PG&E 2012 Annual Report Download - page 121

Download and view the complete annual report

Please find page 121 of the 2012 PG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15: COMMITMENTS AND CONTINGENCIES (Continued)
unless an amount within the range is a better estimate than any other amount. Amounts recorded are not discounted
to their present value.
The following table presents the changes in the environmental remediation liability:
(in millions)
Balance at December 31, 2011 ....................................... $ 785
Additional remediation costs accrued:
Transfer to regulatory account for recovery ............................ 150
Amounts not recoverable from customers ............................. 150
Less: Payments .................................................. (175)
Balance at December 31, 2012 ....................................... $ 910
The environmental remediation liability is composed of the following:
Balance at
December 31,
2012 2011
(in millions)
Utility-owned natural gas compressor site near Hinkley, California(1) $ 226 $ 149
Utility-owned natural gas compressor site near Topock, Arizona(1) . . 239 218
Utility-owned generation facilities (other than for fossil fuel-fired),
other facilities, and third-party disposal sites ................ 158 133
Former manufatured gas plant sites owned by the Utility or third
parties ............................................ 181 154
Fossil fuel-fired generation facilities formerly owned by the Utility . . 87 81
Decommissioning fossil fuel-fired generation facilities and sites .... 19 50
Total environmental remediation liability .................... $ 910 $ 785
(1) See ‘‘Natural Gas Compressor Site’’ below.
The CPUC has authorized the Utility to recover most of its environmental remediation costs through various
ratemaking mechanisms, subject to exclusions for certain sites, such as the Hinkley natural gas compressor site, and
subject to limitations for certain liabilities such as amounts associated with fossil fuel-fired generation facilities
formerly owned by the Utility. At December 31, 2012, the Utility expected to recover $548 million through these
ratemaking mechanisms. The Utility also recovers environmental remediation costs from insurance carriers and from
other third parties whenever possible. Amounts collected in excess of the Utility’s ultimate obligations may be subject
to refund to customers through rates.
Natural Gas Compressor Sites
The Utility is legally responsible for remediating groundwater contamination caused by hexavalent chromium
used in the past at the Utility’s natural gas compressor sites near Hinkley, California (‘‘Hinkley site’’) and Topock,
Arizona (‘‘Topock site’’). The Utility is also required to take measures to abate the effects of the contamination on
the environment.
Hinkley Site
The Utility’s remediation and abatement efforts at the Hinkley site are subject to the regulatory authority of the
California Regional Water Quality Control Board, Lahontan Region (‘‘Regional Board’’). The Regional Board has
issued several orders directing the Utility to implement interim remedial measures to reduce the mass of the
underground plume of hexavalent chromium, monitor and control movement of the plume, and provide replacement
water to affected residents.
117