CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Operating Revenues | ||
Electric | $2,510 | $2,426 |
Natural gas | 965 | 1,005 |
Total operating revenues | 3,475 | 3,431 |
Operating Expenses | ||
Cost of electricity | 920 | 883 |
Cost of natural gas | 495 | 557 |
Operating and maintenance | 991 | 1,059 |
Depreciation, amortization, and decommissioning | 451 | 419 |
Total operating expenses | 2,857 | 2,918 |
Operating Income | 618 | 513 |
Interest income | 2 | 9 |
Interest expense | (168) | (181) |
Other (expense) income, net | (6) | 18 |
Income Before Income Taxes | 446 | 359 |
Income tax provision | 185 | 115 |
Net Income | 261 | 244 |
Preferred dividend requirement of subsidiary | 3 | 3 |
Income Available for Common Shareholders | $258 | $241 |
Weighted Average Common Shares Outstanding, Basic | 371 | 364 |
Weighted Average Common Shares Outstanding, Diluted | 389 | 366 |
Net Earnings Per Common Share, Basic | 0.69 | 0.65 |
Net Earnings Per Common Share, Diluted | 0.67 | 0.65 |
Dividends Declared Per Common Share | 0.46 | 0.42 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Mar. 31, 2010
| Dec. 31, 2009
|
Current Assets | ||
Cash and cash equivalents | $258 | $527 |
Restricted cash | 629 | 633 |
Accounts receivable | ||
Customers (net of allowance for doubtful accounts of $69 million in 2010 and $68 million in 2009) | 1,528 | 1,609 |
Accrued unbilled revenue | 638 | 671 |
Regulatory balancing accounts | 1,468 | 1,109 |
Inventories | ||
Gas stored underground and fuel oil | 59 | 114 |
Materials and supplies | 196 | 200 |
Income taxes receivable | 112 | 127 |
Prepaid expenses and other | 733 | 667 |
Total current assets | 5,621 | 5,657 |
Property, Plant, and Equipment | ||
Electric | 30,918 | 30,481 |
Gas | 10,823 | 10,697 |
Construction work in progress | 1,993 | 1,888 |
Other | 14 | 14 |
Total property, plant, and equipment | 43,748 | 43,080 |
Accumulated depreciation | (14,371) | (14,188) |
Net property, plant, and equipment | 29,377 | 28,892 |
Other Noncurrent Assets | ||
Regulatory assets | 5,602 | 5,522 |
Nuclear decommissioning funds | 1,929 | 1,899 |
Income taxes receivable | 596 | 596 |
Other | 415 | 379 |
Total other noncurrent assets | 8,542 | 8,396 |
TOTAL ASSETS | 43,540 | 42,945 |
Current Liabilities | ||
Short-term borrowings | 1,251 | 833 |
Long-term debt, classified as current | 842 | 342 |
Energy recovery bonds, classified as current | 390 | 386 |
Accounts payable | ||
Trade creditors | 882 | 984 |
Disputed claims and customer refunds | 772 | 773 |
Regulatory balancing accounts | 312 | 281 |
Other | 481 | 349 |
Interest payable | 795 | 818 |
Income taxes payable | 268 | 214 |
Deferred income taxes | 506 | 332 |
Other | 1,281 | 1,501 |
Total current liabilities | 7,780 | 6,813 |
Noncurrent Liabilities | ||
Long-term debt | 9,882 | 10,381 |
Energy recovery bonds | 730 | 827 |
Regulatory liabilities | 4,190 | 4,125 |
Pension and other postretirement benefits | 1,968 | 1,773 |
Asset retirement obligations | 1,603 | 1,593 |
Deferred income taxes | 4,656 | 4,732 |
Other | 2,110 | 2,116 |
Total noncurrent liabilities | 25,139 | 25,547 |
Shareholders' Equity | ||
Preferred stock, no par value, authorized 80,000,000 shares, $100 par value, authorized 5,000,000 shares, none issued | 0 | 0 |
Common stock, no par value, authorized 800,000,000 shares, issued 371,222,918 common and 480,848 restricted shares in 2010 and issued 370,601,905 common and 670,552 restricted shares in 2009 | 6,307 | 6,280 |
Reinvested earnings | 4,302 | 4,213 |
Accumulated other comprehensive loss | (240) | (160) |
Total shareholders' equity | 10,369 | 10,333 |
Noncontrolling Interest - Preferred Stock of Subsidiary | 252 | 252 |
Total equity | 10,621 | 10,585 |
TOTAL LIABILITIES AND EQUITY | $43,540 | $42,945 |
PARENTHETICAL DATA FOR CONDENSE
PARENTHETICAL DATA FOR CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
Current Assets | ||
Allowance for doubtful accounts | $69 | $68 |
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | 0 | 0 |
Preferred stock, shares authorized (no par value) | 80,000,000 | 80,000,000 |
Preferred stock, shares issued (no par value) | 0 | 0 |
Preferred stock, par value (in dollars per share) | 100 | 100 |
Preferred stock, shares authorized ($100 par value) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued ($100 par value) | 0 | 0 |
Common stock, no par value | 0 | 0 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 371,222,918 | 370,601,905 |
Common stock, shares issued (restricted) | 480,848 | 670,552 |
1_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Cash Flows from Operating Activities | ||
Net income | $261 | $244 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation, amortization, and decommissioning | 506 | 463 |
Allowance for equity funds used during construction | (28) | (25) |
Deferred income taxes and tax credits, net | 137 | 235 |
Other changes in noncurrent assets and liabilities | (113) | (51) |
Effect of changes in operating assets and liabilities | ||
Accounts receivable | 114 | 301 |
Inventories | 59 | 166 |
Accounts payable | 87 | (116) |
Income taxes receivable/payable | 69 | 209 |
Regulatory balancing accounts, net | (377) | (180) |
Other current assets | 35 | 32 |
Other current liabilities | (381) | (390) |
Other | 26 | 2 |
Net cash provided by operating activities | 395 | 890 |
Cash Flows from Investing Activities | ||
Capital expenditures | (855) | (1,079) |
Decrease in restricted cash | 4 | 11 |
Proceeds from sales of nuclear decommissioning trust investments | 337 | 387 |
Purchases of nuclear decommissioning trust investments | (343) | (412) |
Other | 9 | 7 |
Net cash used in investing activities | (848) | (1,086) |
Cash Flows from Financing Activities | ||
Borrowings under revolving credit facility | 0 | 300 |
Repayments under revolving credit facility | 0 | (300) |
Net issuance of commercial paper, net of discount of $2 million in 2009 | 418 | 96 |
Proceeds from issuance of long-term debt, net of discount and issuance costs of $16 million in 2009 | 0 | 884 |
Long-term debt matured or repurchased | 0 | (600) |
Energy recovery bonds matured | (93) | (89) |
Common stock issued | 10 | 96 |
Common stock dividends paid | (157) | (138) |
Other | 6 | (1) |
Net cash provided by financing activities | 184 | 248 |
Net change in cash and cash equivalents | (269) | 52 |
Cash and cash equivalents at January 1 | 527 | 219 |
Cash and cash equivalents at March 31 | 258 | 271 |
Cash received (paid) for | ||
Interest, net of amounts capitalized | (193) | (190) |
Income taxes, net | 0 | 294 |
Supplemental disclosures of noncash investing and financing activities | ||
Common stock dividends declared but not yet paid | 169 | 154 |
Capital expenditures financed through accounts payable | 215 | 235 |
Noncash common stock issuances | $0 | $33 |
2_PARENTHETICAL DATA FOR CONDEN
PARENTHETICAL DATA FOR CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Cash Flows from Financing Activities | ||
Net issuance of commercial paper, discount | $0 | $2 |
Proceeds from issuance of long-term debt, discount and issuance costs | $0 | $16 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION PGE Corporation is a holding company whose primary purpose is to hold interests in energy-based businesses.PGE Corporation conducts its business principally through Pacific Gas and Electric Company ("Utility"), a public utility operating in northern and central California.The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers.The Utility is primarily regulated by the California Public Utilities Commission ("CPUC") and the Federal Energy Regulatory Commission ("FERC").The Utility's accounts for electric and gas operations are maintained in accordance with the Uniform System of Accounts prescribed by the FERC. This quarterly report on Form 10-Q is a combined report of PGE Corporation and the Utility.Therefore, the Notes to the Condensed Consolidated Financial Statements apply to both PGE Corporation and the Utility.PGE Corporation's Condensed Consolidated Financial Statements include the accounts of PGE Corporation, the Utility, and other wholly owned and controlled subsidiaries.The Utility's Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries, as well as, the accounts of variable interest entities ("VIEs") for which the Utility is the primary beneficiary.All intercompany transactions have been eliminated from the Condensed Consolidated Financial Statements. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements.PGE Corporation's and the Utility's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition, results of operations, and cash flows for the periods presented.The information at December 31, 2009 in both PGE Corporation's and the Utility's Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets incorporated by reference into their combined 2009 Annual Report on Form 10-K filed on February 19, 2010.PGE Corporation's and the Utility's combined 2009 Annual Report on Form 10-K, together with the information incorporated by reference into such report, is referred to in this quarterly report as the "2009 Annual Report." The significant accounting policies used by PGE Corporation and the Utility are discussed in Notes 1 and 2 of the Notes to the Consolidated Financial Statements in the 2009 Annual Report.Any significant changes to those policies or new significant policies are described in Note 2 below. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on a wide range of factors, including future regul |
NEW AND SIGNIFICANT ACCOUNTING
NEW AND SIGNIFICANT ACCOUNTING POLICIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
NEW AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: NEW AND SIGNIFICANT ACCOUNTING POLICIES Pension and Other Postretirement Benefits PGE Corporation and the Utility provide a non-contributory defined benefit pension plan for eligible employees and retirees (referred to collectively as "pension benefits"), contributory postretirement medical plans for eligible employees and retirees and their eligible dependents, and non-contributory postretirement life insurance plans for eligible employees and retirees (referred to collectively as "other benefits").PGE Corporation and the Utility use a December 31 measurement date for all plans. The net periodic benefit costs as reflected in PGE Corporation's Condensed Consolidated Statements of Income as a component of Operating and maintenance for the three months ended March 31, 2010 and 2009 were as follows: Pension Benefits Other Benefits Three Months Ended March 31, Three Months Ended March 31, (in millions) 2010 2009 2010 2009 Service cost for benefits earned $ 69 $ 66 $ 10 $ 8 Interest cost 161 155 23 21 Expected return on plan assets (156 ) (145 ) (18 ) (17 ) Amortization of transition obligation - - 6 6 Amortization of prior service cost 13 11 6 4 Amortization of unrecognized (gain) loss 11 25 1 1 Net periodic benefit cost 98 112 28 23 Less: transfer to regulatory account (1) (58 ) (71 ) - - Total $ 40 $ 41 $ 28 $ 23 (1) The Utility recorded $58 million and $71 million for the three month periods ended March 31, 2010 and 2009, respectively, to a regulatory account as the amounts are probable of recovery from customers in future rates. There was no material difference between PGE Corporation's and the Utility's consolidated net periodic benefit costs for the three months ended March 31, 2010 and 2009. On February 16, 2010, the Utility amended its defined benefit medical plans for retirees to provide for additional contributions towards retiree premiums.The plan amendment was accounted for as a plan modification that required re-measurement of the accumulated benefit obligation, plan assets, and periodic benefit costs.The inputs and assumptions used in re-measurement did not change significantly from December 31, 2009 and did not have a material impact on the funded status of the plans.The re-measurement of the accumulated benefit obligation and plan assets resulted in an increase to pension and other postretirement benefits and a decrease to other comprehensive loss of $148 million as of February 16, 2010.The impact to net periodic benefit cost for the three months ended March 31, 2010 was not significant. Adoption of New Accounting Pronouncements Consolidations (Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities On January 1, 2010, PGE Corporation and the Utility adopted Accounting Standards Update ("ASU") No. 2009-17, "Consolidations (Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" ("ASU No. 2009-17").ASU No. 2009-17 amends the Consolidation Top |
REGULATORY ASSETS, LIABILITIES,
REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS | NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS Regulatory Assets Current Regulatory Assets At March 31, 2010 and December 31, 2009, the Utility had current regulatory assets of $568 million and $427 million, respectively, consisting primarily of the current portion of price risk management regulatory assets.Price risk management regulatory assets represent the deferral of unrealized losses related to price risk management derivative instruments with terms of one year or less.(See Note 7 below for further discussion.)Current regulatory assets are included in Prepaid expenses and other in the Condensed Consolidated Balance Sheets. Long-Term Regulatory Assets Long-term regulatory assets are composed of the following: Balance at (in millions) March 31, 2010 December 31, 2009 Pension benefits $ 1,421 $ 1,386 Deferred income taxes 1,067 1,027 Energy recovery bonds 1,039 1,124 Utility retained generation 719 737 Price risk management 484 346 Environmental compliance costs 397 408 Unamortized loss, net of gain, on reacquired debt 197 203 Other 278 291 Total long-term regulatory assets $ 5,602 $ 5,522 The regulatory asset for pension benefits represents the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized in accordance with GAAP, which also includes amounts that otherwise would be fully recorded to Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets.(See Note 13 of the Notes to the Consolidated Financial Statements in the 2009 Annual Report.) The regulatory assets for deferred income taxes represent deferred income tax benefits previously passed through to customers offset by deferred income tax liabilities.The CPUC requires the Utility to pass through certain tax benefits to customers, ignoring the effect of deferred taxes on rates.Based on current regulatory ratemaking and income tax laws, the Utility expects to recover deferred income taxes related to regulatory assets over periods ranging from 1 to 45 years. The regulatory asset for energy recovery bonds ("ERBs") represents the refinancing of the regulatory asset provided for in the settlement agreement entered into between PGE Corporation, the Utility, and the CPUC in 2003 to resolve the Utility's proceeding under Chapter 11 of the U.S. Bankruptcy Code ("Chapter 11 Settlement Agreement").(See Note 4 below.)The regulatory asset is amortized over the life of the bonds consistent with the period over which the related billed revenues and bond-related expenses are recognized.The Utility expects to fully recover this asset by the end of 2012 when the ERBs mature. In connection with the Chapter 11 Settlement Agreement, the CPUC authorized the Utility to recover $1.2 billion of costs related to the Utility's retained generation assets.The individual components of these regulatory assets are amortized over the respective lives of the underlying generation facilities, consistent with the period over which the related revenues are recognized.The weighted average remaining life of the assets is 15 years |
DEBT
DEBT | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
DEBT | NOTE 4: DEBT Utility Senior Notes On April 1, 2010, the Utility issued $250 million principal amount of 5.8% Senior Notes due March 1, 2037. Pollution Control Bonds On April 8, 2010, the California Infrastructure and Economic Development Bank issued $50 million of tax-exempt pollution control bonds series 2010E due on November 1, 2026 and loaned the proceeds to the Utility.The proceeds were used to refund the corresponding related series of pollution control bonds issued in 2005 which were repurchased by the Utility in 2008.The series 2010E bonds bear interest at 2.25% per year through April 1, 2012 and are subject to mandatory tender on April 2, 2012 at a price of 100% of the principal amount plus accrued interest.Thereafter, this series of bonds may be remarketed in a fixed or variable rate mode. Credit Facility and Short-Term Borrowings At March 31, 2010, the Utility had $265 million of letters of credit outstanding under the Utility's $1.94 billion revolving credit facility. The revolving credit facility also provides liquidity support for commercial paper offerings.At March 31, 2010, the Utility had $751 million of commercial paper outstanding at an average yield of 0.31%. Energy Recovery Bonds In 2005, PERF, a wholly owned consolidated subsidiary of the Utility, issued two separate series of ERBs in the aggregate amount of $2.7 billion.The proceeds of the ERBs were used by PERF to purchase from the Utility the right, known as "recovery property," to be paid a specified amount from a dedicated rate component to be collected from the Utility's electricity customers.The total amount of ERB principal outstanding was $1.1billion at March 31, 2010. While PERF is a wholly owned subsidiary of the Utility, it is legally separate from the Utility.The assets, including the recovery property, of PERF are not available to creditors of the Utility or PGE Corporation, and the recovery property is not legally an asset of the Utility or PGE Corporation. |
EQUITY
EQUITY | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
EQUITY | NOTE 5: EQUITY PGE Corporation's and the Utility's changes in equity for the three months ended March 31, 2010 were as follows: PGE Corporation Utility (in millions) Total Equity Total Shareholders' Equity Balance at December 31, 2009 $ 10,585 $ 11,185 Net income 261 264 Common stock issued 10 - Share-based compensation amortization 15 - Common stock dividends declared and paid - (179 ) Common stock dividends declared but not yet paid (169 ) - Preferred stock dividend requirement - (3 ) Preferred stock dividend requirement of subsidiary (3 ) - Tax benefit from employee stock plans 2 1 Other comprehensive income (80 ) (80 ) Equity contribution - 20 Balance at March 31, 2010 $ 10,621 $ 11,208 For the three months ended March 31, 2010, PGE Corporation contributed equity of $20 million to the Utility in order to maintain the 52% common equity target authorized by the CPUC and to ensure that the Utility has adequate capital to fund its capital expenditures. Comprehensive Income Comprehensive income consists of net income and accumulated other comprehensive income, which includes certain changes in equity that are excluded from net income.Specifically, cumulative adjustments for employee benefit plans, net of tax, are included in accumulated other comprehensive income. PGE Corporation Utility Three Months Ended March 31, Three Months Ended March 31, (in millions) 2010 2009 2010 2009 Net income $ 261 $ 244 $ 264 $ 239 Employee benefit plan adjustment, net of tax (80 ) 7 (80 ) 7 Comprehensive Income $ 181 $ 251 $ 184 $ 246 Dividends During the three months ended March 31, 2010, PGE Corporation paid common stock dividends totaling $157 million.On February 17, 2010, the Board of Directors of PGE Corporation declared a dividend of $0.455 per share, totaling $169 million, which was paid on April 15, 2010 to shareholders of record on March 31, 2010. During the three months ended March 31, 2010, the Utility paid common stock dividends totaling $179 million to PGE Corporation. During the three months ended March 31, 2010, the Utility paid dividends totaling $4 million to holders of its outstanding series of preferred stock.On February 17, 2010, the Board of Directors of the Utility declared a dividend totaling $3 million on its outstanding series of preferred stock, payable on May 15, 2010, to shareholders of record on April 30, 2010. |
EARNINGS PER SHARE
EARNINGS PER SHARE | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
EARNINGS PER SHARE | NOTE 6: EARNINGS PER SHARE Earnings per common share ("EPS") is calculated utilizing the "two-class" method, dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding during the period.In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities.PGE Corporation's 9.50% Convertible Subordinated Notes are entitled to receive pass-through dividends and meet the criteria of participating securities.All of the participating securities participate in dividends on a 1:1 basis with shares of common stock. The following is a reconciliation of PGE Corporation's income available for common shareholders and weighted average shares of common stock outstanding for calculating basic EPS: Three Months Ended March 31, (in millions, except per share amounts) 2010 2009 Basic Income Available for Common Shareholders $ 258 $ 241 Less: distributed earnings to common shareholders 169 154 Undistributed earnings $ 89 $ 87 Allocation of undistributed earnings to common shareholders Distributed earnings to common shareholders $ 169 $ 154 Undistributed earnings allocated to common shareholders 85 83 Total common shareholders earnings $ 254 $ 237 Weighted average common shares outstanding, basic 371 364 Convertible Subordinated Notes 16 17 Weighted average common shares outstanding and participating securities 387 381 Net earnings per common share, basic Distributed earnings, basic (1) $ 0.46 $ 0.42 Undistributed earnings, basic 0.23 0.23 Total $ 0.69 $ 0.65 (1) Distributed earnings, basic may differ from actual per share amounts paid as dividends, as the EPS computation under GAAP requires the use of the weighted average, rather than the actual, number of shares outstanding. In calculating diluted EPS, PGE Corporation applies the "if-converted" method to reflect the dilutive effect of the Convertible Subordinated Notes to the extent that the impact is dilutive when compared to basic EPS.In addition, PGE Corporation applies the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS.The following is a reconciliation of PGE Corporation's income available for common shareholders and weighted average shares of common stock outstanding for calculating diluted EPS for three months ended March 31, 2010: Three Months Ended (in millions, except per share amounts) March 31, 2010 Diluted Income Available for Common Shareholders $ 258 Add earnings impact of assumed conversion of participating securities: Interest expense on convertible subordinated notes, net of tax 4 Income Available for Common Shareholders and Assumed Conversion $ 262 Weighted average common shares outstanding, basic 371 Add incremental shares from assumed conversions: Convertible subordinated notes 16 Employee share-based compensation 2 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
DERIVATIVES AND HEDGING ACTIVITIES | NOTE 7: DERIVATIVES AND HEDGING ACTIVITIES Use of Derivative Instruments The Utility faces market risk primarily related to electricity and natural gas commodity prices.All of the Utilitys risk management activities involving derivatives occur to reduce the volatility of commodity costs on behalf of its customers.The CPUC and the FERC allow the Utility to charge customer rates designed to recover the Utilitys reasonable costs of providing services, including the cost to obtain and deliver electricity and natural gas.As these costs are passed through to customers in rates, the Utilitys earnings are not exposed to the commodity price risk inherent in the purchase and sale of electricity and natural gas. The Utility uses both derivative and non-derivative contracts in managing its customers exposure to commodity-related price risk, including: forward contracts that commit the Utility to purchase a commodity in the future; swap agreements that require payments to or from counterparties based upon the difference between two prices for a predetermined contractual quantity; option contracts that provide the Utility with the right to buy a commodity at a predetermined price; and futures contracts that are exchange-traded contracts that commit the Utility to purchase a commodity or make a cash settlement at a specified price and future date. These instruments are not held for speculative purposes and are subject to certain regulatory requirements. Commodity-Related Price Risk Commodity-related price risk management activities that meet the definition of a derivative are recorded at fair value on the Condensed Consolidated Balance Sheets.As long as the ratemaking mechanisms discussed above remain in place and the Utilitys risk management activities are carried out in accordance with CPUC directives, the Utility expects to fully recover from customers, in rates, all costs related to commodity-related price risk-related derivative instruments.Therefore, all unrealized gains and losses associated with the fair value of these derivative instruments are deferred and recorded within the Utilitys regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. (See Note 3 above.)Net realized gains or losses on derivative instruments related to price risk for commodities are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from customers. The Utility elects the normal purchase and sale exception for qualifying commodity-related derivative instruments.Derivative instruments that require physical delivery, are probable of physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered are eligible for the normal purchase and sale exception.The fair value of instruments that are eligible for the normal purchase and sales exception are not reflected in the Condensed Consolidated Balance Sheets. The following is a discussion of the Utilitys use of derivative instruments intended to mit |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 8: FAIR VALUE MEASUREMENTS PGE Corporation and the Utility measure their cash equivalents, trust assets, dividend participation rights, and price risk management instruments at fair value.Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: Level1-Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level2-Include other inputs that are directly or indirectly observable in the marketplace. Level3-Unobservable inputs which are supported by little or no market activities. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.(See Note 12 of the Notes to the Consolidated Financial Statements in the 2009 Annual Report for further discussion of fair value measurements.) Assets and liabilities measured at fair value on a recurring basis for PGE Corporation and the Utility are summarized below (money market investments, rabbi trusts, and dividend participation rights are held by PGE Corporation and not the Utility): Fair Value Measurements at March 31, 2010 (in millions) Level 1 Level 2 Level 3 Total Assets: Money market investments $ 195 $ - $ - $ 195 Nuclear decommissioning trusts U.S. equity securities (1) 813 30 - 843 Non-U.S. equity securities 328 - - 328 U.S. government and agency securities 664 73 - 737 Municipal securities 4 86 - 90 Other fixed income securities - 76 - 76 Total nuclear decommissioning trusts (2) 1,809 265 - 2,074 Price risk management instruments Electric (3) 47 - - 47 Total price risk management instruments 47 - - 47 Rabbi trusts Equity securities 22 - - 22 Life insurance contracts - 62 - 62 Total rabbi trusts 22 62 - 84 Long-term disability trust U.S. equity securities (1) 3 28 - 31 Corporate debt securities (1) - 148 - 148 Total long-term disability trust 3 176 - 179 Total assets $ 2,076 $ 503 $ - $ 2,579 Liabilities: Dividend participation rights $ - $ - $ 7 $ 7 Price risk management instruments Electric (4) - 50 295 345 Gas (5) - 1 41 42 Total price risk management instruments - 51 336 387 Other liabilities - - 1 1 Total liabilities $ - $ 51 $ 344 $ 395 (1) Level 2 balances include commingled funds, which are comprised primarily of securities traded publicly on exchanges. Price quotes for the assets h |
RELATED PARTY AGREEMENTS AND TR
RELATED PARTY AGREEMENTS AND TRANSACTIONS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
RELATED PARTY AGREEMENTS AND TRANSACTIONS | NOTE 9: RELATED PARTY AGREEMENTS AND TRANSACTIONS The Utility and other subsidiaries provide and receive various services to and from their parent, PGE Corporation, and among themselves.The Utility and PGE Corporation exchange administrative and professional services in support of operations.Services provided directly to PGE Corporation by the Utility are priced at the higher of fully loaded cost (i.e., direct cost of good or service and allocation of overhead costs) or fair market value, depending on the nature of the services.Services provided directly to the Utility by PGE Corporation are generally priced at the lower of fully loaded cost or fair market value, depending on the nature and value of the services.PGE Corporation also allocates various corporate administrative and general costs to the Utility and other subsidiaries using agreed-upon allocation factors, including the number of 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 transactions were as follows: Three Months Ended March 31, (in millions) 2010 2009 Utility revenues from: Administrative services provided to PGE Corporation $ 1 $ 1 Utility expenses from: Administrative services received from PGE Corporation $ 16 $ 19 Utility employee benefit due to PGE Corporation 10 6 At March 31, 2010 and December 31, 2009, the Utility had a receivable of $25 million and $26 million, respectively, from PGE Corporation included in Accounts receivable - Related parties and Other Noncurrent Assets - Related parties receivable on the Utility's Condensed Consolidated Balance Sheets, and a payable of $24 million and $16 million, respectively, to PGE Corporation included in Accounts payable - Related parties on the Utility's Condensed Consolidated Balance Sheets. |
RESOLUTION OF REMAINING CHAPTER
RESOLUTION OF REMAINING CHAPTER 11 DISPUTED CLAIMS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
RESOLUTION OF REMAINING CHAPTER 11 DISPUTED CLAIMS | NOTE 10: RESOLUTION OF REMAINING CHAPTER 11 DISPUTED CLAIMS Various electricity suppliers filed claims in the Utility's proceeding under Chapter 11 seeking payment for energy supplied to the Utility's customers through the wholesale electricity markets operated by the CAISO and the California Power Exchange ("PX") between May 2000 and June 2001.These claims, which the Utility disputes, are being addressed in various FERC and judicial proceedings in which the State of California, the Utility, and other electricity purchasers are seeking refunds from electricity suppliers, including municipal and governmental entities, for overcharges incurred in the CAISO and the PX wholesale electricity markets between May 2000 and June 2001.At March 31, 2010 and December 31, 2009, the Utility held $515 million in escrow, including interest earned, for payment of the remaining net disputed claims.These amounts are included within Restricted cash on the Condensed Consolidated Balance Sheets. While the FERC and judicial proceedings have been pending, the Utility entered into a number of settlements with various electricity suppliers to resolve some of these disputed claims and to resolve the Utility's refund claims against these electricity suppliers.These settlement agreements provide that the amounts payable by the parties are, in some instances, subject to adjustment based on the outcome of the various refund offset and interest issues being considered by the FERC.The proceeds from these settlements, after deductions for contingencies based on the outcome of the various refund offset and interest issues being considered by the FERC, will continue to be refunded to customers in rates.Additional settlement discussions with other electricity suppliers are ongoing.Any net refunds, claim offsets, or other credits that the Utility receives from energy suppliers through resolution of the remaining disputed claims, either through settlement or the conclusion of the various FERC and judicial proceedings, will also be credited to customers. The following table presents the changes in the remaining disputed claims liability and interest accrued from December 31, 2009 to March 31, 2010: (in millions) Balance at December 31, 2009 $ 946 Interest accrued 8 Less: Supplier Settlements - Balance at March 31, 2010 $ 954 At March 31, 2010, the Utility's net disputed claims liability was $954 million, consisting of $772 million of remaining disputed claims (classified on the Condensed Consolidated Balance Sheets within Accounts payable - Disputed claims and customer refunds) and interest accrued at the FERC-ordered rate of $675 million (classified on the Condensed Consolidated Balance Sheets within Interest payable) partially offset by accounts receivable from the CAISO and the PX of $493 million (classified on the Condensed Consolidated Balance Sheets within Accounts receivable - Customers). Interest accrues on the liability for disputed claims at the FERC-ordered rate, which is higher than the rate earned by the Utility on the escrow balance.Although the Utility has been collecting the difference between the accrued interest and the |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to the Financial Statements [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11: COMMITMENTS AND CONTINGENCIES PGE Corporation and the Utility have substantial financial commitments in connection with agreements entered into to support the Utilitys operating activities.PGE Corporation and the Utility also have significant contingencies arising from their operations, including contingencies related to guarantees, regulatory proceedings, nuclear operations, environmental compliance and remediation, tax matters, and legal matters. Commitments Utility Third-Party Power Purchase Agreements As part of the ordinary course of business, the Utility enters into various agreements to purchase power and electric capacity.The price of purchased power may be fixed or variable.Variable pricing is generally based on the current market price of either gas or electricity at the date of purchase. At March 31, 2010, the undiscounted future expected power purchase agreement payments were as follows: (in millions) 2010 $ 1,674 2011 2,260 2012 2,309 2013 2,307 2014 2,268 Thereafter 38,464 Total $ 49,282 Payments made by the Utility under power purchase agreements amounted to $201 million and $663 million for the three months ended March 31, 2010 and March 31, 2009, respectively.The amounts above do not include payments related to the DWR purchases for the benefit of the Utilitys customers, as the Utility only acts as an agent for the DWR. Some of the power purchase agreements that the Utility entered into with independent power producers that are qualifying facilities (QFs) are treated as capital leases.The following table shows the future fixed capacity payments due under the QF contracts that are treated as capital leases.(These amounts are also included in the table above.)The fixed capacity payments are discounted to their present value in the table below using the Utilitys incremental borrowing rate at the inception of the leases.The amount of this discount is shown in the table below as the Amount representing interest. (in millions) 2010 $ 43 2011 50 2012 50 2013 50 2014 42 Thereafter 162 Total fixed capacity payments 397 Amount representing interest 85 Present value of fixed capacity payments $ 312 Minimum lease payments associated with the lease obligation are included in Cost of electricity on PGE Corporations and the Utilitys Condensed Consolidated Statements of Income.The timing of the Utilitys recognition of the lease expense conforms to the ratemaking treatment for the Utilitys recovery of the cost of electricity.The QF contracts that are treated as capital leases expire between April 2014 and September 2021. At March 31, 2010 and December 31, 2009, PGE Corporation and the Utility had $32 million included in Current Liabilities Other, and $280 million and $282 million included in Noncurrent Liabilities Other, respectively, representing the present value of the fixed capacity payments due under these contracts recorded on PGE Corporations and the Utilitys Condensed Consolidated Balance Sheets.The corresponding assets at March 31, 2010 and December 31, 2009 of $312 million and $314 million, including amortization of $ |
Document Information
Document Information | |
3 Months Ended
Mar. 31, 2010 | |
Document Information [Text Block] | |
Document Type | 10-Q |
Document Period End Date | 2010-03-31 |
Amendment Flag | false |
Entity Information
Entity Information (USD $) | |||
3 Months Ended
Mar. 31, 2010 | Apr. 30, 2010
| Jun. 30, 2009
| |
Entity [Text Block] | |||
Entity Registrant Name | PG&E CORP | ||
Entity Central Index Key | 0001004980 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $14,193,000,000 | ||
Entity Common Stock, Shares Outstanding | 372,345,954 | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | Q1 |