REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

9 Months Ended

Sep. 30, 2021

REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets and Liabilities

Regulatory Assets

Long-term regulatory assets are comprised of the following:


	Balance at
(in millions)	September 30, 2021		December 31, 2020
Pension benefits (1)	$	2,136	$	2,245
Environmental compliance costs	1,082		1,112
Utility retained generation (2)	145		181
Price risk management	223		204
Unamortized loss, net of gain, on reacquired debt	40		49
Catastrophic event memorandum account (3)	989		842
Wildfire expense memorandum account (4)	455		400
Fire hazard prevention memorandum account (5)	75		137
Fire risk mitigation memorandum account (6)	44		66
Wildfire mitigation plan memorandum account (7)	342		390
Deferred income taxes (8)	1,515		908
Insurance premium costs (9)	232		294
Wildfire mitigation balancing account (10)	215		156
General rate case memorandum accounts (11)	117		376
Vegetation management balancing account (12)	690		592
COVID-19 pandemic protection memorandum account (13)	47		84
Other	1,132		942
Total long-term regulatory assets	$	9,479	$	8,978

(1) Payments into the pension and other benefits plans are based on annual contribution requirements. As these annual requirements continue indefinitely into the future, the Utility expects to continuously recover pension benefits.

(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 2001 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) Includes costs of responding to catastrophic events that have been declared a disaster or state of emergency by competent federal or state authorities. As of September 30, 2021, $64 million in COVID-19 related costs was recorded to CEMA regulatory assets. Recovery of CEMA costs is subject to CPUC review and approval.

(4) Includes $339 million incremental wildfire claims and outside legal expenses related to the 2021 Dixie fire plus the noncurrent portion of incremental wildfire liability insurance premium costs for the period July 26, 2017 through December 31, 2019 totaling $116 million. Recovery of WEMA costs is subject to CPUC review and approval.

(5) Includes costs associated with the implementation of regulations and requirements adopted to protect the public from potential fire hazards associated with overhead power line facilities and nearby aerial communication facilities that have not been previously authorized in another proceeding. Recovery of FHPMA costs is subject to CPUC review and approval.

(6) Includes costs associated with the 2019 WMP for the period January 1, 2019 through June 4, 2019 and other incremental costs associated with fire risk mitigation. Recovery of FRMMA costs is subject to CPUC review and approval.

(7) Includes costs associated with the 2019 WMP for the period June 5, 2019 through December 31, 2019 and the 2020 WMP for the period of January 1, 2020 through December 31, 2020 and the 2021 WMP for the period of January 1, 2021 through September 30, 2021. Recovery of WMPMA costs is subject to CPUC review and approval.

(8) Represents cumulative differences between amounts recognized for ratemaking purposes and expense recognized in accordance with GAAP.

(9) Represents excess liability insurance premium costs recorded to RTBA and adjustment mechanism for costs determined in other proceedings, as authorized in the 2020 GRC and 2019 GT&S rate cases, respectively.

(10) Includes costs associated with certain wildfire mitigation activities for the period January 1, 2020 through September 30, 2021. Noncurrent balance represents costs above 115% of adopted revenue requirements, which are subject to CPUC review and approval.

(11) The General Rate Case Memorandum Accounts record the difference between the gas and electric revenue requirements in effect on January 1, 2020 and through February 28, 2021 as authorized by the CPUC in December 2020. These amounts will be recovered in rates over 22 months, beginning March 1, 2021.

(12) Represents costs from routine vegetation management and enhanced vegetation management activities previously recorded in the FRMMA/WMPMA, and tree mortality and fire risk reduction work previously recorded in CEMA. Recovery of VMBA costs above 120% of adopted revenue requirements is subject to CPUC review and approval.

(13) On April 16, 2020, the CPUC passed a resolution that established the CPPMA to recover costs associated with customer protections, including higher uncollectible costs related to a moratorium on electric and gas service disconnections for residential and small business customers. On a go forward basis, the CPPMA applies only to small business customers and was approved on July 27, 2020 with an effective date of March 4, 2020. The RUBA applies to residential customers and was approved on April 13, 2021 with an effective date of June 11, 2020. As of September 30, 2021, the Utility had recorded an aggregate under-collection of $297 million, representing incremental bad debt expense over what was collected in rates for the period the CPPMA and the RUBA are in effect. Of the $297 million under-collection, at September 30, 2021, $250 million is recorded in the RUBA current balancing accounts receivable and $30 million is recorded in the CPPMA. The remaining $17 million is associated with program costs and higher accounts receivable financing costs. Recovery of CPPMA costs is subject to CPUC review and approval.

Regulatory Liabilities

Long-term regulatory liabilities are comprised of the following:


	Balance at
(in millions)	September 30, 2021		December 31, 2020
Cost of removal obligations (1)	$	7,216	$	6,905
Recoveries in excess of AROs (2)	306		458
Public purpose programs (3)	974		948
Employee benefit plans (4)	1,022		995
Tower Licenses (5)	455		—
SFGO Sale (6)	359		—
Other	1,329		1,118
Total long-term regulatory liabilities	$	11,661	$	10,424

(1) Represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets.

(2) Represents the cumulative differences between ARO expenses and amounts collected in rates. Decommissioning costs related to the Utility’s nuclear facilities are recovered through rates and are placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on these nuclear decommissioning trust investments. (See Note 9 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.

(4) Represents cumulative differences between incurred costs and amounts collected in rates for post-retirement medical, post-retirement life and long-term disability plans.

(5) Represents the portion of the net proceeds received from the sale of transmission tower wireless licenses that will be returned to customers. Of the $455 million, $314 million and $141 million will be refunded to FERC and CPUC jurisdiction customers, respectively. (See Note 3 above.)

(6) Represents the noncurrent portion of the gain on the sale of SFGO that will be refunded to customers.

Regulatory Balancing Accounts

Current regulatory balancing accounts receivable and payable are comprised of the following:


	Receivable Balance at
(in millions)	September 30, 2021		December 31, 2020
Gas distribution and transmission	$	225	$	102
Energy procurement	225		413
Public purpose programs	278		292
Fire hazard prevention memorandum account	81		121
Fire risk mitigation memorandum account	22		33
Wildfire mitigation plan memorandum account	108		161
Wildfire mitigation balancing account	41		27
General rate case memorandum accounts	467		313
Vegetation management balancing account	277		115
Insurance premium costs	508		135
Other	673		289
Total regulatory balancing accounts receivable	$	2,905	$	2,001


	Payable Balance at
(in millions)	September 30, 2021		December 31, 2020
Electric distribution	$	330	$	55
Electric transmission	100		267
Gas distribution and transmission	53		76
Energy procurement	133		158
Public purpose programs	300		410
Other	223		279
Total regulatory balancing accounts payable	$	1,139	$	1,245

For more information, see Note 4 of the Notes to the Consolidated Financial Statements in Item 8 of the 2020 Form 10-K.