Balance Sheet Components (Notes)

9 Months Ended

Sep. 30, 2019

Inventories

PGE’s inventories, which are recorded at average cost, consist primarily of materials and supplies for use in operations, maintenance, and capital activities, as well as fuel, which includes natural gas, coal, and oil for use in the Company’s generating plants. Periodically, the Company assesses inventory for purposes of determining that inventories are recorded at the lower of average cost or net realizable value.

Other Current Assets

Other current assets consist of the following (in millions):



	September 30, 2019		December 31, 2018
Prepaid expenses	$	28	$	54
Assets from price risk management activities	14		20
Margin deposits	12		16
Other current assets	$	54	$	90

Electric Utility Plant, Net

Electric utility plant, net consists of the following (in millions):



	September 30, 2019			December 31, 2018
Electric utility plant	$	10,778		$	10,344
Construction work-in-progress	258			346
Total cost	11,036			10,690
Less: accumulated depreciation and amortization	(4,022		)	(3,803		)
Electric utility plant, net	$	7,014		$	6,887

Accumulated depreciation and amortization in the table above includes accumulated amortization related to intangible assets of $350 million and $302 million as of September 30, 2019 and December 31, 2018, respectively. Amortization expense related to intangible assets was $16 million and $49 million for the three and nine months ended September 30, 2019, respectively, and $16 million and $43 million for the three and nine months ended September 30, 2018, respectively. The Company’s intangible assets primarily consist of computer software development and hydro licensing costs.

Regulatory Assets and Liabilities

Regulatory assets and liabilities consist of the following (in millions):



	September 30, 2019					December 31, 2018
	Current			Noncurrent		Current			Noncurrent
Regulatory assets:
Price risk management	$	12		$	96	$	32		$	99
Pension and other postretirement plans	—			218		—			222
Debt issuance costs	—			18		—			16
Trojan decommissioning activities	—			93		—			26
Other	14			58		29			38
Total regulatory assets	$	26		$	483	$	61		$	401
Regulatory liabilities:
Asset retirement removal costs	$	—		$	1,011	$	—		$	979
Deferred income taxes	—			262		—			267
Asset retirement obligations	—			54		—			53
Tax Reform Deferral⁽¹⁾	23			6		23			22
Other	17			47		13			34
Total regulatory liabilities	$	40	⁽²⁾	$	1,380	$	36	⁽²⁾	$	1,355

(1) Related to the deferral of the 2018 net tax benefits due to the change in corporate tax rate under TCJA, including interest.

(2) Included in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in millions):



	September 30, 2019		December 31, 2018
Accrued employee compensation and benefits	$	63	$	66
Accrued taxes payable	45		34
Accrued interest payable	39		27
Accrued dividends payable	35		34
Regulatory liabilities—current	40		36
Other	71		71
Total accrued expenses and other current liabilities	$	293	$	268

Asset Retirement Obligations

Asset retirement obligations (AROs) consist of the following (in millions):



	September 30, 2019		December 31, 2018
Trojan decommissioning activities	$	137	$	68
Utility plant	114		112
Non-utility property	17		17
Asset retirement obligations	$	268	$	197

Trojan decommissioning activities represents the present value of future decommissioning costs for the plant, which ceased operation in 1993. The remaining decommissioning activities primarily consist of the long-term operation and decommissioning of the Independent Spent Fuel Storage Installation (ISFSI), an interim dry storage facility that is licensed by the Nuclear Regulatory Commission (NRC). The ISFSI is to house the spent nuclear fuel at the former plant site until an off-site storage facility is available. Decommissioning of the ISFSI and final site restoration activities will begin once shipment of all the spent fuel to a U.S. Department of Energy facility is complete, which is not expected prior to 2059. In the third quarter of 2019, the NRC issued PGE a renewed license to operate the ISFSI through the first quarter of 2059. PGE updated its ARO to reflect the estimated costs through this date, which increased the Trojan ARO by $69 million as of September 30, 2019.

Credit Facilities

As of December 31, 2018, PGE had a $500 million revolving credit facility scheduled to terminate in November 2021. On January 16, 2019, PGE executed an amendment to the credit facility extending the termination date to November 14, 2022 and allowing for unlimited extensions, provided that lenders with a pro-rata share of more than 50% approve the extension request. Pursuant to the terms of the agreement, the revolving credit facility may be used for general corporate purposes, as backup for commercial paper borrowings, and to permit the issuance of standby letters of credit. PGE may borrow for one, two, three, or six months at a fixed interest rate established at the time of the borrowing, or at a variable interest rate for any period up to the then remaining term of the applicable credit facility. The revolving credit facility contains a provision that requires annual fees based on PGE’s unsecured credit ratings, and contains customary covenants and default provisions, including a requirement that limits consolidated indebtedness, as defined in the agreement, to 65% of total capitalization. As of September 30, 2019, PGE was in compliance with this covenant with a 50.2% debt-to-total capital ratio.

The Company has a commercial paper program under which it may issue commercial paper for terms of up to 270 days, limited to the unused amount of credit under the revolving credit facility.

PGE classifies any borrowings under the revolving credit facility and outstanding commercial paper as Short-term debt on the condensed consolidated balance sheets.

Under the revolving credit facility, as of September 30, 2019, PGE had no borrowings outstanding or commercial paper issued. As a result, the aggregate unused available credit capacity under the revolving credit facility was $500 million.

In addition, PGE has four letter of credit facilities that provide a total capacity of $220 million under which the Company can request letters of credit for original terms not to exceed one year. The issuance of such letters of credit is subject to the approval of the issuing institution. Under these facilities, letters of credit for a total of $60 million

were outstanding as of September 30, 2019. Letters of credit issued are not reflected on the Company’s condensed consolidated balance sheets.

Pursuant to an order issued by the FERC, the Company is authorized to issue short-term debt in an aggregate amount of up to $900 million through February 6, 2020.

Long-term Debt

On April 12, 2019, PGE issued $200 million of 4.30% Series First Mortgage Bonds (FMBs) due in 2049. Proceeds from the transaction were used to repay the $300 million current portion of long-term debt on April 15, 2019.

On October 25, 2019, PGE entered into an agreement to issue $270 million of privately placed FMBs in two tranches, both of which will bear interest from their issue date at an annual rate of 3.34%. The first tranche, $110 million, with a maturity in 2049, was issued on October 25, 2019, a portion of which was used to redeem $50 million of 6.75% FMBs that had a maturity date in 2023. Due to the anticipated repayment of the $50 million, this amount of long-term debt was classified as current on the Company’s balance sheets as of September 30, 2019. The second tranche, $160 million, with a maturity in 2050, is expected to be issued and funded on or about November 15, 2019.

Defined Benefit Retirement Plan Costs

Components of net periodic benefit cost under the defined benefit pension plan are as follows (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Service cost	$	4		$	5		$	12		$	15
Interest cost*	8			8			25			24
Expected return on plan assets*	(10		)	(10		)	(30		)	(31		)
Amortization of net actuarial loss*	3			4			8			12
Net periodic benefit cost	$	5		$	7		$	15		$	20

* The expense portion of non-service cost components are included in Miscellaneous income, net within Other income on the Company’s condensed consolidated statements of income and comprehensive income.

PGE sponsors a health and welfare plan, under which it offers medical and life insurance benefits, as well as health reimbursement arrangements (HRAs). Retirees who participate in the Company’s postretirement health insurance plans are eligible for a Defined Dollar Medical Benefit (DDB), which limits PGE’s obligation pursuant to the postretirement health plan by establishing a maximum benefit per employee with employees responsible for the additional cost. In the third quarter of 2019, PGE announced an amendment to its HRAs and DDBs for non-represented employees, resulting in a $2 million curtailment gain, which has been recorded in Miscellaneous income, net on the condensed consolidated statement of income and comprehensive income.