PG&E 2014 Annual Report Download - page 131

123
Environmental Remediation Contingencies
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 Utility’s environmental remediation liability is
primarily included in non-current liabilities on the Consolidated Balance Sheets and is composed of the following:
Balance at
(in millions) December 31, 2014 December 31, 2013
Topock natural gas compressor station (1) $ 291 $ 264
Hinkley natural gas compressor station (1) 158 190
Former manufactured gas plant sites owned by the Utility or third parties 257 184
Utility-owned generation facilities (other than fossil fuel-red),
other facilities, and third-party disposal sites 150 160
Fossil fuel-red generation facilities and sites 98 102
Total environmental remediation liability $ 954 $ 900
(1) See “Natural Gas Compressor Station Sites” below.
At December 31, 2014 the Utility expected to recover $663 million of its environmental remediation liability through
various ratemaking mechanisms authorized by the CPUC. One of these mechanisms allows the Utility rate recovery for 90% of its
hazardous substance remediation costs for certain approved sites (including the Topock site) without a reasonableness review. The
Utility may incur environmental remediation costs that it does not seek to recover in rates, such as the costs associated with the
Hinkley site.
Natural Gas Compressor Station 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 stations. One of these stations is located near Hinkley, California and is referred to
below as the “Hinkley site.” Another station is located near Needles, California and is referred to below as the “Topock site.” The
Utility is also required to take measures to abate the effects of the contamination on the environment.
Hinkley Site
The Utility has been implementing interim remediation measures at the Hinkley site to reduce the mass of the chromium
plume and to monitor and control movement of the plume. The Utility’s remediation and abatement efforts at the Hinkley site
are subject to the regulatory authority of the Regional Board. In 2013, the Regional Board certified a final environmental report
evaluating the Utility’s proposed remedial methods to contain and remediate the underground plume of hexavalent chromium and
the potential environmental impacts. On January 22, 2015, the Regional Board issued a preliminary draft clean-up and abatement
order that proposes that the Utility continue and improve its remedial treatment methods evaluated in the environmental report,
along with a proposed monitoring and reporting program and proposed deadlines in 2021 and 2026 to meet specified interim clean-
up targets. Comments by the Utility and the public are due on March 13, 2015. The Regional Board is tentatively scheduled to
consider final adoption of the clean-up and abatement order at its September 2015 meeting.