Attached files
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| 8-K - FORM 8-K DATED MAY 13, 2011 - PG&E Corp | final8k0513.htm |
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PG&E
Corporation
Investor Meetings
May 16 - May 17, 2011
Kent Harvey
Chief Financial Officer, PG&E Corporation
Chief Financial Officer, PG&E Corporation
Exhibit 99
2
Cautionary Language Regarding
Forward-Looking Statements
Forward-Looking Statements
This presentation contains forward-looking statements regarding the anticipated outcome and timing
of various regulatory proceedings involving Pacific Gas and Electric Company (“Utility”), estimated
costs and future insurance recoveries associated with the natural gas explosion and fire that occurred
in a residential area of San Bruno, California on September 9, 2010 (“San Bruno Accident”), and
forecasts of capital expenditures, rate base, and equity financing for 2011. These statements are
based on various assumptions and management’s current knowledge of relevant facts. Actual results
could differ materially based on various factors, including:
of various regulatory proceedings involving Pacific Gas and Electric Company (“Utility”), estimated
costs and future insurance recoveries associated with the natural gas explosion and fire that occurred
in a residential area of San Bruno, California on September 9, 2010 (“San Bruno Accident”), and
forecasts of capital expenditures, rate base, and equity financing for 2011. These statements are
based on various assumptions and management’s current knowledge of relevant facts. Actual results
could differ materially based on various factors, including:
•the Utility’s ability to efficiently manage capital expenditures and its operating and maintenance expenses within authorized levels
and timely recover its costs through rates;
and timely recover its costs through rates;
•the outcome of pending and future regulatory, legislative, or other proceedings or investigations, including the investigations by
the NTSB and CPUC into the cause of the San Bruno accident and the safety of the Utility’s natural gas transmission pipelines in
its northern and central California service territory; the CPUC investigation of the Rancho Cordova accident; whether the Utility
incurs civil or criminal penalties as a result of these proceedings; whether the Utility is required to incur additional costs for third-
party liability claims or to comply with regulatory or legislative mandates that the Utility is unable to recover through rates or
insurance; and whether the Utility incurs third-party liabilities or other costs in connection with service disruptions that may occur
as the Utility complies with regulatory orders to decrease pressure in its natural gas transmission system;
the NTSB and CPUC into the cause of the San Bruno accident and the safety of the Utility’s natural gas transmission pipelines in
its northern and central California service territory; the CPUC investigation of the Rancho Cordova accident; whether the Utility
incurs civil or criminal penalties as a result of these proceedings; whether the Utility is required to incur additional costs for third-
party liability claims or to comply with regulatory or legislative mandates that the Utility is unable to recover through rates or
insurance; and whether the Utility incurs third-party liabilities or other costs in connection with service disruptions that may occur
as the Utility complies with regulatory orders to decrease pressure in its natural gas transmission system;
•reputational harm that PG&E Corporation and the Utility may suffer depending on the outcome of the various investigations,
including those by the NTSB and the CPUC, the outcome of civil litigation, and the extent to which civil or criminal proceedings
may be pursued by regulatory or governmental agencies;
including those by the NTSB and the CPUC, the outcome of civil litigation, and the extent to which civil or criminal proceedings
may be pursued by regulatory or governmental agencies;
•explosions, fires, accidents, mechanical breakdowns, the disruption of information technology and systems, human errors, and
similar events that may occur while operating and maintaining an electric and natural gas system in a large service territory with
varying geographic conditions that can cause unplanned outages, reduce generating output, damage the Utility’s assets or
operations, subject the Utility to third-party claims for property damage or personal injury, or result in the imposition of civil,
criminal, or regulatory fines or penalties on the Utility;
similar events that may occur while operating and maintaining an electric and natural gas system in a large service territory with
varying geographic conditions that can cause unplanned outages, reduce generating output, damage the Utility’s assets or
operations, subject the Utility to third-party claims for property damage or personal injury, or result in the imposition of civil,
criminal, or regulatory fines or penalties on the Utility;
• the impact of federal or state laws or regulations, or their interpretation, on energy policy and the regulation of
utilities and their holding companies;
utilities and their holding companies;
• the extent to which PG&E Corporation or the Utility incurs costs in connection with third-party claims or
litigation, that are not recoverable through insurance, rates, or from other third parties;
litigation, that are not recoverable through insurance, rates, or from other third parties;
• the ability of PG&E Corporation, the Utility, and counterparties to access capital markets and other sources of
credit in a timely manner on acceptable terms;
credit in a timely manner on acceptable terms;
• the outcome of tax audits and the impact of changes in federal or state tax laws, policies, or regulations, such
as The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010; and
as The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010; and
• other factors and risks discussed in PG&E Corporation and the Utility’s 2010 Annual Report on Form 10-K and
other reports filed with the Securities and Exchange Commission.
other reports filed with the Securities and Exchange Commission.
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Rate Case Updates Page 4
Gas Pipeline Updates Page 7
Financial Summary Page 11
Appendix Page 16
Table of Contents
4
2011 General Rate Case
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Final Decision
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Settlement Revenue Requirement Increase
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$395
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Revenue for Undepreciated Legacy Meters
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$ 55
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Total
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$450
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Average annual capital expenditures: $2.2 - $2.3B
Attrition revenues: $180M and $185M for 2012 and 2013
2011 Revenue Requirements ($ in Millions)
Final decision approved May 5 for 2011 - 2013
• Commission approved uncontested settlement
• Commission decided return on legacy meters
5
2011 Gas Transmission and
Storage Rate Case
Storage Rate Case
Final decision approved in April for 2011 - 2014
2011 Revenue Requirements ($ in Millions)
• Commission approved settlement
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Final Decision
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Settlement Revenue Requirement Increase
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$52
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Average annual capital expenditures: $174M
Attrition revenues: $27M, $24M, and $17M for 2012, 2013 and 2014
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FERC TO13 Filing
Rates approved in March, subject to refund
Settlement filed on April 28, 2011 for 2011
TO13 final decision expected by Q3 2011
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Revenue Requirement Request
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$1,026
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Proposed Settlement
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$ 934
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2011 Revenue Requirements ($ in Millions)
7
San Bruno Update - NTSB
NTSB has primary responsibility to determine root cause
Ruled out external corrosion or excavation-related damage
Noted discrepancy in PG&E’s records relating to ruptured
pipeline
pipeline
Issued recommendations to verify pipeline records in
January 2011
January 2011
Final NTSB report expected in Fall 2011
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San Bruno Update - CPUC
CPUC appointed an Independent Review Panel to look
into PG&E and Commission policies and practices for
managing gas transmission system
into PG&E and Commission policies and practices for
managing gas transmission system
• Final Review Panel report expected in late May
In February, the CPUC began:
• an investigation of the Utility’s gas pipeline
recordkeeping (“OII”)
recordkeeping (“OII”)
• a rulemaking to adopt new rules on pipeline safety
and reliability (“OIR”)
and reliability (“OIR”)
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Gas Transmission System
Records OII
Records OII
Primary objectives
• Examine PG&E’s gas transmission recordkeeping practices
for compliance with regulatory standards
for compliance with regulatory standards
• Determine whether deficient recordkeeping caused or
contributed to the San Bruno pipeline accident
contributed to the San Bruno pipeline accident
OII will take into account NTSB report findings
10
Gas Pipeline Safety OIR
May 10, 2011 proposed decision would require all California
gas transmission operators file a comprehensive
“Implementation Plan” 60 days after a final decision
addressing:
gas transmission operators file a comprehensive
“Implementation Plan” 60 days after a final decision
addressing:
• Plan for pressure testing or replacement of pipeline segments
lacking complete records
lacking complete records
• Interim plans for pressure reductions prior to testing or
replacement
replacement
• Cost estimates and rate recovery proposal. PG&E to include
cost sharing proposal between shareholders and customers
cost sharing proposal between shareholders and customers
The Implementation Plan would supersede the compliance plan
previously submitted by PG&E
previously submitted by PG&E
PG&E’s Pipeline 2020 concepts will be incorporated
into the Implementation Plan
into the Implementation Plan
11
Capital Expenditures
2010 Actual
2011
CapEx Forecast ($B)(1)
$3.9B
CapEx
CapEx from Bonus
Depreciation
Depreciation
Q1’11 earnings call:
As a result of bonus
depreciation, we’ll
increase our CapEx about
$200 million this year and
$600 million next year
(compared to 2010).
depreciation, we’ll
increase our CapEx about
$200 million this year and
$600 million next year
(compared to 2010).
(1) Current as of May 4, 2011, the date of PG&E Corporation’s earnings release
12
2010 Actual
2011 Authorized
Rate Base
Rate Base ($B)(1)
(1) Current as of May 4, 2011, the date of PG&E Corporation’s earnings release
Q1’11 earnings call:
Our rate base will grow
more modestly in 2012,
perhaps half the rate of
2011.
more modestly in 2012,
perhaps half the rate of
2011.
We don’t receive customer
funding for items like
charitable contributions,
advertising, and public
affairs. These go in the
opposite direction to CWIP
earnings.
funding for items like
charitable contributions,
advertising, and public
affairs. These go in the
opposite direction to CWIP
earnings.
$21.1B
$23.5B
13
Dividend 2011
Payout ratio range of 50% - 70%
Maintain current level for 2011
14
Financial Impacts of Pipeline Matters
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Incurred Costs
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Third-Party Liability
Accrual |
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Costs in 2010
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$63 million
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$220 million
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Estimated 2011
Range(1) |
$350 - $550 million
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$0 - $180 million
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Charges Related to Gas Pipeline Matters
PG&E expects a significant portion of the costs associated with
third-party claims to be recovered through insurance.
third-party claims to be recovered through insurance.
(1)Current of as May 4, 2011, the date of PG&E Corporation’s earnings release.
Ranges do not include potential fines or penalties
Ranges do not include potential fines or penalties
15
Internal Equity Sources
401(k) and DRIP Programs
~$250 million for 2011
External Equity
Expected ~$150 million for 2011
Source: Equity Dribble Program
initiated November 2010
2011 Equity Needs(1)
(1) Current of as May 4, 2011, the date of PG&E Corporation’s earnings release
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Appendix
17
Key Regulatory Proceedings