Pacific Gas & Electric Co. · NYSE:PCG
Pacific Gas & Electric — PG&E — Citigroup Investment Research Power, Gas and Utilities Conference 2007
33 slides from Pacific Gas & Electric's conference presentation, Jun 26, 2007
Slide 1: PG&E Corporation: Preparing For the Future
PG&E Corporation: Preparing For the Future Christopher P. Johns, CFO Citigroup Investment Research Power, Gas and Utilities Conference June 7 – June 8, 2007, Charleston, SC 1
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2007 and 2008 earnings per share from operations, targeted average annual growth rate for earnings per share from operations, antici
Slide 3: Key Takeaways From Today's Discussion
Key Takeaways From Today’s Discussion • PCG is a core utility holding, delivering strong investment opportunities and low regulatory risk. • Potential earnings “upsides” in 2008 and beyond are not included in guidance. • Emerging growth strategies present additional business opportunities. 3
Slide 4: Pacific Gas and Electric Company (PG&E)
Pacific Gas and Electric Company (PG&E) • $12.5 B in Revenues • $34.8 B in Assets • 5.1 MM Electric/4.2 MM Gas Customers • $18 B+ Market Capitalization Business Unit 2006 Rate Regulation Base ($B) Electric and gas distribution $10.3 CPUC Electric generation $1.8 CPUC Gas transmission $1.5 CPUC Elect
Slide 5: PG&E Vision
PG&E Vision The leading Our vision utility in the United States Delighted Energized Rewarded Our goals customers employees shareholders Operational excellence Our strategies Transformation We act with integrity and communicate honestly and openly. We are passionate about meeting our customers’ needs
Slide 6: Our Business Strategy
Our Business Strategy • Competitive customer focus • Operational excellence • Regulatory alignment • Environmental leadership • Community involvement 6
Slide 7: Regulated Business Drivers
Regulated Business Drivers • Statewide Energy Strategy - California Energy Action Plan - Renewable Portfolio Standard - AB32 Greenhouse Gas Legislation • Constructive Regulatory Environment - Decoupling/Balancing Account Treatment - Purchased Power and Fuel Costs Pass-Through - Pre-Approved CapEx 7
Slide 8: Core Business Investment Opportunities
Core Business Investment Opportunities • Electric and gas distribution • Electric transmission - System reliability - Growth to reach renewable resources • Natural gas transmission and storage • Electric resource requirements - Energy efficiency - Renewables - Conventional generation 8
Slide 9: Capital Expenditure Outlook
Capital Expenditure Outlook Capital Expenditures ($MM) Chart Key Common Plant Gas Trans. Electric Trans. Generation Distribution $3,200 $3,200 $3,100 $3,000 $2,500 $2,200 $2,000 $1,000 0 2007 2008 2009 2010 2011 9
Slide 10: Rate Base Growth
Rate Base Growth Average Annual Rate Base ($B)* $23.3 $24 $22.3 $22 $20.8 $20 $18.7 $18 $17.0 $15.9 $16 $14 $12 2006A 2007 2008 2009 2010 2011 * Projected 2007-2011 rate base is not adjusted for the impact of the carrying cost credit that primarily results from the second series of the Energy Recove
Slide 11: EPS Guidance
EPS Guidance EPS from Operations*: 2007 guidance of $2.70-$2.80 per share 2008 guidance of $2.90-$3.00 per share EPS from Operations* 8% $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 2006 Actual 2007 Estimated 2008 Estimated 2009-2011 Estimated Guidance Range * Reg G reconciliation to GAAP for 2006 EPS from O
Slide 12: EPS Growth – Comparator Group
EPS Growth – Comparator Group EPS from operations annual growth targeted to average 8% for 2007 – 2011 Survey of analyst estimates of EPS growth: Annual Long-Term EPS Growth (%) 16 14 12 10 8 6 4 2 0 gy up rp gy gy ny gy er en st ce on gy er o o e r e r p a e r w r e r i s e r E n G r E C nt En m En
Slide 13: Potential Earnings Upsides
Potential Earnings Upsides • Transformation benefits • Energy efficiency incentives • Additional transmission and generation investments 13
Slide 14: California Energy Policy
California Energy Policy PG&E’s resource investment strategy is aligned with California’s Energy Action Plan “preferred loading order”: 1. Energy Efficiency 2. Demand Response 3. Renewable Resources 4. Distributed Generation 5. Conventional Resources 14
Slide 15: California's Success With Energy Efficiency
California’s Success With Energy Efficiency Over the past 30 years, California per capita energy use has remained relatively flat compared to the 50% increase in U.S. per capita energy use. 14,000 12,000 10,000 8,000 kWh 6,000 4,000 2,000 - 1960 1965 1970 1975 1980 1985 1990 1995 2000 US CA Western
Slide 16: Changing Legislative Environment for GHG
Changing Legislative Environment for GHG Recent greenhouse gas legislation: • California global warming legislation enacted in 2006 • Federal legislation expected in 2 to 4 years PG&E supports: • Mandatory market-based approach • Encouraging early action toward goals before full regulatory implement
Slide 17: Relative CO2 Emissions Rates - Generation
Relative CO2 Emissions Rates - Generation 2004 CO2 Emissions and Emission Rates* 2004 CO2 Emissions (Tons) All Source CO2 Emissions Rate (lbs/MWh) 180,000,000 2,500.00 160,000,000 2,000.00 140,000,000 120,000,000 1,500.00 100,000,000 80,000,000 1,000.00 60,000,000 40,000,000 500.00 20,000,000 - - AY
Slide 18: Industry Leadership and Emerging Growth
Industry Leadership and Emerging Growth PG&E is looking ahead to the future of utility services • Clean/renewable fuel technologies • Smart Energy Web • Plug-in anywhere technologies • Sustainable Energy Communities 18
Slide 19: PCG Investment Opportunity Summary
PCG Investment Opportunity Summary • First quartile EPS growth - Approved infrastructure investment • Potential upsides - Transformation benefits - Energy efficiency incentives - Additional transmission and generation investment • New Products and Services - Diverse management team with a competitiv
Slide 20: Conference Notes
Conference Notes 20
Slide 21: Appendix
Appendix Citigroup Investment Research Power, Gas and Utilities Conference June 7 – June 8, 2007, Charleston, SC 21
Slide 22: PG&E's Energy Efficiency Programs
PG&E’s Energy Efficiency Programs • About half of expected load growth will be met by energy efficiency • PG&E’s budget and goals for 2006-2008: - Overall energy efficiency budget: $975 million - PG&E filled goals: 3,063 GWh; 47 therms GWh Savings: Historic and Target 1500 1250 1000 750 500 250 0 20
Slide 23: Demand Response Programs
Demand Response Programs Demand response impacts expected to double from 2007 MWs Actual and Projected Capacity Savings from Demand Response Programs 1800 1600 1400 1200 1000 800 600 400 200 0 2004A 2005A 2006A 2007 2008 2009 2010 2011 Existing New SmartMeter™ program 23
Slide 24: Renewable Resource Procurement
Renewable Resource Procurement Renewable Portfolio Standard target is 20% by 2010 Projected Deliveries Plus Contracts* 25 Projected Contracts Under Contract Deliveries Percentage of Projected Load 20 2006 deliveries comprised of: 15 Wind 11% 10 Small hydro Geothermal 35% 20% 5 Biopower 34% 0 2006 20
Slide 25: New Generation Resources: Utility-Owned & Conventional Power Purchase Agreements
New Generation Resources: Utility-Owned & Conventional Power Purchase Agreements Facility Size (MW) Status Target Operational Date Estimated Capital Costs Gateway 530 broken ground 2009 $370 million Humboldt Bay 163 permitting 2009 $239 million Colusa 657 permitting 2010 $673 million Total 1,350 $1,
Slide 26: Long-Term Electric Resources
Long-Term Electric Resources • Energy efficiency expected to meet half of future load growth • Growth in renewable resources and resources with operating flexibility • Growth in utility ownership 2012 Projected Sources of Energy 89,900 GWh 2007 Projected Sources of Energy New 85,500 GWh Other Renewa
Slide 27: Carbon Legislation Landscape
Carbon Legislation Landscape • CA State legislation in place - Global Warming Solutions Act (AB 32) - Emissions Performance Standard for Baseload Generation (SB 1368) • Potential federal near-term actions - Expanded incentives for renewable energy - Energy efficiency incentives - Accelerated depreci
Slide 28: Carrying Cost Credit Impacts
Carrying Cost Credit Impacts Estimated Average Deferred Tax Balances and Carrying Cost Credit Impacts ($MM) 2007 2008 2009 2010 2011 2012 Rate Reduction Bond and $854 $683 $542 $396 $243 $82 Energy Recovery Bond Average Deferred Tax Balance Estimated After-tax Carrying $(50) $(40) $(32) $(23) $(14)
Slide 29: ERB Amortization Schedule
ERB Amortization Schedule ($MM) 2007 2008 2009 2010 2011 2012 Annual ERB $340 $354 $369 $386 $404 $423 Amortization End-of-year ERB $1,936 $1,582 $1,213 $827 $423 - balance 29
Slide 30: 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) • Average Utility Metrics (2007-2011)* - S&P Business Profile Rating: 5 - Total Debt to capitalization (EOY): 53.6% - Funds from Operations Cash Interest Co
Slide 31: Dividend Policy
Dividend Policy • Objectives: - Flexibility - Sustainability - Comparability • Payout ratio range of 50% - 70% • Growth balanced with funding for additional investment opportunities • Dividend growth is expected to be generally in line with the growth in EPS from Operations 31
Slide 32: 2006 EPS - Reg G Reconciliation
2006 EPS - Reg G Reconciliation 2006 EPS on an Earnings from Operations Basis* $2.57 Items Impacting Comparability: Scheduling Coordinator Cost Recovery 0.21 Environmental Remediation Liability (0.05) Recovery of Interest on PX Liability 0.08 Severance Costs (0.05) EPS on a GAAP Basis $2.76 * Earnin
Slide 33: EPS Guidance - Reg G Reconciliation
EPS Guidance - Reg G Reconciliation 2007 Low High EPS Guidance on an Earnings from Operations Basis* $2.70 $2.80 Estimated Items Impacting Comparability 0.00 0.00 EPS Guidance on a GAAP Basis $2.70 $2.80 2008 Low High EPS Guidance on an Earnings from Operations Basis* $2.90 $3.00 Estimated Items Imp
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