PG&E 2009 Annual Report Download - page 21

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service providers. The Utility does not procure natural gas
for non-core customers. When the Utility provides both
transportation and natural gas supply, the Utility refers to
the combined service as “bundled natural gas service.” In
2009, core customers represented over 99% of the Utility’s
total customers and 38% of its total natural gas deliveries,
while non-core customers comprised less than 1% of the
Utility’s total customers and 62% of its total natural gas
deliveries.
The following table provides a summary of the Utility’s
natural gas operating revenues:
(in millions) 2009 2008 2007
Bundled natural gas revenues $2,794 $3,557 $3,417
Transportation service-only revenues 348 333 340
Total natural gas operating
revenues $3,142 $3,890 $3,757
Average bundled revenue per Mcf(1)
of natural gas sold $11.04 $13.52 $12.94
Total bundled natural gas sales
(in millions of Mcf) 253 263 264
(1) One thousand cubic feet
The Utility’s total natural gas operating revenues
decreased by $748 million, or 19%, in 2009 compared to
2008, primarily due to a $799 million decrease in the total
cost of natural gas. This cost is passed through to
customers and generally does not impact net income. (See
“Cost of Natural Gas” below.) Natural gas operating
revenues, excluding items passed through to customers,
increased by $51 million. This was primarily due to $53
million of increase in authorized base revenues consisting
of $22 million for the 2009 attrition adjustments, $10
million as a result of the 2007 Gas Accord IV Settlement
Agreement, and $21 million representing additional
authorized revenue requirements to recover the capital
costs of new assets placed in service (such as the
SmartMeterTM advanced metering project).
The Utility’s natural gas operating revenues increased by
$133 million, or 4%, in 2008 compared to 2007, primarily
due to an increase in costs of natural gas of $55 million
and public purpose programs of $24 million, which are
passed through to customers and generally do not have an
impact on earnings. Natural gas operating revenues,
excluding items passed through to customers, increased by
$54 million, primarily due to a $22 million increase in base
revenue requirements as a result of attrition adjustments
authorized in the 2007 GRC and an increase in natural gas
revenue requirements of $25 million to fund the
SmartMeterTM advanced metering project.
The Utility’s natural gas operating revenues for 2010 are
expected to increase by $22 million due to attrition
adjustments that were authorized by the CPUC in the 2007
GRC. The Utility’s future natural gas operating revenues
for 2011 through 2014 will depend on the amount of
revenue requirements authorized by the CPUC in the
Utility’s 2011 GRC and the Gas Transmission and Storage
rate case. (See “Regulatory Matters” below.) In addition, the
Utility expects future natural gas operating revenues to
increase to the extent that the CPUC approves the Utility’s
separately funded projects. (See “Capital Expenditures”
below.) Finally, the CPUC has not yet determined how the
existing energy efficiency incentive mechanism will be
modified, so the amount of incentive revenues that the
Utility may earn for the implementation of its programs in
2009 and future years is uncertain. (See “Regulatory
Matters” below.)
Cost of Natural Gas
The Utility’s cost of natural gas includes the purchase costs
of natural gas, transportation costs on interstate pipelines,
and gas storage costs but excludes the transportation costs
on intrastate pipelines for core and non-core customers,
which are included in Operating and maintenance expense
in the Consolidated Statements of Income. The Utility’s
cost of natural gas also includes realized gains and losses on
price risk management activities. (See Notes 10 and 11 of
the Notes to the Consolidated Financial Statements.)
The following table provides a summary of the Utility’s
cost of natural gas:
(in millions) 2009 2008 2007
Cost of natural gas sold $1,130 $1,955 $1,859
Transportation cost of natural gas
sold 161 135 176
Total cost of natural gas $1,291 $2,090 $2,035
Average cost per Mcf of natural gas
sold $ 4.47 $ 7.43 $ 7.04
Total natural gas sold
(in millions of Mcf) 253 263 264
The Utility’s total cost of natural gas decreased by $799
million, or 38%, in 2009 compared to 2008, primarily due
to decreases in the average market price of natural gas.
The Utility’s total cost of natural gas increased by $55
million, or 3%, in 2008 compared to 2007, primarily due to
increases in the average market price of natural gas
purchased. The increase was partially offset by a $23
million refund that the Utility received as part of a
settlement with TransCanada’s Gas Transmission
Northwest Corporation related to 2007 gas transmission
capacity rates.
17