Good afternoon and welcome to the PG&E 2015 Fourth Quarter Earnings Call. All lines will be muted during the presentation portions of our call, with an opportunity for questions and answers at the end. At this time, I'd like to turn over to our host Janet Loduca. Thank you, and enjoy your conference. You may proceed.

Thank you, Matt 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 outlook for future financial results, which is 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 slide deck. We also encourage you to view the 2015 annual report that will be filed with the SEC later today and the discussion of the risk factors that appears there. With that, I'll hand it over to Tony. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Well, thank you, Janet. Hello everyone, thanks for joining us today. 2015 was a really strong year for us both operationally and financially. We continue to improve the safety and reliability of our gas and electric systems, while delivering really solid financial results. Our earnings from operations in 2015 were $3.12 a share, which is slightly ahead of our guidance range. So I'm going to spend a few minutes reviewing the operational and regulatory progress we've made, and then I'm going to turn it over to Jason Wells to review our financial results in more detail. We continue to believe that focusing on three key areas, positioning the company for a clean energy economy, delivering on customer expectations and addressing outstanding issues will provide the foundation for operational and financial success. So let me start with how we're positioning the company for a clean energy economy. PG&E continues to be a recognized leader in supporting the nation's goals around clean energy. In December several PG&E team members and I joined Governor Brown for…

And our first question comes from the line of Dan Eggers with Credit Suisse. Daniel L. Eggers - Credit Suisse Securities (USA) LLC (Broker): Hey, good morning, you guys. Jason, just kind of going back in this bonus depreciation discussion a little bit. So you guys will adjust the rate base as the slides show for the treatment at the Utility level, but you will not be able to recover the cash until you get out of your NOL position at the corporate level? Jason P. Wells - Chief Financial Officer & Senior Vice President: Right, again, yes that's a fair assumption. Daniel L. Eggers - Credit Suisse Securities (USA) LLC (Broker): So how do you get net cash in to avoid the equity issuance if you're not going to be able to generate more cash, kind of in this interim three-year rate planning cycle? Jason P. Wells - Chief Financial Officer & Senior Vice President: It's already factored in, in the guidance that we provided, the impact is really small in 2017 and 2019. So it's really the 2019 period to concentrate on. Daniel L. Eggers - Credit Suisse Securities (USA) LLC (Broker): When you would actually start getting more bonus cash or perpetuate the cash tax position? Jason P. Wells - Chief Financial Officer & Senior Vice President: That's correct. Daniel L. Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. So the equity issuance kind of the $600 million base line, the blue bar in the slides for 2016, and then you have the shaded area for contingencies. Is that $600 million become the ongoing run rate number as your expectation in this guidance or does that number come down? Jason P. Wells - Chief Financial Officer & Senior Vice President: We're not giving longer term equity…

Thank you. Our next question comes from the line of Michael Weinstein with UBS.

Hi, guys. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Good morning. Jason P. Wells - Chief Financial Officer & Senior Vice President: Good morning.

Hey, good morning. I was wondering if you could comment a little bit more about the impact of the distribution rate plan, DRP plan on possible increasing the CapEx forecast going forward and offsetting some of that bonus depreciation impact. As well, just wondering how much spending are you planning on doing under the rider that you currently have in between rate case? Jason P. Wells - Chief Financial Officer & Senior Vice President: Yeah. So a couple of questions there as it relates to the DRP, I wouldn't necessarily look to that as a separate source of incremental capital. As we said in the past, our plans around modernizing our electric grid are incorporated in that 2017 through 2019 rate case and are reflected already in the CapEx that we filed. As it relates to the mechanism, something to consider there, that regulatory mechanism, which we call TAMA has really allowed us to spend additional capital previously to offset the extension of bonus. That was really intended to address situations where the extension occurred after a rate case decision, not when it's extended before the decision as it is in this case. So that mechanism isn't necessarily analogous to the situation we have here.

Got you. And another question about the time-of-use rates and the recent approval of Net metering rules. Just wondering if is it possible that the time-of-use rates might actually make Net metering less valuable to solar players in your jurisdiction? I'm just wondering what you think the impact of time-of-use might have on solar growth in your jurisdiction? Steven E. Malnight - Senior Vice President, Regulatory Affairs, PG&E Corp.: Hi, this is Steve Malnight, from regulatory affairs. Let me comment quickly on that. I do think there are several components of what we feel the rate structures need to move towards in the future, and time-of-use rates is one of them. So we were pleased to see in the NEM decision that we will be moving solar customers to time-of-use rate. It's not the silver bullet that solves all the problems, and in total that NEM decision we feel didn't really go far enough in addressing the issues that are caused by subsidization that happens with the NEM rate. So we'll continue to look at that decision. The Commission did decide that they will be revisiting it in 2019. And I would just remind you between now and 2019, we have a lot of changes that are happening in base rates in California with collapsing of the tiers, and with the potential to move customers, all customers, to time-of-use rate. So we'll look forward to that conversation in 2019 as well.

All right. Thank you very much.

Thank you. Our next question comes from the line of Hugh Wynne with Bernstein. Hugh D. Wynne - Sanford C. Bernstein & Co. LLC: Hi. Thank you for taking the question. Just going into page six and the quarter-over-quarter comparison, the miscellaneous items this year of this quarter of $0.09 are equivalent to almost 20% of the Q4 earnings. Just wondering if you can give us a little more clarity as to what the bigger items are in that, if possible. Jason P. Wells - Chief Financial Officer & Senior Vice President: Sure. Thanks, Hugh. Just as a quick reminder, for the year miscellaneous items is at roughly about $0.02. And so what I'll say is miscellaneous items generally have a number of factors both timing and non-timing related. A couple of the things that have driven the Q4 results were higher gas transmission revenues as a result of the colder weather we experienced in the fourth quarter, as well as we experienced some favorable settlements and employee benefit costs during that quarter, which are reflected in those numbers. But again these are really timing items, and over the course of the year they netted out to a small amount. Hugh D. Wynne - Sanford C. Bernstein & Co. LLC: Great. And then on the item on the right, the $0.10 GT&S cost recovery item, those are basically increased GT&S costs that you've not been able to recover due to the delay in any revenue increase being granted in the case. There's nothing in that number for rate base growth and return on equity associated with your request in the case, right? That is excluded here. Jason P. Wells - Chief Financial Officer & Senior Vice President: That's correct. That $0.10 really relates to our operating expenses for which we're…

Next question comes from the line of Chris Turnure with JPMorgan.

Hi, guys. I just wanted to follow up on the criminal trial question, and maybe you guys could elaborate on the timing there and the different scenarios of what could play out. Are you saying that the gross gains fine could potentially be thrown out by the judge, or is it just best case scenario there would be kind of together with the current trial as opposed to separated out into a separate proceeding, and kind of in all of those cases, what would we look at in terms of changes to the calendar? Hyun Park - Senior Vice President & General Counsel: Yeah. So this is Hyun Park again. The court has not decided whether to admit the gross gains evidence. So that's still under consideration. So the trial is scheduled to start on the 22nd of March, and barring any further continuance, the parties have submitted an estimate, and the estimate that's been submitted is that it may take approximately six weeks, four weeks for the prosecution and two weeks for the defense, but that's I think a very rough estimate at this point. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: This is Tony. One other thing on the issue around the Alternative Fines, because it's a criminal case, it has to be proven beyond a reasonable doubt. And I have trouble figuring how there would be any gain shown, in fact, the company sustained huge losses as a result of that. So the suggestion that they're going to be able to prove beyond a reasonable doubt that the company had $500 million in gains resulting from San Bruno, it's hard for me to understand.

Okay. And they could still kind of throw out the idea that there was $550 million of gains, but still prove you guys guilty of having a deliberate attempt to thwart the law to achieve gains. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Well, they have to prove that first, that's the first step is, that they would have to prove that there was a willful and deliberate violation of the law, that somebody decided, I know what the law is, but I'm just going to violate it anyway and then you don't even get to the alternative gains consideration unless you get that. And then they would have to prove beyond a reasonable doubt that the number was the number, whatever number they want to push.

Okay. Got you. And then what would be the potential final, I guess jury decision point here, in terms of when that would occur, and then is there still I guess a chance on this point in the process for a settlement to occur? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Let me comment on the settlement. I mean, we're always open to a settlement if someone wants to make an offer. We've made efforts in the past that haven't gone anywhere, but we'd be open to it. But Hyun, why don't you comment on the timing that you think... Hyun Park - Senior Vice President & General Counsel: Yeah. So I gave you the current estimate of how long the trial might take. And then of course it's a question of how long it takes for the jury to deliberate and reach a decision. And I can't tell you how long that will take. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: But given a late March start, you'd be looking at some time in probably the May timeframe.

Okay. And then, my second question relates to the GT&S ALJ decision, and final decision whenever that may kind of finally come here. Is there a way that we can think about different buckets of CapEx that you have requested here, and any kind of color into how those could come out in terms of approval or disapproval? And just how to think about the various scenarios of the outcome here, even though you probably wouldn't want to forecast what actually happens? Jason P. Wells - Chief Financial Officer & Senior Vice President: I really think it's probably premature to forecast what the decision will look like before we have it in hand. What I will say though is the capital expenditures' forecast for the year that we've included, the $700 million reflects what we filed in that case. And so you'll have to make your own assumptions around where that case will ultimately end up.

Okay. Great. Thanks.

Thank you. Our next question comes from the line of Michael Goldenberg with Luminus Management.

Good morning. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Good morning, Michael. Jason P. Wells - Chief Financial Officer & Senior Vice President: Good morning.

I wanted to understand better at the issue of bonus depreciation. So I understand that mathematically how it works. But I also do know that you have the mechanism that you kind of have and it can be applied for. Does this take that – does the announcement that you've put forward take into consideration the fact that you may yet get this mechanism and reinvest the CapEx, and you just don't have somewhere to invest, or are you just assuming you're not going to get it, or you're being conservative and just not incorporating it in? Jason P. Wells - Chief Financial Officer & Senior Vice President: The ranges we provided do not reflect any incremental capital from that mechanism we've had in the past. I really think it's important to point out that, that regulatory mechanism which has allowed us to spend that additional capital, when bonus was extended in the past, it was really intended to address the situations where that extension occurred after we received the rate case decision. In this case, bonus was extended before we have a decision, so it's not necessarily applicable in this case.

Are you not going to apply for it? Jason P. Wells - Chief Financial Officer & Senior Vice President: We've requested the extension of that mechanism as part of our original 2017 GRC filing. But again, it really is intended to address situations where bonus was extended after we received a decision in the case.

So are you saying you're unlikely to get the treatment again? Jason P. Wells - Chief Financial Officer & Senior Vice President: I would say, that's a fair assumption. It could be extended, but since bonus has already been extended for five years, I think that's a fair assumption.

And if you were to get it, how would the numbers change? Jason P. Wells - Chief Financial Officer & Senior Vice President: I really don't think the numbers change in this case.

I got you. Thank you. Jason P. Wells - Chief Financial Officer & Senior Vice President: What I will point out though in the comment that I made is, the high-end of our ranges reflect what we've currently filed in our rate cases. And so just as a quick reminder over this 2016 through 2019 period, our currently filed rate case for our electric transmission assets is only through 2016. So we'll have to file an annual case for 2017, 2018 and 2019. As well our GT&S case only covers up to 2017. So we will file an additional rate case covering the period of 2018 and 2019. There is an opportunity where we may spend additional capital or request additional capital in those rate cases that are not reflected in these ranges here.

Okay.

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

Hi, guys. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Hello.

A quick question on slide 12, where you're talking about your updated rate base. And it seems like effectively because you're mitigating the need to issue equity or reducing the need to issue equity. In your base case plan there was equity need literally in each of the years as 2017, 2018, 2019, is that fair? And secondly, is it possible that due to bonus now you probably don't need any equity in any one of those years, how should we think about that? Jason P. Wells - Chief Financial Officer & Senior Vice President: What I'll come back to is, the two main drivers of our equity needs have really been our CapEx program, and so we provided ranges here. You're going to have to make your assumptions about where we fallout in that range, and what that incremental equity will be needed to fund those levels. The other driver of our equity needs, as I mentioned before, is our unrecovered cost. As I mentioned, the majority of the unrecovered costs that are driving our equity needs in 2016 really relate to the financing of the remaining penalties of the San Bruno Penalty Decision. We will complete the financing of that penalty this year in 2016. So you can make your assumption about what those unrecovered costs will be post 2016.

Got you. And then secondly, from a retail rate perspective, as bonus depreciation reverses over time, and rate base grows, is there any concern that there is a concern for retail rates going up in the 2019 timeframe, and what that means for pushback in terms of further CapEx spend? Jason P. Wells - Chief Financial Officer & Senior Vice President: We're constantly focused on affordability of our service, but there is a number of factors that are going to play out over the period of time with which bonus depreciation reverses. So I don't think we can isolate that today as a driver or a concern about our rate levels.

Okay. Great. Thanks guys.

Thank you. Our next question comes from the line of Paul Patterson with Glenrock.

Good morning. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Good morning, Paul.

Just a few quick ones, the Community Choice Aggregation and Net metering issues, are those sort of resolved now one-way or the other, or do you expect further action in those areas? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: As Steve Malnight mentioned earlier, Net Energy Metering is not fully resolved. The Commission issued a decision, I mean, what we call Net Energy Metering 2.0, but now in 2019, they're going to take the issue up again. I mean, there is still this issue of cross subsidization. We think there is still work to do to get the rate structure right. So we don't have one group of customers subsidizing another, and we're going to be continuing to work with, not only the Commission, but all of the parties on this. So more to come on Net Energy Metering. And so that's something we're going to be working on. The other part...

Community Choice Aggregation. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah, CCAs, I mean, CCAs are – that gives local communities the right to aggregate. Now, they are still PG&E customers. We deliver the energy to the customer. The energy costs are a pass-through, so we don't make money or lose money on CCAs. One of the frustrations that we have is we want to make sure that customers understand what they're getting, when they go to a CCA. We want to make sure that from a cost standpoint and from a clean energy standpoint we are very competitive and we think we are. But in the end, right now, it doesn't have an impact on our bottom line.

Well, theoretically, Net metering wouldn't either, right? I mean, in terms of... Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: No. Yeah, Net metering doesn't hurt us, it hurts our customers.

Right. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Or a certain class of the customers.

Right. I was just wondering if Community Choice Aggregation, I think the Commission acted on this, or at least one of the issues related to this, whether or not that cost shifting is an issue similar to net metering, or if that's been resolved, I guess. Do you follow what I'm saying? Steven E. Malnight - Senior Vice President, Regulatory Affairs, PG&E Corp.: Yeah. This is Steve Malnight again. I think you're referring to the PCIA proceeding that occurred last year in our ERRA case. And the Commission set – they finalized the ERRA case in December, and really that sets our rates for this year. They did announce they're going to have a workshop to look at the PCIA methodology going forward. It's a very complex methodology by which we calculate what are the costs that when customers leave, bundled customers have already procured on their behalf. And as a part of the CCA mechanism they retain those costs when they go to CCA service. So we'll have a workshop on that here coming up very shortly, actually, and we'll continue to work through that during the year, but there's not another formal proceeding that's been opened on that.

Okay. And then as you guys are well aware, there's all this effort for CPUC reform. I mean, we've had legislation that's passed unanimously, was vetoed last year, and it looks like it's again showing up. I think it just recently – some of the similar legislation, and apparently they don't override vetoes with the Governor, but their validation of efforts et cetera. I mean, just if you could comment a little bit on that or what opportunities or risks you see with – I mean, with these rather – I don't know, it just seems that there is a big push legislatively, obviously to pass this unanimously for some form of reform, and how we should think about that and how you guys are sort of handling it? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Well, I mean, in California there are always lots of pieces of legislation, and it's hard to handicap which ones are going to make it through the process and which ones aren't. And quite honestly we've kind of stayed out of that issue. I mean, however, the state wants to structure the CPUC, we'll work with it. The bottom-line though from a regulatory standpoint in California we still have really good regulatory structures in place, and there's nothing that leads any of us to believe that the fundamental positive regulatory structures that we have in California is going to change.

Okay. So these efforts and what have you, it's a lot of noise but you don't see that as a threat to, or risk to, any potential change in that good constructive regulatory environment that you have. I don't mean to put words in your mouth, but am I understanding it correctly? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah. I mean, we think from the Utility standpoint – we'll work within whatever regulatory structure, and a lot of the proposals around governance at the CPUC, but no one is proposing we change some of these very positive structures. And the trends that we've had such as going to clean energy, which means we got to modernize and make the grid more flexible, which means we've got a lot of investments which is driving our capital needs.

Okay. Fair enough. And then just finally on the criminal case. I guess I'm a little bit confused. It seems like they are asking or they are seeking – the way you described it is that there has to be a finding of willful, deliberate deceit and I would assume that that would be on the part of individuals. But it doesn't seem like they are charging any individuals, they are charging the company as a whole, if I understand it correctly. Is that unusual to be sort of saying, hey, instead of making a charge that, there was a deliberate attempt to do something, but not actually charging the individuals with it. I guess, I'm just a little bit confused about how that works, or is that sort of typical in these cases? I just don't know. Hyun Park - Senior Vice President & General Counsel: Well, that's something that we've obviously been pointing out to the court. The requirement is knowing and willful violation of the Pipeline Safety Act regulation, and there is also an obstruction charge as well. And there is a theory out there called collective knowledge, and we believe that's what the government is looking to, but as you know, corporations are entities, and corporations as legal entities don't commit actions, it's the individuals, right? So these are issues that are very much at play and they are before the court right now.

Okay. Thanks so much.

The next question comes from the line of Anthony Crowdell with Jefferies.

Hey, good morning. Quickly, earlier in the San Bruno proceeding you had reserved some funds for the state fine. Have you guys reserved any funds for the potential of a federal fine? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: We have not.

Okay. And also I wanted to follow up on Mike Goldenberg's question, just on bonus, and if I follow it correctly, understand it, it lowers rate base. Is there an appetite with intervenors or the regulators for maybe the company to spend more than it historically has because customers do – there's some type of shield – I wouldn't say – it minimizes the rate impact with bonus there. Is there any appetite for that with intervenors or the regulators? Jason P. Wells - Chief Financial Officer & Senior Vice President: I want to continue to emphasize that TAMA account or that regulatory mechanism that we had to increase our capital expenditures in the past really isn't applicable in this case for the extension of bonus. So what I would really concentrate on is the potential opportunity for additional spending in our transmission rate cases, which we will file over the next couple of years.

No. I follow that, that mechanism is not going to be like – doesn't really work here, but when you make those filings, do you get a feeling with intervenors now that they'd be willing to maybe spend more in CapEx because of bonus? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: We haven't picked up that any of them are demanding we spend more money right now. I mean, and to just reiterate what Jason said, in these later cases that we file, we're going to be evaluating what our needs are, and that will then be the subject of a hearing. But no one's out there saying, that I've heard, has said, yeah, because of bonus depreciation being extended, you guys ought to be spending more money.

Great. Thanks for taking my questions.

Thank you. Our next question comes from the line of Travis Miller with Morningstar.

Hi, thanks. I want to go back on the GT&S. I think I heard you correctly at the $0.60 cash benefit that you guys expect in 2016, obviously, pending that decision. If that's correct, I heard you guys correctly, how much of that is going into that equity reduction bucket, and then how much would go to other uses perhaps reducing short-term debt or whatever financing you took out last year? Jason P. Wells - Chief Financial Officer & Senior Vice President: Yeah. So I want to clarify that $0.60, that really is sort of the full impact of not having a rate case decision. The placeholder that we put in terms of a driver of our equity needs, there is a number of assumptions that are going to go into that. It includes things like what are the overall level of revenues that are going to be authorized in that case, the timing of the decision, when we will collect those additional revenues. And so we're not providing guidance to this specific factors. I'll leave that up to you. But I wanted to point out that one of the drivers for the reduction in equity needs year-over-year is the fact that we anticipate the GT&S decision this year.

Okay. Would it be fair to assume it's somewhat in lines of that – of your authorized capital structure such that you expect probably half of that to go to equity and half to pay down whatever debt or other financing you used? Jason P. Wells - Chief Financial Officer & Senior Vice President: I think that's a reasonable way to think about it.

Okay. The second for Tony, strategically, you're looking ahead – a couple of years you talked about clean energy, you talked about the next generation grid stuff. What's your appetite for investing outside of the Utility in some of those projects or whether it's secondary, third-party, or even you guys yourselves directly? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: That's a really good question. And over the four-and-a-half years I have been here, the focus has been on really focusing on back to basics, getting the company running well, getting through the regulatory proceedings, things we've talked about on this call. We do think that there are opportunities. I will tell you the affiliate rules here in California make that very difficult. In many states, you can have your experts in various areas spend part of their time, looking outside the Utility, just divvy up their time to make sure that their time is being charged to the right place. Whereas California, it's very difficult to use the expertise you've developed in the Utility to work on things outside the Utility. So you'd have to have a big enough opportunity to say, all right, I'm going to bite the bullet, set up a whole separate organization to pursue these things. But that said, I don't think, a week goes by where one of us on the team doesn't have somebody coming in and having some ideas about how technology can improve this business. We actually look at them, can we incorporate them within the Utility structure and be successful, and help us, they wouldn't help the bottom line necessarily, but it might lower our costs to our customers, which in the long run I think is a very positive thing. So we are looking at those opportunities because we really do believe that we are as far if not farther along than most other Utility incorporating some of these technologies into the grid, I mean, as I said, we've crossed over 30% on renewables now, and as for the 33% requirement by 2020. So we're way ahead of the curve, going to 50% renewables, we have confidence that we can manage 50% renewable. Many of our colleagues in the industry are struggling with how do you handle 10% or 15% renewables on your system. So we've put in place the mechanisms and the technology to do it.

So Matt, I think we have time for one more question on the call today.

Thanks very much.

Okay. Our question comes from the line of Ashar Khan with Visium.

Hey, good morning and congrats. Jason, it would really help us because you gave us the rate base which was very, very helpful, and I think, one thing would be very helpful if you can just tell us what would the 2016 equity needs have been on a normalized year. If there was no funding of penalty or the extra costs that you incurred this year. What would have that number been for the year 2016, that would help us to clear a lot of confusion regarding the growth rate. Jason P. Wells - Chief Financial Officer & Senior Vice President: We're not providing those individual factors, but what I would say is, we provided rate base out there. So you have sort of the inputs to calculate it yourself, and in addition, we've got a couple of slides in the back of the deck which highlight the equity needs for the San Bruno Penalty Decision which you can also use to kind of back out sort of the equity needs related to that component of our equity drivers. So the factors are there, but we're not providing specific value.

So if my math is correct, if I do that it would have been nearly half, like $300 million to $400 million if you take all those extraneous factors out? Jason P. Wells - Chief Financial Officer & Senior Vice President: I think I'll leave you to do that calculation.

Okay.

All right. Thank you everyone for joining us this morning and have a safe day.