PG&E 2015 Annual Report Download - page 119

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PART II
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Other Contingencies
Accruals for other legal and regulatory contingencies
(excluding amounts related to the contingencies discussed
above under “Enforcement and Litigation Matters” and
“Other Legal and Regulatory Contingencies”) totaled
$63 million at December 31, 2015, and $55 million at
December 31, 2014. These amounts are included in other
current liabilities in the Consolidated Balance Sheets.
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
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 December
Topocknaturalgascompressorstation()  
Hinkleynaturalgascompressorstation()  
Formermanufacturedgasplantsitesownedbythe
Utilityorthirdparties
 
Utility-ownedgenerationfacilities(otherthanfossil
fuel-fired)otherfacilitiesandthird-partydisposalsites  
Fossilfuel-firedgenerationfacilitiesandsites  
TOTALENVIRONMENTALREMEDIATIONLIABILITY    
() See“NaturalGasCompressorStationSites”below
At December 31, 2015 the Utility expected to recover
$695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 eects 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
eorts at the Hinkley site are subject to the regulatory
authority of the Regional Board. On November 4, 2015, the
Regional Board adopted a final clean-up and abatement
order to contain and remediate the underground plume
of hexavalent chromium and the potential environmental
impacts. The final order states that the Utility must continue
and improve its remediation eorts; define the boundaries
of the chromium plume, and take other action. Additionally,
the final order requires setting plume capture requirements,
requires establishing a monitoring and reporting program,
and finalizes deadlines for the Utility to meet interim
cleanup targets. The clean-up and abatement order did
not have a material impact on the Utility’s consolidated
financial statements.
The Utility’s environmental remediation liability at
December 31, 2015 reflects the Utility’s best estimate of
probable future costs associated with its final remediation
plan. Future costs will depend on many factors, including
the extent of work to be performed to implement the final
remediation plan and the Utility’s required time frame for
remediation. Future changes in cost estimates and the
assumptions on which they are based may have a material
impact on future financial condition and cash flows.
Topock Site
The Utility’s remediation and abatement eorts at the
Topock site are subject to the regulatory authority of the
California Department of Toxic Substances Control and
the U.S. Department of the Interior. In November 2015,
the Utility submitted its final remediation design to the