Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - UIL HOLDINGS CORP | ex99_1.htm |
| 8-K - UIL HOLDINGS CORPORATION 8-K 8-3-2012 - UIL HOLDINGS CORP | form8k.htm |
2Q 2012 Earnings Presentation
August 6, 2012
Exhibit 99.2
2
Note to Investors
James Torgerson
President and Chief Executive Officer
Richard Nicholas
Executive Vice President and Chief Financial Officer
2012 Earnings Highlights
q 2Q & YTD ‘12 earnings below 2011 levels mainly due to weather
§ 2Q ‘12 consolidated earnings of $12.0M or $0.23 per diluted earnings per share, compared to 2Q ‘11
earnings of $14.2M or $0.28 per diluted share - a decrease of $2.2M or 15%
earnings of $14.2M or $0.28 per diluted share - a decrease of $2.2M or 15%
§ YTD ‘12 consolidated earnings of $59.0M or $1.16 per diluted share, compared to YTD ‘11 earnings of
$66.2M or $1.30 per diluted share - a decrease of $7.2M or 12%
$66.2M or $1.30 per diluted share - a decrease of $7.2M or 12%
▫ Lower gas sales volumes, primarily driven by record warm temperatures that continued into April
and reduced per customer usage
and reduced per customer usage
q Pre-tax earnings from equity investment in GenConn increased $1.3M in 2Q ’12, and $3.7M
YTD ’12, compared to same periods in ‘11
YTD ’12, compared to same periods in ‘11
§ Middletown plant became fully operational in June ’11
q Continued progress on gas conversion growth initiative - on target to meet ‘12 goal
§ Converted 46% more customers YTD ’12, compared to YTD ’11
§ Mild winter weather allowed jump start on gas construction projects
q Affirming 2012 earnings guidance of $2.00-$2.15 per share
§ Mitigated some of the YTD weather impact by maintaining focus on short-term O&M cost controls
q Regulated businesses are expected to earn at or near the allowed returns on a weather
normalized aggregate basis
normalized aggregate basis
3
Gas Conversions
q Converted 4,673 customers as of the end of June ’12 - 46% increase over the same period in ‘11
q 2011-2013 target is to convert 30,000-35,000 gas heating customers
§ 2012 goal is to convert approximately 10,200 customers
§ Converted approximately 8,300 customers in 2011
q Conversion targets for 2014 and beyond to be announced in the 4Q ‘12
4
As of June ‘12, 46% ahead of 2011 customer conversions pace
Gas Conversions - cont.
q Consumer interest in converting remains strong
§ Financing options have been expanded to assist customers with up-front conversion
costs
costs
§ Natural gas supply prices are low and projected to remain low for the foreseeable future
§ Delivered natural gas price for heating customers is approximately half the cost of
heating oil on an equivalent basis
heating oil on an equivalent basis
q Each new residential customer is anticipated to generate approximately $280-
$315 of distribution net operating income annually
$315 of distribution net operating income annually
q CT DEEP Comprehensive Energy Strategy expected in 3Q ‘12
§ Expect energy policy support for natural gas expansion
5
State Regulatory Update
q Investigation of Public Service Companies’ response to
2011 Storms (DN 11-09-09)
2011 Storms (DN 11-09-09)
q Final decision issued 8/1/12 containing reporting
requirements
requirements
§ UI - various recommendations, improving mutual
assistance and release of customer information in
emergency situations
assistance and release of customer information in
emergency situations
§ SCG & CNG - fueling plan and lessons learned
q Multiple dockets opened in relation to storm
response/preparedness, including:
response/preparedness, including:
§ Establishment of Industry Performance Standards for
Electric and Gas Companies (DN 12-06-09)
Electric and Gas Companies (DN 12-06-09)
Utility Company Storm Response
Renewable Energy
q On 1/18/12, UI filed proposal with PURA outlining
framework for approval of UI’s renewable connections
program under which UI would develop up to 10MW
of renewable generation for recovery on a cost of
service basis
framework for approval of UI’s renewable connections
program under which UI would develop up to 10MW
of renewable generation for recovery on a cost of
service basis
q Final decision issued 7/18/12, approved one solar &
one fuel cell facility in Bridgeport and one fuel cell
facility in New Haven
one fuel cell facility in Bridgeport and one fuel cell
facility in New Haven
§ Allowed ROE is the same as electric distribution ROE,
currently 8.75%
currently 8.75%
UI Electric Decoupling
q $4.3M owed by customers for the 2011-2012 rate year
q PURA decision expected in the third quarter 2012
UI Electric Distribution Rate Case
q Evaluating timing of distribution rate case to reflect
significant investments in distribution infrastructure
significant investments in distribution infrastructure
q On 5/9/12, the Connecticut General Assembly
confirmed Arthur House (D) and Jack Betkoski (D) as
directors of PURA
confirmed Arthur House (D) and Jack Betkoski (D) as
directors of PURA
q Arthur House serves as chairman and Betkoski serves
as vice chairman
as vice chairman
q On 7/12/12, the Governor announced the interim
appointment of Michael Caron (R) as the third director
of PURA
appointment of Michael Caron (R) as the third director
of PURA
Public Utilities Regulatory Authority
6
GenConn
q On 7/27/12, GenConn filed a rate case request seeking
approval of 2013 revenue requirements of $73.5M
approval of 2013 revenue requirements of $73.5M
q Final decision expected by the end of 2012
Service Territory Economic Update
7
q Seasonally adjusted unemployment rates as of June 2012(1)
§ CT - 8.1%
§ MA - 6.0%
§ National - 8.2%
q Unemployment rates in the largest service areas and cities as of June 2012(2)
§ Bridgeport labor market areas (LMAs) 7.8%, (City of Bridgeport 12.6%)
§ New Haven LMAs 8.8%, (City of New Haven 12.3%)
§ Hartford LMAs 8.5%, (City of Hartford 15.5%)
(1) U.S. Bureau of Labor Statistics
(2) CT Department of Labor
1Q ‘12 Earnings
FERC-Related Development
Challenge to Regional Transmission Base ROE:
q “206” complaint filed at FERC by multiple state governmental entities in September 2011
§ Claim that New England Transmission Owners’ base ROE is too high
▫ States current 11.14% base ROE is not just and reasonable and seeks a reduction of the base ROE to
9.20%
9.20%
q On May 3, 2012, FERC issued an order setting the matter for hearing and establishing
settlement procedures
settlement procedures
§ The parties have been unable to reach a settlement
§ Settlement proceedings have terminated, and a hearing judge has been assigned
§ A FERC order is expected to be issued in 2013
§ In the event there is a reduction to the ROE, the order established a refund effective date of October 1,
2011
2011
Note:
A 25 basis point change in the weighted-average ROE for UI’s transmission business
would impact net income by approximately $0.6M annually
8
2Q & YTD 2012 Financial Results by Business
Net Income ($M)
Net Income ($M)
9
2Q ‘12 vs. 2Q ‘11
YTD ‘12 vs. YTD ‘11
2Q & YTD 2012 Financial Results - Details
10
Electric distribution, CTA, GenConn & Other
q Slight decline in net income for the 2Q ‘12; 15% increase YTD compared to YTD ‘11
§ Decrease in allowance for funds used during construction in 2Q ‘12 , partially offset by increased income from
GenConn
GenConn
§ GenConn contributed pre-tax earnings of $3.9M and $8.4M for 2Q ‘12 and first six months ‘12, respectively
§ Recorded after-tax earnings sharing of $1.2M in 2Q ’12, compared to no sharing recorded in 2Q ’11; YTD ‘12
after-tax earnings sharing of $2.1M recorded compared to $0.7M YTD ‘11
q Average D & CTA ROE as of 6/30/12: 8.43%
Electric transmission
q Decreased net income in the quarter and first six months, primarily due to a decrease in AFUDC,
partially offset by an increase in rate base
partially offset by an increase in rate base
q Weighted-average T ROE as of 6/30/12: 12.2%-12.4%
Gas distribution
q Lower sales volumes primarily due to the impact of warmer weather and reduced customer
usage, compared to the same periods in 2011
usage, compared to the same periods in 2011
§ 2Q ‘12 retail sales were 10 million mcf, a decrease of 1.7 million mcf compared to 2Q ’11; YTD ‘12 retail sales were
39.1 million mcf, a decrease of 7.4 million mcf compared to YTD ‘11
39.1 million mcf, a decrease of 7.4 million mcf compared to YTD ‘11
§ $4.1M decrease in pre-tax gross margin in 2Q ‘12 compared to 2Q ’11; $18.1M decrease in pre-tax gross margin
YTD ‘12 compared to YTD ’11
YTD ‘12 compared to YTD ’11
▫ YTD partially offset by $3.5M of weather insurance
q 2Q ‘12 heating degree days were 23.7% below normal and 13.7% below 2Q ’11; YTD heating
degree days were 20.7% below normal and 21.0% below YTD ‘11
degree days were 20.7% below normal and 21.0% below YTD ‘11
q Preliminary avg. ROEs as of 6/30/12: SCG 4.38%-4.58%, CNG 5.29%-5.49%
q Preliminary avg. weather normalized ROEs as of 6/30/12: SCG 6.38%-6.58%, CNG 7.37%-7.57%
Corporate
q The reduction of costs for the first six months was primarily attributable to decreased interest
expense resulting from lower short-term borrowings
expense resulting from lower short-term borrowings
Debt Maturities, Liquidity & Credit Ratings
11
|
Issuer
|
S&P
|
Moody’s
|
|
UIL
Holdings |
BBB
(Stable) |
Baa3
(Stable) |
|
United
Illuminating |
BBB
(Stable) |
Baa2
(Stable) |
|
SCG
|
BBB
(Stable) |
Baa2
(Stable) |
|
CNG
|
BBB
(Stable) |
Baa1
(Stable) |
|
Berkshire
|
BBB
(Stable) |
Baa2
(Stable) |
Evaluating the impact of PURA’s decision
concerning Renewable Generation Resources,
current business plans and market conditions
to determine potential timing and need for
external equity
concerning Renewable Generation Resources,
current business plans and market conditions
to determine potential timing and need for
external equity
Available Liquidity
Debt Maturities ($M)
Credit Ratings
Amounts may not add due to rounding.
Affirming 2012 Earnings Guidance
12
q ‘12 goal of converting 10,200 customers to natural gas heat
q Execution of capital expenditure plan at each of our regulated businesses
q Focused short-term O&M cost controls at each of our regulated businesses
q Gas distribution guidance factors in warmer than normal weather YTD ‘12 and assumes
normal weather through the rest of ‘12
normal weather through the rest of ‘12
Q&A