PG&E 2012 Annual Report Download - page 112

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15: COMMITMENTS AND CONTINGENCIES (Continued)
At December 31, 2012, the undiscounted future expected obligations under power purchase agreements were as
follows:
Qualifying Renewable Total
Facility (Other than QF) Other Payments
(in millions)
2013 ..................... $ 892 $ 1,356 $ 846 $ 3,094
2014 ..................... 914 1,843 677 3,434
2015 ..................... 727 2,038 649 3,414
2016 ..................... 618 2,054 626 3,298
2017 ..................... 490 2,053 597 3,140
Thereafter ................. 2,238 30,958 3,322 36,518
Total ..................... $ 5,879 $ 40,302 $ 6,717 $ 52,898
Some of the power purchase agreements that the Utility entered into with independent power producers that are
QFs are treated as capital leases. The following table shows the future fixed capacity payments due under the QF
agreements that are treated as capital leases. (These amounts are also included in the table above.) The fixed
capacity payments are discounted to their present value in the table below using the Utility’s incremental borrowing
rate at the inception of the leases. The amount of this discount is shown in the table below as the amount
representing interest.
(in millions)
2013 .......................................................... $ 35
2014 .......................................................... 27
2015 .......................................................... 24
2016 .......................................................... 22
2017 .......................................................... 18
Thereafter ...................................................... 20
Total fixed capacity payments ........................................ 146
Less: amount representing interest .................................... 21
Present value of fixed capacity payments ............................... $ 125
Minimum lease payments associated with the lease obligations are included in cost of electricity on PG&E
Corporation’s and the Utility’s Consolidated Statements of Income. The timing of the recognition of the lease
expense conforms to the ratemaking treatment for the Utility’s recovery of the cost of electricity. The QF agreements
that are treated as capital leases expire between April 2014 and September 2021.
The present value of the fixed capacity payments due under these agreements is recorded on PG&E
Corporation’s and the Utility’s Consolidated Balance Sheets. At December 31, 2012 and 2011, current liabilities—
other included $29 million and $36 million, respectively, and noncurrent liabilities—other included $96 million and
$212 million, respectively. The corresponding assets at December 31, 2012 and 2011 of $125 million and $248 million
including accumulated amortization of $148 million and $160 million, respectively are included in property, plant,
and equipment on PG&E Corporation’s and the Utility’s Consolidated Balance Sheets.
Natural Gas Supply, Transportation, and Storage Commitments
The Utility purchases natural gas directly from producers and marketers in both Canada and the United States
to serve its core customers and to fuel its owned-generation facilities. The Utility also contracts for natural gas
transportation from the points at which the Utility takes delivery (typically in Canada, the US Rocky Mountain
supply area, and the southwestern United States) to the points at which the Utility’s natural gas transportation
system begins. In addition, the Utility has contracted for natural gas storage services in northern California in order
to more reliably meet customers’ loads.
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