Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Investor Presentation (February 2020)
43 slides from Pacific Gas & Electric's investor presentation, Feb 18, 2020
Slide 1: PG&E Business Outlook
PG&E Business Outlook February 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements regarding and governance in connection therewith; • the impact of the Utility’s implementation of its PSPS management’s expectations and objectives for future periods program, including the timing and outcome of the PSPS OII • the impa
Slide 3: Use of Non-GAAP Financial Measures and No Securities Offering
PG&E Corporation and Pacific Gas and Electric Company: Use of Non- GAAP Financial Measures and No Securities Offering PG&E Corporation and Pacific Gas and Electric Company: Use of Non-GAAP Financial Measures PG&E Corporation discloses historical financial results and provides guidance based on “non-
Slide 4: PG&E System at a Glance
PG&E System at a Glance PG&E Overview Key Highlights PG&E Corporation is a holding company Roughly two-thirds of PG&E’s revenues are associated whose primary operating subsidiary is Pacific with owning and operating gas, electric, and generation Gas and Electric Company, an investor- infrastructure.
Slide 5: Executive Summary
Executive Summary Emergence Positioned for timely Chapter 11 exit ∎ Settlements reached with major wildfire victim groups and regulatory resolution ∎ Clarity in ratemaking clarity through progress in major rate cases Improvement Changes in leadership, governance, structure, operations, and oversight
Slide 6: Agenda
Agenda 1 Recent Progress Enables Timely Emergence 2 Operational, Safety & Structural Improvements 3 Clean Energy Opportunities 4 Sustainable Financials 5
Slide 7: Resolution of Key Issues
RECENT PROGRESS ENABLES TIMELY EMERGENCE Resolution of Key Issues Wildfire settlements, regulatory resolutions, the enactment of AB 1054, and establishment of a multi-year investment and rate roadmap resolve uncertainty and provide stability. Third-Party Claims Ratemaking Regulatory & Legislative ✓
Slide 8: Path to June 2020 Confirmed Plan
RECENT PROGRESS ENABLES TIMELY EMERGENCE Path to June 2020 Confirmed Plan Upcoming Bankruptcy Court and CPUC milestones will allow for timely confirmation of PG&E’s Plan. Chapter 11 1.31 2.5 2.7 2.28 3.10 5.15 5.27 Amended RSA with Proposed Key parties’ Disclosure Deadline to First Day of POR Filed
Slide 9: Plan of Reorganization Summary
RECENT PROGRESS ENABLES TIMELY EMERGENCE Plan of Reorganization Summary Key Elements of the Plan of Reorganization $59 Billion in Plan Funding Sources ($B) PG&E’s Plan of Reorganization prioritizes wildfire victims, 1.6 Cash Immediately Prior to Emergence puts customers ahead of investors, and enabl
Slide 10: Potential Capital Raise
RECENT PROGRESS ENABLES TIMELY EMERGENCE Potential Capital Raise $59B funding for entirety of plan of reorganization has been secured. ~$27B may be raised via future public offerings. Sources of Funds: $59.0B Potential Capital Raise: $26.925B 4.8 New HoldCo Debt 5.8 New Utility Debt Backstop, Bridge
Slide 11: Structural and Governance Commitments
RECENT PROGRESS ENABLES TIMELY EMERGENCE Structural and Governance Commitments PG&E is moving forward with a number of structural, management and governance changes to improve operations and ensure long-term accountability for sustained performance. Operational & ▪ Regional restructuring placing lea
Slide 12: Agenda
Agenda 1 Recent Progress Enables Timely Emergence 2 Operational, Safety & Structural Improvements 3 Clean Energy Opportunities 4 Sustainable Financials 11
Slide 13: Regionalization Model
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Regionalization Model Over time, we will reorganize our operations into smaller regions designed to get us closer to our customers and be more responsive to specific regional and community needs. Proposed New Regional Operating Model PG&E’s Diverse Cu
Slide 14: Evolution of Risk Management at PG&E
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Evolution of Risk Management at PG&E Risk management at PG&E has significantly evolved. In collaboration with the commission and external stakeholders, PG&E has developed models to identify, rank, measure, and mitigate all top safety risks. Data-Drive
Slide 15: Wildfire Mitigation Overview
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Wildfire Mitigation Overview We developed our expanded wildfire safety programs based on analysis of the accelerated wildfire risks stemming from climate change. We met or exceeded goals for core elements of our 2019 Wildfire Mitigation Plan, resultin
Slide 16: 2020 Wildfire Mitigation Plan Detail
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS 2020 Wildfire Mitigation Plan Detail PG&E is committed to sustaining and building upon 2019 progress with our 2020-22 Wildfire Mitigation Plan. The 2020-22 Plan will focus on reducing ignitions through core programs, reducing wildfire spread by levera
Slide 17: System Hardening
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS – WILDFIRE MITIGATION System Hardening In 2019, PG&E exceeded our system hardening goal by completing and quality validating 171 miles of system hardening, all of which were in Tiers 2 and 3 High Fire Threat Districts. System Hardening Approach 2019 P
Slide 18: Enhanced Vegetation Management (EVM)
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS – WILDFIRE MITIGATION Enhanced Vegetation Management (EVM) PG&E’s enhanced vegetation management program goes beyond compliance. The program is evolving to balance our overall goals, including shifting resources for rights-of-way (ROW) expansion that
Slide 19: Enhanced Inspections
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS – WILDFIRE MITIGATION Enhanced Inspections In 2019, PG&E conducted an unprecedented number of enhanced fire ignition-based inspections and high- priority corrective actions of all transmission, distribution, and substation assets in HFTD areas. Wildfi
Slide 20: Improved Situational Awareness
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS – WILDFIRE MITIGATION Improved Situational Awareness PG&E has established fire detection and fire spread modeling capabilities based on an industry-leading satellite system that offers 24/7 advance warning of potential new fire incidents. These data-d
Slide 21: Public Safety Power Shutoff (PSPS) Improvements
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS – WILDFIRE MITIGATION Public Safety Power Shutoff (PSPS) Improvements Leveraging learnings from 2019, PG&E is committed to reducing customer impact by minimizing the frequency, scope, and duration of future PSPS events. 2020 PSPS Goals and Mitigation
Slide 22: Significant Progress in Gas Safety
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Significant Progress in Gas Safety We have demonstrated progress and continued focus on gas system safety since 2010, achieving industry- leading gains in process safety, asset management, and technology innovation. Industry Recognitions and Certifica
Slide 23: Continued Focus on Gas Safety
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Continued Focus on Gas Safety Our goal is to be the safest, most reliable gas utility in the United States. Gas Operations will further improve safety though strength testing, asset management, workforce safety and reductions in non-conformance. Asset
Slide 24: Continued Progress in Generation Safety
OPERATIONAL, SAFETY, AND STRUCTURAL IMPROVEMENTS Continued Progress in Generation Safety Generation safety continues to be a priority; we are receiving industry-leading recognition while enhancing our existing programs, technologies and oversight capabilities. 2019 Over Next 5 Years: 2019DCPP DCPPRa
Slide 25: Agenda
Agenda 1 Recent Progress Enables Timely Emergence 2 Operational, Safety & Structural Improvements 3 Clean Energy Opportunities 4 Sustainable Financials 24
Slide 26: Commitment to California's Clean Energy Future
CLEAN ENERGY OPPORTUNITIES Commitment to California’s Clean Energy Future We are recommitting to California’s clean energy future by implementing and advocating for clean energy policy and investing in electrification. Implementing State Policy Continued Policy Promoting Transparency Goals Advocacy
Slide 27: Transportation Electrification Opportunity
CLEAN ENERGY OPPORTUNITIES Transportation Electrification Opportunity We will extend our track record of enabling California’s adoption of advanced energy technologies by investing $385M in transportation electrification by 2025, positioning for long-term load growth. 2020 0.2% 2025 1.2% 2030 CAGR(1
Slide 28: Building Decarbonization and the Future of Natural Gas
CLEAN ENERGY OPPORTUNITIES Building Decarbonization and the Future of Natural Gas In alignment with key stakeholders and in support of California’s zero-carbon objectives, PG&E is committed to managing an equitable and viable transition to zero-carbon alternatives for electric and gas customers. PG&
Slide 29: Agenda
Agenda 1 Recent Progress Enables Timely Emergence 2 Operational, Safety & Structural Improvements 3 Clean Energy Opportunities 4 Sustainable Financials 28
Slide 30: Attractive Ratebase Profile
SUSTAINABLE FINANCIALS Attractive Ratebase Profile Sustainable Future Upon Emergence Projected Ratebase Growth ~8% Industry-leading growth from investments in wildfire risk reduction, and safety and reliability 6.5% Disciplined focus on cost optimization to balance ratebase growth and affordable rat
Slide 31: Substantial Capital Investments
SUSTAINABLE FINANCIALS Substantial Capital Investments Unprecedented level of system investments, accelerated wildfire risk reduction, and continued execution of gas safety commitments drive substantial capital investments. 2019 Act. 2020 2019-2024 2021 CAPEX 2022FORECAST ($B) 2023 2024 Subject to O
Slide 32: 2019-2022 Wildfire Mitigation Plan Investments
SUSTAINABLE FINANCIALS 2019-2022 Wildfire Mitigation Plan Investments PG&E’s AB1054-mandated fire risk mitigation capital expenditures of ~$3.2B is anticipated to be fully expended in 2022. WILDFIRE MITIGATION INVESTMENTS ($B) ~$3.4 ~$2.9 ~$2.8 ~$2.6 1.5 1.4 1.4 1.6 1.3 0.9 0.1 0.9 0.9 0.7 0.5 0.6 2
Slide 33: Ratebase Growth Forecast
SUSTAINABLE FINANCIALS Ratebase Growth Forecast WEIGHTED AVERAGE RATEBASE FORECAST BY RATE CASE ($B) Potential Growth Opportunities ~8% CAGR on equity earning ratebase 2019- 2024 (1, 2) ▪ Additional wildfire mitigation $57-$60 $53-$55 ▪ Transportation electrification $50-$51 (Phase II Light Duty) $4
Slide 34: 2020 Earnings Overview and Assumptions
SUSTAINABLE FINANCIALS 2020 Earnings Overview and Assumptions Substantial progress has been made but there remain a few critical uncertainties that affect earnings. Shifting focus to non-GAAP core earnings and non-core earnings. Non-GAAP Core Earnings (1) in 2020 will be impacted partial period of C
Slide 35: 2021-2024 Earnings Overview and Assumptions
SUSTAINABLE FINANCIALS 2021-2024 Earnings Overview and Assumptions Post emergence, factors impacting non-GAAP core earnings will reduce over time. Key Factors Affecting Non-GAAP Core Earnings (1) (2) 2020 2021 2022 2023 2024 Authorized 10.25% across the Enterprise CPUC ROE Drivers of Net BTL and Spe
Slide 36: Cost Savings Areas of Focus
SUSTAINABLE FINANCIALS Cost Savings Areas of Focus Identified an average of $1B per year in operational costs through 2025. These savings will moderate the expected increase on customer bills to support infrastructure investment. Plan of Reorganization results in an additional $1B in net interest sa
Slide 37: AB1054 Wildfire Fund
SUSTAINABLE FINANCIALS AB1054 Wildfire Fund California established Wildfire Fund to address timely compensation for victims and liquidity needs for Investor-Owned Utilities (IOUs). Total Funding and Participation Fund Mechanics Upon Plan of Reorganization confirmation by Wildfire Fund claims paid by
Slide 38: Conclusion
Conclusion Our five-year outlook is positioned for significant growth and sustained performance We are positioned to emerge from Chapter 11 and provide safe, affordable, and clean energy to our customers for the long term 37
Slide 39: Appendix
Appendix
Slide 40: Refresher: Revenue Sources and Standard Rate Cases
APPENDIX Refresher: Revenue Sources and Standard Rate Cases Roughly two-thirds of PG&E’s revenues are associated with owning and operating gas, electric, and generation infrastructure. The remaining third are pass-through costs associated with commodity procurement. 2019 Revenue Sources (1) PG&E’s S
Slide 41: Resolution of Key Issues
APPENDIX Resolution of Key Issues Remaining key regulatory issues and Chapter 11 proceedings are on track to be largely resolved by Q2 2020. Status as of 2/18/20 2020 Milestones (1) Q1 Q2 Wildfire, Trade RSAs: TCC, Subros, Public Entities Hearing on Payables, and Pending: FEMA, CalOES, CalFire and O
Slide 42: Expected Residential Rate and Bill Trajectory
APPENDIX Expected Residential Rate and Bill Trajectory Safety-related spend is driving higher rate and bill growth. PG&E is implementing affordability initiatives and is actively identifying efficiency opportunities to mitigate bill impact. Expected Electric and Gas Rates Expected Average Monthly Re
Slide 43: Accountability in Compensation Incentives
APPENDIX Accountability in Compensation Incentives Substantially increased weighting of safety-related metrics in Short-Term Incentive Plan from 10% in 2009 to 65% in 2019. The peer average safety weighting was 13% in 2018. PG&E’s performance-based compensation program will align with customer welfa