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FAIR VALUE MEASUREMENTS
12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
PG&E Corporation and the Utility measure their cash equivalents, trust assets, and price risk management instruments at fair value.  A three-tier fair value hierarchy is established that prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs which are supported by little or no market activities.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Assets and liabilities measured at fair value on a recurring basis for PG&E Corporation and the Utility are summarized below.  Assets held in rabbi trusts are held by PG&E Corporation and not the Utility.
 Fair Value Measurements
 
 At December 31, 2022
(in millions)Level 1Level 2Level 3
Netting (1)
Total
Assets:     
Short-term investments$658 $— $— $— $658 
Fixed-income securities— 49 — — 49 
Nuclear decommissioning trusts
Short-term investments117 — — — 117 
Global equity securities1,845 — — — 1,845 
Fixed-income securities1,094 791 — — 1,885 
Assets measured at NAV— — — — 25 
Total nuclear decommissioning trusts (2)
3,056 791   3,872 
Customer credit trust
Short-term investments19 — — — 19 
Global equity securities218 — — — 218 
Fixed-income securities216 292 — — 508 
Total customer credit trust
453 292   745 
Price risk management instruments (Note 11)     
Electricity— 94 432 40 566 
Gas— 604 — 327 931 
Total price risk management instruments 698 432 367 1,497 
Rabbi trusts     
Short-term investments25 — — — 25 
Global equity securities— — — 5 
Fixed-income securities— 69 — — 69 
Life insurance contracts— 64 — — 64 
Total rabbi trusts30 133   163 
Long-term disability trust     
Short-term investments10 — — — 10 
Assets measured at NAV— — — — 133 
Total long-term disability trust10    143 
TOTAL ASSETS$4,207 $1,963 $432 $367 $7,127 
Liabilities:     
Price risk management instruments (Note 11)     
Electricity$— $10 $233 $(20)$223 
Gas— 172 — (166)6 
TOTAL LIABILITIES$ $182 $233 $(186)$229 
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and cash collateral.
(2) Represents amount before deducting $575 million primarily related to deferred taxes on appreciation of investment value. 
 Fair Value Measurements
 December 31, 2021
(in millions)Level 1Level 2Level 3
Netting (1)
Total
Assets:     
Short-term investments$289 $— $— $— $289 
Nuclear decommissioning trusts
Short-term investments22 — — — 22 
Global equity securities2,504 — — — 2,504 
Fixed-income securities1,158 866 — — 2,024 
Assets measured at NAV— — — — 31 
Total nuclear decommissioning trusts (2)
3,684 866   4,581 
Price risk management instruments (Note 10)    
Electricity— 214 229 
Gas— — 137 141 
Total price risk management instruments 13 214 143 370 
Rabbi trusts    
Fixed-income securities— 104 — — 104 
Life insurance contracts— 76 — — 76 
Total rabbi trusts 180   180 
Long-term disability trust    
Short-term investments— — — 6 
Assets measured at NAV— — — — 132 
Total long-term disability trust6    138 
TOTAL ASSETS$3,979 $1,059 $214 $143 $5,558 
Liabilities:    
Price risk management instruments (Note 10)    
Electricity$— $11 $248 $(24)$235 
Gas— 10 — (3)7 
TOTAL LIABILITIES$ $21 $248 $(27)$242 
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and cash collateral.
(2) Represents amount before deducting $783 million, primarily related to deferred taxes on appreciation of investment value.

Valuation Techniques

The following describes the valuation techniques used to measure the fair value of the assets and liabilities shown in the tables above. There are no restrictions on the terms and conditions upon which the investments may be redeemed. There were no material transfers between any levels for the years ended December 31, 2022 and 2021.

Trust Assets

Assets Measured at Fair Value

In general, investments held in the trusts are exposed to various risks, such as interest rate, credit, and market volatility risks. Nuclear decommissioning trust assets, customer credit trust assets and other trust assets are composed primarily of equity and fixed-income securities and also include short-term investments that are money market funds classified as Level 1.

Global equity securities primarily include investments in common stock that are valued based on quoted prices in active markets and are classified as Level 1.
Fixed-income securities are primarily composed of U.S. government and agency securities, municipal securities, and other fixed-income securities, including corporate debt securities.  U.S. government and agency securities primarily consist of U.S. Treasury securities that are classified as Level 1 because the fair value is determined by observable market prices in active markets. A market approach is generally used to estimate the fair value of fixed-income securities classified as Level 2 using evaluated pricing data such as broker quotes, for similar securities adjusted for observable differences.  Significant inputs used in the valuation model generally include benchmark yield curves and issuer spreads.  The external credit ratings, coupon rate, and maturity of each security are considered in the valuation model, as applicable.

Assets Measured at NAV Using Practical Expedient

Investments in the nuclear decommissioning trusts and the long-term disability trust that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy tables above.  The fair value amounts are included in the tables above in order to reconcile to the amounts presented in the Consolidated Balance Sheets.  These investments include commingled funds that are composed of equity securities traded publicly on exchanges as well as fixed-income securities that are composed primarily of U.S. government securities, credit securities and asset-backed securities.

Price Risk Management Instruments

Price risk management instruments include physical and financial derivative contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. 

Power purchase agreements, forwards, and swaps are valued using a discounted cash flow model.  Exchange-traded futures that are valued using observable market forward prices for the underlying commodity are classified as Level 1.  Over-the-counter forwards and swaps that are identical to exchange-traded futures, or are valued using forward prices from broker quotes that are corroborated with market data are classified as Level 2.  Exchange-traded options are valued using observable market data and market-corroborated data and are classified as Level 2. 

Long-dated power purchase agreements that are valued using significant unobservable data are classified as Level 3. These Level 3 contracts are valued using either estimated basis adjustments from liquid trading points or techniques, including extrapolation from observable prices, when a contract term extends beyond a period for which market data is available.  The Utility utilizes models to derive pricing inputs for the valuation of the Utility’s Level 3 instruments using pricing inputs from brokers and historical data.

The Utility holds CRRs to hedge the financial risk of CAISO-imposed congestion charges in the day-ahead market.  Limited market data is available in the CAISO auction and between auction dates; therefore, the Utility utilizes historical prices to forecast forward prices. CRRs are classified as Level 3.

Level 3 Measurements and Uncertainty Analysis

Inputs used and the fair value of Level 3 instruments are reviewed period-over-period and compared with market conditions to determine reasonableness.

Significant increases or decreases in any of those inputs would result in a significantly higher or lower fair value, respectively.  All reasonable costs related to Level 3 instruments are expected to be recoverable through rates; therefore, there is no impact on net income resulting from changes in the fair value of these instruments.  See Note 11 above.
 Fair Value at   
(in millions)At December 31, 2022Valuation
Technique
Unobservable
Input
 
Fair Value MeasurementAssetsLiabilities
 Range (1)/Weighted-Average Price (2)
Congestion revenue rights$305 $138 Market approachCRR auction prices
$ (145.09) - 2,724.93 / 0.89
Power purchase agreements$127 $95 Discounted cash flowForward prices
$ (6.39) - 286.75 / 78.14
(1) Represents price per MWh.
(2) Unobservable inputs were weighted by the relative fair value of the instruments.
 Fair Value at   
(in millions)At December 31, 2021Valuation
Technique
Unobservable
Input
 
Fair Value MeasurementAssetsLiabilities
 Range (1)/Weighted-Average Price (2)
Congestion revenue rights$188 $93 Market approachCRR auction prices
$ (40.77) - 2,265.94 / 0.40
Power purchase agreements$26 $155 Discounted cash flowForward prices
$ (7.97) - 256.20 / 47.17
(1) Represents price per MWh.
(2) Unobservable inputs were weighted by the relative fair value of the instruments.

Level 3 Reconciliation

The following table presents the reconciliation for Level 3 price risk management instruments for the years ended December 31, 2022 and 2021, respectively:
 Price Risk Management Instruments
(in millions)20222021
Liability balance as of January 1$(34)$(72)
Net realized and unrealized gains:
Included in regulatory assets and liabilities or balancing accounts (1)
233 38 
Asset (Liability) balance as of December 31$199 $(34)
(1) The costs related to price risk management activities are recovered through rates. Accordingly, unrealized gains and losses are deferred in regulatory liabilities and assets and net income is not impacted.

Financial Instruments

PG&E Corporation and the Utility use the following methods and assumptions in estimating fair value for financial instruments: the fair values of cash, net accounts receivable, short-term borrowings, accounts payable, customer deposits, and the Utility’s variable rate pollution control bond loan agreements approximate their carrying values as of December 31, 2022 and December 31, 2021, as they are short-term in nature.

The carrying amount and fair value of PG&E Corporation’s and the Utility’s long-term debt instruments were as follows (the table below excludes financial instruments with carrying values that approximate their fair values):
 At December 31, 2022At December 31, 2021
(in millions)Carrying AmountLevel 2 Fair Value
Carrying Amount
Level 2 Fair Value
Debt (Note 5)    
PG&E Corporation
$4,355 $4,490 $4,619 $4,796 
Utility32,847 27,666 31,816 35,803 
Nuclear Decommissioning Trust Investments

The following table provides a summary of equity securities and available-for-sale debt securities:
(in millions)Amortized
Cost
Total
Unrealized
Gains
Total
Unrealized
Losses
Total Fair
Value
As of December 31, 2022    
Nuclear decommissioning trusts    
Short-term investments$117 $— $— $117 
Global equity securities413 1,468 (11)1,870 
Fixed-income securities1,991 10 (116)1,885 
Total (1)
$2,521 $1,478 $(127)$3,872 
As of December 31, 2021    
Nuclear decommissioning trusts    
Short-term investments$22 $— $— $22 
Global equity securities479 2,066 (10)2,535 
Fixed-income securities1,938 98 (12)2,024 
Total (1)
$2,439 $2,164 $(22)$4,581 
(1) Represents amounts before deducting $575 million and $783 million as of December 31, 2022 and December 31, 2021, respectively, primarily related to deferred taxes on appreciation of investment value.

The fair value of fixed-income securities by contractual maturity is as follows:
 As of
(in millions)December 31, 2022
Less than 1 year$42 
1–5 years624 
5–10 years400 
More than 10 years819 
Total maturities of fixed-income securities$1,885 

The following table provides a summary of activity for the fixed-income and equity securities:
(in millions)202220212020
Proceeds from sales and maturities of nuclear decommissioning trust investments$3,316 $1,678 $1,518 
Gross realized gains on securities286 159 
Gross realized losses on securities(3)(19)(41)

Customer Credit Trust

The following table provides a summary of equity securities and available-for-sale debt securities:
(in millions)Amortized
Cost
Total
Unrealized
Gains
Total
Unrealized
Losses
Total Fair
Value
As of December 31, 2022    
Customer credit trust    
Short-term investments$19 $— $— $19 
Global equity securities219 13 (14)218 
Fixed-income securities516 — (8)508 
Total
$754 $13 $(22)$745 
The fair value of fixed-income securities by contractual maturity is as follows:
 As of
(in millions)December 31, 2022
Less than 1 year$79 
1–5 years123 
5–10 years120 
More than 10 years186 
Total maturities of fixed-income securities$508 

The following table provides a summary of activity for the fixed-income and equity securities:
(in millions)2022
Proceeds from sales and maturities of customer credit trust investments$250 
Gross realized gains on securities10 
Gross realized losses on securities (1)
(41)
(1) Includes $6 million of impaired debt securities which were written down to their respective fair values during the year ended December 31, 2022.