2010 FERC Form 1 - Pacific Gas and Electric Company

Name of Respondent
PACIFIC GAS AND ELECTRIC COMPANY
This Report is:
(1) X An Original
(2) A Resubmission
Date of Report
(Mo, Da, Yr)
04/08/2011
Year/Period of Report
2010/Q4
NOTES TO FINANCIAL STATEMENTS (Continued)
Introduction:
The accompanying financial statements on pages 110 through 121 of this Form 1 report of Pacific Gas and Electric Company
(the “Utility”) were prepared in accordance with the accounting requirements of the Federal Energy Regulatory Commission (“FERC”)
as set forth in its applicable Uniform System of Accounts and published accounting releases, which is a comprehensive basis of
accounting other than accounting principles generally accepted in the United States of America (“GAAP”). The primary differences
from the Utility’s GAAP-basis financial statements as presented in the Form 1 are that (1) subsidiaries are not consolidated and are
shown under the equity method of accounting, (2) deferred income tax assets and liabilities are not offset against each other but are
shown as separate items on the balance sheet and are long-term, (3) cost of removal is reported in accumulated depreciation for FERC
reporting purposes (GAAP requires that cost of removal be classified as a regulatory liability), (4) there is no current liability
classification of the current portion of long-term debt for FERC reporting, (5) there is no reclassification of negative balances of
balancing accounts from current assets to current liabilities for FERC reporting, (6) there is no reclassification of price risk
management activities relating to the offsetting of financial assets and financial liabilities in the balance sheet for FERC reporting, and
(7) interdepartmental revenues and expenses between electric and gas operations of the Utility are not eliminated for FERC reporting .
The notes below are excerpts from PG&E Corporation and the Utility’s combined Annual Report on Form 10-K for the year
ended December 31, 2010, as filed with the Securities and Exchange Commission (“SEC”) on February 17, 2011. The following
disclosures contain information in accordance with SEC reporting requirements. As such, due to the differences between FERC and
SEC reporting requirements, certain amounts disclosed in the following notes may not agree to balances in the FERC financial
statements.
PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2010
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
PG&E Corporation is a holding company whose primary purpose is to hold interests in energy-based businesses. PG&E
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 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 is a combined annual report of PG&E Corporation and the Utility. The Notes to the Consolidated Financial Statements
apply to both PG&E Corporation and the Utility. PG&E Corporation’s Consolidated Financial Statements include the accounts of
PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries. The Utility’s Consolidated Financial Statements
include the accounts of the Utility and its wholly owned and controlled subsidiaries. All intercompany transactions have been
eliminated from the Consolidated Financial Statements.
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for annual financial statements and in accordance with the instructions to Form
10-K and Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). 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
regulatory decisions and economic conditions that are difficult to predict. Some of the more critical estimates and assumptions relate
to the Utility’s regulatory assets and liabilities, environmental remediation liabilities, asset retirement obligations (“ARO”), and
pension plan and other postretirement plan obligations. In addition, management has made significant estimates and assumptions for
accruals related to the rupture of a natural gas transmission pipeline owned and operated by the Utility in the City of San Bruno,
California on September 9, 2010, as well as accruals for various legal matters. (See Note 15 below.) Management believes that its
estimates and assumptions reflected in the Consolidated Financial Statements are appropriate and reasonable. Actual results could
FERC FORM NO. 1 (ED. 12-88) Page 123.1