PG&E 2007 Annual Report Download - page 134

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At December 31, 2007, the undiscounted obligations
under nuclear fuel agreements were as follows:
(in millions)
2008 $ 82
2009 82
2010 113
2011 98
2012 88
Thereafter 620
Total $1,083
Payments for nuclear fuel amounted to approximately
$102 million in 2007, $106 million in 2006, and $65 million
in 2005.
Other Commitments and Operating Leases
The Utility has other commitments relating to operating
leases, vehicle leasing, and telecommunication and infor-
mation system contracts. At December 31, 2007, the future
minimum payments related to other commitments were
as follows:
(in millions)
2008 $ 43
2009 16
2010 13
2011 12
2012 26
Thereafter 28
Total $138
Payments for other commitments and operating leases
amounted to approximately $38 million in 2007, $100 mil-
lion in 2006, and $146 million in 2005.
Underground Electric Facilities
At December 31, 2007, the Utility was committed to
spending approximately $236 million for the conversion
of existing overhead electric facilities to underground
electric facilities. These funds are conditionally committed
depending on the timing of the work, including the
schedules of the respective cities, counties, and telephone
utilities involved. The Utility expects to spend approximately
$50 million to $60 million each year in connection with
these projects. Consistent with past practice, the Utility
expects that these capital expenditures will be included
in rate base as each individual project is completed and
recoverable in rates charged to customers.
CONTINGENCIES
PG&E CORPORATION
PG&E Corporation retains a guarantee related to certain
indemnity obligations of its former subsidiary, NEGT, that
were issued to the purchaser of an NEGT subsidiary company.
PG&E Corporation’s sole remaining exposure relates to any
potential environmental obligations that were known to
NEGT at the time of the sale but not disclosed to the pur-
chaser, and is limited to $150 million. PG&E Corporation has
not received any claims nor does it consider it probable that
any claims will be made under the guarantee. At December 31,
2007, PG&E Corporation’s potential exposure under this
guarantee was immaterial and PG&E Corporation has not
made any provision for this guarantee.
UTILITY
Nuclear Insurance
The Utility has several types of nuclear insurance for
Diablo Canyon and Humboldt Bay Unit 3. The Utility has
insurance coverage for property damages and business inter-
ruption losses as a member of Nuclear Electric Insurance
Limited (“NEIL”). NEIL is a mutual insurer owned by utili-
ties with nuclear facilities. NEIL provides property damage
and business interruption coverage of up to $3.24 billion
per incident for Diablo Canyon. In addition, NEIL provides
$131 million of property damage insurance for Humboldt
Bay Unit 3. Under this insurance, if any nuclear generating
facility insured by NEIL suffers a catastrophic loss causing
a prolonged outage, the Utility may be required to pay an
additional premium of up to $38.5 million per one-year
policy term.
NEIL also provides coverage for damages caused by acts of
terrorism at nuclear power plants. Under the Terrorism Risk
Insurance Program Reauthorization Act of 2007 (“TRIPRA”),
acts of terrorism may be “certifi ed” by the Secretary of the
Treasury. For a certifi ed act of terrorism, NEIL can obtain
compensation from the federal government and will provide
up to the full policy limits to the Utility for an insured loss.
If one or more non-certifi ed acts of terrorism cause property
damage covered under any of the nuclear insurance policies
issued by NEIL to any NEIL member, the maximum recov-
ery under all those nuclear insurance policies may not exceed
$3.24 billion within a 12-month period plus the additional
amounts recovered by NEIL for these losses from reinsurance.
TRIPRA extends the Terrorism Risk Insurance Act of 2002
through December 31, 2014.