Exhibit 99.1
Leading the Way in Electricity SM
Business Update
May-June 2008
May 9, 2008
EDISON INTERNATIONAL®
Forward-Looking Statements
Leading the Way in Electricity SM
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 other reports filed with the Securities and Exchange Commission 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.
May 9, 2008
EDISON INTERNATIONAL®
What’s New Since Our April Update
Leading the Way in Electricity SM
Updated Information
1Q 2008 results and forward looking forecasts as appropriate
Regulatory matters (p. 19, 33)
Additional Topics
Renewable transmission planning (p. 20)
Electronic technology solutions to meet the climate change challenge (p. 21)
Shareholder value proposition (p. 31)
May 9, 2008
EDISON INTERNATIONAL®
Strategic Overview
Leading the Way in Electricity SM
May 9, 2008 3 EDISON INTERNATIONAL®
Edison International Value Drivers
Leading the Way in Electricity SM
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 rooftop program 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 use of Non-GAAP Financial Measures in Appendix for additional information on EBITDA and Adjusted EBITDA. |
May 9, 2008 4 EDISON INTERNATIONAL®
Our Business Portfolio
Leading the Way in Electricity SM
Financial data is for the year ended December 31, 2007
Edison International
Revenue $13.1
Operating Cash Flow $3.2
Generation Capacity (MW) 14, 955
Market Capitalization $ 17.1
Southern California Edison
Revenue $10.5
Generation Capacity (MW) 5,502
Population Served (MM) 13+
Edison Mission Group Revenue $2.6
Generation Capacity (MW) 9,453
Wind Pipeline (MW) ~5,000
Note: Capacity and wind pipeline data is as of March 31, 2008, and market capitalization is as of May 1, 2008. Dollar amounts in billions, population served in millions. Edison Mission Group includes Edison Mission Energy and Edison Capital.
May 9, 2008 5 EDISON INTERNATIONAL®
Financial Strategies
Leading the Way in Electricity SM
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. |
May 9, 2008 6 EDISON INTERNATIONAL®
2008 Earnings Guidance
Leading the Way in Electricity SM
Reconciliation of Core Earnings Guidance to GAAP Earnings Guidance
Core EPS1 2007 Results 2008 Guidance Reaffirmed as of 5/8/2008
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 GAAP earnings per share $ 3.33 $ 3.61 — $ 4.01
The current outlook for EIX 2008 Core Earnings is around the high end of the guidance range No change in Key Factors and Assumptions Provided on February 27, 2008
SCE
• 11.5% Return on Equity
• Energy Efficiency potential of $0.08 per share
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
• Excludes discontinued operations and non-core items
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. GAAP earnings per share refers to basic earnings per share.
May 9, 2008 7 EDISON INTERNATIONAL®
Southern California Edison (SCE)
Leading the Way in Electricity SM
An Investor-Owned Electric Utility
May 9, 2008 8 EDISON INTERNATIONAL®
SCE System
Leading the Way in Electricity SM
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 under CPUC jurisdiction rates are decoupled from demand consistent with California’s constructive regulatory model
??Earnings driven by approved rate of return on approved earning 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
May 9, 2008 9 EDISON INTERNATIONAL®
SCE Long-Term Resource Objectives
Leading the Way in Electricity SM
SCE Distribution System Supply and Demand Balance (MW)
Power Resource Needs
Supply Objectives
830
4,790
4,176
1,874
New Renewables
Other Projects Underway
1,339
319
Increased Demand 1 Requirement
Potential Retirements
Anticipated New Generation
New Demand-Side Resources
Potential Need by 20152
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
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. |
May 9, 2008 10 EDISON INTERNATIONAL®
SCE Renewable Energy Goals
Leading the Way in Electricity SM
2007 Renewable Resources 12.5 Billion kWh
Renewable Resources 2007-2010 (Billion kWh)
Biomass 8%
Wind 21%
Solar 5% Small Hydro 4%
Geothermal 62%
12.5
28% Increase
2007 Actual Procurement
2010 Goal
SCE 2007 Renewable Energy Program
• 16% of SCE portfolio (RPS basis)
• ~1/8 of all US renewable electrons
• Over 90% of US solar energy
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
May 9, 2008 11 EDISON INTERNATIONAL®
SCE Capital Investment
Leading the Way in Electricity SM
Proposed $19.9 Billion Five-Year Capital Spending Plan
$ Billions
$5 $4.5 $4.6 $4.1
$4 $3.8 $2.9 $3
$2
$1
$0
2008 2009 2010 2011 2012
Forecast by Classification
$ % Solar Rooftop Program 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 rooftop program announced on March 27, 2008.
May 9, 2008 12 EDISON INTERNATIONAL®
SCE’s Earning Asset Base
Leading the Way in Electricity SM
Forecast SCE Rate Base 2007-20121
$ Billions $25
$20 $15 $10 $5 $0
2007 2008 2009 2010 2011 2012
1 | | 2 + % Compound Annual Growth |
$15.5
$11.7 $12.7
$18.3
$23.6
$21.3
Effective execution of its capital expenditure program and continued regulatory support could double SCE’s earning 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-progress (CWIP) recovery in rate base and the Economic Stimulus Act of 2008. Forecast is as of March 2008 and includes $692 million of capital spending for DPV2, the majority of which is expected to occur in 2009 and 2010. The Arizona Corporation Commission (ACC) denied approval of the DPV2 project. The denial has resulted in a minimum two-year delay of the project. SCE has initiated pre-filing activities with the FERC and is continuing to work with ACC on acceptable alternatives.
May 9, 2008 13 EDISON INTERNATIONAL®
SCE Transmission Investment Program
Leading the Way in Electricity SM
• Tehachapi transmission line to interconnect up to 4,500 MW of generation
• New transmission needed to strengthen system reliability and access economical power
NEVADA CALIFORNIA
Las Vegas Midway Tehachapi SCE Eldorado
(PG&E) Service
Windhub
Territory
Antelope Palmdale Lugo
Vincent Mohave ARIZONA Santa Clarita Pardee RanchoVista MiraLoma Devers Los Angeles Serrano PalmSprings Phoenix Valley SantaAna Verde Palo
San Diego
Existing 500kV Tehachapi Segments 1-3 500kV DPV2 & Rancho Vista 500kV Tehachapi Segments 4-11 500kV
Project Name Phase 2008-2012 In-Service ($ 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 earning 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, 125 b.p. project specific adder for Tehachapi & DPV2, and 75 b.p. project specific adder for Rancho Vista.
May 9, 2008 14 EDISON INTERNATIONAL®
SCE Edison SmartConnectTM Program
Leading the Way in Electricity SM
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. |
May 9, 2008 15 EDISON INTERNATIONAL®
Nation’s Leader in Energy Efficiency
Leading the Way in Electricity SM
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 PG&E NSP FPL CL&P
9,031
7,090
4,041 3,863
2,226
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
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. |
May 9, 2008 16 EDISON INTERNATIONAL®
SCE Energy Efficiency Earnings Opportunity
Leading the Way in Electricity SM
CPUC Approved Energy Efficiency (EE) Shareholder Incentive Mechanism1
2006-2008 EE Cycle
Year 2006 2007 2008
2009-2011 EE Cycle
2009 2010 2011 2012 2013
Potential Earnings Profile by Year3
65% of 2006-2007 earnings opportunity2
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.
May 9, 2008 17 EDISON INTERNATIONAL®
SCE Solar Rooftop Program
Leading the Way in Electricity SM
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 program1
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. Direct capital forecast in 2008 dollars (2008-2013). |
May 9, 2008 18 EDISON INTERNATIONAL®
Constructive Regulatory Environment
Leading the Way in Electricity SM
What’s Changed Since the Power Crisis
Advance approval of annual procurement plans for purchased power
Trigger mechanism for fuel and purchased power cost recovery
Forward-looking rate-making includes expected cost inflation
State support for reliable electric system infrastructure
Benefits to Customers and Investors
Upfront review of utility purchasing decisions through a defined procurement plan
Better matching of revenues and cash expenditures for fuel and purchased power costs with predetermined trigger mechanisms for recovering higher costs
Three-year process based on forecast expenses, capital spending and asset base increases between rate cases
Regulatory decisions address emerging issues (such as adding peaking capacity for 2007 summer season) and opportunities (new energy efficiency program and incentives for utility renewable energy investment)
California’s regulatory framework has been strengthened to support growth and reliability needs, while longstanding decoupling policies mitigate risks of volatile commodity prices and economic slowdown
May 9, 2008 19 EDISON INTERNATIONAL®
Renewable Transmission Planning
Leading the Way in Electricity SM
Renewable Transmission Planning
Objective
Build a robust renewable transmission system that balances all requirements
Delivery Capacity System reliability and power quality Schedule Cost
Challenges
Technical: Integrating Intermittent resources Regulatory: Requirements, Processes Financial: Capital, Cost recovery, Customer rates
May 9, 2008 20 EDISON INTERNATIONAL®
Electric Technology Solutions to Meet the Climate Change Challenge
Leading the Way in Electricity SM
Advanced Generation
Smart Grid/Smart Connect
Grid-connected Transportation
Technology Advancement Delivers Required GHG Responses
Low Carbon Fuel Mix
Demand-Side Management & Efficiency
While protecting customers:
• Mitigate rate shocks, and ensure fair cost responsibility within electric industry and across other industries
• Meet customer expectations for value (reliable service and improved power quality)
May 9, 2008 21 EDISON INTERNATIONAL®
Edison Mission Group (EMG)
Leading the Way in Electricity SM
A Competitive Power Generation Company
May 9, 2008 22 EDISON INTERNATIONAL®
EMG Business Platform
Status at March 31, 2008
Leading the Way in Electricity SM
Washington
Natural Gas 70 MW
California
Natural Gas 964 MW
Natural Gas (Pipeline) 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) 400 MW
Iowa
Wind 145 MW
Wind (Pipeline) 200 MW
Minnesota
Wind 75 MW Wind (UC) 70 MW Wind (Pipeline) 130 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 Pipeline2
MW Under Construction 447 Pipeline 4,992 Turbines (Not Shown) 1,166
Thermal Pipeline3
MW Natural Gas 479
1 Natural gas includes oil-fired; other includes Doga in Turkey (144 MW) and Huntington biomass (9 MW) which are not shown.
2 | | Owned or under exclusive agreement. Turbines purchased or committed to support development pipeline. |
3 | | Contract award subject to regulatory approval with planned on-stream date June 2013. |
May 9, 2008 23 EDISON INTERNATIONAL®
EMG Coal-Fired Fleet
Leading the Way in Electricity SM
Midwest Generation
• 5,776 MW – Six facilities and peakers acquired in 1999
• Powder River Basin coal (PRB)
• Rail under contract through 2011
• Operational Statistics: 2005 2006 2007 Total Generation (GWh) 30,953 28,898 29,961 Load Factor 79.1% 74.1% 80.4%
Homer City
• 1,884 MW – Three units acquired in 1999
• Northern Appalachian coal (NAPP)
• Largely sourced locally and delivered by truck
• Operational Statistics: 2005 2006 2007 Total Generation (GWh) 13,637 12,286 13,649 Load Factor 96.7% 90.7% 92.4%
All-in Average Realized Prices1
$/MWh
$60 $40 $20 $0
$53
$46 $47
$40
$34 $34
$12 $13 $13
2005 2006 2007
All-in Average Realized Prices1
$60 $40 $20 $0
$56 $49 $46 $34 $26 $25
$21 $23 $22 2005 2006 2007
Average realized gross margin ($/MWh)2 Average fuel and emission costs ($/MWh)
1 | | Includes the price of energy, capacity, ancillary services, etc. |
2 | | Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. |
May 9, 2008 24 EDISON INTERNATIONAL®
EMG Hedge Program Status
Leading the Way in Electricity SM
Status at March 31, 2008 – No Significant Hedging Activity in 1Q 08
Remainder of
2008 2009 2010
Midwest Generation
Energy Only Contracts
Megawatt Hours 7,746 7,692 3,472
Average Price ($/MWh) $60.85 $62.38 $62.58
Load Requirement Services Contracts
Estimated MWh1 3,689 1,571 —
Average Price ($/MWh)2 $64.21 $63.65 —
Total estimated GWh hedged 11,436 9,263 3,472
Coal under contract (in millions of tons) 12.3 11.7 11.7
Homer City
Total estimated GWh hedged 5,434 2,867 1,022
Average Price ($/MWh)3 $60.84 $73.84 $77.80
Coal under contract (in millions of tons) 4.3 4.4 0.4
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 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.
May 9, 2008 25 EDISON INTERNATIONAL®
EMG Capacity Sales
Leading the Way in Electricity SM
Status at March 31, 2008 – No New Capacity Auctions in 1Q 08
Apr 1, 2008 — May 31, 2008 Jun 1, 2008 — May 31, 2009 Jun 1, 2009 — May 31, 2010 Jun 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 (2,647) (173) (1,942) (159) (447) (214) (548) (71)
Net Capacity Available for Sale 3,129 1,711 3,834 1,725 5,329 1,670 4,929 1,813
Fixed Price Capacity Sales
RPM Auction Process
• Net Capacity Sold3 2,629 786 2,978 820 4,614 1,670 4,929 1,813
• Price per MW-day3 $37.27 $40.80 $123.77 $113.22 $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 — 925 — 905 — — — —
• Expected price per MW-day2 $ — $70.37 $ — $63.96 $ — $ — $ — $ —
Total Capacity Sold 3,129 1,711 3,858 1,725 5,329 1,670 4,929 1,813
Average Price per MW-Day $34.72 $56.79 $110.22 $87.38 $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 March 31, 2008.
3 During 1Q 08, PJM updated capacity prices for the period June 1, 2008 to May 31, 2009 to reflect the final incremental auction for this planning year. Homer City’s adjusted prices for capacity per megawatt hour is $113.22 compared to the original price of $111.92. In addition, the price was affected by Midwest Generation’s participation in a supplemental RPM auction which resulted in purchasing certain capacity amounts at a price of $10/MW-day, thereby reducing the aggregate forward capacity sales for this period and increasing the effective capacity price to $123.77 at March 31, 2008.
May 9, 2008 26 EDISON INTERNATIONAL®
Edison Mission Marketing & Trading (EMMT)
Leading the Way in Electricity SM
• 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
$195
$130 $143
$34 $23
2003 2004 2005 2006 2007
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.
May 9, 2008 27 EDISON INTERNATIONAL®
EMG Environmental Compliance
Leading the Way in Electricity SM
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 expects to comply with the 2010 phase of mercury requirements by installing ACI on Units 1 & 2
EMG is conducting a competitive process to select an equipment supplier and EPC contractor for Powerton, Illinois environmental upgrades.
Based on this process, EMG expects to update environmental capital expenditure estimates in 2008.
Note: Cost estimates are in 2006 dollars.
May 9, 2008 28 EDISON INTERNATIONAL®
Wind Energy Development Strategy & Portfolio
Leading the Way in Electricity SM
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 33 4,992
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 March 31, 2008. |
May 9, 2008 29 EDISON INTERNATIONAL®
Other EMG Growth Opportunities
Leading the Way in Electricity SM
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
May 9, 2008 30 EDISON INTERNATIONAL®
Our Shareholder Value Proposition
Leading the Way in Electricity SM
• Attractive business portfolio and growth opportunities
• Southern California Edison
??Demonstrated need for utility infrastructure investments
??Among the best domestic electric utility growth platforms
• Edison Mission Group
??Favorable market conditions for unregulated generation portfolio
??Strong growth pipeline led by renewable investments
• Commitment to long-term shareholder value creation
• Incentive compensation and stock ownership guidelines consistent with shareholder interests
• Edison people committed to excellence in safety and customer service
May 9, 2008 31 EDISON INTERNATIONAL®
Appendix
Leading the Way in Electricity SM
May 9, 2008 32 EDISON INTERNATIONAL®
SCE Regulatory Update
Leading the Way in Electricity SM
Case Date of Next
Number Filing Status Milestone
2009 GRC A. 07-11-011 November 2007 GRC Application filed and CPUC schedule approved. DRA and other intervenor recommendations received. SCE rebuttal to be filed 5/13/08 Evidentiary hearings begin 5/29/08 Proposed decision expected 11/4/08 Final Decision expected 12/4/08
Cost of Capital (COC) Multi-Year Program A. 07-05-003 May The possibility of a multi-year cost of 2007 capital mechanism, as opposed to annual Initial comments due 5/19/08 Final Decision expected 5/29/08 filings. Proposed Decision issued 4/29/08.
Tehachapi Transmission A. 04-12-007/8 (Segments 1-3) A. 07-06-031 (segments 4-11) December 2004 June 2007 Decision Granted D. 07-03-012 / 045 Pre-hearing conference held August, 2007. Supplemental cost testimony filed in October, 2007 Construction began March 2008 Draft EIR/EIS scheduled August, 2008. Decision anticipated late 2008 / early 2009
DPV 2 – Transmission1 ACC: L-00000A-06- 0295-00130 May 2006 ACC denied approval of application in May, 2007 Initiated pre-filing activities with FERC. on Continuing acceptable to alternatives. work with ACC
Edison SmartConnectTM Phase III A. 07-07-026 July 2007 Phases I and II approved Phase III filed Final Phase III decision expected August 2008
Capacity Market R. 05-12-013 December 2005 Awaiting intervenor comments on Phase 2/Track 2 proposals, comments due March 14, 2008 Final Decision expected May 2008
SCE Solar Rooftop Program A. 08-03-015 March 2008 Application and testimony filed Commission approves memorandum account for start- up activites
1 CPUC has approved (A. 05-04-015) and FERC has declared the region a National Interest Electric Transmission Corridor (N.I.E.T.C.).
May 9, 2008 33 EDISON INTERNATIONAL®
First Quarter Financial Results
Leading the Way in Electricity SM
Reconciliation of Core Earnings to GAAP Earnings
Core Earnings 1Q 07 1Q 08 Variance
SCE $ 0.45 $ 0.46 $ 0.01
EMG 0.48 0.49 0.01
EIX parent company (0.03) (0.03) —and other
Core EPS1 $ 0.90 $ 0.92 $ 0.02
Non-core Items
SCE $ 0.10 $ ? $ (0.10)
EMG 0.01 (0.01) (0.02)
Total Non-Core $ 0.11 $ (0.01) $ (0.12) Basic EPS $ 1.01 $ 0.91 $ (0.10) Diluted EPS $ 1.00 $ 0.91 $ (0.09)
Core Earnings Variances SCE
Lower net interest expense 0.01
EMG
Midwest Generation
Higher gross margin mainly from higher realized prices, lower 0.12 interest expense and favorable buy-out of a coal contract
EMMT2
Higher income from energy trading 0.03
Homer City
Lower generation and realized prices (0.02)
Edison Capital
Lower gains from Global Infrastructure Funds (0.03)
Income from other projects (0.03) Corporate expense and other items
Higher EME interest expense and higher expenses related to (0.06) growth activities
Non-Core Variances
SCE 1Q 07: Resolution of the tax treatment of certain (0.10) environmental remediation costs EMG 1Q 07: Lakeland distributions $0.01; 1Q 08: Foreign (0.02) exchange losses on contract indemnity ($0.01)
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 $(0.01) per share for each of the quarters ended March 31, 2008 and 2007.
2 | | EMMT overhead is included in Corporate expense and other items. |
May 9, 2008 34 EDISON INTERNATIONAL®
EMG – First Quarter Adjusted EBITDA
Leading the Way in Electricity SM
Reconciliation to Net Income ($ Millions) 1Q 07 1Q 08
Net income $ 159 $ 154 Addback (Deduct): Discontinued operations (3) 5 Income from continuing operations 156 159 Interest expense 91 73 Interest income (30) (11) Income taxes 77 83 Depreciation and amortization 37 46
EBITDA1 331 350
Production tax credits2 5 9
Adjusted EBITDA1 $ 336 $ 359
1 | | See Use of Non-GAAP Financial Measures for additional information on EBITDA and Adjusted EBITDA. |
2 | | Production tax credits (PTC) are after-tax. |
May 9, 2008 35 EDISON INTERNATIONAL®
EMG Adjusted EBITDA
Leading the Way in Electricity SM
Reconciliation to Net Income ($ Millions) 2006 2007
Net income $ 432 $ 410 Addback (Deduct): Discontinued operations (97) 2 Income from continuing operations 335 412 Interest expense 409 323 Interest income (118) (101) Income taxes 154 170 Depreciation and amortization 157 172
EBITDA1 937 976
Production tax credits2 17 28 Discrete items: Gain on sale of assets (22) (1) Loss on early extinguishment of debt 146 241
Adjusted EBITDA $ 1,078 $ 1,244
1 | | See Use of Non-GAAP Financial Measures for additional information on EBITDA and Adjusted EBITDA. |
2 | | Production tax credits (PTC) are after-tax. |
May 9, 2008 36 EDISON INTERNATIONAL®
EMG Capital Expenditures
Leading the Way in Electricity SM
Estimated Expenditures1 2008 – 2010
Projects Under Construction Wind Turbine Commitments Plant/Corporate Capex Plan Environmental Plan
$ Millions $1,000
$800 $600 $400 $200 $0
2008 2009 2010
$817 $843
$449
Total $2,109 Million
Estimated Expenditures (2008 – 2010)
Additional growth opportunities Additional wind turbines
Balance of plant costs for purchased wind turbines Homer City will comply with 2010 phase of mercury requirements
Estimated Expenditures After 2010
Midwest Generation environmental spending plan Evaluating FGD installation at Homer City Additional growth opportunities
1 EMG expects to make substantial investments in new projects during the next three years. As of March 31, 2008, EMG had a development pipeline of potential wind projects with an estimated installed capacity of approximately 5,000 MW (the development pipeline represents potential projects for which EME either owns the project rights or has exclusive negotiation rights). Completion of these projects is dependent upon a number of items which may include, depending on the project’s status, completion of a power sales agreement, permits, an interconnection agreement or other agreements necessary to start construction. Additional projects may from time to time be added to the development pipeline, and there is no assurance that the projects included in the development pipeline currently or added in the future will lead to the successful completion of a wind project. 2008 expenditures are for the period April 1 – December 31, 2008.
May 9, 2008 37 EDISON INTERNATIONAL®
Liquidity Profile
Leading the Way in Electricity SM
Available Liquidity at March 31, 2008
Sources ($ in Millions) SCE EMG EIX Parent Co. & Other Total1
Credit Facility $ 2,500 $ 1,100 $ 1,500 $ 5,100
Credit Facility (availability) $ 1,883 $ 937 $ 1,500 $ 4,320
Cash & short term investments2 283 1,222 75 1,580
Available Liquidity $ 2,166 $ 2,159 $ 1,575 $ 5,900
1 | | Total amounts do not imply any credit support among entities except as specified in each credit facility. |
2 | | SCE amount includes $113 million held by SCE’s consolidated variable interest entities. |
May 9, 2008 38 EDISON INTERNATIONAL®
Midwest Generation – Operating Performance
Leading the Way in Electricity SM
1Q 07 vs. 1Q 08
• Generation lower by 2.9% in 1Q 08 largely due to a forced outage at Powerton
• Higher load factor
Operating Statistics 1Q 07 1Q 08
Total Generation (GWh) 8,630 8,383 Equivalent Availability 88.0 % 82.5 % Capacity Factor 71.2 % 70.3 % Load Factor 80.9 % 85.3 % Forced Outage Rate 5.9 % 11.8 %
All-in average realized price increased 7% in 1Q 08 compared to last year
All-in Average Realized Prices1
$/MWh
$60 $40 $20 $0
$56.24
$52.31
$42.16
$39.68
$12.63 $14.08
1Q 07 1Q 08
Average realized gross margin ($/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. |
May 9, 2008 39 EDISON INTERNATIONAL®
Homer City – Operating Performance
Leading the Way in Electricity SM
1Q 07 vs. 1Q 08
• Generation lower by 3.1% reflecting higher forced outage rate and lower off-peak demand
Operating Statistics 1Q 07 1Q 08
Total Generation (GWh) 3,293 3,192 Equivalent Availability 86.5 % 87.5 % Capacity Factor 80.8 % 77.5 % Load Factor 93.3 % 88.5 % Forced Outage Rate 5.8 % 9.5 %
All-in average realized price decreased 2% in 1Q 08 compared to last year
All-in Average Realized Prices1
$/MWh
$60 $40 $20 $0
$59.72 $58.42
$37.91 $35.85
$21.81 $22.57
1Q 07 1Q 08
Average realized gross margin ($/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. |
May 9, 2008 40 EDISON INTERNATIONAL®
Use of Non-GAAP Financial Measures
Leading the Way in Electricity SM
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.
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. Our management uses Adjusted EBITDA as an important financial measure for evaluating EMG.
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.
May 9, 2008 41 EDISON INTERNATIONAL®
