app
Slide 9: System Investments
Leading the Way in Electricity SM SCE System Investments ($ 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 10: 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 11: 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 filed March 2014, Scoping Memo issued, schedule revised July 21st Supplemental testimony, ordered by May 15th Assigned Commissions Ruling, on risk management and safety matters sub
Slide 12: CPUC and FERC Cost of Capital
Leading the Way in Electricity SM CPUC and FERC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/13 – 7/16/14) = 4.99% 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% equity with 10.
Slide 13: Key Regulatory Events Calendar
Leading the Way in Electricity SM SCE Key Regulatory Events Calendar 2H 2014 1H 2015 2H 2015 2016 SONGS TBD – Proposed Decision Settlement (I.12-10-013) July – Revised Scoping Jan – Update Hearing 2015 GRC Memo (A.13-11-003) Aug – ORA testimony Sept - Evidentiary Hearings Sept – NEM Scoping Spring –
Slide 14: 2014 Core and Basic Earnings Guidance
Leading the Way in Electricity SM 2014 Core and Basic Earnings Guidance 2014 Earnings Key Assumptions: Guidance as of 4/29/14 • Midpoint rate base of $22.1 billion Low Mid High • Approved capital structure – SCE $3.85 48% equity, 10.45% CPUC & FERC ROE EIX Parent & Other (0.15) 1 • 325.8 million com
Slide 15: EIX Dividend Growth
Leading the Way in Electricity SM EIX Dividend Growth $3.85 Guidance Midpoint 2008 – 2013 CAGR 2014 $1.42 (37%) SCE Core EPS 12% $3.88 2013 EIX Dividend 2% $1.35 (35%) $4.10 2012 $1.30 (32%) • EIX targets paying out 45 – 55% of SCE earnings $3.33 2011 $1.28 (38%) • Dividend growth rate slowed to hel
Slide 16: 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 • SCE 2013 cost of capital • 10% 5-year SCE rate base • Acquired SoCore Energy What We’ve • SCE 2012 FERC formula rate CAGR (20
Slide 17: 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 18: Appendix
Leading the Way in Electricity SM Appendix August 1, 2014 18 EDISON INTERNATIONAL®
Slide 19: Changes Since Our Last Presentation
Leading the Way in Electricity SM Changes Since Our Last Presentation • Quarterly updates • SCE Growth Drivers Beyond 2017 (p. 10) – new slide • SCE 2015 CPUC General Rate Case (p. 11) • SCE Key Regulatory Events Calendar (p. 13) – new slide • 2014 Core and Basic Earnings Guidance (p. 14) • EIX is R
Slide 20: 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 21: 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 22: 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 Rulemaking (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 23: 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 24: Solar Installations in SCE Service Territory
Leading the Way in Electricity SM Solar Installations in SCE Service Territory 4,000 30,000 3,500 25,000 3,000 20,000 2,500 Number of Installations kW Installed 2,000 15,000 1,500 10,000 1,000 5,000 500 – – Jan-09 Jul-09 Jul-10 Jul-13 Mar-09 Jan-11 Jul-11 Jul-12 May-09 Sep-09 Nov-09 Jan-10 Mar-10 Ma
Slide 25: Rooftop Solar – Grid Interaction
Leading the Way in Electricity SM Rooftop Solar – Grid Interaction Typical Residential Rooftop Solar Customer Profile1,2 3.5 3.0 Summer Customer uses grid to export excess power 2.5 2.0 Kilowatt 1.5 SCE Provides 1.0 Customer generation, Power grid support needed SCE Provides 0.5 Power 0.0 1 2 3 4 5
Slide 26: All Generation Cost Trends, Unsubsidized
Leading the Way in Electricity SM All Generation Cost Trends, Unsubsidized Distributed Central Station / Utility Scale Generation Generation $0.250 $0.204 $0.206 $0.200 $0.150 $0.145 $0.149 $0.144 $/kWh $0.122 $0.123 $0.104 $0.100 $0.087 $0.108 $0.095 $0.109 $0.067 $0.086 $0.089 $0.086 $0.050 $0.065
Slide 27: 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 28: 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 29: 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 30: California Renewables Policy
Leading the Way in Electricity SM California Renewables Policy • On April 12, 2011, Governor Brown signed SB X 1 2, which codifies a 33% Renewables Portfolio Standard (RPS) for Actual 2013 Renewable Resources: California by 2020 21.6% of SCE’s portfolio Allows use of Renewable Energy Credits (RECs
Slide 31: Energy Efficiency Programs
Leading the Way in Electricity SM SCE Energy Efficiency Programs Annual kWh Savings (billions) Energy efficiency programs updated for 2013 – 2014 • SCE is a national leader 1.7 1.6 2012 energy savings = 1.8% of retail sales1 1.1 0.9 • 2014 budget of $352 million2 • Target 0.9 billion kWh average a
Slide 32: 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 33: System Reliability
Leading the Way in Electricity SM SCE System Reliability • Short-term SONGS closure solutions Transmission – 220 kV Barre-Ellis reconfiguration Voltage support – Huntington Beach 3 and 4 synchronous condensers Substations – Santiago, Viejo, Johanna capacitor bank upgrades Generation – El Seg
Slide 34: Second Quarter Earnings Summary
Leading the Way in Electricity SM Second Quarter Earnings Summary Q2 Q2 SCE Key Core Earnings Drivers Variance 2014 2013 Core EPS1 Higher revenue $0.17 SCE $1.11 $0.84 $0.27 SONGS impact 0.03 Higher O&M2 (0.02) EIX Parent & Other (0.03) (0.05) 0.02 Higher depreciation (0.05) Core EPS1 $1.08 $0.79 $0
Slide 35: 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 $0.31 SCE $2.04 $1.63 $0.41 SONGS impact 0.02 Lower O&M2 0.05 EIX Parent & Other (0.06) (0.06) 0.00 Higher depreciation (0.12) Core EPS1 $1.98 $1.57 $0.41
Slide 36: Earnings Non-GAAP Reconciliations
Leading the Way in Electricity SM Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX Core Earnings to EIX GAAP Earnings Earnings Attributable to Q2 Q2 YTD YTD Edison International 2014 2013 2014 2013 Core Earnings SCE $362 $274 $666 $530 EIX Parent & Other (10) (15) (20) (20) Core
Slide 37: 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 $3.88 12% Non-Core Items Tax settleme
Slide 38: Results of Operations
Leading the Way in Electricity SM SCE Results of Operations ($ 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 39: 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, Steam with book value balance disallowed. Revenues related to the SGRP collected after February 1, Generators 2012, refunded to cust
Slide 40: SONGS Settlement – Third-Party Recoveries
Leading the Way in Electricity SM SONGS Settlement – Third-Party Recoveries • SCE’s share of recoveries from NEIL and MHI will be allocated between SCE and customers • Litigation fees recovered prior to SCE / customer sharing SCE Share NEIL All 17.5% MHI • First $100 million 85% Non-Core Earnings •
Slide 41: SONGS Settlement – Accounting
Leading the Way in Electricity SM SONGS Settlement – Accounting • Q2 2013, SCE recorded $575 million pre-tax and $365 million after-tax impairment based on management’s judgment of the recoverability of SONGS investment Developed based on a range of possible outcomes Each quarter, management mus
Slide 42: SONGS Settlement – Regulatory Asset
Leading the Way in Electricity SM SONGS Settlement – Regulatory Asset ($ millions) December 31, June 30, Authorized Category 20131 2014 Return Base Plant $488 2.62% SGRP - n/a CWIP2 $2,166 403 2.62% Materials and Supplies 78 2.62% Nuclear Fuel 407 Commercial Paper Rate Asset Impairment (575) (5) n/a
Slide 43: SONGS Third-Party Recovery – MHI
Leading the Way in Electricity SM SONGS Third-Party Recovery – MHI Warranty Summary Request for Arbitration • 20-year warranty: • October 2013, Request for Arbitration filed Repair or replace defective items with the International Chamber of Commerce per MHI contract Specified damages for certai
Slide 44: SONGS Third-Party Recovery – NEIL Insurance
Leading the Way in Electricity SM SONGS Third-Party Recovery – NEIL Insurance • Accidental property damage and accidental outage insurance through Nuclear Electric Insurance Limited (“NEIL”) Accidental Property Damage Policies – $2.5 million deductible; $2.75 billion liability limit Accidental O
Slide 45: 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 46: EME Bankruptcy Settlement Implementation
Leading the Way in Electricity SM EME Bankruptcy Settlement Implementation • April 2014, amended Plan of Reorganization completed • EME emerged from bankruptcy and remains subsidiary of EIX Consolidated for tax purposes • Reorganization Trust established to receive tax benefit payments from EIX Cash
Slide 47: 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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