Exhibit 99.1
Leading the Way in Electricity SM
Business Update
April 2008
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
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 2007 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and are available on our website: www.edisoninvestor.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.
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
What’s New Since Our March Update
Revised SCE System Summary (p. 9)
Key business statistics
Highlights most transmission and distribution capital spending for infrastructure replacement not new connections
Expanded SCE Renewable Energy Summary (p.11)
Includes 2007 renewable energy profile
SCE Solar Initiative
Updated SCE capital expenditures and earnings asset forecasts (p. 12 & 13)
SCE solar initiative summary (p. 18) Expanded EIX Liquidity Summary (p. 36)
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
Strategic Overview
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
Edison International Value Drivers
EIX Integrated Platform
SCE Value Drivers
Strong focus on infrastructure investment helps ensure reliability Tight system reserve margins keep focus on power procurement Energy Efficiency programs represent a new earnings opportunity Proposed $19.9 billion, 5-year capital investment plan1
49%—Expand and strengthen distribution system
28%—New transmission for renewable interconnection and system reliability
13%—San Onofre steam generators and other generation
6%—Edison SmartConnectTM metering program
4%—Solar initiative
Strengthened regulatory framework
Three-year forward rate-setting
Cost of capital
Procurement cost recovery mechanisms
FERC transmission incentives Financial performance
Earning assets expected to grow 12%+ annually from 2007—2012
EMG Value Drivers
Low-cost coal generation portfolio
Adjusted EBITDA has exceeded $1 billion annually2 Favorable capacity market trends Operational and marketing/trading capabilities
Improving merchant price trends
Experienced and value-adding trading capability Long-term environmental plan for Midwest Generation Financial flexibility & allocation of cash
Hedging collateral
Diversify and grow generation portfolio
Emphasize renewables, natural gas, clean-coal technologies
Focus on organic growth
1 Subject to timely receipt of permitting, licensing and regulatory approvals. See “SCE Capital Investment” (page 12) for further information.
2 | | See adjusted EMG EBITDA in Appendix for reconciliation to net income. |
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
Our Business Portfolio
Financial data is for the year ended December 31, 2007
Edison International
Revenue $13.1
Operating Cash Flow1 $3.2
Generation Capacity (MW) 14,955
Market Capitalization $16.0
Southern California Edison
Revenue $10.5
Operating Cash Flow $3.0
Generation Capacity (MW) 5,502
Population Served (MM) 13+
Edison Mission Group
Revenue $2.6
Operating Cash Flow $0.6
Generation Capacity (MW) 9,453
Wind Pipeline (MW) 5,000+
1 | | Reflects inter-company eliminations. |
Note: Capacity and wind pipeline data is as of December 31, 2007, and market capitalization is as of March 27, 2008. Dollar amounts in billions, population served in millions. Edison Mission Group includes Edison Mission Energy and Edison Capital.
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
Financial Strategies
Funding Growth Investments
Southern California Edison
Operating cash flow and financing Edison Mission Energy
Cash on hand, operating cash flow and project debt
Credit Objectives1
Southern California Edison
A rating metrics (current: S&P BBB, Fitch A, Moody’s A3) Edison Mission Energy
BB rating metrics (current: S&P & Fitch BB-, Moody’s B1)
Dividend Policy
Targeting annual dividend increases
Dividend increases balanced with growth investments Parent financing capacity supports financial strategies
1 | | Senior unsecured credit ratings shown. |
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
2008 Earnings Guidance
Reconciliation of Core Earnings Guidance to Reported Earnings Guidance
Core EPS1 2007 Results 2008 Guidance as of 2/27/2008
Southern California Edison $2.07 $2.18 — $2.28
Edison Mission Group 1.72 1.57 — 1.87
EIX parent company and other (0.10) (0.14)
EIX core earnings per share $3.69 $3.61 — $4.01
Non-Core Items
Southern California Edison 0.10 —
Edison Mission Group (0.46) —
Total Non-Core Items (0.36) —
EIX reported earnings per share $3.33 $3.61 — $4.01
Key Factors/Assumptions
SCE
11.5% Return on Equity
Energy Efficiency potential -$0.08
EMG
Forward hedge positions and prices as of 1/31/08
EMMT pre-tax trading margin -$75M
Lower pre-tax earnings from EMG’s Sycamore and Watson projects
Other
No changes in GAAP accounting
Excludes discontinued operations
1 See use of Non-GAAP Financial Measures in appendix. The impact of participating securities is $(0.04) per share for 2007 results and the expected impact of participating securities is $(0.05) per share for 2008 guidance and are included in EIX parent company and other. Reported earnings per share refers to basic earnings per share.
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
Southern California Edison (SCE)
An Investor-Owned Electric Utility
April 1, 2008
EDISON INTERNATIONAL®
Leading the Way in Electricity SM
SCE System
Largest electric utility in California
13 million residents
4.8 million customer accounts
Almost 400,000 new connections over last five years
50,000 square-mile service area Earnings model
SCE earnings decoupled from retail sales and energy costs consistent with California’s constructive regulatory model
Earnings driven by approved rate of return on approved earnings asset base
Cost inflation forecast included in general rate case Infrastructure replacement and upgrades drives distribution system investment
Almost 85% of transmission and distribution investment over last five years was for system improvements, not new customer connections
2008 new connections forecast (~61,500) represents nearly 80% of five-year average and a decline of less than 10% from new connections in 2007
2008 peak demand expected to grow ~2.5% above 23,303 MW record in 2007
California and SCE Service Territory
SCE Service Territory
April 1, 2008
EDISON INTERNATIONAL®
9
Leading the Way in Electricity SM
SCE Long-Term Resource Objectives
SCE Distribution System Supply and Demand Balance (MW)
Power Resource Needs
Increased Demand Requirement1
1,874
Potential Retirements
4,790
Supply Objectives
Anticipated New Generation
4,176
Other Projects Underway
830
New Renewables
New Demand-Side Resources
1,339
Potential Need by 20152
319
System Reliability
Price Stability
Environmental Considerations
Balance Objectives
Energy efficiency
Demand response
Renewable resources
Distributed generation
Clean fossil fuel generation
Load growth, retirements, and renewable mandates drive power resource needs
~6,700 MW new resources required
~1,350 MW new generation contracts awarded March 2008
~350 MW still to be procured
1 Relative to 2007; data as of February 2008, includes planning reserve margin (PRM) of 15%. Source: 2006 SCE Long-Term Procurement Plan Final Decision; CEC November Load Forecast.
2 | | This number is without DPV2. |
April 1, 2008
EDISON INTERNATIONAL®
10
Leading the Way in Electricity SM
SCE Renewable Energy Goals
2007 Renewable Resources 12.5 Billion kWh
Biomass 8%
Wind 21%
Solar 5%
Small Hydro 4%
Geothermal 62%
SCE 2007 Renewable Energy Program
16% of SCE portfolio (RPS basis)
~1/8 of all US renewable electrons
Over 90% of US solar energy
Renewable Resources 2007-2010 (Billion kWh)
2007 Actual Procurement
12.5
2010 Goal
16
28% Increase
SCE 2010 Renewable Energy Goal
Contracts are in place to meet 20% of customers’ energy requirements with renewable resources, but not by 2010
Transmission constraints and unexpectedly high customer demand make it unlikely that 20% of 2010 energy will be delivered from renewable resources
SCE will demonstrate compliance through continued, aggressive procurement efforts and use of flexible compliance rules
April 1, 2008
EDISON INTERNATIONAL®
11
Leading the Way in Electricity SM
SCE Capital Investment
Proposed $19.9 Billion Five-Year Capital Spending Plan $ Billions $5 $4 $3 $2 $1 $0
2008 $2.9
2009 $4.1
2010 $4.5
2011 $4.6
2012 $3.8
Forecast by Classification
$%
Solar Initiative 0.85 4
Edison SmartConnectTM 1.25 6
Generation 2.50 13
Transmission 5.50 28
Distribution 9.80 49
Total1 19.90 100
Forecast by Type of Proceeding
$%
CPUC Rate Cases 11.8 59
CPUC Project Specific 2.6 13
FERC Rate Cases 5.5 28
Total1 19.9 100
In 2008 SCE anticipates regulatory approval on a substantial portion of its capital spending program
1 Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2008 and includes $692 million of capital spending for DPV2, the majority of which is expected to occur in 2009 and 2010. The Arizona Corporation Commission (ACC) denied approval of the DPV2 project. The denial has resulted in a minimum two-year delay of the project. SCE has initiated pre-filing activities with the FERC and is continuing to work with ACC on acceptable alternatives. Solar initiative announced on March 27, 2008.
April 1, 2008
EDISON INTERNATIONAL®
12
Leading the Way in Electricity SM
SCE Earnings Asset Base
Forecast SCE Rate Base 2007-20121 $ Billions $25 $20 $15 $10 $5 $0
2007 $11.7
2008 $12.7
2009 $15.5
2010 $18.3
2011 $21.3
2012 $23.6
12+% Compound Annual Growth
Effective execution of its capital expenditure program and continued regulatory support could double SCE’s earnings asset base by 2012
1 Includes impact of 2006 CPUC and 2006 FERC GRC decisions and forecasted rate base for FERC (2007-2012) and CPUC (2009-2012) which are subject to timely receipt of permitting, licensing and regulatory approvals; includes estimated impacts of the November 15, 2007 FERC incentives decision allowing construction work-in-process (CWIP) recovery in rate base and the Economic Stimulus Act of 2008. Forecast is as of March 2008 and includes $692 million of capital spending for DPV2, the majority of which is expected to occur in 2009 and 2010. The Arizona Corporation Commission (ACC) denied approval of the DPV2 project. The denial has resulted in a minimum two-year delay of the project. SCE has initiated pre-filing activities with the FERC and is continuing to work with ACC on acceptable alternatives.
April 1, 2008
EDISON INTERNATIONAL®
13
Leading the Way in Electricity SM
SCE Transmission Investment Program
Tehachapi transmission line to interconnect up to 4,500 MW of generation
New transmission needed to strengthen system reliability and access economical power
NEVADA
CALIFORNIA
Midway (PG&E)
Tehachapi Windhub
Antelope
Palmdale
Vincent
SCE Service Territory
Las Vegas
Eldorado
Mohave
Lugo
Santa Clarita
Pardee
Los Angeles
San Diego
Rancho Vista
Serrano
Santa Ana
Mira Devers Loma
Palm Springs
Valley
Phoenix
Palo Verde
ARIZONA
Existing 500kV
DPV2 & Rancho Vista 500kV
Tehachapi Segments 1-3 500kV Tehachapi Segments 4-11 500kV
Project Name Phase In-Service 2008-2012 ($ Millions) 1 FERC Adders (bps)3
Renewables
Tehachapi Segments 1–3 Construction 2008-2009 328 175
Tehachapi Segments 4–11 Licensing 2011-2013 1,742 175
Other Projects Licensing Various 933 —
Total Renewables 3,003
Reliability
Rancho Vista Substation Construction 2009 192 125
Other Projects Various Various 1,589 —
Total Reliability 1,781
Economics
DPV2 Licensing2 2011 692 175
Total Economics 692
Grand Total 5,476
FERC investment incentives will provide important earnings and cash flow benefits as FERC earnings asset base is forecast to more than double from 10% of rate base in 2007 to over 20% by 2012
1 | | Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of February 2008. |
2 All approvals have been received except the Bureau of Land Management and the Arizona Corporation Commission (ACC). The ACC denied approval of the DPV2 project. The denial has resulted in a minimum two-year delay of the project. SCE has initiated pre-filing activities with the FERC and is continuing to work with ACC on acceptable alternatives.
3 Includes 50 b.p. ROE adder for belonging to CAISO and 125 b.p. project specific adder for Tehachapi & DPV2 and 75 b.p. project specific adder for Rancho Vista
April 1, 2008
EDISON INTERNATIONAL®
14
Leading the Way in Electricity SM
SCE Edison SmartConnectTM Program
Phase III Meter Installation Timeline Cumulative Capital Spending & Meter Installations
2008 2009 2010 2011 2012
$100 M $450 M $800 M $1,100 M $1,245 M
– 1.4 M 3.0 M 4.6 M 5.3 M
Highlights
Phase III application filed July 2007 to deploy to 5.3 million residential and small commercial customers between 2008 – 2012 Estimated total project cost is $1.7 billion, of which approximately $1.25 billion is capital cost to be included in rate base1 SmartConnectTM combines the efforts of IBM, Itron and eMeter to manage system integration, meter technology and data management, respectively Edison SmartConnectTM has the potential to reduce peak power consumption by as much as 1,000 MW and reduce GHG emissions by 365,000 metric tons per year
Integrate Homes with the Utility Circuit
Integrate Smart Appliances with the Home
SCE leadership in advanced metering infrastructure
1 | | Subject to CPUC approval. |
April 1, 2008
EDISON INTERNATIONAL®
15
Leading the Way in Electricity SM
Nation’s Leader in Energy Efficiency
1992 to 2006 National EE Leaders 1
GWh
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
SCE
9,031
PG&E
7,090
NSP
4,041
EE Milestones
SCE has 69 energy efficiency programs, providing financial incentives and/or other benefits for saving energy and shifting usage from on-peak periods During the past 5 years –
SCE customers have saved more than 5 billion kWhs –enough to power over 700,000 homes for an entire year
SCE has reduced greenhouse gas emissions by 2 million metric tons – the equivalent of taking 375,000 cars off the road SCE has consistently won national recognition including:
7 | | United States Department of Energy “Energy Star” awards |
2 Environment Protection Agency “Stratospheric Ozone Protection” awards, including the “Best of the Best International Stratospheric Ozone Protection Award” for 2007
Alliance to Save Energy “Star of Energy Efficiency” award
American Council for an Energy Efficient Economy “Champion of Energy Efficiency” award
Potential Earnings Profile by Year3
SCE’s strong performance history in EE coupled with a Constructive Regulatory Environment has SCE poised for future Success
1 | | US Department of Energy, Energy Information Administration. |
April 1, 2008
EDISON INTERNATIONAL®
16
Leading the Way in Electricity SM
SCE Energy Efficiency Earnings Opportunity
CPUC Approved Energy Efficiency (EE) Shareholder Incentive Mechanism1
2006-2008 EE Cycle
Year
2006 2007 2008
65% of 2006-2007 earnings opportunity2
2009-2011 EE Cycle
2009 2010 2011 2012 2013
65% of 2008 earnings opportunity
35% of 2006-2008 earnings opportunity plus true-up
65% of 2009-2010 earnings opportunity2
65% of 2011 earnings opportunity
35% of 2009-2011 earnings opportunity plus true-up
SCE, the national leader in energy efficiency, is targeting $1.2 billion in net customer savings and an earnings opportunity of up to ~$146 million (pre-tax) for 2006-20084
1 Based upon September 20, 2007 and January 31, 2008 decisions released by the California Public Utilities Commission (CPUC).
2 There is no assurance of earnings in any given year. If approved by the CPUC, SCE currently projects, based on preliminary results, that it will record a progress payment in the range of $41 million to $49 million in the fourth quarter of 2008 for the years (2006-2007) of the program cycle. SCE expects to collect this progress payment in rates in 2009. SCE is scheduled to file advice filings in September of each year requesting recovery of the progress payments. SCE expects it will recognize earnings in the amount of the progress payments upon CPUC acceptance of its filing, expected in the fourth quarter of each year.
3 Assumes SCE achieves all of its energy efficiency goals, and delivers customer benefits of approximately $1.2 billion. Based on forecast, cash is received in the year following the period when earnings are recognized.
4 The January 2008 modifications incorporate an update to the effective useful life of the energy efficiency measures installed. If the draft CPUC effective useful life study is adopted in its current form, the effective useful life of residential compact fluorescent lights, one of the largest contributors to SCE’s energy efficiency portfolio, would be reduced and SCE’s earnings opportunity would decrease to approximately $124 million.
April 1, 2008
EDISON INTERNATIONAL®
17
Leading the Way in Electricity SM
SCE Solar Initiative
SCE Rooftop Solar Program1
Install 250 MW of solar photovoltaic generation on leased commercial rooftops
– 1-2 MW average installations target significant cost economies of scale
– May seek future authority to expand to 500 MW program $875 million capital spending program
– 100 b.p. premium for utility-owned renewable generation (SCE’s CPUC-approved return on equity is 11.5% for 2008) SCE has requested authority to recover costs incurred during regulatory approval process to facilitate a 2008 program launch Operating costs would be recovered through a balancing account with after-the-fact reasonableness review until included in base rates as part of general rate cases
SCE’s proposed rooftop solar program will help advance California public policy and help build scale for the large rooftop photovoltaic solar market
1 | | Subject to CPUC approval. |
April 1, 2008
EDISON INTERNATIONAL®
18
Leading the Way in Electricity SM
Constructive Regulatory Environment
Element Regulatory Details
Forward looking rate-making GRC provides three-year forward-looking rate-setting mechanism based on forecast spending
GRC Expected cost-inflation provided for in rate-making process Adopted operation and maintenance costs include approval for cost inflation assumptions for principal operating costs such as labor and benefits
State support for reliable electric system infrastructure
Procurement Trigger mechanism for fuel and purchased power cost recovery Fuel and purchased power costs are covered through a separate balancing account process, with predetermined trigger mechanisms for recovery of higher costs
Advanced approval of annual procurement plans for purchased power Upfront review of utility procurement decisions by way of adoption of a defined procurement plan
Cost of Capital Enabling strong investing capabilities to support growth and reliability needs Consistently fair returns allowed. An 11.5% ROE approved for 2008
Energy Efficiency Providing alternative forms of shareholder incentives CPUC adopted incentive mechanism allows for incentives and penalties capped at $200 million for three-year period 2006-2008 with second three-year period to follow
California’s regulatory framework supports growth and reliability needs
April 1, 2008
EDISON INTERNATIONAL®
19
Leading the Way in Electricity SM
Edison Mission Group (EMG)
A Competitive Power Generation Company
April 1, 2008
EDISON INTERNATIONAL®
20
Leading the Way in Electricity SM
EMG Business Platform
Washington
Natural Gas 70 MW
California
Natural Gas 964 MW Natural Gas (UC) 479 MW
Arizona
Wind (Pipeline) 1,140 MW
Wyoming
Wind (UC) 141 MW
Utah
Wind (Pipeline) 70 MW Wind (UC) 19 MW
Oklahoma
Wind 95 MW
Wind (Pipeline) 300 MW
Nevada
Wind (Pipeline) 515 MW
New Mexico
Wind 90 MW
Wind (Pipeline) 1,070 MW
Texas
Wind 161 MW Wind (UC) 150 MW Wind (Pipeline) 480 MW
Iowa
Wind 145 MW
Wind (Pipeline) 200 MW
Minnesota
Wind 75 MW Wind (UC) 70 MW Wind (Pipeline) 149 MW
Nebraska
Wind (Pipeline) 80 MW
Illinois
Coal 5,471 MW Natural Gas 305 MW Wind (Pipeline) 520 MW
Maryland
Wind (Pipeline) 95 MW
Wisconsin
Wind (Pipeline) 100 MW
New York
Wind (Pipeline) 140 MW
West Virginia
Coal 40 MW
Wind (Pipeline) 232 MW
Pennsylvania
Coal 1,884 MW Wind (UC) 67 MW
Operating Platform1
MW %
Coal 7,395 79
Natural Gas 1,339 14
Wind 566 5
Other 153 2
9,453 100
Wind Development Pipeline1
MW
Under Construction 447
Pipeline2 5,091
Turbines (Not Shown) 1,166
Thermal Pipeline3
MW
Natural Gas Plant 479
1 Natural gas includes oil-fired; other includes Doga in Turkey (144 MW) and Huntington biomass (9 MW) which are not shown. Turbines purchased or committed to support development pipeline. Data as of December 31, 2007.
2 | | Owned or under exclusive agreement. |
3 | | Contract award subject to regulatory approval with planned on-stream date June, 2013. |
April 1, 2008
EDISON INTERNATIONAL®
21
Leading the Way in Electricity SM
Midwest Generation – Operating Performance
2007 vs. 2006
Generation up 3.7%
Forced Outage Rate impacted by unplanned maintenance outages at Powerton Station (1,538 MW) during 4Q 07
Operating Statistics 2007 2006
Total Generation (GWh) 29,961 28,898
Equivalent Availability 75.8 % 79.3 %
Capacity Factor 60.9 % 58.8 %
Load Factor 80.4 % 74.1 %
Forced Outage Rate 9.7 % 7.9 %
All-in average realized price increased 13% in 2007 compared to last year
All-in Average Realized Prices1 $/MWh $60 $40 $20 $0
4Q 07 4Q 06 2007 2006 $53.53 $40.28 $13.25 $42.95 $30.69 $12.26 $53.36 $40.00 $13.36 $47.03 $33.84 $13.19
Average realized gross margin ($/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. |
April 1, 2008
EDISON INTERNATIONAL®
22
Leading the Way in Electricity SM
Homer City – Operating Performance
2007 vs. 2006
Generation up 11.1%
Strong operating performance across the board in 2007
Operating Statistics 2007 2006
Total Generation (GWh) 13,649 12,286
Equivalent Availability 89.4 % 81.9 %
Capacity Factor 82.5 % 74.3 %
Load Factor 92.4 % 90.7 %
Forced Outage Rate 4.1 % 13.5 %
All-in average realized price increased 15% in 2007 compared to last year
All-in Average Realized Prices1 $/MWh $60 $40 $20 $0
4Q 07 4Q 06 2007 2006 $56.68 $32.85 $23.83 $48.61
$27.05
$21.56 $56.52 $34.07 $22.45 $49.20
$26.14
$23.06
Average realized gross margin ($/MWh)2 Average fuel and emission costs ($/MWh)
1 | | Includes the price of energy, capacity, ancillary services, etc. |
2 | | Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. |
April 1, 2008
EDISON INTERNATIONAL®
23
Leading the Way in Electricity SM
EMG Hedge Program Status
Status at December 31, 2007
2008 2009 2010 Midwest Generation
Energy Only Contracts
Megawatt hours (in GWh) 10,838 7,692 3,472 Average Price ($/MWh) $61.27 $62.38 $62.62
Load Requirement Services Contracts
Estimated GWh1 5,613 1,632 —Average Price ($/MWh)2 $64.01 $63.65 —Total estimated GWh hedged 16,451 9,324 3,472 Coal under contract (in millions of tons) 17.5 11.7 11.7
Homer City
Total estimated GWh hedged 7,232 2,8673 1,022 Average Price ($/MWh)4 $60.85 $73.84 $77.80 Coal under contract (in millions of tons) 5.7 4.4 0.3
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.
3 Homer City hedge position for 2009 was incorrectly reported as 3,890/GWh at September 30, 2007. The correct hedge position for 2009 was 2,867/GWh. There was no change in the hedge position during the fourth quarter.
4 The average price/MWh for Homer City’s hedge position is based on PJM West Hub prices. As a result of transmission congestion in the PJM, actual energy prices at the Homer City busbar have been lower than those at the PJM West Hub.
April 1, 2008
EDISON INTERNATIONAL®
24
Leading the Way in Electricity SM
EMG Capacity Sales
Status at December 31, 2007
Jan. 1, 2008 — May 31, 2008 June 1, 2008 — May 31, 2009 June 1, 2009 — May 31, 2010 June 1, 2010 — May 31, 2011
Megawatts except price per MW-day Midwest Generation Homer City Midwest Generation Homer City Midwest Generation Homer City Midwest Generation Homer City
INSTALLED CAPACITY 5,776 1,884 5,776 1,884 5,776 1,884 5,477 1,884
Less: Net capacity held due to load requirement services contracts,1 and retained for outages (2,673) (207) (1,613) (173) (447) (214) (548) (71)
NET CAPACITY AVAILABLE FOR SALE 3,103 1,677 4,163 1,711 5,329 1,670 4,929 1,813
Fixed Price Capacity Sales
RPM Auction Process
Net Capacity Sold 2,603 786 3,283 820 4,614 1,670 4,929 1,813
Price per MW-day $40.80 $40.80 $111.92 $111.92 $102.04 $191.32 $174.29 $174.29
Non-unit Specific Capacity Sales
Net Capacity Sold 500 — 880 — 715 — — —
Price per MW-day (Net) $21.31 $— $64.35 $— $71.46 $— $— $—
Variable Capacity Sales
Third Party Transaction
Capacity — 891 — 891 — — — —
Expected price per MW-day2 $— $66.71 $— $69.50 $— $— $— $—
TOTAL CAPACITY SOLD 3,103 1,677 4,163 1,711 5,329 1,670 4,929 1,813
AVERAGE PRICE PER MW-DAY $37.66 $54.57 $101.86 $89.83 $97.94 $191.32 $174.29 $174.29
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. Expected price per MW-day is based on forward over-the-counter NYISO prices on December 31, 2007.
April 1, 2008
EDISON INTERNATIONAL®
25
Leading the Way in Electricity SM
Edison Mission Marketing & Trading (EMMT)
Optimize forward sales opportunities
Extending hedge program
Reducing collateral requirements
EMMT provides opportunistic trading revenues
Leverages knowledge gained from managing merchant coal fleet
Trading primarily transmission congestion products and electricity basis spreads
Entering California and Texas markets 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
EMMT Trading Margin (pre-tax)1 $ Millions $250 $200 $150 $100 $50 $0
2003 2004 2005 2006 2007 $34 $23 $195 $130 $143
EMMT provides significant incremental income from trading activity
1 Income from energy trading represents gains recognized from trade price changes. The overhead cost of energy trading is excluded.
April 1, 2008
EDISON INTERNATIONAL®
26
Leading the Way in Electricity SM
EMG Environmental Compliance
MWG Compliance Plan
Phase I – Mercury Reductions
90% removed by 2015
Installation of Activated Carbon Injection (ACI) technology by July 2009
Estimated cost of $60 million
Phase II – NOx Reductions
Emissions of .11 lbs. per million Btus by 2011 (66% reduction)
Installation of primarily Selective Catalytic Reduction (SCR) systems by the end of 2011
Estimated cost of $450 million
Phase III – SO2 Reductions
Emissions of .11 lbs. per million Btus by 2019, with interim step-down (78% reduction)
Flue Gas Desulfurization (FGD) technology
Estimated cost $2.2 – $2.9 billion
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
EMG is conducting a competitive process to select equipment supplier and EPC contractor for Powerton, Illinois environmental upgrades.
Based on this process, EMG expects to update environmental capital expenditure estimates by the end of 2008.
Note: Cost estimates are in 2006 dollars.
April 1, 2008
EDISON INTERNATIONAL®
27
Leading the Way in Electricity SM
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 energy provides attractive opportunities
Growing RPS requirements and national desire for renewables
Production tax credits
Accelerated depreciation (MACRS) over 5 years
Mainly long-term contracts for output
Wind Project Portfolio & Development Pipeline
Projects1 No. of Projects MW
In-Service 13 566
Under Construction 8 447
Total Projects 21 1,013
Development Pipeline 39 5,091
Turbines
Purchased and under option 1,166
Development pipeline includes projects owned or under exclusive agreements Turbines purchased and under option support development pipeline Working through wind turbine generator blade issues with Suzlon and Clipper
1 | | Data as of December 31, 2007. |
April 1, 2008
EDISON INTERNATIONAL®
28
Leading the Way in Electricity SM
Other EMG Growth Opportunities
Natural Gas-Fired Generation
Walnut Creek, CA – Awarded 10-year power purchase agreement with Southern California Edison for 479 MW –Online June 1, 2013 Sun Valley, CA opportunity (500 MW) in permitting and engineering stage Potential acquisitions of assets or portfolios
Will be selective and disciplined
Complement marketing and trading skills
Solar
Evaluating investment opportunities in solar power generation
Clean-Coal Technologies
Continuing to investigate clean coal technologies
Carbon capture
Post-combustion options
April 1, 2008
EDISON INTERNATIONAL®
29
Leading the Way in Electricity SM
Appendix
April 1, 2008
EDISON INTERNATIONAL®
30
Leading the Way in Electricity SM
SCE Regulatory Update
Case Number Date of Filing Status Next Milestone
GRC A. 07-11-011 November 2007 GRC Application filed and CPUC schedule approved Evidentiary Hearings begin May 29, 2008 Proposed decision expected Nov. 4, 2008 Final decision expected Dec. 4, 2008
Cost of Capital A. 07-05-003 May 11.5% ROCE established in None
(COC) 2007 D. 07-12-049 The possibility of a multi-year cost of
COC Multi-Year May Proposed Decision pending
A. 07-05-003 capital mechanism, as opposed to
Program 2007
annual filings.
A. 04-12-007/8 December Decision Granted D. 07-03-012 / 045 Construction began March 2008
Tehachapi (Segments 1-3) 2004
Pre-hearing conference held August, Draft EIR/EIS scheduled August,
Transmission A. 07-06-031 June 2008. Decision anticipated late
2007. Supplemental cost testimony
(segments 4-11) 2007 filed in October, 2007 2008 / early 2009
DPV 2 – ACC: ACC denied approval of Initiated pre-filing activities with
May FERC. Continuing to work with ACC
Transmission1 L-00000A-06- application in May, 2007
2006 on acceptable alternatives.
0295-00130
Edison Phase III July Phases I and II approved Final Phase III decision expected
SmartConnectTM A. 07-07-026 2007 Phase III filed August 2008
Awaiting intervenor comments on
Capacity Market December Final Decision expected
R. 05-12-013 Phase 2/Track 2 proposals, comments
2005 May 2008
due March 14, 2008
Long-Term D. 07-12-052 approved an additional
December 1,200—1,700 MW, in addition to the 305 Procuring 1,700 MW
Procurement R. 06-02-013
2006 MW remaining from SCE’s standard-track by 2015
Plan2 RFO, procurement through 2015
1 CPUC has approved (A. 05-04-015) and FERC has declared it a National Interest Electric Transmission Corridor (N.I.E.T.C.).
2 | | SCE has the opportunity to bid into building generation for the 1,200 – 1,700 MW of additional power. |
April 1, 2008
EDISON INTERNATIONAL®
31
Leading the Way in Electricity SM
Fourth Quarter Financial Results
Reconciliation of Core Earnings to Reported Earnings
Core Earnings 4Q 07 4Q 06 Var.
SCE $0.37 $0.32 $0.05
EMG 0.30 0.36 (0.06)
EIX parent company and other (0.02) (0.03) 0.01
Core EPS1 $0.65 $0.65 $?
Non-core Items
SCE $? $0.16 $(0.16)
EMG (0.01) 0.06 (0.07)
Total Non-Core $(0.01) $0.22 $(0.23)
Basic EPS $0.64 $0.87 $(0.23)
Diluted EPS $0.64 $0.87 $(0.23)
Core Earnings Variances
SCE
Settlement of a tariff dispute 0.05
EMG
Midwest Generation
Lower interest expense from debt repayment in 2Q 07 and higher realized energy margin, partially offset by higher maintenance costs and SFAS #133 impact 0.06
Homer City
Higher energy margin, mostly offset by SFAS #133 impact 0.01
EMMT2
Higher trading margin 0.05
Corporate Expense and Other Items (0.07)
Edison Capital
2006 infrastructure fund gains and other (0.11)
Non-Core Variances
SCE 4Q 06 resolution of a state tax apportionment issue $0.15 and generator refund incentive $0.01 (0.16)
EMG 4Q 07 includes ($0.01) from discontinued operations; 4Q 06 includes $0.07 from discontinued operations and ($0.01) from early debt extinguishment charges (0.07)
1 See use of Non-GAAP Financial Measures in appendix. The impact of participating securities is included in EIX parent company and other, and was $(0.01) per share for each of the quarters ended December 31, 2007 and 2006.
2 | | EMMT overhead is excluded from trading margin. |
April 1, 2008
EDISON INTERNATIONAL®
32
Leading the Way in Electricity SM
Full-Year Financial Results
Reconciliation of Core Earnings to Reported Earnings
Core Earnings 2007 2006 Var.
SCE $2.07 $1.89 $0.18
EMG 1.72 1.30 0.42
EIX parent company and other (0.10) (0.12) 0.02
Core EPS1 $3.69 $3.07 $0.62
Non-core Items
SCE $0.10 $0.49 $(0.39)
EMG (0.46) 0.02 (0.48)
Total Non-Core $(0.36) $0.51 $(0.87)
Basic EPS $3.33 $3.58 $(0.25)
Diluted EPS $3.31 $3.57 $(0.26)
Core Earnings Variances
SCE
Higher operating margin, settlement of a tariff dispute and lower income taxes, partially offset by higher net interest expense 0.18
EMG
Midwest Generation
Higher energy margin (generation and realized energy prices) and lower interest expense, partially offset by SFAS #133 impact and higher maintenance costs 0.39
Homer City
Higher energy margin (generation and realized energy prices), partially offset by SFAS #133 impact 0.14
Income from Other Projects 0.07
EMMT2
Higher trading margin 0.03
Corporate Expense and Other Items
Higher development costs, corporate expenses and other (0.15)
Edison Capital
2006 infrastructure fund gains and other (0.06)
Non-Core Variances
SCE 2007: $0.10 income tax treatment of certain environmental remediation costs; 2006: $0.40 resolution of regulatory and tax issues, generator settlement $0.07, and generator refund incentive $0.02 (0.39)
EMG 2007 and 2006 include ($0.45) and ($0.28) for early debt extinguishment charges, and ($0.01) and $0.30 for discontinued operations, respectively (0.48)
1 See use of Non-GAAP Financial Measures in appendix. The impact of participating securities is included in EIX parent company and other, and was $(0.04) and $(0.05) per share for year-to-date December 31, 2007 and 2006, respectively.
2 | | EMMT overhead is excluded from trading margin. |
April 1, 2008
EDISON INTERNATIONAL®
33
Leading the Way in Electricity SM
EMG Adjusted EBITDA
Reconciliation to Net Income ($ Millions) 2007 2006
Net Income $410 $432
Addback (Deduct):
Cumulative change in accounting, net of tax — —
Discontinued operations 2 (97)
Income from continuing operations 412 335
Interest expense 323 409
Interest income (101) (118)
Income taxes 170 154
Depreciation and Amortization 172 157
EBITDA 976 937
Production tax credits1 28 17
Discrete items:
Loss on lease termination, asset impairment and other — —
Impairment of equity method investment — —
Gain on sale of assets (1) (22)
Loss on early extinguishment of debt 241 146
Adjusted EBITDA $1,244 $1,078
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 | | Production tax credits (PTC) are after-tax. |
April 1, 2008
EDISON INTERNATIONAL®
34
Leading the Way in Electricity SM
EMG Capital Expenditures
Estimated Expenditures1
2008 – 2010
Growth Commitments Environmental Plan Plant/Corporate Capex Plan $ Millions $1,000
$800 $600 $400 $200 $0
2008 2009 2010 $861 $729 $380
Total $1,970 Million
Estimated Expenditures (2008 – 2010)
Additional growth opportunities
Additional wind turbines
Balance of plant costs for purchased wind turbines
Homer City will comply with 2010 phase of mercury requirements
Estimated Expenditures After 2010
Midwest Generation environmental spending plan
Evaluating FGD installation at Homer City
Additional growth opportunities
1 EMG expects to make substantial investments in new projects during the next three years. As of December 31, 2007, EMG had a development pipeline of potential wind projects with an estimated installed capacity of over 5,000 MW (the development pipeline represents potential projects for which EME either owns the project rights or has exclusive negotiation rights). Completion of these projects is dependent upon a number of items which may include, depending on the project’s status, completion of a power sales agreement, permits, an interconnection agreement or other agreements necessary to start construction. Additional projects may from time to time be added to the development pipeline, and there is no assurance that the projects included in the development pipeline currently or added in the future will lead to the successful completion of a wind project.
April 1, 2008
EDISON INTERNATIONAL®
35
Leading the Way in Electricity SM
Liquidity Profile
Available Liquidity at December 31, 2007
Sources ($ Millions) SCE EMG EIX Parent & Other
Credit Facility $2,500 $1,100 $1,500
Credit Facility (availability) $1,771 $1,004 $1,500
Cash & short term investments1 252 1,230 40
Available Liquidity $2,023 $2,234 $1,540
1 SCE and EMG amounts exclude $37 million and $121 million, respectively, of cash collateral held by counterparties. SCE amount includes $110 million held by SCE’s consolidated variable interest entities.
April 1, 2008
EDISON INTERNATIONAL®
36
Leading the Way in Electricity SM
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. Our management uses core earnings and EPS by principal operating subsidiary internally for financial planning and for analysis of performance. We also use core earnings and EPS by principal operating subsidiary as primary performance measurements when communicating with analysts and investors regarding our earnings results and outlook, as it allows us to more accurately compare the company’s ongoing performance across periods. Core earnings exclude discontinued operations and other non-core items and are reconciled to basic earnings per common share.
EPS by principal operating subsidiary is based on the principal operating subsidiary net income and Edison International’s weighted average outstanding common shares. The impact of participating securities (vested stock options that earn dividend equivalents that may participate in undistributed earnings with common stock) for each principal operating subsidiary is not material to each principal operating subsidiary’s EPS and is therefore reflected in the results of the Edison International holding company, which we refer to as EIX parent company. EPS and core EPS by principal operating subsidiary are reconciled to basic earnings per common share.
A reconciliation of Non-GAAP information to GAAP information, including the impact of participating securities, is included either on the slide where the information appears or on another slide referenced in the presentation.
April 1, 2008
EDISON INTERNATIONAL®
37
