PG&E 2008 Annual Report Download - page 56

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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”). Due to the uncertainty sur-
rounding tax audits, PG&E Corporation and the Utility
cannot make reliable estimates of the amount and period of
future payments to major tax jurisdictions related to FIN 48
liabilities. Matters relating to tax years that remain subject
to examination are discussed below and in Note 10 of the
Notes to the Consolidated Financial Statements.
The contractual commitments table above excludes poten-
tial commitments associated with the conversion of existing
overhead electric facilities to underground electric facilities.
At December 31, 2008, the Utility was committed to spending
approximately $228 million for these conversions. 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 $40 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.
CONTRACTUAL COMMITMENTS
The following table provides information about PG&E Corporation’s and the Utility’s contractual commitments at
December 31, 2008.
Payment due by period
Less than More than
(in millions) Total 1 year 1–3 years 3–5 years 5 years
Contractual Commitments:
Utility
Long-term debt(1):
Fixed rate obligations $17,125 $1,089 $1,540 $1,314 $13,182
Variable rate obligations 954 7 332 615 —
Energy recovery bonds(2) 1,742 435 871 436 —
Purchase obligations:
Power purchase agreements(3):
Qualifying facilities 12,979 1,361 2,649 2,221 6,748
Renewable contracts 9,779 439 1,076 1,278 6,986
Irrigation district and water agencies 372 64 135 89 84
Other power purchase agreements 1,945 275 458 171 1,041
Natural gas supply and transportation 1,444 898 298 91 157
Nuclear fuel 950 95 200 160 495
Pension and other benefi ts(4) 580 300 280 — —
Capital lease obligations(5) 454 50 100 100 204
Operating leases 123 21 35 33 34
Preferred dividends(6) 70 14 28 28 —
Other commitments 24 24 — — —
PG&E Corporation
Long-term debt(1):
Convertible subordinated notes 318 27 291 — —
(1) Includes interest payments over the terms of the debt. Interest is calculated using the applicable interest rate at December 31, 2008 and outstanding
principal for each instrument with the terms ending at each instrument’s maturity. Variable rate obligations consist of bonds, due in 2016-2026,
backed by letters of credit that expire in 2011 and 2012. These bonds are subject to mandatory redemption unless the letters of credit are extended or
replaced or if applicable to the series, the issuer consents to the continuation of these bonds without a credit facility. Accordingly, these bonds have
been classifi ed for repayment purposes in 2011 and 2012. (See Note 4 of the Notes to the Consolidated Financial Statements.)
(2) Includes interest payments over the terms of the bonds. (See Note 5 of the Notes to the Consolidated Financial Statements.)
(3) This table does not include DWR-allocated contracts because the DWR is legally and fi nancially responsible for these contracts and payments.
(See Note 17 of the Notes to the Consolidated Financial Statements.)
(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) See Note 17 of the Notes to the Consolidated Financial Statements.
(6) Based on historical performance, it is assumed for purposes of the table above that dividends are payable within a fi xed period of fi ve years.