PG&E 2012 Annual Report Download - page 118

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15: COMMITMENTS AND CONTINGENCIES (Continued)
Corporation and the Utility are unable to estimate the amount (or range of amounts) of reasonably possible losses
associated with any civil or criminal penalties that could be imposed on the Utility as a consequence of this
investigation.
Third-Party Claims
In addition to the investigations and proceedings discussed above, at December 31, 2012, approximately
140 lawsuits involving third-party claims for personal injury and property damage, including two class action lawsuits,
had been filed against PG&E Corporation and the Utility in connection with the San Bruno accident on behalf of
approximately 450 plaintiffs. The lawsuits seek compensation for personal injury and property damage, and other
relief, including punitive damages. These cases were coordinated and assigned to one judge in the San Mateo County
Superior Court. Many of the plaintiffs’ claims have been resolved through settlements. The trial of the first group of
remaining cases began on January 2, 2013 with pretrial motions and hearings. On January 14, 2013, the court vacated
the trial and all pending hearings due to the significant number of cases that have been settled outside of court. The
court has urged the parties to settle the remaining cases. As of February 8, 2013, the Utility has entered into
settlement agreements to resolve the claims of approximately 140 plaintiffs. It is uncertain whether or when the
Utility will be able to resolve the remaining claims through settlement.
At December 31, 2012, the Utility had recorded cumulative charges of $455 million for estimated third-party
claims related to the San Bruno accident, including an $80 million charge made during 2012, primarily to reflect
settlements and information exchanged by the parties during the settlement and discovery process. The Utility
estimates it is reasonably possible that it may incur as much as an additional $145 million for third-party claims, for a
total possible loss of $600 million. PG&E Corporation and the Utility are unable to estimate the amount (or range
of amounts) of reasonably possible losses associated with punitive damages, if any, related to these matters. The
Utility has publicly stated that it is liable for the San Bruno accident and will take financial responsibility to
compensate all of the victims for the injuries they suffered as a result of the accident.
The following table presents changes in third-party claims activity since the San Bruno accident in 2010; the
balance is included in other current liabilities in PG&E Corporation’s and the Utility’s Consolidated Balance Sheets:
(in millions)
Balance at January 1, 2010 .......................................... $ —
Loss accrued .................................................... 220
Less: Payments .................................................. (6)
Balance at December 31, 2010 ....................................... 214
Additional loss accrued ............................................ 155
Less: Payments .................................................. (92)
Balance at December 31, 2011 ....................................... 277
Additional loss accrued ............................................ 80
Less: Payments .................................................. (211)
Balance at December 31, 2012 ....................................... $ 146
Additionally, the Utility has liability insurance from various insurers who provide coverage at different policy
limits that are triggered in sequential order or ‘‘layers.’’ Generally, as the policy limit for a layer is exhausted the
next layer of insurance becomes available. The aggregate amount of insurance coverage for third-party liability
attributable to the San Bruno accident is approximately $992 million in excess of a $10 million deductible. The
Utility has recognized cumulative insurance recoveries for third-party claims of $284 million, which included
$185 million for 2012 and $99 million for 2011. Although the Utility believes that a significant portion of costs
incurred for third-party claims relating to the San Bruno accident will ultimately be recovered through its insurance,
it is unable to predict the amount and timing of additional insurance recoveries.
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