Good morning and welcome to the PG&E Corporation Third Quarter Earnings Conference Call. All lines will be muted during the presentation portions of the call, with an opportunity for questions and answers at the end. At this time I will like to introduce your hostess, Ms Janet Loduca. You may proceed.

Thank you, [Monique], and thanks to those of you on the phone for joining us. Before I turn it over to Tony Earley, I want to remind you that our discussion today will include forward-looking statements about our outlooks for future financial results which are based on assumptions, forecasts, expectations and information currently available to management. Some of the important factors that could affect the Company’s actual financial results are described on the second page of today’s third quarter earnings and business update presentations. We also encourage you to review our quarterly report on form 10-Q that will be filed with the SEC later today and the discussion of risk factors that appears there and in the 2015 annual report. With that, I’ll hand it over to Tony.

Well, thank you, Janet. And thanks all of you for joining us. We're going to do something little different on today's call. We've resolved number of regulatory and legal issues over the last several months. With the gas transmission and storage rate case decision, the all party general rate case settlement and the resolution of the most of the San Bruno related proceedings we want to step back and review where we are and where we're heading. We plan to spend about half a time on today call with our prepared remarks. I'll start with the quick overview of our third quarter results and then share our vision for where the company is headed. We're also initiating 2017 earnings guidance today. So our presentation will take a little longer than usual, but we still expect to have about 30 minutes for questions at the end. So with that, let me turn it over to Jason to cover the third quarter results and then I'll talk more about or longer term vision.

Thank you, Tony, and good morning everyone. I'm going to just start with the third quarter earnings presentation that we issued this morning and then we'll move to the business update presentation. Slide three shows our results for the third quarter. Earnings from operations came at $0.94. I know this is lower than many of you expected, but we are reaffirming our guidance from earnings from operations for the full year. As I'll discuss more in a minute, the Q3 results are largely driven by timing items. Our third quarter GAAP earnings including the items impacting comparability were also shown on slide three. Pipeline related expenses were $31 million pretax this quarter. The charge for legal and regulatory related expenses was $23 of pretax, and fines and penalties were $67 million pretax are primarily related to the San Bruno penalty decision. We're showing $60 million pretax for the Butte fire-related, net of insurance which are largely for legal costs associated with the butte fire. We did not adjust our insurance receivable this third quarter. However, we do intent to seek recovery of all insured losses from our insurance carriers. And as a reminder, the current receivable should not be viewed as a ceiling on insurance recoveries. Moving to slide four, you'll see our quarter-over-quarter comparison of earnings from operations of $0.84 in Q3 of last year to $0.94 in Q3 of this year. As a result of the Phase 1 gas transmission storage rate case decision we increased our rates in August to begin recovering the higher approved revenues. This resulted in a $0.11 of higher revenues compared to Q3 of last year. We also continue to see $0.05 positive for growth and rate concerns, and regulatory and legal matters total$0.05 positive for the quarter. This item include some incentive…

Thanks, Jason. Let me turn to the business update presentation that we issued earlier this morning. I'd encourage all of you to have the presentation in front of you as I share my comments because I think it will be a little easier to follow on. As you can see on slide three, we're going to cover three areas today. First, I'm going to review the progress we've made over the last six years because we have come a long way. We know we still have more work to do but I am really proud of what the team has accomplished and I want to share some of those results with you. Second, I'm going to talk about some of the things that really provide PG&A with a strategic advantage, and third I'm going to talk about what's driving growth going forward. As part of that Jason is going to review the 2017 earnings guidance as well as our updated CapEx at rate base guidance through 2019. Between our 6.5% to 7% rate base growth and our above average dividend per share growth we expect to deliver strong returns over the next several years. So let me start with the progress that we made. Slide five provides the high level overview of the company. As you can see over 90% of our revenues are set by the California Public Utilities Commission with the remainder set by FERC and nearly half of our revenues are pass through for things like energy procurement costs and public purpose programs. Turning to slides six, one of things I'm most proud of is how we've embedded safety into our core governance structures. Safety is really the foundation of everything that we do. When I join the company in 2011 we began a back to basic…

Thank you, Tony. I’m going to finish up today’s presentation by reviewing our 2017 earnings guidance and updated CapEx and rate base guidance through 2019. Turning to slide 25, our 2017 guidance on an earnings from operations basis is $3.55 to $3.75 per share. We are also providing ranges for the items impacting comparability, which I will come back to in a minute after we review the guidance assumptions on slide 26. Starting the upper left corner, you will see we are assuming capital expenditures of roughly $6 billion. We’ve included the breakdown by rate case here. In the upper right corner, our estimate weighted average rate base is about $34.3 billion for the year. Both the CapEx and rate base assumptions are within the ranges as we provided last quarter. In the lower left, we continue to assume a CPUC authorized equity ratio of 52% and a return on equity of 10.4%. Finally in the bottom right corner, we list some of the other factors we believe will affect 2017 earnings from operations. Our guidance assumes that both the GRC settlement and a proposed Phase 2 decision in the gas transmission rate case are approved without material change. And you will recall that we do not seek recovery in the gas transmission rate case for about $50 million of costs in 2017. We are also showing a positive item here for incentive revenues and other benefits, which include things like our energy efficiency programs. I will note that we are no longer showing a positive item for tax benefits, consistent with the guidance we previously provided. And we continue to expect that CWIP earnings will be offset by below-the-line costs, which includes things like charitable contributions, advertising and certain environmental costs. In 2017, we expect that a number of…

[Operator Instructions] Our first question comes from the line of Steve Fleishman with Wolfe Research. You may proceed, Mr. Fleishman.

Hi. Good morning. So, just on the financing plan for 2017 and the equity, is this -- are we pretty much at a level where we are just funding the core business, or we are not really dealing with any of the kind of balance sheet fixes for some of the lingering issues?

Hey. Good morning, Steve. The 2017 equity guidance plan does assume that we continue to fund some unrecovered costs, which are primarily related to the clearance of our rights-of-way, our gas transmission business. Otherwise the major driver of the equity plan is our CapEx and the needs of our CapEx spending.

And how much -- is that a $100 million still or is that a different rights-of-way for $75million?

We are estimating between $80 million to $125 million for the year.

Okay.

Pre-tax.

Okay. And then one other high-level question. Tony, you mentioned in terms of the affordability stuff, you have a lot of your old PPA contract rolling off over the next five years?

That’s correct.

My recollection is some of these probably are pretty high pricing. So, I’m just curious how much potential rate headroom that creates over the long-term or any kind of just sense of that?

Yes. Steve, the way to look at is -- our objective is to maintain a rate trajectory to approximate the rate of inflation and you’ve got several levers to pull. One is we are working hard on efficiencies within our operations. But as you recognized, another will be the cost of purchase power. And you are absolutely right. Some of the early renewable contracts that we signed probably decade ago were significantly higher and while those aren’t changes that fall to the bottom line as such but they are changes that affect affordability because they directly affect the customer bill. So, we are working on pulling those levers. And then we have a number of other balancing accounts. So, we continue to work on where again, don’t necessarily fall to the bottom line but give us more headroom when we invest the capital that we see we are going to be investing over the next decade or so.

Okay. Thank you.

Thank you, Mr. Fleishman. Our next question comes from the line of Julien Smith with UBS. You may proceed.

Hi. Two questions here. First, little bit more detailed, when you think about the cost of capital proceeding coming up, can you give us some comments on what the tailwinds you are seeing in your cost of debt versus what’s embedded in rates today and willingness to potentially use that as something as part of the ongoing conversations? I will stop there.

Cost of capital or any settlement discussions are confidential. But what I would say in terms of the embedded benefit for cost of that is roughly around $75 million a year.

Got it. And that’s pretty stable right now.

That’s kind of what we are currently experiencing. Now, I will have to see what rates, how rates move and what our upcoming issuances look like.

Got it. Excellent. And then going back a little bit higher level, you commented one of the erosions in your sales forecast relates to CCAs. Can you comment on what the pace of the CCA is and just broadly what that means for your business? I know there is puts and takes but I’d just be curious, specifically on the procurement front, what does that mean?

Geisha Williams will comment on that.

Hi, Julien. This is Geisha. So, we have CCA activity going on at various stages of development or at various stages of considerations. Some of the CCAs, some of the communities present larger amounts of loads than others and so it’s really a probabilistic view of trying to figure out when certain CCAs are going to happen, what kind of load might affect the partner. Now, remember that they would only be responsible for providing the energy, the energy side of the business. We would still be responsible for the T&D business. So, as we look at our load projections, it is kind of difficult to pinpoint it down to a particular number in terms of what we might be able to see from CCAs. It can move pretty quickly. And in other cases we see CCA is taking longer, sometimes up to 18 months or 24 months. So it’s a bit fluid is how I would answer that.

Got it. Maybe just curious, do you think broadly the tariff structure, the exits and ongoing payments are sort of reflective of what the incurred costs?

Hey, Julien. This is Steve Malnight from Regulatory Affairs. As we look back, we are constantly working with the commission on how to continue to revisit and look at the cost allocation mechanisms that are in place. I will say as Geisha alluded to, I think when we look forward, we see a significant expansion of CCA load growth and that’s one of the reasons why the Diablo Canyon settlement made sense for us. So in light of that, we continue to go back and look. And I think that it’s likely that those mechanisms will evolve as the marketplace evolves as well.

Got it. Great. Thank you so much.

Thank you, Mr. Smith. Our next question comes from the line of Jonathan Arnold with Deutsche Bank. You may proceed.

Good morning, guys.

Good morning, Jon.

Hi, Jon.

Thanks for all the details. Just a quick question. You indicated that the items kind of other than regular rate base type of math would amount to about zero in 2017. Any reason to see that changing, as you look out into ‘18 and ‘19 that’s obvious?

It continues to remain our objective to earn our authorized return on equity. What I will say is the gas transmission and storage Phase 1 decision created some challenges for us in terms of mandated work levels and certain cost gaps. However, we are going to continue to drive efficiencies to offset these challenges to enable us to earn our authorized return. So, I think that should be focus, earning the authorized return on equity across the enterprise as a whole.

And then just sort of a little detailed. I think you said that going forward ‘18, ’19, you think you could hit your equity needs largely through internal plans and that they generate about 350 a year. Should we be using 350, is it little higher or?

I was going to stick with what I had said, which was it will largely meet our equity needs.

Thanks. All right. That’s it. Thank you very much.

Thank you, Mr. Arnold. Our next question comes from the line of Michael Lapides with Goldman Sachs. You may proceed.

Hey guys. Congrats. Tony, one question, the slide on grid modernization and the $1 billion spend, just curios is all of that embedded in some of the GRC settlement in your distribution spend that you have over the next few years, or we have to go into the CPUC and request approval of this in some kind of memo account?

The approach we’re making is to embed our grid modernization in our GRC cases, in our transmission system cases. So, we’ve been making these investments probably for close to a decade and we continue to make and the $1 billion numbers are estimate of what it’s going to be in the next couple years coming up.

As a reminder, I would say most of it has already been approved but there is a component that we are still seeking recovery from in terms of our TO case.

Got it. And turning to the TO on the electric side, just curious how do you think about what the trajectory of electric transmission spend is over the next three to five years, kind of flattish to what you’ve got in 2016, 2017 potentially elevated and what could be some of the drivers that could move that around?

Yes. I think as you look at the next -- clearly through 2019, you are going see a pretty flat but pretty robust spend in TO. And that’s really driven by a number of things but a lot as we look beyond 2019 frankly, will be with renewals integration work. As we seek to achieve a 55% RPS goal by 2031, we recognized that we are going to need to continue to invest in our transmission infrastructure. So, a strong amount of capital through 2019 and although we are not providing guidance beyond it, I would imagine that we continue with the similar type of expenditure.

And then finally when I look at your CapEx budget, so kind of in the $6 billion range for the next three years, pretty flat actually, not kind of accelerating which is fine. But that would imply that free cash flow should improve, right because you get D&A, you have some other items like insurance proceeds and those things that add to some cash flow. So should we think about -- your earnings growth may slow down a little bit in the backend of this forecast because CapEx is just confined at the $6 billion level but maybe your cash flow actually accelerates each year relative to the prior one?

I think that’s -- there's a couple of things that are moving against towards those assumptions. So what we’ve seen is sort of an increase in the regulatory lag for cash recoveries, certain items. One of the things that I would point to would be our expenditures for our wildfire prevention costs, which are pretty significant given the drought in the state and that’s generally been taking us three years -- between the time we spend the money and when we collected in rates. And so there are offsetting factors that I would point to that would offset the cash acceleration that you mentioned.

Got it. Okay. Thanks guys. Much appreciate it.

Thank you, Michael. Our next question comes from the line of Chris Turnure with J.P. Morgan. You may proceed.

Good morning. I wanted to focus on the equity needs for next year. You saw a pretty good range there of $200 million. What is embedded in that assumption in terms of proceeds from insurance on the Butte fire or other factors that might move you to the top or bottom end of the range?

We continue to expect to see recovery for all of our insured losses from insurers. There will be a timing lag between points in which we recognize the charge for the costs when we actually paid those and when we collect them. Since they are mostly timing related items, we’d expect to try to finance as much as possible with short-term financing.

Okay. And when you think about the GT&S 2011 to ’14 audit, you are kind of putting that into 2018 rate base. Right now is that a full assumption of the amount that’s being reviewed and how can we think about the considerations that that audit group will be taking into consideration there?

Yes. The $400 million reflect the full rate base impact subject to audits and we feel good about the spend. We feel it was prudent. We feel it was necessary. So, we are going to have to go through that out. You are going to have to make your assumptions around any perspective we will receive from our regulators but we feel confident enough to have proposed it and we will continue to seek recovery of it through the audit.

And what about timing there? Is early 2018 a conservative assumption that could be accelerated?

There wasn’t really a timing ascribed to the audit in the Phase 1 gas transmission rate case. So that’s why we conservatively move the rate base impact to 2018. I think it’s just going to be important to follow the timing of the audit here throughout 2017 to make assumptions on ultimate timing of collection.

Okay. That makes sense. Thanks.

Thank you. Our next question comes from the line of Michael Weinstein with Credit Suisse. You may proceed.

Hi, guys. Question on the $1 billion grid modernization investment plan, how much of that or how much upside is there potentially when you look at that versus the distribution resource plan that are filed? Specifically, I’m thinking of the amount that you originally intended to spend on let’s say for example, electric vehicles. That’s been pared back and I’m just wondering if there’s more -- if there is more spending that you would like to do beyond the $1 billion that just simply hasn’t been approved yet or that you’re not planning on filing immediately and how long could that go out for?

Hi, Michael. This is Geisha. We’ve been at this grid modernization for quite some time now. And we’ve continued to be making investments for the last five, six years and so what’s reflected on page 20 is our estimate of the work that we intend to do through 2020. As we get more insights and we continue to work with the commission on the DER plan, on IDER and the DRP, there could be additional sort of changes along the way. But we would invest. We would actually seek that recovery through future rate cases. So, I think in terms of an outlook through 2020, I think what we are showing on page 20 is accurate.

All right. Not expected to change much then. And then also on the equity range, just going back to that previous question that you said that the timing high versus low depends on insurance recoveries, is that accurate?

No, I wouldn’t count the insurance recoveries for the Butte fire in that equity issuance guidance. What I was referring to is there is going to be a timing difference between ultimately when we report the charge, when we pay out the cash and when we collect it from insurers. Since that is largely a timing related issue, financing those payments we will do so through short-term financing options.

Like so how -- what are the factors that vary between the high and low end of the equity range for 2017?

I think there is going to be a lot of factors in terms of sort of timing of recoveries. As I mentioned, I think we are seeing a trend towards a lag in cash recovery of certain expenditures, particularly as I mentioned wildfire prevention costs. Our last application for recovering those costs was about $200 million. And so we continue to accelerate the spend in terms of preventing wildfires here in the state because of the drought. So there are assumptions on the recovery that could push us, recovery of cash that could push us to the upper end of that range.

Got you. Thank you

Thank you, Michael. Our next question comes from the line of Anthony Crowdell with Jefferies. You may proceed.

Good morning. Just a question on CWIP. I guess prior to the San Bruno incident, I think CWIP was split, half went to shareholders, half went for below-the-line costs. As you’ve cleared maybe a lot of the issues related to the San Bruno incident, you’ve cleared them up. Is there still a need with this level of below-the-line costs?

It would be hard for us right now to say we could cut back on them. We still are dealing with some San Bruno issues. But also as we look forward with this size of capital investment, we’ve got to make sure the public understands why we are investing in renewables, why we are investing in electric vehicles. So, I would be reluctant to say we could cut back on those costs in the next couple years certainly.

Okay. And just, last question and Anthony, you don’t have to answer, that’s fine. Just when you had started this endeavor of turning the company around, you looked at a timeframe of maybe three to four years, kind of in five years. I think the slides today you put out really show how much the company has been transformed over that time. Do you see yourself still around there through this transformation or you thinking other things?

I’m having a great time. I love seeing these slides. We pulled them together and you are making progress that when you lay them out. It’s fun to see how things have come together. I talk to our Board all the time about our talent development plans and at some point we will make a decision about transition but I'm not going to speculate. I’m having too good of a time.

Okay. Thanks for taking my question.

Thank you, Anthony. Our next question comes from the line of Praful Mehta with Citigroup. You may proceed.

Thank you and thanks a lot for the slides. They are very helpful. Quick question on business update and I guess an important component of that is regulatory relationships. How do you see that having transitioned over this transformation and are there anything that you are looking to achieve, or any trackers that we should look for that would suggest where regulatory relationships stand today?

Hi. This is Steve Malnight. So, I would say we recognize that over the last several years we’ve had a need to focus on rebuilding trust with our regulators and stakeholders externally. We have really made intensive efforts at that and are continuing to increase our engagement with commissioners, with staff, with interveners, all with clear eye toward the ex parte rules and restrictions. And I think that those kinds of efforts have really paid off as we are working on trying to settle key cases or other things. So, we're going to really continue on that path and keep moving forward. I think that between the commission and PG&E we share tremendous common interest on ensuring that this company runs a safe, reliable, and affordable and clean system and that's we're going to keep working.

What I'd like to add too is, if you look at the role of the regulator I mean, they ultimately wanting sure that we're delivering safe and reliable service to our customers. And so, when you look at the slide deck that's been put together and you look at the type of improvement that we've made over the last five or six years, we feel good about it and we think it’s a foundational basis of conversation with our regulators about the good work that we've done. So, I think that it's about making sure you're delivering great service to your customers and that in turn ultimately we believe leads to improved relationships with our regulator as well.

Got you. That's very helpful. Thanks. And then, secondly in terms of retail rates, you've really pointed out that something that you're focused on which make sense. And as you're looking forward post 2019 and you're looking at growth rates relative to keeping retail rates in check. Is there is deepening off of the growth you see over time balancing off these different considerations or how do you see that growth being maintained through the post 2019 period?

I think we are going to look at lot of factors here, Tony mentioned earlier on the call the fact that we've potentially got some headroom associated with our expiring procurement contracts. Our focus is continue to drive efficiency in our operations to keep our rates affordable. And kind of as we mentioned the trends we're seeing for capital investment, we think our longer term and extent beyond this 2019 period. So our objective is to kind of balance the need for that system investment while continuing to drive efficiencies in all aspects of the customers build.

And there are structural things in rates that the commission has already laid out [audio gap] dynamic area, but we watch it very closely, so we don't get rates spiking in any part of the state.

Fair enough. Thank you guys.

Thank you, Praful. Our next question comes from the line of Kevin Fallon with Citgroup – I'm sorry Citadel. You may proceed.

I had a question on slide 10 on the dividend that you are targeting in 2019 of $2.40. Are you guys implicitly trying to lead people to earnings power of $4 in 2019? Or does the roughly 60% payout range fall in the old guidance of 55% to 65%?

I think we're not trying to lead there, we're trying to focus on a 60% payout ratio of our earnings to 2019 and our objective is to get there over the next several years. [audio gap] that's correct yes.

Okay. Thank you.

Thank you, Kevin. Our next question comes from the line of Travis Miller with Morningstar. You may proceed.

All right. Thank you.

Good morning.

With respect to the grid modernization investments, the $1 billion and then any other extra that might come of that, how do you think about rate recovery for that? Are you thinking GRC? Are you thinking other trackers? Is there something else completely different out there? Help me think about the recovery of that?

I think you should think of it in terms of the regular recovery we through the GRC and the TO rate case, that's the approach we've taken over the last six to ten years now. We have been investing in our grid at a pretty good clip. It’s a big part of the reason we're seeing the improved reliability and as we look at future GRC that will be the right mechanism for distribution and infrastructure improvements modernization and cases for the transmission piece.

Got it. Are any of these initiatives you would expect to either request or get rate tracker treatment and annual true up type treatment?

The one that sort of a little bit different is probably the electric vehicle. That would be outside. It’s a separate sort of filing. We're expecting to get a decision on that hopefully in the near term, so that's an example of one falls outside the GRC. And there could be others, but right now we don't think of anything else. We really do like putting everything for the GRC and using the TO rate case for transmission as well.

Great. Appreciate it. Thanks.

You bet.

Thank you, Travis. There are currently no additional questions waiting in queue.

Alright. Great. Thanks Monique, and thanks to everyone for joining us this morning. We look forward to seeing many of you next week at the EEI conference. Thank you.