PG&E 2013 Annual Report Download - page 104

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14: COMMITMENTS AND CONTINGENCIES (Continued)
Criminal Investigation
In June 2011, the U.S. Department of Justice, the California Attorney General’s Office, and the San Mateo
County District Attorney’s Office began an investigation of the San Bruno accident and indicated that the Utility is a
target of the investigation. Although the San Mateo County District Attorney’s Office has publicly indicated that it
will not pursue state criminal charges, the U.S. Department of Justice may still bring criminal charges, including
charges based on claims that the Utility violated the federal Pipeline Safety Act, against PG&E Corporation or the
Utility. It is uncertain whether any criminal charges will be brought against any of PG&E Corporation’s or the
Utility’s current or former employees. The Utility is continuing to cooperate with federal investigators. PG&E
Corporation and the Utility are unable to estimate the amount or range of reasonably possible losses associated with
any civil or criminal penalties that could be imposed and such penalties could have a material impact on PG&E
Corporation’s and the Utility’s financial condition, results of operations, and cash flows. In addition, the Utility’s
business or operations could be negatively affected by any remedial measures that the Utility may undertake, such as
operating its natural gas transmission business subject to the supervision and oversight of an independent monitor.
Third-Party Liability Claims
The Utility has settled the claims of substantially all of the remaining plaintiffs who sought compensation for
personal injury and property damage, and other relief, including punitive damages, following the San Bruno accident.
(Approximately 165 lawsuits on behalf of approximately 525 plaintiffs have been filed against the Utility.) At
December 31, 2013, the Utility has recorded cumulative charges of $565 million as its best estimate of probable loss
for third-party claims related to the San Bruno accident and has made cumulative payments of $520 million for
settlements. In addition, the Utility has incurred cumulative expenses of $86 million for associated legal costs. The
Utility’s liability for third-party claims is included in other current liabilities in the Consolidated Balance Sheets and
totaled $45 million at December 31, 2013 and $146 million at December 31, 2012.
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. Through December 31, 2013, the Utility has
recognized cumulative insurance recoveries of $354 million for third-party claims and associated legal costs. These
amounts were recorded as a reduction to operating and maintenance expense in the Consolidated Statements of
Income. Although the Utility believes that a significant portion of costs incurred for third-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 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 who were customers of the Utility between 1997 and 2010, with certain exceptions. The plaintiffs allege that
the Utility collected more than $100 million in customer rates from 1997 through 2010 for the purpose of various
safety measures and operations projects but instead used the funds for general corporate purposes such as executive
compensation and bonuses. The plaintiffs allege that PG&E Corporation and the Utility engaged in unfair business
practices in violation of California state law. The plaintiffs seek restitution and disgorgement, as well as
compensatory and punitive damages.
PG&E Corporation and the Utility contest the plaintiffs’ allegations. On May 23, 2013, the court granted PG&E
Corporation’s and the Utility’s request to dismiss the complaint on the grounds that the CPUC has exclusive
jurisdiction to adjudicate the issues raised by the plaintiffs’ allegations. The plaintiffs have appealed the court’s ruling
to the California Court of Appeal. PG&E Corporation and the Utility are unable to estimate the amount or range of
reasonably possible losses, if any, that may be incurred in connection with this matter if the lower court’s ruling is
reversed.
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