PG&E 2010 Annual Report Download - page 107

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corporate debt instruments. The fund is valued using
pricing models and valuation inputs that are unobservable
and is considered a Level 3 asset.
Other fixed income primarily includes pass-through
and asset-backed securities. Pass-through securities are
valued based on benchmark yields created using
observable market inputs and are Level 2 assets. Asset-
backed securities are primarily valued based on broker
quotes in non-active markets and are considered Level 3
assets. Other fixed income also includes municipal bonds
and futures. Municipal bonds are valued based on a
compilation of primarily observable information or
broker quotes in non-active markets and are considered
Level 2 assets. Futures are valued based on unadjusted
prices in active markets and are Level 1 assets.
Cash Equivalents
Cash equivalents consist primarily of money markets and
commingled funds of short-term securities that are
considered Level 1 assets and valued at the net asset value
of $1 per unit. The number of units held by the plan
fluctuates based on the unadjusted price changes in active
markets for the funds’ underlying assets.
TRANSFERS BETWEEN LEVELS
PG&E Corporation and the Utility recognize any
transfers between levels in the fair value hierarchy as of
the end of the reporting period. There were no significant
transfers between levels for the year ended December 31,
2010.
Level 3 Reconciliation
The following table is a reconciliation of changes in the fair value of instruments for pension and other benefit plans that
have been classified as Level 3 for the years ended December 31, 2010 and 2009:
(in millions) Absolute
Return
Corporate
Fixed
Income
Other
Fixed
Income Total
Pension Benefits:
Balance as of December 31, 2009 $ 340 $ 531 $ 190 $ 1,061
Actual return on plan assets:
Relating to assets still held at the reporting date 44 52 5 101
Relating to assets sold during the period 5 5 5 15
Purchases, sales, and settlements 105 (39) (80) (14)
Transfers into (out of) Level 3 – – – –
Balance as of December 31, 2010 $ 494 $ 549 $ 120 $ 1,163
Other Benefits:
Balance as of December 31, 2009 $ 32 $ 124 $ 17 $ 173
Actual return on plan assets:
Relating to assets still held at the reporting date 4 15 – 19
Relating to assets sold during the period 1 (2) – (1)
Purchases, sales, and settlements 10 (8) (7) (5)
Transfers into (out of) Level 3 – – – –
Balance as of December 31, 2010 $ 47 $ 129 $ 10 $ 186
103