PG&E 2010 Annual Report Download - page 111

payments under these renewable energy agreements are
expected to grow significantly, assuming that the facilities
are developed timely. No single supplier accounted for
more than 5% of the Utility’s 2010, 2009, or 2008
electricity sources.
OtherPowerPurchase Agreements — In accordance with
the Utility’s CPUC-approved long-term procurement
plans, the Utility has entered into several power purchase
agreements with third parties. The Utility’s obligations
under a portion of these agreements are contingent on the
third party’s development of a new generation facility to
provide the power to be purchased by the Utility under
the agreements.
IrrigationDistrict and WaterAgency PowerPurchase
Agreements – The Utility has contracts with various
irrigation districts and water agencies to purchase
hydroelectric power. Under these contracts, the Utility
must make specified semi-annual minimum payments
based on the irrigation districts’ and water agencies’ debt
service requirements, whether or not any hydroelectric
power is supplied, and variable payments for operation
and maintenance costs incurred by the suppliers. These
contracts expire on various dates from 2011 to 2031.
Irrigation districts and water agencies consist of small and
large hydro plants. No single irrigation district or water
agency accounted for more than 5% of the Utility’s 2010,
2009, or 2008 electricity sources.
At December 31, 2010, the undiscounted future expected power purchase agreement payments were as follows:
Qualifying Facility Renewable (Other than QF) Irrigation District & Water Agency Other
(in millions) Energy Capacity Energy Capacity Operations & Maintenance Debt Service Energy Capacity Total Payments
2011 $ 720 $ 366 $ 796 $ 8 $ 59 $ 21 $ 3 $ 691 $ 2,664
2012 545 321 944 9 45 21 3 684 2,572
2013 542 312 1,261 9 28 15 3 822 2,992
2014 548 301 1,647 – 13 12 1 605 3,127
2015 509 259 1,942 – 11 11 – 583 3,315
Thereafter 3,129 1,263 40,882 5 27 16 – 4,227 49,549
Total $ 5,993 $ 2,822 $ 47,472 $ 31 $ 183 $ 96 $ 10 $ 7,612 $ 64,219
Some of the power purchase agreements that the
Utility entered into with independent power producers
that are QFs are treated as capital leases. The following
table shows the future fixed capacity payments due under
the QF contracts that are treated as capital leases. (These
amounts are also included in the table above.) The fixed
capacity payments are discounted to their present value in
the table below using the Utility’s incremental borrowing
rate at the inception of the leases. The amount of this
discount is shown in the table below as the amount
representing interest.
(in millions)
2011 $ 50
2012 50
2013 50
2014 42
2015 38
Thereafter 124
Total fixed capacity payments 354
Less: amount representing interest 72
Present value of fixed capacity payments $ 282
Minimum lease payments associated with the lease
obligation are included in cost of electricity on PG&E
Corporation’s and the Utility’s Consolidated Statements
of Income. The timing of the recognition of the lease
expense conforms to the ratemaking treatment for the
Utility’s recovery of the cost of electricity. The QF
contracts that are treated as capital leases expire between
April 2014 and September 2021.
The present value of the fixed capacity payments due
under these contracts is recorded on PG&E Corporation’s
and the Utility’s Consolidated Balance Sheets. At
December 31, 2010 and December 31, 2009, current
liabilities – other included $34 million and $32 million,
respectively, and noncurrent liabilities – other included
$248 million and $282 million, respectively. The
corresponding assets at December 31, 2010 and
December 31, 2009 of $282 million and $314 million
including accumulated amortization of $126 million and
$94 million, respectively are included in property, plant,
and equipment on PG&E Corporation’s and the Utility’s
Consolidated Balance Sheets.
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