PG&E 2015 Annual Report Download - page 109

101
PART II
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Components of Accumulated Other
Comprehensive Income
PG&E Corporation and the Utility record unrecognized prior
service costs and unrecognized gains and losses related to
pension and post-retirement benefits other than pension
as components of accumulated other comprehensive
income, net of tax. In addition, regulatory adjustments
are recorded in the Consolidated Statements of Income
and Consolidated Balance Sheets to reflect the dierence
between expense or income calculated in accordance with
GAAP for accounting purposes and expense or income for
ratemaking purposes, which is based on authorized plan
contributions. For pension benefits, a regulatory asset or
liability is recorded for amounts that would otherwise be
recorded to accumulated other comprehensive income.
For post-retirement benefits other than pension, the
Utility generally records a regulatory liability for amounts
that would otherwise be recorded to accumulated other
comprehensive income. As the Utility is unable to record
a regulatory asset for these other benefits, the charge
remains in accumulated other comprehensive income (loss).
The estimated amounts that will be amortized into net periodic benefit costs for PG&E Corporation in 2016 are as follows:
(inmillions) PensionPlan PBOPPlans
Unrecognizedpriorservicecost   
Unrecognizednetloss  
TOTAL    
There were no material dierences between the estimated amounts that will be amortized into net periodic benefit
costs for PG&E Corporation and the Utility.
Valuation Assumptions
The following actuarial assumptions were used in determining the projected benefit obligations and the net periodic
benefit costs. The following weighted average year-end assumptions were used in determining the plans’ projected
benefit obligations and net benefit cost.
PensionPlan PBOPPlans
December December
     
Discountrate    - - -
Rateoffuturecompensation
increases   ---
Expectedreturnonplanassets    - - -
The assumed health care cost trend rate as of December 31, 2015 was 7.2%, decreasing gradually to an ultimate trend
rate in 2024 and beyond of approximately 4%. A one-percentage-point change in assumed health care cost trend rate
would have the following eects:
(inmillions)
One-Percentage-Point
Increase
One-Percentage-Point
Decrease
Eectonpostretirementbenefitobligation     ()
Eectonserviceandinterestcost   ()
Expected rates of return on plan assets were developed
by determining projected stock and bond returns and then
applying these returns to the target asset allocations of
the employee benefit plan trusts, resulting in a weighted
average rate of return on plan assets. Returns on fixed-
income debt investments were projected based on real
maturity and credit spreads added to a long-term inflation
rate. Returns on equity investments were estimated based
on estimates of dividend yield and real earnings growth
added to a long-term inflation rate. For the pension plan,
the assumed return of 6.1% compares to a ten-year actual
return of 7.8%. The rate used to discount pension benefits
and other benefits was based on a yield curve developed
from market data of over approximately 688 Aa-grade
non-callable bonds at December 31, 2015. This yield curve
has discount rates that vary based on the duration of the
obligations. The estimated future cash flows for the pension
benefits and other benefit obligations were matched to
the corresponding rates on the yield curve to derive a
weighted average discount rate.