Exhibit 99.1
Business Update
Handout
August 2007
August 14, 2007
EDISON INTERNATIONAL®
Forward-Looking Statements
Statements contained in this presentation about future performance, including, without limitation, earnings, asset and rate base growth, load growth, capital investments, 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. Important factors that could cause different results are discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis” in Edison International’s 2006 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and available on our website: www.edison.com. 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.
EDISON INTERNATIONAL®
Use of Non-GAAP Financial Measures
Edison International’s earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. Edison International’s management uses core earnings, which exclude earnings from discontinued operations and other non-core items, internally for financial planning and for analysis of performance. Edison International also uses core earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings results and outlook, as it allows them to more accurately compare the company’s ongoing performance across periods. 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 the presentation.
Second Quarter Highlights
Core earnings1 $0.73 per share up 33%; reported earnings of $0.29 per share impacted by non-core items
Results for Southern California Edison (SCE) on plan
Strong operating performance for Edison Mission Group (EMG)
Core earnings2 guidance increased from $3.05 - $3.45 to $3.24 - $3.59 per share on a higher outlook for EMG
SCE Update
Submitted regulatory filings for $1.8 billion Tehachapi transmission project (June) and $1.3 billion in capital investment for Edison SmartConnectTM (July)
Tendered 2009 General Rate Case notice of intent (July) with final application to be filed in November – consistent with 12%+ 2007-2011 rate base growth
DPV2 transmission project denied by Arizona Corporation Commission (ACC); SCE is evaluating its options on how best to advance the project
EMG Update
Strong operating performance and strengthening capacity market
Placed into service the largest wind project to date, Wildorado (161 MW), located in Texas
Additional wind projects placed into construction, turbine commitments increased, and development pipeline expanded
1 | | See second quarter segment highlights for reconciliation of core earnings to reported earnings. |
2 | | See earnings guidance for reconciliation of core earnings guidance to total earnings guidance. |
Edison International - - Value Drivers
EIX Integrated Platform
SCE Value Drivers
Strong customer and load growth
Tight system reserve margins keep focus on reliability Proposed $17 billion, 5-year capital investment plan1
51% - Expand and strengthen distribution system
25% - New transmission for system reliability and renewables
15% - San Onofre steam generators and other generation
8% - Edison SmartConnectTM metering program
1% - Five small generation units (“Peakers”) Strengthened regulatory framework
Three-year forward rate-setting
Cost of capital
Procurement cost recovery mechanisms Financial performance
Earning assets expected to grow 12%+ annually over the next five years from 2006 - 2011
EMG Value Drivers
Low-cost coal generation portfolio
Adjusted EBITDA exceeds $1 billion annually2 Strong operational and marketing/trading capabilities
Focus on optimizing and stabilizing merchant margins
Experienced/value-added trading capability Effective allocation of cash
New generation investments
Hedging collateral
Phased environmental compliance Diversify and grow the generation portfolio
Focus on development of non-coal projects with long-term contracts, regional diversity Renewables Thermal - natural gas IGCC
1 Subject to timely receipt of permitting, licensing and regulatory approvals. See SCE growth driver-investment for further information.
2 See Edison Mission Group - adjusted EBITDA for reconciliation to net income. 2007 adjusted EBITDA calculation based on mid-point of EMG guidance range.
4 EDISON INTERNATIONAL®
Southern California Edison (SCE)
An Investor-Owned Electric Utility
SCE Value Driver – System Growth
SCE Growth1
New Meter Connections
87,708
90,000 83,979
77,437 75,626
80,000 73,204
70,000 63,463
60,000
50,000
2002 2003 2004 2005 2006 2007
Forecast
26,000 Peak Demand
22,889 23,517
21,934
22,000 20,136 20,762
18,821
MW 18,000
14,000
10,000
2002 2003 2004 2005 2006 2007
Forecast
SCE’s service territory has
4 | | of the 10 fastest growing counties in the nation2 |
5 | | of the 25 fastest growing cities in the nation3 New meter connections |
Expect to be 75,626 in 2007
385,791 meters added in the past 5 years Home remodeling and population gains in high-temperature regions contribute to growth Peak Demand
In July 2006 peak demand 22,889 MW 4.4% growth from 2005 peak 10.2% higher than 2004 peak
Strong customer and load growth keeps statewide focus on the need to expand and strengthen the utility infrastructure
1 | | 2007 figures projected for full-year. |
2 LA, Riverside, San Bernardino and Orange counties. US Census Bureau data, in terms of population increase between 2000 and 2005.
3 Moreno Valley, Rancho Cucamonga, Irvine, Lancaster and Fontana. US Census Bureau data, in terms of population percentage increase between 2004 and 2005.
SCE Value Driver – Reliability
State law requires that SCE serve 20% of its customers’ electricity needs with renewable energy by 2010
SCE’s current renewable portfolio (2006 data)
Renewable resources ~13 billion kWh
Represents ~17% of customer power deliveries
SCE’s 2010 renewable resources target ~16 billion kWh
Completed four renewable power solicitations to date; 2007 solicitation to be finalized by 2Q08
SCE – the nation’s leading renewable energy purchaser in 2006
Agreement with Alta Windpower Development LLC
Secures at least 1,500 MW of power, more than doubling SCE’s wind portfolio
The wind project, when completed, will be twice the size of the largest wind project in the
U.S.
Projects to be built in the Tehachapi area of CA
Expanded Geothermal Agreement with Calpine
SCE expanded agreement to purchase 225 MW of geothermal energy for 10 years
SCE entered into a new agreement for 714 MW of non-renewable capacity for 2008 – 2011
SCE signs largest wind energy contract in U.S. history & expands geothermal agreement
SCE Value Driver - Reliability
All-Source RFO
Contracts totaling up to 3,450 MW were executed in January 2007
Contracts cover 2007 - 2011 and include energy and capacity
New all-source RFO seeking resources for 2008-2011 was launched in August 2007 and is expected to close in October 2007
New Generation RFO
Solicited up to 1,500 MW of new IPP generation -1,205 MW has been awarded
Summer 2007 Track
NRG received a 10-year PPA to provide 260 MW Project in-service in August 2007
Fast Track
On-line by August 2010
Blythe Energy and Competitive Power Ventures each received 10-year PPAs for 490 and 455 MW, respectively CPUC decision expected in September 2007
Standard Track
On-line by August 2013 Shortlist notification June 2007
Notification of successful offers in January 2008
In December 2007 the CPUC is expected to determine if additional procurement may be necessary in its upcoming Long-Term Procurement Plan decision
CPUC has provided cost recovery assurance
SCE leadership in securing long-term power needs
8 EDISON INTERNATIONAL®
SCE Value Driver – Reliability
SCE is committed to creating, transmitting and improving end-use efficiency of electricity in an environmentally responsible manner
During the past 5 years, SCE has –
Saved more than 4 billion kWh – enough energy to power 500,000 homes for an entire year
Reduced greenhouse gas emissions by more than 2 million tons – the equivalent of removing 250,000 cars from the road
During the next 2 years, SCE will –
Help customers save an additional 2 billion kWh, reducing greenhouse gas emissions by another 1 million tons
SCE offers a wide array of energy efficiency and demand response programs which offer financial incentives and/or other benefits for saving energy and shifting usage from on-peak periods
Time-of-Use (TOU) rates, load management programs and energy management systems (EMS) are some of the many programs offered
Regulatory mechanisms mitigate the revenue impact of changes in electricity sales
Recognized as a leader in energy efficiency by U.S. EPA & DOE
9 EDISON INTERNATIONAL®
SCE Growth Driver - Investment
Proposed Five-Year Capital Spending Plan $ Billions $5 $4 $3 $2 $1 $0 $2.4 $2.8 $3.9 $4.2 $4.0
2007 2008 2009 2010 2011
Forecast by Classification
Edison SmartConnectTM Generation Transmission Distribution Total1 $
1.3 2.8 4.3 8.9
17.3
%
8 16 25 51
100
Current Forecast by Proceeding
CPUC Rate Cases CPUC Project Specific FERC Rate Cases Total1 $
11.0 2.0 4.3
17.3
%
64 11 25
100
Five-year spending plan emphasizes infrastructure replacement, renewables transmission, demand growth and energy efficiency (e.g. Edison SmartConnectTM)
1 Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2007 and includes about $600 million of capital spending for DPV2, the majority of which was expected to occur in 2008 & 2009. Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project. Inclusion of Mountainview power plant in rate base per SCE 2009
GRC NOI not included (no material earnings impact).
10 EDISON INTERNATIONAL®
SCE Growth Driver - Investment
Forecast SCE Rate Base 2006-20111 $ Billions $21 $18 $15 $12 $9 $6 $3 $0
1 2
+
%
Compound
Annual
Growth
Rate $10.9 $11.7 $12.7 $14.5 $17.6 $20.4
2006 2007 2008 2009 2010 2011
Approved
2009 GRC
Rate base growth provides foundation for strong SCE earnings and cash flow growth while meeting customer service and infrastructure objectives
1 Includes impact of 2006 CPUC and 2006 FERC GRC decisions and forecasted rate base for FERC (2007-2011) and CPUC (2009-2011) which are subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2007 and includes about $600 million of capital spending for DPV2, the majority of which was expected to occur in 2008 & 2009. Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project. Inclusion of Mountainview power plant in rate base per
SCE 2009 GRC NOI not included (no material earnings impact).
11 EDISON INTERNATIONAL®
SCE Value Driver - Capital Investment
Tehachapi transmission line to interconnect up to 4,500 MW of generation
New transmission needed to strengthen system reliability and access economical power
NEVADA
CALIFORNIA
Midway (PG&E)
Santa Clarita
Pardee
Los Angeles
Tehachapi Windhub
Antelope
Palmdale
Vincent
SCE Service Territory
Las Vegas
Eldorado
Lugo
Rancho Vista Mira Loma
Serrano
Valley
Santa Ana
Mohave
Devers
Palm Springs
ARIZONA
Phoenix
Palo Verde
San Diego
Existing 500kV
DPV2 & Rancho Vista 500kV
Tehachapi Segments 1-3 500kV Tehachapi Segments 4-11 500kV
Project Name
Renewables
Tehachapi Segments 1 - 3 Tehachapi Segments 4 - 11 Other Renewable Projects
Total Renewables
Reliability
Rancho Vista Substation Other Reliability Projects
Total Reliability
Economics
DPV2
GRAND TOTAL
Phase
Licensing Ending2 Licensing Starting Licensing Starting
Construction Various
Licensing Ending3
In-Service
2008 - 2009 2011 - 2013 Various
2009 Various
2009
2007-2011 (Millions)1
255 1,504 343
2,102
213 1,351
1,564
587
4,253
SCE leadership in new transmission to support system reliability and renewable energy
1 Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2007.
2 CAISO, CPUC approvals received; USFS approval for Segment 1 pending.
3 CAISO, CPUC, USFWS and Arizona Siting Commission approvals received. Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project.
12 EDISON INTERNATIONAL®
SCE Value Driver – Capital Investment
Five “Black Start” Peakers
Initiated in August 2006 at the CPUC’s request
Capital Investment forecast at $275 million – $179 million spent or firmly committed through June 30
Four of five units were placed online in August 2007
Oxnard peaker permit denied by the City of Oxnard; SCE is appealing to Coastal Commission and expects a decision in 4Q07
San Onofre Nuclear Generation Station
2,150 MW total (SCE share 78.21%)
Unit 2 SGR in service 2010 and Unit 3 SGR in service 2011
$0.5 billion – SGR project costs (SCE share) for 2007-2011
SCE responds to peak demand with up to 225 MW in new peaker capacity
CPUC approved SONGS 2 & 3 steam generator replacement
13 EDISON INTERNATIONAL®
SCE Value Driver - Edison SmartConnectTM
2005
2006
2007
2008
2009
2010
2011
2012
2013
Current Schedule1
Pre-Deployment
Design Phase Deployment Phase Phase
Schedule
Pre-deployment, which began in January 2007, included field testing with 5,000 homes and small businesses Field testing is underway in the summer of 2007 under $45 MM Phase II CPUC authorization granted in July 2007 Phase III application filed July 2007 to deploy to 5.3 million residential and small commercial customers between 2008 - 2012; total cost estimate $1.7 billion, of which $1.3 billion is capital cost to be included in rate base1 Edison SmartConnectTM has the potential to reduce peak power consumption by as much as 1,000 MW
Vendor Candidates eMeter to provide the meter data management system to support customer billing, energy information and utility operations Corix Utilities selected to provide meter installation services IBM will serve as the system integrator for Edison SmartConnectTM, managing the development and integration for the network management and meter data management system Meter Candidates: Itron, Landis + Gyr Communications Infrastructure Candidates: Cellnet, Itron, Sensus
SCE leadership in advanced metering infrastructure
1 Subject to CPUC Approval.
14 EDISON INTERNATIONAL®
Constructive Regulatory Environment
Rate Base
General Rate Case (GRC) provides three-year forward looking rate-setting mechanism based on forecast spending; affirmed
twice
2006 GRC Decision approved majority of capital requests and operating expenses 2006 GRC Decision results in increased depreciation providing annual cash flow of about $1 billion for 2006-2008 Tendered 2009 GRC Notice of Intent in July 2007 with final application to be filed in November 2007
Investors’ Return
11.6% return on common equity (ROCE) approved through 2007 11.8% ROCE requested May 2007 in 2008 Cost of Capital application to be effective January 2008 (subject to CPUC review and approval)
Energy Efficiency
CPUC preliminary decision on energy efficiency economic savings sharing issued in August 2007; final decision expected in September 2007
Procurement Cost
Energy Resources Recovery Account (ERRA) and related Trigger Mechanism provides timely recovery of procurement costs and mitigates energy price exposure
Customer Rates
Rate increases expected in base rates (i.e. GRC) as the results of new rate base growth. 2008 generation rates to increase due to the projected reduction in ERRA over collections.
California’s regulatory framework has been strengthened to support growth and reliability needs, and mitigate risks of volatile commodity prices
15 EDISON INTERNATIONAL®
Edison Mission Group (EMG)
A Competitive Power Generation Company
16 EDISON INTERNATIONAL®
EMG Growth Driver – Operating Platform
Washington Iowa Minnesota Illinois
Natural Gas 70 MW
Wind 145 MW
Wind 75 MW/70 MW (UC)
Natural Gas 305 MW
Coal 5,613 MW
Wyoming
Wind 61 MW (UC) Pennsylvania
Coal 1,884 MW
Wind 67 MW (UC)
California
Natural Gas 964 MW West Virginia
Coal 40 MW
EMG Generation Fuel Mix1
MW %
Coal 7,537 79%
Natural Gas 1,339 14%
Wind 471 5%
New Mexico Oklahoma Texas Other 153 2%
Wind 90 MW
Wind 95 MW (UC)
Wind 161 MW
9,500 100%
1 Excludes 293 MW wind projects under construction (UC); natural gas includes oil-fired; other includes Doga in Turkey (144 MW) and Huntington biomass (9 MW) which are not shown. Data as of June 30, 2007.
17 EDISON INTERNATIONAL®
EMG – Key Value Drivers
Low-cost coal generation driver for strong EBITDA
EMG adjusted EBITDA in excess of $1 billion for last two years, also forecasted for 20071
Strong operational and marketing/trading capabilities
Effective management of fuel, transportation, and emissions to protect gross margins
More efficient and expanding market/hedging opportunities
Experienced/value adding trading business
Long-term environmental plan for Midwest Generation
Financial flexibility with simplified capital structure
EMG liquidy2 – $2.3 billion as of June 30, 2007
Recent financing eliminates near-term maturities and high interest rate notes
Expanding capital expenditures – $1.9 billion estimated through 2009
Expansion and diversification goals
Larger scale and operational efficiencies
Greater diversification of generation technology and fuel type
Bias towards development, contract vs. merchant, low emission technologies
Focus areas – renewables, natural gas, IGCC
1 See Edison Mission Group – adjusted EBITDA for reconciliation to net income. 2007 adjusted EBITDA calculation based on mid-point of EMG guidance range.
2 | | See EMG liquidity profile. |
18 EDISON INTERNATIONAL®
Midwest Generation – Operating Performance
YTD 2007 vs. YTD 2006
Generation up 16%
Capacity and load factors increased on higher off-peak sales
Availability and forced outage rates in line with plan
YTD YTD
Operating Statistics 07 06
Total Generation (GWh) 14,756 12,738
Equivalent Availability 74.7 % 76.4 %
Capacity Factor 60.5 % 52.3 %
Load Factor 81.1 % 68.4 %
Forced Outage Rate 6.0 % 5.0 %
All-in average realized price increased by about $6 per MWh YTD compared to the same period last year
All-in Average Realized Prices1
$ 60
$ 53.53
$ 52.81
$ 47.93
$ 46.85
$ 40
$ 39.71
$ 39.68
$/MWh
$ 34.51
$ 33.71
$ 20
$ 13.42
$ 13.82
$ 13.14
$ 13.13
$ 0
2Q 06 2Q 07 YTD 06 YTD 07
Average realized gross margin ($/MWh)2 Average fuel and emission costs ($/MWh)
1 | | Includes the price of energy, capacity, ancillary services, etc. |
2 | | Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. |
19 EDISON INTERNATIONAL®
Homer City – Operating Performance
YTD 07 vs. YTD 06
Generation up 20%
2006 availability and forced outage rates impacted by the Unit 3 transformer failure
2007 operating performance in line with plan
YTD YTD
Operating Statistics 07 06
Total Generation (GWh) 6,453 5,387
Equivalent Availability 85.0 % 73.1 %
Capacity Factor 78.7 % 65.7 %
Load Factor 92.6 % 89.9 %
Forced Outage Rate 3.9 % 22.8 %
All-in average realized price increased by over $8 per MWh YTD compared to the same period last year
All-in Average Realized Prices1
$ 60 $ 56.44 $ 58.14
$ 48.61 $ 49.55
$ 40 $ 34.82 $ 36.42
$ 24.48 $ 25.52
$/MWh
$ 20
$ 24.13 $ 21.62 $ 24.03 $ 21.72
$ 0
2Q 06 2Q 07 YTD 06 YTD 07
Average realized gross margin ($/MWh)2
Average fuel and emission costs ($/MWh)
1 | | Includes the price of energy, capacity, ancillary services, etc. |
2 | | Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. |
20 EDISON INTERNATIONAL®
EMG Hedge Program Status
Hedge Program Status at June 30, 2007 Midwest Generation
Energy Only Contracts GWh Average price/MWh
Load Requirements Services Contracts Estimated GWh Estimated average price/MWh Total Estimated GWh Coal under contract (millions of tons)1
Homer City
Megawatt hours (in GWh) Average price ($/MWh)
1
Coal under contract (millions of tons)
Remainder of 2007
8,250 $48.07
4,072 $64.35 12,322 9.2
3,820 $64.29 2.7
2008
10,838 $61.38
5,613 $64.01 16,451 14.6
7,232 $60.85 4.3
2009
2,048 $60.00
1,632 $63.65 3,680 11.7
2,048 $71.05 3.5
1 The amount of power sold is a portion of the retail load of the purchasing utility and can vary significantly with variations in that retail load. Retail load depends upon a number of factors, including the time of day and year, and the utility’s number of new and continuing customers. Estimated MWh have been forecast based on historical patterns and on assumptions regarding the factors that may affect retail loads in the future. The actual load will vary from that used for the above estimate, and the amount of variation may be material.
2 The average price per MWh, which is subject to a seasonal price adjustment, represents the sale of a bundled product that includes, but is not limited to, energy, capacity and ancillary services. Also, Midwest Generation will incur charges from PJM as a load-serving entity. Thus, the average price per MWh is not comparable to the sale of power under an energy only contract. The average price per MWh represents the sale of the bundled product based on an estimated customer load profile.
21 EDISON INTERNATIONAL®
EMG Capacity Sales
Status at July 27, 2007 July 1, 2007—May 31, 2008 June 1, 2008—May 31, 2009
Midwest Generation Homer City Midwest Generation Homer City
Megawatts except price per MW-day
INSTALLED CAPACITY 5,918 1,884 5,918 1,884
Less: Net capacity held due to load requirements
services contracts1, and retained for outages (2,793) (228) (1,755) (183)
NET CAPACITY AVAILABLE FOR SALE 3,125 1,656 4,163 1,701
Fixed Price Capacity Sales
RPM Auction Process
– Net Capacity Sold 2,625 786 3,283 820
– Price per MW-day $ 40.80 $ 40.80 $ 111.92 $ 111.92
Non-unit Specific Capacity Sales
– Net Capacity Sold 500 — 880 —
– Price per MW-day $ 21.29 $ — $ 64.35 $ —
Variable Capacity Sales
Third Party Transaction
– Capacity — 870 — 881
– Price per MW-day 2 $ — $ 69.39 $ — $ 72.56
TOTAL CAPACITY SOLD 3,125 1,656 4,163 1,701
AVERAGE PRICE PER MW-DAY $ 37.68 $ 55.82 $ 101.86 $ 91.53
1 | | Load requirements services contracts include energy, capacity and ancillary services. |
2 Actual contract price for Homer City sale is a function of NYISO capacity auction clearing prices. Capacity price per MW-day is based on forward over-the-counter NYISO prices at July 27, 2007.
22 EDISON INTERNATIONAL®
EMG - Operational, Marketing and Trading Capabilities
Maximize forward sales opportunities as markets evolve
Originally focused on bilateral agreements
Market transitioning to bilateral agreements without collateral requirements
Illinois Auction (winning supplier: 17- and 29- month tranches)
Expanding trading and hedging footprint beyond PJM
RPM settlement provides new option to sell capacity EMMT provides opportunistic trading revenues
Leverage knowledge gained from managing merchant coal fleet
Trading primarily transmission congestion products and electricity basis spreads Controls on types and sizes of exposures
Allowed products and region (large majority of positions are low risk congestion contracts)
VaR, volumetric, duration and credit limits
200 150 100 50 0 $23 $195 $130
2004 2005 2006
EMMT Trading Revenue ($ MM pre-tax)
Edison Mission Marketing and Trading provides significant incremental income from trading activity
23 EDISON INTERNATIONAL®
EMG Growth Driver – Recapitalization
$ 2.7 billion EMG refinancing
Favorable market conditions
Enhanced financial flexibility
Moves refinancing risk past environmental spending period
Simplifies capital structure
Facilitates longer-term hedging
Expands liquidity
Tender premium and other non-core1 costs: $0.45 per share
Interest savings: $0.07 per share in 2007, $0.11 per share annualized
2007 Edison Mission Energy Debt Financing
$1,200,000,000 7.00% Senior Notes due 2017
$800,000,000 7.20% Senior Notes due 2019
$700,000,000 7.625% Senior Notes due 2027
1 | | See second quarter segment highlights for reconciliation of core earnings to reported earnings. |
24 EDISON INTERNATIONAL®
EMG – Midwest Gen Environmental Agreement
Comprehensive agreement addresses mercury, NOx, and SO2 emissions
Achieves specified emission reductions through retrofits or unit shutdowns
Mercury – 90% removal by 2015
NOx – emissions of 0.11 lbs. per million Btus by 2011 (66% reduction)
SO2 – emissions of 0.11 lbs. per million Btus by 2019, with interim step downs (78% reduction)
Helps continue good relationships with key constituents and regulators and supports growth
Agreement supported by Gov. Blagojevich, City of Chicago, and several influential environmental and community groups
Illinois EPA assistance with IGCC and wind development, permit approvals
Emission credit selling allowed
Agreement filed under Illinois State Implementation Plan of CAIR
Provides reasonable certainty of amount & timing of emission reductions through 2018
25 EDISON INTERNATIONAL®
EMG – Environmental Compliance
MWG Compliance Plan
Phase 1 – Reduction of Mercury Emissions
Installation of Activated Carbon Injection (ACI) technology by July 2009
Estimated cost approx. $60 million
Phase 2 – Reduction of NOx Emissions
Installation of primarily Selective Catalytic Reduction (SCR) systems by the end of 2011
Estimated cost approx.2 $450 million
Phase 3 – Reduction of SO2 Emissions
Flue Gas Desulfurization (FGD) technology
Estimated cost $2.2 – $2.9 billion
Shutdown of Small Units
Waukegan 6 (100 MW) – by end of 2007
Will County 1 & 2 (310 MW) – by end of 2010
Homer City Compliance Plan
PA State Implementation Plan for CAMR and CAIR adopted
Homer City will comply with 2010 phase of mercury requirements by installing ACI on Units 1 & 2
Evaluating compliance approaches for 2015 phase
EMG environmental compliance plan allows assessment of market conditions before incurring capital expenditures
Note: Cost estimates are in 2006 dollars.
26 EDISON INTERNATIONAL®
EMG – Wind Energy Development Strategy & Portfolio
Wind Energy Development Strategy
Strategic Importance to Growth Plan
Contributes to portfolio diversification
Objective is to attain national scope and leadership scale
Leverages successful wind energy experience to date
Wind Project Portfolio & Development Pipeline
Wind Energy Provides Attractive Opportunities
Growing RPS requirements and national desire for renewables
Production tax credits
Accelerated depreciation (MACRS) over 5 yrs.
Mainly long-term contracts for output
Projects1 No. of Projects MW
In-Service 10 471
Under Construction 4 293
Total Projects 14 764
Development Pipeline2 31 3,103
Turbines
Purchased and under option 1,414
1 | | Data as of June 30, 2007; turbines purchased or committed to support development pipeline |
2 | | Owned or under exclusive agreements. |
Pipeline of over 3,100 MWs under exclusive development agreements
Extensive prospect list supports further growth of development pipeline
Purchased and option for 1,414 MW of turbines for 2007—2009 delivery
27
EDISON INTERNATIONAL®
EMG Wind Projects and Pipeline
Nebraska Iowa Minnesota
Pipeline 100 MW In-Service 145 MW In-Service 75 MW
Pipeline 200 MW Construction 70 MW
Wyoming Pipeline 169 MW
Construction 61 MW
Pipeline 80 MW
Utah
Pipeline 90 MW
Oklahoma
Construction 95 MW
Pipeline 300 MW
Nevada
Pipeline 315 MW
New Mexico
In-Service 90 MW
Pipeline 60 MW
Texas
In-Service 161 MW
Pipeline 630 MW
Wisconsin Maine
Pipeline 100 MW Pipeline 54 MW
Illinois Pennsylvania
Pipeline 390 MW Construction 67 MW
Pipeline 60 MW
New York
Pipeline 130 MW
Maryland
Pipeline 80 MW
West Virginia
Pipeline 345 MW
EMG Wind Portfolio1
MW
In-Service 471
Construction 293
Development Pipeline 3,103
Turbines (not shown) 1,414
~3,100 MW development pipeline in 16 states
1 | | Data as of June 30, 2007; turbines purchased or committed to support development pipeline. |
28 EDISON INTERNATIONAL®
EMG Growth Driver - Thermal
Natural Gas-Fired Generation
Thermal development (1,000 MW)
Walnut Creek and Sun Valley, CA opportunities (500 MW each) in permitting and engineering stage - SCE and other potential customers Potential acquisitions of assets or portfolios
Will be selective and disciplined
Some regions showing developing capacity markets and higher spark spreads
Assets complement marketing and trading skills
IGCC with Carbon Sequestration
Carson Hydrogen Project (400-450 MW)
Joint Venture with BP at their Carson City refinery
Confirming project economics and CO2 requirements
Target operating date 2012 - 2013
Other opportunities in early stage development
29 EDISON INTERNATIONAL®
Appendix
30 EDISON INTERNATIONAL®
Second Quarter Financial Results
Reconciliation of Core Earnings to Reported Earnings
Core Earnings 2Q 07 2Q 06 Var.
SCE $ 0.44 $ 0.47 $ (0.03)
EMG 0.30 0.10 0.20
EIX Holding Co. (0.01) (0.02) 0.01
Core EPS $ 0.73 $ 0.55 $ 0.18
Non-Core Items
SCE $ — $ 0.25 $ (0.25)
EMG (0.44) (0.26) (0.18)
Total Non-Core $ (0.44) $ (0.01) $ (0.43)
Basic EPS $ 0.29 $ 0.54 $ (0.25)
Diluted EPS $ 0.28 $ 0.54 $ (0.26)
Core Earnings Variances
SCE
Primarily due to the catch-up adjustment upon receipt of the 2006 GRC decision in May of last year, partially offset by the favorable resolution of an outstanding state income tax issue -0.03
EMG
Midwest Generation
Primarily higher energy margin, driven by higher generation and higher average realized prices, and lower net interest expense, partially offset by higher planned maintenance costs +0.12
Homer City
Higher energy margin, driven by higher generation and higher average realized prices, offset by higher planned maintenance costs in 2007 and estimated insurance recovery in 2006 related to Unit 3 outage –
Edison Capital
Gains on global infrastructure fund investments, lower taxes and other +0.07
Other +0.01
Non-Core Variances
SCE 2006 includes the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes. -0.25
EMG Results include per share charges of $0.45 and $0.27 for early debt extinguishment in 2Q 07 and 2Q 06, respectively, and $0.01 from discontinued operations in both periods. -0.18
31 EDISON INTERNATIONAL®
Year-to-Date Financial Results
Reconciliation of Core Earnings to Reported Earnings
Core Earnings YTD 07 YTD 06 Var.
SCE $ 0.90 $ 0.84 $ 0.06
EMG 0.78 0.32 0.46
EIX Holding Co. (0.05) (0.06) 0.01
Core EPS $ 1.63 $ 1.10 $ 0.53
Non-Core Items
SCE $ 0.10 $ 0.25 $ (0.15)
EMG (0.44) (0.03) (0.41)
Total Non-Core $ (0.34) $ 0.22 $ (0.56)
Basic EPS $ 1.29 $ 1.32 $ (0.03)
Dilulted EPS $ 1.29 $ 1.32 $ (0.03)
Core Earnings Variances
SCE
Mainly due to higher revenue associated with the GRC decision and lower taxes from the favorable resolution of an outstanding state income tax issue +0.06
EMG
Midwest Generation +0.25
Primarily higher energy margin, driven by higher generation and higher average realized prices, and lower net interest expense, partially offset by higher planned maintenance costs
Homer City +0.13
Primarily higher energy margin, driven by higher generation and higher average realized prices, partially offset by higher planned maintenance costs in 2007 and estimated insurance recovery in 2006 related to Unit 3 outage
Edison Capital +0.08
Predominantly gains on global infrastructure fund investments
Non-Core Variances
SCE YTD 07 $0.10 reflecting progress made with the IRS related to the income tax treatment of certain environmental remediation costs; YTD 06 $0.25 related to the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes -0.15
EMG YTD 07 and YTD 06 include ($0.45) and ($0.27) per share for early debt extinguishment charges, and $0.01 and $0.24 per share primarily from proceeds from discontinued operations related to Lakeland, respectively. -0.41
32 EDISON INTERNATIONAL®
Earnings Guidance
Reconciliation of Core Earnings Guidance to Total Earnings Guidance
2007 Guidance Effective 05/09/07 2007 Guidance Updated 08/09/07
Core EPS
Southern California Edison $ 1.97—$ 2.07 $ 1.97—$ 2.07
Edison Mission Group 1.21—1.51 1.40—1.65
EIX Holding Company (0.13) (0.13)
Core $ 3.05—$ 3.45 $ 3.24—$ 3.59
Non-Core Item1
Southern California Edison 0.10 0.10
Edison Mission Group (0.45) (0.44)
Total Non-Core Items (0.35) (0.34)
Total $ 2.70—$ 3.10 $ 2.90—$ 3.25
1 2007 non-core items reflect refinancing costs of ($0.45) for EMG and a tax benefit of $0.10 for SCE. The 2007 guidance effective 08/09/07 also reflects $0.01 from discontinued operations.
33 EDISON INTERNATIONAL®
Edison Mission Group - Adjusted EBITDA
Reconciliation to Net Income ($ Millions)
Net Income Add back (Deduct):
Cumulative effect of change in accounting, net of tax Discontinued operations Income (loss) from continuing operations Interest expense Interest income Income taxes Depreciation and amortization
EBITDA
Production tax credits2 Discrete items:
Loss on lease, asset impairment and other Impairment of equity method investment Gain on sale of assets Loss on early extinguishment of debt
Adjusted EBITDA
2005 Actual $ 443
1
(30) 414 435 (74) 163 147 1,085 8
7 55
\
25 $ 1,180
2006 Actual $ 432
(1)
(97) 334 409 (118) 154 157 936 17
\ \
(22) 146 $ 1,077
2007 Forecast $ 3541
\
(5) 349 329 (82) 127 175 898 30
\ \ \
241 $ 1,169
Note: EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA includes production tax credits from EMG’s wind projects and excludes amounts from gain on the sale of assets, loss on early extinguishment of debt and leases, and impairment of assets and investments.
1 Represents the mid-point of the EMG guidance range.
2 Production tax credits (PTC) are after tax numbers.
34
EDISON INTERNATIONAL®
EMG Liquidity Profile
Available Liquidity
Sources ($ Millions) 12/31/06 6/30/07
EME Revolver $ 473 $ 522
MWG Revolver 495 467
Cash & Short term investments1 2,181 1,321
$ 3,149 $ 2,310
$1.1 billion of credit facilities between MWG and EME
1 Excludes $73 million and $192 million of cash collateral held by counterparties at 12/31/06 and 6/30/07, respectively.
35 EDISON INTERNATIONAL®
EMG – Capital Expenditures
Planned Expenditures1
July 2007 – 2009
Plant/Corporate Capex Plan Environmental Plan Growth Commitments
Potential Expenditures (2007 – 2009)
Additional growth opportunities
Additional wind turbines
Balance of plant costs for purchased wind turbines
Potential Expenditures After 2009
Midwest Generation environmental spending plan
Evaluating FGD installation at Homer City
Additional growth opportunities
$ Millions
650
325
0
2007 2008 2009
Total $1,883 Million
1 EME expects to make substantial investments in new projects during the next three years. As of June 30, 2007, EME had a development pipeline of potential wind projects with an installed capacity of approximately 3,100 MW (the development pipeline represents potential projects which EME either owns the project rights or has exclusive negotiation rights). Completion of these projects is dependent upon a number of items which may include, depending on the project’s status, completion of a power sales agreement, permits, an interconnection agreement or other agreements necessary to start construction. Additional projects may from time to time be added to the development pipeline, and there is no assurance that the projects included in the development pipeline currently or added in the future will lead to the successful completion of a wind project.
36 EDISON INTERNATIONAL®
