10-Q 1 form10q.htm FORM 10-Q

 


 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549
FORM 10-Q

(Mark One)

 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30,2016

OR

 

 

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from ___________ to __________

 

 


Commission
File
Number
_______________

Exact Name of
Registrant
as Specified
in its Charter
_______________


State or Other
Jurisdiction of
Incorporation
______________


IRS Employer
Identification
Number
___________

 

 

 

 

1-12609

PG&E Corporation

California 

94-3234914

1-2348

Pacific Gas and Electric Company

California 

94-0742640

 

PG&E Corporation
77 Beale Street
P.O. Box 770000
San Francisco, California 94177
________________________________________

Pacific Gas and Electric Company
77 Beale Street
P.O. Box 770000
San Francisco, California94177

______________________________________

Address of principal executive offices, including zip code

 

PG&E Corporation
(415) 973-1000
________________________________________

Pacific Gas and Electric Company
(415) 973-7000
______________________________________

Registrant's telephone number, including area code

 

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  [X] Yes     [  ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

PG&E Corporation:

[X] Yes [  ] No

Pacific Gas and Electric Company:

[X] Yes [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

PG&E Corporation:

[X] Large accelerated filer

[  ] Accelerated filer

 

[  ] Non-accelerated filer

[  ] Smaller reporting company

Pacific Gas and Electric Company:

[  ] Large accelerated filer

[  ] Accelerated filer

 

[X] Non-accelerated filer

[  ] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

PG&E Corporation:

[  ] Yes [X] No

Pacific Gas and Electric Company:

[  ] Yes [X] No

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common stock outstanding as of October 24,2016:

 

PG&E Corporation:

505,666,694

Pacific Gas and Electric Company:

264,374,809


 


PG&E CORPORATION AND
PACIFIC GAS AND ELECTRIC COMPANY
FORM 10-Q

FOR THE QUARTERLY PERIOD ENDEDSEPTEMBER 30,2016

 

TABLE OF CONTENTS

 

GLOSSARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

NOTE 4: DEBT

NOTE 5: EQUITY

NOTE 6: EARNINGS PER SHARE

NOTE 7: DERIVATIVES

NOTE 8: FAIR VALUE MEASUREMENTS

NOTE 9: CONTINGENCIES AND COMMITMENTS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

OVERVIEW

RESULTS OF OPERATIONS

LIQUIDITY AND FINANCIAL RESOURCES

ENFORCEMENT AND LITIGATION MATTERS

REGULATORY MATTERS

LEGISLATIVE AND REGULATORY INITIATIVES

ENVIRONMENTAL MATTERS

CONTRACTUAL COMMITMENTS

RISK MANAGEMENT ACTIVITIES

CRITICAL ACCOUNTING POLICIES

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

FORWARD-LOOKING STATEMENTS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

SIGNATURES


 


GLOSSARY

 

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.

 

2015 Form 10-K

PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2015

2016 Q1 Form 10-Q

PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2016

2016 Q2 Form 10-Q

PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2016

AFUDC

allowance for funds used during construction

ALJ

Administrative Law Judge

ARO(s)

asset retirement obligation(s)

ASU

Accounting Standards Update issued by the FASB (see below)

Cal Fire

California Department of Forestry and Fire Protection

CAISO

California Independent System Operator Corporation

Central Coast Water Board

Central Coast Regional Water Quality Control Board

CPUC

California Public Utilities Commission

CRRs

congestion revenue rights

DER

distributed energy resources

Diablo Canyon

Diablo Canyon nuclear power plant

DOI

U.S. Department of the Interior

DTSC

California Department of Toxic Substances Control

EMANI

European Mutual Association for Nuclear Insurance

Energy Division

CPUC’s Energy Division

EPS

earnings per common share

EV

electric vehicle

FASB

Financial Accounting Standards Board

FERC

Federal Energy Regulatory Commission

GAAP

U.S. Generally Accepted Accounting Principles

GHG

greenhouse gas

GRC

general rate case

GT&S

gas transmission and storage

GWH

gigawatt-hours

IOU(s)

investor-owned utility(ies)

MOD POD

modified presiding officer's decision

NAV

net asset value

NDCTP

Nuclear Decommissioning Cost Triennial Proceedings

NEIL

Nuclear Electric Insurance Limited

NEM

Net Energy Metering

NRC

Nuclear Regulatory Commission

NTSB

National Transportation Safety Board

OII

order instituting investigation

ORA

Office of Ratepayer Advocates

POD

presiding officer's decision

PSEP

pipeline safety enhancement plan

PV

photovoltaic

Regional Board

California Regional Water Control Board, Lahontan Region

RPS

Renewable Portfolio Standards

SEC

U.S. Securities and Exchange Commission

SED

Safety and Enforcement Division of the CPUC, formerly known as the Consumer Protection and Safety Division or the CPSD

TO

transmission owner

 


TURN

The Utility Reform Network

Utility

Pacific Gas and Electric Company

VIE(s)

variable interest entity(ies)


 


PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

(in millions, except per share amounts)

2016

 

2015

 

2016

 

2015

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

Electric

$

3,994 

 

$

3,868 

 

$

10,590 

 

$

10,344 

Natural gas

 

816 

 

 

682 

 

 

2,363 

 

 

2,322 

Total operating revenues

 

4,810 

 

 

4,550 

 

 

12,953 

 

 

12,666 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of electricity

 

1,613 

 

 

1,681 

 

 

3,719 

 

 

3,958 

Cost of natural gas

 

80 

 

 

50 

 

 

377 

 

 

442 

Operating and maintenance

 

1,783 

 

 

1,621 

 

 

5,631 

 

 

5,028 

Depreciation, amortization, and decommissioning

 

694 

 

 

653 

 

 

2,090 

 

 

1,935 

Total operating expenses

 

4,170 

 

 

4,005 

 

 

11,817 

 

 

11,363 

Operating Income

 

640 

 

 

545 

 

 

1,136 

 

 

1,303 

Interest income

 

8 

 

 

2 

 

 

17 

 

 

6 

Interest expense

 

(211)

 

 

(194)

 

 

(621)

 

 

(575)

Other income, net

 

24 

 

 

24 

 

 

74 

 

 

100 

Income Before Income Taxes

 

461 

 

 

377 

 

 

606 

 

 

834 

Income tax provision (benefit)

 

70 

 

 

67 

 

 

(105)

 

 

84 

Net Income

 

391 

 

 

310 

 

 

711 

 

 

750 

Preferred stock dividend requirement of subsidiary

 

3 

 

 

3 

 

 

10 

 

 

10 

Income Available for Common Shareholders

$

388 

 

$

307 

 

$

701 

 

$

740 

Weighted Average Common Shares Outstanding, Basic

 

501 

 

 

486 

 

 

497 

 

 

481 

Weighted Average Common Shares Outstanding, Diluted

 

503 

 

 

489 

 

 

500 

 

 

484 

Net Earnings Per Common Share, Basic

$

0.77 

 

$

0.63 

 

$

1.41 

 

$

1.54 

Net Earnings Per Common Share, Diluted

$

0.77 

 

$

0.63 

 

$

1.40 

 

$

1.53 

Dividends Declared Per Common Share

$

0.49 

 

$

0.46 

 

$

1.44 

 

$

1.37 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


 

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

(in millions)

2016

 

2015

 

2016

 

2015

Net Income

$

391 

 

$

310 

 

$

711 

 

$

750 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

Pension and other postretirement benefit plans obligations

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $0, $0, $0 and $0, at respective dates)

 

- 

 

 

- 

 

 

- 

 

 

- 

Net change in investments

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $0, $0, $0 and $12, at respective dates)

 

- 

 

 

- 

 

 

- 

 

 

(17)

Total other comprehensive income (loss)

 

- 

 

 

- 

 

 

- 

 

 

(17)

Comprehensive Income

 

391 

 

 

310 

 

 

711 

 

 

733 

Preferred stock dividend requirement of subsidiary

 

3 

 

 

3 

 

 

10 

 

 

10 

Comprehensive Income Attributable to

 

 

 

 

 

 

 

 

 

 

 

Common Shareholders

$

388 

 

$

307 

 

$

701 

 

$

723 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(Unaudited)

 

Balance At

 

September 30,

 

December 31,

(in millions)

2016

 

2015

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

71 

 

$

123 

Restricted cash

 

168 

 

 

234 

Accounts receivable:

 

 

 

 

 

Customers (net of allowance for doubtful accounts of $53 and $54

 

 

 

 

 

   at respective dates)

 

1,233 

 

 

1,106 

Accrued unbilled revenue

 

956 

 

 

855 

Regulatory balancing accounts

 

1,475 

 

 

1,760 

Other

 

475 

 

 

286 

Regulatory assets

 

370 

 

 

517 

Inventories:

 

 

 

 

 

Gas stored underground and fuel oil

 

134 

 

 

126 

Materials and supplies

 

343 

 

 

313 

Income taxes receivable

 

218 

 

 

155 

Other

 

306 

 

 

338 

Total current assets

 

5,749 

 

 

5,813 

Property, Plant, and Equipment

 

 

 

 

 

Electric

 

51,532 

 

 

48,532 

Gas

 

17,384 

 

 

16,749 

Construction work in progress

 

2,117 

 

 

2,059 

Other

 

2 

 

 

2 

Total property, plant, and equipment

 

71,035 

 

 

67,342 

Accumulated depreciation

 

(21,605)

 

 

(20,619)

Net property, plant, and equipment

 

49,430 

 

 

46,723 

Other Noncurrent Assets

 

 

 

 

 

Regulatory assets

 

7,534 

 

 

7,029 

Nuclear decommissioning trusts

 

2,597 

 

 

2,470 

Income taxes receivable

 

70 

 

 

135 

Other

 

1,185 

 

 

1,064 

Total other noncurrent assets

 

11,386 

 

 

10,698 

TOTAL ASSETS

$

66,565 

 

$

63,234 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(Unaudited)

 

Balance At

 

September 30,

 

December 31,

(in millions, except share amounts)

2016

 

2015

LIABILITIES AND EQUITY

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Short-term borrowings

$

1,145 

 

$

1,019 

Long-term debt, classified as current

 

160 

 

 

160 

Accounts payable:

 

 

 

 

 

Trade creditors

 

1,370 

 

 

1,414 

Regulatory balancing accounts

 

764 

 

 

715 

Other

 

496 

 

 

398 

Disputed claims and customer refunds

 

233 

 

 

454 

Interest payable

 

144 

 

 

206 

Other

 

1,958 

 

 

1,997 

Total current liabilities

 

6,270 

 

 

6,363 

Noncurrent Liabilities

 

 

 

 

 

Long-term debt

 

16,528 

 

 

15,925 

Regulatory liabilities

 

6,613 

 

 

6,321 

Pension and other postretirement benefits

 

2,632 

 

 

2,622 

Asset retirement obligations

 

4,672 

 

 

3,643 

Deferred income taxes

 

9,850 

 

 

9,206 

Other

 

2,394 

 

 

2,326 

Total noncurrent liabilities

 

42,689 

 

 

40,043 

Commitments and Contingencies (Note 9)

 

 

 

 

 

Equity

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

Common stock, no par value, authorized 800,000,000 shares;

 

 

 

 

 

505,183,752 and 492,025,443 shares outstanding at respective dates

 

12,083 

 

 

11,282 

Reinvested earnings

 

5,278 

 

 

5,301 

Accumulated other comprehensive loss

 

(7)

 

 

(7)

Total shareholders' equity

 

17,354 

 

 

16,576 

Noncontrolling Interest - Preferred Stock of Subsidiary

 

252 

 

 

252 

Total equity

 

17,606 

 

 

16,828 

TOTAL LIABILITIES AND EQUITY

$

66,565 

 

$

63,234 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

Nine Months Ended September 30,

(in millions)

2016

 

2015

Cash Flows from Operating Activities

 

 

 

 

 

Net income

$

711 

 

$

750 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

Depreciation, amortization, and decommissioning

 

2,090 

 

 

1,935 

Allowance for equity funds used during construction

 

(84)

 

 

(80)

Deferred income taxes and tax credits, net

 

644 

 

 

260 

Disallowed capital expenditures

 

517 

 

 

270 

Other

 

293 

 

 

247 

Effect of changes in operating assets and liabilities:

 

 

 

 

 

     Accounts receivable

 

(546)

 

 

(322)

     Inventories

 

(38)

 

 

5 

     Accounts payable

 

189 

 

 

95 

     Income taxes receivable/payable

 

(63)

 

 

42 

     Other current assets and liabilities

 

254 

 

 

(87)

     Regulatory assets, liabilities, and balancing accounts, net

 

(634)

 

 

78 

Other noncurrent assets and liabilities

 

(85)

 

 

(251)

Net cash provided by operating activities

 

3,248 

 

 

2,942 

Cash Flows from Investing Activities

 

 

 

 

 

Capital expenditures

 

(4,128)

 

 

(3,662)

Decrease in restricted cash

 

66 

 

 

11 

Proceeds from sales and maturities of nuclear decommissioning

 

 

 

 

 

trust investments

 

1,019 

 

 

1,023 

Purchases of nuclear decommissioning trust investments

 

(1,050)

 

 

(1,124)

Other

 

10 

 

 

18 

Net cash used in investing activities

 

(4,083)

 

 

(3,734)

Cash Flows from Financing Activities

 

 

 

 

 

Net issuances (repayments) of commercial paper, net of discount of $5

 

 

 

 

 

     and $2 at respective dates

 

(128)

 

 

545 

Short-term debt financing

 

250 

 

 

- 

Short-term debt matured

 

- 

 

 

(300)

Proceeds from issuance of long-term debt, net of discount and

 

 

 

 

 

     issuance costs of $6 and $14 at respective dates

 

594 

 

 

486 

Common stock issued

 

727 

 

 

689 

Common stock dividends paid

 

(678)

 

 

(638)

Other

 

18 

 

 

13 

Net cash provided by financing activities

 

783 

 

 

795 

Net change in cash and cash equivalents

 

(52)

 

 

3 

Cash and cash equivalents at January 1

 

123 

 

 

151 

Cash and cash equivalents at September 30

$

71 

 

$

154 

 

 


Supplemental disclosures of cash flow information

 

 

 

 

 

Cash received (paid) for:

 

 

 

 

 

Interest, net of amounts capitalized

$

(611)

 

$

(569)

Income taxes, net

 

154 

 

 

- 

Supplemental disclosures of noncash investing and financing activities

 

 

 

 

 

Common stock dividends declared but not yet paid

$

248 

 

$

223 

Capital expenditures financed through accounts payable

 

325 

 

 

245 

Noncash common stock issuances

 

15 

 

 

15 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

(in millions)

2016

 

2015

 

2016

 

2015

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

Electric

$

3,993 

 

$

3,868 

 

$

10,590 

 

$

10,344 

Natural gas

 

816 

 

 

682 

 

 

2,363 

 

 

2,322 

Total operating revenues

 

4,809 

 

 

4,550 

 

 

12,953 

 

 

12,666 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of electricity

 

1,613 

 

 

1,681 

 

 

3,719 

 

 

3,958 

Cost of natural gas

 

80 

 

 

50 

 

 

377 

 

 

442 

Operating and maintenance

 

1,782 

 

 

1,622 

 

 

5,630 

 

 

5,028 

Depreciation, amortization, and decommissioning

 

694 

 

 

653 

 

 

2,090 

 

 

1,935 

Total operating expenses

 

4,169 

 

 

4,006 

 

 

11,816 

 

 

11,363 

Operating Income

 

640 

 

 

544 

 

 

1,137 

 

 

1,303 

Interest income

 

8 

 

 

2 

 

 

16 

 

 

6 

Interest expense

 

(209)

 

 

(191)

 

 

(614)

 

 

(567)

Other income, net

 

23 

 

 

22 

 

 

68 

 

 

68 

Income Before Income Taxes

 

462 

 

 

377 

 

 

607 

 

 

810 

Income tax provision (benefit)

 

73 

 

 

72 

 

 

(99)

 

 

95 

Net Income

 

389 

 

 

305 

 

 

706 

 

 

715 

Preferred stock dividend requirement

 

3 

 

 

3 

 

 

10 

 

 

10 

Income Available for Common Stock

$

386 

 

$

302 

 

$

696 

 

$

705 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


 

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

(Unaudited)

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

(in millions)

2016

 

2015

 

 

2016

 

2015

Net Income

$

389 

 

$

305 

 

$

706 

 

$

715 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

Pension and other postretirement benefit plans obligations

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $0, $0, $0 and $0, at respective dates )

 

- 

 

 

- 

 

 

1 

 

 

- 

Total other comprehensive income (loss)

 

- 

 

 

- 

 

 

1 

 

 

- 

Comprehensive Income

$

389 

 

$

305 

 

$

707 

 

$

715 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(Unaudited)

 

Balance At

 

September 30,

 

December 31,

(in millions)

2016

 

2015

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

68 

 

$

59 

Restricted cash

 

168 

 

 

234 

Accounts receivable:

 

 

 

 

 

Customers (net of allowance for doubtful accounts of $53 and $54

 

 

 

 

 

  at respective dates)

 

1,233 

 

 

1,106 

Accrued unbilled revenue

 

956 

 

 

855 

Regulatory balancing accounts

 

1,475 

 

 

1,760 

Other

 

473 

 

 

284 

Regulatory assets

 

370 

 

 

517 

Inventories:

 

 

 

 

 

Gas stored underground and fuel oil

 

134 

 

 

126 

Materials and supplies

 

343 

 

 

313 

Income taxes receivable

 

194 

 

 

130 

Other

 

306 

 

 

338 

Total current assets

 

5,720 

 

 

5,722 

Property, Plant, and Equipment

 

 

 

 

 

Electric

 

51,532 

 

 

48,532 

Gas

 

17,384 

 

 

16,749 

Construction work in progress

 

2,117 

 

 

2,059 

Total property, plant, and equipment

 

71,033 

 

 

67,340 

Accumulated depreciation

 

(21,603)

 

 

(20,617)

Net property, plant, and equipment

 

49,430 

 

 

46,723 

Other Noncurrent Assets

 

 

 

 

 

Regulatory assets

 

7,534 

 

 

7,029 

Nuclear decommissioning trusts

 

2,597 

 

 

2,470 

Income taxes receivable

 

70 

 

 

135 

Other

 

1,066 

 

 

958 

Total other noncurrent assets

 

11,267 

 

 

10,592 

TOTAL ASSETS

$

66,417 

 

$

63,037 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(Unaudited)

 

Balance At

 

September 30,

 

December 31,

(in millions, except share amounts)

2016

 

2015

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Short-term borrowings

$

981 

 

$

1,019 

Long-term debt, classified as current

 

160 

 

 

160 

Accounts payable:

 

 

 

 

 

Trade creditors

 

1,370 

 

 

1,414 

Regulatory balancing accounts

 

764 

 

 

715 

Other

 

765 

 

 

418 

Disputed claims and customer refunds

 

233 

 

 

454 

Interest payable

 

144 

 

 

203 

Other

 

1,681 

 

 

1,750 

Total current liabilities

 

6,098 

 

 

6,133 

Noncurrent Liabilities

 

 

 

 

 

Long-term debt

 

16,179 

 

 

15,577 

Regulatory liabilities

 

6,613 

 

 

6,321 

Pension and other postretirement benefits

 

2,540 

 

 

2,534 

Asset retirement obligations

 

4,672 

 

 

3,643 

Deferred income taxes

 

10,135 

 

 

9,487 

Other

 

2,350 

 

 

2,282 

Total noncurrent liabilities

 

42,489 

 

 

39,844 

Commitments and Contingencies (Note 9)

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

Preferred stock

 

258 

 

 

258 

Common stock, $5 par value, authorized 800,000,000 shares;

 

 

 

 

 

264,374,809 shares outstanding at respective dates

 

1,322 

 

 

1,322 

Additional paid-in capital

 

7,955 

 

 

7,215 

Reinvested earnings

 

8,291 

 

 

8,262 

Accumulated other comprehensive income

 

4 

 

 

3 

Total shareholders' equity

 

17,830 

 

 

17,060 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

66,417 

 

$

63,037 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

Nine Months Ended September 30,

(in millions)

2016

 

2015

Cash Flows from Operating Activities

 

 

 

 

 

Net income

$

706 

 

$

715 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

Depreciation, amortization, and decommissioning

 

2,090 

 

 

1,935 

Allowance for equity funds used during construction

 

(84)

 

 

(80)

Deferred income taxes and tax credits, net

 

648 

 

 

245 

    Disallowed capital expenditures

 

517 

 

 

270 

    Other

 

234 

 

 

200 

Effect of changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(546)

 

 

(321)

Inventories

 

(38)

 

 

5 

Accounts payable

 

194 

 

 

148 

Income taxes receivable/payable

 

(64)

 

 

14 

Other current assets and liabilities

 

258 

 

 

(45)

Regulatory assets, liabilities, and balancing accounts, net

 

(634)

 

 

78 

    Other noncurrent assets and liabilities

 

(75)

 

 

(232)

Net cash provided by operating activities

 

3,206 

 

 

2,932 

Cash Flows from Investing Activities

 

 

 

 

 

Capital expenditures

 

(4,128)

 

 

(3,662)

Decrease in restricted cash

 

66 

 

 

11 

Proceeds from sales and maturities of nuclear decommissioning

 

 

 

 

 

trust investments

 

1,019 

 

 

1,023 

Purchases of nuclear decommissioning trust investments

 

(1,050)

 

 

(1,124)

Other

 

10 

 

 

18 

Net cash used in investing activities

 

(4,083)

 

 

(3,734)

Cash Flows from Financing Activities

 

 

 

 

 

Net issuances (repayments) of commercial paper, net of discount of $5

 

 

 

 

 

     and $2 at respective dates

 

(293)

 

 

545 

Short-term debt financing

 

250 

 

 

- 

Short-term debt matured

 

- 

 

 

(300)

Proceeds from issuance of long-term debt, net of discount and

 

 

 

 

 

     issuance costs of $6 and $14 at respective dates

 

594 

 

 

486 

Preferred stock dividends paid

 

(10)

 

 

(10)

Common stock dividends paid

 

(423)

 

 

(537)

Equity contribution from PG&E Corporation

 

740 

 

 

605 

Other

 

28 

 

 

20 

Net cash provided by financing activities

 

886 

 

 

809 

Net change in cash and cash equivalents

 

9 

 

 

7 

Cash and cash equivalents at January 1

 

59 

 

 

55 

Cash and cash equivalents at September 30

$

68 

 

$

62 

 

 


Supplemental disclosures of cash flow information

 

 

 

 

 

Cash received (paid) for:

 

 

 

 

 

Interest, net of amounts capitalized

$

(602)

 

$

(561)

Income taxes, net

 

151 

 

 

- 

Supplemental disclosures of noncash investing and financing activities

 

 

 

 

 

Common stock dividends declared but not yet paid

$

244 

 

$

- 

Capital expenditures financed through accounts payable

 

325 

 

 

245 

 

 

 

 

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.


 


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

 

PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, a public utility serving northern and central California.  The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers.  The Utility is primarily regulated by the CPUC and the FERC.  In addition, the NRC oversees the licensing, construction, operation, and decommissioning of the Utility’s nuclear generation facilities.

 

This quarterly report on Form 10-Q is a combined report of PG&E Corporation and the Utility.  PG&E Corporation’s Condensed Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries.  The Utility’s Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries.  All intercompany transactions have been eliminated in consolidation.  The Notes to the Condensed Consolidated Financial Statements apply to both PG&E Corporation and the Utility.  PG&E Corporation and the Utility operate in one segment, as the companies assess financial performance and allocate resources on a consolidated basis.

 

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and in accordance with the interim period reporting requirements of Form 10-Q and reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of PG&E Corporation and the Utility’s financial condition, results of operations, and cash flows for the periods presented.  The information at December 31, 2015 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in the 2015 Form 10-K.  This quarterly report should be read in conjunction with the 2015 Form 10-K. 

 

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities.  Some of the more significant estimates and assumptions relate to the Utility’s regulatory assets and liabilities, legal and regulatory contingencies, environmental remediation liabilities, asset retirement obligations, and pension and other postretirement benefit plans obligations.  Management believes that its estimates and assumptions reflected in the Condensed Consolidated Financial Statements are appropriate and reasonable.  A change in management’s estimates or assumptions could result in an adjustment that would have a material impact on PG&E Corporation’s and the Utility’s financial condition and results of operations during the period in which such change occurred.

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies used by PG&E Corporation and the Utility are discussed in Note 2 of the Notes to the Consolidated Financial Statements in the 2015 Form 10-K.

 

Variable Interest Entities

 

A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest.  An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE. 

 

Some of the counterparties to the Utility’s power purchase agreements are considered VIEs.  Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility.  To determine whether the Utility has a controlling interest or was the primary beneficiary of any of these VIEs at September 30, 2016, the Utility assessed whether it absorbs any of the VIE’s expected losses or receives any portion of the VIE’s expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE’s gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE’s performance, such as dispatch rights and operating and maintenance activities.  The Utility’s financial obligation is limited to the amount the Utility pays for delivered electricity and capacity.  The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs.  Since the Utility was not the primary beneficiary of any of these VIEs at September 30, 2016, it did not consolidate any of them.

 

 


Asset Retirement Obligations

 

Detailed studies of the cost to decommission the Utility’s nuclear generation facilities are conducted every three yearsin conjunction with the Nuclear Decommissioning Cost Triennial ProceedingsIn the first quarter of 2016, the Utility submitted its updated decommissioning cost estimate with the CPUC, which reflects an increase of approximately $1.4 billion in the estimated undiscounted cost to decommission the Utility’s nuclear power plants.  The change in total estimated cost resulted in an $818 million adjustment to the ARO recognized on the Condensed Consolidated Balance Sheets.  The adjustment relates to spent fuel storage, staffing, and out-of-state waste disposal costs.  Actual decommissioning costs may vary from these estimates as a result of changes in assumptions such as decommissioning dates; regulatory requirements; technology; and costs of labor, materials, and equipment.  The Utility recovers its revenue requirements for decommissioning costs from customers through a non-bypassable charge that the Utility expects will continue until those costs are fully recovered.  The Utility requested that the CPUC authorize the collection of increased annual revenue requirements beginning on January 1, 2017 based on these updated cost estimates.

 

On June 20, 2016, the Utility entered into a joint proposalwith certain parties to retire Diablo Canyon nuclear power plant at the expiration of its current operating licenses in 2024 (Unit 1) and 2025 (Unit 2), subject to certain approvals, resulting in an additional $115 million increase to the ARO recognized on the Condensed Consolidated Balance Sheets in the second quarter of 2016. 

 

The estimated total nuclear decommissioning cost of $4.8 billion is discounted for GAAP purposes and recognized as an ARO on the Condensed Consolidated Balance Sheets.  The total nuclear decommissioning obligation accrued in accordance with GAAP was $3.5 billion at September 30,2016 and $2.5 billion at December 31, 2015.  Changes in these estimates could materially affect the amount of the recorded ARO for these assets.

 

Pension and Other Postretirement Benefits

 

PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan.  Both plans are included in “Pension Benefits” below.  Post-retirement medical and life insurance plans are included in “Other Benefits” below.

 

The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2016 and 2015 were as follows:

 

 

Pension Benefits

 

Other Benefits

 

Three Months Ended September 30,

(in millions)

2016

 

2015

 

2016

 

2015

Service cost for benefits earned

$

113 

 

$ 

123 

 

$ 

13 

 

$ 

14 

Interest cost

 

179 

 

 

168 

 

 

19 

 

 

18 

Expected return on plan assets

 

(207)

 

 

(219)

 

 

(26)

 

 

(28)

Amortization of prior service cost

 

2 

 

 

4 

 

 

3 

 

 

4 

Amortization of net actuarial loss

 

6 

 

 

1 

 

 

1 

 

 

1 

Net periodic benefit cost

 

93 

 

 

77 

 

 

10 

 

 

9 

Regulatory account transfer (1)

 

(8)

 

 

8 

 

 

- 

 

 

- 

Total

$ 

85 

 

$ 

85 

 

$ 

10 

 

$ 

9 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

 

 


 

Pension Benefits

 

Other Benefits

 

Nine Months Ended September 30,

(in millions)

2016

 

2015

 

2016

 

2015

Service cost for benefits earned

$

339 

 

$ 

360 

 

$ 

39 

 

$ 

41 

Interest cost

 

537 

 

 

505 

 

 

57 

 

 

54 

Expected return on plan assets

 

(621)

 

 

(655)

 

 

(80)

 

 

(84)

Amortization of prior service cost

 

6 

 

 

11 

 

 

11 

 

 

14 

Amortization of net actuarial loss

 

18 

 

 

7 

 

 

3 

 

 

3 

Net periodic benefit cost

 

279 

 

 

228 

 

 

30 

 

 

28 

Regulatory account transfer (1)

 

(25)

 

 

26 

 

 

- 

 

 

- 

Total

$ 

254 

 

$ 

254 

 

$ 

30 

 

$ 

28 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

 

There was no material difference between PG&E Corporation and the Utility for the information disclosed above.

 

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss)

 

The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) are summarized below:

 

 

Pension

 

Other

 

 

 

 

Benefits

 

Benefits

 

Total

(in millions, net of income tax)

Three Months Ended September 30, 2016

Beginning balance

$

(23)

 

$

16 

 

$

(7)

Amounts reclassified from other comprehensive income: (1)

 

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

(net of taxes of $0 and $2, respectively)

 

2 

 

 

1 

 

 

3 

Amortization of net actuarial loss

 

 

 

 

 

 

 

 

(net of taxes of $3 and $0, respectively)

 

3 

 

 

1 

 

 

4 

Regulatory account transfer

 

 

 

 

 

 

 

 

(net of taxes of $3 and $2, respectively)

 

(5)

 

 

(2)

 

 

(7)

Net current period other comprehensive gain (loss)

 

- 

 

 

- 

 

 

- 

Ending balance

$ 

(23)

 

$ 

16 

 

$ 

(7)

 

 

 

 

 

 

 

 

 

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

 

 


 

Pension

 

Other

 

 

 

 

Benefits

 

Benefits

 

Total

(in millions, net of income tax)

Three Months Ended September 30, 2015

Beginning balance

$

(21)

 

$

15 

 

$

(6)

Amounts reclassified from other comprehensive income: (1)

 

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

(net of taxes of $1 and $2, respectively)

 

3 

 

 

2 

 

 

5 

Amortization of net actuarial loss

 

 

 

 

 

 

 

 

(net of taxes of $0, and $0, respectively)

 

1 

 

 

1 

 

 

2 

Regulatory account transfer

 

 

 

 

 

 

 

 

(net of taxes of $3 and $3, respectively)

 

(4)

 

 

(3)

 

 

(7)

Net current period other comprehensive gain (loss)

 

- 

 

 

- 

 

 

- 

Ending balance

$

(21)

 

$ 

15 

 

$ 

(6)

 

 

 

 

 

 

 

 

 

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

 

 

Pension

 

Other

 

 

 

 

Benefits

 

Benefits

 

Total

(in millions, net of income tax)

Nine Months Ended September 30, 2016

Beginning balance

$

(23)

 

$ 

16 

 

$

(7)

Amounts reclassified from other comprehensive income: (1)

 

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

(net of taxes of $2 and $5, respectively)

 

4 

 

 

6 

 

 

10 

Amortization of net actuarial loss

 

 

 

 

 

 

 

 

(net of taxes of $7 and $1, respectively)

 

11 

 

 

2 

 

 

13 

Regulatory account transfer

 

 

 

 

 

 

 

 

(net of taxes of $9 and $6, respectively)

 

(15)

 

 

(8)

 

 

(23)

Net current period other comprehensive gain (loss)

 

- 

 

 

- 

 

 

- 

Ending balance

$

(23)

 

$

16 

 

$

(7)

 

 

 

 

 

 

 

 

 

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

 

 


 

Pension

 

Other

 

Other

 

 

 

 

Benefits

 

Benefits

 

Investments

 

Total

(in millions, net of income tax)

Nine Months Ended September 30, 2015

Beginning balance

$

(21)

 

$

15 

 

$

17 

 

$

11 

Amounts reclassified from other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

      Amortization of prior service cost

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $4, $6, and $0, respectively) (1)

 

7 

 

 

8 

 

 

- 

 

 

15 

      Amortization of net actuarial loss

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $3, $1, and $0, respectively) (1)

 

4 

 

 

2 

 

 

- 

 

 

6 

     Regulatory account transfer

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $7, $7, and $0, respectively) (1)

 

(11)

 

 

(10)

 

 

- 

 

 

(21)

Change in investments

 

 

 

 

 

 

 

 

 

 

 

(net of taxes of $0, $0, and $12, respectively)

 

- 

 

 

- 

 

 

(17)

 

 

(17)

Net current period other comprehensive gain (loss)

 

- 

 

 

- 

 

 

(17)

 

 

(17)

Ending balance

$

(21)

 

$ 

15 

 

$ 

- 

 

$ 

(6)

 

 

 

 

 

 

 

 

 

 

 

 

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

 

There was no material difference between PG&E Corporation and the Utility for the information disclosed above, with the exception of other investments which are held by PG&E Corporation.

 

Recently Adopted Accounting Guidance

 

Fair Value Measurement

 

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which standardizes reporting practices related to the fair value hierarchy for all investments for which fair value is measured using the net asset value per share.  PG&E Corporation and the Utility adopted this guidance effectiveJanuary 1, 2016 and applied the requirements retrospectively for all periods presentedThe adoption of this standard did not impact their Condensed Consolidated Financial Statements.  All prior periods presented in these Condensed Consolidated financial statements reflect the retrospective adoption of this guidance. (See Note 8 below.) 

 

Accounting for Fees Paid in a Cloud Computing Arrangement

 

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which adds guidance to help entities evaluate the accounting treatment for cloud computing arrangements.  PG&E Corporation and the Utility adopted this guidance effective January 1, 2016.  The adoption of this guidance did not have a material impact on their Condensed Consolidated Financial Statements. 

 

Presentation of Debt Issuance Costs

 

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends the existing guidance relating to the presentation of debt issuance costs.  The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  PG&E Corporation and the Utility adopted this guidance effective January 1, 2016 and applied the requirements retrospectively for all periods presented.  The adoption of this guidance did not have a material impact on their Condensed Consolidated Financial Statements.  PG&E Corporation and the Utility reclassified $105 million and $103 million, respectively, of debt issuance costs as of December 31, 2015 with no impact to net income or total shareholders’ equity previously reported.  All prior periods presented in these Condensed Consolidated Financial Statements reflect the retrospective adoption of this guidance.  

 

 


Accounting Standards Issued But Not Yet Adopted

 

Share-based Payment Accounting

 

In March 2016, the FASB issued ASU No. 2016-09, CompensationStock Compensation (Topic 718), which amends the existing guidance relating to the accounting for share-based payment awards issued to employees, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  The ASU will be effective for PG&E Corporation and the Utility on January 1, 2017.  PG&E Corporation and the Utility will early adopt this guidance in the fourth quarter of 2016 and do not expect this ASU to have a material impact on their Condensed Consolidated Financial Statements and related disclosures.

 

Recognition of Lease Assets and Liabilities

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing guidance relating to the recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The ASU will be effective for PG&E Corporation and the Utility on January 1, 2019 with retrospective application.  PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures.

 

Recognition and Measurement of Financial Assets and Financial Liabilities

 

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the existing guidance relating to the recognition and measurement of financial instruments.  The ASU will be effective for PG&E Corporation and the Utility on January 1, 2018.  PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures.

 

Revenue Recognition Standard

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends the existing revenue recognition guidanceIn August 2015, the FASB deferred the effective date of this amendment for public companies by one year to January 1, 2018, with early adoption permitted as of the original effective date of January 1, 2017.  (See ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.)  PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures.

 

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

 

Regulatory Assets

 

Long-term regulatory assets are composed of the following:

 

 

Balance at

 

September 30,

 

December 31,

(in millions)

2016

 

2015

Pension benefits

$

2,416 

 

$

2,414 

Deferred income taxes 

 

3,649 

 

 

3,054 

Utility retained generation

 

376 

 

 

411 

Environmental compliance costs

 

760 

 

 

748 

Price risk management

 

96 

 

 

138 

Unamortized loss, net of gain, on reacquired debt

 

81 

 

 

94 

Other

 

156 

 

 

170 

Total long-term regulatory assets

$

7,534 

 

$ 

7,029 

 

For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2015 Form 10-K.

 

 


Regulatory Liabilities

 

Long-term regulatory liabilities are composed of the following:

 

 

Balance at

 

September 30,

 

December 31,

(in millions)

2016

 

2015

Cost of removal obligations

$

4,939 

 

$

4,605 

Recoveries in excess of asset retirement obligations

 

656 

 

 

631 

Public purpose programs 

 

539 

 

 

600 

Other

 

479 

 

 

485 

Total long-term regulatory liabilities

$

6,613 

 

$

6,321 

 

For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2015 Form 10-K.

 

Regulatory Balancing Accounts

 

The Utility tracks (1) differences between the Utility’s authorized revenue requirement and customer billings, and (2) differences between incurred costs and customer billings.  To the extent these differences are probable of recovery or refund over the next 12 months, the Utility records a current regulatory balancing account receivable or payable.  Regulatory balancing accounts that the Utility expects to collect or refund over a period exceeding 12 months are recorded as other noncurrent assets – regulatory assets or noncurrent liabilities – regulatory liabilities, respectively, in the Condensed Consolidated Balance Sheets.  These differences do not have an impact on net incomeBalancing accounts will fluctuate during the year based on seasonal electric and gas usage and the timing of when costs are incurred and customer revenues are collected. 

 

Current regulatory balancing accounts receivable and payable are comprised of the following:

 

 

Receivable

 

Balance at

 

September 30,

 

December 31,

(in millions)

2016

 

2015

Electric distribution

$

43 

 

$

380 

Utility generation

 

- 

 

 

122 

Gas distribution

 

583 

 

 

493 

Energy procurement

 

174 

 

 

262 

Public purpose programs

 

122 

 

 

155 

Other

 

553 

 

 

348 

Total regulatory balancing accounts receivable

$

1,475 

 

$

1,760 

 

 

Payable

 

Balance at

 

September 30,

 

December 31,

(in millions)

2016

 

2015

Utility generation

$

47 

 

$

- 

Energy procurement

 

109 

 

 

112 

Public purpose programs

 

289 

 

 

244 

Other

 

319 

 

 

359 

Total regulatory balancing accounts payable

$

764 

 

$

715 

 

 

 

 

 

 

 

 


The electric distribution, utility generation, and gas distribution balancing accounts track the collection of revenue requirements approved in the GRC.  Energy procurement balancing accounts track recovery of costs related to the procurement of electricity, including any environmental compliance-related activities.  Public purpose programs balancing accounts are primarily used to record and recover authorized revenue requirements for commission-mandated programs such as energy efficiency and low income energy efficiency.

 

NOTE 4: DEBT

 

Revolving Credit Facilities and Commercial Paper Program

 

The following table summarizes PG&E Corporation’s and the Utility’s outstanding borrowings under their revolving credit facilities and commercial paper programs at September 30, 2016:

 

 

 

 

 

 

Letters of

 

 

 

 

 

Termination

 

Facility

 

Credit

 

Commercial

 

Facility

(in millions)

Date

 

Limit

 

Outstanding

 

Paper

 

Availability

PG&E Corporation

April 2021

 

$

300 

(1)

$

- 

 

$

165 

 

$

135 

Utility

April 2021

 

 

3,000 

(2)

 

31 

 

 

731 

 

 

2,238 

Total revolving credit facilities

 

 

$

3,300 

 

$

31 

 

$

896 

 

$

2,373 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Includes a $50 million lender commitment to the letter of credit sublimit and a $100 million commitment for “swingline” loans defined as loans that are made available on a same-day basis and are repayable in full within 7 days.

(2) Includes a $500 million lender commitment to the letter of credit sublimit and a $75 million commitment for swingline loans.

 

In June 2016, PG&E Corporation and the Utility each extended the termination dates of their existing revolving credit facilities by one year from April 27, 2020 to April 27, 2021.

 

Other Short-term Borrowings

 

In March 2016, the Utility entered into a $250 million floating rate unsecured term loan that matures on February 2, 2017.  The proceeds were used for general corporate purposes, including the repayment of a portion of the Utility’s outstanding commercial paper.

 

Senior Notes Issuances

 

In March 2016, the Utility issued $600 million principal amount of 2.95% Senior Notes due March 1, 2026. The proceeds were used for general corporate purposes, including the repayment of a portion of the Utility’s outstanding commercial paper.

 

Variable Rate Interest

 

AtSeptember 30, 2016, the interest rates on the $614 million principal amount of pollution control bonds Series 1996 C, E, F, and 1997 B and the related loan agreements ranged from 0.89% to 0.92%.  At September 30, 2016, the interest rates on the $309  million principal amount of pollution control bonds Series 2009 A-D and the related loan agreements ranged from 0.77% to 0.85%.  Pollution control bonds Series 2009 C and D will mature on December 1, 2016.

 

 


NOTE 5: EQUITY

 

PG&E Corporation’s and the Utility’s changes in equity for the nine months ended September 30, 2016were as follows:

 

 

PG&E Corporation

 

Utility

 

Total

 

Total

(in millions)

Equity

 

Shareholders' Equity

Balance at December 31, 2015

$

16,828 

 

$

17,060 

Comprehensive income

 

711 

 

 

707 

Equity contributions

 

- 

 

 

740 

Common stock issued

 

742 

 

 

- 

Share-based compensation

 

59 

 

 

- 

Common stock dividends declared

 

(724)

 

 

(667)

Preferred stock dividend requirement

 

- 

 

 

(10)

Preferred stock dividend requirement of subsidiary

 

(10)