Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Investor Presentation (March 2019)
56 slides from Consolidated Edison's investor presentation, March 2019
Slide 1: March 2019 Company Update
March 2019 Company Update GconEdison
Slide 2: Available Information and Forward-Looking Statements
Available Information On February 21, 2019, Consolidated Edison, Inc. issued a press release reporting its 2018 earnings and filed with the Securities and Exchange Commission the company’s 2018 Form 10-K. This presentation should be read together with, and is qualified in its entirety by reference t
Slide 3: Table of Contents
Table of Contents Page Organizational Structure and Plan 4-5 Dividend and Earnings Announcements 6 4Q 2018 Earnings 7-10 4Q 2018 Developments 11-13 CECONY Electric & Gas Rate Filings 14-18 Clean Energy Businesses – PG&E Related Projects 19 Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 2
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $24.5 billion Ratings(b): Baa1 / BBB+ / BBB+ Outlook(b): Stable / Stable / Stable Utilities Transmission Clean Energy Con Edison Con Edison Consolidated Clean Energy Orange and Transmission, Edison Businesses, Rockland Inc. Company of 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 January 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 -- an annualized increase of 10 cents over the previous annualized dividend of $2.86 a share and its 45th
Slide 7: 4Q 2018 Earnings
4Q 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $331 $505 $1.06 $1.63 TCJA re-measurement — (259) — (0.84) Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (a) (126) — (0.42) — Income tax
Slide 8: Walk from 4Q 2017 EPS to 4Q 2018 EPS
Walk from 4Q 2017 EPS to 4Q 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $1.63 $0.01 $0.01 $0.80 $0.02 $(0.01) $0.77 $(0.01) $(0.04) $(0.01) $0.07 $1.06 $(0.62) $(0.02) (a) (a) a. Includes parent company and consolidation adjustments. 8
Slide 9: 4Q 2018 vs. 4Q 2017 EPS Variances - Three Months Ended Variation
4Q 2018 vs. 4Q 2017 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans $ 0.15 Reflects primarily higher electric and gas net base revenues of $0.11 a share and $0.04 a share, respectively, and growth in the number of gas customers of $0.01 a share. Electric and gas base rat
Slide 10: 4Q 2018 vs. 4Q 2017 EPS Reconciliation by Company
4Q 2018 vs. 4Q 2017 EPS Reconciliation by Company Three Months Ended December 31, 2018 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $0.72 $0.02 $0.28 $0.04 $— $1.06 Gain on acquisition of Sempra Solar Holdings, LLC, net of — — (0.41) — (0.01) (0.42) transaction costs (pre-tax) (a) In
Slide 11: 4Q 2018 Developments
4Q 2018 Developments(a) CECONY & O&R • In August and November 2017, the NYSPSC issued orders in its proceeding investigating a subway power outage. NYSPSC Case 17-E-0428 – In The Matter of an Investigation into the April 21, 2017 Metropolitan Transportation Authority Subway Power Outage and Consolid
Slide 12: 4Q 2018 Developments (cont'd)
4Q 2018 Developments (cont’d)(a) CECONY & O&R • CECONY and O&R's current five-year forecasts for 2019-2023 of average annual growth of the peak demand in their service areas at design conditions: (pages 9, 22-23, 25, 26, 27, 28) Electric Gas Steam CECONY 0.1 percent 1.0 percent (0.5) percent O&R (0.
Slide 13: 4Q 2018 Developments (cont'd)
4Q 2018 Developments (cont'd)(a) Con Edison Transmission • In December 2018, the NYISO board of directors in its competitive proceeding to select AC transmission projects that would relieve transmission congestion between upstate and downstate concluded that the most efficient or cost effective tran
Slide 14: CECONY Electric & Gas Rate Filings – January 31, 2019
CECONY Electric & Gas Rate Filings – January 31, 2019(a) Electric case number 19-E-0065 Gas case number 19-G-0066 Proposed Rate of Return and Equity Ratio Return on equity………….……………...9.75% Equity ratio………….………………………50% Test Year Historic test year: Twelve months ended September 30, 2018 Rate year:
Slide 15: CECONY Rate Filings – Illustrative Rate-Filing Timeline
CECONY Electric & Gas Rate Filings – January 31, 2019 (cont'd) Illustrative Rate-Filing Timeline • Rate filing made 11 months prior to effective date of new rates (a) a. New rates requested to be effective January 2020, regardless of whether the final rate order is issued in December 2019 or later.
Slide 16: Key Drivers of Proposed 2020 Electric Rate Increase
CECONY Electric & Gas Rate Filings – January 31, 2019 (cont'd) Key Drivers of Proposed 2020 Electric Rate Increase Rate increase of $485M represents a 4.9% increase in total bill and 8.6% increase in delivery. The average monthly electric bill for a New York City residential customer using 300 kilow
Slide 17: Key Drivers of Proposed 2020 Gas Rate Increase
CECONY Electric & Gas Rate Filings – January 31, 2019 (cont'd) Key Drivers of Proposed 2020 Gas Rate Increase Rate increase of $210M represents a 9.1% increase in total bill and 14.5% increase in delivery. The average monthly gas bill for a residential customer using 100 therms would increase $17.28
Slide 18: CECONY Rate Filings – Other Major Provisions Proposed
CECONY Electric & Gas Rate Filings – January 31, 2019 (cont'd) Electric case number 19-E-0065 Gas case number 19-G-0066 Other Major Provisions Proposed • Deferral as a regulatory liability of the revenue requirement impact of the amount, if any, by which actual average net plant balances for categor
Slide 19: Clean Energy Businesses – PG&E Related Projects
Clean Energy Businesses – PG&E Related Projects Total Generating Capacity: 2,588 MW • 2019 forecast of adjusted earnings (Non-GAAP) of $25-35 million from PG&E-related projects (5) • Average annual O&M for PG&E-related projects: $40-$60/kW (6) • Average annual capacity factor for PG&E-related projec
Slide 20: Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017
Utility 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 • Customer credit started on January 1, 2019 and wil
Slide 21: Utility Rate Adjustments for Tax Cuts and Jobs Act (cont'd)
Utility 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 (which is subject to NYSPSC approval) (Case 18-E-0067; 18-G-0068), intends to reflect its TCJA net benefits as follows: – annual ongoing savings of $
Slide 22: 2018 Earnings
2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $1,382 $1,525 $4.43 $4.97 Income tax effect of the TCJA 42 (259) 0.14 (0.85) Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (a) (114) — (0.3
Slide 23: Walk from 2017 EPS to 2018 EPS
Walk from 2017 EPS to 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.25 $4.97 $(0.02) $4.43 $0.04 $0.00 $0.25 $4.33 $(0.62) $4.12 $(0.15) $(0.02) $0.00 $(0.06) (a) (a) a. Includes parent company and consolidation adjustments. 23
Slide 24: 2018 vs. 2017 EPS Variances - Year Ended Variation
2018 vs. 2017 EPS Variances - Year Ended Variation CECONY(a) Changes in rate plans $ 0.84 Reflects primarily higher electric and gas net base revenues of $0.59 a share and $0.16 a share, respectively, and growth in the number of gas customers of $0.06 a share. Electric and gas base rates increased i
Slide 25: 2018 vs. 2017 EPS Reconciliation by Company
2018 vs. 2017 EPS Reconciliation by Company Year Ended December 31, 2018 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $3.84 $0.19 $0.46 $0.15 $(0.21) $4.43 Income tax effect of the TCJA — — — — 0.14 0.14 Gain on acquisition of Sempra Solar Holdings, LLC, net of — — (0.39) — 0.03 (0.3
Slide 26: 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, 2014 2015 2016 2017 2018 Reported EPS – GAAP basis $3.73 $4.07 $4.15 $4.97 $4.43 Income tax effect of the TCJA — — — (0.85) 0.14 Gain on acquisition of Sempra Solar Holdings, LLC, net of transact
Slide 27: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and Assessments (b) Health Care/ Other Employee Benefits Pension/ OPEBs (c) (c) (c) (c) a. Other Expenses generally are either reconciled through amounts reflected in rates, or represent s
Slide 28: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of December 31, 2018) CECONY ($ in millions) Electric NY $20,057 Gas NY 5,581 Steam NY 1,419 Total CECONY $27,057 O&R ($ in millions) O&R Electric NY $806 O&R Gas NY 426 RECO NJ 226 Total O&R $1,458 Total Rate Base $28,515 a. Average rate base for 12 months
Slide 29: Average Rate Base Balances
Average Rate Base Balances ($ in millions) $34,312 $32,391 $29,779 $28,515 $26,014 $24,522 $25,014 $23,795 O&R CECONY Actual Forecast(a) 2014 2015 2016 2017 2018 2019E 2020E 2021E Electric $ 17,403 $ 17,599 $ 17,971 $ 18,513 $ 20,057 $ 20,546 $ 22,365 $ 23,478 CECONY Gas 3,593 4,023 4,267 4,723 5,58
Slide 30: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended December 31, 2018) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.4% Gas 9.0 9.0 Steam 9.3 11.6 Overall – CECONY 9.0(a) 9.5 CECONY Equity Ratio 48.0% 47.2% O&R Electric 9.0% 7.6% Gas 9.0 7.9 RECO 9.6 7.4 Overall – O&R 9.1(a)
Slide 31: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms ($ in millions) (d) Positive Incentives(a) (b) ($ in millions) (c) a. In 2017 and 2018, CECONY achieved positive incentives of $12 million and $11 million, respectively, one third of which, pursuant to the accounti
Slide 32: Capital Expenditures
Capital Expenditures ($ in millions) (a) (b) Actual Forecast(c) a. 2016 includes Stagecoach JV investment of $974 million. b. 2018 includes Con Edison Development subsidiary’s purchase of Sempra Solar Holdings, LLC. c. 2018 Form 10-K, page 33. 32
Slide 33: Utility Capital Expenditures
Utility Capital Expenditures ($ in millions) Steam Gas Electric Actual Forecast(a) Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Depreciation Electric Gas Depreciation 2014 1,500 549 83 991 105 37 61 2015 1,658 671 106 1,040 114 46 68 2016 1,819 811 126 1,106
Slide 34: 2018 Financing Activity
2018 Financing Activity Equity Financing Activity • In November 2018, Con Edison priced 14,973,492 of its common shares at $77.00 per share under equity forward sale agreements(a) • In December 2018, upon the closing of the Sempra Solar Holdings, LLC acquisition, Con Edison issued 9,324,123 common s
Slide 35: 2019 Financing Plan and Activity
2019 Financing Plan and Activity • Capital expenditures of $3,627 million (CECONY: $3,016 million, O&R: $211 million, the CEBs: $200 million, CET: $200 million) • Issue between $1.6 billion and $2.2 billion of long-term debt, mostly at the utilities • Issue additional debt secured by the CEBs' renew
Slide 36: Capital Structure – December 31, 2018
Capital Structure – December 31, 2018 ($ in millions) Consolidated Edison, Inc. Baa1 / BBB+ / BBB+ Debt 18,145 52% Equity 16,839 48 Total $ 34,984 100% CECONY O&R Parent and Other A3 / A- / A- Baa1 / A- / A- Debt $ 14,151 52% Debt $ 756 51% Debt $3,238 50% Equity 12,910 48 Equity 712 49 Equity 3,217
Slide 37: Commercial Paper and Letters of Credit
Commercial Paper and Letters of Credit ($ in millions) 37
Slide 38: Utility Sales and Revenues – Fourth Quarter and Full Year
Utility Sales and Revenues – Fourth Quarter and Full Year 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 months and year ended December 31, 2018 (expressed as a percentage of
Slide 39: Utility Sales and Revenues – Electric Fourth Quarter
Utility Sales and Revenues – Electric Fourth Quarter ($ in millions) Electric – 4th Quarter Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 2,423 2,348 $635 $590 Commercial and Industrial 2,244 2,280 417 429 Retail choice customers
Slide 40: Utility Sales and Revenues – Electric Full Year
Utility Sales and Revenues – Electric Full Year ($ in millions) Electric – Full Year Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 10,797 9,924 $2,846 $2,515 Commercial and Industrial 9,588 9,246 1,850 1,823 Retail choice custome
Slide 41: Utility Sales and Revenues – Gas Fourth Quarter
Utility Sales and Revenues – Gas Fourth Quarter ($ in millions) Gas – 4th Quarter Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 14,259 12,356 $238 $189 General 8,421 7,408 92 79 Firm Transportation 20,846 17,401 143 134 Total Firm Sales and Trans
Slide 42: Utility Sales and Revenues – Gas Full Year
Utility Sales and Revenues – Gas Full Year ($ in millions) Gas – Full Year Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 57,815 52,244 $966 $802 General 34,490 30,761 390 334 Firm Transportation 82,472 71,353 595 524 Total Firm Sales and Transpor
Slide 43: Utility Sales and Revenues – Steam Fourth Quarter and Full Year
Utility Sales and Revenues – Steam Fourth Quarter and Full Year ($ in millions) Steam – 4th Quarter Millions of Pounds Revenues in Millions 2018 2017 2018 2017 Con Edison of New York General 151 126 $7 $6 Apartment House 1,688 1,505 45 39 Annual Power 3,498 3,093 108 93 Total Sales 5,337 4,724 $160
Slide 44: Income Statement - 2018 Fourth Quarter
Income Statement - 2018 Fourth Quarter ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $2,558 $201 $190 $1 $(1) $2,949 Depreciation and amortization 327 20 30 — — 377 Other operating expenses 1,727 158 156 3 2 2,046 Total operating expenses 2,054 178 186 3 2 2,423 Gain on
Slide 45: Income Statement - 2018 Full Year
Income Statement - 2018 Full Year ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $10,680 $891 $763 $4 ($1) $12,337 Depreciation and amortization 1,276 77 85 1 (1) 1,438 Other operating expenses 7,050 682 615 10 9 8,366 Total operating expenses 8,326 759 700 11 8 9,804 Ga
Slide 46: Balance Sheet - As of December 31, 2018
Balance Sheet - As of December 31, 2018 ($ in millions) CECONY O&R CEBs CET Other(a) Total ASSETS Current assets $3,357 $263 $(63) $32 $275 $3,864 Investments 385 25 — 1,362 (6) 1,766 Net plant 35,374 2,210 4,148 17 — 41,749 Other noncurrent assets 3,992 394 1,736 14 405 6,541 Total assets $43,108 $
Slide 47: Statement of Cash Flows - Year Ended December 31, 2018
Statement of Cash Flows - Year Ended December 31, 2018 ($ in millions) CECONY O&R CEBs CET Other(a) Total Net cash flows from/(used in) operating activities $2,204 $172 $220 $87 $12 $2,695 Net cash flows from/(used in) investing activities (3,306) (198) (1,740) (227) — (5,471) Net cash flows from/(u
Slide 48: List of Notes to 2018 Form 10-K Financial Statements
List of Notes to 2018 Form 10-K Financial Statements Page A – Summary of Significant Accounting Policies and Other Matters 110 - 118 B – Regulatory Matters 118 - 133 C – Capitalization 133 - 135 D – Short-Term Borrowing 135 - 136 E – Pension Benefits 136 - 141 F – Other Postretirement Benefits 141 -
Slide 49: Con Edison: Poised for a Strong Future
Con Edison: Poised for a Strong Future • One of the nation’s largest investor-owned energy-delivery companies – $12 billion in annual revenues – $54 billion asset base • Steady earnings, growing dividend – 45 consecutive years of dividend growth • Attractive capex opportunities – Three-year infrastr
Slide 50: Dividend Growth for Shareholders
Dividend Growth for Shareholders • 45 consecutive years of dividend increases • Accelerated growth over past five years • Target dividend payout range: 60 – 70% of adjusted earnings 5-year CAGR (2015-2019) 3.3% 5-year CAGR (2010-2014) 1.3% $2.96* $2.86 $2.76 $2.68 $2.60 $2.46 $2.52 $2.38 $2.40 $2.42
Slide 51: Complementary Business Mix with Utilities at the Core
Complementary Business Mix with Utilities at the Core 2018 GAAP EPS Contribution 2018 Adjusted EPS Contribution (Non-GAAP) (a) Regulated Utilities 92% 93% Clean Energy 10% 5% Transmission 3% 3% (5)% Other (b) (1)% a. Represents Adjusted Earnings per Share. Please see slide 25 for reconciliation to G
Slide 52: Opportunities for Growth Across Our Businesses
Opportunities for Growth Across Our Businesses 2019 – 2021 Forecasted Capital Investment(a) $10.9 billion $1.0 billion $0.2 billion Regulated Utilities Clean Energy Regulated Businesses Transmission a. From 2018 Form 10-K, page 33. 52
Slide 53: Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources
Regulatory Framework in NY Supports Energy Efficiency and Distributed Resources Reduced regulatory lag • Forward-looking test years • Timely recovery of most fuel and commodity costs • Revenue decoupling mechanism in NY (electric and gas) • Adjustment mechanisms for several major uncontrollable expe
Slide 54: New York Public Service Commission (NYSPSC) Commissioners
New York Public Service Commission (NYSPSC) Commissioners John Rhodes (D) Chair Gregg Sayre (D) Diane Burman (R) James Alesi (R) Feb-2021 Feb-2018 Feb-2024 Feb-2021 Open Seat Appointed June Appointed June 2017 Appointed June Appointed June 2012 2013 2017 PSC Staff Office of Accounting, Office of Ele
Slide 55: NYSPSC's Formulaic ROE Approach: Decisions 2006 – 2019 YTD
Rate of return on equity NYSPSC’s Formulaic ROE Approach: 2/3 Discounted Cash Flow model Decisions 2006 – 2019 YTD + 1/3 Capital Asset Pricing model Date Company ROE Term Date Company ROE Term 09/06 CECONY Steam 9.80% 2 years 06/11 Niagara Mohawk Electric 9.30% 2 years 10/06 O&R Gas 9.80% 3 years 06
Slide 56: Long-Range Plan – Complementary Business Mix with Utilities
Long-Range Plan – Complementary Business Mix with Utilities • Core utility business expected to continue to dominate the business mix • Investment in contracted renewables expected to complement utility growth • Transmission infrastructure investment opportunities expected to contribute to EPS 2018
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