Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Q3 2014 Earnings Presentation
35 slides from Pacific Gas & Electric's earnings presentation, Oct 28, 2014
Slide 1: Third Quarter Earnings Call
THIRD QUARTER EARNINGS CALL October 28, 2014
Slide 2: Safe Harbor Statements
Safe Harbor Statements Management's statements regarding PG&E Corporation’s 2014 earnings per share; estimated amounts of future non-recoverable pipeline-related costs, capital expenditures, rate base, and equity issuances; and the assumptions and forecasts on which the statements are based, are for
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 Napa Earthquake Response • Restored electric power to more than 70,000 customers in 24 hours • 6,000 customer gas calls; 2,500 courtesy gas safety checks • In-depth leak surveys using vehicle-mounted detection systems Gas Safety Work in 2014
Slide 5: Q3 2014: Earnings Results
Q3 2014: Earnings Results Q3 Earnings EPS (millions) Earnings from Operations $ 820 $ 1.73 Items Impacting Comparability Natural Gas Matters (13) (0.03) Environmental-Related Costs 4 0.01 Earnings on a GAAP Basis $ 811 $ 1.71 Natural Gas Matters (millions, pre-tax) Q3 Pipeline-related expenses $ (10
Slide 6: Q3 2014: Quarter over Quarter Comparison
Q3 2014: Quarter over Quarter Comparison EPS from Operations $1.80 $0.08 $0.03 $0.02 $0.17 ($0.05) $1.60 $0.18 $1.40 $0.14 $1.20 $0.28 $1.00 $1.73 $0.80 $0.60 $0.88 $0.40 $0.20 $0.00 Q3 2013 EPS 2014 GRC Growth in rate Tax benefit - Timing of taxes Gain on Regulatory Miscellaneous Increase in Q3 201
Slide 7: Assumptions for 2014
Assumptions for 2014 Capital Expenditures Authorized Rate Base (weighted average) ($ millions) ($ billions) 2014 2014 Electric Distribution 1,950 Electric Distribution 12.3 Electric Transmission 1,000 Electric Transmission* 4.6 Gas Transmission 400 Gas Transmission 1.8 Gas Distribution 700 Gas Distr
Slide 8: 2014 Earnings Per Share Guidance
2014 Earnings Per Share Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.45 $ 3.55 Estimated Items Impacting Comparability Natural Gas Matters (0.40) (0.33) Environmental-Related Costs 0.01 0.01 Estimated EPS on a GAAP Basis $ 3.06 $ 3.23 Natural Gas Matters (millions, pre-ta
Slide 9: 2014 Natural Gas Matters
2014 Natural Gas Matters ($ millions, pre-tax) 2014 Unrecovered PSEP Expenses 150 - 175 Non-PSEP Expenses 150 - 175 Rights of Way Encroachment Integrity Management and Other Work Legal and Other ~ 50 Pipeline Related Expenses 350 - 400 Guidance range excludes potential future insurance recoveries an
Slide 10: 2014 Equity Issuance
2014 Equity Issuance Does not reflect resolution of pending investigations or other enforcement matters $800M - 1,000M $800M - 900M - Lower capital expenditures - Lower unrecovered gas costs - Depreciation rate change + Cash impact of delayed GRC resolution 2014 2014 2013 EOY shares outstanding: 457
Slide 11: Looking Ahead: Capital Expenditures 2014-2016
Looking Ahead: Capital Expenditures 2014-2016 $5.3B - 5.8B $5.4B - 5.6B ~$5.1B 2014 (1) 2015 2016 The ranges reflect recent regulatory decisions, current or planned regulatory filings, and historic spending patterns. (1) 2014 capex includes ~$400 million that has already been reserved for PSEP capit
Slide 12: Looking Ahead: Rate Base Growth 2014-2016
Looking Ahead: Rate Base Growth 2014-2016 2014-2016 Weighted Average Rate Base CAGR: ~9% $33.4B - 33.8B $30.9B - 31.1B ~$28.2B 2014 2015 2016 The ranges reflect recent regulatory decisions, current or planned regulatory filings, and historic spending patterns. See the Safe Harbor Statements for fact
Slide 13: Appendix 1 – Regulatory and Guidance Matters
Appendix 1 – Regulatory and Guidance Matters • Updates to Appendix 1 Since the Previous Quarter slide 14 Rate Cases • 2014 CPUC General Rate Case slide 15 • 2015 CPUC Gas Transmission and Storage Rate Case slide 16 • FERC Transmission Owner Rate Cases slide 17 Natural Gas Matters • Gas Regulatory Pr
Slide 14: Updates to Appendix Since the Previous Quarter
Updates to Appendix 1 Since the Previous Quarter • Slide 15 2014 CPUC General Rate Case • Slide 16 2015 CPUC Gas Transmission and Storage Rate Case • Slide 17 FERC Transmission Owner Rate Cases • Slide 18 Gas Regulatory Proceedings Schedule • Slide 19 Gas Pipeline Safety Costs • Slide 20 Presiding O
Slide 15: 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 cost of capital determination, electric transmission, gas transmission, and cost of fuel and purchased power
Slide 16: 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 for authorized revenue requirement for 2015-2017 – Includes operating costs and capital for CPUC jurisdictional gas transmission and storage • 2015 requested revenue requirement of $1.3
Slide 17: FERC Transmission Owner Rate Cases
FERC Transmission Owner Rate Cases TO15 • September 2013 – FERC accepted TO15 subject to refund • Requested revenue requirement of $1.072 billion and ROE of 10.9% • July 15, 2014 – Settlement filed with FERC, with a revenue requirement of $1.0396 billion and a depreciation rate of 2.56% • Rates effe
Slide 18: Gas Regulatory Proceedings Schedule
Gas Regulatory Proceedings Schedule 10/16: PSEP Update Proposed 11/5: Comments on Proposed Gas Pipeline Decision Decision Safety OIR R. 11-02-019 10/30: PSEP quarterly 11/10: Reply comments on compliance filing Proposed Decision September November 2014 October December Recordkeeping OII 9/2: Presidi
Slide 19: Gas Pipeline Safety Costs
Gas Pipeline Safety Costs Shareholder Funded Gas Transmission Safety-Related Costs ($ millions) 2014 and Beyond 2010-2013 Total Estimated Forecast Pipeline Safety Enhancement Plan (PSEP) PSEP Expense 736 ~175 (1) PSEP Capital 114 ~440 (2) Total PSEP 850 ~615 $1,465 Gas Accord V* ~500 ~760 $1,260 Tot
Slide 20: Presiding Officers’ Penalty Decisions: Estimated Total Shareholder Impact
Presiding Officers’ Penalty Decisions: Estimated Total Shareholder Impact ALJs' penalty SED penalty ($ millions) decision recommendation Fine payable to the State General Fund $ 950 300 (1) Refund of PSEP revenues previously authorized 400 (2) Additional estimated unrecoverable costs 50 1,515 Total
Slide 21: 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 22: Appendix 2 – Supplemental Earnings Materials
Appendix 2 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation Earnings from Operations to Consolidated slide 23 Income Available for Common Shareholders in Accordance with GAAP Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share from Operations slide 24
Slide 23: Reconciliation of Earnings from Operations
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”) Third Quarter and Year to Date (“YTD”), 2014 vs. 2013 (in millions, except per share amounts) Three Mon
Slide 24: Key Drivers of EPS from Operations
Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share (“EPS”) from Operations Third Quarter and YTD, 2014 vs. 2013 Third Quarter 2013 EPS from Operations (1) $ 0.88 ($/Share, Diluted) 2014 GRC expense recovery (2) 0.28 Timing of taxes and other expenses (3) 0.17 (4) Tax benefit – repa
Slide 25: Operational Performance Metrics
Exhibit C: Operational Performance Metrics Third Quarter and YTD, 2014 vs. 2013 2014 Performance Results Q3 YTD EOY Meets YTD Actual Target Target(1) Safety (includes both public and employee safety metrics) Nuclear Operations Safety Unit 1 Performance Indicator 79.16 94.00 - Unit 2 Performance Indi
Slide 26: 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 27: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Third Quarter and YTD, 2014 vs. 2013 Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 2014 2013 Sales from Energy Deliveries (in millions kWh) 25,128 24,682 65,359 65,684 Total Electric Customers at Septe
Slide 28: PG&E Corporation Earnings Per Share Guidance
Exhibit E: PG&E Corporation Earnings Per Share Guidance 2014 EPS Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.45 $ 3.55 Estimated Items Impacting Comparability: (1) Natural gas matters (2) (0.40) (0.33) Environmental-related costs (3) 0.01 0.01 Estimated EPS on a GAAP Bas
Slide 29: 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 30: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2015 Gas Transmission and Storage Rate Case A.13-12-012 Dec 19, 2013 – Application filed Jan 16, 2014 – PG&E workshop Mar 7, 2014 – Supplemental testimony served Mar 12, 2014 – Prehear
Slide 31: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Apr 18, 2013 – Application filed (Phase II) 2014 General Rate Case A.13-04-020 Nov 15, 2013 – ORA testimony Phase II: Rate Design for 2015-2017 Dec 13, 2013 – Intervenor testimony Apr
Slide 32: 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 33: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates R.14-05-013 May 21, 2014 – Commission issues OIR Safety Citation OIR Jun 20, 2014 – Opening comments on proposed electric citation program Jul 1, 2014 – SB 291 deadline for gas citatio
Slide 34: 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 $37.9 million: 2012 and partial 2013 EE program year incentives R.12-01-005 Earnings Mechanism Nuclear D
Slide 35: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Wholesale Distribution Tariff Rate Case (WDT2) ER13-1188 Mar 29, 2013 – PG&E filed WDT2 rate case seeking increase to initial generic WDT service rates and increase to rates for CCSF,