Slide 1: Fourth Quarter Earnings Call
FOURTH QUARTER EARNINGS CALL February 16, 2017
Slide 2: Forward Looking Statements
Forward Looking Statements This slide presentation contains forecasts and estimates of PG&E Corporation’s 2017 financial results, 2017 items impacting comparability, 2017 equity issuance, 2017-2019 capital expenditures and rate base growth, dividend policy, general earnings sensitivities, and potent
Slide 3: Well-positioned to Deliver Strong Returns
Well-positioned to Deliver Strong Returns A Strengthened Company • Significant safety, reliability and operational improvements • Improved customer satisfaction Healthy 3-year Key Advantages growth profile • One of the greenest utilities in the country • ~6.5-7% ratebase • Constructive regulatory an
Slide 4: Continued Progress in 2016
Continued Progress in 2016 Safety and Operational Regulatory and Legal Clean Energy Economy Performance • Second best electric • Final Phase 2 decision in • Delivered nearly 70% reliability year in Gas Transmission and GHG-free energy in 2016, company’s history Storage rate case including ~33% RPS e
Slide 5: Tax Reform Helps Affordability and Creates Potential for Future Investments
Tax Reform Helps Affordability and Creates Potential for Future Investments 1. Lower Corporate Tax 2. Loss of Interest 3. Full Expensing of Rate Expense Deduction Capital Expenditures Utility • Excess deferred taxes flow • Higher costs borne by • Minimal near-term impact back to customers customers
Slide 6: Q4 2016 Earnings Results
Q4 2016 Earnings Results Q4 2016 Earnings Earnings EPS EPS (millions) (millions) Earnings from Operations $ 675 $ 1.33 $ 1,884 $ 3.76 Items Impacting Comparability Pipeline related expenses (20) (0.04) (67) (0.13) Legal and regulatory related expenses (11) (0.02) (43) (0.09) Fines and penalties (101
Slide 7: Q4 2016: Quarter over Quarter Comparison
Q4 2016: Quarter over Quarter Comparison Earnings per Share from Operations $1.60 $1.40 $0.05 $0.05 $0.06 ($0.01) $1.20 $0.20 $1.00 $0.48 $0.80 $1.33 $0.60 $0.40 $0.50 $0.20 $0.00 Q4 2015 EPS Timing of 2015 Timing of taxes Nuclear Growth in rate Miscellaneous Increase in Q4 2016 EPS from Operations
Slide 8: 2017 Earnings Per Share Guidance
2017 Earnings Per Share Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.55 $ 3.75 Estimated Items Impacting Comparability Pipeline related expenses (0.14) (0.09) Legal and regulatory related expenses (0.05) (0.01) Fines and penalties ~ (0.05) ~ (0.05) Butte fire related cost
Slide 9: 2017 Assumptions
2017 Assumptions Capital Expenditures Authorized Ratebase (weighted average) ($ millions) ($ billions) 2017 2017 General Rate Case 3,900 General Rate Case 24.6 Gas Transmission and Storage 1,000 Gas Transmission and Storage 3.0 Transmission Owner 18 1,100 Transmission Owner 6.8 Total Cap Ex ~$6 bill
Slide 10: 2017 Items Impacting Comparability
2017 Items Impacting Comparability ($ millions, pre-tax) 2017 Pipeline related expenses (80 - 125) Legal and regulatory related expenses (10 - 40) Fines and penalties ~ (45) Butte fire related costs, net of insurance - GT&S revenue timing impact ~ 150 2017 Items Impacting Comparability Total ~ $(60)
Slide 11: 2017 Equity Issuance
2017 Equity Issuance ~$800M $400 - 600M - San Bruno Penalty - GT&S Capital Disallowance + Capital Expenditures 2016 2017 2016 EOY shares outstanding: ~507 million See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and under
Slide 12: Robust Cap Ex Supports Strong Returns
Robust Cap Ex Supports Strong Returns Capital Expenditures ($ in B) 2016-2019 $5.8B ~$6B ~$6B ~$6B 2016 Recorded 2017 2018 2019 General Rate Case Gas Transmission & Storage Electric Transmission Owner Range Changes from prior quarter noted in blue See the Forward Looking Statements for factors that
Slide 13: Ratebase Supports Strong Returns
Ratebase Supports Strong Returns Weighted Average Ratebase ($ in B) Base Case Assumptions: 2016-2019 • 2017 General Rate Case settlement through 2019 • 2015 Gas Transmission & Storage rate case ~6.5-7% – Phase 2 decision through 2018; flat in 2019 CAGR – ~$400M for 2011-2014 spend subject to audit a
Slide 14: Dividend Policy Supports Strong Total Shareholder Return
Dividend Policy Supports Strong Total Shareholder Return + ~8% ~60% Payout Ratio $1.96 $1.82 2015 2016 2019 Targeting 55-65% payout ratio over time See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and underlying assumptio
Slide 15: Appendices
[t PG&E Corporation Appendices
Slide 16: Table of Contents
Table of Contents Appendix 1: Guidance Slide 17 Appendix 2: Supplemental Earnings Materials Slides 18 – 34 16
Slide 17: CPUC Penalty Decision in Gas Transmission Pipeline Investigations
APPENDIX 1 – GUIDANCE CPUC Penalty Decision in Gas Transmission Pipeline Investigations 12 Months Cumulative Future Ended Charges ($ millions) Charges and Total December 31, December 31, Costs 2016 2016 Fine paid to the state $ - $ 300 $ - $ 300 Customer bill credit paid - 400 - 400 Charge for disal
Slide 18: Appendix 2 – Supplemental Earnings Materials
Appendix 2 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation’s Earnings from Operations to Slides 19-20 Consolidated Income Available for Common Shareholders in Accordance with GAAP Exhibit B: Key Drivers of PG&E Corporation’s Earnings per Common Share Slide 21 from Ope
Slide 19: Exhibit A: 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 Fourth Quarter, 2016 vs. 2015 Three Months Ended December 31, Twelve Months Ended Decembe
Slide 20: Exhibit A: Reconciliation of Earnings from Operations to GAAP (Page 2)
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 Three Months Ended Twelve Months Ended (in millions, pre-tax) December 31, 2016 December
Slide 21: Exhibit B: Key Drivers of Earnings per Common Share
Exhibit B: Key Drivers of PG&E Corporation’s Earnings per Common Share (“EPS”) from Operations Fourth Quarter and YTD, 2016 vs. 2015 ($/Share, Diluted) Fourth Quarter 2015 EPS from Operations (1) $ 0.50 GT&S revenue impact (2) 0.48 Timing of taxes 0.20 Nuclear refueling outage 0.06 Growth in rate ba
Slide 22: Exhibit C: Operational Performance Metrics
Exhibit C: Operational Performance Metrics Meets YTD 2016 End of Year (EOY) EOY Actual EOY Target Target (1) Safety (includes both public and employee safety metrics) Nuclear Operations Safety Unit 1 Performance Indicator 100.0 98.7 P Unit 2 Performance Indicator 90.0 98.7 - Electric Operations Safe
Slide 23: 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 24: Exhibit D: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Fourth Quarter and Year to Date, 2016 vs. 2015 Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Sales from Energy Deliveries (in millions kWh) 19,531 21,015 83,017 85,860 Total Electric Customer
Slide 25: Exhibit E: 2017 Earnings per Share Guidance (Page 1)
Exhibit E: PG&E Corporation’s 2017 Earnings per Share Guidance Page 1 of 2 2017 EPS Guidance Low High Estimated EPS on an Earnings from Operations (1) Basis $ 3.55 $ 3.75 Estimated Items Impacting Comparability: (2) Pipeline related expenses (3) (0.14) (0.09) Legal and regulatory related expenses (4
Slide 26: Exhibit E: 2017 Earnings per Share Guidance (Page 2)
Exhibit E: PG&E Corporation’s 2017 Earnings per Share Guidance Page 2 of 2 (6) “Butte fire related costs, net of insurance” refers to estimated third-party claims and legal costs associated with the Butte fire, and any related insurance recovery. The Utility currently is unable to estimate the low a
Slide 27: Exhibit F: 2017 General Earnings Sensitivities
Exhibit F: 2017 General Earnings Sensitivities PG&E Corporation and Pacific Gas and Electric Company Variable Description of Change Estimated 2017 Earnings Impact Rate base +/- $100 million change in allowed rate base +/- $5 million Return on equity (ROE) +/- 0.1% change in allowed ROE +/- $18 milli
Slide 28: Exhibit G: 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 29: Exhibit H: 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 30: Exhibit H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Nov 1, 2016 – Phase 2 Proposed Decision to identify safety-related programs to qualify for the $850M disallowance Dec 1, 2016 – Phase 2 Final Decision 2017 General Rate Case
Slide 31: Exhibit H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Aug 18, 2016 – Commission Decision Sep 8, 2016 - Fine Paid to General Fund Sep 26, 2016 – Safety Enforcement Division Files Application for Rehearing Dec 16, 2016 – Initial
Slide 32: Exhibit H: 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 Plan A.15-07-006, Aug 13, 2014 – Commission issues OIR directing utilities to file Electric Distribution Resources Plans (DRP) R.14-08-0
Slide 33: Exhibit H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Oct 29, 2014 – Proposed decision on electric citation program Nov 18, 2014 – Comments on proposed decision Nov 24, 2014 – Reply comments on proposed decision Dec 4, 2014 – F
Slide 34: Exhibit H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Winter 2017 – Decision adopting 2017 Assumptions and Scenarios issued Spring 2017 – Proposed decision issued on guidance for IRPs Spring 2017 – ARB finalizes 2030 Scoping Pl