PG&E 2015 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2015 PG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

45
PART II
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Utility Revenues and Costs that did not Impact Earnings
Fluctuations in revenues that did not impact earnings are primarily driven by procurement costs, see below for more
detail.
Cost of Electricity
The Utility’s cost of electricity includes the cost of power purchased from third parties (including renewable energy
resources), transmission, fuel used in its own generation facilities, fuel supplied to other facilities under power purchase
agreements, costs to comply with California’s cap-and-trade program, and realized gains and losses on price risk
management activities. (See Note 13 of the Notes to the Consolidated Financial Statements in Item 8.)
(inmillions)     
Costofpurchasedpower()     
Fuelusedinowngenerationfacilities     
Totalcostofelectricity     
AveragecostofpurchasedpowerperkWh     
Totalpurchasedpower(inmillionsofkWh)()     
() Costofpurchasedpowerwasimpactedprimarilybyadeclineinthemarketpriceofnaturalgasincomparedto
() ThedecreaseinpurchasedpowerresultedfromanincreaseingenerationfromtheUtility’sowngenerationfacilitiesGas-
firedandnucleargenerationincreasedduringtheyearendedDecemberascomparedtothesameperiodsin
The Utility’s total purchased power is driven by customer demand, the availability of the Utility’s own generation facilities
(including the Diablo Canyon nuclear generation power plant and hydroelectric plants), and the cost-eectiveness
of each source of electricity.
Cost of Natural Gas
The Utility’s cost of natural gas includes the costs of
procurement, storage, transportation of natural gas,
costs to comply with California’s cap-and-trade program,
and realized gains and losses on price risk management
activities. (See Note 9 of the Notes to the Consolidated
Financial Statements in Item 8.) The Utility’s cost of
natural gas is impacted by the market price of natural
gas, changes in the cost of storage and transportation,
and changes in customer demand.
(inmillions)     
Costofnaturalgassold     
Transportationcostofnaturalgassold     
Totalcostofnaturalgas     
AveragecostperMcf()ofnaturalgassold()      
Totalnaturalgassold(inmillionsofMcf)   
() Onethousandcubicfeet
() Averagecostofnaturalgassoldimpactedprimarilybyadeclineinthemarketpriceofnaturalgasincomparedto

Operating and Maintenance Expenses
The Utility’s operating expenses that did not impact
earnings include certain costs that the Utility is authorized
to recover as incurred such as pension contributions and
public purpose programs costs. If the Utility were to spend
more than authorized amounts, these expenses could
have an impact to earnings. For 2015, 2014, and 2013, no
material amounts were incurred above authorized amounts.