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PG&E Corporation and Pacific Gas and Electric Company
2013 Annual Report

Table of contents

  • Page 1
    PG&E Corporation and Pacific Gas and Electric Company 2013 Annual Report

  • Page 2

  • Page 3
    ...Consolidated Financial Statements Quarterly Consolidated Financial Data Management's Report on Internal Control Over Financial Reporting PG&E Corporation and Pacific Gas and Electric Company Boards of Directors Officers of PG&E Corporation and Pacific Gas and Electric Company Shareholder Information...

  • Page 4

  • Page 5
    ... rights Environmental Protection Agency earnings per common share Federal Energy Regulatory Commission generally accepted accounting principles greenhouse gas general rate case gas transmission and storage Internal Revenue Service long term incentive plan manufactured gas plant Nuclear Electric...

  • Page 6

  • Page 7
    ... from the Utility's transmission pipeline rights-of-way and perform other gas-related work. Costs incurred also included charges for disallowed PSEP capital expenditures, fines related to natural gas enforcement matters, and increases in the accrual for third-party claims arising from the San Bruno...

  • Page 8
    ... stock is traded on the New York Stock Exchange. The official New York Stock Exchange symbol for PG&E Corporation is ''PCG.'' COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN(1) This graph compares the cumulative total return on PG&E Corporation common stock (equal to dividends plus stock...

  • Page 9
    ... share(1) . At Year-End Common stock price per share ...Total assets ...Long-term debt (excluding current portion) ...Capital lease obligations (excluding current portion)(2) ...Energy recovery bonds (excluding current portion)(3) ...Pacific Gas and Electric Company For the Year Operating revenues...

  • Page 10
    ... the rates and terms and conditions of service governing the Utility's electric transmission operations and interstate natural gas transportation contracts. The NRC oversees the licensing, construction, operation, and decommissioning of the Utility's nuclear generation facilities. The Utility also...

  • Page 11
    ... issues shares to fund its equity contributions to the Utility to maintain the Utility's capital structure and fund operations, including expenses related to natural gas matters. This has no dollar impact on earnings. Key Factors Affecting Results of Operations, Financial Condition, and Cash...

  • Page 12
    ...common stock to fund its equity contributions as the Utility pays fines and incurs additional unrecoverable gas safety-related costs. These additional issuances could have a material dilutive effect on PG&E Corporation's EPS. PG&E Corporation's and the Utility's ability to access the capital markets...

  • Page 13
    ... costs to purchase electricity and natural gas, as well as costs to fund public purpose programs. They also include revenues authorized in various rate cases that are designated for a specific purpose such as the payment of pension costs. (See ''Utility Cost Recovery Activities'' below.) 2013 Cost...

  • Page 14
    ...lower return authorized in the 2013 Cost of Capital proceeding. The Utility's electric and natural gas operating revenues increased by $340 million, or 4%, in 2012 compared to 2011 primarily due to an increase in revenues authorized in various rate cases and increases in natural gas storage revenues...

  • Page 15
    ... Effective tax rate ...Utility Cost Recovery Activities Cost of Electricity The Utility's cost of electricity includes the costs of power purchased from third parties, transmission, fuel used in its own generation facilities, fuel supplied to other facilities under power purchase agreements, and...

  • Page 16
    ... in energy commodity costs, collateral requirements related to price risk management activities, the timing and amount of tax payments or refunds, and the timing and effect of regulatory decisions and long-term financings, among other factors. The Utility generally utilizes equity contributions from...

  • Page 17
    ... investigations related to natural gas matters and the San Bruno accident. PG&E Corporation's and the Utility's credit ratings may affect their access to the credit and capital markets and their respective financing costs in those markets. Credit rating downgrades may increase the cost of short-term...

  • Page 18
    ..., the Dividend Reinvestment and Stock Purchase Plan, and share-based compensation plans; and • 11 million shares were sold for cash proceeds of $455 million, net of commissions paid of $4 million, under equity distribution agreements. The proceeds from these sales were used for general corporate...

  • Page 19
    ...: Allow sufficient cash to pay a dividend and to fund investments while avoiding having to issue new equity unless PG&E Corporation's or the Utility's capital expenditure requirements are growing rapidly and PG&E Corporation or the Utility can issue equity at reasonable cost and terms; and...

  • Page 20
    ...and 2015 GT&S rate cases; • the timing and amount of tax payments, tax refunds, net collateral payments, and interest payments; • the timing and amount of insurance recoveries related to third party claims; • the timing and amount of fines or penalties that may be imposed, as well as any costs...

  • Page 21
    ... used to purchase new nuclear decommissioning trust investments. The funds in the decommissioning trusts, along with accumulated earnings, are used exclusively for decommissioning and dismantling the Utility's nuclear generation facilities. The Utility's cash flows from investing activities for 2013...

  • Page 22
    ...: Utility Long-term debt(1): Fixed rate obligations ...Variable rate obligations ...Purchase obligations(2): Power purchase agreements: Qualifying facilities ...Renewable energy (other than QF) . Other power purchase agreements . . Natural gas supply, transportation, and storage ...Nuclear fuel...

  • Page 23
    ...payments to major tax jurisdictions related to unrecognized tax benefits. Matters relating to tax years that remain subject to examination are discussed in Note 8 of the Notes to the Consolidated Financial Statements. NATURAL GAS MATTERS Since the San Bruno accident, PG&E Corporation and the Utility...

  • Page 24
    ... Show Cause. In August 2013, the CPUC issued two OSCs related to a document submitted by the Utility on July 3, 2013 as ''errata'' to correct information about some segments in Lines 101 and 147 (two of the Utility's natural gas transmission pipelines that serve the San Francisco peninsula) that had...

  • Page 25
    ... the Consolidated Financial Statements. Class Action Complaint On August 23, 2012, a complaint was filed in the San Francisco Superior Court against PG&E Corporation and the Utility (and other unnamed defendants) by individuals who seek certification of a class consisting of all California residents...

  • Page 26
    ... 2013, the Utility filed its 2015 GT&S rate case application (covering 2015 through 2017) requesting the CPUC approve a total annual revenue requirement of $1.29 billion for anticipated costs of providing natural gas transmission and storage services beginning on January 1, 2015. This is an increase...

  • Page 27
    ... Oakley facility. The Utility is reviewing the court's decision. Diablo Canyon Nuclear Power Plant In 2009, the Utility filed an application with the NRC to renew the operating licenses for the two operating units at Diablo Canyon. (The current licenses expire in 2024 and 2025.) In May 2011, after...

  • Page 28
    ... it issues a new ''waste confidence decision.'' (See ''Risk Factors'' below.) The CPUC is considering the Utility's December 2012 application to recover estimated costs to decommission the Utility's nuclear facilities at Diablo Canyon and the retired nuclear facility Humboldt Bay Power Plant Unit...

  • Page 29
    ...Utility's natural gas customers. The Utility has filed requests at the CPUC for authority to recover the natural gas supplier-related compliance costs from natural gas customers on an annual basis effective January 1, 2015. The Utility expects all costs and revenues associated with GHG cap-and-trade...

  • Page 30
    ... and storage costs for non-core customers may not be fully recoverable. The Utility is subject to price and volumetric risk for the portion of intrastate natural gas transportation and storage capacity that has not been sold under long-term contracts providing for the recovery of all fixed costs...

  • Page 31
    ... industry, including the CAISO market, other California investor-owned electric utilities, municipal utilities, energy trading companies, financial institutions, electricity generation companies, and oil and natural gas production companies located in the United States and Canada. If a counterparty...

  • Page 32
    ..., power plant sites, gas compressor stations, and sites used by the Utility for the storage, recycling, or disposal of potentially hazardous materials, even if the Utility did not deposit those substances on the site. The Utility generally commences the environmental remediation assessment process...

  • Page 33
    ... timing differences between the recognition of expenses and costs recovered through the ratemaking process. Most of PG&E Corporation's and the Utility's AROs relate to the Utility's obligation to decommission its nuclear generation facilities, certain fossil fuel-fired generation facilities, and gas...

  • Page 34
    ... significant actuarial assumptions used in determining pension and other benefit obligations include the discount rate, the average rate of future compensation increases, the health care cost trend rate and the expected return on plan assets. PG&E Corporation and the Utility review these assumptions...

  • Page 35
    ...the Utility's natural gas compressor station site located near Hinkley, California; • the impact of new legislation or NRC regulations, recommendations, policies, decisions, or orders relating to the nuclear industry, including operations, seismic design, security, safety, relicensing, the storage...

  • Page 36
    ... amount of insurance recoveries related to third party claims arising from the San Bruno accident; • the ability of PG&E Corporation and the Utility to access capital markets and other sources of debt and equity financing in a timely manner on acceptable terms; • changes in credit ratings which...

  • Page 37
    ...and safety of the Utility's information, operating, and billing systems; and the future development of the state-mandated California High Speed Rail project through the Utility's service territory. Media coverage of outages, vandalism, physical attacks on the Utility's facilities (such as the attack...

  • Page 38
    ... control program. The Utility's ability to recover its natural gas transmission and storage costs in 2015, 2016, and 2017, will be determined by whether the CPUC approves the Utility's GT&S rate case application. (See ''Regulatory Matters'' above.) PG&E Corporation's and the Utility's financial...

  • Page 39
    ... of the energy industry, volatility in electricity or natural gas prices, and general economic and financial market conditions. If PG&E Corporation's or the Utility's credit ratings were downgraded to below investment grade, their ability to access the capital and credit markets would be negatively...

  • Page 40
    ... through its costs to procure electricity and natural gas to customers in rates, a significant and sustained rise in commodity prices, caused by costs associated with new renewable energy resources and California's new cap-and-trade program and other factors, could create overall rate pressures that...

  • Page 41
    ... power facilities owned or under contract by the Utility, and the implementation of new energy efficiency and demand response programs. The market prices of electricity also fluctuate due to various factors, including the type of generation resources. Hydroelectric generation resources are generally...

  • Page 42
    ...increasing self-generation and net energy metering, and the growth of distributed generation and storage, PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows could be materially adversely affected. The operation of the Utility's electricity and natural gas...

  • Page 43
    ... in increased costs, the inability to track or collect revenues, the diversion of management's and employees' attention and resources, and could negatively affect the effectiveness of the companies' control environment, and/or the companies' ability to timely file required regulatory reports. The...

  • Page 44
    ... through customer rates. However, the costs or damages the Utility may incur in connection with the operation and decommissioning of its nuclear power plants could exceed the amount of the Utility's insurance coverage and nuclear decommissioning trust assets. The Utility has insurance coverage for...

  • Page 45
    ... rule would affect the Utility's nuclear generation operations during the current terms of the NRC licenses for Diablo Canyon. The CPUC has authority to determine the rates the Utility can collect to recover its nuclear fuel, operating, maintenance, compliance, and decommissioning costs. The Utility...

  • Page 46
    ... gas plant sites, current and former power plant sites, former gas gathering and gas storage sites, sites where natural gas compressor stations are located, current and former substations, service center and general construction yard sites, and sites currently and formerly used by the Utility...

  • Page 47
    ...proceedings, see MD&A ''Natural Gas Matters'' above.) A California law enacted in 2013 requires the CPUC to establish a safety enforcement program for gas facilities by July 1, 2014 and for electric facilities by January 1, 2015. The law requires the CPUC to delegate enforcement authority to the SED...

  • Page 48
    ...these plans and trusts. The cost of providing pension and other postretirement benefits is also affected by other factors, including the assumed rate of return on plan assets, employee demographics, discount rates used in determining future benefit obligations, rates of increase in health care costs...

  • Page 49
    ... (in the form of dividends and share repurchases) and reimburse PG&E Corporation for the Utility's share of applicable expenses. Before it can distribute cash to PG&E Corporation, the Utility must use its resources to satisfy its own obligations, including its obligation to serve customers, to pay...

  • Page 50
    PG&E Corporation CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) Year ended December 31, 2013 2012 2011 Operating Revenues Electric ...Natural gas ...Total operating revenues ...Operating Expenses Cost of electricity ...Cost of natural gas ...Operating and maintenance ......

  • Page 51
    PG&E Corporation CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year ended December 31, 2013 2012 2011 $ 828 $ 830 $ 858 (in millions) Net Income ...Other Comprehensive Income Pension and other postretirement benefit plans obligations (net of taxes of $80, $72, and $9, at respective dates) ...Gain...

  • Page 52
    ..., 2013 and 2012, respectively) ...Accrued unbilled revenue ...Regulatory balancing accounts ...Other ...Regulatory assets ...Inventories Gas stored underground and fuel oil ...Materials and supplies ...Income taxes receivable ...Other ...Property, Plant, and Equipment Electric ...Gas ...Construction...

  • Page 53
    PG&E Corporation CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) Balance at December 31, 2013 2012 LIABILITIES AND EQUITY Current Liabilities Short-term borrowings ...Long-term debt, classified as current ...Accounts payable Trade creditors ...Disputed claims and customer refunds ...

  • Page 54
    ... equity funds used during construction ...Deferred income taxes and tax credits, net ...PSEP disallowed capital expenditures ...Other ...Effect of changes in operating assets and liabilities: Accounts receivable ...Inventories ...Accounts payable ...Income taxes receivable/payable ...Other current...

  • Page 55
    ... stock issued, net . Stock-based compensation amortization ...Common stock dividends declared ...Tax benefit from employee stock plans ...Preferred stock dividend requirement of subsidiary Balance at December 31, 2011 ...Net income ...Other comprehensive income ...Common stock issued, net . Stock...

  • Page 56
    Pacific Gas and Electric Company CONSOLIDATED STATEMENTS OF INCOME (in millions) Year ended December 31, 2013 2012 2011 Operating Revenues Electric ...Natural gas ...Total operating revenues ...Operating Expenses Cost of electricity ...Cost of natural gas ...Operating and maintenance ...Depreciation...

  • Page 57
    Pacific Gas and Electric Company CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year ended December 31, 2013 2012 2011 $ 866 $ 811 $ 845 (in millions) Net Income ...Other Comprehensive Income Pension and other postretirement benefit plans obligations (net of taxes of $75, $73, and $4, at ...

  • Page 58
    ... Customers (net of allowance for doubtful accounts of $80 and $87 at December 31, 2013 and 2012, respectively) ...Accrued unbilled revenue ...Regulatory balancing accounts ...Other ...Regulatory assets ...Inventories Gas stored underground and fuel oil ...Materials and supplies ...Income taxes...

  • Page 59
    ... Gas and Electric Company CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) Balance at December 31, 2013 2012 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings ...Long-term debt, classified as current ...Accounts payable Trade creditors ...Disputed claims...

  • Page 60
    ...trust investments Purchases of nuclear decommissioning trust investments ...Other ... Net cash used in investing activities ...Cash Flows from Financing Activities Borrowings under revolving credit facilities ...Repayments under revolving credit facilities ...Net issuances (repayments) of commercial...

  • Page 61
    ... ...Balance at December 31, 2012 . . Net income ...Other comprehensive income ...Equity contribution ...Tax expense from employee stock plans ...Common stock dividend ...Preferred stock dividend ... Balance at December 31, 2013 ... See accompanying Notes to the Consolidated Financial Statements...

  • Page 62
    ... the licensing, construction, operation, and decommissioning of the Utility's nuclear generation facilities. This is a combined annual report of PG&E Corporation and the Utility. PG&E Corporation's Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other...

  • Page 63
    ... ...Natural gas distribution facilities ...Natural gas transportation and storage ...Construction work in progress ... Total property, plant, and equipment ...Accumulated depreciation ...Net property, plant, and equipment ...(1) Balance includes nuclear fuel inventories. Stored nuclear fuel...

  • Page 64
    ... future on-site storage costs from the federal government. Recovered amounts will be refunded to customers through rates. The estimated undiscounted nuclear decommissioning cost for the Utility's nuclear generation facilities was approximately $3.5 billion at December 31, 2013 and 2012, as filed in...

  • Page 65
    ... in 2011. Revenue Recognition The Utility recognizes revenues as electricity and natural gas services are delivered, and includes amounts for services rendered but not yet billed at the end of the period. The CPUC authorizes most of the Utility's revenues in the Utility's GRC and its GT&S rate cases...

  • Page 66
    ... to a tax-sharing agreement under which the Utility determines its income tax provision (benefit) on a stand-alone basis. Nuclear Decommissioning Trusts The Utility's nuclear generation facilities consist of two units at Diablo Canyon and the retired facility at Humboldt Bay. Nuclear decommissioning...

  • Page 67
    ... funds that are considered VIEs. Under these agreements, PG&E Corporation has made cumulative lease payments and investment contributions of $362 million from 2010 to 2013 to these companies in exchange for the right to receive benefits from local rebates, federal grants, and a share of the customer...

  • Page 68
    ...:(1) Amortization of prior service cost (net of taxes of $8, $10, and $0, respectively) ...Amortization of net actuarial loss (net of taxes of $45, $3, and $0, respectively) ...Transfer to regulatory account (net of taxes of $54, $0, and $0, respectively) ...Net current period other comprehensive...

  • Page 69
    ... unrealized gains and losses on the nuclear decommissioning trust investments. (See Note 10 below.) Represents amounts received from customers designated for public purpose program costs expected to be incurred beyond the next 12 months, primarily related to energy efficiency programs. (2) (3) 63

  • Page 70
    ... accounts receivable and payable are composed of the following: Receivable Balance at December 31, 2013 2012 ...$ 102 57 70 410 56 429 1,124 $ 219 117 44 193 48 315 936 (in millions) Electric distribution ...Utility generation ...Gas distribution ...Energy procurement ...Public purpose programs...

  • Page 71
    ... 2009 A-D, variable rates(4), due 2016 and 2026(5) ...Total pollution control bonds ...Total Utility long-term debt, net of current portion ...Total consolidated long-term debt, net of current portion ...(1) (2) At December 31, 2013, interest rates on these bonds and the related loans ranged from...

  • Page 72
    ... plant or at the Utility's Diablo Canyon nuclear power plant. In 1999, the Utility sold all bond-financed facilities at the non-retired units of the Geysers geothermal power plant to Geysers Power Company, LLC pursuant to purchase and sale agreements stating that Geysers Power Company, LLC will use...

  • Page 73
    ... from May 31, 2016 to April 1, 2018. These agreements contain substantially similar terms as their original 2011 credit agreements. PG&E Corporation's and the Utility's revolving credit facilities may be used for working capital, the repayment of commercial paper, and other corporate purposes. At PG...

  • Page 74
    ... on cash distributions from the Utility to meet its debt service and other financial obligations and to pay dividends on its common stock. Long-Term Incentive Plan The PG&E Corporation LTIP permits various forms of share-based incentive awards, including stock options, stock appreciation rights...

  • Page 75
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 5: COMMON STOCK AND SHARE-BASED COMPENSATION (Continued) Share-based compensation costs capitalized during 2013, 2012, and 2011 was immaterial. There was no material difference between PG&E Corporation and the Utility for the information disclosed...

  • Page 76
    ... in dividend and liquidation rights. Upon liquidation or dissolution of the Utility, holders of preferred stock would be entitled to the par value of such shares plus all accumulated and unpaid dividends, as specified for the class and series. During each of 2013, 2012, and 2011 the Utility paid...

  • Page 77
    ... TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 7: EARNINGS PER SHARE PG&E Corporation's basic EPS is calculated by dividing the income available for common shareholders by the weighted average number of common shares outstanding. PG&E Corporation applies the treasury stock method of...

  • Page 78
    ...) Deferred income tax assets: Customer advances for construction Reserve for damages ...Environmental reserve ...Compensation ...Net operating loss carryforward ...GHG allowances ...Other ...Deferred income tax liabilities: Regulatory balancing accounts . . Property related basis differences Income...

  • Page 79
    ... natural gas transmission and distribution businesses during 2014. PG&E Corporation's and the Utility's unrecognized tax benefits may change significantly within the next 12 months depending on the guidance to be issued by the IRS and the resolution of the IRS audits related to the 2010, 2011, and...

  • Page 80
    ...annual and monthly CRR processes. CRRs are considered derivatives. Natural Gas Procurement (Electric Fuels Portfolio) The Utility's electric procurement portfolio is exposed to natural gas price risk primarily through physical natural gas commodity purchases to fuel natural gas generating facilities...

  • Page 81
    ... cash flow variability from fluctuating natural gas prices. These instruments are considered derivatives. Natural Gas Procurement (Core Gas Supply Portfolio) The Utility enters into physical natural gas commodity contracts to fulfill the needs of its residential and smaller commercial customers...

  • Page 82
    ... combined positions of the electric fuels and core gas supply portfolios. Million British Thermal Units. Presentation of Derivative Instruments in the Financial Statements In PG&E Corporation's and the Utility's Consolidated Balance Sheets, derivatives are presented on a net basis by counterparty...

  • Page 83
    ...posting requirements(1) ...(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. NOTE 10: FAIR VALUE MEASUREMENTS PG&E Corporation and the Utility measure their cash equivalents, trust...

  • Page 84
    ...Other fixed-income securities ...Total nuclear decommissioning trusts(2) . . Price risk management instruments (Note 9) Electricity ...Gas ...Total price risk management instruments Rabbi trusts Fixed-income securities ...Life insurance contracts ...Total rabbi trusts ...Long-term disability trust...

  • Page 85
    ...Other fixed-income securities ...Total nuclear decommissioning trusts(2) . . Price risk management instruments (Note 9) Electricity ...Gas ...Total price risk management instruments Rabbi trusts Fixed-income securities ...Life insurance contracts ...Total rabbi trusts ...Long-term disability trust...

  • Page 86
    ... Balance Sheets. Trust Assets The assets held by the nuclear decommissioning trusts, the rabbi trusts related to the non-qualified deferred compensation plans, and the long-term disability trust are composed primarily of equity securities, debt securities, and life insurance policies. In general...

  • Page 87
    ... balancing accounts(1) ...Liability balance as of December 31 ...(1) 49 $ (30) $ (5) (79) The costs related to price risk management activities are recoverable through customer rates, therefore, balancing account revenue is recorded for amounts settled and purchased and there is no impact to net...

  • Page 88
    ... cash, restricted cash, net accounts receivable, short-term borrowings, accounts payable, customer deposits, and the Utility's variable rate pollution control bond loan agreements approximate their carrying values at December 31, 2013 and 2012, as they are short-term in nature or have interest rates...

  • Page 89
    ... Cost Total Unrealized Gains Total Unrealized Losses Total Fair Value (in millions) As of December 31, 2013 Nuclear decommissioning trusts Money market investments ...Equity securities U.S...Non-U.S...Debt securities U.S. government and agency securities ...Municipal securities ...Other fixed...

  • Page 90
    ...and the Utility can deduct payments made to the qualified trusts, subject to certain limitations. PG&E Corporation and the Utility use a December 31 measurement date for all plans. PG&E Corporation's and the Utility's funding policy is to contribute tax-deductible amounts, consistent with applicable...

  • Page 91
    ... plans' aggregate funded status for pension benefits and other benefits for PG&E Corporation during 2013 and 2012: Pension Benefits (in millions) Change in plan assets: Fair value of plan assets at January 1 Actual return on plan assets ...Company contributions ...Benefits and expenses paid ...2013...

  • Page 92
    ...the Utility for the information disclosed above. Components of Net Periodic Benefit Cost Net periodic benefit cost as reflected in PG&E Corporation's Consolidated Statements of Income was as follows: Pension Benefits (in millions) Service cost for benefits earned . . Interest cost ...Expected return...

  • Page 93
    ... FINANCIAL STATEMENTS (Continued) NOTE 11: EMPLOYEE BENEFIT PLANS (Continued) Other Benefits (in millions) Service cost for benefits earned ...Interest cost ...Expected return on plan assets ...Amortization of transition obligation Amortization of prior service cost . . Amortization of net...

  • Page 94
    ... and the Utility's trusts hold significant allocations to fixed-income investments that include U.S. government securities, corporate securities, and other fixed-income securities. Although they contribute to funded status volatility, equity investments are held to reduce long-term funding costs due...

  • Page 95
    .../equity allocation of the pension's portfolio. Foreign currency exchange contracts are also used to hedge a portion of the currency of the global equity investments. PG&E Corporation and the Utility apply a risk management framework for managing the risks associated with employee benefit plan trust...

  • Page 96
    ...total plan assets disclosed at fair value in the table above, the trusts had other net assets of $131 million and $132 million at December 31, 2013 and 2012, respectively. These net assets and net liabilities were comprised primarily of cash, accounts receivable, accounts payable, and deferred taxes...

  • Page 97
    ...Commingled funds are valued using a net asset value per share and are maintained by investment companies for large institutional investors and are not publicly traded. Commingled funds are comprised primarily of underlying equity securities that are publicly traded on exchanges, and price quotes for...

  • Page 98
    ...2013 and 2012: Pension Benefits Corporate Fixed-Income Real Assets $ 585 28 (1) 12 (13) $ 611 1 - 20 (7) $ 625 $ $ $ 65 12 - 208 - 285 49 (3) 352 (139) 544 $ $ $ (in millions) Balance as of January 1, 2012 ...Actual return on plan assets: Relating to assets still held at the reporting date Relating...

  • Page 99
    ... 3 in 2013 and 2012. Cash Flow Information Employer Contributions PG&E Corporation and the Utility contributed $323 million to the pension benefit plans and $145 million to the other benefit plans in 2013. These contributions are consistent with PG&E Corporation's and the Utility's funding policy...

  • Page 100
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 11: EMPLOYEE BENEFIT PLANS (Continued) Defined Contribution Benefit Plans PG&E Corporation sponsors employee retirement savings plans, including a defined contribution savings plan that is qualified as a 401(k) plan under the Internal Revenue Code...

  • Page 101
    ... in San Bruno, California. The ensuing explosion and fire resulted in the deaths of eight people, numerous personal injuries, and extensive property damage. PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows have been materially affected by the costs the...

  • Page 102
    ..., and for future costs. (See ''Disallowed Capital Costs'' below.) Other parties, including the City of San Bruno, TURN, the CPUC's ORA, and the City and County of San Francisco, have recommended total penalties of at least $2.25 billion, including fines payable to the State General Fund of differing...

  • Page 103
    ... Show Cause. In August 2013, the CPUC issued two OSCs related to a document submitted by the Utility on July 3, 2013 as ''errata'' to correct information about some segments in Lines 101 and 147 (two of the Utility's natural gas transmission pipelines that serve the San Francisco peninsula) that had...

  • Page 104
    ...-party claims (and associated legal costs) 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. Class Action Complaint On August 23, 2012, a complaint was filed in the San Francisco...

  • Page 105
    ...laws. These sites include former manufactured gas plant sites, power plant sites, gas gathering sites, sites where natural gas compressor stations are located, and sites used by the Utility for the storage, recycling, or disposal of potentially hazardous substances. Under federal and California laws...

  • Page 106
    ... in rates, such as the costs associated with the Hinkley site. Natural Gas Compressor Sites The Utility is legally responsible for remediating groundwater contamination caused by hexavalent chromium used in the past at the Utility's natural gas compressor sites near Hinkley, California and Topock...

  • Page 107
    ... mutual insurer owned by utilities with nuclear facilities. NEIL provides insurance coverage for property damages and business interruption losses incurred by the Utility if a nuclear event were to occur at the Utility's two nuclear generating units at Diablo Canyon and the retired Humboldt Bay Unit...

  • Page 108
    ... of these agreements is contingent on the third parties' development of new generation facilities to provide capacity and energy products to the Utility. The Utility also has agreements with various irrigation districts and water agencies to purchase hydroelectric power. At December 31, 2013, the...

  • Page 109
    ...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...

  • Page 110
    ...2015 ...2016 ...2017 ...2018 ...Thereafter ...$ 42 37 34 27 24 193 357 Total ... $ Payments for other commitments relating to operating leases amounted to $40 million in 2013, $32 million in 2012, and $27 million in 2011. PG&E Corporation and the Utility had operating leases on office facilities...

  • Page 111
    ... Utility's pipeline safety enhancement plan. See Note 14 of the Notes to the Consolidated Financial Statements. The Utility recorded a provision of $110 million and $80 million in the third quarter 2013 and in the second quarter 2012, respectively, for estimated third-party claims related to the San...

  • Page 112
    ... & Touche LLP, an independent registered public accounting firm, has audited PG&E Corporation's and the Utility's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring...

  • Page 113
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of PG&E Corporation and Pacific Gas and Electric Company San Francisco, California We have audited the accompanying consolidated balance sheets of PG&E Corporation and subsidiaries (the ''Company'') ...

  • Page 114
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of PG&E Corporation and Pacific Gas and Electric Company San Francisco, California We have audited the internal control over financial reporting of PG&E Corporation and subsidiaries (the ''Company'') and of Pacific Gas and Electric...

  • Page 115
    ... of the 2014 annual meetings of shareholders on May 12, 2014. PG&E CORPORATION OFFICERS ANTHONY F. EARLEY, JR. Chairman of the Board, Chief Executive Officer, and President KENT M. HARVEY Senior Vice President and Chief Financial Officer HYUN PARK Senior Vice President and General Counsel GREG...

  • Page 116
    ... President and Chief Nuclear Officer KENT M. HARVEY Senior Vice President, Financial Services GREGORY K. KIRALY Senior Vice President, Electric Distribution Operations GREG S. PRUETT Senior Vice President, Corporate Affairs JOHN R. SIMON Senior Vice President, Human Resources JESUS SOTO, JR. Senior...

  • Page 117
    ... should contact the Investor Relations Office. Vice President, Investor Relations Sara A. Cherry PG&E Corporation P. O. Box 770000 San Francisco, CA 94177 415-972-7080 PG&E Corporation General Information 415-973-1000 Pacific Gas and Electric Company General Information 415-973-7000 Stock Held...

  • Page 118
    ... on Form 10-K for the year ended December 31, 2013, which has been filed with the Securities and Exchange Commission, please send a written request to, or call, the Corporate Secretary's Office at: Linda Y.H. Cheng PG&E Corporation Pacific Gas and Electric Company P. O. Box 770000 San Francisco, CA...

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