Con Edison, Inc. Lehman Brothers CEO Energy/Power Conference. New York, NY September 6, 2007

Transcription

1 Con Edison, Inc. Lehman Brothers CEO Energy/Power Conference New York, NY September 6,

2 Forward-Looking Statements This presentation contains certain forward-looking statements of future expectations and financial measures not determined in accordance with Generally Accepted Accounting Principles (non- GAAP) financial measures. Actual results might differ materially from those projected in the forward-looking statements because of factors such as those identified in reports the company has filed with the Securities and Exchange Commission. For more information, contact: Jan Childress, Director, Investor Relations Ellen Socolow, Manager, Investor Relations

3 Long Tradition, Solid Performance Con Edison, Inc. Parent Net Loss: $32 million (4)% Regulated Utilities Orange and Rockland Net Income: $45 million 6% Con Edison of New York Net Income: $686 million 93% Competitive Energy Businesses Con Edison Solutions Net Income: $8 million 1% Con Edison Energy Net Income: $1 million 0% Con Edison Development Net Income: $30 million 4% Note: For the year ended December 31,

4 Competitive Energy Business Focus Con Edison Development Asset ownership and operation Con Edison Energy Wholesale Con Edison Solutions Retail Own or lease 1,668 MW of generation Leases and investments Asset optimization Fuel management Retail supply management Wholesale supply Standard offer service Commodity Supply Commercial, industrial, governmental, residential Green power Aggregation Energy Services Government performance contracting Utility based DSM programs Utility area-wide contracts 2006 Net Income $30 million (reported) $31 million (excluding MTM) 2006 Net Income $1 million (reported) $2 million (excluding MTM) 2006 Net Income $8 million (reported) $28 million (excluding MTM) 4

5 Con Edison of New York Regulated Business Service Area 3.2 million electric customers 1.1 million gas customers 1,800 steam customers 709 MW of regulated generation 36,000 miles of overhead transmission and distribution lines 93,000 miles of underground transmission and distribution lines 4,300 miles of gas mains 105 miles of steam mains and lines 5

6 Con Edison of New York Summary of Gas Joint Proposal Three-year rate plan: October 1, 2007 September 30, 2010 Base rate increases RY1 $67.4 million RY2 $32.7 million RY3 $42.7 million Recovery of uncollectible and storage gas costs via fuel surcharge $17.2 million Authorized ROE 9.7% Earnings sharing threshold 10.9% (RY1) and 10.7% (RY2 and RY3) Based on actual equity ratio up to 50% Continued full recovery of fuel costs Revenue decoupling mechanism Opportunity to retain 20% of non-firm revenues $35 million $50 million, 25% above this level Reconciliation of average gas utility plant, net of depreciation Reconciliation of pension and OPEB costs, property taxes, environmental costs, and interference costs Potential penalties of up to $7.5 million (annually) for not meeting certain performance standards 6

7 Con Edison of New York Gas Rate Base For rate years ending $ billions September 2007* September 2008 September 2009 September 2010 * Reflected in current rate plan. Rate base on June 30, 2007 was $2.3 billion. 7

8 Con Edison of New York Summary of Electric Rate Filing Three year rate plan Proposed rate increase of $1,225 million, or 11.6% Proposed rate year 2 increase $335 million, or 3.2% Proposed rate year 3 increase $390 million, or 3.7% ROE requested 11.5% Equity ratio forecast 48.7% True-up reconciliations requested Pensions, property taxes, environmental remediation, interference costs, storm expenses, and ERRP (East River) maintenance. May 4, 2007 September 2007 Sep. Oct October 2007 Nov. Dec January 2008 February 2008 March 2008 April 1, 2008 Filing with PSC Staff Case/ Rebuttal Testimony Settlement Negotiations Evidentiary Hearings Briefs/ Negotiations Recommended Decision Brief on Exception Final Rate Order New Rates in Effect 8

9 Con Edison of New York Major Components of Proposed Rate Increase ($ millions) Impact of current rate plan $ 515 Expiring credits $250 Plant additions $195 Pensions, property taxes $50 New deferrals/credits $20 New and expanded operating programs 280 $ 44 $ 45 Public safety, reliability, environmental remediation, interference, other Rate Year 1 Rate Year 2 Rate Year 3 New infrastructure investments Return on equity 115 Depreciation Taxes Pension, OPEBs (RY2, RY3) 5 34 Other ( 20 ) ( 27 ) ( 43 ) Total $1,225 $ 335 $ 390 9

10 Con Edison of New York Electric Rate Base For rate years ending $ billions Incremental Investment Rate Plan/Filing 5 0 March 2008* March 2009 March 2010 March 2011 * Reflected in current rate plan. Rate base on June 30, 2007 was $11 billion. 10

11 Con Edison of New York New York City Population Density: 26,000 per Square Mile 11

12 Con Edison of New York New York City Tops All US Cities in Attracting New Residents 10 largest US cities New York Los Angeles Chicago Houston Phoenix Philadelphia San Antonio San Diego Dallas San Jose 3,849, ,884 2,833,321-62,700 2,144, ,936 1,512, ,314 1,448,394-69,156 1,296, ,738 1,256, ,535 1,232, , , ,619 8,214, ,750 Population as of 2006 Change Source: Census Bureau 12

13 Con Edison of New York New York City Job Growth By Sector For the 12-month period ended July 2007 Professional and business services Financial services Leisure and hospitality Health care Construction Trade, transportation, and utilities 14,700 11,800 9,700 8,500 7,100 5,900 Social assistance Other services Government Educational services Information Manufacturing 1, (1,700) (7,200) Source: New York State Department of Labor 13

14 Con Edison of New York New York City and Westchester Housing Permits Number of New Dwelling Units New York City Westchester Total to Date Indicated 35,000 30,000 25,000 Represents New 32-Year Record for New York City 1,364 31,599 1,006 30,927 20,000 15, year average of 14,434 for New York City July 19,383 July 18,486 July 20,944 10,000 1,674 8,987 5, Source: U.S. Census Bureau 14

15 Con Edison of New York New York City Is the Most Energy Efficient Large City in America Average annual residential electricity usage by city Incidence of commuters using public transportation 2000 KWh/customer New York 4,696 New York 53% San Francisco 6,753 San Francisco Chicago 26% 31% Chicago 8,143 Philadelphia 25% Phoenix 13,344 Atlanta 15% Houston 14,542 Los Angeles Houston 10% 6% Dallas 16,116 Dallas 5% Source: Energy Velocity; U.S. Census

16 Con Edison of New York New York s Future: Grow and Grow Greener Mayor s 2030 Plan Governor s 15 by 15 Clean Energy Plan Projects population will rise by 900,000 Construction of new housing Rezoning Reclaim brownfields from the state Enhance NYC infrastructure Transportation, utilities Charge congestion fee Improve energy efficiency Offer incentives to reduce demand Add 3 GW of clean power capacity Encourage long-term power contracts Clean-up the environment Reduce greenhouse gas emissions by 30% Enhance NYS energy supply and delivery Reduce demand by 15% Decouple utility s profits from the amount of energy consumption Strengthen efficiency standards Increase supply of clean power Invest in energy infrastructure Replace Article X Encourage long-term contracts Encourage job retention Lower energy bills to retain 41,000 jobs Clean-up the environment Reduce carbon dioxide by 12.8 m tons 16

17 Con Edison of New York Unparalleled Reliability Interruptions per 1,000 customers served 1,200 1,000 1,050 1,000 1,200 1,000 NYS CECONY Source: New York State Public Service Commission National (USA) New York State (w/o CECONY) CECONY (non-network) CECONY (overall) 21 CECONY (network)

18 Con Edison of New York Major Substation Construction Program Transmission Switching Station Distribution Substation Planned Construction 18

19 Con Edison of New York M29 Transmission Line Project 9.5-mile, 345-kV line connecting Westchester with upper Manhattan Will add 350 MW to New York City s import capability Improve the system s reliability Allow increased delivery of lower-cost power to customers Will serve portions of Bronx and upper Manhattan NYPSC approved Article VII certificate on August 23, 2007 Need NYPSC approval of Environmental Management Expect to be in service by summer

20 Con Edison of New York New York City Continues to Increase Its Building Density 20

21 International Benchmarking 1 ComEd Commonwealth Edison/Exelon Chicago, IL 2 6,560 MW peak Con Edison Consolidated Edison Co. of NY New York, NY ,141 MW peak 3 EDF Energy EDF Energy/EDF Group London, England 4,200 MW peak 4 EDF EDF France/EDF Group Paris, France 3,200 MW peak 5 Hong Kong Electric Hong Kong Electric Company Hong Kong China 7 SMEPC Shanghai Municipal Power Company Shanghai, China 9 KEPKO Kansai Electric Power Company Osaka, Japan 2,560 MW peak 16,680 MW peak 33,600 MW peak 6 CLP China Light & Power Hong Kong China 8 TEPCO Tokyo Electric Power Company Tokyo, Japan 7,820 MW peak 64,300 MW peak 21

22 Advanced Metering Initiative Mobile AMR pilot commenced in ,000 electric meters and 30,000 gas meters installed Second phase AMI pilot program began in 2007 Evaluate performance of selected technologies Validate business case assumptions Integrate meter data into our existing systems Assess customer response to additional information on usage $500 million investment between Plan filed with New York PSC for full deployment by

23 Con Edison of New York New Development is Helping to Spur 1.5% Annual Growth in Electric Peak Usage 111 CENTRAL PARK NORTH SILVERCUP WEST TRUMP PLACE FLUSHING COMMONS NEW YORK TIMES BUILDING ATLANTIC YARDS MILLENIUM TOWERS 23

24 Orange and Rockland Regulated Business Service Area 296,000 electric customers 126,000 gas customers 5,800 miles of transmission and distribution lines 1,830 miles of gas mains Pennsylvania New York Orange and Rockland Connecticut Rockland Electric Pike County Light & Power New Jersey New York City 24

25 Orange and Rockland Regulatory Update O&R Electric Show Cause Order December 2006 Administrative Law Judge/NYPSC decision expected in fall 2007 Temporary rates effective March 1, 2007 Subject to refund pending a proceeding Electric Rate Filing August 2007 Three year rate plan: July 2008 July 2010 Proposed rate increase of $47.8 million in July 2008 ROE requested 11.5% Equity ratio forecast 48.6% Rockland Electric New rates effective April 1, 2007 Rate increases of $6.4 million in rate year 1 25

26 Orange and Rockland 2.3% Annual Growth in Electric Peak Usage Expected Population Thousands 2,140 Employment Thousands 720 2, , , , , , , Source: Census Bureau Source: Moody s Economy.com 26

27 Orange and Rockland Major Substation Construction Program Transmission Switching Station Distribution Substation Planned Construction

28 Orange and Rockland Capital Investment to Meet Growing Demand Chester Substation, Chester, NY Orangeburg Substation, Orangeburg, NY Darlington Substation, Ramsey, NJ Line 60, Rockland County, NY 28

29 Financial Overview Financial Strategy Provide current income and consistent total returns for shareholders at low risk. Proven track record in regulatory relations Current recovery of all energy costs Reconciliation of major uncontrollable costs Weather normalization for gas Stable balance sheet Earnings growth consistent with conservative, low-risk business model 29

30 Con Edison of New York Infrastructure Investment Millions $2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, Actual $1, Actual $1, Actual $1, Actual $1, Budget $1, Forecast $1, Forecast $1,790 Common Plant Steam Gas Electric Depreciation 30

31 Orange and Rockland Infrastructure Investment Millions $ Gas Electric Depreciation Actual $ Actual $ Actual $ Actual $ Budget $ Forecast $ Forecast $125 31

32 Growing Rate Base and Solid Balance Sheet (as of June 30, 2007) Rate Base ($ millions) Capital Structure ($ millions) Target Equity Ratio 48% 50% Con Edison of New York Preferred Stock 1.3% $213 Electric $ 10,990 Gas $ 2,315 Steam $ 1,350 Orange and Rockland Pike Gas $ 1 Pike Electric $ 9 Rockland Electric (distribution) $ 130 (transmission) $ 20 O&R Gas $ 210 O&R Electric $ Long-Term Debt 46.3% $7,778 Common Equity 52.4% $8,806 Total Rate Base $ 15,425 May 2007 issued 11 million common shares. Net proceeds of $558 million. May 2007 redeemed $325 million 7 1/4% CEI PINES. August 2007 issued $525 million in new debt. Expect to issue more in Continued issuances through DRIP and employee stock plans. 32

33 A Compelling Dividend Record: 33 Consecutive Years of Dividend Increases Annualized Dividend $2.50 $2.00 Only utility in S&P 500 with 25 or more consecutive years of dividend increases $2.32 $1.50 $1.00 $0.50 $0.30 $

34 Total Return to Shareholders Average Annual Total Return for Period Ended June 30, Con Edison S&P Year 5 Year 10 Year Source: Bloomberg 34

35 Con Edison s Investment Thesis Low-risk T&D model Strong balance sheet A credit rating Deep management Superior dividend track record 35

36 Appendix 36

37 Con Edison of New York Unparalleled Reliability 2006 Customer Interruption Rate Average Rate = Con Edison Major Utilities Source: Salt River Project Large City Survey 37

38 Summary of Rate Plans Con Edison of New York Electric Apr Yr. 1 $9.3 b Yr. 1 $104.6 m Yr. 1 $128 m $60 m of 11.4% 13%: 50/50 Mar Yr. 2 $9.6 b Yr. 2 None Yr. 2 $173 m annual TCC >13%: 25/75 Yr. 3 $10.3 b Yr. 3 $220.4 m**** Yr. 3 $249 m revenues Gas Oct Yr. 1 $2.0 b Yr. 1 $46.8 m $41 m $35 m of >11.75%: 50/50 Sept Yr. 2 $2.1 b Yr. 2 None over 3 yrs annual non- Yr. 3 $2.2 b Yr. 3 None firm revenues Steam Oct Yr. 1 $1.3 b None $53 m 9.8% 11% 12%: 50/50 Sept Yr. 2 $1.3 b over 2 yrs >12%: 25/75 Orange and Rockland Gas Nov Yr. 1 $235 m Yr. 1 $6.5 m $(3) m 9.8% 11% 12%: 50/50 Oct Yr. 2 $242 m Yr. 2 $6.5 m over 3 yrs 12% 14%: 35/65 Yr. 3 $251 m Yr. 3 $6.3 m >14%: 0/100 RECO Apr Yr. 1 $132 m Yr. 1 $6.4 m $(0.6) m 9.75% Mar per yr continued Effective Rate Rate Amortization Other Authorized Earnings Sharing Terms *** Period Base * Increases ** of Credits Increases ROE (Shareholders/Customers) 38

39 Summary of Rate Plans Footnotes continued * Under Con Edison of New York s electric rate plan, the company is allowed to accrue a full return on increases in net electric transmission and distribution plant above the levels reflected in rates. For the period from April 1, 2005 through December 31, 2006, actual net transmission and distribution has exceeded the net transmission and distribution reflected in rates by $1 billion. The company accrued revenues of $115 million and $38 million in 2006 and 2005, respectively, to reflect the revenue requirement impact of net transmission and distribution difference. For the fix month ended June 30, 2007, the company recognized $98 million in revenues from this rate mechanism compared with $52 million through June ** The Orange and Rockland gas rate plan provides for rate increases in base rates of $12 million in the first year, $0.7 million in the second year, and $1.1 million in the third year. To phase in the effect of the increase for customers, the rate plan provides for O&R to accrue revenues for, but defer billing to customers of, $5.5 million of the first rate year increase by establishing a regulatory asset which, together with interest, will be billed to customers in the second and third years. This chart reflects the phase-in of those rate increases. *** Subject to limitation for cost reconciliations. **** $60 million accrued to income in rate year two. 39

40 Orange and Rockland Summary of Rockland Electric Rate Plan Three year rate plan: April 1, 2007 March 31, 2010 One time base rate increase $6.4 million in April 2007 Authorized ROE 9.75% Common equity ratio 46.5% Rate allowance provides for full recovery of previously deferred costs (e.g. storm charges, removal costs, regulatory expenses) 40

41 Orange and Rockland Summary of Gas Rate Plan Three year rate plan: November 1, 2006 October 31, 2009 Rate increases to be phased in over three years RY1 $6.5 million RY2 $6.5 million RY3 $6.3 million Continued full recovery of fuel costs Reconciliation of pension and OPEB costs, property taxes, and environmental costs 9.8% authorized ROE with earnings sharing threshold of 11% Based on actual equity ratio up to 50% Deferral limitation for earnings above 11% Potential penalties of $1.2 million geared toward gas safety performance and customer service 41

42 Con Edison of New York The Electric System Transmission Distribution Generating Station (electricity generated at 13.8 to 22.0 kv) Transformers (voltage stepped up to transmission voltage) Transmission Substation Area Substation (voltage stepped down to distribution voltage) Transformers (voltage stepped down to 480, 208, or 120 V) Feeders Network Customers (residential, commercial, industrial, hospitals, schools, and street and traffic lights) Connection To Others Radial Customers 42

43 Con Edison Development Overview of Con Edison Development Name Newington (a) ADA Location New Hampshire Michigan 1 Power Plant Type Base/Peak/ Intermediate Base Base Ownership 95.0% 48.0% Fuel Source Gas/Oil Gas Aggregate Capacity (in MW) (b) Owned Capacity (in MW) GENOR CEEMI Guatemala Massachusetts 2 Intermediate Intermediate 49.5% 100.0% Oil Gas/Oil/Hydro (d) Lakewood New Jersey 3 Intermediate 80.0% Gas/Oil 236 (c) 189 NEISO CEEMI Massachusetts 2 Peaking 100.0% Gas/Oil NYISO Ocean Peaking New Jersey 3 Peaking 100.0% Gas PJMISO Rock Springs Maryland 4 Peaking 100.0% Gas Total Capacity 1,778 1,668 (a) Leased pursuant to a consolidated lease transaction. (b) Subject to a power purchase agreement expiring in (c) Subject to a power purchase agreement expiring in (d) Includes 18MW from five small hydroelectric facilities. 43

44 Con Edison Solutions Con Edison Solutions Highlights Ninth largest ESCO nationwide Profitable every year since 2001 Provides commodity service in eight states and the District of Columbia 200,000 plus customers 10.6 million MWhrs sold in % greater than 2005 Supplies green power in New York and Massachusetts Acquired BGA, Inc., an energy service and engineering company headquartered in Tampa, FL, in May 2007 MD TX DE NY NJ CT NH MA 44