PG&E 2008 Annual Report Download - page 104

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Cost of removal liabilities represent revenues collected
for asset removal costs that the Utility expects to incur in
the future.
Employee benefi t plan regulatory liability represents
the cumulative differences between amounts recognized
in accordance with GAAP and amounts recognized for
rate making purposes, which also includes amounts that
otherwise would be fully recorded to Accumulated other
comprehensive income in the Consolidated Balance Sheets
in accordance with SFAS No. 158. (See Notes 2 and 14
of the Notes to the Consolidated Financial Statements.)
These balances will be charged against expense to the extent
that future expenses exceed amounts recoverable for regula-
tory purposes.
Public purpose program liabilities represent revenues
designated for public purpose program costs that are
expected to be incurred in the future.
Regulatory liability for recoveries in excess of asset retire-
ment obligation represents timing differences between the
recognition of an ARO in accordance with GAAP and the
amounts recognized for ratemaking purposes. (See Note 13
of the Notes to the Consolidated Financial Statements.)
California Solar Initiative liabilities represent revenues
collected from customers to pay for costs the Utility expects
to incur in the future to promote the use of solar energy in
residential homes and commercial, industrial, and agricul-
tural properties.
Price risk management regulatory liabilities represent the
deferral of unrealized gains related to price risk management
derivative instruments with terms in excess of one year.
The Gateway Generating Station (“Gateway”) regulatory
liabilities represent future customer benefi ts associated with
acquisition of Gateway as part of a settlement with Mirant
Corporation. The associated liability will be amortized over
30 years beginning in January 2009, when Gateway was
placed in service.
The insurance recoveries are refunded to customers
as a reduction to rates until customers are fully reimbursed
for the cost of hazardous substance remediation that has
been collected in rates. (See Note 17 of the Notes to the
Consolidated Financial Statements.)
“Other” is an aggregate of regulatory liabilities representing
amounts collected for future costs.
The regulatory asset related to scheduling coordinator
costs represents costs that the Utility incurred beginning
in 1998 in its capacity as a scheduling coordinator for its
then existing wholesale transmission customers. The Utility
expects to fully recover the scheduling coordinator costs
by the end of the second quarter of 2010.
At December 31, 2008 and 2007 “Other” primarily
consisted of regulatory assets relating to asset retirement
obligation costs recorded in accordance with GAAP,
which are probable of future recovery through the rate-
making process.
In general, the Utility does not earn a return on regula-
tory assets where the related costs do not accrue interest.
Accordingly, the Utility earns a return only on the Utility’s
retained generation regulatory assets; unamortized loss, net
of gain, on reacquired debt; and regulatory assets associated
with the plan of reorganization.
Current Regulatory Assets
At December 31, 2008 and December 31, 2007, the Utility
had current regulatory assets of approximately $355 million
and $131 million, respectively, consisting primarily of the
current component of price risk management regulatory
assets and the current portion of long-term regulatory
assets. Price risk management regulatory assets represent the
deferral of unrealized losses related to price risk management
derivative instruments with terms of less than one year.
Current regulatory assets are included in Prepaid expenses
and other in the Consolidated Balance Sheets.
REGULATORY LIABILITIES
Long-Term Regulatory Liabilities
Long-term regulatory liabilities comprise the following:
Balance at December 31,
(in millions) 2008 2007
Cost of removal obligation $2,735 $2,568
Employee benefi t plans — 578
Public purpose programs 259 264
Recoveries in excess of asset retirement
obligation 226 573
California Solar Initiative 183 159
Price risk management 81 124
Gateway Generating Station 67 67
Environmental remediation 52 66
Other 54 49
Total regulatory liabilities $3,657 $4,448