Regulatory Assets, Liabilities, And Balancing Accounts

12 Months Ended

Dec. 31, 2013

Regulatory Assets, Liabilities, And Balancing Accounts

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets

Long-term regulatory assets are composed of the following:

	Balance at December 31,				Recovery
(in millions)	2013		2012		Period
Pension benefits ⁽¹⁾	$	1,444	$	3,275	N/A⁽⁴⁾
Deferred income taxes⁽¹⁾		1,835		1,627	1 - 45 years
Utility retained generation⁽²⁾		503		552	11 years
Environmental compliance costs ⁽¹⁾		628		604	32 years
Price risk management ⁽¹⁾		106		210	9 years
Electromechanical meters ⁽³⁾		135		194	4 years
Unamortized loss, net of gain, on reacquired debt ⁽¹⁾		135		141	13 years
Other		127		206	Various
Total long-term regulatory assets	$	4,913	$	6,809

⁽¹⁾ Represents the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized in accordance with GAAP and also includes amounts that otherwise would be recorded to accumulated other comprehensive loss in the Consolidated Balance Sheets. (See Note 11 below.)

⁽²⁾ In connection with the settlement agreement entered into among PG&E Corporation, the Utility, and the CPUC in 2003 to resolve the Utility's proceeding under Chapter 11, the CPUC authorized the Utility to recover $1.2 billion of costs related to the Utility's retained generation assets. The individual components of these regulatory assets are being amortized over the respective lives of the underlying generation facilities, consistent with the period over which the related revenues are recognized.

⁽³⁾ Represents the expected future recovery of the net book value of electromechanical meters that were replaced with SmartMeter™ devices.

⁽⁴⁾ The Utility expects to continuously recover pension benefits.

In general, the Utility does not earn a return on regulatory assets if the related costs do not accrue interest. Accordingly, the Utility earns a return only on its regulatory assets for retained generation, regulatory assets for electromechanical meters, and regulatory assets for unamortized loss, net of gain, on reacquired debt.

Regulatory Liabilities

Long-term regulatory liabilities are composed of the following:

	Balance at December 31,
(in millions)	2013		2012
Cost of removal obligations ⁽¹⁾	$	3,844	$	3,625
Recoveries in excess of AROs ⁽²⁾		748		620
Public purpose programs⁽³⁾		587		590
Other		481		253
Total long-term regulatory liabilities	$	5,660	$	5,088

⁽¹⁾ Represents the cumulative differences between asset removal costs recorded and amounts collected in rates for expected asset removal costs.

⁽²⁾ Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of the Utility's nuclear generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments. (See Note 10 below.)

⁽³⁾ Represents amounts received from customers designated for public purpose program costs expected to be incurred beyond the next 12 months, primarily related to energy efficiency programs.

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 the Utility's authorized revenue requirement and actual customer billings, and (2) differences between incurred costs and customer billings. To the extent these differences are probable of recovery or refund over the next 12 months, the Utility records a current regulatory balancing account receivable or payable. Regulatory balancing accounts that the Utility does not expect to collect or refund over the next 12 months are included in other noncurrent assets - regulatory assets or noncurrent liabilities - regulatory liabilities, respectively, in the Consolidated Balance Sheets.

The Utility sells and delivers electricity and natural gas, which includes procuring and generating electricity. The Utility also administers public purpose programs, primarily related to customer energy efficiency programs. The balancing accounts associated with these items will fluctuate during the year based on seasonal electric and gas usage and the timing of when costs are incurred and customer revenues are collected.

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

	Receivable
	Balance at December 31,
(in millions)	2013		2012
Electric distribution	$	102	$	219
Utility generation		57		117
Gas distribution		70		44
Energy procurement		410		193
Public purpose programs		56		48
Other		429		315
Total regulatory balancing accounts receivable	$	1,124	$	936

	Payable
	Balance at December 31,
(in millions)	2013		2012
Energy procurement	$	298	$	116
Public purpose programs		171		131
Other		539		387
Total regulatory balancing accounts payable	$	1,008	$	634