Slide 1: PG&E Corporation Third Quarter Earnings Call
PG&E Corporation Third Quarter Earnings Call November 3, 2011 This presentation is not complete without the accompanying statements made by management during the webcast conference call held on November 3, 2011. In addition, this presentation is complementary to the financial and other information c
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements that relate to management's guidance for PG&E Corporation’s 2011 and 2012 earnings per share from operations and various assumptions and estimates on which such guidance is based, including forecasts of costs related to plan
Slide 3: Today's Speakers
Today’s Speakers Tony Earley Chairman, CEO and President, PG&E Corporation Chris Johns President, Pacific Gas and Electric Company Kent Harvey Senior Vice President and CFO, PG&E Corporation Gabe Togneri Vice President, Investor Relations, PG&E Corporation 3
Slide 4: Initial Observations at PG&E
Initial Observations at PG&E • Commitment to Excellence in Operations • Benchmark – Celebrate the Gaps • Organizational Structure Supports Improvement 4
Slide 5: PG&E Officer Team
PG&E Officer Team • Nick Stavropoulos, EVP, Gas Operations Key Recent Additions • Karen Austin, SVP and Chief Information Officer Leadership team includes strong, diverse experience at PG&E and other utilities PG&E Tenure Avg. Utility Experience less than 1 year 11% 12 years 26% 17 years 1-5 years 5
Slide 6: Improvement Plans
Improvement Plans Additional Benchmark to Drive Restore Confidence Gas and Electric Improvement and Trust Spending • Accelerate previously • Work to improve • Compare to the best planned work operations is vital in operations • Identified new work • Consistently provide • Identify gaps in better ser
Slide 7: Operational Review
Operational Review Reviewed all areas of operations Assessed opportunities to improve safety, reliability, and customer service Identified work requiring additional expense spending 7
Slide 8: Additional Expenses in 2012
Additional Expenses in 2012 Annual Projections Beyond Previously Planned Expense Level 2012: ~$200 million 2013: Comparable Amount Accelerated Gas and Electric Work • Evaluate and remediate gas services vulnerable to corrosion Gas • Increase right of way clearances • Protect or relocate gas distribu
Slide 9: Natural Gas Pipeline Matters
Natural Gas Pipeline Matters Regulatory Pipeline Third Party Proceedings Work Liability NTSB Strength Testing Additional Accrual Final Report Issued Q3: Tested 46 miles Q3: $96 million charge YTD: Cleared > 100 mi • New information about nature of claims CPUC • Experience to date Investigation (OII)
Slide 10: Environmental-Related Costs
Environmental-Related Costs Q3 2011 Accrual Increase: $125 million Primary Drivers • Hinkley - final remediation plan proposal • Chromium plume extends farther than previously believed • Order for permanent replacement water 10
Slide 11: 3Q 2011 EPS
3Q 2011 EPS Earnings (millions) EPS Earnings from Operations $ 436 $ 1.08 Items Impacting Comparability Natural Gas Pipeline Matters (162) (0.40) Environmental-Related Costs (74) (0.18) EPS on a GAAP Basis $ 200 $ 0.50 Natural Gas Pipeline Matters (millions, pre-tax) 3Q 2011 Pipeline-related costs $
Slide 12: 3Q 2011 Q over Q Comparison
3Q 2011 Q over Q Comparison $1.40 3Q 2010 vs. 3Q 2011 $1.20 $0.03 ($0.04) ($0.03) $1.00 $0.10 $0.80 $0.60 $1.08 $1.02 $0.40 $0.20 $- 3Q 2010 EPS Increase in rate Miscellaneous Litigation and Increase in 3Q 2011 EPS from Operations base earnings items regulatory shares from Operations matters outstan
Slide 13: 2011 EPS Guidance
2011 EPS Guidance Low High EPS from Operations $ 3.45 $ 3.60 Estimated Items Impacting Comparability Natural Gas Pipeline Matters (1.28) (0.65) Environmental-Related Costs (0.18) (0.18) Estimated EPS on a GAAP Basis $ 1.99 $ 2.77 Natural Gas Pipeline Matters (millions, pre-tax) Low guidance High gui
Slide 14: Assumptions for 2012 Guidance
Assumptions for 2012 Guidance Authorized Rate Base (weighted average) Capital Expenditures Forecast ($ millions) ($ billions) 2011 2012 28.0 Gas Distribution 375 500 26.0 Electric Distribution 1250 1400 ~$1.6 Gas Transmission 175 275 24.0 ~$1.5 22.0 Electric Transmission 750 775 20.0 Conventional Ge
Slide 15: 2012 Additional Expenses
2012 Additional Expenses 2012: ~$200 million more than previously planned Accelerate work previously planned 1/3 over a number of years Plan to complete by end of 2013 Elevate ongoing performance to a 2/3 higher level 15
Slide 16: Earnings from Ops Comparison
Earnings from Ops Comparison 2011 EPS from Operations 2012 EPS from Operations $3.45 - $3.60 - Higher expenses - Higher shares + Rate base growth $3.10 - $3.30 “Earnings from Operations” is not calculated in accordance with GAAP and excludes items impacting comparability. 16
Slide 17: 2012 EPS Guidance
2012 EPS Guidance Low High EPS from Operations $ 3.10 $ 3.30 Estimated Items Impacting Comparability Natural Gas Pipeline Matters (0.60) (0.14) Environmental-Related Costs (0.14) 0.00 Estimated EPS on a GAAP Basis $ 2.36 $ 3.16 Natural Gas Pipeline Matters (millions, pre-tax) Low guidance High guida
Slide 18: Equity Issuance
Equity Issuance YTD 2011 Through EOY 2012 ~$600M + Higher capex ~$400M + Lower earnings from ops + Q3 accruals - Lower unrecovered pipeline costs 18
Slide 19: In Closing
In Closing The Plan Resolve pipeline issues Improve operational performance Restore reputation with customers and regulators Objective Sustainable earnings and dividend growth 19