PG&E 2014 Annual Report Download - page 134

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Purchase Commitments
The following table shows the undiscounted future expected obligations under power purchase agreements that have been
approved by the CPUC and have met specified construction milestones as well as undiscounted future expected payment
obligations for natural gas supplies, natural gas transportation, natural gas storage, and nuclear fuel as of December 31, 2014:
Power Purchase Agreements
Renewable Qualifying Natural Nuclear
(in millions) Energy Facility Other Gas Fuel Total
2015 $ 2,145 $ 601 $ 820 $ 544 $ 138 $ 4,248
2016 2,185 525 766 164 129 3,769
2017 2,187 418 758 107 131 3,601
2018 2,063 382 731 107 115 3,398
2019 2,053 304 706 107 109 3,279
Thereafter 30,289 1,217 2,390 648 429 34,973
Total purchase commitments $ 40,922 $ 3,447 $ 6,171 $ 1,677 $ 1,051 $ 53,268
Third-Party Power Purchase Agreements
In the ordinary course of business, the Utility enters into various agreements, including renewable energy agreements, QF
agreements, and other power purchase agreements to purchase power and electric capacity. The price of purchased power may be
fixed or variable. Variable pricing is generally based on the current market price of either natural gas or electricity at the date of
delivery.
Renewable Energy Power Purchase Agreements – In order to comply with California’s RPS requirements, the Utility is
required to deliver renewable energy to its customers at a gradually increasing rate. The Utility has entered into various agreements
to purchase renewable energy to help meet California’s requirement. The Utility’s obligations under a significant portion of these
agreements are contingent on the third party’s construction of new generation facilities, which are expected to grow significantly.
As of December 31, 2014, renewable energy contracts expire at various dates between 2016 and 2043.
Qualifying Facility Power Purchase Agreement – The Utility has entered into agreements to purchase energy and
capacity with independent power producers that own generation facilities that meet the definition of a QF under federal law.
Several of these agreements are treated as capital leases. At December 31, 2014 and 2013, net capital leases reflected in property,
plant, and equipment on the Consolidated Balance Sheets were $74 million and $97 million including accumulated amortization
of $128 million and $176 million. The present value of the future minimum lease payments due under these agreements included
$20 million and $23 million in Current Liabilities and $54 million and $74 million in Noncurrent Liabilities on the Consolidated
Balance Sheet, respectively. As of December 31, 2014, QF contracts in operation expire at various dates between 2015 and 2028.
Other Power Purchase Agreements – The Utility has entered into many power purchase agreements for conventional
generation resources, which include tolling agreements and resource adequacy agreements. The Utility’s obligation under a portion
of these agreements is contingent on the third parties’ development of new generation facilities to provide capacity and energy
products to the Utility. In addition, the Utility has agreements with various irrigation districts and water agencies to purchase
hydroelectric power. As of December 31, 2014, other power purchase agreements expire at various dates between 2015 and 2033.
The costs incurred for all power purchases and electric capacity amounted to $3.6 billion in 2014, $3.0 billion in 2013,
and $2.3 billion in 2012.