Edison International · NYSE:EIX
Edison International — Corporate Update (September 2013)
48 slides from Edison International's corporate update, Sep 23, 2013
Slide 1: Revised Business Update
Leading the Way in Electricity SM Revised Business Update September 2013 September 23, 2013 0 EDISON INTERNATIONAL®
Slide 2: Forward-Looking Statements
Leading the Way in Electricity SM Forward-Looking Statements 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 (SONGS), EME bankruptcy, and othe
Slide 3: SCE Highlights
Leading the Way in Electricity SM SCE Highlights • 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 investments: 1.4 million power poles 700
Slide 4: SCE Decoupled Regulatory Model
Leading the Way in Electricity SM SCE Decoupled Regulatory Model Regulatory Model Elements Key Benefits Decoupling of Regulated • SCE earnings are not affected by changes in retail Revenues from Sales electricity sales • Differences between amounts collected and authorized levels are either billed o
Slide 5: SCE Customer and Revenue Profile
Leading the Way in Electricity SM SCE Customer and Revenue Profile 2012 Sales by Class of Service 2012 Revenue Requirement by Source Total Sales (millions kWh): 88,215 Agricultural, FERC Resale & Other Other 7% 4% Public CPUC Residential Authorities 12% 35% 6% Fuel & Industrial Purchased 9% Power 33
Slide 6: SCE Customer Demand Trends
Leading the Way in Electricity SM SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2012 2011 2010 2009 2008 Residential 30,563 29,631 29,034 30,063 30,745 Commercial 40,541 39,622 39,318 40,076 41,978 Industrial 8,504 8,490 8,507 8,524 9,658 Public authorities 5,196 5,206 5,336 5,687
Slide 7: SCE Operational Excellence Framework
Leading the Way in Electricity SM SCE Operational Excellence Framework VISION MISSION VALUES To be an industry pacesetter Safely delivering reliable, affordable Integrity, Excellence, Respect, providing safe, reliable, and electricity to our customers. Continuous Improvement, affordable electric ser
Slide 8: SCE 2015 CPUC General Rate Case
Leading the Way in Electricity SM SCE 2015 CPUC General Rate Case • Notice of Intent (NOI) submitted to the CPUC’s Division of Ratepayer Advocates (DRA) on July 15, 2013 • Request sets base revenue requirement for 2015 – 2017 Includes operating costs and CPUC jurisdictional capital Excludes fuel
Slide 9: CPUC Cost of Capital
Leading the Way in Electricity SM CPUC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/2012 – 7/1/2013) = 4.65%) 100 basis point +/- Deadband 6 Rate (%) 5 Starting Value – 5.00% 4 3 Oct-12 Oct-13 Oct-14 Oct-15 • 10.45% Return on Equity (ROE) and a
Slide 10: 2012 FERC Formula Rate Settlement
Leading the Way in Electricity SM 2012 FERC Formula Rate Settlement • August 2011 – FERC accepted SCE’s formula rates subject to refund and settlement • August 2013 – SCE filed settlement for rates retroactive to January 1, 2012 and interim rate reduction request effective October 1, 2013 • 10.45% s
Slide 11: SCE Historical Capital Expenditures
Leading the Way in Electricity SM SCE Historical Capital Expenditures ($ billions) $3.8 $3.9 $3.9 $2.9 $2.4 $2.2 2007 2008 2009 2010 2011 2012 September 23, 2013 10 EDISON INTERNATIONAL®
Slide 12: SCE Historical Rate Base and Core Earnings
Leading the Way in Electricity SM SCE Historical Rate Base and Core Earnings ($ billions) 2007 – 2012 CAGR Rate Base 11% $21.0 Core Earnings 15% $18.8 $16.8 $15.0 $12.5 $13.1 2007 2008 2009 2010 2011 2012 Core Earnings $2.07 $2.25 $2.68 $3.01 $3.33 $4.10 Note: Recorded rate base, year-end basis. See
Slide 13: Capital Expenditures Forecast
Leading the Way in Electricity SM Capital Expenditures Forecast ($ billions) $17.8 – $20.3 billion forecasted capital program 2013 – 2017 Distribution Transmission Generation • Capital expenditures plateau at $4.2 $4.2 $4.0 $4.0 $3.9 approximately $4 billion per year • CPUC GRC requests additional i
Slide 14: Rate Base Forecast
Leading the Way in Electricity SM Rate Base Forecast ($ billions) $29.1 CAGR 7 – 9% projected $27.1 rate base 2013 – 2017 $24.7 • Driven by infrastructure replacement, reliability $22.4 investments, Smart and public policy requirements Grid $20.5 • FERC rate base includes CWIP and is approximately 2
Slide 15: SCE Large Transmission Projects
Leading the Way in Electricity SM SCE Large Transmission Projects ($ millions) Project Total Project In Service FERC 2013 – 2017 Name Costs1 Date Incentives Forecast Status2 • Total project costs and in service date include Chino Hills undergrounding and exclude FAA Petition For 125 bps Tehachapi 1-
Slide 16: SCE Distribution Program
Leading the Way in Electricity SM 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 infrastructure replacement over 2012 GRC 2015 – 2017 Requested GRC
Slide 17: EIX Dividend Growth
Leading the Way in Electricity SM EIX Dividend Growth $3.50 Guidance Midpoint 2007 – 2012 CAGR 2013 $1.35 (39%) SCE Core EPS 15% $4.10 2012 EIX Dividend 2% $1.30 (32%) $3.33 2011 $1.28 (38%) • EIX targets paying out 45 – 55% of SCE earnings $3.01 2010 $1.26 (42%) • Dividend growth rate slowed to hel
Slide 18: 2013 Core and Basic Earnings Guidance
Leading the Way in Electricity SM 2013 Core and Basic Earnings Guidance SONGS Guidance: • $(0.15) per share from removal of $1.2 billion rate base effective in June pending regulatory treatment of return on investment 2013 Earnings 2013 Earnings Guidance as of Guidance as of • $(0.03) per share from
Slide 19: Creating Shareholder Value
Leading the Way in Electricity SM Creating Shareholder Value Create Sustainable Position for Resolve Earnings and Transformative Uncertainties Dividend Growth Sector Change What We’ve Done • SCE 2012 GRC • 5-year rate base CAGR of 11% • Leadership and development • SCE 2013 cost of capital (2007 – 2
Slide 20: EME Bankruptcy
Leading the Way in Electricity SM EME Bankruptcy • December 2012, EME and certain of its wholly-owned subsidiaries filed voluntary petitions for Chapter 11 bankruptcy • EIX recorded full impairment of EME in 2012 and no longer consolidates EME earnings and losses • July 2013, Transaction Support Agr
Slide 21: Updates Since Our Last Presentation
Leading the Way in Electricity SM Updates Since Our Last Presentation • EME Bankruptcy – new slide (p. 19) • SONGS Regulatory – CPUC OII Testimony (p. 25) • Legislative Rate Reform – AB327 – new slide (p. 34) • SCE Energy Efficiency Programs (p. 39) September 23, 2013 20 EDISON INTERNATIONAL®
Slide 22: Appendix – SONGS
Leading the Way in Electricity SM Appendix – SONGS September 23, 2013 21 EDISON INTERNATIONAL®
Slide 23: SONGS – Supplemental Data
Leading the Way in Electricity SM SONGS – Supplemental Data ($ millions) Since (SCE Share as of June 30, 2013) 1/1/2012 Revenue Requirement Collected1 $860 Steam Generator Replacement (SGRP) – Approved2 $665 SGRP Total – Incurred $602 Incremental Inspection & Repair Costs $115 Severance – Shut Down3
Slide 24: SONGS – Asset Impairment
Leading the Way in Electricity SM SONGS – Asset Impairment (As of May 31, 2013 – $ millions) Revenue Subject to Refund Net Investment in SONGS Since Since 1/1/12 11/1/12 Net investment as of May 31, 2013 $2,096 Authorized revenues $804 $262 Replacement power $670 $329 Exposure to refunds for amounts
Slide 25: SONGS Regulatory – CPUC OII Phases
Leading the Way in Electricity SM SONGS Regulatory – CPUC OII Phases • October 2012, CPUC issued Order Instituting Investigation for SONGS outages (I.12-10-013) Consolidates all SONGS proceedings to determine appropriate cost recovery – steam generator project, market power, capital expenditures,
Slide 26: SONGS Regulatory – CPUC OII Testimony
Leading the Way in Electricity SM SONGS Regulatory – CPUC OII Testimony • August 2013, SCE Phase 2 testimony requested return on 2013 investment1: $425 million used and useful, materials and supplies – 7.90% through December 2017 (currently authorized full rate of return); 5.54% through 2020 (weig
Slide 27: SONGS – Recovery Examples
Leading the Way in Electricity SM SONGS – Recovery Examples Partial Return of Return on Docket# Owner & Project Investment 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 Legacy Meters D.11-09-017 Golden State Water – Hill
Slide 28: SONGS Third-Party Recovery – MHI Warranty
Leading the Way in Electricity SM SONGS Third-Party Recovery – MHI Warranty Warranty Summary Notice of Dispute • 20-year warranty: • July 2013, Notice of Dispute submitted Repair or replace defective items to MHI Specified damages for certain repairs • Exceptions to damage limitations are argued
Slide 29: SONGS Third-Party Recovery – NEIL Insurance
Leading the Way in Electricity SM SONGS Third-Party Recovery – NEIL Insurance • Property damage and outage insurance through Nuclear Electric Insurance Limited (“NEIL”) Property Damage Policies – $2.5 million deductible; $2.75 billion liability limit Outage Policy – weekly indemnity up to $3.5 m
Slide 30: SONGS – Decommissioning
Leading the Way in Electricity SM SONGS – Decommissioning Decommissioning Trusts • Decommissioning costs recovered in rates approved by CPUC in triennial proceeding • December 2012, A.12-12-013 Joint Filing with SDG&E submitted • July 2013, updated early retirement scenario total decommissioning cos
Slide 31: SCE System Reliability
Leading the Way in Electricity SM SCE System Reliability • Short-term SONGS closure solutions Transmission – 220 kV Barre-Ellis reconfiguration Voltage support – Huntington Beach 3 and 4 synchronous condensers Substations – Santiago, Viejo, Johanna capacitor bank upgrades Generation – El Seg
Slide 32: Appendix – Regulatory
Leading the Way in Electricity SM Appendix – Regulatory September 23, 2013 31 EDISON INTERNATIONAL®
Slide 33: SCE Rates and Bills Comparison
Leading the Way in Electricity SM SCE Rates and Bills Comparison 2012 Average Residential Rates Key Factors (¢/kWh) 16.1¢ • SCE’s residential rates are above national average due, in part, to a cleaner fuel mix – 12.3¢ cost for renewables are higher than high 31% carbon sources Higher • Average mont
Slide 34: Distributed Generation
Leading the Way in Electricity SM 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 transmission facilities Public policy support EIX is focu
Slide 35: Legislative Rate Reform – AB 327
Leading the Way in Electricity SM Legislative Rate Reform – AB 327 2013 SCE Residential Rate Structure1,2,3 September 2013, Assembly Bill 327 (Perea) provides the following changes to rate structure 35 31.1¢ • Rate Reform 30 Tier 4 Removes tier restrictions on residential rates 27.1¢ Allows fixe
Slide 36: SCE Residential Net Metering Rate Structure
Leading the Way in Electricity SM SCE Residential Net Metering Rate Structure Solar Subsidies1,2 • Residential solar customer generation offsets total retail rate 30 20.1¢ 28.3¢ • Average retail rate of 28.3¢/kWh vs. actual generation cost of 8.2¢/kWh 25 • Resulting 20.1¢/kWh is a subsidy funded 20
Slide 37: California Climate Change Policy
Leading the Way in Electricity SM California Climate Change Policy • Assembly Bill 32 (2006) – reduces State greenhouse gas (GHG) emissions to 1990 levels by 2020 (~16% reduction) AB32 Emissions • Cap and trade program basics: Reduction Programs State-wide cap in 2013 – decreases over time Compl
Slide 38: California Renewables Policy
Leading the Way in Electricity SM California Renewables Policy • On April 12, 2011, Governor Brown signed Actual 2012 Renewable Resources: SB X 1 2, which codifies a 33% 20% of SCE’s portfolio Renewables Portfolio Standard (RPS) for California by 2020 Allows use of Renewable Energy Credits Small H
Slide 39: 2012 SCE Energy Portfolio
Leading the Way in Electricity SM 2012 SCE Energy Portfolio 1 (Billion kWh – Retail Sales) 75.6 30.8 Market Source 2 Coal Natural Gas Nuclear Low Carbon Large Hydro 52% Wind 5.4 41% Solar 15.8 Small Hydro 7% Geothermal Biomass & Waste Carbon Neutral 31% 5.3 21% 3.1 Renewables 7% 6.2 20% 4% 1.0 0.6 6
Slide 40: SCE Energy Efficiency Programs
Leading the Way in Electricity SM SCE Energy Efficiency Programs Energy efficiency programs updated for 2013 – 2014 Annual kWh Savings (billions) • SCE is a national leader 2012 energy savings = 1.8% of retail sales1 1.7 1.6 • 2013 budget of $347 million2 – all balancing account based • Target 0.9
Slide 41: Appendix – Financial
Leading the Way in Electricity SM Appendix – Financial September 23, 2013 40 EDISON INTERNATIONAL®
Slide 42: Second Quarter Earnings Summary
Leading the Way in Electricity SM Second Quarter Earnings Summary Q2 2013 Q2 2012 Variance SCE Key Core Earnings Drivers Core EPS1 Impact of delay in 2012 GRC $0.16 SCE $0.84 $0.59 $0.25 Higher revenue 0.08 EIX Parent & Other (0.05) (0.03) (0.02) Increase in 2013 revenues Rate base growth Core EPS1
Slide 43: Year-to-Date Earnings Summary
Leading the Way in Electricity SM Year-to-Date Earnings Summary YTD YTD SCE Key Core Earnings Drivers 2013 2012 Variance Core EPS1 Impact of delay in 2012 GRC $0.30 SONGS refueling revenue (0.07) SCE $1.63 $1.14 $0.49 Higher revenue 0.13 EIX Parent & Other (0.06) (0.04) (0.02) Increase in 2013 reven
Slide 44: SCE Results of Operations
Leading the Way in Electricity SM SCE Results of Operations ($ millions) • Utility earning activities – revenue authorized by CPUC and FERC to provide reasonable cost recovery and return on investment • Utility cost-recovery activities – CPUC- and FERC-authorized balancing accounts to recover specif
Slide 45: SCE Core EPS Non-GAAP Reconciliations
Leading the Way in Electricity SM SCE Core EPS Non-GAAP Reconciliations Reconciliation of SCE Core Earnings Per Share to SCE Basic Earnings Per Share Earnings Per Share Attributable to SCE 2007 2008 2009 2010 2011 2012 CAGR Core EPS $2.07 $2.25 $2.68 $3.01 $3.33 $4.10 15% Non-Core Items Tax settleme
Slide 46: Non-GAAP Reconciliations
Leading the Way in Electricity SM Non-GAAP Reconciliations ($ millions) Reconciliation of EIX Core Earnings to EIX GAAP Earnings Earnings Attributable to Q2 Q2 YTD YTD Edison International 2013 2012 2013 2012 Core Earnings SCE $274 $191 $530 $373 EIX Parent & Other (15) (8) (20) (13) Core Earnings $
Slide 47: Quarterly Earnings Per Share Highlights
Leading the Way in Electricity SM Quarterly Earnings Per Share Highlights 2011 Q1 Q2 Q3 Q4 2011 SCE $0.68 $0.65 $1.25 $0.76 $3.33 EIX – Parent and Other (0.03) (0.02) (0.01) 0.03 (0.02) Core EPS $0.65 $0.63 $1.24 $0.79 $3.31 Non-core items 0.02 0.01 (0.03) (0.11) (0.11) EIX Parent and Other – Discon
Slide 48: Use of Non-GAAP Financial Measures
Leading the Way in Electricity SM 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. Co
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