Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Citi Power, Gas and Utilities Conference 2008
33 slides from Pacific Gas & Electric's conference presentation, Jun 5, 2008
Slide 1: PG&E Corporation
PG&E Corporation Christopher P. Johns Senior Vice President & CFO Citi Power Gas and Utilities Conference June 5 and 6, 2008, Washington, DC
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: PG&E Vision
Tiley py ‘a-4 PG&E Vision Our Vision and Values OUR VISION utility in the United States OUR GOALS Delighted Customers Energized Employees Rewarded Shareholders OUR STRATEGIES Operational Excellence Transformation OUR VALUES We act with integrity and communicate honestly and openly We are passionate
Slide 5: 2008 Business Priorities
2008 Business Priorities Deliver on Financial Objectives Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability 5
Slide 6: Delivering on Financial Objectives
Delivering on Financial Objectives Invest in needed infrastructure Ensure adequate liquidity Meet EPS targets Generate strong cash flow 6
Slide 7: 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 8: 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 Ra
Slide 9: Capital Expenditure Outlook
Capital Expenditure Outlook Prior Forecast Levels $ MM $4,000 $3.7 B $3.6B $3,500 $3.3 B $3.3 B $3.4 B $3.2 B $3.0 B $3.0 B $3,000 $2,500 $2,000 $1,500 $1,000 $500 2008 2009 2010 2011 Common Plant $260 $230 $200 $250 SmartMeter Program $260 $330 $260 $220 Gas Transmission $230 $200 $175 $200 Electri
Slide 10: Rate Base Growth
Rate Base Growth Weighted Average Annual Rate Base* Prior Vs. Current Forecast Prior Forecast** Current Forecast $B 30.0 22.6 24.1 23.9 25.0 20.8 22.1 20.4 18.6 18.3 20.0 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
Slide 11: Additional CapEx
Additional CapEx Proposed Projects Above 2008-2011 Base CapEx Forecast SmartMeterTM Program Upgrade $460 MM capital total/ $300 MM capital 2008-2011 Approval expected by year-end 2008 Cornerstone Improvement Program (Enhanced Reliability Investment) $800 MM capital 2008-2011 $1.5 B capital investmen
Slide 12: SmartMeter Program Progress
SmartMeterTM Program Progress Over 550,000 meters installed 270,000 meters being read electronically Year-end 2008 target: 1.3 million meters installed Live AMI billing 12/07 Demand Response Interval Billing Live Billing IT infrastructure 05/08 live 2Q 2007 Upgrade technology Deployment (incl.upgrad
Slide 13: Cornerstone Improvement Program
Cornerstone Improvement Program Proposed $2.3 B/ 6-yr. System Upgrade Key to electric distribution system reliability improvements Supporting distribution automation Preparing for the grid of the future 13
Slide 14: Improved Operational Planning
Improved Operational Planning Current-state Performance Value Multi-year operating plan Rigorous comprehensive process Both tactical and strategic view Business Reviews Real-time decisions Sr. management dialogue and engagement Project governance Holistic approach Multi-functional business case revi
Slide 15: Identifying Operational Efficiencies
Identifying Operational Efficiencies Strategic Sourcing IT, Telecom, and consulting ($1.4 B in annual spend) Contract extensions ($1.2 B in annual spend) Labor Productivity Timekeeping and reporting process Asset Management Fleet Management ($200 M in annual spend) Real Estate Optimization ($100 M i
Slide 16: Innovative EE and DR programs
Innovative EE and DR programs 16
Slide 17: Energy Efficiency Incentives
Energy Efficiency Incentives Guidance assumes: $90 - $130 MM in Energy Efficiency Incentives 2008-2011 2 years in 2008, 1 year in 2009, hold-back in 2010, 2 years in 2011 2006-2008 Program effectiveness phase (“net-to-gross issues”) to be finalized by CPUC summer 2008 Program goals for 2009-2011 to
Slide 18: Cash Flow and Equity Needs
Cash Flow and Equity Needs Financing Needs 2008-2011 (in $MM) 2007 2008 2009 2010 2011 Actual Low High Low High Low High Low High Cash from operations* 1,953 3,225 to 3,125 2,275 to 2,175 2,400 to 2,250 2,825 to 2,675 Capital Expenditures (2,768) (3,650) to (3,750) (3,275) to (3,375) (2,975) to (3,1
Slide 19: Dividend Policy
Dividend Policy Dividend Policy Objectives: Flexibility Sustainability Comparability Target payout ratio range of 50% - 70% Growth balanced with funding for additional investment opportunities 19
Slide 20: 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 21: Key Financial Takeaways
Key Financial Takeaways Delivering on Near-term EPS Guidance and 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 21
Slide 22: Notes
Notes 22
Slide 23: Appendix
Appendix Citi Power and Gas Utilities Conference June 5 and 6, 2008
Slide 24: JD Power Rankings
JD Power Rankings 2007 Higher than 2006 Residential Electric Residential Gas Business Gas Business Electric 0 2 5 4 10 11 20 20 30 # Utilities Ranked 40 38 2006 2007 43 50 46 51 55 60 58 70 80 76 24
Slide 25: Diablo Steam Generator Replacement
Diablo Steam Generator Replacement Steam Generator Replacement $700 MM approved capital investment Unit 2 replacement completed in 69 days Unit 1 replacement scheduled for early 2009 25
Slide 26: Gateway Generating Station
Gateway Generating Station More than 50% complete On budget, on time >1,000,000 hours with no injury Begins operations 1Q 2009 26
Slide 27: New Generation: Colusa & Humboldt
New Generation: Colusa & Humboldt Project Status: Humboldt Colusa: CEC permits received; 163 MW construction imminent Colusa Humboldt: Slight delays in 657 MW permitting, construction expected to begin by end of year Gateway 530 MW Strategy for execution mirrors successes at Gateway Experienced proj
Slide 28: Earnings Drivers Reconciliation
Earnings Drivers Reconciliation Cumulative four-year totals (pre-tax earnings in $MM) Need identified in December 2007 (2008-2011) $335- $575 Potential sources identified in December 2007 to fill need: Additional Rate Base Investment $125- $175 CEE Program Incentives $100- $200 Operational Efficienc
Slide 29: Operational Changes and Efficiencies in Current Operating Plan
Operational Changes and Efficiencies in Current Operating Plan + Economic Stimulus Act of 2008 + Resolution of outstanding tax audits + Settlement of outstanding generator claims − Delay in electric transmission project (C3ET) + Workforce reductions + Strategic sourcing + Cash cycle management + Inv
Slide 30: Measuring Our Performance
Measuring Our Performance Compensation Aligned with Business Focus Percentage 2008 Compensation metrics weight Delivering on EPS Goals 40% (Measurement of earnings from ongoing core operations) Brand Health Index 20% (Composite of customer surveys and marketing research) Reliable Energy Delivery 20%
Slide 31: Utility Net Plant
Utility Net Plant Historical Plant by Line of Business (in $B) Gross Plant* Net Plant* Estimated Business Line 12/31/2007 12/31/2007 Useful Lives Generation $2.2 $1.9 4 to 37 years Electric Distribution $16.1 $9.8 16 to 58 years Electric $4.7 $3.1 40 to 70 years Transmission Gas Distribution $5.2 $2
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