Slide 1: PG&E Corporation Investor Conference May 22, 2008
Investor Conference May 22, 2008 Sonoma, California PG&E Corporation Investor Conference May 22, 2008 Sonoma, California This presentation is not complete without the accompanying statements made by management on May 22, 2008. A replay is available on PG&E Corporation’s homepage at www.pge-corp.com.
Slide 2: 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 the 2007-2011 outlook period, as well as management’s proje
Slide 3: Morning and Afternoon Sessions
May 22, Morning Session 9:00 a.m. -Noon = Performance Outlook (Peter Darbee, Chairman, CEO, President, PG&E Corporation) = Financial Review (Chris Johns, Sr. VP, CFO and Treasurer PG&E Corporation) = Break = Operational Performance (Bill Morrow, CEO and President, Pacific Gas and Electric and Jack K
Slide 4: Performance Outlook
Performance Outlook Peter Darbee Chairman, CEO and President, PG&E Corporation
Slide 5: Today's Key Takeaways
Today’s Key Takeaways § PG&E has a plan to deliver on its financial objectives § Management is committed to execute on plan § PG&E is on track to achieve its guidance
Slide 6: Top Analyst Questions
Top 5 Analyst Questions 1. How will you achieve 8% growth rate? 2. What are the risks to your growth targets? 3. How are you achieving your efficiency improvements? 4. What is the CapEx outlook? 5. What are your equity and financing needs?
Slide 7: PCG: Investment Case
8% CAGR in EPS 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 §
Slide 8: Our Vision and Values
Our Vision and Values The leading utility in the United States Delighted Customers Energized Employees Rewarded 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 sha
Slide 9: PG&E Goals
PG&E Goals § Customer Loyalty § Employee Engagement § Environmental Leadership § Deliver for Shareholders
Slide 10: Environmental Leadership
Exhibit § Climate change, GHG legislation and energy independence § Founding member of U.S. Climate Action Partnership and a leading voice in global climate change § Commitment to renewable energy sources § Over 1,000 MW of contracted solar capacity § “First look” at new technologies § Environmental
Slide 11: Customer and Community Focus
Customer and Community Focus § Climate Smart § Corporate Citizenship § Supplier Diversity Award § E-Source: Website ranked 1 of 111 § Habitat for Humanity § $1.2 M in solar installations
Slide 12: Business Priorities
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 13: Financial Objectives
Financial Objectives Chris Johns Senior Vice President, CFO, Treasurer, PG&E Corporation
Slide 14: Business Priorities
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 15: Delivering on Financial Objectives
Delivering on Financial Objectives § Invest in needed infrastructure § Ensure adequate liquidity § Meet EPS targets § Generate strong cash flow
Slide 16: Confirming EPS Guidance
EPS from Operations* * Reg G reconciliation to GAAP for 2007 EPS from Operations, and 2008 and 2009 EPS Guidance available in Appendix and at www.pge-corp.com 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
Slide 17: EPS Growth Forecast Drivers
Base Forecast Rate Base Growth (+9% to 10%) Add’l CapEx (+1 to 3%) New Shares (-3% to- 5%) $2.70- $2.80 8% CAGR 2007- 8% 10% 6% Guidance { Range % CAGR 2007-2011
Slide 18: Capital Expenditure Outlook
$ MM $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Common Plant $260 $230 $200 $250 SmartMeter Program $260 $330 $260 $220 Gas Transmission $230 $200 $175 $200 Electric Transmission $550 $580 $660 $750 Generation $1,100 $750 $530 $260 Distribution $1,300 $1,200 $1,200 $1,350 Projects not inc
Slide 19: Rate Base Growth
• Projected 2008-2011 rate base is not adjusted for the impact of the carrying cost credit that primarily results from the second series of the Energy Recovery Bonds. Earnings will be reduced by an amount equal to the deferred tax balance associated with the Energy Recovery Bonds regulatory asset, m
Slide 20: Additional Earnings Drivers
Pre-Tax Earnings ($ MM) Additional Earnings Drivers
Slide 21: Additional CapEx
Additional CapEx Proposed Projects Above 2008-2011 Base CapEx Forecast § SmartMeter TM 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 22: Improved Operational Planning
All current-state processes include integrated analysis with disciplined tracking and follow up to minimize surprises and ensure planned results Improved Operational Planning
Slide 23: Operational Changes and Efficiencies in 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 24: 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 § 2006-2008 Program effectiveness phase (“net-to-gross issues”) to be finalized by CPUC summer 2008 § Program goals for 2009-201
Slide 25: Cash Flow Projections
*Net cash flow = Cash flow from ops less CapEx, values reflect the mid-point of forecast range Cash Flow Projections
Slide 26: Cash Flow and Equity Needs
Financing Needs 2008-2011 in $MM * excludes cash from Energy Recovery Bond and Rate Recovery Bond revenues Cash Flow and Equity Needs
Slide 27: Dividend Policy
Dividend Policy § Objectives: § Flexibility § Sustainability § Comparability § Payout ratio range of 50% - 70% § Growth balanced with funding for additional investment opportunities
Slide 28: 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 29: 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 30: Managing the Business
Managing the Business Bill Morrow President and CEO, Pacific Gas and Electric Company
Slide 31: Business Priorities
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: 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 33: JD Power Rankings
JD Power Rankings Higher than 2006
Slide 34: Innovative EE and DR programs
Innovative EE and DR programs
Slide 35: SmartMeter Program Progress
* to 2011 estimates are based on forecasted construction schedules and additional contracted resources Year-end 2008 target: 1.3 million meters installed 2007 2008 2009 2010 2011 1st meter installed Billing IT infrastructure live 2Q Live AMI billing SmartMeter TM Upgrade Filing Demand Response Inter
Slide 36: Business Priorities
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 37: 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 Optimization ($100 M in annual spend) § Inv
Slide 38: Business Priorities
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 39: 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 40: Measuring Our Performance
Internal target is not publicly reported but is consistent with our public guidance for 2007 EPS from operations. Compensation Aligned with Business Focus Measuring Our Performance
Slide 41: Focusing on Operations
Focusing on Operations Jack Keenan Chief Operating Officer, Pacific Gas and Electric Company
Slide 42: Business Priorities
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 43: Major Project Highlights
Major Project Highlights § Diablo Canyon Steam Generator Replacement § New Generation § Gateway Generating Station § Colusa Generating Station § Humboldt Generating Station § Electric Transmission Investment § Cornerstone Improvement Program
Slide 44: 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 Diablo Steam Generator Replacement
Slide 45: Diablo Canyon Capacity Factor
Diablo Canyon Capacity Factor* *Including impact of refueling outage periods Unit-1 R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 R12 R13 R14 Unit-2 R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 R12 R13 Historical Diablo Capacity Factors (Total Plant)
Slide 46: Gateway Generating Station
Gateway Generating Station § More than 50% complete § >1,000,000 hours with no injury § On budget, on time § Begins operations 1Q 2009
Slide 47: New Generation: Colusa & Humboldt
Colusa MW Gateway MW Humboldt MW New Generation: Colusa & Humboldt § Status § Colusa: CEC permits received; construction imminent § Humboldt: Slight delays in permitting, construction expected to begin by end of year § Strategy for execution mirrors successes at Gateway § Experienced project teams i
Slide 48: 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 49: 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 50: 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 51: Conclusion
Conclusion Peter Darbee
Slide 52: PCG: Investment Case
8% CAGR in EPS 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 § Sustain
Slide 53: Regulatory Overview
Regulatory Overview Investor Conference May 22, 2008 Tom Bottorff Senior Vice President, Regulatory Relations
Slide 54: Topics for Discussion
Topics for Discussion § Utility Revenue Requirement § Revenue Protected from Sales Fluctuations § Key Regulatory Proceedings § Average Electric Rate Compared to CPI § CPUC Commissioner Terms
Slide 55: Utility Revenue Requirement
64% Utility Revenue Requirement May Public Purpose Programs Combined Electric and Natural Gas Supply Base Electric Supply Natural Gas 50% 43% 34% 41% 54% 2% 5% 7%
Slide 56: Revenue Protected from Sales Fluctuations
5% Public Purpose 35% Base 54% Electric and gas supply Revenue not protected from sales fluctuations Total revenue protected from sales fluctuations = 94% Revenue Protected from Sales Fluctuations
Slide 57: Key Regulatory Proceedings
*Q2 2009 if settlement reached; Q3 2010 if litigated ** Supplemental filing submitted 5/14/2008 Key Regulatory Proceedings
Slide 58: Average Electric Rate Compared to CPI
Average Electric Rate Compared to CPI
Slide 59: CPUC Commissioner Terms
CPUC Commissioner Terms California Public Utilities Commission § Commissioners serve six-year staggered terms; appointed by Governor, confirmed by state Senate § Current commissioners/term expiration date: § President Michael Peevey January 1, 2009 § Commissioner John Bohn January 1, 2012 § Commissi
Slide 60: Reliability Overview
Reliability Overview Investor Conference May 22, 2008 Ed Salas, Senior Vice President, Engineering and Operations Geisha Williams, Senior Vice President, Energy Delivery
Slide 61: The Cornerstone Improvement Program Summary
The Cornerstone Improvement Program Summary PG&E seeking CPUC approval for a six-year program to improve reliability of our electric distribution system. § Enhances overall reliability of energy delivery § Increases grid flexibility to mitigate outages § Sets higher performance expectations as measu
Slide 62: Cornerstone Program Costs
Cornerstone Program Costs $2.3 B total capital investment with revenue requirement true-up $2.3 B total capital investment with revenue requirement true-up
Slide 63: Cornerstone Program Scope
Cornerstone Program Scope Three major initiatives: 1. Increase available capacity and interconnectivity of system by installing approximately 95 substation transformers, 180 additional feeders, and 1,000 miles of conductor 2. Implement distribution automation on approximately 1,200 circuits in urban
Slide 64: Cornerstone Program Benefits
Cornerstone Program Benefits § Reduces duration, frequency, and extent of outages § Reduces duration by about 25% § Lowers frequency by about 30% § Increases ability to reconfigure system to quickly restore service § Together with PG&E’s SmartMeter TM initiatives, provides the foundation for a “Smar
Slide 65: Conclusion
The Cornerstone Improvement Program is a significant step toward building a more robust electric infrastructure The Cornerstone Improvement Program is a significant step toward building a more robust electric infrastructure This provides an opportunity to: This provides an opportunity to: § Increase
Slide 66: Customer Overview
Customer Overview Investor Conference May 22, 2008 Helen Burt, Senior Vice President and Chief Customer Officer Brad Whitcomb, Vice President, Marketing and Customer Innovation
Slide 67: Agenda
Agenda § Customer Care Background § Customer Segmentation § Demand Side Management § The SmartMeter™ Program
Slide 68: Customer Care Mission Statement
“We commit to earn the right to serve customers one interaction at a time.” Customer Care Mission Statement
Slide 69: J.D. Power Customer Satisfaction Performance
Electric Customers Gas Customers Note: * Residential data released in July (Electric) and September (Gas); Business data released in February (Electric) and March (Gas) Bottom Quartile 3 rd Quartile 2 nd Quartile Top Quartile Residential* Overall Customer Satisfaction Index Bottom Quartile 3 rd Quar
Slide 70: Customer Satisfaction Success
PG&E has taken Business Customer Satisfaction from 4 th Quartile (“Worst”) to the Top Quartile (“First”) Customer Satisfaction Success Business Customer Satisfaction Drivers 1. Segmenting our business customers 2. Tailoring our product offerings 3. Focusing our Service and Sales force 4. Providing a
Slide 71: Residential Segmentation
Segmentation leads to enhanced customer experience HIGH HIGH LOW Customer Needs Energy Needs • Higher Income / Large Homes ILLUSTRATIVE • Non-Temperate Climate Account Needs • Multiple Accounts • Multiple Payment Methods • Missed 20% Payments past 12 months Attention Needs • Help Tickets(2+ Past 12
Slide 72: Demand Side Management
Demand Side Management is projected to offset over 50% of PG&E’s future load growth Demand Reduction Strategies Solar Demand Response Transportation Energy Efficiency Demand Side Management
Slide 73: The Best Year Ever in Energy Efficiency Innovation
The Best Year Ever in Energy Efficiency Innovation Energy Efficiency Successes § PG&E set a personal best in terms of the highest gross savings we’ve ever achieved § Prevented more than 1 million tons of CO2 emissions § Equivalent to taking 150,000 cars off the road for one year § Saved enough energ
Slide 74: Energy Efficiency Incentive Approval Process
Energy Efficiency Incentive Approval Process
Slide 75: Looking Ahead
Looking Ahead § 2009 - 2011 Energy Efficiency Programs § Opportunities for Innovation
Slide 76: Innovating for the Future: Smart Energy Web
Today Near-Term Future • Home Area Network Energy Management • PHEV SmartCharge™ • Vehicle to Grid • Distributed storage and generation • SmartMeters™ • Electric Field Vehicles Innovating for the Future: Smart Energy Web
Slide 77: Procurement Overview
Procurement Overview Investor Conference May 22, 2008 Fong Wan, Vice President, Energy Procurement Roy Kuga, Vice President, Energy Supply
Slide 78: Energy Procurement Objectives and Challenges
§ Manage electric and gas procurement to achieve the following objectives: § Ensure reliable supply § Reduce customer costs and price risk § Support environmentally preferred resources § Minimize shareholder risk § Key challenges include managing the uncertainties related to: § Changing market struc
Slide 79: Energy Procurement Strategy
Energy Procurement Strategy § Portfolio diversification is key to long-term success § Portfolio of both utility owned generation and IPP contracts § Diversify contracts across terms, technologies, and counterparties to ensure performance § Diversify timing of commercial execution to minimize market
Slide 80: Energy Procurement Accomplishments
We have made the following progress toward achieving our goals: § Reliably met our gas and electric demands with full cost recovery § Contracted for over 3000 MW of renewable energy resources § Contracted or developed over 2000 MW of new, efficient, operationally flexibly gas-fired resources § Devel
Slide 81: Emerging Clean Technologies
Emerging Clean Technologies BioGas Wind Wave Energy Storage Geothermal Renewable Fuel Cell
Slide 82: Solar Technologies Under Deployment
Solar Technologies Under Deployment Power Tower Concentrating PV Thin Film PV Compact Linear Fresnel Trough Dish Engine
Slide 83: Officer Biographies
§ Officer Biographies
Slide 84: Peter A. Darbee
PETER A. DARBEE Chairman of the Board, Chief Executive Officer, and President PG&E Corporation Peter Darbee, a veteran of the energy, telecommunications, and investment banking industries, is Chairman of the Board, Chief Executive Officer, and President of PG&E Corporation. Based in San Francisco, P
Slide 85: William T. Morrow
WILLIAM T. MORROW President and Chief Executive Officer Pacific Gas and Electric Company Bill Morrow is President and Chief Executive Officer of Pacific Gas and Electric Company. Morrow, 47, has more than 26 years of management experience in the telecommunications industry. Prior to joining PG&E in
Slide 86: Christopher P. Johns
CHRISTOPHER P. JOHNS Senior Vice President, Chief Financial Officer and Treasurer PG&E Corporation, and SVPand Treasurer of Pacific Gas and Electric Company Chris Johns is Senior Vice President, Chief Financial Officer and Treasurer of PG&E Corporation, and Senior Vice President and Treasurer of Pac
Slide 87: Jack Keenan
JACK KEENAN Chief Operating Officer Pacific Gas and Electric Company Jack Keenan is Chief Operating Officer of Pacific Gas and Electric Company, and oversees the day-to-day operations of the Utility. Keenan joined Pacific Gas and Electric Company as Senior Vice President, Generation and Chief Nuclea
Slide 88: Barbara Barcon
BARBARA BARCON Vice President, Finance and Chief Financial Officer Pacific Gas and Electric Company Barbara Barcon is Vice President, Finance and Chief Financial officer of Pacific Gas and Electric Company. Barcon is responsible for business planning, management reporting, performance management and
Slide 89: Thomas E. Bottorff
THOMAS E. BOTTORFF Senior Vice President, Regulatory Relations Pacific Gas and Electric Company Tom Bottorff is Senior Vice President, Regulatory Relations, at Pacific Gas and Electric Company. He oversees the following areas: Energy Revenue Requirements, Operations Revenue Requirements, Rates and T
Slide 90: Helen A. Burt
HELEN A. BURT Senior Vice President and Chief Customer Officer Pacific Gas and Electric Company Helen Burt is Senior Vice President and Chief Customer Officer of Pacific Gas and Electric Company. Burt is responsible for all marketing and customer care functions at PG&E. Organizational responsibility
Slide 91: Roy M. Kuga
ROY M. KUGA Vice President, Energy Supply Pacific Gas and Electric Company Roy Kuga oversees the commercial transactions related to the procurement of gas and electricity commodities for PG&E's core gas and bundled electric service customers. Commercial transactions include short, medium, and/or lon
Slide 92: Hyun Park
HYUN PARK Senior Vice President and General Counsel PG&E Corporation Hyun Park is Senior Vice President and General Counsel of PG&E Corporation. Park is responsible for leading and directing the legal function for PG&E Corporation and its businesses, including its principal subsidiary, Pacific Gas a
Slide 93: Greg S. Pruett
GREG S. PRUETT Senior Vice President, Corporate Relations PG&E Corporation Greg S. Pruett is Senior Vice President, Corporate Relations of PG&E Corporation. He is responsible for leading and overseeing all external and internal communications and activities supporting the reputation and identity of
Slide 94: Edward A. Salas
EDWARD A. SALAS Senior Vice President, Engineering and Operations Pacific Gas and Electric Company Edward Salas is Senior Vice President of Engineering and Operations of Pacific Gas and Electric Company. He oversees gas and electric strategy, planning, engineering and operations, for both the transm
Slide 95: Gabriel B. Togneri
GABRIEL B. TOGNERI Vice President, Investor Relations PG&E Corporation Gabe Togneri is Vice President, Investor Relations of PG&E Corporation. With more than 25 years of experience in energy and finance, Togneri is responsible for providing the investment community with information about the Corpora
Slide 96: Fong Wan
FONG WAN Vice President, Energy Procurement Pacific Gas and Electric Company Fong Wan is Vice President, Energy Procurement of Pacific Gas and Electric Company, and is responsible for gas and electric supply planning and policies, market assessment and quantitative analysis, supply development, proc
Slide 97: Bradley E. Whitcomb
BRADLEY E. WHITCOMB Vice President, Marketing and Customer Innovation Pacific Gas and Electric Company Brad Whitcomb is the Vice President, Marketing and Customer Innovation for Pacific Gas and Electric Company. Whitcomb has primary responsibility for developing and managing market segment-specific
Slide 98: Appendix
Appendix Investor Conference May 22, 2008 Sonoma, California
Slide 99: PG&E Service Area in California
PG&E SERVICE AREA IN CALIFORNIA Pacific Gas and Electric Company (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 100: Electric and Gas Distribution
(1) Authorized revenues = operating costs + (rate of return rate base) Rate base = net plant ± adjustments to approximate invested capital Electric and Gas Distribution
Slide 101: Electric Transmission Business Scope
Business Scope = Wholesale electric transmission services (construction, maintenance) = Operation by CA Independent System Operator Primary Assets = $2.6 billion of rate base (2007 wid. avg.) Regulation = Federal Regulation (FERC) *" Cost of Service Ratemaking pratha e = Revenues vary with system lo
Slide 102: Gas Transmission Business Scope
Business Scope = Natural gas transportation, storage, parking and lending services = Customers: PG&E natural gas distribution and electric generation businesses, industrial customers, California electric generators Primary Assets = $1.5 billion of rate base (2007 wtd. avg.) Regulation = California s
Slide 103: Electric Procurement and Owned Generation
Electric Procurement and Owed Generation
Slide 104: PG&E Generation in California
Helms Pumped Storage Humboldt Conventional Hydroelectric facilities PG&E Generation in California
Slide 105: Customer Profiles - % by Sales
Agricultural Industrial 69% Residential 23% Industrial 18% Residential 36% Electric Customers (86,179 GWh delivered) Gas Customers (869 Bcf delivered) Commercial 8% Commercial 40% Agricultural & Other 6% Customer Profiles - % by Sales
Slide 106: Preferred Loading Order
Preferred Loading Order § PG&E’s resource investment strategy is aligned with California’s Energy Action Plans: § Energy Efficiency § Demand Response § Renewable Resources § Distributed Generation § Conventional Resources
Slide 107: Renewable RFO and Long-Term Plan
Renewable RFO = PG&E issued its annual Renewable RFO in March 2008 = Objective to sign an additional 1-2% = Offers due by June, followed by CPUC review Long-Term Plan 2006 Cycle « PG&E issued its RFO in April, 2008 = PG&E was authorized to procure 800-1200 MW of operationally flexible resources by 2
Slide 108: PG&E: Existing Resource Mix
Utility Owned 32% DWR 25% QFs/ Renewables 23% Irrigation Districts 3% Other Power Purchases 17% total sources of electric energy* * Approximately 12% of total retail sales are supplied by eligible renewable resources coming from utility-owned, QF, Irrigation Districts, and other sources. PG&E: Exist
Slide 109: Comparative Energy Procurement Costs
New Build Energy Procurement Cost ($/MWh) Combined Cycle Diablo Canyon Energy Efficiency Wind Geothermal Biomass Solar & Emerging Comparative Energy Procurement Costs
Slide 110: Renewable Contracts Signed
*Based on contracts signed through August 2007 1) Average delivered energy over multiple years: pre-RPS baseline Over 21% of Projected 2010 Load Currently Signed* Renewable Contracts Signed
Slide 111: Deferred Tax Balances and Carrying Cost Credit Impacts
* Estimated carrying cost credits include only the equity portion and assume a utility equity ratio of 52% and ROE at 11.35%. Estimated Average Deferred Tax Balances and Carrying Cost Credit Impacts ($MM) Carrying Cost Credit Impacts
Slide 112: ERB Amortization Schedule
($MM) 2008 2009 2010 2011 2012 Annual ERB Amortization $354 $369 $386 $404 $423 End-of-year ERB balance $1,582 $1,213 $827 $423 $- ERB Amortization Schedule
Slide 113: Liquidity Availability and Targets
Liquidity Availability and Targets
Slide 114: Credit Profile
* Metrics include debt equivalents for long-term power purchase contracts Current Ratings § Utility Corporate Credit/Issuer: BBB+ (S&P) and A3 (Moody’s) § Utility Senior unsecured debt: BBB+ (S&P) and A3 (Moody’s) Average Utility Metrics (2008-2011)* § S&P Business Profile Rating: 5 § Total Debt to
Slide 115: EPS - Reg G Reconciliation
* Earnings per share from operations is a non-GAAP measure. This non-GAAP measure is used because it allows investors to compare the core underlying financial performance from one period to another, exclusive of items that do not reflect the normal course of operations. EPS on an Earnings from Opera
Slide 116: EPS Guidance - Reg G Reconciliation
Low High EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis $2.90 0.00 $2.90 $3.00 0.00 $3.00 Low High EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis $3.15 0.