Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K EPS - PACIFIC GAS & ELECTRIC Co | form8k021162012.htm |
| EX-99.2 - ADDITIONAL SUPPLEMENTAL INFORMATION - PACIFIC GAS & ELECTRIC Co | ex9902.htm |
| EX-99.1 - PG&E CORPORATION PRESS RELEASE DATED FEBRUARY 16, 2012 - PACIFIC GAS & ELECTRIC Co | ex9901.htm |
®
PG&E
Corporation
Fourth Quarter Earnings Call
February 16, 2012
This presentation is not complete without the accompanying statements made by management during the webcast conference call held on
February 16, 2012. In addition, this presentation is complementary to the financial and other information contained in the exhibits attached
to PG&E Corporation’s Current Report on Form 8-K that was furnished to the Securities and Exchange Commission on February 16, 2012.
The Form 8-K, attached exhibits, and replay of the conference call are available on PG&E Corporation’s website at www.pge-corp.com
Exhibit 99.3
2
This presentation contains forward-looking statements about management's guidance for PG&E Corporation’s 2012 earnings per share and
various assumptions and estimates on which such guidance is based, including forecasts of costs, capital expenditures, and future equity
issuances, and estimated liabilities for penalties associated with natural gas matters, third-party liabilities associated with the September 9,
2010 natural gas pipeline accident in San Bruno, California, and environmental remediation. These statements are necessarily subject to
various risks and uncertainties, the realization or resolution of which may be outside of management's control. Actual results may differ
materially. Factors that could cause actual results to differ materially include:
various assumptions and estimates on which such guidance is based, including forecasts of costs, capital expenditures, and future equity
issuances, and estimated liabilities for penalties associated with natural gas matters, third-party liabilities associated with the September 9,
2010 natural gas pipeline accident in San Bruno, California, and environmental remediation. These statements are necessarily subject to
various risks and uncertainties, the realization or resolution of which may be outside of management's control. Actual results may differ
materially. Factors that could cause actual results to differ materially include:
• the outcome of pending and future investigations and regulatory proceedings related to the San Bruno accident, and the safety of the Utility’s natural gas transmission
pipelines in its service territory; the ultimate amount of costs the Utility incurs for natural gas matters that are not recovered through rates; the ultimate amount of third-party
claims associated with the San Bruno accident that are not recovered through insurance; and the amount of any civil or criminal penalties the Utility may incur related to
noncompliance with regulations, rules, and orders;
pipelines in its service territory; the ultimate amount of costs the Utility incurs for natural gas matters that are not recovered through rates; the ultimate amount of third-party
claims associated with the San Bruno accident that are not recovered through insurance; and the amount of any civil or criminal penalties the Utility may incur related to
noncompliance with regulations, rules, and orders;
• whether PG&E Corporation and the Utility are able to repair the reputational harm they have suffered which, in part, will depend on their ability to adequately and timely
respond to the findings and recommendations made by the NTSB and CPUC’s independent review panel and cure the deficiencies that have been identified in the Utility’s
operating practices and procedures and corporate culture; developments that may occur in the various investigations of the San Bruno accident and natural gas matters; the
decisions, findings, or orders issued in connection with these investigations, including the amount of civil or criminal penalties that may be imposed on the Utility,
developments that may occur in the civil litigation related to the San Bruno accident; and the extent of service disruptions that may occur due to changes in pipeline pressure
as the Utility continues to inspect and test pipelines;
respond to the findings and recommendations made by the NTSB and CPUC’s independent review panel and cure the deficiencies that have been identified in the Utility’s
operating practices and procedures and corporate culture; developments that may occur in the various investigations of the San Bruno accident and natural gas matters; the
decisions, findings, or orders issued in connection with these investigations, including the amount of civil or criminal penalties that may be imposed on the Utility,
developments that may occur in the civil litigation related to the San Bruno accident; and the extent of service disruptions that may occur due to changes in pipeline pressure
as the Utility continues to inspect and test pipelines;
• explosions, fires, accidents, mechanical breakdowns, equipment failures, human errors, labor disruptions, and similar events, as well as acts of terrorism, war, or
vandalism, including cyber-attacks, that can cause unplanned outages, reduce generating output, disrupt the Utility’s service to customers, or damage or disrupt the facilities
operations, or information technology and systems owned by the Utility, its customers, or third parties on which the Utility relies, and subject the Utility to third-party claims
for property damage or personal injury, or result in the imposition of civil, criminal, or regulatory penalties on the Utility;
vandalism, including cyber-attacks, that can cause unplanned outages, reduce generating output, disrupt the Utility’s service to customers, or damage or disrupt the facilities
operations, or information technology and systems owned by the Utility, its customers, or third parties on which the Utility relies, and subject the Utility to third-party claims
for property damage or personal injury, or result in the imposition of civil, criminal, or regulatory penalties on the Utility;
• the impact of storms, tornados, floods, drought, earthquakes, tsunamis, wildland and other fires, pandemics, solar events, electromagnetic events, and other natural
disasters, or that affect customer demand or that damage or disrupt the facilities, operations, or information technology and systems owned by the Utility, its customers, or
third parties on which the Utility relies;
disasters, or that affect customer demand or that damage or disrupt the facilities, operations, or information technology and systems owned by the Utility, its customers, or
third parties on which the Utility relies;
• the impact of federal or state laws or regulations, or their interpretation, on energy policy and the regulation of utilities and their holding companies, including how the
CPUC interprets and enforces the financial and other conditions imposed on PG&E Corporation when it became the Utility’s holding company, and whether the outcome of
proceedings and investigations relating to the Utility’s natural gas operations affects the Utility’s ability to make distributions to PG&E Corporation in the form of dividends or
share repurchases;
CPUC interprets and enforces the financial and other conditions imposed on PG&E Corporation when it became the Utility’s holding company, and whether the outcome of
proceedings and investigations relating to the Utility’s natural gas operations affects the Utility’s ability to make distributions to PG&E Corporation in the form of dividends or
share repurchases;
• whether the Utility’s newly installed electric and gas SmartMeterTM devices and related software systems and wireless communications equipment continue to accurately
and timely measure customer energy usage and generate billing information, and whether the Utility can continue to rely on third-party vendors and contractors to support
the advanced metering system;
and timely measure customer energy usage and generate billing information, and whether the Utility can continue to rely on third-party vendors and contractors to support
the advanced metering system;
• whether the Utility is able to protect its information technology, operating systems and networks, including the advanced metering system infrastructure, from damage,
disruption, or failure caused by cyber-attacks, computer viruses, and other hazards; and whether the Utility’s security measures are sufficient to protect the confidential
customer, vendor and financial data contained in such systems and networks from unauthorized access and disclosure;
disruption, or failure caused by cyber-attacks, computer viruses, and other hazards; and whether the Utility’s security measures are sufficient to protect the confidential
customer, vendor and financial data contained in such systems and networks from unauthorized access and disclosure;
• 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;
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;
terms;
• the impact of environmental remediation laws, regulations, and orders; the extent to which the Utility is able to recover compliance and remediation costs
from third parties or through rates or insurance, and the ultimate amount of environmental remediation costs the Utility incurs in connection with its natural
gas compressor station located near Hinkley, California which costs are not recoverable through insurance or rates;
from third parties or through rates or insurance, and the ultimate amount of environmental remediation costs the Utility incurs in connection with its natural
gas compressor station located near Hinkley, California which costs are not recoverable through insurance or rates;
• and other factors and risks discussed in PG&E Corporation and the Utility’s 2011 Annual Report to Shareholders and incorporated by reference into their
combined Annual Report on Form 10-K for the year ended December 31, 2011.
combined Annual Report on Form 10-K for the year ended December 31, 2011.
Safe Harbor Statement
3
Position company
for success
Key Focus Areas
Resolve gas issues
Rebuild relationships
with key stakeholders
with key stakeholders
• Move forward with
gas work planned in
2012
gas work planned in
2012
• Work to resolve
regulatory
proceedings
regulatory
proceedings
• Conduct rigorous
benchmarking
benchmarking
• Build culture of
continuous
improvement
continuous
improvement
• Provide excellent
service
service
• Meet commitments
to customers and
regulators
to customers and
regulators
4
Resolve Gas Issues
Gas
Operations
Operations
• Completed work
§ Validated MAOP for 2000+ pipeline miles
including all urban pipelines
including all urban pipelines
§ Pressure tested ~160 miles
• Three Investigations
§ Recordkeeping
§ Class Location
§ Gas Pipeline
• Staff Citation Authority
§ $16.8M for self-report of missing maps
• Rulemaking
§ No action on memo account
§ Hearings in March
Regulatory
Developments
5
Increased 2012 Costs for Gas Work
Increase Over Prior Estimates: ~$120 million
Main Driver
Hydrostatic Testing Costs
• Short segments
• Access challenges
• Permitting/environmental issues
6
4Q 2011 Earnings Results
7
4Q 2011 Q over Q Comparison
Earnings from Operations is not calculated in accordance with GAAP and excludes items impacting comparability.
*Costs incurred in 2010 with no similar costs in 2011
8
2012 EPS Guidance Updates
9
2012 Gas Pipeline Related Costs
$100-200 million
(non-PSEP costs)
PSEP $230 million
Non-PSEP $100-200 million
Total $330-430 million
$450-550 million
(PSEP & non-PSEP costs)
Previous $330-430 million
Increase $120 million
Total $450-550 million
Assumed PSEP
approved as filed
approved as filed
Assumes PSEP not resolved
until end of 2012
until end of 2012
PIPELINE
WORK
WORK
PSEP
RECOVERY
RECOVERY
IIC
GUIDANCE
(GAAP Guidance)
GUIDANCE
(GAAP Guidance)
Current
Previous
+ strength
testing costs
testing costs
+ carryover work
10
2012 EPS Guidance
Includes full cost of PSEP in 2012, pending regulatory decision. The guidance range for 2012 does not include future insurance
recoveries or potential penalties (other than those already accrued) or any potential punitive damages.
recoveries or potential penalties (other than those already accrued) or any potential punitive damages.
11
2012 Equity Issuance
+ Higher
unrecovered
gas costs
unrecovered
gas costs
+ Accrual for
penalty
penalty
− Q4 2011
Actual
Issuance
Actual
Issuance
Previous Estimate
Q4 2011 - Q4 2012
2011: $686 million actual equity issued
2012: ~$600 million estimated equity need
Current Estimate
Q1 2012 - Q4 2012
12
APPENDIX
13
Regulatory Calendar
Gas Pipeline
Safety OIR
Safety OIR
R.11-02-019
Recordkeeping
OII
OII
I. 11-02-016
Class Location
OII
OII
I. 11-11-009
Gas Pipeline
OII
OII
I. 12-01-007
1/31: Intervenor
Testimony
Testimony
2/28: PG&E Rebuttal Testimony
3/12-3/23: Hearings
3/5: Staff Report
4/5: Intervenor Testimony
6/25: PG&E Response
9/5-9/19: Evidentiary
Hearings
Hearings
Mid-Nov: Case
Submitted
Submitted
Dec/Jan: Presiding
Officer’s Decision
Officer’s Decision
Feb 2013: Presiding
Officer’s Decision Final
Officer’s Decision Final
2/3: Prehearing
Conference
4/2: Filing to Update Outstanding Issues
Mid-Apr:
Prehearing Conference
2/14: Prehearing
Conference
Conference
3/16: CPSD
Testimony
Testimony
4/16: Intervenor Testimony
6/15: PG&E Testimony
8/10: CPSD Rebuttal
Testimony
Testimony
Late Aug: Prehearing
Conference #2
Conference #2
9/7: Discovery Cut-Off
9/17: Evidentiary Hearings Start
14
Assumptions for 2012 Guidance
2012: ~$4,600 - $4,800
Capital Expenditures Forecast
($ millions)
Authorized ROE: 11.35%
Equity Ratio: 52%
Cost of Capital
Additional Expenses
($ millions)
2012: ~$200 incremental spend
2013: Comparable amount
Authorized Rate Base
(weighted average)