UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C., 20549
FORM
10-Q
|
||||||||||
(Mark
One)
|
||||||||||
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
|
|||||||||
For
the quarterly period ended June 30, 2008
OR
|
||||||||||
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
|
|||||||||
For
the transition period from ___________ to __________
|
||||||||||
Commission
File
Number
_______________
|
Exact
Name of
Registrant
as
specified
in
its charter
_______________
|
State
or other
Jurisdiction
of
Incorporation
______________
|
IRS
Employer
Identification
Number
___________
|
|||||||
1-12609
|
PG&E
Corporation
|
California
|
94-3234914
|
|||||||
1-2348
|
Pacific
Gas and Electric Company
|
California
|
94-0742640
|
|||||||
Pacific
Gas and Electric Company
77
Beale Street
P.O.
Box 770000
San
Francisco, California 94177
________________________________________
|
PG&E
Corporation
One
Market, Spear Tower
Suite
2400
San
Francisco, California 94105
______________________________________
|
|||||||||
Address
of principal executive offices, including zip code
|
||||||||||
Pacific
Gas and Electric Company
(415)
973-7000
________________________________________
|
PG&E
Corporation
(415)
267-7000
______________________________________
|
|||||||||
Registrant's
telephone number, including area code
|
||||||||||
Indicate
by check mark whether each registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) have been subject
to such filing requirements for the past 90 days. [X] Yes [ ]
No
|
||||||||||
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
|
||||||||||
PG&E
Corporation:
|
[X] Large accelerated
filer
|
[ ] Accelerated
Filer
|
||||||||
[ ]
Non-accelerated filer
|
[ ] Smaller
reporting company
|
|||||||||
Pacific
Gas and Electric Company:
|
[ ] Large
accelerated filer
|
[ ] Accelerated
Filer
|
||||||||
[X] Non-accelerated
filer
|
[ ] Smaller
reporting company
|
|||||||||
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
|
||||||||||
PG&E
Corporation:
|
[ ] Yes [X] No
|
|||||||||
Pacific
Gas and Electric Company:
|
[ ] Yes [X] No
|
|||||||||
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
|
||||||||||
Common
Stock Outstanding as of August 1, 2008:
|
||||||||||
PG&E
Corporation
|
358,556,042
shares (excluding 24,665,500 shares held by a wholly owned
subsidiary)
|
|||||||||
Pacific
Gas and Electric Company
|
283,856,022
|
|||||||||
PART
I.
|
FINANCIAL
INFORMATION
|
PAGE
|
||
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
|
||||
PG&E
Corporation
|
||||
3
|
||||
4
|
||||
6
|
||||
Pacific
Gas and Electric Company
|
||||
7
|
||||
8
|
||||
10
|
||||
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
||||
Organization
and Basis of Presentation
|
11
|
|||
New
and Significant Accounting Policies
|
11
|
|||
Regulatory
Assets, Liabilities, and Balancing Accounts
|
14
|
|||
Debt
|
17
|
|||
Shareholders'
Equity
|
18
|
|||
Earnings
Per Common Share
|
19
|
|||
Derivatives
and Hedging Activities
|
20
|
|||
Fair
Value Measurements
|
21
|
|||
Related
Party Agreements and Transactions
|
25
|
|||
Resolution
of Remaining Chapter 11 Disputed Claims
|
26
|
|||
Commitments
and Contingencies
|
26
|
|||
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
|
||||
33
|
||||
35
|
||||
37
|
||||
43
|
||||
47
|
||||
48
|
||||
50
|
||||
51
|
||||
51
|
||||
53
|
||||
55
|
||||
56
|
||||
57
|
||||
57
|
||||
59
|
||||
59
|
||||
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
60
|
|||
CONTROLS
AND PROCEDURES
|
60
|
|||
PART
II.
|
OTHER
INFORMATION
|
|||
LEGAL
PROCEEDINGS
|
60
|
|||
ITEM 1A. | RISK FACTORS |
60
|
||
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
61
|
|||
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
61
|
|||
OTHER
INFORMATION
|
63
|
|||
EXHIBITS
|
64
|
|||
65
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions, except per share amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Operating
Revenues
|
||||||||||||||||
Electric
|
$ | 2,645 | $ | 2,359 | $ | 5,159 | $ | 4,534 | ||||||||
Natural
gas
|
933 | 828 | 2,152 | 2,009 | ||||||||||||
Total
operating revenues
|
3,578 | 3,187 | 7,311 | 6,543 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Cost
of electricity
|
1,097 | 884 | 2,124 | 1,607 | ||||||||||||
Cost
of natural gas
|
487 | 396 | 1,262 | 1,150 | ||||||||||||
Operating
and maintenance
|
991 | 922 | 2,027 | 1,842 | ||||||||||||
Depreciation,
amortization, and decommissioning
|
419 | 430 | 821 | 860 | ||||||||||||
Total
operating expenses
|
2,994 | 2,632 | 6,234 | 5,459 | ||||||||||||
Operating
Income
|
584 | 555 | 1,077 | 1,084 | ||||||||||||
Interest
income
|
33 | 37 | 59 | 89 | ||||||||||||
Interest
expense
|
(185 | ) | (185 | ) | (372 | ) | (375 | ) | ||||||||
Other
income, net
|
1 | 10 | 3 | 14 | ||||||||||||
Income
Before Income Taxes
|
433 | 417 | 767 | 812 | ||||||||||||
Income
tax provision
|
140 | 148 | 250 | 287 | ||||||||||||
Net
Income
|
$ | 293 | $ | 269 | $ | 517 | $ | 525 | ||||||||
Weighted
Average Common Shares Outstanding, Basic
|
356 | 350 | 355 | 350 | ||||||||||||
Weighted
Average Common Shares Outstanding, Diluted
|
357 | 352 | 356 | 352 | ||||||||||||
Net
Earnings Per Common Share, Basic
|
$ | 0.80 | $ | 0.75 | $ | 1.42 | $ | 1.46 | ||||||||
Net
Earnings Per Common Share, Diluted
|
$ | 0.80 | $ | 0.74 | $ | 1.42 | $ | 1.45 | ||||||||
Dividends
Declared Per Common Share
|
$ | 0.39 | $ | 0.36 | $ | 0.78 | $ | 0.72 | ||||||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 297 | $ | 345 | ||||
Restricted
cash
|
1,322 | 1,297 | ||||||
Accounts
receivable:
|
||||||||
Customers
(net of allowance for doubtful accounts of $59 million in 2008 and $58
million in 2007)
|
2,417 | 2,349 | ||||||
Regulatory
balancing accounts
|
1,357 | 771 | ||||||
Inventories:
|
||||||||
Gas
stored underground and fuel oil
|
251 | 205 | ||||||
Materials
and supplies
|
177 | 166 | ||||||
Income
taxes receivable
|
52 | 61 | ||||||
Prepaid
expenses and other
|
469 | 255 | ||||||
Total
current assets
|
6,342 | 5,449 | ||||||
Property,
Plant, and Equipment
|
||||||||
Electric
|
26,693 | 25,599 | ||||||
Gas
|
9,860 | 9,620 | ||||||
Construction
work in progress
|
1,432 | 1,348 | ||||||
Other
|
17 | 17 | ||||||
Total
property, plant, and equipment
|
38,002 | 36,584 | ||||||
Accumulated
depreciation
|
(13,297 | ) | (12,928 | ) | ||||
Net
property, plant, and equipment
|
24,705 | 23,656 | ||||||
Other
Noncurrent Assets
|
||||||||
Regulatory
assets
|
4,300 | 4,459 | ||||||
Nuclear
decommissioning funds
|
1,914 | 1,979 | ||||||
Other
|
1,351 | 1,089 | ||||||
Total
other noncurrent assets
|
7,565 | 7,527 | ||||||
TOTAL
ASSETS
|
$ | 38,612 | $ | 36,632 | ||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
PG&E
CORPORATION
|
||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
Balance
At
|
||||||||
(in
millions, except share amounts)
|
June
30,
2008
|
December
31, 2007
|
||||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Short-term
borrowings
|
$ | 156 | $ | 519 | ||||
Long-term
debt, classified as current
|
600 | - | ||||||
Energy
recovery bonds, classified as current
|
362 | 354 | ||||||
Accounts
payable:
|
||||||||
Trade
creditors
|
1,133 | 1,067 | ||||||
Disputed
claims and customer refunds
|
1,588 | 1,629 | ||||||
Regulatory
balancing accounts
|
924 | 673 | ||||||
Other
|
388 | 394 | ||||||
Interest
payable
|
744 | 697 | ||||||
Income
taxes payable
|
12 | - | ||||||
Deferred
income taxes
|
228 | - | ||||||
Other
|
1,926 | 1,374 | ||||||
Total
current liabilities
|
8,061 | 6,707 | ||||||
Noncurrent
Liabilities
|
||||||||
Long-term
debt
|
7,721 | 8,171 | ||||||
Energy
recovery bonds
|
1,409 | 1,582 | ||||||
Regulatory
liabilities
|
5,185 | 4,448 | ||||||
Asset
retirement obligations
|
1,614 | 1,579 | ||||||
Income
taxes payable
|
230 | 234 | ||||||
Deferred
income taxes
|
3,178 | 3,053 | ||||||
Deferred
tax credits
|
96 | 99 | ||||||
Other
|
1,969 | 1,954 | ||||||
Total
noncurrent liabilities
|
21,402 | 21,120 | ||||||
Commitments
and Contingencies
|
||||||||
Preferred
Stock of Subsidiaries
|
252 | 252 | ||||||
Preferred
Stock
|
||||||||
Preferred
stock, no par value, authorized 80,000,000 shares, $100 par value,
authorized 5,000,000 shares, none issued
|
- | - | ||||||
Common
Shareholders' Equity
|
||||||||
Common
stock, no par value, authorized 800,000,000 shares, issued 381,076,783
common and 1,392,583 restricted shares in 2008 and issued 378,385,151
common and 1,261,125 restricted shares in 2007
|
6,211 | 6,110 | ||||||
Common
stock held by subsidiary, at cost, 24,665,500 shares
|
(718 | ) | (718 | ) | ||||
Reinvested
earnings
|
3,389 | 3,151 | ||||||
Accumulated
other comprehensive income
|
15 | 10 | ||||||
Total
common shareholders' equity
|
8,897 | 8,553 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 38,612 | $ | 36,632 | ||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(in
millions)
|
2008
|
2007
|
||||||
Cash
Flows From Operating Activities
|
||||||||
Net
income
|
$ | 517 | $ | 525 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation,
amortization, decommissioning, and allowance for equity funds used during
construction
|
870 | 914 | ||||||
Deferred
income taxes and tax credits, net
|
346 | 102 | ||||||
Other
changes in noncurrent assets and liabilities
|
493 | 130 | ||||||
Gain
on sale of assets
|
- | (1 | ) | |||||
Effect
of changes in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(68 | ) | 142 | |||||
Inventories
|
(57 | ) | (22 | ) | ||||
Accounts
payable
|
121 | (214 | ) | |||||
Income
taxes receivable/payable
|
21 | (61 | ) | |||||
Regulatory
balancing accounts, net
|
(351 | ) | (483 | ) | ||||
Other
current assets
|
431 | 273 | ||||||
Other
current liabilities
|
(79 | ) | (46 | ) | ||||
Other
|
(3 | ) | (23 | ) | ||||
Net
cash provided by operating activities
|
2,241 | 1,236 | ||||||
Cash
Flows From Investing Activities
|
||||||||
Capital
expenditures
|
(1,712 | ) | (1,320 | ) | ||||
Proceeds
from sale of assets
|
12 | 8 | ||||||
Increase
in restricted cash
|
(7 | ) | (13 | ) | ||||
Proceeds
from nuclear decommissioning trust sales
|
636 | 548 | ||||||
Purchases
of nuclear decommissioning trust investments
|
(665 | ) | (606 | ) | ||||
Net
cash used in investing activities
|
(1,736 | ) | (1,383 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Repayments
under accounts receivable facility and working capital
facility
|
(250 | ) | (300 | ) | ||||
(Repayment)
issuance of commercial paper, net of $1 million discount in 2008 and $2
million in 2007
|
(114 | ) | 109 | |||||
Proceeds
from issuance of long-term debt, net of premium, discount, and issuance
costs of $2 million in 2008 and $10 million in 2007
|
598 | 690 | ||||||
Long-term
debt matured, redeemed, or repurchased
|
(454 | ) | - | |||||
Rate
reduction bonds matured
|
- | (143 | ) | |||||
Energy
recovery bonds matured
|
(165 | ) | (160 | ) | ||||
Common
stock issued
|
82 | 89 | ||||||
Common
stock dividends paid
|
(267 | ) | (242 | ) | ||||
Other
|
17 | 14 | ||||||
Net
cash (used in) provided by financing activities
|
(553 | ) | 57 | |||||
Net
change in cash and cash equivalents
|
(48 | ) | (90 | ) | ||||
Cash
and cash equivalents at January 1
|
345 | 456 | ||||||
Cash
and cash equivalents at June 30
|
$ | 297 | $ | 366 | ||||
Supplemental
disclosures of cash flow information
|
||||||||
Cash
paid for:
|
||||||||
Interest
(net of amounts capitalized)
|
$ | 260 | $ | 239 | ||||
Income
taxes paid (refunded), net
|
(60 | ) | 282 | |||||
Supplemental
disclosures of noncash investing and financing activities
|
||||||||
Common
stock dividends declared but not yet paid
|
$ | 140 | $ | 128 | ||||
Capital
expenditures financed through accounts payable
|
180 | 120 | ||||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Operating
Revenues
|
||||||||||||||||
Electric
|
$ | 2,645 | $ | 2,359 | $ | 5,159 | $ | 4,534 | ||||||||
Natural
gas
|
933 | 828 | 2,152 | 2,009 | ||||||||||||
Total
operating revenues
|
3,578 | 3,187 | 7,311 | 6,543 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Cost
of electricity
|
1,097 | 884 | 2,124 | 1,607 | ||||||||||||
Cost
of natural gas
|
487 | 396 | 1,262 | 1,150 | ||||||||||||
Operating
and maintenance
|
991 | 921 | 2,027 | 1,840 | ||||||||||||
Depreciation,
amortization, and decommissioning
|
418 | 430 | 820 | 859 | ||||||||||||
Total
operating expenses
|
2,993 | 2,631 | 6,233 | 5,456 | ||||||||||||
Operating
Income
|
585 | 556 | 1,078 | 1,087 | ||||||||||||
Interest
income
|
33 | 35 | 57 | 83 | ||||||||||||
Interest
expense
|
(178 | ) | (178 | ) | (358 | ) | (360 | ) | ||||||||
Other
income, net
|
7 | 15 | 26 | 24 | ||||||||||||
Income
Before Income Taxes
|
447 | 428 | 803 | 834 | ||||||||||||
Income
tax provision
|
134 | 154 | 254 | 299 | ||||||||||||
Net
Income
|
313 | 274 | 549 | 535 | ||||||||||||
Preferred
stock dividend requirement
|
4 | 4 | 7 | 7 | ||||||||||||
Income
Available for Common Stock
|
$ | 309 | $ | 270 | $ | 542 | $ | 528 | ||||||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 69 | $ | 141 | ||||
Restricted
cash
|
1,322 | 1,297 | ||||||
Accounts
receivable:
|
||||||||
Customers
(net of allowance for doubtful accounts of $59 million in 2008 and $58
million in 2007)
|
2,417 | 2,349 | ||||||
Related
parties
|
- | 6 | ||||||
Regulatory
balancing accounts
|
1,357 | 771 | ||||||
Inventories:
|
||||||||
Gas
stored underground and fuel oil
|
251 | 205 | ||||||
Materials
and supplies
|
177 | 166 | ||||||
Income
taxes receivable
|
- | 15 | ||||||
Prepaid
expenses and other
|
468 | 252 | ||||||
Total
current assets
|
6,061 | 5,202 | ||||||
Property,
Plant, and Equipment
|
||||||||
Electric
|
26,693 | 25,599 | ||||||
Gas
|
9,860 | 9,620 | ||||||
Construction
work in progress
|
1,432 | 1,348 | ||||||
Total
property, plant, and equipment
|
37,985 | 36,567 | ||||||
Accumulated
depreciation
|
(13,282 | ) | (12,913 | ) | ||||
Net
property, plant, and equipment
|
24,703 | 23,654 | ||||||
Other
Noncurrent Assets
|
||||||||
Regulatory
assets
|
4,300 | 4,459 | ||||||
Nuclear
decommissioning funds
|
1,914 | 1,979 | ||||||
Related
parties receivable
|
27 | 23 | ||||||
Other
|
1,260 | 993 | ||||||
Total
other noncurrent assets
|
7,501 | 7,454 | ||||||
TOTAL
ASSETS
|
$ | 38,265 | $ | 36,310 | ||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
PACIFIC
GAS AND ELECTRIC COMPANY
|
||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
Balance
At
|
||||||||
(in
millions, except share amounts)
|
June
30,
2008
|
December
31, 2007
|
||||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Short-term
borrowings
|
$ | 156 | $ | 519 | ||||
Long-term
debt, classified as current
|
600 | - | ||||||
Energy
recovery bonds, classified as current
|
362 | 354 | ||||||
Accounts
payable:
|
||||||||
Trade
creditors
|
1,133 | 1,067 | ||||||
Disputed
claims and customer refunds
|
1,588 | 1,629 | ||||||
Related
parties
|
24 | 28 | ||||||
Regulatory
balancing accounts
|
924 | 673 | ||||||
Other
|
373 | 370 | ||||||
Interest
payable
|
744 | 697 | ||||||
Income
taxes payable
|
42 | - | ||||||
Deferred
income taxes
|
234 | 4 | ||||||
Other
|
1,740 | 1,200 | ||||||
Total
current liabilities
|
7,920 | 6,541 | ||||||
Noncurrent
Liabilities
|
||||||||
Long-term
debt
|
7,441 | 7,891 | ||||||
Energy
recovery bonds
|
1,409 | 1,582 | ||||||
Regulatory
liabilities
|
5,185 | 4,448 | ||||||
Asset
retirement obligations
|
1,614 | 1,579 | ||||||
Income
taxes payable
|
82 | 103 | ||||||
Deferred
income taxes
|
3,214 | 3,104 | ||||||
Deferred
tax credits
|
96 | 99 | ||||||
Other
|
1,863 | 1,838 | ||||||
Total
noncurrent liabilities
|
20,904 | 20,644 | ||||||
Commitments
and Contingencies
|
||||||||
Shareholders'
Equity
|
||||||||
Preferred
stock without mandatory redemption provisions:
|
||||||||
Nonredeemable,
5.00% to 6.00%, outstanding 5,784,825 shares
|
145 | 145 | ||||||
Redeemable,
4.36% to 5.00%, outstanding 4,534,958 shares
|
113 | 113 | ||||||
Common
stock, $5 par value, authorized 800,000,000 shares, issued 283,856,022
shares in 2008 and issued 282,916,485 shares in 2007
|
1,419 | 1,415 | ||||||
Common
stock held by subsidiary, at cost, 19,481,213 shares
|
(475 | ) | (475 | ) | ||||
Additional
paid-in capital
|
2,269 | 2,220 | ||||||
Reinvested
earnings
|
5,952 | 5,694 | ||||||
Accumulated
other comprehensive income
|
18 | 13 | ||||||
Total
shareholders' equity
|
9,441 | 9,125 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 38,265 | $ | 36,310 | ||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(in
millions)
|
2008
|
2007
|
||||||
Cash
Flows From Operating Activities
|
||||||||
Net
income
|
$ | 549 | $ | 535 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation,
amortization, decommissioning and allowance for equity funds used during
construction
|
870 | 913 | ||||||
Deferred
income taxes and tax credits, net
|
316 | 101 | ||||||
Other
changes in noncurrent assets and liabilities
|
480 | 129 | ||||||
Gain
on sale of assets
|
- | (1 | ) | |||||
Effect
of changes in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(66 | ) | 143 | |||||
Inventories
|
(57 | ) | (22 | ) | ||||
Accounts
payable
|
123 | (221 | ) | |||||
Income
taxes receivable/payable
|
57 | (59 | ) | |||||
Regulatory
balancing accounts, net
|
(351 | ) | (483 | ) | ||||
Other
current assets
|
429 | 271 | ||||||
Other
current liabilities
|
(73 | ) | (48 | ) | ||||
Other
|
(3 | ) | (23 | ) | ||||
Net
cash provided by operating activities
|
2,274 | 1,235 | ||||||
Cash
Flows From Investing Activities
|
||||||||
Capital
expenditures
|
(1,712 | ) | (1,320 | ) | ||||
Proceeds
from sale of assets
|
12 | 8 | ||||||
Increase
in restricted cash
|
(7 | ) | (13 | ) | ||||
Proceeds
from nuclear decommissioning trust sales
|
636 | 548 | ||||||
Purchases
of nuclear decommissioning trust investments
|
(665 | ) | (606 | ) | ||||
Net
cash used in investing activities
|
(1,736 | ) | (1,383 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Repayments
under accounts receivable facility and working capital
facility
|
(250 | ) | (300 | ) | ||||
(Repayment)
issuance of commercial paper, net of discount of $1 million in 2008 and $2
million in 2007
|
(114 | ) | 109 | |||||
Proceeds
from issuance of long-term debt, net of premium, discount, and issuance
costs of $2 million in 2008 and $10 million in 2007
|
598 | 690 | ||||||
Long-term
debt matured, redeemed, or repurchased
|
(454 | ) | - | |||||
Rate
reduction bonds matured
|
- | (143 | ) | |||||
Energy
recovery bonds matured
|
(165 | ) | (160 | ) | ||||
Equity
infusion
|
50 | 200 | ||||||
Common
stock dividends paid
|
(284 | ) | (254 | ) | ||||
Preferred
stock dividends paid
|
(7 | ) | (7 | ) | ||||
Other
|
16 | 21 | ||||||
Net
cash (used in) provided by financing activities
|
(610 | ) | 156 | |||||
Net
change in cash and cash equivalents
|
(72 | ) | 8 | |||||
Cash
and cash equivalents at January 1
|
141 | 70 | ||||||
Cash
and cash equivalents at June 30
|
$ | 69 | $ | 78 | ||||
Supplemental
disclosures of cash flow information
|
||||||||
Cash
paid for:
|
||||||||
Interest
(net of amounts capitalized)
|
$ | 246 | $ | 226 | ||||
Income
taxes paid (refunded), net
|
(60 | ) | 299 | |||||
Supplemental
disclosures of noncash investing and financing activities
|
||||||||
Capital
expenditures financed through accounts payable
|
$ | 180 | $ | 120 | ||||
See
accompanying Notes to the Condensed Consolidated Financial
Statements.
|
PG&E
Corporation
|
Utility
|
|||||||||||||||
Three
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Stock
options
|
$ | - | $ | 2 | $ | - | $ | 1 | ||||||||
Restricted
stock
|
5 | 5 | 4 | 3 | ||||||||||||
Performance
shares
|
10 | 6 | 6 | 4 | ||||||||||||
Total
compensation expense (pre-tax)
|
$ | 15 | $ | 13 | $ | 10 | $ | 8 | ||||||||
Total
compensation expense (after-tax)
|
$ | 9 | $ | 8 | $ | 6 | $ | 5 |
PG&E
Corporation
|
Utility
|
|||||||||||||||
Six
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Stock
options
|
$ | 1 | $ | 4 | $ | 1 | $ | 2 | ||||||||
Restricted
stock
|
14 | 13 | 9 | 8 | ||||||||||||
Performance
shares
|
6 | - | 3 | (1 | ) | |||||||||||
Total
compensation expense (pre-tax)
|
$ | 21 | $ | 17 | $ | 13 | $ | 9 | ||||||||
Total
compensation expense (after-tax)
|
$ | 12 | $ | 10 | $ | 8 | $ | 5 |
Pension
Benefits
|
Other
Benefits
|
|||||||||||||||
Three
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost for benefits earned
|
$ | 59 | $ | 59 | $ | 7 | $ | 7 | ||||||||
Interest
cost
|
144 | 135 | 20 | 20 | ||||||||||||
Expected
return on plan assets
|
(175 | ) | (177 | ) | (24 | ) | (24 | ) | ||||||||
Amortization
of transition obligation (1)
|
- | - | 7 | 6 | ||||||||||||
Amortization
of prior service cost (1)
|
12 | 12 | 4 | 4 | ||||||||||||
Amortization
of unrecognized gain (1)
|
- | - | (4 | ) | (3 | ) | ||||||||||
Net
periodic benefit cost
|
$ | 40 | $ | 29 | $ | 10 | $ | 10 | ||||||||
(1)
In 2007, under SFAS No.158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R)” (“SFAS No. 158”), PG&E Corporation and
the Utility recorded amounts related to other benefits in other
comprehensive income, net of related deferred taxes, except for a portion
recorded as a regulatory liability in accordance with SFAS No. 71,
“Accounting for the Effects of Certain Types of Regulation,” as amended
(“SFAS No. 71”). Other comprehensive income does not include
amortization of the amounts related to the defined benefit pension plan,
which are recorded as a reduction to the existing pension regulatory
liability in accordance with the provisions of SFAS No.
71.
|
Pension
Benefits
Six
Months Ended
June
30,
|
Other
Benefits
Six
Months Ended
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost for benefits earned
|
$ | 118 | $ | 118 | $ | 15 | $ | 14 | ||||||||
Interest
cost
|
287 | 270 | 40 | 40 | ||||||||||||
Expected
return on plan assets
|
(349 | ) | (354 | ) | (47 | ) | (48 | ) | ||||||||
Amortization
of transition obligation (1)
|
- | - | 12 | 12 | ||||||||||||
Amortization
of prior service cost (1)
|
24 | 24 | 8 | 8 | ||||||||||||
Amortization
of unrecognized gain (1)
|
- | - | (8 | ) | (6 | ) | ||||||||||
Net
periodic benefit cost
|
$ | 80 | $ | 58 | $ | 20 | $ | 20 | ||||||||
(1)
In 2007, under SFAS No.158, PG&E Corporation and the Utility recorded
amounts related to other benefits in other comprehensive income, net of
related deferred taxes, except for a portion recorded as a regulatory
liability in accordance with SFAS No. 71. Other comprehensive income
does not include amortization of the amounts related to the defined
benefit pension plan, which are recorded as a reduction to the existing
pension regulatory liability in accordance with the provisions of SFAS No.
71.
|
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
Energy
recovery bond regulatory asset
|
$ | 1,668 | $ | 1,833 | ||||
Utility
retained generation regulatory assets
|
909 | 947 | ||||||
Regulatory
assets for deferred income tax
|
788 | 732 | ||||||
Environmental
compliance costs
|
335 | 328 | ||||||
Unamortized
loss, net of gain, on reacquired debt
|
261 | 269 | ||||||
Regulatory
assets associated with plan of reorganization
|
110 | 122 | ||||||
Contract
termination costs
|
89 | 96 | ||||||
Scheduling
coordinator costs
|
80 | 90 | ||||||
Other
|
60 | 42 | ||||||
Total
regulatory assets
|
$ | 4,300 | $ | 4,459 |
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
Cost
of removal obligation
|
$ | 2,650 | $ | 2,568 | ||||
Price
risk management
|
803 | 124 | ||||||
Employee
benefit plans
|
621 | 578 | ||||||
Asset
retirement costs
|
455 | 573 | ||||||
Public
purpose programs
|
285 | 264 | ||||||
California
Solar Initiative
|
200 | 159 | ||||||
Other
|
171 | 182 | ||||||
Total
regulatory liabilities
|
$ | 5,185 | $ | 4,448 |
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
Electricity
revenue and cost balancing accounts
|
$ | 1,277 | $ | 678 | ||||
Natural
gas revenue and cost balancing accounts
|
80 | 93 | ||||||
Total
|
$ | 1,357 | $ | 771 |
Balance
At
|
||||||||
(in
millions)
|
June
30,
2008
|
December
31, 2007
|
||||||
Electricity
revenue and cost balancing accounts
|
$ | 828 | $ | 618 | ||||
Natural
gas revenue and cost balancing accounts
|
96 | 55 | ||||||
Total
|
$ | 924 | $ | 673 |
PG&E
Corporation
|
Utility
|
|||||||
(in
millions)
|
Total
Common Shareholders' Equity
|
Total
Shareholders'
Equity
|
||||||
Balance
at December 31, 2007
|
$ | 8,553 | $ | 9,125 | ||||
Net
income
|
517 | 549 | ||||||
Common
stock issued
|
82 | - | ||||||
Share-based
compensation amortization
|
15 | - | ||||||
Common
stock dividends declared and paid
|
(139 | ) | (284 | ) | ||||
Common
stock dividends declared but not yet paid
|
(140 | ) | - | |||||
Preferred
stock dividends
|
- | (7 | ) | |||||
Tax
benefit from share-based payment awards
|
4 | 3 | ||||||
Other
comprehensive income
|
5 | 5 | ||||||
Equity
infusion
|
- | 50 | ||||||
Balance
at June 30, 2008
|
$ | 8,897 | $ | 9,441 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions, except per share amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
income
|
$ | 293 | $ | 269 | $ | 517 | $ | 525 | ||||||||
Less:
distributed earnings to common shareholders
|
139 | 127 | 278 | 253 | ||||||||||||
Undistributed
earnings
|
$ | 154 | $ | 142 | $ | 239 | $ | 272 | ||||||||
Common
shareholders earnings
|
||||||||||||||||
Basic
|
||||||||||||||||
Distributed
earnings to common shareholders
|
$ | 139 | $ | 127 | $ | 278 | $ | 253 | ||||||||
Undistributed
earnings allocated to common shareholders
|
146 | 135 | 227 | 258 | ||||||||||||
Total
common shareholders earnings, basic
|
$ | 285 | $ | 262 | $ | 505 | $ | 511 | ||||||||
Diluted
|
||||||||||||||||
Distributed
earnings to common shareholders
|
$ | 139 | $ | 127 | $ | 278 | $ | 253 | ||||||||
Undistributed
earnings allocated to common shareholders
|
146 | 135 | 227 | 258 | ||||||||||||
Total
common shareholders earnings, diluted
|
$ | 285 | $ | 262 | $ | 505 | $ | 511 | ||||||||
Weighted
average common shares outstanding, basic
|
356 | 350 | 355 | 350 | ||||||||||||
9.50%
Convertible Subordinated Notes
|
19 | 19 | 19 | 19 | ||||||||||||
Weighted
average common shares outstanding and participating securities,
basic
|
375 | 369 | 374 | 369 | ||||||||||||
Weighted
average common shares outstanding, basic
|
356 | 350 | 355 | 350 | ||||||||||||
Employee
share-based compensation
|
1 | 2 | 1 | 2 | ||||||||||||
Weighted
average common shares outstanding, diluted
|
357 | 352 | 356 | 352 | ||||||||||||
9.50%
Convertible Subordinated Notes
|
19 | 19 | 19 | 19 |
Weighted
average common shares outstanding and participating securities,
diluted
|
376 | 371 | 375 | 371 | ||||||||||||
Net
earnings per common share, basic
|
||||||||||||||||
Distributed
earnings, basic (1)
|
$ | 0.39 | $ | 0.36 | $ | 0.78 | $ | 0.72 | ||||||||
Undistributed
earnings, basic
|
0.41 | 0.39 | 0.64 | 0.74 | ||||||||||||
Total
|
$ | 0.80 | $ | 0.75 | $ | 1.42 | $ | 1.46 | ||||||||
Net
earnings per common share, diluted
|
||||||||||||||||
Distributed
earnings, diluted
|
$ | 0.39 | $ | 0.36 | $ | 0.78 | $ | 0.72 | ||||||||
Undistributed
earnings, diluted
|
0.41 | 0.38 | 0.64 | 0.73 | ||||||||||||
Total
|
$ | 0.80 | $ | 0.74 | $ | 1.42 | $ | 1.45 | ||||||||
(1)
Distributed earnings, basic may differ from actual per share amounts paid
as dividends, as the EPS computation under GAAP requires the use of the
weighted average, rather than the actual number of, shares
outstanding.
|
Total
Price Risk Management Derivatives
|
Price
Risk Management Derivatives Designated as Cash Flow
Hedges
|
|||||||||||||||
(in
millions)
|
June
30, 2008(1)
|
December
31, 2007(2)
|
June
30, 2008(3)
|
December
31, 2007(4)
|
||||||||||||
Current
Assets – Prepaid expenses and other
|
$ | 307 | $ | 55 | $ | 139 | $ | (2 | )(5) | |||||||
Other
Noncurrent Assets – Other
|
418 | 171 | 162 | 42 | ||||||||||||
Current
Liabilities – Other
|
28 | 67 | 9 | 12 | ||||||||||||
Noncurrent
Liabilities – Other
|
37 | 20 | - | 3 | ||||||||||||
(1)
Balances reflect a $445 million reduction to Current Assets-Prepaid
expenses and other, a $385 million reduction to Other Noncurrent
Assets–Other, and a $1 million increase to Current Liabilities–Other as a
result of netting cash collateral in accordance with FIN
39-1.
|
(2)
Balances reflect a $3 million increase to Current Assets-Prepaid
expenses and other, a $46 million increase to Other Noncurrent
Assets–Other, and a $16 million reduction to Current Liabilities–Other as
a result of netting cash collateral in accordance with FIN
39-1. This collateral was classified as Current Assets–Prepaid
expenses in the 2007 Annual Report.
|
(3)
Balances reflect a $77 million reduction to Current Assets-Prepaid
expenses and other and a $51 million reduction to Other Noncurrent
Assets-Other as a result of netting cash collateral in accordance with FIN
39-1.
|
(4)
Balances reflect a $9 million increase to Other Noncurrent
Assets-Other and a $7 million reduction to Current Liabilities-Other as a
result of netting cash collateral in accordance with FIN
39-1. This collateral was classified as Current Assets–Prepaid
expenses in the 2007 Annual Report.
|
(5)
$2 million of the cash flow hedges in a liability position at December 31,
2007 relate to counterparties for which the total net derivatives position
is a current asset.
|
PG&E
Corporation
|
||||||||||||||||
Fair
Value Measurements as of June 30, 2008
|
||||||||||||||||
(in
millions)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
Assets:
|
||||||||||||||||
Nuclear
Decommissioning Funds(1)
|
$ | 1,704 | $ | 328 | $ | 7 | $ | 2,039 | ||||||||
Price
Risk Management Instruments(2)
|
169 | 109 | 382 | 660 | ||||||||||||
Rabbi
Trusts(3)
|
18 | - | - | 18 | ||||||||||||
Long
Term Disability Trust
|
25 | - | 95 | 120 | ||||||||||||
Assets
Total
|
$ | 1,916 | $ | 437 | $ | 484 | $ | 2,837 | ||||||||
Liabilities:
|
||||||||||||||||
Dividend
Participation Rights
|
$ | - | $ | - | $ | 55 | $ | 55 | ||||||||
Other
|
- | - | 6 | 6 | ||||||||||||
Liabilities
Total
|
$ | - | $ | - | $ | 61 | $ | 61 | ||||||||
(1)
Excludes taxes on appreciation of investment value and cash and cash
equivalents.
|
||||||||||||||||
(2)
Balances include the impact of netting adjustments in accordance with the
requirements of FIN 39-1 of $(164) million to Level 1, $(347) million to
Level 2, and $(320) million to Level 3.
|
||||||||||||||||
(3)
Excludes life insurance policies.
|
Utility
|
||||||||||||||||
Fair
Value Measurements as of June 30, 2008
|
||||||||||||||||
(in
millions)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
Assets:
|
||||||||||||||||
Nuclear
Decommissioning Funds(1)
|
$ | 1,704 | $ | 328 | $ | 7 | $ | 2,039 | ||||||||
Price
Risk Management Instruments(2)
|
169 | 109 | 382 | 660 | ||||||||||||
Long-Term
Disability Trust
|
25 | - | 95 | 120 |
Assets
Total
|
$ | 1,898 | $ | 437 | $ | 484 | $ | 2,819 | ||||||||
Liabilities:
|
||||||||||||||||
Other
|
$ | - | $ | - | $ | 6 | $ | 6 | ||||||||
Liabilities
Total
|
$ | - | $ | - | $ | 6 | $ | 6 | ||||||||
(1)
Excludes taxes on appreciation of investment value and cash and cash
equivalents.
|
||||||||||||||||
(2)
Balances include the impact of netting adjustments in accordance with the
requirements of FIN 39-1 of $(164) million to Level 1, $(347) million to
Level 2, and $(320) million to Level 3.
|
PG&E
Corporation
|
||||||||||||||||||||||||
(in
millions)
|
Price
Risk Management Instruments
|
Nuclear
Decommissioning Funds(3)
|
Long-term
Disability
|
Dividend
Participation Rights
|
Other
|
Total
|
||||||||||||||||||
Asset
(liability) Balance as of January 1, 2008
|
$ | 115 | (1) | $ | 8 | $ | 69 | $ | (68 | )(2) | $ | (4 | ) | $ | 120 | |||||||||
Realized
and unrealized gains (losses):
|
||||||||||||||||||||||||
Included
in earnings
|
- | - | - | (1 | ) | - | (1 | ) | ||||||||||||||||
Included
in regulatory assets and liabilities or balancing accounts
|
267 | (1 | ) | (7 | ) | - | (2 | ) | 257 | |||||||||||||||
Purchases,
issuances, and settlements
|
- | - | 33 | 14 | - | 47 | ||||||||||||||||||
Transfers
in/out of Level 3
|
- | - | - | - | - | - | ||||||||||||||||||
Asset
(liability) Balance as of June 30, 2008
|
$ | 382 | $ | 7 | $ | 95 | $ | (55 | ) | $ | (6 | ) | $ | 423 | ||||||||||
Earnings
for the period were impacted by a $1 million unrealized loss relating to
assets or liabilities still held at the reporting date.
|
||||||||||||||||||||||||
(1)
Includes the impact of the $48 million retrospective adjustment related to
the CRRs on January 1, 2008. Additionally, the balance includes the
impact of netting adjustments in accordance with the requirements of FIN
39-1 of $6 million.
|
||||||||||||||||||||||||
(2)
The discount factor used to value these rights was adjusted on January 1,
2008 in order to comply with the provisions SFAS No. 157, resulting in a
$6 million expense to increase the value of the liability.
|
||||||||||||||||||||||||
(3)Excludes
taxes on appreciation of investment value and cash and cash
equivalents.
|
Utility
|
||||||||||||||||||||
(in
millions)
|
Price
Risk Management Instruments
|
Nuclear
Decommissioning
Funds(2)
|
Long-term
Disability
|
Other
|
Total
|
|||||||||||||||
Asset
(liability) Balance as of January 1, 2008
|
$ | 115 | (1) | $ | 8 | $ | 69 | $ | (4 | ) | $ | 188 | ||||||||
Realized
and unrealized gains (losses):
|
||||||||||||||||||||
Included
in earnings
|
- | - | - | - | - | |||||||||||||||
Included
in regulatory assets and liabilities or balancing accounts
|
267 | (1 | ) | (7 | ) | (2 | ) | 257 | ||||||||||||
Purchases,
issuances, and settlements
|
- | - | 33 | - | 33 | |||||||||||||||
Transfers
in/out of Level 3
|
- | - | - | - | - | |||||||||||||||
Asset
(liability) Balance as of June 30, 2008
|
$ | 382 | $ | 7 | $ | 95 | $ | (6 | ) | $ | 478 | |||||||||
Earnings
for the period were not impacted by unrealized gains or (losses) relating
to assets or liabilities still held at the reporting date.
|
||||||||||||||||||||
(1)
Includes the impact of the $48 million retrospective adjustment related to
the CRRs on January 1, 2008. Additionally, the balance includes the
impact of netting adjustments in accordance with the requirements of FIN
39-1 of $6 million.
|
||||||||||||||||||||
(2)Excludes
taxes on appreciation of investment value and cash and cash
equivalents.
|
PG&E
Corporation
|
||||||||||||||||||||||||
(in
millions)
|
Price
Risk Management Instruments
|
Nuclear
Decommissioning
Funds(1)
|
Long-term
Disability
|
Dividend
Participation Rights
|
Other
|
Total
|
||||||||||||||||||
Asset
(liability) Balance as of March 31, 2008
|
$ | 299 | $ | 7 | $ | 103 | $ | (63 | ) | $ | (2 | ) | $ | 344 | ||||||||||
Realized
and unrealized gains (losses):
|
||||||||||||||||||||||||
Included
in earnings
|
- | - | - | 1 | - | 1 | ||||||||||||||||||
Included
in regulatory assets and liabilities or balancing accounts
|
83 | - | (1 | ) | - | (4 | ) | 78 | ||||||||||||||||
Purchases,
issuances, and settlements
|
- | - | (7 | ) | 7 | - | - | |||||||||||||||||
Transfers
in/out of Level 3
|
- | - | - | - | - | - | ||||||||||||||||||
Asset
(liability) Balance as of June 30, 2008
|
$ | 382 | $ | 7 | $ | 95 | $ | (55 | ) | $ | (6 | ) | $ | 423 |
Earnings
for the period were impacted by a $1 million unrealized gain relating to
assets or liabilities still held at the reporting date.
|
||||||
(1)
Excludes taxes on appreciation of investment value and cash and cash
equivalents.
|
Utility
|
||||||||||||||||||||
(in
millions)
|
Price
Risk Management Instruments
|
Nuclear
Decommissioning
Funds(1)
|
Long-term
Disability
|
Other
|
Total
|
|||||||||||||||
Asset
(liability) Balance as of March 31, 2008
|
$ | 299 | $ | 7 | $ | 103 | $ | (2 | ) | $ | 407 | |||||||||
Realized
and unrealized gains (losses):
|
||||||||||||||||||||
Included
in earnings
|
- | - | - | - | - | |||||||||||||||
Included
in regulatory assets and liabilities or balancing accounts
|
83 | - | (1 | ) | (4 | ) | 78 | |||||||||||||
Purchases,
issuances, and settlements
|
- | - | (7 | ) | - | (7 | ) | |||||||||||||
Transfers
in/out of Level 3
|
- | - | - | - | - | |||||||||||||||
Asset
(liability) Balance as of June 30, 2008
|
$ | 382 | $ | 7 | $ | 95 | $ | (6 | ) | $ | 478 | |||||||||
Earnings
for the period were not impacted by unrealized gains or (losses) relating
to assets or liabilities still held at the reporting date.
|
||||||||||||||||||||
(1)
Excludes taxes on appreciation of investment value and cash and cash
equivalents.
|
Three
Months Ended
|
Six
Months Ended
|
Receivable
(Payable)
Balance
Outstanding at
|
||||||||||||||||||||||
June
30,
|
June
30,
|
June
30,
|
December
|
|||||||||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||||
Utility
revenues from:
|
||||||||||||||||||||||||
Administrative
services provided to
PG&E
Corporation
|
$ | 1 | $ | 1 | $ | 2 | $ | 2 | $ | - | $ | 2 | ||||||||||||
Utility
employee benefit assets due from PG&E Corporation
|
- | - | - | - | 27 | 27 | ||||||||||||||||||
Interest
from PG&E Corporation
on
employee benefit assets
|
- | 1 | - | 1 | - | - | ||||||||||||||||||
Utility
expenses from:
|
Administrative
services received from PG&E Corporation
|
$ | 28 | $ | 28 | $ | 52 | $ | 52 | $ | (24 | ) | $ | (28 | ) | ||||||||||
Utility
employee benefit assets due to PG&E Corporation
|
1 | 1 | 1 | 2 | - | - |
(in
millions)
|
||||
2008
|
$ | 1,526 | ||
2009
|
2,877 | |||
2010
|
2,653 | |||
2011
|
2,609 | |||
2012
|
2,481 | |||
Thereafter
|
19,924 | |||
Total
|
$ | 32,070 |
(in
millions)
|
||||
2008
|
$ | 29 | ||
2009
|
50 | |||
2010
|
50 | |||
2011
|
50 | |||
2012
|
50 | |||
Thereafter
|
253 | |||
Total
fixed capacity payments
|
482 | |||
Less:
Amount representing interest
|
(120 | ) | ||
Present
value of fixed capacity payments
|
$ | 362 |
(in
millions)
|
||||
2008
|
$ | 1,074 | ||
2009
|
915 |
2010
|
93 | |||
2011
|
80 | |||
2012
|
49 | |||
Thereafter
|
199 | |||
Total
|
$ | 2,410 |
·
|
After
assumption, the Utility's issuer rating by Moody’s Investors Service
(“Moody's”) will be no less than A2 and the Utility's long-term issuer
credit rating by Standard and Poor’s Rating Service (“S&P”) will be no
less than A. The Utility’s current issuer rating by Moody’s is
A3 and the Utility’s long-term issuer credit rating by S&P is
BBB+;
|
·
|
The
CPUC first makes a finding that the DWR power purchase contracts to be
assumed are just and reasonable; and
|
·
|
The
CPUC has acted to ensure that the Utility will receive full and timely
recovery in its retail electricity rates of all costs associated with the
DWR power purchase contracts to be assumed without further
review.
|
(in
millions)
|
||||
Balance
at December 31, 2007
|
$ | 30 | ||
Additional
severance accrued
|
15 | |||
Less:
Payments
|
(13 | ) | ||
Balance
at June 30, 2008
|
$ | 32 |
·
|
Approximately
$221 million for remediation at the Hinkley and Topock natural gas
compressor sites;
|
·
|
Approximately
$83 million related to remediation at divested generation
facilities;
|
·
|
Approximately
$182 million related to remediation costs for the Utility’s generation and
other facilities, third-party disposal sites, and manufactured gas plant
sites owned by the Utility or third parties (including those sites that
are the subject of remediation orders by environmental agencies or claims
by the current owners of the former manufactured gas plant sites);
and
|
·
|
Approximately
$52 million related to remediation costs for fossil decommissioning
sites.
|
·
|
The Outcome of Regulatory
Proceedings and the Impact of Ratemaking Mechanisms. The
amount of the Utility’s revenues and the amount of costs that the Utility
is authorized to recover from customers are primarily determined
through regulatory
proceedings. Most of the Utility’s revenue requirements are
based on its costs of service, in proceedings such as the General Rate
Case (“GRC”) filed with the CPUC and transmission owner (“TO”) rate cases
filed with the FERC. On July 30, 2008, the Utility filed a new
TO rate case requesting a retail revenue requirement of approximately $849
million and a rate increase, effective October 1, 2008, to recover
the costs associated with significant electric transmission infrastructure
expansion and replacement. From time to time, the Utility also
files separate applications requesting the CPUC or the FERC to authorize
additional revenue requirements for specific projects, such as new power
plants, gas or electric transmission projects, and the advanced metering
infrastructure. On May 15, 2008, the Utility requested that the
CPUC approve additional funding to improve customer service and
reliability beyond the level assumed in the last GRC. The
Utility’s revenues can also be affected by incentive ratemaking, such as
the CPUC’s customer energy efficiency shareholder incentive
mechanism. The amount of incentives the Utility may receive and
the amount of any reimbursement obligations the Utility may incur will
depend on the level of energy efficiency savings actually achieved over
the three-year program cycles (2006-2008 and 2009-2011). (See
“Regulatory Matters” below.) Finally, the outcome of regulatory
proceedings may also be affected by increases in the prices of natural gas
and electricity as these costs are passed through to customers in the form
of higher rates.
|
·
|
Capital Structure and Return
on Common Equity. On May 29, 2008, the CPUC adopted a
new three-year cost of capital mechanism to replace the CPUC’s annual cost
of capital proceeding. The Utility’s current authorized capital
structure, including a 52% common equity component, will be maintained
through 2010. The Utility’s current authorized cost of capital,
including a ROE of 11.35% on its electric and natural gas distribution and
electric generation rate base, will be maintained through 2010, unless the
annual automatic adjustment mechanism established by the CPUC is
triggered. The Utility can apply for an adjustment to either
the capital structure or cost of capital sooner based on extraordinary
circumstances. (See “Regulatory Matters” below.) In
September 2007, the FERC accepted the Utility’s request to earn a ROE of
12% on its electric transmission rate base, as part of the annual TO rate
case, effective March 1, 2008, subject to hearing and
refund.
|
·
|
The Ability of the Utility to
Control Costs. The Utility’s revenue requirements are
primarily set based on forecasted operating expenses and capital
expenditures. The Utility’s revenue requirements are designed
to allow the Utility to earn an ROE, as well as to recover depreciation,
tax, and interest expense associated with authorized capital
expenditures. Material differences in the amount or timing of
forecasted and actual operating expenses and capital expenditures can
materially affect the Utility’s ability to earn its authorized rate of
return and the amount of PG&E Corporation’s net income available for
shareholders. In particular, the Utility anticipates that it
will incur higher expenses than originally forecasted in the GRC in
connection with the operations and maintenance of its natural gas system
and maintenance of aging infrastructure. The Utility intends to
continue its efforts to identify and implement initiatives to achieve
operational efficiencies to create future sustainable cost-savings and to
offset increased spending related to the natural gas system and the
increasing cost of materials. (See “Results of Operations –
Operating and Maintenance” below.) When capital is placed in
service at a higher rate than forecasted, the Utility incurs associated
depreciation, property tax, and interest expense. The Utility
does not recover an ROE on the higher level of capital expenditures until
added to rate base in future rate cases. The Utility’s
financial condition and results of operations will be impacted by the
amount of revenue requirements it is authorized to recover, the amount and
timing of its capital expenditures, and whether the Utility is able to
manage its operating costs and capital expenditures within authorized
revenues.
|
·
|
The Amount and Timing of Debt
and Equity Financing Needs. The Utility’s needs for
additional financing during 2008 and future years will be affected by the
amount and timing of capital expenditures, as well as by the amount and
timing of interest payments related to the remaining disputed claims that
were made by electricity suppliers in the Utility’s proceeding under
Chapter 11 of the U.S. Bankruptcy Code (“Disputed
Claims”). (See Note 10 of the Notes to the Condensed
Consolidated Financial Statements.) In addition, the Utility’s
financing needs will be affected by when certain pollution control bonds
aggregating $454 million that the Utility repurchased during March and
April 2008 can be resold. The Utility’s financial condition and
results of operations will be affected by the interest rates, timing, and
terms and conditions of any such financings. The timing and
amount of PG&E Corporation’s future equity contributions to the
Utility will affect the timing and amount of any PG&E Corporation
equity issuances and/or debt issuances which, in turn, will affect
PG&E Corporation’s results of operations and financial
condition. (See “Liquidity and Financial Resources”
below.)
|
·
|
the
Utility’s ability to manage capital expenditures and operating expenses
within authorized levels and recover such costs through rates in a timely
manner;
|
·
|
the
outcome of regulatory proceedings, including pending and future ratemaking
proceedings at the CPUC and the FERC;
|
·
|
the
adequacy and price of electricity and natural gas supplies, and the
ability of the Utility to manage and respond to the volatility of the
electricity and natural gas markets;
|
·
|
the
effect of weather, storms, earthquakes, fires, floods, disease, other
natural disasters, explosions, accidents, mechanical breakdowns, acts of
terrorism, and other events or hazards on the Utility’s facilities and
operations, its customers, and third parties on which the Utility
relies;
|
·
|
the
potential impacts of climate change on the Utility’s electricity and
natural gas businesses;
|
·
|
changes
in customer demand for electricity and natural gas resulting from
unanticipated population growth or decline, general economic and financial
market conditions, changes in technology, including the development of
alternative energy sources, or other reasons;
|
·
|
operating
performance of Diablo Canyon, the occurrence of unplanned outages at
Diablo Canyon, or the temporary or permanent cessation of operations
at Diablo Canyon;
|
·
|
whether
the Utility can maintain the cost savings it has recognized from operating
efficiencies it has achieved and identify and successfully implement
additional sustainable cost-saving measures;
|
·
|
whether
the Utility incurs substantial unanticipated expense to improve the safety
and reliability of its electric and natural gas distribution
systems;
|
·
|
whether
the Utility achieves the CPUC’s energy efficiency targets and recognizes
any incentives the Utility may earn in a timely manner;
|
·
|
the
impact of changes in federal or state laws, or their interpretation, on
energy policy and the regulation of utilities and their holding
companies;
|
·
|
the
impact of changing wholesale electric or gas market rules, including new
rules of the California Independent System Operator (“CAISO”) to
restructure the California wholesale electricity
market;
|
·
|
how
the CPUC administers the conditions imposed on PG&E Corporation when
it became the Utility’s holding company;
|
·
|
the
extent to which PG&E Corporation or the Utility incurs costs and
liabilities in connection with litigation that are not recoverable through
rates, from insurance, or from other third parties;
|
·
|
the
ability of PG&E Corporation and/or the Utility to access capital
markets and other sources of credit in a timely manner on favorable
terms;
|
·
|
the
impact of environmental laws and regulations and the costs of compliance
and remediation;
|
·
|
the
effect of municipalization, direct access, community choice aggregation,
or other forms of bypass; and
|
·
|
the
impact of changes in federal or state tax laws, policies, or
regulations.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Utility
|
||||||||||||||||
Electric
operating revenues
|
$ | 2,645 | $ | 2,359 | $ | 5,159 | $ | 4,534 | ||||||||
Natural
gas operating revenues
|
933 | 828 | 2,152 | 2,009 | ||||||||||||
Total
operating revenues
|
3,578 | 3,187 | 7,311 | 6,543 | ||||||||||||
Cost
of electricity
|
1,097 | 884 | 2,124 | 1,607 | ||||||||||||
Cost
of natural gas
|
487 | 396 | 1,262 | 1,150 | ||||||||||||
Operating
and maintenance
|
991 | 921 | 2,027 | 1,840 | ||||||||||||
Depreciation,
amortization, and decommissioning
|
418 | 430 | 820 | 859 | ||||||||||||
Total
operating expenses
|
2,993 | 2,631 | 6,233 | 5,456 | ||||||||||||
Operating
income
|
585 | 556 | 1,078 | 1,087 | ||||||||||||
Interest
income
|
33 | 35 | 57 | 83 | ||||||||||||
Interest
expense
|
(178 | ) | (178 | ) | (358 | ) | (360 | ) | ||||||||
Other
income, net(1)
|
3 | 11 | 19 | 17 | ||||||||||||
Income
before income taxes
|
443 | 424 | 796 | 827 | ||||||||||||
Income
tax provision
|
134 | 154 | 254 | 299 | ||||||||||||
Income
available for common stock
|
$ | 309 | $ | 270 | $ | 542 | $ | 528 | ||||||||
PG&E
Corporation, Eliminations and Other(2)
|
||||||||||||||||
Operating
revenues
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Operating
expenses
|
1 | 1 | 1 | 3 | ||||||||||||
Operating
loss
|
(1 | ) | (1 | ) | (1 | ) | (3 | ) | ||||||||
Interest
income
|
- | 2 | 2 | 6 | ||||||||||||
Interest
expense
|
(7 | ) | (7 | ) | (14 | ) | (15 | ) | ||||||||
Other
expense, net
|
(2 | ) | (1 | ) | (16 | ) | (3 | ) | ||||||||
Loss
before income taxes
|
(10 | ) | (7 | ) | (29 | ) | (15 | ) | ||||||||
Income
tax provision (benefit)
|
6 | (6 | ) | (4 | ) | (12 | ) | |||||||||
Net
loss
|
$ | (16 | ) | $ | (1 | ) | $ | (25 | ) | $ | (3 | ) | ||||
Consolidated
Total
|
||||||||||||||||
Operating
revenues
|
$ | 3,578 | $ | 3,187 | $ | 7,311 | $ | 6,543 | ||||||||
Operating
expenses
|
2,994 | 2,632 | 6,234 | 5,459 | ||||||||||||
Operating
income
|
584 | 555 | 1,077 | 1,084 | ||||||||||||
Interest
income
|
33 | 37 | 59 | 89 | ||||||||||||
Interest
expense
|
(185 | ) | (185 | ) | (372 | ) | (375 | ) | ||||||||
Other
income, net(1)
|
1 | 10 | 3 | 14 | ||||||||||||
Income
before income taxes
|
433 | 417 | 767 | 812 | ||||||||||||
Income
tax provision
|
140 | 148 | 250 | 287 | ||||||||||||
Net
income
|
$ | 293 | $ | 269 | $ | 517 | $ | 525 | ||||||||
(1)
Includes preferred stock dividend requirement as other
expense.
|
||||||||||||||||
(2)
PG&E Corporation eliminates all intercompany transactions in
consolidation.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Electric
revenues
|
$ | 2,948 | $ | 2,868 | $ | 5,789 | $ | 5,594 | ||||||||
DWR
pass-through revenues(1)
|
(303 | ) | (509 | ) | (630 | ) | (1,060 | ) | ||||||||
Total
electric operating revenues
|
$ | 2,645 | $ | 2,359 | $ | 5,159 | $ | 4,534 | ||||||||
Total
electricity sales (in Gigawatt hours)(2)
|
18,141 | 16,177 | 35,477 | 30,955 | ||||||||||||
(1)These
are revenues collected on behalf of the DWR for electricity allocated to
the Utility’s customers under contracts between the DWR and power
suppliers, and are not included in the Utility's Condensed Consolidated
Statements of Income.
|
||||||||||||||||
(2)These
volumes exclude electricity provided by DWR.
|
·
|
Electricity
procurement costs, which are passed through to customers, increased by
approximately $208 million in the three months ended June 30, 2008 and
approximately $505 million in the six months ended June 30, 2008,
primarily due to an increase in the volume of power purchased by the
Utility following the DWR’s termination of a power purchase contract in
December 2007 and during the scheduled outage at Diablo Canyon, and
increases in purchased power prices. (See “Cost of Electricity”
below.)
|
·
|
Electric
operating revenues to fund public purpose and energy efficiency programs
increased by approximately $62 million in the three months ended June 30,
2008 and approximately $138 million in the six months ended June 30,
2008. (See “Operating and Maintenance”
below.)
|
·
|
Base
revenue requirements increased by approximately $26 million in the three
months ended June 30, 2008 and approximately $51 million in the six months
ended June 30, 2008, as a result of attrition adjustments as authorized in
the 2007 GRC.
|
·
|
Electric
transmission revenues increased by approximately $12 million in the three
months ended June 30, 2008 and approximately $27 million in the six months
ended June 30, 2008, primarily due to an increase in rates as authorized
in the current TO rate case.
|
·
|
Other
electric operating revenues, including revenues to recover costs related
to the Diablo Canyon steam generator replacement project and
revenues to fund the Smart MeterTM
advanced metering project, increased by approximately $43 million in the
three months ended June 30, 2008 and approximately $39 million in the six
months ended June 30, 2008. (See “Capital Expenditures”
below.)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Cost
of purchased power
|
$ | 1,140 | $ | 892 | $ | 2,178 | $ | 1,620 | ||||||||
Proceeds
from surplus sales allocated to the Utility
|
(90 | ) | (46 | ) | (135 | ) | (88 | ) | ||||||||
Fuel
used in own generation
|
47 | 38 | 81 | 75 | ||||||||||||
Total
cost of electricity
|
$ | 1,097 | $ | 884 | $ | 2,124 | $ | 1,607 | ||||||||
Average
cost of purchased power per kWh
|
$ | 0.089 | $ | 0.084 | $ | 0.088 | $ | 0.087 | ||||||||
Total
purchased power (in millions of kWh)
|
12,862 | 10,629 | 24,652 | 18,683 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Bundled
natural gas revenues
|
$ | 849 | $ | 746 | $ | 1,990 | $ | 1,849 | ||||||||
Transportation
service-only revenues
|
84 | 82 | 162 | 160 | ||||||||||||
Total
natural gas operating revenues
|
$ | 933 | $ | 828 | $ | 2,152 | $ | 2,009 | ||||||||
Average
bundled revenue per Mcf(1)
of natural gas sold
|
$ | 15.72 | $ | 14.08 | $ | 11.92 | $ | 11.21 | ||||||||
Total
bundled natural gas sales (in millions of Mcf)
|
54 | 53 | 167 | 165 | ||||||||||||
(1)
One thousand cubic feet
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(in
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Cost
of natural gas sold
|
$ | 448 | $ | 354 | $ | 1,202 | $ | 1,060 | ||||||||
Cost
of natural gas transportation
|
39 | 42 | 60 | 90 | ||||||||||||
Total
cost of natural gas
|
$ | 487 | $ | 396 | $ | 1,262 | $ | 1,150 | ||||||||
Average
cost per Mcf of natural gas sold
|
$ | 8.30 | $ | 6.68 | $ | 7.20 | $ | 6.42 |
Total
natural gas sold (in millions of Mcf)
|
54 | 53 | 167 | 165 |
·
|
Public
purpose program and customer energy efficiency incentive program expenses
increased by approximately $67 million and $140 million in the three and
six months ended June 30, 2008, respectively. These changes
were primarily due to increased customer participation and increased
marketing of new and existing programs. Of these changes,
approximately $62 million and $138 million, respectively, are
recovered in electric operating revenues and approximately $6 million and
$14 million, respectively, are recovered in natural gas operating
revenues. The excess of revenue over expense is primarily due
to the recovery during 2008 for costs incurred during the second half of
2007 related to the SmartACTM
Program.
|
·
|
Labor
costs increased by approximately $11 million and $17 million in the three
and six months ended June 30, 2008, respectively, to conduct expanded
natural gas leak surveys in parts of the Utility's service territory and
to make related repairs in an effort to improve operating and maintenance
processes in the Utility's natural gas system.
|
·
|
Costs
related to injuries and damages not specifically related to gas or
electric lines of business increased by approximately $8 million for both
the three and six months ended June 30, 2008 as a result of a favorable
settlement in 2007. There was no similar settlement in
2008.
|
·
|
Labor
costs increased by approximately $6 million for system-wide repair and
restoration of electric distribution systems for the three months ended
June 30, 2008. For the six months ended June 30, 2008, labor
costs increased by approximately $38 million for the repair and
restoration of electric distribution systems and responding to customer
inquiries as a result of the January 2008 winter storm. Of the
approximately $38 million in costs, the Utility is seeking recovery of
approximately $12 million in eligible costs in its March 28, 2008
Catastrophic Events Memorandum Account application. There was
no similar storm in the same period in 2007.
|
·
|
The
timing of the planned outages at Diablo Canyon favorably impacted the
results for the three months ended June 30, 2008 compared to the same
period in 2007. There was a decrease in maintenance costs of
approximately $35 million because the planned outage of Diablo Canyon Unit
1 occurred during the second quarter of 2007, while costs for the planned
outage of Diablo Canyon Unit 2 were incurred primarily in the first
quarter of 2008.
|
·
|
Interest
expense decreased by approximately $7 million in the three months
ended June 30, 2008, and approximately $28 million in the six months ended
June 30, 2008, due to the reduction in the outstanding balance of energy
recovery bonds and the maturity of the RRBs in December
2007.
|
·
|
Interest
expense on pollution control bonds decreased by approximately $7 million
in the three and six months ended June 30, 2008, due to the repurchase of
pollution control bonds series 2005 A-G (“PC2005 bonds”) in March and
April 2008 and a decrease in interest rates on outstanding variable rate
pollution control bonds.
|
·
|
Other
interest expense decreased by approximately $2 million in the three months
ended June 30, 2008, and approximately $1 million in the six months ended
June 30, 2008, primarily due to lower commercial paper interest rates and
a lower average outstanding commercial paper
balance.
|
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(in
millions)
|
2008
|
2007
|
||||||
Net
income
|
$ | 549 | $ | 535 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation,
amortization, decommissioning and allowance for equity funds used during
construction
|
870 | 913 | ||||||
Deferred
income taxes and tax credits, net
|
316 | 101 | ||||||
Other
changes in noncurrent assets and liabilities
|
480 | 129 | ||||||
Gain
on sale of assets
|
- | (1 | ) | |||||
Effect
of changes in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(66 | ) | 143 | |||||
Inventories
|
(57 | ) | (22 | ) | ||||
Accounts
payable
|
123 | (221 | ) | |||||
Income
taxes receivable/payable
|
57 | (59 | ) | |||||
Regulatory
balancing accounts, net
|
(351 | ) | (483 | ) | ||||
Other
current assets
|
429 | 271 | ||||||
Other
current liabilities
|
(73 | ) | (48 | ) | ||||
Other
|
(3 | ) | (23 | ) | ||||
Net
cash provided by operating activities
|
$ | 2,274 | $ | 1,235 |
·
|
Increase
of approximately $936 million in collateral payable primarily related
to price risk management activities between December 31, 2007 and June 30,
2008, compared with a decrease of approximately $138 million in collateral
receivable related to price risk management activities over the same
period in 2007 as a result of changes in the Utility’s exposure to
counterparties’ credit risk. Collateral payable represents cash
collected, and collateral receivable represents cash paid, to reduce the
Utility’s net credit exposure to price risk management
activities. The Utility’s collateral payables and receivables
will fluctuate based on changes in the Utility’s net credit exposure,
which is primarily dependent on electricity and gas price
movement.
|
·
|
Increase
in liabilities of approximately $316 million for deferred income taxes and
tax credits between December 31, 2007 and June 30, 2008, compared to
approximately $101 million increase over the same period in
2007. Increase in 2008 is primarily due to higher billings to
customers and an increase in deductible tax depreciation from the 2008
Economic Stimulus Act with no similar changes for the same period in
2007.
|
·
|
Increase
in Regulatory balancing accounts, net under-collection of approximately
$351 million between December 31, 2007 and June 30, 2008, compared with an
approximately $483 million increase in the net under-collection over the
same period in 2007. The increase resulted from receipt of a
$230 million refund from the California Energy Commission (“CEC”), which
more than offset the increase in the under-collection resulting from
higher than forecasted electricity procurement costs during 2008 (see
“Cost of Electricity” above). The funds from the CEC will be
refunded to customers in 2009.
|
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(in
millions)
|
2008
|
2007
|
||||||
Capital
expenditures
|
$ | (1,712 | ) | $ | (1,320 | ) | ||
Net
proceeds from sale of assets
|
12 | 8 | ||||||
Increase
in restricted cash
|
(7 | ) | (13 | ) | ||||
Other
investing activities
|
(29 | ) | (58 | ) | ||||
Net
cash used in investing activities
|
$ | (1,736 | ) | $ | (1,383 | ) |
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(in
millions)
|
2008
|
2007
|
||||||
Repayments
under accounts receivable facility and working capital
facility
|
$ | (250 | ) | $ | (300 | ) | ||
(Repayment)
issuance of commercial paper, net discount of $1 million in 2008 and $2
million in 2007
|
(114 | ) | 109 | |||||
Proceeds
from issuance of long-term debt, net of premium, discount, and issuance
costs of $2 million in 2008 and $10 million in 2007
|
598 | 690 | ||||||
Long-term
debt matured, redeemed, or repurchased
|
(454 | ) | - | |||||
Rate
reduction bonds matured
|
- | (143 | ) | |||||
Energy
recovery bonds matured
|
(165 | ) | (160 | ) | ||||
Equity
infusion
|
50 | 200 | ||||||
Common
stock dividends paid
|
(284 | ) | (254 | ) | ||||
Preferred
stock dividends paid
|
(7 | ) | (7 | ) | ||||
Other
|
16 | 21 | ||||||
Net
cash (used in) provided by financing activities
|
$ | (610 | ) | $ | 156 |
·
|
In
an effort to mitigate increasing interest rates as a result of downgrades
to the bond issuer’s credit rating and credit issues which impacted the
auction rate markets, the Utility repurchased $454 million of PC2005 bonds
in March and April 2008. There was no similar repurchase in
2007.
|
·
|
Proceeds
from the issuance of Senior Notes were approximately $92 million less in
the six months ended June 30, 2008 as compared to the same period in
2007. Proceeds from the issuance of Senior Notes were used to
repay outstanding commercial paper, for working capital purposes, and to
fund capital expenditures.
|
·
|
The
Utility’s net repayments of commercial paper were approximately $223
million higher in the six months ended June 30, 2008 as compared to the
same period in 2007 primarily due to the increases in cash from operations
in 2008 as described above.
|
·
|
The
Utility received an equity infusion of $50 million from PG&E
Corporation in February 2008, as compared to $200 million equity infusion
during the same period in 2007. Equity infusions are sized to
maintain the common equity ratio authorized by the CPUC and to ensure that
the Utility has adequate capital to fund its capital
expenditures.
|
·
|
Repayments
under the accounts receivable facility and working capital facility were
approximately $50 million less for the six months ended June 30, 2008 as
compared to the same period in 2007. The accounts receivable
facility was terminated in February 2007 in connection with an upsize of
the working capital facility, and the full outstanding balance of $300
million was repaid. Only $250 million was drawn on the working
capital facility as of December 31, 2007, the balance of which was repaid
during the first quarter of 2008.
|
·
|
The
RRBs matured and were fully repaid in December 2007. As a result,
there were no debt repayments in 2008 as compared to $143 million in
payments for the six months ended June 30,
2007.
|
(in
millions)
|
Gross
Credit
Exposure
Before Credit Collateral(1)
|
Credit
Collateral
|
Net
Credit Exposure(2)
|
Number
of
Wholesale
Customers
or Counterparties
>10%
|
Net
Exposure to
Wholesale
Customers
or Counterparties
>10%
|
|||||||||
June
30, 2008
|
$ |
1,462
|
$
660
|
$ |
802
|
1
|
$ |
111
|
||||||
December
31, 2007
|
$ |
311
|
$
91
|
$ |
220
|
2
|
$ |
111
|
||||||
(1)
Gross credit exposure equals mark-to-market value on financially settled
contracts, notes receivable, and net receivables (payables) where netting
is contractually allowed. Gross and net credit exposure amounts
reported above do not include adjustments for time value or
liquidity.
|
||||||||||||||
(2)
Net credit exposure is the gross credit exposure minus credit collateral
(cash deposits and letters of credit). For purposes of this table,
parental guarantees are not included as part of the
calculation.
|
·
|
regulatory
assets and liabilities;
|
·
|
unbilled
revenues;
|
·
|
environmental
remediation liabilities;
|
·
|
asset
retirement obligations;
|
·
|
income
taxes; and
|
·
|
pension
and other postretirement benefits.
|
(in
millions)
|
Value
as of June 30, 2008
|
|||
Nuclear
Decommissioning Funds
|
$ | 7 | ||
Price
Risk Management Instruments
|
382 | |||
Long
Term Disability Trust
|
95 | |||
Dividend
Participation Rights
|
(55 | ) | ||
Other
|
(6 | ) | ||
Total
Level 3 Instruments
|
$ | 423 |
·
|
Approximately
$221 million for remediation at the Hinkley and Topock natural gas
compressor sites;
|
·
|
Approximately
$83 million related to remediation at divested generation
facilities;
|
·
|
Approximately
$182 million related to remediation costs for the Utility’s generation and
other facilities, third-party disposal sites, and manufactured gas plant
sites owned by the Utility or third parties (including those sites that
are the subject of remediation orders by environmental agencies or claims
by the current owners of the former manufactured gas plant sites);
and
|
·
|
Approximately
$52 million related to remediation costs for fossil decommissioning
sites.
|
For
|
Against
|
Abstain
|
|
David
R. Andrews
|
266,235,373
|
3,047,596
|
4,268,100
|
C.
Lee Cox
|
265,271,261
|
4,056,555
|
4,223,253
|
Peter
A. Darbee
|
265,158,877
|
4,149,574
|
4,242,618
|
Maryellen
C. Herringer
|
265,596,437
|
3,791,112
|
4,163,520
|
Richard
A. Meserve
|
225,354,269
|
43,960,973
|
4,235,827
|
Mary
S. Metz
|
264,611,678
|
4,769,367
|
4,170,024
|
Barbara
L. Rambo
|
266,308,879
|
2,957,106
|
4,285,084
|
Barry
Lawson Williams
|
262,704,969
|
6,523,337
|
4,322,763
|
For:
|
266,061,878
|
Against:
|
3,856,499
|
Abstain:
|
3,632,692
|
For:
|
11,798,255
|
Against:
|
218,506,882
|
Abstain:
|
5,976,209
|
Broker
non-vote (1):
|
37,269,723
|
For:
|
121,773,318
|
Against:
|
109,174,157
|
Abstain:
|
5,333,871
|
Broker
non-vote (1):
|
37,269,723
|
For:
|
57,261,504
|
Against:
|
170,820,904
|
Abstain:
|
8,198,938
|
Broker
non-vote (1):
|
37,269,723
|
For
|
Against
|
Abstain
|
|
David
R. Andrews
|
272,294,704
|
197,831
|
91,240
|
C.
Lee Cox
|
272,281,529
|
197,546
|
104,700
|
Peter
A. Darbee
|
272,295,625
|
186,490
|
101,660
|
Maryellen
C. Herringer
|
272,288,492
|
199,871
|
95,412
|
Richard
A. Meserve
|
272,240,567
|
247,147
|
96,061
|
Mary
S. Metz
|
272,274,958
|
214,048
|
94,769
|
William
T. Morrow
|
272,296,059
|
180,903
|
106,813
|
Barbara
L. Rambo
|
272,281,908
|
205,706
|
96,161
|
Barry
Lawson Williams
|
272,274,075
|
204,658
|
105,042
|
For:
|
272,357,765
|
Against:
|
87,495
|
Abstain:
|
138,515
|
3.1
|
Bylaws
of PG&E Corporation, as amended as of May 14, 2008 (incorporated by
reference to PG&E Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2008 (File No. 1-12609) Exhibit
3.1)
|
3.2
|
Bylaws
of Pacific Gas and Electric Company, as amended as of May 14, 2008
(incorporated by reference to Pacific Gas and Electric Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2008 (File
No. 1-2348) Exhibit 3.2)
|
10.1*
|
Amendment
to January 3, 2007 Restricted Stock Agreement between PG&E Corporation
and Peter A. Darbee, effective May 9, 2008 (January 3, 2007 Restricted
Stock Agreement filed as Exhibit 10.3 to PG&E Corporation’s and
Pacific Gas and Electric Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007)
|
10.2*
|
Restricted
Stock Unit Agreement between Peter A. Darbee and PG&E Corporation
dated May 9, 2008
|
11
|
Computation
of Earnings Per Common Share
|
12.1
|
Computation
of Ratios of Earnings to Fixed Charges for Pacific Gas and Electric
Company
|
12.2
|
Computation
of Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends for Pacific Gas and Electric Company
|
31.1
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of PG&E
Corporation required by Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of Pacific
Gas and Electric Company required by Section 302 of the Sarbanes-Oxley Act
of 2002
|
32.1**
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of PG&E
Corporation required by Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2**
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of Pacific
Gas and Electric Company required by Section 906 of the Sarbanes-Oxley Act
of 2002
|
*
Management contract or compensatory agreement
|
|
**Pursuant
to Item 601(b) (32) of SEC Regulation S-K, these Exhibits are furnished
rather than filed with this
report.
|
PG&E
CORPORATION
|
||
CHRISTOPHER P. JOHNS | ||
Christopher
P. Johns
Senior
Vice President, Chief Financial Officer, and Treasurer
(duly
authorized officer and principal financial
officer)
|
PACIFIC
GAS AND ELECTRIC COMPANY
|
||
BARBARA L. BARCON | ||
Barbara
L. Barcon
Vice
President, Finance and Chief Financial Officer
(duly
authorized officer and principal financial
officer)
|
3.1
|
Bylaws
of PG&E Corporation, as amended as of May 14, 2008 (incorporated by
reference to PG&E Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2008 (File No. 1-12609) Exhibit
3.1)
|
3.2
|
Bylaws
of Pacific Gas and Electric Company, as amended as of May 14, 2008
(incorporated by reference to Pacific Gas and Electric Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2008 (File
No. 1-2348) Exhibit 3.2)
|
10.1*
|
Amendment
to January 3, 2007 Restricted Stock Agreement between PG&E Corporation
and Peter A. Darbee, effective May 9, 2008 (January 3, 2007 Restricted
Stock Agreement filed as Exhibit 10.3 to PG&E Corporation’s and
Pacific Gas and Electric Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007)
|
10.2*
|
Restricted
Stock Unit Agreement between Peter A. Darbee and PG&E Corporation
dated May 9, 2008
|
11
|
Computation
of Earnings Per Common Share
|
12.1
|
Computation
of Ratios of Earnings to Fixed Charges for Pacific Gas and Electric
Company
|
12.2
|
Computation
of Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends for Pacific Gas and Electric Company
|
31.1
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of PG&E
Corporation required by Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of Pacific
Gas and Electric Company required by Section 302 of the Sarbanes-Oxley Act
of 2002
|
32.1**
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of PG&E
Corporation required by Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2**
|
Certifications
of the Chief Executive Officer and the Chief Financial Officer of Pacific
Gas and Electric Company required by Section 906 of the Sarbanes-Oxley Act
of 2002
|
*
Management contract or compensatory agreement
|
|
**Pursuant
to Item 601(b) (32) of SEC Regulation S-K, these Exhibits are furnished
rather than filed with this report.
|