Michael Buckley, Senior Manager, Financial Analysis, EEI

ONE Future Methane & Climate Strategies Event Wednesday, May 22, 2019 | Houston, Texas

ESG/Sustainability Initiative

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Trade Association of Investor-Owned Electric Companies Membership includes:

- All U.S. investor-owned electric companies - 65 international electric company affiliates in more than 90 countries - Hundreds of industry suppliers and related organizations as Associate Members

U.S. member companies: - Operate in all 50 states and the District of Columbia - Provide electricity for about 220 million Americans

Our mission focuses on advocating public policy; expanding market opportunities; and providing strategic business information.

About the Edison Electric Institute

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Environment, Social, and Governance (ESG)

Environmental • GHG & energy use• Air quality • Coal ash• Water stewardship • Energy efficiency

Social • Community impacts• Economic contributions• Health & safety • Grid reliability • Lobbying

Governance • Board diversity • Board experience • Independence • Incentives & compensation • Tax strategy

Example ESG topics

Source: PwC U.S. Power & Utilities team

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NYC Comptroller Boardroom Accountability Project 2.0

Source: New York City Comptroller, Boardroom Accountability Project 2.0, Example Board Matrix.

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Board Diversity and Voluntary Refreshment is Imperative

Sources: Elliott, A New Arconic, April 11, 2017. Arconic, Investor Presentation, March 27, 2017.

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AES

D

EIX

XOMOXY

AEE

D

AEE

GXP

AES AEE

DDTEDUK

ETRPNM

PPL

SO

LNT

D

NEE

DUK

DUK

PNM

ProxyAccess

(3)

EmissionsReporting

(2)

Renewables(2)

Two DegreeScenario

(9)

Other(2)

PoliticalSpending

(5*)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Shareholder ActivismResults of Shareholder Proposals in 2017

Pass

Fail

Notes: *Only four results charted because one proposal was withdrawn prior to shareholder meeting after discussion with company.**ExxonMobil and Occidental Petroleum had Two Degree shareholder proposals pass in 2017. XOM and OXY are shown for information only and not included otherwise.

Source: Member Company Survey, Proxy Monitor, SEC.

9 of the 23 (39%) shareholder proposals were related to “Two Degree” reporting.Despite being the first year many were introduced, the Two Degree proposals received significant votes in favor and was accepted by shareholders of one member company.

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Shareholder ActivismResults of Shareholder Proposals in 2018

Pass

Fail

Note: The passing resolution at Ameren Corporation was related to reporting on coal combustion residuals (CCR) and water impacts. Source: EEI and 2018 company SEC filings.

Proposals related to reporting on methane emissions include energy companies in the oil and gas sector, as well as regulated electric companies in the electric utility sector. The remaining

categories in this chart include shareholder proposals at regulated electric companies only.

EIX

PCGSO SRE

NEE DOGEFENIDTE

PNMMGEE

CMSNEELNT

DUK

AEE

PNMMGEEDTE

PCG

Proxy Access

(4)

Special Meeting

(6)

Renewables (2)

Two Degree Scenario

(2)

Political Spending

(4)

Other(5)

ETR

MGEE

KMI

RRCCVX

Methane Emissions

(3)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Six withdrawn proposals at:

APC, EGN, EQT, D, DTE, EXC

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Moody’s Investors Service General Principles for Assessing ESG Risks (September 2018)

S&P Global Ratings Proposal For ESG Evaluations (September 2018)

Fitch Ratings Approach to Capturing ESG Risk in Credit Ratings (November 2017) January 2019 – Launch of ESG Relevance Scores to show impact of

ESG on credit ratings. - The standardized scoring system is sector-based and entity-specific.

Credit Ratings Agencies Evaluating ESG

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ESG/Sustainability Matters to MillennialsInvestors & Customers

Source: PwC, https://www.pwc.com/us/en/industries/financial-services/library/managing-millennial-money.html.

Notes: (1) Equity mutual fund flows include net new cash flow and reinvested dividends. Data excludes mutual funds that invest primarily in other mutual funds.

(2) ETF distribution channel.(3) All mutual index funds (excludes ETFs).(4) All mutual funds that are not index funds.(5) Data only available for 1Q 2017.

Source: Lazard, FactSet, P&I and Simfund.

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US Electric IOUs Credit Rating History

Regulated Electric Companies are Different

Sector Beta vs. S&P 500

Movement Relative to MarketLow High

Source: AltaVista Research LLC (June 2017).

Gender Diversity in the Boardroom

Source: Department of Energy, Energy Information Administration. Note: Chart percentages are based on net generation data.

2007 2017

Cleaner National Fuel Mix

20%

8%2%

13%

23%

10%

22% 24%

18%

19% 24%

35%

13%15%

29%

13%6% 6%

2003 2010 2017

A or higher

A-

BBB+

BBB

BBB-

Below BBB-

0.25

1.13

1.29

1.07

0.99

1.17

1.00

0.60

1.07

0 1 2

Utilities

Technology

Materials

Industrials

Health Care

Financials

Energy

Consumer Staples

Consumer Discretionary

Beta

22.2%

77.8%

Male CEOs

Female CEOs

6.4%

93.6%

Male CEOs

Female CEOs

Regulated Electric Companies

Fortune 500 Companies

BBB+BBB Increasing Industry Average

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Investor Engagement & Stakeholder Outreach

InvestorsContinue to expand

Related Trade GroupsAGA, EPRI, APPA, NRECAAPI, IPIECA, INGAA, IPAA

Proxy ServicesInstitutional Shareholder Services

(ISS), Glass, Lewis & Co, etc.

Credit Rating AgenciesMoody’s, Fitch, S&P Ratings

ESG Data ProvidersSustainalytics, MSCI, Bloomberg,

IHS Markit, S&P Global, etc.

Interest GroupsCeres, SASB, etc.

Membersand

EEI

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Qualitative

ESG/Sustainability Governance Management and oversight of ESG/Sustainability

ESG/Sustainability Strategy

Practices, programs, and initiatives designed to support the company’s transition to a lower carbon and increasingly sustainable energy future

ESG/Sustainability Template

Quantitative

Portfolio An Excel-based data reporting template that is customized for electric companies to include metrics on owned and/or purchased generation data by technology/resource type, as well as other metrics related to capital investments, emissions, and natural and human resources

Emissions

Resources

EEI’s ESG/Sustainability Steering Committee identified 5 areas of focus based on discussions with investors to include in the Version 1 Template

Note: data for these areas should include as much historical, current, and forward-looking information as is appropriate.

Version 2 – LDC Metrics

• EEI and AGA have engaged investors to seek guidance on relevant ESG metrics for LDCs.

• A group of AGA pilot companies are currently publishing gas LDC metrics in parallel with the Version 1 template.

• These LDC metrics will be fully incorporated into Version 2 to report 2018 data later this year.

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EEI Member Company ESG Activist Type of Proposal

AEP New York State Comptroller GHG Reduction Targets

AES Mercy Investment Services 2D Scenario Analysis

AES New York State Comptroller GHG Reduction Targets

Ameren Mercy Investment Services 2D Scenario Analysis

CMS Energy Seventh Generation Interfaith 2D Scenario Analysis

ConEd Friends Fiduciary Corporation Report on Lobbying

Dominion Energy As You Sow Methane Reduction Targets

Dominion Energy New York State Comptroller 2D Scenario Analysis

DTE Energy As You Sow Methane Reduction Targets

DTE Energy New York State Comptroller 2D Scenario Analysis

Duke Energy As You Sow Report on Coal Risks

Duke Energy Mercy Investment Services Report on Lobbying

Exelon As You Sow Methane Reduction Targets

FirstEnergy As You Sow 2D Scenario Analysis

FirstEnergy The Nathan Cummings Foundation Report on Lobbying

SCANA Friends Fiduciary Corporation Report on Lobbying

WEC Energy Group Seventh Generation Interfaith 2D Scenario Analysis

Withdrawn Proxy Proposals in 2018

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Exposure to Methane Reduction Proxy Proposals in 2018

EEI and AGA Members

Oil and Gas Companies

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Status of M&A ActivityU.S. Investor Owned Electric Companies, 1995-2018

Source: S&P Global Market Intelligence, EEI Finance Department.

$0 B

$2 B

$4 B

$6 B

$8 B

$10 B

$12 B

$14 B

$16 B

$18 B

$20 B

0

5

10

15

20

25

30

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Avg Market Cap($ Billion)

Number of Transactions

Completed (116 total)

Announced (146 total)

Withdrawn (31 total)

Avg Market Cap per Company ($B)

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6% 6% 6% 4% 5% 5%7% 6% 5% 3% 4% 3%

12% 13% 12% 15% 16% 17%17% 18% 18% 17% 17% 18%22%

25% 27%27%

29%30%36%

31% 32%35%

29%27%

$0 B

$20 B

$40 B

$60 B

$80 B

$100 B

$120 B

Industry Projected Functional Capital Expenditures (2013-2018)

Notes: Total company functional spending of U.S. Investor-Owned Electric Utilities may not sum to 100% due to rounding error. Projections based on publicly available information and extrapolated for companies not reporting functional detail (1.3%, 1.3%, 1.3%, 0.7%, 0.9%, 0.8% of the industry for 2013, 2014,2015, 2016, 2017, 2018 respectively).

Source: EEI Finance Department, company reports , S&P Global Market Intelligence (October 2018).

$120.8 B $122.8 B

Generation

Distribution

Transmission

Gas-Related

Environment

Other

$103.3 B $108.6 B$95.2 B

$127.1 B

2016P 2017P2014P 2015P2013P 2018P

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Natural Gas Sustainability Initiative (NGSI)

An overarching framework to recognize and advance the innovative, voluntary sustainability

programs from the wellhead to the burner tip.

NGSI enables the natural gas industry to measure, disclose, and recognize industry-wide progress

and innovation on key sustainability metrics.

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NGSI Conceptual Design

Program Elements

Measure

Recognize

Disclose

Encourage consistent approaches for measuring and tracking key metrics

Support and encourage robust reporting across the industry

Encourage environmental performance and sustainability leadership

Strategic Goals

Provide cohesive framework for sustainability metrics throughout the

natural gas supply chain

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NGSI Summary

Production Processing Transmission Distribution

Recognizing voluntary actions and sustainability commitments from industry leaders across the natural gas value chain

Engage stakeholders Incorporate feedback into NGSI design

Other Industries

Power Generation

Next Steps

Upstream Midstream

Downstream

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EEI ESG/Sustainability Contacts

Name Title Phone E-mail

Richard McMahon Senior Vice President, Energy Supply & Finance 202-508-5571 rmcmahon@eei.org

Mark Agnew Senior Director, Financial Analysis 202-508-5049 magnew@eei.org

Michael Buckley Senior Manager, Financial Analysis 202-508-5614 mbuckley@eei.org

Randall Hartman Director, Accounting 202-508-5494 rhartman@eei.org

Eric Holdsworth Senior Director, Climate Programs 202-508-5103 eholdsworth@eei.org

Devin James Manager, Investor Relations and ESG 202-508-5057 djames@eei.org

Karen Obenshain Senior Director, Fuels, Technology & Commercial Policy 202-508-5223 kobenshain@eei.org

Bill Pfister Senior Director, Business Analytics 202-508-5531 bpfister@eei.org

Kristin Rudman Manager, Media Relations 202-508-5515 krudman@eei.org

The Edison Electric Institute (EEI) is the association that represents all U.S. investor-owned electric companies. Our members provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States.

In addition to our U.S. members, EEI has more than 60 international electric companies, with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members.

Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.

For more information, visit our Web site at www.eei.org.