Results Presentation. Third Quarter October 24 / Avangrid, utility of the future

Transcription

1 Results Presentation Third Quarter October 24 / 2018 Avangrid, utility of the future

2 Legal Notice FORWARD LOOKING STATEMENTS Certain statements in this presentation may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements may be identified by the use of forward-looking terms such as may, will, should, would, could, can, expect(s,) believe(s), anticipate(s), intend(s), plan(s), estimate(s), project(s), assume(s), guide(s), target(s), forecast(s), are (is) confident that and seek(s) or the negative of such terms or other variations on such terms or comparable terminology. Such forward looking statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on our business, results of operations or financial condition. Such statements are based upon the current reasonable beliefs, expectations and assumptions of our management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on form 10-Q for the six months ended June 30, 2018, which are on file with the Securities and Exchange Commission (SEC) and available on our investor relations website at and on the SEC website at Additional information will also be set forth in subsequent filings with the SEC. You should consider these factors carefully in evaluating for-ward looking statements. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forwardlooking statements to reflect events or circumstances after the date of this presentation whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. About AVANGRID AVANGRID, Inc. (NYSE: AGR) is a leading, sustainable energy company with approximately $32 billion in assets and operations in 24 U.S. states. AVANGRID has two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns eight electric and natural gas utilities, serving 3.2 million customers in New York and New England. Avangrid Renewables owns and operates 7.1 gigawatts of electricity capacity, primarily through wind power, with a presence in 22 states across the United States. AVANGRID employs approximately 6,500 people. AVANGRID supports the U.N. s Sustainable Development Goals, received a Climate Development Project climate score of A-, the top score received in the utilities sector, and has been recognized for two consecutive years by Ethical Boardroom as the North American utility with the best corporate governance practices. For more information, visit Investors@AVANGRID.com 2

3 Legal Notice Use of Non-U.S. GAAP Financial Measures To supplement our consolidated financial statements presented in accordance with U.S. GAAP, AVANGRID considers certain non- GAAP financial measures that are not prepared in accordance with U.S. GAAP, including adjusted net income, adjusted EPS, adjusted gross margin and adjusted EBITDA. The non-gaap financial measures we use are specific to AVANGRID and the non-gaap financial measures of other companies may not be calculated in the same manner. We use these non-gaap financial measures, in addition to U.S. GAAP measures, to establish operating budgets and operational goals to manage and monitor our business, evaluate our operating and financial performance and to compare such performance to prior periods and to the performance of our competitors. We believe that presenting such non-gaap financial measures is useful because such measures can be used to analyze and compare profitability between companies and industries because it eliminates the impact of financing and certain non-cash charges as well as allow for an evaluation of AVANGRID with a focus on the performance of its core operations. In addition, we present non- GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance. We provide adjusted net income and adjusted earnings per share, which are adjusted to reflect the effect of mark-to-market changes in the fair value of derivative instruments used by AVANGRID to economically hedge market price fluctuations in related underlying physical transactions for the purchase and sale of electricity, adjustments for the non-core Gas Storage business including certain losses related to its sale, restructuring charges primarily associated with reorganizing to better align our people resources with business demands and priorities as part of the Forward program, income from cash collateral released in excess of outstanding receivables from a bankruptcy proceeding authorization with a Renewables customer regarding two power purchase agreements and impact from measurement of deferred income tax balances as a result of the Tax Act enacted by the U.S. federal government on December 22, We define adjusted EBITDA as net income attributable to AVANGRID, adding back income tax expense, depreciation, amortization, impairment of non-current assets and interest expense, net of capitalization, and then subtracting other income and earnings from equity method investments. We also define adjusted gross margin as adjusted EBITDA adding back operations and maintenance and taxes other than income taxes and then subtracting transmission wheeling. The most directly comparable U.S. GAAP measure to adjusted EBITDA and adjusted gross margin is net income. We believe that presenting these non-gaap financial measures is useful in understanding and evaluating actual and projected financial performance and contribution of AVANGRID core lines of business and to more fully compare and explain our results. The most directly comparable U.S. GAAP measure to adjusted net income is net income. We also provide adjusted EPS, which is adjusted net income converted to an earnings per share amount. The use of non-gaap financial measures is not intended to be considered in isolation or as a substitute for, or superior to, AVANGRID s U.S. GAAP financial information, and investors are cautioned that the non-gaap financial measures are limited in their usefulness, may be unique to AVANGRID, and should be considered only as a supplement to AVANGRID s U.S. GAAP financial measures. The non-gaap financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools. Non-GAAP financial measures are not primary measurements of our performance under U.S. GAAP and should not be considered as alternatives to operating income, net income or any other performance measures determined in accordance with U.S. GAAP. 3

4 James Torgerson 3Q & 9M 2018 Highlights 4

5 Highlights 3Q 18 Net Income $125M, $0.40/share 9M 18 Net Income $476M, $1.54/share 3Q 18 Adjusted Net Income $139M, $0.45/share (1) 9M 18 Adjusted Net Income $511M, $1.65/share (1) 3Q 18 Financials Implementing our Strategies Advancing Large Projects 3Q 18 EPS +27% yoy & 3Q 18 Adj. EPS + 11% yoy 9M 18 EPS +4% yoy & 9M 18 Adj. EPS + 3% yoy Dividend increase in 3 rd quarter to $0.440/share, paid on October 1 st ~970 MW onshore wind under construction Filed rate case for CMP; Expect to file for NY companies in 1H 19 Moving forward with CNG & BGC rate cases; Expect approval of CNG mid- December New rate years for UI, SCG, & NY companies in 18 (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. (2) AVANGRID s 50/50 Partnership with Copenhagen Infrastructure Partners. Making progress on key approvals for Vineyard Wind (2) offshore wind project o Executed 20-year contracts & filed with MA PUC on August 1 Advancing NECEC transmission project o FERC Approval received o Maine Certificate of Public Convenience & Necessity in process 5

6 Earnings Results 3Q 18 & 9M 18 3Q 18 & 9M 18 EPS Includes: +27% EPS +4% $1.48 $ months of the gas trading & 4 months of the gas storage businesses Renewables MtM Restructuring & other $0.32 $0.40 3Q 17 3Q 18 9M 17 9M 18 Key drivers 9M 18 year-over-year comparison 11% $0.40 $0.45 Adjusted EPS (1) +3% $1.60 $1.65 3Q 17 3Q 18 9M 17 9M 18 (1) See Appendix for reconciliation of adjusted EPS to EPS. Amounts may not add due to rounding. + Networks rate plans - Impacts of Networks minor storms & lower capitalized labor + New MW in production in late 17 & improved production at existing projects (although below expectations), sale of FES claim & transmission queue position - 1H 18 Renewables project start up & transmission issues 6

7 Earnings Guidance Re-affirming 18 Outlook (1) as of October 23, 2018 EPS $ $2.46 Adjusted EPS (2) $ $2.50 Guiding to lower part of range for 18 due to: Impacts related to storms, including lower capitalizations of overheads, interest & labor vs. forecast Delay in NY earnings adjustment mechanism (EAM) Start up issues & transmission outages at new wind farms Low wind performance Higher Corporate expenses related to tax & audit Risks &/or Opportunities Best practices & operating efficiencies Wind performance Timing of capital spending Weather/storms Sale of renewables development projects Taxes & regulatory Re-affirming & EPS & Adjusted EPS (2) CAGR of ~8-10% (1) (1) As of February 20, 2018 (does not include Vineyard Wind, NECEC or the Networks Resiliency Program (except for AMI)). (2) See Appendix for reconciliation of non-gaap adjusted net income and adjusted EPS to net income and EPS. Management uses adjusted EPS in determining its outlook. 7

8 Renewables Update Renewables has ~1 GW Under Construction AVANGRID Operations In Construction (970 MW) Montague (OR): 201 MW COD Late 19 Coyote Ridge (SD): 97 MW COD Late 19 Karankawa #1 (TX): 202 MW COD Late 19 Karankawa #2 (TX): 86 MW COD Late 19 Patriot Wind (TX): 226 MW COD Mid 19 Otter Creek (IL): 158 MW COD Late 19 8

9 Renewables Update Secured 67% of 22 Long Term Outlook Target (1,833 MW of 2,744 MW) Secured 94% of 20 Target (1,833 MW of 1,944 MW) 2,744 MW in Outlook 600 MW COD in 17 & 18 (Including Wy East Solar 10 MW COD September 7, 2018) ~970 MW Under Construction (COD 19) ~263 MW with Contracts (COD 20) = 1,833 (67%) of 22 Target SECURED 6.6 GW Installed Capacity Increased onshore pipeline from 8 to 9.7 GW Total ~13.7 GW Pipeline, including ~4 GW Offshore Wind 9

10 Vineyard Wind Project Vineyard Wind 800 MW Project (1) - the Largest U.S. Offshore Wind Project 50/50 Partnership with Copenhagen Infrastructure Partners (CIP) Phase 1: 400 MW COD 21 $74/Mwh (annual esc. 2.5%) Phase 2: 400 MW COD 22 $65/Mwh (annual esc. 2.5%) Eligible for ITC & capacity payments (2) Utilizing existing, proven technology in similar geographic conditions to European offshore Significant, proven European offshore experience with Iberdrola affiliates and CIP on Vineyard Wind team PROJECT HIGHLIGHTS First U.S. Offshore Wind farm to apply for the Bureau of Ocean Energy Management (BOEM) Construction & Operation Plan (COP) BOEM approval timeframe allows for ITC qualification 21 & 22 (1) Not included in our Long Term Outlook as of February 20, 2018 (2) NCF ~50%, based on assumptions, subject to confirming assumptions on turbine model, layout and wind profile. 10

11 Offshore Wind Update Vineyard Wind 800 MW Project on Target with Timeline & Expectations BOEM & State Task Forces meet with stakeholders, conduct environmental studies from Vineyard Wind secures Offshore Wind Lease from BOEM in 15 Energy Diversity Act - Section 83C of Chapter 188 of the Acts of 2016 requires 1,600 MW of offshore wind for MA by 27 (1) Avangrid partners with Copenhagen Infrastructure Partners (CIP) 50/50 in May 17 Vineyard Wind awarded RFP with MA Electric Distribution Companies (EDCs) May 18 for 800 MW; filed executed contracts with MA Department of Public Utilities August 18 Filed for key state & Federal approvals in 17 (including BOEM s SAP & COP) Filed Supplemental Draft Environmental Impact Report to the Massachusetts Environmental Policy Act Office (MEPA) September 18; deemed compliant with MEPA can now submit Final EIR Executed Host Community Agreement in October 18 with Town of Barnstable (gen-tie landing point & on-shore substation); Vineyard Wind has two queue positions for 800 MW each Signed lease October 18 for New Bedford Marine terminal starting December 1, 2020 Procurement process underway first selection will be for WTGs this fall Expect receipt of all approvals in 19 UPDATES (1) MA also passed a bill requesting that the DOER to undertake a cost benefit analysis to procure an additional 1,600 MW of offshore wind to be operational by

12 Vineyard Wind Approvals & Permitting On Track KEY Vineyard Wind Approvals Filing Status Expected Completion Federal: BOEM Site Assessment Plan (SAP) Filed March 17 Approved May 18 Construction & Operation Plan (COP) Filed Dec 17 COP Completeness & Sufficiency Review Completed Anticipate Fall 19 Record of Decision State (for MA RFP): MA DPUC Approval of Contract with EDCs Environmental Impact Study (EIS) Notice of Intent March day Comment Period Expired Expect: Draft Fall 18 Final Spring 19 Filed July 18 Expected Spring 19 MA Environmental Policy Act (MEPA) Environmental Notification Filed Dec 17 Environmental Impact Report (EIR):Draft April 18; Supplemental Draft filed Sept 18 Certificate Issued Feb 18 Supplementary EIR Deemed Compliant Final Pending Final EIR Expected Spring 19 MA Energy Facilities Siting Board (EFSB) Filings in Dec 17 & Feb 18 Expected Spring 19 12

13 Offshore Wind Additional Opportunities U.S. Offshore Wind Pipeline ~25 GW (1) Multiple U.S. offshore wind RFPs anticipated in Northeast lead to further potential opportunities for Vineyard Wind State Targets (MW) Selections to Date New RFPs MA 1) 1,600 by 27 2) 1,600 by 35 MA I: 800 MW (Vineyard Wind May 18) MA II: 800 MW expected in 19 CT N/A CT I: 200 MW June 18 CT II: Up to 12,000,000 MWh Zero Carbon (Vineyard Wind submitted proposals up to 800 MW) NY 2,400 MW by 30 N/A NY I: expected Jan 19 for MW RI 1,000 MW by 20 RI I: 400 MW May 18 RI II: 400 MW In October 18, the U.S. Secretary of the Interior Ryan Zinke announced that the BOEM would auction 3 additional offshore leases in MA on December 13, 2018, with a lease area of ~4.1 GW; 19 companies qualify to participate In April 18 the BOEM also announced it was seeking interest in additional lease areas for offshore New York (1) US DOE Offshore Wind Technologies Report, August

14 Offshore Wind Kitty Hawk Avangrid Renewables Kitty Hawk, NC Offshore Wind Lease 100% ownership 122,405 acres 24 nautical miles from shore Lease area has potential capacity of up to 2.5 GW Grid connection application at Virginia Beach for 3x800 MW submitted to PJM Project has secured a queue position for 2.4 GW in area where high demand is expected Virginia issued its 18 Energy Plan, with an objective of deploying 2 GW of Offshore Wind by 28 Expected timeframe as early as 25 14

15 Networks Regulatory Highlights Tax Reform Act NY NYSEG & RGE began crediting customers October 1, 2018 as required by NYPSC Order on August 9, 2018 ME Included in distribution tariffs effective July 1, 2018, along with recovery of deferred October 17 storm restoration costs CT Proceedings in process MA All MA utilities ordered to return benefits to customers (utilities with pending rate cases, including BGC, may defer & reflect in tariffs) FERC New England Transmission Owner formula rate will automatically capture benefits (UI & CMP); NYSEG & RGE submitted proposed revisions to Transmission rates in May 18 15

16 Networks Regulatory Highlights - Other ME MPUC Order found that the company acted reasonably in its preparation for & response to a major wind & rain storm in October 2017 CMP rate case filed October 15 for a 1-year revenue increase of $24M effective July 1, 2019 (expect 10 month time period), with no net increase in rates due to offset by tax reform liabilities o Request includes 10% ROE/55% Equity, continued decoupling, & initial $16M capex/$5m vegetation for rate year related to Resiliency Program (expect to update during proceeding) CT CNG rate case settlement reached, for 3-year period, with 9.3% ROE/54-55% equity, continued decoupling o Decision expected in December for new rates January 1 MA BGC filed rate case May 17, 2018 for rates effective April 1, 2019; settlement negotiations ongoing NY AMI & EAM settlement discussions, impacted by ongoing storm investigations, management audit, re-engaging in 4Q 18 Expect to file rate case by May 19 16

17 FERC ROE Update FERC issued order on October 16, 2018 regarding New England Transmission Owner ROE Complaints I-IV & methodology The new ROE approach is applied preliminarily (subject to change) to Complaint I, establishing a range of just & reasonable ROEs of 9.60% to 10.99% & setting a just & reasonable base ROE of 10.41% (vs. prior ROE of 10.57%) with a new ROE cap (including incentives) of 13.08%; Briefs on the new approach are due December 17 Benefit of higher ROE cap marginally outweighs lower base ROE ~64% of CMP-T & UI-T is currently capped at 11.74% Transmission Rate Base($M) Currently Capped at 11.74% 11.91% $115 $ % 12.16% $998 (1) As of 12/31/

18 NECEC Project NECEC Transmission Project (1) Building the Grid of the Future PROJECT HIGHLIGHTS 1,200 MW Transmission project delivering Canadian hydro-power to Massachusetts EDCs $950 million capital cost (2) Timing & approval process on track with expectations Expect to begin construction in late 19 with COD by year-end 22 Already control 100% of rights of way 2/3 in existing transmission corridor 1/3 in industrial forest Expect all state permits by 1Q 19 & final project approvals by YE 19 (1) Not included in our Long Term Outlook as of February 20, 2018 (2) Excluding AFUDC. 18

19 NECEC Project Updates NECEC Project on Target with Timeline & Expectations Secured 100% of rights of way to the Canadian Border ( 15-18) Energy Diversity Act - Section 83D of Chapter 188 of the Acts of 2016 requires 9,450,000 MWh of clean energy generation for MA by 27 Support received from over 90% of host communities ( 17-18) Filed all key approvals in 17 & 18 NECEC awarded RFP with MA EDCs March 18; filed executed contracts with MA Department of Public Utilities July 18 Announced MOU for investment in western Maine conservation & nature-based tourism infrastructure with nonprofit Western Mountains and Rivers Corporation (May 18) MA PUC issues procedural order. Contracts expected to be approved by 2Q 19 Announced project will tunnel under Kennebec River & will file amendment to DEP application (October 18) Received FERC Approval October 18 ME CPCN in-process: public meetings/hearings underway; MEPUC examiners report scheduled for December 7, 2018 Expect receipt of all project approvals by year-end 19 UPDATES Procurement progressing on converter stations & other key equipment, within economic targets 19

20 NECEC Approvals & Permitting On Track NECEC Filing Status Expected Completion MA PUC Approval of Contracts Filed July 18 Mid 19 FERC Approval Filed August 18 October 18 (Completed Early) ME PUC Certificate of Public Convenience & Necessity (CPCN) Filed September 17 Early 19 Maine DEP Approval Filed September 17 Early Mid 19 Presidential Permit Filed July 17 End of 19 ISO-NE System Impact Study Filed April 17 Study Started On Time in August Expect Completion Mid-End 19 Army Corps of Engineers Environmental Assessment Filed September 17 Mid 19 Local/Municipal Construction Approvals Est. beginning in 19 Timing as needed through construction period 20

21 Networks Resiliency Program Comprehensive resiliency plan to address the impact of storms on our infrastructure Capital costs of $2.0B:(only ~$500M in Long Term Outlook (AMI)) Operating expenses of ~$500M (vegetation management) Subject to Regulatory Approval Up to 10 year program Initial amounts included in October 15 CMP rate case filing in Maine & expect to update during proceeding Will include in next rate filings in New York in 1H 19 Seeing support from local communities 21

22 On Target to Meet Expectations Implementing our Strategies Advancing Projects Awarded in RFPs Fulfilling our commitment to increase the dividend Re-affirming 18 EPS Outlook: EPS $2.16-$2.46 & Adjusted EPS (1) $2.22-$2.50 Guiding Adjusted EPS to lower part of range for 18 (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. (2) As of February 20, 2018 (does not include Vineyard Wind, NECEC or the Networks Resiliency Program (excluding AMI)). 22

23 James Doug Stuver Torgerson 3Q & 9M 2018 Financial Results 23

24 Results by Business 3Q 18 EPS 9M 18 EPS $1.75 $0.50 $0.40 $0.30 $0.32 ($0.03) $0.01 $0.03 $0.07 $0.40 $1.55 $1.35 $1.15 $1.48 $0.01 $0.08 ($0.08) $0.05 $1.54 $0.20 $0.95 $0.10 $0.75 $- $0.55 No Gas Trading business No Gas Storage business 2 months of Gas Trading business 4 months of Gas Storage business Amounts may not add due to rounding. 24

25 Results by Business 3Q 18 & 9M 18 Adjusted EPS (1) improve year-over-year 3Q 18 Adjusted EPS (1) 9M 18 Adjusted EPS (1) $0.50 $0.40 $0.40 ($0.03) $0.05 $0.03 $0.45 $1.75 $1.55 $1.35 $1.60 $0.01 $0.11 ($0.06) $1.65 $0.30 $1.15 $0.20 $0.95 $0.10 $0.75 $- $0.55 Positive results are primarily driven by new installed capacity at Renewables, improved wind production (although below normal expectations), & Networks rate plans, reduced by storm-related costs & certain renewables start-up & transmission issues (now resolved), & lower capitalized labor (1) See Appendix for reconciliation of adjusted EPS to EPS. Amounts may not add due to rounding. 25

26 Results by Business - Networks 3Q 18 9M 18 Net income $96M Net income $375M Adjusted Net Income (1) $96M Adjusted Net Income (1) $376M Adjusted Net Income 18 vs 17 -$9M (-9%) Adjusted Net Income 18 vs 17 +$2M (+1%) Adjusted EPS (1) $0.31 Adjusted EPS (1) $1.22 Adjusted EPS 18 vs. 17 -$0.03 Adjusted EPS 18 vs. 17 +$0.01 Rate increases +$0.06 Rate increases +$0.17 Non-deferrable storms, capitalized labor & related impacts -$0.03 Non-deferrable storms, capitalized labor & related impacts -$0.10 Depreciation & provisions -$0.03 Depreciation & provisions -$0.08 Earnings Sharing $0.00 Earnings Sharing +$0.03 Other -$0.03 Other -$0.01 New rates for NYSEG, RGE, UI & SCG are offset by non-deferrable minor storm costs & related impacts, higher depreciation & taxes (partially offset in Corporate). Positive earnings sharing impacts for the 9 month to day year-over-year reflects a 17 earnings sharing charge. (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. Amounts may not add due to rounding. 26

27 Results by Business - Renewables 3Q 18 9M 18 Net income $20M Net income $141M Adjusted Net Income (1) $33M Adjusted Net Income (1) $147M Adjusted Net Income 18 vs 17 +$15M (86%) Adjusted Net Income 18 vs 17 +$33M (+29%) Adjusted EPS (1) $0.11 Adjusted EPS (1) $0.48 Adjusted EPS 18 vs. 17 +$0.05 Adjusted Net Income 18 vs. 17 +$0.11 New Wind & Solar (2) -$0.01 New Wind & Solar (2) +$0.05 Existing Wind & Solar (2) +$0.06 Existing Wind & Solar (2) +$0.08 Sale of Projects in Development +$0.01 Sale of Projects in Development +$0.01 Net PTC (New less Roll-Off) -$0.02 Net PTC (New less Roll-Off) +$0.01 Existing Wind RECs $0.00 Existing Wind RECs -$0.01 Taxes & Other +$0.01 Taxes & Other -$0.03 New Wind & Solar included the 590 MW that reached commercial operation in late 17, offset in the quarterover-quarter comparison by the impact of depreciation & operating expenses in a traditionally low wind quarter. Operating results improve at existing projects, including the benefit from the recognition of collateral & settlement of an FES claim. 3Q Sale of Projects in Development includes results of sale of a transmission queue position. (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. (2) Includes the impact of depreciation and operating expenses Amounts may not add due to rounding. 27

28 Results by Business - Corporate 3Q 18 9M 18 Net income $10M Net income -$20M Adjusted Net Income (1) $10M Adjusted Net Income (1) -$13M Adjusted Net Income 18 vs 17 $9M (>100%) Adjusted Net Income 18 vs 17 -$19M(>100%) Adjusted EPS $0.03 Adjusted EPS -$0.04 Adjusted EPS 18 vs. 17 +$0.03 Adjusted Net Income 18 vs. 17 -$0.06 New LTD in November 17 -$0.01 New LTD in November 17 -$0.03 Intercompany Interest, net (2) $0.00 Intercompany Interest, net (2) -$0.02 Tax & Other +$0.04 Tax & Other -$0.01 Finance expenses impact results with 17 issuance of Green Bond & elimination of intercompany interest income from the Gas Storage & Trading businesses in 18, offset by intercompany interest income from Renewables 3Q taxes impacted by annualized rate adjustments to balance segment income tax results with consolidated tax results. Consolidated 9M 18 ETR ~27.7% (3) (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. (2) Interest income from intercompany loan to Renewables and absence of intercompany interest from Gas Storage and Trading businesses in (3) Management format Amounts may not add due to rounding. 28

29 AVANGRID Renewables Metrics Year-over-year impacts largely reflect the addition of new projects in 17 Wind & Solar Installed Capacity (MW) (1) 6, , Montague 201 MW Karankawa 288 MW Patriot 226 MW Coyote Ridge 97 MW Otter Creek 158 MW 9M '17 9M '18 Capacity under construction Capacity Factor (2)(3) +1.3% 28.9% 30.2% 9M 17 9M 18 Long Term Outlook (4) Average NCF Assumptions: New Wind ~40% Operating Wind ~32% Wind Production GWh (3) South & Texas 28% 30% +25% West +25% Avg. Price (5) ($/MWh) +1.2% $50.3 $50.9 Long Term Outlook (4) Average Pricing Assumptions: Northeast -1% 9M % 19% 23% MidCont +1% 9M 17 9M 18 Merchant Wind ~$26/MWh RECs decline from $8-$11/MWh to $5/MWh PPA prices decline 13% to ~$48- $50/MWh from 16 to (1) Includes owned capacity and joint ventures. (2) Average annual capacity factor based on wind production & capacity (3) Includes owned capacity only. (4) As of February 20, (5) Includes PPA, merchant (including JVs) and RECs. Amounts may not add due to rounding. 29

30 AVANGRID Financial Strength Maintaining our strong balance sheet & cash flow Increased the Dividend Credit Metrics as of 9/30/2018 (1) Dividends 2.9x Net Debt/ Adjusted EBITDA DPS $0.44/quarter ($1.76 annually) Beginning with 3Q 18 29% Net Leverage ( to 43% by 22 in Long Term Outlook (2) ) Payout Target 65-75% 29% FFO/Debt Increases in line with EPS growth & Payout target (1) See Appendix for Company definitions of metrics and reconciliation of adjusted EBITDA to net income, funds from operations (FFO) to net income and net debt to debt. (2) Long term outlook , as of February 20,

31 Re-affirming 18 Outlook as of October 23, Guidance is Based on: Adjusting Business Segment 18 Outlooks AVANGRID EPS $ $2.46 AVANGRID Adjusted EPS (1) $ $2.50 Networks $ $1.76 Networks $ $1.76 Renewables $ $0.70 Renewables $ $0.70 Corporate ($0.06) $0.04 Corporate ($0.06) $0.04 Gas Storage ($0.06) ($0.03) Sale of Gas Trading March 18 Sale of Gas Storage May 18 Guiding to lower part of range 18 Guidance is based on Adjusted EPS (1) (1) Adjusted EPS excludes the Gas Storage & Trading businesses. See Appendix for reconciliation of non-gaap adjusted net income and adjusted EPS to net income. Management uses adjusted EPS in determining its outlook. 31

32 Appendix 32

33 Reconciliation AVANGRID 3Q 18 Adjusted Net Income Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 AVANGRID CONS Networks Renewables Corporate Gas Storage AVANGRID CONS Networks Renewables Corporate Gas Storage (in millions) Net Income (Loss) Attributable to Avangrid, Inc. $ 125 $ 96 $ 20 $ 10 $ (1) 476 $ 375 $ 141 $ (20) $ (20) Adjustments: Add: Mark-to-market adjustments - Renewables Restructuring charges (1) Loss from held for sale measurement (2) Income from release of collateral - Renewables (3) 7 7 Impact of the Tax Act (4) (0) (0) 7 7 Income tax impact of adjustments (5) (5) (1) (5) (0) 11 (1) (2) 14 Gas Storage & Transportation adjustment, net of tax (6) 0 0 (10) (10) Adjusted Net Income $ 139 $ 96 $ 33 $ 10 $ (0) $ 511 $ 376 $ 147 $ (13) $ Add: Net income attributable to noncontrolling interests Income tax expense (7) (4) Depreciation and amortization (8) Interest expense, net of capitalization (9) Less: Other income and (expense) Earnings (losses) from equity method investments 1 4 (3) 8 10 (2) Adjusted EBITDA $ 494 $ 313 $ 174 $ 7 $ (0) $ 1,579 $ 1,032 $ 542 $ 5 $ Add: Operations and maintenance (10) (7) 1,198 1, (5) Taxes other than income taxes Adjusted Gross Margin $ 998 $ 742 $ 256 $ 0 $ (0) $ 3,193 $ 2,414 $ 779 $ 0 $ (1) Restructuring charges relate to costs resulted from restructuring actions involving targeted voluntary workforce reductions within the Networks segment. (2) The amount of loss from measurement of assets and liabilities held for sale of Gas Storage & Transportation activity. (3) Relates to cash collateral released in excess of outstanding receivables from a bankruptcy proceeding authorization with a Renewables customer regarding two power purchase agreements. (4) The amount of the impact from measurement of deferred income tax balances as a result of the Tax Cuts and Jobs Act of 2017, (Tax Act) enacted by the U.S. federal government on December 22, (5) Income tax impact of adjustments: $(2.6) million and $(2.3) million from mark-tomarket (MtM) adjustment, $(1.9) million and $0 from release of collateral, $(0.3) million and $(0.6) million from restructuring charges, $(0.1) million and $14.4 million from loss from held for sale measurement for the three and nine months ended September 30, (6) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. (7) Adjustments have been made for production tax credit adjustments for the amount of $11 million and $59 million for three and nine months ended September 30, 2018, respectively, have been reclassified from revenues to reflect classification by nature in the three and nine months ended September 30, After reflecting these by nature classification adjustments the calculated effective income tax rate are impacted for the period presented under this by nature classification presentation. (8) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based on the by nature classification. Vehicle depreciation was $4 million and $13 million and bad debt provision was $24 million and $62 million in Networks, for the three and nine months ended September 30, Additionally, government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization based on the by nature classification as follows: government grants of $1.0 million and $3.0 million in Networks and investment tax credits of $23 million and $67 million in Renewables, for the three and nine months ended September 30, (9) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses in Networks for the periods presented. (10) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of these items for the periods presented. In addition, the vehicle depreciation and bad debt provision have been reflected within depreciation and amortization in Networks for the periods presented. 33

34 Reconciliation AVANGRID 3Q 17 Adjusted Net Income Three Months Ended AVANGRID CONS Networks Renewables Corporate Gas Storage Nine Months Ended September 30, 2017 September 30, 2017 AVANGRID CONS Networks Renewables Corporate Gas Storage Net Income (Loss) Attributable to Avangrid, Inc. $ 99 $ 104 $ 15 $ 1 $ (21) $ 458 $ 372 $ 115 $ 6 $ (35) Adjustments: Mark-to-market adjustments - Renewables 4 4 (2) (2) Restructuring charges (1) Income tax impact of adjustments (2) (3) (1) (2) (0) (1) 1 Gas Storage & Transportation adjustment, net of tax (3) Adjusted Net Income $ 125 $ 106 $ 17 $ 1 $ $ 494 $ 374 $ 114 $ 6 $ Add: Net income attributable to noncontrolling interests Income tax expense (4) (11) (2) 10 Depreciation and amortization (5) Interest expense, net of capitalization (6) (5) (14) Less: Earnings (losses) from equity method investments 0 4 (4) 1 12 (10) Adjusted EBITDA $ 468 $ 341 $ 120 $ 6 $ $ 1,561 $ 1,102 $ 457 $ 3 $ Add: Operations and maintenance (7) (8) 1, (6) Taxes other than income taxes Adjusted Gross Margin $ 936 $ 740 $ 196 $ (0) $ $ 3,028 $ 2,349 $ 679 $ 0 $ (in millions) (1) Restructuring charges relate to costs resulted from restructuring actions involving targeted voluntary workforce reductions and related costs in our plan to vacate a lease, predominantly within the Networks segment. (2) Income tax impact of adjustments: $(2) million and $1 million from MtM adjustment for the three and nine months ended September 30, 2017, respectively, and $(1) million from restructuring charges for the three and nine months ended September 30, (3) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. (4) Adjustments have been made for production tax credit adjustments for the amount of $11 million and $37 million for three and nine months ended September 30, 2017, respectively, as they have been included in operating revenues in Renewables, and $14 million of unfunded future income taxes in Networks have been reclassified from revenues to reflect classification by nature in nine months ended September 30, After reflecting these by nature classification adjustments the calculated effective income tax rates are impacted for both periods presented under this by nature classification presentation. (5) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based on the by nature classification. Vehicle depreciation was $4 million and $13 million and bad debt provision was $23 million and $50 million in Networks, for the three and nine months ended September 30, 2017, respectively. Additionally, government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization based on the by nature classification as follows: government grants of $1.3 million and $4.5 million in Networks and investment tax credits of $22 million and $67 million in Renewables, for the three and nine month periods ended September 30, 2017, respectively. (6) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses in Networks for the periods presented. (7) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of these items for the periods presented. In addition, the vehicle depreciation and bad debt provision have been reflected within depreciation and amortization in Networks for the periods presented. 34

35 Reconciliation AVANGRID 3Q 18 & 3Q 17 Adjusted EPS Avangrid, Inc. Reconciliation of Adjusted Non-GAAP Earnings (Loss) Per Share (EPS) (Unaudited) Three months ended September 30, Nine months ended September 30, '18 vs ' '18 vs '17 Networks $ 0.31 $ 0.34 $ (0.03) $ 1.21 $ 1.20 $ 0.01 Renewables Corporate (0.06) 0.02 (0.08) Gas Storage (0.00) (0.07) 0.07 (0.06) (0.11) 0.05 Earnings Per Share $ 0.40 $ 0.32 $ 0.08 $ 1.54 $ 1.48 $ 0.06 Adjustments: Restructuring charges (0.00) (0.00) Mark-to-market adjustments - Renewables (0.01) 0.03 Loss from held for sale measurement Income from release of collateral - Renewables Impact of the Tax Act (0.00) - (0.00) Income tax impact of adjustments* (0.02) (0.01) (0.01) 0.04 (0.00) 0.04 Gas Storage, net of tax (0.07) (0.03) 0.11 (0.15) Adjusted Earnings Per Share $ 0.45 $ 0.40 $ $ 1.60 $ 0.05 Weighted-avg # of Shares (M): Amounts may not add due to rounding * 2018: EPS Income tax impact of adjustments: $(0.01) from mark-tomarket (MtM) adjustment - Renewables, $(0.00) from restructuring charges - Networks, $0.05 from loss from held for sale measurement. * 2017: EPS Income tax impact of adjustments: $0.01 from MtM adjustment - Renewables and $(0.01) from restructuring charges - Networks. Non-GAAP Adjusted Earnings (Loss) Per Share Three months ended September 30, Nine months ended September 30, Adjusted Adjusted '18 Adjusted 2018 Adjusted 2017 '18 vs '17 Adjusted 2018 Adjusted 2017 vs '17 Networks $ 0.31 $ 0.34 $ (0.03) $ 1.22 $ 1.21 $ 0.01 Renewables Corporate (0.04) 0.02 (0.06) Adjusted Earnings Per Share $ 0.45 $ 0.40 $ 0.05 $ 1.65 $ 1.60 $ 0.05 Weighted-avg # of Shares (M): Amounts may not add due to rounding 35

36 Reconciliation AVANGRID Net Debt The Net Debt quantitative reconciliation as of September 30, 2018 and December 31, 2017 is as follows $M Non-current debt $ 5,096 $ 5,196 Add: Current portion of debt Notes payable (including affiliates) Other notes payable - long-term Debt 6,159 6,207 Add: Tax equity financing arrangements 98 Interest accrued Less: Cash and cash equivalents Net Debt $ 6,194 $ 6,321 36

37 Reconciliation AVANGRID FFO The Adjusted Funds from Operations (FFO) quantitative reconciliation as of September 30, 2018 and December 31, 2017 is as follows $M As of September 30, 2018 December 31, 2017 (in millions) Net Income Attributable to Avangrid, Inc Adjustments: Add: Mark-to-market adjustments - Renewables 9 15 Restructuring charges (1) 2 20 Loss from held for sale measurement (2) Impact of the Tax Act (3) 7 (328) Impairment of equity method and other investment (4) 49 Income tax impact of adjustments (5) 11 (162) Gas Storage & Transportation adjustment, net of tax (6) (10) 64 Adjusted Net Income Add: Net (loss) income attributable to noncontrolling interests 8 1 Depreciation and amortization 798 1,021 Deferred Income Taxes Cash distribution from equity method investments 5 20 Less: Other income and (expense) 2 1 Earnings from equity method investments 8 5 Adjusted FFO 1,468 1, Adjusted FFO 1,811 9 months Adjusted FFO 1,468 1,473 Last 12 months Adjusted FFO 1,807 FFO/Net Debt 29.2% 28.7% (1) Restructuring charges relate to costs resulted from restructuring actions involving targeted voluntary workforce reductions and related costs in our plan to vacate a lease, predominantly within the Networks segment. (2) The amount of loss from measurement of assets and liabilities held for sale of Gas Storage & Transportation activity. (3) The amount of the impact from measurement of deferred income tax balances as a result of the Tax Cuts and Jobs Act of 2017, (Tax Act) enacted by the U.S. federal government on December 22, (4) The amount of other than temporary impairment (OTTI) on equity method investment in 2017 and other investment in 2016 (5) Income tax impact of adjustments: $(2.3) million from mark-tomarket adjustment, $(0.6) million from restructuring charges, $14.4 million from loss from held for sale measurement; $(5) million from mark-to-market adjustment, $(8) million from restructuring charges, $(13) million from other than temporary impairment on equity method investment, $(179) million from loss from held for sale measurement and $43 million from adjustment to unitary income taxes at Renewables as a result of expected sale of Gas. (6) Removal of the impact from Gas Storage & Transportation activity in the reconciliation of Net Income to adjusted EBITDA and adjusted gross margin. 37

38 AVANGRID Renewables Average Price PPA prices decrease Energy prices plus RECs for merchant increase PPA Avg. Price ($/MWh) Merchant Avg. Price (1) ($/MWh) -3% $56.0 $54.2 Other (2) $39.9 $ % $43.4 $15.7 Energy $23.1 $27.7 9M 17 9M 18 9M 17 9M 18 Avg. Price (3) ($/MWh) +1% $50.3 $50.9 9M 17 9M 18 (1) Includes JVs. (2) Includes RECs & hedges. (3) Includes PPA, merchant & RECS. 38

39 Avangrid Renewables Regional Data Capacity Factor (1)(2) by Area 3Q 18 vs. 3Q 17 West 30.8% +8.3pp MidCont 24.5% +15.0pp Northeast 16.6% +10.4pp South/Texas 23.9% -4.6pp Capacity Factor (1)(2) by Area 9M 18 vs. 9M 17 West 30.4% +15.8pp MidCont 30.9% +0.6pp Northeast 26.6% -3.4pp South/Texas 32.3% +1.9pp Wind Production by Area (GWh) (2) 3Q 18 vs. 3Q 17 West 1, % MidCont % Northeast % South/Texas % TOTAL 3, % Wind Production by Area (GWh) (2) 9M 18 vs. 9M 17 West 3, % MidCont 2,858 +1% Northeast 2,263-1% South/Texas 3, % TOTAL 12, % Avg. Price (3) Var% vs. 3Q 17 West -4% -$2.43/MWh MidCont -8% -$2.75/MWh Northeast -12% -$7.92/MWh South/ Texas +30% /MWh Avg. Price (3) Var% vs. 9M 17 West -1% -$0.80/MWh MidCont +1% +$0.25/MWh Northeast -6% -$3.56/MWh South/ Texas +7% +$3.24/MWh (1) Average annual capacity factor based on wind production & capacity. (2) Excludes joint ventures. (3) Includes PPAs, merchant and RECs, includes joint ventures. Amounts may not add due to rounding. 39

40 Projects in Long Term Outlook (1) Long Term Outlook (1) includes 2,744 MW new wind & solar 1,570 MW Completed or In Construction ~1,833 MW Completed, In Construction or with Contracts (~67%) Project ~MW PPA Counterparty / Other COD COD (600 MW) Gala Solar (OR) 56 Large C&I 17 Deerfield (VT) 30 Green Mtn. Power 17 Secured Safe Harbor for: 100% PTCs up to 2 GW 80% PTCs for > 0.5 GW Tule I (CA) 131 Southern CA Edison 17 El Cabo (NM) 298 Southern CA Edison 17 Twin Buttes II (CO) 75 Tri-State Generation 17 Wy East Solar (OR) 10 PGE 18 In Construction (~970 MW) Montague (OR) 201 Large C&I Late 19 Karankawa #1 (TX) 202 Austin Energy Late 19 Karankawa #2 (TX) 86 Major Footwear & Apparel Company Late 19 Coyote Ridge (SD) 97 Google, Inc. Late 19 Otter Creek (IL) 158 Large C&I Late 19 Patriot Wind Project (TX) 226 Project with 12-year Hedge (Developed by NRG) Additional Contracts (~263 MW) Mid 19 NEW in 2018 Tatanka Ridge (SD) 97 Google, Inc. Late 20 La Joya (NM) 166 Public Service of New Mexico Late 20 (1) As of February 20,