Edison International · NYSE:EIX
Edison International — Investor Presentation (October 2018)
49 slides from Edison International's investor presentation, Oct 31, 2018
Slide 1: Business Update October 2018
Exhibit 99.1 Business Update October 2018
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
Updated (U) or New (N) from July 2018 Business Table of Contents Page Update EIX Shareholder Value 3 SCE Highlights, SCE Long-Term Growth Drivers, Regulatory Model 4-6 U Wildfire Legislation Update 7N California’s GHG Emissions Overview, SCE’s Clean Power and Electrification Pathway 8-9 U Capital Ex
Slide 4: EIX Strategy Should Produce Superior Value
EIX Strategy Should Produce Superior 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 • SC
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 • 725,000 transformers • 118,000 miles of distribution and transmi
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 Legislation Update
Wildfire Legislation Update Summary of Senate Bill 901 Key Components Wildfire Mitigation • Requires annual detailed wildfire mitigation plans with objectives, preventive strategies, metrics and Plans specific details regarding de-energization protocols, vegetation management and inspections Requi
Slide 9: 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 10: 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 11: SCE Historical Rate Base and Core Earnings
SCE Historical Rate Base and Core Earnings ($ billions, except per share data) 2012– 2017 CAGR Rate Base 6% Core Earnings 2% $27.8 $25.9 $24.6 $23.3 $21.0 $21.1 2012 2013 2014 2015 2016 2017 Core $4.20 EPS $4.10 $3.88 $4.68 $4.22 $4.58 Note: Recorded rate base, year-end basis. See SCE Core EPS Non-G
Slide 12: SCE Capital Expenditure Forecast
SCE Capital Expenditure Forecast ($ billions) $13.7 Billion 2018-2020 Capital Program Traditional Capital Spending: • Capital expenditure forecast incorporates GRC, FERC and Distribution1 Transmission Generation non-GRC CPUC spending Grid Modernization Capital Spending: Grid Modernization 2 GRC de
Slide 13: SCE Rate Base Forecast – Request Level
SCE Rate Base Forecast – Request Level ($ billions) 3-year CAGR of 9.8% Traditional Grid Modernization CPUC • $34.7 Rate base based on request levels from 2018 GRC Tax Reform February Update $31.8 $29.1 FERC $26.2 • FERC rate base, including Construction Work in Progress (CWIP), is approximately 19%
Slide 14: 2018 SCE General Rate Case (GRC)
2018 SCE General Rate Case (GRC) • 2018 GRC Application (A. 16-09-001) filed September 1, 2016 • Addresses CPUC jurisdictional revenue requirement for 2018-2020 Includes operating costs and capital investment Excludes CPUC jurisdictional costs such as fuel and purchased power, cost of capital an
Slide 15: SCE Key Regulatory Proceedings
SCE Key Regulatory Proceedings Proceeding Description Next Steps Key CPUC Proceedings 2018 General Rate Case Set CPUC base revenue requirement, capital Updated Testimony filed on February 16, 2018; hearing held (A. 16-09-001) expenditures and rate base for 2018-2020 March 19, 2018; oral arguments he
Slide 16: CPUC Cost of Capital
CPUC Cost of Capital 7 CPUC Adjustment Mechanism Moody’s Baa Utility Index Spot Rate Moving Average (10/1/18 – 10/26/18) = 4.90% 100 basis point +/- Deadband 6 5 Rate (%) 4 Starting Value – 5.00% ROE fixed at 10.45% ROE fixed at 10.30% for 2017, independent for 2018, independent of trigger mechanism
Slide 17: 2018 Financial Assumptions
2018 Financial Assumptions ($ billions) SCE Capital Expenditures SCE Weighted Average Rate Base Distribution $3.4 Traditional $28.8 Transmission 0.6 Grid Mod 0.3 Generation 0.2 2018 Request $29.1 2018 Plan $4.2 • Based on 2018 budgeted expenditures at SCE • FERC comprises about 20% of total rate bas
Slide 18: SCE Distribution System Investments
SCE Distribution System Investments Distribution Trends • Continued focus on safety and reliability with infrastructure replacement representing 45% of total 2018 – 2020 Capital Spending Forecast distribution capital spend, but not yet reaching for Distribution including Grid Modernization1,2 equili
Slide 19: Grid Safety and Resiliency Program Overview
Grid Safety and Resiliency Program Overview • Application at CPUC aligns with SB 901 requirements to develop wildfire risk mitigation plans and upcoming Risk Assessment Mitigation Phase (RAMP) proceeding, part of the 2021 GRC • Requesting 2018-2020 program costs due to changing risk profile and 2018
Slide 20: SCE Transportation Electrification Proposals
SCE Transportation Electrification (TE) Proposals • By 2030, SCE calls for: an electric grid supplied by 80 percent carbon-free energy supported by 10 GWs of energy storage, at least 7 million light-duty electric vehicles on California roads, 15% of medium-duty and 6% of heavy-duty vehicles to
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 250 during 2014-20); ownership allowed up to 290 MW for SCE 200 • Flexibility to transfer
Slide 22: SCE Large Transmission Projects
SCE Large Transmission Projects Summary of Large Transmission Projects Remaining Investment Estimated In-Service Project Name Total Cost4 (as of September 30, 2018) Date West of Devers1,2 $848 million $671 million 2021 Mesa Substation1 $646 million $434 million 2022 Alberhill System3 $486 million $4
Slide 23: SCE Operational Excellence
SCE Operational Excellence Defining Excellence Measuring Excellence Top Quartile • Employee and public safety • Safety metrics • Reliability • System performance and • Customer service reliability (SAIDI, SAIFI, MAIFI) • Cost efficiency • J.D. Power customer Optimize satisfaction • Capital productiv
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 Fourteen Years of Dividend Growth $2.42 1 $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 Target dividend growth at a higher than industry average and within
Slide 27: Appendix
Appendix October 31, 2018 Energy for What's Ahead” 26
Slide 28: 2018 SCE GRC Items
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) $4.0 $3.9 $3.8 $3.5 $3.5 2013 2014 2015 2016 2017 October 31, 2018 28
Slide 30: Capital Expenditure/Rate Base Detailed Forecast
Capital Expenditure/Rate Base Detailed Forecast ($ in billions) Detailed Capital Expenditures – 2017-2020 2017 2018 2019 2020 Total (Actual) Distribution1,2 $3.1 $3.4 $3.2 $3.1 $12.9 Transmission1 0.5 0.6 0.7 0.8 2.6 Generation1 0.2 0.2 0.2 0.2 0.8 Total Traditional $3.8 $4.2 $4.1 $4.1 $16.3 Grid Mo
Slide 31: Edison International's ESG Strategy
Edison International’s ESG Strategy “At Edison International, we are leading the transformation of the electric power industry toward a clean energy future by focusing on opportunities in clean energy, efficient electrification, the grid of the future, and customer choice. As we pursue this vision,
Slide 32: Distribution Power Grid of the Future
Distribution Power Grid of the Future Current State Future State One-Way Electricity Flow Variable, Two-Way Electricity Flow • System designed to distribute electricity • Distribution system at the center of the from large central generating plants power grid • Voltage centrally maintained • System
Slide 33: Grid Modernization Highlights
Grid Modernization Highlights Devices that provide Devices that provide stable voltage and power quality more flexibility during outage events Future circuit designs integrate State of the art Distributed operating tools Energy Resources for utility and increase operators and flexibility engineers S
Slide 34: SCE Grid Modernization – Request Level
SCE Grid Modernization – Request Level ($ billions) $1.3 Billion Capital Request for 2019-20201,2 Building next generation electric grid requires accelerating traditional Transmission and Distribution / Information Technology programs and investing in new capabilities $0.65 • Upgrade portions of gri
Slide 35: Distributed Energy Resources (DER) Proceedings
Distributed Energy Resources (DER) Proceedings 2018 Activities • DER Hosting Capacity analysis • Locational Net Benefits Distribution •Integration of DERs in distribution planning and • DER forecasting and operations distribution planning Resource Plan (DRP) •Development of tools and methodologies,
Slide 36: SCE Customer Demand Trends
SCE Customer Demand Trends Kilowatt-Hour Sales (millions of kWh) 2013 2014 2015 2016 2017 Residential 29,889 30,115 29,959 29,141 29,765 Commercial 40,649 42,127 42,207 41,565 41,873 Industrial 8,472 8,417 7,589 7,056 6,559 Public authorities 5,012 4,990 4,774 4,645 4,639 Agricultural and other 1,88
Slide 37: SCE Bundled Revenue Requirement
SCE Bundled Revenue Requirement 2017 Bundled 2018 Bundled Revenue Revenue Requirement Requirement $millions ¢/kWh $millions ¢/kWh Fuel & Purchased Power – includes CDWR Bond 5,130 7.1 4,869 7.0 Fuel & Purchased Power Charge (44%) Distribution – poles, wires, substations, service 4,386 6.1 4,362 6.2
Slide 38: 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 & 20-yr 10-yr 5-yr EIX 16.0¢ -- purchased power costs, and 3) a lower 2015 ('98-’18)
Slide 39: 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 40: 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, nearly 400,000 residential customers migrated to TOU rate structures Remaining eligib
Slide 41: 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) • In 2019, SCE is changing its basic TOU pricing period definition for the first time in over 30 years All non-residential and new residential NEM 2.0 customers are served on
Slide 42: SCE Net Energy Metering
SCE Net Energy Metering Monthly Residential Solar SCE Net Metering Statistics (9/18) Installations and MW Installed • 283,374 combined residential and non-residential projects – 2,389 MW installed 7000 40 • 99.6 % solar projects • 276,774 residential (6.2% of all residential customers) – 1,499 MW •
Slide 43: SCE Rates and Bills Comparison
SCE Rates and Bills Comparison 2017-18 Average Residential Rates (¢/kWh) KeyKey Factors Factors 27% 16.6 ₵ Higher • SCE’s residential rates are above national 13.0 ₵ 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 44: Third Quarter Earnings Summary
Third Quarter Earnings Summary Q3 Q3 Key SCE EPS Drivers4 2018 2017 Variance Revenue 5,6,7 $ (0.03) Basic Earnings Per Share (EPS)1 - CPUC revenue (0.02) SCE $ 1.64 $ 1.43 $ 0.21 - FERC revenue (0.01) EIX Parent & Other (0.07) 0.01 (0.08) Lower O&M 0.08 Higher depreciation (0.02) Basic EPS $ 1.57 $
Slide 45: Year to Date Earnings Summary
Year to Date Earnings Summary YTD YTD Key SCE EPS Drivers4 2018 2017 Variance Revenue 5,6,7 $0.04 Basic Earnings Per Share (EPS) 1 - CPUC revenue 0.02 SCE $ 3.43 $ 3.44 $ (0.01) - FERC and other operating revenue 0.02 Higher O&M (0.10) EIX Parent & Other (0.34) (0.03) (0.31) Lower depreciation 0.01
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 Q3 Q3 YTD YTD Earnings Attributable to Edison International 2018 2017 2018 2017 SCE $536 $465 $1,119 $1,121 EIX Parent & Other (23) 5 (112) (11) Basic Earnings $513 $470 $1,007 $1,110 Non-Core Ite
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 2015 2016 2017 CAGR Basic EPS 3.13 $4.02 $1.73 (26%) Non-Core Items SCE Write down, impairment
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
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