PG&E 2009 Annual Report Download - page 96

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fixed income investments leading up to and during the
entire course of the decommissioning activities.
During 2009, the trusts earned $63 million in interest
and dividends. All earnings on the assets held in the trusts,
net of authorized disbursements from the trusts and
investment management and administrative fees, are
reinvested. Amounts may not be released from the
decommissioning trusts until authorized by the CPUC. All
of the Utility’s investment securities in the trust are
classified as “available-for-sale.” At December 31, 2009, the
Utility had accumulated nuclear decommissioning trust
funds with an estimated fair value of $1.9 billion, net of
deferred taxes on unrealized gains.
In general, investment securities are exposed to various
risks, such as interest rate, credit, and market volatility risks.
Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the
market values of investment securities could occur in the
near term, and such changes could materially affect the
trusts’ fair value. (See Note 11 of the Notes to the
Consolidated Financial Statements.)
At December 31, 2009, total unrealized losses on the
investments held in the trusts were $8.0 million. The
Utility concluded that the unrealized losses were other-
than-temporary impairments and recorded an $8.0 million
reduction to the nuclear decommissioning trusts assets and
the corresponding regulatory liability asset retirement costs.
The following table provides a summary of the fair value of the available-for-sale investments held in the Utility’s
nuclear decommissioning trusts:
(in millions) Amortized
Cost
Total
Unrealized
Gains
Total
Unrealized
Losses Estimated(1)
Fair Value
As of December 31, 2009
Equity securities $ 526 $588 $ (2) $1,112
U.S. government and agency issues 656 52 (4) 704
Municipal bonds and other 197 3 (2) 198
Total $1,379 $643 $ (8) $2,014
As of December 31, 2008
Equity securities $ 588 $340 $(27) $ 901
U.S. government and agency issues 617 103 — 720
Municipal bonds and other 187 3 (12) 178
Total $1,392 $446 $(39) $1,799
(1) Excludes taxes on appreciation of investment value.
The U.S government agency obligations and state
municipal bonds mature on the following schedule:
As of December 31, 2009 (in millions)
Less than 1 year $ 57
1–5 years 368
5–10 years 238
More than 10 years 238
Total maturities of debt securities $901
The following table provides a summary of the activity
for the debt and equity securities:
Year Ended December 31,
(in millions) 2009 2008 2007
Proceeds received from sales of
securities $1,351 $1,635 $830
Gross realized gains on sales of
securities held as available-for-sale 27 30 61
Gross realized losses on sales of
securities held as available-for-sale (55) (142) (42)
92