PG&E 2015 Annual Report Download - page 58

50
PART II
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Department of Interior Inquiry
In September 2015, the Utility was notified that the U.S.
Department of Interior (“DOI”) had initiated an inquiry into
whether the Utility should be suspended or debarred from
entering intofederal procurement and non-procurement
contracts and programs citing the allegations contained
in the superseding criminal indictment (See Note 13 in
the Consolidated Financial Statements in Item 8). The
Utility filed its initial response on November 2, 2015, to
demonstrate that it is a presently responsible contractor
under federal procurement regulations and that it believes
suspension or debarment is not appropriate. It is uncertain
when or if further action will be taken.
Pending Lawsuits and Claims
As of December 31, 2015, there were six purported derivative
lawsuits seeking recovery on behalf of PG&E Corporation
and the Utility for alleged breaches of fiduciary duty by
ocers and directors, among other claims.
Four of the complaints were consolidated as the San Bruno
Fire Derivative Cases and are pending in the Superior
Court of California, County of San Mateo. On August 28,
2015, the Superior Court overruled the demurrers filed by
PG&E Corporation, the Utility and the individual director
and ocer defendants seeking to dismiss the San Bruno
Fire Derivative Cases, based upon the plaintis’ failure to
demand action by the Boards of PG&E Corporation and
the Utility prior to filing the complaint. After the ruling, and
pursuant to co-petitions for writ of mandate previously
filed by PG&E Corporation, the Utility, and the individual
defendants, on September 3, 2015 the California Court
of Appeal issued an order staying the San Bruno Fire
Derivative Cases pending the court’s final determination
whether to stay the matter altogether until the resolution
of federal criminal proceedings against the Utility. On
September 30, 2015, PG&E Corporation, the Utility, and
the individual defendants filed an additional petition for
writ of mandate asking the Court of Appeal to review the
lower court’s August 28 decision overruling their demurrers.
On October 22, 2015, the Court of Appeal issued a ruling
declining to review the August 28 decision. On December 8,
2015, the Court of Appeal issued a writ of mandate to the
Superior Court, ordering the Superior Court to stay all
proceedings in the San Bruno Fire Derivative Cases “pending
conclusion of the federal criminal proceedings” against
the Utility. The other two derivative actions are entitled
Tellardin v. PG&E Corp. et. al., pending in the Superior Court
of California, San Mateo County, and Iron Workers Mid-
South Pension Fund v. Johns, et. al., pending in the United
States District Court for the Northern District of California.
PG&E Corporation, and the other defendants have not
answered or otherwise responded to the complaints in
these actions. In the Tellardin action, the defendants must
answer or respond to the complaint 30 days after the stay
in the San Bruno Fire Derivative Cases is lifted. In the Iron
Workers action, the court has not established a deadline
by which the defendants must answer or respond. Case
management conferences have been scheduled in both
actions (March 21, 2016 in the Tellardin action and June
3, 2016 in the Iron Workers action), after which PG&E
Corporation will have more information about any further
proceedings in these actions.
PG&E Corporation and the Utility are uncertain when and
how the above lawsuits will be resolved.
Regulatory Matters
The Utility is subject to substantial regulation by the CPUC, the FERC, the NRC and other federal and state regulatory
agencies. The resolutions of these and other proceedings may aect PG&E Corporation’s and the Utility’s financial
condition, results of operations, and cash flows.
2017 General Rate Case
On September 1, 2015, the Utility filed its 2017 GRC
application with the CPUC. In the 2017 GRC, the Utility has
requested that the CPUC determine the annual amount of
base revenues (or “revenue requirements”) that the Utility
will be authorized to collect from customers from 2017
through 2019 to recover its anticipated costs for electric
distribution, natural gas distribution, and electric generation
operations and to provide the Utility an opportunity to
earn its authorized rate of return. (The Utility’s revenue
requirements for other portions of its operations, such as
electric transmission, natural gas transmission and storage
services, and electricity and natural gas purchases, are
authorized in other regulatory proceedings overseen
by the CPUC or the FERC.) In its application, the Utility
requested a revenue requirement increase of $457 million,
as compared to authorized base revenues for 2016, as
shown in the following tables: 