PG&E 2013 Annual Report Download - page 105

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14: COMMITMENTS AND CONTINGENCIES (Continued)
Other Legal and Regulatory Contingencies
PG&E Corporation and the Utility are subject to various laws and regulations and, in the normal course of
business, are named as parties in a number of claims and lawsuits. In addition, penalties may be incurred for failure
to comply with federal, state, or local laws and regulations. A provision for a loss contingency is recorded when it is
both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. PG&E
Corporation and the Utility evaluate the range of reasonably estimated losses and record a provision based on the
lower end of the range, unless an amount within the range is a better estimate than any other amount. The
assessment of whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is
estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed
quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery,
settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a
particular matter. PG&E Corporation’s and the Utility’s policy is to exclude anticipated legal costs from the provision
for loss and expense these costs as incurred.
Accruals for other legal and regulatory contingencies (excluding amounts related to natural gas matters above)
totaled $43 million at December 31, 2013 and $34 million at December 31, 2012. These amounts are included in
other current liabilities in the Consolidated Balance Sheets. The estimated reasonably possible range of loss for these
matters in excess of the recorded accrual is not material. The resolution of these matters is not expected to have a
material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, or cash flows.
Environmental Remediation Contingencies
The Utility is required to pay for environmental remediation at sites where it has been, or may be, a potentially
responsible party under federal and state environmental 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, the Utility may be responsible for remediation of hazardous substances even if it did not deposit those
substances on the site.
Given the complexities of the legal and regulatory environment and the inherent uncertainties involved in the
early stages of a remediation project, the process for estimating remediation liabilities is subjective and requires
significant judgment. The Utility records an environmental remediation liability when the site assessments indicate
that remediation is probable and the Utility can reasonably estimate the loss or a range of probable amounts. The
Utility records an environmental remediation liability based on the lower end of the range of estimated probable
costs, unless an amount within the range is a better estimate than any other amount. Amounts recorded are not
discounted to their present value.
The following table presents the changes in the environmental remediation liability:
(in millions)
Balance at December 31, 2012 ....................................... $ 910
Additional remediation costs accrued:
Transfer to regulatory account for recovery ............................ 116
Amounts not recoverable from customers ............................. 49
Less: Payments .................................................. (175)
Balance at December 31, 2013 ....................................... $ 900
99