PG&E 2011 Annual Report Download - page 68

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
table sets forth the after-tax changes in each component of PG&E Corporation’s accumulated other comprehensive
loss:
2011 2010 2009
(in millions)
Balance at beginning of year ............................................... $(202) $(160) $(221)
Period change in pension benefits and other benefits (Note 12):
Unrecognized prior service cost(1) .......................................... 36 (29) (1)
Unrecognized net gain (loss)(2) ............................................ (655) (110) 363
Unrecognized net transition obligation(3) ..................................... 15 15 15
Transfer to regulatory account(4)(5) .......................................... 593 82 (316)
Balance at end of year ................................................... $(213) $(202) $(160)
(1) Net of income tax benefit (expense) of $(24) million, $20 million, and $1 million for December 31, 2011, 2010, and 2009, respectively.
(2) Net of income tax benefit (expense) of $452 million, $73 million, and $(216) million for December 31, 2011, 2010, and 2009, respectively.
(3) Net of income tax benefit (expense) of $(11) million for December 31, 2011, 2010, and 2009.
(4) Net of income tax benefit (expense) of $(408) million, $(57) million, and $218 million for December 31, 2011, 2010, and 2009, respectively.
(5) Amounts transferred to the pension regulatory asset are probable of recovery from customers in future rates.
There was no material difference between PG&E Corporation’s and the Utility’s accumulated other
comprehensive income (loss) for the periods presented above.
Revenue Recognition
The Utility recognizes revenues after the CPUC or the FERC has authorized rate recovery, amounts are
objectively determinable and probable of recovery, and amounts will be collected within 24 months. (See Note 3
below.) The Utility recognizes revenues as the electricity and natural gas services are delivered, and include amounts
for services rendered but not yet billed at the end of the period.
The CPUC authorizes most of the Utility’s revenue requirements in its general rate case (‘‘GRC’’), which
generally occurs every three years. The Utility’s ability to recover revenue requirements authorized by the CPUC in
the GRC is independent, or ‘‘decoupled’’, from the volume of the Utility’s sales of electricity and natural gas services.
Generally, the revenue recognition criteria are met ratably over the year.
The CPUC also has authorized the Utility to collect additional revenue requirements to recover certain capital
expenditures and costs that the Utility has been authorized to pass on to customers, including costs to purchase
electricity and natural gas; to fund public purpose, demand response, and customer energy efficiency programs.
Generally, the revenue recognition criteria for pass through costs billed to customers are met at the time the costs
are incurred.
The Utility’s revenues and earnings also are affected by incentive ratemaking mechanisms that adjust rates
depending on the extent to which the Utility meets certain performance criteria.
The FERC authorizes the Utility’s revenue requirements in annual transmission owner rate cases. The Utility’s
ability to recover revenue requirements authorized by the FERC is dependent on the volume of the Utility’s
electricity sales, and revenue is recognized only for amounts billed and unbilled.
The Utility records differences between actual customer billings and the Utility’s authorized revenue
requirement, as well as differences between incurred costs and customer billings or authorized revenue meant to
recover those costs. To the extent these differences are probable of recovery or refund, the Utility records a
regulatory balancing account asset or liability, respectively.
In determining whether revenue transactions should be presented net of the related expenses, the Utility
considers various factors, including whether the Utility takes title to the product being delivered, has latitude in
establishing price for the product, and is subject to the customer credit risk.
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