Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Deutsche Bank 2008 Energy & Utilities Conference
41 slides from Pacific Gas & Electric's conference presentation, May 28, 2008
Slide 1: PG&E Corporation: Highlights from the May Investor Conference
PG&E Corporation Highlights from the May 22 Investor Conference Christopher P. Johns Senior Vice President & CFO Deutsche Bank 2008 Energy & Utilities Conference May 28 – 29, 2008 Miami, Florida This presentation is not complete without the accompanying statements made by management on May 22 and Ma
Slide 2: Cautionary Language Regarding Forward-Looking Statements
Cautionary Language Regarding Forward-Looking Statements This presentation contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2008 and 2009 earnings per share from operations, targeted compound average growth rate for earnings per share from operations over th
Slide 3: PCG: Investment Case
PCG: Investment Case PCG offers competitive growth in a constructive regulatory environment with an attractive valuation: $13 billion planned CapEx 2008-2011 85% of CapEx approved 11.45% weighted ROE on 52% equity High-performing, low-carbon generation Decoupled revenues Sustainable di
Slide 4: PG&E Vision
PG&E Vision Our Vision and Values OUR VISION The leading utility in the United States OUR GOALS Delighted Customers Energized Employees Rewarded Shareholders OUR STRATEGIES Operational Excellence Transformation OUR VALUES We act with integrity and communicate honestly and openly We are passionate ab
Slide 5: PG&E Goals
PG&E Goals Customer Loyalty Employee Engagement Environmental Leadership Deliver for Shareholders
Slide 6: 2008 Business Priorities
2008 Business Priorities Deliver on Financial Objectives Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability
Slide 7: Delivering on Financial Objectives
Delivering on Financial Objectives Invest in needed infrastructure Ensure adequate liquidity Meet EPS targets Generate strong cash flow
Slide 8: Confirming EPS Guidance
Confirming EPS Guidance EPS from Operations Guidance: 2008 guidance of $2.90-$3.00 per share 2009 guidance of $3.15-$3.25 per share 8% targeted CAGR 2007-2011 EPS from Operations* $3.60 $3.20 $2.80 $2.40 $2.00 2007 2008 Estimated 2009 Estimated Guidance Range * Reg G reconciliation to GAAP f
Slide 9: Achieving 8% Growth Target
Achieving 8% Growth Target Components of Compound Average Growth Rate 2007-2011 % CAGR 2007-2011 Other Drivers (0% to +1%) New Shares (-3% to- 5%) Add’l CapEx Efficiency Savings 10% (+1 to 3%) CEE Incentives Holding Company Leverage 8% 8% CAGR Base 2007- 2011 6% 2007 Forecast Guidance { Rate Base Ra
Slide 10: Capital Expenditure Outlook
Capital Expenditure Outlook Prior Forecast Levels $ MM $4,000 $3.7 B $3.6B $3,500 $3.3 B $3.3 B $3.4 B $3.2 B $3.0 B $3.0 B $3,000 $2,500 $2,000 $1,500 $1,000 $500 2008 2009 2010 2011 Common Plant $260 $230 $200 $250 SmartMeter Program $260 $330 $260 $220 Gas Transmission $230 $200 $175 $200 Electri
Slide 11: Rate Base Growth
Rate Base Growth Weighted Average Annual Rate Base* Prior Vs. Current Forecast Prior Forecast** Current Forecast $B 30.0 22.6 24.1 23.9 25.0 20.8 22.1 20.4 18.6 18.3 20.0 15.0 10.0 5.0 0.0 2008 2009 2010 2011 • Projected 2008-2011 rate base is not adjusted for the impact of the carrying cost credit
Slide 12: Earnings Drivers Reconciliation
Earnings Drivers Reconciliation Cumulative four-year totals (pre-tax earnings in $MM) Need identified in December 2007 (2008-2011) $335- $575 Potential sources identified in December 2007 to fill need: Additional Rate Base Investment $125- $175 CEE Program Incentives $100- $200 Operational Eff
Slide 13: Additional CapEx
Additional CapEx Proposed Projects Above 2008-2011 Base CapEx Forecast SmartMeterTM Program Upgrade $460 MM capital Approval expected by year-end 2008 Cornerstone Improvement Program (Enhanced Reliability Investment) $800 MM capital 2008-2011 $1.5 B capital investment beyond 2011 CPUC
Slide 14: Improved Operational Planning
Improved Operational Planning Current-state Performance Value Multi-year operating plan Rigorous comprehensive process Both tactical and strategic view Business Reviews Real-time decisions Sr. management dialogue and engagement Project governance Holistic approach Multi-functional busine
Slide 15: Operational Changes and Efficiencies in Current Operating Plan
Operational Changes and Efficiencies in Current Operating Plan + Economic Stimulus Act of 2008 + Resolution of outstanding tax audits + Settlement of outstanding generator claims − Delay in electric transmission project (C3ET) + Workforce reductions + Strategic sourcing + Cash cycle management + Inv
Slide 16: Energy Efficiency Incentives
Energy Efficiency Incentives Guidance assumes: $90 - $130 MM in Energy Efficiency Incentives 2008-2011 2 years in 2008, 1 year in 2009, hold-back in 2010, 2 years in 2011 2006-2008 Program effectiveness phase (“net-to-gross issues”) to be finalized by CPUC summer 2008 Program goals for 200
Slide 17: Cash Flow and Equity Needs
Cash Flow and Equity Needs Financing Needs 2008-2011 in $MM 2007 2008 2009 2010 2011 Actual Low High Low High Low High Low High Cash from operations* 1,953 3,225 to 3,125 2,275 to 2,175 2,400 to 2,250 2,825 to 2,675 Capital Expenditures (2,768) (3,650) to (3,750) (3,275) to (3,375) (2,975) to (3,125
Slide 18: Dividend Policy
Dividend Policy Objectives: Flexibility Sustainabilility Comparability Payout ratio range of 50% - 70% Growth balanced with funding for additional investment opportunities
Slide 19: Financial Assumptions 2008-2011
Financial Assumptions 2008-2011 Capital expenditure base forecast reflects projects that are highly likely or already approved CPUC authorized ROE is 11.35% and Utility earns at least 12% at FERC on projected rate base Ratemaking capital structure maintained at 52% equity Additional capital
Slide 20: Key Financial Takeaways
Key Financial Takeaways Delivering on Near-term EPS Guidance and 8% CAGR Investing in Attractive Rate Base Opportunities Utilizing Operating Efficiencies, Incentive Earnings and Leverage Effectively Delivering Strong Cash Flow and Liquidity Sustaining a Comparable Dividend
Slide 21: 2008 Business Priorities
2008 Business Priorities Deliver on our EPS Goals Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability
Slide 22: Focus on our Customers
Focus on our Customers Improvements made in 2007 Increase in success rate for resolving customer issues on the first visit Sped up issue resolution by 50% Website improvements Resulted in Increased Customer satisfaction Continued upward trend in 2007 PG&E ranks in top 10% for both elec
Slide 23: JD Power Rankings
JD Power Rankings 2007 Higher than 2006 Residential Electric Residential Gas Business Gas Business Electric 0 2 5 4 10 11 20 20 30 # Utilities Ranked 40 38 2006 2007 43 50 46 51 55 60 58 70 80 76
Slide 24: Innovative EE and DR programs
Innovative EE and DR programs
Slide 25: SmartMeter Program Progress
SmartMeterTM Program Progress Over 550,000 meters installed 270,000 meters being read electronically Year-end 2008 target: 1.3 million meters installed Live AMI billing 12/07 Demand Response Interval Billing Live Billing IT infrastructure 05/08 live 2Q 2007 Upgrade technology Deployment (incl.up
Slide 26: 2008 Business Priorities
2008 Business Priorities Deliver on our EPS Goals Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability
Slide 27: Identifying Operational Efficiencies
Identifying Operational Efficiencies Strategic Sourcing IT, Telecom, and consulting ($1.4 B in annual spend) Contract extensions ($1.2 B in annual spend) Labor Productivity Timekeeping and reporting process Asset Management Fleet Management ($200 M in annual spend) Real Estate Optimi
Slide 28: 2008 Business Priorities
2008 Business Priorities Deliver on our EPS Goals Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability
Slide 29: Developing a High Performance Team
Developing a High Performance Team New Channels for Labor Talent Investment in recruiting expertise and infrastructure Power Pathways We’ve complimented our management ranks with additional leaders that broadens our diversity of backgrounds, expertise and thinking Leveraging Experience S
Slide 30: Measuring Our Performance
Measuring Our Performance Compensation Aligned with Business Focus Percentage 2008 Compensation metrics weight Delivering on EPS Goals 40% (Measurement of earnings from ongoing core operations) Brand Health Index 20% (Composite of customer surveys and marketing research) Reliable Energy Delivery 20%
Slide 31: 2008 Business Priorities
2008 Business Priorities Deliver on our EPS Goals Focus on Customer Service and Satisfaction Identify and Capture Operating Efficiencies Ensure Workforce Readiness and Alignment Improve System Reliability
Slide 32: Diablo Steam Generator Replacement
Diablo Steam Generator Replacement Steam Generator Replacement $700 MM approved capital investment Unit 2 replacement completed in 69 days Unit 1 replacement scheduled for early 2009
Slide 33: Gateway Generating Station
Gateway Generating Station More than 50% complete On budget, on time >1,000,000 hours with no injury Begins operations 1Q 2009
Slide 34: New Generation: Colusa & Humboldt
New Generation: Colusa & Humboldt Humboldt Status 163 MW Colusa: CEC permits received; construction imminent Colusa Humboldt: Slight delays in permitting, 657 MW construction expected to begin by end of year Gateway 530 MW Strategy for execution mirrors successes at Gateway Experienced pro
Slide 35: Electric Transmission Investment
Electric Transmission Investment Palermo Transmission Substation $15 MM interconnection for local transmission Lakeville-Sonoma Transmission Line $27 MM upgrade serving 60,000 customers Central California Clean Energy Transmission (C3ET) Line $1.2 B renewable access and increased reliabi
Slide 36: Cornerstone Improvement Program
Cornerstone Improvement Program Proposed $2.3 B/ 6-yr. System Upgrade Key to electric distribution system reliability improvements Supporting distribution automation Preparing for the grid of the future
Slide 37: Key Operations Takeaways
Key Operations Takeaways Large scale projects are progressing smoothly New generation projects are achieving excellent results: on time, on budget New transmission projects are gaining momentum with project development and permitting The Cornerstone Improvement Program is a significant step
Slide 38: PCG: Investment Case
PCG: Investment Case PCG offers competitive growth and a constructive regulatory environment with an attractive valuation: $13 billion planned CapEx 2008-2011 85% of CapEx approved 11.45% ROE on 52% equity High-performing, low-carbon generation Decoupled revenues Sustainable dividend,
Slide 39: Appendix
Appendix Deutsche Bank Energy and Utilities Conference May 27-29, 2008
Slide 40: 2007 EPS - Reg G Reconciliation
2007 EPS - Reg G Reconciliation EPS on an Earnings from Operations Basis $2.78 Items Impacting Comparability 0.00 EPS on a GAAP Basis $2.78
Slide 41: EPS Guidance - Reg G Reconciliation
EPS Guidance - Reg G Reconciliation 2008 Low High EPS Guidance on an Earnings from Operations Basis* $2.90 $3.00 Estimated Items Impacting Comparability 0.00 0.00 EPS Guidance on a GAAP Basis $2.90 $3.00 2009 Low High EPS Guidance on an Earnings from Operations Basis* $3.15 $3.25 Estimated Items Imp
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