PG&E CORP, 10-K filed on 2/11/2014
Annual Report
Document And Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2013
Jun. 30, 2013
Feb. 3, 2014
PG&E Corporation [Member]
Dec. 31, 2013
Pacific Gas And Electric Company [Member]
Feb. 3, 2014
Pacific Gas And Electric Company [Member]
Document Type
10-K 
 
 
10-K 
 
Document Period End Date
Dec. 31, 2013 
 
 
Dec. 31, 2013 
 
Amendment Flag
false 
 
 
false 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Non-accelerated Filer 
 
Entity Registrant Name
PG&E CORP 
 
 
PACIFIC GAS & ELECTRIC CO 
 
Entity Central Index Key
0001004980 
 
 
0000075488 
 
Current Fiscal Year End Date
--12-31 
 
 
--12-31 
 
Document Fiscal Year Focus
2013 
 
 
2013 
 
Entity Current Reporting Status
Yes 
 
 
Yes 
 
Document Fiscal Period Focus
FY 
 
 
FY 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Yes 
 
Entity Voluntary Filers
No 
 
 
No 
 
Entity Public Float
 
$ 20,326 
 
 
 
Entity Common Stock, Shares Outstanding
 
 
457,663,407 
 
264,374,809 
Consolidated Statements Of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Operating Revenues
 
 
 
Electric
$ 12,494 
$ 12,019 
$ 11,606 
Natural gas
3,104 
3,021 
3,350 
Total operating revenues
15,598 
15,040 
14,956 
Operating Expenses
 
 
 
Cost of electricity
5,016 
4,162 
4,016 
Cost of natural gas
968 
861 
1,317 
Operating and maintenance
5,775 
6,052 
5,466 
Depreciation, amortization, and decommissioning
2,077 
2,272 
2,215 
Total operating expenses
13,836 
13,347 
13,014 
Operating Income
1,762 
1,693 
1,942 
Interest income
Interest expense
(715)
(703)
(700)
Other income, net
40 
70 
49 
Income Before Income Taxes
1,096 
1,067 
1,298 
Income tax provision
268 
237 
440 
Net Income
828 
830 
858 
Preferred stock dividend requirement of subsidiary
14 
14 
14 
Preferred stock dividend requirement
14 
14 
14 
Income Available for Common Shareholders
814 
816 
 
Weighted Average Common Shares Outstanding, Basic
444 
424 
401 
Weighted Average Common Shares Outstanding, Diluted
445 
425 
402 
Net earnings per common share, basic
$ 1.83 
$ 1.92 
$ 2.1 
Net Earnings Per Common Share, Diluted
$ 1.83 
$ 1.92 
$ 2.1 
Pacific Gas And Electric Company [Member]
 
 
 
Operating Revenues
 
 
 
Electric
12,489 
12,014 
11,601 
Natural gas
3,104 
3,021 
3,350 
Total operating revenues
15,593 
15,035 
14,951 
Operating Expenses
 
 
 
Cost of electricity
5,016 
4,162 
4,016 
Cost of natural gas
968 
861 
1,317 
Operating and maintenance
5,742 
6,045 
5,459 
Depreciation, amortization, and decommissioning
2,077 
2,272 
2,215 
Total operating expenses
13,803 
13,340 
13,007 
Operating Income
1,790 
1,695 
1,944 
Interest income
Interest expense
(690)
(680)
(677)
Other income, net
84 
88 
53 
Income Before Income Taxes
1,192 
1,109 
1,325 
Income tax provision
326 
298 
480 
Net Income
866 
811 
845 
Preferred stock dividend requirement
14 
14 
14 
Income Available for Common Shareholders
$ 852 
$ 797 
$ 831 
Condensed Consolidated Statements Of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Net income
$ 828 
$ 830 
$ 858 
Other Comprehensive Income
 
 
 
Pension and other postretirement benefit plans obligations (related to corporation net of income tax of $80, $72 and $9, at respective dates and related to utility of $75, $73, and $4, at respective dates)
 
108 
(11)
Gain on investments (net of taxes $26, $3, and $0, at respective dates)
38 
Total other comprehensive income (loss)
151 
112 
(11)
Comprehensive Income
979 
942 
847 
Preferred stock dividend requirement of subsidiary
14 
14 
14 
Comprehensive Income
965 
928 
833 
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Other Comprehensive Income
 
 
 
Gain on investments (net of taxes $26, $3, and $0, at respective dates)
38 
 
 
Other Postretirement Benefit Plans Defined Benefit [Member]
 
 
 
Other Comprehensive Income
 
 
 
Total other comprehensive income (loss)
92 
 
 
Other Postretirement Benefit Plans Defined Benefit [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Other Comprehensive Income
 
 
 
Gain on investments (net of taxes $26, $3, and $0, at respective dates)
 
 
Other Pension Plans Defined Benefit [Member]
 
 
 
Other Comprehensive Income
 
 
 
Total other comprehensive income (loss)
38 
 
 
Other Pension Plans Defined Benefit [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Other Comprehensive Income
 
 
 
Gain on investments (net of taxes $26, $3, and $0, at respective dates)
38 
 
 
Defined Benefits Plan Pension [Member]
 
 
 
Other Comprehensive Income
 
 
 
Total other comprehensive income (loss)
21 
 
 
Defined Benefits Plan Pension [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Other Comprehensive Income
 
 
 
Gain on investments (net of taxes $26, $3, and $0, at respective dates)
 
 
Pacific Gas And Electric Company [Member]
 
 
 
Net income
866 
811 
845 
Other Comprehensive Income
 
 
 
Pension and other postretirement benefit plans obligations (related to corporation net of income tax of $80, $72 and $9, at respective dates and related to utility of $75, $73, and $4, at respective dates)
106 
109 
(7)
Total other comprehensive income (loss)
106 
109 
(7)
Comprehensive Income
$ 972 
$ 920 
$ 838 
Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Pension and other postretirement benefit plans obligations tax
$ 80 
$ 72 
$ 9 
Gain on investments tax
26 
Other Postretirement Benefit Plans Defined Benefit [Member] |
Amounts Reclassified From Other Comprehensive Income [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
 
 
Unrecognized net gain, income tax benefit (expense)
10 
 
 
Transfer to regulatory account of income
 
 
Other Postretirement Benefit Plans Defined Benefit [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
35 
 
 
Gain on investments tax
 
 
Transfer to regulatory account of income
22 
 
 
Other Pension Plans Defined Benefit [Member] |
Amounts Reclassified From Other Comprehensive Income [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
 
 
Unrecognized net gain, income tax benefit (expense)
 
 
Transfer to regulatory account of income
 
 
Other Pension Plans Defined Benefit [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
 
 
Gain on investments tax
26 
 
 
Transfer to regulatory account of income
 
 
Defined Benefits Plan Pension [Member] |
Amounts Reclassified From Other Comprehensive Income [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
45 
 
 
Unrecognized net gain, income tax benefit (expense)
 
 
Transfer to regulatory account of income
54 
 
 
Defined Benefits Plan Pension [Member] |
Other Comprehensive Income Before Reclassifications [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
804 
 
 
Gain on investments tax
 
 
Transfer to regulatory account of income
790 
 
 
Pacific Gas And Electric Company [Member]
 
 
 
Pension and other postretirement benefit plans obligations tax
$ 75 
$ 73 
$ 4 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Current Assets
 
 
Cash and cash equivalents
$ 296 
$ 401 
Restricted cash
301 
330 
Accounts receivable
 
 
Customers (net of allowance for doubtful accounts of $80 and $87 at December 31, 2013 and 2012)
1,091 
937 
Accrued unbilled revenue
766 
761 
Regulatory balancing accounts
1,124 
936 
Other
312 
365 
Regulatory assets
448 
564 
Inventories
 
 
Gas stored underground and fuel oil
137 
135 
Materials and supplies
317 
309 
Income taxes receivable
574 
211 
Other
611 
172 
Total current assets
5,977 
5,121 
Property, Plant, and Equipment
 
 
Electric
42,881 
39,701 
Gas
14,379 
12,571 
Construction work in progress
1,834 
1,894 
Other
Total property, plant, and equipment
59,096 
54,167 
Accumulated depreciation
(17,844)
(16,644)
Net property, plant, and equipment
41,252 
37,523 
Other Noncurrent Assets
 
 
Regulatory assets
4,913 1
6,809 1
Nuclear decommissioning trusts
2,342 
2,161 
Income taxes receivable
85 
176 
Other
1,036 
659 
Total other noncurrent assets
8,376 
9,805 
TOTAL ASSETS
55,605 
52,449 
Current Liabilities
 
 
Short-term borrowings
1,174 
492 
Long-term debt, classified as current
889 
400 
Accounts payable
 
 
Trade creditors
1,293 
1,241 
Disputed claims and customer refunds
154 
157 
Regulatory balancing accounts
1,008 
634 
Other
471 
444 
Interest payable
892 
870 
Other
1,612 
2,018 
Total current liabilities
7,493 
6,256 
Noncurrent Liabilities
 
 
Long-term debt
12,717 
12,517 
Regulatory liabilities
5,660 
5,088 
Pension and other postretirement benefits
1,601 
3,575 
Asset retirement obligations
3,539 
2,919 
Deferred income taxes
7,823 
6,748 
Other
2,178 
2,020 
Total noncurrent liabilities
33,518 
32,867 
Commitments and Contingencies (Note 14)
   
   
Shareholders' Equity
 
 
Preferred stock
Common stock
9,550 
8,428 
Reinvested earnings
4,742 
4,747 
Accumulated other comprehensive income (loss)
50 
(101)
Total shareholders' equity
14,342 
13,074 
Noncontrolling Interest - Preferred Stock of Subsidiary
252 
252 
Total equity
14,594 
13,326 
TOTAL LIABILITIES AND EQUITY
55,605 
52,449 
Other Postretirement Benefit Plans Defined Benefit [Member]
 
 
Noncurrent Liabilities
 
 
Pension and other postretirement benefits
57 2
181 2
Shareholders' Equity
 
 
Accumulated other comprehensive income (loss)
15 
(77)
Other Pension Plans Defined Benefit [Member]
 
 
Shareholders' Equity
 
 
Accumulated other comprehensive income (loss)
42 
Defined Benefits Plan Pension [Member]
 
 
Shareholders' Equity
 
 
Accumulated other comprehensive income (loss)
(7)
(28)
Pacific Gas And Electric Company [Member]
 
 
Current Assets
 
 
Cash and cash equivalents
65 
194 
Restricted cash
301 
330 
Accounts receivable
 
 
Customers (net of allowance for doubtful accounts of $80 and $87 at December 31, 2013 and 2012)
1,091 
937 
Accrued unbilled revenue
766 
761 
Regulatory balancing accounts
1,124 
936 
Other
313 
366 
Regulatory assets
448 
564 
Inventories
 
 
Gas stored underground and fuel oil
137 
135 
Materials and supplies
317 
309 
Income taxes receivable
563 
186 
Other
523 
160 
Total current assets
5,648 
4,878 
Property, Plant, and Equipment
 
 
Electric
42,881 
39,701 
Gas
14,379 
12,571 
Construction work in progress
1,834 
1,894 
Total property, plant, and equipment
59,094 
54,166 
Accumulated depreciation
(17,843)
(16,643)
Net property, plant, and equipment
41,251 
37,523 
Other Noncurrent Assets
 
 
Regulatory assets
4,913 
6,809 
Nuclear decommissioning trusts
2,342 
2,161 
Income taxes receivable
81 
171 
Other
814 
381 
Total other noncurrent assets
8,150 
9,522 
TOTAL ASSETS
55,049 
51,923 
Current Liabilities
 
 
Short-term borrowings
914 
372 
Long-term debt, classified as current
539 
400 
Accounts payable
 
 
Trade creditors
1,293 
1,241 
Disputed claims and customer refunds
154 
157 
Regulatory balancing accounts
1,008 
634 
Other
432 
419 
Interest payable
887 
865 
Other
1,382 
1,806 
Total current liabilities
6,609 
5,894 
Noncurrent Liabilities
 
 
Regulatory liabilities
5,660 
5,088 
Pension and other postretirement benefits
1,530 
3,497 
Asset retirement obligations
3,539 
2,919 
Deferred income taxes
8,042 
6,939 
Other
2,111 
1,959 
Total noncurrent liabilities
33,599 
32,569 
Commitments and Contingencies (Note 14)
   
   
Shareholders' Equity
 
 
Preferred stock
258 
258 
Common stock
1,322 
1,322 
Additional paid-in capital
5,821 
4,682 
Reinvested earnings
7,427 
7,291 
Accumulated other comprehensive income (loss)
13 
(93)
Total shareholders' equity
14,841 
13,460 
TOTAL LIABILITIES AND EQUITY
$ 55,049 
$ 51,923 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Restricted cash
$ 301 
$ 330 
Allowance for doubtful accounts
80 
87 
Regulatory assets current
448 
564 
Common stock, shares authorized
800,000,000 
800,000,000 
Common stock, shares outstanding
456,670,424 
430,718,293 
Pacific Gas And Electric Company [Member]
 
 
Restricted cash
301 
330 
Allowance for doubtful accounts
80 
87 
Regulatory assets current
$ 448 
$ 564 
Common stock, par value
$ 5 
$ 5 
Common stock, shares authorized
800,000,000 
800,000,000 
Common stock, shares outstanding
264,374,809 
264,374,809 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash Flows from Operating Activities
 
 
 
Net income
$ 828 
$ 830 
$ 858 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization, and decommissioning
2,077 
2,272 
2,215 
Allowance for equity funds used during construction
(101)
(107)
(87)
Deferred income taxes and tax credits, net
1,075 
648 
544 
Disallowed capital expenditures
196 
353 
Other
355 
290 
326 
Effect of changes in operating assets and liabilities:
 
 
 
Accounts receivable
(152)
(40)
(288)
Inventories
(10)
(24)
(63)
Accounts payable
113 
65 
Income taxes receivable/payable
(363)
(132)
(103)
Other current assets and liabilities
(469)
262 
23 
Regulatory assets, liabilities, and balancing accounts, net
(202)
291 
(100)
Other noncurrent assets and liabilities
80 
243 
349 
Net cash provided by operating activities
3,427 
4,882 
3,739 
Cash Flows from Investing Activities
 
 
 
Capital expenditures
(5,207)
(4,624)
(4,038)
Decrease in restricted cash
29 
50 
200 
Proceeds from sales and maturities of nuclear decommissioning trust investments
1,619 
1,133 
1,928 
Purchases of nuclear decommissioning trust investments
(1,604)
(1,189)
(1,963)
Other
56 
104 
(113)
Net cash provided by (used in) investing activities
(5,107)
(4,526)
(3,986)
Cash Flows from Financing Activities
 
 
 
Borrowings under revolving credit facilities
140 
120 
358 
Repayments under revolving credit facilities
(358)
Net issuances (repayments) of commercial paper, net of discount of $2, $3, and $4 at respective dates
542 
(1,021)
782 
Proceeds from issuance of short-term debt
250 
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs of $18, $13, and $8 at respective dates
1,532 
1,137 
792 
Short-term debt matured
(250)
(250)
Long-term debt matured or repurchased
(861)
(50)
(700)
Energy recovery bonds matured
(423)
(404)
Common stock issued
1,045 
751 
662 
Common stock dividends paid
(782)
(746)
(704)
Other
(41)
14 
41 
Net cash provided by (used in) financing activities
1,575 
(468)
469 
Net change in cash and cash equivalents
(105)
(112)
222 
Cash and cash equivalents at January 1
401 
513 
291 
Cash and cash equivalents at December 31
296 
401 
513 
Cash received (paid) for:
 
 
 
Interest, net of amounts capitalized
(623)
(594)
(647)
Income taxes, net
(41)
114 
(42)
Supplemental disclosures of noncash investing and financing activities
 
 
 
Common stock dividends declared but not yet paid
208 
196 
188 
Capital expenditures financed through accounts payable
322 
362 
308 
Noncash common stock issuances
22 
22 
24 
Terminated Capital Leases
136 
Pacific Gas And Electric Company [Member]
 
 
 
Cash Flows from Operating Activities
 
 
 
Net income
866 
811 
845 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization, and decommissioning
2,077 
2,272 
2,215 
Allowance for equity funds used during construction
(101)
(107)
(87)
Deferred income taxes and tax credits, net
1,103 
684 
582 
Disallowed capital expenditures
196 
353 
Other
299 
236 
289 
Effect of changes in operating assets and liabilities:
 
 
 
Accounts receivable
(152)
(40)
(227)
Inventories
(10)
(24)
(63)
Accounts payable
99 
(26)
51 
Income taxes receivable/payable
(377)
(50)
(192)
Other current assets and liabilities
(404)
272 
36 
Regulatory assets, liabilities, and balancing accounts, net
(202)
291 
(100)
Other noncurrent assets and liabilities
22 
256 
414 
Net cash provided by operating activities
3,416 
4,928 
3,763 
Cash Flows from Investing Activities
 
 
 
Capital expenditures
(5,207)
(4,624)
(4,038)
Decrease in restricted cash
29 
50 
200 
Proceeds from sales and maturities of nuclear decommissioning trust investments
1,619 
1,133 
1,928 
Purchases of nuclear decommissioning trust investments
(1,604)
(1,189)
(1,963)
Other
21 
16 
14 
Net cash provided by (used in) investing activities
(5,142)
(4,614)
(3,859)
Cash Flows from Financing Activities
 
 
 
Borrowings under revolving credit facilities
208 
Repayments under revolving credit facilities
(208)
Net issuances (repayments) of commercial paper, net of discount of $2, $3, and $4 at respective dates
542 
(1,021)
782 
Proceeds from issuance of short-term debt
250 
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs of $18, $13, and $8 at respective dates
1,532 
1,137 
792 
Short-term debt matured
(250)
(250)
Long-term debt matured or repurchased
(861)
(50)
(700)
Energy recovery bonds matured
(423)
(404)
Preferred stock dividends paid
(14)
(14)
(14)
Common stock dividends paid
(716)
(716)
(716)
Equity contribution
1,140 
885 
 
Other
(26)
28 
54 
Net cash provided by (used in) financing activities
1,597 
(424)
349 
Net change in cash and cash equivalents
(129)
(110)
253 
Cash and cash equivalents at January 1
194 
304 
51 
Cash and cash equivalents at December 31
65 
194 
304 
Cash received (paid) for:
 
 
 
Interest, net of amounts capitalized
(600)
(574)
(627)
Income taxes, net
(62)
174 
(50)
Supplemental disclosures of noncash investing and financing activities
 
 
 
Capital expenditures financed through accounts payable
322 
362 
308 
Terminated Capital Leases
$ 0 
$ 136 
$ 0 
Consolidated Statements Of Cash Flows (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash Flows from Financing Activities
 
 
 
Net issuances of commercial paper, discount
$ 2 
$ 3 
$ 4 
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs
18 
13 
Pacific Gas And Electric Company [Member]
 
 
 
Cash Flows from Financing Activities
 
 
 
Net issuances of commercial paper, discount
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs
$ 18 
$ 13 
$ 8 
Consolidated Statements Of Equity (USD $)
In Millions, except Share data
Total
USD ($)
Other Postretirement Benefit Plans Defined Benefit [Member]
USD ($)
Other Pension Plans Defined Benefit [Member]
USD ($)
Defined Benefits Plan Pension [Member]
USD ($)
Pacific Gas And Electric Company [Member]
USD ($)
Common Stock Shares [Member]
Common Stock Shares [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Preferred Stock [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Common Stock Amount [Member]
USD ($)
Additional Paid-In Capital [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Reinvested Earnings [Member]
USD ($)
Reinvested Earnings [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Accumulated Other Comprehensive Income (Loss) [Member]
USD ($)
Accumulated Other Comprehensive Income (Loss) [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Total Shareholders' Equity [Member]
USD ($)
Total Shareholders' Equity [Member]
Pacific Gas And Electric Company [Member]
USD ($)
Noncontrolling Interest - Preferred Stock Of Subsidiary [Member]
USD ($)
Balance at Dec. 31, 2010
$ 11,534 
 
 
 
 
 
$ 1,322 
$ 258 
$ 6,878 
$ 3,241 
$ 4,606 
$ 7,095 
$ (202)
$ (195)
$ 11,282 
$ 11,721 
$ 252 
Balance, in shares at Dec. 31, 2010
 
 
 
 
 
395,227,205 
 
 
 
 
 
 
 
 
 
 
 
Net income
858 
 
 
 
845 
 
 
 
 
 
858 
845 
 
 
858 
845 
 
Other comprehensive income (loss)
(11)
 
 
 
(7)
 
 
 
 
 
 
 
(11)
(7)
(11)
(7)
 
Equity contribution
 
 
 
 
 
 
 
 
 
555 
 
 
 
 
 
555 
 
Common stock issued, net
 
 
 
 
 
 
 
 
686 
 
 
 
 
 
686 
 
 
Common stock issued, net, shares
 
 
 
 
 
17,029,877 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation amortization
37 
 
 
 
 
 
 
 
37 
 
 
 
 
 
37 
 
 
Common stock dividends declared
(738)
 
 
 
 
 
 
 
 
 
(738)
(716)
 
 
(738)
(716)
 
Tax benefit (expense) from employee stock plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividend
 
 
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
Preferred stock dividend requirement of subsidiary
(14)
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
 
Balance at Dec. 31, 2011
12,353 
 
 
 
 
 
1,322 
258 
7,602 
3,796 
4,712 
7,210 
(213)
(202)
12,101 
12,384 
252 
Balance, in shares at Dec. 31, 2011
 
 
 
 
 
412,257,082 
 
 
 
 
 
 
 
 
 
 
 
Net income
830 
 
 
 
811 
 
 
 
 
 
830 
811 
 
 
830 
811 
 
Other comprehensive income (loss)
112 
 
 
 
109 
 
 
 
 
 
 
 
112 
109 
112 
109 
 
Equity contribution
 
 
 
 
885 
 
 
 
 
885 
 
 
 
 
 
885 
 
Common stock issued, net
773 
 
 
 
 
 
 
 
773 
 
 
 
 
 
773 
 
 
Common stock issued, net, shares
 
 
 
 
 
18,461,211 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation amortization
52 
 
 
 
 
 
 
 
52 
 
 
 
 
 
52 
 
 
Common stock dividends declared
(781)
 
 
 
 
 
 
 
 
 
(781)
(716)
 
 
(781)
(716)
 
Tax benefit (expense) from employee stock plans
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividend
 
 
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
Preferred stock dividend requirement of subsidiary
(14)
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
 
Balance at Dec. 31, 2012
13,326 
 
 
 
 
 
1,322 
258 
8,428 
4,682 
4,747 
7,291 
(101)
(93)
13,074 
13,460 
252 
Balance, in shares at Dec. 31, 2012
430,718,293 
 
 
 
264,374,809 
430,718,293 
 
 
 
 
 
 
 
 
 
 
 
Net income
828 
 
 
 
866 
 
 
 
 
 
828 
866 
 
 
828 
866 
 
Other comprehensive income (loss)
151 
92 
38 
21 
106 
 
 
 
 
 
 
 
151 
106 
151 
106 
 
Equity contribution
 
 
 
 
1,140 
 
 
 
 
1,140 
 
 
 
 
 
1,140 
 
Common stock issued, net
1,067 
 
 
 
 
 
 
 
1,067 
 
 
 
 
 
1,067 
 
 
Common stock issued, net, shares
 
 
 
 
 
25,952,131 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation amortization
56 
 
 
 
 
 
 
 
56 
 
 
 
 
 
56 
 
 
Common stock dividends declared
(819)
 
 
 
 
 
 
 
 
 
(819)
(716)
 
 
(819)
(716)
 
Tax benefit (expense) from employee stock plans
(1)
 
 
 
 
 
 
 
(1)
(1)
 
 
 
 
(1)
(1)
 
Preferred stock dividend
 
 
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
Preferred stock dividend requirement of subsidiary
(14)
 
 
 
 
 
 
 
 
 
(14)
 
 
 
(14)
 
 
Balance at Dec. 31, 2013
$ 14,594 
 
 
 
 
 
$ 1,322 
$ 258 
$ 9,550 
$ 5,821 
$ 4,742 
$ 7,427 
$ 50 
$ 13 
$ 14,342 
$ 14,841 
$ 252 
Balance, in shares at Dec. 31, 2013
456,670,424 
 
 
 
264,374,809 
456,670,424 
 
 
 
 
 
 
 
 
 
 
 
Organization And Basis Of Presentation
Organization And Basis Of Presentation
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
 
PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, 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 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 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 Notes to the Consolidated Financial Statements apply to both PG&E Corporation and the Utility.  PG&E Corporation and the Utility operate in one segment.
 
The accompanying Consolidated Financial Statements have been prepared in accordance with GAAP and the instructions to Form 10-K and Regulation S-X promulgated by the 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, legal and regulatory contingencies, environmental remediation liabilities, asset retirement obligations, and pension and other postretirement benefit plans obligations.  Management believes that its estimates and assumptions reflected in the Consolidated Financial Statements are appropriate and reasonable.  Actual results could differ materially from those estimates.
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies
 
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Regulation and Regulated Operations
 
As a regulated entity, the Utility collects rates from customers to recover “revenue requirements” that have been authorized by the CPUC or the FERC based on the Utility's costs of service.  The Utility's ability to recover a significant portion of its authorized revenue requirements through rates is independent, or “decoupled,” from the volume of the Utility's electricity and natural gas sales.  The Utility records assets and liabilities that result from the regulated ratemaking process that would not be recorded under GAAP for nonregulated entities.  The Utility capitalizes and records, as regulatory assets, costs that would otherwise be charged to expense if it is probable that the incurred costs will be recovered in future rates.  Regulatory assets are amortized over the future periods in which the costs are recovered.  If costs expected to be incurred in the future are currently being recovered through rates, the Utility records those expected future costs as regulatory liabilities.  Amounts that are probable of being credited or refunded to customers in the future are also recorded as regulatory liabilities.
 
The Utility also records a regulatory balancing account asset or liability for differences between actual customer billings and authorized revenue requirements that are probable of recovery or refund.  These differences do not have an impact on net income.  The Utility also records differences between incurred costs and customer billings or authorized revenue meant to recover those costs.  To the extent these differences are probable of recovery or refund, the Utility records a regulatory balancing account asset or liability, respectively, and the differences do not have an impact on net income.  See “Revenue Recognition” below.
 
To the extent that portions of the Utility's operations cease to be subject to cost-of-service rate regulation, or recovery is no longer probable as a result of changes in regulation or other reasons, the related regulatory assets and liabilities are written off.  
 
Management continues to believe the use of regulatory accounting is applicable and that all regulatory assets and liabilities are recoverable or refundable.
 
Cash and Cash Equivalents
 
Cash and cash equivalents consist of cash and short-term, highly liquid investments with original maturities of three months or less.  Cash equivalents are stated at fair value.  
 
Restricted Cash
 
Restricted cash consists primarily of the Utility's cash held in escrow pending the resolution of the remaining disputed claims made by electricity suppliers in the Utility's proceeding under Chapter 11 of the U.S. Bankruptcy Code.  (See Note 12 below.)  
 
Allowance for Doubtful Accounts Receivable
 
Accounts receivable are primarily composed of trade receivables and unbilled revenue.  PG&E Corporation and the Utility recognize an allowance for doubtful accounts to record accounts receivable at estimated net realizable value.  The allowance is determined based upon a variety of factors, including historical write-off experience, aging of receivables, current economic conditions, and assessment of customer collectability.
 
Inventories
 
Inventories are carried at weighted-average cost and include natural gas stored underground as well as materials and supplies.  Natural gas stored underground represents gas that is recorded to inventory when purchased and then expensed as the gas is withdrawn for distribution  to customers or to be used as fuel for electric generation.  Materials and supplies are recorded to inventory when purchased and then expensed or capitalized to plant, as appropriate, when consumed or installed.
 
 
      The Utility also purchases greenhouse gas emission allowances that are recorded as inventory. They are carried at weighted average cost and included in Other Noncurrent Assets - Other in the Consolidated Balance Sheets.  The costs of the greenhouse gas emissions are expensed and recoverable through rates.
 
Property, Plant, and Equipment
 
Property, plant, and equipment are reported at the lower of their historical cost less accumulated depreciation or fair value.  Historical costs include labor and materials, construction overhead, and AFUDC.  (See “AFUDC” below.) The Utility's total estimated useful lives and balances of its property, plant, and equipment were as follows:
 
 
 
Estimated Useful
 
Balance at December 31,
(in millions, except estimated useful lives)
Lives (years)
 
2013
 
2012
Electricity generating facilities (1)
20 to 100
 
$
9,116
 
$
8,253
Electricity distribution facilities
10 to 55
 
 
25,333
 
 
23,767
Electricity transmission
10 to 70
 
 
8,429
 
 
7,681
Natural gas distribution facilities
20 to 53
 
 
9,117
 
 
8,257
Natural gas transportation and storage
5 to 65
 
 
5,265
 
 
4,314
Construction work in progress
 
 
 
1,834
 
 
1,894
Total property, plant, and equipment
 
 
 
59,094
 
 
54,166
Accumulated depreciation
 
 
 
(17,843
 
(16,643
)
Net property, plant, and equipment
 
 
$
41,251
 
$
37,523
 
 
 
 
 
 
 
 
 (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 14 below.)
 
 
The Utility depreciates property, plant, and equipment using the composite, or group, method of depreciation, in which a single depreciation rate is applied to the gross investment balance in a particular class of property.  This method approximates the straight line method of depreciation over the useful lives of property, plant, and equipment.  The Utility's composite depreciation rates were 3.51% 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 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 against 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.  
 
AFUDC
 
AFUDC represents the estimated costs of debt (i.e., interest) and equity funds used to finance regulated plant additions and is capitalized as part of the cost of construction.  AFUDC is recoverable from customers through rates over the life of the related property once the property is placed in service.  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 related to debt and equity, respectively, of $47 million and $101 million during 2013, $49 million and $107 million during 2012, and $40 million and $87 million during 2011.
 
Asset Retirement Obligations
 
PG&E Corporation and the Utility record an ARO at discounted fair value in the period in which the obligation is incurred if the discounted fair value can be reasonably estimated.  In the same period, the associated asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset.  In each subsequent period, the ARO is accreted to its present value.  PG&E Corporation and the Utility also record an ARO if a legal obligation to perform an asset removal exists and can be reasonably estimated, but performance is conditional upon a future event.  The Utility recognizes timing differences between the recognition of costs and the costs recovered through the ratemaking process as regulatory assets or liabilities.  (See Note 3 below.)  The Utility has an ARO 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 transmission pipeline replacements.
 
Detailed studies of the cost to decommission the Utility's nuclear generation facilities are conducted every three years in conjunction with the Nuclear Decommissioning Cost Triennial Proceeding conducted by the CPUC.  In December 2012, the Utility submitted its updated decommissioning cost estimate with the CPUC.  The estimated undiscounted cost to decommission the Utility's nuclear power plants increased by $1.4 billion in 2012 due to higher spent nuclear fuel disposal costs and an increase in the scope of work.  A significant portion of the increase in decommissioning cost estimates is due to the need to develop on-site storage for spent nuclear fuel because the federal government has failed to meet its obligation to develop a permanent repository for the disposal of nuclear waste from nuclear facilities in the United States.  The Utility expects that it will recover its future on-site storage costs from the federal government. Recovered amounts will be refunded to customers through rates.
 
The estimated undiscounted nuclear decommissioning cost for the Utility's nuclear generation facilities was approximately $3.5 billion at December 31, 2013 and 2012, as filed in the 2012 triennial proceeding.  In future dollars, the estimated nuclear decommissioning cost is approximately $6.1 billion at December 31, 2013 and 2012.  These estimates are based on the 2012 decommissioning cost studies and are prepared in accordance with CPUC requirements.  The estimated nuclear decommissioning cost in future dollars is discounted for GAAP purposes and recognized as an ARO on the Consolidated Balance Sheets.  The total nuclear decommissioning obligation accrued in accordance with GAAP was $2.5 billion at December 31, 2013 and 2012.  
 
A reconciliation of the changes in the ARO liability is as follows:
(in millions)
 
 
ARO liability at December 31, 2011
$
1,609
Revision in estimated cash flows
 
1,301
Accretion
 
101
Liabilities settled
 
(92
)
ARO liability at December 31, 2012
 
2,919
Revision in estimated cash flows
 
596
Accretion
 
130
Liabilities settled
 
(107
)
ARO liability at December 31, 2013
$
3,538
 
 
The Utility has identified the following AROs for which a reasonable estimate of fair value could not be made.  As a result, the Utility has not recorded a liability related to these AROs:  
∙      Restoration of land to its pre-use condition under the terms of certain land rights agreements.  Land rights will be maintained for the foreseeable future, and therefore, the Utility cannot reasonably estimate the settlement date(s) or range of settlement dates for the obligations associated with these assets;  
 
Removal and proper disposal of lead-based paint contained in some Utility facilities.  The Utility does not have information available that specifies which facilities contain lead-based paint and, therefore, cannot reasonably estimate the settlement date(s) associated with the obligations; and
 
Removal of certain communications equipment from leased property, and retirement activities associated with substation and certain hydroelectric facilities.  The Utility will maintain and continue to operate its hydroelectric facilities until the operation of a facility becomes uneconomical.  The operation of the majority of the Utility's hydroelectric facilities is currently, and for the foreseeable future, expected to be economically beneficial.  Therefore, the settlement date(s) cannot be reasonably estimated at this time.
 
 
Disallowance of Plant Costs
 
PG&E Corporation and the Utility record a charge when it is both probable that costs incurred or projected to be incurred for recently completed plant will not be recoverable 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 disallowed.  (See “Natural Gas Matters” in Note 14 below).  No material disallowance losses were recorded in 2011.
 
Gains and Losses on Debt Extinguishments
 
Deferred gains and losses on debt extinguishments are recorded to current assets - regulatory assets and other noncurrent assets - regulatory assets in the Consolidated Balance Sheets. Gains and losses on debt extinguishments associated with regulated operations are deferred and amortized over a period consistent with the recovery of costs through regulated rates.  PG&E Corporation and the Utility recorded unamortized loss on debt extinguishments, net of gain, of $157 million, $163 million, and $186 million at December 31, 2013, 2012, and 2011, respectively.  The amortization expense related to this loss was $23 million in both 2013 and 2012, and $18 million in 2011.  
 
Revenue Recognition
 
The Utility recognizes revenues as electricity and natural gas services are delivered, and includes amounts for services rendered but not yet billed at the end of the period. 
 
The CPUC authorizes most of the Utility's revenues in the Utility's GRC and its GT&S rate cases, which generally occur every three years.  In general, the Utility's ability to recover revenue requirements authorized by the CPUC in these rates cases is independent, or “decoupled” from the volume of the Utility's sales of electricity and natural gas services.  The Utility recognizes revenues once they have been authorized for rate recovery, amounts are objectively determinable and probable of recovery, and amounts are expected to be collected within 24 months.  Generally, the revenue is recognized ratably over the year. 
 
The CPUC also has authorized the Utility to collect additional revenue requirements to recover costs that the Utility has been authorized to pass on to customers, including 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's revenue requirements in periodic (often annual) TO rate cases.  The Utility's ability to recover revenue requirements authorized by the FERC is dependent on the volume of the Utility's electricity sales, and revenue is recognized only for amounts billed and unbilled.
 
The Utility's revenues and net income can be affected by incentive ratemaking mechanisms that adjust rates depending on the extent to which the Utility meets certain performance criteria. 
 
Income Taxes
 
PG&E Corporation and the Utility use the liability method of accounting for income taxes.  The income tax provision includes current and deferred income taxes resulting from operations during the year.  PG&E Corporation and the Utility estimate current period tax expense in addition to calculating deferred tax assets and liabilities.  Deferred tax assets and liabilities result from temporary tax and accounting timing differences, such as those arising from depreciation expense.  (See Note 8 below.)
 
PG&E Corporation and the Utility recognize a tax benefit if it is more likely than not that a tax position taken or expected to be taken in a tax return will be sustained upon examination by taxing authorities based on the merits of the position.  The tax benefit recognized in the financial statements is measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement.  As such, the difference between a tax position taken or expected to be taken in a tax return in future periods and the benefit recognized and measured pursuant to this guidance represents an unrecognized tax benefit.  
 
Investment tax credits are deferred and amortized to income over time. The Utility amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment.  PG&E Corporation amortizes its investment tax credits over the projected investment recovery period.
 
PG&E Corporation files a consolidated U.S. federal income tax return that includes the Utility and domestic subsidiaries in which its ownership is 80% or more.  PG&E Corporation files a combined state income tax return in California.  PG&E Corporation and the Utility are parties to a tax-sharing agreement under which the Utility determines its income tax provision (benefit) on a stand-alone basis.
 
Nuclear Decommissioning Trusts
 
The Utility's nuclear generation facilities consist of two units at Diablo Canyon and the retired facility at Humboldt Bay.  Nuclear decommissioning requires the safe removal of a nuclear generation facility from service and the reduction of residual radioactivity to a level that permits termination of the NRC license and release of the property for unrestricted use.  The Utility's nuclear decommissioning costs are recovered from customers through rates and are held in trusts until authorized for release by the CPUC.  
 
The Utility classifies its investments held in the nuclear decommissioning trusts as “available-for-sale.”  Since the Utility's nuclear decommissioning trust assets are managed by external investment managers, the Utility does not have the ability to sell its investments at its discretion.  Therefore, all unrealized losses are considered other-than-temporary impairments.  Gains or losses on the nuclear decommissioning trust investments are refundable or recoverable, respectively, from customers through rates.  Therefore, trust earnings are deferred and included in the regulatory liability for recoveries in excess of the ARO.  There is no impact on the Utility's earnings or accumulated other comprehensive income.  The cost of debt and equity securities sold by the trust is determined by specific identification.
 
Variable Interest Entities
 
A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest.  An enterprise that has a controlling financial interest in a VIE is known as the VIE's primary beneficiary and is required to consolidate the VIE.  In determining whether consolidation of a particular entity is required, PG&E Corporation and the Utility first evaluate whether the entity is a VIE.  If the entity is a VIE, PG&E Corporation and the Utility use a qualitative approach to determine if either is the primary beneficiary of the VIE.
 
Some of the counterparties to the Utility's power purchase agreements are considered VIEs.  Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility.  To determine whether the Utility was the primary beneficiary of any of these VIEs at December 31, 2013, it assessed whether it absorbs any of the VIE's expected losses or receives any portion of the VIE's expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE's gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE's performance, such as dispatch rights and operating and maintenance activities.  The Utility's financial exposure is limited to the amount the Utility pays for delivered electricity and capacity.  The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs.  Since the Utility was not the primary beneficiary of any of these VIEs at December 31, 2013, it did not consolidate any of them.
 
PG&E Corporation affiliates have entered into four tax equity agreements to fund residential and commercial retail solar energy installations with four separate privately held 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 payments made to these companies.  At December 31, 2013 and 2012, the carrying amount of PG&E Corporation's investment in these agreements was $98 million and $166 million, respectively.  PG&E Corporation has no material remaining commitment to fund these agreements.  PG&E Corporation determined that it does not have control over the companies' significant economic activities, such as the design of the companies, vendor selection, construction, and the ongoing operations of the companies.  Since PG&E Corporation was not the primary beneficiary of any of these VIEs at December 31, 2013, it did not consolidate any of them.
 
Other Accounting Policies
 
For other accounting policies impacting PG&E Corporation's and the Utility's consolidated financial statements, see “Derivatives” in Note 9, “Fair Value Measurements” in Note 10, and “Contingencies” in Note 14 of the Notes to the Consolidated Financial Statements.
 
Adoption of New Accounting Pronouncements
 
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
 
In February 2013, the Financial Accounting Standards Board issued an ASU that requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income.  The ASU became effective for PG&E Corporation and the Utility on January 1, 2013. 
 
The changes, net of income tax, in PG&E Corporation's accumulated other comprehensive income for the year ended December 31, 2013 consisted of the following:
 
 
Pension
 
Other
 
Other
 
 
 
(in millions)
Benefits
 
Benefits
 
Investments
 
Total
Beginning balance
$
(28
$
(77
$
4
 
$
(101
)
Other comprehensive income before reclassifications:
 
 
 
 
 
 
 
 
 
 
 
      Unrecognized net actuarial loss (net of taxes of $804,
 
 
 
 
 
 
 
 
 
 
 
      $35, and $0, respectively)
 
1,169
 
 
45
 
 
-
 
 
1,214
     Transfer to regulatory account (net of taxes of
 
 
 
 
 
 
 
 
 
 
 
     $790, $22, and $0, respectively)
 
(1,150
 
31
 
 
-
 
 
(1,119
)
      Gain on investments (net of taxes of $0, $0, and $26,
 
 
 
 
 
 
 
 
 
 
 
      respectively)
 
-
 
 
-
 
 
38
 
 
38
Amounts reclassified from other comprehensive income: (1)
 
 
 
 
 
 
 
 
 
 
 
      Amortization of prior service cost (net of taxes of
 
 
 
 
 
 
 
 
 
 
 
      $8, $10, and $0, respectively)
 
12
 
 
13
 
 
-
 
 
25
      Amortization of net actuarial loss (net of taxes of
 
 
 
 
 
 
 
 
 
 
 
      $45, $3, and $0, respectively)
 
66
 
 
3
 
 
-
 
 
69
     Transfer to regulatory account (net of taxes of
 
 
 
 
 
 
 
 
 
 
 
     $54, $0, and $0, respectively)
 
(76
 
-
 
 
-
 
 
(76
)
Net current period other comprehensive income
 
21
 
 
92
 
 
38
 
 
151
Ending balance
$
(7)
 
$
15
 
$
42
 
$
50
 
 
 
 
 
 
 
 
 
 
 
 
 (1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See Note 11 below for additional details.)
 
With the exception of other investments, there was no material difference between 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 entity to disclose gross and net information about derivatives that are offset in the balance sheet or subject to an enforceable master-netting arrangement or similar agreement.  The ASU became effective for PG&E Corporation and the Utility on January 1, 2013.  (See Note 9 below.)
 
Regulatory Assets, Liabilities, And Balancing Accounts
Regulatory Assets, Liabilities, And Balancing Accounts
 
NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS
 
Regulatory Assets
 
Long-term regulatory assets are composed of the following:
 
 
 
Balance at December 31,
 
Recovery
(in millions)
2013
 
2012
 
Period
Pension benefits (1)
$
1,444
 
$
3,275
 
N/A (4)
Deferred income taxes (1)
 
1,835
 
 
1,627
 
1 - 45 years
Utility retained generation (2)
 
503
 
 
552
 
11 years
Environmental compliance costs (1)
 
628
 
 
604
 
32 years
Price risk management (1)
 
106
 
 
210
 
9 years
Electromechanical meters (3)
 
135
 
 
194
 
4 years
Unamortized loss, net of gain, on reacquired debt (1)
 
135
 
 
141
 
13 years
Other
 
127
 
 
206
 
Various
Total long-term regulatory assets
$
4,913
 
$
6,809
 
 
 
 
 
 
 
 
 
 
 
(1) Represents the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized in accordance with GAAP and also includes amounts that otherwise would be recorded to accumulated other comprehensive loss in the Consolidated Balance Sheets.  (See Note 11 below.)
 
(2) In connection with the settlement agreement entered into among PG&E Corporation, the Utility, and the CPUC in 2003 to resolve the Utility's proceeding under Chapter 11, 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.  
 
(3) Represents the expected future recovery of the net book value of electromechanical meters that were replaced with SmartMeter™ devices.
 
(4) The Utility expects to continuously recover pension benefits.
 
In general, the Utility does not earn a return on regulatory assets if the related costs do not accrue interest.  Accordingly, the Utility earns a return only on its regulatory assets for retained generation, regulatory assets for electromechanical meters, and regulatory assets for unamortized loss, net of gain, on reacquired debt.
 
 
 
Regulatory Liabilities
 
Long-term regulatory liabilities are composed of the following:
 
 
 
Balance at December 31,
(in millions)
2013
 
2012
Cost of removal obligations (1)
$
3,844
 
$
3,625
Recoveries in excess of AROs (2)
 
748
 
 
620
Public purpose programs (3)
 
587
 
 
590
Other
 
481
 
 
253
Total long-term regulatory liabilities
$
5,660
 
$
5,088
 
 
 
 
 
 
 
(1) Represents the cumulative differences between asset removal costs recorded and amounts collected in rates for expected asset removal costs.
 
(2) Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of the Utility's nuclear generation facilities.  Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts.  This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments.  (See Note 10 below.)
 
(3) Represents amounts received from customers designated for public purpose program costs expected to be incurred beyond the next 12 months, primarily related to energy efficiency programs.
 
Regulatory Balancing Accounts
 
The Utility's recovery of a significant portion of revenue requirements and costs is decoupled from the volume of sales.  The Utility records (1) differences between the Utility's authorized revenue requirement and actual customer billings, and (2) differences between incurred costs and customer billings.  To the extent these differences are probable of recovery or refund over the next 12 months, the Utility records a current regulatory balancing account receivable or payable.  Regulatory balancing accounts that the Utility does not expect to collect or refund over the next 12 months are included in other noncurrent assets - regulatory assets or noncurrent liabilities - regulatory liabilities, respectively, 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 these items will fluctuate during the year based on seasonal electric and gas usage and the timing of when costs are incurred and customer revenues are collected.
 
Current regulatory balancing accounts receivable and payable are composed of the following:
 
 
 
Receivable
 
Balance at December 31,
(in millions)
2013
 
2012
Electric distribution
$
102
 
$
219
Utility generation
 
57
 
 
117
Gas distribution
 
70
 
 
44
Energy procurement
 
410
 
 
193
Public purpose programs
 
56
 
 
48
Other
 
429
 
 
315
Total regulatory balancing accounts receivable
$
1,124
 
$
936
 
 
 
 
 
 
 
 
 
Payable
 
Balance at December 31,
(in millions)
2013
 
2012
Energy procurement
$
298
 
$
116
Public purpose programs
 
171
 
 
131
Other
 
539
 
 
387
Total regulatory balancing accounts payable
$
1,008
 
$
634
 
 
 
 
 
 
 
Debt
Debt
 
NOTE 4: DEBT
 
Long-Term Debt
 
The following table summarizes PG&E Corporation's and the Utility's long-term debt:
 
 
December 31,
(in millions)
2013
 
2012
PG&E Corporation
 
 
 
Senior notes, 5.75%, due 2014
 
350
 
 
350
Less: current portion
 
(350
 
-
Total senior notes
 
-
 
 
350
Total PG&E Corporation long-term debt
 
-
 
 
350
Utility
 
 
 
 
 
Senior notes:
 
 
 
 
 
6.25% due 2013
 
-
 
 
400
4.80% due 2014
 
539
 
 
1,000
5.625% due 2017
 
700
 
 
700
8.25% due 2018
 
800
 
 
800
3.50% due 2020
 
800
 
 
800
4.25% due 2021
 
300
 
 
300
3.25% due 2021
 
250
 
 
250
2.45% due 2022
 
400
 
 
400
3.25% due 2023
 
375
 
 
-
3.85% due 2023
 
300
 
 
-
6.05% due 2034
 
3,000
 
 
3,000
5.80% due 2037
 
950
 
 
950
6.35% due 2038
 
400
 
 
400
6.25% due 2039
 
550
 
 
550
5.40% due 2040
 
800
 
 
800
4.50% due 2041
 
250
 
 
250
4.45% due 2042
 
400
 
 
400
3.75% due 2042
 
350
 
 
350
4.60% due 2043
 
375
 
 
-
5.125% due 2043
 
500
 
 
-
Less: current portion
 
(539
 
(400
)
Unamortized discount, net of premium
 
(51
 
(51
)
Total senior notes, net of current portion
 
11,449
 
 
10,899
Pollution control bonds:
 
 
 
 
 
Series 1996 C, E, F, 1997 B, variable rates (1), due 2026 (2)
 
614
 
 
614
Series 2004 A-D, 4.75%, due 2023 (3)
 
345
 
 
345
Series 2009 A-D, variable rates (4), due 2016 and 2026 (5)
 
309
 
 
309
Total pollution control bonds
 
1,268
 
 
1,268
Total Utility long-term debt, net of current portion
 
12,717
 
 
12,167
Total consolidated long-term debt, net of current portion
$
12,717
 
$
12,517
 
 
 
 
 
 
(1)  At December 31, 2013, interest rates on these bonds and the related loans ranged from 0.01% to 0.04%.
(2)  Each series of these bonds is supported by a separate letter of credit.  In April 2013, the letters of credit were extended to April 1, 2018.  Although the stated maturity date is 2026, each series will remain outstanding only if the Utility extends or replaces the letter of credit related to the series or otherwise obtains consent from the issuer to the continuation of the series without a credit facility.
(3) The Utility has obtained credit support from an insurance company for these bonds.
(4) At December 31, 2013, interest rates on these bonds and the related loans ranged from 0.01% to 0.02%.
(5) Each series of these bonds is supported by a separate direct-pay letter of credit.  Series A and B letters of credit expire on May 31, 2016.  In October 2013, Series C and D letters of credit were extended to December 3, 2016 to coincide with the maturity of the underlying bonds.  Subject to certain requirements, the Utility may choose not to provide a credit facility without issuer consent.
 
 
Pollution Control Bonds
 
The California Pollution Control Financing Authority and the California Infrastructure and Economic Development Bank have issued various series of fixed rate and multi-modal tax-exempt pollution control bonds for the benefit of the Utility.  Substantially all of the net proceeds of the pollution control bonds were used to finance or refinance pollution control and sewage and solid waste disposal facilities at the Geysers geothermal power plant or at the Utility's Diablo Canyon nuclear power plant.  In 1999, the Utility sold all bond-financed facilities at the non-retired units of the Geysers geothermal power plant to Geysers Power Company, LLC pursuant to purchase and sale agreements stating that Geysers Power Company, LLC will use the bond-financed facilities solely as pollution control facilities for so long as any tax-exempt pollution control bonds issued to finance the Geysers project are outstanding.  The Utility has no knowledge that Geysers Power Company, LLC intends to cease using the bond-financed facilities solely as pollution control facilities.
 
Repayment Schedule
 
PG&E Corporation's and the Utility's combined short-term and long-term debt principal repayment amounts at December 31, 2013 are reflected in the table below:
 
(in millions,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 except interest rates)
2014
 
2015
 
2016
 
2017
 
 
2018
 
Thereafter
 
Total
PG&E Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average fixed interest rate
 
5.75
%
 
 
              -
 
 
 
              -
 
 
 
              -
 
 
 
              -
 
 
 
              -
 
 
 
5.75
%
Fixed rate obligations
$
       350
 
 
$
              -
 
 
$
              -
 
 
$
              -
 
 
$
              -
 
 
$
              -
 
 
$
           350
 
Utility
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average fixed interest rate
 
4.80
%
 
 
              -
 
 
 
              -
 
 
 
5.63
%
 
 
8.25
%
 
 
5.06
%
 
 
5.29
%
Fixed rate obligations
$
          539
 
 
$
              -
 
 
$
              -
 
 
$
          700
 
 
$
          800
 
 
$
      10,345
 
 
$
      12,384
 
Variable interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    as of December 31, 2013
 
              -
 
 
 
              -
 
 
 
0.02
%
 
 
              -
 
 
 
0.02
%
 
 
              -
 
 
 
0.02
%
Variable rate obligations (1)
$
              -
 
 
$
              -
 
 
$
          309
 
 
$
              -
 
 
$
          614
 
 
$
              -
 
 
$
          923
 
Total consolidated debt
$
          889
 
 
$
              -
 
 
$
       309
 
 
$
         700
 
 
$
       1,414
 
 
$
     10,345
 
 
$
     13,657
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (1) These bonds, due in 2016 and 2026, are backed by separate letters of credit that expire on May 31, 2016, December 3, 2016, or April 1, 2018.
 
Short-term Borrowings
 
The following table summarizes PG&E Corporation's and the Utility's outstanding borrowings under their revolving credit facilities and the Utility's commercial paper program at December 31, 2013:
 
 
 
 
 
 
Letters of
 
 
 
 
 
 
 
Termination
 
Facility
 
 Credit
 
 
 
Commercial
 
Facility
(in millions)
Date
 
Limit
 
Outstanding
 
Borrowings
 
Paper
 
Availability
PG&E Corporation
April 2018
 
$
300
(1)
 
$
 
 
$
260
 
$
-
 
 
$
40
 
Utility
April 2018
 
 
3,000
(2)
 
 
79
 
 
-
 
 
914
(3)
 
 
2,007
(3)
Total revolving credit facilities
 
 
$
3,300
 
 
$
79
 
$
260
 
$
914
 
 
$
2,047
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes a $100 million sublimit for letters of credit and a $100 million commitment for loans that are made available on a same-day basis and are repayable in full within 7 days.
(2) Includes a $1.0 billion sublimit for letters of credit and a $300 million commitment for loans that are made available on a same-day basis and are repayable in full within 7 days.
(3) The Utility treats the amount of its outstanding commercial paper as a reduction to the amount available under its revolving credit facility.
 
For 2013, the average outstanding borrowings on PG&E Corporation's revolving credit facility was $214 million and the maximum outstanding balance during the year was $260 million.  For 2013, the Utility's average outstanding commercial paper balance was $542 million and the maximum outstanding balance during the year was $1.1 billion.  The Utility did not borrow under its credit facility in 2013.  
 
Revolving Credit Facilities
 
In April 2013, PG&E Corporation and the Utility amended and restated their revolving credit facilities to extend their termination dates from May 31, 2016 to April 1, 2018.  These agreements contain substantially similar terms as their original 2011 credit agreements.  PG&E Corporation's and the Utility's revolving credit facilities may be used for working capital, the repayment of commercial paper, and other corporate purposes.  At PG&E Corporation's and the Utility's request and at the sole discretion of each lender, the facilities may be extended for additional periods.  Provided certain conditions are met, PG&E Corporation and the Utility have the right to increase, in one or more requests, given not more frequently than once a year, the aggregate lenders' commitments under the revolving credit facilities by up to $100 million and $500 million, respectively, in the aggregate for all such increases.
 
Borrowings under the revolving credit facilities (other than swingline loans) bear interest based, at PG&E Corporation's and the Utility's election, on (1) a London Interbank Offered Rate plus an applicable margin or (2) the base rate plus an applicable margin.  The base rate will equal the higher of the following: the administrative agent's announced base rate, 0.5% above the federal funds rate, or the one-month LIBOR plus an applicable margin.  Interest is payable quarterly in arrears, or earlier for loans with shorter interest periods.  PG&E Corporation and the Utility also will pay a facility fee on the total commitments of the lenders under the revolving credit facilities.  The applicable margins and the facility fees will be based on PG&E Corporation's and the Utility's senior unsecured debt ratings issued by Standard & Poor's Rating Services and Moody's Investor Service.  Facility fees are payable quarterly in arrears.
 
PG&E Corporation's and the Utility's revolving credit facilities include usual and customary provisions for revolving credit facilities of this type, including those regarding events of default and covenants limiting liens to those permitted under their senior note indentures, mergers, sales of all or substantially all of their assets, and other fundamental changes.  In addition, the revolving credit facilities require that PG&E Corporation and the Utility maintain a ratio of total consolidated debt to total consolidated capitalization of at most 65% as of the end of each fiscal quarter.  PG&E Corporation's 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 was 0.26%.
 
In January 2014, PG&E Corporation established a commercial paper program.  PG&E Corporation will treat the amount of its outstanding commercial paper as a reduction to the amount available under its revolving credit facility.
 
The borrowings from PG&E Corporation and the Utility's commercial paper programs are used primarily to fund temporary financing needs.  Liquidity support for these borrowings is provided by available capacity under their respective revolving credit facilities, as described above.  The commercial paper may have maturities up to 365 days and ranks equally with PG&E Corporation's and the Utility's other unsubordinated and unsecured indebtedness.  Commercial paper notes are sold at an interest rate dictated by the market at the time of issuance.  
 
Common Stock And Share-Based Compensation
Common Stock And Share-Based Compensation
 
NOTE 5: COMMON STOCK AND SHARE-BASED COMPENSATION
 
PG&E Corporation had 456,670,424 shares of common stock outstanding at December 31, 2013.  PG&E Corporation held all of the Utility's outstanding common stock at December 31, 2013.  
 
In May 2013, PG&E Corporation entered into a new equity distribution agreement providing for the sale of PG&E Corporation common stock having an aggregate gross sales price of up to $400 million.  As of December 31, 2013, PG&E Corporation had       sold common stock having an aggregate gross sales price of $395 million and had the ability to issue an additional $5 million of its common stock under this agreement.  During 2013, PG&E Corporation paid commissions of $3 million under this agreement.
 
            During 2013, PG&E Corporation issued 26 million shares of its common stock for aggregate net cash proceeds of $1,045 million in the following transactions:
 
 7 million shares were sold in an underwritten public offering for cash proceeds of $300 million, net of fees and commissions;
 8 million shares were issued for cash proceeds of $290 million under the PG&E Corporation 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.
 
Dividends
 
The Board of Directors of PG&E Corporation and the Utility declare dividends quarterly.  Under the Utility's Articles of Incorporation, the Utility cannot pay common stock dividends unless all cumulative preferred dividends on the Utility's preferred stock have been paid.  For 2013, the Board of Directors of PG&E Corporation declared a quarterly common stock dividend of $0.455 per share.
 
Under their respective credit agreements, PG&E Corporation and the Utility are each required to maintain a ratio of consolidated total debt to consolidated capitalization of at most 65%.  Based on the calculation of this ratio, $493 million of the Utility's reinvested earnings was restricted at December 31, 2013.  In addition, the CPUC requires the Utility to maintain a capital structure composed of at least 52% equity on average.  At December 31, 2013, the Utility was required to maintain reinvested earnings of $7.4 billion as equity to meet this requirement.
 
In addition, to comply with the revolving credit facility's 65% ratio requirement and the CPUC's requirement to maintain a 52% equity component, $7.7 billion and $14.6 billion of the Utility's net assets were restricted at December 31, 2013 to comply with these requirements, respectively, and could not be transferred to PG&E Corporation in the form of cash dividends.  As a holding company, PG&E Corporation depends 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, restricted stock awards, RSUs, performance shares, deferred compensation awards, and other share-based awards, to eligible employees of PG&E Corporation and its subsidiaries.  Non-employee directors of PG&E Corporation are also eligible to receive certain share-based awards.  A maximum of 12 million shares of PG&E Corporation common stock (subject to adjustment for changes in capital structure, stock dividends, or other similar events) has been reserved for issuance under the 2006 LTIP, of which 3,310,474 shares were available for future awards at December 31, 2013.  
 
The following table provides a summary of total share-based compensation expense recognized by PG&E Corporation for share-based incentive awards for 2013, 2012, and 2011:
 
(in millions)
2013
 
2012
 
2011
Restricted stock units
$
36
 
$
31
 
$
23
Performance shares:
 
 
 
 
 
 
 
 
Equity awards
 
28
 
 
26
 
 
16
Liability awards
 
-
 
 
-
 
 
(13
)
Total compensation expense (pre-tax)
$
64
 
$
57
 
$
26
Total compensation expense (after-tax)
$
38
 
$
34
 
$
16
 
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 over three year periods.  RSUs generally vest in 20% increments on the first business day of March in year one, two, and three, with the remaining 40% vesting on the first business day of March in year four.  Vested RSUs are settled in shares of PG&E Corporation common stock.  Additionally, upon settlement, RSU recipients receive payment for the amount of dividend equivalents associated with the vested RSUs that have accrued since the date of grant.  RSU expense is generally recognized ratably over the vesting period based on the fair values determined.  The weighted average grant-date fair value for RSUs granted during 2013, 2012, and 2011 was $42.92, $42.17, and $45.10, respectively.  The total fair value of RSUs that vested during 2013, 2012, and 2011 was $30 million, $18 million, and $11 million, respectively.  The tax benefit from RSUs that vested during each period was not material.  As of December 31, 2013, $50 million of total unrecognized compensation costs related to nonvested RSUs was expected to be recognized over the remaining weighted average period of 2.17 years.
 
The following table summarizes RSU activity for 2013:
 
 
 
Number of
 
Weighted Average Grant-
 
Restricted Stock Units
 
Date Fair Value
Nonvested at January 1
2,069,291
 
$
42.52
Granted
993,115
 
$
42.92
Vested
(719,071