PG&E 2010 Annual Report Download - page 72

the Utility’s nuclear power plants was approximately $2.3
billion at December 31, 2010 and 2009 (or approximately
$4.4 billion and $4.6 billion in future dollars, respectively).
These estimates are based on the 2009 decommissioning
cost studies, prepared in accordance with CPUC
requirements.
Differences between amounts collected in rates for
decommissioning the Utility’s nuclear power facilities and
the decommissioning obligation recorded in accordance
with GAAP are reflected as a regulatory liability. (See Note
3 below.)
A reconciliation of the changes in the ARO liability is as
follows:
(in millions)
ARO liability at December 31, 2008 $ 1,684
Revision in estimated cash flows (129)
Accretion 98
Liabilities settled (60)
ARO liability at December 31, 2009 1,593
Revision in estimated cash flows (23)
Accretion 93
Liabilities settled (77)
ARO liability at December 31, 2010 $ 1,586
The Utility has identified additional ARO for which a
reasonable estimate of fair value could not be made. The
Utility has not recognized a liability related to these
additional obligations, which include obligations to restore
land to its pre-use condition under the terms of certain
land rights agreements, removal and proper disposal of
lead-based paint contained in some Utility facilities,
removal of certain communications equipment from leased
property, and retirement activities associated with
substation and certain hydroelectric facilities. The Utility
was not able to reasonably estimate the ARO associated
with these assets because the settlement date of the
obligation was indeterminate and information sufficient to
reasonably estimate the settlement date or range of
settlement dates does not exist. Land rights,
communications equipment leases, and substation facilities
will be maintained for the foreseeable future, and therefore,
the Utility cannot reasonably estimate the settlement date
or range of settlement dates for the obligations associated
with these assets. The Utility does not have information
available that specifies which facilities contain lead-based
paint and, therefore, cannot reasonably estimate the
settlement date(s) associated with the obligation. The
Utility will maintain and continue to operate its
hydroelectric facilities until the operation of a facility
becomes uneconomical. The operation of the majority of
the Utility’s hydroelectric facilities is currently, and for the
foreseeable future, economically beneficial. Therefore, the
settlement date cannot be determined at this time.
IMPAIRMENT OF LONG-LIVED ASSETS
PG&E Corporation and the Utility evaluate the carrying
amounts of long-lived assets for impairment, based on
projections of undiscounted future cash flows, whenever
events occur or circumstances change that may affect the
recoverability or the estimated life of long-lived assets. If
this evaluation indicates that such cash flows are not
expected to fully recover the assets, the assets are written
down to their estimated fair value. No significant
impairments were recorded in 2010, 2009, or 2008.
GAINS AND LOSSES ON DEBT
EXTINGUISHMENTS
Gains and losses on debt extinguishments associated with
regulated operations are deferred and amortized over the
remaining original amortization period of the debt
reacquired, consistent with recovery of costs through
regulated rates. PG&E Corporation and the Utility
recorded unamortized loss on debt extinguishments, net of
gain, of $204 million and $227 million at December 31,
2010 and 2009, respectively. The amortization expense
related to this loss was $23 million in 2010, $25 million in
2009, and $26 million in 2008. Deferred gains and losses
on debt extinguishments are recorded to other and other
noncurrent assets – regulatory assets in the Consolidated
Balance Sheets.
Gains and losses on debt extinguishments associated
with unregulated operations are fully recognized at the
time such debt is reacquired and are reported as a
component of interest expense.
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