Slide 1: PG&E Corporation: Opportunities in Renewable Energy
1 PG&E Corporation: Opportunities in Renewable Energy Peter Darbee, Chairman, CEO and President Merrill Lynch Conference September 25-26, 2007 Exhibit 99.1
Slide 2: Forward-looking statements
This presentation contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2007 and 2008 earnings per share from operations, targeted average annual growth rate for earnings per share from operations, as well as management’s projections regarding Pacific Gas and Ele
Slide 3: Key Takeaways From Today's Discussion
Key Takeaways From Today’s Discussion • PCG is a core utility holding delivering 1 st quartile earnings growth at low risk. • PG&E is aligned with regulators/policy leaders to increase the supply of cost-effective renewable generation. • Evolving renewables policy creates attractive investment oppor
Slide 4: Agenda for Today
Agenda for Today • PG&E’s core investment strategy and upside earnings outlook • PG&E’s position on renewable energy - Current position - Future investment opportunities
Slide 5: Capital Expenditures Drive Core Growth
Investment Driver Cap Ex Notable Projects Common Plant ~$1.3 Billion • Building Investment • Technology Infrastructure • General Use Fleet Electric and Gas Transmission ~$3.8 Billion • Central California Clean Energy Transmission Line ( formerly Midway-Gregg) • Line Upgrades for Renewables • McDonal
Slide 6: EPS from Operations Guidance
* Reg G reconciliation to GAAP for 2006 EPS from Operations and 2007 and 2008 EPS Guidance available in Appendix and at www.pgecorp.com EPS from Operations* EPS Guidance EPS from Operations*: 2007 guidance of $2.70-$2.80 per share 2008 guidance of $2.90-$3.00 per share 8%
Slide 7: Additional Investment Opportunities Provide Upside
Additional Investment Opportunities Provide Upside • Proposed Pacific Connector Gas Pipeline (PCGP) - 1.0 -1.5 Bcf/d, 230 mile LNG pipeline - $1.1 B (33% PG&E share) • 2006 Long Term Procurement Plan - Up to 2,300 MW proposed post-2011 • Potential BC Renewables Transmission Project - $14 M a
Slide 8: RPS Eligible Renewable Resources - Traditional
Biomass Energy Wind Energy Small Hydropower (<30MW) Geothermal Energy RPS Eligible Renewable Resources - Traditional
Slide 9: Eligible Renewables - Emerging
Biogas Ocean Power Central Solar Energy ~ Eligible Renewables - Emerging
Slide 10: Signed Renewable Projects: 18% of Projected 2010 Load
Year Signed Project Max GWh/yr Technology Year Signed Project Max GWh/yr Technology Pre Various Projects ~7500 Various Calpine Geysers 13 & 20 Geothermal Wheelabrator #4 Biomass CBEA Projects (3) Biomass Big Valley Lumber Biomass Diablo Winds Wind FPL Energy-Montezuma Winds Wind Buena Vista Energy L
Slide 11: PG&E's RPS Compliance Outlook
Year 18% 15% 12% 19% Expected Deliveries From Contracts 20% 20% Renewable Portfolio Standard target is 20% by 2010* * See Appendix for further description of RPS requirements PG&E’s RPS Compliance Outlook
Slide 12: Challenges to Meeting RPS Goal
Challenges to Meeting RPS Goal • Increasing competition for renewables projects from other states/countries/utilities • Many renewable resources are located in areas requiring either new transmission or transmission upgrades • Uncertain whether contracts will perform as projected • System integratio
Slide 13: New Transmission Investment is Necessary
Wind Bioenergy Ocean Solar Geothermal Geothermal Geothermal Small Hydro Wind Wind Wind Transmission Line Project Renewable Resources Central California Clean Energy Transmission (previously Midway-Gregg) Resources to the south Vaca Dixon - Contra Costa Upgrade Solano County wind resources California
Slide 14: Renewable Investment Landscape
Increasing opportunities for utilities in renewable development Renewable Investment Landscape • Renewable Provisions in Federal Energy Bill - PTC (Wind, Biomass, Geothermal, Hydro, Solid Waste) - ITC (Solar, Geothermal, Distributed Generation) - Federal Renewable Portfolio Standard (RPS) • PG&E’s 2
Slide 15: PG&E Investment Opportunities
PG&E Investment Opportunities • PG&E is in the early stages of feasibility analysis • Includes system-wide survey of land holdings and assets for renewable potential • Technologies include wind, solar and small hydro
Slide 16: PCG Value Summary
PCG Value Summary • PG&E is a core holding, delivering strong investment opportunities and low risk. • Renewables and related transmission investments provide potential earnings “upsides” in 2008 and beyond which are not currently included in long-term guidance.
Slide 17: Appendix
17 Appendix
Slide 18: Pacific Gas and Electric Company (PG&E)
Business Unit Rate Base ($B) Regulation Electric and gas distribution $10.3 CPUC Electric generation $1.8 CPUC Gas transmission $1.5 CPUC Electric transmission $2.3 FERC PCG Total Business $15.9 85% CPUC/15% FERC Pacific Gas and Electric Company (PG&E) • $12.5 B in Revenues • $34.8 B in Assets • 5.1
Slide 19: Capital Expenditure Outlook
Common Plant Electric Trans. Generation Projected Capital Expenditures ($MM) Gas Trans. Distribution Chart Key $1,000 $2,000 $3,000 $3,200 $3,200 $2,500 $3,100 $2,200 Capital Expenditure Outlook
Slide 20: Rate Base Growth
* Projected 2007-2011 rate base is not adjusted for the impact of the carrying cost credit that primarily results from the second series of the Energy Recovery Bonds. Earnings will be reduced by an amount equal to the deferred tax balance associated with the Energy Recovery Bonds regulatory asset, m
Slide 21: 2006 EPS - Reg G Reconciliation
EPS on an Earnings from Operations Basis* $2.57 Items Impacting Comparability: Scheduling Coordinator Cost Recovery Environmental Remediation Liability Recovery of Interest on PX Liability Severance Costs EPS on a GAAP Basis 0.21 (0.05) 0.08 (0.05) $2.76 * Earnings per share from operations is a non
Slide 22: EPS Guidance - Reg G Reconciliation
EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis Low $2.70 0.00 $2.70 High $2.80 0.00 $2.80 EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis Low $2.90 0.00 $2
Slide 23: EPS Growth - Comparator Group
Consensus of analyst estimates of EPS growth: Source: Thomson IBIS long-term EPS Growth Consensus Estimate Median May 8, 2007 EPS Growth - Comparator Group EPS from operations annual growth targeted to average 8% for 2007 - 2011
Slide 24: California's RPS Program
Mandate • Deliveries of 20% of load from eligible renewables by 2010. Large hydro (>30 MW) doesn’t qualify. Purpose • Fuel Diversity • GHG Reduction • Economic Development Penalty • $50/MWhr, up to $25 million per year Exceptions 1) Contract failure 2) Insufficient public goods funds 3) Insufficient
Slide 25: RPS Procurement Process
RPS Procurement Process • PG&E conducts annual renewable RFOs, targeting 1 - 2% increases in supply • Projects are evaluated on: § Market value § Creditworthiness § Transmission availability § Portfolio fit § Commercial and technical feasibility • Bilateral contracts allow PG&E to negotiate unique r
Slide 26: Illustrative Energy Procurement Costs
Illustrative Energy Procurement Costs
Slide 27: Long-Term Electricity Resources
* Over 20% of total retail sales expected to be eligible renewable resources coming from utility-owned, QFs, Irrigation Districts, and other sources. ** May include utility-owned resources. * Approximately 13% of total retail sales expected to be eligible renewable resources coming from utility-owne