Edison International · NYSE:EIX
Edison International — Q4 2013 Earnings Presentation
51 slides from Edison International's earnings presentation, Feb 25, 2014
Slide 1: Fourth Quarter and 2013 Financial Results
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 0 Fourth Quarter and 2013 Financial Results
Slide 2: Forward-Looking Statements
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 1 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 (SONG
Slide 3: Fourth Quarter Earnings Summary
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 2 Fourth Quarter Earnings Summary Q4 2013 Q4 2012 Variance Core EPS1 SCE $0.79 $1.85 $(1.06) EIX Parent & Other 0.02 (0.06) 0.08 Core EPS1 $0.81 $1.79 $(0.98) Non-Core Items SCE $— $0.71 $(0.71) EIX Parent & Other
Slide 4: Year End Earnings Summary
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 3 Year End Earnings Summary 2013 2012 Variance Core EPS1 SCE $3.88 $4.10 $(0.22) EIX Parent & Other (0.08) (0.18) 0.10 Core EPS1 $3.80 $3.92 $(0.12) Non-Core Items SCE $(1.12) $0.71 $(1.83) EIX Parent & Other 0.02
Slide 5: 2013 Results vs. Guidance
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 4 2013 Results vs. Guidance Note: See Use of Non-GAAP Financial Measures in Appendix Co re EP S Ba sic EP S Less: $1.10 of non-core items = $2.55 Positive variances: • EME discontinued operations – $0.11 Less: $0.
Slide 6: SCE Historical Rate Base and Core Earnings
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 5 $13.1 $15.0 $16.8 $18.8 $21.0 $21.12 2008 2009 2010 2011 2012 2013 Rate Base2 Core Earnings 10% 12% 2008 – 2013 CAGR 1 Recorded rate base, year-end basis. See Non-GAAP Reconciliations and Use of Non-GAAP Financi
Slide 7: SCE Capital Expenditures Forecast
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 6 Note: forecasted capital spending subject to timely receipt of permitting, licensing, and regulatory approvals. Forecast range reflects an average variability of 12%. SCE Capital Expenditures Forecast ($ billion
Slide 8: SCE Rate Base Forecast
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 7 ($ billions) SCE Rate Base Forecast • Driven by infrastructure replacement, reliability investments, and public policy requirements • FERC rate base includes CWIP and is approximately 22% of 2014 rate base forec
Slide 9: SCE Fuel and Purchased Power Account
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 8 SCE Fuel and Purchased Power Account • The Energy Resource Recovery Account (ERRA) balancing account was established in 2004 • Rates set based on annual forecast submitted in August – compliance review applicati
Slide 10: SCE 2015 CPUC General Rate Case
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 9 SCE 2015 CPUC General Rate Case • November 2013, 2015 GRC Application A.13-11-003 submitted to Office of Ratepayer Advocate (ORA) Prehearing conference held on February 11 Proposed schedule anticipates final
Slide 11: 2014 Core and Basic Earnings Guidance
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 10 $3.40 $(0.07) $0.52 $(0.15) $3.70 SCE 2014 EPS from Rate Base Forecast SONGS Shutdown SCE 2014 Positive Variances EIX Parent & Other 2014 Midpoint Guidance 2014 Core and Basic Earnings Guidance Note: See Use of
Slide 12: Creating Shareholder Value
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 11 Creating Shareholder Value Resolve Uncertainties Create Sustainable Earnings and Dividend Growth Position for Transformative Sector Change • SCE 2012 GRC • SCE 2013 cost of capital • SCE 2012 FERC formula rate
Slide 13: Appendix
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 12 Appendix
Slide 14: Changes Since Our Last Presentation
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 13 Changes Since Our Last Presentation • Quarterly and year-end updates • SCE Capital Expenditures Forecast (p. 6) • SCE Rate Base Forecast (p. 7) • SCE Fuel and Purchased Power Account (p. 8) • SCE 2015 CPUC Gene
Slide 15: EIX Dividend Growth
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 14 $1.22 $1.24 $1.26 $1.28 $1.30 $1.35 $1.42 $2.25 $2.68 $3.01 $3.33 $4.10 $3.88 $3.85 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2008 2009 2010 2011 2012 2013 2014 SCE Core EPS EIX Dividend Paid (37%) EIX Dividend Growt
Slide 16: EME Bankruptcy Settlement Summary
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 15 EME Bankruptcy Settlement Summary • On February 18, settlement reached among EIX, EME, and certain of EME’s creditors holding a majority of its outstanding senior unsecured notes • Settlement will extinguish al
Slide 17: EME Bankruptcy Settlement Implications
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 16 EME Bankruptcy Settlement Implications Cash Impact • Based on current estimates: EIX expects net benefits of approximately $200 million over time EIX expects to utilize approximately $1.2 billion of EME tax
Slide 18: EIX – Positioned for Industry Change
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 17 EIX – Positioned for Industry Change EIX will respond and adapt to industry trends by advancing flexible use of the grid and investing in new business opportunities while continuing to provide safe, reliable, a
Slide 19: SONGS – Supplemental Data
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 18 SONGS – Supplemental Data 1 Includes direct operations and maintenance costs, depreciation, taxes, and return on investment 2 In 2005 the CPUC authorized expenditures of approximately $525 million ($665 million
Slide 20: SONGS – Asset Impairment
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 19 SONGS – Asset Impairment Exposure to refunds for amounts collected from customers Exposure to recovery of net investment from future rates Revenue Subject to Refund Since 1/1/12 Since 11/1/12 Authorized revenue
Slide 21: SONGS Regulatory – CPUC OII Phases
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 20 SONGS Regulatory – CPUC OII Phases Next Steps Phase 1 – Determine whether expenses and capital expenditures recorded for 2012 were reasonable; establish methodology to determine market-related costs attributabl
Slide 22: SONGS – Recovery Examples
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 21 SONGS – Recovery Examples Docket# Owner & Project Return of Investment Partial Return on Investment D.92-08-036 SCE – SONGS 1 generating plant D.12-10-051 SCE – GRC Legacy Meters D.11-05-018 PG&E – GRC
Slide 23: SONGS Third-Party Recovery – MHI Warranty
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 22 SONGS Third-Party Recovery – MHI Warranty Warranty Summary Request for Arbitration • 20-year warranty: Repair or replace defective items Specified damages for certain repairs $138 million liability limit,
Slide 24: SONGS Third-Party Recovery – NEIL Insurance
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 23 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
Slide 25: SONGS – Decommissioning
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 24 SONGS – Decommissioning Decommissioning Trusts • Decommissioning Trust contributions recovered in rates approved by CPUC in triennial proceeding • December 2012, A.12-12-013 Joint Filing with SDG&E submitted •
Slide 26: SONGS – NRC Notice of Nonconformance
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 25 SONGS – NRC Notice of Nonconformance • Nuclear Regulatory Commission (NRC) issued Inspection Report and Notice of Nonconformance to MHI for its flawed computer modeling in the design of San Onofre’s steam gener
Slide 27: CPUC and FERC Cost of Capital
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 26 3 4 5 6 7 10/1/12 10/1/13 10/1/14 10/1/15 Ra te (% ) CPUC and FERC Cost of Capital • CPUC – 10.45% Return on Equity (ROE) and adjustment mechanism approved through 2015 ROE adjustment based on 12-month averag
Slide 28: SCE Large Transmission Projects
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 27 Project Name Total Project Costs1 In Service Date ROE Incentives2 2014–2017 Forecast Status Tehachapi $3,174 2016 – 2017 125 bpsROE adder $966 Costs and schedule remain uncertain. Cost estimate includes known s
Slide 29: SCE Distribution Program
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 28 SCE Distribution Program • Average equipment age beginning to approach mean time to failure making it critical to achieve equilibrium replacement rates • 2015 GRC request represents ~120% increase in infrastruc
Slide 30: SCE Highlights
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 29 • 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 inv
Slide 31: SCE Decoupled Regulatory Model
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 30 SCE Decoupled Regulatory Model Decoupling of Regulated Revenues from Sales Major Balancing Accounts • Fuel • Purchased power • Energy efficiency • Pension-related contributions Advanced Long-Term Procurement Pl
Slide 32: SCE 2013 Bundled Revenue Requirement
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 31 SCE 2013 Bundled Revenue Requirement 2013 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 4,285 5.8 Distribution – poles, wires, substations, service centers; Edis
Slide 33: SCE Customer Demand Trends
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 32 Kilowatt-Hour Sales (millions of kWh) Residential Commercial Industrial Public authorities Agricultural and other Resale Total Kilowatt-Hour Sales Customers Residential Commercial Industrial Public authorities
Slide 34: SCE Historical Capital Expenditures
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 33 $2.4 $2.9 $3.8 $3.9 $3.9 $3.5 2008 2009 2010 2011 2012 2013 SCE Historical Capital Expenditures ($ billions) Note: 2013 distribution reliability spend up $300 million, offset by completion of SmartConnect in 20
Slide 35: SCE System Reliability
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 34 Coastal Power Plants Local Reliability Areas (generalized) California Transmission System (partial, generalized) CA Once Through Cooling Policy – Legend • Short-term SONGS closure solutions Transmission – 220
Slide 36: Distributed Generation
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 35 Distributed Generation • Distributed generation (DG) will be a key part of the future generation mix due to: Rapidly declining cost of solar photovoltaic panels Challenges to building new generation and tra
Slide 37: Solar PV Cost Trends
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 36 Solar PV Cost Trends $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 1998 2000 2002 2004 2006 2008 2010 2012 Me dia n V alu e p er W at t ( 20 12 $ ) ≤ 10 kW 10-100 kW > 100 kW Over the past decade, re
Slide 38: All Generation Cost Trends, Unsubsidized
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 37 All Generation Cost Trends, Unsubsidized $0.149 $0.109 $0.065 $0.061 $0.086 $0.089 $0.045 $0.123 $0.067 $0.108 $0.144 $0.086 $0.000 $0.050 $0.100 $0.150 $0.200 $0.250 Solar PV (Distributed) Fuel Cell Coal Gas (
Slide 39: Legislative Rate Reform – AB 327
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 38 Legislative Rate Reform – AB 327 September 2013, Assembly Bill 327 (Perea) provides the following changes to rate structure (subject to further CPUC rulemaking) • Rate Reform Removes tier restrictions on resi
Slide 40: SCE Residential Net Metering Rate Structure
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 39 SCE Residential Net Metering Rate Structure 8.2¢ 28.3¢20.1¢ 0 5 10 15 20 25 30 ¢/ kW h Solar Subsidies1,2 Generation Rate Subsidy Paid by Other Ratepayers Equivalent Solar Rate 1 Based on average home usage of
Slide 41: SCE Rates and Bills Comparison
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 40 12.4 16.5 US Average SCE 33% Higher SCE Rates and Bills Comparison • SCE’s residential rates are above national average due, in part, to a cleaner fuel mix – cost for renewables are higher than high carbon sour
Slide 42: California Climate Change Policy
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 41 California Climate Change Policy • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16% reduction) • Cap and trade program basics: State-wide cap in 2013 – decre
Slide 43: California Renewables Policy
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 42 California Renewables Policy • On April 12, 2011, Governor Brown signed SB X 1 2, which codifies a 33% Renewables Portfolio Standard (RPS) for California by 2020 Allows use of Renewable Energy Credits (RECs)
Slide 44: 2012 SCE Energy Portfolio
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 43 2012 SCE Energy Portfolio1 1 CEC Power Source Disclosure Program 2 Accounts for non-technology specific energy procured from market More than half of SCE’s energy portfolio consists of low-carbon resources incl
Slide 45: CAISO Net Load
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 44 CAISO Net Load Renewables • Current 33% RPS by 2020 set as floor for CPUC per AB327 • More variable and less predictable output • Output does not fully match demand • Need for flexible, dispatchable capacity Re
Slide 46: SCE Energy Efficiency Programs
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 45 SCE Energy Efficiency Programs 1.7 1.6 0.9 0.9 2011 2012 2013 2014 Energy efficiency programs updated for 2013 – 2014 • SCE is a national leader 2012 energy savings = 1.8% of retail sales1 • 2013 budget of $3
Slide 47: Energy Storage
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 46 Energy Storage • September 2010, AB2514 (Skinner) directs CPUC to establish procurement targets and policies for energy storage • October 2013, CPUC final decision in Energy Storage OIR (R.10-12-007) 1,325 MW
Slide 48: Non-GAAP Reconciliations
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 47 Non-GAAP Reconciliations ($ millions) Note: See Use of Non-GAAP Financial Measures. EME’s financial results are reported as non-core for all periods Q42012 $602 (20) $582 $231 (26) (1,326) (1,121) $(539) Q42013
Slide 49: SCE Results of Operations
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 48 $6,682 — 2,518 1,562 296 32 4,408 2,274 94 (494) 1,874 214 1,660 91 $1,569 $5,169 4,139 1,026 — (1) — 5,164 5 — (5) — — — — $— $6,602 — 2,348 1,622 307 575 4,852 1,750 48 (519) 1,279 279 1,000 100 $900 $5,960 4
Slide 50: Non-GAAP Reconciliations
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 49 Earnings Per Share Attributable to SCE Core EPS Non-Core Items Tax settlement Health care legislation Regulatory and tax items Asset impairment Total Non-Core Items Basic EPS SCE Core EPS Non-GAAP Reconciliatio
Slide 51: Use of Non-GAAP Financial Measures
Exhibit 99.2 EDISON INTERNATIONAL® Leading the Way in Electricity SM February 25, 2014 50 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 analys