Oncor Electric Delivery Third Quarter 2011 Investor Call October 28, 2011 Exhibit 99.1 |
1 Oncor Electric Delivery Forward Looking Statements This presentation contains forward-looking statements, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that could cause actual results to differ materially from management’s current projections, forecasts, estimates and expectations is contained in filings made by Oncor Electric Delivery Company LLC (Oncor) with the Securities and Exchange Commission (SEC). Specifically, Oncor makes reference to the section entitled “Risk Factors” in its annual and quarterly reports. In addition to the risks and uncertainties set forth in Oncor’s SEC filings, the forward-looking statements in this presentation could be affected by, among other things: prevailing governmental policies and regulatory actions; legal and administrative proceedings and settlements; weather conditions and other natural phenomena; acts of sabotage, wars or terrorist activities; economic conditions, including the impact of a recessionary environment; unanticipated population growth or decline, or changes in market demand and demographic patterns; changes in business strategy, development plans or vendor relationships; unanticipated changes in interest rates or rates of inflation; unanticipated changes in operating expenses, liquidity needs and capital expenditures; inability of various counterparties to meet their financial obligations to Oncor, including failure of counterparties to perform under agreements; general industry trends; hazards customary to the industry and the possibility that Oncor may not have adequate insurance to cover losses resulting from such hazards; changes in technology used by and services offered by Oncor; significant changes in Oncor’s relationship with its employees; changes in assumptions used to estimate costs of providing employee benefits, including pension and other post-retirement employee benefits, and future funding requirements related thereto; significant changes in critical accounting policies material to Oncor; commercial bank and financial market conditions, access to capital, the cost of such capital, and the results of financing and refinancing efforts, including availability of funds in the capital markets and the potential impact of disruptions in US credit markets; circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets; financial restrictions under Oncor’s revolving credit facility and indentures governing its debt instruments; Oncor’s ability to generate sufficient cash flow to make interest payments on its debt instruments; actions by credit rating agencies; and Oncor’s ability to effectively execute its operational strategy. Any forward-looking statement speaks only as of the date on which it is made, and Oncor undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. Regulation G This presentation includes certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in this presentation, which is available on Oncor’s website, www.oncor.com, under the ‘News’ tab in the Investor Information section, and also filed with the SEC. |
2 Oncor Electric Delivery 3rd Quarter 2011 Investor Call Agenda Financial Overview David Davis Chief Financial Officer Operational Review Bob Shapard Chairman and CEO Q&A |
3 Oncor Electric Delivery Weather Drove Q3 2011 Volumes and Impacted Weather- Adjusted Response Avg KWH/Residential Premise, Weather Adj Q3 ‘10 vs. Q3 ‘11 Residential GWH, Actual Q3 1 ‘10 vs. Q3 ‘11 Residential Points of Delivery Q3 ‘10 vs. Q3 ‘11; thousands of meters Residential GWH, Weather Adj Q3 ‘10 vs. Q3 ‘11 14,133 16,098 Q3 '10 Q3 '11 4,836 4,664 Q3 '10 Q3 '11 13,017 12,671 Q3 '10 Q3 '11 2,693 2,717 At 9/30/2010 At 9/30/2011 0.9% 13.9% 2.7% 3.6% 1 Unless otherwise indicated, reflects three months ended September 30. |
4 Oncor Electric Delivery Large C&I Demand and Usage Trends Suggest Continued Economic Recovery Large C&I GWH, Actual Q3 ‘10 vs. Q3 ‘11 Large C&I GWH, Weather Adj Q3 ‘10 vs. Q3 ‘11 18,411 18,722 Q3 '10 Q3 '11 3.4% 2.9% 17,640 18,234 Q3 '10 Q3 '11 Large C&I Billed MW Demand (Avg) Q3 1 ‘10 vs. Q3 ‘11 18,795 19,822 Q3 '10 Q3 '11 17,053 16,575 Q3 '10 Q3 '11 Large C&I Actual MW Demand (Avg) Q3 ‘10 vs. Q3 ‘11 5.5% 1.7% 1 Three months ended September 30. |
5 Oncor Electric Delivery Starting Q3 ‘11, Distribution “Book” Revenue Related to Recovery of Wholesale Transmission Service Will Match Expense 1 $143 $144 $147 $153 $158 $160 $160 $144 $130 $172 $133 $150 $147 $204 Includes affiliate transmission costs and excludes impacts of deferrals of accounting recognition to reflect timing of recovery under PUCT regulations. Numbers indicate amounts TCRF – Transmission Cost Recovery Factor 1 per quarter |
6 Oncor Electric Delivery Summary of Financial Results 1 Adjusted Net Income Q3 ‘10 vs. Q3 ‘11; $ millions 146 141 Q3 '10 Q3 '11 Adjusted Operating Revenues Q3 2 ‘10 vs. Q3 ‘11; $ millions 788 851 Q3 '10 Q3 '11 PP&E, net Q3 ‘10 vs. Q3 ‘11; $ millions 9,529 10,247 At 9/30/2010 At 9/30/2011 Adjusted Operating Cash Flow Q3 ‘10 vs. Q3 ‘11; $ millions 334 396 Q3 '10 Q3 '11 1 Excludes impacts from transition bond debt, and fair value accounting adjustments associated with the October 2007 merger. 2 Unless otherwise indicated, reflects three months ended September 30. 8.0% 18.6% 3.4% 7.5% |
7 Oncor Electric Delivery Credit Metrics 1 Continue to be Strong EBITDA Q3 2 ‘10 vs. Q3 ’11 and TME 3 9/30/10 vs TME 9/30/11; $ millions EBITDA/Cash Interest TME 9/30/10 vs. TME 9/30/11; Ratio 4.7x 4.7x TME 9/30/10 TME 9/30/11 Debt/EBITDA TME 9/30/10 vs. TME 9/30/11; Ratio 3.7x 3.5x TME 9/30/10 TME 9/30/11 1 Excludes impacts from transition bond debt, a one-time write-off of regulatory assets and fair value accounting adjustments associated with the October 2007 merger. 2 Three months ended September 30. 3 Twelve months ended. 452 480 1,407 1,509 Q3 '10 Q3 '11 TME 9/30/10 TME 9/30/11 7.2% 6.2% |
8 Oncor Electric Delivery Oncor’s Credit Facility Maturity Has Been Extended to October 2016 Revolver Capacity Borrowings and Letters of Credit Effective Remaining Capacity Cash Total Available Liquidity $2.0 billion Secured Revolving Credit Facility 1 Balances at October 26, 2011; $ millions $2,000 $564 $1,436 $20 $1,456 Rating Outlook Moody’s Baa1 Stable Standard & Poor’s A- Stable Fitch Ratings BBB+ Stable Solid Credit Ratings 1 Oncor’s $2.0 billion Credit Facility matures in 2016. 2 Excludes transition bond debt. $376 $524 $500 $324 $550 $126 11 12 13 14 15 16 17 18 19 20 Long-Term Debt 2 Maturity Profile 2011-2020; $ millions |
9 Oncor Electric Delivery 226 200 230 240 305 325 305 171 180 170 185 200 205 215 164 160 150 257 290 140 135 475 490 202 580 555 390 1,020 1,410 1,250 950 1,000 1,005 1,010 340 155 10 11E 12E 13E 14E 15E 16E Actual and Estimated Capital Expenditures 10 - 16E; $ millions New Service Advanced Metering CREZ 1 / Voltage Support IT / Maintenance / General Plant Transmission Grid Expansion Capital Program 1 Oncor currently estimates that the total cost of the CREZ / Voltage Support projects will be approximately $2.0 billion. |
10 Oncor Electric Delivery 3rd Quarter 2011 Investor Call Agenda Financial Overview David Davis Chief Financial Officer Operational Review Bob Shapard Chairman and CEO Q&A |
11 Oncor Electric Delivery Summer Heat of 2011 DFW Days Low >= 80 o 1 2011 55 2 1998 39 3 2008 27 4 2010 24 5 2006 23 DFW Days>=105 o Since 1998 2011 19 2000 10 1998 9 2006 6 1999 5 2008 5 2010 3 2003 2 DFW Days >= 100 o 1 2011 70 2 1980 69 3 1998 56 4 1954 52 5 1956 48 |
12 Oncor Electric Delivery CREZ Update Competitive Renewable Energy Zones 2011 signals major shift in CREZ project as it moves from CCN proceedings to ROW acquisition and actual construction Will invest ~$2.0 billion on project in total, including voltage support, and $580M in 2011 $689M invested in CREZ through September 30, 2011; $373M invested YTD 2011 All 14 CCN’s have been approved |
13 Oncor Electric Delivery AMS Initiative on Target for 2012 Completion Advanced Metering Initiative More than 2.1M meters installed through September 30, 2011; ~609,000 meters installed in YTD ‘11 $477M invested in AMS through September 30, 2011; $117M invested YTD 2011 Customer education |
14 Oncor Electric Delivery Oncor’s Ring-Fencing Oncor Holdings and Oncor are ring-fenced entities and have no obligation to pay any amounts due on EFH and EFIH debt that is secured by EFIH’s equity in Oncor Holdings. In the event of a valid permitted asset transfer (disposition of EFIH’s equity interests in Oncor Holdings), this debt would become obligations of the third party transferee. |
15 Oncor Electric Delivery Appendix - Regulation G Reconciliations and Supplemental Data |
16 Oncor Electric Delivery Measure Definition TSC +TCRF Billed Revenues (non-GAAP) Charges billed to retail electric providers under Public Utility Commission of Texas (PUCT) approved tariffs for the recovery of wholesale transmission service costs excluding accruals for unbilled deliveries and deferral of over/under collected amounts calculated under PUCT reconciliation rules Gross Wholesale Transmission Service Costs (non-GAAP) Charges billed to Oncor distribution business under the PUCT’s wholesale transmission tariff matrix, including Oncor transmission affiliate charges and excluding deferrals of costs calculated under PUCT reconciliation rules Adjusted Operating Revenues (non-GAAP) Oncor operating revenues, less operating revenues of Oncor Electric Delivery Transition Bond Company LLC (BondCo) Adjusted Net Income (non- GAAP) Oncor net income, less effects of purchase accounting and net income of BondCo Debt (non-GAAP) Oncor total debt, less transition bonds of BondCo Adjusted Operating Cash Flow (non-GAAP) Oncor cash provided by operating activities, less BondCo cash provided by operating activities Total Debt (GAAP) Oncor long-term debt (including current portion), plus bank loans and commercial paper EBITDA (non-GAAP) Income from continuing operations before interest expense and related charges and provisions in lieu of income tax, plus depreciation and amortization and special items. EBITDA is a measure used by Oncor to assess performance. Debt/EBITDA (non-GAAP) Total debt less transition bonds divided by EBITDA. Transition, or securitization, bonds are serviced by a regulatory transition charge on wires rates and are therefore excluded from debt in credit reviews. Debt / EBITDA is a measure used by Oncor to assess credit quality. EBITDA/Cash Interest (non- GAAP) EBITDA divided by cash interest expense is a measure used by Oncor to assess credit quality. Financial Definitions |
17 Oncor Electric Delivery Table 1: Oncor TSC + TCRF Billed Revenues and Wholesale Transmission Service Costs Reconciliation Three Months Ended Q1 ‘10 – Q3 ‘11 $ millions Q1 ‘10 Q2 ’10 Q3 ’10 Q4 ’10 Q1 ’11 Q2 ’11 Q3 ’11 Oncor operating revenues 703 702 831 678 706 756 897 Adjustments: Operating revenues – Bondco (41) (37) (43) (32) (35) (38) (46) Other revenues (547) (504) (616) (526) (552) (526) (695) TCRF revenue deferral - - - - - - 39 Unbilled revenues 29 (31) - 13 31 (45) 9 TSC + TCRF billed revenues 144 130 172 133 150 147 204 Oncor operation and maintenance expense 249 252 256 252 258 259 281 Less: Non-wholesale transmission service expense (151) (154) (154) (156) (155) (153) (168) Wholesale transmission service expense 98 98 102 96 103 106 113 Plus: Affiliate wholesale transmission service costs 45 46 45 49 50 50 51 Net wholesale transmission cost deferral - - - 8 5 4 (4) Gross wholesale transmission service costs 143 144 147 153 158 160 160 1 Other revenues consist of distribution base rates other than TSC and TCRF, advanced metering surcharges, third party transmission revenues and other miscellaneous revenues 1 |
18 Oncor Electric Delivery Table 2: Oncor Adjusted Operating Revenues Reconciliation Three Months Ended September 30, ‘10 and ‘11 $ millions Q3 ‘10 Q3 ‘11 Operating revenues – Oncor 831 897 Less: Operating revenues – BondCo (43) (46) Adjusted operating revenues, excluding BondCo 788 851 |
19 Oncor Electric Delivery Q3 ‘10 Q3 ‘11 Net income – Oncor 149 144 Less: Effects of fair value accounting (after tax) (3) (3) Adjusted net income, excluding BondCo 146 141 Table 3: Oncor Adjusted Net Income Reconciliation Three Months Ended September 30, ‘10 and ‘11 $ millions |
20 Oncor Electric Delivery Table 4: Oncor Operating Cash Flow Reconciliation Three Months Ended September 30, ‘10 and ‘11 $ millions Q3 ‘10 Q3 ‘11 Operating cash flow – Oncor 368 436 Less: Operating cash flow – BondCo (34) (40) Operating cash flow, excluding BondCo 334 396 |
21 Oncor Electric Delivery Table 5: Oncor EBITDA Reconciliation Three Months Ended September 30, ‘10 and ‘11 $ millions Q3 ‘10 Q3 ‘11 Net income – Oncor 149 144 Plus: Depreciation & amortization – Oncor 176 190 Provision in lieu of income taxes – Oncor 79 99 Interest expense – Oncor 87 89 Equals: EBITDA – Oncor 491 522 Less: Net income – BondCo - - Depreciation & amortization – BondCo (33) (38) Provision in lieu of income taxes – BondCo - - Interest expense – BondCo (9) (8) Effects of fair value accounting (pre tax) (8) (7) Regulatory asset amortization 11 11 Oncor EBITDA, excluding BondCo 452 480 |
22 Oncor Electric Delivery Table 6: Oncor EBITDA Reconciliation Twelve Months Ended September 30, ‘10 and ‘11 $ millions TME ‘10 TME ‘11 Net Income – Oncor 352 350 Plus: Depreciation & amortization – Oncor 659 706 Provision in lieu of income taxes – Oncor 207 238 Interest expense – Oncor 347 353 Equals: EBITDA – Oncor 1,565 1,647 Less: Net income – BondCo - - Depreciation & amortization – BondCo (115) (116) Provision in lieu of income taxes – BondCo - - Interest expense – BondCo (39) (33) Effects of fair value accounting (pre tax) (35) (30) Regulatory asset amortization 41 41 Adjustment of goodwill liability (10) - Oncor EBITDA, excluding BondCo 1,407 1,509 |
23 Oncor Electric Delivery Table 7: Oncor Total Debt Reconciliation At September 30, ‘10 and ‘11 $ millions ‘10 ‘11 Short-term debt- Oncor 428 553 Long-term debt due currently – Oncor 111 493 Long-term debt, less due currently – Oncor 5,395 4,882 Total debt – Oncor, including BondCo 5,934 5,928 Less: Short-term debt – BondCo - - Long-term debt due currently – BondCo (111) (117) Long-term debt, less due currently – BondCo (591) (472) Fair value adjustment – BondCo 4 2 Total Oncor debt, excluding BondCo 5,236 5,341 |
24 Oncor Electric Delivery Table 8: Oncor Interest and Debt Coverages Twelve Months Ended September 30, ‘10 and ‘11 $ millions TME ‘10 TME ‘11 Ref Source Interest expense and related charges – Oncor 347 353 Amortization of debt fair value discount – Oncor (1) - Amortization of debt discount – Oncor (7) (3) AFUDC – Oncor - 2 Cash interest expense – Oncor 339 352 Less: Interest expense – BondCo (39) (33) Cash interest expense, excluding BondCo 300 319 A EBITDA, excluding BondCo 1,407 1,509 B Table 5 Total debt, excluding BondCo 5,236 5,341 C Table 6 EBITDA/cash interest – ratio (B / A) 4.7x 4.7x Debt/EBITDA – ratio (C / B) 3.7x 3.5x |