PG&E 2012 Annual Report Download - page 16

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The following table provides a summary of the Utility’s cost of electricity and the total amount and average cost
of purchased power:
2012 2011 2010
(in millions)
Cost of purchased power ..................... $ 3,873 $ 3,719 $ 3,647
Fuel used in own generation facilities ............ 289 297 251
Total cost of electricity ...................... $ 4,162 $ 4,016 $ 3,898
Average cost of purchased power per kWh(1) ...... $ 0.079 $ 0.089 $ 0.081
Total purchased power (in millions of kWh) ....... 48,933 41,958 44,837
(1) Kilowatt-hour
The Utility’s total cost of electricity increased by $146 million, or 4%, in 2012 compared to 2011, primarily due
to an increase in the volume of power purchased as customer demand increased and higher costs to purchase
renewable energy. The higher cost of electricity was partially offset by the decrease in the average cost of purchased
power which reflected lower spot prices. The volume of power the Utility purchases is driven by customer demand,
the availability of the Utility’s own generation facilities, and the cost effectiveness of each source of electricity.
The Utility’s total cost of electricity increased by $118 million, or 3%, in 2011 compared to 2010. The increase
was due to an increase in the average cost of purchased power resulting from increased renewable energy deliveries
and higher transmission costs.
Various factors will affect the Utility’s future cost of electricity, including the market prices for electricity and
natural gas, the availability of Utility-owned generation, and changes in customer demand. Additionally, the cost of
electricity is expected to be impacted by the higher cost of procuring renewable energy as the Utility increases the
amount of its renewable energy deliveries to comply with current and future California law and regulatory
requirements. The Utility’s future cost of electricity also will be affected by legislation and rules applicable to GHG
emissions. (See ‘‘Environmental Matters’’ below.)
Natural Gas Operating Revenues
The Utility’s natural gas operating revenues consist of amounts charged for transportation, distribution, and
storage services, as well as amounts charged to customers to recover the cost of natural gas procurement and public
purpose programs.
The following table provides a summary of the Utility’s natural gas operating revenues:
2012 2011 2010
(in millions)
Revenues excluding passed-through costs ......... $ 1,772 $ 1,696 $ 1,627
Revenues for recovery of passed-through costs ..... 1,249 1,654 1,569
Total natural gas operating revenues ............ $ 3,021 $ 3,350 $ 3,196
The Utility’s natural gas operating revenues, including revenues intended to recover costs that are passed
through to customers, decreased by $329 million, or 10%, in 2012 compared to 2011. Revenues intended to recover
costs that are passed through to customers and do not impact net income decreased by $405 million primarily due to
a decrease in the cost of natural gas. Natural gas operating revenues, excluding revenues intended to recover costs
that are passed through to customers, increased by $76 million, primarily due to an increase in base revenues as
authorized in the 2011 GT&S rate case and the 2011 GRC and increases in natural gas storage revenues.
The Utility’s natural gas operating revenues, including revenues intended to recover costs that are passed
through to customers, increased by $154 million, or 5%, in 2011 compared to 2010. Revenues intended to recover
costs that are passed through to customers and do not impact net income increased by $85 million, primarily due to
an increase in the costs of public purpose programs and pension contributions. Natural gas operating revenues,
excluding revenues intended to recover costs that are passed through to customers, increased by $69 million,
primarily due to an increase in authorized base revenue, partially offset by a decrease in natural gas storage
revenues. (The Utility’s storage facilities were at capacity throughout 2011 and less gas was transported from storage
due to the milder weather that prevailed in 2011 compared to 2010. As result, the Utility was unable to accept more
gas for storage.)
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