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PG&E Corporation and Pacific Gas and Electric Company
2013 Annual Report

Table of contents

  • Page 1
    PG&E Corporation and Pacific Gas and Electric Company 2013 Annual Report

  • Page 2

  • Page 3
    ...Consolidated Financial Statements Quarterly Consolidated Financial Data Management's Report on Internal Control Over Financial Reporting PG&E Corporation and Pacific Gas and Electric Company Boards of Directors Officers of PG&E Corporation and Pacific Gas and Electric Company Shareholder Information...

  • Page 4

  • Page 5
    ... System Operator California Air Resources Board California Public Utilities Commission congestion revenue rights Environmental Protection Agency earnings per common share Federal Energy Regulatory Commission generally accepted accounting principles greenhouse gas general rate case gas transmission...

  • Page 6

  • Page 7
    ...185) 70 812 Total natural gas matters ... $ $ PG&E Corporation's earnings from operations for 2013 and 2012 also exclude $7 million and $106 million, pre-tax, for environmental remediation costs associated with the Utility's natural gas compressor station site located near Hinkley, California. 1

  • Page 8
    ... Assumes $100 invested on December 31, 2008 in PG&E Corporation common stock, the Standard & Poor's 500 Stock Index, and the Dow Jones Utilities Index, and assumes quarterly reinvestment of dividends. The total shareholder returns shown are not necessarily indicative of future returns. 2

  • Page 9
    ... per common share(1) . At Year-End Common stock price per share ...Total assets ...Long-term debt (excluding current portion) ...Capital lease obligations (excluding current portion)(2) ...Energy recovery bonds (excluding current portion)(3) ...Pacific Gas and Electric Company For the Year Operating...

  • Page 10
    ...equipment, and other property used or useful in providing utility service to its customers. The primary FERC proceeding is the electric TO rate case which generally occurs on an annual basis. The rate of return for the Utility's FERC jurisdictional assets is embedded in revenues authorized in the TO...

  • Page 11
    ... impact of a higher number of weighted average shares outstanding during 2013, compared to 2012. PG&E Corporation issues shares to fund its equity contributions to the Utility to maintain the Utility's capital structure and fund operations, including expenses related to natural gas matters. This has...

  • Page 12
    ... by changes in their respective credit ratings, the outcome of natural gas matters, general economic and market conditions, and other factors. For more information about the factors and risks that could affect PG&E Corporation's and the Utility's future results of operations, financial condition...

  • Page 13
    ... pass on to customers, including costs to purchase electricity and natural gas, as well as costs to fund public purpose programs. They also include revenues authorized in various rate cases that are designated for a specific purpose such as the payment of pension costs. (See ''Utility Cost Recovery...

  • Page 14
    ... million higher than the level of authorized revenue requirements to improve the safety and reliability of its operations that will not be recovered in rates. The Utility's operating and maintenance expenses increased by $476 million, or 12%, in 2012 compared to 2011, primarily due to costs incurred...

  • Page 15
    ... parties, transmission, fuel used in its own generation facilities, fuel supplied to other facilities under power purchase agreements, and realized gains and losses on price risk management activities. (See Note 9 of the Notes to the Consolidated Financial Statements.) The volume of power purchased...

  • Page 16
    ... with California's GHG laws. (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 Gas The Utility's cost of natural gas includes the costs of...

  • Page 17
    ... costs related to natural gas matters, incremental work to improve safety and reliability of electric and gas operations in excess of authorized revenue requirements, and environmental remediation costs. The Utility's equity needs would also increase to the extent it is required to pay fines...

  • Page 18
    ... 401(k) plan, the Dividend Reinvestment and Stock Purchase Plan, and share-based compensation plans; and • 11 million shares were sold for cash proceeds of $455 million, net of commissions paid of $4 million, under equity distribution agreements. The proceeds from these sales were used for general...

  • Page 19
    ... the CPUC requirement that the Utility maintain, on average, its CPUC-authorized capital structure including a 52% equity component. The Board of Directors of PG&E Corporation declared dividends of $0.455 per share for each of the quarters of 2013, 2012, and 2011, for annual dividends of $1.82...

  • Page 20
    ... Utility's spent nuclear fuel disposal costs and made tax payments that were $224 million lower than in 2011. The remaining changes in cash flows from operating activities consisted of fluctuations in activities within the normal course of business such as the timing and amount of customer billings...

  • Page 21
    ...discount, and issuance costs of $18 in 2013, $13 in 2012, and $8 in 2011 ...Short-term debt matured ...Long-term debt matured or repurchased ...Energy recovery bonds matured ...Preferred stock dividends paid ...Common stock dividends paid ...Equity contribution ...Other ...Net cash provided by (used...

  • Page 22
    ...) . Other power purchase agreements . . Natural gas supply, transportation, and storage ...Nuclear fuel agreements ...Pension and other benefits(3) ...Capital lease obligations(2) ...Operating leases(2) ...Preferred dividends(4) ...PG&E Corporation Long-term debt(1): Fixed rate obligations ...Total...

  • Page 23
    ... the Utility that relate to (1) the Utility's safety recordkeeping 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...

  • Page 24
    .... Gas Safety Citation Program. The Utility and other California gas corporations are required to provide notice to the SED of any self-identified or self-corrected violations of certain state and federal regulations that relate to the safety of their natural gas facilities and operating practices...

  • Page 25
    ... proposed changes in the PSEP update application. Of this amount, approximately $280 million is recorded in Property, Plant, and Equipment on the Consolidated Balance Sheets at December 31, 2013. The Utility could record additional charges to the extent PSEP capital costs are higher than currently...

  • Page 26
    ... with state law, which requires gas corporations to develop a plan to identify and minimize hazards and systemic risk for public and employee safety. The forecasts include the continuation of work begun in the Utility's PSEP, such as testing pipelines to verify safe operating pressures, replacing...

  • Page 27
    ... that provides for the construction of a 586-megawatt natural gas-fired facility in Oakley, California. The CPUC authorized the Utility to recover the purchase price through rates. The CPUC's denial of various applications for rehearing that had been filed with respect to its December 2012 decision...

  • Page 28
    ...Consolidated Financial Statements.) ENVIRONMENTAL MATTERS The Utility's operations are subject to extensive federal, state, and local laws and permits relating to the protection of the environment and the safety and health of the Utility's personnel and the public. These laws and requirements relate...

  • Page 29
    ...a number of allowances for free to natural gas suppliers, including the Utility, for the benefit of the Utility's natural gas customers. The Utility has filed requests at the CPUC for authority to recover the natural gas supplier-related compliance costs from natural gas customers on an annual basis...

  • Page 30
    ... alternative compliance measures or to make payments to support various environmental mitigation projects. The Utility would seek to recover such costs in rates. The Utility's Diablo Canyon operations must be in compliance with the California Water Board's policy by December 31, 2024. OFF-BALANCE...

  • Page 31
    ... interest rate-sensitive instruments outstanding. Energy Procurement Credit Risk The Utility conducts business with counterparties mainly in the energy industry, including the CAISO market, other California investor-owned electric utilities, municipal utilities, energy trading companies, financial...

  • Page 32
    ..., 2013, PG&E Corporation and the Utility reported regulatory assets (including current regulatory balancing accounts receivable) of $6.5 billion and regulatory liabilities (including current balancing accounts payable) of $6.8 billion. In addition, regulatory accounting standards require recognition...

  • Page 33
    ...expenses and costs recovered through the ratemaking process. Most of PG&E Corporation's and the Utility's AROs relate to the Utility's obligation to decommission its nuclear generation facilities, certain fossil fuel-fired generation facilities, and gas transmission assets. The Utility estimates its...

  • Page 34
    ... assumptions used in determining pension and other benefit obligations include the discount rate, the average rate of future compensation increases, the health care cost trend rate and the expected return on plan assets. PG&E Corporation and the Utility review these assumptions on an annual basis...

  • Page 35
    ... and enforcement matters related to the Utility's natural gas system operating practices and the San Bruno accident are concluded, including the ultimate amount of fines the Utility will be required to pay to the State General Fund, the amount of natural gas transmission costs the Utility will...

  • Page 36
    ...cap-and-trade regulations and the cost of renewable energy procurement; • changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline in the Utility's service area, general and regional economic and financial market conditions, the extent of...

  • Page 37
    ... the Utility violated any laws, rules, regulations or orders relating to safety recordkeeping, pipeline installation, integrity management, or other operational practices. (See ''Natural Gas Matters'' above.) PG&E Corporation and the Utility anticipate that there will be additional media coverage...

  • Page 38
    ... natural gas transmission costs also could be affected by the final decisions to be issued in the CPUC's pending investigations discussed above. PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows will be affected by their ability to continue accessing...

  • Page 39
    ... their credit ratings, changes in the federal or state regulatory environment affecting energy companies generally or PG&E Corporation and the Utility in particular, the overall health of the energy industry, volatility in electricity or natural gas prices, and general economic and financial market...

  • Page 40
    ... authorized rate of return. Although current law and regulatory mechanisms permit the Utility to pass through its costs to procure electricity and natural gas to customers in rates, a significant and sustained rise in commodity prices, caused by costs associated with new renewable energy resources...

  • Page 41
    ... day-ahead and real-time wholesale electricity market operated by the CAISO. The amount of electricity the Utility purchases on the wholesale market fluctuates due to a variety of factors, including, the level of electricity generated by the Utility's own generation facilities, changes in customer...

  • Page 42
    ... build pipeline connections that bypass the Utility's natural gas transmission and distribution system, or by customers who use and transport liquefied natural gas. Alternatively, the Utility's customers could become direct access customers who purchase electricity from alternative energy suppliers...

  • Page 43
    ... of these events could affect demand for electricity or natural gas; cause unplanned outages or reduce generating output which may require the Utility to incur costs to purchase replacement power; cause damage to the Utility's assets or operations requiring the Utility to incur unplanned expenses to...

  • Page 44
    ... nuclear generation plants when their licenses expire. To reduce the Utility's financial exposure to these risks, the Utility maintains insurance and manages decommissioning trusts that hold nuclear decommissioning charges collected through customer rates. However, the costs or damages the Utility...

  • Page 45
    ... facility-specific orders, which could require the Utility to incur additional costs. In 2009, the Utility filed an application with the NRC to renew the operating licenses for the two operating units at Diablo Canyon. (See ''Regulatory Matters-Diablo Canyon Nuclear Power Plant'' above.) In May 2011...

  • Page 46
    ... party under federal and state environmental laws. These sites, some of which the Utility no longer owns, include former manufactured gas plant sites, current and former power plant sites, former gas gathering and gas storage sites, sites where natural gas compressor stations are located, current...

  • Page 47
    ...the North American Electric Reliability Corporation and approved by the FERC. These standards relate to maintenance, training, operations, planning, vegetation management, facility ratings, and other subjects. These standards are designed to maintain the reliability of the nation's bulk power system...

  • Page 48
    ..., employee demographics, discount rates used in determining future benefit obligations, rates of increase in health care costs, levels of assumed interest rates, future government regulation, and prior contributions to the plans. Similarly, funding requirements for the nuclear decommissioning trusts...

  • Page 49
    ... interest on outstanding debt, to pay preferred stock dividends, and meet its obligations to employees and creditors. The Utility's ability to pay common stock dividends is constrained by regulatory requirements, including that the Utility maintain its authorized capital structure with an average 52...

  • Page 50
    PG&E Corporation CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) Year ended December 31, 2013 2012 2011 Operating Revenues Electric ...Natural gas ...Total operating revenues ...Operating Expenses Cost of electricity ...Cost of natural gas ...Operating and maintenance ......

  • Page 51
    ... Pension and other postretirement benefit plans obligations (net of taxes of $80, $72, and $9, at respective dates) ...Gain on investments (net of taxes of $26, $3, and $0, at respective dates) ...Total other comprehensive income (loss) ...Comprehensive Income ...Preferred stock dividend requirement...

  • Page 52
    PG&E Corporation CONSOLIDATED BALANCE SHEETS (in millions) Balance at December 31, 2013 2012 ASSETS Current Assets Cash and cash equivalents ...Restricted cash ...Accounts receivable Customers (net of allowance for doubtful accounts of $80 and December 31, 2013 and 2012, respectively) ...Accrued ...

  • Page 53
    ...Regulatory liabilities ...Pension and other postretirement benefits Asset retirement obligations ...Deferred income taxes ...Other ... Total noncurrent liabilities ...Commitments and Contingencies (Note 14) Equity Shareholders' Equity Preferred stock ...Common stock, no par value, authorized 800,000...

  • Page 54
    ... costs of $18, $13, and $8 at respective dates ...Short-term debt matured ...Long-term debt matured or repurchased ...Energy recovery bonds matured ...Common stock issued ...Common stock dividends paid ...Other ... Net cash provided by (used in) financing activities ...Net change in cash and cash...

  • Page 55
    ...$ Common Stock Shares Balance at December 31, 2010 ...Net income ...Other comprehensive loss . . Common stock issued, net . Stock-based compensation amortization ...Common stock dividends declared ...Tax benefit from employee stock plans ...Preferred stock dividend requirement of subsidiary Balance...

  • Page 56
    ...459 2,215 13,007 1,944 5 (677) 53 1,325 480 845 14 831 Total operating expenses ... Income Before Income Taxes ...Income tax provision ...Net Income ...Preferred stock dividend requirement ...Income Available for Common Stock ... See accompanying Notes to the Consolidated Financial Statements. 50

  • Page 57
    Pacific Gas and Electric Company CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year ended December 31, 2013 2012 2011 $ 866 $ 811 $ 845 (in millions) Net Income ...Other Comprehensive Income Pension and other postretirement benefit plans obligations (net of taxes of $75, $73, and $4, at ...

  • Page 58
    ...923 Total current assets ...Property, Plant, and Equipment Electric ...Gas ...Construction work in progress ...Total property, plant, and equipment ...Accumulated depreciation ...Net property, plant, and equipment ...Other Noncurrent Assets Regulatory assets ...Nuclear decommissioning trusts Income...

  • Page 59
    ... 2,919 6,939 1,959 32,569 Total current liabilities ... Total noncurrent liabilities ...Commitments and Contingencies (Note 14) Shareholders' Equity Preferred stock ...Common stock, $5 par value, authorized 800,000,000 shares, outstanding at December 31, 2013 and 2012 ...Additional paid-in capital...

  • Page 60
    ..., discount, and issuance costs of $18, $13, and $8 at respective dates ...Short-term debt matured ...Long-term debt matured or repurchased ...Energy recovery bonds matured ...Preferred stock dividends paid ...Common stock dividends paid ...Equity contribution ...Other ...Net cash provided by (used...

  • Page 61
    ... ...Balance at December 31, 2012 . . Net income ...Other comprehensive income ...Equity contribution ...Tax expense from employee stock plans ...Common stock dividend ...Preferred stock dividend ... Balance at December 31, 2013 ... See accompanying Notes to the Consolidated Financial Statements...

  • Page 62
    ...of electricity and natural gas to customers. The Utility is primarily regulated by the CPUC and the FERC. In addition, the NRC oversees the licensing, construction, operation, and decommissioning of the Utility's nuclear generation facilities. This is a combined annual report of PG&E Corporation and...

  • Page 63
    ...in 2013, 3.63% in 2012, and 3.67% in 2011. The useful lives of the Utility's property, plant, and equipment are authorized by the CPUC and the FERC, and the depreciation expense is recovered through rates charged to customers. Depreciation expense includes a component for the original cost of assets...

  • Page 64
    ... primarily for its nuclear generation facilities, certain fossil fuel-fired generation facilities, and gas transmission system assets. For the year ended December 31, 2013, the Utility recorded an increase of $596 million to its ARO. The increase primarily reflects a higher expected cost per unit of...

  • Page 65
    ... through rates charged to customers and the amount of disallowance can be reasonably estimated. During 2013 and 2012, the Utility recorded charges of $196 million and $353 million, respectively, for PSEP capital costs that are expected to exceed the CPUC's authorized levels or that are specifically...

  • Page 66
    ... costs to purchase electricity and natural gas; and to fund public purpose, demand response, and customer energy efficiency programs. Generally, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. The FERC authorizes the Utility...

  • Page 67
    ... funds that are considered VIEs. Under these agreements, PG&E Corporation has made cumulative lease payments and investment contributions of $362 million from 2010 to 2013 to these companies in exchange for the right to receive benefits from local rebates, federal grants, and a share of the customer...

  • Page 68
    ... PG&E Corporation and the Utility for the information disclosed above. Disclosures about Offsetting Assets and Liabilities In January 2013, the Financial Accounting Standards Board issued an ASU that clarifies the scope of disclosures about offsetting assets and liabilities. The guidance requires an...

  • Page 69
    ... 31, 2013 2012 ...$ 1,444 1,835 503 628 106 135 135 127 4,913 $ 3,275 1,627 552 604 210 194 141 206 6,809 (in millions) Pension benefits(1) ...Deferred income taxes(1) ...Utility retained generation(2) ...Environmental compliance costs(1) ...Price risk management(1) ...Electromechanical meters...

  • Page 70
    ... in the Consolidated Balance Sheets. The Utility sells and delivers electricity and natural gas, which includes procuring and generating electricity. The Utility also administers public purpose programs, primarily related to customer energy efficiency programs. The balancing accounts associated with...

  • Page 71
    ...Total Utility long-term debt, net of current portion ...Total consolidated long-term debt, net of current portion ...(1) (2) At December 31, 2013, interest rates on these bonds and the related loans ranged from 0.01% to 0.04%. Each series of these bonds is supported by a separate letter of credit...

  • Page 72
    ... the Utility's commercial paper program at December 31, 2013: Termination Date April 2018 April 2018 $ $ Facility Limit Letters of Credit Outstanding - 79 79 Commercial Paper $ $ Facility Availability 40 2,007(3) 2,047 (in millions) PG&E Corporation ...Utility ...Total revolving credit facilities...

  • Page 73
    ...revolving credit facility agreement also requires that PG&E Corporation own, directly or indirectly, at least 80% of the common stock and at least 70% of the voting capital stock of the Utility. Commercial Paper Programs At December 31, 2013, the average yield on outstanding Utility commercial paper...

  • Page 74
    ... on cash distributions from the Utility to meet its debt service and other financial obligations and to pay dividends on its common stock. Long-Term Incentive Plan The PG&E Corporation LTIP permits various forms of share-based incentive awards, including stock options, stock appreciation rights...

  • Page 75
    ... (Continued) Share-based compensation costs capitalized during 2013, 2012, and 2011 was immaterial. There was no material difference between PG&E Corporation and the Utility for the information disclosed above. Restricted Stock Units RSU awards issued and outstanding under the LTIP generally vest...

  • Page 76
    ... shares of the $25 par value preferred stock authorized are designated as nonredeemable preferred stock without mandatory redemption provisions. The following table summarizes the Utility's outstanding preferred stock, none of which had mandatory redemption provisions at December 31, 2013 and 2012...

  • Page 77
    ... dilutive effect of outstanding share-based compensation in the calculation of diluted EPS. The following is a reconciliation of PG&E Corporation's income available for common shareholders and weighted average common shares outstanding for calculating diluted EPS for 2013, 2012 and 2011. Year Ended...

  • Page 78
    ...) Deferred income tax assets: Customer advances for construction Reserve for damages ...Environmental reserve ...Compensation ...Net operating loss carryforward ...GHG allowances ...Other ...Deferred income tax liabilities: Regulatory balancing accounts . . Property related basis differences Income...

  • Page 79
    ...matters relates to the repairs accounting method changes. The IRS has been working with the utility industry to provide guidance concerning the deductibility of repairs. PG&E Corporation and the Utility expect the IRS to issue guidance with respect to repairs made in the natural gas transmission and...

  • Page 80
    ... the Utility's third-party power purchase agreements contain market-based pricing terms. In order to reduce volatility in customer rates, the Utility may enter into financial instruments, such as futures, options, or swaps, to effectively fix and/or cap the price of future purchases and reduce cash...

  • Page 81
    ... a lesser extent, daily spot market to balance such seasonal supply and demand. The Utility purchases financial instruments, such as futures, swaps and options, as part of its core winter hedging program in order to manage customer exposure to high natural gas prices during peak winter months. These...

  • Page 82
    ... Cash Collateral 16 - 69 2 87 $ Total Derivative Balance 48 95 (43) (104) (4) (in millions) Current assets-other ...Other noncurrent assets-other Current liabilities-other ...Noncurrent liabilities-other . . Total commodity risk ... $ $ $ At December 31, 2012, PG&E Corporation's and the Utility...

  • Page 83
    ... by any of the Utility's credit risk-related contingencies. NOTE 10: FAIR VALUE MEASUREMENTS PG&E Corporation and the Utility measure their cash equivalents, trust assets, price risk management instruments, and other investments at fair value. A three-tier fair value hierarchy is established that...

  • Page 84
    ... securities ...U.S. government and agency securities Municipal securities ...Other fixed-income securities ...Total nuclear decommissioning trusts(2) . . Price risk management instruments (Note 9) Electricity ...Gas ...Total price risk management instruments Rabbi trusts Fixed-income securities...

  • Page 85
    ... securities ...U.S. government and agency securities Municipal securities ...Other fixed-income securities ...Total nuclear decommissioning trusts(2) . . Price risk management instruments (Note 9) Electricity ...Gas ...Total price risk management instruments Rabbi trusts Fixed-income securities...

  • Page 86
    ... Price risk management instruments include physical and financial derivative contracts, such as power purchase agreements, forwards, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. Power purchase agreements, forwards, and swaps are valued using a discounted cash...

  • Page 87
    ...) - 12.04 105 Discounted cash flow Forward prices $ 23.43 - 51.75 Represents price per megawatt-hour Fair Value at December 31, 2012 Assets Liabilities $ $ 80 $ - $ (in millions) Fair Value Measurement Congestion revenue rights . . Power purchase agreements . (1) Valuation Technique Unobservable...

  • Page 88
    ..., accounts payable, customer deposits, and the Utility's variable rate pollution control bond loan agreements approximate their carrying values at December 31, 2013 and 2012, as they are short-term in nature or have interest rates that reset daily. • The fair values of the Utility's fixed-rate...

  • Page 89
    ... Cost Total Unrealized Gains Total Unrealized Losses Total Fair Value (in millions) As of December 31, 2013 Nuclear decommissioning trusts Money market investments ...Equity securities U.S...Non-U.S...Debt securities U.S. government and agency securities ...Municipal securities ...Other fixed...

  • Page 90
    ... plans. PG&E Corporation's and the Utility's funding policy is to contribute tax-deductible amounts, consistent with applicable regulatory decisions and federal minimum funding requirements. Based upon current assumptions and available information, the Utility's minimum funding requirements related...

  • Page 91
    ...show the reconciliation of changes in plan assets, benefit obligations, and the plans' aggregate funded status for pension benefits and other benefits for PG&E Corporation during 2013 and 2012: Pension Benefits (in millions) Change in plan assets: Fair value of plan assets at January 1 Actual return...

  • Page 92
    ... the information disclosed above. Components of Net Periodic Benefit Cost Net periodic benefit cost as reflected in PG&E Corporation's Consolidated Statements of Income was as follows: Pension Benefits (in millions) Service cost for benefits earned . . Interest cost ...Expected return on plan assets...

  • Page 93
    ...GAAP, and a portion of the credit balance in accumulated other comprehensive income. However, this recovery mechanism does not allow the Utility to record a regulatory asset for an underfunded position related to other benefits. Therefore, the charge remains in accumulated other comprehensive income...

  • Page 94
    ...'s and the Utility's funded status volatility. In addition to affecting the trust's fixed-income portfolio market values, interest rate changes also influence liability valuations as discount rates move with current bond yields. To manage this risk, PG&E Corporation's and the Utility's trusts hold...

  • Page 95
    ..., manage risk through appropriate use of physical direct asset holdings and derivative securities, and identify permitted and prohibited investments. The target asset allocation percentages for major categories of trust assets for pension and other benefit plans are as follows: Pension Benefits 2013...

  • Page 96
    ... for pension and other benefits plans by major asset category at December 31, 2013 and 2012. Fair Value Measurements At December 31, 2013 (in millions) Pension Benefits: Money market investments ...Global equity securities ...Absolute return ...Real assets ...Fixed-income securities: U.S. government...

  • Page 97
    ... 1 assets. Private real estate funds are valued using a net asset value per share derived using appraisals, pricing models, and valuation inputs that are unobservable and are considered Level 3 assets. Fixed-Income The fixed-income category includes U.S. government securities, corporate securities...

  • Page 98
    ...2013 and 2012: Pension Benefits Corporate Fixed-Income Real Assets $ 585 28 (1) 12 (13) $ 611 1 - 20 (7) $ 625 $ $ $ 65 12 - 208 - 285 49 (3) 352 (139) 544 $ $ $ (in millions) Balance as of January 1, 2012 ...Actual return on plan assets: Relating to assets still held at the reporting date Relating...

  • Page 99
    ... Total 54 3 - 22 (1) 78 7 - 34 (26) 93 Balance as of December 31, 2012 ... Balance as of December 31, 2013 ... There were no transfers out of Level 3 in 2013 and 2012. Cash Flow Information Employer Contributions PG&E Corporation and the Utility contributed $323 million to the pension benefit plans...

  • Page 100
    ... Various electricity suppliers filed claims in the Utility's proceeding filed under Chapter 11 of the U.S. Bankruptcy Code seeking payment for energy supplied to the Utility's customers between May 2000 and June 2001. These claims, which the Utility disputes, are being addressed in various FERC and...

  • Page 101
    ... employees, operating and maintenance expenses, total assets, and other cost allocation methodologies. Management believes that the methods used to allocate expenses are reasonable and meet the reporting and accounting requirements of its regulatory agencies. The Utility's significant related party...

  • Page 102
    ... the Utility that relate to (1) the Utility's safety recordkeeping 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...

  • Page 103
    ...) Gas Safety Citation Program. The Utility and other California gas corporations are required to provide notice to the SED of any self-identified or self-corrected violations of certain state and federal regulations that relate to the safety of their natural gas facilities and operating practices...

  • Page 104
    .... The plaintiffs allege that the Utility collected more than $100 million in customer rates from 1997 through 2010 for the purpose of various safety measures and operations projects but instead used the funds for general corporate purposes such as executive compensation and bonuses. The plaintiffs...

  • Page 105
    ... The Utility is required to pay for environmental remediation at sites where it has been, or may be, a potentially responsible party under federal and state environmental laws. These sites include former manufactured gas plant sites, power plant sites, gas gathering sites, sites where natural gas...

  • Page 106
    ... with its final remediation plan, interim remediation measures, and whole house water program. Future costs will depend on many factors, including the levels of hexavalent chromium the Utility is required to use as the standard for remediation, the required time period by which those standards must...

  • Page 107
    ... the final groundwater remedy 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, results of operations, and cash flows. Reasonably Possible Environmental...

  • Page 108
    ... power may be fixed or variable. Variable pricing is generally based on the current market price of either natural gas or electricity at the date of delivery. The costs incurred for all power purchases and electric capacity were as follows: (in millions) Qualifying facilities(1) ...Renewable energy...

  • Page 109
    ... included in property, plant, and equipment on the Consolidated Balance Sheets. Natural Gas Supply, Transportation, and Storage Commitments The Utility purchases natural gas directly from producers and marketers in both Canada and the United States to serve its core customers and to fuel its owned...

  • Page 110
    ... 1,380 Total ... $ Payments for nuclear fuel amounted to $162 million in 2013, $118 million in 2012, and $77 million in 2011. Other Commitments PG&E Corporation and the Utility have other commitments relating to operating leases. At December 31, 2013, the future minimum payments related to these...

  • Page 111
    ...with the Utility's pipeline safety enhancement plan. See Note 14 of the Notes to the Consolidated Financial Statements. The Utility recorded a provision of $110 million and $80 million in the third quarter 2013 and in the second quarter 2012, respectively, for estimated third-party claims related to...

  • Page 112
    ... with authorizations of management and directors of PG&E Corporation and the Utility, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements. Because...

  • Page 113
    ...'s and the Utility's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

  • Page 114
    ... is to express an opinion on the Company's and the Utility's internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

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    BOARDS OF DIRECTORS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY LEWIS CHEW Executive Vice President and Chief Financial Officer, Dolby Laboratories, Inc. C. LEE COX(1) Vice Chairman, Retired, AirTouch Communications, Inc. and President and Chief Executive Officer, Retired, AirTouch ...

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    ..., Community Relations and Chief Sustainability Officer LORAINE M. GIAMMONA Vice President, Customer Service DEANN HAPNER Vice President, FERC and ISO Relations SANFORD L. HARTMAN Vice President and Managing Director, Law PATRICK M. HOGAN Vice President, Electric Operations Asset Management TRINA...

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    ...of all issued and outstanding shares of Pacific Gas and Electric Company common stock. If you have questions about your PG&E Corporation common stock account or Pacific Gas and Electric Company preferred stock account, please contact our transfer agent, American Stock Transfer and Trust Company, LLC...

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    ... 12, 2014 Time: 10:00 a.m. Location: PG&E Corporation and Pacific Gas and Electric Company Headquarters 77 Beale Street San Francisco, CA 94105 Form 10-K If you would like to obtain a copy, free of charge, of PG&E Corporation's and Pacific Gas and Electric Company's joint Annual Report on Form 10...

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