Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Q2 2019 Earnings Presentation
47 slides from Consolidated Edison's earnings presentation, Aug 1, 2019
Slide 1: August 2019 Company Update
August 2019 Company Update GconEdison
Slide 2: Available Information and Forward-Looking Statements
Available Information On August 1, 2019, Consolidated Edison, Inc. issued a press release reporting its second quarter 2019 earnings and filed with the Securities and Exchange Commission the company’s second quarter 2019 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Table of Contents
Table of Contents Page Organizational Structure and Plan 4–5 Dividend and Earnings Announcements 6 2Q 2019 Earnings 7 – 10 2Q 2019 Developments 11 – 12 CECONY Electric & Gas Rate Filings 13 – 18 Utilities' Rate Adjustments for Tax Cuts and Jobs Act of 2017 (TCJA) 19 – 20 2018 Sustainability Report H
Slide 4: Organizational Structure
Organizational Structure Market Cap(a): $29.1 billion Ratings(b): Baa1 / BBB+ / BBB+ Outlook (b): Stable / Stable / Stable Utilities Transmission Clean Energy Con Edison Con Edison Consolidated Clean Energy Orange and Transmission, Edison Businesses, Rockland Inc. Company of Inc. New York, Inc. Util
Slide 5: The Con Edison Plan
The Con Edison Plan Customer Focused Strategic Value Oriented Provide safe and Strengthen core utility Provide steady, reliable service delivery business predictable earnings Enhance the Pursue additional Maintain balance customer experience regulated growth sheet opportunities to add stability valu
Slide 6: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On July 18, 2019, the company issued a press release reporting that the company had declared a quarterly dividend of 74 cents a share on its common stock. • On August 1, 2019, the company issued a press release in which it confirmed its previous forecast of adju
Slide 7: 2Q 2019 Earnings
2Q 2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $0.46 $0.60 $152 $188 HLBV effects of the Clean Energy Businesses (pre-tax) 0.10 — 28 — Income taxes (a) (0.03) — (7) — HLBV effects of the Cl
Slide 8: Walk from 2Q 2018 EPS to 2Q 2019 EPS
Walk from 2Q 2018 EPS to 2Q 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.60 $0.61 $0 $0 $0 $0 $0.58 $(0.02) $(0.01) $0 $(0.02) $(0.01) $0.46 $(0.11) (a) (a) a. Includes parent company and consolidation adjustments. 8
Slide 9: 2Q 2019 vs. 2Q 2018 EPS Variances
2Q 2019 vs. 2Q 2018 EPS Variances – Three Months Ended Variation CECONY(a) Changes in rate plans $0.2 Reflects higher electric and gas net base revenues of $0.12 a share and $0.03 a share, respectively, due 3 primarily to electric and gas base rates increases in January 2019 under the company's rate
Slide 10: 2Q 2019 vs. 2Q 2018 EPS Reconciliation by Company
2Q 2019 vs. 2Q 2018 EPS Reconciliation by Company Three Months Ended June 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $0.46 $0.01 $(0.03) $0.04 $(0.02) $0.46 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.10 — — 0.10 Income taxes (a) — — (0.03) — — (0.03) HLBV
Slide 11: 2Q 2019 Developments
2Q 2019 Developments(a) CECONY & O&R • In May 2019, the New York State Public Service Commission (NYSPSC) staff submitted testimony in the NYSPSC proceeding in which CECONY requested an electric rate increase, effective January 2020. The NYSPSC staff testimony supports an electric rate increase of $
Slide 12: 2Q 2019 Developments (cont'd)
2Q 2019 Developments (cont'd)(a) CECONY & O&R • In May 2019, RECO filed a request with the New Jersey Board of Public Utilities for an electric rate increase of $19.9 million, effective February 2020. The filing reflected a return on common equity of 10.00 percent and a common equity ratio of 49.93
Slide 13: Summary of CECONY Electric & Gas Rate Filings
Summary of CECONY Electric & Gas Rate Filings(a) Rate Change and Capital Expenditures Electric Gas Case number 19-E-0065 Case number 19-G-0066 Rate Rate Capital Rate Rate Capital ($ millions) Change Base(b) Expenditure Change Base(b) Expenditure Rate Year 1: 2020 $470 $21,836 $2,322 $206 $7,193 $1,1
Slide 14: CECONY Electric & Gas Rate Filings: Electric Rate Drivers
CECONY Electric & Gas Rate Filings (cont'd) Key Drivers of Proposed 2020 Electric Rate Increase Note: 2020 amounts were proposed in a January 2019 filing. In June, CECONY filed an update to the request it filed in January 2019. 14
Slide 15: CECONY Electric & Gas Rate Filings: Gas Rate Drivers
CECONY Electric & Gas Rate Filings (cont'd) Key Drivers of Proposed 2020 Gas Rate Increase Note: 2020 amounts were proposed in a January 2019 filing. In June, CECONY filed an update to the request it filed in January 2019. 15
Slide 16: CECONY Electric Rate Case – Comparison of Filings
CECONY Electric Rate Case – Comparison of Filings (cont'd) ($ millions) 16
Slide 17: CECONY Gas Rate Case – Comparison of Filings
CECONY Gas Rate Case – Comparison of Filings (cont'd) ($ millions) 17
Slide 18: Comparison of Rate Changes
Comparison of Rate Changes (cont'd) ($ millions) 18
Slide 19: Utilities' Rate Adjustments for TCJA
Utilities' 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
Slide 20: Utilities' Rate Adjustments for TCJA (cont'd)
Utilities' 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 (Case 18-E-0067; 18-G-0068), is reflecting its TCJA net benefits as follows: – annual ongoing savings of $18 million – pass back of 2018 savings (
Slide 21: 2018 Sustainability Report Highlights
2018 Sustainability Report Highlights * The 49 percent decrease in Con Edison’s greenhouse gas emissions since 2005 reflects the emission reductions resulting from equipment and repair projects, including projects to reduce sulfur hexafluoride emissions, and increased use of natural gas at CECONY’s
Slide 22: YTD 2019 Earnings
YTD 2019 Earnings Net Income for Earnings per Share Common Stock ($ in Millions) 2019 2018 2019 2018 Reported Net Income for Common Stock and EPS – GAAP basis $1.77 $1.98 $576 $616 HLBV effects of the Clean Energy Businesses (pre-tax) 0.15 — 49 — Income taxes (a) (0.04) — (12) — HLBV effects of the
Slide 23: Walk from YTD 2018 EPS to YTD 2019 EPS
Walk from YTD 2018 EPS to YTD 2019 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.00 $0.00 $1.98 $0.01 $0.00 $1.99 $0.01 $0.01 $0.00 $1.96 $0.01 $1.77 $(0.05) $(0.23) (a) (a) a. Includes parent company and consolidation adjustments. 23
Slide 24: YTD 2019 vs. YTD 2018 EPS Variances
YTD 2019 vs. YTD 2018 EPS Variances – Six Months Ended Variation CECONY(a) Changes in rate plans $ 0.48 Reflects higher electric and gas net base revenues of $0.24 a share and $0.10 a share, respectively, due primarily to electric and gas base rates increases in January 2019 under the company's rate
Slide 25: YTD 2019 vs. YTD 2018 EPS Reconciliation by Company
YTD 2019 vs. YTD 2018 EPS Reconciliation by Company Six months ended June 30, 2019 CECONY O&R CEBs CET Other(c) Total Reported EPS – GAAP basis $1.73 $0.11 $(0.13) $0.08 $(0.02) $1.77 HLBV effects of the Clean Energy Businesses (pre-tax) — — 0.15 — — 0.15 Income taxes (a) — — (0.04) — — (0.04) HLBV
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, 2015 2016 2017 2018(d) 2019(a)(d) Reported EPS – GAAP basis $4.07 $4.15 $4.97 $4.43 $4.23 Income tax effect of the TCJA — — (0.85) 0.14 0.14 HLBV effects of the Clean Energy Businesses (pre-tax)
Slide 27: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and $165 YTD Assessments (b) Health Care/ Other Employee $222 YTD Benefits $776 YTD Pension/ OPEBs $80 YTD $67 YTD (c) (c) (c) (c) a. Other Expenses generally are either reconciled through
Slide 28: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of June 30, 2019) CECONY ($ in millions) Electric NY $20,674 Gas NY 5,980 Steam NY 1,436 Total CECONY $28,090 O&R ($ in millions) O&R Electric NY $817 O&R Gas NY 437 RECO NJ 241 Total O&R $1,495 Total Rate Base $29,585 a. Average rate base for 12 months end
Slide 29: Average Rate Base Balances
Average Rate Base Balances ($ in millions) $34,336 $32,415 $30,238 $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 $ 20,850 $ 22,365 $ 23,478 CECONY Gas 3,593 4,023 4,267 4,723 5,58
Slide 30: Regulated Utilities' Rates of Return and Equity Ratios
Regulated Utilities' Rates of Return and Equity Ratios (12 Months ended June 30, 2019) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.4% Gas 9.0 9.2 Steam 9.3 9.4 Overall – CECONY 9.0(a) 9.4 CECONY Equity Ratio 48.0% 47.2% O&R Electric 9.0% 9.8% Gas 9.0 6.3 RECO 9.6 6.1 Overall – O&R 9.1(a) 8
Slide 31: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms ($ in millions) (e) Positive Incentives(a) (b) ($ in millions) (c) (d) a. In 2017 and 2018, CECONY achieved positive incentives of $12 million and $11 million, respectively, one third of which, pursuant to the acco
Slide 32: Capital Expenditures
Capital Expenditures ($ in millions) (a) (b) Actual Forecast(c) a. 2016 includes Stagecoach JV investment of $974 million. b. 2018 includes Con Edison Development subsidiary’s purchase of Sempra Solar Holdings, LLC. c. 2018 Form 10-K, page 33. 32
Slide 33: Utilities' Capital Expenditures
Utilities' Capital Expenditures ($ 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 1,1
Slide 34: 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 $2.2 billion of long-term debt, mostly at the utilities • Issue additional debt secured by the CEBs' renew
Slide 35: Capital Structure – June 30, 2019
Capital Structure – June 30, 2019 ($ in millions) Consolidated Edison, Inc. Baa1 / BBB+ / BBB+ Debt $ 19,468 52% Equity 17,865 48 Total $ 37,333 100% CECONY O&R Parent and Other A3 / A- / A- Baa1 / A- / A- Debt $ 14,373 51% Debt $ 754 51% Debt $ 4,341 57% Equity 13,868 49 Equity 737 49 Equity 3,260
Slide 36: Commercial Paper and Letters of Credit
Commercial Paper and Letters of Credit ($ in millions) 36
Slide 37: Utilities' Sales and Revenues – Second Quarter and Year-to-Date
Utilities' Sales and Revenues – Second 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 six months ended June 30, 2019 (expressed as a percentage o
Slide 38: Utilities' Sales and Revenues – Electric Second Quarter
Utilities' Sales and Revenues – Electric Second Quarter ($ in millions) Electric – 2nd Quarter Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 2,101 2,187 $541 $601 Commercial and Industrial 2,283 2,222 429 438 Retail choice custom
Slide 39: Utilities' Sales and Revenues – Electric Year-to-Date
Utilities' Sales and Revenues – Electric Year-to-Date ($ in millions) Electric – Year-to-Date Millions of Kilowatt-hours Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential and Religious 4,516 4,597 $1,137 $1,225 Commercial and Industrial 4,743 4,637 848 890 Retail choice cus
Slide 40: Utilities' Sales and Revenues – Gas Second Quarter
Utilities' Sales and Revenues – Gas Second Quarter ($ in millions) Gas – 2nd Quarter Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 9,816 11,973 $183 $217 General 6,550 7,252 76 90 Firm Transportation 16,037 17,627 120 118 Total Firm Sales and Tra
Slide 41: Utilities' Sales and Revenues – Gas Year-to-Date
Utilities' Sales and Revenues – Gas Year-to-Date ($ in millions) Gas – Year-to-Date Thousands of Dekatherms Revenues in Millions 2019 2018 2019 2018 Con Edison of New York Residential 36,940 39,272 $621 $610 General 20,983 21,693 254 244 Firm Transportation 51,518 52,417 388 378 Total Firm Sales and
Slide 42: Utilities' Sales and Revenues – Steam
Utilities' Sales and Revenues – Steam Second Quarter and Year-to-Date ($ in millions) Steam – 2nd Quarter Millions of Pounds Revenues in Millions 2019 2018 2019 2018 Con Edison of New York General 60 92 $4 $5 Apartment House 1,033 1,177 25 29 Annual Power 2,286 2,655 60 72 Total Sales 3,379 3,924 $8
Slide 43: Income Statement – 2019 Second Quarter
Income Statement – 2019 Second Quarter ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $2,331 $179 $233 $1 $— $2,744 Depreciation and amortization 339 21 58 — — 418 Other operating expenses 1,616 145 103 3 1 1,868 Total operating expenses 1,955 166 161 3 1 2,286 Operating
Slide 44: Income Statement – 2019 Year-to-Date
Income Statement – 2019 Year-to-Date ($ in millions) CECONY O&R CEBs CET Other(a) Total Total operating revenues $5,371 $437 $450 $2 $(2) $6,258 Depreciation and amortization 673 42 116 — — 831 Other operating expenses 3,597 328 251 5 2 4,183 Total operating expenses 4,270 370 367 5 2 5,014 Operatin
Slide 45: Balance Sheet – As of June 30, 2019
Balance Sheet – As of June 30, 2019 ($ in millions) CECONY O&R CEBs CET Other(a) Total ASSETS Current assets $3,143 $218 $407 $— $(61) $3,707 Investments 422 26 — 1,458 (7) 1,899 Net plant 36,348 2,269 4,111 17 — 42,745 Other noncurrent assets 4,562 368 1,901 14 406 7,251 Total assets $44,475 $2,881
Slide 46: Statement of Cash Flows – 2019 Year-to-Date
Statement of Cash Flows – 2019 Year-to-Date ($ in millions) CECONY O&R CEBs CET Other(a) Total Net cash flows from/(used in) operating activities $1,291 $124 $154 $82 $(113) $1,538 Net cash flows from/(used in) investing activities (1,591) (116) (92) (78) 1 (1,876) Net cash flows from/(used in) fina
Slide 47: List of Notes to 2019 Second Quarter Form 10-Q Financial Statements
List of Notes to 2019 Second Quarter Form 10-Q Financial Statements Page A – Summary of Significant Accounting Policies and Other Matters 19 – 23 B – Regulatory Matters 23 – 26 C – Capitalization 27 – 28 D – Short-Term Borrowing 28 E – Pension Benefits 28 – 29 F – Other Postretirement Benefits 29 G