PG&E 2007 Annual Report Download - page 55

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53
CONTRACTUAL COMMITMENTS
The following table provides information about the Utility’s and PG&E Corporation’s contractual obligations and
commitments at December 31, 2007. PG&E Corporation and the Utility enter into contractual obligations in connection
with business activities. These future obligations primarily relate to fi nancing arrangements (such as long-term debt, preferred
stock, and certain forms of regulatory fi nancing), purchases of transportation capacity, natural gas and electricity to support
customer demand, and the purchase of fuel and transportation to support the Utility’s generation activities. (See Note 17
of the Notes to the Consolidated Financial Statements.)
Payment due by period
Less than More than
(in millions) Total 1 year 1–3 years 3–5 years 5 years
Contractual Commitments:
Utility
Purchase obligations:
Power purchase agreements(1):
Qualifying facilities $17,185 $1,770 $3,248 $2,891 $ 9,276
Irrigation district and water agencies 479 83 164 107 125
Renewable contracts 8,783 245 672 1,026 6,840
Other power purchase agreements 716 238 386 79 13
Natural gas supply and transportation 1,446 1,181 244 21 —
Nuclear fuel 1,083 82 195 186 620
Preferred dividends(2) 70 14 28 28 —
Other commitments(3) 26 24 2 — —
Pension and other benefi ts(4) 900 300 600 — —
Operating leases 112 19 27 38 28
Long-term debt(5):
Fixed rate obligations 13,910 368 1,303 1,161 11,078
Variable rate obligations 1,796 28 53 688 1,027
Other long-term liabilities refl ected on the Utility’s balance sheet under GAAP:
Energy recovery bonds(6) 2,177 435 871 871 —
Capital lease obligations(7) 503 50 100 100 253
PG&E Corporation
Long-term debt(5):
Convertible subordinated notes 345 27 318 — —
(1) This table does not include DWR allocated contracts because the DWR is currently legally and fi nancially responsible for these contracts and payments.
See Note 17 of the Notes to the Consolidated Financial Statements for the Utility’s contractual commitments including power purchase agreements
(including agreements with qualifying facility co-generators, irrigation districts, and water agencies and renewable energy providers), natural gas supply
and transportation agreements, and nuclear fuel agreements.
(2) Preferred dividend estimates beyond fi ve years are not included as these dividend payments continue in perpetuity.
(3) Includes commitments for telecommunications and information system contracts in the aggregate amount of approximately $6 million, vehicle leasing
arrangements in the aggregate amount of $3 million, and SmartMeter™ contracts in the aggregate amount of approximately $17 million.
(4) PG&E Corporation’s and the Utility’s funding policy is to contribute tax-deductible amounts, consistent with applicable regulatory decisions, suffi cient
to meet minimum funding requirements. (See Note 14 of the Notes to the Consolidated Financial Statements.)
(5) Includes interest payments over the terms of the debt. Interest is calculated using the applicable interest rate and outstanding principal for each
instrument with the terms ending at each instrument’s maturity. (See Note 4 of the Notes to the Consolidated Financial Statements.)
(6) Includes interest payments over the terms of the bonds. (See Note 6 of the Notes to the Consolidated Financial Statements.)
(7) See Note 17 of the Notes to the Consolidated Financial Statements.
The contractual commitments table above excludes
potential commitments associated with the conversion of
existing overhead electric facilities to underground electric
facilities. At December 31, 2007, the Utility was committed
to spending approximately $236 million for these conver-
sions. 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.
The contractual commitments table above also excludes
potential payments associated with unrecognized tax benefi ts
accounted for under Financial Accounting Standards Board
(“FASB”) Interpretation No. 48 “Accounting for Uncertainty
in Income Taxes,” (“FIN 48”). On January 1, 2007, PG&E
Corporation and the Utility adopted the provisions of