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New And Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Variable Interest Entities

A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE.

Some of the counterparties to the Utility's power purchase agreements are considered VIEs. Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility. To determine whether the Utility was the primary beneficiary of any of these VIEs at September 30, 2014, it assessed whether it absorbs any of the VIE's expected losses or receives any portion of the VIE's expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE's gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE's performance, such as dispatch rights and operating and maintenance activities. The Utility's financial obligation is limited to the amount the Utility pays for delivered electricity and capacity. The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs. Since the Utility was not the primary beneficiary of any of these VIEs at September 30, 2014, it did not consolidate any of them.

PG&E Corporation affiliates previously entered into four tax equity agreements to fund residential and commercial retail solar energy installations with four separate privately held funds that were considered VIEs. On July 2, 2014, PG&E Corporation disposed of its interest in the tax equity agreements and has no remaining commitment to fund these agreements.

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 net periodic benefit costs reflected in PG&E Corporation's Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2014 and 2013 were as follows:

	Pension Benefits						Other Benefits
	Three Months Ended September 30,
(in millions)	2014			2013			2014			2013
Service cost for benefits earned	$	92		$	121		$	12		$	14
Interest cost		175			158			19			19
Expected return on plan assets		(202	)		(162	)		(25	)		(20	)
Amortization of prior service cost		5			5			6			6
Amortization of net actuarial loss		1			28			1			1
Net periodic benefit cost		71			150			13			20
Transfer from (to) regulatory account ⁽¹⁾		13			(66	)		-			-
Total	$	84		$	84		$	13		$	20

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

	Pension Benefits						Other Benefits
	Nine Months Ended September 30,
(in millions)	2014			2013			2014			2013
Service cost for benefits earned	$	287		$	351		$	34		$	40
Interest cost		521			470			57			56
Expected return on plan assets		(605	)		(487	)		(77	)		(60	)
Amortization of prior service cost		15			15			17			17
Amortization of net actuarial loss		2			83			2			4
Net periodic benefit cost		220			432			33			57
Transfer from (to) regulatory account ⁽¹⁾		31			(179	)		-			-
Total	$	251		$	253		$	33		$	57

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

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

Amounts Reclassified Out of Accumulated Other Comprehensive Income

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

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

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

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

	Pension			Other			Other
	Benefits			Benefits			Investments			Total
(in millions, net of income tax)	Three Months Ended September 30, 2013
Beginning balance	$	(28	)	$	(69	)	$	26		$	(71	)
Other comprehensive income before reclassifications:
Loss on investments (net of taxes of $0, $0, and $2,
respectively)		-			-			(3	)		(3	)
Amounts reclassified from other comprehensive income: ⁽¹⁾
Amortization of prior service cost (net of taxes of
$2, $3, and $0, respectively)		3			3			-			6
Amortization of net actuarial loss (net of taxes of
$11, $0, and $0, respectively)		17			1			-			18
Transfer to regulatory account (net of taxes of
$13, $0, and $0, respectively)		(20	)		-			-			(20	)
Net current period other comprehensive income (loss)		-			4			(3)			1
Ending balance	$	(28)		$	(65)		$	23		$	(70)

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

	Pension			Other			Other
	Benefits			Benefits			Investments		Total
(in millions, net of income tax)	Nine Months Ended September 30, 2013
Beginning balance	$	(28	)	$	(77	)	$	4	$	(101	)
Other comprehensive income before reclassifications:
Gain on investments (net of taxes of $0, $0, and $13,
respectively)		-			-			19		19
Amounts reclassified from other comprehensive income: ⁽¹⁾
Amortization of prior service cost (net of taxes of
$6, $8, and $0, respectively)		9			9			-		18
Amortization of net actuarial loss (net of taxes of
$34, $1, and $0, respectively)		49			3			-		52
Transfer to regulatory account (net of taxes of
$39, $0, and $0, respectively)		(58	)		-			-		(58	)
Net current period other comprehensive income		-			12			19		31
Ending balance	$	(28)		$	(65)		$	23	$	(70)

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

- Definition

Disclosure of accounting policy for consolidation to describe the significant judgments and assumptions made in determining whether a variable interest held by the entity requires the variable interest entity to be consolidated and (or) disclose information about its involvement with the variable interest entity; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; and the significant factors considered and judgments made in determining that the power to direct the activities that significantly impact the economic performance of the variable interest entity are shared (as defined).

+ References+ Details

- Definition

Disclosure of accounting policy for pension and other postretirement benefit plans. This accounting policy may address (1) the types of plans sponsored by the entity, and the benefits provided by each plan (2) groups that participate in (or are covered by) each plan (3) how plan assets, liabilities and expenses are measured, including the use of any actuaries and (4) significant assumptions used by the entity to value plan assets and liabilities and how such assumptions are derived.

+ References+ Details