America's Electric Companies

America’s Electric Companies Are #Committed2Clean

Electric Power Industry Outlook February 10, 2021 COVID-19 Response Storm and Wildfire Response “What you are will show in what you do.”

—THOMAS ALVA EDISON 2021 Industry Priorities

5 Leading on Clean Energy Leading on Clean Energy

Changing U.S. Energy Mix Nearly 40% CARBON-FREE

>1/2 Over the Past 10 Years, More Than Half of New Electricity Generation Capacity Was Providing WIND AND SOLAR 67% Using of the 90%+ SOLAR ENERGY of all in the Country U.S. ENERGY STORAGE

7 Carbon-Free Technology Initiative

Achieving deep carbon reductions will require new, affordable, 24/7 carbon-free technologies. 5 Key Technology Areas of Focus: § Advanced, dispatchable renewables (e.g., superhot deep geothermal) and advanced power electronics § Zero-carbon fuels, such as hydrogen or ammonia, produced from a variety of sources

§ Advanced nuclear energy (both fission and fusion) § Carbon capture, utilization, and sequestration, especially for natural gas facilities § Advanced demand efficiency and long-duration storage

8 Clean Energy Policy Priorities

To meet long-term clean energy and climate goals, we need policies that: § Advance carbon-free technologies through appropriations, authorizations, and tax policy. § Recognize industry’s clean energy leadership in reducing carbon emissions and support rapid investment in clean energy resources and the infrastructure needed to integrate it. § Support investments in the electric transmission system to integrate more renewables, more clean energy, and new technologies into the energy grid affordably and reliably. § Promote electric transportation and facilitate build-out

of EV infrastructure. 9 Accelerating the Transition to a Cleaner Economy

Electric transportation: § Benefits communities, businesses, and customers

§ Reduces CO2 emissions and brings immediate improvements to air quality § Leverages the ongoing reductions in power sector emissions

10 Energy-Related Executive Orders

EEI and our member companies: § Support America rejoining the Paris Agreement. § Support the U.S. Environmental Protection Agency developing strong and cost-effective federal regulations on methane emissions throughout the natural gas supply chain for new and existing sources. § Support expanding production of renewable energy from offshore wind and identifying ways to build the critical electric transmission and energy grid infrastructure we need to deliver more clean energy to customers as quickly and efficiently as possible. § Support efforts to electrify the transportation sector and the federal fleet.

11 Federal Fleet Electrification

Federal Fleet Inventory by Vehicle Type

Source: U.S. General Services Administration Federal Fleet Report 12 Investing in Smarter Energy Infrastructure Investing in Smarter Energy Infrastructure

§ Since 2010, EEI’s member companies have invested more than $1 trillion to build smarter energy infrastructure and to integrate new generation. § EEI’s member companies also are harnessing technology and data to provide clean energy, energy management services, EV charging, and more—and providing an increasingly seamless customer experience.

Smart meters have been the foundation for today’s customer-facing, modern energy grid.

14 Key Regulatory Policy Issues

§ Energy Storage § Environmental Policy § Middle-Mile Broadband § Resilience Investments § Streamlined Infrastructure Siting & Permitting § Transmission Planning & Policy

15 Bridging the Digital Divide

EEI’s member companies are well-positioned to help close the digital divide by providing middle-mile broadband networks. This is a win for customers, particularly in underserved and rural communities. We need favorable policies to: § Ensure that electric companies are eligible and incentivized to participate in federal broadband grant programs. § Allow electric companies to provide middle-mile broadband infrastructure. § Facilitate innovative partnerships between electric companies, telecommunications, and last-mile internet providers. § Provide states flexibility to build out permanent rural broadband infrastructure. 16 Grid Modernization Activity

2020 State Regulatory & Legislative Activity

17 Building a Stronger Energy Future Addressing Wildfire Risks

Industry and government leaders are partnering to:

§ Enable more effective coordination among stakeholders. § Foster urgency and accountability for all stakeholders. § Improve the allocation of resources to harmonize programs, prioritize efforts, and ensure new programs are funded and utilized effectively. § Identify and address public policy issues that may be hindering effective wildfire risk management and response efforts. § Prepare communities in high fire risk areas by communicating with a more unified voice. § Invest in research, development, and deployment of technologies that proactively mitigate wildfire risks.

19 Securing the Energy Grid

§ Cross-Sector Coordination

§ Cyber Mutual Assistance

§ Enhanced Resilience Against All Hazards

§ Federal Research & Development

§ Supply Chain Security Risks

20 Maintaining Our Financial Strength Industry Capital Expenditures (CapEx)

139.8 $140 B 135.6 Chart represents total company spending of U.S. Investor- 132.2 Owned Electric Companies, consolidated at the parent or 128.1 $130 B 125.8 appropriate holding company. 118.0 $120 B 124.1 Note: At the industry level, CapEx is consistently 119.2 $110 B overestimated for the current, or first, year’s projection 112.5 113.1 and underestimated for the two following years. The first- $100 B 104.0 year overestimation historically averages around 5-7%, whereas the ensuing underestimation is typically in the $90 B 96.1 range of about 6-10% for the second year and about 20- 90.3 90.3 25% for the third year. Therefore, although the chart $80 B indicates investments are trending down in 2021 and 2022, 78.6 we expect a continued level of elevated spending after $70 B 74.3 accounting for the historical trend of over- and underestimation. $60 B $50 B $40 B 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Actuals Projections (Oct. 2019) Projections (Oct. 2020) 22 Source: EEI Finance Department, member company reports, and S&P Global Market Intelligence (updated October 2020). Projected Functional CapEx

$139.8 B $135.6 B Chart represents total company functional $140 B $127.1 B spending of U.S. Investor-Owned Electric $120.8 B $122.8 B Companies. Individual years may not sum to 100% due to rounding error. $120 B 27% $108.6 B 28% Generation $103.3 B 27% Note: Each annual functional projection is $95.2 B 29% compiled during the calendar year for which it $100 B 35% Distribution is reported and is not revised to align with the 32% actual total. Therefore, the projected total 31% dollar amounts in the functional chart do not 30% align with the actual totals reported on the $80 B 36% 29% 30% Transmission enclosed industry capital expenditures chart. 29% 27% $60 B 27% 25% Gas-Related 22% 19% 18% 19% $40 B 17% 18% 18% 17% 17% Regulatory 17% Compliance $20 B 16% 17% 17% 12% 13% 12% 15% Other 7% 6% 5% 4% 3% 3% 2% 3% 6% $0 B 6% 6% 6% 4% 5% 5% 5% 2013P 2014P 2015P 2016P 2017P 2018P 2019P 2020P

23 Source: EEI Finance Department, member company reports, and S&P Global Market Intelligence (updated October 2020). Financial Highlights as of 12-31-2020

EEI Index DJIA S&P 500 NASDAQ 1-year -1.2% 9.7% 18.4% 43.6% Stock 3-year 28.9% 32.8% 48.9% 86.7% Performance 5-year 69.1% 98.1% 103.0% 157.4% 10-year 190.0% 238.4% 267.0% 385.8%

• Yield = 3.6% Dividends • 38 of 39 companies are currently paying a dividend • 87% of companies increased their dividend in 2020

• BBB+ Average Industry Credit Rating Credit Ratings • Outlook 66% Stable or Positive

Note: Stock returns are total returns, ending 12-31-2020, (i.e., include dividends) except for NASDAQ, which is price appreciation only. Source: EEI Finance Department, S&P Global Market Intelligence. 24 Investor Feedback on the ESG/Sustainability Template

How helpful is each section of the ESG/Sustainability Template?

For the Version 3 ESG Template, Gas-Related we are currently working to include DEI metrics for the Emissions entire workforce (versus only for the board of directors Portfolio currently in Version 2).

Resources

Strategy

Governance

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Not helpful Somewhat helpful Very helpful

Note: 100% of survey respondents indicated that they would like to see a continuation of the qualitative section in the ESG/Sustainability Template. 25 Natural Gas Sustainability Initiative

A consistent approach for company-level reporting within each segment of the U.S. natural gas supply chain

ü Methane Emissions Intensity White Paper (April 2019) Methodology ü Draft Protocol (July 2019) Methane Emissions ü Final Draft Protocol Methane Throughput (December 2019) ü Pilot Process (Summer 2020) Segments Ø Protocol Version 1.0 • Onshore Production (Q1 2021) • Gathering & Boosting Ø Member ESG Disclosure • Processing • Transmission & Storage (Summer 2021) • Distribution 26 “For there is always light, if only we’re brave enough to see it. If only we’re brave enough to be it.”

—AMANDA GORMAN Appendix Creating Value in America’s Economy

29 Electricity Is a Great Value

30 Sources: U.S. Department of Labor, Bureau of Labor Statistics, and U.S. Department of Energy, Energy Information Administration. Our Industry Vision Is Customer-Driven

31 Our Clean Energy Journey

From Sources and Notes: ‡Average Annual U.S. Retail Electricity Rates Electric Power Industry 2005–2020 (real 2005 $) | *Carbon-free = nuclear and hydropower 2005 and other renewables | **U.S. Department of Energy, Energy ** Levels Carbon Emissions 33% Information Administration, Monthly Energy Review, March 2020 32 Transforming the Energy Mix

2010 National Energy Resource Mix 2020 National Energy Resource Mix (preliminary)

Source: U.S. Department of Energy, Energy Information Administration. 33 Carbon-Free Electricity Generated 2020 Preliminary

Nuclear energy remains the largest source of carbon-free electricity.

Currently, 94 reactors in 28 states produce nearly 20 percent of our nation’s electricity and 50 percent of our carbon-free electricity.

“Other” includes biomass, geothermal, and landfill gas.

Source: U.S. Department of Energy, Energy Information Administration. 34 Reducing Carbon Emissions

§ Nearly 40 percent of U.S. electricity comes from carbon- free sources

§ As of 2019, electric

power industry CO2 emissions are 33 percent below 2005 levels

§ Trajectory is expected to continue based on current trends

Source: U.S. Department of Energy, Energy Information Administration, Monthly Energy Review, March 2020. 35 Comparing CO2 Emissions Electric Power, Tr a n s p o r t a t i o n , and Industrial Sectors

Source: U.S. Department of Energy, Energy Information Administration, Monthly Energy Review, March 2020. 36 Power Plant Emissions Decreasing

1990 represents the base year. Graph depicts increases or decreases from the base year. 37 Sources: U.S. Department of Energy, Energy Information Administration; U.S. Environmental Protection Agency; and U.S. Bureau of Economic Analysis. Electric Transportation Trends

38 Direction of Ratings Actions Investor-Owned Electric Companies, 2003-2020

Total Percent Ratings Upgrades Actions

39 Source: EEI Finance Department, Fitch Ratings, Moody’s, and Standard & Poor’s. Status of M&A Activity Investor-Owned Electric Companies, 1995-2020

40 Source: EEI Finance Department, S&P Global Market Intelligence. Shift to More Regulated Business

Industry gradually increased to 82% regulated in 2019 from 63% in 2003

18% Other 37% 13%

6% Regulated Natural Gas Company 69% 57% Regulated Electric Company

2003 2019

Note: Based on 2019 year-end assets; data will be updated in spring 2021 when all EEI member company 2020 SEC 10-K filings are available.

Source: EEI Finance Department. 41 U.S. Electric IOUs Rating History 2003-2019

Industry maintains BBB+ rating since 2014, majority of outlooks stable or positive

7% 4% 13%

14% 27% 13% A or higher

24% A- 19%

BBB+ 40% 22% 27% BBB

13% BBB-

20% 18%

20% Below BBB- 7% 8% 4% 2003 2011 2019 42 Source: EEI Finance Department and Standard & Poor’s. Rate Review Activity: Volume and Lag Investor-Owned Electric Companies

Number of Electric Rate Reviews Filed (Trailing 12 Months)

Average Regulatory Lag (Quarterly)*

*Average Regulatory Lag is defined here as the amount of time between the filing of and ruling on a rate review. This does not take into consideration the preparation time leading up to an initial filing. MRQ = Most Recent Quarter. 4Q Avg = Trailing four-quarter average. 43 Source: S&P Global Market Intelligence / Regulatory Research Associates (RRA), EEI Finance Department. Rate Review Activity: Average ROEs Requested ROE vs. 10-Ye a r US Tre a s u r y Yield

Requested ROE*

10-Year U.S. Treasury Yield*

ROE & Yield (%) Spread

*Requested ROE represents the equal-weight average of all electric reviews filed during the indicated period. 10-Year U.S. Treasury Yield is the average of daily 44 reported yields during each period. Source: S&P Global Market Intelligence / Regulatory Research Associates (RRA), EEI Finance Department. Rate Review Activity: Average ROEs Allowed ROE vs. Corresponding Requested ROE

Requested ROE*

Allowed ROE* ROE (%) Spread

*The Allowed ROE represents the electric reviews settled during the indicated period while the Requested ROE represents the value requested by the company when the reviews were initially filed, generally during an earlier period (i.e., the regulatory lag is not factored in). Average returns are equal-weight. 45 Source: S&P Global Market Intelligence / Regulatory Research Associates (RRA), EEI Finance Department. EEI Finance Department Resources

Examples of EEI Finance Public Reports & Data EEI Finance, Analytics, and Investor Relations Items updated quarterly unless otherwise indicated

Richard McMahon Bill Pfister Financial Review (annual) SVP, Energy Supply & Finance Sr. Director, Business Analytics Incorporates the following reports and additional industry material [email protected] [email protected] Stock PerformanceMark Agnew 202-508-5574 202-508-5531 Director, Financial Analysis Financial market performance (Price, TSR, etc.) of proprietary EEI member Mark Agnew Steve Frauenheim 202-508-5049 index and equity analyst opinions Sr. Director, Financial Analysis Sr. Manager, Business Analytics [email protected] [email protected] [email protected] Credit Ratings 202-508-5049 202-508-5580 Holding company Billratings Pfister & rating agency activity Manager, Financial Analysis Michael Buckley Devin James Dividends 202-508-5531 Sr. Manager, Financial Analysis Sr. Manager, Investor Relations & ESG Dividend-related [email protected] of EEI members and relevant issues [email protected] [email protected] 202-508-5614 202-508-5057 Rate Review SummaryMichael Buckley Aggregate industry statisticsFinancial on Analystquarterly rate review data Wenni Zhang Aaron Cope, Jr. 202-508-5614 Sr. Financial & Business Analyst Investor Relations Specialist Industry [email protected] Financial Statements (annual) [email protected] [email protected] • Income Statement 202-508-5142 202-508-5128 • Balance Sheet • Cash Flow Statement