Edison International · NYSE:EIX
Edison International — Corporate Update (February 2022)
50 slides from Edison International's corporate update, Feb 25, 2022
Slide 1: Business Update
Business Update February 25, 2022
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: Edison International is leading the transformation of the electric power industry
Edison International is leading the transformation of the electric power industry Holding company focused on opportunities in clean energy, efficient electrification, grid of the future, and customer choice One of the nation’s largest electric-only utilities, serving over 15 million residents EIX’s
Slide 4: EIX is well positioned for a decarbonized future, with no coal or gas LDC exposure
EIX is well positioned for a decarbonized future, with no coal or gas LDC exposure and high electric sales growth potential UTY1 EEI Index2 Electric-Only & No stranded asset risk with No Gas LDC Exposure (# of Companies) 6 of 20 12 of 39 increased electrification No Coal Generation No coal generat
Slide 5: Sustainability is central to Edison's vision to lead the transformation
Sustainability is central to Edison’s vision to lead the transformation of the electric power industry We are committed to achieving net-zero GHG emissions by 2045 and have other long-term ESG goals related to clean energy, electrification, DE&I, and safety Environmental Social Governance 2045 goals
Slide 6: Our sustainable financing activities underscore the strong link between strategy and financings
Our sustainable financing activities underscore the strong link between our strategy and financings Green, Social, and Sustainability instruments will fund Edison’s Sustainable Financing projects that provide distinct environmental or social benefits Framework aligned with Eligible Project Categorie
Slide 7: Thesis: Wires-focused electric utility with regulated rate base growth
Thesis: Wires-focused electric utility with regulated rate base growth aligned with state’s aggressive clean energy goals Decoupling of sales Constructive California and Forward-looking ratemaking Federal regulatory structures Premium California ROE Wildfire prudency standard Aggressive climate goal
Slide 8: California's regulatory mechanisms provide revenue certainty
California’s regulatory mechanisms provide revenue certainty, even as load and payment patterns change Revenue Decoupling Long-standing regulatory mechanism that breaks the link between retail means earnings aren’t electricity sales and revenue; promotes energy efficiency, helps stabilize affected b
Slide 9: Clean Energy Transition Leadership
CLEAN ENERGY TRANSITION LEADERSHIP
Slide 10: Reaching California's 2045 GHG goals requires a near-complete transformation of energy use
Reaching California’s 2045 GHG goals requires a near- complete transformation of energy use economy wide Pathway 2045: Key steps California must take to reach carbon neutrality 100% of grid sales 76% of light-duty 30% of space and Natural gas capacity Sequestration can be with carbon-free vehicles n
Slide 11: SCE is a catalyst for achieving California's aggressive GHG and clean energy goals
SCE is a catalyst for achieving California’s aggressive GHG and clean energy goals via economy-wide electrification Achieving 80% GHG reduction by 2050 will require fuel Electricity sales required to be use changes in all sectors 100% carbon-free by 2045 State Carbon Emissions Reduction Pathway Cali
Slide 12: Significant incremental grid investments required by 2045
Significant incremental grid investments required by 2045 to serve load growth and integrate renewables and storage At least a third of incremental grid investment fits CAISO-wide investment required at squarely within IOU jurisdictions various voltage levels and to address CAISO-wide grid investmen
Slide 13: A decarbonized, electrified world produces energy cost savings for an average household
A decarbonized, electrified world produces energy cost savings for an average household Total energy cost for an average household decreases By 2045, a greater reliance on by about one-third by 2045 electricity, combined with Annual residential household energy costs (2019$)1 population and economic
Slide 14: SCE's average rate has grown less than inflation over the last 20 years
SCE’s average rate has grown less than inflation over the last 20 years, even with recent increases to mitigate wildfire risks Among California IOUs, SCE has SCE’s system average rate has grown at an annualized the lowest system average rate ~2.3% vs. local inflation of ~2.6% since 20012 System Aver
Slide 15: Edison International has one of the strongest electrification profiles in the industry
Edison International has one of the strongest electrification profiles in the industry Transportation Building Energy Electrification Electrification Storage Largest U.S. IOU EV charging SCE recently proposed $677 SCE has installed or procured programs with over $800 million plan to accelerate ~3.2
Slide 16: SCE leads the largest utility transportation electrification initiatives in the U.S.
SCE leads the largest utility transportation electrification initiatives and programs in the U.S. Edison’s large suite of TE programs enables By 2030, SCE will administer over $1 California’s leadership of EV adoption billion of EV purchase incentives and Approved Electric Utility Transportation Ele
Slide 17: SCE's future load growth is highly levered to EV adoption
SCE’s future load growth is highly levered to EV adoption, which is a critical component of reaching state GHG goals Electric vehicles in SCE’s service area added ~2,250 GWh To date, ~1 in 7 U.S. electric of load in 2021 and could grow to 50,000+ GWh by 2045 vehicles have been sold in SCE’s Electric
Slide 18: Increased energy storage is essential to support the transition to a carbon-free future
Increased energy storage is essential to support the transition to a carbon-free future SCE has installed or procured ~3.2 GW of storage SCE is in the process of procuring capacity and must procure ~3.2 GW more by 20261 2,800 MW for 2023 and 2024 Energy storage capacity procured and online (MW) 7,00
Slide 19: SCE Wildfire Mitigation: Approach, Progress, and Results
SCE WILDFIRE MITIGATION: APPROACH, PROGRESS, AND RESULTS
Slide 20: AB 1054 provides a strong regulatory construct for wildfire liability and cost recovery
AB 10541 provides a strong regulatory construct for determining wildfire liability and cost recovery Established safety Under AB 1054, SCE can obtain an annual safety certification upon submission of certification process and required safety information, including an approved wildfire mitigation pla
Slide 21: AB 1054 and the Wildfire Insurance Fund provide clear pathway to determine prudency
AB 1054 and the Wildfire Insurance Fund provide clear pathway to determine IOU’s prudency and ceiling on liability AB 1054 Wildfire Insurance Fund Mechanics1 IOUs contribute $10.5 billion Customers contribute non-bypassable charge PG&E: $4.8Bn initial + $193MM annually through 2028 Customers contrib
Slide 22: Wildfire Fund Illustrated: Eligible claims paid by Fund and IOUs
Wildfire Fund Illustrated: Eligible claims paid by Fund and IOUs reimburse up to cap only to degree found imprudent1,2 Example of Wildfire Insurance Fund operations, reimbursement, and IOU liability from a hypothetical wildfire resulting in $5 billion of paid claims $ in Billions; Example based on S
Slide 23: Many of SCE's wildfire mitigation practices have been in place for years
Many of SCE’s wildfire mitigation practices have been in place for years and have greatly evolved since 2018 Longstanding Foundational Advance technology Update of long-term wildfire mitigation strategy established and risk modeling system hardening efforts at SCE in 2018–2019 capabilities strategy
Slide 24: Publicly available real-time data enhances situational awareness
Publicly available real-time data enhances situational awareness and informs critical operational decisions Cameras on ALERT Santa Ana Wildfire Emergency Operations Wildfire Network HD Weather Stations Threat Index Center (EOC) Live HD camera feeds Provide real-time weather Helps fire agencies and t
Slide 25: Covered conductor is one of the most effective measures to reduce wildfire and PSPS risks
Covered conductor is one of the most effective measures to reduce wildfire and PSPS risks in SCE’s service area Covered conductor is a very valuable tool to expeditiously and cost-effectively reduce wildfire risk specific to SCE. Undergrounding considered for certain locations based on risk profile
Slide 26: California has continued to increase investments in wildfire suppression and prevention
California has continued to increase investments in wildfire suppression and prevention1 CAL FIRE budget support Substantial increase in Governor’s proposed budget along with actions to wildfire suppression budget would increase funding to increase staffing and to address shifting support firefighte
Slide 27: SCE's execution of its wildfire mitigation strategy is reducing wildfire risk
SCE’s execution of its wildfire mitigation strategy is reducing risk of wildfires associated with utility infrastructure 2021 Completed 2021 Completed Completed/Target Since 2018 Completed/Target 110% Since 2018 400/375 107% 1,460+ Distribution 179,600/163,000 completed 764,000+ weather stations ins
Slide 28: The 2021 fire season marks 3 consecutive years without a catastrophic wildfire
The 2021 fire season marks 3 consecutive years without a catastrophic wildfire associated with SCE’s infrastructure1 SCE’s grid hardening and SCE’s improved PSPS California investment in situational awareness execution and community wildfire suppression and measures support prevention ~30% of overhe
Slide 29: SCE has made substantial progress on grid hardening and situational awareness measures
SCE has made substantial progress on grid hardening and situational awareness measures Investments to harden the grid and enhance situational awareness targeted through 2023 Green shading represents completed measures through December 31, 2021, as proportionate to the 2023 forecast in SCE’s 2022 WMP
Slide 30: SCE is making meaningful progress in mitigating wildfire risk for its customers
SCE is making meaningful progress in mitigating wildfire risk for its customers Covered Expanded High fire risk Today’s PSPS use conductor has vegetation inspection would have reduced faults, management program has prevented majority which could lead and tree removal reduced of damage from to igniti
Slide 31: SCE estimates wildfire mitigation and PSPS have reduced probability of catastrophic losses
SCE estimates its wildfire mitigation and PSPS have reduced probability of losses from catastrophic wildfires by ~65-70%1,2 SCE expects to further reduce risk and decrease the need for PSPS with continued grid hardening investments Pre- Q4 PSPS 2018 2021 Estimated Risk Reduction Contribution Decreas
Slide 32: Financial Information
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Slide 33: SCE has significant capital expenditure opportunities driven by safety and reliability investments
SCE has significant capital expenditure opportunities driven by investments in the safety and reliability of the grid Capital deployment expected to increase beyond the current Total 2021–2025 capital plan of GRC cycle and will be proposed in future applications $27–30 billion driven by Capital Expe
Slide 34: 2021 GRC track 1 decision provides rate base visibility through 2023
2021 GRC track 1 decision provides rate base visibility through 2023; future applications expected to extend growth From a 2021 base, rate base growth forecast of 7–9% Forecast includes recovery of through 2025, reflecting future incremental investment utility-owned storage for Rate Base1 $ in Billi
Slide 35: SCE's long-term growth drivers are highly aligned with California's public policy goals
SCE’s long-term growth drivers are highly aligned with California’s public policy goals Overarching Goals SCE Growth Drivers Sustained investment required to reach Infrastructure and maintain equilibrium replacement Safe, Reliable, and Replacement rate Affordable Electricity Service Significant inve
Slide 36: Cash flow from memo account recovery and securitization strengthens our balance sheet
Cash flow from memo account recovery and securitization strengthens our balance sheet and credit metrics GRC, Uncollectibles, Wildfire-related, and Wildfire Insurance Applications $ in Millions Approved Applications Balance @ Recovery Rate Recovery by Year Application / Account Dec. 31 Through 2022
Slide 37: 2017/2018 Wildfire/Mudslide Events Update: Less than 22% of best estimate remains
2017/2018 Wildfire/Mudslide Events Update: Less than 22% of best estimate remains SCE continues to make substantial progress resolving claims1 SCE has not admitted wrongdoing Remaining expected potential losses, $ in Billions or liability as part of any settlements 7.5 California Attorney General's
Slide 38: 2022 cost of capital being addressed in ongoing proceeding
2022 cost of capital being addressed in ongoing proceeding; separately, IOUs will file cost of capital request for 2023–’25 CPUC’s scoping memo separates the 2022 cost of capital mechanism (CCM) into two steps Key Dates Phase 1 (Current) 2022 Cost of Capital Are there extraordinary Evidentiary heari
Slide 39: EIX has a strong track record of meeting EPS guidance and growing its dividend
EIX has a strong track record of meeting or exceeding EPS guidance and growing its dividend EIX has consistently met or exceeded Core EPS guidance… …and has 18 consecutive years of dividend growth2 Core EPS Relative to Guidance Range Dividends per Share (in Dollars) 2004 Exceeded 2005 Exceeded 2.80
Slide 40: EIX and SCE are committed to maintaining their investment grade credit ratings
EIX and SCE are committed to maintaining their investment grade credit ratings Long-term Issuer Rating and Outlook Investment grade ratings at SCE and EIX, As of February 24, 2022 targeting EIX long-term FFO-to-Debt ratio SCE EIX of 15–17% Moody’s Baa2 Baa3 Total liquidity of $4.4 billion1 Stable St
Slide 41: Edison Energy empowers organizations to conquer biggest challenges in energy today
Edison Energy empowers organizations to conquer biggest challenges in energy today: Cost. Carbon. Complex Choices. Partners with market leaders to align energy spend with strategic, financial, and sustainability goals Provide independent, Using an integrated approach to design and implement strategi
Slide 42: EIX initiates 2022 core EPS guidance of $4.40–4.70
EIX initiates 2022 core EPS guidance of $4.40–4.70 EIX 2022 Core Earnings Per Share Guidance Range Key components of variances from Building from SCE Rate Base EPS SCE rate base EPS1 2022 Rate Base EPS Guidance1 Recording at current cost of capital pending 2022 cost of capital decision SCE 2022 Rate
Slide 43: 2022 EIX Core Earnings Guidance Assumptions
2022 EIX Core Earnings Guidance Assumptions 2022 Assumption Additional Notes CPUC Rate Base ($ in Billions) $31.3 • Assumes CSRP track 1 decision in 2022. Decision delay would defer ~$55 million earnings to 2023 Return on Equity (ROE) 10.30% • ROE sensitivity: 4 cents EPS for 10bps change in ROE Equ
Slide 44: EIX parent projects total 2022 financing needs of $1.2 billion
EIX parent projects total 2022 financing needs of $1.2 billion, including $300–400 million equity content Use of Proceeds $ in Millions 2022 EIX Financing Plan1 $1,200 Expect to issue securities with $300–400 million of equity content (consistent with prior disclosure)2 in combination of: $500 – Pot
Slide 45: EIX reaffirms 2021–2025 EPS growth rate target
EIX reaffirms 2021–2025 EPS growth rate target, which would result in 2025 EPS of $5.50–5.90 Earnings progression expected to continue to 2025 2025 Core EPS Components2 Core Earnings per Share Core Earnings per Share Approximate 5–7% Ranges2 2021–’25 CAGR1 5.50–5.90 2025 Rate Base EPS $6.45–6.90 • A
Slide 46: EIX has double-digit total return potential, supported by leadership in clean energy transition
EIX has double-digit total return potential, supported by leadership role in clean energy transition 5–7% core EPS CAGR1 Strong rate base growth of ~7–9% 2021 to 2025 $27–30 billion 2021–2025 capital program 4%+ Target dividend payout of 45–55% of SCE core earnings current dividend yield2 Wildfire m
Slide 47: Appendix
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Slide 48: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description and Next Steps Base 2021 GRC Track 4 Set CPUC base revenue requirement for third attrition year (2024) Rates (A.19-08-013) Track 4 to be filed Q2 2022 2022 Cost of Capital Establish cost of capital for 2022 (A.21-08-013) Opening briefs and reply
Slide 49: 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 Guidance1 2022 EPS Attributable to Edison International Low High Basic EIX EPS $4.40 $4.70 Total Non-Core Items2 — — Core EIX EPS $4.40 $4.70 1. EPS is calculated on the
Slide 50: 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
Edison International — Corporate Update (February 2022) on 6ix