PG&E 2011 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2011 PG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
assets of PERF were $485 million at December 31, 2011 and primarily consisted of assets related to ERBs, which are
included in other current assets—regulatory assets in the Consolidated Balance Sheets. The liabilities of PERF were
$423 million at December 31, 2011 and consisted of ERBs, which are included in current liabilities in the
Consolidated Balance Sheets. (See Note 5 below.) The assets of PERF are only available to settle the liabilities of
PERF.
As of December 31, 2011, PG&E Corporation’s affiliates had entered into four tax equity agreements with two
privately held companies to fund residential and commercial retail solar energy installations. Under these
agreements, PG&E Corporation has agreed to provide lease payments and investment contributions of up to
$396 million to these companies in exchange for the right to receive benefits from local rebates, federal grants, and a
share of the customer payments made to these companies. The majority of these amounts are recorded in other
noncurrent assets—other in PG&E Corporation’s Consolidated Balance Sheets. As of December 31, 2011, PG&E
Corporation had made total payments of $359 million under these tax equity agreements and received $136 million
in benefits and customer payments. PG&E Corporation holds a variable interest in these companies as a result of
these agreements. PG&E Corporation was not the primary beneficiary of and did not consolidate any of these
companies at December 31, 2011. In making this determination, PG&E Corporation evaluated which party has
control over these companies’ significant economic activities such as designing the companies, vendor selection,
construction, customer selection, and re-marketing activities at the end of customer leases, and determined that these
activities are under the control of these companies. PG&E Corporation’s financial exposure from these arrangements
is generally limited to its lease payments and investment contributions to these companies.
Accounting Standards Issued But Not Yet Adopted
Amendments to Fair Value Measurement Requirements
In May 2011, the Financial Accounting Standards Board (‘‘FAS B’’) issued an accounting standards update that
will clarify certain fair value measurement requirements. In addition, the accounting standards update will permit an
entity to measure the fair value of a portfolio of financial instruments based on the portfolio’s net position, provided
that the portfolio has met certain criteria. Furthermore, the accounting standards update will refine when an entity
should, and should not, apply certain premiums and discounts to a fair value measurement. The accounting standards
update will be effective prospectively for PG&E Corporation and the Utility beginning on January 1, 2012. The
adoption of the accounting standards update will be reflected in footnote disclosures only and will not have an
impact on PG&E Corporation’s or the Utility’s Consolidated Financial Statements.
Presentation of Comprehensive Income
In June 2011, the FASB issued an accounting standards update that will require an entity to present either (1) a
statement of comprehensive income or loss or (2) a statement of other comprehensive income or loss. A statement
of comprehensive income or loss would be comprised of a statement of income or loss with other comprehensive
income and losses, total other comprehensive income or loss, and total comprehensive income or loss appended. A
statement of other comprehensive income or loss would immediately follow a statement of income or loss and would
be comprised of other comprehensive income and losses, total other comprehensive income or loss, and total
comprehensive income or loss. Furthermore, the accounting standards update will prohibit an entity from presenting
other comprehensive income and losses in a statement of equity.
In December 2011, the FASB issued an accounting standards update to defer the requirement for an entity to
present reclassifications between other comprehensive income or loss and net income or loss. This supersedes the
requirement that was originally included in the June 2011 accounting standard update.
The accounting standards updates will be effective retrospectively for PG&E Corporation and the Utility
beginning on January 1, 2012. The adoption of the accounting standards updates will impact financial statement
presentation with the addition of new statements of comprehensive income or loss.
67