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www.avangrid.com 1 51 st Annual EEI Financial Conference November 2016
Transcript of Sin título de diapositiva - Seeking Alpha › uploads › 2017 › 1 › 11 › 4949105 › ... ·...
www.avangrid.com 2
Legal Notices
FORWARD LOOKING STATEMENTS
Certain statements in this presentation may relate to our future business and financial performance and future events or developments involving
us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,”
“will,” “should,” “can,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “is
confident that” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking
statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings,
revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on
our business, results of operations or financial condition. Such statements are based upon the current beliefs and expectations of our
management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important
factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the
risks and uncertainties set forth under the section entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2015 and our Quarterly Report on Form 10-Q
for the six months ended June 30, 2016, which are on file with the Securities and Exchange Commission (SEC) and available on our investor
relations website at www.avangrid.com and on the SEC website at www.sec.gov. Additional information will also be set forth in subsequent
filings with the SEC. You should consider these factors carefully in evaluating for-ward looking statements. Should one or more of these risks or
uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those
expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. We do
not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this
presentation whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
www.avangrid.com 3
Legal Notices
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with U.S. GAAP, AVANGRID considers certain non-GAAP
financial measures that are not prepared in accordance with U.S. GAAP, including adjusted net income and adjusted EPS. The non-GAAP
financial measures we use are specific to AVANGRID and the non-GAAP financial measures of other companies may not be calculated in the
same manner. We use these non-GAAP financial measures, in addition to U.S. GAAP measures, to establish operating budgets and operational
goals to manage and monitor our business, evaluate our operating and financial performance and to compare such performance to prior periods
and to the performance of our competitors. We believe that presenting such non-GAAP financial measures is useful because such measures can
be used to analyze and compare profitability between companies and industries because it eliminates the impact of financing and certain non-
cash charges. In addition, we present non-GAAP financial measures because we believe that they and other similar measures are widely used
by certain investors, securities analysts and other interested parties as supplemental measures of performance.
We provide adjusted net income, which is adjusted to reflect the full nine month pro forma results of the merged UIL entities, the costs of the
combination of AVANGRID with UIL, and the impairment of certain investments and excludes the sale of certain equity investments and certain
mark-to-market changes in the fair value of derivative instruments used by AVANGRID to economically hedge market price fluctuations in related
underlying physical transactions for the purchase and sale of electricity and gas. We believe adjusted net income is more useful in understanding
and evaluating actual and projected financial performance and contribution of AVANGRID lines of business and to more fully compare and
explain our results. The most directly comparable U.S. GAAP measure to adjusted net income is net income. We also provide adjusted EPS,
which is adjusted net income converted to an earnings per share amount.
The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, AVANGRID’s U.S.
GAAP financial information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness, may be unique to
AVANGRID, and should be considered only as a supplement to AVANGRID’s U.S. GAAP financial measures. The non-GAAP financial measures
may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools. Non-GAAP financial
measures are not primary measurements of our performance under U.S. GAAP and should not be considered as alternatives to operating
income, net income or any other performance measures determined in accordance with U.S. GAAP.
About AVANGRID
Avangrid, Inc. (NYSE: AGR) is a diversified energy and utility company with more than $30 billion in assets and operations in 25 states. The
company operates regulated utilities and electricity generation through two primary lines of business. Avangrid Networks includes eight electric
and natural gas utilities, serving more than 3.0 million customers in New York and New England. Avangrid Renewables operates approximately
6.3 gigawatts of electricity capacity, primarily through wind power, in states across the United States. AVANGRID employs approximately 7,000
people. The company was formed through a merger between Iberdrola USA, Inc. and UIL Holdings Corporation in 2015. Iberdrola S.A. (Madrid:
IBE), a worldwide leader in the energy industry, owns 81.5% of AVANGRID. For more information, visit www.avangrid.com.
www.avangrid.com 4
AVANGRID is a Geographically Diverse Energy Company Focused on Regulated & Renewable Businesses
NYSE: AGR
www.AVANGRID.com
Avangrid Networks:
• 8 utilities in NY, CT, MA, ME
• Rate base: $8.6B
Avangrid Renewables:
• 5.7 GW(1) Wind & Solar in operation
+ 810 MW under construction
25+ States in the U.S.
~7,000 employees; ~3.2M customers
Total Generation 6.6 GW
BBB+ Credit Rating (all rated subsidiaries A- or better) (1) Includes 50% of JVs.
www.avangrid.com 5
AVANGRID’s Investment Highlights
Diversity, Experience, Opportunity
Asset & Regulatory Diversity
Strong Growth Opportunities in Regulated Assets &
Renewables (2nd largest wind operator in U.S.)
Robust balance sheet & cash flow
Annual dividend of $1.728 with growth expected
Focus on Clean Energy with > 85% Emission Free
Capacity
www.avangrid.com 6
AVANGRID 2016-2020 Long-Term Plan Highlights
Regulated Growth Renewables Growth
• ~70% of AGR
EBITDA
• Rate Base
Growth ~6%
• $6.8B CAPEX
• NY Rate settlement
to 2019
~ 50% Rate Base
• Plan: 1.4 GW growth
• Current Opportunity for
up to 2.8 GW
o 810 MW in
construction
o ~2 GW Safe
Harbor Strategy
• ~350 MW Repowering
• 8-10% Earnings
Growth
• 5-7% EBITDA Growth
• Strong Balance Sheet
Net Leverage ~24%
growing to low 30%
• Not a cash taxpayer
• Dividend Policy:
$1.728 annual floor
with growth expected
as 65-75% target
payout is achieved
Financial Strength
www.avangrid.com 7
AVANGRID 5-YR Capex Plan
Plan 2016 – 2020 - $9.6B ($1.9B Annual Average)
(1) Risk-adjusted projects.
Amounts may not add due to rounding.
2016 - 2020 2016 - 2018 2019 - 2020
Electric, Gas & Other FERC Transmission
FERC Growth Transmission Renewables
$9.6B
$6.0B
(62%)
$3.6B
(38%)
53%
10%
29%
8%
(1)
Renewables
$2.8B
(1.4 GW)
Networks
$6.8B
www.avangrid.com 8
Avangrid Renewables Business Highlights
• 2nd Largest Wind Operator in U.S.
• Wind & solar pipeline of 6.8 GW:
o Growth based on adherence to
value creation investment criteria
o Build to own
• National Control Center with 24/7
operations in 7 electric power
markets
o Dispatch & remote operation of
all generation assets with unique
self-balancing capability for the
company’s Northwest wind fleet
• Provide unique energy solutions
to customers
• All new Projects with PPAs
www.avangrid.com 9
Avangrid Renewables Drivers of Growth
State Renewables
Demand Tax Incentives C&I Demand
• Long-term
extension of PTC &
ITC supports
additional growth
• ~$200M investment
in ’16 for:
o~2 GW Safe
Harbor Strategy
o~350 MW
Repowering Plan
California
Oregon
New York
PJM
50% by 2030
50% by 2030
50% by 2040
Insufficient
renewables to
meet RPS
Requirements
• Growing demand,
especially in the
Fortune 500 sector
• Recent additions
include:
o Amazon Wind
Farm East
o Nike, Inc.
o Gala solar
project
www.avangrid.com 10
Avangrid Renewables: Operating Footprint
AVANGRID
2nd Largest Owner/Operator of Renewables in U.S.
5.7 GW Wind & Solar in Operation with 810 MW in Construction
Wind
Solar
Thermal
Under Construction
www.avangrid.com 11
Amazon Wind Farm
US East (NC)
• 208 MW
• COD ’16
• $375M CAPEX
• PPA with Amazon
Avangrid Renewables: Projects with 2016-2018 COD
• 298 MW*
• COD late ’17
• $515M CAPEX
• PPA with CA IOU
El Cabo (NM)
* Option for JV partner to purchase 49.5% at COD.
Deerfield (VT)
Twin Buttes II (CO)
Tule I (CA)
• 132 MW
• COD late ’17
• $235M CAPEX
• PPA with CA IOU
• 30 MW
• COD late ’17
• $75M CAPEX
• PPA with IOU
• 76 MW
• COD late ’17
• $120M CAPEX
• PPA with IOU
Gala Solar (OR)
Repurchase from
SunPower
Wy’East Solar (OR)
• 56 MW
• COD late ’17
• $120M CAPEX
• PPA with Large C&I
• 10 MW
• COD late ’18
• $20M CAPEX
• PPA with Portland General
Electric
Wind Solar
www.avangrid.com 12
Deer River 100 MW
Desert Wind 2 92 MW
La Joya 400 MW
Otter Creek 150 MW
Coyote Ridge 98 MW
Tule 2 69 MW
McCloud 200 MW
Karankawa 200 MW
Sorrel Solar 200 MW
Estacado Solar 100 MW
Montague 1 202 MW
Comanche Run 200 MW
Roaring Brook 78 MW
Camino Solar 44 MW
6.8 GW pipeline(1), of which 2.1 GW of Wind & 0.4 GW of
Solar projects provides opportunity in 2018-2020
Avangrid Renewables Pipeline
(1) Includes 810 MW with 2016-2018 COD.
Amounts may not add due to rounding.
Horse Creek 100 MW
North Ridge 100 MW
Tatanka Ridge 98 MW
Champagne Solar 100 MW
West
Texas/Southwest
Midwest
East
Wind
Solar
www.avangrid.com 13
1,400 MW in
2016-2020 Plan
590 MW
(TBD)
6.8 GW pipeline with
2.5 GW Wind &
Solar Projects
available 2018-2020
~2 GW Safe Harbor
810 MW
in Construction
Avangrid Renewables: Continue to Develop Pipeline
The Plan:
Supported by:
810 MW
in Construction
~2 GW
Safe Harbor
2.8 GW
Opportunity
Opportunity:
www.avangrid.com 14
o 56 MW Gala solar project in Oregon has a LT PPA with a Fortune 500
C&I company
o Most recently announced 10-year transaction with Nike Inc.
Amazon Web Services
The Ohio State University
Collection of Philadelphia/surrounding area hospitals
District of Columbia
Bellingham Cold Storage
Bay Area Rapid Transit
• Avangrid Renewables is positioned well to meet growing demand in the C&I
space
o Unique among renewables developers due to our
Energy Management Platform
o Provides custom products to the C&I segment with an emphasis on
creative renewable energy solutions
• Existing customers include
Avangrid Renewables Growth Driver – C&I Demand
• Focused on accelerating market share
www.avangrid.com 15
Avangrid Renewables: Analyzing US Offshore market
Department of Energy (DOE) forecasts 86 GW of Offshore wind
installed by 2050
AVANGRID will leverage Iberdrola, S.A. experience
(1.3 GW operating or under construction in Europe)
Growth opportunity in an early stage market with strong potential;
(Not in Current Long-Term Plan)
States taking significant steps to support offshore
• August ’16 legislation in MA for Renewables RFP
including 1,600 MW offshore wind
• Bureau of Ocean and Energy Management (BOEM)
to auction a wind energy area offshore in NY in
December ’16
o On Oct 27 ’16 BOEM announced Avangrid
Renewables as one of 14 qualified potential bidders
based on legal, technical and financial capabilities
www.avangrid.com 16
Avangrid’s Networks: Operating Footprint
8 Regulated Utilities in NY, CT, ME & MA serving ~3.2M customers
NY State Electric & Gas
(NYSEG)
NY
Rochester Gas and Electric
(RGE)
NY
United Illuminating (UI) CT
Southern CT Gas (SCG) CT
Connecticut Natural Gas (CNG) CT
Central Maine Power (CMP) ME
Maine Natural Gas (MNG) ME
Berkshire Gas (BGC) MA
www.avangrid.com 17
Avangrid Networks Business Highlights
• Capital Investment
opportunities for:
o FERC-regulated transmission
o Electric & gas distribution
infrastructure
o Gas distribution growth
• Stable regulatory environments
with decoupling & various
revenue recovery mechanisms
o NY utilities achieved a 3-yr rate
settlement (represent ~50% of
Networks’ rate base)
• Geographic diversity
• Utility of the Future investments,
incl. NYSEG and RGE Distribution
System Implementation Plan (not
in Plan Capex)
www.avangrid.com 18
75%
14% 11%
Avangrid Networks 5-YR Capex Plan
Plan 2016 – 2020 - $6.8B ($1.4B Annual Average)
is ~80% of Rate Base(1)
(1) 2014 avg. rate base.
(2) Risk-adjusted projects.
Amounts may not add due to rounding.
$6.8B
$4.1B (60%)
$2.7B (40%)
FERC
Transmission
FERC
Growth Transmission(2)
(2)
Electric, Gas, Other
2016 - 2018 2019 - 2020
FERC Growth Transmission
FERC Transmission
Electric, Gas & Other
www.avangrid.com 19
Avangrid Networks Rate Base Growth through 2020
$4.5 $6.2
$2.0
$3.1 $1.9
$2.5
2014 2020
Rate Base Growth $B
Gas
Transmission
Electric
’14-’20 CAGR
~6%
(1) Includes UIL Holdings Corporation.
Amounts may not add due to rounding.
$8.3B
$11.8B
(1)
www.avangrid.com 20
Avangrid Networks: 2016-2020 Capex Plan Update
$6.8B Capex for Utility Projects On Track
Focusing on
resiliency, aging
infrastructure &
automation
• FERC transmission, replacements & alternatives,
electric & gas distribution safety, reliability,
infrastructure; customer service automation
Plan CAPEX: ~$6.1B (89% of Networks Capex)
+ Growth
Transmission
Projects
(1) Examples not all-inclusive; Growth Transmission includes other probability-weighted projects.
(2) Maine Electric Power Company, Inc.
• Includes ~ $220M with 100% probability(1): o MEPCO(2) Section 388 Rebuild (~$108M)
o Lewiston Loop (~$70M)
o NY Transco (3 projects ~$40M)
• Includes projects in NE Clean Energy RFP
o Our projects not accepted. Less than 20% of RFP awarded (No Transmission)
o Planning on bidding projects into Massachusetts RFP for ~1,200 MW of hydro,
wind & solar plus ~1,600 MW offshore wind
o Anticipate RFP Spring ’17
Plan CAPEX: ~$740M (11% of Networks Capex)
www.avangrid.com 21
• RGE Rochester Area Reliability Project
NY T ~ $290M (2016-2020)
• Ginna Retirement Trans.
NY T ~ $140M (2015-2017)
• NY Transco (AGR 20%)
FERC Growth T
• Western NY – FERC Growth T
(confidential bid)
Avangrid Networks Projects
NY
ME
MA
CT
• Coopers Mills STATCOM
FERC T ~ $52M (2016-2018)
• Customer Smart Care
Dist. ~ $52M (2016-2017)
• Lewiston Loop
FERC Growth T ~ $70M
(2015-2018)
• MEPCO Section 388
FERC Growth T ~ $108M
(2017-2020)
• Metro-North RR Corridor
FERC T ~ $175M (2016-2020)
• Rocky Hill Liquefaction
Gas Dist. ~ $40M (2016-2018)
Regulated T&D Projects in Long-Term Plan
Under construction
www.avangrid.com 22
1,000 MW DC underground transmission line (not in Plan
Capex)
• FERC Transmission Project that alleviates congestion;
path along NY Thruway ROW
• Pursuing public policy avenues for moving project
forward through NY ISO Public Policy Process (Article
VII filing)
Avangrid Networks: Additional Opportunities
Connect NY
Additional Networks Opportunities Not In Plan
Provide Upside Potential
NYSEG & RGE
DSIP Plan Investments of ~$760M (not in Plan Capex)(1)
(1) Includes AMI of ~$500M.
• Installation of 1.8M smart meters in NY in next
3-4 years
• Proposed rate recovery in-between rate cases
o Filing to be made by end of November ’16, which
will propose rate recovery
www.avangrid.com 23
Avangrid Networks: Regulatory Update
UI (CT) - 3-Yr Rate Filed; Dec ’16 decision on schedule
CMP (ME) - Potential filing first half ’17
CNG & SCG (CT) – New rates effective no earlier
than Jan ’18
BGC (MA) – New rates effective no earlier than
June ’18
NYSEG & RGE (NY) - 3-Yr Rate Settlement 2Q ’16
Rate Base(1)
(1) ‘15 Average Rate Base of $8.6B.
Amounts may not add due to rounding.
MNG (ME) – Settlement of 10 yr. rate plan in ’16
46%
11%
9%
11%
1%
< 1%
FERC Transmission (CT & ME) ~70% of $2B Transmission
Rate Base earns at current ROE cap of 11.74% 23%
NY Rate Settlement provides certainty on 46% of rate base
www.avangrid.com 24
AVANGRID 3Q ’16 and 9M ’16 Net Income
• Better wind resource
• Extension of useful life of wind
assets
• Improved revenues with
growing rate base &
settlement of NY rate case
• Improved results in gas
storage business with
expiration of contract in ’15
• Focus on best practices
identification & implementation
Highlights
$54 $109 $171
$423
3Q '15 3Q '16 9M '15 9M '16
Net Income
($M)
Net Income improves from ’15
3Q ’16 EPS
$0.35/share
9M ’16 EPS
$1.36/share
$76 $109
$279 $404
3Q '15 3Q '16 9M '15 9M '16
Adjusted Net Income(1)
+ 44%
+ 45% 3Q ’16
Adjusted EPS
$0.35/share
9M ’16
Adjusted EPS
$1.30/share
($M)
(1) Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See Appendix for calculation of Adjusted Net Income and
reconciliation to Net Income and Adjusted EPS to EPS.
www.avangrid.com 25
AVANGRID’s 2016 Initiatives
Remain Focused on our Growth Objectives
Executing the Long-Term Plan to grow regulated &
contracted assets
Significant Improvement in Year-Over-Year Performance
Maintaining 8-10% Net Income CAGR (2014-2020)
Integration supports
growth plan
Risk mitigation remains a
key initiative
• CAPEX on track with Plan
• Safe Harbor Strategy Executed
• Repowering Plan
• Focusing on identifying &
implementing best practices
• Actively managing merchant
exposure
• Rate cases with de-risking
measures
www.avangrid.com 26
AVANGRID 2016 Guidance & 2017 Updates
2016 EPS Outlook of $1.95- $2.05 as of October 25, 2016
Networks
Renewables
Other (1)
AVANGRID
$1.52 - $1.58
$0.51 - $0.54
$(0.08) - $(0.07)
$1.95 - $2.05
(1) Other includes Gas Business and Corporate.
Next Long-Term Outlook Update
4Q ’16 & Full Year
Earnings Update
2017 EPS Guidance
Capital Project Update
Earnings Growth Update
www.avangrid.com 29
$0.35
$0.22
$109
$54
3Q ’16 & 9M ’16 Earnings Results
3Q ’15 3Q ’16 3Q ’15 3Q ’16
Net Income ($M)(1) EPS(1)
$0.68
$1.36
$171
$423
9M ’15 9M ’16 9M ’15 9M ’16
(1) U.S. GAAP Net Income.
(2) Adjusted Net Income and Adjusted EPS are non-GAAP financial measures and are adjusted to reflect the impact of the combination of
AVANGRID with UIL, the gain from the sale of certain investments, and the impairment of an investment. See Appendix for calculation of
Adjusted Net Income and Adjusted EPS and reconciliation to Net Income and EPS.
Adjusted Net
Income ($M)(2)
Adjusted EPS(2)
$0.25
$0.35 $76
$109
3Q ’15 3Q ’16 3Q ’15 3Q ’16
+ 44% + 43%
$0.90
$1.30 $404
$279
9M ’15 9M ’16 9M ’15 9M ’16
+ 45% +45%
Continued quarterly and nine-month improvements ’16 vs. ’15
www.avangrid.com 30
$M NI EPS
Networks $75 $0.24
Renewables $37 $0.12
Other (Corporate & Gas) $(3) $(0.01)
Consolidated $109 $0.35
3Q ’16 & 9M ’16 Earnings for AVANGRID Businesses
(1) Adjusted Net Income and Adjusted EPS are adjusted to reflect the combination of AVANGRID with UIL, the gain from the sale of certain
investments, and the impairment of an investment. See Appendix for calculation of Adjusted Net Income and Adjusted EPS and reconciliation
to Net Income and EPS. Amounts may not add due to rounding.
$319 $121 $423M
Other -$17
9M ’16 Net Income ($M) 3Q ’16 Net Income ($M)
$M Adj. NI(1) Adj.EPS(1)
Networks $75 $0.24
Renewables $37 $0.12
Other (Corporate & Gas) $(3) $(0.01)
Consolidated $109 $0.35
$321 $119
$404M
+45%
9M ’16 Non-GAAP Adjusted Net Income ($M)
(vs. 9M ’15)(1) 3Q ’16 Non-GAAP Adjusted Net Income ($M)(1)
Other -$36
Networks
Renewables
Renewables
Networks
www.avangrid.com 31
9M ’16 Adjusted EBITDA
9M ’16 Adjusted EBITDA growth reflects NY rate settlement &
higher wind production
(1) Adjusted EBITDA is a non-GAAP financial measure and has been adjusted to include the first nine months of UIL and merger costs for
2015. See Appendix for calculation of Adjusted EBITDA and reconciliation to Net Income.
Amounts may not add due to rounding.
Adjusted EBITDA ($M)(1)
vs. 9M ’15 9M ’16
Networks +2.9% $1,043
Renewables +4.1% $489
Other (Corporate & Gas) +63.3% ($18)
Total +5.6% $1,513
• Networks: NY Rate
Settlement
• Renewables: Improved
performance with
stronger wind
• Other: Improved results
from transportation
contracts & storage
spreads
www.avangrid.com 32
0%
10%
20%
30%
40%
1Q 2Q 3Q 4Q
Wind Net Capacity Factor
2015 2016 Avg 2011-14
AVANGRID Seasonality
-
2,000
4,000
6,000
8,000
10,000
12,000
1Q 2Q 3Q 4Q
Electric Delivery (GWh)
2014
2015
2016
Avg.
Renewables Networks
• Networks-Electric (~62% Revenues(1))
Relative stability quarter to quarter (100% decoupled)
• Networks Gas (~20% Revenues(1))
Strongest quarters 1Q & 4Q with colder weather
(decoupled except for SCG & Berkshire)
(1) Revenue amounts based on 9M ’16 and exclude impacts of Corporate/Other segment.
-
20,000
40,000
60,000
80,000
100,000
120,000
1Q 2Q 3Q 4Q
Gas Delivery (mcf)
2014
2015
2016
Avg.
• Renewables (~20% Revenues(1))
Wind Production lowest in 3Q
www.avangrid.com 33
Year-over-Year Adjusted EPS(1) – Key Impacts
(1) Adjusted EPS is a non-GAAP financial measure and s adjusted to reflect the combination of AVANGRID with UIL, the sale of certain investments, and the
impairment of an investment. See Appendix for calculation of Adjusted EPS and reconciliation to EPS.
Amounts may not add due to rounding.
Solid Earnings Performance 3Q ’16 & 9M ’16 compared to 3Q ’15 &
9M ’15 with:
• Improved wind production
• Extension of useful life
• NY rate settlement
Subsidiary performance reduced by Intercompany items that are offset at
Corporate/Other • Renewables Intercompany Note Settlement & Interest Reduction
(Excluding these adjustments, Renewables Adjusted Net Income increased ~10%)
3Q ’15 to 3Q ’16: ($0.01)
9M ’15 to 9M ’16: ($0.16)
• Higher effective tax rates at Renewables & Networks
3Q ’15 to 3Q ’16: ($0.07)
9M ’15 to 9M ’16: ($0.11)
Year-over-Year MtM at Renewables ~ No Change
Year-over-Year MtM Gas storage improves $0.07 with elimination of ’15
contract
www.avangrid.com 34
Additions to ’16 Capital
Expenditures
• Safe Harbor purchases
• Repowering
• Accelerated spend on 2017 wind
projects
AVANGRID 9M ’16 Earning Drivers
Capital expenditures increase 55% 9M ’16 vs. ’15
$670
$1,036
9M ’15 9M ’16
+55%
Highlights
• Two-thirds of 9M ’16 capital
expenditures were in the Networks
business
• Renewables includes the Amazon
Desert Wind Construction
($M)
www.avangrid.com 35
AVANGRID 9M ’16 Renewables Earning Drivers
Average load factor improves…
Load Factor(1)
(1) Average annual capacity factor based on wind production & capacity.
Amounts may not add due to rounding.
… due to better, although below our average, wind resource
28%
30%
9M ’15 9M ’16
+7%
Load Factor by Areas
West 30% +2.6pp
vs. 9M ’15 9M ’16
MidCont 32% -0.6pp
Northeast 27% +0.8pp
South/Texas 30% +4.1pp
pp: percentage point
www.avangrid.com 36
AVANGRID 9M ’16 Renewables Earnings Drivers
Higher wind production in ’16
West 31%
MidCont 28%
NEast 17%
South & Texas 24%
9M ’16
West 3,360 +10%
vs. 9M ’15 9M ’16
MidCont 2,975 -1%
Northeast 1,850 +3%
South/Texas 2,553 +21%
GWh
TOTAL 10,738 +8%
Amounts may not add due to rounding.
Wind Production by Areas
www.avangrid.com 37
$35.6 $35.9
AVANGRID 9M ’16 Renewables Earnings Drivers
PPA and Merchant prices slightly higher
Total Avg. Price relatively flat
Average Price (2)
(1) Average sale price excluding PTC & including REC’s; amounts may not add due to rounding.
West +4% +$2.24/MWh
vs.9M ’15 Var %
MidCont -3% -$1.07/MWh
NorthEast +1% +$0.64/MWh
South/Texas -7% -$3.23/MWh
9M ’15 9M ’16
+1.0%
9M ’15 9M ’16
+2.5%
$56.2 $57.6
PPA Avg. Price
($/MWh)
Merchant Avg.Price
($/MWh)
9M ’15 9M ’16
-.05%
$50.7 $50.6
Avg.Price ($/MWh)
Prices
PPA roll-off
www.avangrid.com 38
9M '15 WindProduction
MtM Other PTCsExpired
9M '16
AVANGRID Renewables 9M ’16
Nine-month Adjusted Gross Margin(1) grows 3% to $690M
$667
+$39
(1)Adjusted Gross Margin is a non-GAAP financial measure and is adjusted for the sale of certain investments. See Appendix for calculation of
Gross Margin to Net Income.
Adjusted Gross Margin for Wind & Solar includes: Energy Sales, RECs, Transmission cost, Hedge gains/losses, Firming & Shaping revenues,
curtailment revenues, utility costs to power the wind farms, PTCs.
Gross Margin for Thermal and Other includes: Energy sales, costs of generation, power purchases and transmission.
Amounts may not add due to rounding.
$690
-$1
+$2
-$17
Effects on Adjusted Gross Margin(1) ($M)
+3%
Wind West 32%
Wind MidCont
18%
Wind Northeast
18% Wind South & Texas 18%
Solar & Other
Ren 4%
Thermal & Other
6%
9M ’16 Adjusted Gross Margin(1)
www.avangrid.com 39
$216
$718
$67
$651
Capex = $749M
Less:
CIAC= $55M
Asset Transfer = $43M
$57
$335 $335
$1,216 $938
($M)
Cash from Operations exceeds Capex
Free Cash
Flow
AVANGRID - 9M ’16 Cash Flow
Capex Cash from
Operations +
Sale of Investments
AVANGRID Networks
Renewables
Free Cash
Flow Capex
Cash from
Operations
Free Cash
Flow Capex Cash from
Operations
($M)
($M)
Amounts may not add due to rounding.
$284
$500
$216
$965
Capex = $1,036M
Less:
CIAC= $55M
Asset Transfer = $43M
$1,273
www.avangrid.com 40
Financial Strength 9M ’16
(1) Net Debt is defined as long-term debt, current portion of long-term debt, short-term debt and accrued interest, less cash. Net Leverage is
Net Debt as a percentage of Net Debt plus Total Equity. See Appendix for reconciliation of Adjusted EBITDA to U.S. GAAP Net Income.
(2) Each period includes the impact of the 2Q ’16 reclassification of government grants and ITC amortization from D&A to EBITDA.
2016-2020
2016-2020
$B
$B
Net Leverage 24% 24%
Networks 43% 40%
Renewables 4% 5%
Net Debt/Adj.
EBITDA(1)(2)
2.5x 2.3x
Networks 4.0x 3.6x
Renewables .4x .6x
YE ’15
• 9M ’16 Net Debt of $4.7B is primarily at the regulated companies.
• Non-utility financial obligations include UIL holding company debt of
$450M and tax equity financing arrangements $218M
9M ’16
www.avangrid.com 42
Business Risks & Opportunities
(1) Average for 2016 – 2020 planning period. Sensitivities are not probability weighted.
Networks
Renewables
Distribution ROE +/- 1%
Growth Transmission
Net Income +/- 50%
Capital Expenditures +/-$200M
Merchant Prices +/- 10%
Net Production +/- 3%
Additional 100 MW Wind
+/- 5-6%
’16 – ’20 AVANGRID Net Income (1)
+/- 2-2.5%
+/- 1-2%
+/- 1.5-2%
+/- 3-5%
+/- 1-1.5%
Gas Storage Storage spreads +/- 12% +/- .5-.8%
www.avangrid.com 43
AVANGRID 2016-2020 Long-Term Plan
Very Low Leverage ~24%
ADJUSTED EBITDA(1)
CAGR 5-7%
Not a Cash Taxpayer
ADJUSTED Net Income (1)
CAGR 8-10%
EBITDA growing faster than
Depreciation
(1) Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures and have been adjusted to include the impact of the first nine
months of UIL and merger costs for 2015, and the gain from the sale of investments and the impairment of an investment for 2016.
Key Opportunities & Risks
Networks & Renewables
Growth not in Plan
Transmission & Distribution
ROEs
Wind Production & Prices
Commodity Prices
www.avangrid.com 44
AVANGRID - Senior Unsecured or Equivalent Ratings
NYSEG
A- / A3 / A-
RG&E
A- / Baa1 / A-
CMP
A- / A2 / A-
UIL Holdings Corporation
A- / Baa2
UI
A- / Baa1 / A-
CNG
A- / A3 / A
SCG
A- / Baa1 / A-
BGC
A- / Baa1 / A
Networks
unrated
Gas
unrated
Renewables
unrated
AGR, Inc
BBB+ / Baa1 / BBB+
Consolidated AVANGRID Debt ~ $5B
• Plan to maintain strong investment grade ratings
• 92% of Long-term Debt is rated investment grade (remainder is un-rated tax-equity
financing)
• 9/12/16 - UIL Holdings, UI, CNG, SCG & BGC upgraded to A- from BBB+ by S&P
o Implementation of insulation measures
www.avangrid.com 45
AVANGRID – 3Q ’16 Leverage
UIL Holdco, $450
Networks; $4,292
TEI Current, $104
TEI Long-Term, $114
Financing Structure (September 30, 2016)
• Approximately $1.6B of Networks debt
matures 2016 – 2020:
$192M 2016
$292M 2017
Includes maturity of $450M of UIL
Senior Notes in 2020
• Tax equity investments (TEI) are
expected to be fully amortized by end
of 2019
Leverage is Primarily at Networks
Short-term liquidity supported by $1B Commercial Paper Facility
at AVANGRID, backed with $1.5B bank credit facility
Highlights
($M)
www.avangrid.com 46
AVANGRID Corporate Governance
Annual Shareholder Meeting
Corporate Governance
Quorum of 98%
Average support of 97% for all proposals submitted to shareholders
Appointment of two new independent directors
Establishment of a Compensation, Nominating
and Corporate Governance Committee
Finalist in the 2016 NYSE Governance Awards
(“Best Governance, Risk & Compliance Program at Large-Cap Company” )
www.avangrid.com 47
• Ideally positioned assets close to
rapidly developing markets
• Low operating expenses
• Spreads earned on differential
between summer injection/winter
extraction prices
AVANGRID’s Natural Gas Storage Business
• Flexible contracted assets in key
strategic supply & demand hubs
• Much of high-cost legacy
contracted transportation & storage
expired at the end of 2015
o Smaller high-cost contracts
expire in 2017 & 2018
ENSTOR (Owned Storage)
EES (Contracted Storage &
Transportation)
Key Business Drivers
• Gas Storage Spreads: o Weather
o Gas prices & volatility
• Legacy out-of-the money contracts
www.avangrid.com 49
16%
30%
18%
36%
West South/TX
NorthEast
MidCont
38%
27%
17%
18% West
South/TX
NorthEast
MidCont
Avangrid Renewables – 2016 Contracted/Merchant
Generation Distributed Across Regions
PPA Merchant
Amounts may not add due to rounding.
• Price exposure managed with PPAs and fixed price power
and gas hedges
• Target overall 75%-85% PPA/Hedge
www.avangrid.com 50
• Repowering ~350 MW of existing projects
• Current tax legislation allows existing wind farms to receive full value of
new PTC if:
o 5% of investment in ’16 (~$20M)
o 80% of fair market value of repowered turbine relates to new
components
• Increase output by ~20% by retrofitting products
• Offer “blend & extend” to PPA-customers of existing fleet
• Execution of Safe Harbor Strategy
for up to 2 GW new wind projects,
capturing 100% Wind PTC realization
• Supports additional build with PPAs
• 5% of investment in ’16 (~$180M);
equipment must be in service by 2020
Avangrid Renewables Growth Driver – Tax Incentives
Additional Capital Spending of ~$200M in ’16
Awarding to 3 Wind Turbine Generator Providers
Start
Construction Wind PTC
Before 2017
Before 2018
Before 2019
Before 2020
100%
80%
60%
40%
www.avangrid.com 51
Avangrid Renewables - PTC Evolution(1)
Per MWh 2015 2016P 2017P 2018P 2019P 2020P
Existing Assets $110 $93 $79 $38 $19 $19
New Build - - $20 $64 $81 $96
Total $110 $93 $99 $102 $100 $115
Retained PTCs $38 $37 $60 $100 $100 $115
TEI PTCs $72 $56 $39 $2 - -
Total $110 $93 $99 $102 $100 $115
$ Millions
• Initial projects funded with Tax-Equity; liabilities rolling off over next few years
• From ’09-’12, projects funded with Section 1603 ITC cash grants; AVANGRID
Renewables received ~$2B in cash for ~$6B investments vs. retaining PTCs on these
projects
• Lower retained PTCs per annum, but allowed company to use cash and avoided
debt
• Recent projects were contracted and funded with cash and equity from Iberdrola
• PTCs on older projects roll off and PTCs are added with new build in our Long-Term
Plan
(1) Includes PTCs in Plan; does not include PTCs related to Safe Harbor or Repowering strategies.
Amounts may not add due to rounding.
www.avangrid.com 52
Avangrid Renewables: PPAs
• Current strategy targets overall 75-85% of value ‘fixed’ through long-
term PPAs & hedging
• 810 MW of executed PPAs to be added in 2016 and 2017
• All new projects will have PPAs
• ~590 MW of 2018-2020 capacity in Plan will be under long-term PPA
• Increasing merchant capacity of existing fleet as PPAs roll off will be
managed through extending/originating new PPAs and hedging
program to maintain target exposure
• Average PPA price $57.6/MWh as of Sep ’16
• 38% of PPAs are indexed
• Average original tenor of PPAs is 16.4 years
• Average remaining tenor of PPAs is 9.7 years
Contracts & Hedging
PPA Characteristics
www.avangrid.com 53
Avangrid Renewables – PPAs & Merchant: 2016-2020
GWs
33% 37% 32% 34% 36% 36%
67% 63% 68% 66% 64% 64%
Merchant %
PPA %
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2015A 2016P 2017P 2018P 2019P 2020P
Existing PPA New Build w/PPA Merchant
Plan to mitigate pricing exposure with focus on adding contracts and use
of conservative pricing assumptions
Reflects PPA expiration before re-contracting:
(1) Includes PPA’s in Plan; does not include PTCs related to Safe Harbor or Repowering strategies
Amounts may not add due to rounding
www.avangrid.com 55
NYSEG 9.5%
RGE 9.5% CMP D
9.45%
CMP T 10.57% - 11.74%
UI D 9.15%
UI T 10.57% - - 11.74%
CNG 9.18%
SCG 9.36%
BGC 10.50%
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
11.0%
Allowed returns as of Sept, 2016
Base: 9.0% Base: 9.0%
Avangrid Networks Base Allowed ROEs
Bubble size reflects each company’s relative rate base(1)
(1) ‘15 Average Rate Base of $8.6B.
Amounts may not add due to rounding.
www.avangrid.com 56
NYSEG Elec 1,873 NYSEG Elec 1,792
NYSEG Gas 505 NYSEG Gas 523
RGE Elec 1,150 RGE Elec 1,113
RGE Gas 449 RGE Gas 410
CMP Dist. 763 CMP Dist. 798
CMP Trans. 1,425 CMP Trans. 1,441
UI Dist. 935 UI Dist. 992
UI Trans. 508 UI Trans. 547
CNG 399 CNG 434 SCG 479 SCG 518 BGC 88
BGC 98 MNG 67 MNG 67
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2015 2016E
$8.6B $8.7B
$M
2015 2016E
Rate Base
Note: Rate Base for UI RDR ($31M in 2016, $0M in 2015) is included under UI Dist.
Avangrid Networks Average Rate Base
www.avangrid.com 57
Avangrid Networks Regulatory Fact Sheet
(1) 9.65% yr. 2, 9.75% yr. 3
UI SCG CNG BGC NYSEG RGE CMP MNG
Rate Plans
2 yr plan (D), 3
yr application
filed 7/1/16,
Annual (T)
Settlement
approved 8/11
1 yr plan thru
12/14
10 yr plan thru
1/12
3 yr plan
thru 7/19
3 yr plan
thru 7/19
1 yr plan (D)
thru 12/14,
Annual (T)
10 yr plan thru
4/26, subject
to Year 7
review
Merger Commitments
Stay-out rates
effective 1/1/17,
Ring Fencing
Stay-out rates
effective 1/1/18,
Ring Fencing
Stay-out rates
effective 1/1/18,
Ring Fencing
Stay-out rates
effective 6/1/18,
Ring Fencing
Ring
Fencing
Ring
FencingRing Fencing Ring Fencing
Allowed ROE 9.15% 9.36% 9.18% 10.5% 9.0% 9.0% 9.45% 9.55%
ROE - T 10.57-11.74% 10.57-11.74%
Equity Ratio 50% 52% 52.52% 41.9% 48% 48% 50% 50%
Equity Ratio - T same 53%-59%
Earnings Sharing 50/50 above ROE 50/50 above ROE 50/50 above ROE No50/50 beg.
@ 9.50%(1)
,
50% equity
50/50 beg.
@ 9.50%(1)
,
50% equity
No
50/50 for non
Augusta above
12.05%
Rate Year Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast
Trackers:
Revenue Decoupling X Next rate case X Next rate case X X X
Distribution Integrity Mgt Program X
System Expansion Rate X X
Major Storm X X X X
New Billing System - one-off X
Environmental X X X
Rate Adjustment Mechanism - up to $40M/yr
Property Taxes X X
Major Storms X X
Gas Leak Prone Pipe Replacement X X
NYSEG Electric Pole Attachment Revenues X X
Reforming the Energy Vision (REV) Costs & Fees X X
Pension & Other Post Retirement Benefits X X
Electric & Gas Vegetation Mgt X X
Economic Development X X
Other - Low Income, Variable Rate & New Fixed
Rate Debt, Accoutning, Tax, Legislative, etc.X X X
www.avangrid.com 58
Avangrid Networks Historical Achieved ROEs
UI SCG CNG BGC NYSEG RGE CMP MNG
'15 Achieved ROEs (after-sharing)
Electric 8.5% 7.9% 6.0% 7.5%
Gas 8.2% 8.6% N/A 9.7% 4.2% N/A
Transmission 11.4% 11.0%
'15 Avg. Rate Base ($M)
Electric 935.4$ 1,872.6$ 1,150.4$ 762.7$
Transmission 508.0$ 1,425.2$
Gas 479.2$ 398.8$ 87.8$ 505.3$ 449.2$ 64.4$
'14 Achieved ROEs (after-sharing)
Electric 9.7% 9.7% 9.5% 9.6%
Gas 8.7% 9.9% N/A 10.0% 7.3% N/A
Transmission 12.1% 10.8%
'13 Achieved ROEs (after-sharing)
Electric 8.5% 9.7% 9.6% 10.7%
Gas 8.1% 8.2% N/A 8.6% 9.8% N/A
Transmission 12.2% 11.3%
www.avangrid.com 59
• Encourage renewable energy, in-state generation, and wider deployment of
distributed energy resources (DER) such as micro grids and storage.
• Promote greater use of advanced energy management products, such as AMI.
• Improve customer engagement in energy choice and management, while providing
affordable electric service.
New York’s Reforming the Energy Vision (REV)
Track 1: Order issued Feb ’16: Utilities will be the Distribution System
Platform Provider
Track 2: Ratemaking & Regulation: Distribution System
Implementation Plan (DSIP) submitted
Earnings Adjustment Mechanisms (EAM) under review
Joint filing with NY utilities
Track 3: Emission Goals to promote zero carbon emissions &
renewable energy
Governors Clean Energy Standard of 50% renewable energy
by 2030
Environmental benefits including 40% reduction in carbon
emissions by 2030
Current
www.avangrid.com 60
• 5-year filing on June 30 for transformation to “Smart Integrator”,
owning and operating a diverse and intelligent platform
• Emphasis on three primary capabilities: 1) Grid Operations,
2) Integrated System Planning, and 3) Market Enablement
NY REV Track 2: Ratemaking & Regulation
Objective
• Greater Distributed Energy Resource penetration will require
foundational investments in AMI, automation and control
• AMI (smart meters) planned for all 1.8M customers, rate recovery
request filed in Nov. ’16
• AMI projected capital cost of ~$500M (incremental to Plan) while
providing over $710M of operational and AMI-enabled benefits
(NPV over 20 yrs)
Cost /
Benefits
• Stakeholders to submit feedback on Avangrid Network’s DSIP filing
• Supplemental DSIP with other utilities and stakeholders on common
utility approaches - filed
• Expect ruling on Earnings Adjustment Mechanisms in 2016 and 2017
and on investments in 2017
Next Steps
NYSEG and RGE filed 5 year DSIP to support the REV
www.avangrid.com 61
AVANGRID Current Networks Utility Projects
Metro-North RR Corridor (FERC T) ~$175M(1) (2016-2020) Increases capacity and reliability of the transmission lines along the Metro-North corridor with
investments such as Baird to Congress 115kV reconductoring
Rocky Hill Liquefaction Replacement (Gas D) ~$40M (2016-2018) New 6M cf/day liquefier and purification system for economic peak load servicing
RGE Rochester Area Reliability Project (RARP) (NY T) ~$290M (2016-2020) 23 miles of 115kV, 1.9 miles of 345kV & substation
Ginna Retirement Trans. Alternative (NY T) ~$140M (2015-2017) Allows local generation plant retirement
NY Transco (AGR investment 20%) (FERC T) First 3 projects completed; Marcy South Series Compensation Project (joint w/NYPA)
completed June ’16
Coopers Mills STATCOM (FERC T) ~ $52M (2016-2018)
ISO requested to support regional bulk electric system upgrades in Boston area
Customer Smart Care data system upgrade (D) ~ $52M (2016-2017) Flexibility/customer service for innovative rate design. Enables dynamic pricing/optimizes AMI
Projects in 5 year plan support resiliency, aging
infrastructure and automation of the system…
CT
CT
NY
NY
ME
ME
NY
www.avangrid.com 62
AVANGRID Networks: Other Utility Projects
Capex also includes Growth Transmission Projects(1)…
MEPCO Section 388 Rebuild ~$108M (Begin construction 2017, in-service
early 2020)
Rebuild 46-yr old structures on 50-mile 345kV circuit; All state approvals
received, present to ISO-NE Planning Committee in August
Lewiston Loop ~$70M (Expected in-service 2Q ’18); Originally part of MPRP
Construction of 2 substations, 11.3 miles of 345kV and 1.4 miles of 115kV
Western NY (Public policy T need; final selection expected mid-late 2017)
NYISO completed sufficiency test, project advances to cost assessment phase
NY
ME
ME
(1) Growth Transmission Projects include risk-adjusted FERC T projects, with total Capex of ~ $750 million or 8% of total ’16-’20 Capex,
including but not limited to the ones presented on this slide. Some of these projects are participating in confidential bidding processes that
prohibit the disclosure of certain details, including the investment dollars.
+ Other Projects
www.avangrid.com 64
Reconciliation – AVANGRID 3Q & 9M ’16 Non-GAAP Adjusted Net Income
Amounts may not add due to rounding.
AVANGRID
CONS Networks Renewables
Corporate
/Others
AVANGRID
CONS Networks Renewables
Corporate/
Others
Net Income Attributable to Avangrid, Inc. 109$ 75$ 37$ (3)$ 423$ 319$ 121$ (17)$
Adjustments:
Add: Sale of equity method and other investment — — — — (36) — (3) (33)
Impairment of investment — — — — 3 3 — —
Income tax impact of adjustments (1) — — — — 14 (1) 1 14
Adjusted Net Income 109$ 75$ 37$ (3)$ 404$ 321$ 119$ (36)$
Add: Income tax expense (2) 61 58 (2) 5 215 193 24 (3)
Depreciation and amortization (3) 261 145 106 10 770 435 312 23
Impairment of non-current assets — — — — — — — —
Interest expense, net of capitalization (4) 35 29 6 (1) 125 103 25 (3)
Less: Earnings from equity method investments 1 3 (2) — 2 10 (8) —
Adjusted EBITDA 465$ 304$ 149$ 11$ 1,513$ 1,043$ 489$ (18)$
Add: Operations and maintenance (5) 357 299 61 (3) 1,026 838 168 20
Taxes other than income taxes 124 111 11 2 386 345 34 7
Adjusted Gross Margin 945$ 714$ 221$ 9$ 2,925$ 2,226$ 690$ 8$
(1) Income tax impact of adjustments: $14 million from sale of equity method investment, $1 million from sale of other investment and $(1) million on impairment of investment.
(4) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses.
(3) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based on the by
nature classification. Vehicle Depreciation of $5 million and $15 million and bad debt provision of $24 million and $36 million, for the three and nine months ended September 30, 2016,
respectively. Additionally, government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization
based on the by nature classification. Government grants of $1.5 million and $4.9 million and investment tax credits of $23 million and $68 million, for the three and nine month periods
ended September 30, 2016, respectively.
(5) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of these items. In addition the vehicle depreciation and bad
debt provision have been reflected within depreciation and amortization.
(2) Adjustments have been made for Production Tax Credit Adjustments for the amount of $7 million and $25 million for three and nine months ended September 30, 2016, respectively as
they have been included in operating revenues and $126 million for Unfunded Future Income Taxes as amounts have been reclassified from revenues based on the by nature classification.
Three Months Ended Nine Months Ended
September 30, 2016 September 30, 2016
(in millions)
www.avangrid.com 65
Reconciliation – AVANGRID 3Q & 9M ’15 Non-GAAP Adjusted Net Income
Amounts may not add due to rounding.
AVANGRID
CONS Networks Renewables
Corporate
/Others
AVANGRID
CONS Networks Renewables
Corporate/
Others
Net Income Attributable to Avangrid, Inc. 54$ 67$ 62$ (75)$ 171$ 185$ 156$ (170)$
Adjustments:
Add: Net Income representing a full nine month period of 2015 for UIL 16 16 — — 89 89 — —
Merger costs 9 2 — 7 32 13 — 19
Income tax impact of adjustments (1) (3) — — (3) (13) (5) (8)
Adjusted Net Income 76$ 85$ 62$ (71)$ 279$ 282$ 156$ (159)$
Add: Income tax expense (2) 75 50 9 16 183 170 (10) 23
Depreciation and amortization (3) 266 147 90 29 812 449 348 15
Impairment of non-current assets 3 — 3 — 10 — 10 —
Interest expense, net of capitalization (4) 50 39 3 8 159 126 (39) 72
Less: Other income and (expense) 4 4 — — 4 4 — —
Earnings (losses) from equity method investments (2) 3 (3) (2) 6 10 (4) —
Adjusted EBITDA 468$ 314$ 170$ (16)$ 1,433$ 1,013$ 469$ (49)$
Add: Operations and maintenance (5) 348 293 57 (2) 1,019 839 164 16
Taxes other than income taxes 124 114 8 1 373 335 34 4
Adjusted Gross Margin 939$ 721$ 235$ (17)$ 2,825$ 2,187$ 667$ (29)$
(1) Income tax impact of adjustments for the full nine month period of 2015 of $8 million, $5 million and $13 million and the three month period of 2015 of $3 million relate to merger costs.
(4) Adjustments have been made for allowance for funds used during construction, debt portion, to reflect these amounts within other income and expenses.
(5) Adjustments have been made for regulatory amounts to reflect amounts in revenues based on the by nature classification of these items. In addition the vehicle depreciation and bad
debt provision have been reflected within depreciation and amortization.
Three Months Ended Nine Months Ended
September 30, 2015 September 30, 2015
(in millions)
(2) In addition to adjustment to include a full nine month period of 2015 for UIL, adjustments have been made for Production Tax Credit Adjustments for the amount of $4 million and $21
million for the three and nine month ended September 30, 2015 as they have been included in operating revenues based on the by nature classification.
(3) Adjustments have been made for the inclusion of vehicle depreciation and bad debt provision within depreciation and amortization from operations and maintenance based on the by
nature classification. Vehicle Depreciation of $4 million and $11 million and bad debt provision of $8 million and $34 million, for the three and nine months ended September 30, 2015,
respectively. Additionally, government grants and investment tax credits amortization have been presented within other operating income and not within depreciation and amortization
based on the by nature classification. Government grants of $1.7 million and $5.1 million and investment tax credits of $26 million and $71 million, for the three and nine month periods
ended September 30, 2015, respectively.
www.avangrid.com 66
Reconciliation – AVANGRID Non-GAAP Adjusted EPS
Amounts may not add due to rounding.
EPS for the third quarter and nine months of 2016 and 2015 :
Net income for the third quarter and first nine months of 2015 are adjusted below to reflect the
combination of AVANGRID with UIL, sale of equity investments, and impairment of an investment:
2016 2015 '16 vs '15 2016 2015 16 vs '15
Networks 0.24$ 0.27$ (0.02)$ 1.03$ 0.73$ 0.30$
Renewables 0.12 0.25 (0.13) 0.39 0.62 (0.23)
Other (0.01) (0.30) 0.29 (0.05) (0.67) 0.62
Earnings Per Share 0.35$ 0.22$ 0.13$ 1.36$ 0.68$ 0.69$
Nine Months ended September 30,
Earnings (Loss) Per Share
Three Months ended September 30,
2016 Adjusted 2015
Adjusted
'16 vs '15 2016 Adjusted 2015
Adjusted
'16 vs '15
Networks 0.24$ 0.27$ (0.03)$ 1.03$ 0.91$ 0.12$
Renewables 0.12 0.20 (0.08) 0.39 0.50 (0.11)
Other (0.01) (0.23) 0.22 (0.05) (0.51) 0.46
EPS 0.35$ 0.25$ 0.10$ 1.36$ 0.90$ 0.46$
Sale of equity inv. & impairment of inv. - - - (0.06) - (0.06)
Adjusted EPS 0.35$ 0.25$ 0.10$ 1.30$ 0.90$ 0.40$
Adjusted Earnings (Loss) Per Share
Three Months ended September 30, Nine Months ended September 30,
