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 June 30, 2013
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
|
|||||
Pacific Gas and Electric Company
77 Beale Street
P.O. Box 770000
San Francisco, California 94177
______________________________________
|
PG&E Corporation
77 Beale Street
P.O. Box 770000
San Francisco, California 94177
______________________________________
|
|||||||
Address of principal executive offices, including zip code
|
||||||||
Pacific Gas and Electric Company
(415) 973-7000
________________________________________
|
PG&E Corporation
(415) 973-1000
______________________________________
|
|||||||
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 July 22, 2013:
|
||||||||
PG&E Corporation:
|
445,151,814
|
|||||||
Pacific Gas and Electric Company:
|
264,374,809
|
PAGE | ||||
GLOSSARY |
ii
|
|||
PART I.
|
FINANCIAL INFORMATION
|
|
||
1
|
||||
PG&E Corporation
|
||||
1
|
||||
2
|
||||
3
|
||||
5
|
||||
Pacific Gas and Electric Company
|
||||
6
|
||||
7
|
||||
8
|
||||
10
|
||||
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
||||
11
|
||||
12
|
||||
14
|
||||
15
|
||||
15
|
||||
16
|
||||
16
|
||||
18
|
||||
24
|
||||
24
|
||||
29
|
||||
30
|
||||
32
|
||||
36
|
||||
39
|
||||
40
|
||||
43
|
||||
45
|
||||
45
|
||||
45
|
||||
45
|
||||
46
|
||||
46
|
||||
47
|
||||
48
|
||||
48
|
||||
48
|
||||
49
|
||||
50
|
PG&E Corporation's and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2012
|
|
AFUDC
|
allowance for funds used during construction
|
ALJ
|
administrative law judge
|
ASU
|
accounting standards update
|
CAISO
|
California Independent System Operator
|
CARB
|
California Air Resources Board
|
CCSF
|
City and County of San Francisco
|
CPUC
|
California Public Utilities Commission
|
CRRs
|
congestion revenue rights
|
DRA
|
Division of Ratepayer Advocates
|
DTSC
|
California Department of Toxic Substances Control
|
EPA
|
Environmental Protection Agency
|
EPS
|
earnings per common share
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
GAAP
|
generally accepted accounting principles
|
GHG
|
greenhouse gas
|
GRC
|
general rate case
|
GT&S
|
gas transmission and storage
|
IRS
|
Internal Revenue Service
|
NEIL
|
Nuclear Electric Insurance Limited
|
NRC
|
Nuclear Regulatory Commission
|
NTSB
|
National Transportation Safety Board
|
PSEP
|
pipeline safety enhancement plan
|
ROE
|
return on equity
|
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)
|
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions, except per share amounts)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Operating Revenues
|
||||||||||||||||
Electric
|
$ | 3,059 | $ | 2,931 | $ | 5,858 | $ | 5,703 | ||||||||
Natural gas
|
717 | 662 | 1,590 | 1,531 | ||||||||||||
Total operating revenues
|
3,776 | 3,593 | 7,448 | 7,234 | ||||||||||||
Operating Expenses
|
||||||||||||||||
Cost of electricity
|
1,189 | 962 | 2,172 | 1,821 | ||||||||||||
Cost of natural gas
|
179 | 132 | 525 | 475 | ||||||||||||
Operating and maintenance
|
1,256 | 1,426 | 2,594 | 2,794 | ||||||||||||
Depreciation, amortization, and decommissioning
|
516 | 606 | 1,019 | 1,190 | ||||||||||||
Total operating expenses
|
3,140 | 3,126 | 6,310 | 6,280 | ||||||||||||
Operating Income
|
636 | 467 | 1,138 | 954 | ||||||||||||
Interest income
|
2 | 3 | 4 | 4 | ||||||||||||
Interest expense
|
(177 | ) | (176 | ) | (353 | ) | (350 | ) | ||||||||
Other income, net
|
24 | 32 | 52 | 58 | ||||||||||||
Income Before Income Taxes
|
485 | 326 | 841 | 666 | ||||||||||||
Income tax provision
|
153 | 87 | 267 | 191 | ||||||||||||
Net Income
|
332 | 239 | 574 | 475 | ||||||||||||
Preferred stock dividend requirement of subsidiary
|
4 | 4 | 7 | 7 | ||||||||||||
Income Available for Common Shareholders
|
$ | 328 | $ | 235 | $ | 567 | $ | 468 | ||||||||
Weighted Average Common Shares Outstanding, Basic
|
442 | 423 | 438 | 419 | ||||||||||||
Weighted Average Common Shares Outstanding, Diluted
|
443 | 425 | 439 | 421 | ||||||||||||
Net Earnings Per Common Share, Basic
|
$ | 0.74 | $ | 0.56 | $ | 1.29 | $ | 1.12 | ||||||||
Net Earnings Per Common Share, Diluted
|
$ | 0.74 | $ | 0.55 | $ | 1.29 | $ | 1.11 | ||||||||
Dividends Declared Per Common Share
|
$ | 0.46 | $ | 0.46 | $ | 0.91 | $ | 0.91 | ||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net Income
|
$ | 332 | $ | 239 | $ | 574 | $ | 475 | ||||||||
Other Comprehensive Income, net of income tax
|
||||||||||||||||
Pension and other postretirement benefit plans
|
||||||||||||||||
Unrecognized prior service credit
|
6 | 6 | 12 | 12 | ||||||||||||
Unrecognized net gain
|
17 | 19 | 34 | 40 | ||||||||||||
Unrecognized net transition obligation
|
- | 4 | - | 8 | ||||||||||||
Transfer to regulatory account
|
(19 | ) | (21 | ) | (38 | ) | (42 | ) | ||||||||
Other investments
|
16 | - | 22 | - | ||||||||||||
Total other comprehensive income, net of income tax
|
20 | 8 | 30 | 18 | ||||||||||||
Comprehensive Income
|
352 | 247 | 604 | 493 | ||||||||||||
Preferred stock dividend requirement of subsidiary
|
4 | 4 | 7 | 7 | ||||||||||||
Comprehensive Income Attributable to Common Shareholders
|
$ | 348 | $ | 243 | $ | 597 | $ | 486 | ||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Balance At
|
||||||||
June 30,
|
December 31,
|
|||||||
(in millions)
|
2013
|
2012
|
||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 281 | $ | 401 | ||||
Restricted cash
|
305 | 330 | ||||||
Accounts receivable:
|
||||||||
Customers (net of allowance for doubtful accounts of $80 and $87
|
||||||||
at respective dates)
|
1,034 | 937 | ||||||
Accrued unbilled revenue
|
766 | 761 | ||||||
Regulatory balancing accounts
|
1,205 | 936 | ||||||
Other
|
272 | 365 | ||||||
Regulatory assets
|
508 | 564 | ||||||
Inventories:
|
||||||||
Gas stored underground and fuel oil
|
148 | 135 | ||||||
Materials and supplies
|
327 | 309 | ||||||
Income taxes receivable
|
365 | 211 | ||||||
Other
|
231 | 172 | ||||||
Total current assets
|
5,442 | 5,121 | ||||||
Property, Plant, and Equipment
|
||||||||
Electric
|
41,227 | 39,701 | ||||||
Gas
|
13,162 | 12,571 | ||||||
Construction work in progress
|
2,030 | 1,894 | ||||||
Other
|
1 | 1 | ||||||
Total property, plant, and equipment
|
56,420 | 54,167 | ||||||
Accumulated depreciation
|
(17,353 | ) | (16,644 | ) | ||||
Net property, plant, and equipment
|
39,067 | 37,523 | ||||||
Other Noncurrent Assets
|
||||||||
Regulatory assets
|
6,786 | 6,809 | ||||||
Nuclear decommissioning trusts
|
2,214 | 2,161 | ||||||
Income taxes receivable
|
126 | 176 | ||||||
Other
|
689 | 659 | ||||||
Total other noncurrent assets
|
9,815 | 9,805 | ||||||
TOTAL ASSETS
|
$ | 54,324 | $ | 52,449 | ||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Balance At
|
||||||||
June 30,
|
December 31,
|
|||||||
(in millions, except share amounts)
|
2013
|
2012
|
||||||
LIABILITIES AND EQUITY
|
||||||||
Current Liabilities
|
||||||||
Short-term borrowings
|
$ | 952 | $ | 492 | ||||
Long-term debt, classified as current
|
1,288 | 400 | ||||||
Accounts payable:
|
||||||||
Trade creditors
|
1,155 | 1,241 | ||||||
Disputed claims and customer refunds
|
156 | 157 | ||||||
Regulatory balancing accounts
|
1,002 | 634 | ||||||
Other
|
456 | 444 | ||||||
Interest payable
|
877 | 870 | ||||||
Income taxes payable
|
17 | 6 | ||||||
Deferred income taxes
|
106 | - | ||||||
Other
|
1,373 | 2,012 | ||||||
Total current liabilities
|
7,382 | 6,256 | ||||||
Noncurrent Liabilities
|
||||||||
Long-term debt
|
11,917 | 12,517 | ||||||
Regulatory liabilities
|
5,226 | 5,088 | ||||||
Pension and other postretirement benefits
|
3,665 | 3,575 | ||||||
Asset retirement obligations
|
2,932 | 2,919 | ||||||
Deferred income taxes
|
6,988 | 6,748 | ||||||
Other
|
2,092 | 2,020 | ||||||
Total noncurrent liabilities
|
32,820 | 32,867 | ||||||
Commitments and Contingencies (Note 10)
|
||||||||
Equity
|
||||||||
Shareholders' Equity
|
||||||||
Preferred stock
|
- | - | ||||||
Common stock, no par value, authorized 800,000,000 shares,
|
||||||||
444,717,704 and 430,718,293 shares outstanding at respective dates
|
9,032 | 8,428 | ||||||
Reinvested earnings
|
4,909 | 4,747 | ||||||
Accumulated other comprehensive loss
|
(71 | ) | (101 | ) | ||||
Total shareholders' equity
|
13,870 | 13,074 | ||||||
Noncontrolling Interest - Preferred Stock of Subsidiary
|
252 | 252 | ||||||
Total equity
|
14,122 | 13,326 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 54,324 | $ | 52,449 | ||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Six Months Ended June 30,
|
||||||||
(in millions)
|
2013
|
2012
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 574 | $ | 475 | ||||
Adjustments to reconcile net income to net cash provided by
|
||||||||
operating activities:
|
||||||||
Depreciation, amortization, and decommissioning
|
1,019 | 1,190 | ||||||
Allowance for equity funds used during construction
|
(52 | ) | (53 | ) | ||||
Deferred income taxes and tax credits, net
|
346 | 234 | ||||||
Other
|
157 | 137 | ||||||
Effect of changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(22 | ) | 13 | |||||
Inventories
|
(31 | ) | 5 | |||||
Accounts payable
|
28 | (125 | ) | |||||
Income taxes receivable/payable
|
(143 | ) | 153 | |||||
Other current assets and liabilities
|
(367 | ) | 74 | |||||
Regulatory assets, liabilities, and balancing accounts, net
|
(192 | ) | (115 | ) | ||||
Other noncurrent assets and liabilities
|
142 | 186 | ||||||
Net cash provided by operating activities
|
1,459 | 2,174 | ||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures
|
(2,521 | ) | (2,219 | ) | ||||
Decrease (increase) in restricted cash
|
25 | (1 | ) | |||||
Proceeds from sales and maturities of nuclear decommissioning
|
||||||||
trust investments
|
795 | 666 | ||||||
Purchases of nuclear decommissioning trust investments
|
(786 | ) | (716 | ) | ||||
Other
|
16 | 64 | ||||||
Net cash used in investing activities
|
(2,471 | ) | (2,206 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Borrowings under revolving credit facilities
|
140 | - | ||||||
Net issuances (repayments) of commercial paper, net of discount of $1 and $2
|
||||||||
at respective dates
|
321 | (566 | ) | |||||
Proceeds from issuance of long-term debt, net of premium, discount, and issuance
|
||||||||
costs of $8 and $6 at respective dates
|
742 | 394 | ||||||
Long-term debt matured or repurchased
|
(461 | ) | (50 | ) | ||||
Energy recovery bonds matured
|
- | (200 | ) | |||||
Common stock issued
|
562 | 561 | ||||||
Common stock dividends paid
|
(386 | ) | (368 | ) | ||||
Other
|
(26 | ) | 40 | |||||
Net cash provided by (used in) financing activities
|
892 | (189 | ) | |||||
Net change in cash and cash equivalents
|
(120 | ) | (221 | ) | ||||
Cash and cash equivalents at January 1
|
401 | 513 | ||||||
Cash and cash equivalents at June 30
|
$ | 281 | $ | 292 | ||||
Supplemental disclosures of cash flow information
|
||||||||
Cash received (paid) for:
|
||||||||
Interest, net of amounts capitalized
|
$ | (312 | ) | $ | (319 | ) | ||
Income taxes, net
|
(65 | ) | 114 | |||||
Supplemental disclosures of noncash investing and financing activities
|
||||||||
Common stock dividends declared but not yet paid
|
$ | 202 | $ | 194 | ||||
Capital expenditures financed through accounts payable
|
253 | 256 | ||||||
Noncash common stock issuances
|
11 | 12 | ||||||
Terminated capital leases
|
- | 136 | ||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Operating Revenues
|
||||||||||||||||
Electric
|
$ | 3,057 | $ | 2,930 | $ | 5,855 | $ | 5,701 | ||||||||
Natural gas
|
718 | 662 | 1,591 | 1,531 | ||||||||||||
Total operating revenues
|
3,775 | 3,592 | 7,446 | 7,232 | ||||||||||||
Operating Expenses
|
||||||||||||||||
Cost of electricity
|
1,189 | 962 | 2,172 | 1,821 | ||||||||||||
Cost of natural gas
|
179 | 132 | 525 | 475 | ||||||||||||
Operating and maintenance
|
1,256 | 1,425 | 2,592 | 2,791 | ||||||||||||
Depreciation, amortization, and decommissioning
|
516 | 606 | 1,019 | 1,190 | ||||||||||||
Total operating expenses
|
3,140 | 3,125 | 6,308 | 6,277 | ||||||||||||
Operating Income
|
635 | 467 | 1,138 | 955 | ||||||||||||
Interest income
|
3 | 2 | 4 | 3 | ||||||||||||
Interest expense
|
(171 | ) | (171 | ) | (341 | ) | (339 | ) | ||||||||
Other income, net
|
22 | 22 | 46 | 45 | ||||||||||||
Income Before Income Taxes
|
489 | 320 | 847 | 664 | ||||||||||||
Income tax provision
|
160 | 93 | 281 | 206 | ||||||||||||
Net Income
|
329 | 227 | 566 | 458 | ||||||||||||
Preferred stock dividend requirement
|
4 | 4 | 7 | 7 | ||||||||||||
Income Available for Common Stock
|
$ | 325 | $ | 223 | $ | 559 | $ | 451 | ||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net Income
|
$ | 329 | $ | 227 | $ | 566 | $ | 458 | ||||||||
Other Comprehensive Income, net of income tax
|
||||||||||||||||
Pension and other postretirement benefit plans
|
||||||||||||||||
Unrecognized prior service credit
|
6 | 6 | 12 | 12 | ||||||||||||
Unrecognized net gain
|
17 | 19 | 35 | 40 | ||||||||||||
Unrecognized net transition obligation
|
- | 4 | - | 8 | ||||||||||||
Transfer to regulatory account
|
(19 | ) | (21 | ) | (38 | ) | (42 | ) | ||||||||
Total other comprehensive income, net of income tax
|
4 | 8 | 9 | 18 | ||||||||||||
Comprehensive Income
|
$ | 333 | $ | 235 | $ | 575 | $ | 476 | ||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Balance At
|
||||||||
June 30,
|
December 31,
|
|||||||
(in millions)
|
2013
|
2012
|
||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 61 | $ | 194 | ||||
Restricted cash
|
305 | 330 | ||||||
Accounts receivable:
|
||||||||
Customers (net of allowance for doubtful accounts of $80 and $87
|
||||||||
at respective dates)
|
1,034 | 937 | ||||||
Accrued unbilled revenue
|
766 | 761 | ||||||
Regulatory balancing accounts
|
1,205 | 936 | ||||||
Other
|
275 | 366 | ||||||
Regulatory assets
|
508 | 564 | ||||||
Inventories:
|
||||||||
Gas stored underground and fuel oil
|
148 | 135 | ||||||
Materials and supplies
|
327 | 309 | ||||||
Income taxes receivable
|
361 | 186 | ||||||
Other
|
169 | 160 | ||||||
Total current assets
|
5,159 | 4,878 | ||||||
Property, Plant, and Equipment
|
||||||||
Electric
|
41,227 | 39,701 | ||||||
Gas
|
13,162 | 12,571 | ||||||
Construction work in progress
|
2,030 | 1,894 | ||||||
Total property, plant, and equipment
|
56,419 | 54,166 | ||||||
Accumulated depreciation
|
(17,352 | ) | (16,643 | ) | ||||
Net property, plant, and equipment
|
39,067 | 37,523 | ||||||
Other Noncurrent Assets
|
||||||||
Regulatory assets
|
6,786 | 6,809 | ||||||
Nuclear decommissioning trusts
|
2,214 | 2,161 | ||||||
Income taxes receivable
|
122 | 171 | ||||||
Other
|
417 | 381 | ||||||
Total other noncurrent assets
|
9,539 | 9,522 | ||||||
TOTAL ASSETS
|
$ | 53,765 | $ | 51,923 | ||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Balance At
|
||||||||
June 30,
|
December 31,
|
|||||||
(in millions, except share amounts)
|
2013
|
2012
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Short-term borrowings
|
$ | 692 | $ | 372 | ||||
Long-term debt, classified as current
|
938 | 400 | ||||||
Accounts payable:
|
||||||||
Trade creditors
|
1,155 | 1,241 | ||||||
Disputed claims and customer refunds
|
156 | 157 | ||||||
Regulatory balancing accounts
|
1,002 | 634 | ||||||
Other
|
471 | 419 | ||||||
Interest payable
|
872 | 865 | ||||||
Income taxes payable
|
25 | 12 | ||||||
Deferred income taxes
|
85 | - | ||||||
Other
|
1,155 | 1,794 | ||||||
Total current liabilities
|
6,551 | 5,894 | ||||||
Noncurrent Liabilities
|
||||||||
Long-term debt
|
11,917 | 12,167 | ||||||
Regulatory liabilities
|
5,226 | 5,088 | ||||||
Pension and other postretirement benefits
|
3,583 | 3,497 | ||||||
Asset retirement obligations
|
2,932 | 2,919 | ||||||
Deferred income taxes
|
7,191 | 6,939 | ||||||
Other
|
2,031 | 1,959 | ||||||
Total noncurrent liabilities
|
32,880 | 32,569 | ||||||
Commitments and Contingencies (Note 10)
|
||||||||
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
|
5,346 | 4,682 | ||||||
Reinvested earnings
|
7,492 | 7,291 | ||||||
Accumulated other comprehensive loss
|
(84 | ) | (93 | ) | ||||
Total shareholders' equity
|
14,334 | 13,460 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 53,765 | $ | 51,923 | ||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
(Unaudited)
|
||||||||
Six Months Ended June 30,
|
||||||||
(in millions)
|
2013
|
2012
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 566 | $ | 458 | ||||
Adjustments to reconcile net income to net cash provided by
|
||||||||
operating activities:
|
||||||||
Depreciation, amortization, and decommissioning
|
1,019 | 1,190 | ||||||
Allowance for equity funds used during construction
|
(52 | ) | (53 | ) | ||||
Deferred income taxes and tax credits, net
|
337 | 242 | ||||||
Other
|
126 | 108 | ||||||
Effect of changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(24 | ) | (50 | ) | ||||
Inventories
|
(31 | ) | 5 | |||||
Accounts payable
|
68 | (107 | ) | |||||
Income taxes receivable/payable
|
(162 | ) | 216 | |||||
Other current assets and liabilities
|
(317 | ) | 78 | |||||
Regulatory assets, liabilities, and balancing accounts, net
|
(192 | ) | (115 | ) | ||||
Other noncurrent assets and liabilities
|
126 | 202 | ||||||
Net cash provided by operating activities
|
1,464 | 2,174 | ||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures
|
(2,521 | ) | (2,219 | ) | ||||
Decrease (increase) in restricted cash
|
25 | (1 | ) | |||||
Proceeds from sales and maturities of nuclear decommissioning
|
||||||||
trust investments
|
795 | 666 | ||||||
Purchases of nuclear decommissioning trust investments
|
(786 | ) | (716 | ) | ||||
Other
|
8 | 11 | ||||||
Net cash used in investing activities
|
(2,479 | ) | (2,259 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Net issuances (repayments) of commercial paper, net of discount of $1 and $2
|
||||||||
at respective dates
|
321 | (566 | ) | |||||
Proceeds from issuance of long-term debt, net of premium, discount, and issuance
|
||||||||
costs of $8 and $6 at respective dates
|
742 | 394 | ||||||
Long-term debt matured or repurchased
|
(461 | ) | (50 | ) | ||||
Energy recovery bonds matured
|
- | (200 | ) | |||||
Preferred stock dividends paid
|
(7 | ) | (7 | ) | ||||
Common stock dividends paid
|
(358 | ) | (358 | ) | ||||
Equity contribution
|
665 | 565 | ||||||
Other
|
(20 | ) | 48 | |||||
Net cash provided by (used in) financing activities
|
882 | (174 | ) | |||||
Net change in cash and cash equivalents
|
(133 | ) | (259 | ) | ||||
Cash and cash equivalents at January 1
|
194 | 304 | ||||||
Cash and cash equivalents at June 30
|
$ | 61 | $ | 45 | ||||
Supplemental disclosures of cash flow information
|
||||||||
Cash received (paid) for:
|
||||||||
Interest, net of amounts capitalized
|
$ | (300 | ) | $ | (309 | ) | ||
Income taxes, net
|
(86 | ) | 111 | |||||
Supplemental disclosures of noncash investing and financing activities
|
||||||||
Capital expenditures financed through accounts payable
|
$ | 253 | $ | 256 | ||||
Terminated capital leases
|
- | 136 | ||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
Pension Benefits
|
Other Benefits
|
|||||||||||||||
Three Months Ended June 30,
|
||||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Service cost for benefits earned
|
$ | 115 | $ | 98 | $ | 13 | $ | 11 | ||||||||
Interest cost
|
156 | 165 | 18 | 21 | ||||||||||||
Expected return on plan assets
|
(163 | ) | (150 | ) | (20 | ) | (20 | ) | ||||||||
Amortization of transition obligation
|
- | - | - | 6 | ||||||||||||
Amortization of prior service cost
|
5 | 5 | 5 | 6 | ||||||||||||
Amortization of unrecognized loss
|
28 | 32 | 2 | 2 | ||||||||||||
Net periodic benefit cost
|
141 | 150 | 18 | 26 | ||||||||||||
Less: transfer to regulatory account (1)
|
(56 | ) | (75 | ) | - | - | ||||||||||
Total
|
$ | 85 | $ | 75 | $ | 18 | $ | 26 | ||||||||
Pension Benefits
|
Other Benefits
|
|||||||||||||||
Six Months Ended June 30,
|
||||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Service cost for benefits earned
|
$ | 230 | $ | 197 | $ | 26 | $ | 23 | ||||||||
Interest cost
|
312 | 329 | 37 | 42 | ||||||||||||
Expected return on plan assets
|
(325 | ) | (299 | ) | (40 | ) | (39 | ) | ||||||||
Amortization of transition obligation
|
- | - | - | 12 | ||||||||||||
Amortization of prior service cost
|
10 | 10 | 11 | 12 | ||||||||||||
Amortization of unrecognized loss
|
55 | 63 | 3 | 3 | ||||||||||||
Net periodic benefit cost
|
282 | 300 | 37 | 53 | ||||||||||||
Less: transfer to regulatory account (1)
|
(113 | ) | (150 | ) | - | - | ||||||||||
Total
|
$ | 169 | $ | 150 | $ | 37 | $ | 53 | ||||||||
Pension and
|
||||||||||||
Other
|
||||||||||||
Postretirement
|
Other
|
|||||||||||
Benefit Plans
|
Investments
|
Total
|
||||||||||
(in millions, net of income tax)
|
Three Months Ended June 30, 2013
|
|||||||||||
Beginning balance
|
$ | (101 | ) | $ | 10 | $ | (91 | ) | ||||
Other comprehensive income before reclassifications
|
(19 | ) | 16 | (3 | ) | |||||||
Amounts reclassified from other comprehensive income:
|
||||||||||||
Amortization of prior service cost (1)
|
6 | - | 6 | |||||||||
Amortization of actuarial gains (1)
|
17 | - | 17 | |||||||||
Net current period other comprehensive income
|
4 | 16 | 20 | |||||||||
Ending balance
|
$ | (97 | ) | $ | 26 | $ | (71 | ) | ||||
Pension and
|
||||||||||||
Other
|
||||||||||||
Postretirement
|
Other
|
|||||||||||
Benefit Plans
|
Investments
|
Total
|
||||||||||
(in millions, net of income tax)
|
Six Months Ended June 30, 2013
|
|||||||||||
Beginning balance
|
$ | (105 | ) | $ | 4 | $ | (101 | ) | ||||
Other comprehensive income before reclassifications
|
(38 | ) | 22 | (16 | ) | |||||||
Amounts reclassified from other comprehensive income:
|
||||||||||||
Amortization of prior service cost (1)
|
12 | - | 12 | |||||||||
Amortization of actuarial gains (1)
|
34 | - | 34 | |||||||||
Net current period other comprehensive income
|
8 | 22 | 30 | |||||||||
Ending balance
|
$ | (97 | ) | $ | 26 | $ | (71 | ) | ||||
Balance at
|
|||||
(in millions)
|
June 30, 2013
|
December 31, 2012
|
|||
Pension benefits
|
$
|
3,324
|
$
|
3,275
|
|
Deferred income taxes
|
1,700
|
1,627
|
|||
Utility retained generation
|
527
|
552
|
|||
Environmental compliance costs
|
604
|
604
|
|||
Price risk management
|
163
|
210
|
|||
Electromechanical meters
|
165
|
194
|
|||
Unamortized loss, net of gain, on reacquired debt
|
146
|
141
|
|||
Other
|
157
|
206
|
|||
Total long-term regulatory assets
|
$
|
6,786
|
$
|
6,809
|
Balance at
|
|||||
June 30,
|
December 31,
|
||||
(in millions)
|
2013
|
2012
|
|||
Cost of removal obligations
|
$
|
3,763
|
$
|
3,625
|
|
Recoveries in excess of asset retirement obligations
|
633
|
620
|
|||
Public purpose programs
|
571
|
590
|
|||
Other
|
259
|
253
|
|||
Total long-term regulatory liabilities
|
$
|
5,226
|
$
|
5,088
|
Receivable (Payable)
|
|||||
Balance at
|
|||||
June 30,
|
December 31,
|
||||
(in millions)
|
2013
|
2012
|
|||
Distribution revenue adjustment mechanism
|
$
|
407
|
$
|
219
|
|
Utility generation
|
267
|
117
|
|||
Hazardous substance
|
75
|
56
|
|||
Public purpose programs
|
(151)
|
(83)
|
|||
Gas fixed cost
|
25
|
44
|
|||
Energy recovery bonds
|
(181)
|
(43)
|
|||
Energy procurement
|
13
|
77
|
|||
U.S. Department of Energy Settlement
|
(279)
|
(250)
|
|||
GHG allowance auction proceeds (1)
|
(199)
|
-
|
|||
Other
|
226
|
165
|
|||
Total regulatory balancing accounts, net
|
$
|
203
|
$
|
302
|
|
PG&E Corporation
|
Utility
|
|||||||
Total
|
Total
|
|||||||
(in millions)
|
Equity
|
Shareholders' Equity
|
||||||
Balance at December 31, 2012
|
$ | 13,326 | $ | 13,460 | ||||
Comprehensive income
|
604 | 575 | ||||||
Common stock issued
|
573 | - | ||||||
Share-based compensation expense
|
31 | (1 | ) | |||||
Common stock dividends declared
|
(405 | ) | (358 | ) | ||||
Preferred stock dividend requirement
|
- | (7 | ) | |||||
Preferred stock dividend requirement of subsidiary
|
(7 | ) | - | |||||
Equity contributions
|
- | 665 | ||||||
Balance at June 30, 2013
|
$ | 14,122 | $ | 14,334 | ||||
·
|
7 million shares were sold in an underwritten public offering for cash proceeds of $300 million, net of fees and commissions;
|
·
|
4 million shares were issued for cash proceeds of $149 million under the PG&E Corporation 401(k) plan, the Dividend Reinvestment and Stock Purchase Plan, and share-based compensation plans; and
|
·
|
3 million shares were sold for cash proceeds of $113 million, net of commissions paid of $1 million, under the equity distribution agreements.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions, except per share amounts)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Income available for common shareholders
|
$ | 328 | $ | 235 | $ | 567 | $ | 468 | ||||||||
Weighted average common shares outstanding, basic
|
442 | 423 | 438 | 419 | ||||||||||||
Add incremental shares from assumed conversions:
|
||||||||||||||||
Employee share-based compensation
|
1 | 2 | 1 | 2 | ||||||||||||
Weighted average common share outstanding, diluted
|
443 | 425 | 439 | 421 | ||||||||||||
Total earnings per common share, diluted
|
$ | 0.74 | $ | 0.55 | $ | 1.29 | $ | 1.11 |
Commodity Risk
|
||||||||||||||||
Gross
|
Total
|
|||||||||||||||
(in millions)
|
Balance
|
Netting
|
Cash Collateral
|
Balance
|
||||||||||||
Current assets – other
|
$ | 31 | $ | (11 | ) | $ | 28 | $ | 48 | |||||||
Other noncurrent assets – other
|
71 | (5 | ) | - | 66 | |||||||||||
Current liabilities – other
|
(188 | ) | 11 | 133 | (44 | ) | ||||||||||
Noncurrent liabilities – other
|
(168 | ) | 5 | 40 | (123 | ) | ||||||||||
Total commodity risk
|
$ | (254 | ) | $ | - | $ | 201 | $ | (53 | ) |
Commodity Risk
|
||||||||||||||||
Gross
|
Total
|
|||||||||||||||
(in millions)
|
Balance
|
Netting
|
Cash Collateral
|
Balance
|
||||||||||||
Current assets – other
|
$ | 48 | $ | (25 | ) | $ | 36 | $ | 59 | |||||||
Other noncurrent assets – other
|
99 | (11 | ) | - | 88 | |||||||||||
Current liabilities – other
|
(255 | ) | 25 | 115 | (115 | ) | ||||||||||
Noncurrent liabilities – other
|
(221 | ) | 11 | 14 | (196 | ) | ||||||||||
Total commodity risk
|
$ | (329 | ) | $ | - | $ | 165 | $ | (164 | ) |
Commodity Risk
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Unrealized gain/(loss) - regulatory assets and liabilities (1)
|
$ | (23 | ) | $ | 219 | $ | 75 | $ | 165 | |||||||
Realized loss - cost of electricity (2)
|
(31 | ) | (125 | ) | (79 | ) | (275 | ) | ||||||||
Realized loss - cost of natural gas (2)
|
(4 | ) | (5 | ) | (12 | ) | (27 | ) | ||||||||
Total commodity risk
|
$ | (58 | ) | $ | 89 | $ | (16 | ) | $ | (137 | ) | |||||
Contract Volume (1)
|
|||||||||||||||||
1 Year or
|
3 Years or
|
||||||||||||||||
Greater but
|
Greater but
|
||||||||||||||||
Less Than 1
|
Less Than 3
|
Less Than 5
|
5 Years or
|
||||||||||||||
Underlying Product
|
Instruments
|
Year
|
Years
|
Years
|
Greater (2)
|
||||||||||||
Natural Gas (3)
|
Forwards and
|
||||||||||||||||
(MMBtus (4))
|
Swaps
|
290,542,776 | 86,670,000 | 6,900,000 | - | ||||||||||||
Options
|
209,492,494 | 136,515,176 | 4,950,000 | - | |||||||||||||
Electricity
|
Forwards and
|
||||||||||||||||
(Megawatt-hours)
|
Swaps
|
3,088,879 | 2,782,480 | 2,008,046 | 2,077,424 | ||||||||||||
Options
|
55,051 | 239,233 | 239,015 | 64,456 | |||||||||||||
Congestion
|
|||||||||||||||||
Revenue Rights
|
55,926,491 | 74,483,974 | 68,123,543 | 14,274,162 | |||||||||||||
Contract Volume (1)
|
|||||||||||||||||
1 Year or
|
3 Years or
|
||||||||||||||||
Greater but
|
Greater but
|
||||||||||||||||
Less Than 1
|
Less Than 3
|
Less Than 5
|
5 Years or
|
||||||||||||||
Underlying Product
|
Instruments
|
Year
|
Years
|
Years
|
Greater (2)
|
||||||||||||
Natural Gas (3)
|
Forwards and
|
||||||||||||||||
(MMBtus (4))
|
Swaps
|
329,466,510 | 98,628,398 | 5,490,000 | - | ||||||||||||
Options
|
221,587,431 | 216,279,767 | 10,050,000 | - | |||||||||||||
Electricity
|
Forwards and
|
||||||||||||||||
(Megawatt-hours)
|
Swaps
|
2,537,023 | 3,541,046 | 2,009,505 | 2,538,718 | ||||||||||||
Options
|
- | 239,015 | 239,233 | 119,508 | |||||||||||||
Congestion
|
|||||||||||||||||
Revenue Rights
|
74,198,690 | 74,187,803 | 74,240,147 | 25,699,804 | |||||||||||||
Balance at
|
||||||||
June 30,
|
December 31,
|
|||||||
(in millions)
|
2013
|
2012
|
||||||
Derivatives in a liability position with credit risk-related
|
||||||||
contingencies that are not fully collateralized
|
$ | (116 | ) | $ | (266 | ) | ||
Related derivatives in an asset position
|
4 | 59 | ||||||
Collateral posting in the normal course of business related to
|
||||||||
these derivatives
|
96 | 103 | ||||||
Net position of derivative contracts/additional collateral
|
||||||||
posting requirements (1)
|
$ | (16 | ) | $ | (104 | ) | ||
·
|
Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
·
|
Level 2 – Other inputs that are directly or indirectly observable in the marketplace.
|
·
|
Level 3 – Unobservable inputs which are supported by little or no market activities.
|
Fair Value Measurements
|
||||||||||||||||||||
At June 30, 2013
|
||||||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Netting (1)
|
Total
|
|||||||||||||||
Assets:
|
||||||||||||||||||||
Money market investments
|
$ | 222 | $ | - | $ | - | $ | - | $ | 222 | ||||||||||
Nuclear decommissioning trusts
|
||||||||||||||||||||
Money market investments
|
32 | - | - | - | 32 | |||||||||||||||
U.S. equity securities
|
956 | 10 | - | - | 966 | |||||||||||||||
Non-U.S. equity securities
|
391 | - | - | - | 391 | |||||||||||||||
U.S. government and agency securities
|
759 | 135 | - | - | 894 | |||||||||||||||
Municipal securities
|
- | 31 | - | - | 31 | |||||||||||||||
Other fixed-income securities
|
- | 166 | - | - | 166 | |||||||||||||||
Total nuclear decommissioning trusts (2)
|
2,138 | 342 | - | - | 2,480 | |||||||||||||||
Price risk management instruments
|
||||||||||||||||||||
(Note 7)
|
||||||||||||||||||||
Electricity
|
- | 26 | 72 | 15 | 113 | |||||||||||||||
Gas
|
1 | 3 | - | (3 | ) | 1 | ||||||||||||||
Total price risk management instruments
|
1 | 29 | 72 | 12 | 114 | |||||||||||||||
Rabbi trusts
|
||||||||||||||||||||
Fixed-income securities
|
- | 29 | - | - | 29 | |||||||||||||||
Life insurance contracts
|
- | 71 | - | - | 71 | |||||||||||||||
Total rabbi trusts
|
- | 100 | - | - | 100 | |||||||||||||||
Long-term disability trust
|
||||||||||||||||||||
Money market investments
|
3 | - | - | - | 3 | |||||||||||||||
U.S. equity securities
|
- | 13 | - | - | 13 | |||||||||||||||
Non-U.S. equity securities
|
- | 12 | - | - | 12 | |||||||||||||||
Fixed-income securities
|
- | 123 | - | - | 123 | |||||||||||||||
Total long-term disability trust
|
3 | 148 | - | - | 151 | |||||||||||||||
Other investments
|
56 | - | - | - | 56 | |||||||||||||||
Total assets
|
$ | 2,420 | $ | 619 | $ | 72 | $ | 12 | $ | 3,123 | ||||||||||
Liabilities:
|
||||||||||||||||||||
Price risk management instruments
|
||||||||||||||||||||
(Note 7)
|
||||||||||||||||||||
Electricity
|
$ | 85 | $ | 112 | $ | 148 | $ | (183 | ) | $ | 162 | |||||||||
Gas
|
6 | 5 | - | (6 | ) | 5 | ||||||||||||||
Total liabilities
|
$ | 91 | $ | 117 | $ | 148 | $ | (189 | ) | $ | 167 | |||||||||
Fair Value Measurements
|
||||||||||||||||||||
At December 31, 2012
|
||||||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Netting (1)
|
Total
|
|||||||||||||||
Assets:
|
||||||||||||||||||||
Money market investments
|
$ | 209 | $ | - | $ | - | $ | - | $ | 209 | ||||||||||
Nuclear decommissioning trusts
|
||||||||||||||||||||
Money market investments
|
21 | - | - | - | 21 | |||||||||||||||
U.S. equity securities
|
940 | 9 | - | - | 949 | |||||||||||||||
Non-U.S. equity securities
|
379 | - | - | - | 379 | |||||||||||||||
U.S. government and agency securities
|
681 | 139 | - | - | 820 | |||||||||||||||
Municipal securities
|
- | 59 | - | - | 59 | |||||||||||||||
Other fixed-income securities
|
- | 173 | - | - | 173 | |||||||||||||||
Total nuclear decommissioning trusts (2)
|
2,021 | 380 | - | - | 2,401 | |||||||||||||||
Price risk management instruments
|
||||||||||||||||||||
(Note 7)
|
||||||||||||||||||||
Electricity
|
1 | 60 | 80 | 6 | 147 | |||||||||||||||
Gas
|
- | 5 | 1 | (6 | ) | - | ||||||||||||||
Total price risk management instruments
|
1 | 65 | 81 | - | 147 | |||||||||||||||
Rabbi trusts
|
||||||||||||||||||||
Fixed-income securities
|
- | 30 | - | - | 30 | |||||||||||||||
Life insurance contracts
|
- | 72 | - | - | 72 | |||||||||||||||
Total rabbi trusts
|
- | 102 | - | - | 102 | |||||||||||||||
Long-term disability trust
|
||||||||||||||||||||
Money market investments
|
10 | - | - | - | 10 | |||||||||||||||
U.S. equity securities
|
- | 14 | - | - | 14 | |||||||||||||||
Non-U.S. equity securities
|
- | 11 | - | - | 11 | |||||||||||||||
Fixed-income securities
|
- | 136 | - | - | 136 | |||||||||||||||
Total long-term disability trust
|
10 | 161 | - | - | 171 | |||||||||||||||
Total assets
|
$ | 2,241 | $ | 708 | $ | 81 | $ | - | $ | 3,030 | ||||||||||
Liabilities:
|
||||||||||||||||||||
Price risk management instruments
|
||||||||||||||||||||
(Note 7)
|
||||||||||||||||||||
Electricity
|
$ | 155 | $ | 144 | $ | 160 | $ | (156 | ) | $ | 303 | |||||||||
Gas
|
8 | 9 | - | (9 | ) | 8 | ||||||||||||||
Total liabilities
|
$ | 163 | $ | 153 | $ | 160 | $ | (165 | ) | $ | 311 | |||||||||
Fair Value at
|
||||||||||||||
(in millions)
|
June 30, 2013
|
|||||||||||||
Fair Value Measurement
|
Assets
|
Liabilities
|
Valuation Technique
|
Unobservable Input
|
Range (1)
|
|||||||||
Congestion revenue rights
|
$ | 72 | $ | 14 |
Market approach
|
CRR auction prices
|
$ | (10.54) - 7.93 | ||||||
Power purchase agreements
|
$ | - | $ | 134 |
Discounted cash flow
|
Forward prices
|
$ | 10.16 - 56.80 | ||||||
Fair Value at
|
||||||||||||||
(in millions)
|
December 31, 2012
|
|||||||||||||
Fair Value Measurement
|
Assets
|
Liabilities
|
Valuation Technique
|
Unobservable Input
|
Range (1)
|
|||||||||
Congestion revenue rights
|
$ | 80 | $ | 16 |
Market approach
|
CRR auction prices
|
$ | (9.04) - 55.15 | ||||||
Power purchase agreements
|
$ | - | $ | 145 |
Discounted cash flow
|
Forward prices
|
$ | 8.59 - 62.90 | ||||||
Price Risk Management Instruments
|
||||||||
(in millions)
|
2013
|
2012
|
||||||
Liability balance as of April 1
|
$ | (75 | ) | $ | (99 | ) | ||
Realized and unrealized gains (losses):
|
||||||||
Included in regulatory assets and liabilities or balancing accounts (1)
|
(1 | ) | 19 | |||||
Liability balance as of June 30
|
$ | (76 | ) | $ | (80 | ) | ||
Price Risk Management Instruments
|
||||||||
(in millions)
|
2013
|
2012
|
||||||
Liability balance as of January 1
|
$ | (79 | ) | $ | (74 | ) | ||
Realized and unrealized gains (losses):
|
||||||||
Included in regulatory assets and liabilities or balancing accounts (1)
|
3 | (6 | ) | |||||
Liability balance as of June 30
|
$ | (76 | ) | $ | (80 | ) | ||
·
|
The fair values of cash, restricted cash, net accounts receivable, short-term borrowings, accounts payable, customer deposits, and the Utility’s variable rate pollution control bond loan agreements approximate their carrying values at June 30, 2013 and December 31, 2012, as they are short-term in nature or have interest rates that reset daily.
|
·
|
The fair values of the Utility’s fixed-rate senior notes and fixed-rate pollution control bonds and PG&E Corporation’s fixed-rate senior notes were based on quoted market prices at June 30, 2013 and December 31, 2012.
|
June 30, 2013
|
December 31, 2012
|
|||||||||||||||
(in millions)
|
Carrying Amount
|
Level 2 Fair Value
|
Carrying Amount
|
Level 2 Fair Value
|
||||||||||||
Debt (Note 4)
|
||||||||||||||||
PG&E Corporation
|
$ | 350 | $ | 363 | $ | 349 | $ | 371 | ||||||||
Utility
|
11,933 | 13,076 | 11,645 | 13,946 |
Total
|
Total
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Total Fair
|
|||||||||||||
(in millions)
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
As of June 30, 2013
|
||||||||||||||||
Nuclear decommissioning trusts
|
||||||||||||||||
Money market investments
|
$ | 32 | $ | - | $ | - | $ | 32 | ||||||||
Equity securities
|
||||||||||||||||
U.S.
|
262 | 704 | - | 966 | ||||||||||||
Non-U.S.
|
205 | 188 | (2 | ) | 391 | |||||||||||
Debt securities
|
||||||||||||||||
U.S. government and agency securities
|
831 | 67 | (4 | ) | 894 | |||||||||||
Municipal securities
|
29 | 2 | - | 31 | ||||||||||||
Other fixed-income securities
|
166 | 2 | (2 | ) | 166 | |||||||||||
Total nuclear decommissioning trusts (1)
|
1,525 | 963 | (8 | ) | 2,480 | |||||||||||
Other investments
|
13 | 43 | - | 56 | ||||||||||||
Total
|
$ | 1,538 | $ | 1,006 | $ | (8 | ) | $ | 2,536 | |||||||
As of December 31, 2012
|
||||||||||||||||
Nuclear decommissioning trusts
|
||||||||||||||||
Money market investments
|
$ | 21 | $ | - | $ | - | $ | 21 | ||||||||
Equity securities
|
||||||||||||||||
U.S.
|
331 | 618 | - | 949 | ||||||||||||
Non-U.S.
|
199 | 181 | (1 | ) | 379 | |||||||||||
Debt securities
|
||||||||||||||||
U.S. government and agency securities
|
723 | 97 | - | 820 | ||||||||||||
Municipal securities
|
56 | 4 | (1 | ) | 59 | |||||||||||
Other fixed-income securities
|
168 | 5 | - | 173 | ||||||||||||
Total (1)
|
$ | 1,498 | $ | 905 | $ | (2 | ) | $ | 2,401 | |||||||
As of
|
||||
(in millions)
|
June 30, 2013
|
|||
Less than 1 year
|
$ | 28 | ||
1–5 years
|
503 | |||
5–10 years
|
221 | |||
More than 10 years
|
339 | |||
Total maturities of debt securities
|
$ | 1,091 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(in millions)
|
||||||||||||||||
Proceeds from sales and maturities of nuclear decommissioning
|
||||||||||||||||
trust investments
|
$ | 432 | $ | 315 | $ | 795 | $ | 666 | ||||||||
Gross realized gains on sales of securities held as available-for-sale
|
25 | 7 | 37 | 14 | ||||||||||||
Gross realized losses on sales of securities held as available-for-sale
|
(5 | ) | (5 | ) | (6 | ) | (8 | ) |
Balance at January 1, 2010
|
$ | - | ||
Loss accrued
|
220 | |||
Less: Payments
|
(6 | ) | ||
Balance at December 31, 2010
|
214 | |||
Additional loss accrued
|
155 | |||
Less: Payments
|
(92 | ) | ||
Balance at December 31, 2011
|
277 | |||
Additional loss accrued
|
80 | |||
Less: Payments
|
(211 | ) | ||
Balance at December 31, 2012
|
146 | |||
Additional loss accrued
|
- | |||
Less: Payments
|
(79 | ) | ||
Balance at June 30, 2013
|
$ | 67 |
Balance at December 31, 2012
|
$ | 910 | ||
Additional remediation costs accrued:
|
||||
Transfer to regulatory account for recovery
|
85 | |||
Amounts not recoverable from customers
|
31 | |||
Less: Payments
|
(92 | ) | ||
Balance at June 30, 2013
|
$ | 934 |
Balance at
|
||||||||
(in millions)
|
June 30, 2013
|
December 31, 2012
|
||||||
Utility-owned natural gas compressor site near Topock, Arizona (1)
|
$ | 270 | $ | 239 | ||||
Utility-owned natural gas compressor site near Hinkley, California (1)
|
207 | 226 | ||||||
Former manufactured gas plant sites owned by the Utility or third parties
|
181 | 181 | ||||||
Utility-owned generation facilities (other than for fossil fuel-fired),
other facilities, and third-party disposal sites
|
169 | 158 | ||||||
Fossil fuel-fired generation facilities formerly owned by the Utility
|
88 | 87 | ||||||
Decommissioning fossil fuel-fired generation facilities and sites
|
19 | 19 | ||||||
Total environmental remediation liability
|
$ | 934 | $ | 910 | ||||
·
|
The Amount and Timing of the Utility’s Financing Needs. PG&E Corporation contributes equity to the Utility as needed by the Utility to maintain its CPUC-authorized capital structure. The Utility has incurred significant expenses that are not recoverable through rates, which has increased the Utility’s equity needs. For the six months ended June 30, 2013, PG&E Corporation made equity contributions to the Utility of $665 million. Additional equity issued by PG&E Corporation to fund the Utility’s future equity needs that arise due to the outcome of the pending investigations and unrecoverable costs incurred by the Utility is expected to have a material dilutive effect on PG&E Corporation’s EPS. The Utility’s financing needs also will be affected by other factors described in “Liquidity and Financial Resources” below. PG&E Corporation’s and the Utility’s ability to access the capital markets and the terms and rates of future financings could be affected by changes in their respective credit ratings, the outcome of natural gas matters, general economic and market conditions, and other factors.
|
·
|
The Timing and Outcome of Ratemaking Proceedings. In the 2014 GRC, the Utility is seeking an increase in its 2014 revenue requirements of $1.207 billion over the comparable revenues for 2013 that were previously authorized, as well as attrition increases for 2015 and 2016. The DRA has recommended that the CPUC approve a 2014 revenue requirement that is lower than 2013. The CPUC is scheduled to issue a decision in the 2014 GRC in late 2013. (See “2014 General Rate Case” below.) The FERC is also considering proposed changes in the Utility’s electric transmission rates in two pending TO rate cases, including the Utility’s most recent application filed on July 24, 2013. (See “Electric Transmission Owner Rate Cases” below.) Finally, the Utility plans to file an application with the CPUC in late 2013 to initiate the Utility’s 2015 GT&S rate case. (See “Gas Transmission and Storage Rate Case” below.) The outcome of these ratemaking proceedings can be affected by many factors, including general economic conditions, the level of customer rates, regulatory policies, and political considerations.
|
·
|
The Ability of the Utility to Control Operating Costs and Capital Expenditures. Authorized revenues are primarily set based on forecasts and assumptions about the amount of operating costs and capital expenditures the Utility will incur in future periods. PG&E Corporation’s and the Utility’s net income is negatively affected when the authorized revenues are not sufficient for the Utility to recover the costs it actually incurs to provide utility services. In 2012, the Utility incurred expenses to improve the safety and reliability of its operations that were approximately $255 million higher than the level of revenue requirements authorized in its 2011 GRC and GT&S rate case. The Utility forecasts that it will incur approximately $250 million in 2013 that it will not recover in rates, as well as capital expenditures that exceed the current authorized levels, to make additional improvements. Differences between the amount or timing of the Utility’s actual costs and forecasted or authorized amounts may also affect the Utility’s ability to earn its authorized ROE.
|
Three Months
|
Six Months
|
|||||||||||||||
Ended June 30,
|
Ended June 30,
|
|||||||||||||||
EPS
|
EPS
|
|||||||||||||||
(in millions, except per share amounts)
|
Earnings
|
(Diluted)
|
Earnings
|
(Diluted)
|
||||||||||||
Income Available for Common Shareholders - June 30, 2012
|
$ | 235 | $ | 0.55 | $ | 468 | $ | 1.11 | ||||||||
Natural gas matters (1)
|
91 | 0.22 | 151 | 0.37 | ||||||||||||
Growth in rate base earnings
|
22 | 0.05 | 43 | 0.10 | ||||||||||||
Environmental-related costs
|
(3 | ) | (0.01 | ) | 39 | 0.09 | ||||||||||
Reduction in authorized cost of capital
|
(43 | ) | (0.09 | ) | (87 | ) | (0.19 | ) | ||||||||
Timing of incremental work
|
(1 | ) | - | (14 | ) | (0.03 | ) | |||||||||
Gas transmission revenues
|
(3 | ) | (0.01 | ) | (6 | ) | (0.02 | ) | ||||||||
Impact of capital spending over authorized
|
(5 | ) | (0.01 | ) | (5 | ) | (0.01 | ) | ||||||||
Nuclear refueling outage
|
27 | 0.06 | - | - | ||||||||||||
Increase in shares outstanding (2)
|
- | (0.03 | ) | - | (0.07 | ) | ||||||||||
Other
|
8 | 0.01 | (22 | ) | (0.06 | ) | ||||||||||
Income Available for Common Shareholders - June 30, 2013
|
$ | 328 | $ | 0.74 | $ | 567 | $ | 1.29 | ||||||||
(1)
|
The Utility incurred lower charges related to natural gas matters for the three and six months ended June 30, 2013, as compared to the same periods in 2012, resulting primarily from the absence of charges for third-party claims and contributions; PSEP expenses authorized for recovery in 2013; and lower legal and other expenses. See “Operating and Maintenance” below for additional information.
|
(2)
|
Represents the impact of a higher number of shares outstanding at June 30, 2013, compared to the number of shares outstanding at June 30, 2012. PG&E Corporation issues shares to fund its equity contributions to the Utility to maintain the Utility’s capital structure and fund operations, including expenses related to natural gas matters. This has no dollar impact on earnings.
|
·
|
when and how the pending investigations and enforcement matters related to the Utility’s natural gas system operating practices and the San Bruno accident are concluded, including the ultimate amount of fines the Utility will be required to pay the State General Fund, the cost of any remedial actions the Utility may be ordered to perform, and the extent to which the Utility’s past and future unrecovered and unrecoverable costs to perform work associated with its natural gas system are considered in reaching the final outcome;
|
·
|
the ultimate amount of third-party liability incurred in connection with the San Bruno accident; the timing and amount of related insurance recoveries; and the ultimate amount of punitive damages, if any, the Utility may incur related to third-party claims;
|
·
|
the outcome of the pending criminal investigation related to the San Bruno accident, including the ultimate amount of civil or criminal fines or penalties, if any, that may be imposed, and the impact of remedial measures such as the appointment of an independent monitor;
|
·
|
the outcomes of current regulatory and ratemaking proceedings, such as the 2014 GRC and the pending TO rate cases; and the outcome of future regulatory and ratemaking proceedings, such as the 2015 GT&S rate case;
|
·
|
the ultimate amount of costs the Utility incurs in the future that are not recovered through rates, including costs to perform incremental work to improve the safety and reliability of electric and natural gas operations;
|
·
|
the outcome of future investigations or proceedings that may be commenced by the CPUC or other regulatory authorities relating to the Utility’s compliance with laws, rules, regulations, or orders applicable to the operation, inspection, and maintenance of its electric and gas facilities;
|
·
|
whether PG&E Corporation and the Utility are able to repair the reputational harm that they have suffered, and may suffer in the future, due to the negative publicity surrounding the San Bruno accident, the related civil litigation, and the pending investigations, including any charge or finding of criminal liability;
|
·
|
the amount and timing of additional common stock issuances by PG&E Corporation, the proceeds of which are contributed as equity to maintain the Utility’s authorized capital structure as the Utility incurs charges and costs, including costs and fines associated with natural gas matters, that are not recoverable through rates or insurance;
|
·
|
the impact of environmental remediation laws, regulations, and orders; the ultimate amount of costs incurred to discharge the Utility’s known and unknown remediation obligations; the extent to which the Utility is able to recover environmental compliance and remediation costs in rates or from other sources; and the ultimate amount of environmental remediation costs the Utility incurs but does not recover, such as the remediation costs associated with the Utility’s natural gas compressor station site located near Hinkley, California;
|
·
|
the impact of new legislation or NRC regulations, recommendations, policies, decisions, or orders relating to the operations, seismic design, security, safety, relicensing, or decommissioning of nuclear facilities, including the Utility’s Diablo Canyon nuclear power plant, or relating to the storage of spent nuclear fuel, cooling water intake, or other issues; and whether the Utility obtains renewed operating licenses for the two nuclear operating units at Diablo Canyon;
|
·
|
the impact of weather-related conditions or events (such as storms, tornadoes, floods, drought, solar or electromagnetic events, and wildland and other fires), natural disasters (such as earthquakes, tsunamis, and pandemics), and other events (such as explosions, fires, accidents, mechanical breakdowns, equipment failures, human errors, and labor disruptions), as well as acts of terrorism, war, or vandalism, including cyber-attacks, that can cause unplanned outages, reduce generating output, disrupt the Utility’s service to customers, or damage or disrupt the facilities, operations, or information technology and systems owned by the Utility, its customers, or third parties on which the Utility relies; and subject the Utility to third-party liability for property damage or personal injury, or result in the imposition of civil, criminal, or regulatory penalties on the Utility;
|
·
|
the impact of environmental laws and regulations aimed at the reduction of carbon dioxide and GHGs, and whether the Utility is able to continue recovering associated compliance costs, including the cost of emission allowances and offsets, that the Utility incurs under cap-and-trade regulations;
|
·
|
changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline in the Utility’s service area, general and regional economic and financial market conditions, the extent of municipalization of the Utility’s electric distribution facilities, changing levels of “direct access” customers who procure electricity from alternative energy providers, changing levels of customers who purchase electricity from governmental bodies that act as “community choice aggregators,” and the development of alternative energy technologies including self-generation and distributed generation technologies;
|
·
|
the adequacy and price of electricity, natural gas, and nuclear fuel supplies; the extent to which the Utility can manage and respond to the volatility of energy commodity prices; the ability of the Utility and its counterparties to post or return collateral in connection with price risk management activities; and whether the Utility is able to recover timely its energy commodity costs through rates;
|
·
|
whether the Utility’s information technology, operating systems and networks, including the advanced metering system infrastructure, customer billing, financial, and other systems, can continue to function accurately while meeting regulatory requirements; whether the Utility is able to protect its operating systems and networks from damage, disruption, or failure caused by cyber-attacks, computer viruses, or other hazards; whether the Utility’s security measures are sufficient to protect confidential customer, vendor, and financial data contained in such systems and networks; and whether the Utility can continue to rely on third-party vendors and contractors that maintain and support some of the Utility’s operating systems;
|
·
|
the extent to which costs incurred in connection with third-party claims or litigation are not recoverable through insurance, rates, or from other third parties;
|
·
|
the ability of PG&E Corporation and the Utility to access capital markets and other sources of debt and equity financing in a timely manner on acceptable terms;
|
·
|
changes in credit ratings which could result in increased borrowing costs, especially if PG&E Corporation or the Utility were to lose its investment grade credit ratings;
|
·
|
the impact of federal or state laws or regulations, or their interpretation, on energy policy and the regulation of utilities and their holding companies, including how the CPUC interprets and enforces the financial and other conditions imposed on PG&E Corporation when it became the Utility’s holding company, and whether the outcome of proceedings and investigations relating to the Utility’s natural gas operations affects the Utility’s ability to make distributions to PG&E Corporation in the form of dividends or share repurchases; and, in turn, PG&E Corporation’s ability to pay dividends;
|
·
|
the outcome of federal or state tax audits and the impact of any changes in federal or state tax laws, policies, or regulations; and
|
·
|
the impact of changes in GAAP, standards, rules, or policies, including those related to regulatory accounting, and the impact of changes in their interpretation or application.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Utility
|
||||||||||||||||
Electric operating revenues
|
$ | 3,057 | $ | 2,930 | $ | 5,855 | $ | 5,701 | ||||||||
Natural gas operating revenues
|
718 | 662 | 1,591 | 1,531 | ||||||||||||
Total operating revenues
|
3,775 | 3,592 | 7,446 | 7,232 | ||||||||||||
Cost of electricity
|
1,189 | 962 | 2,172 | 1,821 | ||||||||||||
Cost of natural gas
|
179 | 132 | 525 | 475 | ||||||||||||
Operating and maintenance
|
1,256 | 1,425 | 2,592 | 2,791 | ||||||||||||
Depreciation, amortization, and decommissioning
|
516 | 606 | 1,019 | 1,190 | ||||||||||||
Total operating expenses
|
3,140 | 3,125 | 6,308 | 6,277 | ||||||||||||
Operating income
|
635 | 467 | 1,138 | 955 | ||||||||||||
Interest income
|
3 | 2 | 4 | 3 | ||||||||||||
Interest expense
|
(171 | ) | (171 | ) | (341 | ) | (339 | ) | ||||||||
Other income, net
|
22 | 22 | 46 | 45 | ||||||||||||
Income before income taxes
|
489 | 320 | 847 | 664 | ||||||||||||
Income tax provision
|
160 | 93 | 281 | 206 | ||||||||||||
Net income
|
329 | 227 | 566 | 458 | ||||||||||||
Preferred stock dividend requirement
|
4 | 4 | 7 | 7 | ||||||||||||
Income Available for Common Stock
|
$ | 325 | $ | 223 | $ | 559 | $ | 451 | ||||||||
PG&E Corporation (1)
|
||||||||||||||||
Operating revenues
|
$ | 3,776 | $ | 3,593 | $ | 7,448 | $ | 7,234 | ||||||||
Operating expenses
|
3,140 | 3,126 | 6,310 | 6,280 | ||||||||||||
Operating income
|
636 | 467 | 1,138 | 954 | ||||||||||||
Interest income
|
2 | 3 | 4 | 4 | ||||||||||||
Interest expense
|
(177 | ) | (176 | ) | (353 | ) | (350 | ) | ||||||||
Other income, net
|
24 | 32 | 52 | 58 | ||||||||||||
Income before income taxes
|
485 | 326 | 841 | 666 | ||||||||||||
Income tax provision
|
153 | 87 | 267 | 191 | ||||||||||||
Net income
|
332 | 239 | 574 | 475 | ||||||||||||
Preferred stock dividend requirement of subsidiary
|
4 | 4 | 7 | 7 | ||||||||||||
Income Available for Common Shareholders
|
$ | 328 | $ | 235 | $ | 567 | $ | 468 | ||||||||
(1) Amounts for PG&E Corporation differ from comparable amounts for the Utility due primarily to PG&E Corporation's interest expense on long-term debt, other income from investments, and income taxes.
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Revenues excluding passed-through costs
|
$ | 1,611 | $ | 1,579 | $ | 3,198 | $ | 3,141 | ||||||||
Revenues for recovery of passed-through costs
|
1,446 | 1,351 | 2,657 | 2,560 | ||||||||||||
Total electric operating revenues
|
$ | 3,057 | $ | 2,930 | $ | 5,855 | $ | 5,701 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Cost of purchased power
|
$ | 1,120 | $ | 907 | $ | 2,030 | $ | 1,682 | ||||||||
Fuel used in own generation facilities
|
69 | 55 | 142 | 139 | ||||||||||||
Total cost of electricity
|
$ | 1,189 | $ | 962 | $ | 2,172 | $ | 1,821 | ||||||||
Average cost of purchased power per kWh (1)
|
$ | 0.088 | $ | 0.072 | $ | 0.086 | $ | 0.074 | ||||||||
Total purchased power (in millions of kWh)
|
12,788 | 12,529 | 23,674 | 22,819 | ||||||||||||
(1) Kilowatt-hour
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Revenues excluding passed-through costs
|
$ | 431 | $ | 445 | $ | 870 | $ | 880 | ||||||||
Revenues for recovery of passed-through costs
|
287 | 217 | 721 | 651 | ||||||||||||
Total natural gas operating revenues
|
$ | 718 | $ | 662 | $ | 1,591 | $ | 1,531 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Cost of natural gas sold
|
$ | 137 | $ | 85 | $ | 437 | $ | 379 | ||||||||
Transportation cost of natural gas sold
|
42 | 47 | 88 | 96 | ||||||||||||
Total cost of natural gas
|
$ | 179 | $ | 132 | $ | 525 | $ | 475 | ||||||||
Average cost per Mcf (1) of natural gas sold
|
$ | 3.43 | $ | 1.70 | $ | 3.08 | $ | 2.54 | ||||||||
Total natural gas sold (in millions of Mcf)
|
40 | 50 | 142 | 149 | ||||||||||||
(1) One thousand cubic feet
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Pipeline-related expenses (1) (2)
|
$ | 74 | $ | 128 | $ | 136 | $ | 232 | ||||||||
Third-party claims
|
- | 80 | - | 80 | ||||||||||||
Insurance recoveries
|
(45 | ) | (25 | ) | (45 | ) | (36 | ) | ||||||||
Contribution to City of San Bruno
|
- | - | - | 70 | ||||||||||||
Total natural gas matters
|
$ | 29 | $ | 183 | $ | 91 | $ | 346 | ||||||||
|
(1) For the three and six months ended June 30, 2013, unrecoverable pipeline-related expenses included $22 million and $47 million, respectively, for work performed under the Utility’s pipeline safety enhancement plan.
|
|
(2) The decrease in unrecoverable pipeline-related expenses reflects amounts that were authorized for recovery in the CPUC’s December 2012 decision (as described above) as well as lower legal and other expenses in 2013.
|
·
|
7 million shares were sold in an underwritten public offering for cash proceeds of $300 million, net of fees and commissions;
|
·
|
4 million shares that were issued for cash proceeds of $149 million under the PG&E Corporation 401(k) plan, the Dividend Reinvestment and Stock Purchase Plan, and share-based compensation plans; and
|
·
|
3 million shares were sold for cash proceeds of $113 million, net of commissions paid of $1 million, under the equity distribution agreements.
|
Letters of
|
|||||||||||||||||||
Termination
|
Facility
|
Credit
|
Commercial
|
Facility
|
|||||||||||||||
Date
|
Limit
|
Outstanding
|
Borrowings
|
Paper
|
Availability
|
||||||||||||||
(in millions)
|
|||||||||||||||||||
PG&E Corporation
|
April 2018
|
$
|
300
|
(1)
|
$
|
-
|
$
|
260
|
$
|
-
|
$
|
40
|
|||||||
Utility
|
April 2018
|
3,000
|
(2)
|
91
|
-
|
692
|
(3)
|
2,217
|
(3)
|
||||||||||
Total revolving
|
|||||||||||||||||||
credit facilities
|
$
|
3,300
|
$
|
91
|
$
|
260
|
$
|
692
|
$
|
2,257
|
|||||||||
2013
|
2012
|
|||||||
Net income
|
$ | 566 | $ | 458 | ||||
Adjustments to reconcile net income to net cash provided by operating
|
||||||||
activities:
|
||||||||
Depreciation, amortization, and decommissioning
|
1,019 | 1,190 | ||||||
Allowance for equity funds used during construction
|
(52 | ) | (53 | ) | ||||
Deferred income taxes and tax credits, net
|
337 | 242 | ||||||
Other
|
126 | 108 | ||||||
Net effect of changes in operating assets and liabilities
|
(532 | ) | 229 | |||||
Net cash provided by operating activities
|
$ | 1,464 | $ | 2,174 |
·
|
the amount of cash internally generated through normal business operations;
|
·
|
the timing and amount of tax payments, tax refunds, net collateral payments, and interest payments;
|
·
|
the timing and amount of payments to third parties in connection with the San Bruno accident and related insurance recoveries;
|
·
|
the timing and amount of fines or penalties that may be imposed, as well as any costs associated with remedial actions the CPUC may order the Utility to perform;
|
·
|
the anticipated higher operating and maintenance costs associated with the Utility’s natural gas and electric operations (see “Operating and Maintenance” above and “Natural Gas Matters” below); and
|
·
|
the timing of the resolution of the Chapter 11 disputed claims and the amount of interest on these claims that the Utility will be required to pay (see Note 9 of the Notes to the Condensed Consolidated Financial Statements).
|
2013
|
2012
|
|||||||
Capital expenditures
|
$ | (2,521 | ) | $ | (2,219 | ) | ||
Decrease (increase) in restricted cash
|
25 | (1 | ) | |||||
Proceeds from sales and maturities of nuclear decommissioning trust investments
|
795 | 666 | ||||||
Purchases of nuclear decommissioning trust investments
|
(786 | ) | (716 | ) | ||||
Other
|
8 | 11 | ||||||
Net cash used in investing activities
|
$ | (2,479 | ) | $ | (2,259 | ) |
2013
|
2012
|
|||||||
Net issuance (repayments) of commercial paper, net of discount of $1 and $2
|
||||||||
at respective dates
|
321 | (566 | ) | |||||
Proceeds from issuance of long-term debt, net of premium, discount, and issuance
|
||||||||
costs of $8 and $6 at respective dates
|
742 | 394 | ||||||
Long-term debt matured or repurchased
|
(461 | ) | (50 | ) | ||||
Energy recovery bonds matured
|
- | (200 | ) | |||||
Preferred stock dividends paid
|
(7 | ) | (7 | ) | ||||
Common stock dividends paid
|
(358 | ) | (358 | ) | ||||
Equity contribution
|
665 | 565 | ||||||
Other
|
(20 | ) | 48 | |||||
Net cash provided by (used in) financing activities
|
$ | 882 | $ | (174 | ) |
Cumulative
|
Six Months Ended
|
Cumulative
|
||||||||||
(in millions)
|
December 31, 2012
|
June 30, 2013
|
June 30, 2013
|
|||||||||
Pipeline-related expenses(1) (2)
|
$ | 1,023 | $ | 136 | $ | 1,159 | ||||||
Disallowed capital expenditures(3)
|
353 | - | 353 | |||||||||
Accrued penalties(4)
|
217 | - | 217 | |||||||||
Third-party claims(5)
|
455 | - | 455 | |||||||||
Insurance recoveries(5)
|
(284 | ) | (45 | ) | (329 | ) | ||||||
Contribution to City of San Bruno
|
70 | - | 70 | |||||||||
Total natural gas matters
|
$ | 1,834 | $ | 91 | $ | 1,925 | ||||||
(1)
|
Cumulative costs through December 31, 2012 include PSEP-related expenses of approximately $600 million and other gas safety-related work of $185 million
|
(2)
|
The Utility forecasts that total pipeline-related expenses for 2013 will range from $400 million to $500 million.
|
(3)
|
In 2012, the Utility recorded a charge for plan-related capital expenditures incurred, corresponding to expenditures that are forecasted to exceed the CPUC’s authorized levels or that were specifically disallowed.
|
(4)
|
See “Pending CPUC Investigations and Enforcement Matters” below. Amount includes $17 million penalty that was paid in 2012.
|
(5)
|
See “Third-Party Claims” below.
|
·
|
$1,251 million for disallowed PSEP expenses and capital costs, and;
|
·
|
$964 million for other gas safety-related work (including pipeline integrity management and rights-of-way maintenance)
|
Increase (Decrease) to Revenue Requirements
|
Difference Between
|
|||||||||||
(in millions)
|
Utility's Forecast (1)
|
DRA's Recommendation
|
Utility and DRA
|
|||||||||
2014
|
$ | 1,207 | $ | (162 | ) | $ | (1,369 | ) | ||||
2015 attrition
|
475 | 168 | (307 | ) | ||||||||
2016 attrition
|
485 | 159 | (326 | ) | ||||||||
The ultimate outcome of the pending investigations related to the Utility’s natural gas operations and the San Bruno accident may require the Utility to incur material charges for non-recoverable costs associated with its natural gas operations as well as for civil or criminal fines and penalties. Such charges could negatively affect the availability, amount, and timing of future debt and equity issuances.
|
3.1 |
Amended Bylaws of PG&E Corporation effective June 19, 2013
|
||
3.2 |
Amended Bylaws of Pacific Gas and Electric Company effective June 19, 2013
|
||
4.1 |
Nineteenth Supplemental Indenture dated as of June 14, 2013 relating to the issuance of $375,000,000 aggregate principal amount of Pacific Gas and Electric Company’s 3.25% Senior Notes due June 15, 2023 and $375,000,000 aggregate principal amount of its 4.60% Senior Notes due June 15, 2043 (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 14, 2013 (File No. 1-2348), Exhibit 4.1)
|
||
*10.1 |
Form of Restricted Stock Unit Agreement for 2013 grants to directors under the PG&E Corporation 2006 Long-Term Incentive Plan
|
||
12.1 |
Computation of Ratios of Earnings to Fixed Charges for Pacific Gas and Electric Company
|
||
12.2 |
Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends for Pacific Gas and Electric Company
|
||
12.3 |
Computation of Ratios of Earnings to Fixed Charges for PG&E Corporation
|
||
31.1 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of PG&E Corporation required by Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
31.2 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of Pacific Gas and Electric Company required by Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
**32.1 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of PG&E Corporation required by Section 906 of the Sarbanes-Oxley
Act of 2002
|
||
**32.2 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of Pacific Gas and Electric Company required by Section 906 of the
Sarbanes-Oxley Act of 2002
|
||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
*
|
Management contract or compensatory agreement.
|
**
|
Pursuant to Item 601(b)(32) of SEC Regulation S-K, these exhibits are furnished rather than filed with this report.
|
PG&E CORPORATION
|
KENT M. HARVEY
|
Kent M. Harvey
Senior Vice President and Chief Financial Officer
(duly authorized officer and principal financial officer)
|
PACIFIC GAS AND ELECTRIC COMPANY
|
DINYAR B. MISTRY
|
Dinyar B. Mistry
Vice President, Chief Financial Officer and Controller
(duly authorized officer and principal financial officer)
|
3.1 |
Amended Bylaws of PG&E Corporation effective June 19, 2013
|
||
3.2 |
Amended Bylaws of Pacific Gas and Electric Company effective June 19, 2013
|
||
4.1 |
Nineteenth Supplemental Indenture dated as of June 14, 2013 relating to the issuance of $375,000,000 aggregate principal amount of Pacific Gas and Electric Company’s 3.25% Senior Notes due June 15, 2023 and $375,000,000 aggregate principal amount of its 4.60% Senior Notes due June 15, 2043 (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 14, 2013 (File No. 1-2348), Exhibit 4.1)
|
||
*10.1 |
Form of Restricted Stock Unit Agreement for 2013 grants to directors under the PG&E Corporation 2006 Long-Term Incentive Plan
|
||
12.1 |
Computation of Ratios of Earnings to Fixed Charges for Pacific Gas and Electric Company
|
||
12.2 |
Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends for Pacific Gas and Electric Company
|
||
12.3 |
Computation of Ratios of Earnings to Fixed Charges for PG&E Corporation
|
||
31.1 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of PG&E Corporation required by Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
31.2 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of Pacific Gas and Electric Company required by Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
**32.1 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of PG&E Corporation required by Section 906 of the Sarbanes-Oxley
Act of 2002
|
||
**32.2 |
Certifications of the Chief Executive Officer and the Chief Financial Officer of Pacific Gas and Electric Company required by Section 906 of the
Sarbanes-Oxley Act of 2002
|
||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
The LTIP and Other Agreements
|
This Agreement constitutes the entire understanding between you and PG&E Corporation regarding the Restricted Stock Units, subject to the terms of the LTIP. Any prior agreements, commitments, or negotiations are superseded. In the event of any conflict or inconsistency between the provisions of this Agreement and the LTIP, the LTIP shall govern. Capitalized terms that are not defined in this Agreement are defined in the LTIP.
|
Grant of Restricted Stock Units
|
PG&E Corporation grants you the number of Restricted Stock Units shown on the cover sheet of this Agreement. The Restricted Stock Units are subject to the terms and conditions of this Agreement and the LTIP.
|
Vesting of Restricted Stock Units
|
In general, provided that you have not had a Separation from Service, your Restricted Stock Units will vest one year from the Date of Grant shown on the cover sheet to this Agreement (the “Normal Vesting Date”). As set forth elsewhere in this Agreement, the Restricted Stock Units may vest earlier upon the occurrence of certain events.
|
Dividends
|
Your Restricted Stock Unit account will be credited quarterly on each dividend payment date with additional Restricted Stock Units (including fractions computed to three decimal places), determined by dividing (1) the amount of cash dividends paid on the number of shares of PG&E Corporation Common Stock represented by the Restricted Stock Units previously credited to your Restricted Stock Unit account by (2) the Fair Market Value of a share of PG&E Corporation Stock on the dividend payment date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time as the Restricted Stock Units covered by this Agreement.
|
Settlement
|
Vested Restricted Stock Units will be settled in an equal number of shares of PG&E Corporation common stock (a “Share”), rounded down to the nearest whole share. PG&E Corporation shall issue shares in settlement of vested Restricted Stock Units upon the earliest of (1) the Normal Vesting Date, (2) your Disability (as defined under Section 409A of the Code), (3) your death, (4) a Section 409A Change in Control, or (5) your Separation from Service following a Change in Control that does not qualify as a Section 409A Change in Control. However, if you previously made a timely, valid deferral election to receive shares in settlement of vested Restricted Stock Units after the Normal Vesting Date (commencing in January of a year following the Normal Vesting Date), then settlement will be according to the terms of your election and the LTIP, unless settled earlier in a lump sum as set forth in the LTIP upon occurrence of any of the events listed in sections (2) – (5) above. Further, if pursuant to any such deferral election you begin receiving any annual installments, then upon the subsequent occurrence of any of the events listed in sections (2) – (5) above any unpaid installments will be settled in a lump sum upon occurrence of the event, except to the extent that such acceleration would result in taxation under Section 409A of the Code.
|
Separation of Service
|
If you have a Separation from Service, whether voluntarily or involuntarily, before the Normal Vesting Date, all Restricted Stock Units subject to this Agreement that have not vested on account of your death, Disability (within the meaning of Section 409A of the Code) or a Change in Control will be automatically cancelled and forfeited, provided, however, that if you Separate from Service due to a pending Disability determination, forfeiture shall not occur until a finding that such Disability has not occurred.
|
Death/Disability
|
In the event of your Disability (as defined in Section 409A of the Code) or death all Restricted Stock Units credited to your account under this Agreement will immediately become fully vested and be settled in accordance with the settlement provisions described above.
|
Change in Control
|
In the event of a Change in Control, all Restricted Stock Units credited to your account under this Agreement will immediately become fully vested and be settled in accordance with the settlement provisions described above.
|
Delay
|
PG&E Corporation shall delay the issuance of any shares of common stock to the extent it is necessary to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly traded companies); in such event, any shares of common stock to which you would otherwise be entitled during the six (6) month period following the date of your Separation from Service (or shorter period ending on the date of your death following such Separation from Service) will instead be issued on the first business day following the expiration of the applicable delay period.
|
Withholding Taxes
|
PG&E Corporation generally will not be required to withhold taxes on taxable income recognized by you upon settlement of your Restricted Stock Units. However, any taxes that are required to be withheld will be payable by you in cash, by check, or through deductions from your compensation. Also, the Board may, in its discretion and subject to such restrictions as the Board may impose, permit you to satisfy such tax withholding obligations by electing to have PG&E Corporation withhold otherwise deliverable Shares having a fair market value equal to the amount that would be required to be withheld.
|
Voting and Other Rights
|
You shall not have voting rights with respect to the Restricted Stock Units until the date the underlying shares are issued (as evidenced by appropriate entry on the books of PG&E Corporation or its duly authorized transfer agent).
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of California.
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
Year Ended December 31,
|
||||||||||||||||||||||||||
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||||||||
Earnings:
|
||||||||||||||||||||||||||||
Net income
|
$ | 329 | $ | 566 | $ | 811 | $ | 845 | $ | 1,121 | $ | 1,250 | $ | 1,199 | ||||||||||||||
Income taxes provision
|
160 | 281 | 298 | 480 | 574 | 482 | 488 | |||||||||||||||||||||
Fixed charges
|
216 | 443 | 891 | 880 | 799 | 817 | 860 | |||||||||||||||||||||
Total earnings
|
$ | 705 | $ | 1,290 | $ | 2,000 | $ | 2,205 | $ | 2,494 | $ | 2,549 | $ | 2,547 | ||||||||||||||
Fixed charges:
|
||||||||||||||||||||||||||||
Interest on short-term borrowings and long-term debt, net
|
$ | 202 | $ | 414 | $ | 834 | $ | 824 | $ | 731 | $ | 754 | $ | 794 | ||||||||||||||
Interest on capital leases
|
2 | 4 | 9 | 16 | 18 | 19 | 22 | |||||||||||||||||||||
AFUDC debt
|
12 | 25 | 48 | 40 | 50 | 44 | 44 | |||||||||||||||||||||
Total fixed charges
|
$ | 216 | $ | 443 | $ | 891 | $ | 880 | $ | 799 | $ | 817 | $ | 860 | ||||||||||||||
Ratios of earnings to
fixed charges
|
3.26 | 2.91 | 2.24 | 2.51 | 3.12 | 3.12 | 2.96 |
Note:
For the purpose of computing Pacific Gas and Electric Company’s ratios of earnings to fixed charges, “earnings” represent net income adjusted for the income or loss from equity investees of less than 100% owned affiliates, equity in undistributed income or losses of less than 50% owned affiliates, income taxes and fixed charges (excluding capitalized interest). “Fixed charges” include interest on long-term debt and short-term borrowings (including a representative portion of rental expense), amortization of bond premium, discount and expense, interest on capital leases, AFUDC debt, and earnings required to cover the preferred stock dividend requirements. Fixed charges exclude interest on tax liabilities.
|
Three Months Ended June 30,
|
Six
Months Ended June 30,
|
Year Ended December 31,
|
||||||||||||||||||||||||||
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||||||||
Earnings:
|
||||||||||||||||||||||||||||
Net income
|
$ | 329 | $ | 566 | $ | 811 | $ | 845 | $ | 1,121 | $ | 1,250 | $ | 1,199 | ||||||||||||||
Income taxes provision
|
160 | 281 | 298 | 480 | 574 | 482 | 488 | |||||||||||||||||||||
Fixed charges
|
216 | 443 | 891 | 880 | 799 | 817 | 860 | |||||||||||||||||||||
Total earnings
|
$ | 705 | $ | 1,290 | $ | 2,000 | $ | 2,205 | $ | 2,494 | $ | 2,549 | $ | 2,547 | ||||||||||||||
Fixed charges:
|
||||||||||||||||||||||||||||
Interest on short-term borrowings
and long-term debt, net
|
$ | 202 | $ | 414 | $ | 834 | $ | 824 | $ | 731 | $ | 754 | $ | 794 | ||||||||||||||
Interest on capital leases
|
2 | 4 | 9 | 16 | 18 | 19 | 22 | |||||||||||||||||||||
AFUDC debt
|
12 | 25 | 48 | 40 | 50 | 44 | 44 | |||||||||||||||||||||
Total fixed charges
|
$ | 216 | $ | 443 | $ | 891 | $ | 880 | $ | 799 | $ | 817 | $ | 860 | ||||||||||||||
Preferred stock dividends:
|
||||||||||||||||||||||||||||
Tax deductible dividends
|
$ | 2 | $ | 4 | $ | 9 | $ | 9 | $ | 9 | $ | 9 | $ | 9 | ||||||||||||||
Pre-tax earnings required to cover
non-tax deductible preferred stock
dividend requirements
|
2 | 4 | 7 | 8 | 7 | 7 | 7 | |||||||||||||||||||||
Total preferred stock dividends
|
$ | 4 | $ | 8 | $ | 16 | $ | 17 | $ | 16 | $ | 16 | $ | 16 | ||||||||||||||
Total combined fixed charges
and preferred stock dividends
|
$ | 220 | $ | 451 | $ | 907 | $ | 897 | $ | 815 | $ | 833 | $ | 876 | ||||||||||||||
Ratios of earnings to combined fixed charges and preferred stock dividends
|
3.20 | 2.86 | 2.21 | 2.46 | 3.06 | 3.06 | 2.91 |
Three Months
|
Six
Months
|
|||||||||||||||||||||||||||
Ended
|
Ended
|
|||||||||||||||||||||||||||
June 30,
|
June 30,
|
Year Ended December 31,
|
||||||||||||||||||||||||||
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||||||||
Earnings:
|
||||||||||||||||||||||||||||
Incoming from continuing operations
|
$ | 332 | $ | 574 | $ | 830 | $ | 858 | $ | 1,113 | $ | 1,234 | $ | 1,198 | ||||||||||||||
Income taxes provision
|
153 | 267 | 237 | 440 | 547 | 460 | 425 | |||||||||||||||||||||
Fixed charges
|
227 | 464 | 931 | 919 | 850 | 877 | 907 | |||||||||||||||||||||
Pre-tax earnings required to cover
the preferred stock dividend of consolidated subsidiaries
|
(5 | ) | (9 | ) | (15 | ) | (17 | ) | (16 | ) | (16 | ) | (16 | ) | ||||||||||||||
Total earnings
|
$ | 707 | $ | 1,296 | $ | 1,983 | $ | 2,200 | $ | 2,494 | $ | 2,555 | $ | 2,514 | ||||||||||||||
Fixed charges:
|
||||||||||||||||||||||||||||
Interest on short-term borrowings and long-term debt, net
|
$ | 208 | $ | 426 | $ | 859 | $ | 846 | $ | 766 | $ | 798 | $ | 825 | ||||||||||||||
Interest on capital leases
|
2 | 4 | 9 | 16 | 18 | 19 | 22 | |||||||||||||||||||||
AFUDC debt
|
12 | 25 | 48 | 40 | 50 | 44 | 44 | |||||||||||||||||||||
Pre-tax earnings required to cover the preferred stock dividend of consolidated subsidiaries
|
5 | 9 | 15 | 17 | 16 | 16 | 16 | |||||||||||||||||||||
Total fixed charges
|
$ | 227 | $ | 464 | $ | 931 | $ | 919 | $ | 850 | $ | 877 | $ | 907 | ||||||||||||||
Ratios of earnings to
fixed charges
|
3.11 | 2.79 | 2.13 | 2.39 | 2.93 | 2.91 | 2.77 | |||||||||||||||||||||
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of PG&E Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: July 31, 2013
|
ANTHONY F. EARLEY, JR.
|
Anthony F. Earley, Jr.
|
|
Chairman, Chief Executive Officer, and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of PG&E Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: July 31, 2013
|
KENT M.HARVEY
|
Kent M. Harvey
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of Pacific Gas and Electric Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: July 31, 2013
|
CHRISTOPHER P. JOHNS
|
Christopher P. Johns
|
|
President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of Pacific Gas and Electric Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: July 31, 2013
|
DINYAR B. MISTRY
|
Dinyar B. Mistry
|
|
Vice President, Chief Financial Officer and Controller
|
(1)
|
the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PG&E Corporation.
|
|
|
|
ANTHONY F. EARLEY, JR.
|
|
ANTHONY F. EARLEY, JR.
|
|
Chairman, Chief Executive Officer and President
|
|
(1)
|
the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PG&E Corporation.
|
|
KENT M. HARVEY
|
|
KENT M. HARVEY
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
|
(1)
|
the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company.
|
CHRISTOPHER P. JOHNS
|
|
CHRISTOPHER P. JOHNS
|
|
|
President
|
(1)
|
the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company.
|
DINYAR B. MISTRY
|
|
DINYAR B. MISTRY
|
|
Vice President, Chief Financial Officer and Controller
|
|
Commitments And Contingencies
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | NOTE 10: COMMITMENTS AND CONTINGENCIES
PG&E Corporation and the Utility have substantial financial commitments in connection with agreements entered into to support the Utility's operating activities. PG&E Corporation and the Utility also have significant contingencies arising from their operations, including contingencies related to regulatory proceedings, investigations, nuclear liability, legal matters and environmental remediation.
Commitments
In the ordinary course of business, the Utility enters into various agreements to purchase power and electric capacity; natural gas supply, transportation, and storage; nuclear fuel supply and services; and various other commitments. The Utility disclosed its commitments at December 31, 2012 in Note 15 of the Notes to the Consolidated Financial Statements in the 2012 Annual Report. During the six months ended June 30, 2013, the Utility entered into seven renewable energy power purchase agreements, resulting in a total commitment of $1.1 billion over the next five to twenty-five years. These agreements have been approved by the CPUC and have completed major milestones with respect to construction.
Contingencies
Legal and Regulatory Contingencies
PG&E Corporation and the Utility are subject to various laws and regulations and, in the normal course of business, are named as parties in a number of claims and lawsuits. In addition, penalties may be incurred for failure to comply with federal, state, or local laws and regulations. PG&E Corporation and the Utility record a provision for a loss contingency when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. PG&E Corporation and the Utility evaluate the range of reasonably estimated losses and record a provision based on the lower end of the range, unless an amount within the range is a better estimate than any other amount. The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. PG&E Corporation's and the Utility's policy is to exclude anticipated legal costs.
Accruals for legal and regulatory contingencies (excluding amounts related to natural gas matters below) totaled $31 million at June 30, 2013 and $34 million at December 31, 2012. These amounts are included in current liabilities - other in the Condensed Consolidated Balance Sheets. Except as discussed below, PG&E Corporation and the Utility do not believe that losses associated with legal and regulatory contingencies would have a material impact on their financial condition, results of operations, or cash flows.
Natural Gas Matters
On September 9, 2010, a natural gas transmission pipeline owned and operated by the Utility ruptured in San Bruno, California. The ensuing explosion and fire resulted in the deaths of eight people, numerous personal injuries, and extensive property damage. Following the San Bruno accident, various regulatory proceedings, investigations, and lawsuits were commenced. The NTSB, an independent review panel appointed by the CPUC, and the SED completed investigations with respect to the San Bruno accident, placing the blame primarily on the Utility. As part of a rulemaking proceeding to consider the adoption of new natural gas safety regulations, the CPUC ordered all natural gas operators in California to submit proposed plans to modernize and upgrade their natural gas transmission systems as well as associated cost forecast and ratemaking proposals.
CPUC Gas Safety Rulemaking Proceeding
On December 28, 2012, the CPUC issued a decision that approved most of the Utility's proposed pipeline safety enhancement plan, but disallowed the Utility's request for rate recovery of a significant portion of costs the Utility forecasted it would incur over the first phase of the plan through 2014. The CPUC decision limited the Utility's recovery of capital costs to $1.0 billion of the total $1.4 billion requested and limited recovery of expenses to $165 million of the total $751 million requested. Disallowed costs are charged to net income in the period incurred. The CPUC stated that the Utility's recovery of the amounts authorized in its decision are subject to refund, noting the possibility that further ratemaking adjustments may be made in the pending CPUC investigations discussed below. In addition, the Utility is required to file an update to its plan on or before October 29, 2013 regarding the results of its pipeline records search and validation work, which may result in further adjustments to the Utility's authorized revenue requirements.
Pending CPUC Investigations and Enforcement Matters
There are three CPUC investigative enforcement proceedings pending against the Utility that relate to (1) the Utility's safety recordkeeping for its natural gas transmission system, (2) the Utility's operation of its natural gas transmission pipeline system in or near locations of higher population density, and (3) the Utility's pipeline installation, integrity management, recordkeeping and other operational practices, and other events or courses of conduct, that could have led to or contributed to the San Bruno accident. Evidentiary hearings and briefing on the issue of alleged violations have been completed in each of these investigations. (See Note 15 of the Notes to the Consolidated Financial Statements of the 2012 Annual Report for additional information regarding each investigative proceeding.) The CPUC has stated that it is prepared to impose significant penalties on the Utility if the CPUC determines that the Utility violated applicable laws, rules, and orders.
On July 16, 2013, the SED filed an amended reply brief in these proceedings to recommend that the CPUC impose what the SED characterized as a penalty of $2.25 billion on the Utility, allocated as follows: (1) $300 million as a fine to the State General Fund, (2) $435 million for a portion of PSEP costs that were previously disallowed by the CPUC and funded by shareholders, and (3) $1.515 billion to perform PSEP work that was previously approved by the CPUC, implement operational remedies, and for future PSEP costs. The SED's recommendation superseded the SED's prior briefs of May 6, 2013 and June 5, 2013 in which it recommended that the entirety of the penalty be in the form of shareholder-funded safety investments in the Utility's natural gas transmission and distribution system and none should be paid as a fine to the State General Fund.
Briefs also were filed during the second quarter of 2013 by the City of San Bruno, TURN, the CPUC's DRA, and the City and County of San Francisco. All parties recommend total penalties of at least $2.25 billion, including fines payable to the State General Fund of differing amounts. The City of San Bruno also recommended that the Utility provide $150 million for a Peninsula Emergency Response Consortium, spend $100 million ($5 million per year for 20 years) to fund an independent advocacy trust (the California Pipeline Safety Trust), and provide funding for an independent monitor to oversee the implementation of the recommended remedial operational measures. TURN also recommended that the Utility bear expenses of $50 million to implement remedial measures and to pay for an independent monitor.
On July 18, 2013, the Utility filed a request to re-open the evidentiary record and extend the procedural schedule in the investigations in order to allow the Utility to present additional evidence to respond to the SED's latest penalty recommendation. As permitted by the ALJs, the SED and other parties responded to the Utility on July 26, 2013 objecting to the request. Although the ALJs have not yet ruled on the Utility's request, on July 30, 2013, the ALJs issued a ruling requesting the Utility to provide answers to questions about its financing plans, how it intends to treat fines or disallowed costs, for regulatory accounting and tax purposes, and the impact on rates. The Utility's response is due on August 14, 2013. The ALJs have asked all parties to file comments to address the impact that fines and disallowances would have on the Utility's ability to raise capital and otherwise remain financially viable, including the tax treatment of amounts disallowed. The parties' comments are due on September 13, 2013 and reply comments are due on September 23, 2013. The Utility is uncertain when the ALJs will act on the Utility's request to re-open the record.
After the briefing process has been completed, it is anticipated that the CPUC ALJs will issue one or more presiding officer's decisions to address the violations that they have determined the Utility committed and to impose penalties. Based on the CPUC's rules, the presiding officer's decisions would become the final decisions of the CPUC 30 days after issuance unless the Utility or another party filed an appeal with the CPUC, or a CPUC commissioner requested that the CPUC review the decision, within such time. If an appeal or review request were filed, other parties would have 15 days to provide comments but the CPUC could act before considering any comments.
As discussed above, various parties have recommended that the CPUC impose total penalties on the Utility of at least $2.25 billion, including fines payable to the State General Fund of differing amounts. At June 30, 2013 and December 31, 2012, PG&E Corporation's and the Utility's financial statements included an accrual of $200 million for the minimum amount of fines deemed probable that the Utility will pay to the State General Fund. The Utility is unable to make a better estimate due to the many variables that could affect the final outcome of these pending investigations. These variables include how the total number and duration of violations will be determined; how the SED's and other parties' recommendations on the amount and form of penalties will be considered; whether and how the financial impact of unrecoverable costs the Utility has incurred, and will continue to incur, to improve the safety and reliability of its pipeline system, will be considered; whether the Utility's costs to perform any required remedial actions will be considered; and how the CPUC responds to public pressure. Future changes in these estimates or the assumptions on which they are based could have a material impact on PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows. The CPUC may impose fines on the Utility that are materially higher than the amount accrued and disallow PSEP costs that were previously authorized for recovery. Disallowed costs would be charged to net income in the period incurred. At June 30, 2013, capitalized PSEP costs of approximately $200 million are included in Property, Plant, and Equipment on the Condensed Consolidated Balance Sheets. A final decision on these investigations could be issued before the end of 2013.
Other Potential Enforcement Matters
As of June 30, 2013, the Utility has submitted 55 self-reports with the SED, plus additional follow-up reports, to provide notice about self-identified and self-corrected violations of certain state and federal regulations related to the safety of natural gas facilities and natural gas operating practices. The SED is authorized to issue citations and impose penalties on the Utility associated with these or future reports that the Utility may file. The SED may consider the same factors as the CPUC in exercising its discretion to impose penalties, except that if a penalty is assessed, the SED is required to impose the maximum daily statutory penalty per violation. The SED has scheduled a workshop in early August to elicit feedback from the California gas utilities and other stakeholders on the gas citation program and to consider future changes to the program. PG&E Corporation and the Utility are uncertain whether the SED will issue citations and impose penalties on the Utility based on the self-reports the Utility has already submitted.
In 2012, the Utility also notified the CPUC and the SED that the Utility is undertaking a system-wide effort to survey its transmission pipelines and identify and remove encroachments from pipeline rights-of-way over a multi-year period. PG&E Corporation and the Utility are uncertain whether this matter will result in the imposition of penalties on the Utility.
Criminal Investigation
Since June 2011, the U.S. Department of Justice, the California Attorney General's Office, and the San Mateo County District Attorney's Office have been conducting an investigation of the San Bruno accident and have indicated that the Utility is a target of the investigation. The Utility is cooperating with the investigation. PG&E Corporation and the Utility believe that criminal charges, including charges based on claims that the Utility violated the federal Pipeline Safety Act, may be brought against PG&E Corporation or the Utility. It is uncertain whether any criminal charges will be brought against any of PG&E Corporation's or the Utility's current or former employees. A criminal charge or finding would further harm the Utility's reputation. PG&E Corporation and the Utility are unable to estimate the amount or range of reasonably possible losses associated with any civil or criminal penalties that could be imposed and such penalties could have a material impact on PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows. In addition, the Utility's business or operations could be negatively affected by any remedial measures imposed on the Utility, such as the appointment of an independent monitor.
Third-Party Claims
Since the San Bruno accident, approximately 160 lawsuits involving third-party claims for personal injury and property damage, including two class action lawsuits, have been filed against PG&E Corporation and the Utility in connection with the accident on behalf of approximately 500 plaintiffs. These lawsuits seek compensation for personal injury and property damage, and other relief, including punitive damages. All cases were coordinated and assigned to one judge in the San Mateo County Superior Court. The Utility has entered into settlement agreements to resolve the claims of approximately 150 plaintiffs and other claimants. In the second quarter of 2013, all class action allegations were dismissed by the court.
As reflected in the table below, the Utility has recorded cumulative charges of $455 million for estimated third-party claims, including personal injury, property damage, damage to infrastructure, and other damage claims. At June 30, 2013, the Utility has made cumulative payments of $388 million for settlements. The Utility estimates it is reasonably possible that it may incur as much as an additional $145 million for unresolved claims, for a total possible loss of $600 million since the San Bruno accident. The Utility and most of the plaintiffs with unresolved claims are engaged in settlement discussions with the assistance of mediators. Settlement discussions with some plaintiffs may conclude in the third quarter of 2013. PG&E Corporation and the Utility are unable to estimate the amount or range of reasonably possible losses associated with punitive damages, if any, related to these matters.
The following table presents changes in the third-party claims liability since the San Bruno accident in September 2010; the balance is included in other current liabilities in PG&E Corporation's and the Utility's Condensed Consolidated Balance Sheets:
The Utility has liability insurance from various insurers who provide coverage at different policy limits that are triggered in sequential order or layers. Generally, as the policy limit for a layer is exhausted the next layer of insurance becomes available. The aggregate amount of insurance coverage for third-party liability attributable to the San Bruno accident is approximately $992 million in excess of a $10 million deductible. Through June 30, 2013, the Utility has recognized cumulative insurance recoveries of $329 million for third-party claims and related legal expenses. (The Utility has incurred cumulative legal expenses of $81 million in addition to the $455 million charge above). Insurance recoveries for the three and six months ended June 30, 2013 were $45 million. These amounts were recorded as a reduction to operating and maintenance expense in PG&E Corporation's and the Utility's Condensed Consolidated Statements of Income. Although the Utility believes that a significant portion of costs incurred for third-party claims relating to the San Bruno accident will ultimately be recovered through its insurance, it is unable to predict the amount and timing of additional insurance recoveries.
Class Action Complaint
On August 23, 2012, a complaint was filed in the San Francisco Superior Court against PG&E Corporation and the Utility (and other unnamed defendants) by individuals who seek certification of a class consisting of all California residents who were customers of the Utility between 1997 and 2010, with certain exceptions. The plaintiffs allege that the Utility collected more than $100 million in customer rates from 1997 through 2010 for the purpose of various safety measures and operations projects but instead used the funds for general corporate purposes such as executive compensation and bonuses. The plaintiffs allege that PG&E Corporation and the Utility engaged in unfair business practices in violation of California state law. The plaintiffs seek restitution and disgorgement, as well as compensatory and punitive damages.
PG&E Corporation and the Utility contest the plaintiffs' allegations. On May 23, 2013, the court granted PG&E Corporation's and the Utility's request to dismiss the complaint on the grounds that the CPUC has exclusive jurisdiction to adjudicate the issues raised by the plaintiffs' allegations. PG&E Corporation and the Utility are unable to estimate the amount or range of reasonably possible losses, if any, that may be incurred in connection with this matter.
Nuclear Insurance
The Utility is a member of NEIL, which is a mutual insurer owned by utilities with nuclear facilities. NEIL provides insurance coverage for property damages and business interruption losses incurred by the Utility if a nuclear event were to occur at the Utility's two nuclear generating units at Diablo Canyon and the retired Humboldt Bay Unit 3. NEIL provides property damage and business interruption coverage of up to $3.2 billion per nuclear incident and $1.8 billion per non-nuclear incident for Diablo Canyon. Humboldt Bay Unit 3 has up to $131 million of coverage for nuclear and non-nuclear property damages. NEIL also provides coverage for damages caused by acts of terrorism at nuclear power plants.
Under the Price-Anderson Act, public liability claims that arise from nuclear incidents that occur at Diablo Canyon, and that occur during the transportation of material to and from Diablo Canyon are limited to $12.6 billion. The Utility purchased the maximum available public liability insurance of $375 million for Diablo Canyon. The balance is provided under a loss-sharing program among utilities owning nuclear reactors. The Price-Anderson Act does not apply to claims that arise from nuclear incidents that occur during shipping of nuclear material from the nuclear fuel enricher to a fuel fabricator or that occur at the fuel fabricator's facility. The Utility has a separate policy that provides coverage for claims arising from some of these incidents up to a maximum of $375 million per incident. In addition, the Utility has $53 million of liability insurance for Humboldt Bay Unit 3 and has a $500 million indemnification from the NRC for public liability arising from nuclear incidents, covering liabilities in excess of the liability insurance. (See Note 15 of the Notes to the Consolidated Financial Statements of the 2012 Annual Report for additional information on the Utility's insurance coverage and premiums.)
Environmental Remediation Contingencies
The Utility has been, and may be required to pay for environmental remediation at sites where it has been, or may be, a potentially responsible party under federal and state environmental laws. These sites include former manufactured gas plant sites, power plant sites, gas gathering sites, sites where natural gas compressor stations are located, and sites used by the Utility for the storage, recycling, or disposal of potentially hazardous substances. Under federal and California laws, the Utility may be responsible for remediation of hazardous substances even if it did not deposit those substances on the site.
Given the complexities of the legal and regulatory environment and the inherent uncertainties involved in the early stages of a remediation project, the process for estimating remediation liabilities is subjective and requires significant judgment. The Utility records an environmental remediation liability when site assessments indicate that remediation is probable and the Utility can reasonably estimate the loss or a range of probable amounts. The Utility records an environmental remediation liability based on the lower end of the range of estimated probable costs, unless an amount within the range is a better estimate than any other amount. Amounts recorded are not discounted to their present value.
The following table presents the changes in the environmental remediation liability:
The environmental remediation liability is composed of the following:
(1) See Natural Gas Compressor Sites below.
At June 30, 2013, the Utility expected to recover $587 million of its environmental remediation liability through various ratemaking mechanisms authorized by the CPUC. One of these mechanisms allows the Utility rate recovery for 90% of its hazardous substance remediation costs for certain approved sites (including the Topock site) without a reasonableness review. The Utility may incur environmental remediation costs that it does not seek to recover in rates, such as the costs associated with the Hinkley site.
Natural Gas Compressor Sites
The Utility is legally responsible for remediating groundwater contamination caused by hexavalent chromium used in the past at the Utility's natural gas compressor sites near Hinkley, California and Topock, Arizona. The Utility is also required to take measures to abate the effects of the contamination on the environment.
Hinkley Site
The Utility's remediation and abatement efforts at the Hinkley site are subject to the regulatory authority of the California Regional Water Quality Control Board, Lahontan Region. The Regional Board has issued several orders directing the Utility to implement interim remedial measures to reduce the mass of the underground plume of hexavalent chromium, monitor and control movement of the plume, and provide replacement water to affected residents. As of June 30, 2013, approximately 350 residential households located near the chromium plume boundary were covered by the Utility's whole house water replacement program and the majority have opted to accept the Utility's offer to purchase their properties. On July 17, 2013, the Regional Board certified a final environmental impact report evaluating the Utility's proposed remedial methods to contain and remediate the chromium plume and the potential environmental impacts. The Regional Board is expected to develop preliminary cleanup standards later this year and issue final cleanup standards in 2014.
The Utility's environmental remediation liability at June 30, 2013 reflects the Utility's best estimate of probable future costs associated with its final remediation plan and whole house water program. Future costs will depend on many factors, including the levels of hexavalent chromium the Utility is required to use as the standard for remediation, the required time period by which those standards must be met, the extent of the chromium plume boundary, and adoption of a final drinking water standard currently under development by the State of California. As more information becomes known regarding these factors, the Utility's cost estimates and the assumptions on which they are based regarding the amount of liability incurred may be subject to further changes. Future changes in estimates or assumptions may have a material impact on PG&E Corporation's and the Utility's future financial condition, results of operations, and cash flows.
Topock Site
The Utility's remediation and abatement efforts are subject to the regulatory authority of the California Department of Toxic Substances Control and the U.S. Department of the Interior. The Utility has implemented interim remediation measures, including a system of extraction wells and a treatment plant designed to prevent movement of a hexavalent chromium plume toward the Colorado River. The DTSC has certified the final environmental impact report and approved the Utility's final remediation plan for the groundwater plume, under which the Utility will implement an in-situ groundwater treatment system to convert hexavalent chromium into a non-toxic and non-soluble form of chromium. On April 5, 2013, the Utility submitted its intermediate design plan for implementing the final groundwater remedy to the DTSC and the U.S. Department of the Interior. The Utility's intermediate plan reflects its evaluation of input received from regulatory agencies and other stakeholders, potential sources of fresh water to be used as part of the remedy, and performing other engineering activities necessary to complete the remedial design. The Utility expects to submit its final plan for approval in 2014.
The Utility's environmental remediation liability at June 30, 2013 reflects its best estimate of probable future costs associated with these developments. Future costs will depend on many factors, including the extent of work to be performed to implement the final groundwater remedy and the Utility's required time frame for remediation. As more information becomes known regarding these factors, the Utility's cost estimates and the assumptions on which they are based regarding the amount of liability incurred may be subject to further changes. Future changes in estimates or assumptions could have a material impact on PG&E Corporation's and the Utility's future financial condition and cash flows.
Reasonably Possible Environmental Contingencies
Although the Utility has provided for known environmental obligations that are probable and reasonably estimable, the Utility's undiscounted future costs could increase to as much as $1.7 billion (including amounts related to the Hinkley and Topock sites described above) if the extent of contamination or necessary remediation is greater than anticipated or if the other potentially responsible parties are not financially able to contribute to these costs, and could increase further if the Utility chooses to remediate beyond regulatory requirements. The Utility may incur actual costs in the future that are materially different than this estimate and such costs could have a material impact on PG&E Corporation's and the Utility's results of operations during the period in which they are recorded.
Tax Matters
The IRS has withheld several matters pertaining to the 2008, 2010, and 2011 tax returns for further review. The most significant of these matters relates to the repairs accounting method changes made by the Utility with the filing of the 2008 and 2011 tax returns. Additionally, the IRS has been working with the utility industry to provide guidance concerning the deductibility of repairs. PG&E Corporation and the Utility expect the IRS to issue guidance with respect to repairs made in the natural gas transmission and distribution businesses by the end of 2013. PG&E Corporation's and the Utility's unrecognized tax benefits may change significantly within the next 12 months depending on the guidance to be issued by the IRS and the resolution of the IRS audits. As of June 30, 2013, PG&E Corporation and the Utility were unable to estimate the amount of the future change in unrecognized tax benefits.
There were no other significant developments to tax matters during the six months ended June 30, 2013. (Refer to Note 9 of the Notes to the Consolidated Financial Statements in the 2012 Annual Report.)
|
Commitments And Contingencies (Environmental Remediation Liability Composed) (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
||||
---|---|---|---|---|---|---|
Utility-owned natural gas compressor site near Hinkley, California | $ 270 | [1] | $ 239 | [1] | ||
Utility-owned natural gas compressor site near Topock, Arizona | 207 | [1] | 226 | [1] | ||
Utility-owned generation facilities (other than for fossil fuel-fired), other facilities, and third-party disposal sites | 181 | 181 | ||||
Former MGP sites owned by the Utility or third parties | 169 | 158 | ||||
Fossil fuel-fired generation facilities formerly owned by the Utility | 88 | 87 | ||||
Decommissioning fossil fuel-fired generation facilities and sites | 19 | 19 | ||||
Total environmental remediation liability | $ 934 | $ 910 | ||||
|
Regulatory Assets, Liabilities, And Balancing Accounts
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Assets, Liabilities, And Balancing Accounts | NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS
Regulatory Assets
Long-Term Regulatory Assets
Long-term regulatory assets are composed of the following:
Regulatory Liabilities
Long-Term Regulatory Liabilities
Long-term regulatory liabilities are composed of the following:
Regulatory Balancing Accounts
The Utility's recovery of a significant portion of revenue requirements and costs is decoupled from the volume of sales. The Utility records (1) differences between actual customer billings and the Utility's authorized revenue requirement, and (2) differences between incurred costs and customer billings. To the extent these differences are probable of recovery or refund, the Utility records a regulatory balancing account receivable or payable. Regulatory balancing accounts receivable and payable 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, Net
(1) The CARB has adopted regulations that established a state-wide, cap-and-trade program (effective January 1, 2013) that sets a
gradually declining limit on the amount of GHGs that may be emitted each year. This balancing account is used to record proceeds
collected by the Utility for GHG emission allowances associated with the cap-and-trade program. These amounts will be refunded
to customers in future periods.
|
Fair Value Measurements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets And Liabilities Measured At Fair Value On A Recurring Basis |
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral.
(2) Excludes $266 million at June 30, 2013 primarily related to deferred taxes on appreciation of investment value.
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral.
(2) Excludes $240 million at December 31, 2012 primarily related to deferred taxes on appreciation of investment value.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 Measurements And Sensitivity Analysis |
(1) Represents price per megawatt-hour
(1) Represents price per megawatt-hour
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 Reconciliation | The following tables present the reconciliation for Level 3 price risk management instruments for the three and six months ended June 30, 2013 and 2012:
(1) The costs related to price risk management activities are recoverable through customer rates, therefore, balancing account revenue is recorded for amounts settled and purchased and there is no impact to net income. Unrealized gains and losses are deferred in regulatory liabilities and assets.
(1) The costs related to price risk management activities are recoverable through customer rates, therefore, balancing account revenue is recorded for amounts settled and purchased and there is no impact to net income. Unrealized gains and losses are deferred in regulatory liabilities and assets.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount And Fair Value Of Financial Instruments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Unrealized Gains (Losses) Related To Available-For-Sale Investments |
(1) Excludes $266 million and $240 million at June 30, 2013 and December 31, 2012, respectively, primarily related to deferred taxes on appreciation of investment value.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Maturities On Debt Instruments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Activity For Debt And Equity Securities |
|
New And Significant Accounting Policies (Policies)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension And Other Postretirement Benefits | Pension and Other Postretirement Benefits
PG&E Corporation and the Utility provide a non-contributory defined benefit pension plan for eligible employees, as well as contributory postretirement medical plans for retirees and their eligible dependents, and non-contributory postretirement life insurance plans for eligible employees and retirees.
The net periodic benefit costs reflected in PG&E Corporation's Condensed Consolidated Financial Statements for the three and six months ended June 30, 2013 and 2012 were as follows:
(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from customers in futures rates.
(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from customers in future rates.
There was no material difference between PG&E Corporation and the Utility for the information disclosed above.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | 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 known as the VIE's primary beneficiary and is required to consolidate the VIE. In determining whether consolidation of a particular entity is required, PG&E Corporation and the Utility first evaluate whether the entity is a VIE. If the entity is a VIE, PG&E Corporation and the Utility use a qualitative approach to determine if either is the primary beneficiary of 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 was the primary beneficiary of any of these VIEs at June 30, 2013, it 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 exposure 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 June 30, 2013, it did not consolidate any of them.
PG&E Corporation affiliates have entered into four tax equity agreements to fund residential and commercial retail solar energy installations with two privately held companies that are considered VIEs. Under these agreements, PG&E Corporation has made cumulative lease payments and investment contributions of $363 million to these companies in exchange for the right to receive benefits from local rebates, federal grants, and a share of the customer payments made to these companies. At June 30, 2013 and December 31, 2012, the carrying amount of PG&E Corporation's investment in these agreements was $143 million and $166 million, respectively. PG&E Corporation determined that it does not have control over the companies' significant economic activities, such as the design of the companies, vendor selection, construction, and the ongoing operations of the companies. PG&E Corporation has no material remaining commitment to fund these agreements. Since PG&E Corporation was not the primary beneficiary of any of these VIEs at June 30, 2013, it did not consolidate any of them.
|
Commitments And Contingencies (Third-Party Power Purchases) (Detail) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Long-term Purchase Commitment [Line Items] | |
Quantity of Long-Term Power Purchase Renewable Energy Agreements | 7 |
Total | $ 1,100 |
Minimum [Member]
|
|
Long-term Purchase Commitment [Line Items] | |
Long-term agreements range, years | 5 |
Maximum [Member]
|
|
Long-term Purchase Commitment [Line Items] | |
Long-term agreements range, years | 25 |
G>>Z*FUH(A-3G]`_?>$S6S-BZF,CFM\DS1K?+,:JN\1CU#
M3$ZK/%-TJSRSE59Y)J=5GBFZ59[91JL\D],JSQ3=*L]46O#H34ZK/%-TJSRS
MVBKO<252:4;T!WU1O+_P[JZ_>/?$7X;DT^R7Z"%(XHAU0G+#SV1._"!OK_1I
M&@9WQ;4UM^SZT5OR/?N93O=KWO.(OOC,UNDMNX;F@_GBIW^&V6L_>$!IMF*S
M9`],`G;[07:M7"F+[Z]?_/,N>\V>^C=]C/W]O__#7A57FT[9M0G)CR_H;#P2
MANG"97?.;%\OV(6GZ]?K'R@^, =&2_V]$EI3
MC%ZP_$E*,60J':F^YWD@DE#,E0NK;G0<6\?72/FJ@./$4JV9(I3,]=D\CN)0
M\46$;C"31;Y4\^)YD^SG-+O>UB[[C\!??!?A*K_%'RZ?`DA<(;-OXFB3W7H[
M[('%[8LKCWLL:5]<=V1J#8H>-&6TM3 $#JQMT]=R[`
MQXI#[<'G#WE(L;Y?^NP+AE"4J'$&P9K_6!,HR+O-/1.@*U=HA\^DS*"B%5(%
MN4%4'W[+(L]OD?J%<:!2/S):*I%I\4GWIPKI_&@I&[Q=?&19,M_1FVS))O(_7_1?,$?ILX0XW5]DG]>0
MS4X^)P](:I_46WE\+<5KEOZ4ED6]!KT5+Y[8(6ZPG_.S=MO5VRFFJ%],4%:8
M#:YWA$'DG
M4#2)%C26I=,6Y*G@#)/S>HX%H$CQV#'X[=Q);2-V&C4=/-E@(7=O1C4`R7>N
MU`>8Q(PY7"[9W`ON2$[;(Y\VY?1;$-[Q<-9.=&.%A$[8U]A=FM;HF`<5-`PN
M5
H000
M`HB=`+%UO:'FLM1<]B2[_-E6-D<@H>:R!)(Z0VMJ+DM@H>:RU%P6S;8W]6A[
M3H^V;I:.$+`["NRS8=.GQ:A7!ZD!.C48[=W-B>P[`=LB8$]N4(4(;88"U%RV
M,T=-;_9&M6W9$<)._<>46^M,;+%G2TBC[K($G<:@LW\'S9//["+JBT4=ZAI)
M6%'&BB!K$V3QI5AQ.0B$P28Z'!,("81MK]U[HG`[0VI:;7>LL9U/B5)[V:X$
MC&?#(:6U"&K-N!)8[`'EM:S#SE[MY0D[A)UMWN/-7E4:)^4]8LS,P@UU=3+U
MET5<+9-)B;I;(3%PF43.1L,;ZB^+"D2DU^A$8I]>4W]95``BG48G$OMT>G`Y
M(:W&!"'2:G0BL4^KSP:7QTQXV"_D3ZBE!K-$##68/9"X6F@K:G.C^;):W^8?
M?XOE^8+S]>MOSE+,8D]\GN<=ES[X,@KCE;J!_.!_BW@DX.?/\]]=H+K.%7N0C--%.S722$;='O_`^S=/*6&`BVDK*2L>RW$-WNM
MP]LY7]/*N6.]['P\K'=H=(^UK&XTC8*G8AZ$@H4;A:<-=L-`NEVR.^_41FP7J
M7GX0L26_%4S&\[GKN.H")OZ*X2)U2>C*'Z#K<]?GH-@PVI4[D7NKA<3NW&@9
MQ!'CLYGNO.NX:P/JA%2IA8#/G*->:]XX3JC\>JG-GY
7)6MG
M3)%)6X%6G0U>;6A6YB]OX08JU+B90U`.5^PG/ML;/AYOVRI$IJ()Z.`\W-
MP!:HQ_JZP"AP$L2IFRQ5>`9[X\$Z\>$9I*^R_/?9:).$[,;`#;6R)%EC"'@6
M(3!%"47%:RL=II1?/$_^9N^A2%^'4,;EI!&@N2#)!D/B2&\N)?ES?Q8[4<_P
MW
%O,1Z+=0#=&U%'OAJAU4_0[^Z
M#NE@1RG;F2M+)BGQ,,4MAM)>6K.L2V8C!9]2^?J\\&QMI?4-4OW+(Y3>QGI8
ML'$JS-=O7UA3,D,!VZP9=289"@J?[#.E11QF)