PG&E 2011 Annual Report Download - page 67

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A reconciliation of the changes in the ARO liability is as follows:
(in millions)
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
Revision in estimated cash flows .......................................... 10
Accretion ........................................................... 100
Liabilities settled ..................................................... (87)
ARO liability at December 31, 2011 ........................................ $1,609
The Utility has identified the following AROs for which a reasonable estimate of fair value could not be made.
As a result, the Utility has not recorded a liability related to these AROs:
•Restoration of land to its pre-use condition under the terms of certain land rights agreements. 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;
•Removal and proper disposal of lead-based paint contained in some Utility facilities. 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 obligations; and
•Removal of certain communications equipment from leased property, and retirement activities associated with
substation and certain hydroelectric facilities. 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, expected to be 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 2011, 2010, or 2009.
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
$186 million and $204 million at December 31, 2011 and 2010, respectively. The amortization expense related to this
loss was $18 million in 2011, $23 million in 2010, and $25 million in 2009. Deferred gains and losses on debt
extinguishments are recorded to current assets—regulatory assets 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.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss reports a measure for accumulated changes in equity of an enterprise
that result from transactions and other economic events, other than transactions with shareholders. The following
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