Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Q3 2018 Earnings Presentation
46 slides from Consolidated Edison's earnings presentation, Nov 1, 2018
Slide 1: 3rd Quarter 2018 Earnings Release and Clean Energy Businesses Update Presentation
3rd Quarter 2018 Earnings Release and Clean Energy Businesses Update Presentation November 1, 2018
Slide 2: Available Information, Forward-Looking Statements, Non-GAAP Financial Measure
Available Information On November 1, 2018, Consolidated Edison, Inc. issued a press release reporting its third quarter 2018 earnings and filed with the Securities and Exchange Commission the company’s third quarter 2018 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Table of Contents
Table of Contents 3rd Quarter 2018 Earnings Release Page Organizational Structure and Plan 5-6 Dividend and Earnings Announcements 7 3Q 2018 Earnings 8-11 3Q 2018 Developments 12-13 Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 14-15 YTD 2018 Earnings 16-19 Five-Year Reconciliation of R
Slide 4: Table of Contents
Table of Contents Clean Energy Businesses Update Page Sempra Solar Holdings Transaction 38 Sempra Solar Holdings Operating Assets 39 CEBs' Pro Forma Portfolio of Renewable Assets 40 Sources and Uses of Funds in Transaction 41 Accounting Considerations for Sempra Solar Holdings Acquisition 42 Forecas
Slide 5: Organizational Structure
Organizational Structure Market Cap(a): $24.0 billion (b) Ratings : Baa1(c) / BBB+ / BBB+ Outlook(b): Stable(c) / Stable / Stable Utilities Transmission Clean Energy Con Edison Con Edison Consolidated Clean Energy Orange and Transmission, Edison Businesses, Rockland Inc. Company of Inc. New York, In
Slide 6: The Con Edison Plan
The Con Edison Plan Customer Focused Strategic Value Oriented Provide safe and Strengthen core Provide steady, reliable service utility delivery predictable business earnings Enhance the Pursue additional Maintain customer regulated growth balance sheet experience opportunities to add stability valu
Slide 7: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On October 18, 2018, the company issued a press release reporting that the company had declared a quarterly dividend of 71.5 cents a share on its common stock. • On November 1, 2018, the company issued a press release forecasting its adjusted earnings per share
Slide 8: 3Q 2018 Earnings
3Q 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $435 $457 $1.40 $1.48 TCJA re-measurement 42 — 0.14 — Sempra Solar Holdings, LLC transaction costs (pre-tax) 14 — 0.04 — Income taxes (a) (4) — (0.01) — Sempra Solar Holdings,
Slide 9: Walk from 3Q 2017 EPS to 3Q 2018 EPS
Walk from 3Q 2017 EPS to 3Q 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.08 $0.00 $0.02 $0.01 $0.03 $0.01 $0.08 $0.00 $1.57 $1.48 $1.47 $(0.02) $1.40 $(0.19) (a) (a) 3Q 2017 CECONY O&R CEBs CET Other 3Q 2018 3Q 2017 CECONY O&R CEBs CET Other 3Q 2018 Reported Report
Slide 10: 3Q 2018 vs. 3Q 2017 EPS Variances - Three Months Ended Variation
3Q 2018 vs. 3Q 2017 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans $0.22 Reflects primarily higher electric and gas net base revenues of $0.19 a share and $0.01 a share, respectively, and growth in the number of gas customers of $0.01 a share. Electric and gas base rate
Slide 11: 3Q 2018 vs. 3Q 2017 EPS Reconciliation by Company
3Q 2018 vs. 3Q 2017 EPS Reconciliation by Company Three Months Ended September 30, 2018 CECONY O&R CEBs CET Other(b) Total Reported EPS – GAAP basis $1.38 $0.07 $0.10 $0.04 $(0.19) $1.40 TCJA re-measurement — — — — 0.14 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 0.04 In
Slide 12: 3Q 2018 Developments
3Q 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 13: 3Q 2018 Developments (cont'd)
3Q 2018 Developments (cont'd)(a) Con Edison Transmission • As a result of challenges to certain federal and state regulatory approvals for the Mountain Valley Pipeline, construction has been delayed on the project. In October 2018, Mountain Valley Pipeline LLC indicated that the project has an estim
Slide 14: Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)
Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA)(a) New York 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 will start on January 1, 2019 and will i
Slide 15: Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)
Utility Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) (cont'd)(a) O&R Electric and Gas • O&R, in its ongoing rate proceedings (Case 18-E-0067; 18-G-0068), intends to reflect its TCJA net benefits as follows: – annual ongoing savings of $18 million – pass back of 2018 savings ($21 million
Slide 16: YTD 2018 Earnings
YTD 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $1,051 $1,020 $3.38 $3.33 TCJA re-measurement 42 — 0.14 — Sempra Solar Holdings, LLC transaction costs (pre-tax) 14 — 0.04 — Income taxes (a) (4) — (0.01) — Sempra Solar Holdi
Slide 17: Walk from YTD 2017 EPS to YTD 2018 EPS
Walk from YTD 2017 EPS to YTD 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.01 $0.03 $0.24 $0.03 $0.03 $3.56 $0.24 $3.33 $(0.01) $3.38 $3.32 $(0.01) $(0.05) $(0.22) (a) YTD 2017 CECONY O&R CEBs CET Other YTD 2018 YTD 2017 CECONY O&R CEBs CET Other (a) YTD 2018 Repor
Slide 18: YTD 2018 vs. YTD 2017 EPS Variances - Nine Months Ended Variation
YTD 2018 vs. YTD 2017 EPS Variances - Nine Months Ended Variation CECONY(a) Changes in rate plans $ 0.69 Reflects primarily higher electric and gas net base revenues of $0.48 a share and $0.13 a share, respectively, and growth in the number of gas customers of $0.05 a share. Electric and gas base ra
Slide 19: YTD 2018 vs. YTD 2017 EPS Reconciliation by Company
YTD 2018 vs. YTD 2017 EPS Reconciliation by Company Nine Months Ended September 30, 2018 CECONY O&R CEBs CET Other(b) Total Reported EPS – GAAP basis $3.12 $0.17 $0.19 $0.11 $(0.21) $3.38 TCJA re-measurement — — — — 0.14 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 0.04 I
Slide 20: Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 12 Months Ending December 31, 2014 2015 2016 2017 2018 (a) Reported EPS – GAAP basis $3.73 $4.07 $4.15 $4.97 $5.03 TCJA re-measurement — — — — 0.14 Sempra Solar Holdings, LLC transaction costs (pre-tax) — — — — 0.04 Income ta
Slide 21: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) $1,577 $1,528 $1,464 $1,477 $1,489 $1,384 $1,422 $1,417 $354 $1,313 $287 $344 $1,329 Other $352 $517 $519 $550 $998 $969 Regulatory Fees and $469 $294 $281 Assessments (b) $211 YTD $220 YTD $1,147 YTD $1,186 YT
Slide 22: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of September 30, 2018) CECONY ($ in millions) Electric NY $19,588 Gas NY 5,342 Steam NY 1,403 Total CECONY $26,333 O&R ($ in millions) O&R Electric NY $789 O&R Gas NY 417 RECO NJ 221 Total O&R $1,427 CECONY CECONY Gas CECONY O&R RECO Total Rate Base $27,760
Slide 23: Average Rate Base Balances
Average Rate Base Balances ($ in millions) .0% C AGR 6 3-year $30,991 $29,093 $1,543 $27,725 $1,511 $29,448 $26,014 $1,448 $27,582 $24,522 $25,014 $23,795 $1,376 $26,277 $1,357 $1,304 $22,311 $1,297 $24,638 $23,165 $23,710 O&R $1,173 $22,498 $21,138 CECONY Actual Forecast(a) 2013 2014 2015 2016 2017
Slide 24: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended September 30, 2018) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.3% Gas 9.0 9.4 Steam 9.3 11.0 Overall – CECONY 9.0(a) 9.4 CECONY Equity Ratio 48.0% 47.6% O&R Electric 9.0% 7.8% Gas 9.0 8.0 RECO 9.6 9.3 Overall – O&R 9.1(a)
Slide 25: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms 70 $59 60 ($ in millions) 50 $42 40 30 $18 20 $11 $13 $9 10 $0 $0 $0 0 2017 2018 (d) 2019 Min Max Achieved / Projected Positive Incentives(a) (b) 20 $17 ($ in millions) 15 $11 10 $8 5 $6 $4 $0 $4 0 (c) 2017 2018 (d
Slide 26: Capital Expenditures
Capital Expenditures ($ in millions) (a) (b) $5,235 $5,313 $249 $1,078 $1,840 $3,606 $3,549 $3,586 $3,418 $1,235 $66 $14 $447 $400 $400 $823 $2,648 $2,721 $378 $447 $3,093 $3,224 $3,135 $3,186 $2,922 $2,595 $2,270 $2,274 2013 2014 2015 2016 2017 2018E 2019E 2020E (b) Actual Forecast CECONY & O&R Cle
Slide 27: Utility Capital Expenditures
Utility Capital Expenditures ($ in millions) $3,224 $3,186 $3,093 $3,135 Steam $2,922 $2,595 $2,270 $2,274 Gas Electric Depreciation 2013 2014 2015 2016 2017 2018E 2019E 2020E Actual Forecast(a) Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Depreciation Electr
Slide 28: 2018 Financing Plan and Activity
2018 Financing Plan and Activity Debt and Equity Financing Plan • Capital expenditures of $5,313 million (CECONY: $3,023 million, the CEBs: $1,840 million, O&R: $201 million, CET: $249 million) • Issue between $1,800 million and $2,400 million of long-term debt at the utilities • Issue up to $825 mi
Slide 29: Capital Structure – September 30, 2018
Capital Structure – September 30, 2018 ($ in millions) Consolidated Edison, Inc. Baa1(a) / BBB+ / BBB+ Debt $ 16,608 51% Equity 15,898 49 Total $ 32,506 100% CECONY O&R Parent and Other A3(a) / A- / A- Baa1(a)/ A- / A- Debt $ 13,662 51% Debt $ 733 52% Debt $2,213 49% Equity 12,869 49 Equity 690 48 E
Slide 30: Liquidity Profile
Liquidity Profile ($ in millions) 30
Slide 31: Utility Sales and Revenues – Third Quarter and Year-to-Date
Utility 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, 2018 (expressed as a percentage
Slide 32: Utility Sales and Revenues – Electric Third Quarter
Utility Sales and Revenues – Electric Third Quarter ($ in millions) Electric – 3rd Quarter Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 3,777 3,237 $988 $805 Commercial and Industrial 2,706 2,570 542 534 Retail choice customers
Slide 33: Utility Sales and Revenues – Electric Year-To-Date
Utility Sales and Revenues – Electric Year-To-Date ($ in millions) Electric – Year-to-Date Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 8,374 7,576 $2,211 $1,925 Commercial and Industrial 7,343 6,965 1,433 1,393 Retail choice cu
Slide 34: Utility Sales and Revenues – Gas Third Quarter
Utility Sales and Revenues – Gas Third Quarter ($ in millions) Gas – 3rd Quarter Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 4,469 4,731 $118 $104 General 4,191 4,292 54 49 Firm Transportation 9,211 8,766 71 67 Total Firm Sales and Transportati
Slide 35: Utility Sales and Revenues – Gas Year-To-Date
Utility Sales and Revenues – Gas Year-To-Date ($ in millions) Gas – Year-to-Date Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 43,731 39,814 $728 $613 General 25,894 23,427 298 255 Firm Transportation 61,628 53,952 448 390 Total Firm Sales and Tr
Slide 36: Utility Sales and Revenues – Steam Third Quarter and Year-To-Date
Utility Sales and Revenues – Steam Third Quarter and Year-To-Date ($ in millions) Steam – 3rd Quarter Millions of Pounds Revenues in Millions 2018 2017 2018 2017 Con Edison of New York General 12 13 $2 $2 Apartment House 781 748 16 15 Annual Power 2,711 2,439 45 42 Total Sales 3,504 3,200 $63 $59 St
Slide 37: List of Notes to 2018 Form 10Q Financial Statements
List of Notes to 2018 Form 10Q Financial Statements Page A – Summary of Significant Accounting Policies 19 – 22 B – Regulatory Matters 23 – 25 C – Capitalization 26 D – Short-Term Borrowing 26 E – Pension Benefits 26 – 27 F – Other Postretirement Benefits 27 – 28 G – Environmental Matters 28 – 30 H
Slide 38: Clean Energy Businesses Update: Sempra Solar Holdings Transaction
Clean Energy Businesses Update: Sempra Solar Holdings Transaction Consolidated Edison Development is purchasing 981 MW of operating renewable assets and related solar and energy storage development activities Transaction Overview Simplified Transaction Structure • Consolidated Edison Development, In
Slide 39: Sempra Solar Holdings Operating Assets
Sempra Solar Holdings Operating Assets Operating investments have a weighted average remaining PPA life of 19 years JV Assets Project State MW(b) COD Offtaker PPA Term Tax Equity Project Debt (a) Copper Mountain Solar 3 NV 128 2015 SCPPA 20 years — ü (a) Mesquite Solar 1 AZ 83 2012 PG&E 20 years — ü
Slide 40: CEBs' Pro Forma Portfolio of Renewable Assets
CEBs' Pro Forma Portfolio of Renewable Assets Acquired assets are co-located with existing CEBs assets with development opportunities in attractive growth markets 40
Slide 41: Sources and Uses of Funds in Transaction
Sources and Uses of Funds in Transaction • CEBs had consolidated non-recourse ($ in millions) project debt of $890 million as of September 30, 2018 Existing Existing Project Project • CEBs expect to consolidate $506 million Debt Debt of project debt associated with the JV Assets that is currently no
Slide 42: Accounting Considerations for Sempra Solar Holdings Acquisition
Accounting Considerations for Sempra Solar Holdings Acquisition There are two significant non-cash accounting effects that are a result of the acquisition: accounting resulting from the acquisition itself, and ongoing accounting for the tax equity partner’s interests in four projects Ongoing Partner
Slide 43: Forecasted GAAP Net Income from Sempra Solar Holdings Acquisition
Forecasted GAAP Net Income from Sempra Solar Holdings Acquisition(a) Assumes closing of acquisition and application of purchase accounting adjustment at December 31, 2018 $155 Purchase accounting adjustment – one-time gain, net of transaction costs and including NYS and CA tax apportionment Income f
Slide 44: Forecasted Return of Equity Used for Sempra Solar Holdings Acquisition
Forecasted Return of Equity Used for Sempra Solar Holdings Acquisition We expect the increase in our net cash flows over the next 10 years resulting from the acquired assets to return approximately 90% of our equity investment ~$100 million average increase in net (a) annual cash flows ~$30 million
Slide 45: CEBs' Utility Scale Pro Forma Portfolio
CEBs' Utility Scale Pro Forma Portfolio The renewable portfolio would nearly double with the purchase of Sempra Solar Holdings Geography (MW) Solar PV Asset Ownership (GW) Pro Forma (end 2017) Current Pro Forma Pro Forma Source: Company information and IHS EER (as of year-end 2017). Off-Takers (MW)
Slide 46: Investment Highlights
Investment Highlights • Forecasted returns expected to exceed regulatory return • Long-term, contracted cash flows with creditworthy counterparties • Efficiencies from operating co-owned and co-located assets • Familiarity with assets and markets of operation • Consistent with CEI’s strategy of grow