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)
customer selection, and re-marketing activities at the end of customer leases. As these activities are under the control of these
companies, PG&E Corporation was not the primary beneficiary of, and did not consolidate, any of these companies at December 31,
2010.
NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS
Regulatory Assets
Current Regulatory Assets
At December 31, 2010 and 2009, the Utility had current regulatory assets of $599 million and $427 million, respectively,
consisting primarily of price risk management regulatory assets. The current portion of price risk management regulatory assets
represents the deferral of unrealized losses related to price risk management derivative instruments with terms of one year or less. (See
Note 10 below.)
Long-Term Regulatory Assets
Long-term regulatory assets are composed of the following:
Balance at December 31,
(in millions) 2010 2009
Pension benefits $ 1,759 $ 1,386
Deferred income taxes 1,250 1,027
Energy recovery bonds 735 1,124
Utility retained generation 666 737
Environmental compliance costs 450 408
Price risk management 424 346
Unamortized loss, net of gain, on reacquired debt 181 203
Other 381 291
Total long-term regulatory assets $ 5,846 $ 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 Consolidated Balance Sheets. (See Note 12 below.)
The regulatory assets for deferred income taxes represent deferred income tax benefits previously passed through to
customers. The CPUC requires the Utility to pass through certain tax benefits to customers by reducing rates, thereby ignoring the
effect of deferred taxes on rates. Based on current regulatory ratemaking and income tax laws, the Utility expects to recover these
regulatory assets over average plant depreciation lives of 1 to 45 years.
The regulatory asset for ERBs represents the refinancing of the regulatory asset provided for in the settlement agreement
entered into between PG&E 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 5 below.) The regulatory asset is amortized over the life of
the bonds, consistent with the period over which the related 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 being 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 13 years.
The regulatory assets for environmental compliance costs represent the portion of estimated environmental remediation costs
FERC FORM NO. 1 (ED. 12-88) Page 123.10