Slide 1: Business Update
BUSINESS UPDATE November 4, 2016
Slide 2: Forward Looking Statements
Forward Looking Statements This slide presentation contains forecasts and estimates of PG&E Corporation’s 2017 financial results and equity issuances, capital expenditures to be made by PG&E Corporation’s subsidiary, Pacific Gas and Electric Company (Utility) through 2019, the Utility’s rate base th
Slide 3: Well-positioned to Deliver Strong Returns
Well-positioned to Deliver Strong Returns A Strengthened Company • Significant safety, reliability and operational improvements • Improved customer satisfaction Healthy 3-year Key Advantages growth profile • One of the greenest utilities in the country • ~6.5-7% ratebase • Constructive regulatory an
Slide 4: Agenda
Agenda A strengthened company Key advantages Robust growth profile 4
Slide 5: PG&E System At a Glance
PG&E System At a Glance 2015 Revenue Sources Key Highlights Employees ~23,000 Californians served ~16M General Net income (2015) ~$1B Rate Case Pass- ~45% through Ratebase (2015) $29.5B ~45% Miles of electric lines ~160,000 Gas Miles of natural gas pipelines ~50,000 Transmission Electric & Storage T
Slide 6: Safety Forms the Foundation of Operational and Financial Success
Safety Forms the Foundation of Operational and Financial Success Strong Operational and Financial Results Leadership Transparency Incentives Culture Significant Developed 50% of short-term Embraced a utility leadership industry-leading variable continuous experience on public safety compensation tie
Slide 7: Improved Safety and Reliability Gas Metrics
Improved Safety and Reliability Gas Metrics ~40% Reduction in Emergency >99% Reduction in Leak 40% Reduction in Dig-ins(3) Response Time(1) Backlog(2) 33.3 ~40% 12,200 >99% 3.5 40% 20.3 2.1 94 2010 2015 2010 2015 2010 2015 Major Progress from 2010-2015: • Achieved international certifications in gas
Slide 8: Improved Safety and Reliability Electric Metrics
Improved Safety and Reliability Electric Metrics 911 Emergency System Average Interruption Customer Experiencing Response(1) Duration Index(2) Multiple Interruptions(3) 3Q 1Q 3Q 2Q 2Q 1Q ~50% 96% ~40% ~60% 157.2 3.31% 96.3 65% 1.36% 2010 2015 2010 2015 2010 2015 Major Progress from 2010-2015: • Deli
Slide 9: Customer Satisfaction has Improved Each Year Since 2012
Customer Satisfaction has Improved Each Year Since 2012 750 J.D. Power Survey Results, 2011-2016 Gas Business 2nd Quartile Electric Business 2nd Quartile 700 Gas Residential 4th Quartile Electric Residential 2nd Quartile 650 600 2011 2012 2013 2014 2015 2016 Unwavering commitment to customer satisfa
Slide 10: Projected Strong Growth
Projected Strong Growth Ratebase ($ in B) Dividend ~60% ~6.5-7% Payout CAGR Ratio ~$39B + ~8% ~$34.3B $1.96 $1.82 2017 2019 2015 2016 2019 Ratebase Range See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and underlying ass
Slide 11: Agenda
Agenda A strengthened company Key advantages Robust growth profile 11
Slide 12: Key Strengths
Key Strengths 1 One of the greenest utilities in the country 2 Constructive regulatory framework 3 California clean energy policies 4 Multiple infrastructure investment drivers 12
Slide 13: Focused on Sustainability
KEY STRENGTH #1: ONE OF THE GREENEST UTILITIES IN THE COUNTRY Focused on Sustainability Nearly 2x More Carbon Free and Renewable PG&E Customers Lead the Nation in Energy Than The U.S. Average in 2015 Clean Technology Adoption >280,000 solar customers 58% Ranked #1 with ~25% of all U.S. rooftop solar
Slide 14: California's Regulatory Mechanisms
K E Y S T R E N G T H # 2 : C O N S T R U C T I V E R E G U L AT O RY F R A M E W O R K California’s Regulatory Mechanisms Revenues decoupled from sales Balancing accounts reduce cost volatility Forward-looking test year rate cases Risk-informed rate making Separate cost of capital proceed
Slide 15: California's Climate Goals
KEY STRENGTH #3: CALIFORNIA CLEAN ENERGY POLICIES California’s Climate Goals California Greenhouse Gas Reduction Goals California is Targeting: and Historic Emissions* Million metric tons CO2e 600 AB 32 requires 50% renewables by Historic Emissions California to return to 500 2030 1990 levels by 202
Slide 16: California Policies Drive Infrastructure Investment
K E Y S T R E N G T H # 4 : M U LT I P L E I N F R A S T R U C T U R E I N V E S T M E N T D R I V E R S California Policies Drive Infrastructure Investment • Gas investments (e.g., pipeline Safety replacement, in-line inspection and capability) Reliability • Electric investments (e.g., substation u
Slide 17: Agenda
Agenda A strengthened company Key advantages Robust growth profile 17
Slide 18: Focus Areas for Growth
Focus Areas for Growth 1 Enhance safety and reliability 2 Enable California’s clean energy economy 3 Ensure customer affordability PG&E’s operating plan provides a strong foundation for future success 18
Slide 19: Continue to Upgrade Our System
GROWTH FOCUS #1: ENHANCE SAFETY AND RELIABILITY Continue to Upgrade Our System % of Gas Annual Projected % Penetration of % of Urban Transmission Miles of Gas Distribution Automated Switches in Substations Upgraded System Piggable Main Replacement Urban Areas ~65% ~170 ~45% ~85% 104 30% 25% 34% 15%
Slide 20: Grid Modernization Will Require Significant Investment
G R O W T H F O C U S # 2 : E N A B L E C A L I F O R N I A’ S C L E A N E N E R G Y E C O N O M Y Grid Modernization Will Require Significant Investment Grid Control and Monitoring Distributed Energy Resources Grid Data Analytics • Increased remote control and • Bi-directional energy flows and • Ad
Slide 21: PG&E Bills Lower Than the National Average
GROWTH FOCUS #3: ENSURE CUSTOMER AFFORDABILITY PG&E Bills Lower Than the National Average PG&E Average Residential Bills Are PG&E’s Electric Bundled Rates Have 30% Below National Average Grown In Line With Inflation $200 20.0¢ USA $150 ~30% 15.0¢ $100 10.0¢ $50 5.0¢ $0 0.0¢ 2015 1991 1996 2001 2006
Slide 22: Strategies to Manage Declining Load
GROWTH FOCUS #3: ENSURE CUSTOMER AFFORDABILITY Strategies to Manage Declining Load Flexible Electric Portfolio Constructive Regulatory Mechanisms Revenues decoupled from sales ~30% of procured MWhs expire by 2021 Utility-Owned Procured Cost Generation ~45% ~55% allocation mechanisms for departing
Slide 23: Well-Positioned for Industry Changes
GOING FORWARD Well-Positioned for Industry Changes Industry Changes PG&E Strategies • Integrate renewables and distributed energy resources Decarbonized • Enable electric vehicle adoption Economy • Expand energy storage options • Enhance energy efficiency programs • Flexible procurement portfolio •
Slide 24: Three-year Financial Outlook
Three-year Financial Outlook 1 2017 Guidance 2 Cap ex growth 3 Ratebase growth 4 Dividend growth and policy 24
Slide 25: Initiating 2017 EPS Guidance
Initiating 2017 EPS Guidance Low High Estimated EPS on an Earnings from Operations Basis $ 3.55 $ 3.75 Estimated Items Impacting Comparability Pipeline related expenses (0.14) (0.09) Legal and regulatory related expenses (0.05) (0.01) Fines and penalties ~ (0.03) ~ (0.03) Butte fire related costs, n
Slide 26: 2017 Assumptions
2017 Assumptions Capital Expenditures Authorized Ratebase (weighted average) ($ millions) ($ billions) 2017 2017 General Rate Case 3,750 General Rate Case 24.5 Gas Transmission and Storage 900 Gas Transmission and Storage 3.0 Transmission Owner 18 ~1,300 Transmission Owner ~6.8 Total Cap Ex ~$6 bill
Slide 27: 2017 Items Impacting Comparability
2017 Items Impacting Comparability ($ millions, pre-tax) 2017 Pipeline related expenses (80 - 125) Legal and regulatory related expenses (10 - 40) Fines and penalties ~ (30) Butte fire related costs, net of insurance - GT&S revenue timing impact ~ 160 2017 Items Impacting Comparability Total ~ $(35)
Slide 28: 2017 Equity Issuance
2017 Equity Issuance ~$800M $400 - 600M - San Bruno Penalty - GT&S Capital Disallowance + Capital Expenditures 2016 2017 September 30, 2016 shares outstanding: ~505 million See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented
Slide 29: Robust Cap Ex Supports Strong Returns
Robust Cap Ex Supports Strong Returns Capital Expenditures ($ in B) 2016-2019 ~$6B ~$6B ~$6B ~$5.7B 2016 2017 2018 2019 General Rate Case Gas Transmission & Storage Electric Transmission Owner Range See the Forward Looking Statements for factors that could cause actual results to differ materially f
Slide 30: Ratebase Supports Strong Returns
Ratebase Supports Strong Returns Weighted Average Ratebase ($ in B) 2016-2019 Base Case Assumptions: • 2017 General Rate Case settlement through 2019 • 2015 Gas Transmission & Storage rate case ~6.5-7% – Phase 2 PD through 2018; flat in 2019 CAGR – ~$400M for 2011-2014 spend subject to audit ~$39B a
Slide 31: Dividend Policy Supports Strong Total Shareholder Return
Dividend Policy Supports Strong Total Shareholder Return + ~8% ~60% Payout Ratio $1.96 $1.82 2015 2016 2019 Targeting 55-65% payout ratio over time See the Forward Looking Statements for factors that could cause actual results to differ materially from the guidance presented and underlying assumptio
Slide 32: Solid Growth Strategy Positions PG&E for Success
IN SUMMARY Solid Growth Strategy Positions PG&E for Success A Strengthened Company • Significant safety, reliability and operational improvements • Improved customer satisfaction Healthy 3-year Key Advantages growth profile • One of the greenest utilities in the country • ~6.5-7% ratebase • Construc
Slide 33: Appendices
[t PG&E Corporation Appendices
Slide 34: Table of Contents
Table of Contents Appendix 1: Leadership Bios Slides 35 – 44 Appendix 2: 2017 Supplemental Earnings Materials Slides 45 – 48 Appendix 3: Overview of Key Regulatory Cases Slides 49 – 57 Appendix 4: Breakdown of 2015 Total Revenue Requirement Slide 58 Appendix 5: Description of Gas System Certificatio
Slide 35: Anthony F. Earley, Jr.
APPENDIX 1 – LEADERSHIP BIOS Anthony F. Earley, Jr. Anthony F. Earley, Jr. Chairman, Chief Executive Officer, and President PG&E Corporation Anthony F. Earley, Jr., is Chairman, Chief Executive Officer, and President of PG&E Corporation. Earley joined PG&E in September 2011 after 17 years at DTE Ene
Slide 36: Nick Stavropoulos
APPENDIX 1 – LEADERSHIP BIOS Nick Stavropoulos Nick Stavropoulos President, Gas Pacific Gas and Electric Company Nick Stavropoulos serves as President, Gas, for Pacific Gas and Electric Company and has more than 35 years of experience in the U.S. and international gas industry. He is a member of the
Slide 37: Geisha J. Williams
APPENDIX 1 – LEADERSHIP BIOS Geisha J. Williams Geisha J. Williams President, Electric Pacific Gas and Electric Company Geisha J. Williams has been President, Electric, at Pacific Gas and Electric Company since 2015 and is a member of the utility’s board of directors. Williams has more than three de
Slide 38: Jason P. Wells
APPENDIX 1 – LEADERSHIP BIOS Jason P. Wells Jason P. Wells Senior Vice President and Chief Financial Officer PG&E Corporation Jason P. Wells is Senior Vice President and Chief Financial Officer for PG&E Corporation. Wells oversees the financial activities of the $50 billion company including account
Slide 39: Patrick M. Hogan
APPENDIX 1 – LEADERSHIP BIOS Patrick M. Hogan Patrick M. Hogan Senior Vice President of Electric Transmission and Distribution Pacific Gas and Electric Company Patrick M. Hogan is Senior Vice President of Electric Transmission & Distribution at Pacific Gas and Electric Company. Hogan oversees PG&E's
Slide 40: Jesus Soto Jr.
APPENDIX 1 – LEADERSHIP BIOS Jesus Soto Jr. Jesus Soto Jr. Senior Vice President, Gas Operations Pacific Gas and Electric Company Jesus Soto Jr. is the Senior Vice President of Gas Operations for Pacific Gas and Electric Company. He is responsible for overseeing and executing the day-to-day operatio
Slide 41: Steven E. Malnight
APPENDIX 1 – LEADERSHIP BIOS Steven E. Malnight Steven (Steve) E. Malnight Senior Vice President, Regulatory Affairs Pacific Gas and Electric Company Steve Malnight is Senior Vice President, Regulatory Affairs, for Pacific Gas and Electric Company. He is responsible for developing, coordinating and
Slide 42: Nicholas M. Bijur
APPENDIX 1 – LEADERSHIP BIOS Nicholas M. Bijur Nicholas M.Bijur Vice President and Treasurer PG&E Corporation Pacific Gas and Electric Company Nicholas M. Bijur is the Vice President and Treasurer of PG&E Corporation and Pacific Gas and Electric Company. He manages the Corporate Banking, Cash Manage
Slide 43: Janet C. Loduca
APPENDIX 1 – LEADERSHIP BIOS Janet C. Loduca Janet C. Loduca Vice President, Investor Relations PG&E Corporation Janet Loduca is Vice President of Investor Relations at PG&E Corporation. She is responsible for providing the investment community with information about the Corporation and its operatio
Slide 44: David S. Thomason
APPENDIX 1 – LEADERSHIP BIOS David S. Thomason David S. Thomason Vice President and Controller PG&E Corporation Vice President, Chief Financial Officer and Controller Pacific Gas and Electric Company David S. Thomason is Vice President and Controller of PG&E Corporation, as well as Vice President, C
Slide 45: PG&E Corporation's 2017 Earnings per Share Guidance
A P P E N D I X 2 – 2 0 1 7 S U P P L E M E N TA L E A R N I N G S M AT E R I A L S PG&E Corporation’s 2017 Earnings per Share Guidance 2017 EPS Guidance Low High Estimated EPS on an Earnings from Operations Basis (1) $ 3.55 $ 3.75 Estimated Items Impacting Comparability: (2) Pipeline related expens
Slide 46: PG&E Corporation's 2017 Earnings per Share Guidance
A P P E N D I X 2 – 2 0 1 7 S U P P L E M E N TA L E A R N I N G S M AT E R I A L S PG&E Corporation’s 2017 Earnings per Share Guidance (6) “Butte fire related costs, net of insurance” refers to estimated third-party claims and legal costs associated with the Butte fire, and any related insurance re
Slide 47: 2017 General Earnings Sensitivities
A P P E N D I X 2 – 2 0 1 7 S U P P L E M E N TA L E A R N I N G S M AT E R I A L S 2017 General Earnings Sensitivities PG&E Corporation and Pacific Gas and Electric Company Variable Description of Change Estimated 2017 Earnings Impact Ratebase +/- $100 million change in allowed ratebase +/- $5 mill
Slide 48: Use of Non-GAAP Financial Measures
A P P E N D I X 2 – 2 0 1 7 S U P P L E M E N TA L E A R N I N G S M AT E R I A L S Use of Non-GAAP Financial Measures PG&E Corporation and Pacific Gas and Electric Company PG&E Corporation discloses historical financial results and provides guidance based on “earnings from operations” in order to p
Slide 49: Separate Rate Cases Maintain Focus on Specific Assets
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S Separate Rate Cases Maintain Focus on Specific Assets General Rate Gas Transmission Transmission Case and Storage Case Owner Case Regulatory Jurisdiction CPUC CPUC FERC Time Period of Current Rate Case 2017-2019 2015-2017 2017
Slide 50: 2017 CPUC General Rate Case
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S 2017 CPUC General Rate Case September 1, 2015 – Filed CPUC application requesting 2017 - 2019 revenues August 3, 2016 – Filed all-party settlement agreement Revenue Requirement Utility’s GRC Settlement Agreement Difference
Slide 51: 2015 CPUC Gas Transmission and Storage Rate Case
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S 2015 CPUC Gas Transmission and Storage Rate Case December 19, 2013 – Filed CPUC application seeking 2015 - 2017 revenues June 23, 2016 – CPUC voted out a final Phase 1 decision with interim revenues through 2018 November
Slide 52: FERC Transmission Owner Rate Case
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S FERC Transmission Owner Rate Case TO17 (2016 Revenues) • July 29, 2015 – Filed TO17 with FERC requesting $1.5 billion revenue requirement in 2016, a $300 million increase over 2015 • September 30, 2015 – FERC accepted TO17 and
Slide 53: Distributed Resources
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S Distributed Resources Distributed Resources Plans July 1, 2015 – Filed Distributed Resources Plan with the CPUC providing detailed, technical overviews of how to evaluate and optimally integrate new distributed energy resourc
Slide 54: CPUC Cost of Capital
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S CPUC Cost of Capital Authorized Structure Trigger Mechanism and Cost Moody’s Baa Utility Index 7% Capital Cost Structure 6% Common Equity 52% 10.40% Preferred Stock 1% 5.60% 5% Long-Term Debt 47% 5.52% 4% PG&E Benchmark Weighte
Slide 55: Electric Vehicle Infrastructure
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S Electric Vehicle Infrastructure February 9, 2015 – Filed CPUC application March 21, 2016 – Filed settlement agreement to deploy ~7,500 charging stations over three years, at a cost of $160 million ($132 capital, $28 expense
Slide 56: Energy Storage
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S Energy Storage Energy Storage RFO CPUC Storage Rulemaking (R.10-12-007) established 1,325 MW target for all IOUs (580 MW target for PG&E) by 2024 with up to 50% utility ownership of transmission and distribution projects; fir
Slide 57: Residential Rate/NEM Decisions
A P P E N D I X 3 – O V E RV I E W O F K E Y R E G U L AT O RY C A S E S Residential Rate/NEM Decisions Residential Rate Design OIR Decision The CPUC reviewed residential rate structure issued a decision in July 2015 which: Transition from 4 to 2 tiers by 2019; PG&E is currently at 3 tiers “Su
Slide 58: Breakdown of 2015 Total Revenue Requirement
APPENDIX 4 Breakdown of 2015 Total Revenue Requirement Revenue Requirement 2015 Revenue Requirement Component ($ in M) General General Rate case (Distribution and Rate Case Generation) 53% Base ~$9,300 M Gas Transmission and Storage • Includes costs to own and operate our assets • Earning the author
Slide 59: Description of Gas System Safety Recognition
APPENDIX 5 Description of Gas System Safety Recognition ISO 55001 ISO (International Organization for Standardization) 55001 enables the development of an effective asset management system so that an organization can achieve its objectives consistently and sustainably over time. ISO consists of memb
Slide 60: Credit Metrics and Ratings
APPENDIX 6 Credit Metrics and Ratings Fitch Moody’s S&P Pacific Gas and Electric Company Senior Unsecured Debt A- A3 BBB+ Short-term Debt F2 P-2 A-2 Outlook Positive Positive Positive PG&E Corporation Senior Unsecured Debt BBB+ Baa1 BBB Short-term Debt F2 P-2 A-2 Outlook Positive Positive Positive 6