1
Exhibit 99
PG&E Corporation:
Opportunities in Renewable Energy
Investor Meetings
Morgan Stanley
Electric Utilities Corporate Access Day
October 9, 2007 - Chicago, IL
2
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, as well as management’s projections regarding Pacific Gas and Electric Company’s (Utility) capital expenditures, rate base and rate base
growth, future electricity resources, and potential investments in transmission, generation and renewable energy resources. These statements are based on current expectations and various
assumptions which management believes are reasonable, including that substantial capital investments are made in Utility business over the 2007-2011 period, Utility rate base averages $17
billion in 2007 and $18.7 billion in 2008, that the Utility earns at least its authorized rate of return on equ ity, and that the Utility’s ratemaking capital structure is maintained at 52 percent equity.
These statements and assumptions are necessarily subject to various risks and uncertainties, the realization or resolution of which are outside of management's control. Actual results may
differ materially. Factors that could cause actual results to differ materially include:
•Utility’s ability to timely recover costs through rates;
•the outcome of regulatory proceedings, including ratemaking proceedings pending at the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory
Commission;
•the adequacy and price of electricity and natural gas supplies, and the ability of the Utility to manage and respond to the volatility of the electricity and natural gas markets;
•the effect of weather, storms, earthquakes, fires, floods, disease, other natural disasters, explosions, accidents, mechanical breakdowns, acts of terrorism, and other events or hazards
that could affect the Utility’s facilities and operations, its customers, and third parties on which the Utility relies;
•the potential impacts of climate change on the Utility’s electricity and natural gas business;
•changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline, general economic and financial market conditions, changes in
technology including the development of alternative energy sources, or other reasons;
•operating performance of the Utility’s Diablo Canyon nuclear generating facilities (Diablo Canyon), the occurrence of unplanned outages at Diablo Canyon, or the temporary or
permanent cessation of operations at Diablo Canyon;
•the ability of the Utility to recognize benefits from its initiatives to improve its business processes and customer service;
•the ability of the Utility to timely complete its planned capital investment projects;
•the impact of changes in federal or state laws, or their interpretation, on energy policy and the regulation of utilities and their holding companies;
•the impact of changing wholesale electric or gas market rules, including the California Independent System Operator’s new rules to restructure the California wholesale electricity
market;
•how the CPUC administers the conditions imposed on PG&E Corporation when it became the Utility’s holding company;
•the extent to which PG&E Corporation or the Utility incur costs and liabilities in connection with pending litigation that are not recoverable through rates, from third parties, or through
insurance recoveries;
•the ability of PG&E Corporation and/or the Utility to access capital markets and other sources of credit;
•the impact of environmental laws and regulations and the costs of compliance and remediation;
•the effect of municipalization, direct access, community choice aggregation, or other forms of bypass, and
•other risks and factors disclosed in PG&E Corporation’s SEC reports.
Cautionary Statement Regarding Forward-Looking
Information
3
Key Takeaways From Today’s Discussion
•PCG is a core utility holding delivering 1st quartile
earnings growth at low risk.
•PG&E is aligned with regulators/policy leaders to
increase the supply of cost-effective renewable
generation.
•Evolving renewables policy creates attractive
investment opportunities.
4
Agenda for Today
•PG&E’s core investment strategy and upside earnings
outlook
•PG&E’s position on renewable energy
-Current position
-Future investment opportunities
5
Investment Driver | Cap Ex | Notable Projects |
Common Plant | ~$1.3 Billion | •Building Investment •Technology Infrastructure •General Use Fleet |
Electric and Gas Transmission | ~$3.8 Billion | •Central California Clean Energy Transmission Line ( formerly Midway-Gregg) •Line Upgrades for Renewables •McDonald Island Gas Storage Pipeline |
Generation | ~$2.9 Billion | •Gateway Generating Station •Humboldt Power Plant •Colusa Power Plant •DCPP Steam Generator Replacement |
Distribution | ~$6.2 Billion | •Distribution maintenance and upgrades •New Customer Connections •AMI |
2007-2011 Estimated CapEx totals more than $14 B (~$2.8 B/yr.)
Capital Expenditures Drive Core Growth
6
* Reg G reconciliation to GAAP for 2006 EPS from Operations and 2007 and 2008
EPS Guidance available in Appendix and at www.pgecorp.com
EPS from Operations*
EPS Guidance
EPS from Operations*: 2007 guidance of $2.70-$2.80 per share
2008 guidance of $2.90-$3.00 per share
8%
7
Additional Investment Opportunities Provide Upside
•Proposed Pacific Connector Gas Pipeline (PCGP)
-1.0 -1.5 Bcf/d, 230 mile LNG pipeline
-$1.1 B (33% PG&E share)
•2006 Long Term Procurement Plan
-Up to 2,300 MW proposed post-2011
•Potential BC Renewables Transmission Project
-$14 M approved to study feasibility
-Coordination between BC, WA, OR, CA
-Q1 2008 - Report to CPUC
•PG&E Owned Renewables
8
Biomass Energy
Wind Energy
Small Hydropower (<30MW)
Geothermal Energy
RPS Eligible Renewable Resources - Traditional
9
Biogas
Ocean Power
Central Solar Energy
~
Eligible Renewables - Emerging
10
Year Signed | Project | Max GWh/yr | Technology |
Pre 2002 | Various Projects | ~7500 1 | Various |
2002 | Calpine Geysers 13 & 20 | 722 | Geothermal |
2002 | Wheelabrator #4 | 25 | Biomass |
2003 | CBEA Projects (3) | 305 | Biomass |
2004 | Big Valley Lumber | 41 | Biomass |
2004 | Diablo Winds | 65 | Wind |
2005 | FPL Energy-Montezuma Winds | 102 | Wind |
2005 | Buena Vista Energy LLC | 108 | Wind |
2005 | Pacific Renewable Energy | 280 | Wind |
2005 | Shiloh 1 Wind Project LLC | 225 | Wind |
2006 | Military Pass Rd. | 840 | Geothermal |
2006 | HFI Silvan | 142 | Biomass |
2006 | Liberty Biofuels | 70 | Biofuels |
2006 | Bottle Rock USRG | 385 | Geothermal |
2006 | IAE Truckhaven | 366 | Geothermal |
2006 | Global Common - Chowchilla | 72 | Biomass |
Year Signed | Project | Max GWh/yr | Technology |
2006 | Global Common - El Nido | 72 | Biomass |
2006 | Newberry | 840 | Geothermal |
2006 | Calpine Geysers | 922 | Geothermal |
2006 | Tunnel Hydro | 2.1 | Hydro |
2006 | Buckeye Hydro | 1.4 | Hydro |
2006 | Eden Vale Dairy | 1.3 | Biogas |
2006 | Microgy | TBD | Biogas |
2006 | Bio_Energy LLC | TBD | Biogas |
2006 | Palco | 36 | Biomass |
2007 | Solel | 1388 | Solar Thermal |
2007 | Western GeoPower | 212 | Geothermal |
2007 | PPM-Klondike | 265 | Wind |
2007 | CalRenew | 9 | PV |
2007 | Green Volts | 5 | PV |
18% of Projected 2010 Load Currently Signed*
*Based on contracts signed through August 2007
1) Average delivered energy over multiple years: pre-RPS baseline
PG&E’s Renewable Contracts Signed
11
Year
18%
15%
12%
19%
Expected Deliveries From Contracts
20%
20%
Renewable Portfolio Standard target is 20% by 2010*
* See Appendix for further description of RPS requirements
PG&E’s RPS Compliance Outlook
12
Challenges to Meeting RPS Goal
•Increasing competition for renewables projects from other
states/countries/utilities
•Many renewable resources are located in areas requiring either
new transmission or transmission upgrades
•Uncertain whether contracts will perform as projected
•System integration of intermittent resources becomes more
challenging at higher volumes
13
Wind
Transmission Line Project | Renewable Resources | |
1 | Central California Clean Energy Transmission (previously Midway-Gregg) | Resources to the south |
2 | Vaca Dixon - Contra Costa Upgrade | Solano County wind resources |
3 | California - Oregon Upgrade | Renewable resources from the Pacific Northwest |
4 | B.C. Renewable Line (possible) | Proposed to bring British Columbia renewable resource energy to California |
4
1
3
2
Bioenergy
Ocean
Solar
Geothermal
Geothermal
Geothermal
Small Hydro
Wind
Wind
Wind
New Transmission Investment is Necessary
14
Increasing opportunities for utilities in renewable development
Renewable Investment Landscape
•Renewable Provisions in Federal Energy Bill
-PTC (Wind, Biomass, Geothermal, Hydro, Solid Waste)
-ITC (Solar, Geothermal, Distributed Generation)
-Federal Renewable Portfolio Standard (RPS)
•PG&E’s 2007/2008 solicitation open to offers for utility
ownership
•CPUC provides incentive ROE on utility-owned renewables
15
PG&E Investment Opportunities
•PG&E is in the early stages of feasibility analysis
•Includes system-wide survey of land holdings and
assets for renewable potential
•Technologies include wind, solar and small hydro
16
PCG Value Summary
•PG&E is a core holding, delivering strong
investment opportunities and low risk.
•Renewables and related transmission investments
provide potential earnings “upsides” in 2008 and
beyond which are not currently included in long-term
guidance.
17
Appendix
18
Business Unit | 2006 Rate Base ($B) | Regulation |
Electric and gas distribution | $10.3 | CPUC |
Electric generation | $1.8 | CPUC |
Gas transmission | $1.5 | CPUC |
Electric transmission | $2.3 | FERC |
PCG Total Business | $15.9 | 85% CPUC/15% FERC |
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
•$16 B+ Market Capitalization
19
Projected Capital Expenditures ($MM)
Common Plant
Gas Trans.
Electric Trans.
Generation
Distribution
Chart Key
0
$1,000
$2,000
$3,000
2007
2008
2009
2010
2011
$3,200
$3,200
$2,500
$3,100
$2,200
Capital Expenditure Outlook
20
* 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 Recovery Bonds. Earnings will be reduced by an amount equal to the deferred tax
balance associated with the Energy Recovery Bonds regulatory asset, multiplied by the utility's equity ratio and by its
equity return. The carrying cost credit declines to zero when the taxes are fully paid in 2012.
Rate Base Growth
21
2006 | |
EPS on an Earnings from Operations Basis* | $2.57 |
Items Impacting Comparability: | |
Scheduling Coordinator Cost Recovery Environmental Remediation Liability Recovery of Interest on PX Liability Severance Costs EPS on a GAAP Basis | 0.21 (0.05) 0.08 (0.05) $2.76 |
*Earnings per share from operations is a non-GAAP measure. This non-GAAP measure is used
because it allows investors to compare the core underlying financial performance from one period to
another, exclusive of items that do not reflect the normal course of operations
2006 EPS - Reg G Reconciliation
22
2007 EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis | Low $2.70 0.00 $2.70 | High $2.80 0.00 $2.80 |
2008 EPS Guidance on an Earnings from Operations Basis* Estimated Items Impacting Comparability EPS Guidance on a GAAP Basis | Low $2.90 0.00 $2.90 | High $3.00 0.00 $3.00 |
* Earnings per share from operations is a non-GAAP measure. This non-GAAP measure is used because it allows
investors to compare the core underlying financial performance from one period to another, exclusive of items that do not
reflect the normal course of operations.
EPS Guidance - Reg G Reconciliation
23
Consensus of analyst estimates of EPS growth:
Source: Thomson IBIS long-term EPS Growth Consensus Estimate Median October 1, 2007
EPS Growth - Comparator Group
EPS from operations annual growth targeted to average 8% for
2007 - 2011
24
Mandate | •Deliveries of 20% of load from eligible renewables by 2010. Large hydro (>30 MW) doesn’t qualify. |
Purpose | •Fuel Diversity •GHG Reduction •Economic Development |
Penalty | •$50/MWhr, up to $25 million per year |
Exceptions | 1)Contract failure 2)Insufficient public goods funds 3)Insufficient offers 4)Lack of transmission |
Flexible Compliance | •Allows shortfalls to be made up within following three years. |
California’s RPS Program
25
RPS Procurement Process
•PG&E conducts annual renewable RFOs, targeting 1 - 2% increases in
supply
•Projects are evaluated on:
§Market value
§Creditworthiness
§Transmission availability
§Portfolio fit
§Commercial and technical feasibility
•Bilateral contracts allow PG&E to negotiate unique renewable
opportunities outside the RFO process. Projects are evaluated against the
same metrics.
•PG&E continually examines new opportunities for utility ownership both via
the RFO process and outside it.
26
Illustrative Energy Procurement Costs
27
* Over 20% of total retail sales expected to be eligible renewable resources coming from
utility-owned, QFs, Irrigation Districts, and other sources.
** May include utility-owned resources.
* Approximately 13% of total retail sales expected to be eligible renewable resources
coming from utility-owned, QFs, Irrigation Districts and other sources.
2007 Projected Sources of Energy
85,500 GWh
2012 Projected Sources of Energy
89,900 GWh
•Energy efficiency expected to meet half of future load growth
•Growth in renewable resources and resources with operating flexibility
•Growth in utility ownership
Long-Term Electricity Resources