PG&E Earnings Call Insights: PSEP Program, Rate Base

On Monday, PG&E Corp (NYSE:PCG) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

PSEP Program

Michael Lapides – Goldman Sachs: Just curious, when you put out the 8-K after the proposed decision on the PSEP came out, one data point was in there caught our eye that I think it said that you would spend $95 million of capital in total on the PSEP and if I look at, I think it was Kent’s Slide 9, your proposed capital spending combined for 2011 and 2012 that $69 million and $384 million, so closer to $450 million, $460 million or so, just curious, after third quarter, are you still vastly under-spending the proposed capital tied to the PSEP?

Kent M. Harvey – SVP and CFO: Michael, this is Kent. The cumulative CapEx under the PSEP program through the end of Q3 was $187 million CapEx, so that number has been updated. You are right. Our original plan shown on Slide 9 here would approach $450 million, and we may not get there completely by year end, but we are going to have a significantly higher number than the $187 million by the end of the year, whatever the number of significant portion would be written off, it’s the PD were approved. Obviously, we are still kind of working with the details of the PD.

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Michael Lapides – Goldman Sachs: But this is a timing issue. This isn’t – hey, you are finding ways to spend capital at a cost lower than what you had filed originally when you made this application?

Anthony F. Earley Jr. – Chairman, CEO and President: Michael that’s right. It is a timing issue and the work was more tilted towards the latter half of the year rather than early in the year.

Rate Base

Jonathan Arnold – Deutsche Bank: Two questions, one is could you – I think that you’ve already shared sort of what that rate base would like under the PSEP PD, is that something you can give us some guidance on?

Anthony F. Earley Jr. – Chairman, CEO and President: We haven’t updated any rate base estimate based on the PD, Jonathan. We just have sort of the original filing, you probably can back into it by just kind of looking at what’s the proposed decision would disallow but we’ve not actually done that.

Jonathan Arnold – Deutsche Bank: Just one, so there is nothing sort of quirky we need to think about then, can we probably just take the numbers at face value and adjust, is that…?

Anthony F. Earley Jr. – Chairman, CEO and President: I think you’ll get pretty close that way Jonathan.

Jonathan Arnold – Deutsche Bank: Secondly more to do with the process. I missed the first couple of minutes, but Tony I believe mentioned that you’d be having a meditator would still be something you guys would be in favor of. Is this sort of a timeframe whereby you would want to sort of see progress with these talks and how long do we have to figure out whether we are going to be talking or litigating?

Anthony F. Earley Jr. – Chairman, CEO and President: Giving us predicting timeframes, I’ve said often I wanted to try and get the proceedings behind us by the end of the year. I guess until December 31, we can still get an agreement principle. Now, it’s probably unlikely to get the agreement and get us through the regulatory approval process with just two months left in the year, but I think the important piece is getting the parties together, and we do believe that given the complexity and the multiple parties that all have different interest that getting a mediator would be helpful. The discussions around George Mitchell if you’ve read (a lot in) the filings, were not an objection as such to a mediator but it was about the process of selecting that particular mediator, even though his credentials were superb, and so we’ve gotten back to the parties and suggested that let’s see if we can get another mediator.

Jonathan Arnold – Deutsche Bank: Right. So it was reported I think CPSD filed on Friday that you were going to have a – there was going to be a meeting today and an update to the ALJ November 1st. Is that still the – is that the sort of the latest and greatest?

Anthony F. Earley Jr. – Chairman, CEO and President: I’m not going to comment on the specific timetable of any meetings, Jonathan, but I can tell you there isn’t a day that goes by that we’re not working that issue.

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