PG&E 2009 Annual Report Download - page 115

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with a CPUC-approved ratemaking mechanism under
which the Utility is authorized to recover 90% of
hazardous waste remediation costs without a
reasonableness review. (Environmental remediation
associated with the Hinkley natural gas compressor site is
not recoverable under this mechanism.) In addition, the
CPUC and the FERC have authorized the Utility to
recover in rates approximately $130 million relating to
remediation costs at fossil decommissioning sites and
certain of the Utility’s transmission stations. The Utility
also recovers its costs from insurance carriers and from
other third parties whenever possible. Any amounts
collected in excess of the Utility’s ultimate obligations may
be subject to refund to customers.
Although the Utility has provided for known
environmental obligations that are probable and reasonably
estimable, estimated costs may vary significantly from
actual costs, and the amount of additional future costs may
be material to results of operations in the period in which
they are recognized. The Utility’s undiscounted future
costs could increase to as much as $1 billion if the other
potentially responsible parties are not financially able to
contribute to these costs or if the extent of contamination
or necessary remediation is greater than anticipated, and
could increase further if the Utility chooses to remediate
beyond regulatory requirements. In addition, it is
reasonably possible that the Utility will incur losses related
to certain MGP sites located in San Francisco but the
Utility is unable to reasonably estimate the amount of such
loss.
LEGAL MATTERS
PG&E Corporation and the Utility are subject to various
laws and regulations and, in the normal course of business,
PG&E Corporation and the Utility are named as parties in
a number of claims and lawsuits.
PG&E Corporation and the Utility make a provision for
a liability when it is both probable that a liability has been
incurred and the amount of the loss can be reasonably
estimated. These accruals, and the estimates of any
additional reasonably possible losses, are reviewed quarterly
and are adjusted to reflect the impacts of negotiations,
discovery, settlements and payments, rulings, advice of
legal counsel, and other information and events pertaining
to a particular matter. In assessing such contingencies,
PG&E Corporation’s and the Utility’s policy is to exclude
anticipated legal costs.
The accrued liability for legal matters is included in
PG&E Corporation’s and the Utility’s Current Liabilities —
Other in the Consolidated Balance Sheets, and totaled $57
million at December 31, 2009 and $72 million at
December 31, 2008. After consideration of these accruals,
PG&E Corporation and the Utility do not expect that
losses associated with legal matters will have a material
adverse impact on their financial condition and results of
operations.
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