Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Lehman Brothers CEO Energy/Power Conference 2006
23 slides from Pacific Gas & Electric's conference presentation, Sep 5, 2006
Slide 1: PG&E Corporation: Customer Focused, Value Driven
This presentation is not complete without the accompanying statements made by management on September 6, 2006. A replay is available on PG&E Corporation’s homepage at www.pge-corp.com. PG&E Corporation: Customer Focused, Value Driven Chris Johns, SVP and CFO Lehman Brothers CEO Energy/Power Conferen
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2006 and 2007 earnings per share from operations, capital expenditures, Pacific Gas and Electric Company’s (Utility) rate base and r
Slide 3: Objectives for Today's Discussion
Objectives for Today’s Discussion • GRC Proposed Settlement • Rate base forecast and EPS guidance • Update progress on other business priorities • Discuss “what’s next” for our leadership vision
Slide 4: GRC Proposed Settlement: Revenue Requirement
4,714 4,927* 5,052 5,212 5,302 * On August 24, 2006, the CPUC approved a waiver of the 2007 cost of capital filing, maintaining the authorized ROE at 11.35% and the authorized equity at 52% through at least 2007. GRC Proposed Settlement: Revenue Requirement
Slide 5: GRC Proposed Settlement
GRC Proposed Settlement • Transformation § Transformation benefits credited to customers in 2008-2010 are factored into Settlement attrition request § 100% of risk and reward for additional Transformation benefits accrue to shareholders through 2010 • Next Steps in the Schedule 9/20/2006: Opening br
Slide 6: Capital Expenditure Outlook
Capital expenditures projected to average $2.5 billion per year for years 2006-2010: * Assumes approval of 2007 GRC Settlement Agreement. Includes capital expenditure estimates for Contra Costa Unit 8, Diablo Canyon Steam Generator Replacement Project, Humboldt Bay Power Plant, and SmartMeter TM Adv
Slide 7: Rate Base Growth
* Assumes approval of 2007 GRC Settlement Agreement. 2006-2010 projected rate base has not been adjusted for the impact of the carrying cost credit that primarily results from the second series of the Energy Recovery Bonds (ERBs). Earnings will be reduced by an amount equal to the deferred tax balan
Slide 8: EPS Guidance
*Reg G reconciliation to GAAP for 2005 EPS from operations and 2006 and 2007 EPS guidance appears in the Appendix and at www.pge- corp.com Operating EPS Assumptions ($MM) Rate Base $15,900 $17,200 Equity Ratio 52% 52% Authorized ROE 11.35 11.35% Carrying Cost Credit ($66) ($52) Holding Company Inter
Slide 9: EPS Growth
Source: Zacks Investment Research, Inc. (August 29, 2006) Survey of analyst estimates of EPS growth: EPS Growth • EPS from operations annual growth targeted to average at least 7.5% for 2006-2010 • Actual growth rate will depend on timing and amount of infrastructure investments
Slide 10: Strategic Direction
We act with integrity and communicate honestly and openly. We are passionate about meeting our customers’ needs and delivering for our shareholders. We are accountable for all of our own actions: these include safety, protecting the environment, and supporting our communities. We work together as a
Slide 11: Transformation Progress
Expected 2006 benefits result from initiatives that were or will be implemented in 2005 and 2006. • 2005: 20 initiatives were fully or partially deployed • 2006: 33 other initiatives will be fully or partially deployed Transformation Progress Benefits from Transformation are increasingly offsetting
Slide 12: Anticipated Transformation Net Costs and Benefits
Anticipated Transformation Net Costs and Benefits Net Cost Range Net Benefit Range
Slide 13: Transformation Progress
Transformation Progress • Concord Resource Management Center opened in June 2006 § First of 7 RMCs which consolidate estimating, engineering and mapping activities of 71 local field offices • Automated Work Deployment § Work and Resource Management Systems § SmartMeter TM Technology (Advanced Meteri
Slide 14: Transformation Progress: Culture Workshops
§ events at locations across PG&E service territory’s § 18,132 employees (or 93%) have participated § 91% of participants indicate that the cultural changes are key to the future success of PG&E PG&E Tomorrow - Diablo Canyon (Aug 2006) Transformation Progress Culture Workshops for Leadership Team •
Slide 15: Electric Transmission Update
Electric Transmission Update • TO9 filed on August 1, 2006 at FERC § Requested annual transmission revenue requirement of $719 million § Increase of approximately $113 million over current authorized rates § Final decision expected 1 st half of 2007
Slide 16: Generation & Energy Procurement Progress
Generation & Energy Procurement Progress • Contra Costa Unit 8 approved § MW expected to come online in 2008 • QF settlement with IEP § Estimated $100 million in annual savings based on QF contract amendments to date • Diablo Canyon Nuclear Power Plant § Improvements have increased DCPP output by MW
Slide 17: Generation & Energy Procurement Progress
Generation & Energy Procurement Progress • Renewable Portfolio Standard (RPS) § RPS Solicitation issued on August 4, 2005 ▲ MW in signed contracts for renewable energy to date § MW of renewable power contracted since 2002 § MOU with Luz II to explore 500 MW of solar energy § RPS Solicitation issued
Slide 18: Business Priorities 2006-2010
Business Priorities 2006-2010 1. Advance business transformation 2. Provide attractive shareholder returns 3. Increase investment in utility infrastructure 4. Implement an effective energy procurement plan 5. Improve reputation through more effective communications 6. Evaluate the evolving industry
Slide 19: Q&A
Q&A
Slide 20: Appendix
Appendix • Reg G Reconciliation / Financial Profile • Long-Term Energy Resource Agreements • Key Pending Regulatory Proceedings
Slide 21: EPS Guidance - Reg G Reconciliation
EPS Guidance - Reg G Reconciliation Low High EPS Guidance on an Earnings from Operations Basis* $ 2.40 $ 2.50 Estimated Items Impacting Comparability Scheduling Coordinator Cost Recovery 0.06 0.06 Environmental Remediation Liability (0.05 ) (0.05 ) EPS Guidance on a GAAP Basis $ 2.41 $ 2.51 Low High
Slide 22: Executed Agreements Pursuant to Long-Term RFO
The parties’ material obligations under these agreements are conditioned upon CPUC approval of the agreements and applicable ratemaking mechanisms. The agreement related to the Calpine Hayward project is a letter of intent to execute a Power Purchase Agreement (PPA). The execution of the PPA is subj
Slide 23: Key Pending Regulatory Proceedings
Key Pending Regulatory Proceedings • Pending approval § GRC Settlement Opening briefs Sept 20, 2006 Final decision February 2007 § Long-Term Generation Resources § FERC TO9 (transmission rates) • Pending investigation § Billing and Collection OII Decision expected end of 2006 • Anticipated filings §
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