PG&E 2009 Annual Report Download - page 73

and the ARO expenses recorded in accordance with GAAP.
Decommissioning costs recovered in rates are placed in
nuclear decommissioning trusts. The regulatory liability for
recoveries in excess of ARO also represents the deferral of
realized and unrealized gains and losses on those nuclear
decommissioning trust assets.
“Other” at December 31, 2009 and 2008 included the
deferral of unrealized gains related to price risk
management derivative instruments with terms in excess of
one year, the gain associated with the Utility’s acquisition
of the permits and other assets related to the Gateway
Generating Station as part of a settlement that the Utility
entered with Mirant Corporation, as well as costs incurred
for hazardous substance remediation.
REGULATORY BALANCING ACCOUNTS
The Utility uses regulatory balancing accounts to
accumulate differences between actual billed and unbilled
revenues and the Utility’s authorized revenue requirements
for the period. The Utility also uses regulatory balancing
accounts to accumulate differences between incurred costs
and actual billed and unbilled revenues, as well as
differences between incurred costs and authorized revenue
meant to recover those costs. Under-collections that are
probable of recovery through regulated rates are recorded
as regulatory balancing account assets. Over-collections
that are probable of being credited to customers are
recorded as regulatory balancing account liabilities.
The Utility’s current regulatory balancing accounts
represent the amount expected to be refunded to or
received from the Utility’s customers through authorized
rate adjustments within the next 12 months. Regulatory
balancing accounts that the Utility does not expect to
collect or refund in the next 12 months are included in
Other Noncurrent Assets — Regulatory assets and
Noncurrent Liabilities — Regulatory liabilities in the
Consolidated Balance Sheets.
Current Regulatory Balancing Accounts, net
Receivable (Payable)
Balance at December 31,
(in millions) 2009 2008
Utility generation $ 355 $ 164
Distribution revenue adjustment
mechanism 152 40
Energy procurement costs 128 598
Gas fixed cost 93 60
Transmission revenue 46 173
Public purpose programs (5) (263)
Energy recovery bonds (185) (231)
Other 244 (74)
Total regulatory balancing accounts, net $ 828 $ 467
The utility generation balancing account is used to
record and recover the authorized revenue requirements
associated with Utility-owned electric generation, including
capital and related non-fuel operating and maintenance
expenses. The Utility’s recovery of these revenue
requirements is independent, or “decoupled,” from the
volume of sales; therefore, the Utility recognizes revenue
evenly over the year, even though the level of cash
collected from customers will fluctuate depending on the
volume of electricity sales. During periods of more
temperate weather, there is generally an under-collection in
this balancing account due to lower electricity sales and
lower rates. During the warmer months of summer, the
under-collection generally decreases due to higher rates and
electric usage that cause an increase in generation revenues.
At December 31, 2009, the under-collection was impacted
by lower than expected electricity sales and an increase in
revenue requirements related to the construction of the
Gateway Generating Station and the replacement of steam
generators at Diablo Canyon Unit 1.
The distribution revenue adjustment mechanism
balancing account is used to record and recover the
authorized electric distribution revenue requirements and
certain other electric distribution-related authorized costs.
The Utility recognizes revenue evenly over the year even
though the level of cash collected from customers will
fluctuate depending on the volume of electricity sales.
During periods of more temperate weather, there is
generally an under-collection in this balancing account due
to lower electricity sales and lower rates. During the warmer
months of summer, the under-collection generally
decreases due to higher rates and electric usage that cause
an increase in distribution revenues. At December 31,
2009, there was an under-collection due to lower than
expected electricity sales.
The Utility is generally authorized to recover 100% of
its prudently incurred electric fuel and energy procurement
costs. The Utility tracks energy procurement costs in
balancing accounts and files annual forecasts of energy
procurement costs that it expects to incur during the
following year, and rates are set to recover such expected
costs.
The gas fixed cost balancing account is used to track the
recovery of CPUC-authorized gas distribution revenue
requirements and certain other gas distribution-related
costs. The under-collection or over-collection position of
this account is dependent on seasonality and volatility in
gas volumes.
The transmission revenue balancing account represents
the difference between electric transmission wheeling
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