Edison International · NYSE:EIX
Edison International — Q1 2020 Earnings Presentation
57 slides from Edison International's earnings presentation, May 1, 2020
Slide 1: Business Update
Exhibit 99.1 Business Update May 1, 2020
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 February 2020 Page Business Update EIX Shareholder Value 3 EIX Summary, SCE Regulatory Framework, SCE Long-Term Growth Drivers 4-6 U SCE Capital Expenditures and Rate Base Forecast 7-9 Commitment to Sustainability: California Mandates, SCE’s Pathway 2045
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 • 7-8% average annual rate base growth • Lead transformation of the electric power through 2023 industry • SCE earnings expec
Slide 5: About Edison International
About Edison International Vision is to lead the transformation of the electric power industry, focusing on opportunities in clean energy, efficient electrification, grid of the future, and customer choice About Southern California Edison One of the nation’s largest electric utilities •15 million re
Slide 6: 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 7: 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 rates Replacement achieved and then maintained Utility investment and operational practices • 2
Slide 8: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) $19.4 - $21.2 billion capital program Distribution for 2020-2023 Transmission • This capital forecast includes: Generation 1 2018 GRC approved CPUC capital spend Wildire mitigation-related spend for 2019-2020 $5.4 $5.4 $5.4 2021 GRC requested CPUC ca
Slide 9: SCE Rate Base Forecast
SCE Rate Base Forecast ($ billions) $41.0 $38.2 $35.9 $33.4 $30.8 $28.5 Range Case 1 2018 2019 2020 2021 2022 2023 CAGR Range Case 2 $28.5 $30.8 $33.3 $35.1 $37.0 $39.2 6.6% 1. Morongo Transmission holds an option to invest up to $400 million in the West of Devers Transmission Project, or half of th
Slide 10: SCE Wildfire Capital Forecast
SCE Wildfire Capital Forecast ($ billions) 1 All Other Wildfire-Related Mitigation $4.4 Billion Capital Request for 2020-2023 1 Spend • Under AB 1054, ~$1.6 billion of SCE’s fire risk capital Wildfire-Related Mitigation Spend - expenditures per CPUC-approved Wildfire Mitigation Plan AB1054 shall not
Slide 11: Commitment to Sustainability: California Mandates
Commitment to Sustainability: California Mandates • SCE emissions from delivered power declined 42% between 2005 and 2018, and in 2018, SCE delivered power with only half the GHG emissions per unit of electricity as the estimated U.S. average • California law requires SCE to deliver on some of the m
Slide 12: Commitment to Sustainability: SCE's Pathway 2045
Commitment to Sustainability: SCE’s Pathway 2045 Pathway 2045 outlines our blueprint for how California can achieve carbon neutrality by 2045. This analysis updates and extends SCE’s November 2017 Pathway 2030 and continues to show electric-led path to be most efficient and cost-effective way to mee
Slide 13: Commitment to Sustainability: SCE Investments
Commitment to Sustainability: SCE Investments Clean Energy Efficient Electrification • Reduced GHG emissions from • Approved and proposed delivered power by 42% between investments of over $1 billion to 2005 and 2018 expand electrification across Southern California’s economy • 46% carbon-free power
Slide 14: Focus on Operations During COVID-19 Pandemic
Focus on Operations During COVID-19 Pandemic • Safety of workers and communities is our first priority; procedures in place to protect workers that align with guidance from the World Health Organization and Center for Disease Control • About 2/3 of all employees have been teleworking since March 16;
Slide 15: Regulatory Mechanisms Provide Revenue Certainty
Regulatory Mechanisms Provide Revenue Certainty • Earnings not affected by variability of retail electricity sales Revenue • Long-standing regulatory mechanism that annually adjusts rates to collect/refund variance Decoupling from authorized revenue requirement • Base Revenue Requirement Balancing A
Slide 16: 2019 Wildfire Mitigation Actions
2019 Wildfire Mitigation Actions Inspections: EOI inspections conducted on all distribution and transmission circuits in 2019; large volume of findings constrained bandwidth for other programs in 2019; transitioning to more risk-prioritized approach using technology and enhanced aerial inspections
Slide 17: Mitigating Catastrophic Wildfire Risk
Mitigating Catastrophic Wildfire Risk 2019 Deployment 2020-22 Wildfire Mitigation Plan Covered Conductor: installed well in excess 4,000 additional circuit miles by Jan 1, 2023 Infrastructure of 2019 WMP target of 96 circuit miles 2020: 700-1,000 / 2021: 1,400 / 2022: 1,600 Hardening Undergrounding:
Slide 18: 2019 Wildfire Legislation Update
2019 Wildfire Legislation Update Summary of Assembly Bill 1054 and Assembly Bill 111 Safety • Creates Wildfire Safety Division1 to provide additional wildfire safety oversight Oversight • Annual safety certifications issued by Wildfire Safety Division1 require: 1) an approved wildfire mitigation pla
Slide 19: Assembly Bill 1054 Wildfire Fund Mechanics
Assembly Bill 1054 Wildfire Fund Mechanics1 IOUs contribute $10.5 B Customers contribute non-bypassable charge • PG&E: $4.8 B initial + $193 M annually for 10 years • $0.9 B per year charge for 15 years ($0.5 B w/o PG&E) (conditional on exiting bankruptcy by June 30, 2020) • California Department of
Slide 20: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2021 General Rate Case Set CPUC base revenue requirement, capital Application filed August 30, 2019; Scoping Memo issued in October 2019; (A. 19-08-013) expenditures and rate base for 2021-2024 CalPA filed testimon
Slide 21: SCE 2021 General Rate Case Overview
SCE 2021 General Rate Case Overview Filed August 30, 2019, request balances the need to advance California’s ambitious decarbonization policy goals and address emergent wildfire public safety risks, while continuing to provide safe, reliable, and affordable service to customers • 2021 GRC Applicatio
Slide 22: SCE 2021 General Rate Case Timeline
SCE 2021 General Rate Case Timeline • Track 1 includes approval of the 2021-2023 GRC revenue requirement. Track 2 includes reasonableness of additional 2018-2019 recorded incremental amounts associated with the Fire Mitigation memorandum accounts1 Estimated 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 23: SCE 2021 General Rate Case Timeline (cont.)
SCE 2021 General Rate Case Timeline (cont.) • In mid-April, the Assigned Commissioner and ALJs in the 2021 GRC issued a Ruling requiring SCE to file its RAMP and propose a revenue requirement for 2024 in May 2022 in a new Track 4 of the rate case proceeding Estimated 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 24: SCE 2021 GRC Update – Intervenor Testimony
SCE 2021 GRC Update – Intervenor Testimony California Public Advocates (CalPA) submitted testimony on April 10, 2020 – Key elements • Proposed 2021 revenue requirement of $6.9 billion, a $651 million reduction from SCE’s request of $7.6 billion o Proposed subsequent 3.5% attrition year increases of
Slide 25: Fire Memorandum Account Update Summary
Fire Memorandum Account Update Summary • On March 5, 2020, SCE filed its 2018-2019 Fire Memorandum Account (FMA) Update which initiated Track 2 of the 2021 GRC proceeding Covers three separate memorandum accounts including: Wildfire Mitigation Plan MA (WMPMA), Fire Hazard Prevention MA (FHPMA), an
Slide 26: Wildfire-Related CPUC Cost Recovery Filings
Wildfire-Related CPUC Cost Recovery Filings ($ millions; inception to December 31, 2019) Total Incremental Incremental Application Mechanism for Memorandum Account Capital Spent O&M Spent Request1,2 Recovery Anticipated Timeline 2018-2019 FMA Update Breakdown: WMPMA $302 $304 FMA Update PD expected
Slide 27: CPUC 2020 Cost of Capital
CPUC 2020 Cost of Capital CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate 6.0 Moving Average (10/1/19 – 4/29/20) = 3.72% 100 basis point +/- Deadband 5.5 5.0 Starting Value – 4.50% 4.5 Rate (%) 4.0 3.5 3.0 2.5 10/1/19 1/1/20 4/1/20 7/1/20 10/1/20 1/1/21 4/1/21 7/1/21 10/1/21 1/1/22 4/1
Slide 28: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Capital expenditures for certain programs deferred over 2020 – 2023 Capital Spending Forecast 2 - next five years to support reallocation of distribution for Distribution $17.5 billion resources to wildfire mitigation1; historical program fun
Slide 29: SCE Transportation Electrification Proposals
SCE Transportation Electrification (TE) Proposals • Proposals advance the vision of SCE’s Pathway 2045, 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 programs acceler
Slide 30: SCE Energy Storage
SCE Energy Storage SCE 2020 Storage Portfolio CPUC Energy Storage Program Requirements: 350 *Up to • 1,325 MW target statewide contracted by 2020, and 300 80% of installed by 2024 (580 MW SCE share); ownership allowed 310 MW to be up to 290 MW for SCE 250 shifted between • SCE has procured over 690
Slide 31: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost4 (as of March 31, 2020) Date West of Devers1,2 $840 million $311 million 2021 Mesa Substation1 $646 million $249 million 2022 Alberhill System3 $486 million $445 m
Slide 32: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and reliability (SAIDI and SAIFI) • Customer service • Customer satisfaction • Cost efficiency calculation based on Optimize internal voic
Slide 33: Edison Energy Summary
Edison Energy Summary About Edison Energy Edison Energy’s Service Offerings • Edison Energy provides independent, expert advice and services to help large corporate and institutional clients better understand and navigate the choices and risks of managing energy. Edison Renewables & Supply enables d
Slide 34: 2020 EIX Core Earnings Guidance
2020 EIX Core Earnings Guidance 2020 Assumption Additional Notes CPUC Rate Base $26.8 billion Return on Equity (ROE) 10.30% 2020 Cost of Capital Final Decision Capital Structure 52% equity 2020 Cost of Capital Final Decision FERC Rate Base $6.6 billion ~20% of total 2020 rate base forecast Informed
Slide 35: EIX Annual Dividends Per Share
EIX Annual Dividends Per Share Sixteen Consecutive Years of Dividend Growth $2.551 $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 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Expect dividend growth within target
Slide 36: Appendix
Appendix May 1, 2020 Energy for What's Ahead 35
Slide 37: Commitment to Sustainability: Transparency
Commitment to Sustainability: Transparency Oversight Strategic Alignment • Board and Nom/Gov Committee: • ESG priority assessment conducted in 2018, with input from internal and external stakeholders, identifying 19 priority topics Full board has responsibility for • Reaffirmed corporate strategy;
Slide 38: Commitment to Sustainability: Strong Corporate Governance
Commitment to Sustainability: Strong Governance 7 of 11 Directors are Corporate Independent Board Key Areas of diverse in terms of Governance Committees Oversight 10 of 11 Directors are race/ethnicity, gender Independent (91%) Highlights and/or LGBTQ identification (64%) Independent Board Audit and
Slide 39: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) $32.6 $29.6 $27.8 $25.9 $24.6 2015 2016 2017 2018 2019 Core EPS $4.20 $4.22 $4.58 $4.42 $5.01 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures. Sin
Slide 40: SCE Historical Capital Expenditures
SCE Historical Capital Expenditures ($ billions) $4.8 $4.4 $3.9 $3.8 $3.5 2015 2016 2017 2018 2019 May 1, 2020 39
Slide 41: 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 stations power grid • Voltage centrally monitored and • Sy
Slide 42: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2015 2016 2017 2018 2019 Residential 30,093 29,579 30,221 29,865 28,985 Commercial 42,396 42,189 42,514 42,369 41,602 Industrial 7,623 7,162 6,659 6,786 6,442 Public authorities 4,795 4,715 4,711 4,510 4,365 Agricultural and other 1,95
Slide 43: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2020 Bundled Revenue Requirement $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond Charge 4,351 8.0 Fuel & Purchased Power (46%) Distribution – poles, wires, substations, service centers 3,698 6.8 Distribution (39%) Generation – owned generation investment a
Slide 44: System Average Rate Historical Growth
System Average Rate Historical Growth ¢/kWh Comparative System Rates reduced due to the implementation of Average Rates1 1) the SONGS Revised Settlement, including % Delta to SCE CAGR NEIL insurance benefits, 2) lower fuel & SCE 17.5¢ -- 30-yr 20-yr 10-yr purchased power costs, and 3) a lower 2015 (
Slide 45: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2019 Average Residential Bills ($ per Month) KeyKey Factors Factors $126 26% • Average monthly residential bills are lower Lower than the national average as higher rate $93 levels are more than offset by lower usage • SCE’s residential customer usage is lower than the
Slide 46: Community Choice Aggregator (CCA) Overview
Community Choice Aggregator (CCA) Overview • Assembly Bill 1171 permits cities and counties, and Joint Powers Authorities (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
Slide 47: 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 48: Impacts of Abundant Solar Energy (Duck Curve)
Impacts of Abundant Solar Energy (Duck Curve) New Time-of-Use (TOU) Periods • On March 1, 2019, SCE changed its basic TOU pricing period definition for the first time in over 30 years • Abundant mid-day renewable energy lowers prices from 8am-4pm (October - June) • Highest cost period is now 4pm-9pm
Slide 49: SCE Net Energy Metering
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (March 2020) Installations and MW Installed • 351,832 combined residential and non-residential projects – 2,922 MW installed 7000 40 • 99.9 % solar projects • 344,104 residential (7.6% of all residential customers) – 1,896
Slide 50: First Quarter Earnings Summary
First Quarter Earnings Summary Key SCE EPS Drivers4 Q1 Q1 Variance 2020 2019 Higher revenue $ 0.42 - CPUC revenue 0.37 Basic Earnings Per Share (EPS)1 - FERC revenue 0.05 SCE $ 0.60 $ 0.90 $ (0.30) Higher O&M (0.28) Higher depreciation (0.01) EIX Parent & Other (0.10) (0.05) (0.05) Higher interest e
Slide 51: Pension Well-Funded at Year End 2019
Pension Well-Funded at Year End 2019 Postretirement Benefits Other Than Pensions Pension Benefits are 96% Funded (PBOP) are 119% Funded with Resilient Asset with Resilient Asset Allocation1 Allocation2 Total Plan Assets: $3.8 billion Represented PBOP Trust: $1.4 billion Global Equity 10% Alternative
Slide 52: Strong EIX and SCE Liquidity Profiles
Strong EIX and SCE Liquidity Profiles ($ billions) Liquidity Profile1 Financing Activities • Targeting EIX long-term FFO/debt ratio of 15-17% $6.4 • EIX financing activities: $800 million 364-day term loan to enhance financial flexibility drawn on March 25th $4.0 $400 million senior note offerin
Slide 53: SCE Annual Results of Operations
SCE Annual Results of Operations ($ 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 54: Earnings Per Share Non-GAAP Reconciliations
Earnings Per Share Non-GAAP Reconciliations Reconciliation of EIX Basic Earnings Per Share Guidance to EIX Core Earnings Per Share Guidance EPS Attributable to Edison International 2020 Low High Basic EIX EPS $4.19 $4.49 Total Non-Core Items1 (0.13) (0.13) Core EIX EPS $4.32 $4.62 1. EPS is calculat
Slide 55: Earnings Non-GAAP Reconciliations
Earnings Non-GAAP Reconciliations ($ millions) Reconciliation of EIX GAAP Earnings to EIX Core Earnings Q1 Q1 Earnings Attributable to Edison International 2020 2019 SCE $219 $293 EIX Parent & Other (36) (15) Basic Earnings $183 $278 Non-Core Items SCE1,2,3 ($42) 72 EIX Parent & Other3 (3) — Total N
Slide 56: 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 2019 2018 2017 Basic EPS 3.78 ($1.30) $1.73 Non-Core Items (*) SCE Impairment and other 2018 G
Slide 57: 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 (losses) internally for financial planning and for analysis of performance. Core earnings (losses) are