New And Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Variable Interest Entities

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 a primary beneficiary and is required to consolidate 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 September 30,2015, 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 obligation 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 September 30,2015, it did not consolidate any of them.

Pension And Other Postretirement Benefits

Pension and Other Postretirement Benefits

PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan.  Both plans are included in “Pension Benefits” below.  Post-retirement medical and life insurance plans are included in “Other Benefits” below.

The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014 were as follows:

	Pension Benefits				Other Benefits
	Three Months Ended September 30,
(in millions)	2015		2014		2015			2014
Service cost for benefits earned	$	123	$	92		$	14		$	12
Interest cost		168		175			18			19
Expected return on plan assets		(219)		(202)			(28)			(25)
Amortization of prior service cost		4		5			4			6
Amortization of net actuarial loss		1		1			1			1
Net periodic benefit cost		77		71			9			13
Regulatory account transfer (1)		8		13			-			-
Total	$	85	$	84		$	9		$	13

(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

	Pension Benefits				Other Benefits
	Nine Months Ended September 30,
(in millions)	2015		2014		2015		2014
Service cost for benefits earned	$	360	$	287	$	41	$	34
Interest cost		505		521		54		57
Expected return on plan assets		(655)		(605)		(84)		(77)
Amortization of prior service cost		11		15		14		17
Amortization of net actuarial loss		7		2		3		2
Net periodic benefit cost		228		220		28		33
Regulatory account transfer (1)		26		31		-		-
Total	$	254	$	251	$	28	$	33

(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

There was no material difference between PG&E Corporation and the Utility for the information disclosed above.

Amounts Reclassified Out of Accumulated Other Comprehensive Income

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) are summarized below:

	Pension			Other
	Benefits			Benefits			Total
(in millions, net of income tax)	Three Months Ended September 30, 2015
Beginning balance	$	(21)	$		15	$		(6)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost
(net of taxes of $1 and $2, respectively)		3			2			5
Amortization of net actuarial loss
(net of taxes of $0 and $0, respectively)		1			1			2
Regulatory account transfer
(net of taxes of $3 and $3, respectively)		(4)			(3)			(7)
Net current period other comprehensive loss		-			-			-
Ending balance	$	(21)	$		15	$		(6)

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

	Pension		Other		Other
	Benefits		Benefits		Investments		Total
(in millions, net of income tax)	Three Months Ended September 30, 2014
Beginning balance	$	(7)	$	15	$	36	$	44
Other comprehensive income before reclassifications:
Change in investments
(net of taxes of $0, $0, and $3, respectively)		-		-		(4)		(4)
Amounts reclassified from other comprehensive income:
Amortization of prior service cost
(net of taxes of $2, $3, and $0, respectively) (1)		3		3		-		6
Regulatory account transfer
(net of taxes of $3, $4, and $0, respectively) (1)		(3)		(3)		-		(6)
Change in investments
(net of taxes of $0, $0, and $10, respectively)		-		-		(14)		(14)
Net current period other comprehensive loss		-		-		(18)		(18)
Ending balance	$	(7)	$	15	$	18	$	26

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

	Pension		Other		Other
	Benefits		Benefits		Investments		Total
(in millions, net of income tax)	Nine Months Ended September 30, 2015
Beginning balance	$	(21)	$	15	$	17	$	11
Amounts reclassified from other comprehensive income:
Amortization of prior service cost
(net of taxes of $4, $6, and $0, respectively) (1)		7		8		-		15
Amortization of net actuarial loss
(net of taxes of $3, $1, and $0, respectively) (1)		4		2		-		6
Regulatory account transfer
(net of taxes of $7, $7, and $0, respectively) (1)		(11)		(10)		-		(21)
Change in investments
(net of taxes of $0, $0, and $12, respectively)		-		-		(17)		(17)
Net current period other comprehensive loss		-		-		(17)		(17)
Ending balance	$	(21)	$	15	$	-	$	(6)

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

	Pension		Other		Other
	Benefits		Benefits		Investments		Total
(in millions, net of income tax)	Nine Months Ended September 30, 2014
Beginning balance	$	(7)	$	15	$	42	$	50
Other comprehensive income before reclassifications:
Change in investments
(net of taxes of $0, $0, and $4, respectively)		-		-		6		6
Amounts reclassified from other comprehensive income:
Amortization of prior service cost
(net of taxes of $6, $7, and $0, respectively) (1)		9		10		-		19
Amortization of net actuarial loss
(net of taxes of $1, $1, and $0, respectively) (1)		1		1		-		2
Regulatory account transfer
(net of taxes of $7, $8, and $0, respectively) (1)		(10)		(11)		-		(21)
Change in investments
(net of taxes of $0, $0, and $20, respectively)		-		-		(30)		(30)
Net current period other comprehensive loss		-		-		(24)		(24)
Ending balance	$	(7)	$	15	$	18	$	26

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs.  (See the “Pension and Other Postretirement Benefits” table above for additional details.)

There was no material difference between PG&E Corporation and the Utility for the information disclosed above, with the exception of other investments which are held by PG&E Corporation.