INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit)

The significant components of income tax provision (benefit) by taxing jurisdiction were as follows:



	PG&E Corporation									Utility
	Year Ended December 31,
(in millions)	2018			2017			2016			2018			2017			2016
Current:
Federal	$	(5	)	$	(10	)	$	(105	)	$	5		$	61		$	(105	)
State	(8		)	48			(70		)	(7		)	50			(66		)
Deferred:
Federal	(2,264		)	481			218			(2,278		)	326			229
State	(1,009		)	6			16			(1,009		)	4			16
Tax credits	(6		)	(14		)	(4		)	(6		)	(14		)	(4		)
Income tax provision (benefit)	$	(3,292	)	$	511		$	55		$	(3,295	)	$	427		$	70

Schedule of Deferred Tax Assets and Liabilities

The following table describes net deferred income tax liabilities:



	PG&E Corporation				Utility
	Year Ended December 31,
(in millions)	2018		2017		2018		2017
Deferred income tax assets:
Tax carryforwards	$	740	$	830	$	650	$	736
Compensation	173		274		121		205
Income tax regulatory liability⁽¹⁾	79		286		79		286
Wildfire-related Reserve⁽²⁾	3,433		34		3,433		34
Other⁽³⁾	87		151		93		160
Total deferred income tax assets	$	4,512	$	1,575	$	4,376	$	1,421
Deferred income tax liabilities:
Property related basis differences	7,672		7,269		7,660		7,256
Other⁽⁴⁾	121		128		121		128
Total deferred income tax liabilities	$	7,793	$	7,397	$	7,781	$	7,384
Total net deferred income tax liabilities	$	3,281	$	5,822	$	3,405	$	5,963

⁽¹⁾Represents the tax gross up portion of the deferred income tax for the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized for tax, including the impact of changes in net deferred taxes associated with a lower federal income tax rate as a result of the Tax Act. (For more information see Note 3 above).

⁽²⁾Amounts primarily relate to wildfire-related claims, net of estimated insurance recoveries, and legal and other costs related to the 2018 Camp fire, 2017 Northern California wildfires, and the 2015 Butte fire.

⁽³⁾Amounts include benefits, environmental reserve, and customer advances for construction.

⁽⁴⁾Amounts primarily relate to regulatory balancing accounts.

Schedule of Effective Income Tax Rate Reconciliation

The following table reconciles income tax expense at the federal statutory rate to the income tax provision:



	PG&E Corporation						Utility
	Year Ended December 31,
	2018		2017		2016		2018		2017		2016
Federal statutory income tax rate	21.0	%	35.0	%	35.0	%	21.0	%	35.0	%	35.0	%
Increase (decrease) in income tax rate resulting from:
State income tax (net of federal benefit)⁽¹⁾	7.9		1.5		(2.5	)	7.9		1.6		(2.2	)
Effect of regulatory treatment of fixed asset differences⁽²⁾	3.6		(16.5	)	(23.7	)	3.6		(16.8	)	(23.4	)
Tax credits	0.1		(1.1	)	(0.8	)	0.1		(1.1	)	(0.8	)
Benefit of loss carryback	—		—		(1.1	)	—		—		(1.1	)
Compensation Related ⁽³⁾	(0.2	)	(1.0	)	(0.1	)	(0.1	)	(0.9	)	(0.2	)
Tax Reform Adjustment ⁽⁴⁾	0.1		6.8		—		0.1		3.0		—
Other, net ⁽⁵⁾	—		(1.1	)	(3.0	)	—		(0.7	)	(2.5	)
Effective tax rate	32.5	%	23.6	%	3.8	%	32.6	%	20.1	%	4.8	%

⁽¹⁾Includes the effect of state flow-through ratemaking treatment. In 2016, amounts reflect a settlement with the IRS on a 2011 audit related to electric transmission and distribution repairs deductions.

⁽²⁾ Includes the effect of federal flow-through ratemaking treatment for certain property-related costs as authorized by the 2014 GRC decision (impacting the twelve months ended December 31, 2017), the 2017 GRC decision (impacting the twelve months ended December 31, 2018), and by the 2015 GT&S decision which impacted all periods presented. All amounts are impacted by the level of income before income taxes. The 2014 GRC, 2017 GRC, and 2015 GT&S rate case decisions authorized revenue requirements that reflect flow-through ratemaking for temporary income tax differences attributable to repair costs and certain other property-related costs for federal tax purposes. For these temporary tax differences, PG&E Corporation and the Utility recognize the deferred tax impact in the current period and record offsetting regulatory assets and liabilities. Therefore, PG&E Corporation’s and the Utility’s effective tax rates are impacted as these differences arise and reverse. PG&E Corporation and the Utility recognize such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates. In 2018, the amounts also reflect the impact of the amortization of excess deferred tax benefits to be refunded to customers as a result of the Tax Act passed in December 2017.

⁽³⁾ Primarily represents adjustments to compensation as a result of the enactment of the Tax Act.

⁽⁴⁾Represents adjustments to deferred tax balances under Staff Accounting Bulletin No. 118 reflecting the tax rate reduction required by the Tax Act.

⁽⁵⁾ These amounts primarily represents the impact of tax audit settlements.

Schedule of Change in Unrecognized Tax Benefits

The following table reconciles the changes in unrecognized tax benefits:



	PG&E Corporation									Utility
(in millions)	2018			2017			2016			2018			2017			2016
Balance at beginning of year	$	349		$	388		$	468		$	349		$	382		$	462
Reductions for tax position taken during a prior year	(27		)	(71		)	(77		)	(27		)	(71		)	(77		)
Additions for tax position taken during the current year	55			48			56			55			48			56
Settlements	—			(14		)	(59		)	—			(8		)	(59		)
Expiration of statute	—			(3		)	—			—			(3		)	—
Balance at end of year	$	377		$	349		$	388		$	377		$	349		$	382

Schedule of Operating Loss and Tax Credit Carryforward Balances

The following table describes PG&E Corporation’s operating loss and tax credit carryforward balances:



(in millions)	December 31, 2018		Expiration Year
Federal:
Net operating loss carryforward	$	3,880	2031 - 2036
Tax credit carryforward	118		2029 - 2037
Charitable contribution loss carryforward	10		2020

State:
Net operating loss carryforward	$	58	2038
Tax credit carryforward	79		Various
Charitable contribution loss carryforward	10		2020 - 2021