Edison International · NYSE:EIX
Edison International — Investor Presentation (March 2019)
49 slides from Edison International's investor presentation, Mar 1, 2019
Slide 1: Business Update March 2019
Exhibit 99.2 Business Update March 2019
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 Page October 2018 Business Update EIX Shareholder Value 3 SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U Wildfire Mitigation/Prevention and Legislation Summary 7-8 N,U California’s GHG Emissions Overview, SCE’s Clean Power and Elect
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 • 9.8% average annual rate base • Lead transformation of the electric growth through 2020 at request level power industry • S
Slide 5: SCE Highlights
SCE Highlights One of the nation’s largest electric utilities • 15 million residents in service territory • 5 million customer accounts • 50,000 square-mile service area Significant infrastructure investment • 1.4 million power poles • 724,000 transformers • 118,000 miles of distribution/transmissio
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 Reliability rates achieved and then maintained • Today – Grid modernization capital expenditure
Slide 7: 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 8: Wildfire Mitigation and Prevention Summary
Wildfire Mitigation and Prevention Summary • SCE’s comprehensive risk mitigation program focuses on three key areas: Grid hardening: Significant investment to prevent ignitions including covered conductor, non- expulsion fuses, and remote-controlled automatic reclosers Increased situational awar
Slide 9: Wildfire Legislation Update
Wildfire Legislation Update Summary of Senate Bill 901 Key Components Wildfire Mitigation • Requires annual detailed wildfire mitigation plans with objectives, preventive strategies, costs, metrics Plans and specific details regarding de-energization protocols, vegetation management and inspections
Slide 10: California's GHG Emissions Overview
California’s GHG Emissions Overview • On October 7, 2015, Governor Brown signed SB 350, which requires a doubling of energy efficiency in existing buildings for California by 2030 • On September 8, 2016, Governor Brown signed SB 32, which requires statewide GHG emissions to be reduced to 40% below t
Slide 11: SCE's Clean Power and Electrification Pathway
SCE’s Clean Power and Electrification Pathway Electric Power Company Roles • Emissions targets met through • Accelerate electrification of the • Doubling of energy efficiency in optimization of renewables transportation sector existing buildings • Implementation of upcoming At least 7 million ligh
Slide 12: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) $29.6 $27.8 $25.9 $24.6 $23.3 $21.1 2013 2014 2015 2016 2017 2018 Core $4.22 EPS $3.88 $4.68 $4.20 $4.58 $4.42 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financ
Slide 13: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) Traditional Capital Spending: Distribution Transmission Generation $9.2 Billion 2019-2020 Capital Program Grid Modernization Capital Spending: • Capital expenditure forecast incorporates GRC, FERC and Grid Modernization 1 non-GRC CPUC spending $4.7 GRC
Slide 14: SCE Rate Base Forecast – Request Level
SCE Rate Base Forecast – Request Level ($ billions) 3-year CAGR of 9.8% Traditional Grid Modernization CPUC $34.7 • Rate base based on request levels from $31.8 2018 GRC Tax Reform February Update $29.1 FERC $26.2 • FERC rate base, including Construction Work in Progress (CWIP), is approximately 19%
Slide 15: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case Set CPUC base revenue requirement, capital Updated Testimony filed on February 16, 2018; awaiting proposed (A. 16-09-001) expenditures and rate base for 2018-2020 decision Grid Safety and Res
Slide 16: 2018 SCE General Rate Case (GRC)
2018 SCE General Rate Case (GRC) • 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital an
Slide 17: CPUC Cost of Capital
CPUC Cost of Capital CPUC Adjustment Mechanism 7 Moody’s Baa Utility Index Spot Rate Moving Average (10/1/18 – 02/27/19) = 4.91% 100 basis point +/- Deadband 6 5 Rate Rate (%) 4 Starting Value – 5.00% ROE fixed at 10.45% ROE fixed at 10.30% for 2017, independent for 2018, independent of trigger mech
Slide 18: 2019 Financial Assumptions
2019 Financial Assumptions ($ billions) SCE Capital Expenditures SCE Weighted Average Rate Base Distribution $3.6 Traditional $31.1 Transmission 0.7 Grid Mod 0.7 Generation 0.2 2019 Request $31.8 2019 Plan $4.5 • Based on 2019 budgeted expenditures at SCE • FERC comprises about 20% of total rate bas
Slide 19: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing 43% of total 2019 – 2020 Capital Spending Forecast distribution capital spend, but not yet reaching for Distribution including Grid Modernization1,2 equili
Slide 20: SCE Transportation Electrification Proposals
SCE Transportation Electrification (TE) Proposals • Proposals build on SCE’s Clean Power and Electrification Pathway 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 prog
Slide 21: Energy Storage
Energy Storage CPUC Energy Storage Program Requirements: SCE 2018 Storage Portfolio • Storage Rulemaking (R.10-12-007) established 1,325 MW target for IOUs by 2024 (580 MW SCE share; spread as biennial targets during 250 2014-20); ownership allowed up to 290 MW for SCE • Flexibility to transfer acro
Slide 22: 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, 2018) Date West of Devers1,2 $848 million $607 million 2021 Mesa Substation1 $646 million $378 million 2022 Alberhill System3 $486 million $44
Slide 23: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and reliability (SAIDI, SAIFI, • Customer service MAIFI) • Cost efficiency • Customer satisfaction Optimize calculation based on internal
Slide 24: Responding to Industry Change
Responding to Industry Change Long-Term Industry Trends Strategy • The technology landscape is evolving at SCE Strategy an unprecedented pace, with innovation • Clean the power system by accelerating driving advances in cost and capabilities of the de-carbonization of electricity supply distributed
Slide 25: Edison Energy Summary
Edison Energy Summary Edison Energy • Energy is a significant risk large commercial and industrial customers face. Edison Energy creates competitive advantage for market leaders by Renewables & Supply quantifying this risk and designing the portfolio solution to protect shareholder value threatened
Slide 26: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Fifteen Consecutive Years of Dividend Growth 1 $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 Target dividend growth within target payout ra
Slide 27: Appendix
Appendix March 1, 2019 Energy for What's Ahead 26
Slide 28: 2018 SCE GRC Overview
2018 SCE GRC Items Carried Over New Items from 2018 Previous Intervenor from 2015 GRC GRC Testimony • Requests continuation of Tax • Capital expenditures of $1.8 • ORA - Proposed no Grid Accounting Memorandum billion for grid modernization Modernization capital Account (TAMA) adjusting capital to su
Slide 29: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.4 $4.0 $3.9 $3.8 $3.5 2014 2015 2016 2017 2018 March 1, 2019 28
Slide 30: Capital Expenditure/Rate Base Detailed Forecast
Capital Expenditure/Rate Base Detailed Forecast ($ in billions) Detailed Capital Expenditures – 2017-2020 2017 2018 2019 2020 Total (Actual) (Actual) (Plan) (Request) 2019-2020 Distribution1,2 $3.1 $3.5 $3.6 $3.1 $6.7 Transmission1 0.5 0.7 0.7 0.8 1.5 Generation1 0.2 0.2 0.2 0.2 0.4 Total Traditiona
Slide 31: Credit Ratings Summary
Credit Ratings Summary S&P Moody’s Fitch Date of Report January 21, 2019 January 24, 2019 January 22, 2019 Edison International Corporate / Outlook BBB/Negative Watch Baa1/Negative Watch BBB+/Negative Senior Unsecured BBB- Baa1 BBB+ Commercial Paper A-2 P-2 F2 Southern California Edison Corporate /
Slide 32: Edison International's ESG Strategy
Edison International’s ESG Strategy “At Edison International, we are leading the transformation of the electric power industry toward a clean energy future by focusing on opportunities in clean energy, efficient electrification, the grid of the future, and customer choice. As we pursue this vision,
Slide 33: 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 plants power grid • Voltage centrally maintained • System
Slide 34: Grid Modernization Highlights
Grid Modernization Highlights Devices that provide Devices that provide stable voltage and power quality more flexibility during outage events Future circuit designs integrate State of the art Distributed operating tools Energy Resources for utility and increase operators and flexibility engineers S
Slide 35: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2014 2015 2016 2017 2018 Residential 30,027 30,093 29,579 30,221 29,865 Commercial 42,004 42,396 42,189 42,514 42,369 Industrial 8,392 7,623 7,162 6,659 6,786 Public authorities 4,975 4,795 4,715 4,711 4,510 Agricultural and other 2,01
Slide 36: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2018 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond 4,869 7.0 Fuel & Purchased Power Charge (44%) Distribution – poles, wires, substations, service 4,362 6.2 centers; Edison SmartConnect® Distribution Generation – owned generat
Slide 37: 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 CAGR % Delta NEIL insurance benefits, 2) lower fuel & 28-yr 20-yr 10-yr SCE 16.0¢ -- purchased power costs, and 3) a lower 2015 (‘90-’18)
Slide 38: Community Choice Aggregator (CCA) Overview
Community Choice Aggregator (CCA) Overview • Assembly Bill 1171 permits cities and counties, and Joint Powers Agencies (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 on
Slide 39: 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 40: Impacts of Abundant Solar Energy (Duck Curve)
Impacts of Abundant Solar Energy (Duck Curve) New Time-of-Use (TOU) Periods (CPUC approved SCE’s proposal on July 12, 2018) • On March 1, 2019, SCE is changing its basic TOU pricing period definition for the first time in over 30 years • Abundant mid-day renewable energy lowers prices from 8am-4pm •
Slide 41: SCE Net Energy Metering
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (12/18) Installations and MW Installed • 294,388 combined residential and non-residential projects – 2,494 MW installed 7000 40 • 99.8 % solar projects • 287,620 residential (6.6% of all residential customers) – 1,562 MW •
Slide 42: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2017-18 Average Residential Rates (¢/kWh) KeyKey Factors Factors 26% 16.3 ₵ Higher • SCE’s residential rates are above national 12.9 ₵ average due, in part, to a cleaner fuel mix, high cost of living, and lower system load factor • SCE’s residential customer usage is l
Slide 43: Fourth Quarter Earnings Summary
Fourth Quarter Earnings Summary Q4 Q4 Variance Key SCE EPS Drivers3 2018 2017 Revenue4,5,6 Basic Earnings Per Share (EPS)1 $ (0.06) - CPUC revenue (0.04) SCE $ (4.38) $ (0.33) $ (4.05) - FERC and other operating revenue (0.02) EIX Parent & Other (0.11) (1.34) 1.23 Higher O&M (0.03) Higher depreciati
Slide 44: Full Year 2018 Earnings Summary
Full Year 2018 Earnings Summary 2018 2017 Variance Key SCE EPS Drivers3 4,5,6 Basic Earnings Per Share (EPS)1 Revenue $ (0.02) - CPUC revenue (0.02) SCE (0.95) $ 3.10 $ (4.05) Higher O&M (0.13) EIX Parent & Other (0.45) (1.37) 0.92 Higher depreciation (0.01) Higher net financing costs (0.12) Discont
Slide 45: SCE Wildfire-Related Charge Summary
SCE Wildfire-Related Charge Summary ($ millions) For the year ended December 31, 2018, the income statements include the estimated losses (established at the lower end of the reasonably estimated range of expected losses), net of expected recoveries from insurance and FERC customers, related to the
Slide 46: 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 47: 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 2018 2017 2018 2017 SCE ($1,429) ($109) ($310) $1,012 EIX Parent & Other (35) (436) (147) (447) Discontinued operations1 34 — 34 — Basic Earning
Slide 48: 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 2018 2017 Basic EPS ($1.30) $1.73 Non-Core Items SCE Wildfire-related claims, net of recoverie
Slide 49: 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 (March 2019) on 6ix