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)
(in millions)
Gross Plant as of
December 31, 2009
Accumulated
Depreciation as of
December 31, 2009
Net Plant as of
December 31, 2009
Electricity generating facilities (1) $ 4,777 $ (1,279) $ 3,498
Electricity distribution facilities 19,924 (6,924) 13,000
Electricity transmission 5,780 (1,751) 4,029
Natural gas distribution facilities 7,069 (2,667) 4,402
Natural gas transportation and storage 3,628 (1,554) 2,074
Construction work in progress 1,888 - 1,888
Total $ 43,066 $ (14,175) $ 28,891
(1) Balance includes nuclear fuel inventories. Stored nuclear fuel inventory is stated at weighted average cost. Nuclear fuel
in the reactor is expensed as it is used based on the amount of energy output. (See Note 15 below.)
AFUDC
AFUDC is a method used to compensate the Utility for the estimated cost of debt (interest) and equity funds used to finance
regulated plant additions and is capitalized as part of the cost of construction projects. AFUDC is recoverable from customers through
rates over the life of the related property once the property is placed in service. The portion of AFUDC related to the cost of debt is
recorded as a reduction to interest expense. AFUDC related to the cost of equity is recorded in other income. The Utility recorded
AFUDC of $110 million and $50 million during 2010, $95 million and $44 million during 2009, $70 million and $44 million during
2008, related to equity and debt, respectively.
Depreciation
The Utility depreciates property, plant, and equipment on a straight-line basis over the estimated useful lives. The composite,
or group, method of depreciation is used, in which a single depreciation rate is applied to the gross investment in a particular class of
property. The Utility’s composite depreciation rate was 3.38% in 2010, 3.43% in 2009, and 3.38% in 2008.
Electricity generating facilities
Electricity distribution facilities
Electricity transmission
Natural gas distribution facilities
Natural gas transportation and storage
Estimated Useful Lives
4 to 37 years
16 to 58 years
40 to 70 years
24 to 52 years
25 to 48 years
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 and a component for estimated cost of future removal, net of any salvage value at retirement. Upon retirement, the
original cost of the retired assets, net of salvage value, is charged to accumulated depreciation. The cost of repairs and maintenance,
including planned major maintenance activities and minor replacements of property, is charged to operating and maintenance expense
as incurred.
Capitalized Software Costs
PG&E Corporation and the Utility capitalize costs incurred during the application development stage of internal use software
projects to property, plant, and equipment. PG&E Corporation and the Utility amortize capitalized software costs ratably over the
expected lives of the software, ranging from 3 to 15 years and commencing upon operational use. Capitalized software costs totaled
$580 million at December 31, 2010 and $562 million at December 31, 2009, net of accumulated amortization of $386 million at
December 31, 2010 and $315 million at December 31, 2009. Amortization expense for capitalized software was $94 million in 2010,
$37 million in 2009, and $73 million in 2008. Amortization expense is estimated to be approximately $120 million annually for 2011
FERC FORM NO. 1 (ED. 12-88) Page 123.3