PG&E 2012 Annual Report Download - page 77

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS (Continued)
costs. These costs are expected to be recovered over the next 14 years, which is the remaining amortization period of
the reacquired debt.
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
Current Regulatory Liabilities
At December 31, 2012 and 2011, the Utility had current regulatory liabilities of $337 million and $161 million,
respectively, consisting of amounts that it expects to refund to customers over the next 12 months. At December 31,
2012 current regulatory liabilities primarily included $158 million of ERB over collections, $84 million of proceeds
from a greenhouse gas (‘‘GHG’’) emission auction to comply with California Air Resources Board requirements, and
electricity supplier settlement agreements of $50 million (See Note 13 below). Current regulatory liabilities are
included within current liabilities—other in the Consolidated Balance Sheets.
Long-Term Regulatory Liabilities
Long-term regulatory liabilities are composed of the following:
Balance at
December 31,
2012 2011
(in millions)
Cost of removal obligations .............................. $ 3,625 $ 3,460
Recoveries in excess of AROs ............................ 620 611
Public purpose programs ................................ 590 499
Other .............................................. 253 163
Total long-term regulatory liabilities ........................ $ 5,088 $ 4,733
The regulatory liability for cost of removal obligations represents the cumulative differences between asset
removal costs recorded and amounts collected in rates for expected asset removal costs.
The regulatory liability for recoveries in excess of AROs 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 11 below.)
The regulatory liability for public purpose programs 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 designed to encourage the manufacture, design, distribution, and customer use of energy efficient
appliances and other energy-using products, the California Solar Initiative program to promote the use of solar
energy in homes and commercial, industrial, and agricultural properties, and the Self-Generation Incentive program
to promote distributed generation technologies installed on the customer’s side of the utility meter.
Regulatory Balancing Accounts
The Utility’s current regulatory balancing accounts represent the amounts expected to be collected from or
refunded to customers through authorized rate adjustments over the next 12 months. 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.
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