PG&E 2011 Annual Report Download - page 74

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS (Continued)
ARO also represents the deferral of realized and unrealized gains and losses on those nuclear decommissioning trust
assets.
The regulatory liability for public purpose programs represents amounts received from customers designated for
public purpose program costs that are expected to be incurred in the future. The public purpose programs regulatory
liabilities primarily consist of amounts collected from customers to pay for costs that the Utility expects to incur in
the future under energy efficiency programs designed to encourage the manufacture, design, distribution, and
customer use of energy efficient appliances and other energy-using products; under the California Solar Initiative
program to promote the use of solar energy in residential homes and commercial, industrial, and agricultural
properties; and under the Self-Generation Incentive program to promote distributed generation technologies installed
on the customer’s side of the utility meter.
At December 31, 2011 and 2010, ‘‘other’’ primarily consisted of regulatory liabilities related to the gain
associated with the Utility’s acquisition of the permits and other assets related to the Gateway Generating Station as
part of a settlement that the Utility entered into with Mirant Corporation and price risk management regulatory
liabilities representing the expected future refund of unrealized gains related to price risk management derivative
instruments with terms in excess of one year. (See Note 10 below.)
Regulatory Balancing Accounts
The Utility’s current regulatory balancing accounts represent the amounts expected to be received from or
refunded to the Utility’s customers through authorized rate adjustments within the next 12 months. Regulatory
balancing accounts that the Utility does not expect to collect or refund in the next 12 months are included in other
noncurrent assets—regulatory assets and noncurrent liabilities—regulatory liabilities in the Consolidated Balance
Sheets.
Current Regulatory Balancing Accounts, net
Receivable
(Payable)
Balance at
December 31,
2011 2010
(in millions)
Utility generation ................................................ $241 $303
Distribution revenue adjustment mechanism ............................ 223 145
Public purpose programs .......................................... 97 164
Hazardous substance ............................................. 57 38
Gas fixed cost .................................................. 16 56
Energy procurement .............................................. (48) (25)
Energy recovery bonds ............................................ (105) (34)
Other ........................................................ 227 202
Total regulatory balancing accounts, net ............................... $708 $849
The utility generation balancing account is used to record and recover the authorized revenue requirements
associated with Utility-owned electric generation, including capital and related non-fuel operating and maintenance
expenses. The distribution revenue adjustment mechanism balancing account is used to record and recover the
authorized electric distribution revenue requirements and certain other electric distribution-related authorized costs.
The Utility’s recovery of these revenue requirements is decoupled from the volume of sales; therefore, the Utility
recognizes revenue evenly over the year, even though the level of cash collected from customers will fluctuate
depending on the volume of electricity sales. During the colder months of winter there is generally an under-
collection in these balancing accounts due to a lower volume of electricity sales and lower rates. During the warmer
months of summer there is generally an over-collection due to a higher volume of electricity sales and higher rates.
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