Consolidated Edison, Inc. · NYSE:ED
Consolidated Edison — Barclays CEO Energy-Power Conference 2018
50 slides from Consolidated Edison's conference presentation, Sep 5, 2018
Slide 1: Barclays Conference
Barclays Conference September 5, 2018
Slide 2: Available Information and Forward-Looking Statements
Available Information On August 2, 2018, Consolidated Edison, Inc. issued a press release reporting its second quarter 2018 earnings and filed with the Securities and Exchange Commission the company’s second quarter 2018 Form 10-Q. This presentation should be read together with, and is qualified in
Slide 3: Con Edison: Poised for a Strong Future
Con Edison: Poised for a Strong Future • One of the nation’s largest investor-owned energy-delivery companies – $12 billion in annual revenues – $49 billion asset base • Steady earnings, growing dividend – 44 consecutive years of dividend growth • Attractive capex opportunities – $11.1 billion three
Slide 4: 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 5: Organizational Structure
Organizational Structure Market Cap(a): $24.0 billion Ratings(b): A3 / BBB+ / BBB+ Outlook(b): Negative / 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. Utili
Slide 6: Complementary Business Mix with Utilities at the Core
Complementary Business Mix with Utilities at the Core 2017 GAAP EPS Contribution 2017 Adjusted EPS Contribution (Non-GAAP)* Regulated Utilities 76% 92% Clean Energy 21% 5% Transmission 3% 3% *Represents Adjusted Earnings per Share. Please see Appendix for reconciliation to GAAP. 6
Slide 7: Opportunities for Growth Across Our Businesses
Opportunities for Growth Across Our Businesses 2018 – 2020 Forecasted Capital Investment* $9.5 billion $1.2 billion $0.4 billion Regulated Utilities Clean Energy Transmission *2017 Form 10-K, page 31. 7
Slide 8: Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves
Reforming the Energy Vision (REV) Presents Opportunities as Industry Evolves • Reforming the Energy Vision (REV) was introduced in 2014 • REV is transforming New York State’s energy policy and initiatives to place energy efficiency and clean, locally-produced power at the core of the State’s energy
Slide 9: Reforming the Energy Vision Track 1: Business Framework
Reforming the Energy Vision Track 1: Business Framework New York Public Unlock full value of Distributed Energy Resources (DERs) Service Commission Objective • Integration of DERs into system planning, design, procurement, Utility Action operations • Develop demonstration projects Distribution Syste
Slide 10: Non-wires Solutions Expand our Toolkit to Solve System Needs
Non-wires Solutions Expand our Toolkit to Solve System Needs Non-wires solutions have the potential to reduce customers’ electric bills, improve reliability, defer capital infrastructure spending, and help advance NYS’s clean energy goals Customer Perspective Shareholder Perspective • 70% share of n
Slide 11: Reforming the Energy Vision Track 2: Regulatory & Ratemaking
Reforming the Energy Vision Track 2: Regulatory & Ratemaking New York Public Incentivize utilities and customers to achieve REV goals Service Commission Objective Utility Action New rate design and earnings opportunities Earnings Adjustment Mechanisms (EAMs) Implementation • Incentives included in u
Slide 12: Reforming the Energy Vision Track 3: Clean Energy Standard
Reforming the Energy Vision Track 3: Clean Energy Standard New York Public Promote decarbonization and support New York State’s 50%- Service Commission renewables-by-2030 energy goal Objective Purchase Zero Emissions Credits (ZECs) and Renewable Utility Action Energy Credits (RECs) for full service
Slide 13: Smart Meter Initiative: Building an Advanced, Smarter Grid
Smart Meter Initiative: Building an Advanced, Smarter Grid • 5.4 million smart meters to be installed by 2022 • $1.4 billion investment • Expected to improve operations and reduce expenses • Empowers customers to manage their bills and energy usage in new ways Utilities' Approved Annual AMI Capital
Slide 14: Supporting Electric Vehicles
Supporting Electric Vehicles Supporting NYC goals: 2,000 municipal fleet vehicles and 20% of vehicles sold for use to be electric vehicles by 2025 • Working with NYC Transit, City and developers to install over 3 MW of quick-charging capability • Providing incentives to charge during off-peak hours
Slide 15: Smart Solutions for Natural Gas Customers Proposals
Smart Solutions for Natural Gas Customers Proposals Programs designed to put New York on a path toward a cleaner energy future 1. Enhanced Gas Energy Efficiency – Aim to double gas efficiency gains with additional funding to existing programs – Annual cost: incremental ~$14.5 million per year in 201
Slide 16: Con Edison: Poised for a Strong Future
Con Edison: Poised for a Strong Future • One of the nation’s largest investor-owned energy-delivery companies • Steady earnings, growing dividend • Attractive capex opportunities • Strong balance sheet and liquidity profile • Focus on safety, sustainability and service – costs. 16
Slide 17: Appendix: Tax Cuts and Jobs Act Update & 2nd Quarter 2018 Earnings Presentation
Appendix: Tax Cuts and Job Act Update & 2nd Quarter 2018 Earnings Presentation 17
Slide 18: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) by Company
Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non- GAAP) by Company For the year ended December 31, 2017 CECONY O&R CEBs CET Other(a) Total Reported EPS – GAAP basis $3.59 $0.21 $1.08 $0.15 $(0.06) $4.97 Enactment of the Tax Cuts and Jobs Act — — (0.88) (0.04) 0.07 (0.85) Net mark-to-market
Slide 19: Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act of 2017 (TCJA) New York Public Service Commission Order on Case 17-M-0815 – Proceeding on Motion of the Commission on Changes in Law that May Affect Rates (August 9, 2018) CECONY Electric • Sur-credit will start on January 1, 2019 and will include: ‒ 2019 annual ongoing tax sav
Slide 20: Dividend and Earnings Announcements
Dividend and Earnings Announcements • On July 19, 2018, the company issued a press release reporting that the company had declared a quarterly dividend of 71.5 cents a share on its common stock. • On August 2, 2018, the company issued a press release in which it confirmed its previous forecast of ad
Slide 21: 2Q 2018 Earnings
2Q 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $188 $175 $0.60 $0.57 Gain on sale of solar electric production project (pre-tax) — (2) — — Income taxes (a) — 1 — — Gain on sale of solar electric production project (net of t
Slide 22: Walk from 2Q 2017 EPS to 2Q 2018 EPS
Walk from 2Q 2017 EPS to 2Q 2018 EPS Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP) $0.01 $0.01 $0.01 $0.61 $0.01 $0.01 $0.60 $0.01 $0.01 $0.57 $0.01 $0.58 $(0.01) $(0.01) (a) (a) a. Includes parent company and consolidation adjustments. 22
Slide 23: 2Q 2018 vs. 2Q 2017 EPS Variances
2Q 2018 vs. 2Q 2017 EPS Variances - Three Months Ended Variation CECONY(a) Changes in rate plans $ 0.26 Reflects primarily higher electric and gas net base revenues of $0.17 a share and $0.03 a share, respectively, and growth in the number of gas customers of $0.02 a share. Electric and gas base rat
Slide 24: 2Q 2018 vs. 2Q 2017 EPS Reconciliation by Company
2Q 2018 vs. 2Q 2017 EPS Reconciliation by Company Three Months Ended June 30, 2018 CECONY O&R CEBs CET Other(a) Total Reported EPS – GAAP basis $0.48 $0.02 $0.08 $0.04 $(0.02) $0.60 Net mark-to-market losses (pre-tax) — — 0.01 — — 0.01 Income taxes (b) — — — — — — Net mark-to-market losses (net of t
Slide 25: 2Q 2018 Developments
2Q 2018 Developments(a) CECONY & O&R • In August and November 2017, the NYSPSC issued orders in its proceeding investigating a subway power outage. NYSPSC Case 17-E-0428 – In The Matter of an Investigation into the April 21, 2017 Metropolitan Transportation Authority Subway Power Outage and Consolid
Slide 26: 2Q 2018 Developments (cont'd)
2Q 2018 Developments (cont'd)(a) CECONY & O&R (cont'd) • In July 2018, a CECONY steam main located on Fifth Avenue and 21st street in Manhattan ruptured. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of buildings and streets for
Slide 27: Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act of 2017 (TCJA)(a) CECONY & O&R • TCJA expected to result in decreased cash flows from operating activities, and require increased cash flows from financing activities, for the utilities as and when customers' rates are adjusted to reflect the reduction in tax rate • Customer ra
Slide 28: Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act of 2017 (TCJA)(a) CECONY & O&R • NYSPSC Case 17-M-0815 - Proceeding on Motion of the Commission on Changes in Law that May Affect Rates – On March 29, 2018, the NYSPSC staff recommended that the NYSPSC require most utilities to begin on October 1, 2018 to credit their customers
Slide 29: YTD 2018 Earnings
YTD 2018 Earnings Net Income ($ in Millions) Earnings per Share 2018 2017 2018 2017 Reported Net Income and EPS – GAAP basis $616 $563 $1.98 $1.84 Gain on sale of solar electric production project (pre-tax) — (2) — — Income taxes (a) — 1 — — Gain on sale of solar electric production project (net of
Slide 30: 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) $0.15 $0.00 $0.01 $0.02 $1.98 $0.15 $0.00 $0.01 $0.02 $1.99 $1.84 $(0.04) $1.85 $(0.04) (a) (a) a. Includes parent company and consolidation adjustments. 30
Slide 31: YTD 2018 vs. YTD 2017 EPS Variances
YTD 2018 vs. YTD 2017 EPS Variances - Six Months Ended Variation CECONY(a) Changes in rate plans $ 0.48 Reflects primarily higher electric and gas net base revenues of $0.29 a share and $0.11 a share, respectively, and growth in the number of gas customers of $0.04 a share. Electric and gas base rat
Slide 32: YTD 2018 vs. YTD 2017 EPS Reconciliation by Company
YTD 2018 vs. YTD 2017 EPS Reconciliation by Company Six Months Ended June 30, 2018 CECONY O&R CEBs CET(a) Other(b) Total Reported EPS – GAAP basis $1.73 $0.10 $0.10 $0.07 $(0.02) $1.98 Net mark-to-market losses (pre-tax) — — 0.01 — — 0.01 Income taxes (c) — — — — — — Net mark-to-market losses (net o
Slide 33: 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 $5.11 Enactment of the TCJA (pre-tax) — — — (1.42) (1.43) Income taxes (c) — — — 0.57 0.57 Enactment of the TCJA (ne
Slide 34: CECONY Operations and Maintenance Expenses
CECONY Operations and Maintenance Expenses ($ in millions) Departmental Other Expenses(a) Other Regulatory Fees and Assessments (b) $142 YTD Health Care/ Other Employee Benefits $203 YTD $794 YTD Pension/ OPEBs $86 YTD $35 YTD (c) (c) a. Other Expenses generally are either reconciled through amounts
Slide 35: Composition of Regulatory Rate Base
Composition of Regulatory Rate Base(a) (as of June 30, 2018) CECONY ($ in millions) Electric NY $19,070 Gas NY 5,062 Steam NY 1,391 Total CECONY $25,523 O&R ($ in millions) O&R Electric NY $768 O&R Gas NY 409 RECO NJ 218 Total O&R $1,395 Total Rate Base $26,918 a. Average rate base for 12 months end
Slide 36: Average Rate Base Balances
Average Rate Base Balances ($ in millions) $30,991 $29,093 $27,725 $26,014 $24,522 $25,014 $23,795 $22,311 O&R CECONY Actual Forecast(a) 2013 2014 2015 2016 2017 2018E 2019E 2020E Electric $ 16,235 $ 17,403 $ 17,599 $ 17,971 $ 18,513 $ 19,530 $ 20,277 $ 21,569 CECONY Gas 3,395 3,593 4,023 4,267 4,72
Slide 37: Regulated Utility Rates of Return and Equity Ratio
Regulated Utility Rates of Return and Equity Ratio (12 Months ended June 30, 2018) Regulated Basis Allowed Actual CECONY Electric 9.0% 9.3% Gas 9.0 10.0 Steam 9.3 12.7 Overall – CECONY 9.0(a) 9.6 CECONY Equity Ratio 48.0% 47.9% O&R Electric 9.0% 8.6% Gas 9.0 9.4 RECO 9.6 8.0 Overall – O&R 9.1(a) 8.8
Slide 38: Earnings Adjustment Mechanisms and Positive Incentives
Earnings Adjustment Mechanisms and Positive Incentives Earnings Adjustment Mechanisms ($ in millions) Positive Incentives(a) (b) ($ in millions) (c) a. In 2017, CECONY achieved positive incentives of $12 million, one third of which, pursuant to the accounting rules for alternative revenue recognitio
Slide 39: Capital Expenditures
Capital Expenditures ($ in millions) (a) (1) Actual Forecast(b) a. 2016 includes Stagecoach JV investment of $974 million. b. 2017 Form 10-K, page 31. 39
Slide 40: Utility Capital Expenditures
Utility Capital Expenditures ($ in millions) Steam Gas Electric Actual Forecast(a) Annual CECONY Capital Expenditures Annual O&R Capital Expenditures Electric Gas Steam Depreciation Electric Gas Depreciation 2013 $1,471 $536 $128 $946 $98 $37 $56 2014 1,500 549 83 991 105 37 61 2015 1,658 671 106 1,
Slide 41: 2018 Financing Plan and Activity
2018 Financing Plan and Activity Debt and Equity Financing Plan • Capital expenditures of $3,969 million (CECONY: $3,008 million, the CEBs: $400 million, O&R: $201 million, CET: $360 million) • Issue between $1,300 million and $1,800 million of long-term debt at the utilities • Issue additional debt
Slide 42: Capital Structure – June 30, 2018
Capital Structure – June 30, 2018 ($ in millions) Consolidated Edison, Inc. A3 / BBB+ / BBB+ Debt $ 17,040 52% Equity 15,655 48 Total $ 32,695 100% CECONY O&R Parent and Other A2 / A- / A- A3 / A- / A- Debt $ 14,293 53% Debt $ 660 49% Debt $2,087 47% Equity 12,625 47 Equity 679 51 Equity 2,351 53 To
Slide 43: Liquidity Profile
Liquidity Profile ($ in millions) 43
Slide 44: Utility Sales and Revenues – Second Quarter and Year-to-Date
Utility 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, 2018 (expressed as a percentage of 2
Slide 45: Utility Sales and Revenues – Electric Second Quarter
Utility Sales and Revenues – Electric Second Quarter ($ in millions) Electric – 2nd Quarter Millions of Kilowatt-hours Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential and Religious 2,187 2,062 $601 $546 Commercial and Industrial 2,222 2,090 438 429 Retail choice customers
Slide 46: Utility Sales and Revenues – Electric Year-To-Date
Utility Sales and Revenues – Electric Year-To-Date ($ 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 $4,597 $4,339 1,225 1,120 Commercial and Industrial 4,637 4,395 890 859 Retail choice custom
Slide 47: Utility Sales and Revenues – Gas Second Quarter
Utility Sales and Revenues – Gas Second Quarter ($ in millions) Gas – 2nd Quarter Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 11,973 10,303 $217 $171 General 7,252 6,503 90 74 Firm Transportation 17,627 14,771 118 102 Total Firm Sales and Trans
Slide 48: Utility Sales and Revenues – Gas Year-To-Date
Utility Sales and Revenues – Gas Year-To-Date ($ in millions) Gas – Year-to-Date Thousands of Dekatherms Revenues in Millions 2018 2017 2018 2017 Con Edison of New York Residential 39,272 34,910 $610 $509 General 21,693 19,306 244 206 Firm Transportation 52,417 45,186 378 325 Total Firm Sales and Tr
Slide 49: Utility Sales and Revenues – Steam Second Quarter and Year-To-Date
Utility Sales and Revenues – Steam Second Quarter and Year-To-Date ($ in millions) Steam – 2nd Quarter Millions of Pounds Revenues in Millions 2018 2017 2018 2017 Con Edison of New York General 92 58 $5 $4 Apartment House 1,177 1,032 29 26 Annual Power 2,655 2,335 72 61 Total Sales 3,924 3,425 $106
Slide 50: 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
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