Slide 1: Second Quarter Earnings Call
SECOND QUARTER EARNINGS CALL July 31, 2014
Slide 2: Safe Harbor Statements
Safe Harbor Statements Management’s statements and assumptions regarding estimated costs, capital expenditures, rate base, equity issuances, general earnings sensitivities, and other factors that can affect PG&E Corporation’s financial results, constitute forward-looking statements that are necessar
Slide 3: Key Focus Areas
Key Focus Areas Resolve gas issues • Execute critical gas work • Complete regulatory and legal proceedings as soon as possible Position company for success • Rigorous multi-year planning • Drive continuous improvement Partner effectively • Strengthen local presence • Engage in public policy developm
Slide 4: Operational and Regulatory Update
Operational and Regulatory Update Executing on Operations Gas Safety Work since 2011 • Tested, or validated through records, 724 miles of pipe • Replaced or installed 153 miles of pipeline • Installed 157 automatic or remote shutoff valves • Received PAS-55 and ISO-55001 safety certifications in May
Slide 5: Q2 2014: Earnings Results
Q2 2014: Earnings Results Q2 Earnings EPS (millions) Earnings from Operations $ 324 $ 0.69 Items Impacting Comparability Natural Gas Matters (57) (0.12) Earnings on a GAAP Basis $ 267 $ 0.57 Natural Gas Matters (millions, pre-tax) Q2 Pipeline-related expenses $ (97) Accrued fines - Third-party liabi
Slide 6: Q2 2014: Quarter over Quarter Comparison
Q2 2014: Quarter over Quarter Comparison EPS from Operations $0.80 $ (0.04) $ 0.01 $ (0.04) $ (0.03) $0.60 $0.40 $0.79 $0.69 $0.20 $0.00 Q2 2013 EPS Timing of 2014 GRC Increase in Miscellaneous Growth in rate Q2 2014 EPS from Operations expense recovery shares outstanding base earnings from Operatio
Slide 7: Assumptions for 2014
Assumptions for 2014 Capital Expenditures Authorized Rate Base (weighted average) ($ millions) ($ billions) Implied Implied Low High Low High GRC PD GRC PD Electric Distribution 1,850 1,850 2,200 Electric Distribution 12.3 12.3 12.4 Electric Transmission 1,000 1,000-1,050 1,050 Electric Transmission
Slide 8: 2014 Natural Gas Matters
2014 Natural Gas Matters ($ millions, pre-tax) 2014 Unrecovered PSEP Expenses 150 - 200 Non-PSEP Expenses 175 - 225 Rights of Way Encroachment Integrity Management and Other Work Legal and Other 25 - 50 Pipeline Related Expenses 350 - 450* * Total does not equal the sum of the components Guidance ra
Slide 9: 2014 Equity Issuance
2014 Equity Issuance Does not reflect resolution of gas investigations $1,070M $800M - 1,000M - Earning authorized return (except Gas Transmission) - Lower Natural Gas Matters costs + Higher capital expenditures 2013 2014* 2013 EOY shares outstanding: 457M * The guidance range for 2014 does not incl
Slide 10: Looking Ahead: Capital Expenditures 2014-2016
Looking Ahead: Capital Expenditures 2014-2016 $5B - 6B $4.5B - 6B $4.5B - 6B ~$5.3B $4.7 - 5.3B $4.7B - 5.5B 2014 (1) 2015 2016* Implied by General Rate Case Proposed Decision The high end of the range reflects capex at GRC request levels, including attrition amounts for 2015 and 2016, capex request
Slide 11: Looking Ahead: Rate Base Growth 2014-2016
Looking Ahead: Rate Base Growth 2014-2016 2014-2016 Weighted Average Rate Base $32B - 35B $30B - 32.5B $33B - 34B $30.5B - 31.5B $28B - 28.5B ~$28B 2014 2015 2016* Implied by General Rate Case Proposed Decision The high end of the range reflects capex at GRC request levels, including attrition amoun
Slide 12: Appendix 1 – Regulatory and Guidance Matters
Appendix 1 – Regulatory and Guidance Matters • Updates to Appendix 1 Since the Previous Quarter slide 13 Rate Cases • 2014 CPUC General Rate Case slide 14 • 2015 CPUC Gas Transmission Rate Case slide 15 • FERC Transmission Owner Rate Cases slide 16 Natural Gas Matters • Gas Regulatory Proceedings Sc
Slide 13: Updates to Appendix Since the Previous Quarter
Updates to Appendix 1 Since the Previous Quarter • Slide 14 2014 CPUC General Rate Case • Slide 15 2015 CPUC Gas Transmission Rate Case • Slide 16 FERC Transmission Owner Rate Cases • Slide 17 Gas Regulatory Proceedings Schedule • Slide 18 Gas Pipeline Safety Costs 13
Slide 14: 2014 CPUC General Rate Case
2014 CPUC General Rate Case • General Rate Case sets base revenue requirement for 2014-2016 – Includes operating costs and capital for generation and electric and gas distribution – Excludes fuel and purchased power, cost of capital, electric transmission, and gas transmission • Proposed Decision re
Slide 15: 2015 CPUC Gas Transmission and Storage Rate Case
2015 CPUC Gas Transmission and Storage Rate Case • Application filed with the CPUC on December 19, 2013 • Request sets revenue requirement for 2015-2017 – Includes operating costs and capital for CPUC jurisdictional gas transmission and storage • 2015 revenue requirement of $1.3 billion is a request
Slide 16: FERC Transmission Owner Rate Cases
FERC Transmission Owner Rate Cases TO15 • September 2013 – FERC accepted TO15 subject to refund and rates • Requested revenue requirement of $1.072 billion and ROE of 10.9% • July 15, 2014 – Settlement filed with FERC, with a revenue requirement of $1.0396 billion and a depreciation rate of 2.56% •
Slide 17: Gas Regulatory Proceedings Schedule
Gas Regulatory Proceedings Schedule 5/16: PSEP Update 7/8: CPUC launches Gas Pipeline prehearing proposed rule changes Safety OIR conference to General Order 112 R. 11-02-019 7/18: Comments on GO 112 rule revisions 7/25: Reply comments on GO 112 rule revisions 7/25: PSEP Update settlement 7/30: PSEP
Slide 18: Gas Pipeline Safety Costs
Gas Pipeline Safety Costs Shareholder Funded Gas Transmission Safety-Related Costs ($ millions) 2014 and Beyond 2010-2013 Total Estimated Forecast Pipeline Safety Enhancement Plan (PSEP) (1) PSEP Expense 736 ~175 (2) PSEP Capital 114 ~440 Total PSEP 850 ~615 $1,465 Gas Accord V* ~500 ~760 $1,260 Tot
Slide 19: CPSD Recommended Penalty – Total Shareholder Impact
CPSD Recommended Penalty – Total Shareholder Impact ($ millions) (1) Gas Pipeline Safety Costs Incurred or Committed ~ 2,700 Safety Division Recommendation - Fine 300 Safety Division Recommendation - Additional Shareholder Costs (2) 1,515 Total Shareholder Impact $ 4,515 (1) Actual and forecast cost
Slide 20: Incremental Equity Factors
Incremental Equity Factors Incremental Equity Factors Associated with Gas Matters Equity Impacting Event Multiplier Fine paid to state General Fund (1) 100% Unrecovered expenses (2) (3) 60% Capital write-off (3) 30% (1) Applies to newly issued fines. Fines already accrued: 50% multiplier at time of
Slide 21: Appendix 2 – Supplemental Earnings Materials
Appendix 2 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation Earnings from Operations to Consolidated slide 22 Income Available for Common Shareholders in Accordance with GAAP Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share from Operations slide 23
Slide 22: Exhibit A: Reconciliation of Earnings from Operations to GAAP
Exhibit A: Reconciliation of PG&E Corporation Earnings from Operations to Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) Second Quarter and Year to Date (“YTD”), 2014 vs. 2013 (in millions, except per share amounts) Three Mo
Slide 23: Exhibit B: Key Drivers of EPS from Operations
Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share (“EPS”) from Operations Second Quarter and YTD, 2014 vs. 2013 ($/Share, Diluted) Second Quarter 2013 EPS from Operations (1) $ 0.79 Growth in rate base earnings 0.01 Timing of 2014 GRC expense recovery (2) (0.04) Increase in shares
Slide 24: Exhibit C: Operational Performance Metrics
Exhibit C: Operational Performance Metrics Second Quarter and YTD, 2014 vs. 2013 2014 Performance Results Q2 YTD EOY Meets YTD Actual Target Target (1) Safety (includes both public and employee safety metrics) Nuclear Operations Safety Unit 1 Performance Indicator 79.21 94.00 - Unit 2 Performance In
Slide 25: Definitions of 2014 Operational Performance Metrics
Definitions of 2014 Operational Performance Metrics from Exhibit C Safety Public and employee safety are measured in four areas: (1) Nuclear Operations Safety, (2) Gas Operations Safety, (3) Electric Operations Safety, and (4) Employee Safety. 1. The safety of the Utility’s nuclear power operations,
Slide 26: Exhibit D: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Second Quarter and YTD, 2014 vs. 2013 Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 Sales from Energy Deliveries (in millions kWh) 20,847 20,676 40,231 41,002 Total Electric Customers at June 30 5,268,0
Slide 27: Exhibit E: Guidance for Items Impacting Comparability
Exhibit E: PG&E Corporation Guidance for Items Impacting Comparability (“IIC”) 2014 IIC Guidance (in millions, after-tax) Low Earnings High Earnings Estimated IIC: (1) Natural Gas Matters (2) $ (267) $ (207) Estimated IIC Guidance (3) $ (267) $ (207) (1) Items impacting comparability are those items
Slide 28: Exhibit F: General Earnings Sensitivities
Exhibit F: General Earnings Sensitivities PG&E Corporation and Pacific Gas and Electric Company Estimated 2014 Variable Description of Change Earnings Impact Rate base +/- $100 million change in allowed rate base +/- $5 million Return on equity (ROE) +/- 0.1% change in allowed ROE +/- $15 million Sh
Slide 29: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2014 General Rate Case A.12-11-009 Nov 15, 2012 – Application filed (Phase I) May 3, 2013 – ORA testimony May 17, 2013 – Intervenor testimony and Safety and Enforcement Division (SED)
Slide 30: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Jul 24, 2013 – PG&E filed TO15 rate case seeking an annual revenue requirement for 2014 Transmission Owner Rate Case (TO15) ER13-2022 Aug 14, 2013 – Comments/interventions due to FERC
Slide 31: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Gas Pipeline Safety Order Instituting Rulemaking R.11-02-019 Dec 20, 2012 – Final decision on Pipeline Safety Enhancement Plan D.11-03-047 Jan 28, 2013 – Intervenor requests for rehear
Slide 32: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Net Energy Metering OIR R.14-07-002 Jul 2, 2014 – Commission issues OIR to establish net metering successor tariffs 2014 Long-Term Procurement Plan Aug 13, 2014 – Phase 1a testimony of
Slide 33: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Rulemaking to Reform Energy Efficiency Incentive Jun 30, 2014 – PG&E filing for 2012 and partial 2013 EE program year incentives $37.9M R.12-01-005 Earnings Mechanism Jul 21, 2013 – Pa