Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — AGA Financial Forum 2010
26 slides from Pacific Gas & Electric's conference presentation, May 17, 2010
Slide 1: PG&E Corporation
PG&E Corporation Chris Johns President Pacific Gas and Electric Company AGA Financial Forum May 17-18, 2010 ®
Slide 2: Cautionary Language Regarding Forward-Looking Statements
Cautionary Language Regarding Forward-Looking Statements This presentation contains management’s guidance for PG&E Corporation’s 2010 and 2011 earnings per share from operations, projections of Pacific Gas and Electric Company’s (Utility) capital expenditures, construction work in progress (CWIP), r
Slide 3: Vision & Values
Vision & Values OUR VISION The leading utility in the United States OUR GOALS Delighted Customers Energized Employees Rewarded Shareholders Environmental Leadership OUR STRATEGIES Customer Focus Operational Excellence • W e act with integrity and communicate honestly OUR VALUES and openly • W e are
Slide 4: PCG Investment Case
PCG Investment Case Excellent service at reasonable cost Constructive regulatory environment Investment in infrastructure- providing solid, regulated growth Clean generation and world-class energy efficiency programs Stable capital structure and return Reliable, growing dividend 4
Slide 5: Regulatory Environment
Regulatory Environment Key Regulatory Cases • Gas Transmission & Storage • Transmission Owner Case • General Rate Case 5
Slide 6: 2011 Gas Transmission and Storage Rate Case
2011 Gas Transmission and Storage Rate Case Sets revenue requirements, rates, terms and conditions for PG&E’s Gas Transmission and Storage services for 2011 – 2014 Revenue Requirement Request: $529M $67M increase over 2010 revenue requirement $235M Capital Expenditures Allows for upgrades to backbon
Slide 7: FERC TO12 Filing
FERC TO12 Filing Sets revenue requirements for PG&E’s Electric Transmission business in 2010-2011 Original Revenue Requirement Request: $946 million $800M Capital Expenditures All-Party Settlement reached in March, 2010: $875 million Adds additional transmission capacity and performance of maintenan
Slide 8: 2011 General Rate Case
2011 General Rate Case Sets revenue requirements for Gas and Electric Distribution and Electric Generation businesses for 2011 – 2013 Revenue Requirement Request: $6.7B $1.048 billion increase $2.7B average capital expenditures per year Allows for necessary investments in energy infrastructure to de
Slide 9: 2011 General Rate Case
2011 General Rate Case Filing includes a flexible attrition mechanism adjusting for: • labor cost adjustments • materials and services adjustments • capital related adjustments • other adjustments, such as changes in franchise, payroll or other taxes Attrition revenues are currently forecasted to be
Slide 10: Capital Expenditure Outlook
Capital Expenditure Outlook Cap Ex Forecast ($B) 5.5 High 5 4.5 High 4 $3.9B Low 3.5 Low 3 2.5 2 2009 2010 2011 Actual Low Case $4.0B Low Case $3.2B High Case $4.6B High Case $5.3B CapEx ranges have not been updated for recent developments in the Solar PV project. 10
Slide 11: Rate Base and CWIP
Rate Base and CWIP Weighted Average Rate Base* and Construction Work in Progress ($B) 28 High Construction Work 26 In Progress (CWIP) Low 24 Low Rate Base High 22 $21.6B 20 18 16 14 12 10 2009 Actual 2010 2011 Rate Base: $19.8B Rate Base Rate Base Rate Base + CWIP: $21.6B Low Case $21.4B Low Case $2
Slide 12: EPS Guidance
EPS Guidance Earnings per Share from Operations* High $3.85 Low $3.65 High $3.50 Low $3.35 $3.21 $2.95 2008 2009 2010 2011 Actual Actual * Reg G reconciliation to GAAP for 2008 and 2009 EPS from Operations, and 2010-2011 EPS Guidance available in Appendix and at www.pge-corp.com 12
Slide 13: Excellent Service / Reasonable Cost
Excellent Service / Reasonable Cost PG&E is sensitive to customer needs - Historic trend in prices - Current comparisons - Plan to restructure residential electric tiers 13
Slide 14: Residential Avg. Electric Rate
Residential Avg. Electric Rate $0.22 $0.20 $0.18 $0.16 CPI $0.14 ($/kWh) $0.12 $0.10 Generation $0.08 $0.06 Public Purpose Program & Other $0.04 Transmission & Distribution $0.02 $0.00 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 14
Slide 15: Residential Avg. Gas Rate
Residential Avg. Gas Rate $1.75 $1.50 $1.25 $1.00 Procurement $/Therm $0.75 CPI $0.50 Public Purpose Program Charges $0.25 Transportation $0.00 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Procurement includes: Gas Supply, Transport to CA Border, Backbone Transmission and Storage Transpo
Slide 16: Electric Rates vs. Bills
Electric Rates vs. Bills 35 Residential Average Electric Rate 31.4¢ 30 25 20 17.9¢ ¢/kWh 14.9¢ 15.1¢ 15 13.3¢ 11.7¢ 11.8¢ 10.0¢ 10.5¢ 10.6¢ 8.5¢ 9.5¢ 10 5 0 West East Mountain East South USA West Pacific Middle PG&E New Alaska North South North Atlantic South Atlantic England and Central Central Cen
Slide 17: Gas Rates vs. Bills
Gas Rates vs. Bills Residential Average Gas Rate $1.75 1.68 1.56 1.59 1.45 $1.50 1.33 1.33 1.22 1.24 1.27 $1.25 1.18 1.09 ($/therm) $1.00 $0.75 $0.50 $0.25 $0.00 Mountain West East North Pacific PG&E USA West East Middle South New North Central South South Atlantic Atlantic England Central Central C
Slide 18: Proposed Summer Rate Relief
Proposed Summer Rate Relief Reduce overall rates by $400M, about 3%, effective June 1, 2010 Collapse Tiers 4 and 5 into one tier and substantially reduce the rates, and moderately increase Tier 3 $0.60 $0.50 $0.40 March 3/1/2010 $0.30 Summer 6/1/2010 $0.20 $0.10 $- Tier 1 Tier 2 Tier 3 Tier 4 Tier 5
Slide 19: GRC Phase 2 - Residential Rate Design
GRC Phase 2 - Residential Rate Design Collapse Tiers 3, 4 and 5 into a single Tier 3 $0.60 $0.50 $0.40 March 3/1/2010 $0.30 GRC Phase II Rates $0.20 $0.10 $- Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 19
Slide 20: PCG Investment Case
PCG Investment Case Excellent service at reasonable cost Constructive regulatory environment Investment in infrastructure- providing solid, regulated growth Clean generation and world-class energy efficiency programs Stable capital structure and return Reliable, growing dividend 20
Slide 21: Appendix
Appendix ®
Slide 22: Key Regulatory Proceedings
Key Regulatory Proceedings Regulatory Case Docket # Expected Decision Date Nuclear Relicensing A.10-01-022 TBD 2011 General Rate Case (“GRC”) A.09-12-020 Final decision is expected in Q4 2010 2011 GRC Phase II A.10-03-014 Final decision is expected in Q2 2011 Manzana Wind Project A.09-12-002 Final d
Slide 23: Cost of Capital
Cost of Capital 52% Equity Level · 11.35% ROE · Adjustment Mechanism • Decided separately from General Rate Case • Current terms in place until 2013 Mechanism • Triggers change to ROE if average Moody’s Utility (A or Baa) bond yield index over a 12 month period moves up or down by 100 basis points o
Slide 24: Financial Assumptions: 2010-2011
Financial Assumptions: 2010-2011 GUIDANCE REFLECTS: Capital expenditures consistent with low and high case ranges Utility earns ROE of at least 11.35% Ratemaking capital structure maintained at 52% equity CEE incentives and tax cash flow consistent with high and low case ranges Resolution of FERC ge
Slide 25: 2009 EPS – Reg G Reconciliation
2009 EPS – Reg G Reconciliation 2009 (1) EPS on an Earnings from Operations Basis $3.21 (2) Items Impacting Comparability (3) Tax Benefit 0.18 (4) Recovery of hydro divestiture costs 0.07 (5) Accelerated work on gas system (0.16) (6) Severance costs (0.10) EPS on a GAAP Basis $3.20 (1) Earnings per
Slide 26: EPS Guidance – Reg G Reconciliation
EPS Guidance – Reg G Reconciliation Guidance Range 2010 Low High EPS Guidance on an Earnings from Operations Basis(1) $3.35 $3.50 Estimated Items Impacting Comparability(2) Statewide Ballot Initiative (3) (0.09) ($0.09) Federal Healthcare Law (4) (0.05) ($0.05) Estimated EPS on a GAAP Basis $3.21 $3