Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — Non-Deal Roadshow (November 2005)
30 slides from Pacific Gas & Electric's roadshow presentation, Nov 28, 2005
Slide 1: Investor Meetings
Investor Meetings November 28 - & December 1, 2005
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements regarding guidance for 2005 and 2006 earnings per share, cash flows, capital expenditures, rate base and rate base growth, stock repurchases, and dividends. These statements are based on
Slide 3: PG&E Corporation: A Value Opportunity
PG&E Corporation: A Value Opportunity - Awholly regulated utility offering a stable platform for growth Stability: * minimum authorized equity ratio and ROE * predictable revenue through 2006 * pass-through for procurement costs * balancing account for sales variability Regulated growth: * utility i
Slide 4: Pacific Gas and Electric Company (PG&E)
Pacific Gas and Electric Company (PG&E) 2005 marks the 100" anniversary of PG&E Provides energy to nearly 1 in 20 people in the U.S. « 70,000 square-mile service territory ¢ Four main operational units: - Electric and gas distribution - Electric transmission — Gas transmission - Electric generation
Slide 5: 2005 Priorities
2005 Priorities 1. Complete financial restoration Transform the way we do business Address electric procurement and owned generation Enhance communications oS Invest in utility infrastructure
Slide 6: Financial Restoration
Financial Restoration Y Authorized equity ratio Achieved 52% in January 2005 ¥ Common Dividend Resumed at $1.20 per share annually Targeted at $1.32 per share for 4Q’05 v Energy Recovery Bonds $1.9B issued in February $850MM issued in November v Share Repurchases $1.05B ASR executed in March $1.1B A
Slide 7: Financial Restoration: EPS Guidance
Financial Restoration: EPS Guidance EPS Guidance from Operations* 2005 toward the upper end of $2.20-$2.30 $2.50 $2.30 $2.10 $1.90 per share 2006 guidance of $2.35-$2.45 per share EPS from Operations * 2004A T 2005E 2006E i Guidance Range * Reg G reconciliation to GAAP for 2004 EPS from Operations a
Slide 8: Financial Restoration: Stock Price Performance
Financial Restoration: Stock Price Performance Stock price has outperformed S&P 500 and Dow Jones Utility Indices as we have worked toward financial restoration 100.0% 80.0% 60.0% 2 S RS S&P 500 Index === PG&E Corp Dow Jones Utility Index
Slide 9: Financial Restoration: Dividend Policy
Financial Restoration: Dividend Policy * Objectives - Flexibility - Sustainability — Comparability ¢ Target payout ratio range of 50%-70% ¢ Growth balanced with funding for additional investment opportunities
Slide 10: Financial Restoration: Dividend Yield
Financial Restoration: Dividend Yield Dividend yield of 3.39% is below comparator group median and average yield, but... 6.0% 5.0% ' Comparator Median 4.0% PG&E Corp 3.0% 2.0% 1.0% 0.0% wo a@8 QO €& FH F FE ZO WwW A EF oo Fe WwW << 6 Y oe zg ° x Source: Bloomberg L.P.
Slide 11: Financial Restoration: Estimated Earnings Growth
Financial Restoration: Estimated Earnings Growth - Zacks estimated earnings growth of 5.4% exceeds comparator group median and average growth 8.0% 7.0% 8.0% PG8E Corp* 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Comparator Median wa a@ A f£ a4 5 z wo uw wow 2 mW F a = Ss 6 G8 F @ <x <x ©) Ww ue oH oO PG&E Corpora
Slide 12: Engaged customers, employees, shareholders
y Ue Engag ewal ‘ 7 customers employees shareholders Operational excellence Transformation We act with integrity and communicate honestly and openly. We are passionate about meeting our customers’ needs and delivering for our shareholders. We are accountable for all of our own actions: these include
Slide 13: Transformation Vision
Transformation Vision Deliver value through operational excellence and customer service * Standardization prevails * Relentless focus on efficiency Understand the Customer Technology/ Innovation * Responsive to customer expectations ¢ Use of technology to drive operational excellence * Deliver new p
Slide 14: Transformation Enhancing Performance
Transformation Enhancing Performance Today (Manual) 2007 (Automated) Outage Management — Customer notifies the utility of a problem. - Multiple manual steps to mobilize resources. - Manual updates to multiple systems. Supply Chain — Multiple ordering systems for materials or services. — Multiple ven
Slide 15: Electric Procurement and Owned Generation
Electric Procurement and Owned Generation * Priority is to meet customer demand cost effectively * Near-term stability, long-term focus * Expected transfer of Contra Costa Unit 8 (530 MW) - Partially constructed (approximately 40%) - Estimate of $310MM to complete - CPUC decision expected 1Q 2006 *
Slide 16: Communications
Communications * Strengthening communications with our stakeholders: - Employees — Customers - Policymakers — Investors
Slide 17: Investment in the Utility
Investment in the Utility Making capital investments to improve infrastructure and meet customer needs * Investment drivers: - Load growth - Aging infrastructure - Technology and reliability-driven enhancements « Annual capital expenditures up to $2.5B through 2009 - Anticipate decision on 2007 GRC
Slide 18: Forecast of Utility Infrastructure Investments
Forecast of Utility Infrastructure Investments Estimated Average Annual Capital Expenditures ($MM) Major Categories of Est. Capital Spending 2007-2009 ($B) 500 Distribution (as indicated in GRC NOI) $4.5 $2,000 Diablo steam generation replacement 05 $1,500 Completion of Contra Costa Unit 8 03 $1,000
Slide 19: Rate Base Growth
Rate Base Growth - Average annual rate base growth will depend on utility infrastructure needs Average Annual Rate Base ($B)* $20.0 $17.5 - al i : $12.5 r 1 1 2005 2006 2007 2008 2009 * 2006-2009 rate base is not adjusted for the impact of the carrying cost credit that results from the second series
Slide 20: Conclusion
Conclusion * PCG: a value opportunity with stability and solid growth prospects Up to $2.5B of capital expenditures annually through 2009 Rate base up to $20B by 2009 Strong cash flow Share repurchases of approximately $2.2B in 2005 * A focus on operational excellence — Transforming operations to pr
Slide 21: Appendix
PG&E Corporation. PGAE Appendix * Reg G Reconciliation * Carrying Cost Credit Impact LOOKING FORWARD e Utility Overview
Slide 22: Reg G Reconciliation
Reg G Reconciliation 2004 2004 PG&E Corporation EPS on an Earnings from Operations Basis Items Impacting Comparability: Gain resulting from prior year impact and recognition of reg. asset from 2003 GRC approval Recovery of previously incurred costs related to electric industry restructuring implemen
Slide 23: Reg G Reconciliation
Reg G Reconciliation 2005 Low High PG&E Corporation EPS Guidance on an Earnings from Operations Basis $2.20 $2.30 Estimated Items Impacting Comparability: Incremental interest expense 1 (0.01) (0.01) Demand-side management & CEE initiatives 2 0.24 0.24 Discontinued Operations - NEGT ? 0.03 0.03 PG&E
Slide 24: Carrying Cost Credit Impacts
Carrying Cost Credit Impacts Estimated Average Deferred Tax Balances and Carrying Cost Credit Impacts ($MM) 2005 2006 2007 2008 2009 2011 RRB & ERB Average Deferred Tax Balance and After-tax Generator Settlements $295 $1,125 $878 $683 $542 $242 Est. Carrying Cost Credit ($17) ($66) ($51) ($40) ($32)
Slide 25: Utility Overview
Utility Overview * Authorized rate of return: 11.22% * Projected 2005 rate base: $15.2B « Adjustment mechanisms for sales levels and procurement cost differences from revenue requirements — Balancing accounts to track over- and under-collections * 2004 rate base levels: - Electric and gas distributi
Slide 26: Existing Resource Mix
Existing Resource Mix * Owned generation Type Net Capacity (MW) — Diablo Canyon Nuclear 2,174 — Hydroelectric facilities Hydro 3,896 — Hunters Pt. and Humboldt Fossil 350 - Total 6,420 Other Purchased * 2004 sources of electric energy Power Irrigation 14% Owned Generation 33% Districts 5% QFs/ Renew
Slide 27: Customer Breakdown by Usage
Customer Breakdown by Usage Electric Customers Gas Customers Commercial Commercial = Residential @ Residential @ Industrial @ Industrial @ Agricultural & her
Slide 28: Credit Profile
Credit Profile * Current Ratings - Utility issuer rating: BBB (S&P) and Baa1 (Moody's) - Utility unsecured debt: BBB (S&P) and Baa1 (Moody's)
Slide 29: Economic Environment
Economic Environment * Forecast for PG&E's service territory is steady population growth... PG&E Service Territory Population w/in CA (000) 30,000 20,000 10,000 0- 2001 2002 2003 2004 2005 2006 2007 2008 2009 m@ PG&E Service Territory = Non PG&E 2001-2004 PG&E CAGR = ~1.0% 2005-2009 PG&E Expected CA
Slide 30: Economic Environment
Economic Environment ¢ While economic growth is expected to grow more quickly PG&E Service Territory Gross Product Contribution to CA ($B) $2,000 $1,500 $1,000 $500 $0 ! 2001 2002 2003 2004 2005 2006 2007 2008 2009 @ PG&E Service Territory ® Non PG&E 2001-2004 PG&E CAGR = ~2.6% 2005-2009 PG&E Expect
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