PG &E's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Start Time: 11:00

End Time: 11:45

PG &E Corporation (PCG)

Q2 2012 Earnings Call

August 7, 2012 11:00 a.m. ET


Gabriel Togneri – VP – IR

Tony Earley – CEO

Chris Johns – President & Director

Kent Harvey – CFO

Tom Bottorff – SVP, Regulatory Relations


Michael Goldenberg – Luminus Management

Greg Gordon – ISI Group

Hugh Wynne – Sanford C Bernstein

Michael Lapides – Goldman Sachs

Jonathan Arnold – Deutsche Bank

Tom O’Neill – Green Arrow Capital Management

Steve Fleishman – Banc of America

Travis Miller – Morningstar Research

Anthony Crowdell – Jefferies

Ashar Khan – Visium Asset Management



Good morning, and welcome to the PG&E Corporation Second Quarter Earnings Conference Call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end.

At this time, I would like to introduce your host, Gabe Togneri with PG&E. Thank you and enjoy your conference. You may proceed, Mr. Togneri.

Gabriel Togneri

Thank you, Jackie. Hello everyone, and thanks for joining our call. Before you hear from Tony Earley, Chris Johns, and Kent Harvey, I’ll remind you that our discussion is going to include forward-looking statements based on assumptions and expectations reflecting information currently available to management. Some of the important factors that could affect the company’s results are described in Exhibit 1 located in the appendix of today’s slides. We also encourage you to review the discussion of risk factors that appears in our 2011 Annual Report and in the Form 10-Q that will be filed with the SEC later today.

And with that, I’ll hand it over to Tony.

Tony Earley

Well good morning everyone, and thank you for joining us. I’m going to provide some opening remarks, and then I’ll turn it over to Chris and Kent to cover operations and financials in more detail.

On slide 2, you see the three key objectives that we have been talking about this year. I’ll speak to the first, resolving gas issues. We’ve been in settlement discussions regarding the regulatory proceedings. These are multiple proceedings, they are multiple parties, and they are complex issues. And beyond that, given where we are in the discussions, I just don’t think it’s helpful to go into any more detail about where we are. But I will say that if and when we have news to share, we will in fact share that at the appropriate time. We continue to believe that resolving the regulatory issues sooner rather than later would be beneficial for PG&E, our regulators, and our customers. So we will continue to push forward on that.

I do want to comment on third party liability, our civil cases. We’re making lots of progress in resolving these claims. We’ve settled several more of the most serious cases, and our intent continues to be that we provide victims with fair compensation and doing that as soon as possible.

Meanwhile, we continue to make good progress on our work in the field. As we’ve done this and as we’ve added new experienced leaders, we’ve identified some new work that we need to accomplish, and given all that we’re currently doing, it’s probably going to take several years to finish this new work as well. And Chris is going to describe that in more detail shortly. And as I’ve indicated in the past, there’s no quick fix, but we’re going to do whatever it takes to meet the commitments we’ve made related to system safety.

With respect to our second objective for the year, positioning the company for long-term success, last month we filed our 2014 General Rate Case Notice of Intent and it reflects the important work we should be doing over the next several years. So we’ll spend some time discussing that in this call as well.

We’ve also introduced a new planning process. It’s one that I’ve used in the past to more effectively manage the business. This process focuses first on developing a long-term strategy and identifying the critical objectives that we want to accomplish. Once the team has clear alignment on this, we develop tactical plans and budgets that then can be implemented on a company-wide basis. I think this is a process that will keep us focused on our key objectives and ultimately help us deliver results for many years to come.

Finally, shifting to our third objective, rebuilding relationships, we’ve seen a slight uptick in customer satisfaction, but I think it’s a little too soon to predict that that is a consistent trend. In the last month, we launched a major new customer outreach campaign. This effort combines advertising, social media, online information, community outreach, and a variety of other elements. It will feature our own employees and provide concrete examples of the work we’re doing to improve safety and reliability, and we anticipate that this is going to be a multiyear educational effort as we continue to work on our system.

Our research had told us that our customers really like the work that our employees are doing and they respect them, but they do want to know what specifically that the company is doing to make our system safer. This multichannel communications campaign will underscore the message that this is a new PG&E that’s serious about making improvements. And ultimately, we believe that this educational campaign is an investment in our relationship with our customers and our communities and part of the recovery plan that’s essential to our long-term success.

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