New And Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Pension And Other Postretirement Benefits

Pension and Other Postretirement Benefits

PG&E Corporation and the Utility provide a non-contributory defined benefit pension plan for eligible employees, as well as contributory postretirement medical plans for retirees and their eligible dependents, and non-contributory postretirement life insurance plans for eligible employees and retirees.  The trusts underlying certain of these plans are qualified trusts under the Internal Revenue Code of 1986, as amended (“Code”).  If certain conditions are met, PG&E Corporation and the Utility can deduct payments made to the qualified trusts, subject to certain Code limitations.  PG&E Corporation and the Utility use a December 31 measurement date for all plans.

The net periodic benefit costs reflected in PG&E Corporation's Condensed Consolidated Financial Statements for the three months ended March 31, 2013 and 2012 were as follows:

	Pension Benefits						Other Benefits
	Three Months Ended						Three Months Ended
	March 31,						March 31,
(in millions)	2013			2012			2013			2012
Service cost for benefits earned	$	115		$	99		$	13		$	12
Interest cost		156			164			19			21
Expected return on plan assets		(162	)		(149	)		(20	)		(19	)
Amortization of transition obligation		-			-			-			6
Amortization of prior service cost		5			5			6			6
Amortization of unrecognized loss		27			31			1			1
Net periodic benefit cost		141			150			19			27
Less: transfer to regulatory account (1)		(57	)		(75	)		-			-
Total	$	84		$	75		$	19		$	27

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

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

Variable Interest Entities

Variable Interest Entities

Some of the counterparties to the Utility's power purchase agreements are considered VIEs.  Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility.  To determine whether the Utility was the primary beneficiary of any of these VIEs at March 31, 2013, it assessed whether it absorbs any of the VIE's expected losses or receives any portion of the VIE's expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE's gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE's performance, such as dispatch rights and operating and maintenance activities.  The Utility's financial exposure is limited to the amount the Utility pays for delivered electricity and capacity.  (See Note 10 below.)  The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs.  Since the Utility was not the primary beneficiary of any of these VIEs at March 31, 2013, it did not consolidate any of them.

At March 31, 2013, PG&E Corporation affiliates had entered into four tax equity agreements to fund residential and commercial retail solar energy installations with two privately held companies that are considered VIEs.  Under these agreements, PG&E Corporation has made lease payments and investment contributions of $363 million to these companies in exchange for the right to receive benefits from local rebates, federal grants, and a share of the customer payments made to these companies.  The majority of these amounts are recorded in other noncurrent assets - other in PG&E Corporation's Condensed Consolidated Balance Sheets.  PG&E Corporation determined that it does not have control over the companies' significant economic activities, such as the design of the companies, vendor selection, and construction. PG&E Corporation's remaining financial exposure is not material.  Since PG&E Corporation was not the primary beneficiary of any of these VIEs at March 31, 2013, it did not consolidate any of them.