Edison International · NYSE:EIX
Edison International — Investor Presentation (February 2020)
52 slides from Edison International's investor presentation, Feb 28, 2020
Slide 1: Business Update
Exhibit 99.1 Business Update February 28, 2020
Slide 2: Forward-Looking Statements
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 statem
Slide 3: Table of Contents
Table of Contents Updated (U) or New (N) from October 2019 Page Business Update EIX Shareholder Value 3 U EIX Summary, SCE Long-Term Growth Drivers 4-5 U SCE Capital Expenditures and Rate Base Forecast 6-8 U Commitment to Sustainability: California Mandates, SCE’s Pathway 2045, SCE Investments 9-11
Slide 4: EIX Strategy Should Produce Long-Term Value
EIX Strategy Should Produce Long-Term Value Sustained Earnings and Dividend Electric-Led Clean Energy Future Growth Led by SCE SCE Rate Base Growth Drives Earnings EIX Vision • 7-8% average annual rate base growth • Lead transformation of the electric power through 2023 industry • SCE earnings expec
Slide 5: About Edison International
About Edison International Vision is to lead the transformation of the electric power industry, focusing on opportunities in clean energy, efficient electrification, grid of the future, and customer choice About Southern California Edison One of the nation’s largest electric utilities •15 million re
Slide 6: SCE Long-Term Growth Drivers
SCE Long-Term Growth Drivers Description Timeframe/Regulatory Process Sustained level of infrastructure investment • Ongoing - current and future GRCs Infrastructure required until equilibrium replacement rates Replacement achieved and then maintained Utility investment and operational practices • 2
Slide 7: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) $19.4 - $21.2 billion capital program Distribution for 2020-2023 Transmission • This capital forecast includes: Generation 1 2018 GRC approved CPUC capital spend Wildire mitigation-related spend for 2019-2020 $5.4 $5.4 $5.4 2021 GRC requested CPUC ca
Slide 8: SCE Rate Base Forecast
SCE Rate Base Forecast ($ billions) $41.0 $38.2 $35.9 $33.4 $30.8 $28.5 Range Case 1 2018 2019 2020 2021 2022 2023 CAGR Range Case 2 $28.5 $30.8 $33.3 $35.1 $37.0 $39.2 6.6% 1. Morongo Transmission holds an option to invest up to $400 million in the West of Devers Transmission Project, or half of th
Slide 9: SCE Wildfire Capital Forecast
SCE Wildfire Capital Forecast ($ billions) 1 All Other Wildfire-Related Mitigation $4.4 Billion Capital Request for 2020-2023 1 Spend • Under AB 1054, ~$1.6 billion of SCE’s fire risk capital Wildfire-Related Mitigation Spend - expenditures per CPUC-approved Wildfire Mitigation Plan AB1054 shall not
Slide 10: Commitment to Sustainability: California Mandates
Commitment to Sustainability: California Mandates • SCE emissions from delivered power declined 42% between 2005 and 2018, and in 2018, SCE delivered power with only half the GHG emissions per unit of electricity as the estimated U.S. average • California law requires SCE to deliver on some of the m
Slide 11: Commitment to Sustainability: SCE's Pathway 2045
Commitment to Sustainability: SCE’s Pathway 2045 Pathway 2045 outlines our blueprint for how California can achieve carbon neutrality by 2045. This analysis updates and extends SCE’s November 2017 Pathway 2030 and continues to show electric-led path to be most efficient and cost-effective way to mee
Slide 12: Commitment to Sustainability: SCE Investments
Commitment to Sustainability: SCE Investments Clean Energy Efficient Electrification • Reduced GHG emissions from • Approved and proposed delivered power by 42% since 2005 investments of over $1 billion to expand electrification across • 46% carbon-free power delivered Southern California’s economy
Slide 13: 2019 Wildfire Mitigation Actions
2019 Wildfire Mitigation Actions Inspections: completed overhead inspections of 100% of T&D assets in HFRA; large volume of findings constrained bandwidth for other programs in 2019; transitioning to more risk-prioritized approach using technology and enhanced aerial inspections Resources: added
Slide 14: Mitigating Catastrophic Wildfire Risk
Mitigating Catastrophic Wildfire Risk 2019 Actuals 2020-22 Wildfire Mitigation Plan Covered Conductor: 372 circuit miles 4,000 additional circuit miles by Jan 1, 2023 Infrastructure completed 2020: 700-1,000 / 2021: 1,400 / 2022: 1,600 Hardening Undergrounding: leverage risk analysis to Approximatel
Slide 15: 2019 Wildfire Legislation Update
2019 Wildfire Legislation Update Summary of Assembly Bill 1054 and Assembly Bill 111 Safety • Creates Wildfire Safety Division1 to provide additional wildfire safety oversight Oversight • Annual safety certifications issued by Wildfire Safety Division1 require: 1) an approved wildfire mitigation pla
Slide 16: Assembly Bill 1054 Wildfire Fund Mechanics
Assembly Bill 1054 Wildfire Fund Mechanics1 IOUs contribute $10.5 B Customers contribute non-bypassable charge • PG&E: $4.8 B initial + $193 M annually for 10 years • $0.9 B per year charge for 15 years ($0.5 B w/o PG&E) (conditional on exiting bankruptcy by June 30, 2020) • California Department of
Slide 17: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2021 General Rate Case Set CPUC base revenue requirement, capital Application filed August 30, 2019; Scoping Memo issued in October 2019; (A. 19-08-013) expenditures and rate base for 2021-2024 intervenor testimony
Slide 18: SCE 2021 General Rate Case Overview
SCE 2021 General Rate Case Overview Filed August 30, 2019, request balances the need to advance California’s ambitious decarbonization policy goals and address emergent wildfire public safety risks, while continuing to provide safe, reliable, and affordable service to customers • 2021 GRC Applicatio
Slide 19: SCE 2021 General Rate Case Timeline
SCE 2021 General Rate Case Timeline • Track 1 includes approval of the 2021-2023 GRC revenue requirement. Track 2 includes reasonableness of additional 2018-2019 recorded incremental amounts associated with the Fire Mitigation memorandum accounts1 Estimated 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 20: CPUC 2020 Cost of Capital
CPUC 2020 Cost of Capital CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate 6.0 Moving Average (10/1/19 – 2/24/20) = 3.66% 100 basis point +/- Deadband 5.5 5.0 Starting Value – 4.50% 4.5 Rate (%) 4.0 3.5 3.0 10/1/19 1/1/20 4/1/20 7/1/20 10/1/20 1/1/21 4/1/21 7/1/21 10/1/21 1/1/22 4/1/22
Slide 21: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Capital expenditures for certain programs deferred over 2020 – 2023 Capital Spending Forecast 2 - next five years to support reallocation of distribution for Distribution $17.5 billion resources to wildfire mitigation1; historical program fun
Slide 22: SCE Transportation Electrification Proposals
SCE Transportation Electrification (TE) Proposals • Proposals advance the vision of SCE’s Pathway 2045, which is an integrated approach to reduce GHG emissions and air pollution by taking action in three California economic sectors: electricity, transportation, and buildings • These programs acceler
Slide 23: SCE Energy Storage
SCE Energy Storage CPUC Energy Storage Program Requirements: SCE 2018 Storage Portfolio • 1,325 MW target statewide by 2024 (580 MW SCE share); 350 ownership allowed up to 290 MW for SCE 300 *Up to • SCE has flexibility to transfer across 3 approved categories 310 80% of 250 MW to be SCE Procurement
Slide 24: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost5 (as of December 31, 2019) Date West of Devers1,2 $840 million $356 million 2021 Mesa Substation1 $646 million $273 million 2022 Alberhill System3 $486 million $44
Slide 25: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and reliability (SAIDI and SAIFI) • Customer service • Customer satisfaction • Cost efficiency calculation based on Optimize internal voic
Slide 26: Edison Energy Summary
Edison Energy Summary About Edison Energy Edison Energy’s Service Offerings • Edison Energy provides independent, expert advice and services to help large corporate and institutional clients better understand and navigate the choices and risks of managing energy. Edison Renewables & Supply enables d
Slide 27: 2020 EIX Core Earnings Guidance
2020 EIX Core Earnings Guidance 2020 Core Earnings Per Share Guidance – Building from SCE Rate Base on 2019 Weighted Average Shares $0.20 ($0.10) $5.17 ($0.41) • Interest related to • Financial, ($0.39) debt issued for operating and fund contribution: • Operating $4.47 other: expenses and ($0.09) •
Slide 28: 2020 EIX Core Earnings Guidance (cont.)
2020 EIX Core Earnings Guidance (cont.) Key Assumptions 2020 Assumption Additional Notes Total Rate Base $33.4 billion Based on rate base forecast CPUC Rate Base $26.8 billion Return on Equity (ROE) 10.30% 2020 Cost of Capital Final Decision Capital Structure 52% equity 2020 Cost of Capital Final De
Slide 29: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Sixteen Consecutive Years of Dividend Growth $2.551 $2.42 $2.45 $2.17 $1.92 $1.67 $1.42 $1.35 $1.28 $1.30 $1.22 $1.24 $1.26 $1.16 $1.08 $1.00 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Expect dividend growth within target
Slide 30: Appendix
Appendix February 28, 2020 29
Slide 31: Commitment to Sustainability: Transparency
Commitment to Sustainability: Transparency Oversight Strategic Alignment • Board and Nom/Gov Committee: • ESG materiality assessment conducted in 2018, with input from internal and external stakeholders, identifying 19 priority topics Full board has responsibility for • Reaffirmed corporate strate
Slide 32: Commitment to Sustainability: Strong Corporate Governance
Commitment to Sustainability: Strong Governance 7 of 11 Directors are Corporate Independent Board Key Areas of diverse in terms of Governance Committees Oversight 10 of 11 Directors are race/ethnicity, gender Independent (91%) Highlights and/or LGBTQ identification (64%) Independent Board Audit and
Slide 33: SCE Decoupled Regulatory Framework
SCE Decoupled Regulatory Framework Regulatory Mechanism Key Benefits Decoupling of Revenues from • Earnings not affected by variability of retail electricity sales Sales • Differences between amounts collected and authorized levels either billed or refunded • Promotes energy conservation • Stabilize
Slide 34: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) $32.6 $29.6 $27.8 $25.9 $24.6 2015 2016 2017 2018 2019 Core EPS $4.20 $4.22 $4.58 $4.42 $5.01 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures. Sin
Slide 35: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.8 $4.4 $3.9 $3.8 $3.5 2015 2016 2017 2018 2019 February 28, 2020 34
Slide 36: Distribution Power Grid of the Future
Distribution Power Grid of the Future Current State Future State One-Way Electricity Flow Variable, Two-Way Electricity Flow • System designed to distribute electricity • Distribution system at the center of the from large central generating stations power grid • Voltage centrally monitored and • Sy
Slide 37: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2015 2016 2017 2018 2019 Residential 30,093 29,579 30,221 29,865 28,985 Commercial 42,396 42,189 42,514 42,369 41,602 Industrial 7,623 7,162 6,659 6,786 6,442 Public authorities 4,795 4,715 4,711 4,510 4,365 Agricultural and other 1,95
Slide 38: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2020 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 4,503 7.6 Fuel & Purchased Power (54%) Distribution – poles, wires, substations, service centers 3,920 6.6 Distribution (40%) Generation – owned generation investment a
Slide 39: System Average Rate Historical Growth
System Average Rate Historical Growth ¢/kWh Comparative System Rates reduced due to the implementation of Average Rates 1) the SONGS Revised Settlement, including % Delta to SCE CAGR NEIL insurance benefits, 2) lower fuel & SCE 16.4¢ -- 30-yr 20-yr 10-yr purchased power costs, and 3) a lower 2015 (‘
Slide 40: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2018-19 Average Residential Bills ($ per Month) KeyKey Factors Factors $127 28% • Average monthly residential bills are lower Lower than the national average as higher rate $92 levels are more than offset by lower usage • SCE’s residential customer usage is lower than
Slide 41: Community Choice Aggregator (CCA) Overview
Community Choice Aggregator (CCA) Overview • Assembly Bill 1171 permits cities and counties, and Joint Powers Authorities (JPAs) 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
Slide 42: 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, SCE began to migrate 400,000 residential customers to TOU rate structures Remaining e
Slide 43: Impacts of Abundant Solar Energy (Duck Curve)
Impacts of Abundant Solar Energy (Duck Curve) New Time-of-Use (TOU) Periods • On March 1, 2019, SCE changed its basic TOU pricing period definition for the first time in over 30 years • Abundant mid-day renewable energy lowers prices from 8am-4pm (October - June) • Highest cost period is now 4pm-9pm
Slide 44: SCE Net Energy Metering
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (12/19) Installations and MW Installed • 339,730 combined residential and non-residential projects – 2,830 MW installed • 99.8 % solar projects 7000 40 • 332,180 residential (7.4% of all residential customers) – 1,825 MW •
Slide 45: Fourth Quarter Earnings Summary
Fourth Quarter Earnings Summary Key SCE EPS Drivers3 Q4 Q4 Variance 2019 2018 Higher revenue4 $ 0.32 - CPUC revenue 0.19 Basic Earnings Per Share (EPS)1 - FERC and other operating revenue 0.13 SCE $ 0.54 $ (4.38) $ 4.92 Higher O&M (0.03) Wildfire-related self-insured retention (0.05) EIX Parent & Ot
Slide 46: Full-Year 2019 Earnings Summary
Full-Year 2019 Earnings Summary Key SCE EPS Drivers3 2019 2018 Variance Test Year 2018 GRC true-up4 $ 0.20 Higher revenue5 0.87 Basic Earnings Per Share (EPS)1 - CPUC revenue 0.51 - 2018 FERC Formula Rate settlement6 0.13 SCE $ 4.15 $ (0.95) $ 5.10 - FERC and other operating revenue 0.23 Higher O&M
Slide 47: SCE Annual Results of Operations
SCE Annual Results of Operations ($ millions) • 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 rea
Slide 48: Updated SCE Wildfire-Related Charges
Updated SCE Wildfire-Related Charges ($ millions) For the year ended December 31, 2019 and December 31, 2018, the income statements and balance sheets include the estimated losses/accrued liabilities (established at the lower end of the reasonably estimated range of expected losses), net of expected
Slide 49: Earnings Per Share Non-GAAP Reconciliations
Earnings Per Share Non-GAAP Reconciliations Reconciliation of EIX Basic Earnings Per Share Guidance to EIX Core Earnings Per Share Guidance EPS Attributable to Edison International 2020 Low Midpoint High SCE $4.84 EIX Parent & Other (0.38) Basic EPS1 $4.32 $4.47 $4.62 Non-Core Items SCE — — — EIX Pa
Slide 50: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Q4 Q4 Earnings Attributable to Edison International 2019 2018 2019 2018 SCE $194 ($1,429) $1,409 $(310) EIX Parent & Other (51) (35) (125) (147) Discontinued Operations1 — 34 — 34 Basic Earnings $
Slide 51: EIX Core EPS Non-GAAP Reconciliations
EIX Core EPS Non-GAAP Reconciliations Reconciliation of Edison International Basic Earnings Per Share to Edison International Core Earnings Per Share Earnings Per Share Attributable to Edison International 2019 2018 2017 Basic EPS 3.78 ($1.30) $1.73 Non-Core Items (*) SCE Impairment and other 2018 G
Slide 52: 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
Edison International — Investor Presentation (February 2020) on 6ix