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) — Morgan Stanley Utilities Conference 2010
48 slides from Pacific Gas & Electric's conference presentation, Mar 11, 2010
Slide 1: PG&E Corporation Morgan Stanley Utilities Conference March 11-12, 2010
PG&E Corporation ® Morgan Stanley Utilities Conference March 11-12, 2010 Exhibit 99
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: PCG: Key Takeaways
PCG: Key Takeaways We have a solid strategy - customer focus - excellence in operations - strong regulatory relations - environmentally responsible - community oriented We execute on our strategy - a proven management team - delivering consistent solid results for our customers and shareholders
Slide 4: 2009 Report Card
2009 Report Card ** Measured by OSHA Recordable Injuries $3.21 $3.9 B 2.38 cases $33.4 MM Earnings from Operations* Capital Expenditures 15% Reduction in Injuries** Energy Efficiency Incentives On Time, On Budget Execution $3.15 - $3.25 per share $3.6 to $3.7 B 2.76 cases / 200,000 hours $0 to $30 M
Slide 5: Customer Environment
Customer Environment PG&E is sensitive to customer needs - Proposing plan to restructure residential tiers - Making customers aware of options to tiered rates - Managing revenue changes to keep average rates flat in 2011
Slide 6: System Average Electric Rates
System Average Electric Rates 20.0¢ 18.0¢ 16.0¢ had cpl 12.0¢ 10.0¢ f 8.0¢ (g/kWh) 6.06 4.06 @ 2.0¢ 0.0¢ 20% 4097 408% a 490% 190% a9T 4908 490% 2009 200% 9007 200 200% 400 2008 y06T mie 200% g0'° gor"
Slide 7: Residential Bills
Residential Bills Source: Edison Electric Institute, Statistical Yearbook, Year 2008
Slide 8: CPUC and Regulation
CPUC and Regulation “No matter how one looks at it, California will have to make significant investments in transmission and power plants, be they conventional or renewable, to meet the demands of a growing population and economy.” (President Peevey, June 23, 2009) “We want to actually work with the
Slide 9: Impact of Election
Impact of Election Under a new governor, what changes?
Slide 10: Capital Expenditure Outlook
Capital Expenditure Outlook Low Case $4.0B High Case $4.6B Low Case $3.2B High Case $5.3B Low High $3.9B Cap Ex Forecast ($B) Actual Low High
Slide 11: CapEx Forecast 2010
CapEx Forecast 2010 Capital Expenditure Forecast ($MM)* * Excludes tax equity investment outside of the Utility
Slide 12: CapEx Forecast 2011
CapEx Forecast 2011 Capital Expenditure Forecast ($MM)
Slide 13: Rate Base and CWIP
Rate Base and CWIP 2009 Actual Rate Base Low Case $21.4B High Case $21.3B Rate Base Low Case $24.0B High Case $24.4B Weighted Average Rate Base* and Construction Work in Progress ($B) Low High Low High Construction Work In Progress (CWIP) $21.6B Rate Base + CWIP Low Case $23.7B High Case $23.6B Rate
Slide 14: Energy Efficiency Incentives
Energy Efficiency Incentives Incentive Awards (pre-tax dollars $MM) $33.4 MM $41.5 MM Actual Actual High Low Case $0 MM High Case $20 MM Low Case $0 MM High Case $30 MM High
Slide 15: Impact to Cash Flow from Tax
Impact to Cash Flow from Tax Low Case $0 MM High Case $400 MM* Low Case $(10) MM High Case $340 MM * Estimate of 2010 bonus depreciation impact, but amount could vary based on actual capital additions
Slide 16: EPS Guidance
EPS Guidance $3.85 $2.95 $3.65 $3.50 $3.35 $3.21 Actual Low High Low High Earnings per Share from Operations* Earnings per Share from Operations* 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
Slide 17: Dividend Policy
Dividend Policy Sustainable, comparable dividend Payout ratio range of 50% - 70% Dividend growth in line with EPS growth $ 1.44 $1.68 $1.56 $1.82 $ 1.32 Annualized Dividends per Share
Slide 18: Cash Flow and Equity Needs
Cash Flow and Equity Needs 401k / DRIP forecasted to provide $100 to $200 MM per year (in $MM) ** ** ** The high case scenario reflects bonus depreciation in 2010 of approximately $400MM. If bonus depreciation is not extended, the high case for equity needs in 2010 and 2011 would be $325MM and $1080
Slide 19: 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 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
Slide 21: Appendix
® Appendix
Slide 22: Pacific Gas and Electric Company (PG&E)
Pacific Gas and Electric Company (PG&E) • Provides energy to approximately 15 million people • 70,000 square-mile service territory • Four main operational units: Electric and gas distribution Electric transmission Natural gas transmission Electric generation PG&E SERVICE AREA IN CALIFORNIA
Slide 23: Revenues, Net Income and Assets 2008-2009
2008 2009 Revenues | $14.628 billion $13.399 billion Consolidated Net Income $1.34 billion $1.22 billion Assets | _$40.860 billion $42.945 billion
Slide 24: Electric and Gas Distribution Business Scope
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 • $12.4 billion of
Slide 25: Electric Transmission Business Scope
Electric Transmission Business Scope • Wholesale electric transmission services (construction, maintenance) • Operation by CA Independent System Operator Primary Assets • $3.1 billion of rate base (2009 wtd. avg.) Regulation • Federal regulation (FERC) • Cost of service ratemaking: Transmission Owne
Slide 26: Natural Gas Transmission Business Scope
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 (2009 wtd. avg.)
Slide 27: Electric Procurement & Owned Generation Business Scope
Electric Procurement & Owned Generation Business Scope • Electricity and ancillary services from owned and controlled resources • Energy procurement program Primary Assets • $2.8 billion of rate base (2009 wtd. avg.) • Diablo Canyon Nuclear Power Plant (2,240 MW) • Gateway Generating Station (530 MW
Slide 28: PG&E Generation in California
PG&E Generation in California Humboldt Generating Station (in construction) Colusa Generating Station (in construction) Conventional Hydroelectric facilities Gateway Generating Station Helms Pumped Storage
Slide 29: 2009 Customer Profiles - % of Sales
2009 Customer Profiles - % of Sales Electric Customers Gas Customers (822 Bcf delivered)
Slide 30: Existing Resource Mix
Existing Resource Mix 2009 Total Sources of Electric Energy
Slide 31: RPS Contracts Signed Since 2002
RPS Contracts Signed Since 2002 Over 6,000 MW in RPS Contracts
Slide 32: Greenhouse Gas Emissions
Greenhouse Gas Emissions U.S. Average (1) 1,329 California’s Average 724 2008 641 2007 636 2006 456 2005 489 2004 566 2003 620 Total 2008 Greenhouse Gas Emissions by Source Category (Total 27.1 million metric tons CO 2 -e (2) ) Benchmarking Greenhouse Gas Emissions for Delivered Electricity (Pounds
Slide 33: Regulatory Case Docket Schedule
@ "Regulatory Case Docket # |Nuclear Relicensing A.10-01-022 {TBD [2017 General Rate Case (GRC) ‘A.09-12-020 _|Final decision is requested in Q4 2010 ISmartGrid Compressed Energy Storage ‘A.09.09-019 [Final decision approving PG&E's request received on [Demonstration Project D.10-01-025 January 21,
Slide 34: Cost of Capital
Cost of Capital 52% Equity Level · 11.35% ROE · Adj ustment Mechanism • Decided separately from General Rate Case • Current terms in place until 2013 • 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 over bench
Slide 35: 2011 General Rate Case
2011 General Rate Case Docket # A. 09-12-020 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 energ
Slide 36: 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 37: FERC TO12 Filing
FERC TO12 Filing Docket # ER09-1521-000 Sets revenue requirements for PG&E’s Electric Transmission business in 2010-2011 Revenue Requirement Request: $946 million $800M Capital Expenditures Adds additional transmission capacity and performance of maintenance and replacement work on our substations i
Slide 38: 2011 Gas Transmission and Storage Rate Case
2011 Gas Transmission and Storage Rate Case Docket # A. 09-09-013 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 $235M Capital Expenditures Allows for upgrades to backbone transm
Slide 39: Cornerstone Improvement Program
Cornerstone Improvement Program Docket # A. 08-05-023 Sets revenue requirements aimed at improving the reliability of PG&E’s electric distribution system Request: $2.0 billion capital spend Enables installation of new substation transformers, feeders, conductors and other equipment to add capacity a
Slide 40: Solar PV Program
Solar PV Program Docket # A. 09-02-019 Sets revenue requirements to develop and own 250MW of PV and sign PPAs for an additional 250MW of PV over a five year period Request: $1.45 billion (all capital) for the Utility-owned 250MW PD issued on 01/26/2010 proposes: • development and installation of up
Slide 41: Manzana Wind Project
Manzana Wind Project Docket # A. 09-12-002 Sets revenue requirements to acquire, own, and operate the 189 - 246MW Manzana wind project in the Tehachapi region of Southern California Request: $900 million (all capital) at 246MW capacity Manzana Wind Project would be developed, designed and constructe
Slide 42: Dynamic Pricing
Dynamic Pricing Docket # A. 09-02-022 Sets revenue requirements to implement peak-day pricing and time-of-use pricing Request: $160 million spend in 2008-2010, approximately $110 in capital In February, CPUC issued revised PD approving $123 million of our request and approving default Peak Day Prici
Slide 43: Carrying Cost Credit Impacts
Carrying Cost Credit Impacts ($MM) 2010 2011 2012 Energy Recovery Bond Average Deferred Tax Balance $396 $243 $82 Estimated After-tax Carrying Cost Credit* $(23) $(14) $(5) Estimated Average Deferred Tax Balances and Carrying Cost Credit Impacts ($MM) * Estimated carrying cost credits include only t
Slide 44: ERB Amortization Schedule
ERB Amortization Schedule ($MM) 2010 2011 2012 Annual ERB Amortization $386 $404 $423 End-of-year ERB balance $827 $423 $0
Slide 45: Credit Profile
Credit Profile Current Ratings • Utility Corporate Credit/Issuer: BBB+ (S&P) and A3 (Moody’s) • Utility Senior unsecured debt: BBB+ (S&P) and A3 (Moody’s) Average Utility Metrics (2010-2012)* • S&P Business Profile Rating: Excellent • Total Debt to capitalization (EOY): 55.1% • Funds from Operations
Slide 46: 2008 EPS - Reg G Reconciliation
2008 EPS - Reg G Reconciliation EPS on an Earnings from Operations Basis* $2.95 Items Impacting Comparability** 0.68 EPS on a GAAP Basis $3.63 * 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 financia
Slide 47: 2009 EPS - Reg G Reconciliation
2009 EPS - Reg G Reconciliation (1) 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 financial performance from one period to another, exclusive of items that do not reflect the normal course of operati
Slide 48: EPS Guidance - Reg G Reconciliation
EPS Guidance - Reg G Reconciliation (1) 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 financial performance from one period to another, exclusive of items that do not reflect the normal course of ope