Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Lehman Brothers CEO Energy/Power Conference 2008
33 slides from Pacific Gas & Electric's conference presentation, Sep 3, 2008
Slide 1: PG&E Corporation
PG&E Corporation Christopher P. Johns Senior Vice President and CFO Lehman Brothers CEO Energy/Power Conference September 2 - 4, 2008 New York City This presentation is not complete without the accompanying statements made by management on September 3, 2008. A replay is available on PG&E Corporation
Slide 2: Cautionary Language Regarding Forward-Looking Statements
Cautionary Language Regarding Forward-Looking Statements This presentation contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2008 and 2009 earnings per share from operations, targeted compound average growth rate for earnings per share from operations over th
Slide 3: PCG: Investment Case
PCG: Investment Case PCG offers competitive growth in a constructive regulatory environment with an attractive valuation: $13 billion planned CapEx 2008-2011 85% of CapEx approved 11.45% weighted ROE on 52% equity High-performing, low-carbon generation Decoupled revenues Sustainable dividend, growin
Slide 4: Delivering on Financial Objectives
Delivering on Financial Objectives Invest in needed infrastructure Ensure adequate liquidity Meet EPS targets Generate strong cash flow 4
Slide 5: Confirming EPS Guidance
Confirming EPS Guidance EPS from Operations Guidance: 2008 guidance of $2.90-$3.00 per share 2009 guidance of $3.15-$3.25 per share 8% targeted CAGR 2007-2011 EPS from Operations* $3.60 $3.20 $2.80 $2.40 $2.00 2007 2008 Estimated 2009 Estimated Guidance Range * Reg G reconciliation to GAAP for 2007
Slide 6: Achieving 8% Growth Target
Achieving 8% Growth Target Components of Compound Average Growth Rate 2007-2011 % CAGR 2007-2011 Other Drivers (0% to +1%) New Shares (-3% to- 5%) Add’l CapEx Efficiency Savings 10% (+1% to 3%) CEE Incentives Holding Company Leverage 8% 8% CAGR Base 2007- 2011 6% 2007 Forecast Guidance { Rate Base R
Slide 7: Capital Expenditure Outlook
Capital Expenditure Outlook $ MM 4,000 $3.7 B 3,500 $3.3 B $3.0 B $3.0 B 3,000 2,500 2,000 1,500 1,000 500 2008 2009 2010 2011 Projects not included in forecasts include: SmartMeterTM Upgrade, Cornerstone Improvement Program, additional generation and gas pipeline investments, and BC Transmission 7
Slide 8: Rate Base Growth
Rate Base Growth Weighted Average Annual Rate Base* $B 30.0 $23.9 25.0 $22.1 $20.4 20.0 $18.3 15.0 10.0 5.0 0.0 2008 2009 2010 2011 * Projected 2008-2011 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. E
Slide 9: Financing Plan 2008-2011
Financing Plan 2008-2011 Objective: Maintain strong investment grade ratings at Pacific Gas and Electric Company and PG&E Corporation • Strong financial profile that will support growth plan • Ensure adequate liquidity Pacific Gas and Electric Company Financings • Maintain authorized capital structu
Slide 10: Additional CapEx - Proposed Projects Above 2008-2011 Base Forecast
Additional CapEx - Proposed Projects Above 2008-2011 Base Forecast SmartMeterTM Program Upgrade Cornerstone Improvement Program Tesla Power Plant British Columbia (“BC”) Electric Transmission Line Pacific Connector LNG Pipeline 10
Slide 11: SmartMeter Program Progress
SmartMeterTM Program Progress Year-end 2008 target: 1.5 million meters installed - 950,000 meters currently installed - 750,000 meters being read electronically Live AMI billing 12/07 Demand Response Billing IT infrastructure live 2Q 2007 Interval Billing Live 05/08 Deployment (incl.upgrade) SmartMe
Slide 12: SmartMeter Program Upgrade
SmartMeterTM Program Upgrade Funding request of $572 MM - $463 MM additional capital CPUC decision expected by year end New capabilities - Integrated connect/disconnect switches - Solid state meter technology - Home area network gateway device 12
Slide 13: Cornerstone Improvement Program
Cornerstone Improvement Program PG&E seeking CPUC approval for a six-year program to improve reliability of our electric distribution system. Enhances overall reliability of energy delivery Increases grid flexibility to mitigate outages Sets higher performance expectations as measured by a proposed
Slide 14: Cornerstone Program Costs
Cornerstone Program Costs $2.3 B total capital investment with revenue requirement true-up $700 $600 $500 $400 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 14
Slide 15: Tesla Generating Station
Tesla Generating Station Total Estimated Project Cost of $850MM 560 MW capacity Located in PG&E’s service territory Currently awaiting CPUC approvals Interim order pending Final CPCN decision requested 1st Quarter 2009 15
Slide 16: Transmission Opportunities
Transmission Opportunities BC Transmission Line Recovery of development costs approved by FERC Working on multi-utility partnership for development of the project $5 B forecasted in total capital costs, with PG&E’s share at 51% or greater Pacific Connector LNG Pipeline $50 MM capital forecasted thro
Slide 17: Financial Assumptions 2008-2011
Financial Assumptions 2008-2011 Capital expenditure base forecast reflects projects that are highly likely or already approved CPUC authorized ROE is 11.35% and Utility earns at least 12% at FERC on projected rate base Ratemaking capital structure maintained at 52% equity Additional capital expendit
Slide 18: Key Financial Takeaways
Key Financial Takeaways Delivering on Near-term EPS Guidance and Targeted 8% CAGR Investing in Attractive Rate Base Opportunities Utilizing Operating Efficiencies, Incentive Earnings and Leverage Effectively Delivering Strong Cash Flow and Liquidity Sustaining a Comparable Dividend 18
Slide 19: PCG: Investment Case
PCG: Investment Case PCG offers competitive growth in a constructive regulatory environment with an attractive valuation: $13 billion planned CapEx 2008-2011 85% of CapEx approved 11.45% weighted ROE on 52% equity High-performing, low-carbon generation Decoupled revenues Sustainable dividend, growin
Slide 20: Appendix
Appendix CEO Energy/Power Conference September 2 - 4, 2008
Slide 21: Pacific Gas and Electric (PG&E)
Pacific Gas and Electric (PG&E) Provides energy to nearly 1 in 20 people in the U.S. 70,000 square-mile service territory Four main operational units: Electric and gas distribution Electric transmission Gas transmission Electric generation Forward test-year general rate case with inflation increases
Slide 22: Electric And Gas Distribution
Electric And Gas Distribution Business Scope Retail electricity and natural gas distribution service (construction, operations and maintenance) Customer services (call centers, meter reading, billing) 5.1 million electric and 4.3 million gas customer accounts Primary Assets $11.0 billion of rate bas
Slide 23: Electric Transmission
Electric Transmission Business Scope Wholesale electric transmission services (construction, maintenance) Operation by CA Independent System Operator Primary Assets $2.6 billion of rate base (2007 wtd. avg.) Regulation Federal regulation (FERC) Malin Round Mt Cost of service ratemaking Revenues vary
Slide 24: Natural Gas Transmission
Natural Gas Transmission Business Scope Natural gas transportation, storage, parking and lending services Customers: PG&E natural gas distribution and electric generation businesses, industrial customers, California electric generators Primary Assets $1.5 billion of rate base (2007 wtd. avg.) Regula
Slide 25: Electric Procurement & Owned Generation
Electric Procurement & Owned Generation Business Scope Electricity and ancillary services from owned and controlled resources Energy procurement program Primary Assets $1.7 billion of rate base (2007 wtd. avg.) Diablo Canyon nuclear power plant (2,240 MW) Largest privately owned hydro system (3,896
Slide 26: Financing Structure
Financing Structure PG&E Corporation currently has minimal amount of debt outstanding PG&E Corporation • $280 million of convertible debt due in 2010 LTD Debt Outstanding: $0.3 Bn • $200 million bank credit facility, which has never been drawn upon Credit Rating: Baa1(1)/NR Pacific Gas and Electric
Slide 27: Pacific Gas and Electric Company Long-Term Debt Portfolio
Pacific Gas and Electric Company Long-Term Debt Portfolio Issue Size (MM) Coupon Issue Date Maturity Date Tax Status Senior Notes $600 3.60% 3/23/2004 3/1/2009 Taxable Senior Notes $500 4.20% 3/23/2004 3/1/2011 Taxable Senior Notes $1,000 4.80% 3/23/2004 3/1/2014 Taxable Senior Notes $3,000 6.05% 3/
Slide 28: PG&E Corporation Long-Term Debt Portfolio
PG&E Corporation Long-Term Debt Portfolio Maturity Conversion Issue Size (MM) Coupon Issue Date Shares Date Price Convertible $280 9.50% 6/25/2002 6/30/2010 $15.0873 18,558,059 Subordinated Notes • The convertible notes can be converted into PG&E Corporation common shares at the conversion price of
Slide 29: Long-Term Debt Maturity Schedule
Long-Term Debt Maturity Schedule • Staggered debt maturities reduce refinancing risk • Flexibility to issue benchmark tenors that match long-lived nature of assets $3,500 $3,000 $2,500 $ Millions $2,000 $1,500 PG&E Corporation $1,000 $500 $0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 202
Slide 30: Financial Metrics
Financial Metrics Financing Objective: Expect to maintain solid, investment grade credit metrics Ratings S&P Moody’s Fitch Pacific Gas and Electric Company Senior Unsecured BBB+ A3 A Short Term A2 P2 F1 Expected Average Metric 2008-2012 S&P Business Profile 5 Total Debt / Capitalization 54.3% FFO /
Slide 31: Debt Profile
(1) Debt Profile As of June 30, 2008 Long-Term Debt Mix 7.4% 3.4% 6.5% Senior Notes Tax-Exempt (Fixed) Tax-Exempt (Floating) Convertible Notes 82.7% (2) Fixed-Floating Mix 7.4% Fixed Floating 92.6% (1) PG&E Corporation and Pacific Gas and Electric Company (2) Fixed-floating mix is 90.9% / 9.1% if $1
Slide 32: 2007 EPS - Reg G Reconciliation
2007 EPS - Reg G Reconciliation 2007 EPS on an Earnings from Operations Basis $2.78 Items Impacting Comparability 0.00 EPS on a GAAP Basis $2.78 * Earnings per share from operations is a non-GAAP measure. This non-GAAP measure is used because it allows investors to compare the core underlying financ
Slide 33: EPS Guidance - Reg G Reconciliation
EPS Guidance -Reg G Reconciliation 2008 Guidance Range Low High EPS Guidance on an Earnings from Operations Basis* $2.90 $3.00 Estimated Items Impacting Comparability 0.00 0.00 EPS Guidance on a GAAP Basis $2.90 $3.00 2009 Guidance Range Low High EPS Guidance on an Earnings from Operations Basis* $3
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