Slide 1: First Quarter Earnings Call
CONFIDENTIAL DRAFT FIRST QUARTER EARNINGS CALL May 1, 2014
Slide 2: Safe Harbor Statements
CONFIDENTIAL DRAFT Safe Harbor Statements Management’s statements and assumptions regarding the estimated ranges of pipeline-related expenses, capital expenditures, rate base, costs, equity issuances, general earnings sensitivities, and other factors that can affect PG&E Corporation’s 2014 financial
Slide 3: Key Focus Areas
CONFIDENTIAL DRAFT 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 pub
Slide 4: Operational and Regulatory Update
CONFIDENTIAL DRAFT Operational and Regulatory Update Executing on Operations Gas Safety Work since 2011 • Tested, or validated through records, 676 miles of pipe • Replaced 129 miles of pipe • Installed 143 automatic or remote shutoff valves Electric Achievements Q1 2014 • Reliability technology dep
Slide 5: Q1 2014: Earnings Results
CONFIDENTIAL DRAFT Q1 2014: Earnings Results Q1 Earnings EPS (millions) Earnings from Operations $ 251 $ 0.54 Items Impacting Comparability Natural Gas Matters (24) (0.05) Earnings on a GAAP Basis $ 227 $ 0.49 Natural Gas Matters (millions, pre-tax) Q1 Pipeline-related expenses $ (40) Accrued fines
Slide 6: Q1 2014: Quarter over Quarter Comparison EPS from Operations
CONFIDENTIAL DRAFT Q1 2014: Quarter over Quarter Comparison EPS from Operations $0.60 $ (0.04) $ 0.01 $ (0.03) $ (0.03) $0.40 $0.63 $0.54 $0.20 $0.00 Q1 2013 EPS Timing of 2014 GRC Increase in Miscellaneous Growth in rate Q1 2014 EPS from Operations expense recovery shares outstanding base earnings
Slide 7: 2014 Natural Gas Matters
CONFIDENTIAL DRAFT 2014 Natural Gas Matters ($ millions, pre-tax) 2014 Unrecovered PSEP Expenses 125 - 175 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 com
Slide 8: Appendix 1 – Regulatory and Guidance Matters
CONFIDENTIAL DRAFT Appendix 1 – Regulatory and Guidance Matters • Updates to Appendix 1 Since the Previous Quarter slide 9 Financial Information: Current Year • Assumptions for 2014 slide 10 • 2014 Equity Issuance slide 11 Financial Information: Looking Ahead • Looking Ahead: Capital Expenditures 20
Slide 9: Updates to Appendix 1 Since the Previous Quarter
CONFIDENTIAL DRAFT Updates to Appendix 1 Since the Previous Quarter • Slide 15 2015 CPUC Gas Transmission Rate Case • Slide 16 FERC Transmission Owner Rate Case • Slide 17 Gas Regulatory Proceedings Schedule 9
Slide 10: Assumptions for 2014
CONFIDENTIAL DRAFT Assumptions for 2014 Capital Expenditures Authorized Rate Base (weighted average) ($ millions) ($ billions) Low High Low High Electric Distribution 1,850 2,200 Electric Distribution 12.3 12.4 Electric Transmission 1,000 1,050 Electric Transmission* 4.6 4.6 Gas Transmission 350 350
Slide 11: 2014 Equity Issuance
CONFIDENTIAL DRAFT 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
Slide 12: Looking Ahead: Capital Expenditures 2014-2016
CONFIDENTIAL DRAFT Looking Ahead: Capital Expenditures 2014-2016 $5B - 6B $4.5B - 6B $4.5B - 6B 2014 (1) 2015 2016* The high end of the range reflects capex at GRC request levels, including attrition amounts for 2015 and 2016, capex requested in the 2015 Gas Transmission and Storage case, and curren
Slide 13: Looking Ahead: Rate Base Growth 2014-2016
CONFIDENTIAL DRAFT Looking Ahead: Rate Base Growth 2014-2016 2014-2016 Weighted Average Rate Base CAGR*: 7 – 11% $32B - 35B $30B - 32.5B $28B - 28.5B 2014 2015 2016* The high end of the range reflects capex at GRC request levels, including attrition amounts for 2015 and 2016, capex requested in the
Slide 14: 2014 CPUC General Rate Case
CONFIDENTIAL DRAFT 2014 CPUC General Rate Case • Request 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 • 2014 revenu
Slide 15: 2015 CPUC Gas Transmission and Storage Rate Case
CONFIDENTIAL DRAFT 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 $1.2 b
Slide 16: FERC Transmission Owner Rate Case
CONFIDENTIAL DRAFT FERC Transmission Owner Rate Case TO 15 • September 2013 – FERC accepted TO15 subject to refund and rates went into effect October 1, 2013 • Requested revenue requirement of $1.072 billion and ROE of 10.9% • May 14 and 15, 2014 – Next settlement conference 16
Slide 17: Gas Regulatory Proceedings Schedule
CONFIDENTIAL DRAFT Gas Regulatory Proceedings Schedule 1/30: PSEP quarterly 3/3: PSEP Update 4/30: PSEP quarterly 5/16: PSEP Update Gas Pipeline compliance filing prehearing conference compliance filing prehearing Safety OIR conference R. 11-02-019 Orders to 1/17: Pipeline pressure 2/7: Parties’ res
Slide 18: Gas Pipeline Safety Costs
CONFIDENTIAL DRAFT Gas Pipeline Safety Costs Shareholder Funded Gas Transmission Safety-Related Costs ($ millions) 2014 and Beyond 2010-2013 Total Estimated Forecast Pipeline Safety Enhancement Plan (PSEP) PSEP Expense 736 ~150 (1) PSEP Capital 114 ~440 (2) Total PSEP 850 ~590 $1,440 Gas Accord V* ~
Slide 19: CPSD Recommended Penalty – Total Shareholder Impact
CONFIDENTIAL DRAFT CPSD Recommended Penalty – Total Shareholder Impact ($ millions) Gas Pipeline Safety Costs Incurred or Committed (1) 2,700 Safety Division Recommendation - Fine 300 Safety Division Recommendation - Additional Shareholder Costs (2) 1,515 Total Shareholder Impact $ 4,515 (1) Actual
Slide 20: Incremental Equity Factors
CONFIDENTIAL DRAFT 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% mul
Slide 21: Appendix 2 – Supplemental Earnings Materials
CONFIDENTIAL DRAFT 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 O
Slide 22: Exhibit A: Reconciliation of Earnings from Operations to GAAP
CONFIDENTIAL DRAFT 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”) First Quarter, 2014 vs. 2013 (in millions, except per share amounts) Three Months En
Slide 23: Exhibit B: Key Drivers of Earnings per Common Share
CONFIDENTIAL DRAFT Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share (“EPS”) from Operations First Quarter, 2014 vs. 2013 ($/Share, Diluted) First Quarter 2013 EPS from Operations (1) $ 0.63 Growth in rate base earnings 0.01 Timing of 2014 GRC expense recovery (2) (0.04) Increase
Slide 24: Exhibit C: Operational Performance Metrics
CONFIDENTIAL DRAFT Exhibit C: Operational Performance Metrics 2014 Performance Results Q1 EOY Meets YTD Actual Target Target(1) Safety (includes both public and employee safety metrics) Nuclear Operations Safety Unit 1 Performance Indicator 78.99 94.00 - Unit 2 Performance Indicator 81.60 88.00 - Ga
Slide 25: Definitions of 2014 Operational Performance Metrics
CONFIDENTIAL DRAFT Definitions of 2014 Operational Performance Metrics from Exhibit C The Operational Performance Metrics focus on three areas: safety (public and employee), customer service, and financial performance. The column titled “Meets YTD Target” shows illustratively whether or not the metr
Slide 26: Exhibit D: Sales and Sources Summary
CONFIDENTIAL DRAFT Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary First Quarter and Year-to-Date, 2014 vs. 2013 Three Months Ended March 31, 2014 2013 Sales from Energy Deliveries (in millions kWh) 19,384 20,326 Total Electric Customers at March 31 5,264,413 5,235,631 Total Ga
Slide 27: Exhibit E: Guidance for Items Impacting Comparability
CONFIDENTIAL DRAFT Exhibit E: PG&E Corporation Guidance for Items Impacting Comparability (“IIC”) 2014 IIC Guidance (in millions, after-tax) Low Earnings High Earnings Estimated Items Impacting Comparability: (1) Natural Gas Matters (2) $ (267) $ (207) Estimated IIC Guidance (3) $ (267) $ (207) (1)
Slide 28: Exhibit F: General Earnings Sensitivities
CONFIDENTIAL DRAFT 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
Slide 29: Exhibit G: Summary of Selected Regulatory Cases
CONFIDENTIAL DRAFT 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 Enforcem
Slide 30: Exhibit G: Summary of Selected Regulatory Cases
CONFIDENTIAL DRAFT 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
Slide 31: Exhibit G: Summary of Selected Regulatory Cases
CONFIDENTIAL DRAFT Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Gas Matters Fines & Remedies I.11-02-016 Jan 11, 2013 – PG&E financial analysis testimony I.11-11-009 Feb 8, 2013 – CPSD rebuttal testimony I.12-01-007 Mar 4-5, 2013
Slide 32: Exhibit G: Summary of Selected Regulatory Cases
CONFIDENTIAL DRAFT Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Nuclear Decommissioning Cost Triennial Proceeding A.12-12-012 Dec 21, 2012 – Application filed D.14-02-024 Mar 17, 2013 – Prehearing conference Jun 17, 2013 – Scopin
Slide 33: Exhibit G: Summary of Selected Regulatory Cases
CONFIDENTIAL DRAFT Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Rate Case Plan Order Instituting Rulemaking R. 13-11-006 Nov 14, 2013 – Commission file rulemaking Dec 20, 2013 – Utilities respond to data request on current safety