Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Investor Day (May 2023)
44 slides from Pacific Gas & Electric's investor day presentation, May 24, 2023
Slide 1: 2023 Investor Day: Investing in California's Prosperity
2023 INVESTOR DAY Investing in California’s Prosperity May 24, 2023
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains statements regarding PG&E Corporation’s and Pacific Gas and Electric Company’s (the “Utility”) future performance, including expectations, objectives, and forecasts about operating results (including 2023 and 2024 non-GAAP core earnings), rate ba
Slide 3: PG&E Senior Executive Team
PG&E Senior Executive Team… Sumeet Singh Jason Glickman Carla Peterman Carolyn Burke EVP, Operations & Chief EVP, Engineering, EVP, Corporate Affairs EVP, Chief Financial Officer Operating Officer Planning & Strategy 20 years industry 25 years industry experience 20 years of utility experience 21 ye
Slide 4: Investing In California's Prosperity
Investing In California’s Prosperity… Physical Risk Reduction Financial Risk Mitigation Sector Leading Rate Base Growth Performance Playbook Simple, Affordable Model Regulatory and Stakeholder Support …Improving Outcomes And Earning Trust 4
Slide 5: A Better PG&E Today
A Better PG&E Today… Sumeet Singh EVP, Operations and Chief Mitigating Physical Risk Today Operating Officer Carolyn Burke Mitigating Financial Risk For Customers and Investors EVP, Chief Financial Officer Marlene Santos Lean Operating System and Waste Elimination EVP, Chief Customer Officer Carla P
Slide 6: Operational Mitigations Build on Existing Layers of Protection
Operational Mitigations Build on Existing Layers of Protection… reduction in wildfire 90% reduction in wildfire risk from PG&E equipment1 94% risk from PG&E equipment in 20231 100% Wildfire Mitigation Programs (System Hardening/Undergrounding, Vegetation 80% Management, Enhanced Inspections and Repa
Slide 7: State-of-the-Art Tools
State-of-the-Art Tools… Gridware Early Fault Detection and Piloting Distribution Fault Anticipation Identifies faults not detectable Detect hazards before a with traditional tools fault occurs …Will Build On Existing Wildfire Safety Efforts 7
Slide 8: We Are Prepared For Various Weather Conditions
We Are Prepared For Various Weather Conditions… Water and Wind Flood Drought …With Mitigations That Address a Multitude of Hazards 8
Slide 9: Strategic Partnerships Accelerate Innovation
Strategic Partnerships Accelerate Innovation… …Which Further Mitigates Wildfire Risk 9
Slide 10: Partnerships With State and Local Stakeholders
Partnerships With State and Local Stakeholders… Brian Rice President, California Professional Firefighters …Will Continue To Mitigate Wildfire Risk 10
Slide 11: Key Messages
Key Messages… PG&E is prepared to mitigate This year’s efforts will the wildfire risk from various weather conditions increase wildfire risk Investments in innovative strategies reduction to1 and platforms, globally, will further mitigate wildfire risk Partnerships with state and 94% local stakehold
Slide 12: A Better PG&E Today
A Better PG&E Today… Sumeet Singh EVP, Operations and Chief Mitigating Physical Risk Today Operating Officer Carolyn Burke Mitigating Financial Risk For EVP, Chief Financial Officer Customers AND Investors Marlene Santos Lean Operating System and Waste Elimination EVP, Chief Customer Officer Carla P
Slide 13: Early Assessment
Early Assessment… Constructive Triple Bottom Performance Customer AND California Line Playbook Investor Focus Regulation • People • Lean • Consistent • Decoupling Performance • Four Year GRC • Planet • Breakthrough • Major Shift • Three Year CoC • Prosperity • Test Year at PG&E Strong leadership ali
Slide 14: Investment Drives Safety and Performance
Investment Drives Safety and Performance… $39 $52 $67 billion billion billion Last 5 Years Next 5 Years 6-10 Years (2018-2022) (2023-2027) (2028-2032) …For Customers AND Investors 14
Slide 15: Customer Investment Grows
Customer Investment Grows… Amount (billions) $16,000 Avg. $8B Avg. $10B Avg. $13B /year /year /year $ 16 $14,000 14 Generation, $12,000 IT & Other 12 $10,000 Non-WF Risk Reduction 10 Customer & Connections Electric Distribution $8,000 8 Wildfire Mitigation, System $6,000 Hardening & Undergrounding 6
Slide 16: Benefits of Investment
Benefits of Investment… Safety Wildfire Risk Reduction Reliability Improvements Customer Capacity Productivity, Eliminating Waste De-Carbonization and Electrification California Prosperity …Affordable Service Improvement And Risk Reduction 16
Slide 17: Substantial Incremental Opportunities
Substantial Incremental Opportunities… Opportunities $5B Growth • Transmission • Distribution Generation $52B • Hydro • Storage Efficiency • IT & Automation • Waste Elimination • Sourcing Next 5 Years …To Better Serve Our Customers 17
Slide 18: Simple, Affordable Model
Simple, Affordable Model… MODEL1 Examples of O&M Cost Reductions (Non-Fuel) OPPORTUNITIES 2022 2023 Long-Term Actual Plan Plan Customer Capital Investment ~9% Good Business Decision (millions) (millions) (millions) - Attrition $ 25 $ 25 $ 25 - Efficiencies & Insurance 270 200 50 Offsets - Capital Co
Slide 19: Improving O&M Performance
Improving O&M Performance… Non-Fuel O&M Increase (Decrease)1 Non-Fuel O&M per Customer4 Percent Five-Year Average2 O&M PG&E Quartile Per Customer + 10 % First $ 600 5 PG&E Second 700 2022 0 Third 800 -3% Fourth -5 1,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 (Includes PG&E) Peers3 Presentation endnotes ar
Slide 20: Plan Creates Significant Opportunity
Plan Creates Significant Opportunity… EFFICIENCIES CAPEX & WASTE RELATED FUEL ELIMINATION ~$4B ~$1/2B ~$1B $25B Revenue $22B 2% - 4% Avg. annual increase Expense ~50% O&M 65% PPAs Capital Depreciation Interest ~50% Tax 35% EPS Growth Earnings 2023 2027 …Improves Customer Affordability 20
Slide 21: Capital Investment
Capital Investment… Amount (billions) $ 12 Operating Cashflow $10 10 8 6 $4 4 2 Capital Investment 0 -2 -4 -6 Cashflow Pre-Dividend -8 2022 2023 2024 2025 2026 2027 Federal NOLs ($B) $27 $33 $32 $29 $28 $26 …Also Improves Cashflow 21
Slide 22: Value Proposition
Value Proposition… Value Proposition Takeaways Growing Customer Capital Investment Provides Executing Customer Investment • Important Customer Benefits • Peer leading; no “BIG” bets • Consistent, Premier EPS1 Growth Delivering Affordably • Cash Flow Improvement Reducing Risk (minimizing exposure) Af
Slide 23: A Better PG&E Today
A Better PG&E Today… Sumeet Singh EVP, Operations and Chief Mitigating Physical Risk Today Operating Officer Carolyn Burke Mitigating Financial Risk For Customers and Investors EVP, Chief Financial Officer Marlene Santos Lean Operating System EVP, Chief Customer Officer and Waste Elimination Carla P
Slide 24: Lean: Driving Business Performance For Global Leaders
Lean: Driving Business Performance For Global Leaders… Significant improvements in quality and safety Developed by Toyota Value Stream Mapping eliminated waste across Popularized worldwide entire production process in the 1990s Delivers value to Reduced waste by tracking the exact amount of customer
Slide 25: The Lean Playbook at PG&E
The Lean Playbook at PG&E… NEW 1 2 3 4 5 Visual Operating Problem Standard Waste Management Reviews Solving Work Elimination …Delivering Visibility, Control, Predictability And Continuous Improvement 25
Slide 26: Lean In Action At PG&E
Lean In Action At PG&E… …Improving Performance For Customers AND Investors 26
Slide 27: Lean Play 5: Waste Elimination
Lean Play 5: Waste Elimination… Consistent methodology and tools to Project Pipeline identify, size and eliminate waste Stage 1 Ideation Stage 2 Project Validation Project Stage 3 Implementation Stage 4 Financial Realization >225 Projects …Delivering On Our Simple Affordable Model 27
Slide 28: Key 2023 Projects Eliminating Waste
Key 2023 Projects Eliminating Waste… Joe Forline SVP, Gas Operations Gas Operations Christine Cowsert SVP, Gas Engineering New Customer Connections Peter Kenny SVP, Major Infrastructure Undergrounding and Vegetation Management Delivery …Without Compromising Safety Or Quality 28
Slide 29: Lean Enabling 22% Reduction In Gas Pipeline Dig-ins
Lean Enabling 22% Reduction In Gas Pipeline Dig-ins… Waste Elimination Savings in 2022 $4.6M Gas Dig-ins (1st Quartile Performance) Visual Management and 1 Operating Reviews 0.98 0.96 1,637 0.94 0.92 1,483 0.9 0.88 Simple Problem 0.86 Solving and Forecast: 1,272 0.84 YTD: 356 Standard Work 0.82 2021
Slide 30: Key 2023 Projects Eliminating Waste
Key 2023 Projects Eliminating Waste… Joe Forline SVP, Gas Operations Gas Operations Christine Cowsert SVP, Gas Engineering New Customer Connections Peter Kenny SVP, Major Infrastructure Undergrounding and Vegetation Management Delivery …Without Compromising Safety Or Quality 30
Slide 31: Using Lean To Streamline New Customer Connections
Using Lean To Streamline New Customer Connections… Process Pain Fallout Processing Time Queue Steps Points Customers choose not to move Total avg queue time = 330 days Time forward with 63% of projects Total processing time = 90 days …With Value Stream Mapping 31
Slide 32: Lean Eliminates Waste In New Customer Connections
Lean Eliminates Waste In New Customer Connections... Intake Design & Overall Phase Estimating Cycle Time • Reduce waiting and • Better utilize talent • Stop non-ready work over processing and reduce overtime before costly phases • Implement standard • Cut defects in design • Partner with CBIA to wor
Slide 33: Key 2023 Projects Eliminating Waste
Key 2023 Projects Eliminating Waste… Joe Forline SVP, Gas Operations Gas Operations Christine Cowsert SVP, Gas Engineering New Customer Connections Peter Kenny Undergrounding and Vegetation SVP, Major Infrastructure Delivery Management …Without Compromising Safety Or Quality 33
Slide 34: Vegetation Management Leverages Waste Elimination
Vegetation Management Leverages Waste Elimination… 2023 Cost Reduction ~$300M Waste Elimination Examples • 24 prime contractors; several trips to • 14 prime contractors; work bundled each location by location • High use of Time & Expense contracts • Standardized unit-rate contracts • Significant rew
Slide 35: Undergrounding Leverages Waste Elimination
Undergrounding Leverages Waste Elimination… 2023 Cost Reduction ~$70M Waste Elimination Examples • Expanded use of internal workforce • Concentrated contractor base with contractor base with specialty skills • 36” trench depth and 18” width • 30” trench depth and 8” width • Longer cable runs, fewer
Slide 36: Lean Is Growing And Maturing At PG&E
Lean Is Growing And Maturing At PG&E... Driving a culture of performance and continuous improvement Improving the customer experience Eliminating waste with 200+ projects identified Enabling 2% annual O&M savings Delivering on our simple affordable model ...To Harness The Power Of 26K Co-Workers To
Slide 37: A Better PG&E Today
A Better PG&E Today… Sumeet Singh EVP, Operations and Chief Mitigating Physical Risk Today Operating Officer Carolyn Burke Mitigating Financial Risk For Customers and Investors EVP, Chief Financial Officer Marlene Santos Lean Operating System and Waste Elimination EVP, Chief Customer Officer Carla P
Slide 38: Policymaker And Stakeholder Support
Policymaker And Stakeholder Support… Outcomes that benefit customers and investors provide long–term stability Sept 2022 Nov 2022 Dec 2022 Feb 2023 May 2023 Undergrounding 2022 Cost of 2023 Cost of 2020 WMCE Resolution of and Diablo Canyon Capital Decision Capital Decision Settlement Safety Culture
Slide 39: GRC Brings Further Certainty
GRC Brings Further Certainty… • GRC outcome will provide 4-year stability in core revenues 86% to serve customers of incremental GRC ask is for Safety, Reliability • Revenues from final decision will and Maintenance* be retroactive to January 2023 • Safety and reliability are at the core of this GRC
Slide 40: Working Closely With Stakeholders
Working Closely With Stakeholders… Enabling Diablo Canyon Facilitating Electrification Helping Customers Power Plant to Stay Open and Customer Connections with arrearage relief, advancement through interconnection policies that of the climate credit, and support for at least 5 years by advancing str
Slide 41: Ann Patterson
Ann Patterson Cabinet Secretary Office of California Governor 41
Slide 42: Q&A Panel
Q&A Panel Patti Poppe Physical Risk Reduction CEO Sumeet Singh Financial Risk Mitigation EVP, Operations and Chief Operating Officer Sector Leading Rate Base Growth Carolyn Burke EVP, Chief Financial Officer Performance Playbook Marlene Santos EVP, Chief Customer Officer Simple Affordable Model Carl
Slide 43: Appendix
[k PG&E Corporation Appendix
Slide 44: Endnotes
Endnotes Slide titles are hyperlinks Slide 6: Operational Mitigations Build on Existing Layers of Protection 1. Based on a comparison in the Utility's GRC testimony of the wildfire risk score for a baseline risk level to a risk level reflecting the Utility’s mitigation work. Risk scores are calculat