Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E Corp (PCG, PCG-PA, PCG-PB, PCG-PC, PCG-PD, PCG-PE, PCG-PG, PCG-PH, PCG-PI) — Q2 2018 Earnings Presentation
51 slides from Pacific Gas & Electric's earnings presentation, Jul 27, 2018
Slide 1: PG&E Corporation Business Update
Pa} PG&E Corporation BUSINESS UPDATE July 27,2018
Slide 2: Forward-Looking Statements
StatementsThis presentation contains statements regarding management?s expectations and objectives for future periods as well as forecasts and estimates regarding 2018 IIC guidance, Tax Cuts and Jobs Act expected impact, 2017-2019 capital expenditures, 2017-2019 weighted average ratebase, and genera
Slide 3: Leading the Way on Energy with a Strong Financial Foundation
See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and underlying assumptions. 3 Leading the Way on Energy with a Strong Financial Foundation ~$6B Planned annual capex investment 2018-2019 Relentless focus on safety culture
Slide 4: Agenda
AgendaFocus on Operational ExcellenceKey AdvantagesPositioning for the Future4
Slide 5: System At a Glance
System At a Glance2017 Revenue SourcesGas Transmission& StorageGeneral Rate ~7% Case ~43%Electric Pass- Transmissionthrough ~9% ~41%California Public Utilities Commission Federal Energy Regulatory CommissionKey HighlightsEmployees ~23,000 Californians served ~16M Net income (2017) ~$1.7B Ratebas
Slide 6: Significant Progress on Safety in Operations
Significant Progress on Safety in OperationsStrengthenedSafety Culture and ProceduresInvesting billions of dollars in gas and electric safety improvements Testing and replacing hundreds of miles of natural gas pipelines Installing emergency shut off valves Establishing a state-of-the-art gas safety
Slide 7: Innovative Approaches to Customer Service
Innovative Approaches to Customer ServiceCustomized Focused Communication Segmentation ChannelCustomer FocusCustomer Digitized Collaboration ExperienceChartwell Customer Service Award—Gold 2017 EEI National Key Accounts AwardESource?s Excellence in Customer Experience AwardRanked #1 in ESource?s 201
Slide 8: Agenda
AgendaFocus on Operational ExcellenceKey AdvantagesPositioning for the Future8
Slide 9: Advantages
Advantages1 One of the greenest utilities in the country2 Constructive regulatory framework3 California clean energy policies4 Multiple capital investment drivers9
Slide 10: Practices at the Forefront
Practices at the Forefront 2X More Carbon-Free and Renewable Energy Than The U.S. Average 79%38%PG&E U.S. Avg RPS GHG FreeShaping California Model for Energy Efficiency*Source: US Energy Information AdministrationPG&E Customers Lead the Nation in Clean Technology Adoption>360,000 solar cu
Slide 11: Regulatory Framework
Regulatory FrameworkCalifornia?s Constructive Regulatory MechanismsRevenues decoupled from salesBalancing accounts reduce cost volatilityForward-looking test year rate casesRisk-informed rate makingSeparate cost of capital proceedingCoalition building drives effective outcomes for all stakeholdersDi
Slide 12: Critical to California's Climate Goals
is Critical to California?s Climate GoalsCalifornia Greenhouse Gas Reduction Goals and Historic Emissions*Million metric tons CO2e600Historic Emissions AB 32 requires California to return to 500 1990 levels by 2020 Industrial400 SB 32 requires at Electricity least 40% below 1990 300 Generation level
Slide 13: Policies Drive Infrastructure Investment
Policies Drive Infrastructure Investment Safety and ReliabilityGas investments (e.g., pipeline replacement, in-line inspection capability) Electric investments (e.g., substation upgrades, cable upgrades) Generation asset upgrades Community Wildfire Safety ProgramEnabling California?s Clean Economy E
Slide 14: Positioning for the Future
on Operational ExcellenceKey AdvantagesPositioning for the Future14
Slide 15: Areas for Growth
Areas for Growth1 Enhance safety and reliability2 Enable California clean energy economy3 Ensure customer affordabilityPG&E?s operating plan provides a strong foundation for future success15
Slide 16: Investments to Upgrade Our Gas and Electric System
to Upgrade Our Gas and Electric SystemDistribution % Installation or Upgrade % of Gas % Penetration of Regulator Stations of Remote Reclosing Transmission Automated Switches in Rebuilt and Devices in Tier 2 and 3 System Piggable Urban Areas Capacity Additions Wildfire Areas~35%~45 ~45%100% 28% 37 37
Slide 17: Modernization Enables Clean Energy Economy
Modernization Enables Clean Energy EconomyWe are making purposeful investments in the gridGrid Visibility & Grid Data Analytics Grid Management & Monitoring Control of DERsSubstation and Circuit Overhead Conductor Grid Optimization & Capacity Upgrades and Transformer Automation Replaceme
Slide 18: Navigating the New Energy Landscape
the New Energy LandscapePG&E?s solutions to address CAISO-identified local reliability concerns:Oakland Clean Energy Initiative Moss Landing Storage ProjectDistributed Energy ResourcesIntegrated Grid PlatformThis initiative would be the first time a The proposed project will be the utility has p
Slide 19: Electric Vehicles Present Growth Opportunities
Vehicles Present Growth Opportunities~2MClean Vehicles2030 on PG&E?s grid by Investment Opportunities~80% ~20%Contribution to Carbon Reduction Impact to Load~10% ~ 1M homesTailpipe emissions reduction in PG&E?s ? The average EV consumes about half the electricity of a typical home service te
Slide 20: Rate Structures in a Changing Energy Landscape
Rate Structures in a Changing Energy LandscapeA Changing Landscape Necessitates Regulatory ReformElement Status Est. DecisionPower Charge Electric Vehicles Indifference Open 2018Intermittent home power usage AdjustmentTime of Use Open 2019Net Energy Distributed Energy Community Choice Pending TBDMet
Slide 21: Cap Ex Supports Strong Returns
Cap Ex Supports Strong ReturnsCapital Expenditures ($ in B) 2017-2019$6.3B~$6B $5.8B2017 Recorded 2018 2019General Rate Case Gas Transmission & Storage Electric Transmission Owner RangeSee the Forward Looking Statements for factors that could cause actual results to differ materially from the gu
Slide 22: Ratebase Growth Supports Strong Returns
Supports Strong Returns2017-2019 Weighted Average Ratebase ($ in B) (1) ~7.5—8%CAGR $36.8B ~$40B $34.4B2017 2018 2019General Rate Case Gas Transmission & Storage Electric Transmission Owner RangeBase Case Assumptions Potential Future Updates2018 2019 2019 Gas Transmission & Storage rate case
Slide 23: Appendices
Pa} PG&E Corporation Appendices
Slide 24: Appendix Table of Contents
Table of Contents Appendix 1: Q2 2018 Earnings Results and 2018 Assumptions andSlides 25 ? 28 IIC Guidance Appendix 2: Supplemental Material on Tax Reform Slide 29 Appendix 3: Q2 2018 Supplemental Earnings Materials Slides 30 ? 40 Appendix 4: Leadership Bios Slides 41 ? 47 Appendix 5: Expected Timel
Slide 25: Q2 2018 Earnings Results
A P P E N D I X 1 ? Q 2 2 0 1 8 E A R N I N G S R E S U L T S A N D 2 0 1 8 A S S U M P T I O N S A N D I I C G U I D A N C EQ2 2018 Earnings ResultsQ2 2018 Earnings Earnings EPS EPS (millions) (millions) Earnings (Loss) on a GAAP basis $ (984) $ (1.91) $ (542) $ (1.05) Items Impacting Comparability
Slide 26: Q2 2018: Quarter over Quarter Comparison
A P P E N D I X 1 ? Q 2 2 0 1 8 E A R N I N G S R E S U L T S A N D 2 0 1 8 A S S U M P T I O N S A N D I I C G U I D A N C EQ2 2018: Quarter over Quarter ComparisonNon-GAAP Earnings per Share from Operations$1.40$0.07 ($0.03) ($0.01)$1.20 ($0.01)$0.04 $0.05 $0.05 $1.00 $0.06 $0.08 $0.80$0.60 $1.16
Slide 27: 2018 Assumptions as of July 26, 2018
A P P E N D I X 1 ? Q 2 2 0 1 8 E A R N I N G S R E S U L T S A N D 2 0 1 8 A S S U M P T I O N S A N D I I C G U I D A N C E2018 Assumptions as of July 26, 2018Capital Expenditures Authorized Ratebase (weighted average)($ millions) ($ billions)2018 2018General Rate Case 3,900 General Rate Case 25.9
Slide 28: 2018 Items Impacting Comparability
APPENDIX 1 – Q2 2018 EARNINGS RESULTS AND 2018 AS ASSUMPTIONS AND IIC GUIDANCE 2018 Items Impacting Comparability as of July 26, 2018 (1) Total cost of rights-of -way program expected to range from $450 million to $475 million. (2) Butte fire-related costs, net of insurance, reflects legal costs and
Slide 29: Tax Cuts and Jobs Act Expected Impact
A P P E N D I X 2 ? S U P P L E M E N T A L M A T E R I A L O N T A X R E F O R MTax Cuts and Jobs Act Expected ImpactAnnual reduction in customer revenue driven ~$450M Lower Customer Bills by lower corporate tax rate annual revenue reduction2021 Faster net operating loss amortization and (1)Cash Ta
Slide 30: Table of Contents—2018 Supplemental Earnings Materials
A P P E N D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L STable of Contents—2018 Supplemental Earnings MaterialsExhibit A: Reconciliation of PG&E Corporation?s Consolidated Income Available Slides 32 ? 33 for Common Shareholders in Accordance with Generally Accepte
Slide 31: Exhibit A: Reconciliation of GAAP to Non-GAAP Earnings (Page 1)
Exhibit A: D IReconciliation X 3 ‘ Q 2 2 0 1 of8 PG&E S U P P Corporation’s L E M E N T A L Consolidated E A R N I N G S Income M A T E R Available I A L S for Common Shareholders in Accordance with Generally Accepted Accounting Principles (‘GAAP‘) to Non-GAAP Earnings from Operations (Page 1 of
Slide 32: Exhibit A: Reconciliation of GAAP to Non-GAAP Earnings (Page 2)
Exhibit A: D IReconciliation X 3 ? Q 2 2 0 1 of8 PG&E S U P P Corporation?s L E M E N T A L Consolidated E A R N I N G S Income M A T E R Available I A L S for Common Shareholders in Accordance with Generally Accepted Accounting Principles (?GAAP?) to Non-GAAP Earnings from Operations (Page 2 of
Slide 33: Exhibit B: Key Drivers of Non-GAAP EPS from Operations
A P P E N D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit B: Key Drivers of PG&E Corporation?s Non-GAAP Earnings per Common Share (?EPS?) from OperationsSecond Quarter, 2018 vs. 2017Second Quarter 2018 vs. 2017 Year to Date 2018 vs. 2017 (in millions, excep
Slide 34: Exhibit C: Operational Performance Metrics
A P P E N D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit C: Operational Performance MetricsMeets YTD 2018 Performance Results YTD Actual 2018 Target Target (1) Safety Nuclear OperationsDiablo Canyon Power Plant (DCPP) Reliability and SafetyDCPP Unit 1 Score 96
Slide 35: Definitions of 2018 Operational Performance Metrics
A P P E N D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SDefinitions of 2018 Operational Performance Metrics from Exhibit CSafetyPublic and employee safety are measured in four areas: Nuclear Operations Safety, Electric Operations Safety, Gas Operations Safety, and Em
Slide 36: Exhibit D: Sales and Sources Summary
D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit D: Pacific Gas and Electric Company Sales and Sources SummarySecond Quarter, 2018 vs. 2017Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017Sales from Energy Deliveries (in millions kWh) 18,
Slide 37: Exhibit E: 2018 IIC Guidance (Page 1)
D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit E: PG&E Corporation?s 2018 Items Impacting Comparability (?IIC?) Guidance as of July 26, 2018 (Page 1 of 2)2018 IIC Guidance (in millions, after-tax) Low High Estimated Items Impacting Comparability: (1) Pipel
Slide 38: Exhibit E: 2018 IIC Guidance (Page 2)
APPENDIX 3 – Q2 2018 SUPPLEMENTAL EARNINGS MATERIALS Exhibit E: PG&E Corporation’s 2018 Items Impacting Comparability (“IIC”) Guidance as of July 26, 2018 (Page 2 of 2) (5) “2017 insurance premium cost recoveries” includes insurance premium costs incurred in 2017, above amounts included in authorize
Slide 39: Exhibit F: 2018 General Earnings Sensitivities
D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit F: 2018 General Earnings Sensitivities as of July 26, 2018 PG&E Corporation and Pacific Gas and Electric CompanyVariable Description of Change Estimated 2018 Earnings Impact Rate base +/- $100 million change i
Slide 40: Exhibit G: Use of Non-GAAP Financial Measures
D I X 3 ? Q 2 2 0 1 8 S U P P L E M E N T A L E A R N I N G S M A T E R I A L SExhibit G: Use of Non-GAAP Financial MeasuresPG&E Corporation and Pacific Gas and Electric Company: Use of Non-GAAP Financial MeasuresPG&E Corporation discloses historical financial results and provides guidance b
Slide 41: Leadership Bios: Geisha J. Williams
PPEN D I X 4 ? L E A D E R S H I P B I O S Geisha J. WilliamsGeisha J. WilliamsChief Executive Officer (CEO) and President PG&E CorporationGeisha J. Williams was elected CEO and President of PG&E Corporation, effective March 1, 2017. Williams has more than three decades of experience in the
Slide 42: Leadership Bios: Nick Stavropoulos
PPEN D I X 4 ? L E A D E R S H I P B I O S Nick Stavropoulos Nick StavropoulosPresident & Chief Operating Officer Pacific Gas and Electric CompanyNick Stavropoulos serves as President and Chief Operating Officer of Pacific Gas and Electric Company and has more than 35 years of experience in the
Slide 43: Leadership Bios: Jason P. Wells
PPEN D I X 4 ? L E A D E R S H I P B I O S Jason P. WellsJason P. WellsSenior Vice President and Chief Financial Officer PG&E Corporation Jason P. Wells is Senior Vice President and Chief Financial Officer for PG&E Corporation. Wells oversees the financial activities of the company including
Slide 44: Leadership Bios: John R. Simon
PPEN D I X 4 ? L E A D E R S H I P B I O S John R. SimonJohn R. SimonExecutive Vice President and General Counsel PG&E CorporationJohn R. Simon serves as Executive Vice President & General Counsel for San-Francisco-based PG&E Corporation. In his role, he oversees Law; Marketing and Commu
Slide 45: Leadership Bios: Patrick M. Hogan
PPEN D I X 4 ? L E A D E R S H I P B I O S Patrick M. HoganPatrick M. HoganSenior Vice President of Electric Operations Pacific Gas and Electric CompanyPatrick M. Hogan is Senior Vice President of Electric Operations at Pacific Gas and Electric Company.Hogan oversees PG&E’s electric transmission
Slide 46: Leadership Bios: Jesus Soto Jr.
PPEN D I X 4 ? L E A D E R S H I P B I O S Jesus Soto Jr.Jesus Soto Jr.Senior Vice President, Gas Operations Pacific Gas and Electric CompanyJesus Soto Jr. is the Senior Vice President of Gas Operations for Pacific Gas and Electric Company. He is responsible for overseeing and executing the day-to-d
Slide 47: Leadership Bios: David S. Thomason
PPEN D I X 4 ? L E A D E R S H I P B I O S David S. ThomasonDavid S. ThomasonVice President and Controller PG&E CorporationVice President, Chief Financial Officer and Controller Pacific Gas and Electric CompanyDavid S. Thomason is Vice President and Controller of PG&E Corporation, as well as
Slide 48: Expected Timelines of Selected Regulatory Cases
PPEN D I X 5Expected Timelines of Selected Regulatory CasesRegulatory Case Docket # Key Dates 2017 General Rate Case (Phase I) A. 15-09-001 Sep 1, 2015 ? Application/Testimony Filed Aug 3, 2016 ? Settlement with all parties that filed testimony submitted May, 2017 ? Final decision issuedMar 30, 2018
Slide 49: Expected Timelines of Selected Regulatory Cases
PPEN D I X 5Expected Timelines of Selected Regulatory CasesRegulatory Case Docket # Key Dates2015 Electric Distribution Resources Plan (DRP) A.15-07-006, Aug 13, 2014 ? Commission issues OIR directing utilities to file Electric Distribution Resources Plans R.14-08-013 Jul 1, 2015 ? PG&E files El
Slide 50: Expected Timelines of Selected Regulatory Cases
PPEN D I X 5Expected Timelines of Selected Regulatory CasesRegulatory Case Docket # Key Dates 2017 Integrated Resource Plan / Long Term Procurement R.16-02-007 Feb 11, 2016 ? CPUC opens Order Instituting Rulemaking Plan May 26, 2016 ? Scoping Memo IssuedAug 11, 2016 ? Staff Preliminary Proposal for
Slide 51: Credit Metrics and Ratings
PPEN D I X 6Credit Metrics and RatingsFitch Moody?s S&PPacific Gas and Electric CompanySenior Unsecured Debt A- A3 BBB Short-term Debt F2 P-2 A-2 Outlook Negative Negative NegativePG&E CorporationSenior Unsecured Debt BBB+ Baa1 BBB-Short-term Debt F2 P-2 A-2 Outlook Negative Negative Negativ