PG&E 2015 Annual Report Download - page 40

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PART I
ITEM1B.UNRESOLVED STAFF COMMENTS
ITEM1B. Unresolved Sta Comments
None.
ITEM2. Properties
The Utility owns or has obtained the right to occupy and/or
use real property comprising the Utility’s electricity and
natural gas distribution facilities, natural gas gathering
facilities and generation facilities, and natural gas and
electricity transmission facilities, which are described in
Item 1. Business, under “Electric Utility Operations” and
“Natural Gas Utility Operations.” The Utility occupies or
uses real property that it does not own primarily through
various leases, easements, rights-of-way, permits, or licenses
from private landowners or governmental authorities. In
total, the Utility occupies 11.1 million square feet of real
property, including 8.9 million square feet owned by the
Utility. The Utility’s corporate headquarters comprises
approximately 1.7 million square feet located in several
Utility-owned buildings in San Francisco, California.
PG&E Corporation also leases approximately 42,000 square
feet of oce space from a third party in San Francisco,
California. This lease will expire in 2022.
The Utility currently owns approximately 168,000 acres of
land, including approximately 140,000 acres of watershed
lands. In 2002 the Utility agreed to implement its “Land
Conservation Commitment” (“LCC”) to permanently
preserve the six “beneficial public values” on all the
watershed lands through conservation easements or
equivalent protections, as well as to make approximately
70,000 acres of the watershed lands available for donation
to qualified organizations. The six “beneficial public values”
being preserved by the LCC include: natural habitat of fish,
wildlife, and plants; open space; outdoor recreation by the
general public; sustainable forestry; agricultural uses; and
historic values. The Utility’s goal is to implement all the
transactions needed to implement the LCC by the end of
2018, subject to securing all required regulatory approvals.
ITEM 3. Legal Proceedings
In addition to the following proceedings, PG&E Corporation and the Utility are parties to various lawsuits and regulatory
proceedings in the ordinary course of their business. For more information regarding material lawsuits and proceedings,
see “Enforcement and Litigation Matters” in Note13 of the Notes to the Consolidated Financial Statements in Item 8
and in Item 7. MD&A.
Penalty Decision Related to the CPUC’s Investigative Enforcement Proceedings Related to
Natural Gas Transmission
On April 9, 2015, the CPUC approved final decisions in the
three investigations that had been brought against the
Utility relating to (1) the Utility’s safety record-keeping
for its natural gas transmission system, (2) the Utility’s
operation of its natural gas transmission pipeline system
in or near locations of higher population density, and (3)
the Utility’s pipeline installation, integrity management,
record-keeping and other operational practices, and other
events or courses of conduct, that could have led to or
contributed to the natural gas explosion that occurred in
the City of San Bruno, California on September 9, 2010.
A decision was issued in each investigative proceeding
to determine the violations that the Utility committed.
The CPUC also approved a fourth decision (the “Penalty
Decision”) which imposes penalties on the Utility totaling
$1.6 billion comprised of: (1) a $300 million fine to be
paid to the State General Fund, (2) a one-time $400
million bill credit to the Utility’s natural gas customers, (3)
$850 million to fund future pipeline safety projects and
programs, and (4) remedial measures that the CPUC
estimates will cost the Utility at least $50 million. In August
2015, the Utility paid the $300 million fine. At December 31,
2015, the Consolidated Balance Sheets include $400million
in current liabilities – other for the one-time bill credit that
will be provided to the Utility’s natural gas customers in
2016. On January 14, 2016, the CPUC issued final decisions
to close these investigative proceedings.
The Penalty Decision requires that at least $689 million
of the $850 million disallowance be allocated to capital
expenditures, and that the Utility be precluded from
including these capital costs in rate base. The CPUC
will determine which safety projects and programs will
be funded by shareholders in the Utility’s pending 2015
GT&S rate case. If the $850 million is not exhausted by
designated safety-related projects and programs in the
2015 GT&S proceeding, the CPUC will identify additional