Slide 1: Third Quarter Earnings Call
THIRD QUARTER EARNINGS CALL November 5, 2018
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains statements regarding management’s expectations and objectives for future periods as well as forecasts and estimates regarding the proposed Community Wildfire Safety Program, 2018 assumptions, 2018 IIC guidance, 2018-2023 capital expenditures, 201
Slide 3: Comprehensive Program to Address Wildfire Risk
Comprehensive Program to Address Wildfire Risk Proposed Community Wildfire Safety Program (1) ~$6B Program Spend through 2023 (1) (3) ($B) Increase Enhanced Infrastructure 1.5 Situational Operational Hardening Awareness Practices ~600 HD Cameras ~2,800 miles of tree wire in 12’ radial vegetation 1.0
Slide 4: Legal Update
Legal Update Status Update Next Steps • 8/8/2018: California Supreme Court • Court scheduled to hear motion for denied PG&E Petition for Review stipulated judgement on 11/29/18 • 10/2/18: PG&E filed motion for • Trial scheduled to begin 4/1/19 for Butte Fire stipulated judgement individual plaintiff
Slide 5: Timeline of Key Regulatory Cases
Timeline of Key Regulatory Cases 2018 2019 2020 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Expected 2020 GRC Decision Expected Filing Decision 2019 GT&S Expected Core Rate Decision Expected TO18 Cases TO20 Filed 10/1 Decision Expected Expected Cost of Capital Decision Expected Filing Short Term Decision Filed 10/9
Slide 6: Q3 2018 Earnings Results
Q3 2018 Earnings Results Q3 2018 Earnings Earnings EPS EPS (millions) (millions) Earnings on a GAAP basis $ 564 $ 1.09 $ 22 $ 0.04 Items Impacting Comparability Northern California wildfire-related costs, net of insurance 31 0.06 1,639 3.17 Pipeline-related expenses 9 0.02 25 0.05 Butte fire-related
Slide 7: Q3 2018: Quarter over Quarter Comparison
Q3 2018: Quarter over Quarter Comparison Earnings per Share from Operations $1.40 $0.02 $0.01 ($0.06) $0.06 $1.20 ($0.01) ($0.01) $1.00 $0.80 $0.60 $1.12 $1.13 $0.40 $0.20 $0.00 Q3 2017 Growth in Timing of Taxes Insurance Timing of 2017 Decrease in Miscellaneous Q3 2018 EPS from Rate Base Premium Op
Slide 8: 2018 Assumptions
2018 Assumptions Capital Expenditures Authorized Ratebase (weighted average) ($ millions) ($ billions) 2018 2018 General Rate Case 4,200 General Rate Case 25.9 Gas Transmission and Storage 1,000 Gas Transmission and Storage 3.8 Transmission Owner 19 1,300 Transmission Owner 7.1 Total Cap Ex $6.5 bil
Slide 9: 2018 Items Impacting Comparability Guidance
2018 Items Impacting Comparability Guidance ($ millions, pre-tax) Pipeline-related expenses (1) 40 - 50 Butte fire-related costs, net of insurance (2) 35 - 245 Northern California wildfire-related costs, net of insurance (3) ~2,290 - ~2,300 Reduction in gas-related capital disallowances (4) (38) 201
Slide 10: Robust Cap Ex Supports Strong Returns
Robust Cap Ex Supports Strong Returns Capital Expenditures ($ in B) 2018-2023 ~$0.1B ~$0.2B ~$7B $6.5B ~$6.4B ~$1.0B ~$5.7B CWSP (2) $~700M Other GRC $~300M 2018 2019 Currently Incremental Incremental Incremental Authorized Authorized GRC Request GT&S Request TO Request Plus Requested CapEx CapEx Ra
Slide 11: Ratebase Supports Strong Returns
Ratebase Supports Strong Returns 2018-2023 Weighted Average Ratebase ($ in B) (1) ~7 – 8.5% CAGR ~$52.0-56.0B ~$49.5-52.5B ~$47.0-49.0B ~$44.5-45.5B ~$40.5B $36.8B (3) 2018 2019 2020 2021 2022 2023 General Rate Case (2) Gas Transmission & Storage Electric Transmission Owner Range Changes from prior
Slide 12: Cap Ex and Ratebase Assumptions
Cap Ex and Ratebase Assumptions Base Case Assumptions 2020 2021 2022 2023 General Rate Case L 2017 GRC Decision H 2020 GRC Filing (including CWSP) (1) Gas Transmission & Storage L 2015 GT&S Phase 2 Decision H 2019 GT&S Filing Transmission Owner L TO17 Settlement H TO20 Filing Light-Duty EV Infrastru
Slide 13: Equity Considerations
Equity Considerations Known Factors: Equity Component of Ratebase Growth Cash for Northern California and Butte Wildfires accrued claims and other related costs, net of insurance proceeds Earnings From Operations Other Considerations • Change in net Northern California Wildfires charges • Divi
Slide 14: Appendix
[t PG&E Corporation Appendix
Slide 15: Table of Contents
Table of Contents Appendix 1 – Incremental Equity Factors Slide 16 Appendix 2 – Tax Cuts and Jobs Act Expected Impact Slide 17 Appendix 3 – Supplemental Earnings Materials Slides 18-31 15
Slide 16: Appendix 1 – Incremental Equity Factors
Appendix 1 – Incremental Equity Factors Incremental Equity Factors for Unrecovered Costs Equity Impacting Event Multiplier Non-deductible cash charges 100% Cash expenses 72% Non-cash charges (1) 36% (1) Multiplier applies at time of accrual; additional 36% applies at time of cash charge. 16
Slide 17: Appendix 2 – Tax Cuts and Jobs Act Expected Impact
Appendix 2 – Tax Cuts and Jobs Act Expected Impact Lower Customer Bills Annual reduction in customer revenue driven ~$450M by lower corporate tax rate annual revenue reduction 2021 Faster net operating loss amortization and Cash Tax Payments ~1 year acceleration of federal tax payments or later (1)
Slide 18: Appendix 3 – Supplemental Earnings Materials
Appendix 3 – Supplemental Earnings Materials Exhibit A: Reconciliation of PG&E Corporation’s Consolidated Income Available Slides 19-20 for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) to Non-GAAP Earnings from Operations Exhibit B: Key Drivers of PG&E Cor
Slide 19: A: Reconciliation of Consolidated Income to Non-GAAP Earnings from Operations
Exhibit A: Reconciliation of PG&E Corporation’s Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) to Non-GAAP Earnings from Operations Third Quarter and Year to Date, 2018 vs. 2017 Three Months Ended Nine Months Ended (in milli
Slide 20: A: Reconciliation of Consolidated Income to Non-GAAP Earnings from Operations
Exhibit A: Reconciliation of PG&E Corporation’s Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) to Non-GAAP Earnings from Operations (4) The Utility incurred costs, net of insurance, of $9 million (before the tax impact of $3
Slide 21: B: Key Drivers of Non-GAAP Earnings per Common Share
Exhibit B: Key Drivers of PG&E Corporation’s Non-GAAP Earnings per Common Share (“EPS”) from Operations Third Quarter and Year to Date (“YTD”), 2018 vs. 2017 Third Quarter 2018 vs. 2017 YTD 2018 vs. 2017 (in millions, except per share amounts) Earnings per Earnings per Common Common Share Share Earn
Slide 22: C: Operational Performance Metrics
Exhibit C: Operational Performance Metrics Meets YTD 2018 Performance Results YTD Actual 2018 Target Target (1) Safety Nuclear Operations Diablo Canyon Power Plant (DCPP) Reliability and Safety DCPP Unit 1 Score 96.8 96.4 P DCPP Unit 2 Score 90.0 87.6 P Electric Operations Public Safety Index 1.9 1.
Slide 23: Definitions of 2018 Operational Performance Metrics from Exhibit C
Definitions of 2018 Operational Performance Metrics from Exhibit C Safety Public and employee safety are measured in four areas: Nuclear Operations Safety, Electric Operations Safety, Gas Operations Safety, and Employee Safety. The safety of the Utility’s nuclear power operations, DCPP Unit 1 and Un
Slide 24: D: Sales and Sources Summary
Exhibit D: Pacific Gas and Electric Company Sales and Sources Summary Third Quarter and Year to Date, 2018 vs. 2017 Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Sales from Energy Deliveries (in millions kWh) 23,054 24,160 60,578 62,914 Total Electric Customers
Slide 25: E: 2018 Items Impacting Comparability Guidance
Exhibit E: PG&E Corporation’s 2018 Items Impacting Comparability (“IIC”) Guidance 2018 IIC Guidance (in millions, after-tax) Low High Estimated Items Impacting Comparability: (1) Pipeline-related expenses (2) $ 36 $ 29 Butte fire-related costs, net of insurance (3) 176 25 Northern California wildfir
Slide 26: E: 2018 Items Impacting Comparability Guidance
Exhibit E: PG&E Corporation’s 2018 Items Impacting Comparability (“IIC”) Guidance (5) “Reduction in in gas-related capital disallowances” reflects the reduction to estimated disallowances for gas-related costs expected to exceed authorized amounts in the 2015 GT&S rate case and the Utility’s PSEP. T
Slide 27: F: General Earnings Sensitivities for 2018
Exhibit F: General Earnings Sensitivities for 2018 PG&E Corporation and Pacific Gas and Electric Company Estimated 2018 Earnings Variable Description of Change Impact Rate base +/- $100 million change in allowed rate base +/- $5 million Return on equity (ROE) +/- 0.1% change in allowed ROE +/- $19 m
Slide 28: G: Use of Non-GAAP Financial Measures
Exhibit G: Use of Non-GAAP Financial Measures PG&E Corporation and Pacific Gas and Electric Company: Use of Non-GAAP Financial Measures PG&E Corporation discloses historical financial results and provides guidance based on "non-GAAP earnings from operations" in order to provide a measure that allows
Slide 29: H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2020 General Rate Case (Phase I) A.18-11-XXX October 15, 2018: Update to CPUC that application is expected to be filed between 12/10-12/20/18 Transmission Owner Rate Case (T
Slide 30: H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates Integration of Distributed Energy Resources R.14-10-003 Oct 2, 2014 – CPUC opens Order Instituting Rulemaking Apr 4, 2016 – Assigned Commissioner Ruling (ACR) introducing a
Slide 31: H: Expected Timelines of Selected Regulatory Cases
Exhibit H: Pacific Gas and Electric Company Expected Timelines of Selected Regulatory Cases Regulatory Case Docket # Key Dates 2017 Integrated Resource Plan / Long Term Procurement R.16-02-007 Feb 11, 2016 – CPUC opens Order Instituting Rulemaking Plan May 26, 2016 – Scoping Memo Issued Aug 11, 2016