PG&E 2015 Annual Report Download - page 87

79
PART II
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Nuclear Decommissioning Trusts
The Utility’s nuclear generation facilities consist of two
units at Diablo Canyon and one retired facility at Humboldt
Bay. Nuclear decommissioning requires the safe removal
of a nuclear generation facility from service and the
reduction of residual radioactivity to a level that permits
termination of the NRC license and release of the property
for unrestricted use. The Utility’s nuclear decommissioning
costs are recovered from customers through rates and
are held in trusts until authorized for release by the CPUC.
The Utility classifies its investments held in the nuclear
decommissioning trusts as “available-for-sale.” Since the
Utility’s nuclear decommissioning trust assets are managed
by external investment managers, the Utility does not have
the ability to sell its investments at its discretion. Therefore,
all unrealized losses are considered other-than-temporary
impairments. Gains or losses on the nuclear decommissioning
trust investments are refundable or recoverable, respectively,
from customers through rates. Therefore, trust earnings
are deferred and included in the regulatory liability for
recoveries in excess of the ARO. There is no impact on
the Utility’s earnings or accumulated other comprehensive
income. The cost of debt and equity securities sold by the
trust is determined by specific identification.
Variable Interest Entities
A VIE is an entity that does not have sucient equity
at risk to finance its activities without additional
subordinated financial support from other parties, or whose
equity investors lack any characteristics of a controlling
financial interest. An enterprise that has a controlling
financial interest in a VIE is a primary beneficiary and is
required to consolidate the VIE.
Some of the counterparties to the Utility’s power purchase
agreements are considered VIEs. Each of these VIEs was
designed to own a power plant that would generate
electricity for sale to the Utility. To determine whether
the Utility was the primary beneficiary of any of these
VIEs at December 31, 2015, it assessed whether it absorbs
any of the VIE’s expected losses or receives any portion
of the VIE’s expected residual returns under the terms of
the power purchase agreement, analyzed the variability
in the VIE’s gross margin, and considered whether it had
any decision-making rights associated with the activities
that are most significant to the VIE’s performance, such as
dispatch rights and operating and maintenance activities.
The Utility’s financial obligation is limited to the amount
the Utility pays for delivered electricity and capacity. The
Utility did not have any decision-making rights associated
with any of the activities that are most significant to the
economic performance of any of these VIEs. Since the
Utility was not the primary beneficiary of any of these VIEs
at December 31, 2015, it did not consolidate any of them.
Other Accounting Policies
For other accounting policies impacting PG&E Corporation’s
and the Utility’s consolidated financial statements, see
“Income Taxes” in Note 8, “Derivatives” in Note 9, “Fair
Value Measurements” in Note 10, and “Contingencies and
Commitments” in Note 13 of the Notes to the Consolidated
Financial Statements.
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) for the year
ended December 31, 2015 consisted of the following:
(inmillionsnetofincometax)
Pension
Benefits
Other
Benefits
Other
Investments Total
Beginningbalance  ()      
Othercomprehensiveincomebeforereclassifications
Unrecognizednetactuarialloss
(netoftaxesofandrespectively) () () - ()
Regulatoryaccounttransfer
(netoftaxesofandrespectively)   - 
Amountsreclassifiedfromothercomprehensiveincome
Amortizationofpriorservicecost
(netoftaxesofandrespectively)()  -
Amortizationofnetactuarialloss
(netoftaxesofandrespectively)()  -
Regulatoryaccounttransfer
(netoftaxesofandrespectively)() () () - ()
Realizedgainoninvestments
(netoftaxesofandrespectively) - - () ()
Netcurrentperiodothercomprehensiveloss ()  () ()
Endingbalance  ()    -  ()
() Thesecomponentsareincludedinthecomputationofnetperiodicpensionandotherpostretirementbenefitcosts(SeeNote
belowforadditionaldetails)