Edison International · NYSE:EIX
Edison International — Corporate Update (July 2021)
43 slides from Edison International's corporate update, Jul 30, 2021
Slide 1: Business Update
Business Update July 30, 2021
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 6 of 20 11 of 39 increased electrification (# of Companies) No Coal Generation No coal generat
Slide 5: Sustainability is central to Edison's vision to lead the transformation of the electric power industry
Sustainability is central to Edison’s vision to lead the transformation of the electric power industry We have made long-term, public commitments related to clean energy, transportation electrification, diversity and inclusion, and safety Environmental Social Governance Targeting 100% carbon-free Re
Slide 6: 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 7: 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 8: 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 “Adaptation to climate change must begin in earnest — which SCE is doing in part with our grid hardening, situational awareness, and operational changes — but we must act on longer term solutions
Slide 9: SCE is a catalyst for achieving California's 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 SCE delivered ~43% carbon-free use changes in all sectors electricity to customers in 2020 State Carbon Emissions Reduction Pathwa
Slide 10: 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 $1 California’s leadership of EV adoption billion of EV purchase incentives and Approved Electric Utility Transportation Ele
Slide 11: A decarbonized, electrified world produces energy cost savings for an average household
A decarbonized, electrified world produces energy cost savings for an average household Total energy cost for an average household decreases By 2045, a greater reliance on by about one-third by 2045 electricity, combined with Annual residential household energy costs (2019$)1 population and economic
Slide 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: 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 14: AB 1054 and the Wildfire Insurance Fund provide clear pathway to determine IOU's 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 15: Wildfire Fund Illustrated
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 16: Foundational strategy for mitigating wildfire risk continues
Foundational strategy for mitigating wildfire risk continues; increased focus on risk-prioritization and customer impacts 2020–2022 Wildfire Mitigation Plan Hardening Covered ~4,000 circuit miles by end of 20221 the Grid Conductor 2020: 965 | 2021: 1,000-1,400 | 2022: 1,600 Undergrounding Considerin
Slide 17: SCE's execution of its wildfire mitigation strategy is reducing 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 106% Since 2018 100/375 27% 1,160+ Distribution 173,200/163,000 completed 757,600+ weather stations inst
Slide 18: SCE is making meaningful progress in mitigating wildfire risk
SCE is making meaningful progress in mitigating wildfire risk for its customers Covered conductor Expanded vegetation High fire risk has reduced faults, management inspection program which could lead to and tree removal has has reduced ignitions reduced line contact remediation needs 69% 50% 66% few
Slide 19: SCE has made substantial progress on grid hardening and situational awareness
SCE has made substantial progress on grid hardening and situational awareness measures Investments to harden the grid and enhance situational awareness requested through 2023 Green shading represents completed measures through June 30, 2021, as proportion of GRC request by 20231,2 Request by 20231 C
Slide 20: SCE's publicly available real-time data enhances situational awareness
SCE’s publicly available real-time data enhances situational awareness and informs critical operational decisions Cameras on ALERT Wildfire Threat Index Emergency Operations Wildfire Network HD Weather Stations Predictive Model Center (EOC) Live HD camera feeds Provide real-time weather Helps fire a
Slide 21: 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 Budget continues along with actions to wildfire suppression budget suppression support increase staffing and to address shifting and adds focus on improve effectiv
Slide 22: SCE has strong capex and rate base growth
SCE has strong capex and rate base growth driven by significant electric infrastructure investment opportunities SCE forecasts deploying significant capital in …resulting in strong rate base growth over 2021–2023… the GRC track 1 period Capital Expenditures, $ in Billions Rate Base2, $ in Billions 7
Slide 23: 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 24: Our Sustainable Financing Framework
Our Sustainable Financing Framework underscores the strong link between our strategy and financing activities Green, Social, and Sustainability instruments will fund In June, EIX published its projects that provide distinct environmental or social benefits Sustainable Financing Eligible Project Cate
Slide 25: Ongoing and pending cost recovery will further strengthen balance sheet and credit metrics
Ongoing and pending cost recovery will further strengthen balance sheet and credit metrics Wildfire-related and Wildfire Insurance Applications $ in Millions Approved Application Approved Amount1 Expected recovery mechanism/timing GRC Track 2 Jan. 2021 391 Securitization of O&M and AB 1054 capital
Slide 26: SCE plans to securitize ~$1.6 billion of AB 1054 capex and ~$0.5 billion of O&M
SCE plans to securitize ~$1.6 billion of AB 1054 capex and ~$0.5 billion of O&M upon CPUC approval Steps Required to Issue Securitized Recovery Bonds $ in Millions Cost Recovery Financing Order Issue App Proceeding/ AB 1054 Total File CPUC File CPUC Recovery # Category Capex1 O&M Costs2 Testimony Ap
Slide 27: 2017/2018 Wildfire/Mudslide Events Update
2017/2018 Wildfire/Mudslide Events Update: Less than 23% of best estimate remains SCE continues to make substantial progress resolving claims Remaining claims are primarily Remaining expected potential losses, $ in Billions with individual plaintiffs 6.2 Claims settled in most recent quarter (2Q21):
Slide 28: 2021 GRC track 1: CPUC's proposed decision
2021 GRC track 1: CPUC’s proposed decision supports critical investments and provides foundation through 2023 On July 9, CPUC issued proposed decision (PD) in track 1 Capex under PD-authorized levels of SCE’s 2021 GRC, focused on balancing necessary would be $14.0 billion for 2021–2023 spending on s
Slide 29: SCE's opening comments focus on covered conductor program scope
SCE’s opening comments focus on addressing covered conductor program scope and other critical issues SCE’s opening comments will note several areas that, if corrected, would result in a balanced final decision PD’s cuts to wildfire Proposes $1.86 billion, or 54%, cut to Wildfire Covered Conductor Pr
Slide 30: CPUC cost of capital mechanism
CPUC cost of capital mechanism current measurement period is October 1, 2020 through September 30, 2021 CPUC Cost of Capital Adjustment Mechanism Moody’s Baa Utility Bond Index Rate (%) 6.0 5.5 5.0 Starting Value – 4.50% Dead- 4.5 band 4.0 Current Period 3.5 Average1: 3.36% Current Spot 3.0 Rate1: 3
Slide 31: EIX 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 17 consecutive years of dividend growth2 Core EPS Relative to Guidance Range Dividends per Share (in Dollars) 2004 Exceeded 2005 Exceeded 2.65
Slide 32: EIX and SCE are committed to maintaining 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 July 28, 2021 targeting EIX long-term FFO-to-Debt ratio SCE EIX of 15–17% Moody’s Baa2 Baa3 Total liquidity of $4.6 billion1 Stable Stable
Slide 33: Edison Energy empowers organizations to conquer biggest challenges in energy
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, provides energy solutions for c
Slide 34: Appendix
Appendix
Slide 35: SCE has delivered 7.2% annualized rate base growth since 2015
SCE has delivered 7.2% annualized rate base growth since 2015, driven by growing capital investment Historical Capital Expenditures Historical Recorded Rate Base $ in Billions $ in Billions, Weighted-average basis ~$25.9 billion 2015–2020 7.2% 33.8 5.5 CAGR 30.8 4.8 28.5 26.6 4.4 25.1 23.9 3.9 3.8 3
Slide 36: The bulk of SCE's investments are in its distribution system
The bulk of SCE’s investments are in its distribution system, consistent with wires-focused strategy SCE forecasts investing $13.6 billion from 2021 to 2023 in its Investments will upgrade and distribution system, ~85% of total ~$16 billion capital plan1 modernize World War II-era $ in Billions infr
Slide 37: Covered conductor has not had a CPUC-reportable ignition
On segments where SCE has installed covered conductor, there has not been a CPUC-reportable ignition from contact with objects or wire-to-wire contact Covered conductor has Tree-caused faults in high Since inception of high fire reduced faults that could fire risk area is lower than risk inspection
Slide 38: Increased energy storage is essential as renewables expand
Increased energy storage is essential as we expand the share of intermittent renewable electricity sources 690 MW SCE exceeded 2020 Already state-mandated procured or storage target of installed 580 MW SCE estimates that California will need 10 GW of utility- 1,360 MW Incremental capacity scale ener
Slide 39: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description and Next Steps ($ in Millions unless otherwise noted) Base 2021 GRC Tracks 1 and 4 Set CPUC base revenue requirement for 2021–2024 Rates (A.19-08-013) Track 1 PD can be voted on as soon as Aug. 19. Track 4 to be filed Q2 2022 CSRP Track 1 Request
Slide 40: SCE's 2021 General Rate Case will be approved in four tracks
SCE’s 2021 General Rate Case will be approved in four tracks over 2021–2023 Estimated timeline for 2021 General Rate Case tracks and milestones Opening CPUC SCE Intervenor SCE & Reply Proposed Testimony Testimony Rebuttal Briefs Decision Track 1: 2021–2023 GRC Revenue Requirement Track 2:
Slide 41: SCE's average residential bills lower than national average
SCE’s average residential bills lower than national average because higher rates more than offset by lower usage SCE’s residential usage and …which offset above- Within California, PG&E and bills are lower than national average residential rates that SDG&E’s system average average due to milder refl
Slide 42: SCE's system average rate has grown less than inflation
SCE’s system average rate has grown less than inflation over the last 31 years, with some ups and downs along the way SCE’s system average rate has grown at an annualized ~2.3% as compared to local inflation of ~2.4% since 19901 Cents per kWh 25 Los Angeles Area 20 Inflation 15 SCE System Average Ra
Slide 43: 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