Attached files
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| 8-K - FORM 8-K DATED MARCH 9, 2011 - PACIFIC GAS & ELECTRIC Co | form8k030911.htm |
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TO13 final decision expected by Q3 2011
®
PG&E
Corporation
Morgan Stanley Utilities Conference
March 10, 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 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 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 outcome of the investigations of the San Bruno accident by the National Transportation Safety Board and the California
Public Utilities Commission (“CPUC”), the CPUC’s investigation into the Utility’s recordkeeping practices for the San Bruno
gas transmission pipeline that ruptured as well as for the Utility’s entire natural gas transmission system, the CPUC
investigation of the December 24, 2008 natural gas explosion in Rancho Cordova, California, whether the Utility incurs civil
or criminal penalties as a result of these investigations, the outcome of the CPUC’s proceeding to adopt new safety and
reliability regulations for natural gas transmission and distribution pipelines, whether the Utility is required to incur additional
costs for third-party liability claims associated with the San Bruno accident or to comply with regulatory or legislative
mandates which costs 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;
Public Utilities Commission (“CPUC”), the CPUC’s investigation into the Utility’s recordkeeping practices for the San Bruno
gas transmission pipeline that ruptured as well as for the Utility’s entire natural gas transmission system, the CPUC
investigation of the December 24, 2008 natural gas explosion in Rancho Cordova, California, whether the Utility incurs civil
or criminal penalties as a result of these investigations, the outcome of the CPUC’s proceeding to adopt new safety and
reliability regulations for natural gas transmission and distribution pipelines, whether the Utility is required to incur additional
costs for third-party liability claims associated with the San Bruno accident or to comply with regulatory or legislative
mandates which costs 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;
– 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;
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;
– the impact of storms, earthquakes, floods, drought, wildfires, disease, and similar natural disasters, or acts
of terrorism or vandalism, 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;
of terrorism or vandalism, 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 extent to which PG&E Corporation or the Utility incurs costs in connection with third-party claims or
litigation, including those arising from the San Bruno accident, that are not recoverable through insurance,
rates, or from other third parties;
litigation, including those arising from the San Bruno accident, that are not recoverable through insurance,
rates, or from other third parties;
– the outcome of federal or state 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
regulations, such as The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of
2010, and
– the other factors discussed in PG&E Corporation’s and the Utility’s annual report for the year ended
December 31, 2010 that has been filed with the Securities and Exchange Commission.
December 31, 2010 that has been filed with the Securities and Exchange Commission.
3
Rate Case Updates Page 5
Gas Pipeline Updates Page 8
Financial Summary Page 12
Appendix Page 13
Table of Contents
4
The Governor appoints the five Commissioners to six-year terms.
They must be confirmed by the Senate
within one year of appointment.
5
2011 General Rate Case
A proposed decision and alternate proposed decision were
issued for the 2011 General Rate Case (2011 - 2013)
issued for the 2011 General Rate Case (2011 - 2013)
Final decision expected Mar/Apr 2011
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Settlement Plus
Full Return on Retired Meters |
Proposed
Decision |
Alt.
Proposed Decision |
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Settlement Revenue Requirement Increase
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395
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395
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395
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Return on Undepreciated Meters
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44
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25
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35
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Impact of Change in Amortization Period
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38
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38
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Levelization Adjustment
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(10)
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(14)
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Total Revenue Requirement Increase Incremental
to Settlement |
44
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53
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59
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Total Revenue Requirement Increase
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439
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448
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454
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Average annual capital expenditures: $2.2 - $2.3B
Attrition revenues: $180M and $185M for 2012 and 2013
Comparison of 2011 Revenue Requirements ($ in Millions)
6
2011 Gas Transmission and
Storage Rate Case
Storage Rate Case
Sets revenue requirements, rates, terms and conditions for
PG&E’s Gas Transmission and Storage services for 2011 - 2014
PG&E’s Gas Transmission and Storage services for 2011 - 2014
PG&E and all but one of the active parties are seeking approval
of a settlement agreement
of a settlement agreement
Settlement revenue requirement: $514M for 2011
$52M increase over 2010
$174M average annual capital expenditures
Attrition revenues: $27M, $24M, and $17M for 2012, 2013 and 2014
The CPUC added a new phase to the case to separately address
pipeline safety measures and emergency response procedures to
ensure the safety and reliability of the gas system
pipeline safety measures and emergency response procedures to
ensure the safety and reliability of the gas system
Final GT&S decision expected in Q2 2011
Final decision for new safety phase is expected in Q2 2011
Final decision for new safety phase is expected in Q2 2011
7
FERC TO13 Filing
Sets revenue requirements for PG&E’s Electric Transmission
business in 2011
business in 2011
Revenue Requirement Request: $1.026B
Capital Expenditures: $810M
Requested revenues would provide for additional electric
transmission capacity and increased maintenance and
replacement work on substations, to improve overall reliability
of the system
transmission capacity and increased maintenance and
replacement work on substations, to improve overall reliability
of the system
TO13 final decision expected by Q3 2011
Request Approved Settlement
TO 10 $760.5M $718M
TO 11 $845.0M $776M
TO 12 $946.0M $875M
8
San Bruno Update - NTSB
NTSB released preliminary factual report in October 2010
Full report expected about a year after the accident
First Interim report in December 2010
Second interim report in January 2011
Metallurgical analysis commented on physical makeup
of pipe segment and weld qualities
NTSB Fact-Finding Public Hearings in Washington D.C.
March 1 - 3, 2011
• Ruled out external corrosion or excavation-related damage and
noted discrepancy in records
noted discrepancy in records
Issued recommendations to validate and verify pipeline
records in January 2011
records in January 2011
9
San Bruno Update - CPUC
PG&E is complying with all CPUC directives
Completed comprehensive gas leak survey in Q4 2010
Leak rate comparable to other U.S. pipelines
Leak rate comparable to other U.S. pipelines
Reduced pressure on selected pipelines to 20% below the
Maximum Allowable Operating Pressure (MAOP)
Maximum Allowable Operating Pressure (MAOP)
Began exhaustive records review in January to collect,
validate and verify records
validate and verify records
Field testing may be necessary to verify the MAOP
on some pipelines
on some pipelines
On 2/24/11, the CPUC began an investigation of the
Utility’s gas pipeline recordkeeping
Utility’s gas pipeline recordkeeping
10
Gas Pipeline Safety OIR
On 2/24/11, the CPUC began a proceeding to adopt new
rules on pipeline safety and reliability
rules on pipeline safety and reliability
Primary OIR objectives
• Develop and adopt safety related changes to the CPUC’s
regulation of natural gas pipelines in California
regulation of natural gas pipelines in California
• Consider ways the CPUC can undertake a comprehensive
risk assessment for natural gas pipelines
risk assessment for natural gas pipelines
• Share recommendations from Independent Review Panel
and provide the public a forum to express their views
and provide the public a forum to express their views
CPUC expects to hold Pre-Hearing
Conference in late Q2 2011
11
Pipeline 2020
A PG&E initiative to fundamentally improve gas pipeline
integrity and safety
integrity and safety
Major focus areas include:
Pipeline 2020 filing targeted for Q2 2011
Expected to be considered in the Pipeline Safety OIR
• Modernizing critical pipeline infrastructure
• Expanding use of remote or automated shut-off valves
• Developing next-generation inspection technologies
• Developing industry-leading best practices
• Enhancing public safety partnerships
12
Financial Summary
For 2011, internal equity sources (approximately $200 million)
expected to be sufficient to meet equity needs
expected to be sufficient to meet equity needs
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Third-Party Liability
Accrual |
Direct Costs
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Estimated 2011 Range
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$0 - $180 million
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$200 - $300 million
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Costs in 2010
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$220 million accrual
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$63 million
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Range of Estimates and Charges Related to San Bruno
The CPUC will decide whether the Utility’s ratepayers or
shareholders, or both, will pay for the Utility’s costs incurred in
testing, pipe replacement, or other direct costs.
shareholders, or both, will pay for the Utility’s costs incurred in
testing, pipe replacement, or other direct costs.
Ranges do not include potential penalties.
Believe most costs associated with third-party claims will be
recovered through insurance
recovered through insurance
®
Appendix
14
Key Regulatory Proceedings