Attached files
| file | filename |
|---|---|
| EX-99.2 - PREPARED REMARKS OF PEDRO PIZARRO DATED 5/1/17 - EDISON INTERNATIONAL | eix-sceexhibit99x2q12017.htm |
| EX-99.1 - EIX/SCE PRESS RELEASE DATED 5/1/17 - EDISON INTERNATIONAL | eix-sceexhibit99x1q12017.htm |
| 8-K - 8-K - EDISON INTERNATIONAL | eix-sceform8xkre1q2017earn.htm |
May 1, 2017
First Quarter 2017
Financial Results
Exhibit 99.3
May 1, 2017 1
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 statements. These forward-looking statements reflect our current expectations; however, such statements
involve risks and uncertainties. Actual results could differ materially from current expectations. These forward-looking
statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to
update them to reflect new information, events or circumstances. Important factors that could cause different results include,
but are not limited to the:
• ability of SCE to recover its costs in a timely manner from its customers through regulated rates, including costs related to
San Onofre and proposed spending on grid modernization;
• decisions and other actions by the CPUC, the FERC, the NRC and other regulatory authorities, including determinations of
authorized rates of return or return on equity, approval of proposed spending on grid modernization, the outcome of San
Onofre CPUC proceedings, and delays in regulatory actions;
• risks associated with cost allocation, including the potential movement of costs to certain customers, caused by the ability
of cities, counties and certain other public agencies to generate and/or purchase electricity for their local residents and
businesses, along with other possible customer bypass or departure due to increased adoption of distributed energy
resources or technological advancements in the generation, storage, transmission, distribution and use of electricity, and
supported by public policy, government regulations and incentives;
• risks inherent in SCE’s transmission and distribution infrastructure investment program, including those related to project
site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs
(payments due under power contracts in the event there is insufficient transmission to enable acceptance of power
delivery), and governmental approvals;
• ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and
to recover the costs of such insurance or in the absence of insurance the ability to recover uninsured losses; and
• risks associated with the decommissioning of San Onofre, including those related to public opposition, permitting,
governmental approvals, and cost overruns.
Other important factors are discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis” in
Edison International’s Form 10-K, most recent Form 10-Q, and other reports filed with the Securities and Exchange
Commission, which are available on our website: www.edisoninvestor.com. These filings also provide additional information on
historical and other factual data contained in this presentation.
Forward-Looking Statements
May 1, 2017 2
Q1
2017
Q1
2016
Variance
Basic Earnings Per Share (EPS)1
SCE $1.07 $0.90 $0.17
EIX Parent & Other 0.04 (0.04) 0.08
Basic EPS $1.11 $0.86 $0.25
Less: Non-Core Items
SCE $ − $ − $ −
EIX Parent & Other2 − 0.01 (0.01)
Total Non-Core Items $ − $0.01 $(0.01)
Core Earnings Per Share (EPS)1
SCE $1.07 $0.90 $0.17
EIX Parent & Other 0.04 (0.05) 0.09
Core EPS1 $1.11 $0.85 $0.26
Key SCE EPS Drivers
Revenue3,4 $0.12
- CPUC – Escalation 0.11
- CPUC – Other 0.01
Lower O&M 0.06
Higher depreciation (0.04)
Higher net financing costs (0.03)
Income tax3,4 0.06
Total core drivers $0.17
Non-core items −
Total $0.17
First Quarter Earnings Summary
Key EIX EPS Drivers
EIX parent – Tax benefits on stock option
exercises and other
$0.09
Total core drivers $0.09
Non-core items2 (0.01)
Total $0.08
1. See Earnings Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix
2. Impact includes hypothetical liquidation at book value (HLBV) for SoCore Energy projects
3. Excludes lower income tax benefits for incremental tax repair deductions and pole-loading program-based cost of removal of $0.06 per share
4. Excludes higher income tax benefits of $0.12 per share for the San Onofre tax abandonment in 2017
Note: First quarter 2016 earnings was updated to reflect the implementation of the accounting standard for share-based payments effective January 1, 2016. Diluted earnings were
$1.10 and $0.85 per share for the three months ended March 31, 2017 and 2016, respectively
May 1, 2017 3
$4.05 $4.14(0.25)0.34
SCE 2017 EPS from
Rate Base Forecast
SCE Variances EIX Parent
& Other
EIX 2017 Core EPS
Midpoint Guidance
• O&M and
financing
benefits -
$0.31
• Energy
efficiency -
$0.03
2017 Core Earnings Per Share Guidance –
Building from SCE Rate Base
• SCE authorized rate base $26.2 billion
• Energy efficiency earnings $0.03 per
share
• Authorized CPUC capital structure - 48%
equity and 10.45% ROE
• FERC ROE of 10.5%
• No change in tax policy
• 325.8 million common shares
• Includes share-based tax benefits as
recorded in Q1 2017
• MHI arbitration decision not included –
$47 million pre-tax SCE recovery
recorded as regulatory liability due to
uncertainty - no earnings impact
• SONGS settlement continues to be
implemented as approved by the CPUC
Key Assumptions
• Holding
Company -
($0.17)
• Edison Energy
Group - ($0.08)
2017 Earnings Per Share Guidance
2017 EIX Earnings Per Share Guidance
As of
February 21, 2017
Reaffirmed As of
May 1, 2017
Low Mid High Low Mid High
EIX Basic EPS $4.04 $4.14 $4.24 $4.04 $4.14 $4.24
Less: Non-Core Items1 - - - - - -
EIX Core EPS2 $4.04 $4.14 $4.24 $4.04 $4.14 $4.24
1. There were no non-core items for the three months ended March 31, 2017
2. See Earnings Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix
It is early in the year and our normal practice is to wait until later in the year before formally updating
guidance. At the same time we recognize there is a bias to the upper half of the guidance range
May 1, 2017 4
General Rate Case Update – ORA Testimony
ORA submitted testimony on April 7, 2017
• Proposed 2018 revenue requirement increase of $14 million above 2017 versus SCE’s request of a $222
million increase over presently authorized base rates
• Proposed post test year increases: 2.7% and 4.2% in 2019 and 2020 over presently authorized total rates,
respectively, versus SCE’s request of 4.2% and 5.2%, respectively1
ORA testimony elements of most interest to investors
• Proposes no Grid Modernization capital expenditures and ~90% of traditional capital expenditures
• Other items similar to ORA’s 2015 GRC testimony, including incentive compensation and traditional capital
expenditures such as 4kV Cutovers and Overhead Conductor Program
Other intervenors submit testimony on May 2, 2017
SCE rebuttal testimony is due June 16, 2017
($ billions)
SCE Rate Base Forecast Comparison – 2017-2020
2016 2017 2018 2019 2020 4-year CAGR
SCE’s Request Level Forecast $24.9 $26.2 $29.3 $32.0 $34.6 8.6%
SCE’s Request Level Forecast at ORA
Recommended Capital Spending Levels
$24.9 $26.2 $28.6 $30.4 $32.2 6.6%
Difference ($0.0) ($0.0) ($0.7) ($1.6) ($2.4)
1. Includes $48 million one-time recovery of pre-2018 Balancing/Memorandum Accounts
May 1, 2017 5
Other First Quarter Finance Topics
SCE Capital Spending and Rate Base Forecasts
• At request level, continue to see 8.6% average annual rate base growth opportunity through 2020
• Potential for at least $4 billion of capital spending and at least $2 billion of rate base growth annually well
into the next decade
• $1 billion of investment opportunities through early part of the next decade not included in forecasts
Major Transmission Project Developments
• Mesa – Schedule updated for six-month adjustment of completion date from Fall 2021 to Spring 2022
• West of Devers – CPUC denied ORA’s appeal of its approval of the project on March 23
• Alberhill System – Final environmental impact review received April 7 - accepted SCE’s recommended project
Cost of Capital Settlement
• Initial proposed decision approving settlement withdrawn – awaiting new proposed decision
No Equity Issuances Required to Support SCE Capital Investments
• $139 million of cash used in Q1 to buy common stock to avoid dilution from benefit plans
Strong Balance Sheet - SCE
• Fund capital spending with debt and preferred borrowings, operating cash flow and retained earnings
• Common equity percent of total capitalization unchanged from year-end at 50.4% vs. required 48%
• No short-term debt as of March 31, 2017
Strong Balance Sheet – Edison International Holding Company
• $400 million 2.125% senior notes due 2020 issued in March
Q2 2017 Earnings Reporting Date July 27, 2017 (tentative)
• Expect to update earnings guidance based on year-to-date performance
May 1, 2017 6
Appendix
May 1, 2017 7
SCE Capital Expenditure Forecast – Request Level
Note: Forecasted capital spending includes CPUC, FERC and other spending. See Capital Expenditure/Rate Base Detailed Forecast for further information, including potential
investment excluded in forecasts. SCE currently sees 2017 capital expenditures of $4.0 billion, reflecting the lack of approval of a grid modernization memorandum account and
minor delays on the start of construction for the Mesa Substation project
($ billions)
$19.3 Billion Capital Program
for 2017-2020
• Capital expenditure forecast incorporates GRC, FERC and
non-GRC CPUC spending – unchanged from prior quarter
Grid modernization spending of $2.3 billion during four-
year period
2017 traditional capital spending incorporates 2015 GRC
decision and FERC spending
Includes $289 million of non-GRC CPUC capital spending
for grid modernization and mobile home pilot program
and charge ready pilot in 2017
Excludes transportation electrification and Charge Ready
Phase II
• Authorized/Actual may differ from forecast
Since the 2009 GRC, CPUC has approved 81%, 89%, and
92% of capital requested, respectively
SCE has no prior approval experience on grid
modernization capital spending and, therefore, prior
results may not be predictive
Forecasted FERC capital spending subject to timely
receipt of permitting, licensing, and regulatory approvals
$3.5
$4.2
$5.0 $5.1 $5.0
2016 (Actual) 2017 2018 2019 2020
Distribution Transmission Generation
Traditional Capital Spending:
Grid Modernization Capital Spending:
Grid Modernization
May 1, 2017 8
SCE Rate Base Forecast – Request Level
CPUC
• Rate base based on request levels from
2018 GRC and 2018 positive true-up from
authorized to forecast 2017 rate base
FERC
• FERC rate base is approximately 19% of
SCE’s rate base by 2020; includes
Construction Work in Progress (CWIP)
Other
• No change from prior forecast
• Excludes SONGS regulatory asset
($ billions)
Note: Weighted-average year basis. 2016-2017 based on 2015 GRC decision. 2018-2020 CPUC based on 2018 GRC request, FERC based on latest forecast and current tax law,
except “rate-base offset” for the 2015 GRC decision excluded because of write off of regulatory asset related to 2012-2014 incremental tax repairs
4-year CAGR of 8.6%
$24.9
$26.2
$29.3
$32.0
$34.6
2016
(Authorized)
2017 2018 2019 2020
Traditional Grid Modernization
May 1, 2017 9
SCE Large Transmission Projects
1. CPUC approved
2. FEIR issued and revised costs are being developed, expected Q2
3. Morongo Transmission holds an option to invest up to $400 million, or half of the estimated cost of the transmission facilities only, at the in-service date. If the option is
exercised, SCE’s rate base would be offset by that amount
4. Total Costs are nominal direct expenditures, subject to CPUC and FERC cost recovery approval. SCE regularly evaluates the cost and schedule based on permitting processes,
given that SCE continues to see delays in securing project approvals
FERC Cost of Capital
10.5% ROE in 2017:
• Base ROE = 9.30% + CAISO participation +
weighted average of individual project incentives
• FERC Formula recovery mechanism in effect
through December 31, 2017
• Application for 2018 FERC Formula recovery
mechanism expected to be filed in Q4 of 2017
• Recent court decisions and lack of FERC quorum
could delay some decisions into 2018
Summary of Large Transmission Projects
Project Name Total Cost4
Remaining Investment
(as of March 2017)
In-Service Date
West of Devers1,3 $1.1 billion $1.01 billion 2021
Mesa Substation1 $608 million $577 million 2022
Alberhill System2 $397 million $360 million 2021
Riverside Transmission Reliability $233 million $227 million 2021
Eldorado-Lugo-Mohave Upgrade $269 million $264 million 2020
May 1, 2017 10
MHI Award Accounting
• On March 13, 2017, a decision was received
from the International Chamber of
Commerce International Court (ICC)
regarding the MHI Arbitration
• $47.1 million net proceeds received by SCE
• CPUC will review the documentation of the
final resolution of the MHI dispute and the
legal costs incurred in pursuing claims
against MHI to ensure such costs are not
unreasonable in relation to the recovery
obtained
• Due to uncertainty associated with the
treatment of the proceeds, no gain recorded
• SONGS owners have elected not to appeal
the decision
MHI Arbitration Decision Calculation
Total Liability Under Contract $137.5
Additional Interest (to be paid by MHI) 33.7
Total MHI Proceeds $163.7
Prior Invoice Paid by MHI (45.4)
MHI Litigation Costs (to be paid by
claimants)
(58.1)
Remaining Proceeds $60.2
Co-participants Share (13.1)
SCE Cash Proceeds Received $47.1
($ millions)
May 1, 2017 11
Earnings Non-GAAP Reconciliations
Note: See Use of Non-GAAP Financial Measures. First quarter 2016 earnings was updated to reflect the implementation of the accounting standard for share-based payments effective
January 1, 2016
($ millions)
Reconciliation of EIX GAAP Earnings to EIX Core Earnings
SCE
EIX Parent & Other
Discontinued Operations
Basic Earnings
Non-Core Items
SCE
EIX Parent & Other
Discontinued Operations
Total Non-Core
Core Earnings
SCE
EIX Parent & Other
Core Earnings
$295
(15)
1
$281
$ −
2
1
$3
$295
(17)
$278
$349
13
−
$362
$ –
–
–
$ −
$349
13
$362
Q1
2016
Q1
2017
Earnings Attributable to Edison International
May 1, 2017 12
SCE Core EPS Non-GAAP Reconciliations
Basic EPS
Non-Core Items
Regulatory and tax items
Write down, impairment and other charges
Insurance recoveries
Less: Total Non-Core Items
Core EPS
Reconciliation of SCE Basic Earnings Per Share to SCE Core Earnings Per Share
5%
5%
$3.33
—
—
—
—
$3.33
$4.81
0.71
—
—
0.71
$4.10
$2.76
—
(1.12)
—
(1.12)
$3.88
Note: See Use of Non-GAAP Financial Measures
$4.46
—
(0.22)
—
(0.22)
$4.68
$3.06
—
(1.18)
0.04
(1.14)
$4.20
Earnings Per Share Attributable to SCE CAGR2011 2012 2013 2014 2015
$4.22
—
—
—
—
$4.22
2016
May 1, 2017 13
2016 Retrospectively Adjusted EPS by Quarter
20161 Q4 Q3 Q2 Q1
Earnings (loss) per share attributable
to Edison International
Continuing Operations
SCE $4.22 $1.01 $1.34 $0.98 $0.90
Edison International Parent & Other (0.23) (0.04) (0.05) (0.11) (0.04)
Discontinued Operations 0.03 0.04 − (0.01) −
Edison International $4.02 $1.01 $1.29 $0.86 $0.86
Less: Non-Core Items
SCE − − − − −
Edison International Parent & Other 0.02 − − 0.01 0.01
Discontinued Operations 0.03 0.04 − (0.01) −
Total Non-Core Items $0.05 $0.04 − − $0.01
Core Earnings (losses)
SCE 4.22 1.01 1.34 0.98 0.90
Edison International Parent & Other (0.25) (0.04) (0.05) (0.12) (0.05)
Edison International $3.97 $0.97 $1.29 $0.86 $0.85
1. As a result of rounding, the total of the four quarters does not always equal the amount for the year
Note: Edison International and SCE adopted an accounting standard in the fourth quarter of 2016, effective January 1, 2016, which resulted in all of the tax effects related to share
based payments being recorded through the income statement. Diluted EPS would have been, $1.00 for the fourth quarter of 2016, $1.27 for the third quarter of 2016, $0.85 for the
second quarter of 2016 and $0.85 for the first quarter of 2016
May 1, 2017 14
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
communicating with investors and analysts regarding Edison International's earnings results
to facilitate comparisons of the Company's performance from period to period. Core
earnings are a non-GAAP financial measure and may not be comparable to those of other
companies. Core earnings (or losses) are defined as earnings or losses attributable to Edison
International shareholders less income or loss from discontinued operations and income or
loss from significant discrete items that management does not consider representative of
ongoing earnings, such as: exit activities, including sale of certain assets, and other activities
that are no longer continuing; asset impairments and certain tax, regulatory or legal
settlements or proceedings.
A reconciliation of Non-GAAP information to GAAP information is included either on the
slide where the information appears or on another slide referenced in this presentation.
EIX Investor Relations Contact
Scott Cunningham, Vice President (626) 302-2540 scott.cunningham@edisonintl.com
Allison Bahen, Senior Manager (626) 302-5493 allison.bahen@edisonintl.com