PG&E 2008 Annual Report Download - page 99

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As further discussed in Note 17 of the Notes to the
Consolidated Financial Statements, in January 2001,
the California Department of Water Resources (“DWR”)
began purchasing electricity to meet the portion of demand
of the California investor-owned electric utilities that was
not being satisfi ed from their own generation facilities
and existing electricity contracts. Under California law, the
DWR is deemed to sell the electricity directly to the Utility’s
retail customers, not to the Utility. The Utility acts as a
pass-through entity for electricity purchased by the DWR
on behalf of its customers. Although charges for electricity
provided by the DWR are included in the amounts the
Utility bills its customers, the Utility deducts the amounts
passed through to the DWR from its electricity revenues.
The pass-through amounts are based on the quantities of
electricity provided by the DWR that are consumed by
customers at the CPUC-approved remittance rate. These
pass-through amounts are excluded from the Utility’s
electricity revenues and from the cost of electricity in its
Consolidated Statements of Income.
There was no material difference between PG&E
Corporation’s and the Utility’s accumulated other compre-
hensive income (loss) for the periods presented above.
REVENUE RECOGNITION
The Utility’s operating revenues are composed of revenue
from electric and natural gas distribution and transmission
services and electric generation services. Amounts recorded
for these services are billed to the Utility’s customers at the
CPUC-approved and FERC-approved rates, which provide
an authorized rate of return, and recovery of operation and
maintenance and capital-related carrying costs. The Utility’s
revenues are recognized as electricity and natural gas are
delivered, and include amounts for services rendered but
not yet billed at the end of each year.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) reports a measure for accumulated changes in equity of an enterprise that
result from transactions and other economic events, other than transactions with shareholders. The following table sets forth
the after-tax changes in each component of accumulated other comprehensive income (loss):
Minimum Employee Benefi t Accumulated
Pension Plan Adjustment in Other
Liability Adoption of Accordance with Comprehensive
(in millions) Adjustment SFAS No. 158 SFAS No. 158 Income (Loss)
Balance at December 31, 2005 $(8) $ — $ — $ (8)
Period change in:
Adoption of SFAS No. 158 (net of income tax benefi t of $8 million) 8 (19) — (11)
Balance at December 31, 2006 — (19) — (19)
Period change in pension benefi ts and other benefi ts:
Unrecognized prior service cost (net of income tax expense
of $18 million) — — 26 26
Unrecognized net gain (net of income tax expense of $195 million) — — 289 289
Unrecognized net transition obligation (net of income tax expense
of $11 million) — — 16 16
Transfer to regulatory account (net of income tax benefi t
of $207 million)(1) — — (302) (302)
Balance at December 31, 2007 — (19) 29 10
Period change in pension benefi ts and other benefi ts:
Unrecognized prior service cost (net of income tax expense
of $27 million) — — 37 37
Unrecognized net loss (net of income tax benefi t of $1,088 million) — — (1,583) (1,583)
Unrecognized net transition obligation (net of income tax expense
of $11 million) — — 15 15
Transfer to regulatory account (net of income tax expense
of $894 million)(1) — — 1,300 1,300
Balance at December 31, 2008 $ — $(19) $
(202) $ (221)
(1) The Utility recorded approximately $2,259 million in 2008 and $109 million in 2007, pre-tax, as a reduction to the existing pension regulatory liability in
accordance with the provisions of SFAS No. 71. The adjustment resulted in a regulatory asset balance at December 31, 2008. The Utility recorded approxi-
mately $44 million in 2007, pre-tax, as an addition to the existing pension regulatory liability in accordance with SFAS No. 71. See Note 14 of the Notes
to the Consolidated Financial Statements for further information on pre-tax transfer amounts to the regulatory account.