Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Q4 2014 Earnings Presentation
35 slides from Pacific Gas & Electric's earnings presentation, Feb 10, 2015
Slide 1: Fourth Quarter Earnings Call
FOURTH QUARTER EARNINGS CALL February 10, 2015
Slide 2: Safe Harbor Statements
Safe Harbor Statements Management's statements and assumptions about PG&E Corporation’s 2015 earnings from operations (including estimates and forecasts of costs, capital expenditures, rate base, and equity issuances) are forward-looking statements that reflect management’s judgment and opinions. Th
Slide 3: Key Focus Areas
Key Focus Areas Resolve gas issues • Execute critical gas work • Complete regulatory and legal proceedings as soon as possible Position company for success • Rigorous multi-year planning • Drive continuous improvement Partner effectively • Strengthen local presence • Engage in public policy developm
Slide 4: Operational and Regulatory Update
Operational and Regulatory Update Executing on Operations 2014 Operational Results • Record reliability (SAIDI) 6th year in a row • Highest customer satisfaction score since 2009 • Renewables exceeded 25% of electric power provided Gas Safety Work in 2014 • Tested, or validated through records, 190
Slide 5: 2014 Earnings Results
2014 Earnings Results Q4 2014 Earnings Earnings EPS EPS (millions) (millions) Earnings from Operations $ 253 $ 0.53 $ 1,648 $ 3.50 Items Impacting Comparability Natural Gas Matters (122) (0.26) (216) (0.45) Environmental Related Costs - - 4 0.01 Earnings on a GAAP Basis $ 131 $ 0.27 $ 1,436 $ 3.06 N
Slide 6: Q4 2014: Quarter over Quarter Comparison
Q4 2014: Quarter over Quarter Comparison EPS from Operations $0.04 $0.02 $0.02 $0.05 $0.60 $0.06 $0.08 ($0.14) ($0.02) $0.40 $0.53 $0.20 $0.42 $0.00 Q4 2013 EPS 2014 GRC Tax benefit - Growth in rate Regulatory Uneconomic Miscellaneous Timing of taxes Increase in Q4 2014 EPS from Operations expense r
Slide 7: Assumptions for 2015
Assumptions for 2015 Capital Expenditures Authorized Rate Base (weighted average) ($ millions) ($ billions) 2015 2015 Electric Distribution 1,950 Electric Distribution 13.1 Electric Transmission 1,150 Electric Transmission 5.1 Gas Transmission 600-800 Gas Transmission 3.3-3.4 Gas Distribution 900 Ga
Slide 8: 2015 Items Impacting Comparability
2015 Items Impacting Comparability ($ millions, pre-tax) 2015 Pipeline Related Expenses 100 - 150 Legal and Regulatory Related Expenses 25 - 75 Fines and Penalties – 2015 Items Impacting Comparability Total 125 - 225 Guidance ranges exclude potential fines or penalties and any future insurance recov
Slide 9: 2015 Equity Issuance
2015 Equity Issuance Does not reflect resolution of pending investigations or other enforcement matters $827M $400M - 600M - Timing of financing and GRC decision - Higher earnings (rate base growth) - Lower unrecovered costs + Higher capital expenditures 2014 2015 Recorded 2014 EOY shares outstandin
Slide 10: Capital Expenditures 2014-2016
Capital Expenditures 2014-2016 $5.3B - 5.8B* ~$5.5B $4.9B 2014 2015 2016 Recorded (1) * Range reflects recent regulatory decisions, current or planned regulatory filings, and historic spending patterns. (1) 2014 recorded capex includes ~$400 million that has already been reserved for PSEP capital th
Slide 11: Rate Base Growth 2014-2016
Rate Base Growth 2014-2016 2014-2016 Weighted Average Authorized Rate Base CAGR: ~9% $33.4B - 33.8B* ~$31B ~$28.2B 2014 2015 2016 * Range reflects recent regulatory decisions, current or planned regulatory filings, and historic spending patterns. Changes from prior quarter are noted in blue. See the
Slide 12: Appendix 1 – Regulatory and Guidance Matters
Appendix 1 – Regulatory and Guidance Matters • Updates to Appendix 1 Since the Previous Quarter slide 13 Rate Cases • 2015 CPUC Gas Transmission and Storage Rate Case slide 14 • CPUC General Rate Cases slide 15 • FERC Transmission Owner Rate Case slide 16 Natural Gas Matters • Gas Regulatory Proceed
Slide 13: Updates to Appendix 1 Since the Previous Quarter
Updates to Appendix 1 Since the Previous Quarter • Slide 14 2015 CPUC Gas Transmission and Storage Rate Case • Slide 15 CPUC General Rate Cases • Slide 16 FERC Transmission Owner Rate Case • Slide 17 Gas Regulatory Proceedings Schedule • Slide 18 Gas Pipeline Safety Costs • Slide 19 Presiding Office
Slide 14: 2015 CPUC Gas Transmission and Storage Rate Case
2015 CPUC Gas Transmission and Storage Rate Case • Application filed with the CPUC on December 19, 2013 • Request for authorized revenue requirement for 2015-2017 – Includes operating costs and capital for CPUC jurisdictional gas transmission and storage • 2015 requested revenue requirement of $1.3
Slide 15: CPUC General Rate Cases
CPUC General Rate Cases 2014 GRC • General Rate Case set base revenue requirement for 2014-2016 – Includes operating costs and capital for generation and electric and gas distribution – Excludes cost of capital determination, electric transmission, gas transmission, and cost of fuel and purchased po
Slide 16: FERC Transmission Owner Rate Case
FERC Transmission Owner Rate Case TO16 • July 30, 2014 – TO16 filed with FERC • Requested revenue requirement of $1.366 billion and ROE of 11.26% • September 30, 2014 – TO16 was accepted and rate changes suspended until March 1, 2015 • February 25 and 26, 2015 – Next settlement conference 16
Slide 17: Gas Regulatory Proceedings Schedule
Gas Regulatory Proceedings Schedule 1/23: Proposed decision on GO 2/26: CPUC to vote on GO Gas Pipeline 112 (pipeline safety) rule 112 (pipeline safety) rule Safety OIR revisions revisions R. 11-02-019 1/30: PSEP quarterly compliance filing 12/22: Parties respond to OII Gas Distribution OII and Orde
Slide 18: Gas Pipeline Safety Costs
Gas Pipeline Safety Costs Shareholder Funded Gas Transmission Safety-Related Costs ($ millions) 2015 and Beyond 2010-2014 Total Estimated Forecast Pipeline Safety Enhancement Plan (PSEP) (1) PSEP Expense 885 ~25 (2) PSEP Capital 455 ~210 Total PSEP 1,340 ~235 $1,575 Gas Accord V* ~760 ~500 $1,260 To
Slide 19: Presiding Officers’ Joint Penalty Decision: Estimated Total Shareholder Impact
Presiding Officers’ Joint Penalty Decision: Estimated Total Shareholder Impact ALJs' penalty SED penalty ($ millions) decision recommendation Fine payable to the State General Fund $ 950 300 Refund of PSEP (1) revenues previously authorized 400 Additional estimated unrecoverable costs (2) 50 1,515 T
Slide 20: Incremental Equity Factors
Incremental Equity Factors Incremental Equity Factors Associated with Gas Matters Equity Impacting Event Multiplier Fine paid to state General Fund (1) 100% Unrecovered expenses (2) (3) 60% Capital write-off (3) 30% (1) Applies to newly issued fines. Fines already accrued: 50% multiplier at time of
Slide 21: Appendix 2 – Supplemental Earnings Materials
Appendix 2 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation Earnings from Operations to Consolidated slide 22 Income Available for Common Shareholders in Accordance with GAAP Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share from Operations slide 23
Slide 22: A: Reconciliation of Earnings from Operations to GAAP
Exhibit A: Reconciliation of PG&E Corporation Earnings from Operations to Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) Fourth Quarter and full year, 2014 vs. 2013 Three Months Ended December 31, Twelve Months Ended Decembe
Slide 23: B: Key Drivers of EPS from Operations
Exhibit B: Key Drivers of PG&E Corporation Earnings per Common Share (“EPS”) from Operations Fourth Quarter and full year, 2014 vs. 2013 Fourth Quarter 2013 EPS from Operations (1) $ 0.42 ($/Share, Diluted) 2014 GRC expense recovery (2) 0.08 (3) Tax benefit – repairs method and forecast change 0.06
Slide 24: C: Operational Performance Metrics
Exhibit C: Operational Performance Metrics 2014 Performance Results 2014 2014 Meets Actual Target Target Safety (includes both public and employee safety metrics) Nuclear Operations Safety Unit 1 Performance Indicator 84.22 94.00 - Unit 2 Performance Indicator 84.43 88.00 - Gas Operations Safety Gas
Slide 25: Definitions of 2014 Operational Performance Metrics
Definitions of 2014 Operational Performance Metrics from Exhibit C Safety Public and employee safety are measured in four areas: (1) Nuclear Operations Safety, (2) Gas Operations Safety, (3) Electric Operations Safety, and (4) Employee Safety. 1. The safety of the Utility’s nuclear power operations,
Slide 26: D: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Fourth Quarter and full year, 2014 vs. 2013 Three Months Ended December 31, Twelve Months Ended December 31, 2014 2013 2014 2013 Sales from Energy Deliveries (in millions kWh) 20,944 20,829 86,303 86,513 Total Electric Customers a
Slide 27: E: Guidance for Items Impacting Comparability
Exhibit E: PG&E Corporation Guidance for Items Impacting Comparability (“IIC”) 2015 IIC Guidance (in millions, after-tax) Low Earnings High Earnings Estimated Items Impacting Comparability: (1) Pipeline related expenses (2) $ (89) $ (59) Legal and regulatory related expenses (3) $ (44) $ (15) Fines
Slide 28: F: General Earnings Sensitivities
Exhibit F: General Earnings Sensitivities PG&E Corporation and Pacific Gas and Electric Company Estimated 2015 Variable Description of Change Earnings Impact Rate base +/- $100 million change in allowed rate base +/- $5 million Return on equity (ROE) +/- 0.1% change in allowed ROE +/- $16 million Sh
Slide 29: G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Dec 19, 2013 – Application filed 2015 Gas Transmission and Storage Rate Case A.13-12-012 Jan 16, 2014 – PG&E workshop Mar 7, 2014 – Supplemental testimony served Mar 12, 2014 – Prehear
Slide 30: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Jul 24, 2013 – PG&E filed TO15 rate case seeking an annual revenue requirement for 2014 Transmission Owner Rate Case (TO15) ER13-2022 Aug 14, 2013 – Comments/interventions due to FERC
Slide 31: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Gas Pipeline Safety Order Instituting Rulemaking R.11-02-019 Dec 20, 2012 – Final decision on Pipeline Safety Enhancement Plan D.11-03-047 Jan 28, 2013 – Intervenor requests for rehear
Slide 32: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Class Location Designation Order Instituting I.11-11-009 Aug 24, 2012, Jan 7, 2013, and Mar 4-5, 2013 – Evidentiary hearings Investigation Nov 20, 2012 – Concurrent opening briefs Dec
Slide 33: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2014 Long-Term Procurement Plan Phase 1 R.13-12-010 Phase 1a: system reliability needs Aug 13, 2014 – Phase 1a testimony of modeling parties Phase 1b: filling system reliability needs,
Slide 34: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Nuclear Decommissioning Cost Triennial Proceeding A.12-12-012 Dec 21, 2012 – Application filed D.14-02-024 Mar 17, 2013 – Prehearing conference Jun 17, 2013 – Scoping memo to bifurcate
Slide 35: Exhibit G: Summary of Selected Regulatory Cases
Exhibit G: Pacific Gas and Electric Company Summary of Selected Regulatory Cases Regulatory Case Docket # Key Dates Wholesale Distribution Tariff Rate Case (WDT2) ER13-1188 Mar 29, 2013 – PG&E filed WDT2 rate case seeking increase to initial generic WDT service rates and increase to rates for CCSF,