PG&E 2011 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 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 10: DERIVATIVES AND HEDGING ACTIVITIES (Continued)
At December 31, 2010, PG&E Corporation’s and the Utility’s outstanding derivative balances were as follows:
Gross Derivative Cash Total Derivative
Balance Netting Collateral Balances
(in millions)
Commodity Risk (PG&E Corporation and the Utility)
Current assets—other ............ $ 56 $(45) $ 79 $ 90
Other noncurrent assets—other ..... 77 (62) 96 111
Current liabilities—other .......... (388) 45 119 (224)
Noncurrent liabilities—other ....... (486) 62 130 (294)
Total commodity risk ............. $(741) $ — $424 $(317)
Gains and losses recorded on PG&E Corporation’s and the Utility’s derivative instruments were as follows:
Commodity Risk
(PG&E Corporation
and Utility)
For the year ended
December 31,
2011 2010 2009
(in millions)
Unrealized (loss) gain—regulatory assets and liabilities(1) ........................... $ 21 $(260) $ 15
Realized loss—cost of electricity(2) ........................................... (558) (573) (701)
Realized loss—cost of natural gas(2) .......................................... (106) (79) (54)
Total commodity risk instruments ........................................... $(643) $(912) $(740)
(1) Unrealized gains and losses on commodity risk-related derivative instruments are recorded to regulatory assets or liabilities, rather than
recorded to the Consolidated Statements of Income. These amounts exclude the impact of cash collateral postings.
(2) These amounts are fully passed through to customers in rates. Accordingly, net income was not impacted by realized amounts on these
instruments.
Cash inflows and outflows associated with the settlement of all derivative instruments are included in operating
cash flows on PG&E Corporation’s and the Utility’s Consolidated Statements of Cash Flows.
The majority of the Utility’s commodity risk-related derivative instruments contain collateral posting provisions
tied to the Utility’s credit rating from each of the major credit rating agencies. As of December 31, 2011, the Utility’s
credit rating was investment grade. If the Utility’s credit rating were to fall below investment grade, the Utility would
be required to immediately post additional cash to fully collateralize its net liability derivative positions. At
December 31, 2011, the additional cash collateral that the Utility would be required to post if its credit risk-related
contingency features were triggered was as follows:
(in millions)
Derivatives in a liability position with credit risk-related contingencies that are not fully
collateralized ....................................................... $(611)
Related derivatives in an asset position ...................................... 86
Collateral posting in the normal course of business related to these derivatives ......... 250
Net position of derivative contracts/additional collateral posting requirements(1) ........ $(275)
(1) This calculation excludes the impact of closed but unpaid positions, as their settlement is not impacted by any of the Utility’s credit
risk-related contingencies.
86