how wells fargo views regulated utilities - rmg financial · 2 who we are a diversified financial...

How Wells Fargo views Regulated Utilities Yann Blindert Lisa Larpenteur

September 12, 2014

1

Agenda

Overview of Wells Fargo and the Power and Utilities Group

Wells Fargo’s underwriting criteria for investor owned utilities

Key trends in the utility industry

Relationship banking

2

Who we are A diversified financial services company providing banking, insurance, investments, mortgage and consumer finance through more than 9,000 Wells Fargo stores, 12,500 Wells Fargo ATMs, the internet and other distribution channels across North America and internationally.

One in three households in America does business with Wells Fargo. Wells Fargo has $1.6 trillion in assets and more than 265,000 team members across approximately 90 business lines.

Assets1 $1.6 trillion

Rank by assets 4th

Among U.S. Peers

Rank by value of stock 1st Among U.S. Peers

World’s largest bank 1st By market capitalization

Market value of stock $276 billion

Team members 265,000

Customers 70 million

Fortune 500 rank1 25th Among all companies, by revenue

Total stores More than 9,000 North America

ATMs More than 12,500

Key facts

Company data as of June 30, 2014 12013 Fortune

We want to satisfy all our customers’ financial needs, help them succeed financially, be the premier provider of financial services in every one of our markets, and be known as one of America’s great companies.

Our vision

3

$276.8

$218.0

$192.5

$161.6$143.1

$103.0

$78.6 $74.9 $68.8 $63.7 $59.7$48.6 $45.7

Wells Fargo strength We are one of only a handful of strong, stable and well-capitalized banks in the world today

Numbers in billions Market capitalization as of 6/30/14 Source: Capital IQ

4

Wells Fargo debt rating summary

Fitch Moody’s Standard & Poor’s

Long-term issuer rating AA- A2 A+

Short-term issuer rating F1+ P-1 A-1

Senior unsecured AA- A2 A+

Subordinated A+ A3 A

Fitch Moody’s Standard & Poor’s

Long-term issuer rating AA- Aa3 AA-

Short-term issuer rating F1+ P-1 A-1+

Bank Deposits AA Aa3 AA-

Senior unsecured AA- Aa3 AA-

Subordinated A+ A1 A+

Wells Fargo & Co.

Wells Fargo Bank N.A.

As of June 30, 2014

5

Power & Utilities Group

Wells Fargo builds relationships by understanding our client’s objectives and providing solutions to meet those needs. A dedicated, industry focused relationship manager brings creative ideas, insights and solutions to help companies to: Meet capital needs Manage operations and

infrastructure Invest capital and manage risk

A client-focused approach Well-connected Foundation in credit commitment

Our dedicated relationship coverage team has offices in 6 locations with more than 30 team members nationwide.

Wells Fargo’s Power & Utilities Group serves investor-owned electric, natural gas, and water utilities, as well as generation and transmission companies. We build long-term relationships based on industry knowledge, market expertise, and innovative solutions. Wells Fargo has remained consistent in its credit approach while others have entered and exited the industry. The Wells Fargo Power and Utilities Group has a portfolio of more than $10 billion in credit commitments.

Our commitment to long-term relationships is demonstrated by a responsive service model that delivers all the resources of Wells Fargo through a single point of contact.

6

Wells Fargo’s underwriting criteria for investor owned utilities

Overview of criteria: – Regulatory considerations

– Leverage

– Access to capital

– Holding company risk

– Dividend payout

– Operational / Other considerations

– Qualitative factors

7

Wells Fargo’s underwriting criteria for investor owned utilities (cont’d)

Regulatory framework designed to provide a utility:

Fair and reasonable return on capital

Pass through of operating costs

Return of its capital (depreciation)

8


Regulatory framework – How rates are changed:

General Rate Cases: – Capital additions, increase operating costs

– Cost of Capital (Debt & Equity) and Capital Structure

– Typically every 2-3 years

Mechanisms for increases outside rate cases: – Power Cost, Decoupling, Capex Trackers, Attrition

increases

9

Wells Fargo’s underwriting criteria for investor owned utilities (cont’d) Regulatory environment and framework vary across each state. Transparency and communication

– Amicable vs. adversarial process – How commission is appointed – Influence of interveners – Disallowances

Managing rate lag – Forward looking; Time of proceedings; Interim increase; Attrition

increase; Capex Trackers

Mechanisms to stable cash flows – Power cost adjustment clauses – Decoupling mechanisms delinking volumes from earnings

Threat of deregulation and consumer choice

10


Regulatory considerations – Qualitative factors

– Realized ROE vs authorized ROE

– Volatility of realized ROE

– Quality of service

Environment has generally improved with adoption of mechanisms

11

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

9.5%

10.0%

10.5%

11.0%

11.5%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

10-Y

r Tr

easu

ry

Ave

rage

Allo

wed

RO

E

Authorized Electric Utility ROE Through Time

Declining ROEs

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: SNL Financial, Regulatory Research Associates

10.0%

2.7% 4.0%

11.1%

Electric ROE ROE Spread 10-Yr Treasury

Authorized ROE’s Reduced low treasuries (risk free rate) and lower risk

Gas utilities ROE’s typically ~0.5%

ROE Spread Over 10-Yr Treasury

12


Leverage – Focus on debt to operating EBITDA and FFO to debt

– Debt to cap expected to track authorized levels

– Actual and projected

– Large capex programs puts pressure on leverage

• Capex is >2.0x Depreciation & Amortization

• Free Cash Flow shortfalls

Free Cash Flow = Cash Flow from Ops – Capex – Dividends

• Heightens importance of regulatory lag and environment

• T&D Capex less risky than generation

– Debt service coverage not a primary consideration

13

Wells Fargo’s underwriting criteria for investor owned utilities (cont’d) Access to capital

– Debt - S&P, Moody's, & Fitch

– Equity – Performance and outlook

– Financial support of private owned / holdco

Holding company risk – Double leverage juice return

– Ring fencing and no upstream guaranty heightens risk

– Regulated equity (value) / Holdco debt

– Holdco debt as % of total consolidated debt

– Holdco cash flows

– Unregulated businesses

Sources UsesUpstream Dividends from subs Investor DividendsExternal Equity Issuances Equity Contributions to subsHoldco Debt Holdco Op. Expense

Holdco Interest Expense

Holdco Cash Flows

14


Dividend payout

– Prudent dividend policy in 60% payout range on recurring earnings

– Net cash flow with Equity Contributions impact leverage

Operational / Other considerations

– Size

– Diversification (regulatory, geographical, weather)

– Generation mix

– Customer mix for consistent demand and diversification

• Residential - Commercial – Industrial

Qualitative factors

– Management – key consideration

– Legal and Environment Risks

Lower risk Higher risk

15

Overview of some key trends in the utility industry

Changes in load growth

Increase in renewables

Consolidation and leveraged buyouts

Increasing equity valuations

16

Load growth

Load growth has slowed and no longer tracks GDP Impacted by conservation, technology efficiency,

distributed generation Lower load growth reduces earnings between rate

cases due to utility’s largely fixed costs and variable revenue receipts

At rate case, the revenue requirement is reallocated/reset

Decoupling moderates impact from change in load/customer

Lower load growth raises rates and resulting regulatory risk

Higher load growth attracts equity investors

17

83.2% of revenues collected on variable basis and only 57.3% of operating costs are variable

Source: Portland General Electric Corp.’s 6/30/2014 10Q.

Portland General Electric August 2014 Bill SummaryPrice (cents) / Kwh Volume (Kwh) % Total

Fixed Basic Charge $10.00 16.8%

Energy Use Charge 6.2450 488 $30.48 51.3%Transmission Charge 0.2830 488 $1.38 2.3%Distribution Charge 3.7940 488 $18.51 31.2%Other Adjustments (0.1947) 488 ($0.95) -1.6%Total Variable $49.42 83.2%Total Before Taxes $59.42

Portland General Electric - Q2 2014 Operating Costs (in MM's)Fixed Variable Total

Purchased Power Variable 142.0 142.0 Production / Distribution Variable - 67.0 67.0 Admin. & other Fixed 56.0 56.0 Depreciation Fixed 73.0 73.0 Taxes other than income taxes Fixed 27.0 27.0

156.0 209.0 365.0

% of Total 42.7% 57.3% 100.0%

18

Load growth / Decoupling

• Total revenue collected not dependent on volumes • Delinks per customer volume changes from earnings • Adjust rates for changes per customer usage since last rate

case • Adjusted for changes in demand due to

• Weather • Economy • Conservation, or • All for “Full Decoupling”

• New customer growth is not factored in and will still impact earnings

• Increasing the fixed component of the ratepayers bill has a similar effect, but not to the same extent

19

Renewables continued growth expected In the U.S., 29 states have renewable goals and 8 states have voluntary goals.

Southeast states do not have established goals. – Coal retirements (+10 GW) and political pressures could drive increased renewable

development.

In Q1 2014, renewables generated 7% of total generation

RI 16%, 2020

CT 27%, 2020

DC 20%, 2020

DE 25%, 2026

40% 2030

15% 2020

25% 2025

33% 2020

25% 2025

15% 2015

20% 2025

15% 2025 20%

2020

5,880 MWs 2015

10% 2015

10% 2015

25% 2025 10%

2015

15% 2021

25% 2025

12.5% 2024

18% 2021

29% 2015

10% 2017

20% 2017 25%

2025

15% 2020

20% 2021

15% 2025

12.5% 2021

20% 2020

30% 2020

105 MW

10% 2015

25% 2025

15% 2015

10% 2025

20% 2022

Voluntary Goals

RPS in Place

No State RPS

Source: SNL Financial, American Wind Energy Association, Edison Electric Institute, Database of State Incentives for Renewables & Efficiency

20

0%

10%

20%

30%

40%

50%

60%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5 mos2014

Coal

Natural Gas

Nuclear

Hydro

Renewables

Other

Renewables (cont’d)

U.S. Generation Mix

Source: EIA Electric Power Monthly November 2011 Edition

21

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5mos2014

Renewables (cont’d) Renewable share of total US generation

Source: EIA Electric Power Monthly November 2011 Edition

22

Renewables (cont’d)

Utility operational considerations

– Unreliable dispatch

• Solar matches load better than wind

– Transmission to reach renewables

Economics

– Solar costs reducing with technology advancements and economies of scale with world wide growth

• In Q1 2014, residential system prices reduce yoy 7.1% to $4.56 per watt

– Solar cost competitive in areas with higher energy prices and strong sun conditions (eg Hawaii)

– Lower natural gas prices with shale development has impacted renewable cost competitiveness

– Development may slow if government incentive not extended

Distributed solar / Generation – how utilities are impacted

– Reduced load

– Excess generation sold to utility at retail instead of wholesale

– Cost of backup generation is underpriced with fixed component of bill is usually very small

• Until affordable energy storage is available, backup generation is required

– Political challenges limiting renewable distributed generation

23

$422

$477

$563 $572

$414

$449$468

$539 $533

$583

$644

100 101 101

94

9290

88

85

80

77 77

70

80

90

100

110

$300

$400

$500

$600

$700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Num

ber

of U

tiliti

es

Mar

ket

Cap

italiz

atio

n ($

in b

illio

ns)

Total Market Capitalization Number of Utilities

1 By closing date 2 By announcement date Source: Company filings, Capital IQ, Wells Fargo Securities

The number of publicly traded utilities has declined over 20% in the last 10 years

Publicly Traded Utilities 1

24

$39.1

$15.3

$61.5

$9.7

$0.0

$24.3

$43.2

$1.5

$14.9

$21.6

3 3

4

10

6

4

1

4

3

0

2

4

6

8

$0.0

$20.0

$40.0

$60.0

$80.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nu

mb

er o

f tr

ansa

ctio

ns

Ente

rpri

se V

alu

e ($

in b

lillio

ns)

$0.6

$2.8

$1.0 $2.0$0.0

$1.6$0.1

$3.4 $1.0$3.5

2

8

3

6

1

4

1

4

2 2

0

3

6

9

$0.0

$20.0

$40.0

$60.0

$80.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nu

mb

er o

f tr

ansa

ctio

ns

Ente

rpri

se V

alu

e ($

in b

lillio

ns)

Gas Transactions

1 By closing date 2 By announcement date Source: Company filings, Capital IQ, Wells Fargo Securities

The number of publicly traded utilities has declined over 20% in the last 10 years (cont’d)

Utility M&A Transactions 2

Electric Transactions Public Company Private Company

Public Company Private Company

Public Co. # 0 5 1 1 1 1 0 0 0 0 Private Co. # 2 3 2 5 0 3 1 4 2 2

Public Co. # 2 2 3 1 0 3 4 1 2 2 Private Co. # 1 1 1 0 0 3 0 0 2 1

25

Consolidation and leveraged buyouts

Recent transaction drivers – Prospects of rate base or load growth

• South and Southwest utilities have higher load growth

– Increase regulated portion of business

– Historically high valuations

• Small utilities sell at peak

• Acquirer uses its valuable stock

26

Consolidation and leveraged buyouts (cont’d)

Electric M&A transactions are typically larger than Gas – With Generation electric more expensive

– Gas utility industry is smaller

Gas valuations higher

Enterprise Value / Price / Premium AnalysisRate EBITDA Earnings Book 5 Day 30 Day 52 Week

Base 1 LTM 1 Fwd 2 LTM 1 Fwd 2 Value 1 Day Average Average High Electric Transacations- 20 Transacation totaling $165.6Bn in EV

Low 83 1.22x 6.5x 6.8x 7.0x 11.8x 0.94x (0.4%) 1.8% 0.8% (26.4%)Mean 8,281 1.57x 9.0x 8.7x 18.6x 17.1x 2.40x 18.0% 18.7% 19.3% 7.4%Median 6,867 1.62x 8.8x 8.3x 22.2x 17.8x 1.66x 17.7% 17.3% 14.1% 9.0%High 44,368 1.82x 11.2x 12.2x 23.3x 25.8x 14.85x 48.4% 52.8% 58.4% 45.0%

Gas Transacations- 19 Transacations totaling $15.7Bn in EV

Low 74 0.79x 7.0x 7.3x 15.8x 18.0x 0.67x 13.3% 17.3% 15.7% (8.7%)Mean 827 1.59x 10.2x 9.0x 21.1x 18.0x 2.00x 17.1% 21.2% 23.0% (0.8%)Median 780 1.52x 10.8x 8.7x 21.9x 18.0x 1.70x 15.5% 17.8% 24.5% (3.1%)High 3,143 3.19x 12.6x 12.3x 24.3x 18.0x 3.88x 22.6% 28.4% 28.9% 9.3%

1 LTM m u lt iples ba sed on m ost r ecen t LTM per iod ba sed on t im e of a n n ou n cem en t

2 For w a r d m u lt iples a dju sted for pen din g r a te ca ses, r estr u ctu r in g a n d oth er n on -r ecu r r in g , on e-t im e item sSou r ce: Pu blic filin g s, equ ity r esea r ch , SNL, Ca pita l IQ, a n d Wells Fa r g o Secu r it ies

Value (EV)

Summary of Regulated Electric and Gas M&A since 2007

27


Target / Acquiror Close DateTarget

Sector(s)Transaction Value ($B)

LTM EBITDA Multiple

2014 Transactions

/ Pending Electric 7.7 20.0x

/ Pending Electric, Gas 12.2 10.6x

/ Pending Electric, Merchant 8.9 N/A

/ Pending Electric 0.3 10.8x

11.6x

/ Pending Electric $9.8

/ Pending Gas 1.9

11.3x

/ Pending Gas 1.6 11.5x

1 PPL will spin-off PPL Energy Supply, LLC, which will merge with RJS Power Holdings, LLC to form Talen Energy Corporation Source: Company filings, Wall Street research, SNL Financial, Capital IQ, Wells Fargo Securities

28


Target / Acquiror Close DateTarget

Sector(s)Transaction Value ($B)

LTM EBITDA Multiple

2013 Transactions

2012 Transactions

0.1 N/A

/ Pending

/ 7/1/2014 Electric 0.2 8.7x

/ Pending Electric, Gas

Pending

12/19/13

/ Gas 1.0 11.0x

1.0

1.0

0.1

1.1

10.8x

1.5 10.5x

N/A

/ Electric, Gas

8/30/12

6/27/13

/ Gas

/ Gas

4/1/13

MGE: 9/3/13

/ Gas 8.6x

/ Gas 11.3x

/ Gas 0.1 N/A

12/17/13

12/20/13

/ Electric 10.4 8.8x

Electric, Gas 4.3 9.3x

Georgia Gas Utility

Source: Company filings, Wall Street research, SNL Financial, Capital IQ, Wells Fargo Securities

29

Utility equity valuations

Utilities equity valuations are close to all time highs With low bond yields, investors attracted to dividend yield and

low business risk Utility Industry has the highest payout ratios As treasuries and bond yields increase, utility stocks may come

under pressure Aging population seeking income investments may moderate

this Forward P/E multiples imply 6.7% ROE vs realized ROE’s in the

8-9% range

UtilitiesConusmer

Staples Industrial TechHealth Care Energy Financial

62.6% 52.2% 33.1% 30.6% 30.1% 29.5% 25.8%

Estimated 2013 Dividend Payout Ratio

30

(3.0%)

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

(10.0x)

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

Jul-84 Jul-89 Jul-94 Jul-99 Jul-04 Jul-09 Jul-14

Utility equity valuations (cont’d)

Note: Utility Index trades as PHLX Utility Sector Index and includes AEE, AEP, AES, CNP, CVA, D, DTE, DUK, ED, EE, EIX, ETR, EXC, FE, NEE, NU, PCG, PEG, SO, and XEL Source: FactSet, Wells Fargo Securities estimates | Market data as of July 18, 2014

Utility Index S&P 500 P/E Spread (S&P 500/UTY) 10-Yr US Treasury

Trailing P/E Multiple (30 Years)

3.1% (2015E)

2.8% (2014E)

31

Relationship banking

Focus on building long-term relationships with strong entities – Credit metrics

– Leadership

– Business case

Approach to Relationship Management – Provide capital at a meaningful level

– Large bank groups create competition

– Differentiate with advice / products / service quality

– Relationship team drives cross sell to earn desired return

– Client centric growth strategy

– Industry vertical enhances client experience

32

Investment grade revolving credit facility pricing Drawn bank credit spreads consistent since 2011

Historically, bank credit spreads tracked bonds spreads

Recent divergence due to Basel III Implementation and Dodd Frank with increased:

– Capital requirements

– Liquidity requirements

0.00

50.00

100.00

150.00

200.00

250.00

300.00

3Q92

1Q93

3Q93

1Q94

3Q94

1Q95

3Q95

1Q96

3Q96

1Q97

3Q97

1Q98

3Q98

1Q99

3Q99

1Q00

3Q00

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

Libo

r Mar

gin

(bps

)

Bank Credit Spreads Bond Spreads swapped to Libor

Baa1/BBB+ bank credit spreads remain above of bond spreads

Source: Bloomberg and Wells Fargo Securities

33

Sample bank group

Sample Bank Group

Operating Company A Operating Company B $400MM RLOC due XX/XX/2018 $250MM RLOC due XX/XX/2018 Total Percent

Titles Allocations Titles Allocations Allocations of Total

Wells Fargo AA $ 49,846,154 AA $ 31,153,846 $81,000,000 12.46% JPMorgan Chase Bank, National Association 34,461,538 21,538,462 $56,000,000 8.62% The Bank of Nova Scotia 34,461,538 21,538,462 $56,000,000 8.62% Union Bank, N.A. 34,461,538 21,538,462 $56,000,000 8.62% Barclays Bank PLC 28,307,692 17,692,308 $46,000,000 7.08% The Royal Bank of Scotland PLC 28,307,692 17,692,308 $46,000,000 7.08% Mizuho Bank, LTD 24,615,385 15,384,615 $40,000,000 6.15% SunTrust Bank 24,615,385 15,384,615 $40,000,000 6.15% The Bank of New York Mellon 24,615,385 15,384,615 $40,000,000 6.15% US Bank, National Association 24,615,385 15,384,615 $40,000,000 6.15% PNC Bank, National Association 21,538,462 13,461,538 $35,000,000 5.38% The Northern Trust Company 21,538,462 13,461,538 $35,000,000 5.38% BNP Paribas 20,307,692 12,692,308 $33,000,000 5.08% Canadian Imperial Bank of Commerce 15,384,615 9,615,385 $25,000,000 3.85% TD Bank 12,923,077 8,076,923 $21,000,000 3.23%

Total $ 400,000,000 $ 250,000,000 $650,000,000 100.00%

34

Rank InstitutionNumber of Deals

1 JPMorgan 982 Bank of America Merrill Lynch 803 Wells Fargo & Company 724 Mitsubishi UFJ Financial Group 595 RBS 536 Barclays 467 Citi 418 BNP Paribas 219 PNC Bank 209 U.S. Bancorp 20

LTM 1H 2014 U.S. Utilities Lead Arranger(# of Deals)

Wells Fargo’s Investment Grade Loan capabilities

Source: Loan Pricing Corporation


1 JPMorgan 7982 Bank of America Merrill Lynch 4263 Wells Fargo & Company 3354 Citi 2115 RBS 1306 Mitsubishi UFJ Financial Group 1157 Barclays 1098 U.S. Bancorp 1069 PNC Bank 1038 BNP Paribas SA 106

LTM 1H 2014 U.S. IG Lead Arranger(# of Deals)


1 Wells Fargo & Company 1902 JPMorgan 1223 Bank of America Merrill Lynch 734 Citi 725 RBS 396 RBC Capital Markets 347 Mitsubishi UFJ Financial Group 298 Barclays 249 Deutsche Bank 239 BMO Capital Markets 23

LTM 1H 2014 U.S. Oil & Gas Lead Arranger(# of Deals)


1 JPMorgan 1,4082 Bank of America Merrill Lynch 1,3153 Wells Fargo & Company 1,0434 Citi 4935 Barclays 3866 Deutsche Bank 3677 RBS 3318 PNC Bank 3209 Credit Suisse 3178 RBC Capital Markets 316

LTM 1H 2014 U.S. Lead Arranger(# of Deals)

35

Rank Lead ManagerNumber of Deals

Volume($ in MM) Share

1 JPMorgan 31 $2,292.9 8.57%2 Bank of America Merrill Lynch 30 $2,274.9 8.51%3 Wells Fargo Securities 31 $2,230.8 8.34%4 RBS 20 $1,600.3 5.98%5 RBC 20 $1,582.5 5.92%6 Morgan Stanley 21 $1,549.9 5.80%7 Barclays 21 $1,541.1 5.76%8 BNP Paribas 22 $1,452.8 5.43%9 Mitsubishi UFJ Securities 19 $1,431.9 5.36%10 Scotia 21 $1,370.3 5.12%11 Citigroup Inc. 17 $1,199.4 4.49%12 Credit Suisse 17 $1,186.9 4.44%13 US Bank 15 $1,047.5 3.92%14 Deutsche Bank 13 $1,003.3 3.75%15 UBS 9 $808.3 3.02%

YTD 2014 Power & Utilities League TableProportional Credit to each Bookrunner

Rank Lead ManagerNumber of Deals

Volume($ in MM) Share

1 Wells Fargo Securities 58 $4,661.1 10.46%2 JPMorgan 52 $4,054.9 9.10%3 Barclays 46 $3,886.3 8.27%4 RBS 44 $3,189.0 7.83%5 Bank of America Merrill Lynch 39 $3,022.5 6.78%6 Citigroup Inc. 28 $2,452.5 5.50%7 RBC 20 $2,239.2 5.02%7 Morgan Stanley 28 $2,218.2 4.98%8 Mitsubishi UFJ Securities 27 $2,120.7 4.76%9 Goldman Sachs 23 $2,019.2 4.53%10 UBS 23 $2,016.3 4.52%11 BNP Paribas 23 $1,885.0 4.23%12 Scotia 21 $1,839.5 4.13%13 Mizuho 19 $1,632.1 3.66%15 Credit Suisse 20 $1,541.1 3.46%

2013 Power & Utilities League TableProportional Credit to each Bookrunner

Wells Fargo Securities – A leading DCM platform to the Power & Utilities Industry

Experience & Continuity Since 2004:

– 294 Lead Bookrunning Transactions – $110+ billion in Debt, Preferred, and Hybrid Capital

Raised – 57 Issuing Clients

• 46 Repeat Clients

$250 Million First Mortgage Bonds

• Jt. Book-Running Manager

$500 Million Senior Unsecured Notes










2 - 4 Transactions Repeat Lead Managed Clients Since 2004

5 - 18 Transactions

Source: Thompson Financial/Bloomberg

http://www.dom.com/index.jsp

http://www.conedison.com/

http://www.nexteraenergy.com/index.shtml

36

Wells Fargo Securities – Equity capabilities Energy Book-runner

Since 01/01/10 Utility Book-runner

Since 01/01/10

$304 Million

Follow-On Offering of Common Stock

• Left Book-runner

$326 Million


• Joint Book-runner

$2.5 Billion Follow-On Offering of Common Stock


$488 Million

Follow-On Offering of Common Units


$703 Million

Follow-On Offering of Units


$207 Million

Initial Public Offering of Common Units


$326 Million



$408 Million



$147 Million



$111 Million



$388 Million



$445 Million

Follow-On Offering of Common Shares


$377 Million



$420 Million



$1.3 Billion

Initial Public Offering of Common Shares


$249 Million



$703 Million Follow-On Offering of Common Units


$214 Million



$2.9 Billion Initial Public Offering

of Class A Shares


$479 Million



$346 Million Follow-On Offering of Common Units


Selected Initial Public Offerings Selected Follow-on Offerings

$575 Million



$364 Million



$150 Million



$443 Million



$423 Million Initial Public Offering

of Common Units


$176 Million



$309 Million



$194 Million



$212 Million



$1.1 Billion


• Joint Bookrunner

$935 Million



$1.1 Billion


• Joint Bookrunner

Rank Book-runner# of

Deals

1 Wells Fargo Securities 2472 Citi 2432 Barclays 2434 Bank of America Merrill Lynch 2115 Morgan Stanley 1686 JPMorgan 1627 UBS 1488 RBC Capital Markets 1439 Credit Suisse 13010 Goldman Sachs 97

Sou r ce: Dea log ic

1 Wells Fargo Securities 247

Rank Book-runner# of

Deals

1 JPMorgan 182 Morgan Stanley 153 Wells Fargo Securities 144 Bank of America Merrill Lynch 135 Barclays 106 Credit Suisse 87 Citi 78 UBS 39 Robert W Baird & Co 29 RBC Capital Markets 2

Sou r ce: Dea log ic

3 Wells Fargo Securities 14

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US / International Treasury Management

Investment Management

Time Deposit Accounts WF Funds Structured Notes Separately Managed Accounts Institutional Brokerage/Sales

Corporate Purchasing Cards Disbursement / Payables

Services Collections International Trade Services Lockbox Multicurrency Accounts1

Credit and Capital

Syndicated Financing Traditional loans: Revolver/Term

Private Placements Asset-Based Lending Equipment and IT Leasing Letters of Credit Depository Services

Strategic Advisory and Capital Markets

Buyside/Sellside Advisory and Fairness Opinions

Debt Capital Markets Loan Syndications Equity Capital Markets Real Estate Advisory

Risk Management

Foreign Exchange Cross-currency Swaps Interest Rate Hedging Commodity Hedging Equity Hedging Commercial Insurance Broker

Pension / 401(k)

Centralized Asset Management for: 401(k) Pension Plans VEBA Plans

Trustee and Administrator for Pension / 401(k) plans and other Corporate assets

Corporate Trust Services

Receivables Management

Securitizations Supply Chain Finance Vendor Solutions Payable Solutions

Trade Receivables Protection

Escrow agent Corporate debt 1031 exchange Collateral trust Transfer agent Trustee, administrator, backup and master servicer, document custodian (structured debt)

Deposit products offered by Wells Fargo Bank, N.A. Member FDIC Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Institutional Securities, LLC, a member of FINRA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC carries and provides clearing services for Wells Fargo Institutional Securities, LLC customer accounts. Wells Fargo Securities, LLC, Wells Fargo Institutional Securities, LLC, and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

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