Slide 1: Second Quarter Earnings Call
SECOND QUARTER EARNINGS CALL July 28, 2016
Slide 2: Forward Looking Statements
Forward Looking Statements This slide presentation contains forecasts and estimates of PG&E Corporation’s 2016 financial results and equity issuances, capital expenditures to be made by PG&E Corporation’s subsidiary, Pacific Gas and Electric Company ( Utility), through 2019, the Utility’s rate base
Slide 3: Key Focus Areas
Key Focus Areas Position PG&E for a Clean Energy Economy • California policies drive transmission and distribution investment • Diablo Canyon retirement at end of current NRC licenses • Voluntary 55% RPS commitment by 2031 Deliver on Customer Expectations • Unwavering safety focus; affordable and re
Slide 4: Key Assumptions: 2015 GT&S Rate Case
Key Assumptions: 2015 GT&S Rate Case Revenue Recognition • Final revenues uncertain pending final Phase 2 decision; billing begins August 1 • Undercollected revenues for revenue requirement increase in 2015 and 7 months of 2016 will be amortized over 36 months • Timing for revenue recognition • 2016
Slide 5: Q2 2016 Earnings Results
Q2 2016 Earnings Results Q2 2016 Earnings Earnings EPS EPS (millions) (millions) Earnings from Operations $ 330 $ 0.66 $ 737 $ 1.48 Items Impacting Comparability Pipeline related expenses (16) (0.03) (29) (0.06) Legal and regulatory related expenses (8) (0.02) (18) (0.04) Fines and penalties (112) (
Slide 6: Q2 2016: Quarter over Quarter Comparison
Q2 2016: Quarter over Quarter Comparison Earnings per Share from Operations $1.00 $0.05 ($0.08) $0.80 ($0.06) ($0.05) ($0.03) ($0.08) $0.60 $0.91 $0.40 $0.66 $0.20 $0.00 Q2 2015 EPS Growth in rate base Timing of taxes Nuclear refueling Regulatory and Increase in shares Miscellaneous Q2 2016 EPS from
Slide 7: 2016 Earnings Per Share Guidance
2016 Earnings Per Share Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.65 $ 3.85 Estimated Items Impacting Comparability Pipeline related expenses (0.18) (0.12) Legal and regulatory related expenses (0.09) (0.03) Fines and penalties ~(0.54) ~(0.54) Butte fire related costs,
Slide 8: Assumptions for 2016
Assumptions for 2016 Capital Expenditures Authorized Rate Base (weighted average) ($ millions) ($ billions) 2016 2016 Electric Distribution 2,000 Electric Distribution 13.8 Electric Transmission 1,200 Electric Transmission 5.9 (1) 2.8 Gas Transmission 700 Gas Transmission Gas Distribution 1,000 Gas
Slide 9: 2016 Items Impacting Comparability
2016 Items Impacting Comparability ($ millions, pre-tax) 2016 (1) Pipeline related expenses (100 - 150) Legal and regulatory related expenses (25 - 75) Fines and penalties ~ (434) Butte fire related costs, net of insurance ~ (170) GT&S capital disallowance (190) GT&S revenue timing impact ~350 2016
Slide 10: 2016 Equity Issuance
2016 Equity Issuance $600 - $800M ~$800M - Butte Fire Insurance Receivable + GT&S Capital Disallowance + Gas Distribution Recordkeeping Fine 2016 2016 As of Q1 2016 As of Q2 2016 June 30, 2016 shares outstanding: ~498 million Changes from prior quarter are noted in blue. See the Forward Looking Stat
Slide 11: Capital Expenditures 2015-2019
Capital Expenditures 2015-2019 $5.4B – 6.4B annually* ~$5.6B $5.4B 2015 2016 2017 2018 2019 * Ranges reflect authorized amounts, amounts requested but not yet authorized, amounts that are currently planned subject to future authorization requests, and historic spending patterns. Ranges also include
Slide 12: Rate Base Growth 2016-2019
Rate Base Growth 2016-2019 2016-2019 Weighted Average Rate Base 2017-2019 CAGR: 5.5 – 6.5% $37 – 39.5B $35 – 37B $33.3 – 34.9B ~ $32.4B 2016 2017 2018 2019 Estimates reflect authorized amounts, amounts requested but not yet authorized, amounts that are currently planned to be subject to future autho
Slide 13: PG&E Dividend Policy
PG&E Dividend Policy ~60% Payout Ratio ~8% increase $1.96 $1.82 2015 2016 2019 Targeting 55-65% payout ratio over time 13 See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and underlying assumptions.
Slide 14: Appendix 1 – Guidance and Regulatory Matters
Appendix 1 – Guidance and Regulatory Matters • Updates to Appendix 1 Since the Previous Quarter slide 15 Regulatory • CPUC Penalty Decision in Gas Transmission Pipeline Investigations slide 16 • 2015 CPUC Gas Transmission and Storage Rate Case slide 17 • 2017 CPUC General Rate Case slide 18 • FERC T
Slide 15: Updates to Appendix Since the Previous Quarter
Updates to Appendix 1 Since the Previous Quarter • Slide 16 CPUC Penalty Decision in Gas Transmission Pipeline Investigations • Slide 17 2015 CPUC Gas Transmission and Storage Rate Case • Slide 18 2017 CPUC General Rate Case • Slide 19 FERC Transmission Owner Rate Case • Slide 20 CPUC Investigative
Slide 16: CPUC Penalty Decision in Gas Transmission Pipeline Investigations
CPUC Penalty Decision in Gas Transmission Pipeline Investigations Cumulative Estimated Charges Future ($ millions) Q2 2016 June 30, 2016 Periods Total Fine paid to the State $ 300 $ 300 Customer bill credit 400 400 Charge for disallowed capital (1) $ 235 642 50 692 Disallowed revenue for pipeline sa
Slide 17: 2015 CPUC Gas Transmission and Storage Rate Case
2015 CPUC Gas Transmission and Storage Rate Case • Application filed with the CPUC December 19, 2013 • On June 23, 2016, the CPUC voted out a final decision in Phase 1 of the proceeding ($ millions) 2015 2016 2017 2018 Utility Requested Revenue $ 1,263 $ 1,346 $ 1,488 $ N/A Requirement Adopted Reven
Slide 18: 2017 CPUC General Rate Case
2017 CPUC General Rate Case • Application filed with the CPUC September 1, 2015 • Request for authorized revenue requirement for 2017-2019 • 2017 requested revenue requirement of $8.24 billion includes increase of $319 million • Request includes new investments in: – Smart grid technologies that bet
Slide 19: FERC Transmission Owner Rate Case
FERC Transmission Owner Rate Case TO17 • July 29, 2015 – TO17 filed with FERC; requested revenue requirement of $1.5 billion, a $314 million increase over TO16 • September 30, 2015 – FERC accepted TO17 and rate changes suspended until March 1, 2016 • February 4-5, 2016 – FERC settlement conference •
Slide 20: CPUC Investigative Proceedings Schedule
CPUC Investigative Proceedings Schedule 4/1: Reply briefs 6/1: Presiding 7/1: SED appeal of Gas Distribution officer’s decision presiding OII and Order to officer's Show Cause decision I. 14-11-008 6/28: Carmel appeal of presiding 7/18: PG&E response officer’s to appeals decision May July September
Slide 21: Incremental Equity Factors
Incremental Equity Factors Incremental Equity Factors for Unrecovered Costs Equity Impacting Event Multiplier Fine payable to Government (1) 100% Customer bill credit (2) (4) 60% Charge for disallowed capital (3) (4) 30% Disallowed revenue / unrecoverable expenses (1) (4) 60% GT&S revenue timing imp
Slide 22: Appendix 2 – Supplemental Earnings Materials
Appendix 2 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated slide 23-24 Income Available for Common Shareholders in Accordance with GAAP Exhibit B: Key Drivers of PG&E Corporation’s Earnings per Common Share from Operations sl
Slide 23: Reconciliation of Earnings from Operations to GAAP
Exhibit A: Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) Page 1 of 2 Second Quarter, 2016 vs. 2015 (in millions, except per share amounts) Three Months Ended
Slide 24: Reconciliation of Earnings from Operations to GAAP
Exhibit A: Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) Page 2 of 2 (6) The Utility accrued charges of $0 and $350 million pre-tax (before tax impact of $143
Slide 25: Key Drivers of EPS from Operations
Exhibit B: Key Drivers of PG&E Corporation’s Earnings per Common Share (“EPS”) from Operations Second Quarter and Year to Date, 2016 vs. 2015 ($/Share, Diluted) Second Quarter 2015 EPS from Operations (1) $ 0.91 Growth in rate base earnings 0.05 Timing of taxes (2) (0.08) Nuclear refueling outage (0
Slide 26: Operational Performance Metrics
Exhibit C: Operational Performance Metrics 2016 Year to Date 2016 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 100.0 98.7 Unit 2 Performance Indicator 100.0 98.7
Slide 27: Definitions of 2016 Operational Performance Metrics
Definitions of 2016 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 28: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Second Quarter and Year to Date, 2016 vs. 2015 Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Sales from Energy Deliveries (in millions kWh) 19,879 20,682 39,419 40,041 Total Electric Customers at June 3
Slide 29: Earnings Per Share Guidance
Exhibit E: PG&E Corporation’s Earnings Per Share Guidance Page 1 of 2 2016 EPS Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.65 $ 3.85 Estimated Items Impacting Comparability: (1) Pipeline related expenses (2) (0.18) (0.12) Legal and regulatory related expenses (3) (0.09)
Slide 30: Earnings Per Share Guidance
Exhibit E: PG&E Corporation’s Earnings Per Share Guidance Page 2 of 2 (5) “ Butte fire related costs, net of insurance” includes charges of $430 million pre-tax (before tax impact of $175 million) recorded for the six months ended June 30, 2016 related to estimated third-party claims and Utility cle
Slide 31: General Earnings Sensitivities
Exhibit F: General Earnings Sensitivities PG&E Corporation and Pacific Gas and Electric Company 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 +/- $17 million Share count +/- 1
Slide 32: Use of Non-GAAP Financial Measures
Exhibit G: Use of Non-GAAP Financial Measures PG&E Corporation and Pacific Gas and Electric Company: Use of Non-GAAP Financial Measures PG&E Corporation discloses historical financial results and provides guidance based on “earnings from operations” in order to provide a measure that allows investor
Slide 33: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2015 Gas Transmission A.13-12-012 Dec 19, 2013 – Application filed and Storage Rate Case Jan 16, 2014 – PG&E workshop Mar 7, 2014 – Supplemental testimony served Mar 12, 201
Slide 34: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2017 General Rate Case (Phase I) A. 15-09-001 Sep 1, 2015 – Application Filed Sep 29, 2015 – Application Workshop Oct 29, 2015 – Prehearing conference Jan 22, 2016 – PG&E Su
Slide 35: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Ex Parte Order Instituting Investigation I.15-11-015 Nov 23, 2015 – OII issued and Order to Show Cause Dec 3, 2015 – City of San Bruno, City of San Carlos and TURN comments
Slide 36: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2015 Electric Distribution Resources A.15-07-006 Aug 13, 2014 – Commission issues OIR directing utilities to file Electric Distribution Resources Plans Plan (DRP) R.14-08-01
Slide 37: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Order Instituting Rulemaking on the R.14-05-013 May 21, 2014 – Commission issues OIR for electric citation program by Jan 1, 2015 complying with SB 291 Commission’s Natural
Slide 38: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Integration of Distributed Energy R.14-10-003 Sept 22, 2015 – Decision to expand scope to include distributed energy resources (DERs) on system side of customer's meter Reso