PG&E 2012 Annual Report Download - page 110

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13: RESOLUTION OF REMAINING CHAPTER 11 DISPUTED CLAIMS (Continued)
At December 31, 2012, the remaining net disputed claims liability consisted of $157 million of remaining net
disputed claims (classified on the Consolidated Balance Sheets within accounts payable—disputed claims and
customer refunds) and $685 million of accrued interest (classified on the Consolidated Balance Sheets within interest
payable).
At December 31, 2012 and December 31, 2011, the Utility held $291 million and $320 million, respectively, in
escrow, including earned interest, for payment of the remaining net disputed claims liability. These amounts are
included within restricted cash on the Consolidated Balance Sheets.
Interest accrues on the remaining net disputed claims at the FERC-ordered rate, which is higher than the rate
earned by the Utility on the escrow balance. Although the Utility has been collecting the difference between the
accrued interest and the earned interest from customers in rates, these collections are not held in escrow. If the
amount of accrued interest is greater than the amount of interest ultimately determined to be owed on the remaining
net disputed claims, the Utility would refund to customers any excess interest collected. The amount of any interest
that the Utility may be required to pay will depend on the final determined amount of the remaining net disputed
claims and when such interest is paid.
NOTE 14: RELATED PARTY AGREEMENTS AND TRANSACTIONS
The Utility and other subsidiaries provide and receive various services to and from their parent, PG&E
Corporation, and among themselves. The Utility and PG&E Corporation exchange administrative and professional
services in support of operations. Services provided directly to PG&E Corporation by the Utility are priced at the
higher of fully loaded cost (i.e., direct cost of good or service and allocation of overhead costs) or fair market value,
depending on the nature of the services. Services provided directly to the Utility by PG&E Corporation are generally
priced at the lower of fully loaded cost or fair market value, depending on the nature and value of the services.
PG&E Corporation also allocates various corporate administrative and general costs to the Utility and other
subsidiaries using agreed-upon allocation factors, including the number of employees, operating and maintenance
expenses, total assets, and other cost allocation methodologies. Management believes that the methods used to
allocate expenses are reasonable and meet the reporting and accounting requirements of its regulatory agencies.
The Utility’s significant related party transactions were as follows:
Year Ended
December 31,
2012 2011 2010
(in millions)
Utility revenues from:
Administrative services provided to PG&E
Corporation ............................ $ 7 $ 6 $ 7
Utility expenses from:
Administrative services received from PG&E
Corporation ............................ $ 50 $ 49 $ 55
Utility employee benefit due to PG&E Corporation . 51 33 27
At December 31, 2012 and 2011, the Utility had receivables of $19 million and $21 million, respectively, from
PG&E Corporation included in accounts receivable—other and other noncurrent assets—other on the Utility’s
Consolidated Balance Sheets, and payables of $17 million and $13 million, respectively, to PG&E Corporation
included in accounts payable—other on the Utility’s Consolidated Balance Sheets.
NOTE 15: COMMITMENTS AND CONTINGENCIES
PG&E Corporation and the Utility have substantial financial commitments in connection with agreements
entered into to support the Utility’s operating activities. PG&E Corporation and the Utility also have significant
contingencies arising from their operations, including contingencies related to regulatory proceedings, nuclear
operations, legal matters, environmental remediation, and guarantees.
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